Xperi Holding 22 Feb 232022 Q4 Earnings call transcript

Good day, everyone. Thank you for standing by. Welcome to Adeia's Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Following the presentation, the call will be open for questions.

I'd now like to turn the call over to Ned Mitchell, for Adeia. ahead. go please Ned,

Executive thank quarter joining results. XXXX call Davis, on and Financial Jones, reports Officer. With as its the Chief Paul are fourth and today and you afternoon Keith us Chief for Adeia me Officer; Good full-year financial

today's there addition can earnings you is presentation, website. to In along Adeia’s with IR an which access the earnings release, webcast on

would I begin, like we a reminders. to Before few provide

which other contains subject discussion are statements based statements expectations about current forward-looking events, and to changes therefore, or today's First, in predictions, and future circumstances. that are uncertainties, and management's on projections, beliefs risks,

Factors For arising actual report in including filings, statements annual risks XX-K results on more we note our and alter our the company materially Form our report update differ could reflect not our Risk to these from events what this cause refer that the section and or information Form Please to to please circumstances discussed call. SEC intend after uncertainties on does forward-looking today, XX-Q. that on quarterly or the to

related refer fees, to facility and or actual refinancing amortization loss compensation; retention discontinued expense effects. planned impairment which separation extinguishment; to operations, tax exclude and including costs non-GAAP non-cash severance, debt acquired costs, Second, we intangibles financial ongoing intangible charges, combinations business stock-based costs, or integration related certain costs, transaction measures, one-time bonuses; closures, assets, on debt of

Relations recording www.adeia.com. release conference at comparable section on will Relations have of measures We the these of earnings The the available measures on call our most provided reconciliations and this website. Investor be of GAAP the website non-GAAP in the to directly Investor

Paul over will to call Adeia's the I Davis. turn CEO, now

and us thank everyone Thank momentous a XXXX today. year you, for Adeia. joining was for Ned, you

the continue drive and year strong operationally forward, employees financially. dedicated incredibly Our a delivering business to

Xperi, business While operation also completed from October X. which successfully the was navigating on

a million. year our EBITDA of exceeded high of quarter fourth customers margin set approximately in of growing finished with for approximately note Our pipeline million excellent We by opportunities. over adjusted was on the These total the an year driven $XXX diverse results the were XX%. $XXX revenue in and and and expectations revenue

quarter a as strong standalone closed how XX company. our renewals and we highlighted to Our agreements fourth including by Samsung. with are point continue long-term proof results will quarter both of a license fourth in deals the new succeed renewal alone, We

media In OTT, in addition, new renewals social deals we TV, signed renewals two Pay as semiconductors. significant and well as and

to many baseline given successful These recurring revenue the deals, nature the into but future revenue. of durability reinforce enhance they our and annual our only our deals fourth contribute visibility quarter, and help and long-term of not of strength these also

will the Altice, renewal I shortly. the with Importantly, New early which the in continued detail with more momentum Year has into address

momentum deal let the with electronics detail, consumer into in more market. me Diving start the Samsung in

services last As global This the TV market. our with announced long-term month, TVs is we how renewal license industry we a to innovation signed rapidly growing related offerings. Samsung renewal support in testament and players Smart connected a

entertainment a AVOD or digital video is free in reevaluate consumers see the TV We and raising consumption significant ad-supported of advertising-based on-demand services, their budgets. shift or as including behaviors streaming content popularity FAST. This

consumer rapid advertisers, network the the with market streaming manufacturers. among accelerated resulting operators, TV has trend electronics in relationships The and new growth of connected providers,

on roadmap to We be trend. will and capitalize this well-positioned technology portfolio believe our current

TV position approach video our of broadband leading week, Moving a and and leading we to services. this with to agreement Pay an our renewal result announced TV, signed relationships. extends renewal our Pay in a early This and of provider early IP is with as Altice, customer Altice we

rates at the access provide with committed our working technologies. into IP enter to to our multi-year that to portfolio agreements value recognize are that our of customers We expanding

We and as are media the of a serves proof further portfolio agreement our Altice, point longevity pleased of we TV very applicability market. signed with in which this the Pay

We multi-year with media social leading progress signing media renewals saw the companies. market, social two significant also in

our now Importantly, broader The of drive IP, which IP imaging deals of our include imaging companies. these access is part these portfolio from to contribution inclusion portfolio. now helped revenue increased our media both

And moving similar see opportunities we forward.

