Good morning to everyone, and welcome to InterDigital's First Quarter 2024 Earnings Conference Call. I am Raiford Garrabrant, Head of Investor Relations for InterDigital. With me on today's call are Liren Chen, our President and CEO; and Rich Brezski, our CFO. Consistent with prior calls, we will offer some highlights about the quarter and the company and then open up the call for questions. For additional details, you can access our earnings release and a 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 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 the supplemental materials posted to the Investor Relations section of our website. With that taken care of, I will turn the call over to Liren.

Thank you, Raiford. Good morning, everyone. Thank you for joining us today. On our last call, we provided annual guidance for 2024 revenue of between $620 million and $670 million. This guidance highlights the increasing momentum of our business and the multiple growth opportunities that we have identified and expect to achieve through the rest of the year. Today, I'm pleased to share that we have made significant headway in achieving our goal and reconfirm our 2024 annual guidance. Revenue for the first quarter was $264 million, up by 30% year-over-year and above the high end of our guidance. Our Q1 revenue was one of the highest in our history and an all-time high for our CE and IT licensing program. Through the quarter, we have made great progress on multiple fronts of our business. We signed seven new license agreements. We enhanced our position as a leader in the application of AI in both virus and video, and we received several positive court decisions, which we believe will help us to advance negotiations with certain unlicensed smartphone OEMs. We began the quarter with a new landmark license with Samsung's TV business. The agreement covers patents and our joint licensing program with Sony and introduces our own patents across a range of video and Wi-Fi technologies. Samsung is a market leader in TV, and this agreement highlights both the value of video and Wi-Fi innovation and the growth we continue to build in licensing the consumer electronics sector. I would emphasize that this new agreement is separate from the Samsung smartphone license we announced at the start of 2023 that Samsung and InterDigital had agreed to renew the license for their smart TV to our portfolio. The final terms of the smartphone license include how much is owed on mass payouts, which are still the subject of arbitration hearings, scheduled to be held this summer with the final resolution expected by the end of this year. The seven new agreements that we signed in the first quarter reflect the momentum we continue to see across all our licensing programs and our strength in consumer electronics and IT in particular. The revenue and recurring revenue in Q1 from our CE and IT program were both record sizes. With Samsung and other agreements that we closed in the quarter, we have increased the cumulative value of contracts that we have signed over the last three years to almost $2.7 billion, giving us an incredibly strong base from which to drive new long-term agreements and pursue additional growth opportunities. Staying on licensing, we are making significant progress in our effort to ensure that we receive further compensation for our innovation from unlicensed smartphone OEMs. Earlier today, a German court issued a very positive decision for us in our dispute with Lenovo. The court ruled that Lenovo infringed one of our 4G and 5G standard essential patents, that InterDigital has acted in good faith and that Lenovo is an unwilling licensee who engaged in hold out and should therefore be enjoined in the German market. The injunction means that Lenovo will be prohibited from selling 4G and 5G contract devices in Germany. Also, as part of our dispute with OPPO, a German court also found that OPPO infringed InterDigital's 4G and 5G standard essential patents. The court ruled that InterDigital has acted in good faith, and that OPPO is an unwilling licensee; the court also awarded an injunction against OPPO. In India, in another court case against OPPO, we received yet another positive decision, whereby OPPO was ordered to pay royalties in the form of a security deposit to the court. The Indian court also heavily criticized and fined OPPO for delaying tactics during our negotiations and ordered the trial be concluded before the end of the year. We are encouraged by these recent developments in our cases, and we believe we have built significant momentum in our negotiations with both companies. As I have said many times before, we always prefer to sign long-term licenses through amicable negotiations, but we are ready to enforce our patent rights if necessary. Our strength as fundamental innovators in critical technology continues to underpin our progress. Our research team has long been recognized as world leaders in the development of wireless and video technology. And increasingly, our leadership in AI is coming to the forefront. In Q1, one of our senior engineers was appointed to head the AI and machine learning standing committee of IEEE, the standards development organization, which leads the evolution of Wi-Fi. At this year's Mobile World Congress in Barcelona, we showcased two demonstrations that have AI at their heart. One was in partnership with Keysight, which used a newer network developed by our engineers to demonstrate the application of AI in our 6G network. And the second combined advanced video compression and AI to significantly reduce energy consumption of streaming video while preserving picture quality. Also at MWC, we demonstrated cutting-edge immersive video and haptic technology in a specific use case of eSports and showed our increasing leadership in integrated sensing and communications and emerging technology, which will be a pillar of 6G. Our research success continues to be reflected in the development of our global patent portfolio. Recently, we were confirmed among the top 25 companies globally that filed the most new patent applications with the European Patent Office last year. Our number of new applications filed with the EPO increased by 40% year-over-year, a clear indication of our success in translating our foundational innovation into patent assets. The strength of our innovation and patent footprint gives us an excellent platform to drive further growth in our existing licensing program and in greenfield opportunities such as cloud-based video services. And with our track record of delivering new license agreements with leading manufacturers such as Samsung, we believe we are in an excellent position to reach our financial targets for the year. With that, I'll hand it over to Rich to talk you through the numbers in more detail.

