ADEA - Earnings call transcript Q1 2024

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Operator

Good day, everyone. Thank you for standing by. Welcome to Adeia's First Quarter 2024 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 first 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 first 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 to call turning a provide like the I'd Paul, to few reminders.

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

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

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

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

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

Paul Davis

signed Japan first joining mix and broad We the and the signed and Chris, everyone, line you, license the Electronics a quarter results OTT, semiconductors the and and Pay-TV, hit you, agreements, Thank Korea. ground with delivered X which running expectations. Consumer first customers. in XX represented in including of new us today. were X States, customers Agreement quarter South with for in We Europe, in in renewals United thank

X Pay-TV, over million strength. revenue market million quarter continued continues delivered $XX in of portfolio we were a strong in of of of XX our to debt term of loan. accelerated and our which media and $XX.X our show million We the where $XX $XX.X to paid EBITDA our cash adjusted million. down With our commitment agreements generation payments first remains

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a was provider with a multiyear experience us Another Altimedia South user in agreement significant last deal quarter for platform Korea.

and customers signed Telekom, in customers, semiconductors. with a additional with and earlier, the X quarter X agreements we customers Pay-TV signed Austria. Other I in new U.S. long-term during across addition and agreements a X Japanese-based X and Pay-TV included As the provider OTT, large Pay-TV Broadband, in Astound Consumer Electronics to broadband including the renewals, deals mentioned provider Magenta

continue progress on make We our significant strategic objectives. to

long-term Electronics and maintaining Consumer media and through in social our Our $XXX renewal growing Pay-TV, media strong target semiconductors. plan remains rates target adjacent in We and markets OTT, this million. achieve our to revenue customer base

positioned growth new in We of XXXX revenue markets. these of ourselves of these will predictable will revenue given our agreements. remain XXXX. meaningful confident see Success will markets drive also in goal growth license and that our in contributions achieving wins not this we provide I nature key long-term markets deal only well these year, in And each significant but each to the long-term in have

in February, year As we revenue and One are tied infrastructure. that we is highlighted in opportunities, confidence report to growth These talent, I portfolios of pipeline expanding I'm assets. Growing over and investments with area to specific an investment our expanding Keith our of our tools closed imperative. and investing are given our this in portfolios, IP pleased continues patent key opportunities. quarter be XX,XXX the patent to

in a is our order to in new our maintain current and base reminder, add portfolio and rate strong As adjacent growing supporting markets. IP our renewal customer customers focused growth on

growth. remain IP focused a our of acquisitions organic our Tuck-in strategy augment to part growth

we which presence portfolio OTT. in During strengthened of with further added to acquisition our our the media quarter, the first patent assets,

on not and teams in and semiconductor Chiplet share potential for engage with tutorial At only members vision the leaders also showcase the we of methods. packaging these semiconductor actively a a Chiplet to customers. At gave of but types media industry events, our also Our Summit industry involved participated continue in February, our advanced on team our numerous be packaging conferences. in future we expertise and and other panel

March. leading packaging semi Our in paper on a also team at presented bonding hybrid a conference

toward broad As major and customer industry the this a has driven new moves in become engagements. has adoption topic at vital our technology space semiconductor conferences these bonding, of hybrid industry

our innovations the that on photography. Media. At in on Consumer to perfect Turning moment our presentation a capture digital International AI Electronics, members of Conference one uses of to team the delivered

We received the today in from award Shoppable also an in achievement of TV. TV Interactive category

read news and trusted industry. interactive widely source the in and most multi-platform is today TV the Interactive television

alongside in ad-tech for such and invention LG, video recognized to award-winning Comcast winners as efforts proud development invention relevant our other Spectrum. particularly clickable e-commerce. to and is our DIRECTV, category This We are be

sheet remains a Deleveraging to payments. capital debt model accelerated our enables our and allocation strategy, make cash-generative business continue our within to us balance priority

Since nearly paid over our the we in demonstrating million, from strong performance strategic performance. $XXX million XX Xperi separation quarter very financial made our a towards have have first am our objectives. $XX of we while down and stable progress of ago, position over with maintaining debt pleased the months our relatively cash our I

a I first that, would Keith With for like review now quarter our to turn the results. call of over to financial

Keith Jones

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

of quarter, driven revenue markets, across execution of and by the XX Pay-TV, Consumer of Electronics. During first delivered we agreements and broad $XX.X mix license a including OTT end semiconductor million, the