base of believe video of continued media we our we With are expansion our the market. addition well-positioned platforms, grow on imaging revenue social and in consumption this to IP

also of validation position In further of leading market new Qorvo, provider a in DBI a semiconductors, leading hybrid license bonding. agreement our This frequency signed a we radio is with solutions.

markets, RF than more the this pleased with is deal market we modest While semiconductor opportunity our new are win. other

we verticals our IP. the consistently close license addition, agreements and customer with The breadth media applicability Solutions, of efficiently agreements, a including and geographic base and new Fetch to multiple of across and Naver. diversity different our SONIFI and is regions, TV, of renewals and signed ability jurisdictions result In markets our and in

focused and customer our success and are we set diverse of a ability believe are our We At and to heart monetize the unique in on given well-positioned so such diversification our property. in portfolio do our which way to driving we intellectual innovate development. signing the customers innovation leverage our engines is of

which burdened can verticals. are and not big across At multiple Adeia ideas applications industries. technologies roadmaps applications horizontal them Adeia, work expand market multiple product on innovators that by we timelines, on enables and across and cut to focus engineers and that

presentation. horizontal on We approach technology have depicted the Slide of X this

the major industries and On edge, address. technologies markets the have outer our we

have further use our our Moving inside, And have media inside, portfolio applications, the we blocks products features, horizontal and covers. that services, we technology the core that technologies.

advanced is portfolio, advancing media the and semiconductor to our semiconductor the processing node be that we will consumers that robust chips. watch instrumental our to enjoy. technologies hybrid next devices addition of these bonding believe power generation that In the chips and entertainment deliver It

in Historically, via power Importantly, world. Law. these devices computing connected require power came more advancements increasingly computing more Moore's always and and an mobile in

the slowing solutions technology toward new is to and to Moore's cost industry advance semiconductor increasing effective manner. continue cost in the a However, benefits performance driving Law of

role Hybrid bonding bonding technology] in in and enabling particularly a massive and architecture improved provides effective high dye bandwidth, a play Hybrid footprint efficiency. in key energy cost will speed altered architecture. advancements our communication and boost [DBI bonding chip and condensed [ph]

push of will The to nodes smaller to continue the despite processing cover costs. node leading well-positioned boundaries advanced nodes. portfolios foundries the our those associated smaller And

the even believe bonding. semiconductor to we continue move hybrid However, most companies will advanced to

way attractive and these increasingly improve an As performance. manage to costs

than performance particular, the the to hybrid effective cost three of the growing industry. about leading adoption adoption optimistic with of the has potential given it the markets fastest rather market, remain bonding semiconductor addition, for very the across hybrid largest logic that bonding offers, chain the advantages in semiconductor just two supply In we in the foundries. one pervasive In and

Moving to media.

across blocks products, applications, user core deployed computer which learning are vision, services machine bigger verticals technology such we Our of interfaces features, a target. and and networking as power set the much

to multiple is once approach An pioneer goal an experiences. have execute interfaces, user innovate innovation verticals. horizontal user a example and and been we that decades, of we Our technology a in on this across roadmap license that for so can is area

is are the what importance integrated play, in UI understand [transport our it these we [ph], and since guides, include technologies of playback and technologies experience. DNA speed. bar] auto These and consumers UX see and technologies

consumer they UX proliferation media, While music of and Pay for TV, and have with technologies also and the we are video, in best metaverse. known streaming, social electronics, applicability UI the

And consumers medium enjoying which are entertainment. a user in regardless similar the want experience they of digital

free innovators multiple company We are our apply traditional replicate Without to this ways think innovate broadly in across looking verticals. product are continuing engineers limitations, that to horizontal and and approach. big innovation will

we I laid Investor call Before over out to focus at our with agreements, annual baseline turn of portfolio, Day, want our growing financials, will expanding scope areas and on work and making we Keith adjacent the to semiconductor in I touch verticals. our cover year, this our and progress our Consistent towards what to revenue, license patent XXXX. of media in number the the increasing

are new on making annual renewals, providers. with executing customers, OTT agreements unlicensed increase focused signing To revenue, our we and on progress large baseline

innovation targeted portfolio acquisitions. And engines. our driven tuck-in will Our be development internal by

horizontal both licensing and Our verticals. core programs innovation roadmap internal supports existing new

as the of to see also acquisitions we attractive many for will We given environment. of divest IP, macroeconomic look believe an current assets market companies

