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

Good morning, everyone, and welcome. I'm Raiford Garrabrant, Head of Investor Relations for InterDigital. And from those of you in the room with us, to those of you attending virtually, we thank you for taking time out of your busy schedules to be part of our Investor Day today. Before we begin, I need to mention a couple of items. First, we will be making forward-looking statements during today's presentations. And those forward-looking statements are subject to numerous risks and uncertainties, so we encourage you to familiarize yourself with the risk factors noted in our SEC filings. Secondly, we will be referring to non-GAAP financial measures today. A reconciliation of those non-GAAP financial measures with the comparable GAAP measures is available on our IR website. Today, Liren Chen, our President and CEO, will walk you through a company overview and our growth strategy. Rajesh Pankaj, our Chief Technology Officer, will describe how innovation drives IP. Eeva Hakoranta, our Chief Licensing Officer, will discuss how the licensing team captures growth opportunities. Rich Brezski, our Chief Financial Officer, will provide a financial overview. And then Liren will return for some closing comments. After that, we will open it up for the Q&A session. I also want to mention for those in the room that the management team will be available after the formal presentation to chat and get acquainted. But it's important to note that any questions about InterDigital should be asked during the live Q&A session. With that, I'll turn it over to Liren.

All right. Good morning. Welcome. Thank you for joining us. My name is Liren Chen. Before I start, let me reflect on how much appreciation we have for everyone to join us today. It's a beautiful day in New York. This morning, I was out walking from hotel coming here, I was reflecting on what a privilege we have to host everyone here in New York City on such a beautiful day. Thank you for bringing wonderful weather to the city. [ My name's ] Liren Chen. I joined the company 4 years ago. And together with my [ exact ] team, we can go through our presentation, followed by Q&A. Before I joined InterDigital, I spent 25 years at Qualcomm. My career at Qualcomm can be defined by 2 phases. The first half of my career was on engineering side and [ core ] R&D side. In the second half, I was focusing on different aspects of IP from patent creation, portfolio management to the overall optimization, business strategy as well as licensing. Today, I'm going to go through a brief presentation. First, give you guys an introduction for InterDigital as a company. Then I'm going to do a little bit deeper dive on the team we have, led by the [ exact ] team here, but I'll go a layer deeper. And then I'm going to talk about technology, primarily the standard essential technology development, how it's driving our patent portfolio. And then I'm going to spend a little bit of time describing the business momentum we have achieved in the last several years and followed by what we define a long-term strategy. By long term, we mean until end of this decade, 2030. So let's dive into it. So InterDigital, as you guys know, it's a technology company. But like any successful company, I always start with people. And we are really, really proud of the world-class team we have built, both from the leadership-wise as well as the next-level functional teams. We focus on very, very important technology, we call them foundational technology, in wireless, video and AI. Rajesh will do a deeper dive on why do we pick those areas and what it means for the industry. And through our groundbreaking research, we are building a very large and -- but more importantly, a super high-quality portfolio. And it's also important to know our patent portfolio is evergreen. I'll explain what we mean by evergreen. Our business model is really based on long-term customer relationship with some of the largest vendors in our industry and because the way we license it based on long-term contract. So we like to think our licensing model is very, very similar to a subscription-based business model. That gives us continuity, that gives us stability and gives us a stable baseline for growth. And lastly, we are super proud of the role we play in the whole ecosystem. Even though our revenue, it's -- as [ released ] in 2023, it's in the mid- to small size, company-wise. But we make a huge impact to the industry because the way we drive our business and also because of the way we share technology. On the bottom half of the screen -- I'm not getting into the details because Rich will dive into the financial performance for the company. But what I want to point out is under the leadership for this team, we have delivered double-digit growth for revenue. And equally importantly, we are driving really high earnings growth due to the operating leverage we are building in our business model. And that we have done a lot of licensing and frankly, generally very high free cash flow that enabled us to do fairly large share buybacks and paying dividends, as we have announced this morning for a dividend increase. Let's start with the team. I'm not going to spend too much time introducing everyone because the presenters will actually introduce themselves when they present. But what I want to highlight here is this is a relatively new leadership team. Almost all of us joined the company in the last 4 to 5 years. All [ were ] promoted to our role with the current title in the last 3, 4 years. The only exception is Rich, which is a great thing by the way. Rich will explain his journey at the company. What I want to say is this team works extraordinarily well together. We are very, very collaborative. We hold each other accountable. And by the way, we are really, really proud of how we are able to drive execution for our strategy in the last several years. Let's talk about our business model. I think I see a lot of familiar faces in this room, again, welcome. For those of you who know our business model, our business model is really defined by 2 critical passes. I'll spend time explaining them. On the top half of our business model is based on how we create technology, how we protect them, how we monetize them. On the bottom half, it's really driven by how we share technology, how we make sure our technology is being used by as broad audience as possible. And we like to think these two things goes hand-in-hand. And you cannot really have one without the other. But fundamentally, this is driven by our groundbreaking technology development. And this business model requires us to be extraordinarily innovative. [ We have ] to lead the industry by multiple years in doing groundbreaking work. At the same time, it requires to be very, very collaborative because our licensing subscription-based business model would not be successful unless other people adopt our technology. So there's a very fine balance in driving and leading the industry forward, yet putting everyone together with us. So that's really tied with how we're conducting business. Let me get into the technology we work on. I'm not going to spend too much time on this because Rajesh will dive deeper into them. And by the way, he's way smarter than me. He can do a much better job than I can on the technology side. But if you look at the fundamental technology, what we define here, we focus on 3 pillars of our research. So as a company, InterDigital was born mobile. The company was founded in 1972. We were involved in building the very first wireless system in United States, and that was in Texas. So since then, we have been [ evolving ] every single generation of wireless research, from 1G to 2G to 3G. Now it's 4G. And going forward, it will be 5G-Advanced, which is under development, and 6G. And through our Technicolor acquisition, which the company made in '19 -- 2018 and 2019. And we acquired the patent portfolio, but also really, really importantly, the research team of Technicolor. Technicolor actually has been in the business of video and media, actually, longer than InterDigital. It's literally a 100-year-old company. They were involved in making the very first color movie picture The Wizard of Oz and others. Through that acquisition, we really got into one of the leading research company and combined with the [ virtual ] R&D for video space. And the AI, actually, we have been working on for multiple decades. And we are applying AI to solve those fundamental problems. Again, Rajesh will get into the detail for this technology. But one thing I want to emphasize is InterDigital is one of the very few people in the world that have possession of key pillars of research in all 3 areas. By having all 3, we are actually able to achieve a 1 plus 1 plus 1 is bigger than 3 effects. We actually like to think they actually multiply together how we're able to solve the most fundamental problem and getting the best solution. By the way, I mean, every CEO will tell you their company is great. This is not just we say we are great. We are actually being recognized by a third party to say we are awesome. And so this is a report by LexisNexis, who rate every company in the world. This is not just a company in our industry. This is every company in the world, they rate them by innovative score. So it's really, really quite an accomplishment for our company to be rated 3 years in a row to be the top 100 most innovative companies in the world. Our innovation is driven by people. One of the most important thing we pay attention to is to making sure inventors are the superstars of our company. And on this chart here, if there's one thing I want you to take away is 90-plus percent [ our ] engineers are the inventors. That's really what separates us from any other company that I know in the world. In most other companies, that percentage is a single-digit percentage. And the reason being, in most other companies, large majority of the engineers are focused on product implementation. That's not what we do. We employ the most smartest engineers and put them in groundbreaking work, and they are the inventors. On the right-hand side, those are some of our leading inventors. I'm not going to go through all of them for time purposes here. But one thing I want you to take away to see, number 1, they come from many different countries. Number 2 is, if you look at the number of inventions they have created while they are in our company, those are astonishing high numbers. Just to give you a reference point. The most famous inventor probably in the history is Thomas Edison, and who has about 1,100 patents in his lifetime. So those inventors we have are literally the modern day Thomas Edisons in our industry. As I very like to see, patent is assets we create. So I'm not going to dive too much into details. But the reason we picked those two reference points was 2017 was a year -- whole year before we made the Technicolor acquisition. And 2024 is obviously the current day. So what I want you guys to takeaway is, number one, the patent portfolio has grown quite a bit, by 70%. But equally important, it's a patent portfolio that has become more diversed. We used to be a predominantly wireless patent portfolio. Now we've added a lot of really, really valuable assets in multimedia areas, in some of the product [ implementation ] side. What that allows us to do is drive a higher valuation in our core business. And really, really importantly, it's opening up new greenfield for us to generating new licensing programs. And also on the right-hand side, it's a very important note because I very often get a question to say, when does your patent portfolio expire? The answer is never because every single day, we add 5 new patents to our portfolio. That is every day on average, okay? The next, it's really about quality. Patent, by definition, every single one is different. So -- by the way, with a caveat, there's not a uniform methodology to count the value of portfolio, but we do pay attention to improving the quality of our patent. So this is not us saying we have the best body. This is, again, reported by third-party. LexisNexis, which is a leading IP research company in the world. When they rate patent portfolios for wireless, particularly 5G and also video codec, that's [ smart watch ] generation video codec; we came in at the top in wireless, and we came in top 3 in video. So again, combined, that gives us a lot of strength. All right? So if you keep track here, I just described the top half of our business model. Now I'm going to get into the second bottom half, which is how we share. So first of all, standard is super important to us. And by the way, standards are everywhere. If you look around the room, you'll see the power [ outlay ], that's a standard. You see the voltage of the currents, that's a standard. But so why do we need standards? Standard-ing in our industry really means multiple things here. Standard is what drives interoperability. So from a consumer perspective, that's what allows an iPhone to be able to speak to an Android device. But standard also drives really the massive economy of scale. If you are a cellphone maker in the world, without standard, you would have to make probably many, many different type of phones that will work in different markets. By having a global standard, that allows a vendor to make one phone, essentially able to work everywhere in the world. What that does is that drives the maker to make very large volume for the same SKU. That gives them economy of scale. But standard is also built to be backward compatible. What this means if you are a massive carrier like AT&T or Verizon, when it deploy 5G, it can take time. Deploy them from the most dense urban area first and taking your time deploy in the rest of the country because the new [ later ] standard like 5G is built to be backward compatible with previous generation. So okay. I hopefully just commented standard is very important, but what does that mean for InterDigital? We are a huge laboring standard. And the fact that we don't make product, we don't do product implementation, gives us an edge. Your people know our decision is driven by purely the merit of the technology. And that allows our engineers, which I already demonstrated to you are the modern day Thomas Edisons, to be voted, to be the leader for the standard organization themselves. That allow us to lead the future of the technology development, which allows us to collaborate more effectively with the rest of the company -- the industry and allows us to make a huge impact, which I'll show you a number, next slide. Those are enormous numbers, okay? And by the way, those are not our numbers. Those are coming from the GSMA, which is our industry association. So if you think about it here, practically everyone in the world has a cellphone. And the economic impact is huge. That's 5.7 trillion, that's a trillion with a T. And there's tens of millions jobs, and then we are expecting to add 1 trillion more value into the economy. Just try to put things into perspective, those numbers are so large, it's hard to put into context. [ 5 point ] trillion, if this were a separate country, this will be the third largest economy in the world from GDP-wise. This is only second to U.S. and China. So I think it's fair to say that InterDigital helped create the largest and most successful platform for human beings. Let me talk about sustainability a little bit here. Because we don't do manufacturing, so therefore, our direct footprint is relatively small, but we really focus on what matters. Our employees are from 60 different countries. So diversity is very important. We focus on human capital. Our technology drives the performance of system, including energy-saving part, which is the very large, important aspect of 5G and AI. And we are really, really responsible [ citizens ] for the society, which lead into our third-party ratings at the top [ 1/3 ] of the highest ratings in our industry. Let me talk about business momentum, and we have to start it with a reference point. We picked last 4 years, 4 years ago the reference point, primarily because we want to demonstrate enhanced execution and the new leadership. So I'm not going to explain all the numbers in detail because some of them will be explained by Rajesh and Eeva and Rich's presentation. But what I try to convince everyone here is we believe we have a worldwide -- world-class leadership team. Our invention creation and our patent portfolio is some of the best in the industry. We have doubled our revenue, doubled our revenue in the last 4 years, and we have more than quadrupled our earnings per share. And we are driven by a new license agreement that has a fairly large backlog for future years that Rich will get into. Okay? Well, let's talk about growth. I'm fully aware that he -- what we have done in the past, so we want to demonstrate how we grew the company. So for those you who follow us for a long time, you know our wireless smartphone licensing has been our bread and butter, and we have 2 related strategic [ growth areas ], which Eeva will explain in more details. One is really how do we grew revenue on account-by-account base. But a really important additional driver for that business is how do we sign up people for the first time, who have been using our technology for a long time. I want to emphasize, with our technology as part of the standard, who has not paid us yet. So we need to sign them up. Again, Eeva will get into details. So that's our core bread and butter. But we also have put a lot of effort into driving our consumer electronics and IoT program. They are a smaller part of our program, but they are growing at a faster pace. And by the way, that is a collection of multiple industry verticals, as we call. So we actually have a fairly sophisticated strategy in driving them collectively. And then lastly is our greenfield opportunity, which is in the cloud side. And given the assets we have, given the R&D effort we are driving, and we feel that's giving us enormous opportunity for longer-term growth. Right. Let me go to the last slide of my presentation, which is really the most important slide. If there's one thing I want you guys to walk away with, if you didn't hear me seeing anything for the last 19 minutes, I want you to remember this slide. So those are the 3 programs we have. On the core smartphone licensing, again, the number we used for 2023, which is the last financial year, we have complete financial data; so we were at about $350 million. We will grow that to be $500 million. And I want to point out, we actually want to get that down before end of the decade. So we are set for 2027 target. For our consumer electronics IoT program, and we are raising our target for that space to $200 million compared to what we had before. And for our cloud, streaming and -- program, which Eeva will explain in more detail, we have set our target to be $300 million plus, and I'll let Eeva explain what that plus means. But I want to add one more thing before I get off stage. This is all about our recurring revenue. So as many of you who follow us know, when we sign up someone for the first time, very often, we were able to get catch-up payments. So the catch-up payments we get over time will be on top of this recurring number. With that, I hand over to Rajesh.

