ADEA - Earnings call transcript Q2 2024

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Operator

Good day, everyone. Thank you for standing by. Welcome to Adeia's Second Quarter 2024 Earnings Conference Call.

During today's presentation, all parties will be in a listen-only mode.

Following the presentation, the call will be open for questions. to of call Investor like Chaney, to now President Vice Relations would turn over the Chris I for Adeia. ahead. go please Chris,

Chris Chaney

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

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

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

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

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

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

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

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

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

Paul Davis

thank results everyone, joining expectations, and adjusted line achieve we the am of our second Chris, $XX.X delivered objectives our with for business, for track million. you, quarter today. are We of on $XX.X making us with of revenue XXXX. I the and Thank to million with you, progress across all strategic pleased EBITDA that were we our in and for remain aspects

markets, and During electronics, quarter, end signed including X consumer across second the social pay-TV. license semiconductors we media, agreements diverse in

multiyear with Additionally, leading end renewal shortly following the quarter, a Liberty European pay-TV Global, of operator. signed a we the

firepower term moving loan pleased to We our million continue very additional $X terms, I will opportunity flexibility more and balanced of making annually expense with in pay agreements forward. capital to OTT, with the of interest such to am We're on separation, excited semiconductors grow continuing are business. our with markets. progress repricing, adjacent to financial we've agreements And to which media the will reprice us very and our be we an terms provide deals these as down more and we We and save take pay add diligently lower return to remain down quarter, over committed the us our the to been debt. new our key in new verticals we a able second Since capital markets. the debt. date to have have to each and in growth signed the saw under and tuck-in for to more allocation working approach acquisitions license shareholders help we in

pleased a Corp. IP the media have pipeline grow of once of In a and an were our second continue am and the X to agreement XXXX business contractual pleased opportunities multiyear in formerly outstanding X we Twitter with terms also that very our we commitment validates as continued all to Corp., look in quarter, our and resolves we reach with During semiconductors our the and both to I quarter, beyond. the customer we expand demonstrates enforcing The value renewal. again. paying our agreement The to is litigation, license for agreement further customers. to

long-term license bonding also U.S. in X with in agreement Panasonic, agreement and hybrid technology technology. hybrid In agreement. license, existing which a adding a supplements signed agreement success a providers our semiconductors, a We transfer to multiyear electronics This multiyear an we our renewal the pay-TV renewals bonding to continues development access with new This regional portfolio consumer die-to-wafer signed signed wafer-to-wafer new and Hamamatsu. our from prior new follows with

partnerships highlights of accelerate with how relationship Hamamatsu and the our products. with help customers their capabilities their improve can hybrid Our bonding advancement

as multiyear internationally. we base customer earlier, As following the continue our second the quarter, a strengthen with renewal pay-TV noted significant Global, is provider to also deal shortly close Liberty of in we Europe. This leading signed a

revenue track this our We our objectives semiconductors year to with portfolios. renewal towards customer and revenue is by maintaining quarter and imperative expand by media goals. patent the plan to growth strong progress assets. our verticals. growing in further worldwide continue We and grow XX,XXX we markets pay-TV, are our over IP base electronics make our on closed and and adjacent drive for our second media well-established customer rates to base, To We in continue meet that social consumer long-term our OTT, to it

while focused maintaining key are on objectives adding markets. growth growth customers portfolio rate our new our in renewal strong Our

are fundamental Our customer renewals. the value founded relationships on IP are our of and to

and addition sales customers the augmenting and in drive existing R&D and adjacent engagement in investments both new markets. of resources will technical our Our

investments to pursuing R&D organically acquisition organic remains by our that enhance inorganically priority actively in our and grow internal Our through portfolios opportunities strategically efforts.

