Good day, everyone. Thank you for joining us. Welcome to Adeia's First Quarter 2024 Earnings Conference Call. During today's presentation, all participants will be on a listen-only mode. I would now like to turn the call over to Chris Chaney, Vice President and Investor Relations for Adeia. Chris, please proceed.

Good afternoon, everyone. Thank you for joining us as we share with you details of our first quarter 2024 financial results. With me today on the call 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 will then conclude with a question-and-answer 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 would 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 discuss 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 understanding of our ongoing economic performance, we will discuss non-GAAP information during this call. We use non-GAAP financial measures internally to evaluate and manage our operations. We have, therefore chosen to provide this information to enable you to perform comparisons of 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. We hit the ground running in the first quarter and delivered results which are in line with expectations. We signed 10 license agreements, including eight renewals and two with new customers. Agreements signed in the first quarter represented a broad mix of customers in Pay-TV, OTT, semiconductors, and consumer electronics in the United States, Europe, Japan, and South Korea. Six of our ten agreements were in Pay-TV, which remains a market where our media portfolio continues to show strength. We delivered revenue of $83.4 million in the first quarter and adjusted EBITDA of $50 million. With our strong cash generation of over $67 million, we continued our commitment to accelerated debt payments and paid down $40.1 million of our term loan. Our commitment to maintaining strong long-term customer relationships is reflected in our high renewal rate, which continues to exceed 90% and demonstrates the continued relevance and value of our portfolios to our customers. Renewals are important because they support our ongoing revenue stream and provide a stable, predictable foundation from which we can grow in the future. Of the deals we signed during the quarter, we are particularly pleased with our multi-year renewal with Paramount, a leading OTT provider, for access to our media portfolio. This agreement continues our recent success in OTT, following the Starz and DEZN deals signed last year. These three recent wins in OTT are great proof points of the relevance of our media portfolio in OTT. This market remains one of our largest growth opportunities, and I'm pleased with the progress the team has made with key customer engagements. Another significant deal for us last quarter was a multi-year agreement with Altimedia, a user experience platform provider in South Korea. As I mentioned earlier, in addition to the eight renewals, we signed long-term agreements with two new customers, including Astound Broadband, a large Pay-TV and broadband provider in the US, and Magenta Telekom, a Pay-TV provider in Austria. Other agreements signed during the quarter included deals with three additional pay TV customers and three Japanese-based customers across OTT, consumer electronics, and semiconductors. We continue to make significant progress on our strategic objectives. Our long-term revenue target remains $500 million. We plan to achieve this target through maintaining our strong renewal rates in Pay-TV, consumer electronics, and social media, and growing our customer base in OTT, adjacent media markets, and semiconductors. We have positioned ourselves well in each of these key growth markets, and I remain confident that we will see significant new deal wins in each of these markets in 2024. Success in 2024 in these growth markets will not only drive revenue this year, but will also provide meaningful contributions to achieving our long-term revenue goal. Given the long-term and predictable nature of our license agreements, as Keith and I highlighted in February, given our confidence in our expanding pipeline of opportunities, we are investing this year in talent, tools, and infrastructure. These investments are tied to specific revenue growth opportunities. One key area of investment is our expanding patent portfolios, and I'm pleased to report that we closed the quarter with over 11,000 patent assets. Growing our IP portfolios continues to be an imperative. As a reminder, our IP portfolio growth is focused on supporting our current customer base in order to maintain our strong renewal rate and add new customers in adjacent and growing markets. Tuck-in acquisitions remain a part of our IP growth strategy to augment our focused organic growth. During the first quarter, we added to our media portfolio with the acquisition of patent assets, which further strengthened our presence in OTT. Our media and semiconductor teams also continue to be actively involved in numerous industry conferences. At these types of events, we not only showcase our expertise and share our vision for the future, but we also engage with other industry leaders and potential customers. At the Chiplet Summit in February, members of our semiconductor team participated in a panel on Chiplet packaging and gave a tutorial on advanced packaging methods. Our semi team also presented a paper on hybrid bonding at a leading packaging conference in March. As the semiconductor industry moves toward broad adoption of hybrid bonding, our technology in this vital space has become a major industry topic at these conferences and has driven new customer engagements. Turning to media, at the International Conference on Consumer Electronics, members of our team delivered a presentation on one of our innovations that uses AI to capture the perfect moment in digital photography. We also received an award from Interactive TV Today in the category of achievement in shoppable TV. We are proud to be recognized for our clickable video invention alongside other category winners such as LG, DirecTV, Comcast, and Spectrum. This award-winning invention is particularly relevant to our development efforts in AdTech and e-commerce. Deleveraging our balance sheet remains a priority within our capital allocation strategy, and our cash generative business model enables us to continue to make accelerated debt payments. Since our separation from Xperi over 18 months ago, we have paid down nearly $200 million of our debt while maintaining a relatively stable cash position of over $80 million demonstrating our strong financial performance. I am very pleased with our performance in the first quarter and the progress we have made towards our strategic objectives. With that, I would like to now turn the call over to Keith for a review of our first quarter financial results.