Thank you, Liren. I'll just get to my picture here. All right. Hello, everyone. My name is Rajesh Pankaj. I am the CTO of InterDigital, and I've been at the company for about 2 years, just a little over. Just like Liren, before coming here, I was also at Qualcomm, where I spent 25 years, but I was always in engineering. I headed the Corporate Research and Development Group in Qualcomm before I left. And in that role, I was running a wide portfolio of research projects in video, wireless, multimedia, AI, all of those different types of things. I want to talk about some of the research and innovation highlights of our company. We are recognized as leaders in innovation, as Liren mentioned that to you. We are solving real-world problems in wireless, video and AI. The fundamental research that we do leads to standards. We take those outputs of those research into standards, and I'll talk a little bit about that. And finally, we have a robust innovation engine that's creating these research outputs, creating these patents that's driving our business. As Liren said, we have 3 areas of research that we focus on. We have wireless, we have video, and we have AI. In wireless, anything cellular. So starting from 3G, 4G, 5G and now 6G that's going to come up in a few years. We have worked on them, and we continue to work on that particular technology. Similarly, WiFi and wireless local area network. We have been working on that for multiple years, and we continue to work on that. On the video side, we work on video compression and then enhancements of video and then how video gets transported, whether it's over wired network or wireless network. When we talk about video, we are thinking about the video that we experience in a 2D. But then people are also thinking about doing immersive media. And so we have a team -- an inside video team that's working on immersive media also, that works on compression of immersive media, transportation, enhancement and so on and so forth. When it comes to AI, we are primarily focused on those aspects of AI as to how that relates to wireless and video and the interplay between the two. And I will give you some examples of that in the future. Our research in these 3 areas underpin our business. So the different licensing programs that Liren talked about, all of them depend upon the output of research from these 3 areas. Now all of you instinctively understand that we have been using more data, more video over the years. But it's good to sometimes see the numbers as to what they look like. Here, we have a projection of what -- how much data goes over mobile networks and how much of that is video or how much that will be in 2027 and compare that to how things were in 2017. And if you look at it, the amount of data that goes over wireless networks into your phones, into other devices is going to be up by 30x. And honestly, if I -- if you ask me, I expect that will probably go more than that. Every time we have seen in the past that we make prediction about how things will look 10 years down the road, people want more data than that. And then if it comes to video, in 2017, roughly 50% of that -- of those bits were representing video. If you look at 2027, the expectation is that number will grow to almost 80%. Okay? So we are moving a massive amount of data over wireless network, and a whole bunch of that is video. So if you can do something to make wireless networks better and make video transport more efficient, that will be great, okay? So here's a claim I will make, is that since you woke up this morning, you probably used one of our inventions, whether you know it or not, okay? And the reason for that will come up in a second. So let's just talk about video. Okay? Almost every video that you watch on a digital screen is compressed. And the reason for that is obvious, if you look at the numbers over here. Take a video -- take a movie, 2-hours long. You may be watching it on Netflix, you may be watching it on Amazon Prime, doesn't matter where you watch it. If you don't compress it, the number of bytes it takes to represent that movie is roughly 12,000 gigabytes, 11,600 or whatever. That's the -- think about that gray square in the middle representing the number of bytes it takes to represent that movie, a 2-hour movie 4K video. If you compress it using a 2-generation old video codec called AVC, and that whole gray square becomes that little thing at the bottom right, okay? It goes from 12,000 gigabytes to 24 gigabytes, a 500x reduction. And then as you go from AVC to the next generation, which is HEVC, to the next generation, which is VVC, and they are alternating in the 5 -- on the right-hand side, you go from 24 to 14 to 9 gigabytes, okay? I've mentioned two other here, VP9 and AV1. These are not standards in the traditional sense, but they're also specification. And many providers use that. And even there, you're using 15 gigabyte or 11 gigabytes. All of the video Codec that I talked about, whether it's AVC, VP9, HEVC, AV1, VVC, all of these use technology from InterDigital, okay? So if you downloaded any video this morning, whether it's on TikTok, YouTube, Netflix, whatever, you have used something that we have invented because it used the standard -- one of the standards that's listed. Pretty much no video comes through without that. And maybe you say, "And while it's too early in the morning, I haven't watched any video yet. Okay, then I'll go to the next one. Wireless," okay? If you think about how cellular wireless has evolved over the years, you go back about 20 years, 3G was the normal thing at that time; the bit rate that you got at that time was of the order of 2 megabits per second, okay? If you wanted to download a 9 gigabyte movie over that, it would take you 10 hours. That's why back then, we used to get a DVD in my mail because that was the fastest way to get the movie to you. Go to 4G, about 10-year-old technology, we got up to about 60 megabits per second. Now if the movie can be downloaded in about 20 minutes, you can stream it because it will keep up, your download will keep up with as you're watching the movie. When you go to 5G, now you're getting at 500 megabits per second, and the movie can be downloaded in 2 minutes. So now, you're rushing to your flight, and you forgot to download your movie that you want to watch on the flight, you get on the plane, you press play over there, that's going to download the movie before the opening credits are done and before they tell you to turn off your cellular connection and put it in airplane mode. Okay. All of that is there, and you can watch the movie in the next 2 hours while you're sitting on a plane. And once again, all of these standards, 3G, 4G and 5G; use InterDigital's technology. Our inventions are part of every single one of them. So whether you're using that on an iPhone, a Samsung phone, on a tablet, whatever you use; if you're using cellular wireless, you're using a technology that we have developed, even if you're using wireless local area network, your WiFi, you're using our technology, okay? So just keep that in mind. So now hopefully, I've convinced you that you've used something, one of our inventions is on your device today because if nothing else, your phone downloaded some email, and that used our technology. Okay. So I'll get into a little bit more detail as to how this thing works. Our engineers do early research. They are developing technology and creating a path for this technology to be standardized. In this phase, which happens pretty early, they are working with a lot of universities. And because the universities have academic research, those researchers are not typically thinking about how it's going to be used in the real system. But when we work with them, we are thinking about how can we translate this academic research into a real commercial product, okay? So that's what we're thinking about in the first phase. In the second phase, we are talking about pre-standard work and thought leadership. This is where we work with other companies to say, "Okay, what are the real problems that we think are going to be important a few years down the road?" Remember that the work we are doing research is way before anything is available. And I'll give you an example of that later. Finally, when we go to the standards development, InterDigital and other companies like us. There are other companies also who do research, although we are the only ones who are pure research, they have research and they have products; we all come together and we say, how do we design the next generation? So right now, that discussion is going on for 6G. What is going to be in 6G? So we come together? We bring our solutions, they all bring their solution. And we all come together to design what the next G in wireless or what the next video codec is going to look like, okay? And throughout this whole process, we are filing patents. Okay? So we file patents, and the reason for that is that when we take this thing to a standard, it becomes -- our invention becomes part of the standard, and now the standard is available for anybody to implement. So an Apple phone can use it, Netflix can use it, anybody can use it. But we don't get paid at this time. We will not get paid until later. So of course, we have to have proof that these inventions are indeed ours, and that's why we need to have these patents. Just to give a little bit of detail on the 3 columns that I talked about just now. We have a lot of research collaborations with universities around the world, in U.S., in Canada, in Europe, in India that cover all the 3 areas that we talked about, wireless, video and AI. Similarly, when we get to the next phase, we have a number of industrial collaborations with other companies and consortiums, where we work with other companies to try to figure out what the next generation of standard, whether it's wireless, video or any of the standards; is going to look like so that we can define our solution that will eventually bring to standards. When we go to standards -- this is an illustration of how well respected our team members are. Okay? These are the people that go to standards, where they are not just bringing their technology there, they are well respected by the standards community, and they have multiple leadership position. So 3GPP is the wireless standards body. ETSI is a European standards body. [ ATIS ] is an American standard body. IEEE, again, an international standard that defines WiFi. IETF, standards body that defines Internet protocols. Similarly on video side, it's [ MPEG, JVET, ] DVB, which defines TV standards; ITU and so on. You can see there are a lot of -- and these are only some of the leadership positions we have shown. We, of course, have many, many more at different levels in the standards. Now I wanted to talk a little bit about how we work with our -- how the researchers in our company work with the patent attorneys to make sure that the inventions that we are coming up with are well protected by the patents. Okay. And that requires very close collaboration between the researchers and patent attorneys. And when [ Josh ] comes up in Q&A, you can ask him questions about that a little bit more. But our researchers really need to make sure the patent attorneys understand what the research direction is, so that they are prepared to take the innovation that's coming out of the research process and convert that into patterns. Then finally, when we get to the patent prosecution stage, which is the process of getting patent application filed and getting it granted, all the things that go on in between; that's when patent attorneys take over. But they have to work with the researchers because the researchers who are going to standards bodies -- and you remember, when I talked about in the last -- in a couple of slides ago that when we take something to a standard, we work with other companies. So what may happen is that we took some solution, but that solution got modified a little bit. And so that modification has to be tracked, and we need to make sure that the pattern that is finally issued is reflecting all of the work that we have done from the initial submission all the way to when the standards comes out. And so these patterns ultimately are the ones -- the assets that we have that prove that the inventions clearly belong to us, that Eeva can then take to her customers and tell them that they're already using our inventions in the video and wireless products that they have. Let me get into a little bit of detail for one particular standard. This is the 6G and 5G standard done by 3GPP. So that gives you a little bit of an idea of how long it takes to do this work. This takes many, many years. The -- in the 3GPP, the pre-6G studies have started roughly end of last year, okay? And that was kicked off by a document from ITU, which was the 6G framework. And I'll talk about what this framework is in the next slide. The final -- or the first version of 6G standard will not come out until the end of 2029 or early 2030. And the early research work that I talked about, collaboration with universities and so on, started even before we ever showed up in 3GPP, okay? So we have already been working on it for 3, 4 years. It will take roughly 10 years from early research to the first standard of 6G coming out, okay? And while that is going on, 5G is the current standard, that work is still ongoing. So 5G is not a static thing. You have to keep improving it. And so our team is working on 5G improvement, and they are working on what 6G is going to shape up to be. Once the standards are out, so in this particular case, if you think about 6G, if the standard is out in 2030, that will then -- implementers will take a little bit of time after that, and the first phones with 6G will start to become available maybe a year after that, okay? So that's how long it takes. And of course, in 2020, we don't know exactly what people will need for 2030. So that's early research and so on, basically leads into that. I'll give you a little bit more detail of 6G, and there is a little bit -- a few acronyms here, but I'll explain those to you. So look at the green triangle in the very middle, that represents 5G. And it has 3 corners there. They are called eMBB, mMTC and URLLC. Don't worry about the alphabet soup, I'll tell you what they mean. One of them, eMBB, simply means, how can you get as much data as possible to a device like your smartphone, okay? mMTC simply means, how can we support on 5G a large number of IoT devices? And then finally, URLLC means, how can you support mission-critical applications on 5G? It is something that where latency requirements are very, very tight and reliability requirements are very, very tight. This was what 5G started out with, and that work is still in progress. But 6G, in addition to those three things, so if you look at the arrow from those 3 points of the triangle, there are the new names for -- in 6G, immersive communication, massive communication and [ hardware ] reliable and low latency communication. In addition to those three, there are three more things in the hexagon that are going to be part of 6G. Integrated sensing and communication, integrated AI and communication and ubiquitous communication are three new things that are being added. So sensing, think about your wireless network is also going to be a radar. AI, again, I can talk a little bit about that in the next few slides. And similarly, ubiquitous connectivity that may require a 6G network to be better connected with satellites and so on, so that we make sure that everywhere in the world, you have connectivity using 6G. I wanted to get a little bit into some of the examples of the types of things we do, okay? And there are more examples that I can talk about. So I have two examples on the slide here. I won't talk about both of them. I'll only talk about one of them. So media over 6G is something that we are working on that will be part of 6G -- our 6G proposal. We are -- as Liren mentioned, we are one of the very few companies that has expertise in wireless and has expertise in video. So we are uniquely positioned to try to figure out how best to transport video over wireless. And that may require changes in video and may require changes in wireless, okay? And so we have the wireless and video teams working together to try to come up with the best way to make changes in video and wireless standards so that media over wireless is as efficient as possible. As I talked to you earlier, that -- video is going to be a fairly big part of the traffic that goes on the wireless system. So of course, that's very, very important, as I said, that's going to be part of our 6G proposal. Similarly, on the video side, we do lots and lots of different works. So all the different video codecs that I talked about, they all use our technology. But in particular, there's one I'm going to talk about. So there are two in here, film grain and sustainability in video. But let me just talk about sustainability in video. So when you are looking at the screen, the screen brightness is different at different pixel. We came up with this idea of something called pixel value reduction. It basically comes down to this. Is it possible for me to reduce the pixel value, the brightness of the pixel, any of these pixels over here; without reducing the video quality, without reducing the picture quality? And if I can do that, then I'm suddenly reducing the amount of power it takes to display that video. And so this is a way to make sure that your video standard is more sustainable because the amount of power it takes in the whole eco chain is primarily dominated by how much power you spend on display. So if you can reduce the power of display, that goes a long way in reducing the amount of power spent on video. And so that's an idea that we came up with, and then we figured out a way as to how you can send this information, this pixel value reduction information, over the network to the other side and how the other side can use it. And by using it, this fundamental idea is being used by different standards to reduce the amount of power it takes to display. And finally, I will come to AI. Again, there are two examples in here, but I will only talk about one. We work on a lot of AI topics that relate to wireless and video. But again, I'll give you one example that's kind of easy to understand. When you think about video compression, any video is compressed using a video Codec To make sure that when you are watching the video, it looks good, okay? It's designed for human consumption. But as time goes on, a lot of video is not just consumed by humans, it's consumed by AI, consumed by algorithms. And so an AI algorithm that is running in a car, in an autonomous vehicle driving around, doesn't need to make sure that the sky looks really nice or the greenery really looks really nice. It needs to make sure that if there's an object in the way, it can figure out -- it can identify that object and make sure that it can avoid it, okay? So it has to focus on object identification and placement as opposed to making it look good. And that requires a different kind of video compression. Actually, if you can take advantage of this reduced need, you can do a much better job in terms of reducing the number of bits you need for the video. So that's the work that our team is doing. And finally, I'm going to -- I just want to give you a number -- or a sense of how we have increased the number of patent filings on wireless video and AI. From 2020 to 2023, we have increased the number of patent filings or annual new patent filings by 3x, which gives you a growth rate of roughly 45%, okay? So it's not just that we have a lot of patents from before or that we are continuing to file a lot of patents. Even the rate at which we are filing new patents is increasing by a pretty good percentage. So this is my last slide. So before I leave, I want you to remember that we have excellent research capability that is creating these inventions that's going into your wireless and video and AI standards. The pace of innovation is increasing. We are increasing the number of innovations that we do every year and the number of patents we file. And this innovation is ultimately going to underpin all of our businesses. With that, I'm going to hand it over to Eeva. Thank you very much.

