Ladies and gentlemen, thank you for standing by. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the InterDigital Third Quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you, and I would now like to turn the conference over to Raiford Garrabrant, Vice President of Investor Relations. Please go ahead.

Thank you, Abby, and good morning, everyone. Welcome to InterDigital's third quarter 2026 earnings conference call. I'm Raiford Garrabrant, VP of Investor Relations for InterDigital. 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 are current beliefs, plans, and expectations which are not guarantees of future performance and are made only as of the date hereof. Forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those described in the risk factors 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.

Thank you, Raiford. Good morning, everyone, and thanks for joining us today. This was another excellent quarter with strong execution across each part of our business. We reached an agreement on a new license with a top PC manufacturer, received favorable decisions from our enforcement campaign, made further progress in our video services program, and continued to drive leadership for the next generation of video and wireless technology and standard development. Driven by our license success, we have delivered financial results well above the top in our guidance. Revenue for third quarter was $193 million, up 17% year over year. Adjusted EBITDA was $131 million, up 25 million year-over-year, up 25% year-over-year. Our annualized recurring revenue reached our record $629 million. As you might recall, in Q2, we reached our full year guidance by $85 million at the midpoint. With our strong execution in Q3, we now have contracted revenue for the year that already exceeded the midpoint of our full year guidance. as we continue to drive business growth for the rest of the year. We also increase our quarterly dividend from $0.70 to $0.75 per share, continue our track record of returning capital, including more than doubling our dividend over the last four years, as we increase quarter, which will cover our financial performance in more detail. I'll start with license. During the quarter, we agreed to enter into a patent license agreement with a top PC manufacturer with a final term to be determined through arbitration. With this agreement, we now have 70% of the PC market under license, including four of the top five PC makers in the world. We also completed a new license with Kiba covering the company's EV charger. With this new license, Our revenue in our CE and IoT program nearly doubled year-over-year to almost $56 million. Staying with consumer electronics, we announced this week that we were awarded a preliminary injunction by a court in Brazil as part of our ongoing enforcement campaign against TCL. Based on an independent expert report, the court found that TCL infringed our two patent lawsuits that the patents are essential to the HEVC standard and the offers we made met friend obligations. The court noted TCL's offer was an order of magnitude too low. Further result, TCL must stop implementing the TCL standard and HEVC standard in devices in manufacture, import, or offer for sale in Brazil. As some of you already know, TCL is a top three global TV manufacturer, and we believe this core decision is an important step to reach a long-term license agreement with them. In streaming services, we continue to make progress towards our long-term goals. During the quarter, the Unified Titan Corp. in Europe awarded us two new injunctions against Disney. The first covers a pattern related to encoding for HEVC video, and the second covers technology for sharing video content between devices, such as casting from a smartphone to a TV. Both injunctions apply across multiple EU countries, and in both cases, the court confirms the validity of the pattern ensued. While the court found Interdigital has acted in a fair manner during the licensing negotiation, the court was critical of Disney's conduct and found Disney has acted as an unwitting licensee. Disney has made its streaming platform at the center for how consumers experience Disney's own IP. But this vision is only possible with advanced compression that supports content delivery with innovation that delivers highest picture quality, speed, and reliability that consumers have come to expect when they are enjoying their favorite movies and shows. These are the technologies that our video researcher has spent decades developing and perfecting. Each of the steps we take in protecting and enforcing our patent serves the purpose of reaching a long-term license with Disney on fair terms that reflect the value of technology and how much Disney has benefited from them. Our success in this campaign, with the court across multiple jurisdictions funding in our favor, in eight out of eight patent trials and awarded us 18 injunctions reflects the quality of our innovation and the depth and strength of our portfolio. It also highlights how our foundational research underpins the whole video streaming industry. As a reminder, in addition to our success against Disney, we have already made considerable progress in our streaming and cloud service program. with the announcement last quarter that we have entered into a new patent license agreement with Amazon covering its devices and services with the final term to be decided through binding arbitration. As I have said many times, while our preference is always to conclude license agreement through bilateral negotiation, binding arbitration is an effective approach to decide the final terms of a license agreement. Turning to research, a lot of momentum is building behind one of the most advanced video codec, VVC, which represents versatile video coding, which will lead to additional licensing opportunities. So VVC standard was finalized in 2020, and we are widely recognized as one of the foundational innovators behind the standard with one of the largest and highest quality patent portfolio. This leadership is particularly important because as we consume more video across devices, streaming services, and social media platforms, compression is the essential foundation that enables high-quality content to be efficiently distributed. Recently, Qualcomm and MediaTek announced that they have implemented VVC hardware decoding to their latest smartphone chipset. It follows an announcement from Google earlier this year that it was adding support for VVC in the latest version of Android. These are significant milestones that VVC is on the way to being widely deployed across hundreds of millions of devices and across a wide range of video services. We had a leading role in developing VVC and our research leadership continued to be recognized by the industry. Last month at IBC 2026, the leading trade show in the video industry, we received the best in-show award, along with our research partner NHK from Japan, for our demonstration of VVC multi-layer coding. This technology allows broadcast and streaming services to carry multiple versions of the same content in one VVC speech stream, which see bandwidth and storage and give you more options such as adding captions or sign languages. Staying on our research, this month one of our wireless engineers was re-elected to a senior leadership position within IEEE. the standard organizations that lead development of Wi-Fi. We believe strongly that standard leadership is a key part of helping to shift the next generation of wireless, video, and AI technologies. This is particularly important as these technologies continue to converge across network devices and services as we move towards a new era of AI-driven connectivity and immersive user experience. In summary, this quarter once again demonstrates the strength of our business model in delivering profitable growth. Our success continues to be recognized by third parties, including most recently by Newsweek, which named us among America's greatest companies, and ByteTime, which named us as America's growth leaders. I'm proud of our achievement and want to thank Newsweek and Time for the recognition on behalf of our colleagues at InterDigital. With that, I'll hand it over to Rich, who will walk you through the numbers in more detail.

