InterDigital, Inc. (IDCC) Earnings Call Transcript & Summary

Good day, and welcome to the InterDigital, Inc. Second Quarter 2020 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the call over to Patrick Van de Wille. Please go ahead, sir.

Thanks very much. Good morning, everyone, and welcome to InterDigital's Second Quarter 2010 Conference Call. With me this morning are Bill Merritt, our President and CEO; and Richard Brezski, our CFO. Consistent with last quarter's call, we'll offer some highlights about the quarter and the company and then open the call up for questions. Before we begin our remarks, I need to remind you that in this call, we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those set forth in our earnings release and our annual report on Form 10-K for the year ended December 31, 2019, and from time to time in other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof. And except as required by law, we undertake no obligation to update or revise any of them, whether as a result of new information, future events or otherwise. In addition, today's presentation may contain references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our second quarter 2020 financial metrics tracker, which can be accessed on our homepage, www.interdigital.com, by clicking on the link on the left side of the homepage that says Financial Metrics Tracker for Q2 2020. Finally, with COVID 19, the participants on this call are all in different locations, some of which are experiencing significant weather events. If there's a weather-related technical issue during the call, I'll just ask everyone to be patient while we exercise a fallback option. With that, taken care of, I'll turn the call over to Bill.

Thanks, Patrick, and good morning, everyone, and thank you for joining us on the call this morning. I appreciate the world continues to be going through a crazy period. I hope you are well and finding some time to relax this summer. With that in mind, I was going to keep my remarks fairly brief today, touching on the status of our licensing business, a quick update on litigation and then closing with some remarks around the company's operations in light of the continuing pandemic. As for the business, we've proven once again how resilient our business model is, growing revenues by 15% during what is arguably one of the more difficult global periods in recent memory. While that revenue increase was driven in part by our renewed agreement with XXXXXX, we've also signed over a half dozen new agreements in the last 3 quarters, all of which have contributed to revenue. We also signed a small new CEXXXXXXXXXX early this quarter that will contribute to third quarter revenue. Licensing is all about momentum, and we certainly have a good amount of that now. In addition to that licensing success, we also continue to move the ball down the field with other potential licensees on both the mobile and CE side. All that speaks to how well our now larger and more diverse licensing business is operating and gives us confidence that we can deliver on the revenue goals we articulated for the different licensing programs. Of course, we occasionally do have the customer that simply refuses to negotiate in good faith. That is the case with XXXXXX. Despite years of effort by InterDigital, Xiaomi has failed to take the licensing issue seriously. This type of behavior never ceases to amaze me. Xiaomi's success in the cellular handset market would have never happened but for cellular standards. They needed to make no upfront investment in the development of wireless technology. It was all provided to them as part of the worldwide cellular standards process, an incredible process that eliminates barriers to entry and enhances competition benefiting product manufacturers and consumers alike. Essentially, billions of dollars of research are made available to brand-new market entrants allowing them to quickly scale up production and become a market force. And that is exactly what Xiaomi did and they have profited enormously. The only thing asked to them is that they pay a fair price for the billions of dollars of technology to which they have been provided access, and Xiaomi has failed to do so. Hence, we made the decision to bring a patent infringement lawsuit against Xiaomi in India, which we filed last week. Of note, we actually filed 2 patent actions in India. The first is based on cellular inventions created by InterDigital. The second lawsuit is based on the video coding technologies developed by our R&IXXXXX, which we acquired as part of the Technicolor transaction. The suit demonstrates the broader reach of the company's innovations and the value that we believe we are due for the use of our inventions. Among other things, the lawsuit seek injunctions against Xiaomi's sales of handsets in India, which is a significant market for them. Of course, we continue to be willing to enter into a license agreement with Xiaomi on fair, reasonable and nondiscriminatory terms. We would also be willing to arbitrate the terms of a license, which is something we offer to all prospective licensees. What we're not willing to do is have Xiaomi use our technology without appropriate compensation. And as we said before, litigation tends to be the last option for us, which we pursue only when other options are exhausted. As said, litigation can be affected as our recent agreements with ZTE and Huawei filed the filing of litigation. Indeed, every company that we have ever litigated against has ultimately signed a license with us. We expect Xiaomi and Lenovo will do the same. Next, let me touch quickly on the overall operations of the company in this period. As is evident from the financial results, we continue to operate well. The company remains in a remote work mode and will remain so at least until the fall. Depending upon the status of the pandemic at that point, we will reopen the offices, consistent with all of the safety best practices for doing so, but will maintain the remote work option for all of our employees for the foreseeable future. Our employees have been highly productive working from home, and we also have been very effective at recruiting new talent and weaving them into the employee populations. So we don't see the need to rush back to the office. That said, we have a set of employees that have preferred office environment so we're looking for the best way to balance these different interests. So as I said, I thought I'd keep it short. We've had a great first half of the year, and we're looking to repeat that success in the second part of the year. With that, let me turn the call over to Rich, our CFO, for a discussion of the financial results.

