InterDigital, Inc.

Good day, and thank you for standing by. Welcome to the InterDigital, Inc. Third Quarter 2024 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 1 1 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 first speaker today, Rayford Garabrant, Head of Investor Relations. Please go ahead.

Thank you, Grace, and good morning, everyone. Welcome to InterDigital's third quarter 2024 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. or CFO. Consistent with prior calls, we will offer some highlights about the quarter and the company, and then open the call up for questions. For additional details, you can access our earnings release and slide presentation that accompany this call on our investor relations website. 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 2023 Annual Report on Form 10-K and in our other SEC items. 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 the supplemental materials posted to the investor relations section of our website. With that taken care of, I will turn the call over to Aaron.

Thanks, Reefer. Good morning, everyone. Thanks for joining us today. I'm very pleased to share that we have delivered a strong third quarter with revenue, adjusted EBITDA and EPS, all exceeding the high end of our guidance range. Driven by accelerating momentum of our business and major deals completed at the beginning of Q4, we have also raised our 2024 annual guidance by $145 million at midpoint to $860 million. To start, as some of you may have already seen, A couple days ago, we announced that we signed a new license with OPPO Group, covering the worldwide sales of OPPO, Realme, and OnePlus-branded mobile devices. As part of the agreement, both parties agreed to dismiss all pending litigations between us. Based in China, OPPO Group is one of the largest smartphone manufacturers in the world. With this agreement, combining with our existing licenses with Samsung, Apple, and Xiaomi, we now have the top four smartphone OEMs under license and have licensed about 70% of the smartphone devices globally. This agreement provides more validation of the importance of our foundational innovations in wireless, video, and AI, and the strength of our patent portfolio to drive our future growth. It also accelerates the momentum we continue to build across all our licensing programs as we work to license the remaining major smartphone vendors, drive more groups from consumer electronic, IoT, and auto, and address our greenfield opportunity in video services. Turning now to our performance in third quarter, I'm pleased to share that we delivered revenue of about $129 million, exceeding the top end of guidance. which will go over the numbers in more detail in his section. We delivered a strong performance in Q3, mainly from the growth from our consumer electronics and IoT licensing. Our new licensing agreement with TPV, a top 10 television vendor that sells devices and several different brands, are an excellent example of our recent success in closing deals with leading CE manufacturers. The agreements include both our joint licensing program with Sony and InterDigital's valuable HEVC video assets. In third quarter, we also signed a new agreement with Panasonic, which cover our 4G and 5G cellular patents, as well as our Wi-Fi and HEVC patents. Staying on the licensing front, as I mentioned earlier, we are off to a great start at the beginning of Q4. In addition to the OPO agreement, we have signed a binding global arbitration agreement to set the terms of a new license agreement with Lenovo. As part of the arbitration agreement, both parties have also agreed to dismiss our pending litigations. As we have said before, binding arbitration can be an excellent mechanism for settling global licensing disputes, providing a more efficient way of reaching an agreement. We expect the process to take roughly 18 months to complete. As you may recall, we are in a binding arbitration to settle the final terms of our licensing with Samsung for mobile devices. The party just finished last round of hearing, and we expect to have a final decision soon after the end of the year. As a reminder, Samsung already agreed to take a license to our portfolio starting from January 1, 2023. and this binding arbitration will determine the final terms of the license. Our licensing success further strengthens our ability to reinvest in cutting-edge R&D and foster innovation for next-generation technology that benefits the whole industry and billions of consumers in the future. Our engineering and patent team continue to fire on all cylinders. We keep on adding to our leadership in advanced video technology, such as HEVC and VVC, and are video engineers on track for a record year in new invention findings. Our position at the cutting edge of video innovation was recognized at a recent award ceremony hosted at this year's International Broadcasting Convention, where we received awards for the best immersive video technology and for best video processing technology. Both awards demonstrate why we believe our innovation will remain central to the video space, including consumer electronics, in streaming, and in new, more immersive video experiences. The amount of video data consumed globally continues to increase every day, making our innovation even more critical in ensuring that end-to-end content distribution systems work efficiently and reliably. In wireless, our innovation pipelines are also growing at an impressive rate, including a record number of 5G inventions declared this year, bringing our total patent and application declared as potentially essential to 5G, 4G, and 3G to just over 13,000. For a company focused on driving foundational research, this constant creation of new inventions It's the engine that drives our business growth for years to come. Recently, we were ranked among the top five patent owners in Wi-Fi when analyzing in terms of quantity and quality of new reports from LexisNexis. Across three separate reports from LexisNexis, we are one of just three companies in the world to rank in top five in 5G, Wi-Fi, and advanced video compression, when judged on both size and quality of our portfolio. But the world become more connected. We believe this puts us in a very powerful position to continue to drive more growth of our business. During our investor day in September, we announced a target of a billion dollars in annual recurring revenue by 2030, including a target of $500 million in annual recurring revenue for our smartphone program by 2027. Our new license agreement with OPPO and arbitration agreement with Lenovo represents excellent progress towards those targets. In summary, We are a recognized leader in technology like 5G, video, Wi-Fi, and AI, which are only becoming more critical to devices and services in multiple industries. We have a world-class team and a track record of superb execution. With a large addressable market, including smartphone, CE, and IoT, and our greenfield opportunity in cloud-based radio services. We believe we have a clear path to drive significant growth going forward. And with that, I'll hand you over to Rich.