Xperi Holding 6 Nov 232023 Q3 Earnings call transcript

Good day, everyone. Thank you for standing by. Welcome to Adeia's Third 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. Chris, please go ahead.

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

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

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

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

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

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

during economic non-GAAP and investors' our enhance of non-GAAP We operations. we our financial manage call. ongoing understanding discuss will information measures To internally evaluate this use performance, to

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

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

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

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

results customers XX%. our quarter, financial pay consumer electronics, We $XXX.X with and a margin OTT in the as of million During operating agreements non-GAAP delivered revenue strong and deal strong semiconductor. with in signed TV, continued X we momentum third

to our loan. we paid continue $XX.X our deleverage we million balance as down In addition, term on sheet

team. We of are experience Officer. Berntzen happy our appointed breadth to as joining announce to And executive and Chief IP independent Phyllis Board. Development today, Turner an we our strengthened depth the announced the expand we we on With Jarl our Brem as director also Corporate

a Over momentum renewed mobile has from media and Our every smartphone significant connected a meaningful renewal because approximately portfolio collectively mobile agreements has quarter customer deal with to been the and media top this largest XX times. access in TVs to our is agreement to with And devices years. licensee our devices. both with ours of us in aspect businesses period, Samsung multiple semiconductor long-term use continued globally is touches XX third a for for the for our producer of semiconductors. relationship This Samsung, their Samsung especially

of renewals our on long expanding with value illustrates and the Our with Samsung IP they place strong our history relationships portfolio. and our customers evolving

second entertainment is We an as a Starz, media also and with Starz in important quarters. many offering OTT premium the OTT a provider, signed deal renewal leading service.

now providers. Starz points media to of value portfolio's and are DEZn with further OTT success recent Our proof our

success. a OTT expanding patents, we fundamental the to the and encouraged am as with are are Our media for OTT providers. momentum springboard leading our the portfolio which recent we making includes believe serve should I relevant progress in believe further

settlement an NVIDIA, IP. resolved quarter, have signed a which outstanding third certain with pleased were agreement litigation legacy related to the During we to

semiconductor We aspects processing agreement of on this node now did bonding behind these hybrid we believe portfolios. or valuable newer this advanced not portfolio. our us, cover discussions Importantly, can our with litigation either begin and

market, a have of Law. address semiconductor the Similarly, value where the believe recognized of portfolio our there our slowing memory many today, is logic semiconductor by increasingly to demonstrated Moore's we try relevant market as companies IP. logic opportunity have As customers the the we leaders is in significant

progress we almost deals. of of with in excited I'm execution have and all including made the renewals aspects new the our continued business,

evidenced have customers months first XX deals we in the with relationships strong. year, signed very the X the remains the by As our of

However, occasionally, arise a us can and the dispute customer. between

to the contract Shaw preference customers rights. it's to the always we rare is our southern work in contractual to After the to breach the baseless. agreement We of we Our agreement. the Shaw's we under and can with choice case. repeat no just are for payments believe we per Accordingly, the filed met but of with our to instance a terms left that. matter, roadblocks, important file lawsuit with York do resistance and attempts resolve a ceasing against entirely and defend In are this of believe so, New stated were positions unable we do we're

company this recognize situation began a over combined It and that is unique after following is merger. took their important to the with or management Shaw, only

customer. this year. gave not accordingly, guidance back TV Canadian original our paying guidance breach have strategic our pay of a will contract And continue license and opportunities pursue of operators the pay-TV Our the earlier we get end long-term remains for and Shaw's market objectives revenue was outlook. contemplated we Shaw as lower to Canadian to unchanged, narrowed to when our all we the

income in and more of margins updated now provided at guidance a midpoint be to of we our net non-GAAP shortly. forecasted outlook the February. as details operating our will Keith our management, above result and are or on original provide expense the Importantly,

turn long-term I markets. Starz Samsung success The portfolio, revenue We expanding renewals significant renewals our and over and year-to-date new on growth, our IP factors, Cox, like several entering with adjacent signed call further update Keith, we revenue of including an executing outlook. Altice, our solidify success. licenses to the measures by Before to I'd Verizon, provide measure our and

growth. for new We are we Digital, the license revenue as the are this signed with our Western [indiscernible] very Kioxia have agreements deals year pleased with and new basis

signing successfully patent is key our new and portfolios Growing renewing licensees to deals.