Thanks, Bill. We delivered strong top line growth in Q2, bringing us in at the top end of our ranges for both total and recurring revenue. This growth was driven by new agreements, including our recent XXXX license agreement with Huawei. As noted in our 10-Q as well as in the financial metrics published to our website this morning, Huawei made up approximately 30% of our total revenue in Q2, including contributions to both recurring and nonrecurring revenue. The contributions from these new agreements were partly offset by our estimate for a sequential decline in per unit royalties of about 20% from Q1 to Q2. This represents our best estimate for the impact of the current health and economic climate on our customers' Q2 sales of royalty-bearing products. As is always the case, we will true up our royalty estimates next quarter when we receive the related royalty reports. Our Q2 operating expenses increased $1 million from Q1. This increase was driven by an expected $2 million charge to step up compensation accruals based on newly signed pat license agreements, and a $2 million increase in litigation expense, both of which were offset by onetime and other cost reductions from Q1 2020. The increase in litigation expense reflected increased activities in our disputes with Lenovo and our recently filed patent infringement case against Xiaomi in India. We currently anticipate our Q3 operating expense could increase in the $2 million to $4 million range, driven by additional litigation expense and revenue sharing within our CE portfolio. Let me now take a moment to discuss our cash flow in some detail. Recently, I have received a number of questions about our cash flow and how it relates to our revenue in a given period. We reported free cash flow of $60 million in Q2. This is a $95 million increase over the $35 million cash outflow we reported in Q1. Many of you that follow us will recognize that such quarter-to-quarter variation is not unusual. Over 90% of our revenue comes from fixed-price agreements. Such agreements typically have prescribed payment schedules. Some agreements call for quarterly or annual payments to be spread evenly over the term of an agreement, others might include an uneven payment schedule that, for example, may be front-loaded to a degree. Ultimately, these payment schedules result in a timing difference between when we recognize revenue and when we collect the related cash payments. To the extent the payments are front-loaded, we recognize a deferred revenue liability. That liability has been reduced as we recognize revenue over the balance of the agreement. The sequential increase in cash flow from Q1 to Q2 was driven in part from the collection of approximately $100 million under agreements signed over the last 3 quarters. These payments cover the $20 million of nonrecurring revenue as well as the recurring revenue we recognized from these customers in Q2. It also represents a partial payment toward the royalties due over the remaining terms of these agreements. This is the big reason why we also see deferred revenue and long-term deferred revenue collectively increased by $50 million from Q1. In fact, you can look at the total deferred revenue balance of $280 million as the total amount of cash we have collected to date related to future periods under signed agreements. As a final comment on this topic, we sometimes accept nonfinancial consideration as a component of the consideration due to us under patent license agreements. Overall, this is a very small percentage, averaging just 5% of our total revenue over the last 3 years. All of this illustrates why recurring revenue is such an important measure for our business and why the free cash flow generated or used in any given quarter must be taken in context. Finally, moving on to taxes. Our recent agreements helped drive a level of profitability sufficient to somewhat normalize our effective tax rate, coming in at about 20% for the quarter and 27% year-to-date. With continued success in expanding our revenue platform, we still expect our long-term tax rate to be roughly 15% until about 2026 when we expect it to increase to about 18% based on prescribed changes in the tax code. I'll now turn it back over to Patrick.

Thank you, Rich. Thank you, Bill. And Travis, we can now open the call up for questions.

Our first question comes from Ian Zaffino, Oppenheimer.

Glad to see you guys are going after the patent enforcement pretty aggressively. Can you maybe give us color on some of the other ones that are not paying right now? Are those kind of close to litigation? Or are you presently just in negotiations? And what should we expect as far as the remaining ones?

