Q4 2021 InterDigital Inc Earnings Call
Speaker 1: Please stand by.
Please standby we're about to begin.
Good day and welcome to the Interdigital, Inc. Fourth quarter 2021 earnings conference call. Today's call is being recorded at this time I'd like to turn the call over to Richard Lloyd. Please go ahead.
Speaker 1: Good day and welcome to the InterDigital Inc. fourth quarter 2021 earnings conference call. Today's call is being recorded. At this time, I'd like to turn the call over to Richard Lloyd. Please go ahead.
Good morning to everyone and welcome to Interdigital fourth quarter 2021 earnings Conference call.
Speaker 2: Good morning to everyone and welcome to Interdigital's fourth quarter 2021 earnings conference call.
Speaker 2: I am Richard Lloyd, Communications Director, and with me in today's call are Liren Chen, our President and CEO , and Rich Bresky, our CFO .
I am Richard Lloyd Communications Director and with me on today's call I'll learn Chen, our president and CEO and rich Breasty our CFO .
Speaker 2: Consistent with last quarter's call, we will offer some highlights about the quarter and the company and then open the call up for questions.
System with 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 in this call. We will make forward looking statements rig out regarding our current beliefs plans and expectations, which are not guarantees of future performance and are made only as of the date hereof.
Speaker 2: 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.
Speaker 2: 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.
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 2021 annual report on Form 10-K and in our other SEC filings.
Speaker 2: These risks and uncertainties include those described in the risk factors section 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.
Speaker 2: 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.
Speaker 2: 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.
Speaker 2: With that taken care of, I will turn the call over to Liran. Thanks Richard.
With that taken care of.
I will turn the call over to Larry.
Thanks Richard.
Good morning, everyone and thank you for joining us today.
Quite simply we had an excellent fourth quarter in what was a banner year for interdigital.
Speaker 3: Quite simply, we had an excellent fourth quarter in what was a banner year for Interd...
In Q4, our revenue increased 23 person year over year $200 million.
Speaker 3: In Q4, our revenue increased 23% year-over-year to $112 million.
Speaker 3: bring our total revenue for the year to 425 million, up 19% from 2020.
Bringing our total revenue for the year to 425 million.
19% from 2020.
In 2021, we improved our Bottomline grew our cash position and achieved several major successes across the business.
Speaker 3: In 2021, we improved our bottom line, grew our cash position, and achieved several major successes across the business.
Among those successes, we have signed 13, new license agreements, including our deal with top three smartphone manufacturer I shall meet our deal with a top 10-Q, remanufacture and our recent renewal with stone.
Speaker 3: Among those successes, we have signed 13 new license agreements, including our deal with top 3 smartphone manufacturer Xiaomi, our deal with the top 10 TV manufacturers, and our recent renewal with Sony.
I will let Rick talk you through this I phone numbers in more detail, but first I want to emphasize just how well positioned the company's fault for their goals.
Speaker 3: I will let Rich talk you through these excellent numbers in more detail. But first, I want to emphasize just how well positioned the company is for further growth.
What was the last 12 months, we have increased our focus on the foundational technology that enable so most of the connected world expanded our patent portfolio you five G and redo.
Speaker 3: Over the last 12 months, we have increased our focus on the foundational technology that enables so much of the connected world, expanded our patent portfolio in 5G and video, built strong deal momentum in our licensing programs, and yet again proved the strength of our research and our IP went into a truly tested encore.
Strong deal momentum in our licensing program.
And yet again proved the strength of our research and our IP weighing towards truly tested in court.
Recently, our category is a world class innovator was highlighted by our inclusion in a new report from last us net debt card in.
Speaker 3: Recently, our category as a world-class innovator was highlighted by our inclusion in a new report from last year's NEXUS called Innovation Momentum 2022, the global top 100.
Innovation momentum 2022 the global top 100.
Speaker 3: This report placed Interdigital among a very selected group of the world's 100 most innovative businesses and, according to the report, specifically recognized companies with exceptional technology relevance for the future and those outperforming their peers.
This report released in their digital.
Oh why are you likely group after what 100, most you know we do business it and I'll call. It Liberty report, specifically recognized companies with exceptional technology relevance for the future and those outperforming their peers.
Speaker 3: Our inclusion demonstrates how our strengths in R&D continue to translate into one of the world's highest quality patent portfolios.
Power's inclusion demonstrate how our strengths in R&D continue to translate into why is the world's highest quality patent portfolio.
Speaker 3: I was also particularly pleased that the report highlighted our contribution to standards such as by
I was also particularly pleased that our report highlighted our contribution to standards such as <unk>.
