Good day, everyone. Thank you for standing by. Welcome to Adeia's Second Quarter 2024 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the call will be open for questions. I would 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 quarterly 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 the 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 investors’ 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 made 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 delivered results for the second quarter that were in line with our expectations, with revenue of $87.4 million and adjusted EBITDA of $52.8 million. I’m pleased with the progress we are making across all aspects of our business and we remain on track to achieve our strategic objectives for 2024. During the second quarter, we signed five license agreements across diverse end markets, including in social media, consumer electronics, semiconductors and Pay-TV. Additionally, shortly following the end of the quarter, we signed a multi-year renewal with Liberty Global, a leading European Pay-TV operator. We continued to pay down our term loan in the second quarter and we saw an opportunity to reprice our debt. I’m very pleased with the terms of the repricing, which will save us over $3 million annually in lower interest expense and provide us with additional financial flexibility moving forward. We remain committed to continuing to pay down our debt and under the new terms, we will be able to take a more balanced approach to capital allocation and return more capital to shareholders while having more firepower for tuck-in acquisitions to help grow our business. Since our separation, we have been diligently working to add license agreements in key growth verticals such as OTT, semiconductors and adjacent media markets. We're very excited with the agreements we've signed to date and the progress we are making on new deals in each of these markets. During the quarter, we also continued to expand our pipeline of opportunities in both media and semiconductors as we look to continue to grow our business in 2025 and beyond. In the second quarter, we were very pleased to reach an agreement with X Corp, formerly Twitter, for a multi-year license renewal. The agreement resolves all outstanding litigation and I’m pleased that X Corp is a paying customer once again. The agreement further validates the value of our IP and demonstrates our commitment to enforcing the contractual terms we have with our customers. We also signed a multi-year renewal with Panasonic, which continues our success in consumer electronics and signed multi-year renewals with two regional Pay-TV providers in the U.S. In semiconductors, we signed a new long-term agreement with Hamamatsu. This new agreement supplements an existing license, adding access to our die-to-wafer hybrid bonding technology. This new agreement follows from a prior development license to our wafer-to-wafer hybrid bonding portfolio in a technology transfer agreement. Our relationship with Hamamatsu highlights how partnerships with our customers can help accelerate the advancement of their hybrid bonding capabilities and improve their products. As noted earlier, shortly following the close of the second quarter, we also signed a multi-year renewal with Liberty Global, a leading Pay-TV provider in Europe. This deal is significant as we continue to strengthen our customer base internationally. We are on track to meet our objectives for this year and continue to make progress towards our long-term goals. We plan to drive revenue growth by expanding our customer base in OTT, adjacent media markets, and semiconductors, while maintaining our strong renewal rates and well-established Pay-TV, consumer electronics and social media verticals. To continue to grow our revenue and customer base, it is imperative that we further expand our IP portfolios. We closed the second quarter with over 11,500 patent assets worldwide. Our portfolio growth objectives are focused on maintaining our strong renewal rate while adding new customers in our key growth markets. Our customer relationships are founded on the value of our IP and are fundamental to renewals. Our investments in R&D and augmenting our technical sales and engagement resources will drive the addition of new customers in both existing and adjacent markets. Our priority remains to grow our portfolios organically through investments in internal R&D and inorganically by actively pursuing acquisition opportunities that strategically enhance our organic efforts. Our focus at Adeia is on driving next-generation innovations for our customers and the markets we serve. As such, we were thrilled to be recognized as one of the most prolific inventors in the world for 2023 by Harrity & Harrity, a leading patent analytics firm. Last year, we were granted 554 patents, ranking us number 70 in the world for the number of granted patents. We outranked many highly respected media companies such as AT&T, Verizon and Comcast, as well as leading semiconductor companies in AI such as AMD and NVIDIA. This is particularly remarkable since these companies have significantly larger R&D resources than we do. Yet, we achieved these results because of our unique business model, which allows our dedicated scientists and engineers to focus exclusively on critical forward-looking innovations. I am immensely proud of our team for this accomplishment. Thought leadership is one of our hallmarks and demonstrates our commitment to innovation. Our R&D professionals continue to fully engage in the ecosystems in which we participate, delivering insightful presentations, speaking on topical panels at industry conferences and publishing research on important forward-looking trends. In the second quarter, members of our media team presented Computing While Cooling at Streaming Media NYC and participated in a panel on the pivotal role of R&D in gaming innovation at the XP 2024 Game Summit. Likewise, members of our semiconductor team gave two presentations on hybrid bonding at this year's Electronic Components and Technology Conference in Denver. I was particularly proud that our paper on fine pitch die-to-wafer hybrid bonding was recognized as the best session paper at the conference. Additionally, we delivered a presentation on co-optimization of semiconductor systems at the 2024 SEMI 3D & Systems Conference. I am very pleased with the progress we have made to date and I am confident we will achieve our 2024 goals. With that, I would now like to turn the call over to Keith for a review of our second quarter financial results.

