Q1 2025 InterDigital Inc Earnings Call

All lines have been placed on mute to prevent any background noise out there to speakers remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press Star and then one on your telephone keypad.

If you would like to withdraw your question.

Star one again, thank you.

Speaker Change: I would now like to turn the call over to Grey forward car O'brien head of Investor Relations.

Speaker Change: Please go ahead.

Speaker Change: Thank you, France and good morning, everyone welcome to Interdigital first quarter 2025 earnings conference call.

Speaker Change: Raiford Garrabrant head of Investor Relations for Interdigital.

Speaker Change: With me on today's call earlier on Chen, our president and CEO and rich <unk> our CFO.

Speaker Change: Consistent with prior calls we will offer some highlights about the quarter and the company and then open the call up for questions for additional details.

Speaker Change: Can access our earnings release and slide presentation that accompany this call on our Investor Relations website.

Speaker Change: Before we begin our remarks I'll 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.

Speaker Change: Could cause actual results or events to differ materially from results and events contemplated by such forward looking statements.

Speaker Change: These risks and uncertainties include those described in the risk factors sections of our 2024 annual report on Form 10-K.

Speaker Change: In our other SEC filings.

In addition, today's presentation may contain references to non-GAAP financial measures reconciliations.

Speaker Change: Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the supplemental materials posted to the Investor Relations section of our website.

Larry: <unk> taken care of I will turn the call over to Larry.

Larry: Thanks Robert.

Larry: Morning, everyone. Thanks for joining us today.

Larry: Our last call we provided annual guidance for 2025 lease revenue of between $660 million and $760 million. These.

Larry: This guidance highlights the increasing momentum of our business and a mouthful goose opportunity that we have identified and expect to achieve through the rest of this year.

Larry: Today I'm pleased to share that we have made significant headway achieving argo re.

Larry: Reconfirm, our 2025 annual guidance.

Larry: During these quarter, we licensed label mobile a major smartphone manufacturer.

Larry: To drive revenue above the top end our guidance increase our annual recurring revenue to all time record level.

Larry: We were also once again recognized as allowance awards, leading innovators demonstrate our cutting edge technology at mobile Congress Tradeshow.

Larry: And shortly after quarter closed we signed another major license agreement with HP.

Consumer electronics and our key program.

Larry: Our revenue adjusted EBITDA and non-GAAP EPS for Q1 were all above the top end of our guidance.

Larry: The revenue from our smartphone program more than doubled year over year.

Larry: Our annualized recurring revenue is up 30% year over year.

Larry: All time record of more than half a billion dollars.

Larry: Rich will go over all the numbers in detail in his section.

Larry: The program have made gave us a very strong base from which to execute our strategy and drive long term growth for the company.

Larry: The long term stable nature of our licensing agreement with over 90% of our revenue coming from long term fixed fee agreements.

Larry: <unk> strong platform from which to invest in our research Charlene innovations for license and deliver shareholder value.

Larry: Some of you may be aware, we will it's a top 10 global smartphone manufacturer with significant market share.

Larry: Ships over 100 million devices per year.

Larry: Our new agreements, we will follow our new agreement with <unk> joined the Q4 last year.

Larry: We now have seven of the top 10 largest manufacturer.

Larry: Marshall vendors and.

Larry: Almost 80% of the entire global smartphone market under license.

Larry: So we will our agreement also represent another significant step towards our goal of achieving a $500 million.

Larry: <unk> annual recurring revenue in our smartphone program by 2027.

Larry: Adding to our recent momentum at the start of second quarter, We also announced a new multi year licensing agreement with HP, which license HP personal computers to our Wi Fi and redo decreasing technologies.

Larry: HP is one of the world's largest PC manufacturers.

Larry: We lease agreement, we have licensed more than 50% of the PC market.

Larry: This is also another security milestone as we keep on driving growth in our consumer electronics and our licensing program.

Larry: I'm also pleased that both HP and labor license like the vast majority of our license agreement was signed through amicable negotiation.

Larry: With additional legal and HP contract.

Larry: Accumulated total contract value that we have signed since 'twenty 'twenty. One is now more than three 6 billion.

Larry: So as I mentioned in our prior earnings call, we arent binding arbitration to settle the final terms of our license with Samsung for mobile devices.

Larry: The party finished all of the hearing last October and will be back to have a final decision.

Larry: As a reminder, since already agreed to take a license to our portfolio starting from January one of 2023.

Larry: And these binding arbitration, we have determined the final term of the license.

Larry: In the first quarter, we build on our strong track record of returning capital to shareholders by increasing our dividend from <unk> 45 to <unk> <unk> per share.

Larry: In fact since Q3 of last year, we have increased our dividend by 50%.

Larry: Okay.

Larry: Our success in our licensing program is only possible because of the quality of our research and the leadership of engineered across wireless <unk> and AI.

Larry: Interdigital is one of the few companies that lead in the development of foundational technology in all of these three areas.

Larry: In the first quarter for the fourth year in a row, we were recognized by the excess in excess.

Larry: <unk> top 100 innovators analyses, we should look at both the impact of our innovation today and its likely impact in the future.

Larry: Our engineers are already closely involved in the early stage of 60, which is beginning to take shape and which we believe will help to drive our growth across multiple verticals.

Larry: Into 2000 Thirty's.

Larry: Also in the first quarter at mobile World Congress in Barcelona, we showcased the way in which we drive evolution of wireless radio in AI and.

Larry: <unk> been senior engineers from each of our three labs demonstrate Har research a changing connectivity in areas like immersive video.

Larry: Same thing in wireless network and the optimization of the EI applications.

Larry: In the first quarter, we also announced our two inventor of the year with volume from our wireless lab and the other from a redo that.

Larry: We are a company of inventors and as I tell our teams internally are inventory year of the award is the most important accolades Debbie announced each year.

Larry: Both of these years, we experienced engineers, who have dedicated their careers to make wireless networks smarter and more efficient.

Larry: We improve connectivity in areas like Iot and XR.

Larry: And to develop next generation, we do some more advanced compression and wider deployment of AI.

Larry: This dedication to research and are laser focused in technology that are foundational to how we connect.

Larry: Combined with our execution across our licensing programs.

Larry: We continue to differentiate interdigital.

Larry: Give us such a powerful platform for growth.

Speaker Change: And with that I'll, let rich talk you through our first quarter numbers in more detail.

Rich: Thanks Liam.

Speaker Change: I am pleased to report that 2025 is off to a great start with Q1 revenue adjusted EBITDA and non-GAAP EPS all exceeding the high end of our guidance range.

Speaker Change: This performance was powered by our new license agreement with vivo a top smartphone manufacturer based in China.

Speaker Change: The new agreement with vivo together with higher than expected variable royalties drove total revenue of $211 million.

Speaker Change: This exceeds both our initial top end guidance for Q1 total revenue of $160 million.

Speaker Change: Our updated increased top end guidance of $206 million that we announced at the time, we signed vivo.

Speaker Change: This compares to a strong first quarter revenue of $264 million last year, when the signing of our Samsung TV license drove $160 million of catch up revenue.

Speaker Change: With related revenue share, which I'll cover in a moment.

Speaker Change: Our annualized recurring revenue or <unk> for the first quarter 2025 increased 30% year over year to $503 million, which is a record level.

Speaker Change: The previously mentioned license with Evo under our smartphone program led the way.

Speaker Change: In the past several years, we have rebuilt our revenue pipeline by renewing major licenses with Apple and Samsung and we also added multiple leading smartphone vendors from China.

Speaker Change: We have grown our share of the smartphone market under license from about 50% to roughly 80%.

As a result, we have made significant progress towards our goal of 500 million an IRR from smartphones by 2027, having increased smartphone revenue by $120 million.

Speaker Change: Yeah.

Speaker Change: Our subscription based IP as a service model offers a high level of visibility and provides a reliable source of cash flow even in the face of an uncertain economic environment.

Speaker Change: This enables us to continue to fuel our innovation engine and drive future revenue growth.

Speaker Change: Based on the strength of our intellectual property and the huge markets build upon it. We believe we are on track to grow.

Speaker Change: At a double digit CAGR towards our 2030 target of $1 billion plus.

Speaker Change: Our adjusted EBITDA for first quarter of nearly $160 million increased 22% year over year and equates to an adjusted EBITDA margin of 76%.

Operator: Operator assisting you today. All lines have been placed on mute to prevent any background noise.

Speaker Change: An increase of 27 points compared to 49% a year ago.

Per cent to roughly 80%.

As a result, we have made significant progress towards our goal of 500 million in ALR from smartphones by 2027, having increased smartphone revenue by $120 million.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and then one on your telephone keypad. If you would like to withdraw the question, press star 1 again. Thank you.

Speaker Change: The increase in adjusted EBITDA margin was largely attributable to a decrease in operating expense.

Speaker Change: As most of the $69 million in Rev share, we reported in Q1 2024 related to the catch up revenue under the Samsung TV agreement, we signed last year.

Speaker Change: Our subscription based IP as a service model offers a high level of visibility and provides a reliable source of cash flow even in the face of an uncertain economic environment.

Raiford Garrabrant: I would now like to turn the call over to Raiford Garrabrant, Head of Investor Relations. Please go ahead. Thank you, France, and good morning, everyone.

Speaker Change: non-GAAP EPS rose, 18% year over year to $4 21.

Speaker Change: And exceeded our increased guidance of $3 60 66 to.

Speaker Change: This enables us to continue to fuel our innovation engine and drive future revenue growth.

Raiford Garrabrant: Welcome to InterDigital's first quarter 2025 earnings conference call. I am Raiford Garrabrant, head of investor relations for InterDigital.

Speaker Change: To $3 90 per share.

Speaker Change: Based on the strength of our intellectual property and the huge markets build upon it. We believe we are on track to grow.

Speaker Change: Cash from operations and free cash flow were negative in Q1 with outflows of $20 million and $47 million respectively.

Raiford Garrabrant: With me on today's call are Liran Chen, our president and CEO, and Rich Brezski, our CFO. Consistent with prior calls, we will offer some highlights about the quarter and the company, and then open the call up for questions. For additional details, you can access our earnings release and slide presentation that accompanied this call on our investor relations website.

Speaker Change: At a double digit CAGR towards our 2030 target of $1 billion plus.

Speaker Change: As a reminder, this is not uncommon on a quarterly basis and there is related to the timing of payments from our licensees.