One accomplished. growing annually. passed becoming of XX% of to and independent now since have We we I proud our year licensing extremely to continue an am what IP has company, track our portfolio goal

XX XX new in deals months, strengthening the deal last expanding our over signed with and engagements. have We numerous pipeline while

also enabling of down have to We million strong us $XXX debt. our pay delivered financial results,

with us X as to and Fortune Operationally, we and IP brings professionals, of and guidance Phyllis independent including us of executive the and and we engineers will of new great expanded our Board. Brim key licensing happy executive to our we announce business. addition world-class our companies. I'm XXX to members X Her added Turner team and another value our director experience licensing of grow to team, have development IP be of decades experience experience

me to call our third quarter review that, financial over With let the turn and to results guidance. Keith our

to $XXX.X of pleased you of third the with quarter. million, share Thank quarter be increase you, quarter, speaking prior our today delivering financial results. an We revenue Paul. third details strong am to XX% a of turned I in from

Our by semiconductor quarter. strong the mobile a the This for phones, agreements executing agreement agreements. revenue was Samsung consumer which driven with their X complements includes execution long-term electronics and of existing in our

agreement our We further announce licensing market. renewal the OTT with of value the to which are very to our also Starz, pleased validates OTT

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

quarter X% quarter increased $XXX,XXX expense services. both decreased Selling, decrease general Litigation the million, pioneering expenses to and as were legal to development prior and administrative due lower to administrative quarter, X% $XX.X growing from and $XXX,XXX X% or portfolios For outsourced of prior quarter, semiconductor various expenses the and or costs our or timing prior a from the of committed million expenses matters. operating $X.X was innovation. $XXX,XXX corporate of million decrease we due prior the expenses to a IP fostering the primarily the from related $X.X from quarter. third remain our media and Research

rates, Interest third quarter which during due from debt expense spite to prior million, principal continued of of rising was repayments $XX.X amount. is and an lower in the quarter the a increase $XXX,XXX interest

under interest and current interest Other Our interest of XXX recognized and was effective our issuance and on to costs long-term investment was billing structures $X.X income agreements million ASC debt related amortization revenue primarily approximately due is on cash portfolio. to with income rate earned X.X%.

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

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

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

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

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

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

million. a loan we term quarter $XXX.X of balance As a with ended result, the

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

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

Shaw subsequent honor our narrowing commitments our but that Shaw X, we to $XXX $XXX had continue release execution operational now merger agreements. for Our to But of on us. revenue the & not to press its was the to of are and Rogers failed full the to million. guidance contemplated October with million contractual be range XXXX, in licensing with Consistent Shaw we year

our $XXX to expenses $XXX the expected lowering also million are to operating in We of be range million.

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

a We resulting XX%. EBITDA adjusted expect margin of

X flow cash be items of adjusted to impact generally operations the $XXX range equal expect million. weight. guidance to we $XXX million cash Additionally, in the flows of share The that from reflects

been priority to maximize agreements. always our economics a licensing has the it Specifically, of

such, accommodated better economics. customers As shifting order XXXX we to in achieve overall from our deal certain to payments

renewal by certain operator, XXXX. obligations. take we we Canadian now failure believe to in not Secondly, will anticipated we honor place their the pay on lastly, And a have been of with Shaw TV contractual were which impacted further impacted

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

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

to a at look provide want high-level XXXX. I

we year. As February XXXX quarter detailed in provide of call on fourth next will a earnings reminder, our guidance more

Also, anniversary First, deal paints patent with account and The made, early. takes I team increase. shifted continue non-GAAP to dividend operating for shareholders in strides be so off proud we operations, customer in we company. continued a margins we We which our am capital stand-alone flows have to X-year expansion we'll to our to anticipate picture our revenue will bright be our priority, to debt portfolio our a XXs. our as payments mid-single-digit future. the a anticipate cash program. from return to a and execution very we including continue our increase as the into moderate reach I the Paying through low anticipate growth referred of

the supported our semiconductor future both Our which enables the by evolution of and media industries. technology is development, investments in

initially at remarks. prepared our separation. strong, As such, we our set and pipeline to in That committed we to the it stay remains forth vision brings