Thanks, Liren. I'm pleased to report that our strong momentum continued in Q3 with revenue, adjusted EBITDA, GAAP-diluted EPS, and non-GAAP-diluted EPS all exceeding the high end of our guidance range. The upside was driven by our new consumer electronics agreement with a top PC manufacturer. Total revenue for the quarter was $193.4 million, an increase of 17% year-over-year and above our guidance range of $154 million to $158 million. Revenue included $36.2 million of catch-up revenue compared with $17.7 million in the third quarter of last year. Our annualized recurring revenue, or ARR, increased 7% year-over-year to another all-time high of $629 million compared with $588 million a year ago. Looking at revenue by program, Smartphone revenue was $122.6 million. CE and IoT and auto revenue nearly doubled year over year to $55.7 million, while streaming and cloud services contributed $15 million. The new agreement with a top PC manufacturer is the latest example of our ability to grow our licensing business beyond smartphones. Under this agreement, The value of the patent license will be determined through binding arbitration. In accordance with GAAP, we have begun to recognize the related revenue based on a conservative estimate of the consideration we expect to be entitled. Turning to profitability, adjusted EBITDA for the quarter was $131.3 million, an increase of 25% year-over-year and above our guidance range of $86 million to $92 million. Our adjusted EBITDA margin was approximately 68%, compared with the roughly 57% margin at the midpoint of our Q3 outlook. Operating expenses were $94.1 million, an increase of $5.2 million year over year, primarily related to increased IP enforcement costs and share-based compensation driven by business success. Gap diluted EPS for the quarter was $2.34, above our guidance range of $1.25 to $1.42. Non-gap EPS was $3.11, up 22% year over year, and above our guidance range of $1.94 to $2.13. Cash from operations was $150.4 million, and free cash flow was $136.2 million. We ended the quarter with cash, cash equivalents, and short-term investments of $1.1 billion. Consistent with our capital allocation priorities, we remain focused on investing for growth, maintaining a fortress balance sheet, and returning excess capital to shareholders. During the quarter, we returned $121.2 million of capital, including $18.7 million through share repurchases, $19.3 million of dividends declared, and $83.2 million of debt repayment. We also increased our quarterly dividend from $0.70 to $0.75 per share, an increase of approximately 7%. Our results again demonstrate the value of our IPS as a service model, the long-term fixed fee nature of most of our agreements, provides visibility into our business, supports ongoing investment in research and portfolio development, and gives us flexibility to pursue growth across our licensing programs while returning capital to shareholders. Looking forward to Q4, we expect revenue from existing contracts in the range of $154 million to $160 million. Based only on existing contracts, We expect adjusted EBITDA of $80 million to $88 million or an adjusted EBITDA margin of about 54% at the midpoint. Gap diluted EPS of $1.04 to $1.27 and non-gap EPS of $1.72 to $1.98. Before adding any potential contributions from new agreements or enforcement outcomes over the balance of the year, we expect to exceed the $810 million-dollar midpoint of the increased full-year revenue guidance we issued last quarter. For full-year 2026, we expect adjusted EBITDA of $507 million to $515 million, GAAP diluted EPS of $8.93 to $9.16, and non-GAAP EPS of $11.99 to $12.25. On existing contracts alone, the midpoint for each of these ranges is also above the midpoint of our prior full-year guidance. Before I turn it back to Raiford, I want to repeat for emphasis that both our fourth quarter and full-year outlooks are now based only on existing licenses. Neither includes contributions from any agreements or enforcement action results we may sign or receive over the balance of the fourth quarter. Any such contributions would be additive. With that, I'll turn it back to Raiford.