All right. Good morning, everyone. Very pleased to be here. What I plan to share with you is how we capture value from the innovations -- the research and innovations that Rajesh's team is championing. But before that, let me just briefly introduce myself. My name is Eeva Hakoranta, and I am the Chief Licensing Officer here at InterDigital. I joined in 2020. And before that, I was a Senior Vice President at Nokia. I held multiple positions. But perhaps more -- most importantly, I worked in licensing in Nokia and helped them grow and quadruple their licensing revenues in their licensing program, which actually has very similar elements than ours. And I've been in this licensing industry for 20-some years. So I think I have some experience to share with you. I'd like to start by refreshing the business model slide that you saw Liren walked through and just sort of pinpoint where licensing comes in. It's pretty clear by this time after Liren and Rajesh, that we are active in the innovation industry. And Rajesh just walked you through how our engineers solve real-world problems and participate in creating global interoperability standards. I'd like you to remember that global interoperability standards, which benefits multiple industries and multiple companies, multiple products. So when those standards and technologies are deployed and taken into use in products and services in different industries by different companies, the role of licensing is to make sure that we receive a fair return on our investments in our innovation. So that way, you will see that licensing is a pretty critical part of the virtual cycle of innovation. And I think with that clear, let's jump right into it. I'll try to explain to you how we do it in licensing. These are the themes I will cover and come back to in various parts of my presentation. First of all, we do have a very strong track record in closing licensing deals with the top vendors in each of our focus markets. Second, as Liren mentioned, patent licensing is, in many ways, similar to many subscription-based business models. That brings stability and predictability to our revenue stream, while we have some of our key customers, such as Apple and Samsung, secured with long-term agreements. And that brings recurring revenue while we work to grow our revenue in other segments and other markets. And the third, and this is something that I would like to remember from my presentation, and I'm saying it already now so that you can focus on it; there's plenty of opportunity for us to grow in each of our focus markets, not only the new greenfield market, but also our other markets by licensing the remaining device makers in the smartphone program and the consumer electronics program, by driving more growth in the emerging IoT and connected car segments and by expanding to the, I will say, blue ocean opportunity of content and cloud services. I'm going to share some of my experience. I mentioned that I've been in this industry for 20 years. So let's look at what it takes to be successful in this industry. And the other thing I want you to remember, coming away from here, is that we have it all. So the foundation of our success is in our great research and in our great intellectual property assets. And the backbone of our success is the world-class licensing team that we have in our company, industry veterans and expert individuals who have experience in IP dealmaking across multiple segments globally. And before I go into the third one, I will just say that the majority of our licensing deals get closed by amicable discussion by these professionals with our customers and companies. But I've been in this industry long enough to say with conviction that to be successful, you also do need a very best-in-class enforcement arm that takes care of your so-called extended negotiation when your amicable efforts do not yield a result. And that's where our litigation team comes into play, and they rock. So litigation is always the last resort for us, but we're not afraid of going there when it is necessary. And I'll just mention that for us in this business, patents being a right to injunct somebody from using your innovation, this is not a negative or a risk. It's always a risk. You don't know. It's a little unpredictable. But this is not a negative and a risk for us. It's more of a tool to capture additional value when your negotiation isn't doing it and to generate positive outcomes. That I want you to remember. It's a bit different than many other lines of business. And last but not least, you obviously need a very large addressable market. And we've identified, as Liren mentioned, multiple such markets, which are our focus markets. And I'll walk you through those markets. But before I go there, let me celebrate a little bit of the track record so far. Liren mentioned, we've generated roughly $2.8 billion of contracted revenue over the past 4 or so years. We've closed 42 license agreements with device makers across the globe. Highlights include deals with some of the most prominent companies in the world. And you'll see on the slide, in 2021, we closed a deal with the #1 smartphone vendor in China, Xiaomi; followed by in 2022, a timely renewal with Apple, confirming the value of our portfolio to their business; and a deal with Amazon. And both of those without needing to resort to any kind of enforcement. In 2023, we closed an HEVC video deal with Lenovo, who is the #1 PC maker in the world. And this year -- early this year, we signed our landmark TV deal with Samsung, the largest TV manufacturer in the world, followed by a deal with Google, just to mention a few. Now licensing is teamwork. And these are no small achievements. And I'm really proud of our team at InterDigital and this track record, and even more excited of what comes next. So let's look at the 3 focus markets where we have focused our go-to-market efforts. Our largest market and our most long-standing market is the smartphone market. It has a high unit shipment, but rather modest -- moderate growth. But it's still growing, the market as a whole is growing and a high consolidation among top OEMs. There's plenty of unlicensed vendors for us and plenty of opportunity to capture in this market alone. And then moving into the second area, consumer electronics, cellular IoT and connected cars. This is an area which is somewhat more fragmented than the smartphone market. But it has high shipment growth, especially in the IoT and the automotive area. And there are many OEMs we have not licensed yet, so it's definitely another very attractive growth market for us. And third, there is the blue ocean opportunity for us, which is the content and cloud services market. This is a large market. We're looking at a roughly $380 billion market, with double-digit growth forecasted for the next few years. It's growing to be comparable to the smartphone market in terms of market value, and we have very high ambitions for this market, as Liren explained. And our innovative footprint really gives us a seat at the table in this market. So let's look at that. I'll look -- I'll go through each of these markets one by one in a little more detail, and I'll start with the smartphone market. And let's think about each of your smartphones, how much use would it be without the cellular standards for you without the ability to connect across the globe and use them? Cellular standards are perhaps, in my view, the most successful industrial collaboration in the history of mankind. Both Liren and Rajesh talked a lot about it. They've generated a massive amount of value for numerous industries. And I often describe them as an innovation platform which provides implementers with immediate access to global markets and global technology without having to spend the R&D dollars into it. And then they're able to innovate on top of that platform in their own various industries. And I'll just say that I'm thrilled to work in a company which is leading this value generation. So with that, let's look at the status here. So we have roughly 50% of the smartphone market under license at the moment with the top 3 OEMs, Samsung, Apple and Xiaomi; and a number of other household brands who have renewed with us many times, some of them. And then also roughly the other 50% still uncovered. And while the market is also growing moderately, there's substantial growth opportunity for us to grow here. And Liren has explained the ambition level here, we will grow. And how will we grow? The growth strategy is 2-pronged -- sorry, I think I jumped over one. There, yes. So first of all, we are going to get the remaining smartphone OEMs under license. And given the high consolidation of the market, we do not need to close tens of deals to get there. There are different ways to turn it, but I would say, for instance, that we're roughly 4 deals away from achieving 75% of market coverage. The second prong of our growth strategy is driving higher value from key accounts upon renewal, thanks to more advanced technologies being deployed in handsets, such as 5G and new more advanced video, technologies which Rajesh has just explained to you. There's also a value growth expected in premium smartphones with the rise of generative AI-enabled handsets. Some people even speak about a new smartphone super cycle. And as I mentioned, we have our key account license agreements long term, providing stability and recurring revenue while we work on growing our revenues. Then moving on to the next focus market, which is consumer electronics, Internet of Things and connected cars. Overall -- oops, jumped again. There. It's -- overall, all of these markets are growing, some faster than others. So this is also a very appealing growth opportunity for us. Consumer electronics has been the primary area for us to license our market-leading video technologies for products like TVs, PCs and tablets. While it's on a relatively modest or moderate growth trajectory, it certainly is, by far, out of these markets; the one that resembles the smartphone market most in terms of shipments, shipment volume. So it has ample opportunity for us to increase our revenue. The IoT segment is forecasted to grow rapidly in the coming years. We've started our own bilateral licensing discussions and are also looking into various types of platforms and industry solutions to provide licenses to the customers in this segment even more efficiently. And for connected cars, we partnered with a platform for both 4G and 5G. And so far, this platform has proven quite successful. Their solution has been accepted by the automotive industry, except for in China, as the one-stop shop model for licensing. So drilling down on CE, there's multiple reasons for us to be bullish about our growth opportunity. First, we have roughly 60% of this market uncovered. And as Rajesh talked to you and I made the claim in my sort of licensing success narrative, our assets certainly are something that benefit greatly all of these products and industries. Second, we've concluded licenses with some of the most sophisticated companies in the world to make their video and/or WiFi-enabled devices licensed under our patents. For instance, in the PC segment, we have licenses in place with Lenovo, Apple, Samsung and LG. And that forms a very good reference for the discussions with the remaining market players, which indeed we are discussing with. So when we get the remaining ones under license, we're at 90% coverage of the PC market. And finally, the TV segment, with roughly 25% of the market covered currently, has a lot of growth opportunity for us. And our deal with Samsung, which is the market leader, certainly provides, again, a good reference for continuing the discussions with others. Moving on to the other markets in this segment. As we mentioned, in vehicle licensing, we have partnered with a platform, Avanci. They currently have roughly 85% of the 4G automotive market under license. And the next growth [ post ] will come with 5G cars in the next 3 to 5 years. Rajesh explained about 5G and 6G. So what you will see is that the more robust connectivity offered by 5G will help to unlock new use cases and features in vehicles and more broadly, in the transportation market and system, which will make traffic more intelligent, more secure, more safe and sustainable, whether or not we would like to be in a self-driving car. But it's going to happen in any way. And our assets are part of that, part of making it happen. In our cellular IoT licensing, we have started addressing 3 distinct segments. These are the biggest markets, so we consider this our primary market for now, but of course, are also observing the development of these other segments for future go-to-market efforts. So to sum it up, we're pretty excited about the growth opportunities in the CE, IoT and automotive market. And with this, I'll move into the final area, which Liren already mentioned. This is a new market for us, and we're super excited about it. And we've already made a lot of progress in our discussions with a number of customers in this space. So it's not like we are just starting. We have been working on this for some time. And I'll start by taking a step back, looking at the history. So that -- going back to that, we really have the great research and the great assets that gives us the justification to sit at the table when this industry is deploying next-generation video technologies. So Liren mentioned, we're a 50-plus year old company, but he also mentioned that in 2018, we acquired Technicolor's video R&D arm, and our legacy video innovation goes back to the early 1900s and continues today and into future, as Rajesh explained. So Technicolor's and InterDigital's inventions, ranging from first film cameras and color TVs and digital broadcasting, have carried the video entertainment industry from its nascency to what it is today. During the 20th century, our innovation has brought to consumers the enjoyment of high-definition video and the ability for producers to make 3D videos and most importantly, video compression, which Rajesh talked about. That has enabled the over-the-top, OTT, entertainment and the entire video streaming industry during the last couple of decades. And we are continuing to innovate higher-quality video and better video compression and are among the top contributors to the next-generation technologies and developing new experiences to consumers while keeping our portfolio future proof. I won't spend a lot of time with this, but Rajesh explained the technology behind this. And I'd just like to sort of reflect in layman terms of sort of what our innovation means because in licensing, it always starts from what are you -- what benefits are you bringing to your customers, what are they getting from your innovation. So take the 2-hour movie that Rajesh mentioned. And uncompressed, it would take multiple days to download it. And with video compression, it's a question of minutes. And then think about your mobile plan as a consumer. So with your normal mobile plan with 25 gigabytes, you would not be able to download a movie to your handset if it was uncompressed. But with video compression, you can watch multiple movies downloaded to your handsets. So that's what it means. And that really means that without these video compression technologies, the video streaming market as we know it today, would not be able to exist. Nobody wants to wait to download movies for 2 weeks, for instance. So let's look at this market, Liren alluded that I would bring more light to it. So we've identified a number of industries for which video compression technologies are key, if not crucial. These include so-called subscription video on demand, SVOD; and advertising video on demand, AVOD, markets, pay TV, video conferencing and cloud gaming. We've chosen the two first as our initial go-to-market verticals because they both benefit from video coding technologies in a way which enables them to exist. And they're also the largest markets, with robust growth forecasted for also the future. SVOD is more commonly known as the video streaming or OTT market, includes companies and services like Netflix, Disney+, Paramount, and Max. And AVOD includes user-driven video content platforms such as Facebook and Instagram, both part of the Meta group, YouTube, TikTok, also fast platforms such as Pluto, Roku and Tubi. So this is a very large and wide market, and we're initially just addressing part of it. So we mentioned that we have high ambition for this market. And how do we justify this? I mentioned that this market is growing to be similar to the smartphone market in terms of market value. Our revenue ambition in the smartphone segment is [ $500 million ], and that's approximately 0.1% of the global market value. And we've landed our revenue ambition for the video services market at $300 million. And that's somewhat lower than 0.1% of the global market value for that market. It's predicted to be $500 billion in 2027, while the smartphone market is predicted to be $570 billion of value. So we believe video compression is so crucial for these businesses to exist that this is a realistic, reasonable and justified market expectation for us. So to sum it up, on cloud and content services, we're truly excited about this growth opportunity. And that takes me to my last slide. And this is a slide where I just sort of recap how we plan to capture the opportunity to fulfill the target of getting to $1 billion plus recurring revenue a year by 2030. So we're going to continue to close agreements with remaining major smartphone OEMs. We're going to deepen and broaden engagement in our CE IoT automotive market, where the impact of our innovation is growing. And we're going to sign the first deal in our blue ocean opportunity in the streaming market and the content market. And with that, I'll give it over to Rich, who is going to share the interesting numbers.

