Q4 2020 InterDigital Inc Earnings Call

Okay.

[music].

Good day and welcome to the Interdigital incorporated fourth quarter 2020 earnings call Today's conference is being recorded and adjusted.

I would like to turn the conference over to Janice equally gallium. Please go ahead.

Thank you good morning, and welcome to the Interdigital as the earnings conference call for fourth quarter, and full year, 2020, and Tennessee, Gilead, Vice President of Finance and Investor Relations Day for me is debate of meeting our Bill Merritt, President and CEO and reached Betty are our CFO.

On the last quarter's call, we'll offer some highlights about the quarter and the company and then open the call up for questions.

Before we begin our remarks I need to remind you that each call. We will make forward looking statements regarding our current beliefs plans and expectations, which are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and events to differ materially from the results and even contemplating the such forward looking statements.

These risks and uncertainties include those set forth in our earnings release and our annual report on form 10-K for the year ended December 31, 2020 and from time to time in our other filings with the securities and exchange for mission.

These forward looking statements are made only as of the date euro and except as required by law. We undertake no obligation to update or revise any of them. What are the result of new information future events or on Hawaii.

The addition, today's presentation may contain references to non-GAAP financial measures. The calculations of these non-GAAP financial measures. The most comparable directly comparable GAAP financial measures are included in our fourth quarter of 2020 financial metrics tracker, which can be accessed on our homepage www digital.

The dot com by going to the investors section of the web.

<unk> site and clicking the link that says financial metrics tracker for Q4 of 2020.

Finally, with the pandemic scale from sorry, the participants on this call on separate location.

There is a technical issue during the call I will just ask everyone for the patients.

Well I will exercise the fallback option the basket.

Thanks for all I will turn the call over to Joe.

Okay. Thank.

Thank you for the Army and good morning, everyone and thank you for joining us on the call. This morning, the similar to past calls in these difficult times of who all of you are staying well.

You saw on the press release issued this morning of the company delivered both the excellent corner or anything of it.

Tactic of the year, while managing our way through the Covid crisis.

Also pleased to announce that we have signed in the first quarter of 2021 of the license agreement with Cubic's, the South Korean manufacturer of set top boxes DVR is in other consumer electronics.

Consumer electronics business continues to progress nicely.

The start to Wonder if Q4 earnings call. So let me recap of the year of 2020, and then talk about our objectives for 2021.

And you'll get the read about the more specifically about the goals, we set for ourselves in 2020, and our proxy but in a nutshell. They were to drive revenue the drive other deals down on the playing field and get them closer to completion continue to innovate and continue the positive evolution of the company in terms of talent and processes and the.

When COVID-19 hit.

And a reflection of the strength of the organization of the company was nonetheless able to deliver on and in some instances exceed our guidance.

I'll also on managing our way through the pandemic.

On revenue generation with all of our best revenue year since 2017 signed six new deals including of the renewal of Huawei. We also moved the number of deal with the on the field positioning us in 2021 with the negotiations.

Typically the matured and are positioned to close.

We also commenced litigation against other companies. We are in negotiations had not matured and where we believe the litigation was appropriate in.

In addition, we continue to be a thought leader in the license the industry as demonstrated by the Companys industry, leading efforts to provide transparency into our REIT structure in the patents.

In some cases, we drove regulatory and legal change that dramatically improve the licensing environment.

Many of the base. If you had another standout year despite of engineers and scientists working remotely and the standard organizations, we contributor of innovation to themselves working remotely on.

On the enough because our research teams already collaborate across our R&D sites the transition to a remote work environment like pretty seamless as the <unk>.

Teams were already well equipped and burst of engaging via teams zoom and other platforms. The result was great innovation.

Great contributions for the standard and more of the advanced thinking of the company of noon.

On the people and process side, we've got some fantastic talent into the organization debt trading demonstrated to our sales and for the world how attractive we all of the company how much of people believe in the opportunity that we had the head.

