InterDigital, Inc.

Good day and welcome to the InterDigital Inc. Fourth Quarter 2021 Earnings Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Richard Lloyd. Please go ahead.

Good morning to everyone and welcome to InterDigital's Fourth Quarter 2021 Earnings Conference Call. I am Richard Lloyd, Communications Director, and with me in today's call are Liren Chen, our President and CEO, and Rich Breski, our CFO. Consistent with last quarter's call, we will offer some highlights about the quarter and the company, and then open the call up for questions. Before we begin our remarks, I need to remind you that in this call, we will make forward-looking statements regarding our current beliefs, plans, and expectations, which are not guarantees of future performance and are made only as of the date hereof. Forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those described in the risk factors section of our 2021 Annual Report on Form 10-K and in our other SEC filings. In addition, today's presentation may contain references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our financial metrics tracker, which is available on the investor relations section of our website. With that taken care of, I will turn the call over to Liren.

Thanks, Richard. Good morning, everyone, and thanks for joining us today. Quite simply, we had an excellent first quarter in what was a banner year for InterDigital. In Q4, our revenue increased 23% year-over-year to $112 million, bringing our total revenue for the year to $425 million, up 19% from 2020. In 2021, we improved our bottom line, grew our cash position, and achieved several major successes across the business. Among those successes, we have signed 13 new license agreements, including our deal with top three smartphone manufacturer Xiaomi, our deal with the top 10 TV manufacturer, and our recent renewal with Zoned. I'll let Rich talk you through those excellent numbers in more detail. But first, I want to emphasize just how well positioned the company is for further growth. Over the last 12 months, we have increased our focus on the foundational technology that enables so much of the connected world expanded our patent portfolio in 5G and video, built strong deal momentum in our licensing programs, and yet again proved the strength of our research and our IP when it was truly tested in court. Recently, our pedigree as a world-class innovator was highlighted by our inclusion in a new report from LexisNexis called Innovation Momentum 2022, the Global Top 100. This report placed InterDigital among a very select group of the world's 100 most innovative businesses and, according to the report, specifically recognized companies with exceptional technology relevance for the future and those outperforming their peers. Our inclusion demonstrates how our strengths in R&D continue to translate into one of the world's highest quality patent portfolio. I was also particularly pleased that the report highlighted our contribution to standards such as 5G. In 2021, our commitment to 5G deepened considerably as we almost doubled our contribution to 5G standards. and increased our 5G invention disclosures by more than 50%. 5G is proving to be a runaway success with hundreds of millions of consumers worldwide, and our innovation is clearly a foundational part of the 5G story. In video, our invention disclosures were up by more than 25%, proving once again that despite of COVID changing the world we work, our engineers have responded and our innovation engine continues to fire on all cylinders. The high quality of our innovator continues to be recognized by industry peers. In the fourth quarter, one of our senior engineers was appointed to the steering board of DVB, an important industry body in development of digital television systems. Another was appointed to the steering board of the Wireless World Research Forum, which brings together leaders from industry and academia to identify key wireless trends that will shape connectivity over the next decade. So this connectivity world become more immersive. It is opening up opportunity for our technology to touch more consumers' lives. At the start of this year, we were selected by the standard organization MPAT to contribute our technology to a new standard for haptics, alongside Technical University of Munich and another technology company, InterHaptics. From the touchscreens of your smartphone and tablet to game controllers, and to more advanced devices. Haptics is a tactile technology that holds great promise in a growing number of applications, and I'm excited for how it could develop in areas like metalworks and in industries such as automotive. The recognition of our work in this area proves that we are focused not only on the technology needs of today, but also on innovation that will underpin connected experiences for years to come. In the fourth quarter, we demonstrated once again how effective we are in translating our technology leadership into licensing revenue. As I mentioned, in Q4, we have signed five new license agreements including a renewal of our licensing deal and research joint venture with Sony. This brings the total number of new licenses we signed in 2021 to 13. Not only is this more than double the number of licenses we have signed in 2020, this is more than we have signed in any year over the last two decades. I'm particularly pleased with the cadence of new deals reflecting not only the strengths of our licensing team, but also our ability to execute across the company, despite of the challenges of the COVID pandemic. Momentum can be an incredible powerful force in this business, and our deal-making piece is a testament to the fact that new and existing licensees continue to recognize the quality of our research and our contributions to numerous key technologies. We are working hard to deliver another strong licensing performance in 2022. But we also need to ensure that each deal we sign reflects the true value of our technology and delivers a strong return to our shareholders. But our recent track record has shown most of our licensing deals are done through bilateral negotiations. Unfortunately, there are times when companies using our technology have been unwitting to sign licenses on what we believe are fair terms. Early this month, our trial to establish friend terms for a license with Lenovo concluded in London. While I'm not going to comment on the specifics of that case, Before the judge renders his decision, we remain confident with the strength of our technology, the quality of our IP portfolio, and the breadth of our case. In fourth quarter, we also filed a series of lawsuits against Chinese smartphone manufacturer OPPO in court in UK, Germany, and India. Again, I do not want to comment on the specific of the details But it is worth remembering that where we had to litigate in the past, we have always concluded a licensing agreement on rent terms. Our track record assumes that we will not be in protecting our research and proving the value of our patent portfolio. As I look back on 2021, I'm very pleased, not only with our excellent financial performance, but also with how we have continued to adapt to the challenges posed by COVID, how we have kept our innovation engine running smoothly, how we have continued to execute across the business, and how the technologies we have invented have become even more important in people's lives around the world. And as we look forward to the rest of 2022, we are well, we are very well positioned to capitalize on our strengths in developing foundational technology, which helps billions of consumers connect to 5G networks, engage with colleagues on video calls, streaming their favorite shows, and seamlessly connect to Wi-Fi networks. Before I hand it over to Rich, I would like to thank all our employees for their hard work and commitment in delivering this excellent performance. Like all companies, we have had to make changes to how we operate over the last couple years, and the InterDigital team has consistently risen to the occasion. And with that, Rich will talk you through the numbers in more detail.