Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the InterDigital First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's prepared remarks, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

to Garrabrant, conference Head like speaker to now Raiford today, of would hand over the your I Investor Relations. ahead. go Please

Raiford Garrabrant

Good the President and CFO. on company today's to and welcome Head of Conference CEO; Raiford everyone, are With Quarter as and to me Relations. Garrabrant, joined Earnings am Call. our Liren InterDigital's recently Rich I call Brezski, Investor XXXX I morning First and Chen, our

say, of up how this will forward. for offer going questions. company, to for you then With with and my I'd Consistent we about highlights part quarter's be and call this first quarter call, the work and investment I the with in some the excited of the being call earnings to with all team the to community company am like the last open opportunity

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

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

Relations of our these metrics financial on measures In addition, section Investor financial measures Reconciliations financial in today's presentation to non-GAAP included website. is tracker, our measures. may contain the of available financial comparable are most references the to which directly GAAP non-GAAP

Liren. the taken care that, of, With turn will now call to over I

Liren Chen

challenging record consistently on ever new today. this and joining to licensing our us quarter track market and another progress shareholders. front invention quarter good key returning continue to in morning of thanks Thank excellent our the terms you, had best disclosures, Despite Good we extended everyone, as conditions, with customers Raiford. capital make was for of of

position call, tripled has business. the our been further to million our our adjusted strong and revenue We belief it our as million. our I a strength $XXX results our in nearly doubled On ever $XXX that to of the quarter and last EBITDA highlighted demonstrate company was first

details, I'll talk result to our I you want Rich business. let performance through only the that across but because this emphasize the outstanding of happened

and licensing our front, On appreciation proceeding we Samsung is which January the fashion announced with according plan. binding in a in to timely

will XXXX, take has our that ago. the Samsung arbitration reiterate than value Samsung and to process monetary reflect that should the new terms. relationship years long-term We confident license our remain where Samsung license decide I XX will January with continue more starts of to portfolio effective a our the X, agreed with portfolio that

on our an update to want I with Lenovo. Next, provide KCS

this may our As and multiple interdeal our litigation in proven of involves to have industry. and nature some patents you the Lenovo of the of foundational trials date and mobile UK know, the innovation to infringement

be portfolio license UK's valid, end the us almost High heard trials, recently of Lenovo. to determine to pay cellular influenced million to in to by our Lenovo judgment XG been to essential of for through how patents Appeal should of Court court have Lenovo two the a XXXX. and license pay ruled XG much our separate trial a three UK assets. XG, must our that cellular In patents $XXX the and was The for by the various found standards from including wireless that received Court We

to for has us devices. been Lenovo it's ordered in full cellular enabled for sales pay all pass

delaying our on of licenses to from a be taking upfront way discouraging intended As court noted, this out license. holding is powerful

waiting the hearing was there rate the for permission final appeal cost judge's interest, next deciding steps. we to such are our as a and before decision and topics regarding week of This determination,

how also a dispute UK tracked impact Lenovo had dispute worth have has Judge we in decision has given been our found our the fast OPPO a standards that should on OPPO. that for litigation essential in have infringed our biocellular pay already positive patents license with beneficial to us our valid to received noting It's OPPO. and by much to US focus wire be

OPPO our that We are proving across portfolio. pleased strength the are both and Lenovo cases our of we

that before, we on As investment adopted our determination innovation. fair our return to and to not will levering I our see in we said global defend IP a ensure

and but license dividends. our I share momentum Rich returned than recent recent to capital that accelerate provide repurchases, want our enabled XXXX details return shareholders. share the to to Our placed further has shareholders highlight more an have to million will more we position $XXX commitment since us strong through and incredibly in business in buybacks to

as how quality our breakthroughs. of top has As filed it QX, we been. our always ever is licensing breadth into ever of of in providing our pipeline our innovation number built research success good our and engineers our are robust turning a invention and on we been has highest as innovation indication disclosures new In believe of quarter foundational

is a advanced new world. We rolled our out also quarter how record XG-related in filings, working XG research had standardization continues around and emphasizes which [indiscernible] the