Thanks, Rich. Before we move to Q&A, I'd like to mention that we'll be attending a number of investor events in Q4, including the RBC Tech Conference in New York, the Roth Tech Conference in New York, and the NASDAQ Investor Conference in London. Please reach out to your representatives at those firms if you'd like to schedule a meeting. Now we're ready to take questions.

Thank you, and we'll now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, press star 1 a second time. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your questions. To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. You may rejoin the queue if you have additional questions. Again, it is star one to join the queue. And our first question comes from the line of Kevin Garrigan with Jefferies. Your line is open.

Yeah. Hey, good morning, guys. Congrats on all the progress. Hey, Larry, you said you're still pursuing more business in Q4. Can you give us a high-level view of kind of what the pipeline looks like? Would any Q4 upside come mainly from consumer electronics and IoT? Or, you know, could any smartphone deals like, you know, maybe progress on transient closing the quarter?

Yeah, hey, Kevin, good morning. Yes, I mean, actually, we are pursuing all these opportunities in parallel. As you might recall, we have three different programs. We are negotiating with two remaining smartphone lenders that haven't been licensed from us. In the meantime, as we announced and also we did press announce early in the week, we have made meaningful progress on the enforcement campaign, some of the TV makers, and as you also know, we are continuing to negotiate with the streaming service providers. While it's hard to predict precise timing for each deal, we are pursuing all those different categories in parallel.

Got it. Okay. That makes sense. And then just on streaming, so, you know, Disney brought 4K back in Germany using VP9 and I know you guys filed a new UPC case targeting that. I mean, does that workaround change the economics or timing of a potential settlement with Disney or, you know, any comments on kind of what happens if, you know, they continue to try and make workarounds?

Yeah, Kevin, so as you noted, we After we have received injunctions in Germany and UPC on our HEVC foundational innovations, it's reported that Disney has turned back some of the 4K features using VP9, which is an alternative codec. As you also mentioned here, our foundational innovation applied to multiple codecs, including VP9. So therefore, after they enable VP9, we have found a new case Based on patent, the court has already found to be valid against VP9. And that court case is scheduled to be heard December of this year. So it's relatively fast track. So we believe very strongly that our value deliver across different multiple codecs. And we also believe that any alternative try to quote-unquote using different codecs, it's still in the end valid in our patent.

