Morning, everyone, and thank you for standing by. My name is Gil, and I will be your operator for today. At this time, I would like to welcome each and every one of you to the InterDigital's fourth quarter twenty twenty five earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on a telephone keypad. If you would like to withdraw your question, kindly press star one again. I will now turn the call over to Raiford Garrabrant, Head of Investor Relations. Please go ahead.

Thank you, Gil, and good morning, everyone. Welcome to InterDigital's Fourth Quarter 2025 Earnings Conference Call. I am Raiford Garrabrant, Head of Investor Relations for [COMPANYNAME]. With me on today's call are Liren Chen, our President and CEO, and Rich Brezski, our CFO. Consistent with prior calls, we will offer some highlights about the quarter and the company, and then open the call up for questions. For additional details, you can access our earnings release and slide presentation that accompany this call on our Investor Relations website. Before we begin our remarks, I need to remind you that in this call, we will make forward-looking statements regarding our current beliefs, plans, and expectations, which are not guarantees of future performance and are made only as of the date hereof. Forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those described in the Risk section of our 2025 annual report on Form 10-K and in our other SEC filings. In addition, today's presentation may contain references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the supplemental materials posted to the Investor Relations section of our website. With that taken care of, I will turn the call over to Liren Chen.

Thank you, Rayford. Good morning, everyone. Thanks for joining us today. At the beginning of 2025, we set aggressive goals to grow our company, including building on the momentum of our smartphone licensing program to drive revenue growth with a special focus on increasing annualized recurring revenue and margin expansion, building a strong licensing pipeline by advancing our video service licensing program, expanding our AI research capability, and growing our standard leadership and patent portfolio at a critical stage in the development of 6Gs and the next-generation video codecs. I'm pleased to say that we have exceeded our goals on all these fronts. We finished 2025 with a strong fourth quarter delivering revenue and EPS above the high end of our outlook, built strong momentum across our licensing programs, completed a key acquisition to strengthen our AI research, and added new inventions to our patent portfolio, reaching a new record-breaking high. This rounded off an excellent year where revenue for the full year was $834 million, the second-highest in our history. We increased our annualized recurring revenue to $582 million, up 24% year over year. Adjusted EBITDA was $589 million, and our non-GAAP EPS was more than $15, both at all-time highs. Today, I will focus on progress throughout the year and why we believe we are well-positioned to drive shareholder value in 2026. Rich will then talk you through our fourth-quarter financial performance, and our 2026 outlook in more detail. In our smartphone program, we had a record-setting year in 2025. We completed the Samsung smartphone licensing contract, extending one of our longest customer relationships all the way to 2030. We signed new deals with two more top 10 global smartphone vendors, Vivo and Honor. With these additions, we have now licensed eight of the top 10 largest smartphone…

Thanks, Liren. Q4 was a strong finish to an excellent year as we delivered revenue, adjusted EBITDA, and non-GAAP EPS in Q4 that all exceeded the high end of our outlook. The upside was driven primarily by the new CE device license agreement with a significant social media company that Liren mentioned earlier. Total revenue of $158 million exceeded the high end of our outlook of $144 million to $148 million and included $13 million of catch-up revenue. ARR increased 24% year over year in Q4 to $582 million. Our adjusted EBITDA for the quarter of $88 million exceeded the high end of our outlook of $68 million to $76 million, resulting in an adjusted EBITDA margin of 56%. GAAP EPS for the quarter of $1.20 exceeded the high end of our outlook of $0.72 to $0.95. Non-GAAP EPS of $2.12 for the quarter exceeded the high end of our outlook of $1.38 to $1.63. Cash generation for the quarter was robust, with cash from operations of $63 million and free cash flow of $48 million. Building on Liren's comments, I'll highlight a few key metrics from our full-year 2025 results and provide additional perspective on how each item has improved over the last four years. First, total revenue for full-year 2025 was a near-record at $834 million, roughly two times the 2021 levels of $425 million. Next, adjusted EBITDA for full-year 2025 reached a record high of $589 million, almost three times the 2021 level of $208 million. Finally, for full-year 2025, we delivered record non-GAAP EPS of $15.31 per share, more than four times the $3.73 per share we reported in 2021. The dramatic gains in these metrics reflect both strong execution and the operating leverage in our business model. Over the past four years, roughly two times…

Thanks, Rich. Before we move to Q and A, I'd like to mention that we'll be attending a number of investor events in Q1, including the ROTH Conference in Dana Point, California, and the Sidoti Conference, which is virtual. Please reach out to your representatives at those firms if you would like to schedule a meeting. Now we are ready to take questions.