Speaker 3: In 2021, our commitment to 5G deepened considerably, but we almost doubled our contribution to 5G standards and increased our 5G invention disclosures by more than 50%.
In 2021, our commitment to five G dependent call separately, but we almost doubled our contribution to five via standard and increased RFID invention disclosures by model.
By more than 50%.
Speaker 3: 5G is proving to be a runaway success with hundreds of millions of consumers worldwide and our innovation is clearly a foundational part of the 5G story.
<unk> is proving to be a round will be success with hundreds of millions of consumers worldwide.
<unk> is clearly a foundational part of the <unk> story.
You can read you argue invention disclosure, while up by more than 25%.
Speaker 3: In video, our invention disclosure was up by more than 25%.
Speaker 3: proving once again that despite of COVID changing the world we work, our engineers have responded and our innovation engine continues to fire on all seven.
Proving once again that despite of Kobe changing the world. We work our engineers have responded and innovation engine continues to fire on all cylinders.
Speaker 3: the high quality of our innovators continue to be recognized by industry peers.
The high quality of our innovator continues to be recognized by industry peers.
Speaker 3: In the fourth quarter, one of our senior engineers was appointed to the steering board of DVB, an important industry body in development of digital television systems.
In the fourth quarter wildfires senior engineers was appointed to the steering board of D V B.
Importing industry body in development of digital television system.
Speaker 3: Another was appointed to the Steering Board of the wireless World Research Forum, which brings together leaders from industry and academia to identify key wireless trends that will shape connectivity over the next decade.
Another was appointed to the steering board of the wireless what research for them.
Brent together leaders from the industry and academia.
I think they've by keyword is things that will shape connectivity, but what's the next decade.
So these connected reward become more immersive it is opening up opportunity for our technology to touch more consumers lives.
Speaker 3: So as this connected world becomes more immersive, it is opening up opportunity for our technology to touch more consumers' lives.
Speaker 3: At the start of this year, we were selected by the standard organization MPEC to contribute our technology to a new standard for haptic
At the start of this year, we were slightly by the standard organization impact to contribute our technology to a new standard for haptics.
Speaker 3: alongside Technical University of Munich and another technology company, InterHapp.
Alongside technical University of Munich, and another technology company Inter haptics.
From the consequences of your smartphone and tablet to game computers and to more advanced devices.
Speaker 3: From the touchscreens of your smartphone and tablet, to game controllers, and to more advanced devices
Speaker 3: Haptics is a tactile technology that holds great promise in a growing number of applications and I am excited for how it could develop in areas like metalworks and in industries such as automotive!
<unk> is the tactile technology that goes quick promise.
A growing number of applications and I'm excited and I'm excited for how it could be lab in areas like matter worst AG industry.
Automotive.
The recognition for our work in this area proof that we are focused not only on the technology needs of today, but also an innovation that will underpin cannot be the currency for years to come.
Speaker 3: The recognition for our work in this area proves that we are focused not only on the technology needs of today, but also on innovations that will underpin connected technologies for years to come.
In the fourth quarter, we demonstrated once again, how your factory, we are translating our technology leadership into licensing revenue.
Speaker 3: In the fourth quarter, we demonstrated once again how effective we are in translating our technology leadership into licensing realm.
Speaker 3: As I mentioned, in Q4, we have signed five new license agreements, including a renewal for licensing deals and research joint venture with Sony.
As I mentioned in Q4, you have a signed five new license agreements.
Including a renewal of our licensing deal and research joint venture with Sony.
This brings the total number of new license, we signed in 2021 KUSA our team.
Speaker 3: This brings the total number of new licenses we signed in 2021 to 13.
Not only this more than doubled the number of licenses. We have signed in 2020. This is more than we have signed in any year over the last two decades.
Speaker 3: Not only this more than double the number of licenses we have signed in 2020, this is more than we have signed in any year over the last two decades.
Speaker 3: I'm particularly pleased with the cadence of new deals, reflecting not only the strength of our licensing team, but also our ability to execute across the company, despite of the challenges of the COVID pandemic.
I'm, particularly pleased with our cadence of new deals, reflecting not only the strength of our licensing team, but also our ability to execute across the company.
Despite all the challenges of the Covid pandemic.
Momentum can be an incredible powerful force in this business our deal making piece is a testament to the fact that new and existing licensees continue to recognize the quality of our research.
Speaker 3: Momentum can be an incredible powerful force in this business. And our deal-making piece is a testament to the fact that new and existing licenses are being used.
Speaker 3: I continue to recognize the quality of our research and our contributions to numerous key technologies.
And our contributions to numerous key technologies.
Speaker 3: We are working hard to deliver another strong licensing performance in 2020-2022.
