ADEA - Earnings call 4 2023

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Operator

Good day, everyone. Thank you for standing by. Welcome to Adeia's Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Chris Chaney, Vice President and Investor Relations for Adeia. Chris, please go ahead.

Chris Chaney

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

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

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

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

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

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

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

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

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

Paul Davis

fourth I a for great and today. XXXX for you company. and outlook Chris, results thank XXXX. with our our like before stand-alone full year as our I'm that, progress review and year had to I provide a in do we would Thank everyone, joining forward looking sharing But XXXX, quarter. a our first to in you, us of you, We made

throughout momentum renewals. across agreements continued social X Consumer fourth verticals. agreements new X and the year, customers X and media, by Electronics quarter, of Pay-TV the This signed our we consisted the With in represented

We are a with further company. leading license the about social our across our platforms. new strength excited particularly agreement social This international of media portfolio validates media media

a million in success our $XX connected within of cash was flow with the States. delivered the the our deleverage market as a in enhanced a long operator United in adjusted have of to million. to we of further revenue generation, quarter and pleased Consumer our down addition relationship of of results Within Breezeline, of extended history $XX manufacturer with TVs. We our strong by With are our $XX and quarter large debt Pay-TV Additionally, new balance renewed we agreement Funai fourth paid the cable with fourth financial Electronics, continue million significant the we EBITDA sheet. global

Joe for solutions. I business. IP team. our business-centered be XX-plus very Guiliano innovative of executive has strategies responsible Joe our media career, patent Outside decades our to Joe of our Intellectual for his with for Chief leading Over We Officer. strengthened is he the joined foresight team, his primarily with further our Lead our for growth Property year as Joseph and will worked appointment known am also Council and us happy driving strategy the has as portfolios. proactive

in success XXXX, deal As we look great we had execution. on back

repeat customer the businesses portfolio, proving and Breezeline, in Digital, media further our important our value license fourth a in our media media generating renewals well semiconductor Western The deals towards companies, our Pay-TV devices. Cox, the use across Kioxia, and renewed strong media goal all million solidify mobile technology its across the U.S. of for top signed XX of the value the portfolio deals DEZn to market. and as hybrid signed again, $XXX bonding our We to our Verizon in we Altice Kioxia media with signed signed year, significantly are we and build with as longevity important validate annual Starz the with our contribute a international it in portfolio large logos step in These expanding new X Samsung, as an top innovations XX the memory multiple forward exciting in will of and added the The growth year revenue. position of Digital deals the memory in all During semiconductor of opportunity momentum verticals. during company course OTT. market. quarter. and social deals the the we Pay-TV. our DEZn us leading for is is and an we as and OTT operators Western

penetration coming years. OTT our for significant continued to offset and in us the in We declines expect revenue contributor become anticipated Pay-TV a

made investment on producing progress growing technology patent development. We and assets, post In and key of point innovation is of continued excellent R&D our portfolio addition, focus in results. proof a separation our objective our a

Our goal filings. happy a XXXX. I growing number original new year exceeded grow goal, the am over of XX% to report was record we this patent with in our to for portfolio XX%

of XXXX, Semiconductors. to e-commerce, our key we and We fueling In Pay-TV, strategic achieved critical investments and our have made long-term initiatives growth. Ad tech These board filling positions. goal also executive fundamental in are OTT,

a Officer, the Over Intellectual Chief Development People Officer. year, and Corporate a we Chief Property Officer past Chief added have

growth. XXXX well to a thank our accomplishments success. and the expanded independent made that directors. for new for individuals, tremendous In we qualified further addition, Having highly with employees their filled contributions like our with two would roles positions these talented I Board organization highly

Semiconductor would and now portfolios. Media our R&D to successful plans We'll XXXX. will for to like growth for business XXXX support you with year, us, markets. resources the in both I the vision in behind invest With our be share expand targeted we This our to our adding

increased to achieving also our term, this, position We the of primary our front have in and annual advantage objectives. will year million investments to revenue. we do be two in business this $XXX take These in sales target activities. investments further will us remains of and Long opportunities To making us. development People growth support Infrastructure