At this time, I would like to remind everyone that in order to ask a question, you may press star then the number one on your telephone keypad. Also, we kindly ask to please limit your questions to one and one follow-up only so that everyone can have the chance to engage with our speakers today. Your first question comes from the line of Scott Searle with Roth Capital. Your line is open.

Hey, good morning. Thanks for taking the questions. Congrats on a nice quarter and outlook. Rich, maybe just to dive in quickly on the guidance. I think I heard the number in terms of the $194 million to $200 million in the first quarter that's got $55 million to $60 million of catch-up. So it kind of implies that recurring has gone down, or at least the immediate outlook of contracts in hand is down sequentially from the December. Now I know that there are expirations that go along with it, but I'm wondering if you could provide a little bit of color if that's the right ballpark in terms of where we're starting with recurring fees, and the outlook and expectation of resigning some of those contracts that I believe Xiaomi was one of them, but Samsung TV, etcetera. How should we be thinking about that over the course of the next couple of quarters?

Yes, Scott. That's right. So as we disclosed, you know, coming a year ago that we had roughly $90 million of expirations at the end of '25 and we updated that disclosure in the current K. But as noted, we did renew Xiaomi, so about two-thirds of that was covered. And then we also had the LG agreement, which is contributing recurring revenue as well. So net net, you know, we haven't recovered all of it yet. We're still working on other renewals. And certainly, we look to get new agreements to drive further increases in ARR over the course of the year.

Got you. Very helpful. And then I'll jump in on the litigation front. Wondering, Liren, if you could provide a little bit of color just in terms of potential timelines as it relates to Disney. You've had some positive outcomes in terms of Brazil and Germany. But is there an expected timeline of when you start to get some more, I guess, court feedback on that front? Similarly, the updated timeline with Amazon and, Rich, on the litigation cost front, I know it was elevated this past quarter. I think the number was about $19 million, which is the highest in recent memory. But given the events and the litigation that's ongoing, how should we think about that going forward into the first, second quarter, and course of 2026? Thanks.

Hey, Scott. Good morning. This is Liren. So on the litigation side, we could not be happier with where we are with the Disney case. As I said in my prepared remarks, we filed the litigations in '25 and already got really positive results from Brazil and Germany. Of the four patents being decided, we essentially won all of them in regard to the infringement. And we've already got preliminary injunctions in two different countries. But that's not all. We have more than a dozen patents asserted, and therefore we still have a majority of the cases coming to trial in even bigger jurisdictions like the United States, as well as UPC, and those are starting in the summertime and also in the second half of this year. We have disclosed each of these cases in our 10-K filings. So we are confident about our case and we await the outcome of those decisions. Regarding our Amazon case, as I said in my prepared remarks, the assertion was frankly starting in Q4. As you might recall, Amazon was actually litigated in Salesforce, and so the case was filed on our side in Q4. So it's trailing a little bit behind in terms of timing. But we are asserting multiple cases in four-plus jurisdictions plus ITC, and Amazon also has devices that we are also asserting against. So it will take time to go through each one of them. Again, there's more disclosure in our 10-K file.

Yeah. And, Scott, on litigation cost, well, the first thing I'd say is you can infer from our guidance that we have some uptick in expenses going into Q1. Without being too granular, let me give you broad strokes there. We have revenue share on the new Madison Agreement we signed, which is roughly almost half of the catch-up sales for Q1. And then, even accounting for that, expenses are still up a little bit, and that's mostly driven by an expectation for increased litigation expense. We do expect it to be higher in Q1 and broadly for 2026. That's all factored into the 2026 full-year guide as well. And then, beyond that, we continue to invest in our research and portfolio, so we have some a little increase there as well.

Great. Thanks so much. Very helpful. I'll get back in the queue.