Okay, perfect. I appreciate the color and congrats on all the progress.

Thank you.

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

Hey, guys.

It's RJ here. Thanks for taking the questions. One, Laren, if I can just ask just on the streaming side, obviously you have the sort of Amazon agreement And I'm curious just whether you've noticed conversations with other streaming providers change or if there's been a reaction to that deal and it makes progress easier with others. How are you seeing that impact sort of the negotiations in the streaming ecosystem?

Yeah. Yeah. Arjun, as we discussed before, most of our negotiations are under NDA that need us to keep the discussion confidential. Having said that, the Amazon agreement, as I mentioned in my prepared remark, was a fairly important milestone for our program. It is being closely, frankly, attention being paid by other players in the industry, both on the license store as well as the licensee side. and as you probably also noticed there have been more recent cases against Disney by other patent holders. So I'll say it's fair to comment that this is the area clearly that important patent holders are paying more attention primarily because so much benefit, so much economic value is being created by a very large industry based on foundational innovation that created by a company like InterDigital. So I'll say the effort for the industry to monetize in this overall area is clearly accelerating.

Okay. Got it. And then just on the PC side, I know you have a new agreement here, but I think Lenovo is still one that's sort of being determined. I'm curious if you have any comments or timeline you can share there. And just in the PC market in general, I'm curious what the remaining opportunity looks like from here, given you now have a new agreement under contract. What's the remaining opportunity look like?

Yes.

Hey Arjun, with our latest deal here, we have signed four of the top five vendors, PC makers worldwide, which makes about 70% of the world market. So which means we have 30 more percent that we are pursuing. Special to Lenovo, we have disclosed in our thank you filing today that we have completed the arbitration hearing with Lenovo early this month. and conservatively speaking, we are expecting a result by each one of next year, first half of next year. Obviously, with holiday time coming in, so it's hard to precise predict when we'll get the result, but we do expect the result come out fairly soon and that we are confident that we have done a good job demonstrating our value with the arbitrator. We just need them to decide what is the final value.

Okay, very helpful. Thank you.

And our next question comes from the line of Scott Cyril with Roth Capital. Your line is open.

Hey, good morning. Thanks for taking the questions. Nice job on the quarter. Maybe just to start off, I just want to clarify in terms of the fourth quarter guidance, I think you said in terms of the PCOM, I thought there was contribution in terms of catch-up in the third quarter, but it still sounds like the final value and many more.

Yeah, Scott. So yeah, let me clarify for you. The PC manufacturer that we have under license and the value will be determined through arbitration. I think the comment went to the final value being determined through arbitration, but we are beginning with the third quarter estimating the revenue, including both catch-up and ARR. So, of course, you're only getting on the ARR side, you know, or the recurring revenue side, you're getting one quarter of that impact. But we did recognize that in Q3, and it is factored in the Q4 guidance. On litigation, yeah, litigation is still going to be, you know, a meaningful investment for us. We have a number of cases, as Liren referred to in his script and in his answers so far, that are underway. So, you know, we don't expect that to necessarily come down, you know, in the immediate future.

Gotcha. And maybe if I could, following up, I guess, a couple questions on the technology front. Liren, VVC, in terms of that acceleration and adoption timeline within the marketplace, how do you expect that to kind of roll into the P&L, I guess, in two ways? Adoption cycle, and then what does that do to your royalty rate? Does it start to push it up? And when should we start to think about that? kind of permeating the model. Is that 28, 29, or is it some other sort of timeline?

