Xperi Holding 7 Aug 232023 Q2 Earnings call transcript

Good day, everyone. Thank you for standing by. Welcome to Adeia's Second Quarter 2023 Earnings Conference Call. [Operator Instructions]

I would like to now turn the call over to Chris Chaney, Vice President of Investor Relations for Adeia. ahead. go please Chris,

Davis, Thank details joining XXXX of on are With everyone. share Paul financial our and you share guidance. financial as second with and me Paul today results call some you our our the President you give afternoon, us will our with then during for and we will results. our Good second Keith CEO; observations further Jones, and quarter Keith CFO. general details on quarter

a with conclude then period. will We question-and-answer

In webcast to there our an IR addition earnings today's is access, of earnings release, can you along presentation website. portion in which with the the

Before turning I like the to Paul, would provide a reminders. over call few to

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

and We these the non-GAAP please differ investors' ongoing Factors and including circumstances results to intend does or For report XX-K statements what our our use we the our note more internally information on we will To manage XX-Q. that on update our performance, on quarterly today, evaluate Please actual or to and uncertainties cause SEC operations. Form during materially economic Form company reflect call. filings, to financial from understanding in could our information refer events that the to annual arising alter this call. not risks this report our after forward-looking enhance discussed section of non-GAAP to discuss Risk measures

internally. perform comparisons information this as provide enable of we to to results chosen you therefore, have, We our operating do to

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

Davis. CEO, call the to to like I'd over Now, Paul our turn

and thank Chris us joining you, you, today. Thank for everyone,

the $XX.X group signed delivered continued deal quarter, both in as a with strong financial million down another over diverse in results pay Pay-TV, bringing second We to million our paid of Consumer EBITDA $XX approximately the international of in of with our quarter of Electronics, down debt we During We since of second markets. and and customers momentum OTT, domestic million. X agreements adjusted $XXX Semiconductor $XX.X quarter, revenue debt million. separation

our this In expand patent addition, on XX% year. we are track to by portfolios

of announce Rymer. of and am the we executive Adam excited with have well-respected expanded has with I over a to Adam XX is he industries the and technology, also that our years entertainment media addition Board in experience Adam track organizations confident gaming, organizations, and variety a I experience live of am in a driving Board. his valued addition at With be record hands-on to our film, streaming. of leading music TV, wide impressive innovation will

the to back quarter. Turning

momentum were with semiconductor. deal Of QX, long-term the we media, and X Within deals continued. Cox we a in license Our in was in significant signed renewal media Communications. X signed X

top XX the market. this we portfolio Pay-TV These first of year. signed media U.S. half with of validate strength the to With X in continue multiyear the in renewal, Cox providers now the renewals our have the renewals

OTT and as growth in an provider we OTT deal market a exciting for important This future agreement our an we DAZN, sports expand continue customers to us in catalyst Additionally, license this a signed will with programming. an be new leading global market. is emerging our of for

service in Massillon Pay-TV multiple breadth of applicability the Cable, markets. electronics included and our Enseo, Australia, video multiyear renewals digital operator. These quarter consumer provider products; a customers provider; free we of technology to portfolio illustrate deals with signed provider a and deals in services to of a domestic domestic a Freeview TV the hospitality jurisdictions Other German the industry; digital TechniSat, and

Our in averaged anticipate in several through XX% technologies and we has renewal rate emerging R&D, new customers which patent strategically innovation in our we portfolios core high internal with past new drives primarily the where markets years. deals investment We invest over in commitment to grow our our beyond.