driving at markets and Adeia Our serve. we focus innovations customers is our for next-generation

and team year, for were focused analytics were and leadership to engineers such, patents. forward-looking semiconductor scientists thrilled AI since companies world our charge, world leading AMD we list amongst our of NVIDIA. the Last we Hardy the the be prolific accomplishment. business which be granted immensely demonstrates and exclusively as AT&T, the some XXX we remarkable of have larger for I to innovations. Thought model, well-respected a As critical of dedicated and in We our is this ranked most we companies our media firm. the such innovation. of particularly these results one resources patents R&D number by than as proud hallmarks significantly on for to of higher the these because leading commitment such recognized many is ranked hottest Hardy, and #XX This Comcast Yet, am inventors companies, achieved we were our than granted XXXX do. & the most of for on patent Verizon unique the which in allows

paper publishing Our at to on continue and industry at speaking computing conferences and Components our team in bonding on forward-looking was topical recognized proud hybrid members XPXX bonding the team presentations NYC at on Game Streaming at at year's and R&D pivotal in pitch role in fully panel Session of trends. paper particularly the Electrical the the as gaming die engage ecosystems Technology a semiconductor Media that Best participated was media professionals insightful our of Likewise, innovation I conference. members cooling X on In second Conference panels Denver. gave wafer our while which important delivering of hybrid fine in participate, research presented on the presentations we quarter, in Summit. this R&D to

very confident I to XXXX I Additionally, review am financial achieve for and to at am a our our systems pleased that, with made on would have will and over we a Keith we now the of presentation we Systems XXXX Semi-XD to delivered second With co-optimization call results. quarter I Conference. semiconductor goals. the progress the of like turn date,

Keith Jones

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

anticipate momentum of During electronics, the strong are $XX.X second the delivered revenue the and we as agreements year. seeing across the These of semiconductor our pay-TV. driven prior with mix quarter, by media, end second social including X license of expectations consumer in in million, a of markets, diverse results execution half line we

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

of million, Interest decrease $XX.X due second with of Loan quarter, the due decreased in repayments. to platforms a corporate debt X% repricing by debt administrative million of a maintenance licensing X% expense our our benefit of primarily following expenses adjacent quarter $X.X and were build-out the $XX.X quarter, an XX% or the or is $XXX,XXX These from costs. administrative X% contract markets. $X.X to during to due million, from prior semiconductor the quarter expenses of related Research primarily operating with interest prior During resolve our were related and dispute lower bad $XXX,XXX the the lower legal matters. primarily from Selling, from development to the the compared of B successful continued the $XXX,XXX $X.X the general million, Corp. and partially associated offset to with increase and or quarter, media expenses million was prior quarter filings expenses second was associated the Litigation quarter. increase to the prior spending third-party prior second expense the to decreases the recovery increase of increased Term X or certain of and rate quarter. costs. in timing due patent increased expenses The OTT, and to an related due

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

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

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

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

generated balance of ended our and few the with a loan sheet. details cash, the equivalents $XX.X for operations. in We cash the $XXX.X on $XX balance quarter in and marketable a from $XX.X and with quarter in debt in million. principal on second term made quarter payments million Now cash the ended securities million million We second

Here light market we loan of saw conditions, the to existing in term quarter, agreement. second favorable in opportunity reprice our an

of achieved we pleased significant as repricing very the with are outcome the X We benefits.

$X.X XX million in annual lowered on significant results successfully the savings an rate basis basis. This by we a fixed points. component First, interest

the effectively of our reduced greatly capital we exit thresholds, flexibility financial mandatory we providing XXXX. cash as flow greater excess us Secondly, with on uses payment

balance we stock current while repurchases dividend our shareholders deleveraging to by in program. returning in our flexibility us term allow to loan. through approach capital take improved dedicated will remain accelerated balanced our continuing Specifically, a to to more make to sheet on addition This payments

increased acquisitions. to Additionally, we through capacity have tuck-in our our business grow

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

of paid Our payment Board on dividend XX share of August to September shareholders also approved to a as be $X.XX another XX. record per of

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

sales the Consequently, are reiterating revenue the with on pleased guidance pipeline. making progress are We executing our full we we prior year. our for are

includes We which $XXX both agreements expect second revenue million to in range significant of the and million, in new $XXX semiconductor the license be half the of to year. OTT in

various During we the year, continued half have strategic objectives. first of the our seen execution of

the As have third-party these as progressed, licensing lower-than-expected achieved spending has year new our we goals we platforms. develop with

initially able been leverage planned. to resources than a extent have to our greater We internal

Additionally, our to ongoing somewhat with and litigation. expected X been settlement lower Corp. of the due timing than litigation have expenses the

the expect we $XXX less which $X are in million previously a lowering them million operating As and we than guidance to to of will to be repricing, our Because debt We of guided. million, result, for interest our IP expenses, is we dedicated and range our originally our rate lower our expense to anticipated. be commitment expand our remain as we less we than grow portfolio. interest R&D from $XXX

of are we $XX is interest than expense to million $X range be less such, to our in we lowering previously million, As which for million the guidance guided. $XX

$X to We range in to million expect other income $X the be of million.