Yeah. So, Scott, the adoptional way we see it is clearly accelerating, as I commented in the prepared remark. The leading chip vendors for smartphones are already essentially built in the hardware decoding function, which you know, once you put into the hardware, it pushes not only for efficiency, power saving, but more importantly, it's going to be adopted by hundreds of million devices in the next phone that people build on the chips. And also Google are building VVC function in the Android operating system overall. So those are clear signs of wide adoption. But then you also will deal with almost like an iterative process. You build a function in the devices which will drive the demand to create more content that supports those encoding, decoding functions that benefit the service provider because it offers much more improved coding efficiency. I see that process taking multiple iterations, multiple years to catch up regarding being a widely adopted codec on the overall ecosystem. Back to your question on how is this going to benefit us, I see these as a very similar thing in the wireless evolution side. But when we had 3G, 4G, 5G, every new generation of wireless technology, we are licensing them on top of the previous generation. People still need the previous generation to access the previous content, the content that's widely deployed out there here. So this will add an incremental function to our existing license program on the multimedia technology area. In addition, separate from the wireless, you know, sort of comparable, this VVC codec also applied to the streaming side. As you know, we are building that function here. So it will enhance value on the device as well as we enhance value on the service side. I would actually say this is different than the wireless ecosystem. On the wireless side, in the cellular space, we are primarily licensing on the device side. So I'll say these are going to give us multiple levels we are going to pull going forward.

Okay, and Lauren, if I could just follow up on one other front. I know it's early in terms of development of the streaming opportunity. You've made some progress with Amazon in junctions with Disney and otherwise. But the cloud opportunity has been something that's been adjacent on the fringe and incremental. I'm wondering if there are some numbers or comfort that you could talk about in terms of what that does to the sizing of the overall market opportunity as we start to look out towards the end of the decade. Thanks.

Yeah. But you're absolutely correct. So cloud, we position cloud as related but separate from the streaming side. We have multiple assets that's applied to the cloud space. As you know, many of the cloud services are already using video, so that can be part of the anchor. We also have a substantial amount of cloud management and middle layer services function that we have built as you might recall from the Convita project that we have worked on for more than a decade. Those are valuable assets. We currently are not putting a number on them yet because we are still developing that overall licensing opportunity. But we know with high confidence that we have a very large collection of valuable IP that's broadly applicable to that industry.

Great, thanks so much.

And, pardon me, as a reminder, it is Star 1 if you would like to ask a question. And our next question comes from the line of Anya Soderstrom with Sidoti. Your line is open.

Hi, thank you for taking my questions and congrats on the nice quarter here. Just curious, in terms of capital allocation, you increased the dividend, but the buybacks seem to be not so aggressive, even though you have a large program there. How should we think about capital allocation as priorities?

Yeah, nothing's really changed, Anya. I mean, we have a lot of cash, we generate a lot of cash, and we do want to return that. As you mentioned, we increased the dividend 7% this quarter. We also repaid a bunch of debt, so there was a fair amount of cash that went there. But we did continue to buy back stock. So from a kind of macro level, from my perspective, nothing's really changed.

Okay, and then how actively are you looking at M&A opportunities? And what do you see there?

So MA Opportunity, we are always looking. As you might remember, we brought in Ken Kashkhan, our chief growth officer, a few years ago. His team is fully devoted, among other things, to look at all the different opportunities coming in. And we are looking at many different aspects. As you might recall, last year we acquired DeepRender, primarily for the AI, deep expertise, as well as some of the technology and IP. So we always look at them. However, because our internal R&D engine is so robust, we produce six new patents per day. So therefore, our bar is fairly high. But we are always looking in various different technology areas, as well as different IPs and other functions.

OK, thank you. That was all for me.

Thanks.

And that concludes our question and answer session. I will now turn the conference back over to Liren Chen for closing remarks.

Thank you, Harvey. Before we close, I'd like to thank all our colleagues for their dedication and contribution to InterDigital, as well as many partners and customers for a strong quarter. Thank you all to everyone who joined the call today, and we look forward to update you on our progress next quarter.

Ladies and gentlemen, this concludes today's call and we thank you for your participation. You may now disconnect.