InterDigital, Inc.

Good day, and thank you for standing by. Welcome to the fourth quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker for today, Richard Lloyd. Please go ahead. The floor is yours.

Good morning to everyone, and welcome to InterDigital's fourth quarter 2022 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 Breske, 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 sections of our 2022 Annual Report in 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.

Thank you, Richard. And good morning, everyone. Thank you for joining us today. 2022 was an excellent year for InterDigital. continuous success in our core smartphone licensing program, and record-setting performance in our CE and IoT, including auto licensing programs. We increased recurring revenue to a record level, significantly increased our net income year-over-year, and we believe put the company in its strongest position ever to deliver future business goals. I will first discuss our fourth quarter performance, then I will provide some more highlights in our key achievement in 2022, and some thoughts on our positioning in 2023 and beyond. In the fourth quarter, despite of ongoing macroeconomic headwinds, we continue to execute exceptionally well in our goals across the business. Revenue for the fourth quarter was up to $117 million, a 5% increase year-over-year, while net income jumped by 48% year-over-year to $32 million, thanks to new licensing deals and continuing discipline management of operating expenses. We once again demonstrated our strengths in our smartphone core with a binding arbitration agreement with Samsung for a new license. We grew our revenue from consumer electronic licenses by renewing our deals with Panasonic and announcing a new deal with LG. And shortly after the year end, we announced a large expansion of our share buyback program. Our Samsung arbitration, as we have previously disclosed, both parties have agreed that the new license will start January 1st of 2023. We will continue to negotiate for a period of time before letting the arbitrator decide on issues we cannot agree on. This is a binding process for both parties that will lead to a new license, and we estimate the whole process will conclude around the middle of 2024. Rich will cover the topic of revenue recognition in his section. I want to remind everyone that Samsung has been licensed to our patents for more than a quarter of a century. And their commitment to another deal reflects how foundational our industry remains to the mobile industry. Together with the renewal of our Apple deal in the third quarter, our agreement with Samsung is further evidence of our position as one of the leading innovators and a top licensed source in the smartphone industry. I'm pleased that Samsung has recognized the quality of innovation and our relationship with them will continue. In the fourth quarter, we also build our increasing momentum for licensing in the spaces of CE and IoT, including auto. Our agreement with LG include both televisions and PCs and licenses LG to our patents related to HEVC and VVC, the latest radio compression technologies where we believe we are world leader and where we see further licensing opportunities. Like Samsung, Panasonic is a long-term licensee, and our new agreements with the company, along with our new deals with LG, underlines the growth strength of our CE licensing program. Coming into 2022, we knew it was going to be a pivotal year for our company. We are thrilled that as a company, we have risen to the challenges. We continued headline smartphone agreement led by a new Apple deal with an incredible strong 12 months for a licensing program outside the smartphone space. We not only welcome LG as a new HEVC and VVC licensee, but also entered into a multi-year license with Amazon, covering a wide range of Amazon's consumer electronic devices and their inter-digital patents. We also saw considerable growth in the automobile market through our licensing partner with more than 80% of the connected cars currently licensed to our 3G, 4G portfolio. Annual revenue from CE and IoT, including auto, reached more than $100 million for the first time, with recurring revenue increased 63% year over year. that helped push total revenue to $458 million for the year, an increase of 8% from 2021, including almost $404 million recurring revenue, a record-setting level, up by 15% year over year. This continues our recent trend of delivering consistent increases to our top line. As I mentioned in our last call, Our recent licensing successes mean that we have signed more than 20 new agreements and renewals with an aggregate contract value of over $1.5 billion since early 2021. This gives us an incredibly strong platform for which to drive further growth and continue to invest in our innovation footprint. At our heart, we are an innovation business. I'm extremely excited by the role that we are playing in the evolution of technology in cellular, video, AI, and beyond, technologies that only become more central to consumers and businesses around the world. The emphasis we place on innovation is clear in the pipeline of new inventions with our number of innovation disclosures increasing by more than 40% in 2022. Last year, we also made a key hire to our executive team with the appointment of Dr. Rajesh Pankaj as our new chief technology officer. Since he joined, Rajesh has hit the ground running and his expertise and leadership are proving invaluable as we play a key role in the development of next generation connected ecosystems. Shortly after quarter end, we received further validation of our position as one of the world's leading innovators as we were included for the second consecutive year in LexisNexis Innovation Momentum, the Global 100 Report. This report recognized not only our impact on innovation today, but also the likely impact of our innovation in the longer term. On the litigation front, we have recently won three decisions since the start of the year from courts in UK in our dispute with Lenovo. On each decision, our patent was held to be valid and essential to various cellular standards and infringed by Lenovo. We are very pleased with these results. These decisions serve as further confirmation of the quality of patenting innovations that many of the leading device manufacturers have chosen to license. We are still waiting for the UK court's decision in our friend licensing trial, and we remain confident in the strength of our case. Thus, we celebrate our 50th year as a leader in developing connected technologies. I'm delighted that 2022 was one of the most productive and successful years in our history. Looking ahead in 2023 and beyond, we believe we are well positioned to deliver additional smartphone deals, increase revenue in consumer electronics close new agreement in the high growth IoT, including auto sectors, and make progress on new licensing opportunities in services. From our innovation pipeline to our business momentums to our financial strengths, we believe the company is the strongest position it has ever been in, and we are perfectly pleased to continue to deliver our compelling growth story. And with that, I hand you over to Rich to talk through our numbers in more detail.