Thank you, Eeva. So good morning, everybody. My name is Rich Brezski. I'm the company's CFO. It's great to see so many familiar faces in the audience. I know Liren already expressed his appreciation, but I'd like to extend mine to everybody here today and all those dialing in. We really appreciate you giving us your time so we can tell you more about InterDigital. I started my career about 30 years ago right here in New York City with Chase Manhattan Bank. After a short stint there, I moved back to my hometown in Philadelphia, joined Coopers & Lybrand in their technology audit practice. Of course, they became PwC. And then I joined InterDigital as the Corporate Controller back in 2003. Since 2012, I've been CFO. And today, I'm going to walk you through InterDigital's financial model. It's a model that any of you that have ever spoken to me about it before, I'm super excited to talk about it. It's a model that I love and I'm passionate about. And really, I think any CFO would be happy to have this business model. In summary, it all starts on the top right with innovation. It's no mistake that Rajesh was the first to speak because Rajesh and his team set the table for the whole company with innovative groundbreaking research they do in these fundamental technologies. That's what drives our top line. And that's been the case since 1972 when this company was founded on the idea of digital telephony. What's really powerful about those innovations is that they apply to these different verticals, as you heard today. And that reuse of that same technology, that video compression, which is so important in smartphones, which was the initial thesis of that Technicolor acquisition, but then apply and open up the whole consumer electronics space, TVs, et cetera. And now today, we're talking about streaming, which is already using that same technology. That drives powerful leverage because it's one investment, okay? We invest in R&D around those technologies, and then we can reuse them multiple times. That, combined with the fact that it's -- basically, there's nothing to ship or service, many times, our contracts are 100% gross margin, and that just drives a tremendous amount of leverage. And what that results in is significant cash flow. And what we're able to do is two very key things, and I'll talk about them today. One is to return the cash flow to our shareholders. And I think we've done a great job of doing that. But more importantly, as we move to the top left of the circle, is reinvest it in the business because we have a great business model, we have a great financial model, and we got a world-class research team. So we want to feed Rajesh and his team. We want to invest $200 million a year in research and portfolio development so we can keep that virtuous cycle going. So let's talk more about how innovation drives the top line. You see on this chart a 5-year time horizon dating back to 2020, consistent with Liren's earlier comments. And for purposes of this chart, I have 2024 in at the guide, which we're updating or affirming what we said earlier this quarter. At the midpoint, that's [ $715 million ]. Over that 5-year time horizon, that would be nearly a 20% cumulative annual growth rate. So we're really proud about the work that we've done over the first 4.5 years of that timeline and look forward to closing out '24 strong. What's important to know, as Eeva just demonstrated, you can't think about the smartphone market as a mature market as it relates to InterDigital. As Eeva showed you, there's only 51% of the market under license by InterDigital today. Yet the entire market, as Rajesh showed, is using our technology. So it's getting the other roughly half of that market or close to half of that market under license that will drive us to that smartphone growth. And you see that happening over the course of this time horizon. But what's been really exciting is how consumer electronics and IoT has really taken off. It's our fastest-growing business segment right now with -- not segment, but area, with $24 million of revenue back in 2020, and we're now closing in on almost 4x that on an annualized basis. And it's not just the annual contributions from Eeva's work in licensing, it's setting the table for the future. You can see how our backlog has grown because we've been taking care of business over the last couple of years, most importantly, with key renewals of Apple and Samsung. Going into those renewals, they are roughly half of our revenue. Okay? They're #1 and #2 in the smartphone market by far. It was so key to get them renewed under new long-term agreements. Now keep in mind, Apple has been a licensee of ours since when Steve Jobs went on that stage and introduced the iPhone. Apple was -- either had signed or was very close to signing its first agreement with us. Samsung has been a licensee since the 1990s. And now, as you see in this chart, they're providing the foundation of growth, going forward, by secured -- giving us secured cash flow and revenue into the future. And as I described, the great thing about that is it drops to the bottom line. Once we cover our semi-fixed costs, every incremental dollar is typically 100% gross margin. As some of you know, in the TV and CDM space, there's a little bit of rev share that goes against that. But by and large, most of the rest of it really drops down. And that's why you see -- Liren mentioned, it was a 19% growth rate but 2x over the time horizon in revenue. That translates to more than 2.5x growth of EBITDA -- or adjusted EBITDA. And you see that margin expanding over that time horizon. But because we then take the cash flow and buy back shares as we have new earnings, that the new earnings are shared over fewer shareholders. So our EPS, on a non-GAAP basis, is growing more than 4.5x over the same time period. And it all comes back to cash flow. This company has a long history of generating cash flow. For this chart, I picked 2011, going back to the time that we initiated our first dividend. Roughly a 7% free cash flow yield over that time period puts us right among the best in the class amongst our peers. So we're very proud about that. And if you look on the chart to the left, while free cash flow is very important and we do a great job with it over time, I sometimes get the question, "But Rich, the first half of this year, you burned cash. I thought you were a cash machine, what's going on?" Well, that's okay. There's not a problem here. That's merely a function of the way that we construct our licenses, okay? So if you look on the chart on the left, the quarterly trend for cash flow can be a little spiky. You got peaks and valleys just based on the timing of the inflow of payments, okay? That's why as important as free cash flow is, over time, if I'm looking at just the quarter, I like to look at adjusted EBITDA. You see that's a smoother ride, okay? The reason for that is -- there's other differences, but the key difference relating here is adjusted EBITDA is based off of revenue. When we are entering into these long-term fixed-price agreements, we straight line the revenue over the period. Free cash flow is going to be based off of the actual cash received in that period. So if, for instance, we have a long-term fixed-price agreement that we don't have equal quarterly payments over the term, but maybe equal annual payments over the term, well, in any given year, you're going to have 3 quarters with no cash from that customer and then a full annual payment coming in the other quarter. So it's going to overstate 1 quarter and understate 3. And that's why I like adjusted EBITDA as a more snapshot measure in terms of our cash generation power. But how correlated are they? Well, on the chart on the right, you see [ fairly so ]. It's a 3-year quarterly average -- trailing 3-year quarterly average. Now there is a difference because, of course, there are different metrics. Adjusted EBITDA is not burdened by CapEx or taxes. So it's going to be a little bit higher. But you see that the free cash flow is straightened out over that time period. That correlation would only increase if you expanded the aperture and looked at, for instance, annual numbers over a 10-year period, okay? And why is that? When we enter into a long-term agreement, for most agreements, the revenue and the cash flow is going to be the same or very close over the full term of the agreement. Okay? But quarter-to-quarter, you're going to have these differences. So with all this cash coming in, I'm often asked about our capital allocation priorities. And it's something I think an awful lot about. It's something Liren and I discuss a lot. It's something we discuss at every single quarterly Board meeting. And whenever I'm asked the question, I typically give the same response. First, it starts with maintaining a strong balance sheet, okay? As Eeva discussed, most of our agreements -- 9 out of 10 times, Eeva is going to get an agreement done through bilateral negotiation. But it's not all within our control, okay? It takes 2 parties to dance. And if the other party is unwilling to sign a license at fair rates, we have two choices. We can accept that, which we're not going to do, or we can enforce our rights. And if we're going to be credible in enforcing our rights against much larger companies, like Lenovo, who you saw is the #1 PC manufacturer in the world and a top 10 smartphone manufacturer, or OPPO, who's a top 5 smartphone manufacturer in the world; it's very important for us to come to the table with a very strong balance sheet so they know that we can see anything through. So that's always top of mind to me. But that also goes into some of the financing that we've done over time as well. The second thing goes back to the first slide that I presented. That flywheel top left, reinvesting $200 million into R&D and portfolio costs so we can keep this machine going. That's very important because, as I said, great business model, we want to keep it going. Third, inorganic investment. Now I've been with the company a long time. We don't do a whole lot of M&A. But I think today, in this demonstration, you saw how important the 2018 and 2019 acquisition of Technicolor have been to our business, how it's expanded our technological capabilities and our reach into new markets. So for us, M&A can be very -- it's opportunistic and can be very important as far as growth. But you should know when we lay out these goals, $1 billion plus in revenue, we don't feel that we're reliant on M&A to achieve it because we have, through Rajesh and his team, the great innovation and Eeva's team's capability to execute upon it. Basically, all the ingredients in the kitchen are here. Okay? Now are we going to look and say, is there a way to accelerate that? Is there a way to expand it? Sure. We're always going to look opportunistically at M&A and see how we can advance the business. But it's not something that we rely on. That's a luxury that we have and something that sets us apart from a lot of other -- what other people would say are licensing businesses. Again, I'll tell you that we're a research company. So after we account for the first 3 items, we still tend to have a lot of excess cash. So we return that to shareholders. And I'll tell you a little more about that. There we go. Again, going back to 2011, when we initiated that first dividend, we've returned over $1.8 billion to shareholders in that time period. The vast majority of that has been through stock buybacks, although we've had a number of dividend increases since 2011, including the one announced here this morning. But we've done, in my mind, a very good job at being good stewards of capital and getting the money back to you. And if you look just over the last roughly 2 years, when we did our May '22 financing, since then, we've returned over $0.5 billion to shareholders just in that time period. We've returned -- repurchased 6.3 million shares just in that slightly more than 2-year time period, taking the share count from 31 million down to just over 25 million. So that's very impactful, particularly when you recognize the average purchase price was about $76. Now if we go again back to 2011 and look at share repurchase over that time period, 45% reduction in share count over that time period. But let's go back further. If you look at our balance sheet, you would see that there's just over 70 million shares that were issued per our balance sheet for InterDigital. We're now down to 25. So we have bought back almost 2/3 of all the shares that were ever issued. Why do we do that? Because we believe in the business. Why do we believe in the business? Because of the growth opportunities, the execution that we've delivered, but also the growth opportunities that we've discussed today. You see that recurring revenue is really the story going forward here. We've been growing total revenue over the last number of years. But on the recurring side, what we've done is fortify that base where there was Apple and Samsung renewals. But now, we have the opportunity to grow recurring revenue from roughly $400 million to $1 billion plus. And that's what really, really has us excited. But what really has me excited even more is when you think about the margin associated with that. We've been delivering at or near 60% margins. We think we can continue that. So $1 billion plus in revenue equates to $600 million plus in adjusted EBITDA. They may say,"Rich, I thought every dollar drops to the bottom line. Couldn't it be higher?" I'll tell you, it could. I'm saying the target at $600 million plus because I'm going to allow room for growth and new investment into areas that will take us beyond $1 billion. So we're up here in a couple of years where we have more things to tell you about, so we can keep giving Rajesh and his team the money that they can get us some new ingredients. We've talked a lot about today, you heard from Liren and Eeva, a little bit for myself about the subscription-like nature of our business. I think that's maybe a helpful way for some to understand and distinguish us from other licensing models because, as Eeva said, when Apple or Samsung is entering into a long-term agreement with us, they're doing it not because of the static portfolio that we had at the beginning of the agreement. We didn't go buy assets from Technicolor and just set them on the shelf and say, "You guys want access to these assets?" We bought the research team, okay? We're moving the technology forward. We're making the world better, all right? And our customers want to participate in that over the long-term nature of these agreements. So that's why we say they're subscription based, and that's much different than maybe some of the other patent licensing models some of you may be familiar with. So as long as we're talking about subscription, those of you that are familiar with the SaaS space, they talk about the Rule of 40. That's the [ gold ] standard. Your growth rate and your margins can be 40%, then you're doing well. Well, with a [ 14% ] CAGR and a 60% growth rate, we're nearly lapping the Rule of 40. That's the kind of opportunity that we have. And we're really grateful that people have begun to take notice. We recognize that our stock price is an important metric, is certainly to everybody here. But it's not the first thing we think about. The first thing we think about is the inputs to that measurement. How are we going to drive the business forward? That's what we think about when we come to work every day. We want to make sure that we're doing right by the business and trusting that over time, the market will catch up to what we're doing. Even with that increase in stock price, I'd argue we're still very well positioned to continue to drive value. I just have two metrics here. You can put other multiple measures comparing us against our peers, P/E ratios, whatever. You'd see that we're pretty far on the left-hand side there. So yes, the stocks run up, but I'll let you investment professionals think what you want, but I think that we have room to show that we deserve it maybe better multiple as we continue to perform. So as I conclude, I just want you all to remember four things. One, we've been delivering at double-digit growth on the top line. But going forward, what's really exciting is the ability to -- an opportunity to deliver double-digit growth in recurring revenue. What's more exciting is when you can do that with a 60% margin, and taken together, that means $1 billion target at the top line, $1 billion-plus, with a $600 million adjusted EBITDA number. So all in, we're super well positioned to continue to grow. I've been at the company, as I said, for 21 years. I can never remember a time where we had anything like this diversity of research into cellular, WiFi, video, AI, right, as well as the diversity of opportunities in the marketplace, smartphone to television, to CDM, point-of-sale machines, other IoT devices, automobiles and now services. So I'm just super excited about what the company has done, but more excited about what we're going to do over the next couple of years. So thank you. I'll turn it over to Liren.