Sure. So Ian, before I get to your question, let me just thank you and the firm for initiating coverage on the company. We obviously appreciate that, and we welcome you to the first call as an analyst for the company. So in terms of patent enforcement, I guess on one end, there is a breaking point with customers sometimes is that we just say that we've exhausted all options and we move ahead to litigation as we did with Xiaomi. The other customers, we have reasonable engagements with. They vary, obviously, between customers. There's a lot of thought that goes into why we bring litigation at particular times. That's obviously related to the company, again, so we seek litigation, but there could be other strategic reasons as well. So whether we would commence additional litigation either against the current folks with whom we're in litigation with or new litigations that we take into account a lot of factors in making that decision. It's not something we do lightly. I always hope that we can secure the agreements without resorting to litigation because there's a cost to litigation. And if you can avoid that cost, that's a good thing. But also, at some point, you have to make sure that you get people on the paying side of the ledger. So we'll see how it all plays out. The current litigations, I think, are -- I think they're well established, meaning we've got good patents in these cases. I think we'll have good schedules to move forward on. They're also though just part of a larger discussion with any licensee. So with Xiaomi, it's not going to be just all about a litigation. We obviously would continue to engage with them in other ways and reach an amicable result if that's possible, and certainly, that's our desire.

Great. And just as a follow-up, you guys are sitting with a lot of kind of net cash even after -- even above and beyond what you need to run the business. So what are you thinking here as far as capital returns? You typically bought back a lot of stock in the past. Where are your head now? What are you thinking as far as buybacks? I know you did the dividend, but specifically on buybacks.

Yes. And I'll be happy to take that. So yes, you're exactly right that we have a very strong history of returning capital to shareholders, both through dividends and especially through buybacks. I think it's more than $600 million over the last 5 years or so, including almost $200 million last year. Like a lot of companies in the current environment, we really value cash right now, given the overall uncertainty that exists in the broader market. But also for us, the potential for opportunities to invest in a way that could drive the most shareholder -- the most value for our shareholders. So that's kind of our current posture right now. But this continues to be a topic, as I always say it is, every time we get together with the Board.

Our next question comes from Eric Wold, B. Riley.

A couple of questions. I guess, one, Bill, can you maybe just talk about the rationale of filing the suit against Xiaomi in India. I know you mentioned, obviously, that it's a big market for them. I'm just trying to get a sense of the benefit of that market versus the U.S. and the U.K. to go towards a global license? Is the Indian courts going to share the same stance towards global licenses that like the U.K. courts do?

Yes. I think the Indian courts, as I just mentioned, it's -- obviously, it's a big market for them. And the purpose of the litigation is really for the other side to take the issue seriously, and so bringing a litigation in a very important venue for someone, I think, achieves that result. The Indian courts have -- there's some opportunity early on in the cases with respect to preliminary injunctions as well as other sort of bonding and escrowing requirements that also would achieve the same result, which is just make the other side think seriously about continuing to willfully infringe the patent that we have. I think the court has been -- so far, it's -- a lot of these fran-related matters in many courts are new. But so far, the Indian courts seem to deal with them in a fair way. And that's really all we want. We don't need the playing field tilted in our favor. We just need a playing field at level, and the India court seem to be doing a good job over there. And despite the pandemic issues around the world, the Indian courts on these particular matters have moved them along at reasonable speed. So for all those reasons, it would -- it seemed like a really good choice, and it also shows, I think, the fact that the portfolio is diverse, not only technologically but geographically, that we can bring actions in different countries as need be. So a lot of other factors, but I think those are important ones.

And I don't want you to necessarily get into your litigation strategy on a public call like this. But I mean, is there -- I know your focus is always a global license. Would you ever stray from that? If there's a market that's large enough for a single entity, you'd be okay getting a single country license, is it going to hurt them? Or if you did that, does that kind of throw a wrench into the works of the other global license you actually have around pricing and whatnot?

Yes. Yes, I think it's a slippery slope. If you think about mobile devices, what's the nature of a mobile device, right? It's designed in one country. Parts are sourced from another country. It's manufactured in a third country. It's sold in the fourth country, and then used in 20 other countries. So the whole concept of a license that just covers one country is -- it's a difficult -- I'm not saying it's impossible. But we've always taken the view that worldwide license makes the absolute most sense here. And frankly, the other approaches don't really have a strong rationale for them. So I think it's a slippery slope, and that's why we've always kind of been very adamant as all -- I think all other patent holders. It's all about a worldwide license. You think about the standards themselves. The standards don't enable sales in a country, the whole nature of the standard is that it enables sales worldwide. So having enabled sales worldwide, the license should follow.