Thanks, Liren. Q1 was another outstanding quarter for InterDigital as our strong revenue growth drove both non-GAAP EPS and adjusted EBITDA to the high end of our guidance range. This growth was powered by new licensing agreements, most notably Samsung TV. These results support our long-term objective of delivering consistent revenue growth combined with strong margins. Total revenue increased 30% year-over-year with CE and IoT leading the way. Based on new licensing agreements reached in Q1, recurring revenue for CE and IoT reached an annualized run rate of almost $90 million, an increase of 57% year-over-year, and has roughly doubled over the last two years. When combined with catch-up revenue of $160 million, CE and IoT total revenue for the quarter reached an all-time high of $183 million. This performance highlights our ability to deliver significant growth beyond the smartphone market. Our adjusted EBITDA for the quarter was $130 million, equating to an adjusted EBITDA margin close to 50%, consistent with our guidance. These results demonstrate the power of our business model. Our investments in fundamental technologies drive top line growth while the reuse of those technologies across multiple verticals delivers high margins and drives cash flow. Our strong performance in Q1 produced cash from operations of $51 million and free cash flow of $41 million. This strong cash flow, combined with a cash balance of nearly $1 billion, supports our continued return of capital to shareholders. In Q1, we repurchased approximately 300,000 shares for $29 million. We repurchased another 200,000 shares in April for a year-to-date total of roughly 500,000 shares. Since we first paid our dividend in 2011, we have now returned approximately $1.8 billion to shareholders through share buybacks and dividends. In that time, we reduced our outstanding share count by almost 45% from more than 45 million shares to just over 25 million shares. And with $246 million left on the current buyback authorization, we're not done yet. Looking forward to Q2, we expect recurring revenue will include $93 million to $97 million of revenue from existing contracts plus any amounts we recognize from any new agreements we may sign over the balance of the quarter. Based only on existing contracts, we expect an adjusted EBITDA margin of about 38% and non-GAAP diluted earnings per share of $0.70 to $0.80. Any additional agreements would be additive to those totals. Our strong first quarter results have us on track to meet our full year 2024 targets, and we are reaffirming our prior guidance of revenue in the range of $620 million to $670 million. We continue to expect an adjusted EBITDA margin of roughly 50% for the full year of 2024 and non-GAAP diluted earnings per share of $7.45 to $8.76. Before I conclude, I'd like to mention that we'll be attending four conferences over the remainder of the second quarter, the Bank of America Global Tech Conference in San Francisco on June 4, the William Blair Growth Stock Conference in Chicago on June 4, the IDEAS Investor Conference in New York on June 12, and the Roth 10th Annual London Conference on June 26 and 27. Please check with your representatives at those firms if you'd like to schedule a meeting.

Thanks, Rich. At this point, operator, we are ready to take questions.

Our first question comes from Arjun Bhatia of William Blair.

To start, Liren, maybe a couple of questions on the Samsung side. More on the smartphone side, not necessarily on the TV side. But as you think about just going through arbitration over the summer and looking at a potential outcome later this year, how should we think about maybe the range of outcomes that you're considering that could result from that arbitration? I mean, is there a possibility that prices are going up and maybe how your royalty rates are coming up? And how do you handicap that? And then for Rich, the same thing on the Samsung smartphone side. Can you just remind us how you're accounting for the license revenue in the recurring line from Samsung thus far? And might that be something that's contributing to the decline in smartphone recurring revenue?

So on the Samsung smartphone arbitration, as we have discussed in the prior call, we’ve had a customer for the smartphone side since 1995. The last contract was a 10-year agreement, which covered frankly the previous generation technology, not including very valuable assets like 5G and a lot of the advanced video technology we have developed. So that agreement expired on December 31, 2022, and both parties agreed, through negotiations, to renew the agreement without disruption; however, we could not reach a pricing agreement in time. We both agreed to do a binding arbitration that started on January 1, 2023. We are well into the process. The panel has been assembled, and the hearing has been confirmed for this summer, with a decision projected before the end of the year. We feel very confident that the value of our portfolio has increased, and that Samsung has benefited through the years compared to the time of the last agreement. Obviously, we still need to have the arbitration go through to confirm our belief. And I'll hand it over to Rich to comment on the revenue recognition side.

On the revenue recognition, we've been recognizing since the first quarter of last year at a level with the prior Samsung agreement, which is just shy of $80 million a year. We believe this is a conservative estimate. We effectively have a license in place with Samsung, and we're just estimating what the ultimate outcome will be on a conservative basis. Because of the conservative nature of the GAAP requirement, we're certainly hopeful that we'll have a positive true-up when it's ultimately concluded. As to the question on the decline in recurring revenue, I presume you mean the decline going into '24. Based on what I just said, it's not because of Samsung, but rather the expiration of other agreements, most notably Huawei, which expired at the end of last year.

