Thank you for standing by. Welcome to the InterDigital, Inc. third quarter earnings call 2022. At this time, all participants are in 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 one one on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Richard Lloyd. Please go ahead. Good morning to everyone, and welcome to InterDigital's third quarter 2022 earnings conference call. I am Richard Lloyd, Communications Director, and with me in today's call are Liren Chen, our President and CEO, and Rich Brezski, our CFO. Consistent with last quarter's call, we will offer some highlights about the quarter and the company and then open the call up to questions. 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 sections of our 2021 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 our financial metrics tracker, which is available on the investor relations section of our website. With that taken care of, I will turn the call over to Liren. Thank you, Richard, and good morning, everyone. In the third quarter, we once again demonstrate how our innovation is becoming more valuable in an increasingly connected world. We grew our innovation pipeline with a record quarter for new inventions, strengthened our recurring revenue base with an 8% growth year-over-year, increased recurring revenue in consumer electronics, IoT, and automobile for the sixth consecutive quarter, and entered into a new seven-year license agreement with Apple that goes all the way to 2029. Our new deal with Apple is a huge validation of both the quality of our innovation and the strength of our patent portfolio. As a term of the deal, InterDigital will recognize around $134 million annually for seven years, which represents a 15% increase over our previous Apple deal. Apple is one of our longest licensee, dating back to before the first iPhone went on sale. I'm delighted that we are able to agree to a new mutually beneficial deal before our previous agreement came to an end. I would also add that Apple is a clear leader in the rollout of 5G, particularly in the premium tier of the smartphone market. This deal serves as a resounding endorsement of the strength of our portfolio, which now consists of more than 10,000 cellular standard essential patent assets, over 6,000 radio-related patents, and a significant number of highly valuable implementation patents for 5G multi-mode handset. The Apple license also comes at a time of increasing momentum in our licensing programs. Over the last 18 months, we have signed new agreements and renewals with an aggregate value of more than $1.5 billion, including 16 direct agreements and additional agreements executed through partner licensing platforms. While we still see plenty of growth in our core smartphone business, we have built considerable traction in the consumer electronics and IoT automobile markets. In the first three quarters of this year, we have seen a 37% increase year-over-year in our CE IoT auto total revenue and a 66% year-over-year increase in recurring revenue in these markets. Together, those verticals are on track to deliver annual revenue of almost $100 million by the end of the year. This is excellent progress and underlines our belief that our innovations are only becoming more critical across a growing number of industries. In the third quarter, automobile was particularly strong, with several manufacturers, including Toyota, Honda, and Nissan, all took a license to our portfolio of 3G and 4G patents through our licensing partner. This agreement means that more than 100 million connected vehicles are now licensed to our 3G and 4G technology, with another 30-40 million forecasted to be licensed in the next year. With the industry analysis projecting double-digit growth in connected cars through 2026, and 5G projected to ramp up by much of the auto industry, we expect automobile to remain a sector with significant upside for the foreseeable future. I should emphasize, however, that we are only at the beginning of our licensing journey in the broader IoT market, and I'm excited by the potential use cases that we are yet to see for our 5G innovation. As I have emphasized in the past, closing a licensing deal without litigation is always our preference. We remain committed to enforce our IP rights when necessary. With $1.5 billion of new contract revenue, including Apple deal, reinforcing the strength of our balance sheet, we remain in excellent position to renew expiring smartphone contracts and license new sectors, while at the same time ensuring that we keep on making investment to grow our innovation footprint. Thanks to the outstanding effort of our engineers, this footprint continue to grow. Recently, we announced a new partnership with Philips to work on more immersive video technology that will benefit XR-driven experiences. We continue to see considerable upside from our strengths in video technology such as VVC, and our work related to more immersive experience should ensure that our video innovation pipeline remains strong for years to come. Overall, our innovation engine is more robust than it has ever been. In Q3, we generate the highest number of new inventions in a quarter in our company history. During the first three quarters of 2022, our total number of new patent family filed was about 10% higher than the whole year of 2021. As an innovation business, we rely on our ability to invest in cutting-edge horizontal technologies, translate them into high quality patents, and make our innovation available by licensing it to a growing universe of device manufacturers across multiple verticals. Our Apple agreement is yet another endorsement of how this cycle continue to deliver significant financial results and our success in consumer electronics and IoT autos demonstrate that the exciting opportunity we have in device outside smartphones. We also see a growing number of opportunities among service providers who are increasing our innovation, which offers another area