IDCC - Earnings call transcript Q1 2022

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Operator

Please stand by. Good day and welcome to the InterDigital, Inc., First Quarter 2022 Earnings Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Richard Lloyd. sir. ahead, go Please

Richard Lloyd

our everyone, we call. to up then Communications questions. I in the with the Liren with to Brezski, and and XXXX CFO. quarter offer our Director. first the some earnings open for me Consistent Chen, are call conference am quarter’s today’s and and and morning call CEO; InterDigital’s Rich call, welcome last quarter And President will Good company, Richard about Lloyd, highlights

I to beliefs, and statements not remind remarks, expectations, in our the call, we forward-looking future that are are begin make this as of regarding date we Before performance need only guarantees of which plans hereof. you made will current our and

cause and and from Factors XXXX and the Forward-looking on differ materially section contemplated to events uncertainties filings. actual in our results our other statements. statements to include that are subject These results events Risk SEC of such risks Form in by forward-looking and described risks XX-K and Report those could Annual uncertainties

financial available presentation financial Relations With may non-GAAP to financial tracker, of Reconciliations in non-GAAP call measures. contain are comparable taken financial to that is Investor of, our financial over references Liren. these included our measures, today’s turn care most which the measures to of GAAP on the measures will the addition, directly website. metrics section In I

Liren Chen

X net first patent up income XX% million our current this would year-over-year by million, with again, this a and $XXX.X highlight in last stand footprint times increased This the Richard. of than Rich technology once in on quarter underlying portfolio, course year. wider and and the provide and I in of cost from video where was our his $XX Through our to to bodies, Thanks, leadership [ph] our the [From industry. to disciplined will more base upon and another our converting strong a start our innovator in $X.X revenue managing into revenue strong while within success million, numbers] in more technology of into added wireless company expanded wireless manner. was total increased recurring details base the [ph], our quarter of XG position a the engineers our licensees. quarter, leading demonstrated in so in closer we section. industry standard context XG strength to we focus several like to

milestone compared the aware, of might devices. hit continued reached everyone a GE smartphones proud the that at is achievement nearly time of sales notable milestone XG proving years As And X after the smartphone such the shipment, XG a XG first We gain surpassing contributions years this involved. this market XG you to is with have X in for time, This success foundational our XG remarkable commercial of with adoption. consumers. to launch And are we of for InterDigital, new to device ahead a January, be momentum. shipment latest

engineers continue our contribute development While technology. this we of to exciting years, XG for the on have to working many been ongoing

in industries. for In notable success not seeing in This only we XG, about time only the to the patent standard initial latest XX broaden and but generation portfolios commercial been to as I communications investment also such make innovations XG. This made are years. of work Mimo XX, fact, total, several the we wide our the the patents commercial the This most for in noting standard development one of of evolution to of Release In XX,XXX known milestone beyond as been of have a invention consumer reached of but exciting disclosures not is patent enhanced go but new into the in return IoT, XG essential the with an smartphones to that of In technology Release are height of support sectors releases and sort taking InterDigital it extensive and [ph] Beam-forming. XG using to commercial specification has we next of has our improve better for each those nearly into valuable applications. to frequency footprint was is month. range, a XG industry. further radio contributions federal technology, us worth higher range new create mountable the rate designed in our low key they features latency the advanced all of first Release sell largest XX. that contributing XG, the XG using and will cellular to cellular quarter, industrial such improved device communication of also adoption related XG reflects details features other backhaul and here, not connectivity expansion communication engineers as and

also key VXX areas, automotive to multiple technologies We in technologies. increased verticals for support continue like with new add including

develop of communication engineers leadership role highly that advisory selection which only industry. regard on not Union. our also the next to InterDigital will the in – industry across InterDigital XG to at industry and of engineers engineers upon in of consumers Telecommunication topic elected are announce in leadership the XX, to advanced. the helps The XXXX release engineers of the like seamlessly. first likely is within body the reflect this to coming our that release a position continue forefront leadership ensure of higher senior Release leadership, delighted in a but expect connect but the one InterDigital into ITU the of be be X X were quarter, first March, standards I’m We evolution, role for International XG the the of technology that to was group the Thing role which the within was can on technology to is held, play influential innovators central known and to The