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

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

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

line our in expectations. was quarter second The with

turn on goals the The as for fronts, team Adeia will remain will all begin efforts for we our to call like that, our grow business expand operator That the with to brings to as concerted success We we entire serve achieve are strive our and session. a prepared Operator? question-and-answer And exceptional progressing nicely confident model. we and remarks. I'd of year. our springboard to the the over into

Operator

you. Thank

Instructions] We begin will Cassidy of [Operator now session. with Securities. Your comes question first the the Kevin Rosenblatt from question-and-answer line

Kevin Cassidy

consumers. some this on both news Congratulations or wondering would OTT even prices for the Do I'm on pay-TV raising on your how to progress their out great you market? have just OTT view market there your affect XXXX. companies is any

Paul Davis

Kevin, great question.

you made more the significant Starz the that some the focused in market, I year anticipate strides recently. some in really note, as on as Obviously, nice Zone we've with deals signaled OTT think having Paramount and players success we're And OTT this with here done we well. getting we've market and

our our number comes rates an have to with a think so, typically platform it And with what have we with to into as to price look we're OTT in our that we the engagements, a don't business. are ultimately able we Certainly, achieve of will significant but have. we that impact licensing pay-TV, subscribers terms from what at it might standpoint compare it of

Kevin Cassidy

what to some even design? bandwidth you market. as are your up, yield these with on And trying in semiconductor to Okay. pipeline issues high of a of Great. up say pipeline moving use as bigger with memory, same see far a your there There's as news broader getting coming Can the you as do side. that plenty and having might And maybe maybe chiplet out various-- of talk around be where keep demand. GPU issues the about the follow-up,

Paul Davis

of on Yes. that talk they chiplet product and chiplet with to we Certainly, architecture new about something the years products for one and to type architecture have. increase Intel a what XXXX. use will And be see to we announced to see companies number had that in continue to a monitor that is plan they with Obviously, logic a announce the side that the trend. continue few think chiplet has that AMD continues had architecture we now

ways in there. to the really come As the traditional limits Moore's Law of limits have

a think As be that possibility memory, of licensees HBM-X years it the would memory we that about that certainly, performance bonded version as it to they'll up need relates happens. at really could until will to well road of to. when with high include It But process well certainly, our the need up level least the that bandwidth to a as be well. few hybrid some and lines renewal for we're likely down excited to get

Operator

from Financial. the comes question Hamed next BWS of Our line with Khorsand

Hamed Khorsand

has emphasis sort some First ask and business changed you're off, to to tuck-in months putting really acquisitions these X in the commentary last want I just some X what's in your on today acquisition? making where of

Paul Davis

Hamed. Yes,

tuck-in we've to a though, focus it's acquisitions. always something think first, and of question. I actually on been It's part going not doing great playbook. that's Certainly, focused our We change. R&D on that's internal

portfolio XX-plus So ZIP of maintaining really that in It's homegrown. And percent from our inventors. that our code. see is we

that efforts add we us we to augments an there portfolio where However, to the source opportunities really well. see internal are occasionally our that or opportunity as to that come

markets some really year. did markets that into And like high-quality We well see this our can opportunities the as look if to we as our so we efforts changed. portfolio towards hasn't do really even and internal of earlier highlight that own it, really add deals a We It's the though. accelerate revenue well. to where as a opportunity we few adjacent in to something expanding semiconductors close

Hamed Khorsand

my Okay. was, you've is question semiconductor about expecting with that that a And you're timing year. the license there all deals streaming been other talking and

Paul Davis

Yes.

very, we on getting really economics and high that of very so, can. a -- And terms one them, we things the I with customers we of is trying don't but do that think working getting large the right, something note pride in is that always the what that of ourselves right? do we is we best economics the deals volume

rather that to getting a time than the we trying aspect, focus so, take happy the with. have to on not right and deal accelerate we're line deal done And that

year, in And given though, saying still so, And the quarter that the predict. all close the been can exact they'll pipeline, where But of timing deals of are we've this have it quarter-to-quarter. really exact that's shift we very what we're hard that confident to our year.

