Good day, everyone. Thank you for standing by. Welcome to Adeia's First Quarter 2023 Earnings Conference Call. I'd now like to turn the call over to Chris Chaney, Vice President of Investor Relations for Adeia. Chris, please go ahead.

Good afternoon, everyone. Thank you for joining us as we share with you details of our first quarter 2023 financial results. With me on the call today are Paul Davis, our President and CEO; and Keith Jones, our CFO. Paul will share with you some general observations regarding our first quarter and then Keith will give further details on our financial results and guidance. We'll then conclude with a question-and-answer session period. In addition to today's earnings release, there is an earnings presentation, which you can access along with the webcast in the IR portion of our website. Before turning the call over to Paul, I'd like to provide a few reminders. First, today's discussion contains forward-looking statements that are predictions, projections, or other statements about future events, which are based on management's current expectations and beliefs and therefore, subject to risks, uncertainties, and changes in circumstances. For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today, please refer to the Risk Factors section in our SEC filings, including our annual report on Form 10-K and our quarterly report on Form 10-Q. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call. To enhance investor's understanding of our ongoing economic performance, we'll discuss non-GAAP financial information on this call. These non-GAAP financial measures are used internally to evaluate and manage our operations. We have therefore chosen to provide this information to enable you to compare our operating results as we do internally. We have provided reconciliations of these non-GAAP measures to the most directly comparable GAAP measures in the earnings release, the earnings presentation, and on the Investor Relations section of our website. A recording of this conference call will be available on the Investor Relations website at adeia.com. Now, I'd like to turn the call over to our CEO, Paul Davis.