Speaker Change: Our adjusted EBITDA for first quarter of nearly $160 million increased 22% year over year and equates to an adjusted EBITDA margin of 76%.

Speaker Change: We continue to expect to have double digit growth in free cash flow for 2025.

Over the strong levels, we reported in 2024.

Raiford Garrabrant: 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 2024 Annual Report on Form 10-K and in our other SEC files.

Speaker Change: An increase of 27 points compared to 49% a year ago.

Speaker Change: The strong cash flow inherent in our business combined with a cash balance of nearly $900 million.

Speaker Change: The increase in adjusted EBITDA margin was largely attributable to a decrease in operating expense.

Speaker Change: Supports our capital allocation priorities.

Speaker Change: As most of the $69 million in Rev share, we reported in Q1 2024 related to the catch up revenue under the Samsung TV agreement, we signed last year.

Speaker Change: First we aim to mainstream excuse me, we aim to maintain a strong balance sheet as financial strength is a strategic asset.

Speaker Change: Second we will continue to make organic investments in the business.

Speaker Change: non-GAAP EPS rose, 18% year over year to $4 21.

Speaker Change: And in recent years, we've invested around 50% of recurring revenue and the research and portfolio development.

Speaker Change: And exceeded our increased guidance of $3 60 66.

Speaker Change: Third we will be opportunistic and exploring inorganic growth opportunities.

Raiford Garrabrant: In addition, today's presentation may contain references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the supplemental materials posted to the investor relations section of our website.

Speaker Change: To $3 90 per share.

Speaker Change: Cash from operations and free cash flow were negative in Q1 with outflows of $20 million and $47 million respectively.

Speaker Change: So they are not required to achieve our 2030 financial targets.

Speaker Change: And fourth we will continue returning excess cash to shareholders.

Speaker Change: As a reminder, this is not uncommon on a quarterly basis and it was related to the timing of payments from our licensees.

Speaker Change: By way of share repurchases and dividends.

Lawrence Chen: With that taken care of, I will turn the call over to Lyric. Thanks, Raiford. Good morning, everyone. Thanks for joining us.

Speaker Change: In Q1, we returned $21 million to shareholders through buybacks and dividends.

Speaker Change: We continue to expect to have double digit growth in free cash flow for 2025 over.

Speaker Change: After accounting for additional share repurchases in April we currently have approximately $216 million remaining on our buyback authorization.

Lawrence Chen: Our last call we provide annual guidance for 2025 with revenue of between $660 million and $760 million. This guidance highlights the increasing momentum of our business and the multiple goods opportunity that we have identified and expect to achieve through the rest of this Today, I'm pleased to share that we have made significant headway in achieving our goal and reconfirm our 2025 annual guidance. During this quarter, we licensed Vivo Mobile, a major smartphone manufacturer, to drive revenue above the top in our guidance and increase our annual recurring revenue to all time record levels. We were also once again recognized as one of the world's leading innovators, demonstrate our cutting edge technology at Mobile Congress trade show.

Over the strong levels, we reported in 2024.

Speaker Change: The strong cash flow inherent in our business combined with a cash balance of nearly $900 million supports.

Speaker Change: Looking forward to Q2.

Speaker Change: We already announced an important new agreement with HP that drives our expectations for another strong quarter.

Speaker Change: Supports our capital allocation priorities.

Speaker Change: First we aimed to mainstream excuse me, we aim to maintain a strong balance sheet as financial strength is a strategic asset.

Speaker Change: We expect Q2 revenues will be $165 million to $175 million from existing contracts, including ketchup sales.

Speaker Change: Second we'll continue to make organic investments in the business.

Speaker Change: Based only on existing contracts, we expect an adjusted EBITDA margin of about 65% and non-GAAP diluted earnings per share of $2 67.

Speaker Change: And in recent years, we've invested around 50% of recurring revenue and the research and portfolio development.

Speaker Change: Third we will be opportunistic and exploring inorganic growth opportunities.

Speaker Change: To $2 90.

Speaker Change: Our second quarter guidance does not include the impact of any new agreements or arbitration results, we may sign or receive over the balance of the second quarter.

Speaker Change: So they are not required to achieve our 2030 financial targets.

Speaker Change: And fourth we will continue returning excess cash to shareholders.

Lawrence Chen: And shortly after quarter closed, we signed another major license agreement with HP in our consumer electronics and IoT Our revenue, adjusted EBITDA, and non-GAAP EPS for Q1 were all above the top in our guidance. The revenue from our smartphone program more than doubled year over year. Our annualized recurring revenue is up 30% year-over-year at an all-time record of more than half a billion dollars.

Speaker Change: By way of share repurchases and dividends.

Speaker Change: Our strong first quarter results and our expectations for a strong Q2 have us well on track to meet our full year 2025 targets and.

Speaker Change: In Q1, we returned $21 million to shareholders through buybacks and dividends.

Speaker Change: After accounting for additional share repurchases in April we currently have approximately $216 million remaining on our buyback authorization.

Speaker Change: And we are reaffirming our prior guidance of revenue in the range of $660 million to $760 million.

Speaker Change: Looking forward to Q2.

Speaker Change: We continue to expect adjusted EBITDA in the range of $400 million to $495 million with non-GAAP earnings per share of $9 69.

Speaker Change: We already announced an important new agreement with HP that drives our expectations for another strong quarter.

Speaker Change: We expect Q2 revenues will be $165 million to $175 million from existing contracts, including catch up sales.

Lawrence Chen: Rich will go over all the numbers in detail in his section. The program can make give us a very strong base from which to execute our strategy and drive long term growth for the company. The long term stable nature of our licensing agreement, with over 90% of our revenue coming from long term fixed fee agreements, it was an incredibly strong platform from which to invest in our research, share our innovations through license and deliver shareholder value. As some of you may be aware, VIVO is a top 10 global smartphone manufacturer with significant market share, which ships over 100 million devices per year.

Speaker Change: To $12 92.

Wafer: With that I'll turn it back to wafer.

Speaker Change: Thanks, Rich before we move to Q&A I'd like to mention that we'll be attending a number of investor events in Q2.

Speaker Change: Based only on existing contracts, we expect an adjusted EBITDA margin of about 65% and non-GAAP diluted earnings per share of $2 67.

Speaker Change: Including the William Blair growth conference in Chicago.

Speaker Change: Our consumer Tech and services conference in New York City.

Speaker Change: Bank of America Tech Conference in San Francisco, and the Roth London Conference. Please reach out to your representatives at those firms if you'd like to schedule a meeting.

Speaker Change: To $2 90.

Speaker Change: Our second quarter guidance does not include the impact of any new agreements or arbitration results, we may sign or receive over the balance of the second quarter.

Speaker Change: In addition, we are hosting our annual meeting of shareholders, which is virtual on June 11 at two P. M.

Speaker Change: Our strong first quarter results and our expectations for a strong Q2 have us well on track to meet our full year 2025 targets and.

Speaker Change: At this point, France, we are ready to take questions.

Speaker Change: Thank you and we will now begin the question and answer session and at this time, if you would like again to ask a question press star followed by the number one on your telephone keypad and to withdraw it you just need to press Star and then followed by the number one again.

Lawrence Chen: Our new agreement we will follow our new agreement with OPPO during the Q4 last year. We now have seven of the top 10 largest manufacturing smartphone vendors, and almost 80% of the entire global smartphone market underlies. The waiver agreement also represents another significant step towards our goal of achieving $500 million in annual recurring revenue in our smartphone program by 2027. Adding to our recent momentum, at the start of second quarter, we also announced a new multi-year licensing agreement with HP, which licenses HP personal computers to our Wi-Fi and radio decoding technology. HP is one of the world's largest PC manufacturers.

Speaker Change: And we are reaffirming our prior guidance of revenue in the range of $660 million to $760 million.

Speaker Change: We continue to expect adjusted EBITDA in the range of $400 million to $495 million with non-GAAP earnings per share of $9 69.

Speaker Change: If you have called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute while asking your question and just a reminder, we ask that you. Please limit your question to one with one follow up only.

Speaker Change: To $12 92.

Wafer: With that I'll turn it back to wafer.

Wafer: Thanks, Rich before we move to Q&A I'd like to mention that we'll be attending a number of investor events in Q2.

Wafer: Including the William Blair growth conference in Chicago.

Speaker Change: Thank you and as of now.

Speaker Change: The first question comes from the line of Scott Hero from Roth Capital. Please go ahead.

Speaker Change: Consumer Tech and services conference in New York City.

Speaker Change: Bank of America Tech Conference in San Francisco, and the Roth London Conference. Please reach out to your representatives at those firms if you'd like to schedule a meeting.

Hey, good morning, Laura and rich raiford, congrats on getting vivo across the finish line.

Lawrence Chen: With this agreement, we have licensed more than 50% of the PC market. This is also another security milestone as we keep on driving growth in our consumer electronics and IoT licenses. I'm also pleased that both HP and Vivo licenses, like the vast majority of our license agreement, were signed through amicable negotiations.

Speaker Change: In addition, we are hosting our annual meeting of shareholders, which is virtual on June 11 at two P. M.

Speaker Change: Thanks Scott.

Speaker Change: Maybe maybe just quickly to I want to clarify on the two key guidance. These are all existing contracts that are in hand, so the big one that's happened so far in the quarter to date as HP. So that $40 million increase is HP <unk> may be other smaller accounts nothing coming in from anticipated Samsung arbitration or other.

Speaker Change: At this point, France, we are ready to take questions.

Speaker Change: Thank you and we will now begin the question and answer session and at this time, if you would like again to ask a question press star followed by the number one on your telephone keypad and to withdraw it you just need to press Star and then followed by the number one again.

Lawrence Chen: With additional VIVO and HP contracts, the cumulative total contract value that we have signed since 2021 is now more than $3.6 billion.

Speaker Change: These based Oems is that correct.

Speaker Change: Yes, Thats right Scott So we're.

Speaker Change: Q2 guidance is set off existing contracts in hand today.

Speaker Change: If you have called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute while asking your question and just a reminder, we ask that you. Please limit your question to one with one follow up only.

Speaker Change: And does not include anything we may sign over the balance of the year and I noted also does not include any arbitration results we may receive.