That makes sense. And last question for me on the CE side. I guess that you previously signed a set-top box license, a TV license. I guess the first question is, what end market was the CE license you mentioned signed in Q2? And then how should we think about these smaller licensees providing a tailwind towards larger licensees? I know you're talking about these kind of providing some level of pricing framework as you talked with the bigger entities. Do the bigger entities consider these smaller deals as relatable in providing framework? Or do they think of them as more irrelevant smaller deals and a larger entity would provide more of the framework needed.

Yes. So I'll go to the last question first. I think every deal becomes important for 2 reasons, right -- or a couple of reasons, right? They contribute to revenue, which is great. Second is when you go to a customer an unlicensed customer, they do provide validation because sometimes, even though deals may be smaller, the companies that sign the deal are big and therefore, they don't give away significant sums of money for no reason, right? And you can use those as benchmarks in negotiations with other people. The third piece is very important, too, because when you go to litigation, all of those agreements become important, right? Because actually, in litigation, this idea of very significant volume discounts -- there's some limits on that. And so I think that they are important for all those reasons. They give us price validation, patent validation. They give us usable material in litigation. And so I think it's -- I think in that context -- and as I mentioned in the script, momentum in licensing, I've been doing it for forever, if you like, is really important. And because people see other signing, there's this -- you get this wind at your back and it's really helpful. So I'll let Rich handle the other questions that you asked in terms of revenue contributions and things like that, but I just wanted to handle that strategic point.

Yes. And Eric, I think you kind of framed it correctly in your question. We had some good success with some smaller licensees on the CE side. But in terms of the traction they provide, it's just what Bill was saying, it's traction for the business. It's -- they are smaller. So on a recurring basis anyway, we've had some nice recurring -- I'm sorry, nonrecurring contributions from some of the new deals. But on a recurring basis, it hasn't moved the needle in a dramatic fashion. I've generally discussed that of the $150 million kind of top line goal we have for that business, we're roughly 10% of the way there. That kind of ebbs and flows quarter-to-quarter because it is more per unit in nature so it's going to depend on our underlying customer sales. To put that into perspective, in the current quarter, when we are estimating a lower level of per unit royalty, also had some true ups that come through that reduced the CE revenue for the current quarter. We're actually trending below that 10% line. So it's going to move around. These haven't changed night and today, but they do set us up for more deals and further traction. And eventually, that begins to pile up.

And is -- what was the end market for this newest one?

For the most recent deals, I believe it was televisions.

Our next question comes from Charlie Anderson, Colliers Securities.

Congrats on a great quarter. So I wanted to start with OpEx. Rich, I wonder if you could maybe just provide a little bit extra context there. I think you alluded to a $2 million to $4 million bump. I think if I heard that right, that was sequentially. I know there was a performance-based comp increase embedded in Q2, $3 million or so. So am I thinking about this right that it's actually kind of naturally a $6 million move up. And I know there was a revenue share component there. I wonder if you maybe could speak to that one directly, too, in terms of how much of the lift is related to that. Then I've got a follow-up.

Yes. So at this point, Charlie, there's not too much more I can add. I mean as you know, we typically don't provide a lot in terms of expense guidance, but when we have a movement or a charge that we anticipate, we'll try to provide a heads-up on that. We, of course, have been doing a little bit more than traditionally given the Technicolor acquisitions and kind of the impact that's had on the P&L. But yes, litigation is definitely a factor there with the Lenovo case kind of going and picking up a little bit of momentum as well as now having a new case, which obviously was just recently filed. So there's typically going to be some run-up prior to filing a case, so it's not as if it's not in Q2 at all, but not to the level that we'd expect it to be in Q3. So that's definitely a component -- probably the biggest component of it. And then there's some smaller nonrecurring items that's running things as well.

Okay. Great. And then, Bill, just thinking big picture about the ability to get the rest of China under license, obviously, great progress with Huawei and ZTE. But I'm sort of just curious from your perspective, is there anything over the course of the next year you see as maybe an external factor, whether it be 5G phone launches or whatnot, that could maybe cause some of those negotiations to quicken the pace relative to normal?

