Adeia Inc.

Everyone, thank you for standing by. Welcome to ARDIA's fourth quarter 2022 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. I'd now like to turn the call over to Ned Mitchell for ARDIA. Ned, please go ahead.

Good afternoon and thank you for joining us as Audia reports its fourth quarter 2022 and full year financial results. With me on the call today are Paul Davis, Chief Executive Officer, and Keith Jones, Chief Financial Officer. In addition to today's earnings release, there is an earnings presentation which you can access along the webcast on Audia's IR website. Before we begin, I would like to provide a few reminders. First, today's discussion contains forward-looking statements that are predictions, projections, or other statements about future events, which are based on management's current expectations and beliefs, and therefore subject to risks, uncertainties, and changes in circumstances. For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today, please refer to the risk factors section in our SEC filings, including our annual report on Form 10-K and our quarterly report on Form 10-Q. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call. Second, we refer to certain non-GAAP financial measures which exclude one time or ongoing non-cash acquired intangibles amortization charges, costs related to actual or planned business combinations, including transaction fees, integration costs, severance, facility closures and retention bonuses, separation costs, stock-based compensation, loss on debt extinguishment, discontinued operations, expense debt refinancing costs, impairment of intangible assets, and related tax effects. We have provided reconciliations of these non-GAAP measures to the most directly comparable GAAP measures in the earnings release and on the investor relations section of our website. The recording of this conference call will be available on the investor relations website at www.audia.com. I will now turn the call over to Audia's CEO, Paul Davis.