We are working hard to deliver another strong licensing performance and continued to the need to.
Speaker 3: But we also need to ensure that each DOV sign reflects the true value of our technology and delivers a strong return to our shareholders.
But we also need to ensure that each deal we sign we fly the true value of our technology and delivers a strong return to our shareholders.
Speaker 3: But our recent track record has shown most of our licensing deals are down through bilateral negotiation.
But our recent track record I assume most of our REIT.
Most of our licensing deals are gone through bilateral negotiations.
Speaker 3: Unfortunately, there are times when companies using our technology have been on reading to sign licenses on what we believe are fair terms.
Unfortunately, there are times when companies using our technology have been unwilling to license Tucson licenses on.
What we believe are fair terms.
Speaker 3: Early this month, our trial to establish prime terms for a license with Lenovo concluded in London.
Early this month, our trout established Rand terms.
Our license with Lenovo concluded in London.
While I'm not going to comment on the specifics of that case before the judge renders his decision we remain confident with the strength of our technology.
Speaker 3: While I'm not going to comment on the specifics of that case before the judge renders his decision, we remain confident with the strength of our technology, the quality of our IP portfolio, and the value of our case.
Quality of our IP portfolio and the buyer of our case.
In the fourth quarter. We also filed a series of lawsuits against Chinese smartphone manufacturer Opel in court in UK, Germany and India.
Speaker 3: In fourth quarter, we also filed a series of lawsuits against Chinese smartphone manufacturer OPPO in courts in UK, Germany, and India.
Speaker 3: Again, I do not want to comment on the specifics of the details, but it is worth remembering that where we had to litigate in the past, we have always concluded a licensing agreement on peaks near the interest rate Gone with the
I do not want to comment on the specific of the detail, but it is worth remembering that where are we had two leading it in the past we have always concluded a license agreement offer and terms.
Our track record has shown that we will not be work in protecting our research I'm proving the value of our patent portfolio.
Speaker 3: Our track record has shown that we have not reworked in protecting our research and proving the value of our patent portfolio.
But as I look back on 2021, I'm very pleased not only with our excellent financial performance, but also with how we have continued to adapt to the challenges posed by Covid how.
Speaker 3: Those are the looks back on 2021. I'm very pleased, not only with our estimate financial performance, but also with how we have continued to adapt to the challenges posed by SoWid.
We have kept our innovation engine running smoothly, how we have continued to execute across our business.
Speaker 3: how we have kept our innovation engine running smoothly, how we have continued to execute across the business.
Speaker 3: and how the technologies we have invented have become even more important in people's lives around the world.
And how the technologies, we have invented have become even more important in people's lives around the world.
And lastly, we look forward to the rest of 2022, we are well, we all worry well positioned to capitalize on our strengths in developing foundational technology, which helped beta is all consumers connect two five D network engage with colleagues on video calls streaming their favorite shows.
Speaker 3: And as we look forward to the rest of 2022, we are very well positioned to capitalize on our strengths in developing foundational technology, which helps billions of consumers connect to 5G networks, engage with colleagues on video calls, and help them to make the most of their lives.
Speaker 3: streaming their favorite shows, and seamlessly connect to Wi-Fi network.
And seamlessly connect to Wi Fi networks.
Okay.
Speaker 3: Before I hand it over to Rich, I would like to thank all our employees for their hard work and commitment in delivering this excellent performance.
Before I hand, it over to rich I would like to thank all our employees for their hard work and commitment.
Delivering this excellent performance.
Like all companies, we have had to make changes to how we operate over the last couple of years.
Speaker 3: we have had to make changes to how we operate over the last couple years.
And then to digital team has consistently rising to the occasion.
Speaker 3: And the interview team has consistently
Speaker 3: And with that, Rich will talk you through the numbers in more detail.
And with that Rich will talk you through the numbers in more detail.
Thanks Lynn.
And good morning, everyone.
I'll start off by going into a little more detail on the very strong financial results, we delivered in 2021.
Speaker 4: I'll start off by going into a little more detail on the very strong financial results we delivered in 2021.
Speaker 4: As Liren already mentioned, the 13 license we signed during the year drove total revenue of $425 million.
As Larry already mentioned the 13 license we signed during the year drove total revenue of $425 million.
Speaker 4: Not only is this a 19% increase over last year, but it also represents the most revenue we reported since 2017.
Not only is this a 19% increase over last year, but it also represents the most revenue we reported since 2017.
Dialing in on the fourth quarter, we earned $112 million of total revenue, which is 23% more than the fourth quarter of last year and 10% above the midpoint of our expected range.