Thank you, Chris, and thank you everyone for joining us today. The first quarter of 2023 represented our second successful full quarter as an independent IP licensing company. We are making excellent progress towards our 2023 goals, and we delivered strong operational and financial results. We signed eight license agreements, highlighted by key new wins with Kioxia and Western Digital in our semiconductor business and renewals completed ahead of plan with Verizon and Altice in our media business. Our commitment to R&D is paying dividends with customers and is driving growth in our patent portfolios. Our investment in R&D helps in the near term with renewals like Verizon and Altice and new license agreements such as Kioxia and Western Digital. It will also be the basis of our long-term revenue growth as we continue to focus on our next-generation innovations for the media and semiconductor industries. Our patent portfolios now number nearly 10,000 patent assets in aggregate, up from approximately 9,750 in December. With the patent additions in the first quarter, we are on track to meet our goal of 10% annual patent growth this year. As we anticipated, we had a strong first quarter. Revenue was $117 million, up 14% from the prior quarter, and adjusted EBITDA was approximately $86 million, up $10 million from the prior quarter. These excellent first quarter results position us well to achieve our annual outlook and again demonstrate our ability to monetize our robust IP portfolios with an increasing pipeline of opportunities. Our deal momentum remains strong. In the first quarter, we signed significant license agreements across both our semiconductor and media businesses. First, I would like to highlight the agreements we signed with two leading flash memory companies, Kioxia and Western Digital. These agreements will deliver significant value to us over time. These deals were structured in line with our new business model for our semiconductor business, and revenue will be recognized over the term of the agreements as opposed to prior deals in which much of the revenue was recognized upfront. These agreements are also an important validation of our semiconductor portfolio, and in particular, our transformative hybrid bonding technology. Hybrid bonding is a key enabler for memory producers, helping them solve issues related to the stacking of hundreds of memory cell layers together with logic on a single die. This capability is important to achieving higher memory density. Higher density means lower cost, and in the memory business, driving down cost is fundamental to success. With the addition of these two new customers, every major flash memory producer is a licensee of our hybrid bonding portfolio. Recently, Kioxia and Western Digital announced new 3D NAND products utilizing wafer bonding technologies, which we believe will begin ramping within the next 12 months. These announcements are significant proof points for the benefits of hybrid bonding to the memory market, and we believe they will lead to more memory products entering the market that use hybrid bonding, which will expand our future revenue opportunity. Moving forward, the next significant growth opportunity for us in our semiconductor business is in the logic market. We believe our hybrid bonding technology and advanced processing node portfolio will help solve challenges with the slowing of Moore's Law and will drive new license agreements for us in that market. AMD, Intel, and others have recently begun shipping or have announced products that use hybrid bonding, and we believe this trend will continue to accelerate. Turning to our media business, we signed six renewals in the quarter. The Verizon and Altice agreements are evidence of our continued success in pay TV, as both renewed their license agreements ahead of plan and for multi-year terms, confirming the value and longevity of our media IP portfolio. Other media license renewals in the quarter included a leading provider of set-top box middleware in the Korean pay TV market and a leading Japanese video-on-demand anime content creator. We also closed a renewal with a large Korean pay TV and telecom provider. While Adeia may be new as an independent IP licensing company, our business model has proven to consistently generate impressive cash flows over the years, with over $9.5 billion of IP licensing revenue recognized in the past two decades. Since the beginning of 2021 alone, we have closed over 70 license agreements with an aggregate total contract value of $1 billion. These 70-plus deals reflect a strong track record of renewals, and our pipeline of new opportunities provides us with confidence that we are well positioned to grow. Our resilient business model, focused on a diversified base of long-term license agreements that often span multiple economic cycles, helps insulate us from temporary swings in the economy or in a particular industry. Supporting our business is a broad diversification of customers across multiple verticals in the media and semiconductor industries. Our contracts average over five years in length, which drive long-term revenue streams and strong cash flow generation. Over the years, our focus on cultivating strong customer relationships has resulted in a number of significant customers renewing and expanding their licenses. These customers include the major North American Pay TV operators and leading semiconductor and consumer electronics companies. Large multinational companies such as Samsung, Sony, and SK Hynix are among those that have renewed their licenses with us many times over the past 25 years. Other major domestic customers such as AT&T, Comcast, Dish, and Micron have renewed their licenses with us repeatedly over nearly 20 years. It is these long-term customer relationships that are the foundation of our business model. As we grow our business, our goal is to cultivate similar long-term relationships in other target markets. One of those target markets is OTT, which represents a significant growth opportunity for us. We believe this vertical alone can more than offset the anticipated subscriber declines in Pay TV. Given our long-term contracts in Pay TV and our track record of renewals, we expect Pay TV to continue to be a significant revenue contributor while we simultaneously grow our OTT business. It is also important to note that OTT is largely an uncharted opportunity for us today. Prior to separation, we were not able to fully pursue this opportunity due to channel conflicts. Since the separation, we have accelerated our efforts in OTT, and engagements are at various stages. With roughly ten times the number of OTT subscribers compared to Pay TV, OTT represents a very large opportunity for us, and we are focused on securing long-term deals with the major OTT providers that reflect the value of our robust patent portfolios. Given the size and growth of the largely unlicensed OTT market, even with modest additional penetration into this vertical, we believe we will be able to more than offset the anticipated declines in Pay TV. Before I turn the call over to Keith to further discuss our financials, I would like to briefly provide an update on our measures of success. Consistent with what we described before, we are focused on increasing our recurring revenue baseline, growing our patent portfolio, expanding the number and scope of our media and semiconductor license agreements, and making progress in adjacent verticals. I am very pleased with the progress we have made to date in each of these key areas. First, we are maintaining our annual baseline revenue at $375 million. Our deals with Kioxia and Western Digital will help contribute to future baseline revenue growth, as revenue from these deals is anticipated to ramp over time. In addition to these new deal wins, our future revenue growth will be primarily driven by opportunities in OTT, adjacent media markets, and the logic market for our semiconductor business. Turning to our portfolio growth, our patent portfolio development is primarily from our internal innovation engine and supplemented with targeted tuck-in acquisitions. With nearly 10,000 patent assets at the end of March, we are well on the way to hit our growth target for the year. Next, we continue to expand the number and scope of our license agreements, as evidenced this quarter by the new deals with Kioxia and Western Digital and the six renewals completed in our media business. We believe our deal momentum will continue during the rest of the year, given our tremendous pipeline of opportunities. Lastly, we have continued to progress our efforts in breaking into adjacent verticals. These efforts remain at various stages, and we continue to anticipate music streaming will be our first area of success. As a reminder, these adjacent verticals are entirely uncharted opportunities and will help drive future revenue growth. With that, let me turn the call over to Keith to cover our first quarter financial results and our guidance for 2023.