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

at Zangler Nick [Operator Instructions] We'll Stephens. to go first this afternoon

here. questions with few guide. top line A Starting the

So X the months to year. for go

factor variable low client, whether you willing to whatever low Just winning separating now gets what just the guess, high more the the end component to or wondering is resigning existing that range variables if an of client, whether that's an the gating a end. existing new clarity provide I versus the you're end a it's looking Wondering they for range? be what might on of deal the versus high of

Great question. Nick, thanks.

we to the that put $XXX million. guidance the So million $XXX at

best then First terms in really coming kind we start bottom anything really basis. a think of floor. with of it's to of do, go-forward the else range. And as what just we of of terms that are see kind on just just in we all, that Quite us the of of the kind interest the frankly, like

So means a economics lot. comment around deal whole that

is Our robust. very pipeline

get We it that like the of economics think deal position of the our in versus out just to many that we customers. down comes to quite frankly, are we take be feel to deep stages should in with a we're where something. forced we not But

a frankly, a matter the and quite sure we get making So of opportunities, we that have just it's proper economics. just, lot of

That's just you And OpEx then removed obviously, obviously pull quickly? able where within it. to lower you talk were so revenue conjunction OpEx the Can Got sizable and chunk the in on was about a guide. side. back with

running year timing. the to you very higher we Nick, Last driver. you biggest if levels. at very, litigation and did be about at That's months $XX where indicative guidance time even take were do we year, X time. lower been the all paid to the beginning at bit not precise. at this and of at expense primarily. in look we the about we're We And a we spend we It's our at It really have the said question, had we when of Great with the has million. that's spot our of about separation, historically talked anything. recall, a if now, just same little were

we proud is had really But SG&A. look delta. spend we that and is what what other precisely, forecasted. at Those being So line that at a on the if the R&D of I'm items more really are from spot take

So that our I'll -- from single-digit It's I company. And we we very take and take great a doing great track bit. variance for of low not heard a delta you we in from as backed that pride have not what his how look that just R&D what forecasted experienced. a that say, at innovation, we're talk Paul our X job patent we off if about

a great we've is company. timing, spending of really that management So as at done a and just experience a matter job that

add just maybe that. I'll Nick, Yes. on

invest invest to we to lower still in maintain think exciting me of what's and is I what able we've been need expense level in. really that for that

the than I innovation big in new terms on in this we in so have way that front, our very showing up so we and a history. on more filed patents have at in It's And new year, Audio far. it's filings of we've patent going think our R&D patents exciting the here

landscape. for Great. so Obviously, you TV final mind. me, don't X many moving within here just And then parts X if the

on there. continues XXXX got got a I number, outlook You've this pay obviously, TV the yet and accelerating prior with or had targeting to by declines know million talked think, within CTV breach guys about Shaw you $XXX proliferate. segment, you've revenue I based grow your churn

think are everything been do feel how on you that going still in that's landscape? achievable, now, million $XXX these on, given Just target that you about different that's dynamics just do the all given going

Thanks, declines, pay-TV our had Yes. were. less And Nick. Great in more factored we they're the or tracking mean, and question. I forecasts absolutely, where

within comes of of none some by focus going confidence growth to we've OTT. that think frame, number. on a is to really it's which in that the we're We been certainly so areas new X headwinds Canada. us But turn that driven give really do had be our going And time surprise. importantly, largely around more achieving in media, from is . One

period. is one, time we're we -- verticals. significant within The be that semiconductors, And is very X each the those new fronts, seeing can second which And the then of think on last traction.

in we revenue, and very in as to I deals will deals in addition remarks, that that. So companies Kioxia in and the there. signed X large last doing to with semiconductors, we've excited which other progress WD, tremendous in making my seeing obviously, continue we continue add X logic to OTT, space to prepared signed traction we're mentioned recurring quarters, the what we're have about the In the are that

the achieve And to set so very, very that bullish the revenue efforts for out on targets we've semiconductor business. our

new on then lastly, And our pipeline to just we verticals, continue there. increase

at what over opportunities of terms number pursuing. we the of in look year this as of so increased And the has we're really significantly course

tracking our about very there. opportunities excited are growth the of X expectations, to all those so we're And and