Lawrence Chen: As I mentioned in the prior call, we are in a binding arbitration to settle the final terms of our license with Samsung for mobile devices. The party finished all the hearings last October, and we expect to have a final decision soon. As a reminder, Samsung already agreed to take license to our portfolio starting from January 1st of 2023. and this binding arbitration will determine the final term of the life.

Speaker Change: Got you and then if I could and then I'll get back in the queue.

Speaker Change: Maybe from a macro level kind of the geopolitical environment, how that is impacting or not impacting discussions.

Speaker Change: Thank you and as of now.

Speaker Change: And in terms of.

Speaker Change: And your timelines.

Speaker Change: The first question comes from the line of spots hero from Roth Capital. Please go ahead.

Speaker Change: Engagement with those customers and rich on the convert now it moves into.

Speaker Change: Current accounts.

Speaker Change: I think within the Q you talked about it being at current price levels, maybe 3 million shares I'm wondering if you could take us through kind of what you anticipate to happen and as it relates to the convert if you expect it to be convert.

Speaker Change: Hey, good morning, Laura and rich raiford, congrats on getting in vivo across the finish line.

Lawrence Chen: In the first quarter, we built on our strong track record of returning capital to shareholders by increasing our dividend from 45 cents to 60 cents per share. In fact, since Q3 of last year, we have increased our dividend by 50%. Our success in our licensing program is only possible because of the quality of research and the leadership of engineers across wireless, video, and AI. InterDigital is one of the few companies that leads in the development of foundational technology in all these three areas.

Thanks Scott.

Speaker Change: Maybe maybe just quickly to I wanted to clarify on the two key guidance. These are all existing contracts that are in hand, so the big one that's happened so far in the quarter to date as HP. So that $40 million increase is HP <unk> may be other smaller accounts nothing coming in from anticipated Samsung arbitration or other.

Speaker Change: And how we should be treating that from an earnings basis going forward. Thanks.

Scott Hero: Yeah, Hey, good morning, Scott I'll take the first question rigor.

Speaker Change: Regarding the macro geopolitical environment as well as the current tariff situation.

Speaker Change: We don't see any impact to our business.

Speaker Change: Annie's based Oems is that correct.

Speaker Change: As you all where our business surrounding <unk> foundational technology share them through open global standard process, and then licensing people primarily through long term fixed fee agreement biased.

Speaker Change: Yes, Thats right Scott so.

Speaker Change: Q2 guidance is set off existing contracts in hand today.

Speaker Change: And does not include anything we may sign over the balance of the year and I noted also does not include any arbitration results we may receive.

Lawrence Chen: In the first quarter, for the fourth year in a row, we were recognized by DexisNexis as one of the top 100 innovators in analysis, which look at both the impact of our innovation today and its likely impact in the future. Our engineers are already closely involved in the early stage of 6G. which is beginning to take shape, and which we believe will help to drive our growth across multiple verticals well into 2030.

Speaker Change: By its nature that does not really change.

Got you and then if I could and then I'll get back in the queue.

Speaker Change: Quarter by quarter due to the fluctuation of shipment during the term of the contract.

Speaker Change: Maybe from a macro level kind of the geopolitical environment, how that is impacting or not impacting discussions and.

Speaker Change: So obviously the situation is dynamic.

Speaker Change: And we are keeping very close monitor the situation.

Speaker Change: And in terms of.

Speaker Change: And your timelines and engagement with those customers and rich on the convert now it moves into.

And Scott regarding the convert.

Speaker Change: So while incurring it actually doesn't mature until spring of 'twenty seven thats a function of when.

Speaker Change: Current accounts.

Speaker Change: I think within the Q you talked about it being at current price levels, maybe 3 million shares I'm wondering if you could take us through kind of what you anticipate to happen and as it relates to the converted if you expect it to be convert.

Lawrence Chen: Also in the first quarter, at Mobile Congress in Barcelona, we showcased the way in which we drive evolution of wireless, video, and AI. At this year's event, senior engineers from each of our three labs demonstrate how our research is changing connectivity in areas like immersive video, sensing in wireless network, and the optimization of AI applications.

Speaker Change: Where the stock prices and certain features in that but typically in where we've been in the money in the past and my understanding Jim more generally is typically those things.

Speaker Change: And how we should be treating that from an earnings basis going forward. Thanks.

Speaker Change: Don't convert early until they're even further in the money.

Speaker Change: Yeah, Hey, good morning, Scott I'll take the first question regarding.

Speaker Change: Because.

Speaker Change: The convert holders have optionality with.

Speaker Change: Regarding the macro geopolitical environment as well as the current tariff situation.

Speaker Change: With the current instrument.

Speaker Change: But rich you don't have the ability to call. It is that correct.

Speaker Change: Probably you don't see any impact to our business.

Speaker Change: So there are certain abilities.

Lawrence Chen: In the first quarter, we also announced our two inventors of the year with one from our wireless lab and the other from our video lab. We are a company of inventors. And as I tell our teams internally, our inventor year of the world is the most important accolades that we announce each year. Both of these years winners are experienced engineers who have dedicated their career to make wireless networks smarter and more efficient, to improve connectivity in areas like IoT and XR, and to develop next generation video through more advanced compression and wider deployment of AI.

Speaker Change: As you all where our business surrounding <unk> foundational technology share them through open global standard process, and then licensing people primarily through long term fixed fee agreement biased.

Speaker Change: Over the term of that agreement.

Speaker Change: And then there is always as we've done in the past, there's always an ability to.

Hi.

Speaker Change: Enter into a transaction.

Speaker Change: So we always look and this is always the case, we're always looking at our capital structure and figuring out what's the best next step.

Speaker Change: By its nature that does not really change.

Speaker Change: Quarter by quarter due to the fluctuation of shipment during the <unk> contract.

Speaker Change: So nothing to report there, but something that we actively monitor.

Speaker Change: So obviously the situation is.

Speaker Change: Great. Thanks, so much ill get back in the queue congrats on the quarter.

Speaker Change: Dynamic and we are keeping a close monitoring the situation.

Speaker Change: Thank you Scott.

Scott: And Scott regarding the convert.

Speaker Change: And your next question comes from.

Speaker Change: While incurring it actually doesn't mature until spring of 'twenty seven thats a function of.

Speaker Change: So strong from Sidoti. Please go ahead.

Speaker Change: Hi, and thank you for taking my question is Don Congrats on the.

Speaker Change: Where the stock prices and certain features in that but typically where we've been in the money in the past and my understanding Jim more generally is typically those things.

Lawrence Chen: This dedication to research and our laser focusing technology that are foundational to how we connect, combined with our execution across our licensing programs, are what continue to differentiate InterDigital and give us such a powerful platform for growth.

Speaker Change: Progress you're making here.

Speaker Change: A final question on the Samsung Arbitration do you have any.

Speaker Change: It seems like that had been pushed out a bit to have any sort of update there any time frame.

Speaker Change: Don't convert early until they're even further in the money.

Speaker Change: Because.

Speaker Change: Yes.

Speaker Change: Is the convert holders have optionality.

Speaker Change: Learn so we currently do not have any new updates on <unk>.

Speaker Change: With the current instrument.

Richard Brezski: And with that, I'll let Rich talk you through our first quarter numbers in more detail. Thanks, Larry. I'm pleased to report that 2025 is off to a great start, with Q1 revenue, adjusted EBITDA, and non-GAAP EPS all exceeding the high end of our guidance range. This performance was powered by our new license agreement with Vivo, a top smartphone manufacturer based in China. The new agreement with Vivo, together with higher than expected variable royalties, drove total revenue of $211 million. This exceeds both our initial top-end guidance for Q1 total revenue of $116 million. and our updated, increased top-end guidance of $206 million that we announced at the time we signed VIVO.

Speaker Change: But rich you don't have the ability to call. It is that correct.

We're the last hearing we downloads on late last year October.

Speaker Change: So there are certain abilities.

Speaker Change: Since then the RV sugar panel has been essentially constitute all of the evidence and writing their decision.

Speaker Change: Over the term of that agreement.

Speaker Change: And then there is always as we've done in the past, there's always an ability to.

Speaker Change: We remain confidence confident about the marriage of our case and.

Speaker Change: Hi.

Speaker Change: Enter into a transaction.

But we don't have any new updates from them as of today.

Speaker Change: So we always look and this is always the case, we're always looking at our capital structure and figuring out what's the best next step.

Speaker Change: Yeah.

Speaker Change: Okay. Thank you and then in terms of additional litigation.

Speaker Change: So nothing to report there, but something that we actively monitor.

Speaker Change: What's going on there.

Speaker Change: Thing happening are.

Speaker Change: Great. Thanks, so much ill get back in the queue congrats on the quarter.

Speaker Change: Is it going to be dragged down do you think yes.

Speaker Change: Yes, so the Disney litigation, that's a you're all aware, we filed a leading Houston.

Speaker Change: Thank you Scott.

Speaker Change: February.

Speaker Change: And your next question comes from.

Speaker Change: Since then we have some confirmation of the core dates.

Speaker Change: <unk> strong from Sidoti. Please go ahead.

Speaker Change: Generally starts in Q4 this year.

Tom: Hi, and thank you for taking my question is Tom Congrats on the great.

<unk> into early next year.

Speaker Change: So we are encouraged by all the days of being said promptly in different jurisdiction and again look forward to demonstrate the merits of our case in Lasalle is of course proceedings.

Speaker Change: And progress you're making here.

Speaker Change: A follow up question on the Samsung application do you have any.

Richard Brezski: This compares to our strong first quarter revenue of $264 million last year when the signing of our Samsung TV license drove $160 million of catch-up revenue, albeit with related revenue share, which I'll cover in a moment. Our annualized recurring revenue, or ARR for the first quarter of 2025, increased 30% year-over-year to $503 million, which is a record level. The previously mentioned license with Evo under our Smartphone Program led the way. In the past several years, we have rebuilt our revenue pipeline by renewing major licenses with Apple and Samsung, and we also added multiple leading smartphone vendors from China.

Speaker Change: It seems like that had been pushed out a bit to have any sort of update there any time frame.

Speaker Change: Okay. Thank you and you mentioned inorganic opportunities.

Speaker Change: Yes.

Speaker Change: This learn so we currently do not have any new updates on <unk>.

Speaker Change: How actively are looking at that and what are you how is the market for gas right now.

Speaker Change: Whereas the last hearing me downwards on late last year October.

Speaker Change: <unk>.