of growth. Overall, I'm delighted with how we continue to execute against our goals across the company. On the litigation front, we are still waiting for the decision from the U.K. High Court in our FRAND file against Lenovo, and we remain confident in the strength of our case. Before I hand it over to Rich, I want to mention that this month at InterDigital, we are celebrating our 50th anniversary, and I want to offer my personal thanks to current and former employees, our shareholders, our licensees and partners, and all those who have supported our journey to become a leading innovator in connected technologies. With that, I'll let Rich give you more detail on our financial performance. Thanks, Liren. As Liren described, this past quarter, we made two very important steps toward our stated goal of achieving $650 million or more in annual recurring revenue from device licensing. First, we renewed Apple to a seven-year agreement valued at more than $930 million. Since we have no variable costs under this agreement, this is essentially 100% gross margin, making the Apple renewal the most valuable contract we have ever signed in our 50-year history. As Liren noted, beginning in Q4, we expect to recognize about $134 million a year under this renewal, which represents a 15% increase over the average annual recurring revenue from our prior agreement with Apple. Second, we reported our sixth consecutive quarter of growth in recurring revenue from the consumer electronics and IoT automotive markets. During that time, we have signed license agreements with Vizio, Sony, and Amazon, among others, and through our participation in an automotive licensing platform, we now have approximately 80% of the connected 3G 4G car market under license. Our aggregate annual recurring revenue for consumer electronics and IoT auto has grown approximately 140% from $23 million in first quarter 2021 to over $54 million in the third quarter of this year. When you include catch-up payments from past infringement, we have reported approximately $75 million of total revenue from these markets in just the last nine months. We have updated our revenue tables and our 10-Q press release and tonight's financial metrics to clearly break out recurring revenue from each of these two important vectors for growth in device licensing. Moving on to expenses. Our operating expenses came in lower than our expectations, driven by our final tallies for litigation and also aided by the strong U.S. dollar. Overall, the combination of our revenue growth and cost management resulted in almost $190 million of adjusted EBITDA through nine months at a healthy 56% adjusted EBITDA margin. With continued progress toward our annual recurring revenue goal from device licensing of $650 million or more and continued cost management, we believe we can increase our adjusted EBITDA margin to about 60% or more. Achieving both our revenue and margin target would equate to roughly $400 million of adjusted EBITDA on an annual basis. We believe adjusted EBITDA is a great metric for us as we essentially have a subscription business. We tend to sign long-term contracts, oftentimes five years or more, and we tend to recognize revenue smoothly over the terms of those contracts. Adjusted EBITDA adjusts for the timing of payments and better depicts the ongoing cash generation power of the business. For example, you can see our accounts receivable increased to over $400 million at the end of Q3 due to the partly front-loaded payment structure of one of our recent agreements. We expect the collection of this receivable in the fourth quarter will drive record free cash flows in the quarter, but will be moderated in our fourth quarter adjusted EBITDA. With that, I'll turn it back to Richard. Thank you, Rich, and thank you, Liren. Operator, we now open it up for questions. Good day, and thank you for standing by. At this time, we'll conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. Thank you. We're now ready for the first question. Our first question comes from the line of Scott Searle from ROTH Capital Partners. Your line is now open. Hey, good morning. Thanks for taking the questions. Hey, morning, Liren. Hey, just to quickly dive in, historically, you've reported the revenue figures a little bit differently. I was wondering if you could recalibrate us on that front in terms of fixed fee in the third quarter. Also trying to get my hands around the operating expense structure. I know this is a particularly active time period from a legal and litigation standpoint, with Apple just concluded, potentially Samsung, what you have going on with Chinese OEMs and Lenovo. I'm wondering if you could help us understand what a more normalized kind of operating expense structure would look like. I know you gave guidance for the fourth quarter, but as we get out into 2023, how should we be thinking about what that structure looks like? I had a couple of follow-up questions. Yeah. Hey, Scott, I'll take those questions. Starting with the first part on the way that we're reporting revenue. You know, we're just been talking about for some time, and the breakout between fixed and variable just doesn't seem as useful. We still provide that information in the metrics that you can access on our investor relations section of our website. So it's available to folks, but for a long time, we've been around 90% or a little bit more of fixed revenue. You know, we see just a lot of growth outside of smartphones in the consumer electronics IoT auto sector. I think we mentioned it's our sixth consecutive quarter of growth there, 140%, you know, compared to first quarter of 2021. We think it's important to show that, you know, we're growing both within smartphones as well in these other areas. The second part of the question on OpEx, I think the important thing to look at there, and you can again see this in our financial metrics, is looking at our overall operating expense. We did note that, you know, with