I have one more question. It was interesting to learn about the injunction against Lenovo and OPPO. I'm curious, Liren, regarding your past experiences with these injunctions, how do you think they have influenced the behavior of some manufacturers? Do you believe they offer enough motivation for these companies to come to the negotiation table and propose a deal? How significant can these injunctions be in encouraging negotiations with you?

As we announced in a separate press release this morning, the Munich court has issued a decision. In that decision, the court decided that InterDigital has consistently acted in good faith under the front obligation at all times. The court also said Lenovo has systematically engaged in hold out, and frankly, has not complied with their obligations. As a result, the court issued the injunction of patents that are essential for both 4G and 5G. Unless something happens, Lenovo will be prohibited from selling devices with those features in the German market. Regarding how the company may behave, I don't want to speculate on how Lenovo will proceed from here. Germany is obviously a very major market, and the injunction applies to a wide range of devices beyond the cell phone. I hope with this decision that Lenovo will come back and negotiate a licensing agreement on fair terms with us.

Our next question comes from Anja Soderstrom of Sidoti.

Can you just talk about this in the past, but maybe go over again the different opportunities you have to reach your guidance for 2024?

This is Liren. We have multiple paths on the smartphone side, just for example, we have OPPO negotiation where we will, as Rich just mentioned, have expired, which we are renewing discussions with them, and the Lenovo license through the UK court decision for the cellular side expired at the end of last year. Now the unlicensed parties have, as we announced this morning, received court injunctions, and we hope to be able to, frankly, sign long-term agreements with them. So that's just on the smartphone side. On the CE side, as we mentioned in the prepared remarks, we signed Samsung TV, which is the largest vendor in the TV space. We are working diligently on the next layers of TV vendors including LG, TCL, and Hisense. Additionally, we are also working on the arbitration and expect that to be completed before the end of the year. If we can obtain a favorable judgment, that will be a positive adjustment to our revenue recognition.

And when it comes to Huawei how constructive are those discussions given you fairly recently signed an agreement with them?

The negotiations are proceeding according to plan. Our last agreement expires at the end of the year, and frankly, Huawei's business has gone through a certain amount of ups and downs. We are currently in negotiations with them, and we are hopeful we will finalize a long-term deal with them soon.

Our next question comes from Scott Searle of ROTH MKM.

Liren, in regard to the Lenovo injunction, what is the actual process and procedure there in terms of how that's going to be implemented? Are there additional costs associated with it? I believe there is an appeal period from their standpoint. So can you walk us through the milestones on the timeline and the cost element?

Scott, I'm not certain you were on the call when we were describing it earlier. Basically, the court has decided that we have acted in good faith consistently. Lenovo has systematically engaged in hold out and their noncompliance with obligations, and they are an unwilling licensee. As a result, the court has issued an injunction against devices with 4G and 5G features built in. There will be procedural steps which we are working through, and our intention is to enforce this injunction as quickly as we can. This is what they call a first instance decision, which is automatically appealable. I don't want to speculate on Lenovo's legal strategy, but that's up to them.

And Liren, just to quickly follow up on that front. This is in Germany. Will that extend to the rest of the EU? What is the plan there in terms of how you implement this across the pan-European marketplace?

Scott, this case is limited to a German patent, and it's a German court ruling. So the decision will be confined to the German market. As you are aware, we do have other cases, including our ITC in the U.S. against them in different technology areas, but this particular decision is strictly limited.

Two others, if I could. Just the latest update in terms of video IP licensing into the streaming and services model. Are there any updated thoughts, timelines in terms of how that's evolving and the impact in '24 and '25?

Scott, we do view the video cloud service licensing as a very good greenfield opportunity. We are proceeding according to plan, believing we have very valuable IP assets and frankly, strong technology leadership. Regarding our direct financial impact, currently, we are not projecting a material impact for 2024. If we have more updates, we will share those timely.

Lastly, you've maintained the guidance range for the year of $620 million to $670 million. I'm curious if there have been any changes in terms of events with a higher or lower likelihood of occurring. I'm not sure if you can comment on this, but I understand that there are various ways to reach that range if certain developments have emerged that give you more confidence.

Scott, as I said in my prepared remarks, when we issued the guidance at the beginning of the year, we feel very strongly that our business momentum has increased, and we have identified multiple paths to achieve our results. Now we have delivered a resoundingly strong quarter in Q1 for both the top line, adjusted EBITDA and EPS, especially in the record revenues from our key sectors. We feel very good about where we are, and we are on track to deliver the results. Currently, we are not predicting changes for the rest of the quarter, other than we feel very confident about our ability to deliver for the year.

Thank you. This concludes the question-and-answer session. At this time, I'd like to turn it back to Liren Chen for closing remarks.

Thank you, operator. Before we close, I'd like to thank all our employees for their dedication and contributions to InterDigital, as well as our many partners and licensees for an outstanding start to 2024. Thanks to everyone who joined our call today, and we look forward to updating you on our progress next quarter.

This concludes today's conference call. Thank you for participating, and you may now disconnect.