to well-positioned will with for continue this be strong look our growth. sheet as our on and selective balance are we accelerate to capitalize opportunities We that can

continue momentum our XXXX, in of healthy given We will deal believe pipeline opportunities. the

proven resort. to as strong We litigating have building focus relationships, a find approach only last and a licensing which to on in we a tirelessly working deal customer

in continued have as our but our are streaming success. as to verticals. music efforts anticipate quarter, I These we noted efforts first breaking into last of we at progress area stages, various Lastly, adjacent

and Given the date. engagement progress to

and our for our to over call the and turn me let XXXX results Keith fourth cover quarter that, financial XXXX. to With guidance

another to are you, company reach am for time. standalone as as for milestone on the speaking the basis reporting we of Adeia, I with you Thank first Paul. be financial a pleased very results we

are as provides insight as clarity independent and into excited operations our an We greater this company.

fourth prior me the a XX% Slide let X. quarter. was patent representing of the verticals. this also with validates Now, starting operating the $XXX.X execution you quarter results for the was by our million, from walk on Revenue increase driven through quarter. increase and execution portfolios our of pleased applicability various of extremely in level We're across it the agreements our pipeline strength license the XX as of it reflects The

OTT, agreements covering Pay including and consumer and multiple semiconductors, evidence earlier, the which social noted license As inventions. of TV, of Paul widespread electronics, media, we is verticals, our technology adoption signed

I'll our discuss be referring only. expenses, numbers non-GAAP which let's Now, operating to

costs. million associated Xperi with call we the to of First, last in I guidance speak the the provided time, to want those included accounting were commitment expenses $X we proper a of the for determining process during which Inc. quarter, At pre-separation approximately still the to

pre-separation we During and that prior the from appropriate in a the expenses [ph] Accordingly, fourth for operating costs agreement treatment included course determining be our quarter, not these fourth non-GAAP treated of similar expenses, the to on X% for the quarter. related $XX.X million, accounting in other be results. quarter, [decrease] this will were the should concluded

previously clarity, excludes of the million the costs I $X this sake referred pre-separation to. For of that

or to expenses accelerate X%, largely quarter due primarily expenses our and administrative innovation flat grow from development and increased in continued general development offset to and costs a were personnel Research spending. as and investments decrease were Selling by increased outside the engine. $XXX,XXX prior relatively

quarter, our prior Other term to quarter. interest $X.X due $X.X earned higher prior decreased an to million cash the to from primarily was interest Litigation the investment portfolio. fourth the million, our rates. related and expenses on loan impact from expense $X.X was interest increase In of of $XX income related quarter, million, million the primarily

for $XXX,XXX. quarter approximately EBITDA was XX%. expense Depreciation reflecting was the EBITDA million, the adjusted of $XX.X fourth an margin adjusted quarter Our for

was rate for tax the period. income non-GAAP Our XX%

taxes. income Our primarily withholding tax of as state and domestic as federal well expense consists taxes, Korean

sheet balance and period with few a cash, marketable in provide securities. million details. We cash me equivalents, ended let Now, the $XXX.X

$XX transaction we million the During approximately operations, quarter, generated impacted in which approximately related payments. cash from separation $XX was million by negatively in

loan significant ended cash as balance momentum balance down during quarter with $XX.X $XXX.X start We has in of year, exiting provided million. a reflects the the the paying term quarter. strong XXXX. The million generation we This

result of following our term the of a start, make of the elected we and $XX of based to on loan financial strength balance end As paydown an this additional the year. our outlook, million

per board of Also record on paid a a to $X.XX Further, XX of March as of dividend $X.XX of our dividend during the March the of common payment XX. approved quarter, we fourth per cash stockholders stock. share share

to turning Now, guidance. our

in agreements license complex large tend reminder, quite As by our their nature. to a be

As we license patented our creating timing look inventions fluctuations we the that in provide, revenue relative execution the our to can and value commensurate the our return agreements achieve quarter-to-quarter. vary, of economic from ensure to

performance a our an we most the is basis guidance on evaluating full-year focus believe perspective we such, Thus will on appropriate only. annual providing measure. As on

full-year to expect For of be we range to million million. in $XXX the the XXXX, revenue $XXX

be to to million. of in million $XXX expenses range operating the expect We $XXX

$X.X range and expense $XX We $X.X $XX expect million. to to we be be in other to the interest million million of to the expect range of in million income

