Adeia Inc.

Good day, everyone. Thank you for standing by. Welcome to Audia's fourth quarter 2023 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 would now like to turn the call over to Chris Cheney, Vice President in Investor Relations for Audia. Chris, please go ahead.

Good afternoon, everyone. Thank you for joining us as we share with you details of our fourth quarter 2023 financial results. With me today on the call are Paul Davis, our president and CEO, and Keith Jones, our CFO. Paul will share with you some general observations regarding our fourth quarter, and then Keith will give further details on our financial results and guidance. We will then conclude with a question and answer period. In addition to today's earnings release, there is an earnings presentation which you can access along with the webcast in the IR portion of our website. Before turning the call over to Paul, 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. 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. To enhance an understanding of our ongoing economic performance, we will discuss non-GAAP information during this call. We use non-GAAP financial measures internally to evaluate and manage our operations. We have therefore chosen to provide this information to enable you to perform comparisons of our operating results as we do internally. We have provided reconciliations of these non-GAAP measures to the most directly comparable GAAP measures in the earnings release, the earnings presentation, and on the Investor Relations section of our website. A recording of this conference call will be available on the Investor Relations website at adia.com. Now, I would like to turn the call over to our CEO, Paul Davis.

Thank you, Chris, and thank you everyone for joining us today. We had a great year in 2023, our first full year as a standalone company. I'm looking forward to sharing with you our results and progress we made in 2023 and our outlook for 2024. But before I do that, I would like to provide a review of our fourth quarter. With the continued momentum throughout the year, we signed eight agreements in the fourth quarter. represented by customers across our social media, pay TV, and consumer electronics verticals. This consisted of two new agreements and six renewals. We are particularly excited about our new license agreement with a leading international social media company. This further validates the strength of our media portfolio across social media platforms. Additionally, our long history of success within the pay TV market was further enhanced by the addition of a new agreement with BreezeLine, a large cable operator in the United States. Within consumer electronics, we are pleased to have renewed and extended our relationship with Finai, a global manufacturer of connected TVs. We delivered strong financial results in the fourth quarter with revenue of $87 million and adjusted EBITDA of $54 million. With our significant cashflow generation, we paid down $29 million of our debt in the fourth quarter as we continued to deleverage our balance sheet. We also further strengthened our executive team with the appointment of Joe Giuliano as our chief intellectual property officer. Joe will primarily be responsible for driving our strategy and growth of our patent portfolios. Joe has worked with us for decades as our lead outside IP counsel for the media business. Over his 30 plus year career, he is known for his proactive strategies and foresight leading to innovative business centered solutions. I am very happy Joe has joined our team. As we look back on 2023, we had great success in deal execution. During the year, we signed 32 deals across multiple verticals. We added five new logos during the course of the year with Western Digital, Keoksha, DAZN, and BreezeLine, as well as the international social media company we signed in the fourth quarter. The Western Digital and Kyoksha deals solidify our strong position with all the top memory companies and further validate the value of our hybrid bonding technology in the memory market. These important deals will contribute significantly towards our goal of generating $100 million in annual semiconductor revenue. Samsung, a repeat customer across our media and semiconductor businesses, renewed its license to our media portfolio for use in mobile devices. Cox, Verizon, and Altice, all top 10 pay TV operators in the US, signed renewals to our media portfolio, again proving the value of our media portfolio and the longevity of our leading innovations in pay TV. The deals we signed with DAZN and STARS are an important step forward as we build momentum in OTT. OTT is an exciting growth opportunity for us as it is a large and expanding market. We expect our continued penetration in OTT to offset anticipated pay TV declines and become a significant revenue contributor for us in the coming years. In addition, our investment in R&D is producing results. We made excellent progress growing our portfolio of patent assets, a key objective post-separation, and a proof point of our continued focus on innovation and technology development. Our goal was to grow our portfolio 10% in 2023. I am happy to report we exceeded this goal, growing over 11% for the year with a record number of new original patent filings. We have made key strategic investments in OTT, pay TV, e-commerce, ad tech, and semiconductors. These initiatives are fundamental to fueling our long-term growth. In 2023, we also achieved our goal of filling critical executive and board positions. Over the past year, we have added a chief people officer, chief corporate development officer, and a chief intellectual property officer. In addition, we expanded our board with two new highly qualified independent directors. Having these roles filled with highly talented individuals positions the organization well for further growth. I would like to thank our employees for their contributions and tremendous accomplishments that made 2023 a success. With a