Yes. I mean I think there are factors, right? There's obviously the things that we can do, right? So bringing litigation or even the threat of litigation is helpful. I think one of the benefits of now having filed a number of lawsuits against Huawei, Lenovo and now Xiaomi, it's pretty clear the company is ready, willing and able to protect its IP. And that sends a pretty strong message to people. So I say that's one. Second, I'm not sure that the 5G launch or things like that is a driver. But one external driver on the legal side has been a development in Germany, which has been -- which is a great development for -- actually, I think, for the industry. And basically, what it is, is the establishment of a framework, which says that if you're a customer and you're using these innovations and you fail to negotiate in good faith with the patent holder, that you may not be able to remedy that later. Like, to wait until they see that you're actually infringing and then make an offer. That there may be a more draconian penalty for having negotiated in bad faith. Just like there can be draconian penalties on the other side if as a patent holder you negotiate in bad faith. I actually think that that could have a significant impact in just causing people to be reasonable. And you maybe think when people are reasonable, and guess what, deals get done. So I actually thought it was a really well thought-out structure that the German courts have come up with. So I think that can be an external force in function. I think other than that, I think, as I mentioned before, if we can get to the finish line with a -- with Xiaomi or Lenovo, in part assisted by the litigation, I think that then the other customers start to become outliers. And on -- with the heightened focus by Trump administration -- in fact, frankly, a lot of people on India's respect -- sorry, China's respect for IP, being an outlier is not where you're going to want to be. So I think -- like we should do. There's -- we have a lot of irons in the fire. And so there's things we can do ourselves, there's external policies that we could influence. There is other policies that get developed that we can simply highlight to our customers, and I think fits that hole. And then at the end of the day, it's also our ability to be fair and reasonable in our negotiations, offer a variety of structures for deals to get things done. So I feel good about where you are. And hopefully, that means we drive a few more across the finish line.

Our next question comes from Scott Searle, ROTH Capital.

Rich, just quickly, I'm not sure if I missed this, but did you give a number for video or Technicolor in the quarter? And I have a couple of follow-ups on India and China.

When you're saying number, you mean revenue?

Yes, yes.

Yes. Yes. Scott, I mentioned that we were -- that we've been kind of operating at, call it, roughly $15 million annualized. And that even with new deals, we're trending a little bit below that this last quarter. And that's based on really 2 things. We had a couple of true ups that came through related to our estimates for Q1 that were booked in Q1 and then the actual reports come through in Q2. So that suppressed things a little bit. And then in addition, the CE business is largely per unit at this point. And as I mentioned, we're anticipating and included in our numbers an estimate for lower per unit royalties in the quarter.

Great. Perfect. And on the India front, could you give us a better idea of what the timing is of the Indian legal process in terms of injunction and otherwise, and what we can expect in terms of the cadence of the litigation?

Yes. I think this will have -- there's some disclosure in the Q around the case. Generally, what -- it moves, let's say, a little quicker on the front end, and things, I think, that occur on the front end are things like preliminary junction requests. And also to the extent that the new -- money put up for an eventual license that may be asked for. Those things happen sooner. I think after that, when you get into the meat of the case, and I think, like, my sense is -- and we obviously have a very skilled counsel in that area and our internal folks over that, but this is somewhat new for the company. My sense is it's a little -- it probably has the same level of lack of predictability as other courts do. But I think it's the front-end process that exists here that, again, I think the purpose of all of this is to get the company -- Xiaomi, to just take this issue seriously. And I think that is hopefully achieved early on in the process. But we'll see.

So Bill, just to follow up on that point, is there a time line or a date associated with the injunction? Because that seems like it's the real trigger point here to get them to the table and start to engage. Is that something that would be decided upon this year?

So my -- I don't know. I have to go back and look at the disclosure that we put out. And I mean, obviously, it's developing sort of as we speak. So that's an item we can follow up on. So I think the important part is, it is relatively quick from my understanding. So -- and we're only halfway through the year, so that -- I think that's a good thing.

Fair enough. And then to transition over to some of the larger China-based OEMS, in particular, Vivo andXXXXX. You've seen Huawei get a lot more aggressive within the domestic market given the limitations of using certain Android features internationally. It's translated to a pretty meaningful increase in share, I think, from the first quarter or the second quarter. So I'm wondering if that -- the licensing agreement with Huawei in combination and even throwing Xiaomi litigation in India on top of it, how is it changing the tone or the cadence and the pace of engagement with Vivo and OPPO, particularly given now it seems like they're shifting more their attention on the export front?