Hamed Khorsand

that, a just may. on I follow-up And if Okay.

it far, per Or that good without to at for $XX deals running happening? a so quarter. be business? is the year You're average million going baseline the the about Is licensing higher

Keith Jones

a It's question. great

$XX I working necessarily add we're subsequent baseline. license renewals and we There's think that is of a on. Paul in that you're to have to million the not about, that that a higher going you And revenue then talked So number is if level. a agreements both OT for referring semiconductor, baseline much

that we as see We what higher being not good we rate. that much see into board spring ongoing rate run and a XXXX. move So acts is an that as forward run really as

Operator

the our have Maxim comes with do we from last of Galinko question line Group. And Matthew

Matthew Galinko

Maybe deals of for Is we're risk that the How sensitivity could discussions? the the 'XX. back kind larger and backdrop environment discussions macro kind just expectation respect does that the around for the of along us with some the to rate in help understand Or of licenses. a firstly, in influenced uncertainty there? grow looking of interest half macro the there

Paul Davis

Yes, Matt.

especially times we've long-term we has that think usually that very on that, the the deals that achieve. experienced I we're able timing often in of uncertainty and given to overall that or we get little economics question do the what historically, nature of impact is

same that to a various things, talking you or of on well-known whether advertising They slowdown. companies. of are a through. ups that then where the be where cycles are sophisticated otherwise industry really are boom media, the goes often be we and very cycles in very large side there's are with there downs understand think that and I going there and it cycles see semiconductor customers Certainly, the to

done through have. same navigate to level the of that and really able usually those we're we at though, deals us expectations For get

that environment. really don't sort of anticipate of challenges we any so because seeing And

Matthew Galinko

run quarter, on OpEx guess, had sounds the then the Okay. outside in number spending. It question rate. this in on a some moving maybe increase of I some favor And in and pieces like couple the you OpEx then

guess, kind a expecting of that kind could in the back I bit sense the forward? So us can can you maybe into a we I pushes should moving your anything share right baseline of of direction. you be as it but if of there's what give we with guidance, guess us

Keith Jones

Matt, great question. Yes,

a if look look kind our take a at you OpEx, items few here. of So we'll at

by tick, So on our an plan. design has that's been and R&D and upward

a make to our and continue We to portfolio. considered patent effort invest grow

will And to take that as amount look a revenue the mid-teens we trajectory. if it's at remainder continue percentage, see in So to the even a you year. that throughout to of the relative our be going

go those So to And path help from from investments had there you that we the that also, what us to perspective of continue outside those the through making some is a third-party anticipated accelerate to some that. in see efforts. is of

to the balance bad it. a slight call as as guy On had debt just side, costs, administrative kind that as had we SG&A quarter-over-quarter if X. the would uptick recovery. you like you we kind those have of well of We of I But if good even and a the some out

and developing platforms. Now notably, side, a my job what management internally the as we've this new on seen, our actually semiconductor as new these new part of team tremendous done say on and then we we've I also X quite about out platforms, of these co-optimization. a smile it's in media the new being When is most areas puts talked frankly, face

about a a what platforms. of give things. have customers, and in was found do to wanted expertise quickly. we deep that, extremely that we very speed these lot terms while other gets really team, in all of dives [indiscernible] to grow we with is doing doing learning a those up kind of new the to what talented really team And good just ourselves that product breakdowns And have we So

overall bit part what in we year more then an about a bringing year. a $X So reset the and than and little but with first And the less a guidance little that's out with terms reliance in lower the as guidance in of set spend the bit litigation, be at modestly we are you'll you us in making a in outside QX. on great progress lower of down you to million see, on beginning parties. third see we of see half the uptick our of And QX

Operator

That over you. concludes our to the Davis, Mr. I the back Paul question-and-answer CEO, session. turn call

Paul Davis

this you, the of of Age first us month, you the at half want City. these at BWS other the and towards be will progress thank seeing events Securities in and Rosenblatt you our have we for I York today. Thank for to New the employees achieving for our the look goals operator. to made Later Thank forward coming conference events in strong and participating We investor at joining we year Conference the months. in AI XXXX.

Operator

Ladies that today's gentlemen, and concludes call. conference

disconnect. now may You

Adeia (ADEA) 6 Aug 242024 Q2 Earnings call transcript