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

million, amount prior Litigation or increase During were X% licensing adjacent $XX.X to in media to increase or costs from compared our prior and quarter timing $X.X certain first quarter increased as to personnel associated due expenses primarily the costs continue million quarter, prior The prior debt related quarter. resulting expenses the was was increased to related $XXX,XXX primarily general of semiconductor timing continued the quarter, during renewal quarter administrative a to hiring. Selling, decrease due of expense to $XXX,XXX from Operating legal result certain $XXX,XXX decreased in repayments from the with or X% $XXX,XXX of by expenses the were partially first quarter. expense from and offset principal Development prior of the or a an platforms the matters. Interest X% which the quarter balances. first $XX.X OTT, of we decline the and lower markets. million expenses Research invest million, our and out $X.X an the ongoing as XX% of patent build is

rate, interest amortization was which includes Our costs, current XX%. of issuance debt effective

was quarter million, on quarter and investment revenue recognized to earned cash related XX%. Depreciation XXX $X.X and margin on income EBITDA interest agreements income the was adjusted expense $XXX,XXX. due $XX billing was under interest an was our EBITDA our for reflecting primarily long-term first for portfolio, the Other of ASC million, structures with and adjusted to

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

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

first reflective paid million. of generated the $XX.X with and in business few a our deleveraging loan sheet. In and balance of the I We we a our on principal for model. securities have by million we We sheet. and the XX months, a great from debt the in $XX $XXX on in quarter the of with ended loan, with made down $XXX.X in marketable accomplishment balance am cash cash any measure progress details is quarter ended million operations. approximately payments our the pleased Now equivalents first strong quarter million and our past term cash in balance million $XX.X cash, generative term have very made

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

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

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

are We prior reiterating our year full guidance the XXXX. for

our guidance $XXX We in $XXX our agreements reflect expect million. it to proper in new includes our underlying which semiconductor the strength value million of range economic that priority be both to reflects executing IP. of anticipating in of pipeline, OTT This the our pipeline, and revenue remains to license achieve terms the

a to our to relatively volatility reminder, large period. As period agreements be and creates complex, tend from which

in fronts, agreements great to the on could of QX QX are our of revenue the executing in This the year. a progress half overall result QX results. agreements revenue may potentially many similar XXXX making you being XXXX we XXXX with extend impacting on into timing couple our see second that While may

half in our year R&D expect $XXX the licensing support our initiatives the $XXX of SG&A We to of We both to timing build-out a and to of ramp expenses in the operating the range platforms. to of and semiconductor million anticipate second result various be million. as media of expenses the

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

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

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

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

a first provides degree we high confidence line The of our with expectations. high will for the engagements first of quarter customer that the in new goals quarter year. achieve us activity was with and in level The our deal

diligently deliver strong Our for shareholders. bright, is our and team is to future our entire working results

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

Operator

Group. comes [Operator Instructions] Maxim Your from first Matthew question of the Galinko line today from

Matthew Galinko

on circle operating back wanted about I I to, ramp-up expenses. understanding in guess, the

back indicated half. now you think I

expense the ramp this possibly a be think talked year, little when to we bit up. going on I was front-end more earlier it driven

if maybe curious -- just correctly, push was in that a have out if spending? So there there I were a understood I follow-up. then that And

Paul Davis

great Matt, to you. with speak

Your memory is on. spot

the when year of and for half expenses it's -- things story. look of a quite frankly, X our we take at the So we success the that back a that ramp is

our and had and than able So about really talked fantastic out investments, one our have projects that quite is candidly to early which is we using those a we year, half making speaks things expertise, bit and were that parties, first actually well of rather on earmarked some outside that of milestones expertise. platforms, own of get resources do. those internal was reach third spend to we matter we for those building subject is to what includes the what of the found to they're that fantastic the our with which domain absolutely And employees third-party do able

Not for but money With necessary that to that other it save invest which the said, for second of in actually that the creates have targeted initiatives half us. an being we to year. opportunity

our that a provided. we team. stay with speaks with said, why previously we being the question. great really it's that's It to that guidance well on track then So And

Matthew Galinko

possibly thinking in interest my I environment, follow-up bought capital And -- about you be would strategy? changes any high persistently the the in first back I rate quarter. question think your given guess shares just on

curious just debt posture? further or aggressively more just retiring it So again, you towards changes to -- if any tips your even

Paul Davis

Yes.

in giving I in with QX. we of answer marketplace. think made that we is in had then And We're a you really almost pricing the fairly flow that opportunities, aggressive the generation pay our saw all looking tremendous down at cash the QX particular, in above. always

in we balance separation talked as as success really progress sheet we year. priority. our million good regard. So $XXX that on still the the -- and deleveraging in of We remains We're that a path and is with achievement, still retiring about that. we through had all evaluate But we're the those really the a go course making happy the things tremendous