Speaker 4: Dialing in on the fourth quarter, we earned $112 million of total revenue, which is 23% more than the fourth quarter of last year, and 10% above the midpoint of our expected range.
Speaker 4: We came in above our expected range by signing a few new license agreements after issuing guidance, including our latest.
We came in above our expected range by signing a few new license agreements after issuing guidance <unk>.
Including our latest renewal with soon.
We also updated estimates for per unit royalties based on new reports we received.
Speaker 4: We also updated estimates for per unit royalties based on new reports we received.
Speaker 4: Importantly, our recurring revenue in the quarter was over $100 million.
Importantly, our recurring revenue in the quarter was over $100 million.
Our licensing successes drove year over year increases in revenue share and share based compensation totaling approximately $28 million.
Speaker 4: Our licensing successes drove year over year increases in revenue share and share based compensation totaling approximately 28 million dollars.
Speaker 4: In addition, we recognized a 28M dollar restructuring charge. And a 6M dollar increase in litigation expense over last year.
In addition, we recognized a $28 million restructuring charge and a $6 million increase in litigation expense over last year.
Our restructuring activities helped drive lower costs across the balance of our operating expenses as compared to 2020.
Speaker 4: Our restructuring activities help drive lower costs across the balance of our operating expenses as compared to 2020.
Focusing on fourth quarter, our operating expenses were relatively flat compared with fourth quarter 2020.
Speaker 4: Focusing on fourth quarter, our operating expenses were relatively flat compared with fourth quarter 2020.
Speaker 4: If we adjust for one-time items and comparatively higher share-based compensation...
If we adjust for one time items and comparatively higher share based compensation.
Speaker 4: Our structuring activities drove a year-over-year decrease of $7 million in the remaining operating expense base.
Our restructuring activities drove a year over year decrease of $7 million and the remaining operating expense base.
Speaker 4: Moving on to cash, we generated robust free cash flow of $65 million in fourth quarter and $95 million for the full year.
Moving on to cash we generated robust free cash flow of $65 million in fourth quarter and $95 million for the full year.
This follows a $121 million of free cash flow in 2020.
Speaker 4: This follows $121 million of free cash flow in 2020.
Speaker 4: In both years, the strong free cash flow was driven by new fixed-priced agreements.
In both years, the strong free cash flow was driven by new fixed price agreements.
Speaker 4: As I've discussed before, such agreements often have uneven or somewhat front loaded payments, resulting in timing differences between when we collect the cash payments and recognize the related revenue.
As I've discussed before such agreements often have uneven or somewhat frontloaded payments, resulting in timing differences between when we collect the cash payments and recognize the related revenue.
Speaker 4: As always, we have provided additional details around our cash receipts, cash due from contracted licenses, and deferred revenue in our 10-K.
As always we have provided additional details around our cash receipts cash due from contracted licenses and deferred revenue in our 10-K.
Speaker 4: The strong free cash flows drove our year-end cash balance up to $942 million, including more than half a billion dollars of net cash.
The strong free cash flows drove our year end cash balance up to $942 million.
Including more than half a billion dollars of that cash.
Speaker 4: In 2021, we continued our long-term effort to return excess cash to shareholders during the year with 73 million returns through buybacks and dividends.
In 2021, we continued our long term effort to return excess cash to shareholders during the year with $73 million returned through buybacks and dividends.
This brings our total return of capital over the last five years to more than $550 million.
Speaker 4: This brings our total return of capital over the last five years to more than $550 million.
Looking forward to the first quarter of 2022.
Speaker 4: Looking forward to the 1st, quarter of 2022, we announced today that we expect another strong quarter with revenue in the range of 95 to 100M dollars. All of which is expected to be recurring revenue.
We announced today that we expect another strong quarter with revenue in the range of $95 million to $100 million.
All of which is expected to be recurring revenue.
Speaker 4: As always, this expectation is based on contracts signed today.
As always this expectation is based on contracts signed to date.
Speaker 4: We also expect that first quarter 2022 will benefit from the restructuring activities we undertook last year.
We also expect that first quarter 2022 will benefit from the restructuring activities, we undertook last year.
Speaker 4: We expect total operating expenses will be roughly $80 million, including about 1 million of pale end restructuring costs. As related savings from our restructuring activities are expected to offset higher litigation costs.
We expect total operating expenses will be roughly $80 million, including about $1 million of tailwind restructuring cost as it related savings from our restructuring activities are expected to offset higher litigation costs.
So in closing we capped off an excellent year with another great quarter, providing us with a strong financial base to start 2022.
Speaker 4: So in closing, we capped off an excellent year with another great quarter, providing us with a strong financial base to start 2022. With that, I'll turn it back over to Richard. Thank you, Rich.