All right. Thank you, Rich. Thanks, Eeva. Thanks, Rajesh. The good news is I have one slide left. So I'll summarize, right? So it has been a wonderful journey, and we have been transforming the company. Last 4 years has been amazing. But what I want to say is, number one, it always boils down to people. We have the best leadership team in the industry. We have some of the most innovative inventors leading our pioneering research. And if you look at our execution momentum, I think it's fair to say the machine functions extraordinarily well. I think we are firing all the cylinders from beginning to the end. That means we are strong. Today, we are also building for the future, the next-generation technology, the next iteration of business opportunities and the next frontier that we may not even know today, but will become obvious 5 years from now, 10 years from now. And our technology has ever -- has never been more important. That underpins all the market opportunity that Eeva has identified and gives us enormous amount of stability in the business, but more importantly, gives us a great growth opportunity. And lastly, what we have demonstrated is we have a clear strategy, we have the right team and we have the operational discipline to achieve our goal, and our goal is $1 billion plus for annual recurring revenue by 2030. With that, I'm wrapping up our presentation, and I believe we're going to take a short break, where we're going to set the chairs for the whole team to answer questions from the audience as well as anyone else on the call. [Break]

Okay. Welcome back, everyone. For our Q&A session, a couple of housekeeping items. For the questions in the room, for the benefit of the audience that's tuning in virtually, we'll have a microphone. If you could raise your hand, we'll bring you a microphone so they can hear you. And also, if you could just give your name and the firm you're with, that would be awesome. Also, I'll be taking questions from the virtual audience, that will be part of the discussion. And lastly, just to reiterate what we said earlier, for those in the room, management team will be available afterwards to chat. There's some lunch, get acquainted, but any questions about InterDigital need to be asked during this live formal Q&A session. So with that, we're happy to open it up to questions in the room.

Scott Searle with ROTH Capital. Thanks so much, [ Rosin ] the day. Appreciate the detail. It's great to see behind-the-screen doors a little bit of what's going on. Maybe first and foremost, just getting right to it, you've had targets in the past that amounted to about $650 million for recurring. Now you're talking about $1 billion. A big chunk of that is the evolution of the content cloud or streaming model. Why the level of confidence now? What's kind of changed in the dialogue? Help us kind of understand how we're kind of getting to that $300 million number and how that ramps up.

Scott, good morning. Thanks for the question. I'll take answer for it, then I'll ask Eeva to see if she has anything to add. Scott, as you know, we had a $650 million target on the device side. We, frankly, are making a lot of progress, as Eeva has summarized, which has demonstrated since I joined the company. Some of them is really reflected on the top line growth, some of them is actually reflected on how we renewed really important license in the device side. So with, frankly, enormous importance of our technology, the cloud side and with a lot of growth opportunity, both in the device side, on smartphone and CE and others. And by the way, it's important for us as a company to keep on driving for the future, both for technology development as well as, frankly, building the team to license, having the right strategy to drive business growth. So we collectively feel this is the right time for us to come out and to share the revenue target for, frankly, end of the decade, which is a long time, but we also provide enough granularity to see for the smartphone, for example, we actually target 2027. So I'll say it's really multiple factors on the technical strengths, on the value of our IP, but equally important for our ability and momentum in our business side. So I'll see if Eeva has anything to add on top that.

I think that very well sums up the answers to the question. I will just say that I think the confidence comes from the track record that we have demonstrated in the past years. We absolutely believe that we have one of the best portfolios of assets. The research is top-notch. And that really brings me the confidence that I need with my team when I go and discuss with our customers, who are very sophisticated global companies leading the pack in a lot of these industries. It's a combination of everything I said, all of the elements that we need to succeed in licensing. And I truly believe that we have it all.

Can we get a microphone to them? Sorry.

Thank you. I'm Anja Soderstrom with Sidoti, and thank you for the overview today. Just a little bit of a follow-up to get to this $500 million target for 2027 on the handsets. How much penetration -- further penetration do you need to get to that target?

How much...

You're 51% penetrated now, right? How much more do you need to coverage to get to that $500 million target?

Rich probably has calculated that more accurately in his mind exactly numbers. In terms of numbers, I would say it's closing 4, 5 deals.

Yes. I think -- and I'll add to that. And Eeva is right. It's really just a handful of deals. And it's like in the 85%, 90% range. If you remember on Eeva's chart, it was 51% under license. The long tail was only 4%. So there's a large amount that's either in negotiation or, I think, transient. And some of the newer ones in terms of their export sales growing and so forth make up that delta.

Okay. And just a follow-up, too, to get to that video technology target of $500 million. It's taking quite a while for you to build up the handset revenue target. And to follow up on Scott, it's kind of an aggressive target to reach that in 5 years. So what gives you the confidence there? And are you leveraging current relationships with handset devices that also in video technology to get to that? And just walk us through a little bit there.