Speaker Change: Yes, I didn't mean to signal anything thereon, yet, it's just really the natural order.

Speaker Change: Since then obviously Theyre panel has been essentially constitute all of the evidence and riding their decision.

Speaker Change: Our approach to capital allocation.

Speaker Change: We remain confidence confident about the merits of our case.

Speaker Change: It's the maintain a strong balance sheet organic investment look at inorganic opportunities and then return capital to shareholders. So really just reciting the way that.

Speaker Change: We don't have any new updates from them as of today.

Speaker Change: Yeah.

Speaker Change: Okay. Thank you and then in terms of their Destiny litigation.

Speaker Change: Our long standing strategy towards capital allocation.

Speaker Change: What's going on there if anything happening or.

Speaker Change: Okay. Thank you enough for me.

Speaker Change: This is going to be dragged up do you think yes.

Speaker Change: Yes, so the Disney litigation, that's a you're all aware, we filed a leading Houston.

Speaker Change: And your next question comes from Blayne Curtis from Jefferies. Please go ahead.

Richard Brezski: We have grown our share of the smartphone market under license from about 50% to roughly 80%. As a result, we have made significant progress towards our goal of $500 million in ARR from smartphones by 2027, having increased smartphone revenue by $120 million. Our subscription-based IP as a service model offers a high level of visibility and provides a reliable source of cash flow, even in the face of an uncertain economic environment. This enables us to continue to fuel our innovation engine and drive future revenue growth. Based on the strength of our intellectual property and the huge markets built upon it, we believe we are on track to grow ARR at a double-digit kegger towards our 2030 target of $1 billion plus.

Speaker Change: February.

Speaker Change: Since then we have some confirmation of the core dates.

Blayne Curtis: For taking my question and nice results guys.

Speaker Change: Generally starts in Q4 this year.

Blayne Curtis: Wanted to just drill in on the consumer Iot side. So you've made some good progress I was wondering if you can just walk us through the rest of the year in terms of your best prospects as well as milestones to be aware of there.

Speaker Change: <unk> into early next year.

Speaker Change: So we are encouraged by all the data being said promptly in different jurisdiction and Ob again look forward to demonstrate the merits of our case in Lasalle is of course proceedings.

Blayne Curtis: Yeah, Hey, Blaine good morning visa learn so on the consumer side, we continue to have the same multi pillar approach.

Speaker Change: Okay. Thank you and you mentioned inorganic opportunities.

Blayne Curtis: The largest opportunity continues to be the smart TV as you.

Blayne Curtis: Where are we signed the largest opportunities on television last year.

Speaker Change: How active we are looking at that and what are you how is the market for that right now you can.

Blayne Curtis: <unk> working on lots of opportunities with GE.

Speaker Change: <unk>.

Speaker Change: Yes, I didn't mean to signal anything thereon, yet, it's just really the natural order of our approach to capital allocation.

Blayne Curtis: <unk> items, so we optimized the century jobs before the number two position.

And we also announced with HP, we have more than 50% of the PC market and our license. So thats a very significant achievement for US and then there is other collateral of our opportunity set aerospace announced that there'll be a portion of them overall and the final thing I'll seeds and our Iot program. We also have.

Speaker Change: It's the maintain a strong balance sheet organic investment look at inorganic opportunities and then return capital to shareholders. So really just reciting the way that our longstanding strategy towards capital allocation.

Richard Brezski: Our adjusted EBITDA for first quarter of nearly $160 million increased 22% year-over-year and equates to an adjusted EBITDA margin of 76%. An increase of 27 points compared to 49% a year ago. The increase in adjusted EBITDA margin was largely attributable to a decrease in operating expense.

Speaker Change: Okay. Thank you and also for me.

Blayne Curtis: The.

Connected car program, which we are a founding member for our vantage platform for both <unk> and <unk> and through that platform. We have achieved quite a few new license agreement.

Blayne Curtis: And your next question comes from Blayne Curtis from Jefferies. Please go ahead.

Blayne Curtis: Thanks for taking my question and nice results guys.

Blayne Curtis: Just drilling on the consumer Iot side. So you've made some good progress I was wondering if you can just walk us through the rest of the year in terms of your best prospects as well as milestones to be aware of there.

Blayne Curtis: <unk>.

Blayne Curtis: <unk> progress, which you are already over 80% courage and and there is more than half a dozen new <unk> lenders signed up.

Richard Brezski: as most of the $69 million in rev share we reported in Q1 2024 related to the catch-up revenue under the Samsung TV agreement we signed last year. Nongap EPS rose 18% year over year to $4.21. and exceeded our increased guidance of $3.66 to $3.90 per share. Cash from operations and free cash flow were negative in Q1 with outflows of $20 million and $47 million respectively. As a reminder, this is not uncommon on a quarterly basis and is related to the timing of payments from our licensees. We continue to expect to have double-digit growth in free cash flow for 2025 over the strong levels we reported in 2024.

Blayne Curtis: Yeah, Hey, Blaine good morning, visa learn so on the consumer side.

Blayne Curtis: In the last quarter also so we are making really good progress.

Blayne Curtis: Continue to have the same multi pillar approach.

Blayne Curtis: Thanks for that.

Modeling question, and then I'll, maybe doing something wrong, but just trying to bridge EBITDA to EPS can you just comment on the tax rate in June and you've been kind of below I've been penciling in 17% even below that so maybe just tax rate for the year in any of the moving pieces on interest and shares with the convert.

Blayne Curtis: The largest opportunity continues to be the smart TV.

Blayne Curtis: We signed the largest opportunities on television last year.

Blayne Curtis: Absolutely working on lot of opportunities.

Blayne Curtis: E T C on biases, so we help them.

Blayne Curtis: Essentially jobs before the number two position.

Blayne Curtis: Yes, sure. So yes, the tax rate was low.

Blayne Curtis: And we also announced with HP, we have more than 50% of the PC market and our license. So thats a significant achievement for US and then there is other collateral of our key opportunity at aerospace announced that there'll be a portion of them overall and the final thing I'll say, it's and our Iot program. We also have.

Blayne Curtis: In the first quarter.

Blayne Curtis: And projects a little bit lower for the year.

Blayne Curtis: Part of what's driving that is when we book our stock based comp we had a.

Blayne Curtis: Increase in the share price driven by the Companys performance over the last year when that vest that results in a larger tax deduction and.

Blayne Curtis: The.

Blayne Curtis: Connected car program, which we are a founding member for Vantiv platform for both <unk> and <unk> and through that platform. We have achieved quite a few new license agreement.

Blayne Curtis: <unk> down a rate a little bit.

Blayne Curtis: For the quarter.

Blayne Curtis: So.

Blayne Curtis: Thats projecting for a little bit lower overall for the year as a result.

Richard Brezski: The strong cash flow inherent in our business, combined with a cash balance of nearly $900 million. supports our capital allocation priority. First, we aim to maintain, excuse me, we aim to maintain a strong balance sheet as financial strength is a strategic asset. Second, we'll continue to make organic investments in the business. And in recent years, we've invested around 50% of recurring revenue into research and portfolio development. Third, we will be opportunistic in exploring inorganic growth opportunities. though they are not required to achieve our 2030 financial targets. And fourth, we will continue returning excess cash to shareholders.

Blayne Curtis: And that's probably the primary thing that Youre looking at.

Blayne Curtis: On top of the <unk> progress, which you are already over 80% courage and then there is more than half a dozen new <unk> lenders signed up.

Blayne Curtis: On the.

Blayne Curtis: I think you asked about the dilution so I'll just mention that.

Blayne Curtis: On GAAP EPS.

Blayne Curtis: In the last in the quarter also so we are making really good progress.

Blayne Curtis: In my view almost double counting your China dilution on the convert and then all of the solution on the warrant without the benefit of the.

Speaker Change: Thanks for that and just a modeling question and then I'll, maybe doing something wrong, but just trying to bridge EBITDA to EPS can you just comment on the tax rate in June and you've been kind of below I've been penciling in 17% even below that so maybe just tax rate for the year in any of the moving pieces on interest and shares with the convert.

Blayne Curtis: Hedge that we have against the convert.

We make a denominator adjustment.

Blayne Curtis: For that in our non-GAAP EPS and you can see all the details about theirs.

Blayne Curtis: Sensitivity table.

Blayne Curtis: In the in the footnotes that describe that.

Blayne Curtis: Yes, sure. So yes, the tax rate was low.

Blayne Curtis: Thank you.

Blayne Curtis: Okay.

Speaker Change: In the first quarter.

Speaker Change: And before we proceed to the next question again, if you want to join the queue to ask another question simply press Star One and your next question comes from Arjun Bhatia.

Speaker Change: And projects a little bit lower for the year.

Speaker Change: Part of what's driving that is when we book our stock based comp we had a.

Richard Brezski: by way of share repurchases and dividends. In Q1, we returned $21 million to shareholders through buybacks and dividends. After accounting for additional share repurchases in April, we currently have approximately $216 million remaining on our buyback authorization.

Speaker Change: Increase in the share price driven by the Companys performance over the last year when that vest that results in a larger tax deduction.

Speaker Change: From William Blair. Please go ahead.

Arjun Bhatia: Thank you.

Speaker Change: And pushed down a rate a little bit.

Arjun Bhatia: Congrats on getting the deal sign et cetera.

Speaker Change: For the quarter.

Speaker Change: So.

Speaker Change: Thats projecting for a little bit lower overall for the year as a result.

One kind of broader question for Huron.

Richard Brezski: Looking forward to Q2. We already announced an important new agreement with HP that drives our expectations for another strong quarter. We expect Q2 revenues will be $165 to $175 million from existing contracts, including catch-up sales. Based only on existing contracts, we expect an adjusted EBITDA margin of about 65% and non-GAAP diluted earnings per share of $2.67 to $2.90.

Speaker Change: And that's probably the primary thing that Youre looking at.

Arjun Bhatia: <unk> video streaming opportunity I think it was in March that.

Speaker Change: On the.

Speaker Change: I think you asked about the dilution so I'll just mention that.

Arjun Bhatia: There was.

Arjun Bhatia: A deal signed between.

Speaker Change: non-GAAP EPS.

Speaker Change: Nokia and Amazon video streaming I'm curious just as you look at it.

Speaker Change: In my view almost double counting your China dilution on the convert and then all of the solution on the warrant without the benefit of the.