Yes. So look, I think you're right. I mean Huawei has -- is focused on that domestic market for the reasons that you gave and the result of that, others are getting pushed out a little bit. So then they've got to decide where to go to grow their businesses, and they are going to the places you'd expect, which is to places Huawei cannot go. So they're in India for one, Huawei's actually never been very strong in India. They're in Europe. And to some extent, they're in the U.S. Historically, as companies have moved into regions where IP enforcement is more predictable and more than stronger, that they do need to take the licensing issues more seriously. There's other things that occur within those jurisdictions as well beyond just sort of the court systems, but there's regulatory pressure that can be brought to bear. I'll give an example. Back -- end of 2018, there was a provision -- or '19, there was a provision put into the National Defense Act that comes out of the U.S. once a year dealing specifically with ZTE and IP. And so -- and that created some level of pressure on ZTE. So I know these companies focus on the international markets more. They're subject to both regulatory and judicial things in a more significant way, and that helps. So again, I feel like the level of engagement is good. And obviously, when we don't feel it's good, the company has not been shy about bringing the appropriate lawsuits.

Great. And lastly, just maybe a quick update on IoT and Avanci. What you're seeing on that front? I know it's early stage, and it's been taking a little bit longer, but it seems like there -- the COVID environment, constant connectivity, the ability to efficiently optimize, et cetera, devices that are connected, it seems like it's gaining more momentum, whether it's in auto and otherwise. So kind of wondering if there are any thoughts or updates as we're going into 2021, does that become a little more measurable in terms of the results?

Sure. So you're right. I think that while the IoT market hasn't accelerated the way I think people would have thought, and I think some of that was hype. The direction is certainly correct in that -- and so there's obviously -- there was always a need for connectivity, constant connectivity. I actually think what you're seeing in the pandemic is sort of making that even more apparent that this connectivity is really important. I think the Avanci automobile platform, it had a nice measure of success. It's really good in getting license suers onboard. There's been some litigation in Europe that they're working their way through. I feel like they're in a good position there. I think that their approach is one that is very much embraced by a lot of people because ultimately, I don't think people want this continuing angst-filled environment around licensing on such a critical technology. And I take it back to that German -- recent German decision. I think that's underlying, in some ways, that decision, which is this is not good that all these cases end up in court. It's consuming a lot of court resources. There should be rational result -- there should be a rational result here. And simply putting in place a structure that forces people to be reasonable, well, can get you there. So we'll see. To some extent -- I think there's 2 pieces here. One is how quickly do the cars themselves roll off the lines with that constant connectivity built in. And then how effective is Avanci in licensing it all. We're very confident with where Avanci is. And I think the big part is just it's going to happen, it just happens a little slower.

Our next question comes from Michael Cohen, MDC Financial Research.

Congratulations on the quarter. I was wondering if you could share the names of some parties that are not fully licensed that you would like to have under license other than Lenovo and Xiaomi.

Sure. So it's mostly the Chinese manufacturers. So it's OPPO, it's Vivo, it's TCL. The ones that we're in litigation with are Lenovo and Xiaomi. I think if you look at -- there this matter -- I don't think I'm missing any of the major Chinese companies, but every once in a while they -- the beauty of the cellular market is and the cellular standards is people can become major players in a relatively short period of time. There are smaller players outside of China, but I'd say most of them are relatively small. So I think that -- the ones I gave here are pretty much the drivers that get us to -- up to our desired revenue platform.

And we saw the U.S. government Department of Justice file a statement of interest in Qualcomm's case. And now we've seen it file in your case in Lenovo. I was wondering, do you have any comments on that?

Yes. I think this particular Department of Justice has taken an interest in making sure that particularly antitrust laws are not abused in a sense that they're not applied in circumstances that they were not intended to be applied in. Because to the extent you start to stretch a law beyond its original purpose, it starts to lose its effect. And so the -- Makan Delrahim has left this particular division within the DOJ has been an advocate of making sure that there's discipline around the use of antitrust provision. And that's why they filed a statement in our case basically claiming that -- the claims -- antitrust claims that are put in the case are not well founded. And so we were happy to see that support. We think it makes a lot of sense. I think that ultimately, when you look at the disputes on fran, they're actually very straightforward disputes. It's a contract dispute. It's -- we've undertaken the obligation to license on fair, reasonable and nondiscriminatory terms and the other side has an obligation to negotiate in good faith to get to that end as well. And if there's a disagreement on that, it's essentially a breech a contract case, call it. So I think it's been -- lots of other things have been tried to be applied into it to make it more complicated, more costly. Frankly, there's a lot of things to make the licensing more difficult. And I think that what you're seeing is, hopefully, a simplification of the issue, right? So again, we were very happy to see that support from the DOJ.

There are no further questions in the queue at this time.

Okay. Well, thank you very much, Travis. And thank you for joining our call this quarter. We look forward to giving you an update again next quarter. Thanks, everybody.

Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.