We EBITDA XX%. margin of resulting expect a

million $XXX expect we operations in of from be to Additionally, $XXX the million. to flows cash range

non-GAAP the the XX% consistent for rate We full-year. roughly tax to expect at remain

expect approximately $X expenditures We capital full-year. also to million for be the

October across we start successful of In milestones traction operating many as are X. stand-alone during very off on fourth business with pleased media company. closing, to for our innovation and a successful the XXXX a is witnessed have and starting efforts I very Adeia, we with in markets. separation a results am brought of the journey quarter business our leading validation The the IP our both semiconductor the

to and product their our our their inventions with market. technologies and Consistent time our accelerate own mission, help service licensees, and offerings, enhance

Our Both inorganically. innovation. capital our business remains allocation strategy focused on and through growing continued organically

to loan our our accelerated payments order We against sheet. will further term make balance continue strengthen to in also to look

returning to pleased long And our strides I of audio program. am growth achievements part capital As made. a and our history very has committed our we remain long-term dividend to continuing for of team provide our the current shareholders, the with success. springboard

That remarks, I'd Operator? to to brings prepared and like an our for the turn over questions. the operator with end to that, call

Thank Zangler go of ahead. you. Nick the question from Stephens. line [Operator Instructions] We Please first take with our

Hey, guys. have do here go questions Great quarter. to few I a through.

As we [XXX] the maybe any is [ph], see the year, that's update didn't revenue left guide but alone? at there, to I'm look for next I unchanged baseline assuming

to Great hear Nick. Hey, from you.

our or under contract time, agreements business [ph] some deals about that movement what for we for baseline we throughout progress to as we XXX momentum, as revenue will that it new represents. a years, we and we as renewal. represents reporting currently look look standpoint. our baseline I It somewhat a see to up have point when reporting just the license and the more to let’s but significant and that from revenue, revenue in new [a that under a in current that at rise] in it On start deem signed shift be the think see you baseline us agreements

that really operations outlook. baseline a revenue point right of necessarily It's now. not is indicative time in So, our future of in

it. Got

we like, talking get XXXX, into that you like when was additional million you're to baseline that So, of this ago, of next am then quarter let's a I XXX. to top XXX top that, thinking into an to right year. on of that, pushed about as guide on And $XX XXX say, though of million the $XX about

that what is of XX So, that off question to exactly the I guess XX incremental is, baseline?

– but win, yet Again, or to trying it the XXX think that been licensing to have have in – you total is baseline? is spread revenue? agreements if of that how should the be included what agreements just represent hope but about or that not do Like I part Does signed, how that just that? agreements to assume is might I – you that new gets that to flat,

a of the How it's it’s No, the baseline. great that I as and look at it said, question. kind XXX Paul is you

high contracts represent we that have under that's for. agreement and degree today renewals confidence of that So going we to then have a

for you manage our business, that the of contracts, by you Now to when have were up of have incremental license, a their we going structure delta a we're licensees a could in catch combination out of period.

So create A have we in fee reflective could have of structures, will XXXX. or in and impact. there amounts in fixed an blip would Micron or that's necessarily deals minimum be contract a that that ongoing not our great we that had that example amounts semiconductor is some that

manage business? we how So, the

a a are about agreement some of due ultimately for we we something non-recurring like for – from We who to we it immediately. minimum be at of generally fees as or license payments mixture that they of that signed back and are or revenue anticipate folks come with revenue them about take profile XX% the our have combination that talked that

Got it.

Qorvo, right relatively revenue there, mean, stay that's maybe thought guess would much right, it's but XXX, like if I like, you that, don't know I that but delve announcement, would like like, win, imagine obviously at obviously, sort on I Qorvo I baseline worth, So, the have this on so that's about the announced same a then, how thinking sizable. new I of harshly, okay, thought

at at already. and Qorvo You maybe XXX you'd could XXX be take

is of is off? or thinking that logic that is incorrect way that So, an

questions. this me Great to is and the thanks from hear Nick, Paul. Yes, for

I they think announcement other or the Qorvo deal, ways. structured any are in different

semiconductor noted as well, well. As modest is call on I for as RF my more a us market

increasing not them, that they're So into new if we when baseline. have we all that even visibility announced will deals win a deal

lot a business, semiconductor the emerging, our with are technologies say also I'd of right.

of technology incremental the deals, in see as increase the time, take that to those as some do developed how baseline. out is you starts see structures so, revenue noted, from We changing. And the to that associated plays the need in