Thank you, Paul. I am pleased to be speaking with you today to share details of our second quarter 2024 financial results. During the second quarter, we delivered revenue of $87.4 million driven by the execution of five license agreements across a diverse mix of end markets, including social media, consumer electronics, semiconductor, and Pay-TV. These results are in line with our prior expectations as we anticipate seeing strong momentum in the second half of the year. Now, I would like to discuss our operating expenses, for which I'll be referring to non-GAAP numbers only. During the second quarter, operating expenses were $35.1 million, an increase of $1.2 million, or 3% from the prior quarter. Research and development expenses increased $590,000, or 4% from the prior quarter. The increase in the second quarter is primarily related to patent filings and related maintenance costs. Selling, general, and administrative expenses decreased $773,000 or 4% from the prior quarter, primarily due to the recovery of bad debt expenses associated with the resolved contract dispute with X Corp and due to lower corporate administrative costs. These decreases were partially offset by increased third-party spending associated with the build-out of our licensing platforms in OTT, semiconductor, and adjacent media markets. Litigation expense was $4.3 million, an increase of $1.3 million, or 45%, compared to the prior quarter, primarily due to the timing of expenses related to certain legal matters. Interest expense during the second quarter was $13.3 million, a decrease of $879,000 from the prior quarter due to the benefit of a lower interest rate following the successful repricing of our term loan B and due to our continued debt repayments. Our current effective interest rate, which includes amortization of debt issuance costs, was 9.6%. Other income was $1.4 million and was primarily related to interest earned on our cash and investment portfolio and due to interest income recognized on revenue agreements with long-term billing structures under ASC 606. Our adjusted EBITDA for the second quarter was $52.8 million, reflecting an adjusted EBITDA margin of 60%. Depreciation expense for the quarter was $490,000. 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 second quarter with $94.5 million in cash, cash equivalents and marketable securities and generated $23.5 million in cash from operations. We made $12 million in principal payments on our debt in the second quarter and ended the quarter with a term loan balance of $549.1 million. During the second quarter, in light of favorable market conditions, we saw an opportunity to reprice our existing term loan agreement. We are very pleased with the outcome of the repricing as we achieved two significant benefits. First, we successfully lowered the fixed interest rate component by 61 basis points, resulting in a significant $3.4 million savings on an annual basis. Secondly, we greatly reduced the mandatory excess cash flow payment thresholds, effectively providing us with greater financial flexibility on our uses of capital as we exit 2024. Specifically, while we remain dedicated to deleveraging our balance sheet by continuing to make accelerated payments on our term loan, this improved flexibility will allow us to take a more balanced approach in returning capital to shareholders through stock repurchases in addition to our current dividend program. Additionally, we have increased our capacity to grow our business through tuck-in acquisitions. During the second quarter, we paid a cash dividend of $0.05 per share of common stock. Our Board also approved a payment of another $0.05 per share dividend to be paid on September 17 to shareholders of record as of August 27. Now, I will go over our guidance for the full year 2024. We are pleased with the progress we are making on executing our sales pipeline. Consequently, we are reiterating our prior revenue guidance for the full year. We expect revenue to be in the range of $380 to $420 million, which includes significant new license agreements in both OTT and semiconductor in the second half of the year. During the first half of the year, we have seen continued execution of our various strategic objectives. As the year has progressed, we have achieved these goals with lower than expected third-party spending as we develop our new licensing platforms. We have been able to leverage our internal resources to a greater extent than initially planned. Additionally, our litigation expenses have been somewhat lower than expected due to the settlement with X Corp and the timing of ongoing litigation. As a result, we are lowering our guidance for operating expenses and we expect them to be in the range of $145 million to $155 million, which is $5 million less than we previously guided. We remain dedicated to our commitment to R&D as we grow and expand our IP portfolio. Because of our lower interest rate from our debt repricing, our interest expense will be less than we originally anticipated. As such, we are lowering our guidance for interest expense to be in the range of $52 million to $55 million, which is $2 million less than we previously guided. We expect other income to be in the range of $5 million to $6 million. We expect a resulting adjusted EBITDA margin of approximately 63%. 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 $2 million for the full year. The second quarter was in line with our expectations. We are progressing nicely on all fronts and remain confident we will achieve our goals for the year. The concerted efforts of the entire Adeia team will serve as a springboard for success as we strive to grow and expand our exceptional business model. That brings an end to our prepared remarks. And with that, I’d like to turn the call over to the operator to begin our question-and-answer session.