And how enjoyable and intellectually challenging the work at interdigital can be the deep for a relatively small company, we have an outsized opportunities the drive groundbreaking innovation.

The thought leader of licensed thing driving the legislation and invent new ways of working we captured much of that will be rolled out the updated mission for the company, which is inventing the technologies that make life boundless.

The combination of our innovation in the key spaces of wireless and video and of our unique business model of making the technology available to all we have helped to untap of the world from wires, we lose the constraints of the geography and bring the world. The joys of friendship knowledge, the music and beauty to anyone anywhere we're really proud of what we do.

What was the very proud of how we've responded as a team for the pandemic.

Roll into 2021, even stronger and ready to deliver on several key goals for the year the <unk>.

First will be continued revenue growth as I mentioned earlier, we moved down the field in 2020 now it's kind of pushed them over the goal line led by uniquely qualified licensing team.

And while it's always difficult to say when and what kind of our objective is to drive new meaningful deals on both the wireless and the consumer electronic side as we just did with helix.

Comment on helix, although he used to do that for all of the set top box market here is about the number of five or six set top box manufacturer.

The Ah <unk>.

In the world in terms of worldwide sales.

The deal with them is notable so right both of the completion of disagreement with the completion of disagree we now so on benchmark agreements in the region.

The areas of our consumer electronics licensing plan.

This would be digital Tvs with the crude the ideal set top boxes for non each of the two patents with the weighted qmax deals represents the third deal specifically around <unk>. The only with these three deals of what was the other one we have concluded since we acquired the business from Technicolor, we continue to be confident of reaching the revenue goals we have set.

For the consumer electronics program.

Moving on to our other 21 objectives, we will continue to drive wireless and video innovation to be measured by our contributions to worldwide standard patent filings publications and other thought leadership of.

For the importance to our research team will be 65, you certainly will do its job of creating a flexible network that can handle the wide variety of use cases from talking to web browsing to check the billions of the machine the supporting self driving cars.

Part of the fixed use mission will be to make all of that happens faster using less power and the less and less reactive and more predictive way.

This will mean investing in adapting solutions that pushed more of processing to the edge drive higher and dramatically faster compute power and that lead in artificial intelligence and machine learning and those of the types of innovation at which we excel.

The one who will also be a year for the higher focus on sustainability.

The company has historically been many good things on the environmental social and governance fun. We just didnt know, we talk speak to them cash.

Said.

The rude awakening of the twice that of the pandemic, but the.

Black lives matter of matters protest and the capital what they clear that it is really really important not only to lead by example, and be more vocal about what we do but also the due more to drive a more vibrant and sustainable world because that is what we intend to do in terms of technology that means of creating innovation that helps reduce the carbon footprint of wireless technology.

For that helped drive the adoption of the water technologies into industries, where that technology can reduce the need for truck rolls travel and other energy intensive activities.

Sales of our company it means driving greater diversity from the top to the bottom of the organization, giving back to our community and rethinking of the future of work to better bandwidth people, who need COVID-19 right and connect.

It helps when you can do all of that from a position of strength thanks to the ACA.

For the team in 2020 of that is where the ore and it's the same team that is poised for great things in 2021 and beyond with that let me turn it over the rich.

Thanks for that.

As Bill said, we delivered tremendous results from 2020 with an increase of nearly $40 million in recurring revenue.

I would like to take a moment to emphasize once again the importance of operating leverage in our business model Fujitsu as exemplified by our 2020 of results.

While our topline increased $40 million or 13%.

Our operating expenses increased just 8%.

Net or scale when you adjust for litigation expense on a full year from our expanded research team the year over year increase in operating expense was less than 3%.

As a result of 13% increase from the top line drove the 46% increase in operating income income.

This is of Great result for 2020.

But more importantly, it is a clear demonstration of how valuable our operating leverages on <unk>.

Areas of growth.

Of course, we recognize that we need to continue to drive top line growth to fully take advantage of this leverage.

As Phil noted in addition to enforcing our intellectual property rights against Xiaomi and Lenovo.