we Inventor I also our from As the recognition much own foundational important research hours as return reasonable In we a outstanding receive, more them, radio. external inventors. R&D our feel engineers innovation announced areas Year, deep our the developed for is to fair engineers innovators we and they it and our the significant leadership recognize critical the impact them standard for like investments. the ensure appreciate and work of to and a like XG the switching receive video. VVC make of because investment determined we in innovation contributions, Between are research cultivate that February, of and of inventions we have It wireless that rewarding we pair as on standard bandwidth, XXX than in and beam in countless a our dynamic company, from in XG blend of is

previous cover strength Sharp The our Our increasingly is is recognized, compelling that XG XG increasing agreement latest our with our to agreement example new new and covers agreements. being expands into XG translate momentum of to the our evidenced assets, and our with patterns. Sharp as by agreement license our XG innovation

about strongest This a noted across Both and I license at consumer success detail] one electronic and to prepared number integral patent have sign important innovations have and fully past to of of said And in rate in terms infringe IP, technologies. platform and great I’m we on most our licensing. yet our insist video IoT just patented using offer as to expect cellular, thing model efforts. business to direct additional of both investing negotiations our [Let’s second quarter had licensing some brief a we holder. Wi-Fi and beyond As verticals waiting before, the licensing quarter, the our calls, horizontal is after smartphones. services and companies many the heavily force that past products in The our in innovations are the we in a [ph]. have result we our automobile when in quarter technology continuing through our the times

X global London. In establish trial Let concluded we so. February, which with term done Lenovo in instances, have update on provide me license for our in to FRAND an

the IP very and a merits We technology, of happy presented our case currently case. we our are are confident remain and portfolio, strength with of the the our We of in the decision. reaching quality

the instance. second on to Moving

last filed with and the smartphone the against have manufacturer. is It of remembering Oppo, past, Realme concluded on which we brand in had series I call, the FRAND together lawsuits a worth top where always we X a mentioned, that agreement terms. On a we OnePlus license litigate have to is

employees execute like to extremely and and I’d strategy. the Rich, all consistently our confident our can the I’m to to thank their continue dedication over impressed hard it feel we InterDigital team by on all expertise work. for of together, hand that I Before

Richard Brezski

Liren, and good morning, Thanks, everyone.

quarter only our revenue also expenses shy $X overall quarter, million another we just revenue. the of alone benefited momentum our established $XXX financial the noted, $XXX Recurring another at revenue of with were of million, license in guided exceeding late Sharp including Sharp million and our CE above our profitability. pushing topped but XXXX recurring we revenue we was than our consecutive strong in reduction range, performance, which renewal, quarter from total $XXX million. As closed renewal continue and from with out in We not more with third strong sequential

XX covering a more quarter our than the as year recurring Importantly, X doubled the signing last underlying revenue the has sales. months unit and space per strong agreements from over first CE last CE of of result

sequential million Moving down our Of compensation, our prior to year for relatively $X expenses year-over-year of on were charges, basis, million share-based litigation million operating $XX expenses. but to in $X On were you sequential QX across with was a operating operating the this decrease We this, in by expenses. lower restructuring a of and when $X reported total expenses the million related year. an adjust our expenses. balance from flat, were decrease

increase last at performance our leads we our the the of in whole, see base to really On to our year-over-year latest a Strong and XXXX results to are are our pleased year. of results. how the And this far in We lot $X.XX report business financial of first revenue and we XXXX. talked from quarter manifests management looking expense in an for about prior quarter, profit, GAAP year. pleased our to we’ve EPS in the reduce and cost strong come $X.XX strong efforts shows

total expectation $XXX revenue we to agreements between recurring executed license expect come and at is be million QX, agreements to that and currently currently in QX. the we $XXX in million. expect based to QX, of Looking million including $XX revenue in $XXX of place forward million, on end to license This