the in patents recent patent XX,XXX patents named in and office nature global patents innovation also report which in were underlines recipients highlighted XX to portfolio was a of translating applications. about our which from the now success the granted of Our top among XXXX. we European European That is by our

stakeholders including how experience. immersive can engaged Barcelona Our enhance networks XG areas innovation was Congress presence video forefront of with and will AI our innovation at how where at of several and our we them research more also key the in on various presented machine learning underpin and World Mobile connected

continue turn believe be presence to of in opening exciting As redefine and to and licensing our opportunities. innovation are MWC up it what at our what connected demonstrated, is means we new

years us where workforce company Technology its Aspen to strategic transform with help he and growth and will our as Maloney XX achieve appointed we Chief of experience has Skip new led functions. Skip People He the global development goals. from our our joined further of Officer. month, industry to the HR Last

also Derek TiVo our former to -- highlight and Board services. former new the Armaly who last our video and year, program if elected, Directors. Samir Like the Aberle into President insight Samir considerable to recent our Qualcomm by Xperi will and bring Executive, delighted excellent also look nomination joined I'm experience licensing products of I as Board into we licensing space expand of

was Rich of made the InterDigital to milestones Last made recent after mobile shortly from hand I phone XXth first to want to Before which talk our over for the very our anniversary through founded. call reflect significant wireless numbers industry. month I it the was you was the

a in From generation developing pivotal this foundational of underpins technologies connected for every inventors moment, that played innovations landmark services. our devices mobile role have and

last forward are role have and played We more the deliver over XX of the look industry years we that future. value in even to the to the proud and consumers

I'll that it to with over Rich. And hand

Rich Brezski

Liren. Thanks

results exceptional driven by quarter Our financial Lenovo. Samsung and were first

that is XX reflects beginning January we binding is last that from we consistent This define the a patent XXXX. XXXX, Samsung will Generally license discussed recording our agreement have which for with consistent on the X, Principles revenue December the arbitration effective with fact is license during a conservative believe Accepted estimate. patent level As Accounting and that call recognized at agreement expired with Samsung, our are a we revenue we

believe will catch-up are that conservative We recognizing the likely exceed revenue and the a it time. that is arbitration award require we at

for total Catch-up QX As revenue from around XXXX. we award the quarter our to doubling from million mid-XXXX. expect a Lenovo revenue top reminder, receive brought arbitration to $XXX the line

this leverage EPS. than operating our more our non-GAAP with Together tripled

Our XX% we EBITDA adjusted XXXX. in This adjusted a EBITDA improvement margin quarter million delivered for first XX% is tremendous quarter the $XXX margin. XX EBITDA a equates from point the of to adjusted

business As of discussed few to last the the great it fee in results over ability to believe business collections in agreements. power because our is time our of calls, adjusts we model. cash generate for adjusted demonstrate differences cash metric measure These fixed the timing EBITDA under a our

verticals drive drives our technologies reuse Our investments our expands while in flow. and growth, margins cash fundamental technologies of those across line the multiple top

Our cash $XXX has driven March XX. recent of our to balance million success as

to under expect thanks agreements. current we receipts In reached the the quarters, cash $X.X additional few agreements addition last an significant of billion over

back $XXX million Dutch period, In roughly our executed share to X.X the have we tender and another long-standing and through our We of to shareholders. to increase continued market million. by $XX After April, shares authorization this shares. a the cash first returning an a total repurchased in cooling started we total of year, the for of of brief We got out repurchase end of practice then announcing quarter we million. repurchased XXX,XXX a a the year off $XXX million

on $XXX We forward reduced have we XX%. In I count the all, authorization, in more with not share another QX. February, in look we're additional spoke left by and current And yet. done than you to strong repurchases buyback quarter share outstanding since our to million

once QX expect revenues We around be again recurring $XXX million. will

We expect a in decrease expenses. sequential operating

XX%. expect additional sustain revenue XX% our goal about And finally, licenses licensing recurring products of achieve upside device adjusted from new Longer million on from a EBITDA margin to services. term, margin EBITDA with and we remains an adjusted $XXX and of