Thank you. We will now begin the question-and-answer session. Your first question comes from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open.

Hi. Yes. Thanks for taking my question and congratulations on the great progress for 2024. I just wondering, there is news out on some OTT companies raising their prices to consumers. Do you have any view on how this would affect both your OTT market or even your Pay-TV market?

Hey Kevin, great question. I think we’re obviously focused on the OTT market. As you note, we’ve made some really nice strides in getting deals done with Paramount recently. And we’ve signaled that we anticipate having success in the OTT market with some more significant players here this year as well. And so with our engagements, we typically look at the number of subscribers that an OTT platform might have. Certainly, pricing comes into it in terms of comparing it to what our rates are that we have with Pay-TV. But we don’t think it will have a significant impact ultimately on what we’re able to achieve from a licensing standpoint with our business.

Okay, great. And maybe as a follow-up, talk about the semiconductor market. There’s plenty of news out there around high bandwidth memory having yield issues or various trying to keep up with demand and same with the GPU side. Can you say what do you see in your pipeline as far as where some of these issues are coming up as your pipeline might be getting bigger and maybe even moving to a broader use of chiplet designs?

Yes. It’s certainly what we see with chiplet architecture on the logic side is something that we continue to monitor and see new companies talk about that. Intel announced a chiplet type architecture with a product that they plan to announce in 2025. Obviously, AMD’s had one – has had used chiplet architecture for a few years now and continues to increase the number of products that they have. And we think that will continue to be the trend as really the limits of Moore’s Law and traditional methods have come to their limits there. As it relates to high bandwidth memory, certainly, we’re excited about HBM4 and the possibility that at least some version of that down the road will include a need to use a hybrid bonded process as well to really get to the level of performance that we think they’ll need. It could be a few years until that happens, but certainly, it aligns well with when likely our memory licensees would be up for renewal as well.

Okay. Great. Thanks. I’ll get back in the queue.

Our next question comes from the line of Hamed Khorsand with BWS Financial. Your line is open.

Hi. First off, I just want to ask what’s changed in the business in these last six to eight months, where your commentary today has really, you’re putting some emphasis on tuck-in acquisitions and making some sort of acquisition?

Yes. Hamed, I think that’s a great question. Certainly, we’ve actually always focused on doing tuck-in acquisitions. It’s something that’s been part of our playbook. We focus on internal R&D first, and that’s not going to change. So over 85% of our portfolio is homegrown, it’s from our inventors, and we see that really maintaining in that range. However, there are occasionally opportunities that come to us or that we source where we see an opportunity to really add to the portfolio that augments our internal efforts as well. And so that really hasn’t changed. We do like to highlight it, though. We did close a few deals earlier this year. It’s something that we focus on as we look towards expanding our markets into some of the adjacent markets and even in semiconductors, where we see opportunities to accelerate revenue expansion if we can add a high-quality portfolio to our own internal efforts.

Okay, my other question was, is there a timing that you're expecting with these streaming and semiconductor license deals that you've been talking about all year?