We made progress in 2020 for license agreements with both additional mobile handset and consumer electronics manufacturers.

We believe we have made fair offers across the board.

And we are pleased to see growing worldwide recognition that manufacturers have a responsibility to pay fair royalties.

We believe the sets us up to drive resolutions to new and meaningful license agreements in 2021.

<unk> support compelling arguments, where counterparties has the ulta negotiate responsibly.

We continue to believe that the true just mobile on consumer electronics.

In the long term, we can deliver roughly $300 million of additional recurring revenue on.

On top of our 2021 right.

Better yet we believe we can achieve this topline while targeting inflationary level of growth and operating expenses.

That is outside of sharing roughly one third of all $150 million consumer electronics revenue target with partners.

We believe our 2020 results support our ability to deliver on this target.

Moving on we delivered over $120 million of free cash flow in 2020.

An increase of $70 million, which more than doubles 2019 levels.

As is typically the case, our intra period of cash flow was a bit choppy with the use of cash of the first quarter and strong free cash flow over the balance of the year.

In particular, the second and third quarters.

Also typical for our business a portion of the 2020 received related to the future periods.

We ended the year with total cash and short term investment balance of $926 million.

This represented a small increase over the prior year and despite of 138 million in debt repayment and dividend payments.

Looking forward, we believe our sizable cash balance puts us on a strong position to continue enforcement of our patents and to make organic investments.

All wall, considering inorganic investments and share repurchases in 2021.

To remove any chance for miscommunication such considerations are normal course and will be made with the same careful focus we have employed in the past.

Finally, we will provide our expectations for Q1 revenue in a few weeks. After we've received our final Q for royalty reports.

Thank you rich and thank you Bill and we will now open the call for questions.

Thank you and ladies and gentlemen at this time, we will open the question and answer session.

He would like to ask a question. Please signal by pressing star one on your telephone keypad now if you're using a speaker phone. Please make sure that your mute function is turned off to allow your signal to reach our equipment and again that's star one if you would like to ask a question.

Our first question comes from Eric Wold with B Riley Securities.

Thank you good morning, guys.

On a couple of questions I guess, just one bill maybe give us a sense of you talked about a lot.

Of the negotiations you can have any kind of progressed to the point, where you think you're close to closing in on others did not you've resorted to litigation I guess, maybe give us a sense of.

No.

What is the difference between the two I mean, what gives you the confidence that some things close to potentially closing versus March kind of one of those the signals and.

Maybe kind of what's been the hit rate.

Of of negotiations on it hit that point before.

Yeah. So look at the it's obviously something that comes from years of doing this right.

Yes, I think the simplest thing is movement right. So you can have a.

The considerable GAAP between the parties.

But there can be moving like they could be inching closer to each other and so that's something that you're just going to allow us to play out and see where it lands of movement I think is.

It's very important I think second is if there's not many of them. You know the question is can you figure out why and some fun.

There could be of really legitimate business.

Where you understand what the other side of it and it's not.

They're not really.

Positioning themselves for litigation, but theyre going through a period of time on their business when movement is not.

Something making the big into the there's a bit of patients that convinced of that.

Third is.

Okay.

On.

You feel like the other side, they actually you'd be positioning things for litigation.

While you don't want things to be a race to the courthouse.

There's some value of that being first sometimes so the kind.

Defense since that.

Oddly enough you have the customers that will actually outright invite litigation because it's how they can raise the profile of the negotiation within their company.

Do you think about that.

It's part of the other reasons stupid does or when it comes to mind.

Okay. That's fair and then on the the CE business you talked about the the kind of of benchmark licensing deals you've done within.

The digital TV set the boxes as you can see.

Yes.

Do you think that business is now with those of benchmark deals and got a point, where it can hidden inflection on.

In terms of getting you know a major deal cross the line to get you closer towards the $50 million revenue target for or there are more benchmark guilty of it can be done within those spaces.

So I don't think we need any more benchmarks right. So you know it is valuable to have deals done with.