With that, back I'll turn Liren. to it

Liren Chen

Liz point are take this ready questions. At Rich. we Thanks to

Operator

Instructions] question Bank comes with of of Liani America. the line Tal [Operator from Our first

Tal Liani

did of And a nonrecurring Hi forward? or calculate, part? you we think guys. surprise earnings can tell about what Good the part about earnings, the morning. How should nonrecurring nonrecurring us, What was do is how income? nonrecurring the the I without part the think is going there you positive

Rich Brezski

Yes.

from this quarter. part is coming the Tal, nonrecurring by So, judgment the on the catch-up Lenovo, driven

that impacts portion far bottom don't the So XXX revenue being nonrecurring as as recurring of line we've the at clearly, offhand portion off have disclosed I the the and of difference,

the nonrecurring relates both of that nonrecurring case have items, recur and the of with technology. is case But as oftentimes other not when as think next to it, revenue infringement to prior it scheduled we way is it's our here quarter, to is the

I forward look recurring. you $XXX to of, to expected is $XXX if about be $XXX we revenue of million to guided said million which So, QX, million to

Tal Liani

also numbers. impact Got I they're question. correlation, better revenues are recovering, and I at with expected. by night your to reported the than $X just revenues? they're I were to could Qualcomm handsets you it. talking it about good know And about hinted million contracts ask have hand the large the than us this can And is about better still look but issues, when how not tight, want you still no quarter, But know last recurring recurring more not you major fixed. China environment? expected there your and the talk decline, other on still

Rich Brezski

Yes.

where let the Liren, in I'll guidance then came So, first recurring our the revenues talk let and address me our versus about quarter environment.

on is As you our mobile or so of XX% side. revenue from that fixed-fee most agreements. of the comes noted, Most

especially So, sensitive of changes, not we're our structure because agreements. of the to market

That there said, variable have an quarter. -- and unit the were we some do in of element or per true-ups

what true have variable XX to And that is. days we when We end. to up get typically component then quarter every up we the quarter, the report, after estimate

some So guidance. the that over contributed of to upside

of the that of was, portion recurring other The element Lenovo.

Liren Chen

Yes. This morning. Good is Liren.

So there's regarding the environment macroeconomic some headwinds. clearly macro

vendor due industry I to in existing no license our back fixed think licensees, point, the Rich's facing, to the impact. every is there's for really agreement

the impact near-term roughly timing, agreement, there's negotiate in years. longer renewal regarding are some For discussions, keep renewal But we and term, headwinds. some generally for those mind, five our regarding when the

So group for vendors. recovery, future as projected we the in as factoring various well are

very not will some it's I but there So significant. say, is impact,

Tal Liani

Got it. Thank you.

Operator

Scott Searle comes next Our from Roth. with question

Scott Searle

but good for to on rev the in the a there's know I the my terms on front. Lenovo. Hi, the appreciate litigation, get Also of call Nice to forma questions. there's I restatements, I I did pro UK morning. recognition I back appeal ongoing wanted the guys. at taking on company. but go to apologize, late, an related that to quarter look job Thanks taking

Lenovo appeal going to guidance So, Has not, million, front? terms couple recurring $XXX a $XXX that cash follow-ups. for a And on is I the the been have then, would And of received forward? that's of I and million pending, element that two given the that's something process. assume questions. including the from in then

Rich Brezski

Yes.

recognize? you're a rev on the about Scott There's talked Lenovo, back rev and what I into the -- under do bit that subject for just little you Samsung. here, appeal, this XXXX. to that very quarter. a rec, So, revenue It analysis in judgment back similar went around was the principle-based, is was to rules level on analysis the It's at of place looking actually expect but

you reversal. do -- there And be you that, kind that it's think have would unlikely of any significant

basis. would recognized conservative on say. So that lends that I And view, it a was to

anticipated the licensed Lenovo, of through to the with agreement So, the is end year. get them

in guide for did QX. element So, our recurring we include a

Scott Searle

cash has Rich But received. correct? Is that you. not been the Got

Rich Brezski

a recent was judgment. fairly It Yes.