success this quarter, we had some adjustment in some of our performance compensation accruals, so it's a little bit elevated. We've guided for that to come back down in Q4, closer to the levels we originally guided for Q3. That does include a healthy amount of litigation. You can see right on our financial metrics where we've been running there at you know about $11 million in Q3. I think you know excluding litigation you know without putting too fine a point on it we're generally in the zip code. You know we're gonna continue to invest in the business. Then the bigger you know more volatile thing is where litigation goes as we continue to you know operate in our litigations with Lenovo and OPPO and then we you know still have some important renewals coming up. Gotcha. That's helpful. Liren, if I could just jump in on the IoT and auto segment. Been having some success now, starting to see some momentum building behind that. I think you mentioned that 80% of connected vehicles are now under the Avanci licensing partnership. That's around 3G and 4G. I'm wondering how you're thinking about 5G. Is that gonna be contributed to a larger industry patent pool, or are you guys gonna go it alone? How do you approach that market going forward? Yeah. Hey, Scott. Good morning. Yes, you are absolutely correct. We've seen a lot of momentum in the IoT and which includes the overall auto sector here. You also heard of a lot of the 3G, 4G coverage under the licensing partnership with Avanci. For 5G, we are actually ready for either approach. We are absolutely ready for direct licensing, but we see a lot of incremental value of 5G-enabled connected cars on top of the 3G, 4G. In the meantime, we are also open for exploration with potential partners within those areas. Regardless with either approach, as I said in my prepared material, we see a lot of growth in the space because the connected car overall will grow in terms of market adoption and 5G just on top of it regarding the value added. Okay. Lastly, if I could, just on the video front, you started to talk a little bit about streaming opportunities. I'm wondering if you could flesh that out a little bit, what your latest thoughts are in terms of the opportunity to monetize your video patents into other, I'll call them non-traditional areas. Maybe throw on top of that as well, look, I know you've got a lot on your plate right now, but inorganic opportunities, are they starting to crop up for you as well? Or there's enough going on in terms of driving a growing recurring revenue stream in IoT, CE, and auto that that's really not, you know, part of the near-term focus? Thanks. Thanks. For the video space, through our internal development as well as our acquisition with Technicolor, we actually have one of the strongest R&D pipeline as well as one of the strongest video patent portfolio in the industry. Our main focus has been, and will continue to be, monetizing the device licensing, which we are projecting at $650 million of, you know, near to mid-term opportunity here. As is very clearly shown in the industry, our technology as our patent portfolio is very much relevant for the service delivery by a number of, you know, very successful service providers in the industry. It's a large industry. It's a growing industry. We have done a lot of work, you know, designing our licensing program in that space. We are optimistic about the opportunity, but it will take time to grow. Regarding the acquisition, inorganic growth or organic growth, as I said earlier, we have an incredible strong innovation engine that frankly creating innovation faster than we ever have been, as demonstrated in our latest, you know, quarter, patent filings. We are happy with our where we are, but we are always look at third-party opportunities. If there's any portfolio, you know, any business opportunity available, we definitely look at all those. Great. Thank you. Thanks, Scott. Thank you. I'll ready up our next question. Thanks, operator. We can take the second question now. There we go. I was just getting them ready in the queue. Thank you, Richard. Thank you. Our next question comes from the line of Anja Soderstrom from Sidoti. Your line is now open. Hi, thank you for taking my questions. I just want to reconfirm that for the consumer electronics, you have been going after the smaller contracts and we should see that growth maybe accelerate as you are targeting the larger opportunities within that? How should we think about that growth? Yeah, Anja, you know, certainly when you think about consumer electronics, you know, which is part of that line, consumer electronics, IoT, and auto, the biggest opportunity there is televisions. Within televisions, the number one and number two players, Samsung and LG, respectively, are unlicensed. There's still, you know, a lot of room for growth there, you know, across, you know, a lot of different segments, but especially television and especially within the top players in the market. Okay. Thank you. For Samsung, with the renewal there, does those discussions include the CE or is that running parallel to the smartphone conversation? Hey, Anja, this is Liren. For our Samsung negotiation, we have been negotiating mobile opportunity renewal as well as consumer electronics, primarily TV side in parallel. This is primarily due to our, you know, CE program is a partnership with Sony, so those negotiations historically has been done separately. Okay. Got it. For the Apple renewal, and congratulations on that. Was that just for the smartphones or is that also for the other consumer electronics-oriented products? Yeah. Anja. This is Liren. Due to confidentiality, we won't be able to get into the scope of the license with Apple beyond what we have already disclosed in the 8-K filing. The right way to think about our relationship with Apple is it's a long-term relationship that frankly both parties are very happy with the overall results that we feel are mutually