IP important our several for reasons. Growing portfolio is

First, customers to us it retain allows thus, maintains pre-existing current revenue our the and base.

add portfolio because initiated they they get to only term also existing utilize IP typically during but Our not benefit patents customers those can of agreements. license new when agreements they the their in we access the our

a services long differentiate new the expanding our portfolio drive history they both great their as Second, that markets. success our enable and products in based semiconductor markets. find and in We history our attracts of take in their being visionary in to customers also pride the being which them value is of on technology. trends of pioneers media evolution and emerging That of innovators innovations

on always what in future Our be focused the and our R&D products. teams are technologies customers' upcoming will adopted

customer verticals Today, years. our such And and development we as our media us enable and investing our businesses and capitalize drive positioned processing of media language these In base other well our and agreements the learning particularly helped AI. these IP business, been media explosion for areas will have generative license on verticals, have in in focus contains this we AI-enabling natural in portfolio as technologies R&D such on and machine in Our us believe media vision, coverage and significant new expand semiconductor adtech of has to innovations recent multiple our in to business. e-commerce. advanced both computer

is advanced high-bandwidth requires advancements and system memory AI for nodes, packaging Generative high-performance also needs. semiconductor technologies. demand meet in The computing those emerging increasing to and logic next-generation

tomorrow's established in enabling as and have investment that AI. technologies will Our bonding portfolio node a in advanced drive us recognized hybrid our pioneer processing

driven addition adjacent would DAZN, opportunities success. market the turn opportunities to the update primarily will ad each revenue as made e-commerce, our streaming and of such measures in pleased to I am discuss music gaming, Before be OTT, very tech, further to gambling. over to recent with progress on call with we provide in briefly our an of our growth Keith as I by these financials, like date have to key in automotive, I sports such areas. deal Future

opportunities significant Importantly, these revenue be adjacent future. are the entirely greenfield contributors in believe and we they markets can

continue customer markets various We engagements are our make adjacent in progress and at to in stages. OTT

We business very for being also devices. logic catalyst excited these about remain the technologies applicability our and we bonding node hybrid portfolio's semiconductor processing see logic a for leading-edge in our advanced market as

remains diverse robust of Our for we believe momentum our will pipeline rest and deals of year. the continue deal and the

track year. this portfolios Lastly, patent to our as remain earlier, noted XX% grow on we

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

I to to Paul. share you, very of quarter financial with Thank our speaking am be pleased you XXXX details results. today second

very provided. be the relative quarter, the that the were year. with split our call. see to half that second second due gave the of on be prior course half closing to of year the the line and quarter midpoint the provided Revenue Our annual Last the much also in expected would the we decrease last color anticipated to first the low second the the of in expected evenly of the of of half the year the quarter. revenue second we for noted we XX% a guidance certain year, during noted we during million, And we point quarter second guidance when renewals $XX.X from to quarter results the was we we trends

our generated half In program of pipeline, revenue execution of We we call. guidance. X renewals. provider, in X a the DAZN. reach is X year with we quarter's revenue from This and the in in what delivered last $XXX.X second a full license we quarter, Communications revenue with agreements strong sports the license agreements first including out of with And line we of renewal in Cox agreement signed million. on year, the OTT with significant to quarter license remain track exactly laid new our were the the

remains renewal strong than Our at rate very greater XX%.

growing this Paul are ongoing our driven to IP which our investments evolving portfolios As in our by R&D. fueled is continued and discussed, dedication by

non-GAAP will expenses only. be like referring which to to Now operating discuss I'd our I numbers for

expenses For and or our out IP expenses primarily the continue administrative expenses higher general to committed X%, related million, to the remain operating teams. to administrative Research quarter, we quarter. build second compared relatively our $XXX,XXX as and due $XX.X Selling, personnel as to and portfolios. growing expenses were flat to we increased development sales were prior consistent costs

the quarter, second million, Litigation the prior quarter expense prior was various during $XX.X from $X.X matters. timing quarter million, a to decrease due to legal to was of from expenses debt expense due Interest continued repayments. related the $XXX,XXX down of $XXX,XXX the the

the variable impact LIBOR interest secured current an Effective amortization on due cost, component issuance July to rate going our other. mirror be interest financing based forward. both will interest will discontinuation on remains the This of of as rates or includes rate debt have rate, not Our the change each which our of at SOFR, expense X.X%. overnight approximately effective X,

on Other ASC under due related with XXX primarily interest and and on income structures and was agreements was cash to portfolio. income billing interest million investment our long-term $X.X recognized to revenue earned