Speaker Change: Your opportunity in this market, how that might impact either but theres any litigation.

Or conversations that youre, having with other streaming services.

Speaker Change: <unk> that we have against the convert.

Speaker Change: We make a denominator adjustment.

Speaker Change: This can be a catalyst to speed up some of those negotiations and get those deals signed.

Speaker Change: For that in our non-GAAP EPS and you can see all the details about theirs.

Hey, good morning.

Speaker Change: Sensitivity table.

Speaker Change: In the in the footnotes that describe that.

Speaker Change: So yes, you are right.

Richard Brezski: Our second quarter guidance does not include the impact of any new agreements or arbitration results we may sign or receive over the balance of second quarter. Our strong first quarter results and our expectations for a strong Q2 have us well on track to meet our full year 2025 target. and we are reaffirming our prior guidance of revenue in the range of $660 to $760 million. We continue to expect adjusted EBITDA in the range of $400 to $495 million with non-gap earnings per share of $9.69 to $12.92.

Speaker Change: Thank you.

Speaker Change: Have seen the public announcement of Nokia's deal with Amazon that cover their streaming services.

Speaker Change: Okay.

Speaker Change: And before we proceed to the next question again, if you want to join the queue to ask another question simply press Star One and your next question comes from Arjun Bhatia.

Speaker Change: From our perspective, we believe that a good policy is to identify our whole industry.

Speaker Change: <unk>, Nokia and Amazon, both very large and sophisticated vendors.

Arjun Bhatia: From William Blair. Please go ahead.

Speaker Change: And the fact that both party recognizing.

Speaker Change: Large streaming function requires a take a license of those rather than the IPR is a good development having.

Arjun Bhatia: Thank you.

Arjun Bhatia: Congrats on getting the deal signed and that's it.

Speaker Change: Having said that though I always believe that interdigital licensing program rise on the merits of our own patent portfolio. So we intend to demonstrate the value of our portfolio through our negotiations as well.

Speaker Change: One kind of broader question for uranium.

Speaker Change: On the video streaming opportunity I think it was in March.

Speaker Change: There was.

Speaker Change: A deal signed between now.

Speaker Change: Nokia and Amazon video streaming I'm curious just as you look at it.

Speaker Change: Enforcement process, particularly is decent.

Raiford Garrabrant: With that, I'll turn it back to Raif. Thanks, Rich. Before we move to Q&A, I'd like to mention that we'll be attending a number of investor events in Q2, including the William Blair Growth Conference in Chicago, the Bayer Consumer Tech and Services Conference in New York City, the Bank of America Tech Conference in San Francisco, and the Roth London Conference. Please reach out to your representatives at those firms if you'd like to schedule a meeting.

Speaker Change: Okay.

Speaker Change: Your opportunity in this market, how that might impact either with Disney litigation.

Speaker Change: Okay understood. Thank you and.

Speaker Change: Maybe again, a little bit of a broader question, but as we're thinking of your long term smartphone goal of 500 million in recurring revenue.

Speaker Change: Our or conversations that youre, having with other streaming services.

Speaker Change: This can be a catalyst to speed up some of those negotiations and get those deals signed.

Speaker Change: Think about how that might breakdown between.

Speaker Change: Hey, good morning.

Speaker Change: So yes, you are right.

Speaker Change: What is dependent on your existing contracts.

Speaker Change: Have seen the public announcement of Nokia's deal with Amazon that cover their streaming services.

Speaker Change: Kind of getting an uplift.

Speaker Change: That renewal versus just capturing the top 10, but you're looking you mentioned you have some of the top 10 smartphone OEM has already and so is the incremental growth.

Raiford Garrabrant: In addition, we are hosting our annual meeting of shareholders, which is virtual, on June 11 at 2 p.m.

Speaker Change: From our perspective, we believe that a good policy is to identify a whole industry.

Operator: At this point, friends, we are ready to take questions. Thank you and we will now begin the question and answer session and at this time if you would like again to ask a question press star followed by the number one on your telephone keypad and to withdraw it you just need to press star and then followed by the number one again.

<unk>, Nokia and Amazon, both very large and sophisticated vendors.

Speaker Change: The remaining three or is that getting uplift.

Speaker Change: And the fact that both party recognizing.

Speaker Change: As you renew and Xiaomi for example, or somewhat other Oems that might come up for renewal over the next few years here.

Speaker Change: Large streaming function requires a take a license of those rather than the IPR is a good development having.

Speaker Change: Yes.

Speaker Change: Having said that though I always believe that interdigital sizes and program rise on the merits of our own patent portfolio. So we intend to demonstrate the value of our portfolios through our negotiations as well.

Speaker Change: So our goal to reach $500 million by 2027 core recurring it's primarily based on our need to add to the customer that's using our technology and sometimes for a very long period of time, but the licensee.

Speaker Change: Enforcement process, particularly is decent.

Speaker Change: Okay.

Speaker Change: That's our primary tool to get to that target.

Speaker Change: Okay understood. Thank you and.

Speaker Change: Maybe again, a little bit of a broader question, but as.

Speaker Change: Regarding renewals, we take every renewal very seriously obviously, but we also look at how.

Speaker Change: If we're thinking of your long term smartphone goal of $500 million in recurring revenue.

Speaker Change: How much they have benefited more overtime.

Scott Searle: The first question comes from the line of Scott Searle from Roth Capital. Please go ahead.

Speaker Change: That's deepening their market share changes, there or product mix changes and some time.

Speaker Change: How do you think about how that might breakdown between.

Speaker Change: What is dependent on your existing contract.

Speaker Change: It also depends on our negotiation with them for different customer category regarding product or what they have expanded too. So it's a multi parameter negotiation and we always try to negotiate a deal that's fair to both party that reflects the value of our IP are back to a question or a smartphone licensing program.

Scott Searle: Hey, good morning, Laren, Rich, Raiford, congrats on getting Vivo across the finish line. Thanks, Scott. Maybe just quickly too, I want to clarify on the 2Q guidance, these are all existing contracts that are in hand. So the big one that's happened so far in the quarter to date is HP. So that $40 million increase is HP and or maybe other smaller accounts, nothing coming in from anticipated Samsung arbitration or other Chinese-based OEMs. Is that correct? Yeah, that's right, Scott. So we're, you know, Q2 guidance is set off existing contracts in hand today, and does not include anything we may sign over the balance of the year.

Speaker Change: Kind of getting an uplift.

Speaker Change: At renewal versus just capturing the top 10, because you're you mentioned you have seven of the top 10 smartphone OEM has already and so is the incremental growth just signing the remaining three or is it getting uplifts.

Speaker Change: Marty based on our need to add those new customers.

Speaker Change: As you renew and Jeremy for example, or some other other Oems that might come up for renewal over the next few years here.

Speaker Change: Alright, perfect. Thank you Mark.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: So our goal to reach $500 million by 2027 core recurring it's primarily based on our need to add to the customer that's using our technology and sometimes for a very long period of time.

Leiyin Chen: There are no further questions at this moment and now I would like to turn the call back over to layer in Chen Chief Executive Officer for the closing remarks. Please go ahead.

Scott Searle: And I noted, also does not include any arbitration results we may receive. Gotcha.

Speaker Change: The license fee.

Leiyin Chen: Thank you operator before we close I'd like to thank our employees for their dedication and contribution between the digital as well as our many partners and licensee for a strong quarter.

Scott Searle: And then if I could, and then I'll get back in the queue.

Speaker Change: That's our primary tool to get to that target.

Lawrence Chen: Liren, maybe from a macro level, kind of the geopolitical environment, how that is impacting or not impacting discussions in terms of your timelines and engagement with those customers. And Rich, on the Convert, now it moves into, you know, current accounts. I think within the queue, you talk about it being at current price levels, maybe 3 million shares. I'm wondering if you could take us through kind of what you anticipate to happen as it relates to the Convert, if you expect it to be Convert, you know, and how we should be treating that from an earnings basis going forward.

Speaker Change: Regarding renewals, we take every renewal very seriously obviously, but we also look at how.

Speaker Change: How much they have benefited more overtime.

Leiyin Chen: Thank you to everyone, who joined today's call and we look forward to updating you on our progress next quarter.

Speaker Change: That's deepening their market share changes, there or product mix changes and some time.

Speaker Change: It also depends on our negotiation with them for different customer category regarding product or what they have expanded too. So it's a multi parameter negotiation, we always try to negotiate a deal that's fair to both party that reflects the value of our IP Abaxis question, our smartphone licensing program.

Richard Brezski: Thanks.

Lawrence Chen: Yeah, hey, good morning, Scott.

Lawrence Chen: I'll take the first question. Regarding the macro geopolitical environment, as well as the current tariff situation. So far, we don't see any impact to our business. And as you are aware, our business surrounding developing foundational technology, share them through, you know, open global standard process, and then licensing people, primarily through a long term, fixed fee agreement, by its that does not really change, you know, quarter by quarter due to the fluctuation of shipment during the term of the contract. So obviously the situation is pretty dynamic, and we are keeping, you know, really close monitor of the situation.

Speaker Change: Based on our need to add those new customers.

Speaker Change: Alright, perfect. Thank you Mark.

Speaker Change: Yes.

Speaker Change: There are no further questions at this moment and now I would like to turn the call back over to layering Chen Chief Executive Officer for the closing remarks. Please go ahead.

Layering Chen: Thank you operator before we close I'd like to thank our employees for their dedication and contribution between the digital as well as our many partners and licensee for a strong quarter.

Layering Chen: Thank you to everyone, who joined today's call and we look forward to updating you on our progress next quarter.

Richard Brezski: And Scott, regarding the convert. So while I'm current, it actually doesn't mature until spring of 27. That's a function of where the stock price is, and certain features in that. But typically, and you know, where we've been in the money in the past, and my understanding more generally is, typically, those things don't convert early until they're even further in the money. Because, you know, the convert holders have optionality with the current instrument.

Layering Chen: Okay.

Layering Chen: [music].

Layering Chen: Yes.

Layering Chen: Okay.

Layering Chen: [music].

Layering Chen: Okay.

Layering Chen: [music].

Richard Brezski: But Rich, you don't have the ability to call it, is that correct? So there are certain abilities over the term of that agreement, and there's always, as we've done in the past, there's always an ability to, you know, enter into a transaction. So we always look in, you know, this is always the case, we're always looking at our capital structure and figuring out, you know, what's the best next step. So nothing to report there, but something that we actively monitor.