Thank you, Ned, and thank you, everyone, for joining us today. 2022 was a momentous year for Adia. Our incredibly dedicated employees continue to drive the business forward, delivering a strong year operationally and financially, while also navigating the business separation from experience, which was successfully completed on October 1st. Our total revenue for the year was approximately $439 million. We finished the year on a high note in the fourth quarter with over $103 million in revenue and an adjusted EBITDA margin of approximately 72%. These excellent results exceeded expectations and were driven by our diverse set of customers and growing pipeline of opportunities. Our strong fourth quarter results are a proof point of how we will continue to succeed as a standalone company. We closed 10 license agreements in the fourth quarter alone, including both renewals and new deals, highlighted by our long-term renewal with Samsung. In addition, we signed two significant social media renewals, as well as renewals and new deals in Pay TV, OTT, and semiconductors. These deals not only helped contribute to our successful fourth quarter, but given the long-term and recurring nature of many of these deals, they also enhance our visibility into future revenue and reinforce the strength and durability of our annual baseline revenue. Importantly, the momentum has continued into the new year with the early renewal with Altice, which I will address in more detail shortly. Diving into the deal momentum in more detail, let me start with Samsung and the consumer electronics market. As we announced last month, we signed a long-term license renewal with Samsung Smart TVs and related offerings. This renewal is a testament to how our innovations support global industry players in the rapidly growing connected TV services market. We see a significant shift in digital content consumption behaviors as consumers reevaluate their entertainment budgets. This is raising the popularity of streaming services, including advertising-based video on demand, or AVOD, and free ad-supported TV, or FAST. The trend has accelerated with the rapid growth of the connected TV market, resulting in new relationships among advertisers, network operators, streaming providers, and consumer electronics manufacturers. We believe our current portfolio and technology roadmap will be well positioned to capitalize on this trend. Moving to Pay TV. As we announced this week, we signed an early renewal with Altice, a leading provider of broadband and video services. This early renewal extends our agreement with Altice and is a result of our leading IP position in Pay TV and our approach to customer relationships. We are committed to working with our customers to enter into multi-year agreements that provide access to our expanding IP portfolio at rates that recognize the value of our technologies. We are very pleased we signed this agreement with Altice, which serves as a further proof point of the longevity and applicability of our media portfolio in the pay TV market. We also saw significant progress in the social media market, signing multi-year renewals with two leading social media companies. Importantly, these deals now include access to our imaging IP, which is now part of our broader media portfolio. The inclusion of our imaging IP portfolio helped drive increased revenue contribution from both these companies, and we see similar opportunities moving forward. With the addition of our imaging IP and continued expansion of video consumption on social media platforms, We believe we are well positioned to grow our revenue base in this market. In semiconductors, we also signed a new DBI license agreement with Corvo, a leading provider of radio frequency solutions. This is a further validation of our leading market position in hybrid bonding. While the RF market opportunity is more modest than our other semiconductor markets, we are pleased with this new deal win. In addition, we signed renewals and new agreements across multiple media verticals and geographic regions, including with Fetch TV, Sonify Solutions, and Naver. The diversity of our customer base and our ability to efficiently and consistently close license agreements in different markets and jurisdictions is a result of the breadth and applicability of our IPs. We are focused on driving our customer diversification and believe we are well positioned to do so, given the way in which we innovate and monetize our intellectual property. At the heart of our success in signing such a diverse set of customers is our ability to leverage our unique innovation engines and portfolio development. At Audia, we focus on big ideas. that can expand across multiple applications and market verticals. Audia innovators and engineers are not burdened by product roadmaps and timelines, which enables them to work on horizontal technologies that cut across multiple applications and industries. We have depicted this horizontal technology approach on slide six of the presentation. On the outer edge, we have the major markets and industries our technologies address. Moving inside, we have the applications, features, services, and products that use our technologies. And further inside, we have the core horizontal technology blocks that our media portfolio covers. In addition to our robust media portfolio, we believe our hybrid bonding and advanced processing node semiconductor technologies will be instrumental to advancing the next generation of semiconductor chips. It is these chips that power the devices that deliver the entertainment that consumers watch and enjoy. Importantly, these devices increasingly require more and more computing power in an always connected and mobile world. Historically, advancements in computing power came via Moore's Law. However, the increasing cost and slowing benefits of Moore's Law is driving the semiconductor industry toward new technology solutions to continue to advance performance in a cost-effective manner. Hybrid bonding, and particularly our DBI ultra-dye bonding technology, will play a key role in enabling cost-effective advancements in chip architecture. Hybrid bonding provides a massive boost in communication bandwidth, condensed height architecture and footprint, and improved speed and energy efficiency. The leading foundries will continue to push the boundaries of smaller processing nodes despite the associated costs. And our advanced node portfolio is well positioned to cover those smaller nodes. However, we believe even the most advanced semiconductor companies will continue to move to hybrid bonding as an increasingly attractive way to manage these costs and improve performance. In addition, given the cost-effective performance advantages that hybrid bonding offers, It has the potential for pervasive adoption across the semiconductor supply chain, rather than just with the two to three leading foundries. In particular, we remain very optimistic about the adoption of hybrid bonding in the logic market, one of the largest and fastest growing markets in the semiconductor industry. Moving to media, our core technology blocks, such as user interfaces, computer vision, machine learning, and networking power a much bigger set of features, applications, services, and products, which are deployed across the verticals we target. Our goal is to execute on a horizontal technology roadmap so that we can innovate once and license that innovation across multiple verticals. An example of this approach is an area we have been a pioneer in for decades. user interfaces, and user experiences. UI and UX technologies are in our DNA, and we understand the importance of these technologies since it is what consumers see and experience. These technologies include integrated guides, autoplay, transport bar, and playback speed. While we are best known for UI and UX technologies and pay TV, With the proliferation of video, they also have applicability in social media, consumer electronics, music streaming, and the metaverse. And consumers want a similar user experience, regardless of the medium in which they are enjoying digital entertainment. We are continuing looking to replicate this horizontal innovation approach. Without traditional product company limitations, our engineers and innovators are free to think big and innovate in ways that will broadly apply across multiple verticals. Before I turn the call over to Keith to cover the financials, I want to touch on our areas of focus in 2023. Consistent with what we laid out in our investor day, this year we will work towards increasing our annual baseline revenue, growing our patent portfolio, expanding the number and scope of our media and semiconductor license agreements, and making progress in adjacent verticals. To increase our annual baseline revenue, we are focused on executing renewals, signing agreements with new customers, and making progress on large unlicensed OTT providers. Our portfolio development will be driven by our internal innovation engines and targeted tuck-in acquisitions. Our internal horizontal innovation roadmap supports both core existing licensing programs and new verticals. We also see an attractive market for acquisitions of IP, as we believe many companies will look to divest of assets given the current macroeconomic environment. We are well positioned to capitalize on this with our strong balance sheet and will continue to be selective as we look for opportunities that can accelerate our growth. We believe the deal momentum will continue in 2023, given our healthy pipeline of opportunities. We have a proven approach to licensing in which we focus on building strong customer relationships, working tirelessly to find a deal, and litigating only as a last resort. Lastly, we have continued to progress our efforts in breaking into adjacent verticals. These efforts are at various stages. But as I noted last quarter, we anticipate music streaming as our first area of success, given the engagement and progress to date. With that, let me turn the call over to Keith to cover our fourth quarter and 2022 financial results and our guidance for 2023.