With that I'll turn it back over to Richard.
Thank you rich thank you Larry.
Operator, we will now open the call for questions.
Okay.
Of course, thank you and if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if youre using a speakerphone. Please pick up your handset and make sure. Your mute function is turned off so that you signal reaches our equipment.
Speaker 1: Of course, thank you. And if you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset and make sure your mute function is turned off so that your signal reaches our equipment. Again, it is star 1 if you'd like to ask a question. And we'll pause just for a moment to allow everyone an opportunity to signal for questions.
Again, it is star one if you would like to ask a question.
And well pause just for a moment to allow everyone an opportunity to signal for questions.
Again, it is star one if you'd like to ask a question and we'll go ahead and take our first question from Scott Searle with Roth Capital. Please go ahead, hey, good.
Speaker 1: Again, it is star one if you'd like to ask a question and we'll go ahead and take our first question from scott Sorelle with roth capital, please. Go ahead Hey, good morning. Nice nice job on the quarter guys, and thanks for taking my questions
Good morning.
Nice job on the quarter guys and thanks for taking my questions.
Speaker 5: Hey, Rich, real quickly to dive in on the OPEX front, I just want to make sure I heard that correctly. $80 million in the first quarter, is that including stock comp as well? I just want to calibrate kind of what's in that number. You know, what are you kind of allocating there in terms of litigation? And so what would the normalized number be, kind of ex-litigation going forward at some point when that kind of shakes out?
Hey, Rich real quick I wanted to dive in on the Opex front I just want to make sure I heard that correctly 80 million in the first quarter is that including stock comp as well I just want to calibrate kind of what what's in that number what is what are you kind of allocating there in terms of litigation and so what would the normalized number be kind of X.
Litigation going forward at some point when that when that kind of shakes out.
Speaker 4: Yeah, yeah. So, well, I'll stick with the first quarter Scott. It is 80 million total apics. And that includes the, you know, one million estimate for structural entarges. So you can see that's coming down. But, but I did mention that we do expect litigation costs to be a little bit higher for the first quarter. Of course, we had the trial, as we mentioned in January , in February .
Yeah, Yeah, so I'll stick with the first quarter Scott It is $80 million total opex and that includes.
1 million estimate for restructuring charges.
So you can see thats coming down.
I did mention that we do expect litigation cost to be a little bit higher for the first quarter of course, we had the the.
The trial as we mentioned in January and February .
Got you helpful.
Speaker 5: Gotcha, helpful. Lear enough I could, you know, it's still early days in terms of starting to move into areas outside of mobility on the video front with TVs, what's going on on the IoT front, and now you're starting to talk about halftips as well. I was wondering if you could quantify, you know, what that was in the fourth quarter and what you think the penetration rate at the current time is into the TV market and kind of how we should be thinking about that, that number in terms of absolute dollars in 22 and 20.
And if I could you know it's still early days in terms of starting to move into areas outside of mobility on the on the video front with Tvs.
What's going on on the Iot front and now you're starting to talk about haptics as well I was wondering if you could quantify what that was in the fourth quarter and what you think the penetration rate at the current time is into the TV market and kind of how we should be thinking about that that number in terms of absolute dollars in 'twenty, two and 'twenty three.
Speaker 3: Yeah, hi Scott, this is learned. So we are doing quite well both on the mobile space as well as the CE space. And as we reported, we have signed a, you know, top 10 TV vendors last year, which brings our real current revenue on the CE side to be a little bit over 20 million. And it's also worth noting that our deal with the top 10 TV vendor last year also, content substantial amount of payment for past sales.
Hi, Scott this is Darren.
So we are doing quite well both on the mobile space as well as let's say use space and us.
We reported we have signed a top 10-K iwi vendors last a year.
Rents are reoccurring revenue on the CE side to be a little bit over $20 million and it's also worth noting that our deal with a top 10-Q, even diglossia also.
Substantial amount of a payment for past sales.
Speaker 3: So, overall we are doing well. We need to probably make more progress in order to make our target, which we have stated before about 150 million per year. So we have a long way to go, but we are making really good progress.
So we're all we're doing well we need to probably make more progress in order to make our target, which we have stated before about $150 million.
Per year. So we have allow me to go but we're making really good progress on that.
Got you is is there any number that youre comfortable with this year Leer and in terms of does that does that grow 50% does it grow 100% when you factor in the new relationship with Sony have resigned to re license agreement with Sony.
Speaker 5: Gotcha. Is there any number that you're comfortable with this year, Liren, in terms of does that does that grow 50%, does it grow 100% when you factor in the new relationship with Sony or re-signed or re-licensed agreement with Sony?