Thank you, Paul. I am very pleased to be speaking with you today to share details of our first quarter 2023 financial results. Revenue for the first quarter was $117.3 million, up 14% from the prior quarter. Our strong revenue during the first quarter is reflective of the continuation of momentum that we saw at the end of 2022. In particular, the increase was driven by the execution of eight license agreements in the quarter, including two very large and significant deals in the semiconductor market. These license agreements are a clear further validation of the value of our semiconductor IP portfolio, especially our hybrid bonding technology. We firmly believe that we continue to see increased adoption of our hybrid bonding in advanced node technologies, as they provide real-world solutions to the underlying challenges in the progression of Moore's Law. For a bit more color, both of these agreements are long-term arrangements that are similar in structure. As we discussed previously, we have been pursuing licensing structures that are more in sync with the economics of all parties by better aligning the revenue recognition measurements with the cash flow expectations. These agreements are reflective of this change. While a portion of the revenue has been recognized in Q1, the vast majority of expected revenue will scale and be recognized in future periods as production volumes increase accordingly. Now I'd like to discuss our operating expenses, for which I will be referring to non-GAAP measures only. For the first quarter, operating expenses were $31.8 million, an increase of 11% from the prior quarter. Research and development expenses increased by $970,000 or 8%, primarily due to increased spending in investments towards achieving growth in our media and semiconductor portfolios. Selling, general, and administrative expenses increased by $958,000 or 6%, due to increased consulting and bad debt expenses related to a certain social media company. Litigation expenses were $2.6 million, an increase of $1.1 million from the prior quarter. Interest expense for the first quarter was $15.9 million, up $915,000 from the prior period, due to higher interest rates on our term loan. Our current effective interest rate, which includes amortization of debt issuance costs, is approximately 9.5%. Other income was $1.3 million and was primarily related to interest income recognized on revenue agreements with long-term billing structures under ASC 606 and due to interest earned on our cash and investment portfolio. Our adjusted EBITDA for the first quarter was $85.8 million, reflecting an adjusted EBITDA margin of 73.2%. Depreciation expense for the quarter was approximately $384,000. Our non-GAAP income tax rate remained constant at 23% for the period. Our income tax expense consists primarily of federal and state domestic taxes as well as Korean withholding taxes. Now, for a few details on the balance sheet, we ended the first quarter with $82.4 million in cash, cash equivalents, and marketable securities. During the quarter, we generated approximately $63.4 million in cash from operations. We made $83.6 million in principal payments on our debt in the first quarter. Our ability to pay this amount is reflective of our tremendous cash generation and belief in our strong financial outlook. As a result, we ended the quarter with a term loan balance of $665.6 million. Also, during the first quarter, we paid a cash dividend of $0.05 per share of common stock. Additionally, our Board approved the payment of another $0.05 per share dividend to be paid on June 20 to shareholders of record as of May 30. Now, I'll give you an update on our guidance for the full year 2023. We are very pleased with the progress that we have made and we are very much on track for achieving the annual guidance we set forth during our last earnings call. With that, we reiterate our full year 2023 guidance with our revenue expectation about $385 million to $415 million. We expect operating expenses to be in the range of $135 million to $145 million. We expect interest expenses to be in the range of $64 million to $67 million, and we expect other income to be in the range of $2.5 million to $3 million. We expect a resulting adjusted EBITDA margin of 66%. Additionally, we expect cash flows from operations to be in the range of $185 million to $215 million. We expect the non-GAAP tax rate to remain consistent at roughly 23% for the full year. We also continue to expect capital expenditures to be approximately $5 million for the full year. While we give guidance on an annual basis, we wanted to provide additional color on the revenue trends that we expect to see during the course of the year. With the momentum from the Kioxia and Western Digital agreements, we fully anticipate the first quarter being our strongest quarter of the year. Looking forward, our pipeline is very strong and is growing. However, we anticipate Q2 being a low point during the course of the year, primarily due to the timing of certain renewals that we currently anticipate occurring in the second half of the year. Overall, relative to the midpoint of guidance we have provided, we see both the first half and the second half of the year being evenly split. This quarterly lumpiness is reflective of our business, as we tend to do a somewhat small number of large agreements that can impact the timing of revenue from quarter to quarter. With that being said, we remain confident in our outlook for the full year, and we are excited about the opportunities that lie ahead. 2023 is off to a strong start at Adeia, and our results set us on the path for a successful year. Our deal momentum has remained strong, and I'm optimistic our funnel of prospective deals will continue to provide many opportunities for growth. Our strong performance further reinforces our current baseline revenue of $375 million, and with the strength of our pipeline, we are excited about the future growth opportunities that will allow our baseline revenue to grow. I'm very pleased with the strides the Adeia team has made, and our current achievements provide a springboard for our long-term growth and success.

Hi. So the first question I had was, you had 10 deals announced for Q4 and then eight in Q1. And what's the good rate of assuming that you could keep this momentum going?

Yeah, thanks Hamed. I appreciate the question. So, a couple ways I'd look at it. If you look at over the last two quarters, you're right, it's about 18 deals. We're very pleased with that. It certainly can fluctuate quarter-to-quarter because it's just the timing of when deals come out. So not all quarters will start equally because you'll have a different number of deals that will come up that you're trying to get done, but over a longer period of time, we talk about 70 license – 70-plus license agreements that we've signed over the last nine quarters since the beginning of 2021. So, on average, that gets you kind of just about eight deals a quarter. Some will be less. You'll see ones that are – some quarters will be three or four and other quarters will have kind of the low teens even at a high point.