Operator

the line question Cassidy next Rosenblatt from comes Kevin Our from Securities. of

Kevin Cassidy

XX Congratulations on the all agreements. signing new

you if into announced or what little progress I strategy that the us On some last of semiconductor maybe give wonder co-optimization. update, quarter, side, is? a you maybe an more there could go details

Paul Davis

Yes. Great call. question, the Kevin, and on thanks being for

certainly, we and as us. continue It's It's So kicked very are really you is co-optimization noted, made we've play something about. in we a for progress. longer-term off, be to that QX, something that good excited

really the our look We building investment we noted and augment I made on back as technologies continue at out really, that mapping the focus, before hire to noted when initial in in an of hires. that to semi. continues We're that's of in one February to effort Keith the I existing space, track. and is And organic be areas program. February, We've

we you know. bonding, really in have So a as already hybrid program strong

In what to advanced processing is we that what industry have. an value focus node at customer the platform that addition, we and on on as we looked was focused really an standpoint organic thing that area packaging. saw demands that wanted portfolio could And this something the well from already that we next we that advanced have the be? We portfolio. what as add unique an we really And would building out could our given be when needed,

build-out continuing it's progress tremendous exactly go excited progress. -- forward the it's more track stage, Expect really it. year how as on from so But a and very far. that's And on I'm in we hear to about so to

Kevin Cassidy

another there new headlines. any -- congratulations with the agreement a as agreement with to I Maybe renewing on if But And ownership? they're, risk Great. have Okay. question course, was Paramount there's your your Paramount. in is of

Paul Davis

license changing quite will it's of type kind And does Thanks now. a what is, something lot And because how question, really that a it's M&A that Kevin. agreements. of in in we how regardless a OTT dynamic of is we for obviously of go right our think companies agreement one out about through. get that something particular that a play Yes. Certainly, of bit impact lot it's

for M&A on that shouldn't of agreement what our and it I -- prepared any the the there really exactly say And it we license so agreements -- plan as comment on will won't or as we speculation of mill really impact is be rumor them. we're M&A I of for result but any and on a see

Operator

Hamed [Operator question Instructions] from Your next comes from the BWS of Khorsand line Financial.

Hamed Khorsand

about are could to So that would Xperi a relationship first many of just go service and left with sort company? who're talk you're like reestablish you that these some off, that you there of -- now how providers standalone have Astound

Paul Davis

pleased There's who you at agreement models to had and Astound really, business really that license for as a of this Thanks approach and recall we quite Certainly, question. the very is different. those. get consistent, few we're many done. -- separation, were the our We've not

providers larger our on licensees. usually typically are the focused We as service are --

ones We overlap. as usually have a of not but smaller obviously there's well, some lot

a we and many more being at unique of those really anticipate So point. this fairly don't situation, there

Hamed Khorsand

Okay. And question you commentary. then could just my clarify is other your

You're how new great making talking headway about you're licensees. with

I is you're QX because like push-outs. also think But QX might you looking it then there few is listed saying of a be like them. that

that be sound it talking in you're progress doesn't that is what side? it's going like to So about? revenue Because the

Paul Davis

Yes.

type quite they our And XX-month as -- engagements. Hamed, be are know, agreement often, So can discussions you license can be XX-, lengthy.

-- that's hardest when progressing, thing timing we we commentary. of versus kind guidance. we is my -- from we're that varies feel about. But Exactly with our good confidence noted always focus predict are talking how provide the of in that's the kind a why other we I and right the And whether to the some year year. That's focus the it land high on about why for try -- falls quarter-to-quarter so quarter that. we And in annual June have X, economics. very or predicting But to they we're with will we're on where the what it, But it's is, is to the within do really have that at. remains, right given where getting as deal pleased progress, of pleased for within avoid exact very that quarter something those is July confidence doing falls date the done And when XX please reason. we that again, but the very it in exactly

Operator

call And remarks. Davis Paul that now to our concludes closing over I will question-and-answer for the turn session. back

Paul Davis

Thank you, operator.

we aligned have employees, remain I to start we the strong with meet results expectations, track thank strategic and goals our the our were want our for first on partners for dedicated objectives. the and customers on year. quarter made our progress to year Our to the and

be you Technology, Conference we'll New investor in Needham us York. We forward to for and the joining Thank Media weeks. other week, in Next events coming this at look participating conference today. you at seeing the and Consumer

Operator

conference This concludes you participation. your Thank call. today's for

disconnect. You may now

Adeia (ADEA) 6 May 242024 Q1 Earnings call transcript