Thank you, Paul. I'm pleased to be speaking with you today to share details of our first quarter 2024 financial results. During the first quarter, we delivered revenue of $83.4 million, driven by the execution of 10 license agreements across a broad mix of end markets, including OTT, Pay-TV, semiconductor, and consumer electronics. Now I'd like to discuss our operating expenses for which I will be referring to non-GAAP numbers only. During the first quarter, operating expenses were $33.9 million, an increase of $721,000 or 2% from the prior quarter. Research and development expenses decreased $439,000 or 3% from the prior quarter. The decline in the first quarter is primarily related to the timing of certain patent renewal costs, which were partially offset by increased personnel costs as a result of ongoing hiring. Selling, general, administrative expenses increased $402,000 or 2% from the prior quarter as we continue to invest and build out our licensing platforms associated with OTT, semiconductor, and adjacent media markets. Litigation expense was $2.9 million, an increase of $758,000 or 35% compared to the prior quarter, primarily due to the timing of expenses related to certain legal matters. Interest expense during the first quarter was $14.2 million, a decrease of $1.3 million from the prior quarter amount due to our continued debt repayments resulting in lower principal balances. Our current effective interest rate, which includes amortization of debt issuance costs, was 10%. Other income was $1.4 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 $50 million, reflecting an adjusted EBITDA margin of 60%. Depreciation expense for the quarter was $520,000. Our non-GAAP income tax rate remained at 23% for the quarter. 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 $89 million in cash, cash equivalents, and marketable securities, and generated $67.2 million in cash from operations. We made $40.1 million in principal payments on our debt in the first quarter and ended the quarter with a term loan balance of $561.1 million. I am very pleased with the progress we have made in deleveraging our balance sheet. In the past 18 months, we have paid down approximately $200 million of our term loan. A great accomplishment by any measure and reflective of our strong cash generative business model. During the first quarter, we paid a cash dividend of $0.5 per share of common stock. Additionally, our board approved the payment of another $0.5 per share dividend to be paid on June 18th to shareholders of record as of May 28th. Now I will go over guidance for the full year 2024. We are reiterating our prior guidance for the full year 2024. We expect revenue to be in the range of $380 million to $420 million. This guidance reflects the strength of our pipeline, which includes anticipating new license agreements in both OTT and semiconductor. In executing our pipeline, it remains our priority to achieve economic terms that reflect the proper value of our underlying IP. As a reminder, our agreements tend to be relatively large and complex, which creates volatility from period to period. While we are making great progress on many fronts, you may see the overall timing on executing agreements impacting our revenue in Q2 2024 with a couple agreements that may potentially extend into the second half of the year. This could result in Q2 2024 revenue being similar to our Q1 2024 results. We expect our operating expenses to be in the range of $150 million to $160 million. We anticipate both R&D and SG&A expenses to ramp in the second half of the year as a result of the timing of various initiatives to support the build out of our media and semiconductor licensing platforms. We expect interest expense to be in the range of $54 million to $57 million, and we expect other income to be in the range of $5 million to $6 million. We expect to result in adjusted EBITDA margin of approximately 62%. We expect the non-GAAP tax rate to remain consistent at roughly 23% for the full year. We also expect capital expenditures to be approximately $3 million for the full year. The first quarter was in line with our expectations. The high level of deal activity and new customer engagements in the first quarter provides us with a high degree of confidence that we will achieve our goals for the year. Our future is bright, and our entire team is working diligently to deliver strong results for our shareholders.

Thank you. Your first question today comes from Matthew Galinko from Maxim Group. Your line is open.

Hey. Good afternoon. Thanks for taking my question. I wanted to, I guess, circle back on understanding about the ramp up in operating expenses. I think you indicated now back half. I think possibly when we talked earlier this year, it was gonna be a little bit more front-end driven on the expense ramp up. So just curious if there were if I understood that correctly, was there a maybe push out in that spending? And I'll have a follow-up.

Hey, Matt. Great to speak with you. Your memory is spot on. So, one of the things that we when we take a look at our expenses and that ramp from the back half of the year is, quite frankly, it's a success story. So, one of the things that we have talked about is building out our platforms, making those investments, which includes a bit of third-party spend, to get subject matter expertise and domain expertise. And, what we really found that was actually fantastic is that some of those projects that we had earmarked early on for the first half of the year, we were quite candidly able to reach those milestones and do with our own internal resources, rather than using outside third parties, which is absolutely fantastic and speaks well to our employees and what they're able to do. With that being said, that creates an opportunity for us. Not necessarily to save that money, but actually to invest it in other initiatives, which we have targeted for the second half of the year. So, it's a great question. It really speaks well to our team. And then with that being said, that's why we stay on track with the guidance that we previously provided.