First, streams second, OTT maintain add revenue recurring signing further semiconductors. with penetrating large And and by as revenue base additional by growing to such customers. renewals our current to and markets

important are and patent such music also continue to sales it We markets, opportunities. to for we portfolio do make e-commerce, supplement investments automotive, that this, positioning sports enhance in efforts the adjacent maximize Ad gaming, ourselves success our as is further streaming to and tech, gambling. To

of semiconductors OTT, making adjacent and We in are opportunities, our great progress verticals. pipeline particularly expanding

to additional portfolio augment support to sales an for and commitment R&D our increased expansion increased Our efforts. infrastructure will activities

form of Our to a our of opportunities that matched will portfolio continue development pipeline IP with large funnel to business grow. opportunities is being

As pipeline. our expand IP with filings we further our opportunity year, so portfolio additional will this

continue pipeline our expand maintain our and in allocation opportunities, capital our we make investments will business we As of also to strategy.

Our proven allowing generative, principal to IP sheet with debt balance is licensing to payments. our cash us accelerated model highly deleverage business continue

at Our technologies the evangelis R&D within of portfolio being investments incubators we and who And growth embed next-generation pioneers, core. our are serve. industries is us and we

markets strategy. leaders These Our expansion that to drive areas revenue the partnerships core develop and future will demonstrates the our R&D key and us at with important efforts of is trends. developing partnering be IP business our our developments to to partnerships commitment the our and in focusing in forefront growth. latest teams are end key ecosystem's the it believe We with ecosystem anticipate enables to

publication participation the key research of semiconductor and leadership through industry thought conferences, involved and trending their Our media at deeply pieces in teams matters. are and subject

prominent industry in hold Additionally, organizations. positions we leadership

example, incubator. our presented is technology For member hybrid on team of Orlando bonding EVO Board Nexus, of member executive team start-up and at ECTC semiconductor in a a our a

team especially such similarly e-commerce, consumer and our target automotive. in tech R&D electronics, is social media active, Our impacting ad as OTT, media, trends verticals,

on personalized and thought media technical to using website, and presentation Expo, many logs, ranking our In technical Computing. leadership At paper presented a our Spatial year. find [indiscernible] addition Dynamic on Summit Technology systems we of the papers World recommendation and we numerous conferences at you team research AI presented a throughout Approach. R&D Augmented At on novel our can the Queuing delivered methods Media white

but of so prototype what and experiences. of leadership often pioneering only customer the on insights solve of media not to leads a many greatly industries Members research. the with our proud team serve partnerships I'm Their recognized leadership demo We our positions extremely of other Adeia within numerous participation organizations new key shopping and for that our ecosystem. IEEE engagements provides their to problems have received and need the with employees. showed also simplifies into positions live also us rewards of also

for on XXXX. Keith, to I Before our turn I call key initiatives want one touch of the new to over

no Our will to continue primary to today's tomorrow's Adeia's And centered overcoming Until semiconductor hybrid products. these debate Moore's team's the approach related solving is now, mission to challenges today problem node be technologies. this the is have technologies advanced industry These our bonding and to to facing problems that to Law. overcoming processing solve on important challenges enable the there's problem.

referred cost. This our and more both to to to far. we and are more space will innovation moving easier this have a However, approach base we our is other particularly holistic system to advanced value it's and to With efficiency effective. holistic experts solutions for Co-optimization approach, existing year, in and efficient, processing the maximize customers and to serve a simultaneously future as advancement solutions in that cost are Co-optimization beyond launching expand industry requires technologies to the perspectives and Moore's making the commonly in key logic advance one reduce and a existing as of proposition and Further optimized more implement which by then for only so as innovative mind, them come process-related future realize, design Law. initiative

the a us on this blend positioned the a leadership, with capitalize employ We transformative most and experience. trend We expertise engineering are thought of puts deep inventors now in uniquely recognized position to world, some market. over domain in technologies which of deliver for prolific guidance. our a like to expand our XXXX and review continue that, Keith impactful the innovations powerful results fourth call to and With would quarter our I addressable to financial to turn of

Keith Jones

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

revenue annual we guidance XXXX range. lining near During of million, the delivered the quarter, our our fourth of midpoint $XX.X revenue

strong X with new Pay-TV was Our and company, a social the including quarter, driven with agreement international new license media revenue a leading of the agreements a execution in Breezeline, a agreement by provider.