So let me provide a high-level summary. I'm sure Eeva can add more color to it. So number one, if you look at this market, so video streaming market, it's actually a concentrated market. We are not talking about 100 vendors. We are talking about a couple of [ thousand ] vendors. And each one of them, especially the top vendors, are fairly large. So there's a lot of similarity on smartphone versus online streaming. They are different vendors, of course, but the dynamic for licensing, that actually can make it more attractive. So that's number one. Number two, as Eeva mentioned, this is something we have been working on for multiple years now. And you [ can't ] start with just [indiscernible], we obviously have to demonstrate our assets, engaging the customers. And we frankly built an internal team dedicated for this effort. And we hired the industry insiders, and that's more familiar with those customers that, frankly, are having a faster dialogue with them. And so that's something we have been working on part of it. Number 3 boils down on what Eeva really says, right? We have the assets, we have the pedigree of Technicolor, and we have, frankly, the ability and the resources to execute over time. And by the way, we're [ not in this EV ] market, far from it. We are also thinking this real-time take time to build out. But another day here is really -- I have confidence in my team, in the company's leadership. And frankly, we are waiting to make the right amount of investment in both our R&D portfolio as well as from the licensing effort pursuing this out. I think that has a lot...

Yes, I'll just add that it's an ambitious target, you're right, but Liren's response really sums it up. Our technology is really making it possible for that business to exist.

Tal Liani from Bank of America. And you're going to get 2 for 1. I'm going to give it to her, she had also a question, [ Nadlin ] from Bank of America. You're targeting subscription revenues to grow 14% on average. This year, it was flat. What -- how do you go from flat to 14%? And what are the components of this growth?

Yes. Good morning. Welcome. Always good to see you. So if you look at our recurring revenue, what we have shown in recent [indiscernible], we have shown up to 2023. For 2024, we obviously still have a few months to go through, and we obviously target groups to grow both the top line and also recurring [ forces ] for it. But the year has not played out, so I'll wait until, obviously, end of the year to see where we will be and where are we. In terms of recurring revenue growth for the last several years, I think it's really, really important to remember 3 years ago, 4 years ago, when Eeva and I joined the company roughly around the same timeline, the most immediate thing we are facing exactly about Apple and Samsung contract renewal, right? Collectively combined, it was actually more than -- I think it's close to 60% of revenues. So at that time, our priority #1 was actually about renewing them. So that obviously replacing the revenue. And we frankly, was able to drive them higher, as you are aware. But that was the way you slowly back in. And frankly, our signed Apple contract was a very long-term contract. We have probably disclosed that contract, it goes all the way to 2029. And the Samsung contract is also long term, which we have not disclosed the term. So combined, it builds us a substantial base that we add on top of it. So that's my take for it, but I'll let Rich to add on it.

Yes. The other thing I'd add is you saw the customer concentration, certainly, in smartphones, but in some of the other markets. So that leads to rather then slow incremental growth, step functions, fistfuls of growth when you get them. So it might be like flat for a little bit, then you get the big deal done, and then it pops up.

Second question, I think more for Rich, but maybe Liren as well, is if you think about kind of this computing and streaming, the $300 million target, how do you pair that with kind of the headwinds that those markets are facing? Because it's on both the SDOV side and the ADOV side. ADOV side, we're seeing trends with companies like TikTok. And Meta, through Instagram, really stepping down the functionality, especially in video, they're spending with other providers, mainly on the [ CDM ] side. But -- and then in the SDOV side as well, Netflix is doing a lot of cost optimization, too. So just how did you think about those trends when you were setting that target?

Yes. So I think what's important, it goes back to what Rajesh and Eeva demonstrated is irrespective of the market as the industry data shows is still expected to grow overall. And that may not be perfectly straight line up either. But the important thing is that these are hugely valuable companies, hugely valuable markets. And our technology has enabled it, okay? Like Rajesh said, without video compression, we're getting Netflix in the mail. Okay? The whole video distribution system is based on compressing this to a size that you can stream. Even when you first stream Netflix, remember, you get the spooling, right? And how frustrating that was. We don't see that anymore because the technology advances over time. That's part of our work that does that, and we just want to get paid for it.

Two questions. The first one is, Liren, can you talk about the evolution of the litigation framework and regulatory environment and how that has either worked for, which I believe it has, your ability to get deals done going forward?

Okay. Hey [ Jim ], it's good to see you. I'm having a bit trouble hearing the first sentence of your question. Do you mind repeating?

Can you talk about the legal developments as well as regulatory developments and how those over the last couple of years or beyond have contributed to your ability to get deals done?

Got you. Yes. So if you've got our business, right? We are a technology-driven business, but we do rely on the global framework of IP protection. So in a sense that we are very much connected and to a degree influenced by the global framework for IP policy as well as a legal framework. So it's hard to make one generic statement for you. But what I can say is based on my 25 years of experience in our industry and Eeva frankly have a similar amount of industry experience here. I feel the legal framework on a global basis has been quite strong. Right? There's smartphone jurisdiction we are, frankly, able to enforce our right. And the global policy environment, it's never easy to make one sentence here. But if you look at U.S., for example, our policy side standard-driven or patent protection side, it's occupied bipartisan issues and has been quite strong. So -- but knowing everything here, we spent a lot of time demonstrating worldwide how our business model really benefits the industry. So we are the R&D engine for the industry, how we are enabling vendors to get into this market, able to leverage our creation, how we are benefiting the consumer. And frankly, we have seen a lot of progress in people recognizing how we are really, really valuable to the industry.

Second question really has to do with the evolution of price. Because I assume you're in negotiation in most circumstances, there's a price at which it gets done and there's a price at which it doesn't. So how can we think about standardization of value of deals, the more deals that we're seeing done in the marketplace? Is that helping you, okay, in terms of getting these deals across the finish line? Or is there still issues for each individual that makes every one of these things a customized deal?

Okay. I really want to make up more generic comments. I'd really like Eeva to answer the question. Regarding the price of the standard essential patent licensing, I would say there's a more generic way to describe it, there's a specific to our company. So more generically to describe it, is the value you're providing to the customer need to be essentially correlated to the value you are enabling them. And so that has been the common thing in our industry, and we, as a company, has a very good track record of demonstrating how our value for the portfolio driven by R&D has gone up over time. Regarding individual negotiation, Eeva is master for it, and she is in charge of our licensing program. I invite her to give some high-level insights.

Thank you, Liren. I would say that in the end, every deal is a little bit like customized. It's because of the different preferences of each of the customers, the different circumstances that they are in. And in that sense, the work involved with doing a small deal can be the same that the work involved with doing a big deal. Different things in the market are reference points. But ultimately, we run our own program. And for us, it's important that our programmatic parameters are realized in all of the deals that we make.

[ Samik ] from JPMorgan. Sorry, new to the story, so the questions might be a bit basic in that sense. In terms of the streaming customers that you talk about and particularly that opportunity, what does the duration of engagement with the customer prior to signing a deal look like relative to your smartphone customers or sort of the installed base you have on the PC or the smartphone side? How do you think about are these customers more on an accelerated time line to adoption or you're seeing more of a slower adoption from the rate up to your installed markets? And then just, Richard, for you, in terms of the 60% EBITDA margin target you're talking about, how should we think about where the upside potentially comes from? Is it more instead of 4 or 5 deals, you get 1 or 2 big ones and that drives the upside? Or just the pace of organic investment doesn't catch up to what you were anticipating in the model?

Should I take the first one?

Yes, go ahead.

I'll take the first one. My experience, in my experience in this market, it's -- it is actually quite similar in the sense that the customer first wants to understand the value of our portfolio to its business. So there is generally usually a technical discussion that is ongoing between us and the customer to establish that value. And then once you get sort of over that phase, you start discussing commercial terms. And I have not really been able to sort of draw any very large distinctions. These are very large customers, very sophisticated customers. They know what they need to know and they are very capable and able of sort of negotiating. So I would say fairly similar.

And on the margin question, I think, 2-part answer. The question was, what's the potential for the upside on the 60-plus percent, the $600-plus million of adjusted EBITDA. I think the 2 parts to that are: first, the top line. It's $1 billion plus. So the key is in the plus because you have a semi-fixed base right? Again, when we sign a new license agreement, there typically are no costs associated with that new agreement. Nothing to ship, nothing in service, no trucks to roll, right? It's granting permission to a customer that's typically already using our technology. Okay? So it's collecting checks at that point. We made our investment typically, years before. So if we can grow the top line more, and Eeva showed some different ways that we could do that, then you got more of that drops down, that will hike up the margin. The second is we're already at the prior long-term goal of $650 million at a 60% margin target. So if we're adding $350 million to that, and that's dropping down, then the math says it all goes up. But your question, talk to the fact that I spoke to the opportunity to make new organic investment to growth beyond that $1 billion. And that's the part that I can't precisely measure at this point. In my closing remarks, I said we have more opportunity to do more things than ever before. And it's just hard at this point to say how will that play out over the next couple of years. I want to leave room to make that investment because I think there's going to be an investment to be made.

It's John Broderick from Permit Capital. I guess this question is for Eeva. When you look at the 50%, let's say, in smartphones of the market that's not under contract, I guess my question is why such a long lag? If it's -- there's only so much customization with each contract, wouldn't the other players who are uncontracted in the market, especially in a world of FRAND negotiations, what are they just sort of come to the table and reach an agreement with maybe some subtle tweaks? That's the first part of your question, why does it take so long? And second, the longer it goes, do we have a larger catch-up payment? Should we assume that the catch-up payments are larger as time goes on?

You were referring to the -- specifically to the part of the market which was unlicensed -- unlicensed. So let me first start by saying that the smartphone market has been actually quite dynamic. So if we think about, for instance, Transient Techno. It started out as a very small player, selling in very, very remote markets where sometimes patent protection is not even present. But now it has sort of grown to be a significant player, and it's clearly now sort of starting to understand that when it sells in markets where patents exist -- the protection exists, it needs to start taking licenses. So part of the lag, I think, is that these companies, a lot of them come from, for instance, China, they are sort of developing themselves and getting the understanding of the market. They have -- some of them have grown very fast, and it has taken a while to get educated on the market. And can you remind me of the second question?

The second part [indiscernible]?

Yes. Yes, I think we should because, of course, there has been a lot of attention now on sort of so-called holdout behavior of various implementers. And we are starting to see, for instance, now courts in different places in the world addressing that problem and saying that you have to pay for all of the past that until -- from the first sale that you've had. So I think you should be expecting catch-up payments from those accounts.

Let me add a little bit color to the catch-up. I recognize it for investors and analysts who follow us. Obviously, a lot of focus on the annual recurring revenue, there's also a catch-up payment, sometimes catch-up payment comes in various different juncture of time. Catch-up payment is important to us for multiple reasons. While it is money that people owe us, and frankly, they should have paid us earlier, but for the delay in licensing or primarily the health side dragging their feet. Second thing is really -- it's a fair thing to do. It's a fair thing to do to us, but it's also the fair thing to do for the other players who have been playing by the rule who pay us share price, fair price. So we are quite proud of InterDigital's effort in these areas, frankly, leading into some of the crystallizing law, even Jean was asking earlier regarding the legal environment. So that's something was actually driven by InterDigital's work in having course in different countries recognize this as the industry-wide problem and therefore, having a uniform way to deal with catch-up payment. Exactly good for the whole industry.

Okay. Pause for a minute. We'll get to the -- in the room questions next, but one from the virtual attendees. This is for Rajesh, 2-part question. The first is, given all the opportunities you could consider to invest in, how do you prioritize? And secondly, the improvement in productivity over the last few years has been really impressive. Can you give some examples of what you've done to make that possible?