Okay. And then historically, Q3 used to be your slow period as far as revenue is concerned. It sounds like that's going to be different. Is that purely from the timing of the contracts that you're looking to renew?

Great question. So if we take a look at our business, we've had inflection points at different quarters in different periods of time. So Q3, to your point, of 2022, we had a lower point. We had a bit of a dip, but if you also go back a little bit further, Q4 '21 was that, and it just really has to do with the phenomenon of our business of really doing a relatively small number of large deals. So it's a timing thing. There's nothing that's really sequenced in terms of renewals that we have at any particular given quarter. What we have in Q2, there's a few more renewals that we're just kind of working on that will be executed in the second half of the year that's leading to that fluctuation. Things normalize in the back half of the year.

Okay. And my last question is, you have pretty good confidence of what you were going to sign in Q1 as far as the guidance was concerned. How confident are you about the contracts that you're talking about for falling into Q3 and Q4?

Yeah, Hamed, we have strong confidence in our ability to get those done. I'd say it's very similar to what we saw at the end of last year, where we had some renewals that we didn't get done in Q3 because we wanted to really wait for those economics to be right, and we ultimately got them done in Q4 as we anticipated. So we have high confidence in our overall number. We've got a 90%-plus renewal rate that we know the timing can sometimes slip quarter-to-quarter, but overall, as you look at us annually, we feel very strong on that.

Hey, congrats on the strong Q1. So can you remind me, I guess, of the cadence we might be able to expect from the NAND deals that you announced this quarter? I understand you mentioned it's tied to the timing or more tightly coupled with the timing of cash flows, but do you have a sense generally or specific to these deals, if you can say when that might become a material contributor to revenue and cash flow?

Thanks, Matt. We are just absolutely excited about Western Digital and Kioxia. Not only in terms of the size of the deals, but the structure. Everything is a big leap forward for us in Adeia and it also speaks volumes to our hybrid bonding technology. Now what you're looking at is a long-term agreement. This is something that all parties are making a long commitment to, and at this point in time, it's in its early stages of ramping. But we're also excited that shortly after we sign our license agreement, they announced that they have products coming out, and what we expect to see is sometime in 2024 that those volumes start to pick up, and you'll see some contribution at least the variable component from a revenue perspective. As that scales, that's just a really great structure of the deals and what we've been talking about; as their volumes grow, our revenue will grow as well.

Thanks. And maybe as my follow up to that, when, given the variable nature and coupling the revenue to success of the customer and their product launches, how do you think about building revenue into the baseline structure that you talk about, and at what point do you have the confidence to build some level of that into the baseline number?

Yeah, that's a great question, and it kind of plays into that ramp cycle as you alluded to. So in the beginning, there are the volumes that will be modest, and with that, that is not at a level that'll be significant for us to change the baseline revenues because as of today, that production isn't significant enough for the increase. But once again, this is a big bet by us and it's a big bet by them. We are frankly excited about the potential of what these deals can look like over time. So as they start to get beyond that '24 and '25 kind of production cycles, you'll see a movement, and it'll be a strong contribution to our baseline revenue amount.

Yeah, Matt, I'll just add that, as Keith mentioned, we are just thrilled with these deals, and I noted in my prepared remarks that these will be additive to that baseline revenue and our revenue growth as they scale. This is the type of deal that we plan to continue to structure in the semiconductor business as we've been talking about since our Investor Day. This is the first one, but as we look forward, we're going to try to continue to use this as a model, as we get into the logic space and beyond that we see our semiconductor portfolio having more and more applicability too.

Well, hello again. I just wanted to get your thoughts on litigation expense and spending for the year. I think clearly you've picked up sequentially, but certainly not any sort of high that we've seen from the business over time. So, is there anything that I guess just generally how would you frame that line item to us through the balance of the year?

Sure, Matt. I think as we noted last quarter, we anticipate litigation expense roughly doubling from last year. Over the last couple of years, in 2021 and 2022, it was really at a low point. So we do see that increasing and it will ramp in the back half of the year. So it is up a little bit, as you noted, and we think that trend will continue throughout the year.

There are no further questions at this time. I would like to turn the floor back over to Paul Davis for closing comments.

Thank you, operator. Our first quarter results demonstrate significant progress towards our goals for the year and our long-term strategic plan. We are pleased with our deal momentum, especially our two new semiconductor agreements. Before we close the call, I would like to mention that we'll be attending the Needham TMT Conference in New York on May 16 and additional conferences later this year. We look forward to meeting with many of you at these and other events to further discuss our progress. Thank you for joining us today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.