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

the Our at tax rate non-GAAP quarter. income XX% for remained constant

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

the second cash million the marketable equivalents We $XX.X Now details ended few and cash, for on securities. a balance sheet. quarter in with

million of $XX.X from cash the we operations. During generated quarter,

we $XX.X principal on made our Additionally, million payments debt. in

share As million. we $X.XX cash with per the a result, balance term stock. we of dividend second of loan Also $XXX.X paid the common a during quarter a quarter, of ended

share August on XX of another our of Additionally, $X.XX to shareholders dividend payment per of paid as record approved the to Board be XX. September

go will XXXX. the guidance I year over Now full for our

last guidance our we million With year achieving $XXX revenue what our million. $XXX year that, we set we the expectation of and earnings full full XXXX track for we guidance during is reiterate to Our communicated line with in annual progress our call remain forth on with then.

can impact large revenue a the timing to of our do lumpy quarterly we agreements from of can number that As small tend quarter-to-quarter. somewhat from quarter-to-quarter be a revenue reminder, as

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

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

resulting We XX%. of margin adjusted EBITDA expect a

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

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

receive updated as with remeasurements in also have we expect the to the taxes GAAP foreign by future for withholding it which our for Korean We impacted rate has tax been refund currency years. a associated guidance

As merely taxes our nor affect remeasurement, a tax cash not rate. our paid this it does is non-GAAP

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

funnel our half quarter, remained the goals. in optimistic signed momentum strong to of deals of has us of year With X year I second for second achieve positions first planned. we deals has the the full have half deal XXXX am The well and progressed as our very our

the performance our strong revenue further million. grow. that with pipeline, about reinforces excited Our will $XXX are baseline our strength we our of the of allow future current to growth opportunities revenue baseline And

like our I'd to our That Operator? call operator that, remarks. brings session. to with an end turn question-and-answer the prepared begin to And to over the

[Operator Khorsand Instructions] We'll our this from Financial. take at afternoon Hamed question BWS first

Just one clarification.

that portfolio internal Is term? at Or are patents near You're expanding. talking about acquiring your looking you in patent the innovation? all

internal good almost we so acquire opportunities R&D R&D well for on. -- portfolios focus growth as efforts to what is look Hamed, Yes, own to are organic has do far, efforts. entirely we question. We though augment the which our been

as as the rising as over you're And far down? in rest you going flow linear it's as concerned, do you're think as for you Okay. the as paying think the far be cash interest you hump And year generate? the of do free to is far expense then environment this as what it

to free to our In that being of the actually that we same extent in cash and signed flow, that have of so terms general of timing the kind we the go direction expect a billings. deal the revenues,

relatively and then we out that would seeing kind volatility with as somewhat see close to we bit being in anticipate a the QX the bit terms we've -- QX and of year. having still we of momentum forward interest relatively a saw in So more little rate, and we of QX, we're QX conservative. that But consistent from

So in further baking we're increases. some still

interest with kind So we're on guidance keeping that, same the that of expense.

that the one in expand focuses of still being streaming Paul, area couple quarters, Is talked then end that do would from And I think about as you've case? Okay. an you Or music of you being to markets your know get licensees first? new the on. other last

to Yes. It's be still the first. most likely

the of adtech streaming, and focused the markets. would adjacent still of of music what kind come my I first. e-commerce would on think as in be But we're soonest streaming music expectation

from next We'll at Nick Zangler question now take Stephens. our

just of with And signed back the were end quarter the working the signed obviously, performance of in So on few months OTT most year-end? so the guess, how we your just just line talk new on it can, about sounds scenarios? saw quarter, deals did that in do X contracts expectations knowing get we've was And likelihood this and licensee could they get the like those you the signed we've maybe months hit onion new What the expectations. unchanged. But in peel renewals in guide, of hit and remains full It or then that guide? about to of recently. X if happen has currently DAZN. you're Can you you year to here? left by the got maybe what low talk many got you they a end happen DAZN has guide revenue that to to I left here, high as -- licensee one, And