Speaker 4: Yeah, so I think moving forward, as we understand, we're kind of, you know, over 20 million and closing in on 25 million as we look next year on sign contracts. But then, you know, further growth, of course, will depend on how the market evolves because there is some per unit in our CE base. But then, you know, most importantly, getting new deals done.
Yes, so I think moving forward as we understand where kind of.
Creeping over $20 million.
In closing in on $25 million as we look next year on on signed contracts.
But then further growth of course, we will.
It depends on how the market evolves because there is some per unit.
In our CE base, but then most importantly, getting new deals done.
Speaker 5: Gotcha. And if I could, you know, on the litigation front, I'm wondering if you could lay out some of the timelines as you see them now, where things like injunctions kind of factor in as last resort is kind of like drawing the line in the sand where something has to get done and kind of how we should be thinking about things in 2022.
Got you.
And if I could on the litigation front I'm Wonder if you could lay out some of the timelines as you see them now where things like injunctions kind of factor in as a last resort is kind of like draw. The line in the sand, where something has to get done and kind of how we should be thinking about things in 2022.
I just got long litigation, let me comment I'll cover the indications here are as.
Speaker 3: I just got long litigation. Let me comment on couple of litigation here. As I mentioned here, the UK friend filed the hearing stage has completed. It finished last month.
As I mentioned here the UK, France, how that here in the states has completely finished last week.
Speaker 3: So we expect the judge to take multiple months to, you know, we all the evidence and to render his decision. So most likely that will happen this year and that we don't really know exactly besides timing for it. So regarding the OPPO case, we just found the case last December . So we are still in the early stage of that case. So I frankly do not have a clear timeline yet. That case is still divided.
So we expect the judge to take multiple months too.
Two you know, we all the evidence and to render his decision. So most likely that will happen this year and but we don't really know exact precise timing for it.
So regarding the Opel case, we just filed the case last December . So we are still in the early stage of that case. So I frankly do not have a clear timeline yet that case is still at <unk>.
Okay very helpful and lastly, if I could just on the capital allocation front.
Speaker 5: Okay, very helpful. And lastly, if I could, just on the capital allocation front, you guys have a high class problem of generating a lot of free cash flow. You've been doing buybacks, dividends. How else are you thinking about capital allocation? What's going on in the market from an M&A standpoint? Are there things out there that are attractive? How should we be thinking about that? Thanks.
You guys have the high class problem of generating a lot of free cash flow.
You've been doing buybacks dividends, how else are you thinking about capital allocation, what's going on in the market from an M&A standpoint learned or the things out there that are attractive have valuations come in and how should we be thinking about that thanks.
Yeah, Let me comment on the M&A stuff, but I wanted to reach to follow up on the overall capital allocation methodology here on the M&A stuff here, we always look look at all the opportunities as they come to us.
Speaker 3: Yeah, let me comment on the MAA stuff, but I wanted to follow up on the world capital education methodology here. On the MAA stuff here, we always look at all the opportunities that come to us. We got to accompany our incredibly well positions. I feel very good about where we are technology wise, where our IP wise, and thank our track record of getting deals done, and it's picking up momentum wise.
We as a company are incredibly well positioned I feel very good about where we are technology life, where our IP allies and Frank our track record of getting deals done and it's picking up momentum wise.
Speaker 3: So, but that obviously gave us our cast position and allows certain freedom to look at all the different MA opportunities. If there are anything that makes sense, we obviously pursue them. But so far, we feel very strong about what we are doing here.
So, but that obviously gave us our cash position will allow us certain freedom to look at all the different M&A opportunities.
It makes sense, we obviously you know pursue them, but so far we feel very strong about what we are doing here.
Speaker 4: Yeah, and I'll just add, you know, in addition to having opportunity, present in the balance sheet because we have a strong cash position. As always, it's important to maintain that strength because of litigations that, you know, we're there in or, you know, frankly, you want to prevent by showing that you're able to withstand litigation with bigger companies than yourself.
Yeah, and I'll just add.
In addition to having a.
Opportunity.
And the balance sheet, because we have a strong cash position as always it's important to maintain that strength because of litigations that we either in or.
Well frankly, you want to prevent by by showing that you're able to withstand.
Litigation with bigger companies than yourself.
Speaker 4: And then beyond that, we also, as I mentioned in my script, acknowledge that sometimes that cash flows are a little bit uneven, quarter to quarter or year to year. So sometimes we get cash a little bit up front when we sign new agreements as well.
And beyond that.
We also as I mentioned in my script acknowledged that sometimes that the cash flows are a little bit uneven quarter to quarter or year over year. So sometimes we get cash a little bit upfront when we signed new agreements as well.