beneficial. Okay, thank you. Just Rich, if you could talk about capital allocation priorities in terms of buybacks and dividends and so forth. Yeah. Anja, happy to. You know, I think the first thing I'll note is, as I alluded to on the prepared remarks, we do expect a large payment coming in in Q4. So, you know, it's always a big topic for us and will remain so. But you know, our priorities remain to keep a strong balance sheet. You know, with you know, the large payment coming in, we'll only get stronger and with Apple now renewed, you know, it's at least comparatively, you know, less a necessity, but still a priority for us to maintain a strong balance sheet. Then, we wanna make sure we can invest in you know, organic opportunities. Liren talked about the growth that we have in R&D and, you know, we've demonstrated the success in, you know, deploying that in the market and getting paid for it. To the extent there are inorganic opportunities, we'll consider them as well. Finally, you know, we wanna make sure we're returning capital to shareholders as appropriate. You know, we always feel like we do a good job with that over any appropriate length of time. Okay, thank you. That was all for me. Great. Thanks, Anja. Yeah. Thank you, Anja. Our next question comes from the line of Tal Liani. Your line is now open. Hey, can you hear me? We can. Yeah. We can hear you. Your line is now open. Okay, awesome. Hey, this is John from Bank of America. Thanks, guys. Apologies in advance. I've been on a couple earnings calls this morning, but just in general, obviously we heard from one of your licensing peers last night on worsening smartphone market demand and general channel inventories. Obviously your situation is a little different, not being on the volume side of licensing, but just kinda curious how that really impacts you guys and what the, I guess, way to navigate that if there's a need for that is for you. Yeah. Hey, John. Good morning. This is Liren. Regarding our license agreement, as Rich just commented here, 80% or 90% of our license agreement comes from fixed fee agreement. In that context here, we are actually better situated than most in our industry to be able to weather, you know, a certain amount of downward storms in this area. Having said that, though, there's still, you know, we are not completely immune when we have renegotiations for renewals, and we are obviously very carefully managing this dynamic. It's worthwhile mentioning a few things here. One is when we negotiate this agreement, those are long-term agreement, as Rich commented earlier. They are five years or longer, so we are really look at long-term projection for volume over this period of time. Very often these will ride out the bumps and valleys, if you would, in the volume. Second thing, which is more applicable to us than some of our peers, is we currently, as we discussed in prior calls, we have roughly 55% of market covered. We are working really hard to get to about 80%-85% by signing up some unlicensed customers that are using our technology. As we, you know, expand our share here, we see plenty of growth in that space. Lastly, as we, you know, starting this quarter, we are, you know, separating our consumer electronics, IoT, and auto industry opportunity. We have done a really good job doing that, you know, certainly in the last year and a half. We feel with all those parameters balancing together, we have a really, really good licensing program here. Got it. Okay. That's helpful. On the, I guess, 'cause you mentioned the 55% penetration, on I guess, going after new deals, obviously the current environment is not, hopefully not a long-term consideration. Have you seen that impacting any conversations on that end in terms of maybe royalty rates or, I guess just general sentiment on signing new deals at this point? John, I mean, signing new deals is always challenging. Yeah. We have a really long track record in the industry to negotiate most of the deals, you know, through bilateral negotiation. In particular, though, our largest opportunity that's unlicensed currently is really OPPO, Vivo, and Lenovo, which combined has roughly 25% of the market share here. As you are aware OPPO and Lenovo are both in litigation. In that context here, especially for Lenovo, we are just waiting for the U.K. judge to issue, you know, FRAND decision, which could come any time soon. In that context here, we don't see frankly near-term market ups and downs impacting those decisions. Got it. Okay. That makes a lot of sense. Then separately on the recent collaboration deal with Philips for the, on the codec side, can you just discuss any potential impacts I guess on bottom line and kind of just what you see coming from that deal in terms of a flow through to the P&L? Yes. Our collaboration with Philips is really a R&D collaboration where we are working together on the multimedia user experience on immersive user experience, which is XR driven. You know, that's extended virtual reality user experience. It's frankly still a foundational research we are doing. It's leveraging the strengths we already have in, you know, some of the codec area in terms of AVC and others. Frankly, it's still early stage R&D, and then the XR market adoption, it's still relatively low volume, so we do not see any immediate, you know, P&L impact. Got it. Okay. That's all for me. Thanks, guys. Thank you. Yes, thank you. Again as a reminder, if anyone would like to make or ask a question, you will need to press star one one on your telephone. Please wait while we organize the queue. At this time, I'd like to turn it back to the speakers for any further comments. Thanks to your operator, and I'll hand you back to Liren for a final message. Before we sign off, I'd just like to thank our employees and our shareholders for their ongoing support. I also hope all of you enjoy the upcoming holiday time and the rest of the year. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.