successful 2023 behind us, I would now like to share with you our vision for 2024. This year, we will invest in the business to support our plans for growth in our target markets. We'll be adding R&D resources to expand both our media and semiconductor portfolios. We will also be making further investments this year in our people and infrastructure to support increased business development and sales activities. These investments will position us to take advantage of the growth opportunities in front of us. Long-term, our target remains achieving $500 million in annual revenue. To do this, we have two primary objectives. First, to maintain a recurring revenue base by signing renewals with current customers. And second, to add additional revenue streams by further penetrating large and growing markets, such as OTT and semiconductors. We are also positioning ourselves for success in adjacent markets, such as ad tech, automotive, e-commerce, gaming, music streaming, and sports gambling. To do this, it is important that we continue to make investments to enhance our patent portfolio and further supplement the sales efforts to maximize opportunities. We are making great progress expanding our pipeline of opportunities, particularly in OTT, semiconductors, and adjacent verticals. Our increased commitment to R&D for portfolio expansion and an additional infrastructure to support increased sales activities will augment our efforts. Our large funnel of opportunities is being matched with our IP portfolio development to form a pipeline of business opportunities that will continue to grow. As we further expand our IP portfolio with additional filings this year, so will our opportunity pipeline. As we continue to make investments in our business and expand our pipeline of opportunities, we will also maintain our capital allocation strategy. Our proven IP licensing business model is highly cash generative, allowing us to continue to deleverage our balance sheet with accelerated principal debt payments. Our R&D investments and portfolio growth embed us within the industries we serve. And being pioneers, incubators, and evangelists of next-generation technologies is who we are at our core. Our R&D teams and business leaders develop partnerships with the ecosystem's core to our strategy. These partnerships are key to focusing our IP expansion efforts in areas that will drive future revenue growth. We believe it is important to be at the forefront of the latest developments in our key end markets and partnering with the ecosystem demonstrates our commitment and enables us to anticipate developing trends. Our semiconductor and media teams are deeply involved through their participation at key industry conferences and the publication of research and thought leadership pieces in trending subject matter. Additionally, we hold leadership positions in prominent industry organizations. For example, our semiconductor team presented on hybrid bonding at ECTC in Orlando. And a member of our executive team is a board member of EvoNexus, a technology startup incubator. Our media R&D team is similarly active, especially in trends impacting our target verticals, such as OTT, consumer electronics, social media, e-commerce, ad tech, and automotive. In addition to numerous white papers and thought leadership blogs you can find on our website, our media R&D team presented technical research at many conferences throughout the year. At Augmented World Expo, we delivered a technical presentation on AI and spatial computing. At the SMPTE Media Technology Summit, we presented our paper on novel methods of personalized ranking and recommendation systems using a dynamic queuing approach. We also showed a demo of our prototype that greatly simplifies live shopping experiences. Members of our media team also serve on numerous leadership positions with IEEE and other organizations and have also received rewards for their pioneering research. I am extremely proud of the recognized leadership positions of so many of our Audia employees. Their participation not only provides us with key insights into what problems the industries need to solve, but often leads to new customer engagements and partnerships within the ecosystem. Before I turn the call over to Keith, I want to touch on one of our key new initiatives for 2024. Our semiconductor team's mission is to solve today's problems to enable tomorrow's products. And there's no debate that the primary problem facing the industry today is overcoming the challenges related to Moore's law. Until now, Adia's approach to overcoming these challenges have centered on our hybrid bonding and advanced processing node technologies. These will continue to be important technologies to solving this problem. However, as we and other experts have come to realize, process-related solutions will only advance the industry so far. Further innovation requires a more holistic approach, one in which existing and future advanced processing technologies serve as a base for advancement and are then simultaneously optimized for both design and system perspectives to maximize efficiency and reduce cost. This holistic approach is commonly referred to as co-optimization and is key to moving beyond Moore's Law. With that in mind, this year we are launching a co-optimization initiative to expand the value proposition of our existing and future innovative solutions to our customers, particularly in the logic space, by making them more efficient, easier to implement, and more cost-effective. We are uniquely positioned to capitalize on this trend with a blend of transformative technologies, recognized thought leadership, deep domain expertise, and engineering experience. We employ some of the most prolific inventors in the world, which puts us in a powerful position to continue to deliver impactful innovations and expand our addressable market. With that, I would like to now turn the call over to Keith for a review of our fourth quarter financial results and our 2024 guidance.