InterDigital, Inc.

Good morning and thank you for standing by. Welcome to InterDigital's second quarter 2023 earnings 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 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rayford Garabrant, Head of Investor Relations. Please go ahead.

Good morning to everyone and welcome to InterDigital's second quarter 2023 earnings conference call. I am Rayford Garabrant, Head of Investor Relations for InterDigital. With me on 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 factor section of our 2022 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.

Thank you, Reefer. Good morning, everyone. Thanks for joining us today. This was another strong quarter for the business. We added to our recent momentum once again demonstrated our ability to deliver stable recurring revenue and strong profitability and continued our excellent track record of returning capital to shareholders. Let me start with a status update on licensing. We continue to make solid progress in the smartphone space where we added a new licensee in Q2. In addition, we closed a new licensing agreement with Alpine a specialist system and technology provider in the IoT and auto sector. In the first half of the year, our recurring revenue from the consumer electronics and IoT, including auto, increased by almost 20% year-over-year, once again highlighting how we are capitalizing the opportunities in multiple verticals. In addition, early in third quarter, we added another new licensee from the consumer electronics sector. We also continue to advance our case in our arbitration with Samsung. The three arbitrators who will hear the case has now been confirmed. And a case management conference is being held today. As a reminder, Samsung has already agreed to take a license to our portfolio, effective January 1st of 2023, where the arbitration process will decide the monetary terms. We remain confident that our new license with Samsung will reflect the value of portfolio and continue our long-term relations with Samsung that started more than 25 years ago. Next, I want to give you an update on our litigation with Lenovo. Recently, we received another good decision from the UK High Court, which increased the amount Lenovo must pay us for a license to our 3G, 4G, and 5G patents to just under $185 million. which we already received from Lenovo, which will explain the revenue recognition topic in his remarks. This is a very positive development for us, and adds to the Court's previous ruling that Lenovo must pay us in full for the past sales going back to 2027. As Court noted, this is intended to be a powerful way of discouraging licenses from holding out on taking off-rent license. I want to remind you that the $185 million judgment is for our license to only our cellular patents until the end of 2023. It does not include our valuable portfolio of video, Wi-Fi, and implementation patents, and we remain committed to receive a full and fair return on our technology that Lenovo uses in its devices each day. One aspect of our dispute, which I'm particularly pleased with, is that when we assert our patent in three separate technical trials against Lenovo, each patent were found to be valid, essential, and infringed. Because they are all standard essential patents, this not only places us in a strong position on Lenovo case, but also in our future negotiations and litigation with other prospective licenses. We are, in our heart, a research innovation business The technology we developed and the patent that we filed each year are in many ways the product that we bring to the market. The high quality of our portfolio is directly connected to our ability to remain at the cutting edge of foundational research in wireless video and increasingly in AI. This year has already included many examples of how we excel as an innovation business. Our engineers produce a record number of new invention findings in the first half across both 5G and video spaces. As we continue our work in 5G, including what will be the first release of 5G Advanced, we are also deepening our research for 6G. In Q2, we announced a new research partnership with the University of Surrey in the UK to focus on specific technologies that we think will become a part of the 6G standard. Our ongoing wireless work, including the use of AI to improve the efficiency and reliability of mobile networks, is an excellent example of how central AI has become so much of our innovation. Our CTO Rajesh Pankaj is a well-known leading expert in AI and has been working in the space for years. Many of our other engineers are becoming noted experts, and like Rajesh, several have emerged as leaders in the field. For example, in Q2, one of our senior engineers were elected as the vice chair of an industry group within the standard body, ETSI, which is focused on creating standards to preserve and improve the security of AI. Staying on our innovation success, We were recently named by LexisNexis as one of the top 100 companies in innovation that advances sustainability. We strongly believe that our innovation is only becoming more valuable in an increasingly connected world, and I'm delighted that we are also playing our part in steering us towards a more sustainable future. Before I hand it over to Rich, I want to thank all our employees for the hard work in putting us in a strong position and deliver superb value to our shareholders. Our financial strength combined with our innovation leadership and the growing importance of our technology for different use cases means that we remain ideally placed to build on our recent success. And with that, I hand it over to Rich.