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

the media the to year of markets. Litigation for repayments to X% $XXX,XXX $XXX,XXX increased the adjacent expenses or $X.X expenses Most amount look and semiconductor lower drivers fourth decrease in Interest the X% balances. spending increased the expenses were an from XX% higher grown and as the fueling future resulting Development the our to through the It prior the in due $X.X have operating to prior during R&D, prior was media for debt this in course expense support investments was growth quarter. all markets and OTT due million the or of primarily we million, continued $XX.X from us. revenue the and For our adjacent R&D flat million, expenses OTT, $XX.X increase both is prior Selling, from innovation quarter quarter. Research million, notably, prior from commitment to propels increase business, fourth engine. $X.X semiconductor from commitment growth initiatives to we a expense which media general our our or our our key principal quarter. markets. revenue and million quarter, of administrative quarter, quarter increased growth

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

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

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

Federal tax State withholding as Korean and expense primarily consists tax. well as income domestic Our of taxes

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

utilizing in generation ended year balance flow of made quarter $XXX.X we of our our fourth a in debt, free for repaid loan XX% with debt Additionally, XXXX, we $XXX on In the principal million million. and $XX.X on the term of million our repayments. debt payments year the cash

the as our of addition further today. reducing of loan goal term our February sheet flows, coupled prior $XXX.X ability is an these a by our of generate to its our business XXXX, have In our to balance cash loan to payments maturity. we significant paying made million accelerated achievement in with This reflection down $XX tremendous model deleverage with million, balance payment to term to significant

fourth cash $X.XX of a the paid of we per common During stock. dividend quarter, share

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

Now year the XXXX. I'll for over the go full guidance

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

the value excited stated are that customers achieve economic to have include We maintaining significant proper technology renewal it in With and our that [indiscernible] semiconductor rates, terms the have new our consistently tremendous about also we to media said, we gains not our invented. are of both that prospects, of goal but which space. only is being by make that reflective adding

continue these deal-by-deal will diligent remain such, achieve to on and basis. As we patient a to objectives

heavily given deals, course that to the With relatively a large volatility second be being quarter our quarter first that there we revenue of of reminder, back will XXXX that XXXX. we year. that half be our small weighted XXXX the consistent of a anticipate our of throughout could relatively of end number specifically, towards with year. More of As the the with said, being more

to to help X operating operating $XXX main $XXX portfolio short-term in areas the to our strategic continue of drive million revenue patent our driven expenses to will both in First, The to invest we and growth. expect in be increase We spending expense strengthen areas: long-term range R&D in is by million.

developing will see related to markets. we our spending in Secondly, new expanding SG&A sales and additional efforts

amount and will be litigation would ], point to line relatively reflects build which our the markets. R&D propel SG&A Finally, low platforms out expense and our years. doubling and grow last new over both media has will [ semiconductor help historical several see out increase trends. been in further opportunities that in our to both the which this with like We investments I the in the

excluding will expect expense we quarters first look of litigation flat expense, of the and the moderate operating year be our at year, thereafter. each relatively the As trend for increase in X we then

a as unique more in being XXXX increase the we in growth However, this years. see moderate anticipate future these to as we areas

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

We expect margin adjusted approximately EBITDA of a XX%. resulting

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

the capital expect amount. with also operations year. from cash be relatively to consistent XXXX be We expenditures approximately $X We the to for full million flows anticipate

about company. XXXX and and I'm beyond. that we proud excited With first the full earnings portfolio have and during quarter have prospects related Through that has QX tremendous the XXXX. Reflecting XXXX made made in we XXXX, year the to stand-alone the am great progress patent incremental payment prior contribution as signing our coming in an on execution, our collected QX noted I deleveraging balance shifted a the sheet, we from agreement expanding our incredibly of strides, call, deal been of

that is Adeia our that separation Our bright to targets And prepared the with Operator? I'd of operator the over team. question-and-answer we remain focus the the future and the to that, brings set into the session. like it begin collective call turn to entire That forth remarks.