The reasonable sized companies that you'll have the good IP teams and things like that so.

If and when you need to litigate against a larger player those agreements become very important in terms of Inc.

Set right so.

I think we're in good shape here, we've covered I'd say the the main.

Products and the main technology, we've done it with really solid companies.

So.

Inc were.

We're in a good spot.

With benchmarks.

As I mentioned in my call I think this is as I've mentioned the others.

Of the conversation we had that.

We really want to move the needle on consumer electronics this year he matches up with the.

The good deal.

Even though the set top box market itself is not the big market share legally the big player in that market.

So.

I think we're I think we're very well positioned.

Perfect and then just final question for me and I know you typically.

Do not guide the litigation spend but what you're seeing kind of the the IP enforcement costs kind of move from.

18 million ish on 18, 26 million ish of 19 29 million lots of them kind of moving ticking higher.

How should we think about the trajectory this year with everything you know at this point.

When would you expect at the start trending lower.

Yeah, I'll take that Eric.

It's something you always say litigation is isn't the investing for us it's something that we prefer not to do but if the situation calls for it we're certainly not afraid to do it.

And.

I'm not saying, we're totally insensitive to the cost, but it's an investment of time and time again has has paid off for us. So.

While we have seen some uptick over the last couple of years. We also saw a resolve deals with <unk> and Huawei net were under litigation.

Not more than 18 months ago.

As for the rest of the year.

Well have to see how things play out here, but what.

What kind of.

More or less around the levels that were at theyre going to ebb and flow, it's really hard to predict very far down the road, where they might go because of course, you could resolve these things or new fronts could open so maybe a bit of an unsatisfying answer, but I think the real message there when it can day if.

We feel like we need to make the investment we're going to make it.

Got it thanks rich thanks al.

Okay.

Okay.

We will take our next question from Derek Soderberg with calling your securities.

Hi, everyone. Thanks for taking my questions Bill I wanted to start with deal renewals I mean, it sounds like the confidence there.

There's definitely some confidence there I'm wondering you know of.

Was there a lot of potential growth in the deal size as those customers renew I guess I'm wondering if these renewals and Apple and Samsung will likely include patents maybe related to the Technicolor and then all of a follow up.

Sure.

So on that.

So on growth I think low for us is going to come in the short term, mostly from new deals right. So things like.

But the heme ex today in the mills.

We're in litigation with folks like Xiaomi and Lenovo day with all the new customers I think that's a pretty big driver of of growth.

When you think about renewals are.

You have a little bit of the mixed bag to answer your question with respect to Apple and Samsung.

Absolutely the.

Technologies that we've acquired and developed since the last.

Deal with those folks will be for.

The center and are in the new negotiation with them. So that's the that's great.

On other renewals so as an example, you know L G.

Yeah. There is I think as people are aware, they've signaled signaled that they're going to the.

For a strategic options process underway for that handset business, which has really declined.

For the last couple of years so.

Conversation with them in the renew their wood wood.

We would be at the lower value than the prior because of the businesses at lower values so but.

The other than that.

Inc. As I said the.

The major revenue growth for the company is the way to come from the timing of people that have never been licensees before.

And then the renewals will be in some cases, if the business has declined it would be a low level, but for people, whose businesses are better or even the same we bring more to the table in the next negotiation.

Got it and then as my follow up.

Thank you know you guys have some good visibility into the by the administration.

You know now that we're starting to see some more policies come out on <unk>.

Active actions taken such How's your view evolved on the new administration, so far and maybe as it relates to the FTC on their views on patent trolls or anything related to that you.

You know, how how might that impact new deals or resigning existing months. Thanks.

Sure.

So yeah.

Yeah, I think there is.

We aspects of.

You know the administration that we would be focused on you know one is their approach to China.

Second would be their approach to IP generally and I think third would be the other.

Other things like tax of I'll, let rich handle the last one I'll do the first two.

So on China, you know what we've seen in share. Many of you have seen this too for example, I think with the secretary of state of it definitely when he got the buy the he actually agreed with the Trump.