one matter we're next level of and to going to meetings a absolutely Nick, trying matter me. it's into we're us and grow of exciting the about for these deals. we in the sales And maximize get opportunities. love going when pipeline. about is of job to our just the looking our thinking to things of a then and and that timing. at It's economics light Well, in reach timing how my of kind And I It's

lot and be long-term we points the deals different a inflection our sacrificing us, have to out close but more to could revenue could slightly we frankly, some that So for would company. benefit

nothing out like more. in a there. extent that point what really that's the fleeting. getting that to it There's we'll to time? let is that down don't, come really we terms I'm little economic we So have It's bit that the play at reached pipeline is the that we at in And going things

So that's between high the at really being us entirely of end end low the the the range or difference range.

what last renewals our range. had Nick, but of that anticipated we that fully the half high the Yes. quarter add, fluctuation call being just earlier still Keith I you see that's have a confidence said in we current in that's this few we year would that still really quarter-to-quarter mentioned on expectation. our second we is the And and guidance in and

said and that know Any XQ but And guide? it. the don't how look Street way to quarterly Got given you guidance between I XQ would guess guys with frame of the that I year recommend I you what XQ provide model, full guess, and split XQ? relative kind like to

midpoint split, really of It's in half about, that and million in. question. focused just great a focused that being we it's because that talked back said what relative volatility the we're we we're is the $XXX total, Really, to evenly of on that's

event, to remain that the midpoint be in any to the little we QX could But there million confident. to So $XXX guidance, one volatility of of quarter next, a QX. bit from relative

exposure talked ways right. All guys to just proliferation it. intelligence. these has one. glad I'm which Adeia the it. expand you about in Last does on Can And of Got artificial AI? Everyone days, gauge support the you way currently. think if least AI tie to use there's your current base you you just cases or could your about or patent exposure at how current any to portfolio your revenue either maybe

look we technology. AI, language kind to mixed agreements been It's innovations media at helped semiconductor innovator and is actually part part Nick. it use And on marketplace. processing, with drive we've the of been focused today both our business expand as an of have Sure, starting on machine media, license AR, But that developing like primarily That part I'd the We're the Happy also natural that. see differently. VR, using that of technologies, learning we really those current AI of our portfolio. around from have. our current in cases always reality

as me broadly capitalize in excites there's out of that's a proliferation though, AI using is and forward, the that AI can really there how development content Going well. what on more media we as economy

exciting in AI our be generative terms how to how and efforts will this us, the is more media explosion and we going apply. for continue portfolio of is our forward look So much to space very there as in out

they So in Doken AI by about got our talk have cycle. focused our They R&D area. always ways all this Serhad time innovation be team can AI is led been and continue at we've inventors and that on that the looking to use key

generation today semi seeing generative has that now current process within right? a is going edge, advanced chips to the bonding it's to be this, to continue because that been more side, next much And really in On advancements in explosion semiconductors to and perfectly. driven has -- And of fit of for processing need The semiconductor you're are is hybrid ability that AI able semiconductor are so able what the the to technologies. while. our the on portfolios around particular, node process more going AI our and

we're about And add and continue very ecosystem driving excited that's so how to the development we as that can this development. to well

Mr. We looks go any Mr. Mr. Galinko. next we we turn Instructions] like Davis, back Jones, Mr. to appears And closing comments. to further [Operator questions I'd lost no it Galinko. have me, you today. for now the Excuse to it conference Davis, like Matthew

you, operator. Thank

our second in results Our expectations. quarter were line with

goals several strong will of we We with at earlier couple we to our weeks set deal make out track continue Also, the and year. remain progress to on meeting our be events. in pipeline executing next this meet investors

in August joining us the and these Deutsche later We progress Conference the year. the today. forward our at to Bank August Conference the Age Technology Rosenblatt you for August attending look Thank We BWS XX, on will other on and Conference XX XX. discussing on be AI events of

Ladies Adeia much earnings Goodbye. conclude and all XXXX you gentlemen, call. will all to great you a We'd for that joining QX like day. the wish so and thank