Layering Chen: Okay.

Layering Chen: Okay.

Layering Chen: [music].

Layering Chen: Okay.

Scott Searle: Great, thanks so much. I'll get back in the queue. Congrats on the quarter. Thank you, Scott.

Layering Chen: [music].

Anja Söderström: And your next question comes from Anja Soderstrom from CIDHOTI. Please go ahead. Hi, and thank you for taking my questions, and congrats on the great progress you're making here. I have a follow-up question on the Samsung arbitration. Do you have any – it seems like that has been pushed out a bit. Do you have any sort of update there or any timeframe?

Layering Chen: Okay.

Layering Chen: [music].

Layering Chen: Okay.

Layering Chen: [music].

Lawrence Chen: Yeah, see, this learn. So we currently do not have any new updates. As you are aware, the last hearing we done was late last year, October. Since then, the arbitrator panel has been essentially consider all the evidence and writing their decision. And we remain confident, confident about the merits of our case. And but we don't have any new updates from them as of today. Okay, thank you.

Lawrence Chen: And then in terms of the Disney litigation, what's going on there? This is going to be dragged out, you think. Yeah, so the Disney litigation, as you are aware, we filed the litigation early February. And since then, we have some confirmation of the court dates, which generally starts in Q4 this year, and expands into early next year. So we are encouraged by, you know, all the dates are being set promptly in different jurisdictions. And we again, look forward to demonstrate the merits of our case in the court proceedings.

Anja Söderström: Okay, thank you.

Anja Söderström: And you mentioned inorganic opportunities. How actively are you looking at that and how is the market for that right now, do you see?

Lawrence Chen: Yeah, I didn't mean to signal anything there, Anja. It's just really the natural order of our approach to capital allocation. You know, it's the maintain a strong balance sheet, organic investment, look at inorganic opportunities, and then return capital to shareholders. So it's really just reciting the way that, you know, our long standing strategy towards capital allocation.

Anja Söderström: Okay, thank you. That was all for me.

Blayne Curtis: And your next question comes from Blayne Curtis from Japan. Please go ahead. Thanks for taking my question and next results guys. I wanted to just drill in on the consumer IoT side. So you've made some good progress.

Blayne Curtis: I was wondering if you can just walk us through the rest of the year in terms of your best prospects as well as milestones to be aware of this.

Lawrence Chen: Yeah, hey Blayne, good morning, this is Lern. So on the consumer IoT side, we continue to have the same multi-pillar approach. The largest opportunity continues to be the smart TV. As you are aware, we signed the largest opportunity in Samsung TV last year. We are actually working on multiple opportunities with LG, TCL, and Tizen, three of them are essentially just for the number two position. And we also announced with HP, we have more than 50% of the PC market under license. So that's a very significant achievement for us.

Lawrence Chen: And then there's other collection of IoT opportunities, settlers-based and non-settlers, that we are pushing them overall. And the final thing I'll say is under our IoT program, we also have the Connected Car Program, which we are a founding member for, of anti-platform for both 4G and 5G. And through that platform, we have achieved quite a few new license agreement on top of the 4G progress, which we were already over 80% coverage. And then there's more than half a dozen new 5G car vendors signed up in the last quarter also. So we are making really good progress.

Blayne Curtis: Thanks for that.

Richard Brezski: And just a modeling question, and I might be doing something wrong, but just trying to bridge EVADATA to EPS, can you just comment on the tax rate in June? And you've been kind of below, I've been penciling in 17%, you've been below that.

Richard Brezski: So maybe just tax rate for the year and any other moving pieces on interest and shares with the convert? Yeah, sure. So yeah, the tax rate was low in the first quarter and projects a little bit lower for the year. Part of what's driving that is when we book our stock-based comp, we had an increase in the share price driven by the company's performance over the last year. When that vests, that results in a larger tax deduction and push down our rate a little bit for the quarter. So that's projecting for a little bit lower overall for the year as a result.

Richard Brezski: And that's probably the primary thing that you're looking at.

Richard Brezski: I think you asked about the dilution. So I'll just mention that on GAAP EPS, it's, in my view, almost double counting. You're counting the dilution on the convert and then all the dilution on the warrant without the benefit of the hedge that we have for that in our non-GAAP EPS. And you can see all the details of that. There's a sensitivity table in the footnotes that describe that.

Operator: Thank you. And before we proceed to the next question, again, if you want to join the queue to ask another question, simply press star one.

Layering Chen: [music].

Arjun Bhatia: And your next question comes from Arjun Bhatia. from William Blair. Please go ahead. Rick, thank you.

Arjun Bhatia: And I'll add my congrats on getting the VIVO deal signed. I said, um, maybe one kind of broader question for you, Aaron, on the video streaming opportunity. I think it was in March that there was a deal signed between Nokia and Amazon on video streaming. I'm curious, just as you look at your opportunity in this market, how that might impact either the Disney litigation or conversations that you're having with with other streaming services and you know if this can be a catalyst maybe to speed up some of those negotiations and get those deals signed. Yeah, hey, Arjun.

Speaker Change: Good morning, and welcome to the first quarter 'twenty to 'twenty five earnings call.

Speaker Change: I am friends and I'll be the operator, assisting you today all lines have been placed on mute to prevent any background noise out there. The speaker's remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press Star and then one on your telephone keypad.

Speaker Change: If you would like to withdraw your question Press Star one again, thank you.

Speaker Change: I would now like to turn the call over to Raiford Garrabrant head of Investor Relations.

Lawrence Chen: Good morning. So yes, you are right. We have seen the public announcement of Nokia's deal with Amazon that covers their streaming services. From our perspective, we believe that's a good positive development for our whole industry. Obviously, Nokia and Amazon, both very large and sophisticated vendors. And the fact that both parties recognizing large streaming function requires to take a license of those relevant IPR is a good development. Having said that, though, I always believe that InterDigital licensing program rides on the merits of our own patent portfolio. So we intend to demonstrate the value of our portfolio through our negotiation as well as enforcement process, particularly with decent Okay, understood.

Speaker Change: Please go ahead.

Speaker Change: Thank you, France and good morning, everyone.

Speaker Change: Welcome to the Interdigital first quarter 2025 earnings conference call.

Raiford Garrabrant: Raiford Garrabrant head of Investor Relations for Interdigital.

Speaker Change: With me on today's call, our Alere <unk>, Chen, our president and CEO and rich <unk> our CFO.

Speaker Change: Just as with prior calls we will offer some highlights about the quarter and the company and then open the call up for questions for additional details.

Speaker Change: Can access our earnings release and slide presentation that accompany this call on our Investor Relations website.

Speaker Change: Before we begin our remarks I'll 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.

Arjun Bhatia: Thank you.

Arjun Bhatia: And maybe again, a little bit of a broader question, but as we're thinking of your long term smartphone goal of 500 million in recurring revenue, How do you think about how that might break down between what is dependent on your existing contracts, kind of getting an uplift at renewal versus just capturing the top 10? Because you're, as you mentioned, you have seven of the top 10 Smart Fund OEMs already. And so is the incremental growth just signing the remaining three? Or is it getting uplift? You know, as you renew Xiaomi, for example, or some other OEMs that might come up for renewal in the next few years.

Speaker Change: Could cause actual results or events to differ materially from results under that's contemplated by such forward looking statements.

Speaker Change: These risks and uncertainties include those described in the risk factors sections of our 2024 annual report on Form 10-K and in our other SEC filings.

Speaker Change: In addition, today's presentation may contain references to non-GAAP financial measures reconciliations.

Speaker Change: Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the supplemental materials posted to the Investor Relations section of our website.

Speaker Change: Taken care of I will turn the call over to Larry.

Larry: Thanks, Robert Good morning, everyone. Thanks for joining us today.

Lawrence Chen: Yeah.

Lawrence Chen: Hey, Arjun. So our goal to reach $500 million by 2027 for recurring is primarily based on our need to add the customer that's, you know, using our technology and sometime for a very long period of time as a licensee. And that's our primary tool to get to that target. And regarding renewals, we take every renewal, you know, very seriously, obviously, but we also look at how much they have benefited more over time. That's dependent on their market share changes, their product mix changes, and sometimes it also depends on, you know, our negotiation with them for different customer category regarding product or what they have expanded to.

Larry: Our last call, we provided annual guidance for 2025 lease revenue of between $660 million and $760 million.

These guidance highlights the increasing momentum of our business and a mouthful goose opportunity that we have identified and expect to achieve sort of the rest of this year.

Larry: Today I'm pleased to share that we have made significant headway in achieving our goal.

Larry: And reconfirm, our 2025 annual guidance.

Larry: Okay.

Larry: During these quarter, we licensed label mobile a major smartphone manufacturer to drive revenue above the top end our guidance increase our annual recurring revenue to all time record level.

Lawrence Chen: So it's a multi-parameter negotiation and we always try to negotiate a deal that's fair to both parties that reflects the value of our IP. But back to your question, our smartphone licensing program is primarily based on our need to add those new customers.

Larry: We were also once again recognized as one of the world's leading innovators demonstrate our cutting edge technology at mobile Congress Tradeshow.

Shortly after quarter closed we signed another major license agreements HP <unk>.

Larry: Consumer electronics and our key program.

Arjun Bhatia: All right, perfect.

Arjun Bhatia: Thank you, Lauren.

Larry: Our revenue adjusted EBITDA and non-GAAP EPS for Q1 were all above the top end of our guidance.

Lawrence Chen: There are no further questions at this moment, and now I would like to turn the call back over to Liren Chen, Chief Executive Officer, for the closing remarks. Please go ahead. Thank you, Operator.

Larry: The revenue from our smartphone program more than doubled year over year.

Larry: Our annualized recurring revenue is up 30% year over year.

Larry: All time record of more than half a billion dollars.

Lawrence Chen: Before we close, I'd like to thank our employees for their dedication and contribution to InterDigital, as well as our many partners and licensees for a strong quarter.

Larry: Rich will go over all the numbers in detail in his section.

Larry: The program, we have made gave us a very strong base from which to execute our strategy and drive long term growth for the company.

Lawrence Chen: Thank you to everyone who joined today's call and we look forward to updating you on our progress next quarter.

Larry: The long term stable nature of our licensing agreement with over 90% of our revenue coming from long term fixed fee agreements.