Khorsand to Financial. at go next BWS now We'll Hamed

the them first on had able rate is step what to the you significant I question the for How renewal renewal, you Starz So on about up you? a rate? achieved of are of kind talk it with was

years. sets next great trying number as We very into Certainly, is a that to we've pleased about being and but offering, licenses OTT Yes. Hamed, have with Starz and we really a is can't lot agreement. few And this us the as really a we're multiyear the talked premium because look another it get of just space in a specifics, expand to we're confidentiality, important. of for precedent

you larger now being Shaw is much with land and on not Rogers? taking was the license license. operator? a form XX% were renewal are comments under is there that how about assuming And expiry, Rogers XX% that place. were operators when disclosure you and Canadian operator now the coming of settlement and operator secondly, sued a up Rogers going that were other about And your I'm to or And of a the given

be longer into tell expect not we from. Rogers is get pay-TV We a I that Yes. that But what that the you of operator to Canadian get the no licensee is ours. to can't can of who current renewal

look Shaw we I is Pay-TV license the operators and goal, said to That to we as in entire our as patent still our and pay a pain when very our is portfolio landscape, should under like portfolio. all at feel entire be license. so our get the back prepared has remarks, under And Canadian the . not Canadian feel to and of TV get landscape, rest licensee Canadian pay-TV we the like to they relevant changed, still

lastly for those how much is on Okay. payments me are of for payments onetime accommodating then for nature? about your And comments in XXXX,

that these another model customers it of lot to annual advance to is I our to way fee situations, revenues relates So be for at that ask of that that referring to is look in business a an think it of part many I'm pay that. in we

to So been in a revenue deferred it wouldn't have prepayment, will, It you if has revenue. us. been

them. from right early they and said, where longer-term XXXX. moment. we in don't simply and at It's us us. trying you can was on adjusting quite And agreed a this frankly, negotiating pay wanted to deal, just it So land good and to us now pay fine, for good we for

we So longer the it. maintained economics of

onetime necessarily contracts. advanced our not leverage all of of payment. kind just long-term company on It's we payments structure the of what at in getting a kind it's So and

Maxim [Operator Instructions] We'll go next now to at Matthew Galinko Group.

ending how financial? you on the that the that the -- think a more little of mentioned the talk Can on Or the side? part conversations newer can talk the about as assets you bit semiconductor I with RECONNECT with start meaningful litigation -- you about enable semiconductor assets we have you Can NVIDIA. does

we have situation, to to logic you're any Happy have on where that Matt. hybrid mentioned, value, or in the hard settled on believe and It In touch bonding NVIDIA get as our currently table tremendous not IP. other noted. connection past was, either -- in with space, with as when especially the litigation, it's some which portfolios, to you to conversations. Sure, we've legacy the our litigation we litigation processing related what's the that. was advanced the

And video party, any or so other within whether that's frankly.

to technologies going we're we our so And discussions that about the in those have we that and really advanced discussions kind portfolio. able resets more settling of more believe be to meaningful now have

Got it.

And scale to on debt about wondering we could as how what just how then just 'XX? of talked you've projections, take you down we outlook. might might 'XX Okay. proxy think just that? the high-level and payments? I'm should . that gauging debt, cash if as operating modeling especially used what your to flow rate around be -- pay you we Or similar 'XX, Or about

It's a great question.

separation make off a at made continue And management paying committed. you've for that that. today pathway there's prior to we clear that that are We, statements a as and is team, commitment the of debt our One maturity. to to

reaches our want we X.Xx. pace, committed quite we roughly us that look debt below would to and to particular, retire seeing stay pace at until we that to in reductions consistently in making leverage And talked will while in this We've in it principal you're of year but carry won't amount XXXX, that say measure, we'll amount, the about forward that I that So that overall that XXXX. it our ratio

further have this we afternoon. back Davis, I'll questions . appears no for Mr. it And sir, to comments. you, hand closing you. things any Thank

continued dedication also continue excited expand our we financial quarter, In delivered future of want and I driving grow commitment the the I'm our momentum as portfolio over years. operator. employees past our third our with their to quarter. you, strong thank for to Thank and about our to success deal the pipeline opportunities. results during we prospects

remainder be the seeing through and attending forward for the at you of TMT will Wells events joining Thank these to Fargo you year. We We other of us today. the Conference. look many

Goodbye. the we will you. much a conclude Earnings Third XXXX joining, for gentlemen you Again, and all so that And Thank wish Call. and Conference thanks ladies Adeia evening. great Quarter