Yes, I think one of the things that we always note is that what we do is very large deals and trying to get the timing right might shift quarter-to-quarter. Getting the economics right and working with customers is something that we pride ourselves on in terms of getting the best economics that we can. So we focus on that aspect rather than trying to accelerate the timeline and take a deal that we’re not happy with. And so the exact timing of it can shift quarter-to-quarter. But given where the deals are in our pipeline, we're still very confident that they'll close this year. And that's really what we've been saying all year, although the exact quarter is hard to predict.

Okay. Just to follow up on that, if I may. You're running out of average so far this year, about $85 million per quarter. Is that a good baseline for the business? Or is it going to be higher without the licensing deals happening?

Hi, that's a great question. I think that $85 million is not necessarily a good baseline. There are a number of renewals that we're working on, and then if you add in the subsequent license agreements that Paul's referring to for both OTT and semiconductor, you're going to have a much higher baseline revenue level. So that is not what we see as an ongoing run rate. We see that run rate being much higher and that acts as a really good springboard as we move forward into 2025.

Okay, thank you.

And we do have our last question comes from the line of Matthew Galinko with Maxim Group. Your line is open.

Hey, thanks for taking my questions. Maybe firstly, with respect to the larger deals that we're looking for in the back half of 2024. How does the expectation for the interest rate environment and the macro backdrop influence the discussions around those licenses? Can – is there a risk that uncertainty in macro could prolong discussions or just help us understand some of the sensitivity there?

Yes, Matt, I think we've often get that question, especially in times of uncertainty. And what we've experienced historically, given the long-term nature of the deals that we do, is that usually has very little impact on the overall timing or economics that we're able to achieve. I think the customers that we're often talking to are very large, sophisticated companies. They understand that there will be various cycles that the industry goes through. Certainly on the semiconductor side of things, there are well-known cycles with ups and downs, and the same goes for media, whether it be in advertising or otherwise, where you see cycles of boom and then a slowdown. For us, though, we're usually able to navigate through that and get those deals done really at the same level of expectations we have. And so we don't anticipate facing any sort of challenges because of that environment.

Okay, thanks. And then I guess on the question about the OpEx run rate, it sounds like you had a couple of moving pieces in the OpEx number this quarter, some in favor and then maybe some increase in outside spending. So I guess, can you give us a bit of a sense of what we should be expecting as the baseline moving forward? I guess we could kind of back into it with your guidance, but maybe if there's anything you could share that kind of pushes us in the right direction.

Yes, Matt, great question. So if you take a look at our OpEx, we'll look at a few items here. So our R&D has been on an upward trend, and that's by design and plan. We continue to make a considered effort to invest and grow our patent portfolio, so we will continue to see that trajectory. If you take a look at the amount relative to our revenue percentage, it will be in that mid-teens throughout the remainder of the year. So that path that we had anticipated to continue to pursue. What we've seen, quite frankly, which puts a smile on my face as part of the management team, is that we’ve done a tremendous job internally of developing out these new platforms. When I say these new platforms, it's the six new areas in our new media and then also on the semiconductor side, most notably, as we've talked about co-optimization. What we wanted was to give ourselves a lot of expertise and wiggle room to really kind of grow these platforms. Doing deep dives in terms of learning about the customers, doing product breakdowns and all those other good things. What we've found is that we have a new team that is very talented that gets up to speed extremely quickly. So we are making great progress with less reliance on outside third parties, which is reflected in our overall guidance, in part due to a little bit lower spending in the first half of the year on litigation. There will be an uptick in Q3 and then a more modest increase in Q4. As you see, we reset the guidance to be about $5 million lower than what we set out at the beginning of the year.

Great. Thank you.

That concludes the question-and-answer session. Mr. Paul Davis, our CEO, I turn the call back over to you.

Thank you, operator. I want to thank our employees for the strong first half of the year and the progress we have made towards achieving our goals for 2024. Later this month, we will be participating in the Rosenblatt Age of AI Conference and at the BWS Securities Conference in New York City. We look forward to seeing you at these events and at other investor events in the coming months. Thank you for joining us today.

Ladies and gentlemen, that concludes today's conference call. You may now disconnect.