The objectives in China, I think the approach will be different and I think it's going to be more of the.

Our coordinated approach with the Europeans and partnership with the Europeans with respect of China, but I think the ultimate objective is the same.

And so that's the that's a good thing and as.

As you May have seen there was recent legislation proposed.

In Congress actually proposed by a Republican to provide additional tools for security.

Security royalties from the Chinese companies shipping into the United States under of using standard essential patents. So hopefully that legislation moves forward. There's also the stronger the patent backwards.

Well, we're very supportive of the need that we believe the administration would be as well.

And so I think that speaks generally to their support of my T. A.

I think that we've all.

Come to recognize that.

The prior narrative used by tech against patent lives of false narratives and net it's really important to have a strong patent system on I think that that's generally the vitamins administration's going to be.

I believe supportive of that Oh, I've mentioned if were centered of crude from Delaware is of very very strong supporter of the patent office and obviously the friend of the President of the administration. So I'll, let Rick handle the other other tax matters.

Yeah, Thanks, Bill and the welcome Eric Derek.

Glad to have the on the call on the tax side.

Really nothing dramatically changed since our we've most recently expressed our views there.

C N number of at least in the short term moderating factors, whether it's the composition of the Senate.

On.

Concerns about the.

The impact of of the pandemic, Colombia economy and midterms. So.

Not anticipating anything in the short term, but it's obviously something that went on watch pretty closely to see how it develops over the longer term.

Great. Thank you so much.

Our next question comes from Scott Searle with Roth capital.

Yeah.

Hey, good morning, Thanks for taking my questions nice job on a difficult operating environment guys. I Hope you your families on your teams are all healthy and safe.

Hey, maybe I'll quickly too maybe quickly too.

Follow up on on some of the litigation.

<unk>.

Could you just give us a quick update in terms of where we are in terms of boat.

Xiaomi in India, and Lenovo in the UK to the.

The next steps over the next couple of months, if we're tracking what that earlier timeline currently look like.

Yes, the follow up on Eric's earlier question on.

In your in your language in the script.

You referenced.

Players that were misbehaving to kind of push to the litigation route. So should we read anything into that in terms of players that you are Oems that you're not currently mitigating with the day are much closer along in the process I E. You know vivo op on some of the other Chinese manufacturers or don't read into that.

So so theres a pretty robust description of the litigation in the 10-K so.

Uh huh.

Yeah, I'll refer you to that for the for the detailed gave you of sort of a high level view of where things of that so.

With respect to Lenovo, they're the series of cases are evolving beyond just the UK case.

On the U S. The Delaware base case, then than theirs.

This is going on in China.

I think that the the leading case there is the UK case, I think from a timing standpoint. It is the most mature we have the.

The trial starting in March you could call that that Keith the way. The UK system works is there's a number of clinical trials those are basically.

The infringement and validity trials, and then sort of stuck in the middle of the technical trials is the friend determination and that is scheduled for early 'twenty 'twenty 'twenty two sorry.

So I think the that those cases are pretty low.

Pretty well developed.

And you know we.

We feel we feel good about the the tactical cases, and we feel good about the the the friends of the trials and the beauty of the UK system as debt.

There is that opportunity to get the world wildlife and resolve the matter of completely.

With the Xiaomi again set of litigation with them.

Around the world in the.

The of China and some other.

The places.

The bow.

Both the China and the India cases has moved slower than one would have anticipated because its hard to say exactly why yeah. There's always that you know of course.

Of course, you're operating remotely so there's always the impact of Covid, but theres other the uncertainty of litigation as well.

So I'd say not quite as mature as the Lenovo litigation, but obviously theres a lot going on there.

And.

The litigation also generally provides an opportunity for other parties to talk right.

It's an expensive way to.

The people of the top but they did talk.

The other question of if somebody's not in litigation does it mean net.

For the partnership so it's not necessarily the back to the answer I gave Eric on.

Why do we bring litigation from time to time, Inc.

It's it could be that the parties remain far apart.