or have additional note will from to that for I a and new we unrelated at later recurring a of new going cover charges. million now, expect $X agreements. QX, We details the provide which do incremental expenses plus But restructuring will products into agreements, on $X don’t automotive, an expect expenses other IoT these We any slight in increase date. additional million

the represent For restructuring driven part, charges final step the are plan. of the disclosed realignment, facility restructuring and our by previously most

note, certain adjusted EBITDA final business, that of back our measure eliminates to will We believe release you and and financial figure, a metric compensation report progress that to a non-GAAP which in we of this useful and As is stock-based health measure periods. it continue non-recurring and our in the adds future metrics reported a see plan on have expenses. press is and

including have Richard. the metrics, each in the of it reconciliation have it GAAP quarter X to case, we With I’ll reported quarters a As for metric, this that, presented first on each reported our back turn in this we financial figures. is

Richard Lloyd

and Rich for will you questions. a take just pause Liren. we Thank Operator,

Operator

will Thank you. [Operator Capital. ROTH with question Instructions] Scott from come Our first Searle

Scott Searle

called the I more should morning. on looking front dive start there figures contribution some Or to attach is And quarter, of we taking to about that Thanks as that IoT, as size kind out. you of auto was good revenue want wondering we’ll was job sounds in right on then, see excited guys. for thinking and specifically, that right be how questions. you’re you’ve if at? on getting in think CE of it the I there. my that? to Hey, Nice well like now, terms could in video Maybe what

sounds like This we’ll it start to [ph] units. And going to an quarter, acceleration as be both the auto advanced direct see in as it’s through well and IoT.

could flush a out of little maybe magnitude the impact. wonder if you the bit Just that

Richard Brezski

this Scott, Rich. Yeah, is

in So the script about million CE that in QX. have revenue we I in mention did $X recurring

So quarters and had that’s from year we ago. stronger double one of a the CE, in

the with of Now, close it’s were to per per does CE CE inverse a of of in course, lot unit, unit XX% have space. – lot XX% the a almost fixed-fee, overall,

auto see in that close. IoT, agreements able XXXX that you pleased shipments. new But QX. On we some So is dependent expected results on in sign we’re in of to QX, and those we’re been quarter-to-quarter agreements signed really to alluded we’ve already to and

So a I have license, platform recent we participate, there. there. GM addition details was the more Through announced

we QX. So contribute expect that in to

Scott Searle

Liren? – sorry. And Rich Great.

Liren Chen

Yeah, in I that use portion Scott, Release as has very June only mentioned, will is, year. the on thing we believe in would XX will the script. specific of Release standard perspective. as I cases IoT use add come the expect well this features to XX development of automobile enable from as case my

Scott Searle

forward? R&D Or a Okay. cost question, some on And quarter, sustainable Rich, helpful. Very down. think that in there there? should March going development OpEx in other down level we the one-time particularly element is that one Is going being and about was

Richard Brezski

a little higher some But of in seasonality, some you Yeah, there’s, to so benefited also some I going forth bit then is aren’t QX. maybe – where for recur things mean, and that sometimes QX. have in we’ve there’s fringe

did I of bit increase reflects the into expense QX. note So in in an a little recurring going guidance

to pretty a is at level but always bit. just going a we’re little overall, around good move think we So, it

Scott Searle

mean, of you. actually wondering that? those was this any thinking could, be big there Is relationships thoughts Liren, you And I where could and been if updated past? about there that they’ve progress. have opportunity expiring contracts we couple larger should have the if Got in I a are be that on year. how I customers

Liren Chen

Scott. Yeah, Hey,

Samsung mentioning As so here. have by we in QX here, this the agreement year, and expiring end Oppo do agreement of final you’re

negotiation. active in are We

and And than they so offering been benefit higher frankly we vendors, believe XG more more features. ever. even has tend compete in strongly level high that of our those technology the the important the from both And to that end of have product

are actively we and are time where So by we we about are expiring. try obviously, feeling the are, get they done, comfortable to being negotiation, them