Great. Thank you.
And we will go ahead and take our next question from Derek Soderberg with <unk> Securities. Please go ahead.
Speaker 1: And we'll go ahead and take our next question from Derek Sotterberg with Collier of Securities. Please go ahead.
Hey, guys. Thanks for taking my questions.
Speaker 6: Hey guys, thanks for taking my questions. I wanted to start with some of the renewals that look like you had six customers that expired this or this past year, 2021, four renewed. I'm curious how you feel about those other two that are still out there. You know, are any of them not expected to renew or any of them exiting the business? Just any additional color on that would be great.
I wanted to start with some of the renewals it looks like you had.
Six customers that expired this or this past year 2021 for.
<unk> renewed cures.
Curious how you feel about those other two that are still out there.
Any of them not expected to renew or are any of them exiting the business.
Just any any additional color on that would be good.
It would be great.
Yeah, Hey, Derik. This learn so we had six operating you. All you are absolutely correct. We signed four of them. So the other two that we have not signed yet they are full night, which is a fairly small I'll see you player that we are working on the other one we have we are still working on we havent signed yet.
Speaker 3: Hey Derek, this is learned. So we had six operating rooms and you are absolutely correct. We signed four of them. So the other two that we have not signed yet, they are full night, which is a very small CE player that we are working on. The other one we are still working on, we haven't signed yet. It's DTE.
E C.
Speaker 3: You might be aware ZTE's volume has gone down quite substantially in the last couple years. So we're working very actively with them and they do something that we haven't signed yet.
So you might be aware of DTE volume has gone down quite substantially.
In the last couple of years. So we're working very actively with them and this is something that we havent signed yet.
Speaker 4: And I'll just note, Derek, it sounds like you probably already read it, but we have disclosures in our 10K every year around the agreements that are up for a renewal at the end of each year and add disclosure on the four or six renewed and the revenue impact for the two that have not.
And I'll just note Derek.
Sounds like you probably already read it but we have disclosures in our 10-K every year around the agreements that are.
For renewal at the end of each year and that disclosure on the Forbes six renewed.
The revenue impact for the two that Aetna.
Speaker 6: Got it, got it. And then, Lear and just back on the friend decision, you know, in the past, have you eventually been successful, you know, after sort of setbacks like these? Just curious how this case might be different than others in the past. And curious if it, you know, might have any impact on the patent portfolio as it relates to renewals for this year. I think you guys have something like nine renewals do this year. Anything on that would be great.
Got it got it and then just back on the friend decision you know in the past.
Eventually been successful you know after sort of setbacks like these I'm just curious how this case might be different than others in the past.
Curious if that might have any impact on the patent portfolio as it relates to renewals for this year I think you guys have something like nine renewals due this year.
Anything on that would be great.
Yes, so derik I'll say it in our past history whenever we litigate, we always end up license agreement.
Speaker 3: Yes, so dark. All thing in our past history, whenever we did it, we always end up with license agreement that's under friend terms. So I see the trial we are having in UK no different than previous litigation that we have undertaken.
And our friend terms, so I see the trial, we are having UK no different than previous litigation that we have undertaken it is important to note that the franchise. Currently franke coherent finished last week evolved in a global trend rate determination basically the judge.
Speaker 3: It is important to know that the Francois currently, Francois, the hearing finish last week, evolved in a global primary determination. Basically the judge, be on the side, how much of a portfolio on a global basis will be worse. And if the network refused to take that term, then they are gonna be facing the potential.
The Ot side, how much of the portfolio on a global basis will be worse.
Lenovo refused to take that that term than they are going to be facing the potential.
Speaker 3: In junction. So in that context here, I think we are very well positioned. Our technology has been demonstrated over and over again to become even more important. And our portfolio is very strong as we have been found our patterns to be valid, infringed and accurate to defend.
Injunction so in that context here I think we are well positioned our technology has been demonstrated over and over again to becoming even more important.
And our portfolio is very strong as we have been found our patents to be valid infringed and accurate to the standard.
So in that context here as we think this is a very positive development and pinion the judge's decision.
Speaker 3: So in that context here, I actually think this is a very positive development and pending the judge's decision.
Awesome. Thanks, guys.
And we'll move on to our next question from R nest Schrum with Sidoti. Please go ahead.
Speaker 1: And we'll move on to our next question from Aynas Huttershroom with Sadadi. Please go ahead.
Speaker 7: Hi, thank you for taking my questions and congratulations on the great year. A lot of good questions asked already, but I'm just curious. It seems like I had a good momentum in the license time for this year. What has been driving that would just say the solidification cases help you in the communications with that with the new licensees or
Hi, Thank you for taking my questions congratulations on a great year and.