But that there's movement.

And so you know.

You want to let that flow.

Lay out.

Yeah without.

Drawing the line in the sand as long as we're seeing moving there's no reason not to continue to engage with the customer of in a positive way so it could be that of deal.

Still a ways off in time, because we can take a while the closed the gap, but it does not make sense in that case, the big litigation, So I wouldn't necessarily read into who's been who weak food and who is not in terms of who's close to the deal and who's not.

Got you and lastly, if I could on the of the.

The variable royalty from was up a little bit this quarter.

Or are you starting to see then the pick up as it relates to video and of where Iot I was wondering if you could give us a quick update in terms of where video came in on the quarter and where avanti is at the current time.

Yeah. So.

I think some of that pickup is just a reflection of the pandemic and the economy and maybe even a little bit of seasonality.

Again, we have comparatively fewer licensees, the but more on the variable side. So.

We will gain more and more understanding of these markets and the trends.

We signed more deals and move forward on right.

Now you're going to have a one or two licenses.

We reported come on unexpectedly high that leads to a true up and cause you to.

Increase your estimates going forward, so I think that will probably settle down over time.

But yes definitely part of it was a level of.

We have to in most quarters estimate the royalties for the quarter without really being involved in the supply chain. So we're not.

Great position at least compared to anybody else to make those estimates we have to look at history and current factors and then they get true up when we get the reports in the following quarter and that true up rule, obviously influenced our estimate for that for so what we've seen in the second half of the year is.

I think things were a little bit better than maybe we would've expected during the pandemic. So there were positive true ups.

And all the kind of ongoing recurring basis, where.

We're still running roughly at the same levels.

That we've been talking about on the CE side.

And in the neighborhood of 10% of that go on.

We look forward to some help from <unk>.

In Q1.

Great. Thank you.

Well take our next question from Ian Zaffino with Oppenheimer.

Hey, Good morning, guys. This is mark on for Ian Thanks for taking our question. So I guess I'll just a quick follow up on the prior question on litigation. It seems like they are for the new case filed in Germany with Xiaomi. Congrats you guys can provide a little bit more detail there.

Something more meaningful or how should we sort of interpret this going forward.

Yes.

Sure So again.

Scripts since in the K, but.

To.

Not surprising in.

The litigation is sometimes these things spread out to various.

Jurisdictions the reasons for that can be different right. So it could be that.

Youre securing certain.

Moving from the judge the sort of the work what maybe going on in China.

And I think that the area of the law of that we've been pushing on.

We've also seen the Ericsson and others pushed that as one of the kind of take what was the very aggressive stance by the Chinese on.

Trying to almost claim exclusive jurisdiction of these matters and having courts around the world pushback on that.

Yeah and it can also there's other purposes for the for litigation, but not getting at the Xiaomi radios, specifically it could be that you want to start another the front of.

Sure.

Plain and simple patent litigation.

Yeah.

I wouldn't.

It's a it's a little bit of of checking.

That goes on.

Litigation and I'd say that this is this is just another just Luke.

Okay.

Okay.

Alright, Thanks for that and then I guess like just another one on the LNG contract I know Theres the news that they're looking to exit the smartphone oxymorphone state on how has the conversation with them go on have you guys engaged or you know sort of on maybe like anything on the fee side with LNG that you guys kind of provide.

Thanks.

So the LG.

<unk> had been a customer of ours for quite some time and you're correct. There's.

Two different areas, where we can have conversations with the LG do have conversations with them. One is on mobile where they had been a customer for one side of the news the new one is on the CE, particularly around their televisions.

Televisions.

Yeah.

On their mobile side.

So I yeah.

These are people that we develop relationships with and they are very straightforward and then it's.

Some of them I think Eric.

Eric for somebody else on.

Earlier on the call you know sometimes you just there's just practical situation thats confronting the someone that yet.

You need to respect.

It doesn't mean it.

There's not an opportunity to license there absolutely is because of the business gets sold.

We would want the.

For the buyer to have a license.

