InterDigital, Inc.

Good day and thank you for standing by. Welcome to the InterDigital third quarter 2023 earnings call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. And to ask a question during the session, you will need to press star one one on your telephone, and 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 today, Rayford Garabrant. Please go ahead.

Good morning to everyone, and welcome to InterDigital's third 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 this 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 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, and good morning, everyone. Thanks for joining us today. This was another very strong quarter for our company, supported by outstanding execution across all aspects of our business. We have signed two new license agreements that build on our strong base of recurring revenue, expanded our industry leadership, had record-setting pace from our inventors in expanding our innovation pipeline, and received acknowledgement of our 5G patent portfolio leadership by a leading third-party report. I'll start with a few highlights from our financial result. Revenue for the quarter was $140 million. up 22% year-over-year. Our smartphone licensing revenue was up 19% year-over-year, and our CE and IoT licensing revenue was up 30% year-over-year. Our net income was almost $48 million, up 116% year-over-year. Our adoption EBITDA was about $84 million, an increase of 48% year-over-year. I'll let Rich discuss more details in his section. These strong financial results demonstrate the continued momentum we have created to grow our smartphone licensing program and our CE and IoT program and demonstrate how our technologies are more important than ever to a growing number of increasingly connected industries. In late September, we signed a new multi-year royalty-bearing license with Lenovo covering our HEVC video compression technology. The NOVA incorporates HEVC video compression in both smartphones and consumer electronic devices, such as PCs. Under this new agreement, we received a catch-up payment for the past use of our technologies and recurring revenue going forward for both our smartphone licensing and our CE and IoT licensing programs. The latest agreement has brought our related HEVC litigation with Lenovo to an end, and we remain committed to resolve the rest of our licensing disputes with them. Staying on the licensing front, in Q3, we also signed a new license agreement with Humax to cover the company's setup boxes. Together with the Lenovo HEVC agreement, this is another validation of our video portfolio as one of the largest and one of the highest quality in key technologies, such as HEVC, as well as the newer VVC video codec. These technologies are applicable to smartphones, CE and other IoT devices, and looking forward to what we see as our large greenfield opportunity to license video streaming and cloud services. Adding to our momentum, we recently became a founding member of Avante 5G automobile patent licensing platform as we look to build up the success of related 4G patent pool. In the third quarter, the platform licensed both Mercedes-Benz and BMW for 5G. Due to the increased value of 5G to automobile manufacturers, the 5G royalty rates are roughly twice the original 4G rates. We believe our revenue from the connected cars will grow with increasing 5G adoption over time. We continue to make strong progress with our smartphone program. In our Samsung arbitration, based on the latest case schedule, the hearing date is set for summer of next year, and we are on track to receive a final determination towards the end of 2024. As a reminder, Samsung has already agreed to take a license to our portfolio starting January 1st of 2023 with the final terms of the license due to be determined through arbitration. As we have said many times before, the most valuable assets for our company are our people. We have some of the world's best innovators in the development of key wireless and video standards and other technologies. Recently, our leadership in cellular space was highlighted by the election of our senior wireless standard engineer, Diana Penny, to chair the RAN2 working group within 3GPP, the cellular wireless standard body responsible for 5G and future 6G development. The RAN2 chair is one of the most critical leadership positions in 3GPP. In her election, Diana received broad support from more than 200 companies across the industry. underlying into digital status as a strong leader in cellular technologies. We also take great pride that Diana is the first woman to be elected to the post as a critical point in 5G evolution with the introduction of 5G Advanced. Her role within 3GPP is one of more than 100 leadership positions that our engineers hold across multiple standard development organizations for wireless and video technologies. In Q3, we also achieved an important milestone with our patent portfolio now exceeding 30,000 granny patents and pending applications. It was also our highest quarter ever for new invention findings, and we are on track for a record year for new invention creation. The strength of our portfolio was recently confirmed by a new analysis from LexisNexis. This analysis, which measures both the quality and the quantity of 5G portfolios from more than 130 companies, recognizes InterDigital as having one of the top five 5G patent portfolios in the world, ranking us ahead of multiple well-known innovators in the cellular space. This confirms our belief that we are in an excellent position to realizing further value from our cellular assets. at a time when we believe 5G advance will drive new use cases for our innovation. Recently, we have announced partnership with university in India and Spain to explore research in technologies that could enable future 6G wireless network. This is another example of the kind of early stage research we do and our efforts to enable broader ecosystem in the wireless space. As I look at our portfolio and our innovation pipeline in the wireless space, we are ideally positioned between our ongoing focus on 5G and our long-term research in fundamental technology for 6G and beyond. In summary, we delivered an excellent performance across our business in the third quarter and continue to build momentum to position the business for long-term growth. With that, I'll hand you over to Rich to talk through the numbers in more detail.