How does the questions asked about it but I'm just curious it seems like you had good momentum in and.
License signed for this year, what has been driving that would you say that's the litigation cases help you in in the communications where that would then your licensees are.
Speaker 7: Is there something you have done internally that applies to this?
And is that something you have done internally that placed us there.
Yeah, Hey, this is learn so yeah, you're absolutely right. Our deal momentum has picked up quite a bit as we mentioned in the in the in the call here, we signed a certain license agreement.
Speaker 3: Yeah, honey, hey, this is learned. So you have to rewrite our deal momentum has picked up quite a bit. You know, as we mentioned in the call here, we signed certain license agreement, which I'll call into our own record, as I said, in my script, as far as the highest number of these signings to decades, and just as I know here to decades, because that's how long history we can find. We have pretty certain, this is the highest number of these signings any year.
I'll cut into our own railcar as I said in my script.
As Stacy is the highest number of lease signing two decades.
And just just as a side note here two decade, because that's how long history. We can find we are pretty stark the highest number of assigning any year.
But back to the momentum stuff here I really attribute all the credit to the team.
Speaker 3: But back to the momentum stuff here, I really attribute all the credit to the team.
Speaker 3: We have worked in crabbly hard. Some of the deals is really years in making. And we work really well, collaborative with the team. We overcome all the challenges that KUWEC having imposed to us here. We build on it and we really work around the clock where we're open, you know, try to get the deal completed here.
We are working collaboratively hard some of that deal will take really you're seeing making and we worked really well classes. Other team. We overcome all the challenges that have imposed to us here.
And we really work around the clock rolls and try to get the deal completed here. So it's really a lot of things coming together I'm very very happy with where we are it's demonstrated the strength of our technology. The strength of our portfolio like I said most of the deals get done without litigation.
Speaker 3: So it's really a lot of things coming together. I'm very, very happy with where we are. It's demonstrating the strength of our technology, the strength of our portfolio. Like I said, most of the deals get down without a decrease.
Speaker 3: And, you know, but when we have to delegate, obviously we have a pouring rather to be able to To bring those to the indications. So I'll say it's a number of different things coming together
And but when we have to dedicate obviously, we have a program rather to be able to.
Two windows litigations, so I'll see if there is a number of different things coming together.
Okay. Thank you and then also have a question about that.
Speaker 7: Okay, thank you. And then I'll also have a question about the, the see how that's progressing. And the passion said you were going to start to graph their smaller deals to set benchmark and then sort of want to set the benchmark for the pricing of that. You would graph the larger concepts. So, so where are you in that program?
See how that's.
Progressing in the past you said you were going to start to go after smaller deals to set benchmark and then sort of once you set the benchmark for the pricing of that you would go after larger concepts now sort of where are you on that progress.
Obviously, we are proceeding well along that strategy and as you said we are working on the CE program for several years now we have initially built out for you.
Speaker 3: How do we are proceeding well along that strategy? And as you said, we have worked on the CE program for several years now. We have initially built a few...
Speaker 3: smaller customers and then signing the top 10 key vendor in Asia was a pretty major milestone. And then we still have some major work to do. And regarding giving moving further up, regarding the major key vendors. We know who they are. We are engaging very active dialogue with them. You.
All of our customers and the signing of the top 10, Kiwi when Theyre nausea, what thought was a pretty major milestone and then we still have some major work to do.
And regarding even moving further up regarding the major acuity vendors, we know who they are we are.
Engaging very active dialogue with them.
Okay. Thank you that was all for me.
Thank you.
And with that that does conclude our question and answer session I would now like to hand, the call back over to Richard Lloyd for any closing or additional remarks.
Speaker 1: And with that, that does conclude our question and their session. I would now like to hand the call back over to Richard Lloyd for any closing or additional remarks. Thank you, Allie.
Thank you Ali Lira did you have any final remarks.
Speaker 3: Yeah, hey, thanks everyone for joining us today. I will closing by saying thank you again to all the employees for your dedication and strong exclusions throughout 2021. I hope everyone stays safe and healthy as we continue to navigate through the pandemic. Thank you.
Oh, Yeah, Hey, thanks, everyone for joining us today, our closing by saying. Thank you again to all the employees for your dedication and strong execution throughout 2021, I hope everybody stays safe and healthy, but we continue to navigate through the pandemic. Thank you.
Speaker 1: And with that, that does conclude today's call. Thank you for your participation. You may now disconnect. Hi, Nick.
And with that that does conclude today's call. Thank you for your participation you may now disconnect.
Speaker 8: favour of my
Okay.
[music].
Yeah.