Larry: I enquired, both strong platform from which to even backing our research Charlene innovation store license and deliver shareholder value.

Larry: Some of you may be aware, we will it's a top 10 global smartphone manufacturer with significant market share.

Larry: Ships over 100 million devices per year.

Larry: Our new agreements, we will follow our new agreement with <unk> joined the Q4 last year.

Larry: We now have seven of the top 10 largest manufacturer.

Larry: Smartphone vendors.

Larry: And almost 80% of the entire global smartphone market under license.

Larry: So we will our agreement also represents another significant step towards our goal of achieving a $500 million.

Larry: <unk> annual recurring revenue or smartphone program by 2027.

Larry: Adding to our recent momentum at the start of second quarter, We also announced a new multi year licensing agreement with HP, which license HP personal computers to our Wi Fi and redo decoding technologies.

Larry: HP is one of the world's largest PC manufacturer.

Larry: With this agreement we have licensed.

Larry: It's more of that 50% of the PC market.

Larry: This is also another security milestone lets me keep on driving growth in our consumer electronics and our key licensing program.

Larry: I'm also pleased that both HP and they will license like the vast majority of our license agreement was signed through amicable negotiation.

Larry: With additional legal and HP contract the accumulated total contract value that we have signed since 'twenty 'twenty. One is now more than three $6 billion.

Larry: So as I mentioned in our prior earnings call, we arent binding arbitration to settle the final terms of our license with Samsung for mobile devices.

Larry: The party finished all of the hearing last October and will be back to have a final decision.

Larry: As a reminder, since already agreed to take a license to our portfolio starting from January one of 2023.

Larry: These binding arbitration, we have determined the final term of the license.

Larry: In the first quarter, we build on our strong track record of returning capital to shareholders by increasing our dividend from <unk> 45 to <unk> <unk> per share.

Larry: In fact since Q3 of last year, we have increased our dividend by 50%.

Larry: Our success in our licensing program is only possible because of the quality of our research and the leadership of engineered across wireless <unk> and AI.

Larry: Interdigital is one of the few companies that lead in the development of foundational technology in all of these three areas.

Larry: In the first quarter for the fourth year in a row, we were recognized by the excess in excess.

Speaker Change: <unk> top 100 innovators analysis, we look at both the impact of our innovation to date and the likely impact in the future.

Speaker Change: Our engineers are already closely involved in the early stage of 60, which is beginning to take shape and which we believe will help to drive our growth across multiple verticals.

Speaker Change: Into 2000 Thirty's.

Speaker Change: Also in the first quarter at mobile World Congress in Barcelona, we showcased the way in which we drive evolution of wireless radio in AI and.

Speaker Change: <unk> been senior engineers from each of our three labs demonstrate higher research a changing connectivity in areas like immersive video.

Speaker Change: Same thing in wireless network and the optimization of our applications.

Speaker Change: In the first quarter, we also announced our two inventor of the year with volume from our wireless lab and the other from a redo that.

Speaker Change: We are a company of inventors and as I tell our teams internally our inventory year of the award is the most important accolades Debbie announced each year.

Speaker Change: Both of these yet experienced engineers, who have dedicated their careers to make wireless networks smarter and more efficient.

Speaker Change: We improve connectivity in areas like our key and XR.

Speaker Change: And to develop next generation, we do some more advanced compression and wider deployment of AI.

Speaker Change: This dedication to research and are laser focused in technology that are foundational to how we connect.

Speaker Change: Combined with our execution across our licensing programs.

Speaker Change: We continue to differentiate interdigital.

Speaker Change: Give us such a powerful platform for growth.

Speaker Change: And with that I'll, let rich talk you through our first quarter numbers in more detail.

Rich Raiford: Thanks Lynn.

Rich Raiford: I am pleased to report that 2025 is off to a great start with Q1 revenue adjusted EBITDA and non-GAAP EPS all exceeding the high end of our guidance range.

Rich Raiford: This performance was powered by our new license agreement with vivo a top smartphone manufacturer based in China.

Rich Raiford: The new agreement with vivo together with higher than expected variable royalties.

Rich Raiford: Total revenue of $211 million.

Rich Raiford: This exceeds both our initial top end guidance for Q1 total revenue of $160 million.

Rich Raiford: And our updated increased top end guidance of $206 million that we announced at the time, we signed vivo.

Rich Raiford: This compares to a strong first quarter revenue of $264 million last year, when the signing of our Samsung TV license drove $160 million of catch up revenue.

Rich Raiford: With related revenue share, which I'll cover in a moment.

Rich Raiford: Our annualized recurring revenue or <unk> for the first quarter 2025 increased 30% year over year to $503 million, which is a record level.

Rich Raiford: The previously mentioned license with vivo under our smartphone program led the way.

Rich Raiford: In the past several years, we have rebuilt our revenue pipeline by renewing major licenses with Apple and Samsung and we also added multiple leading smartphone vendors from China.

Rich Raiford: We have grown our share of the smartphone market under license from about 50% to roughly 80%.

Rich Raiford: As a result, we have made significant progress towards our goal of 500 million in IRR from smartphones by 2027, having increased smartphone revenue by $120 million.

Rich Raiford: Our.

Rich Raiford: <unk> based IP as a service model offers a high level of visibility and provides a reliable source of cash flow even in the face of an uncertain economic environment.

Rich Raiford: This enables us to continue to fuel our innovation engine and drive future revenue growth.

Rich Raiford: Based on the strength of our intellectual property and the huge markets build upon it. We believe we are on track to grow.

Rich Raiford: <unk> had a double digit CAGR towards our 2030 target of $1 billion plus.

Rich Raiford: Our adjusted EBITDA for first quarter of nearly $160 million increased 22% year over year and equates to an adjusted EBITDA margin of 76%.

Rich Raiford: An increase of 27 points compared to 49% a year ago.

Rich Raiford: The increase in adjusted EBITDA margin was largely attributable to a decrease in operating expense.

Rich Raiford: As most of the $69 million in Rev share, we reported in Q1 2024.

Rich Raiford: Related to the catch up revenue under the Samsung TV agreement, we signed last year.

Rich Raiford: non-GAAP EPS rose, 18% year over year to $4 21.

Rich Raiford: And exceeded our increased guidance of $3 60 66 to.

Rich Raiford: To $3 90 per share.

Rich Raiford: Cash from operations and free cash flow were negative in Q1 with outflows of $20 million and $47 million respectively.

As a reminder, this is not uncommon on a quarterly basis and there is related to the timing of payments from our licensees.

Rich Raiford: We continue to expect to have double digit growth in free cash flow for 2025 over.

Rich Raiford: Over the strong levels, we reported in 2024.

Rich Raiford: The strong cash flow inherent in our business combined with a cash balance of nearly $900 million.

Rich Raiford: Supports our capital allocation priorities.

Rich Raiford: First we aim to mainstream excuse me, we aim to maintain a strong balance sheet as financial strength is a strategic asset.

Second we will continue to make organic investments in the business.

Rich Raiford: And in recent years, we've invested around 50% of recurring revenue and the research and portfolio development.

Rich Raiford: Third we will be opportunistic and exploring inorganic growth opportunities.

Rich Raiford: So they are not required to achieve our 2030 financial targets.

Rich Raiford: And fourth we will continue returning excess cash to shareholders.

Rich Raiford: By way of share repurchases and dividends.

Rich Raiford: In Q1, we returned $21 million to shareholders through buybacks and dividends.

Rich Raiford: After accounting for additional share repurchases in April we currently have approximately $216 million remaining on our buyback authorization.

Rich Raiford: Looking forward to Q2.

Rich Raiford: We already announced an important new agreement with HP that drives our expectations for another strong quarter.

Rich Raiford: We expect Q2 revenues will be $165 million to $175 million from existing contracts, including catch up sales.

Rich Raiford: Based only on existing contracts, we expect an adjusted EBITDA margin of about 65% and non-GAAP diluted earnings per share of $2 67.

Rich Raiford: Our second quarter guidance does not include the impact of any new agreements or arbitration results, we may sign or receive over the balance of the second quarter.

Our strong first quarter results and our expectations for a strong Q2 have us well on track to meet our full year 2025 targets and.

Rich Raiford: And we are reaffirming our prior guidance of revenue in the range of $660 million to $760 million.

Rich Raiford: We continue to expect adjusted EBITDA in the range of $400 million to $495 million with.

Rich Raiford: With non-GAAP earnings per share of $9 69.

Rich Raiford: To $12 92.

Rich Raiford: With that I'll turn it back to wafer.

Speaker Change: Thanks, Rich before we move to Q&A I'd like to mention that we'll be attending a number of investor events in Q2.

Rich Raiford: And the William Blair growth conference in Chicago.

Rich Raiford: They are consumer Tech and services conference in New York City Bank.

Rich Raiford: Bank of America Tech Conference in San Francisco, and the Roth London Conference. Please reach out to your representatives at those firms if you'd like to schedule a meeting.

Rich Raiford: In addition, we are hosting our annual meeting of shareholders, which is virtual on June 11 at two P. M.

Rich Raiford: At this point, France, we are ready to take questions.

Speaker Change: Thank you and we will now begin the question and answer session and at this time, if you will.

Speaker Change: I'd like again to ask a question press star followed by the number one on your telephone keypad and to withdraw it you just need to press Star and then followed by the number one again.

Speaker Change: If you have called upon to ask your question and our listening via loud speaker device. Please pickup your handset and ensure that your phone is not on mute.

Speaker Change: Asking your question and just a reminder, we ask that you. Please limit your question to one with one follow up only.

Speaker Change: And as of now.

Speaker Change: The first question comes from the line of spots hero from Roth Capital. Please go ahead.

Speaker Change: Hey, good morning, Laura and rich raiford, congrats on getting vivo across the finish line.

Speaker Change: Thanks Scott.

Speaker Change: Maybe maybe just quickly to I want to clarify on the two key guidance. These are all existing contracts that are in hand, so the big one that's happened so far in the quarter to date as HP. So that $40 million increase is HP <unk> may be other smaller accounts nothing coming in from anticipated Samsung arbitration or other chine.

Speaker Change: These based Oems is that correct.

Speaker Change: Yes, Thats right Scott So we're.

Speaker Change: Q2 guidance is set off existing contracts in hand today.