If the business gets shut down there's going to be sales during the stub period that we would want covered some of theirs.

A lot of really good reasons to continue.

Continuing to engage with them and secure the renewal on the correct terms.

I think you just have to off of respect for people in their life and if they are they're very focused on trying to figure out what to do with the business.

You need to give him a little space to do that.

Okay. That's helpful and then just finally on.

Quick one I know, it's hard to gauge on the long term.

The I guess for the operating expense side, but any sort of like you know kind of moving parts going from <unk> 21, or you know the operating expenses, whether it's litigation or all kinds of management.

That will be very helpful. Thank you.

Yeah, the only thing that I'll highlight the areas that you know.

For the last two years since we acquired the Technicolor.

Patent portfolio, we've had a robust effort.

To bring those costs in line, we feel like we've done a very good job of that had.

I had a little bit of of charge associated with some of the.

Was the activities towards the end of that initial process.

Pat management is an ongoing effort.

At the very large portfolio and like any company with the large portfolio.

We have to stay on top of it and make sure of that we're directing our resources to the best assets. So that's an ongoing effort.

We now have the full year under our belt with the full calendar year with the research teams. So yeah, we see expenses.

We're being a little bit more stable than maybe it had been over the last two years and again as I said one of the things that we come back to again and again is on.

Our appreciation for the operating leverage that exists in the model that was the theme in my prepared remarks today.

When you when you were at in periods of growth and you can drive that top line without really having a meaningful movement on on the operating expense line.

Has the tremendous impact on bottom line results. So that's what we're known for.

Focused on continuum.

Okay, great. Thank you very much.

And we will take our next question from on Yes, that's true with Sidoti.

Sidoti.

Yes.

Hi, everyone. Thank you for taking my question.

It's been on a lot of good. Good question is asked on good discussion already about.

On a seven and I'll sort of incorporated the Technicolor.

And.

Fully what do you see in terms of M&A, and where you could head in that direction and then what do you see in the market.

Sure so.

As rich mentioned in his script the I think we're in a good position.

Simple pursue M&A, if we wanted to so.

In terms of what we would be interested in.

I think it's.

You know a couple of things debt would.

It would be I think fairly on here so in the consumer electronics.

Business, we have today I think is.

The strong.

Inclusive of a wide variety of patents from broadcast standards, the Wi Fi for HSBC.

The product specific implementations.

And we have R&D, obviously behind that creating new into the innovation, but I think that there's opportunity to.

To further strengthen that in a way.

So I'll give you an example, so.

Why five portfolios that don't come on the market all of that often but when they do they're interesting to us because they would cut across all of our programs and so that's an example of the technology that would be on him.

The portfolio that would be interesting to us and it's also very synergistic with the R&D that we already do.

Beyond that I think.

Additional investment in video, particularly standard state of the patents would be interesting again, because it cuts across all of our.

Licensing program so.

And from time to time that stuff becomes available.

So I think we look at things that are going to be widely applicable broadly applicable across all our programs because thats the best way of ensuring that we're going to drive the right return from some of the deployment of that of that capital.

In terms of the opportunities.

It's interesting we there was a little bit of of rush at the beginning of the pandemic it actually from our standpoint at least the things that leverage the it kind of slowed down.

But now we've seen more of a pickup in a variety of opportunities that come through the opportunities kind of fall Inc.

The two categories, one would be simply portfolio.

And those are interesting for us because of it.

Are you getting they can get quickly deployed into our business from time to time at the operating companies as well.

If there is something interesting to kick the tires, but I'd say, it's been a little bit of a pickup.

Over the last quarter or so in terms of M&A opportunity.

Okay that sounds exciting. Thank you very much that was all for me.

Great. Thank you.

And at this time I'm showing no further questions.

Okay.

Thank you Casey and thank you for joining US today. This concludes our call and we look forward to the giving you an update for <unk>.

Excellent.

Ladies and gentlemen. This concludes today's call. Thank you for your participation you may now disconnect your phone lines.

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