InterDigital, Inc. (NASDAQ:IDCC) Q3 2017 Earnings Conference Call - Final Transcript

Oct 26, 2017 • 10:00 am ET


InterDigital, Inc. (NASDAQ:IDCC) Q3 2017 Earnings Conference Call - Final Transcript


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Good day, and welcome to the InterDigital Third Quarter 2017 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Patrick Van de Wille. Please go ahead, sir. Your line is open.

Patrick Van de Wille

Thanks very much Alexis. Good morning, everyone and welcome to InterDigital's Third Quarter 2017 Earnings Conference Call. With me this morning are Bill Merritt, our President and CEO; and Rich Brezski, our CFO. Consistent with last quarter's call, we'll offer some highlights about the quarter and the company, and then open the call up for questions.

(Forward-Looking Cautionary Statements)

With that taken care of, I'll turn the call over to Bill.

Bill Merritt

Good morning, everyone, thank you for joining us on the call today. As you saw from the press release this morning, the company delivered yet another very strong quarter. The strong results were driven by our broad base of licensees and our continued efforts to control our costs. Result was very strong profitability and cash flow. All in, a very good showing. Rich will go through the numbers in more detail in his remarks, which will also address the coming changes on revenue recognition, which have been a topic of conversation in a number of our investor meetings. Of course, the accounting rules don't change fundamentals of the company, which are very strong. The new rules will have a limited impact on how we record revenues, starting in 2018. However, as Rich will explain, based on the unique nature of our licensing business, we don't see the new rules having the same long-term impact on our revenue recognition as we expect may be the case for many of our peers in the licensing space.

Aside from that I wanted to spend just a couple of minutes today talking about the status of our 5G activities. The different standards processes, our conversations with licensees and last, our M&A activities. On 5G, I'm very pleased with the success our team is having in driving the 5G standards process. The pace and scope of the standardization effort is unlike anything we have seen before. With the potential to affect many more markets than previous generations. InterDigital's engineers are actively involved in many key aspects of the 5G effort taking a leadership role in many discussions. This includes one of the most important tasks, which is defining the new 5G radio, where one of our engineers chairs the subgroup responsible for this effort.

The first release of the 5G standard remains set for the end of the year. The release is a stunning example of how amazing a truly open competitive standards process can be. During the last 9 months, InterDigital has invested tens of millions of dollars in standards related activities making 700 detail contributions to the 3GPP standards alone, and many other contributions to other standards organizations. Those contributions have been backed by detailed simulations performed in our lab, demonstrating that the solutions we are proposing will work as they say