Operator

Financial. question first with comes Your from Khorsand BWS Instructions] Hamed [Operator

Hamed Khorsand

social companies? does -- you how media of social as that about other is talk license just first use And you far signed, to your that their and you patents? apply what Could to customer as media versatile that incorporate

Paul Davis

that. Hamed, asking Thanks great question. for

not to media of social significant the we're it company. with many is the really social first them, in unfortunately, happy we've really, able past, media companies that but name international large So a licensed we're of Like deal, all. this

and In terms of of the we've portfolio large a the its portion already. social relevance, actually licensed market media

mention penetration always investor our reads lot of XX% media consistent what portfolio in as where had today. imaging look and mean of well, previously our roughly had is recommendation, not you it's I social video we've of that's the key playback and of as a large about on search portfolio If really which and with deck, our video the we lot applications, to and well. a to aspects market

social all quarter. relevant just including licensed most really So across to the of be media we that last continues one platforms,

Hamed Khorsand

heard right, your And looking you intention, legal doubling? you are having more then is are mean what's coming I if lawsuits you in your I expense snag a at up? negotiations? Or

Paul Davis

we I historical like are return planning it to Yes. there's Hamed, more just to that particular. wouldn't anything It's mentioned we've before. norms say for

we to that hope, is need So bottom will we that litigation, don't. some My and obviously the then don't know, as it. that we as do return if planning as it, have well and ongoing we case the line need contributes you that as in always, it to

incredibly signed all. And X so, in find entirely always In last goal doing XX-plus the at to without so. almost We've been our negotiated deals. is we've litigation any successful years, agreements,

And if for that remains goal. though, prepared it. so we we're need it, our And

Hamed Khorsand

sign any And And you OTT for or that? my like year? the any something resign that providers was question last would this was likelihood service likelihood what

Paul Davis

built well. certainly of anticipate then got that the Starz our DEZn done OTT on getting We renewal We getting move on And Yes. us significant growth continues as last momentum the year, done a that. we area be for to deals certainly as we forward. and

XXXX in And so continue OTT front. we do on to anticipate success the

Operator

next Your Stephens. from comes with question Nicolas Zangler

Unknown Analyst

on Dean Nick. for is This

just mentioned those exactly for efforts along and increased what like how So a in development guys on far currently? you sales look are you activities. might elaborate Quite the business script, you Could that bit. just and

Unknown Executive

Dean, good to to you. talk

Pay-TV. business our of growing adding started subject are making a perspective a, R&D had investments and beyond to we our from adding separation our what and at and expertise from from resources, an SG&A So more in true well. much journey, so we with matter base very expand as plan We where that as saw

For those businesses.

those inflection So of financials, to to notably, for really be in at really continuous in those modest QX kind if last year, revenue, will then will really critical the continue see when in you is that though, QX, We'll And XXXX. the in business throughout more a back we'll the our look of you of seeing half in that in see particular, Most uptick in SG&A financials another our spend uptick I'd the take it well areas. OTT. seen get uptick and for start markets we've another where in what in a make perspective the as semiconductor is in increase. But we year, adjacent like drive to to particular, say investments our as much us QX.

bit grow So shorter-term little our continued and to and that more business. that those we have. we're much a a on place critical are it's path expand

Unknown Analyst

inflection helpful. That's of side, think for volumes any And those maybe just we component And or Western thoughts deals. on about revenue how then just the and variable you me. IP? their your using Great. the products that's of guys And semi anniversary approach for as the the on Kioxia, it of Digital should incremental

Paul Davis

Great. Thanks, questions. Dean. Appreciate the

at to ramp still see goes will and in continue deals, that continue do more XXXX, early more it. to as stages product that and we those deal on track fairly ramp, forward. we it to So They're but anticipate their of of

very, continue time. year, to mentioned to revenue deals them those are long-term very for for us, increase and over it's contribution we a expect we As the last

Operator

any turn no now Seeing closing will Paul Davis remarks. questions, [Operator further Instructions] CEO, back call for the I to

Paul Davis

We we year, support and for partners, employees, I toward sending continued a goals to and Thank throughout the and us at and Bank Internet events many stakeholders at XXXX to and beyond. we investor and of thank Telecom Last our dedication. there Deutsche year. our other operator. you, March, their solid want success financial path in for you us. the Conference. you In delivered see met hope Thank joining Media, participating continued be will on results,

Operator

call. today's concludes conference This

now may You disconnect.

Adeia (ADEA) 20 Feb 242023 Q4 Earnings call transcript