Scott Searle

Helpful. then, And queue. and back hop could, in the lastly, I’ll if I

Some from China-based on they’re the to first like exports. Oppo, More of to it and XX% quarter units OEMs. of exports, the their Vivo continue seems unlicensed relationships for the with be more, and I think, XX% in relying

your particularly trying is they’re Given terms Europe global are the a to that current of gain the current share, geopolitical markets playing of given that is they like seeing are in quarter and of of all out on active in much thoughts sense XG it’s again. the congrats driving so them we’re landscape, more that discussions? kind creating of the what Or closer. How urgency, adoption, in better? on Is they’re front, where terms what macro landscape? Thanks

Liren Chen

Yeah. Thanks, Scott.

also are our than absolutely, more India, So, half China, right, are sales Oppo, Vivo, their well exporting Lenovo as vendors Europe yes, large market. they and and including a lot targeting that of one outside you’re is as major

the and continue. to our are that Lenovo, using So with we definitely Oppo indeed so with factor though we active discussion seen, seeing are we Vivo. disclosed currently we strategy using also trend as are And discussions, damping

those our most is drive comps. in through licensing that a can very, we than negotiation to favorable see current I And the our portfolio us, program base. licensees XX more we is value really important that’s our patent helpful very very with have global trend we thing But R&D, So point established dynamic. as

parameters helpful. So think all those I is

Scott Searle

much. so Thanks Great.

Operator

Soderstrom Anja with from comes question next our And Sidoti.

Anja Soderstrom

that in that performance Or I’m Hi, in growth this happened taking lot that that pretty curious, quarter, good my to we in and you consumer the should asked congratulations trajectory the shown thank whether something A contain? electronics questions the questions the of on special good quarter? first has you for expect just was quarter. good first said first already.

Richard Brezski

$X QX your including closing and XXXX, obviously, rate, of year, of the million CE number it thanks a kind manufacturer, talked that question. a We that’s call for for running that. of XX Yeah, a kind out run we added noted the – top $XX at of it end of we about a above TV we a do agreements, that at million agreements number significant

additional to be on quarter look the those that in which they’ve the last depend on business like. quarters, I every don’t been we’re of of going what want to in without or going million $X on. business working this It’s per unit sales reports it’s say to couple So and deals, But, end strong.

Anja Soderstrom

to And Okay. have been supply sales those by those unit the chain down So must very that’s affected issues, helpful right? then it road, the put units?

Richard Brezski

Yeah.

But we there can in little the given business, particularly supply be that cellphone a So issues. chain bit strong see then seasonality business. I more sometime also in think,

well, that the So at plays as quarters. this it of you into you’re looking said you look couple when last at,

Anja Soderstrom

And declined it. just call I’m Is in the to Got there? royalty then there fixed-fee curious. quarter. anything Okay. The out first

Richard Brezski

XX-K XXXX and Do leading I XXXX, we XX-K. what to a ago, I’d leading recent that calendar our year most updated expire is, was – about then in our think had disclosures point the to in going for into year

in couple that fixed-fee note that disclosure. there you’ll were a expirations So of

Anja Soderstrom

Great. you. for all Okay. That’s me. Thank

Richard Brezski

Great. Thanks, Anja.

Operator

further are now over turn There to no the time. this back Instructions] conference [Operator I’ll you. questions at

Richard Lloyd

I’d it for operator. to back turn like final to you, Thank Liren remarks. some

Liren Chen

our to navigate to the all Thank say thank to also I call. Yeah, your We our just stay support, joining appreciate COVID to you for the quarter. the employees, safe shareholders you. thank as still we for past you customers our as pandemic. hope well everyone continue to and want to

Operator

that your participation. conclude you conference. an And today’s We for you. day. does Have Thank do excellent thank

InterDigital (IDCC) 5 May 222022 Q1 Earnings call transcript