Sure. Let me take the second one first, how have we improved the productivity. Okay. And there are really 2 things that go about that make that happen. One has to do with turning our researchers into inventors. And what I mean by that is people when they come out of their Ph.D. program, they know how to do research, but they are not thinking in terms of how that research becomes an applicable research that goes about -- goes -- that can be standardized and go into a practical system. And there's a significant effort that we have done that, particularly on the video side to sort of make that happen. And the second thing that we had to do in the last couple of years is just sort of making sure that the early part of the research that I talked about in my presentation through the middle part and then through finally standardization, that pipeline is smooth. So the early work then leads to the next part and then that leads to the actual standardization. If you don't pay attention to that, they have a tendency to sort of get a little bit out of alignment. And so that alignment was necessary to make sure that we continue to increase the productivity. So that's the first part. And that answers the second question, hopefully. The first question, how do we decide what is the most important thing to look at. Clearly, we have to drive our patents and output of our research has to drive the business, right? And so in some sense, that's a joint discussion with Eeva and her team, with Josh and his team, who's responsible for actually converting those into patents, as to where we should make sure that we put our effort that's ultimately going to be most important to the customer and that can actually get the right patent portfolio for us. Keep in mind, I am looking many years out, many times more than 10 years out. So I always have to have a small number of people working on these exploratory projects that are thinking about something that may or may not be successful and then keep monitoring them and making sure that if something has a chance of becoming more successful, put a little bit more effort on that. So that's an ongoing process. But the bulk of the research team is working on things that come from the feedback that I get from Eeva's team and from Josh's team. Okay? Hopefully, that answers the question.

I think we had a question up front. Are you still interested in asking? I missed that. Yes.

Nick Hansen from Disciplined Growth Investors here. I had a question about the streaming. I want to understand that dynamic as you penetrate that industry further, you teased a couple of conversations you've been having for years on that front with your team. How determinative will it be initial contracts in that area be to the future sizing of the market and future contracts that you signed? And how soon would you hope to see something on that front?

Can you clarify which market you were asking?

The streaming and cloud services.

The streaming market. And let me clarify the question once more. So...

So how soon would you hope to see revenue [indiscernible] those first contracts needs the future contracts that you sign?

Okay. This is a great question because I think what we usually say is that we do not control the timing, which is why our business is a little difficult for many -- many to understand because it's sort of -- it's bulky, it's varying. I'm not going to sort of sit here and predict that from 3 months from now, we have the first deal. That's not anything, I'm going to do. I'm just going to say that we believe that we will start seeing first revenues in a couple of years. So we are not expecting this to happen overnight, but we will keep investing in these discussions. With regard to your second question, whether the first deals are going to be sort of significant for the trajectory of the program, I do think so. yes. But of course, it also always depends a little bit on who you get under license. First, if you happen to get a market leader, it certainly sort of usually is a very, very strong reference for the rest of the market. If it's a smaller player, you may need to sort of do more work to sort of come up with something that the market as such sort of will accept. But yes, I think they all play together.

Yes. Let me just add one more thing. I like to see all the deals are important. This is not just a hit because our backbone of our program is driven by fundamental R&D is, frankly, in the streaming side, there's a very large patent portfolio. So the first deal is obviously important. But every single deal as we sign over time build momentum. But we have demonstrated our core smartphone program, the Internet of Things, everything. They just, to me, it's a brand new opportunity for us, give us the initial starting point as well as every deal we signed as we have seen other programs add more momentum over time. So I would like to see. First one in [indiscernible] important; second and third, fourth build-out.

My name is [ Martin Young ] from [ Oppenheimer ]. And my question is about revenue patterns between catch-up and recurring, especially when you consider how you have seen mobile side versus how you are expected to see from streaming. So is there any meaningful difference between the breakdown of catch-up and recurring between those 2 markets?

Yes. So let me take a high-level answer. I ask Eeva or Rich to chime in because this [indiscernible] a pretty long history. So first of all, it's important to understand why do we even have catch-up payment. It's really important to know that our technology, by and large, forms a very large important part of the standard. So those vendors have been using our technology very often without a license, infringing our patent for a long period of time, right? So therefore, when we negotiate, we try to convince them to frankly pay for going forward as well pay for the past. But having said everything, though, as Eeva's team as we collectively with the company to approach customers, we are being reasonable. We are frankly being practical. Sometimes we do negotiate with them, try to settle for the past with certain commercial terms and with the focus driving things forward. So that's why there's some flexibility in the negotiations of deals and collectively add up into certain revenue we're recognizing. But I think it's important to know, if you look at our track record for the last several years, that frankly goes back to probably more period before -- before we even joined the company. We have demonstrated repeatedly that we are able to collect or past and going forward. But now I'll ask Rich to give more comments.

If you go back over -- I can't remember I looked at -- it was 10 years or going back to that 2011 time period. We have an average of over $100 million a year in catch up revenue over that long time period. So that's a lot of money. That funded a lot of those buybacks, okay? So it's real cheese, it's really important, okay? The second thing, you talked about pattern. There's not necessarily a pattern to discern because it almost goes back to the earlier question, it's not a linear growth, right? It tends to be a step function. And it's not just smartphone. I think your question kind of talked about smartphone catch-up. When you look first quarter of this year, we signed Samsung TV, largest TV manufacturer in the world, a lot of catch-up revenue came in the first quarter as a result of that. So all throughout Eeva's charts, all the folks that are unlicensed or at least most of them represent catch-up opportunities, whether it's smartphone, CE, IoT or even streaming.

Yes. We'll take another question as the mic moves from the virtual audience. Ken, this is for you. Two-part question. You are the most recent addition to the team. Can you talk about what attracted you to InterDigital and first impressions? And then secondly, what do you consider your top priorities looking forward?

Can you hear me okay? This is Ken Kaskoun, Chief Growth Officer. I've been here for about 6 months. What attracted me. So I have known InterDigital from my experience in the industry and the licensing and technology capabilities was one thing that attracted me. But I think the growth opportunity that we just laid out, the -- not only the opportunity in front of the company but also the willingness to grow beyond smartphone and move into these new areas is as exciting. And then lastly is the team and actually, one of the things I've noticed coming in is the team is very cohesive. Everybody, I think, works very well together. And there's a culture here that goes beyond the executive team, which is -- I kind of put it as they're willing to grind. There's a lot of work, and there's a grinding ability to make sure we get to where we want to go. So all of those things are the reasons why I chose to come here. Focus. So I've been here 6 months. The initial focus was to get to know the company. I have been traveling around to a lot of the different sites and meeting the teams, understanding what each team does and how they interact. I was fortunate enough on the yearly cycle to come in and work on the strategy, the 2030 strategy, which you just saw, which was a focus from mine for the last 4 months, let's say. And that has been very helpful to me because I got to work with all the different organizations in developing that with them. And then lastly, we're looking beyond what we just showed you, Rich laid out capital allocation and M&A as one of the things that we're looking at. We are being opportunistic. We want to find things that leverage our capabilities in licensing and technology but expand beyond our current business. So hopefully, that answers the 2 questions.

Scott Searle with ROTH again. A couple of questions for Rajesh and Liren. First, Rajesh, on the Technicolor front, there's foundational IP from a compression standpoint. But as we look at some of the implementations that are going on in the marketplace today with HEVC and AV1, right, some of the streamers are doing different things. I wonder if you could clarify for us the aspect of your foundational IP for any of the standards that you will get paid in these scenarios, whether it's the current standards or I think you had VVC up on the slides, the evolution to that if you're still going to be in a position to get paid? I'll throw in the question as well on AI, right, it starts to get peppered into the presentation. Is that going to be a stand-alone line item where you guys can get paid and monetized? Or is it really just going to enhance a lot of the aspects of mobility and video compression and otherwise and so it enhances the ability to get paid and get paid more? And lastly, Liren, as you look at a lot of your customers from an OEM standpoint on the equipment front, it's not just connectivity from a mobility standpoint, but it's also video as well then. So are we going to see more bundled deals? Or does that really diminish the value of your intellectual property to do it in a single onetime licensing event?

I can go first. Sure. So video and implementation. Let me just talk about that a little bit. So the team that we got from Technicolor obviously had a lot of capability on standards and implementation side. And we had to rejigger that a little bit to suit our business. But video standards in general, just the way they work, you have to have an implementation of that to even bring your contribution to the standards process, okay? So there is a -- there's a software that everybody has to use to sort of indicate how much better your algorithm as compared to somebody else's algorithm. So that implementation already has to be there. So that's why it turns out that even though we are primarily focusing standard essential patents, the work that we are doing already requires us to do implementation. And then there's also this full interplay between what goes inside the encoder of the video, what goes inside the decoder and exactly where the standards read. But it turns out that aspects of standards ends up being on both sides. So we do have some implementation capability in video. And this is getting into a little bit more detail technically, but hopefully, you can appreciate that. So just the way the standard -- video standards process works does require you to have some amount of implementation, and we have that capability in the technical team. So that's sort of -- so we are well covered there. On the AI side, it's still an evolving thing. Now primarily, we are thinking in terms of how AI intersects with wireless and video, okay? And as I gave you an example, sometimes it's not just that AI can be used for wireless and video, but also you have to think about how AI is using video and wireless and that interplay is there. Whether or not that becomes a business opportunity, I will let others answer that question. And just technically, I'm thinking I want to make sure that anything that's at the intersection of AI video and wireless, I take advantage of that from a technical point of view and make sure that we have the capacity to invent in that.

Got you. So let me comment on AI just briefly, and then I'll answer the second part of your question here. So if you think about AI, there's obviously a lot of companies are working on AI now. So I want to say a couple of things here. One is InterDigital has been working on AI for actually a couple of decades already. We are focusing primarily on the interception of AI with wireless and video to solve the foundational problems. So that's important to know. Second thing is really our business model that's defined today require us to create the most important foundational technology. I frankly share through standard primarily through patent portfolio licensing. So that's probably what differentiates us. Since that we create the most valuable technology, we obviously file a patent to protect our important innovation. But then we share them. So therefore, we lower the barrier to entry for everyone else, so they don't have to recreate what we have done. That's really, really important. So regarding business opportunity, near term wise, I'll say #1, AI can potentially give us more value of IP on a per unit basis going forward, AI becoming more fundamentally important for 5G advance or 6G in the future. Second thing is really, if AI is predicted, as Eeva mentioned, to drive a major cycle of device replacement. When the device sales goes up, we're generally able to negotiate for better terms during renewal if the customer is selling more devices and higher value for the device. And that's all part of the negotiation that Eeva is driving. And lastly, we are very much open minded, and that's partially Ken's job together with Eeva and Rajesh to figure out other new verticals. The new verticals in the device side, but more importantly, probably are the new verticals in the cloud side, where the new AI-based technology using our fundamental IP in our fundamental innovation that other people are benefiting from, okay? That's AI side. Regarding your second part of the question to say, okay, so we have different aspects of our portfolio. Our portfolio is large. It's growing. But if you look at it here, there's wireless assets because video assets wireless have cellular and have WiFi. We do have different slices, and frankly, the imputation patterns and there's AI patterns over time. How do we choose to license? It's -- we are open-minded. So it really depends on how the customer is using those technology. I give you distinct examples. When Eeva is driving the closure for Amazon licensing, which we have signed, I think, in 2022, Amazon is not making cellular devices. So therefore, our cellular portfolio naturally is not part of that negotiation. And that's fair, right? We can't ask people to pay for stuff they are not using. But on the flip side, most large customers prefer to have one large negotiation and secure long-term access to our technology over time. And that's our preference. But if there's someone else wanted to say, okay, let's negotiate for HEVC first and let's look at WiFi, let's look at cellular portion, and we are open for it. And we are -- so the important thing to us is driving a fair valuation based on how they are benefiting from our technology. And we don't mind to do the work and as Ken said, we proud ourselves into grinding and be able to drive closer to those deals.

Another question from the virtual audience. This one is about people. So Skip, a question for you. There's been a lot of talk during the presentation today about the importance of talent. So can you talk about how you attract and retain?

Sure. Yes. Hi, everyone. Skip Maloney. I am the Chief People Officer here at InterDigital, I have been here a little under 1.5 years. Yes. So we spend a lot of time thinking about our employer brand. And like a lot of companies, right, we do our fair share of exit interviews so we can improve upon our culture and the things that we do every day. Unlike a lot of companies, we spend more time talking to people that stay and we talk to the people that choose to build their career, either long-tenured employees or new hires. So we collect a lot of that data. What we've learned is -- you've heard the expression, nothing attracts a crowd like a crowd. Nothing attracts talent like talent. And within our DNA, we look for people that are intellectually curious and are critical thinkers. And those people tend to want to work with other intellectually curious and critical thinkers, right? So it just kind of goes one in the other. And the other thing is that we do -- we really try to create an environment for creativity. I will tell you, innovation is not going to happen if you have a very stale and methodical culture. We not only encourage creativity, we require it. We -- and it's not just R&I, which we see the numbers coming out. That's our bread and butter. It's every department, right? Every department is required to think outside the box to do their role much better. And I would say, lastly, we are a company that believes in meritocracy. It is the best and brightest and those are the folks that we attract, they expect not to just be rewarded for their hard work, but for results. And that's what they want, and that's what we provide. So we -- we really do spend a lot of time on that, along with our culture as well. We're always thinking about it. We're always thinking how we can improve it. But also, I think if you just look at the negatives, you go away from the things you're really good at, and we want to make sure we don't lose our way.