So, there aspect it as well. of that is

but out. right the increase our have put guide revenue, that now baseline nonetheless. So, we high we're to year we in That's why ready for not confidence do it

baseline the we'll as we'll We certainly if it's within end that we longer of – there have period soon on where feel provide time, can the range, and over as as as year a And opportunities year are like the that that. goes increase see we of confidence but level certainly well. to

Thanks to leave guys. Great. Cool. one. right. it the next I'll All

Nick. Thanks

next Thank ahead. Hamed a Khorsand you. BWS line question have with [Operator of Financial. go Instructions] Please from the We

comment My actually for already engaged the with question you? first there Hi. needle many you unlicensed Have script move made was them providers. about regarding and pursuing how during OTT you the are could the the that

There's Yeah. multiple Hamed.

got we've they're I know, stages. – – You certainly at different think are we've

I'm others, know big Some that. like a ultimately know And are are feel us. have from we sure more that obtain you advanced that for others of but certainly the names will opportunities than we revenue well significant that and them contribution large

ultimately will them of others, longer that high but that. have than confidence Some succeed will in we take

we've are multiple our those that various IP on approaching so, we're and as confidence aspects – got reads And we stages them. business of but models

And as it? far any to the minimum guarantees attached concerned, Altice there renewal is as is

the I'd with to, deal previously And a we is them. say, of it's had similar type right. renewal, similar to Altice it's that

involved, guide into – three push-outs consideration I mean, QX you I with ago? this to are that guide the, risk you had were going there so and guidance? the performance was some that taking in exposure of with you mean, kind that that have reduced And confidence Okay. months the revenue you then The you the have QX guidance this provide, question.

Yeah. deals by address was benefits some QX for we a talk we I'll productive did XX guidance, as get In about then though expectations right. execution us. see I let know, right. were that deals we you we done But, QX, start provide quarter. those it guidance done, want my able we our have well provide to and felt as we the like, that well. QX And deals QX, there right. Keith in remarks. annual In quarter for think I that very not know, you did were you It we can number, And in good and very And deals prepared those in long-term a noted to in as us felt got shifted.

think I are going forward, to we provide going guidance. annual

so why are certainly quarter-to-quarter deals difficult guidance. we and lumpy – can Our when standpoint, it's exactly will deals nature time annual on and close from be in a focus those to

Keith, to add would that? you anything

I good. really No, Paul, that's think

I that preferably take profile, the to, licensees in can we terms our prepared think focus in in kind a post it remarks look what our get to you out on is proved deals negotiate the that QX for quarter. again, you see small big commercial volume, default. to to that a really economics that we of best with results And the our we we're take what on at think that interest shop, dollar I results can. is if And the our time said the our once for best by

you incoming know, to top my much frankly, you today. is and not versus this our just And, results specifically in when just matter talk we very to the commercial to pipeline fantastic. September if you know, it you is talking basis. at October where of right is of about terms. talked are strong, we we talking our annual how we guide, stronger, when quite as a that, execution from perspective, looks on to about It And, in an from we're So,

execution outlook, our take specifically, very So, just is time in in how deals time to not their going nature. by we're terms that's on of guidance the over that because business. much And necessarily that quarter-to-quarter honed manage our

it. Got

recognized into on out. XX was associated QX? revenue last QX, in or question and the those My agreements with any spread some license of It's in it go all QX all it were Okay. signed

those terms time. at over agreements take agreements, where typical it's go the roughly profile we five-year – a So, period those have look a of if much license I the for pretty a

over has one very There were to catch look emerging have what at is taken our And take adoption up hit that but instance, lot great of technology. come. technology. note It's that the revenue and Paul semiconductor as a term. a of to amount in license industry we that but then payments volumes small business to the of particular going of are going deliver, be hold a The we

structured future So, agreements the some the those revenue from under how our agreements. current of out in we've come

Okay. Thank you.

you. Thank

to gentlemen, the closing and question-and-answer I'd session. the Ladies to for you. back Over Paul sir. Davis over of Thank we end comments. turn reached to you, have floor the like And

call. operator, and you, for everyone thank Thank today's you joining

results plan. see, you on the As with excellent you. strategic forward to XXXX. you fourth quarter, of can and long-term results look the progress coming that the the progress. discuss many and in momentum, strong for our our significant of make the with months to execution continue our in meeting We're our Thank further to we quarter the We demonstrate fourth outlook pleased deal

and gentlemen, concludes teleconference. today's Thank this you. Ladies

your this lines at your may disconnect time. participation. Thank for you You