Speaker Change: And does not include anything we may sign over the balance of the year and I noted also does not include any arbitration results we may receive.

Speaker Change: Got you and then if I could and then I'll get back in the queue.

Speaker Change: And maybe from a macro level kind of the geopolitical environment, how that is impacting or not impacting discussions and.

Speaker Change: And in terms of.

Speaker Change: And your timelines.

Speaker Change: Engagement with those customers and rich on the convert now it moves into.

Speaker Change: Current accounts.

Speaker Change: I think within the Q you talked about it being at current price levels, maybe 3 million shares I'm wondering if you could take us through kind of what you anticipate to happen and as it relates to the converge if you expect it to be convert.

Speaker Change: And how we should be treating that from an earnings basis going forward. Thanks.

Speaker Change: Yeah, Hey, good morning, Scott I'll take the first question regarding.

Speaker Change: Regarding the macro geopolitical environment as well as the current tariff situation.

Speaker Change: We don't see any impact to our business.

Speaker Change: As you all where our business surrounding <unk> foundational technology share them through open global standard process, and then licensing people primarily through long term fixed fee agreement biased.

Speaker Change: By its nature that does not really change.

Speaker Change: Quarter by quarter due to the fluctuation of shipment during the time with the contract.

Speaker Change: So obviously the situation is dynamic and we are keeping a close monitor the situation.

Scott: And Scott regarding the convert.

Speaker Change: While incurring it actually doesn't mature until spring of 'twenty seven thats a function of.

Speaker Change: Where the stock prices and certain features in that but typically where we've been in the money in the past and my understanding Jim more generally is typically those things.

Speaker Change: Don't convert early until they're even further in the money.

Speaker Change: Because the convert holders have optionality.

Speaker Change: The current instrument.

Speaker Change: But rich you don't have the ability to call. It is that correct.

Speaker Change: So there are certain abilities.

Speaker Change: The term of that agreement.

Speaker Change: And there is always as we've done in the past, there's always an ability to.

Speaker Change: Enter into a transaction.

Speaker Change: So we always look and this is always the case, we're always looking at our capital structure and figuring out what's the best next step.

Speaker Change: So nothing to report there, but something that we actively monitor.

Speaker Change: Great. Thanks, so much ill get back in the queue congrats on the quarter.

Speaker Change: Thank you Scott.

Speaker Change: And your next question comes from.

Speaker Change: <unk> strong from Sidoti. Please go ahead.

Don Congrats: Hi, and thank you for taking my question is Don Congrats on <unk>.

Speaker Change: And progress you're making here.

Don Congrats: I have a follow up question on the Samsung application do you have any.

Speaker Change: It seems like that had been pushed out a bit do you have any sort of update there any time frame.

Don Congrats: Yes.

Don Congrats: Learn so we currently do not have any new updates on <unk>.

Don Congrats: Whereas the last hearing we downloads on late last year October.

Don Congrats: Since then obviously our panel has been essentially constitute all of the evidence and writing their decision.

Don Congrats: And we remain confidence confident about the merits of our case.

Don Congrats: We don't have any new updates from them as of today.

Don Congrats: Yeah.

Don Congrats: Okay. Thank you and then in terms of the <unk> litigation.

Don Congrats: What's going on there is anything happening or.

Don Congrats: This is going to be dragged down do you think.

Don Congrats: Yes, so the Disney litigation, that's a you're all aware, we filed a leading Houston 30 February and.

Don Congrats: Since then we have some confirmation of the core dates.

Don Congrats: Generally starts in Q4, this year and expanding into early next year.

So we are encouraged by all the days of being said promptly in different jurisdiction and again look forward to demonstrate the merits of our case in Lasalle is of course proceedings.

Speaker Change: Okay. Thank you and you mentioned inorganic opportunities.

Speaker Change: How actively are looking at that and what are you how is the market for that late night P&C.

Speaker Change: Yes, I didn't mean to signal anything thereon, yet, it's just really the natural order.

Speaker Change: Our approach to capital allocation.

Speaker Change: Maintaining a strong balance sheet organic investment look at inorganic opportunities and then return capital to shareholders. So really just reciting the way that.

Speaker Change: Our longstanding strategy towards capital allocation.

Speaker Change: Okay. Thank you and I will call for me.

Blayne Curtis: And your next question comes from Blayne Curtis from Jefferies. Please go ahead.

Blayne Curtis: Thanks for taking my question and nice results guys.

Blayne Curtis: Just drilling in on the consumer Iot side. So you've made some good progress I was wondering if you can just walk us through the rest of the year in terms of your best prospects as well as milestones to be aware of there.

Blayne Curtis: Yeah, Hey, Blaine good morning, this learn so on the consumer side.

Blayne Curtis: Continue to have the same multi pillar approach.

Blayne Curtis: The largest opportunity continues to be the smart TV.

Speaker Change: Where are we signed the largest opportunities on television last year.

Blayne Curtis: Absolutely working on lots of opportunities.

Blayne Curtis: Key <unk> items, so we help them.

Blayne Curtis: Essentially jobs before the number two position.

Blayne Curtis: And we also announced with HP, we have more than 50% of the PC market and our license. So thats a significant achievement for US and then there is other collateral of our key opportunity at Aerospace announced February there'll be a portion of them overall and the final thing I'll seats and our Iot program. We also have.

Blayne Curtis: The.

Blayne Curtis: Connected car program, which we are a founding member for Vantiv platform for both <unk> and <unk> and sort of that platform. We have achieved quite a few new license agreement.

Blayne Curtis: On top of the <unk> progress, which we're already over 80% courage and then there is more than half a dozen new <unk> lenders signed up.

Blayne Curtis: In the last quarter also so we are making really good progress.

Speaker Change: Thanks for that and just a.

Speaker Change: A modeling question on maybe doing something wrong, but just trying to bridge EBITDA to EPS can you just comment on the tax rate in June and you've been kind of below I've been penciling in 17% even below that so maybe just tax rate for the year in any of the moving pieces on interest and shares with the convert.

Speaker Change: Yes, sure. So yes, the tax rate was low.

Speaker Change: In the first quarter.

Speaker Change: And projects a little bit lower for the year.

Speaker Change: Part of what's driving that is when we book our stock based comp we had a.

Speaker Change: Increase in the share price driven by the Companys performance over the last year when that vest that results in a larger tax deduction.

Speaker Change: And pushed down our way a little bit.

Speaker Change: For the quarter.

Speaker Change: So.

Speaker Change: Thats projecting for a little bit lower overall for the year as a result.

Speaker Change: And that's probably the primary thing that Youre looking at.

Speaker Change: On the.

Speaker Change: I think you're asking.

Speaker Change: About the dilution so I'll just mention that.

Speaker Change: non-GAAP EPS.

Speaker Change: It's in my view almost double counting your China dilution on the convert and then all the solution on the warrant without the benefit of the hedge that we have against the convert.

Speaker Change: We make a denominator adjustment.

Speaker Change: For that in our non-GAAP EPS and you can see all the details about theirs.

Speaker Change: Sensitivity table.

Speaker Change: In the in the footnotes that describe that.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: And before we proceed to the next question again, if you want to join the queue to ask another question simply press Star One and your next question comes from Arjun Bhatia.

Speaker Change: From William Blair. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Congrats on getting the deal signed and that's it.

Speaker Change: One kind of broader question for you Larry.

Speaker Change: The video streaming opportunity I think it was in March that.

Speaker Change: There was.

Speaker Change: A deal signed between.

Speaker Change: Nokia and Amazon video streaming I'm curious just as you look at it.

Speaker Change: Your opportunity in this market, how that might impact either but theres any litigation.

Speaker Change: Or conversations you are having with other streaming services.

Speaker Change: This can be a catalyst to speed up some of those negotiations and get those deals side.

Speaker Change: Hey, good morning.

Speaker Change: So yes, you are right.

Speaker Change: Have seen the public announcement of Nokia's deal with Amazon that cover their streaming services.

Speaker Change: From our perspective, we believe that a good policy is to add me if our whole industry.

Speaker Change: <unk>, Nokia and Amazon, both very large and sophisticated vendors.

Speaker Change: And the fact that both party recognizing.

Speaker Change: Large streaming function requires a take a license of those rather than the IPR is a good development having.

Speaker Change: Having said that though I always believe that interdigital licensing program rise on the merits of our own patent portfolio. So we intend to demonstrate the value of our portfolio through our negotiations as well.

Speaker Change: Enforcement process, particularly is decent.

Speaker Change: Okay.

Okay understood. Thank you and.

Speaker Change: Maybe again, a little bit of a broader question, but as we're thinking of your long term smartphone goal of 500 million in recurring revenue.

Speaker Change: Think about how that might breakdown between.

Speaker Change: What is dependent on your existing contract.

Speaker Change: Kind of getting an uplift.

Speaker Change: At renewal versus just capturing the top 10.

Speaker Change: You mentioned you have some of the top 10 smartphone OEM has already and so is the incremental growth.

Speaker Change: Signing the remaining three or is that.

Speaker Change: <unk> uplifts.

Speaker Change: As you renew and Xiaomi for example, or some other or other Oems that might come up for renewal over the next few years here.

Speaker Change: Yes.

Speaker Change: So our goal to reach $500 million by 2027 core recurring it's primarily based on our need to add to the customer that's using our technology and sometimes for a very long period of time as a licensee.

Speaker Change: That's our primary tool to get to that target.

Speaker Change: Regarding renewals, we take every renewal very seriously obviously, but we also look at how.

Speaker Change: How much they have benefited more overtime.

Speaker Change: That's deepening their market share changes, there or product mix changes and some time.

Speaker Change: It also depends on our negotiation with them for different customer category regarding product or what they have expanded too. So it's a multi parameter negotiation and we always try to negotiate a deal that's fair to both party that reflects the value of our IP are back to a question or smartphone licensing program.

Speaker Change: Based on our need to add those new customers.

Speaker Change: Alright, perfect. Thank you Mark.

Speaker Change: Yes.

Speaker Change: There are no further questions at this moment and now I would like to turn the call back over to layering Chen Chief Executive Officer for the closing remarks. Please go ahead.

Speaker Change: Thank you operator before we close I'd like to thank our employees for their dedication and contribution between the digital as well as our many partners and licensee for a strong quarter.

Speaker Change: Thank you to everyone, who joined today's call and we look forward to updating you on our progress next quarter.