Jim Barossi here from Permit Capital. Going back to streaming for a second. Help me understand how -- as you go out and begin your discussions with the SVOD and AVOD providers, how do you think about the unit economics? And how are you discussing that internally? In other words, as we look at mobile and as we look at consumer electronics, it's very easy for us to understand units sold or units delivered is kind of what the opportunity set looks like in terms of the patent infringement. In what way are you thinking about having those discussions with the SVOD providers or AVOD providers? And how should we think about it in terms of sizing the opportunity?

Let me start. That's a great question. Let me start and then Liren and others may want to chime in. The way we approach it is obviously sort of through thinking, okay, so what is the benefit that our technology brings to these players. And 1 benefit obviously is sort of cost savings. So that is factored into our thinking. In terms of sort of thinking how you approach sort of the discussions, what they do themselves to measure their business and the healthiness of their business is they talk about the number of subscribers or number of customers. So we like to sort of try and do the same. Go into the terminology which they use themselves and start from there.

Yes. I mean let me just add one thing here. if you compare this industry, even compare to the cell phone industry, I see similarity here. And it's important to know that most of our large agreements in the cell phone space is actually a fixed dollar fees. Right? What that means is we get -- we negotiate a certain amount of dollars per year. But that dollar does not come from single. It's got to be supported by unique projection, supported by how much they're going to sell at least in based on third-party report regarding ASPs of the device, was a 5G 4G mix. So in that context, Eeva is going out to license. If some of the streaming services provided by a subscriber of a certain dollar amount per month, per year based on future growth, we are absolutely are open for that discussion. If on the other side, certain business models based on advertisement base, but they still generate a lot of revenue, generate some amount of profitability, we are open for all those discussions in the end to meet IC similarities and just find the value we bring to the table and how do we cater for how their business model is benefiting from our technology.

Another question from the virtual audience, Josh, this is for you. It's about -- there was a lot of discussion about quality of IP. Question is, one, how is that assessed? And secondly, how does InterDigital focus on maintaining high-quality portfolio going forward?

So yes, Josh Schmidt, I'm the Chief Legal Officer. I've been with the company since 2015. So the first part of the question, how is quality assessed. Liren should cover this in the presentation. There isn't one universal metric that everybody agrees on is how you evaluate the quality of the portfolio. So we'll look at a basket of metrics to evaluate both external and internal, how we think about quality. Liren mentioned one during the presentation, which is based off of forward citations. Some people look at essentiality rates, there are others. In terms of the second part of the question, how do we balance the 2, I guess I'll start by saying, I think it sort of implies a false premise that you have to trade off between the 2. I think in reality, we have to focus on both. And we do. The best way that we can continue to do that is , frankly, do what we're already doing in a lot of ways, which is focus on the high-quality innovation that Rajesh's team is putting out and turn those into high-quality patent applications. To drill down on that a little bit, Rajesh had a slide, right? The major way that we've helped to improve that over the years is through collaboration, right, improving the feedback loops that exists between the patents organization and, frankly, the enforcement arm and Rajesh's team that's responsible for generating the raw materials, if we will. From our side of the -- from the team that I'm responsible for, we see that raw material get turned into a product throughout the life cycle and in some cases, then go through an enforcement mechanism. There's a lot of feedback and information that we derive throughout that process that his team can benefit from in terms of where they're focusing and how they're focusing. On the flip side, right, his team is the subject matter experts. They know the technology better than anybody that's responsible for drafting the applications and for prosecuting those as well as enforcing them. And so we really leverage that expertise throughout the life cycle to improve the quality of our applications, to improve the quality of our responses from the patent and trademark offices around the world in getting allowances and getting granted patents. And so that's really how we, I think, have -- throughout the past couple of years and going forward, we'll continue to balance those 2 ways of looking at the portfolio.

Any additional -- okay. You could use the microphone, please.

Can you talk about working directly with your existing clients working the -- versus working through some of these standard essential organizations in terms of both addressing customer issues as -- and licensing? I know you've had joint ventures in the past where you were trying to solve specific problems. But understanding the problems that the customers are facing in taking the technology forward, how should we think about that because you have -- you've been working with Apple since the beginning of the iPhone. Have to believe that, that gives you an advantage in terms of understanding where these businesses are going as well as your ability to work with customers and solving problems for people in the industry who might not yet be clients.

So [ Jim ], if I understand your question right, there's a technology standard collaboration side, which I would ask Rajesh to comment on. And then there's also a business relationship side of the question, which I would ask probably Eeva or even Rich should touch on because Rich has a lot of history with our company. Does that make sense? Okay. All right.

I will go with the technology part. So as I was describing the -- how we start to do prestandards work and then standards work, that's all collaborative. So when we do prestandards work, it's not that we are working ourselves. We are working with other companies, not just our -- who are going to be our customers, but also their customers. So Verizon and AT&T is going to be in the room, and Apple or Samsung is going to be in the room. And we're going to together try to figure out, okay, what are the problems that are going to be important 5 years down the road so that our reset can start to think about that right now, okay? So that's probably the most that starts to happen early. When you -- when the rubber hits the road, which is at the standards body, then, of course, everybody is there. We are all putting our solutions together. And at that point, you really have to -- you get to know pretty quickly what is driving the contribution from a particular company. Typically, there are customers who are also there. And as I said, our customers' customers are also driving these different kinds of discussions there. So really, it is a collaborative process in terms of technology development, okay? That -- whether it's prestandard or standardization. The early research work is kind of early, but that's still driven by how we understand the industry to be moving, how we understand the technology to be moving and how we understand our customers and their customers who'll be using those technologies.

And if I continue sort of -- I think the part of the question where you're actually addressing customers' issues with the technologies is -- really sits fundamentally in the standards body discussion. And I guess I'm not a technology person, but I guess the benefit that we bring to the table is that we are not necessarily tied to a given product. We can sort of think what might be the best solution for the future next-generation standard irrespective of what is implemented in anybody's product at the moment today. So that sort of like drives the technology development forward in a nice way. And when it comes to understanding your customers' issues in negotiation, you're quite right that having a longer-term relationship does help, especially if you're dealing sometimes with the same people when renewal kicks in. And you remember the discussions that you've had the previous time. I will say that at best, at its best, negotiation is both parties actually helping the other side articulate issues to their management. So that's what's happening. When negotiations work well, both sides -- I've been in transactional work for 35 years. Even in private practice, I did a lot of contract work and transactional work, M&A. In every transaction, the parties first work against each other. And it's like -- and it's almost like driving a bicycle uphill. And then at some point, there's always -- it levels out, and it starts getting easier. And the parties start working with each other and providing the solutions that the other side can bring to their management in order to sort of bridge the gap and get to a deal.

I guess and I'll reiterate what was said in a way that hopefully is helpful from the relationship side from my observation being with the company and seeing folks like Eeva and Liren come in. Everybody knows Eeva and Liren, and Liren and Eeva know everybody. It's a small industry. So I think that's been enormously helpful in the execution over the last couple of years. And it doesn't just stop there. It's other levels within our organization. We have well-known people in Eeva's group that interact with these companies. And that goes a long way to -- at the end of the day, it's still an interpersonal dynamic when you negotiate. As far as the technology, the punchy line I was going to give you is we don't make the iPhone better. We make all phones better, right? It's foundational technology. So we're trying to improve the whole market, not just tailor something to one product.

We have time for a few more questions. We have 2 remaining from the virtual audience, so we'll knock those out, take care of those and then come back to the room in case there are any final questions here. Rob, this is a question for you. It's how does InterDigital marry their communications and public policy programs to enable growth?

Good morning, everybody. I think it's still morning. Rob Stien. I'm the Chief Communications and Public Policy Officer. I've been with the company since 2014. I have the distinct opportunity to lead the communications, marketing and public policy group. And I think one of the critical things to understand, especially when it comes down to public policy, governments around the world are unique, much like InterDigital is a unique organization. But the one thing that governments truly understand is that innovation is power, and innovation economies are critically important. You heard Liren speak earlier that our foundation -- our foundational technology underpins really a $5.4 trillion economy. Standing alone, this is the third largest economy in the world. Governments around the world understand this. They want to be a part of it. So being able to communicate with them, let them know the research that we're doing, how we handle this research and the criticality of the IP that we develop and what it means to this economy at large is extremely important. And it's something that governments will understand. From the communication and the marketing aspect, it's really about showcasing who we are, what we do, how we do it. Skip talked a lot about the talent and the people that we attract. I get the opportunity to talk about those people externally, internally and really promote this company in a different way. As a pure research company, one that doesn't necessarily relate to or need product in our portfolio, we have the ability to go out and be a thought leader that others can't. So we have the ability to speak about technology in a way that others can't. So our brand, our opportunity, our relationships with governments or other groups of people is just a little bit different and a little bit more richer because we're not so tied to making sure that our product tomorrow is just that much better. We get to worry 5 years down the road, 10 years down the road about making our technology that much better and pushing this company that much further forward.

Thank you, Rob. And question for Mike. It's about how does IS enable the business and scale with the growth that's targeted?

Great. So hi, everybody. Mike Cortino. I'm the Chief Information Officer. I've been here a little over 4 years, nearing 4.5. And so how does IS enable the business? First, it's really about having the skills and people and structure within the IS organization to ensure we can support the business strategy. We utilize that structure and that alignment to partner closely with Rajesh and his team to ensure we're providing the infrastructure and the processing power needed to fuel our innovation engine. We also partner very closely, I do and my team does, with all the members of the exec team and their teams, so all the departments, to ensure that we're delivering the tools and services that they need to achieve their unique business objectives.

I have a follow-up question on streaming. So a lot of your peers have been having lawsuits with, say, [indiscernible]. And then there are negotiation -- there's -- I feel like there's progress in there. But like you just mentioned you don't expect the first license agreement to be happening in next few years. Is there a reason that you are like -- don't go to the legal route for now? What's the road map here versus your peers?

And I'll start answering this question. I think it's a good question. The public information has some companies sort of suing in the streaming market. And typically, whenever a new industry takes sort of off in a -- in the licensing business, you will see some lawsuits. They -- generally, from a market perspective, they helped sort of settle certain discrepancies and disputes that parties may have. But that doesn't mean that you need to necessarily litigate. And I'm not sort of projecting that we will necessarily litigate with our customers. But I think it bears a high likelihood that not everybody takes a license from us or from other players in this market. There are a few other licensors who are already looking at this market as well. So we will see how it plays out. And it sort of very much, I think, will be depending on sort of how the business sees the value of this technology for their business models because I think it's a little hard to justify in a courtroom that there's no value in something which actually enables your business.

Let me just add one more picture. I think our licensing principle is actually consistent. We always, always prefer bilateral negotiation. And we acquired patience in negotiating, demonstrating we go above and beyond demonstrating how our technology benefits them to how our patent portfolio is relevant for them and how everything goes. But as we've said repeatedly, as Eeva has mentioned here, we also are ready to defend our business model over time. We use it rarely, but we do have a very good track record in defending our core business. I think that ability, that reputation is also important as we get into a new market. So I think you -- I think we need to be ready for both. And hopefully, most of the [indiscernible] survive after negotiation as we have done in other spaces.

Okay. Any more -- one more question in the room? Are we good? Okay. But that brings our Q&A session to a conclusion. And again, just want to reiterate how much we appreciate all of you, both with us and tuning in virtually, for spending your valuable time with us today. And we're excited to continue the conversation going forward.

Thank you.