stand it that cash receipts amounts there's then let both just XX-Q. we future Lenovo. And about noted that and I'll in So, some And there. disclosure Samsung anticipated our from includes

Scott Searle

you. Got

Okay.

then same had correct? a at the in been the is basically complete. receiving the put not expecting until guys but you So, question out at had arbitration of Is current you in the Samsung. past Samsung minimum guidance the line cash that you're the time where necessarily

Rich Brezski

Yes, what our and to I'll said received on expectations that receipts kind any what in Samsung. commenting of have or cash from Lenovo we what without for we go we back amounts I expect did haven't include

Scott Searle

IoT lastly of then could the And side continues equation. enough. Fair Okay. I ramp video the into and It to if up. go

had about million almost of million that Is plus. you the rate a that there getting You that any $XXX year talked would with to should about? back had now. we be Historically, time thinking you run associate line a Technicolor old $XX

accelerate thinking really is know that seeing that also we P&L? Thanks. course details a have incubating more XXXX. timeline you I should we as would that terms guys front. know it's How of on in get been What actually started the over of the about of to plan model model services and progressing? and impact that be I the And video a that part

Liren Chen

Hey Scott. Liren. This is

to rate to our target you to IoT we to recycle. million are very, So, regarding million for public we is comment years very And recurring well. video our the referring here, stated three $XXX current $XXX here doing -- timeline and feel the five run as

announced the service we really are we substantial but And a of On yet amount proceeding made here side, is deals we The well. have program have underway. progress. any don't

value the In nominated recent Board. my one field. TiVo been I believe he's make Amarley remarks, Board at executives being and add us we'll our comment this has most of appointment will regarding expand to lot to of of business experienced and prepared confirmed in which did a the upcoming meetings, help shareholder Samir frankly, If the expiry further we to in with our our a

Scott Searle

Great. Thank you.

Rich Brezski

Thanks Scott.

Operator

comes Sidoti. question from Anja next Our with Soderstrom

Anja Soderstrom

Hi, for taking my question. you thank

be be how we think and going So, the to the Chinese the that? Sorry the addition revenue to yes, Is should Is driving revenue. to the that out in recurring OEMs? going the be recurring growth. about about going to of that it What's that we're in driving most? near-term? future going think that longer the

Liren Chen

Hey, good morning. This is Liren.

maybe the Let me take question add. and Rich has something to

the primarily market on recurring are be portion revenue suppose have in I it So, we near-term, customers. our major two by and will essentially driven you the aware

years accounts. in over OTC three Lenovo, addition revenue I on we VIVO, and CE obviously in In service longer the And plus. progress have the we've of we by growth period are longer to IoT And to well of mean business. we as got OPPO those term a making the kick expect and also do time, as

Anja Soderstrom

of Okay. those expenses, I well line. you've the seems operating some very like one-time going done if the forward? think back that Thank operating you should we about you. expenses, did out And cuts in and expenses How it on terms

Rich Brezski

QX of Yes, you're an little using a you onetime came of and We at right. that's for our you the basis, litigation. a end I the low out QX bit if in expenses, as driven did out expect And of expenses, back when Anja okay? we back the that by guide kind increase right?

kicking as we cases of then We proceedings course, well. have Lenovo, have the additional our Samsung with with arbitration up OPPO with and and,

Anja Soderstrom

me. you. Thank Okay. all from That was

Rich Brezski

Thanks Anja.

Operator

I'd turn the for Garrabrant [Operator today's closing to session. concludes back to call remarks. Raiford Instructions] like That question-and-answer

Raiford Garrabrant

back remarks. now his I'll Liz. turn closing for it Thank to Liren you,

Liren Chen

you, Raiford. Thank

I to close, everyone us thank and well on InterDigital updating to our forward their all licenses. for look partners and dedication many we our contribution to employees next quarter. like Before who progress as and you we today as you to our joined Thank

Operator

your Thank participating. conference. today’s concludes for does This you

You may now disconnect.

InterDigital (IDCC) 4 May 232023 Q1 Earnings call transcript