Your next question comes from the line of Kevin Durden with Jefferies. Please go ahead.

Yeah. Hey. Good morning, guys. Congrats on the strong results and all the progress. Wondering if you can talk a little bit more about the consumer electronics device agreement with the social media company. Do you guys see that being a high-volume agreement?

Yeah. Hey, Kevin. Good morning. This is Liren. Of that particular agreement, it's a device agreement, and it's licensed our video access and Wi-Fi. So it's actually not a huge volume agreement, neither do they apply to the service side. So that's as far as I can say on that agreement.

Okay. Got it. That makes sense. And then just looking at a litigation question, I know you guys had a strong start to 2025, with positives on Disney, and you are working on Amazon. I mean, what do you guys kind of see as the biggest threats on the litigation front? Is it really just kind of the budgets that Disney and Amazon have?

Can you clarify by "threat" do you mean threats to us?

I guess just the threat of them potentially not signing or the court cases not going your way.

Gotcha. Yeah. Hey, Kevin. As I mentioned earlier, we are being very careful in terms of our litigation strategy. We always prefer negotiations for deal-making. However, on both cases here, after, frankly, lengthy negotiations, we decided it was the right thing to do to enforce our patent rights. But you can also probably tell in our disclosures here, it's a multi-jurisdictional enforcement campaign. In either case, we are asserting more than a dozen different patents even though there's potential risk for each patent litigation. I mean, any litigation carries its own inherent risk. But our patents are really high quality, and some of the patents have already been battle-tested in regard to durability and other issues. So we are doing really, really well. Therefore, our whole litigation campaign does not really depend on winning every single patent assertion, but we feel very strong about the value of our portfolio, and we feel that the right thing for us to do is to get, you know, what is fair so we can keep on funding R&D. So that's our global enforcement campaign, broadly speaking. And you should know that in most of those cases, when we assert them, we ask both for past damages for the infringement as well as injunctions if we win.

Okay. Perfect. I appreciate the color. Thank you.

Your next question comes from the line of Alinda Lee with William Blair. Your line is open. Thank you.

With the focus on R&D, how should we think about M&A as part of the effort to expand and deepen the patent portfolio here?

Yeah. Hey, good morning, Alinda. This is Liren. Yes, so we take a pretty broad approach in our R&D investment. As I said in prior calls, we believe strongly we have one of the most advanced R&D engines in the industry. We have some of the best innovators led by our CTO Rajesh Pankaj, who is widely recognized as one of the most brilliant minds in our industry. But having said that, though, we are also having the luxury of having resources, having the industry reputation that we engage leading companies like DeepRender, which allows us to fill certain gaps in our research, and frankly, allows us to accelerate some areas where we are quite strong already. So we are pretty open-minded, and we have a fairly broad funnel. We are considering them, you know, as they come.

Yep. That makes sense. And then, from a litigation perspective for streaming services, is there anything that's fundamentally different from a litigation perspective as compared to the litigations with smartphones and also the CE and IoT?

Yeah. Hey. That's a great question. So as I said earlier, we always prefer bilateral negotiations. And I'll say one of the differences in the smartphone industry is that we have been licensing for multiple decades, and we have some of the longest relationships, as I said earlier, including the Samsung relationship, which goes all the way to the 1990s. On the streaming platform side, this is a relatively new industry for us, even though our fundamental technology has been used by those vendors for many, many years now. But it does take a bit of extra time for us to demonstrate the strength of our portfolio, to convince them that this would be a fair price. So I'd say we are in the early stage of this industry, so therefore, that's where I see that customer engagement takes a bit of extra time.

Got it. That makes sense. Thank you so much.

Thank you, everyone. And that concludes our Q&A session for today. I will now turn the call over back to Liren Chen, InterDigital's CEO, for the closing remarks. Please go ahead.

Thank you, Gil. Before we close, I'd like to thank all our employees for their dedication and contributions to [COMPANYNAME], as well as our many partners and licensees for a very strong quarter and a record-breaking 2025. Thank you to everyone who joined today's call. And we look forward to updating you on our progress next quarter.

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect. Have a nice day ahead, everyone, and keep safe always. Thank you.