Got it. Thank you. And I guess my follow-up question would be just, you know, given the persistently high interest rate environment, any changes in thinking about your capital strategy? I think you bought back shares possibly in the first quarter. So, just curious if it tips you even further towards retiring debt more aggressively or, you know, just, again, any changes to your posture? Thanks.

Yeah. I think our answer is almost all of the above. We're always looking at opportunities, given pricing in the marketplace. And then, really with the tremendous cash flow generation that we had in Q1 in particular, you saw that we made a fairly aggressive paydown in Q1. So that, you know, that still that deleveraging our balance sheet remain a priority. We're making really good progress on that. You know, we evaluate all those things as we go through the course of the year, but, as we talked about, retiring $200 million since separation is a tremendous achievement, and we're really happy with the path and the success we've had in that regard.

Your next question comes from the line of Kevin Cassidy from Rosenblatt Securities. Your line is open.

Thanks, and congratulations on signing all the 10 new agreements. On the semiconductor side, last quarter, you announced the co-optimization. I wonder if you could give us an update, maybe some progress there or maybe go into a little more details of what that strategy is?

Yeah. Great question, Kevin, and thanks for being on the call. So certainly, co-optimization is something that we are continuing to be very excited about. It's a longer term play for us. It's something that we kicked off, as you noted, in Q1. And we've made really good progress. We continue to hire in that space. And it's one of the areas of investment that Keith and I noted back in February and continues to be on track. We have made initial hires. We are mapping out the program. And really the focus, as I noted before in February, is really building an organic effort to augment our existing technologies when we look at semi. So, we already have a really strong program in hybrid bonding, as you know. In addition, we have an advanced processing node portfolio as well as advanced packaging. And what we wanted to really focus on is something that could be the next thing that we focused on from an organic standpoint in building out that portfolio. And when we looked at what the industry needed, what the customer demands would be, we saw that this was an area that we could add value given our unique platform that we already have. So, really tremendous progress so far. Expect to hear more as we go forward in the year on how that's continuing to progress. But it's, from a build-out stage, exactly on track, and I'm very excited about it.

Okay. Great. Thanks. Maybe as another question I have was, with Paramount. Congratulations on renewing your agreement with Paramount. But, they're, of course, in the headlines. And is there any risk to your agreement, if there's a new ownership?

Yeah. Thanks for that question, Kevin. Certainly, one we get quite a bit of is how does M&A impact our license agreements. And it's something that we think about a lot regardless of the type of agreement it is. How will that play out? Because it's obviously something that a lot of companies go through. And it's a really changing dynamic in OTT in particular right now. And so, I won't comment exactly on that agreement or the speculation of the M&A rumor mill. But what I will say is we're prepared for it, and we plan for it. And there really shouldn't be any impact on, as a result of M&A on really any of our license agreements as we see them.

Your next question comes from Hamed Khorsand from BWS Financial Inc. Your line is open.

So first off, could you just talk about how many of these service providers are there that, like, Astound, you know, were left with Xperi that you would have to go and reestablish some sort of relationship now that you're a standalone company?

Thanks for that question. Certainly, we're very pleased to get the Astound license agreement done. We've had a few of those. There's not many. As you recall, at the separation this is consistent. Really, our business models and who we approach were really quite different. We are usually typically focused on the larger service providers as our licensees. We obviously have some smaller ones as well. But there's not usually a lot of overlap. So fairly unique situation. And we don't anticipate really there being many more of those, at this point.

Okay. And then my other question is just could you clarify your commentary? You're talking about how you're making great headway with new licensees. I think you listed a few of them. But then you're also saying that Q2 is looking like it might be like Q1 because there is push outs. So what is that progress that you're talking about? Because it doesn't sound like it's gonna be in the revenue side.

Our license agreement discussions tend to be lengthy, often spanning 18 to 24 months. We are pleased with the progress we've made, but predicting the exact timing of when these agreements will be finalized in a given quarter is challenging. This is why we provide annual guidance and concentrate on that. We are confident in our performance for the year. The specific dates, such as whether an agreement will close on June 30 or July 1, can vary each quarter. Our main focus is to ensure we secure the right deal with the appropriate economics. We are very satisfied with our progress, but we avoid making predictions about the precise timing within a quarter for this reason.

That concludes our question-and-answer session. I will now turn the call back over to Paul Davis for closing remarks.

Thank you, operator. Our first quarter results were aligned with our expectations, and we remain on track to meet our goals for the year. I want to thank our dedicated employees, partners, and customers for the strong start to the year and the progress we have made on our strategic objectives. Next week, we'll be participating at the Needham Technology, Media and Consumer Conference in New York. We look forward to seeing you at this conference and other investor events in the coming weeks. Thank you for joining us today.

This concludes today's conference call. Thank you for your participation.