InterDigital, Inc. 17th Annual Midwest IDEAS Conference

Good morning. Welcome to the IDEAS conference. I'm Sandy Martin, and next up we've got InterDigital, traded on the NASDAQ, IDCC, and it's an $8.9 billion market cap company. Today we've got Rich Brezski, and he is the Chief Financial Officer. I'm going to hand it off to Rich.

Thank you, Sandy, and good morning, everybody. I'm here today with Raiford Garrabrant, our Vice President of Investor Relations. Raiford and I like nothing more than to get out on the road and introduce InterDigital to anybody that hasn't heard of us or doesn't know the great work that our research team does. Before I start, I want to acknowledge the disclaimers. I'll add no value by reading them to you, so just know they're there and feel free to read them. In my presentation today, I'm going to introduce the company. I think it's really important to spend a moment to talk about the leadership team for InterDigital, really driving a lot of success over the last number of years. I think it's important to dive into the foundational technology and research that we do. At its heart, InterDigital is a research company.

We make money by patent licensing, but it all stems from our research engine. I definitely want to spend a moment talking about the accelerating business momentum as represented by our financial results, and then talk a little bit about our long-term strategy. A couple of highlights from 2025. We had a great year. Over $800 million of revenue, north of $15 per share of non-GAAP EPS, 71% adjusted EBITDA margin, and over $1 billion of cash. I'm happy to say we're delivering a great year so far in 2026 as a follow-up as well. Let me talk for a moment about the leadership team. Our CEO, let me start with him, Liren Chen. Liren joined InterDigital in 2021.

Liren had spent the 25 years preceding that at Qualcomm, where he started out as an engineer, got an MBA, got a law degree, got involved in their patent portfolio and leading that, and then became one of the senior executives within QTL, which is the group within Qualcomm that's somewhat of an analog to InterDigital because that's where they do all the advanced research in wireless, cellular, video, AI, and then contribute that to various standards and license that and monetize it through licensing agreements. Just to the right of Rajesh, I won't go through the whole slide, but just to the right is Rajesh Pankaj, who Liren recruited from Qualcomm. Rajesh was Senior Vice President in charge of corporate research for Qualcomm. All of their advanced research that Qualcomm used to contribute to the standards was led by Rajesh.

Just as when our CEO position opened up a couple of years ago, Liren Chen was the perfect person to fill it. Rajesh is the perfect person to lead our research organization. If you look, I noticed this morning as I was reviewing the slides, there is a great balance in the leadership team. On the left half of the slide, three of the four, including Liren Chen and Rajesh, have come from Qualcomm or have joined InterDigital since Liren Chen joined. On the right half of the slide, myself included, are all folks that have been with InterDigital for, at this point, at least 10 years. I myself have been with InterDigital since 2003. I started back then as the corporate controller, and I have been CFO since 2012.

It is a great balance of, as I said, new folks and folks that have been with the company quite a long time, and I am really proud of the results that I will discuss in a moment. Before I do so, it is important to understand our business model. I have already said it starts with research, and on the left-hand side, you see our research and innovation. That is where it starts. Then there are two parallel tracks. I will start on the bottom track, which I call the technology track. We take our research in the fundamental technologies I will discuss in a moment, but including, for instance, cellular, and we contribute that to the various standards in which we participate. When you think of 5G is a standard. We, through the standards, share that technology with all the folks that are making your 5G devices, like Apple and Samsung.

They are the implementers. That does not get us paid. That is how our technology makes it out into the marketplace and used by the implementers. On a parallel path, we have to protect the rights to our research and innovation through patent filings. We then need to negotiate licensing agreements to get fair compensation from the folks that implement our technology. Then when we get fair compensation, you see we reinvest that in research and keep that chain moving. The three key areas that we focus our research are wireless, video, and AI. We have a lab. We call it our labs, our wireless lab, our video lab, our AI lab. Wireless is really where the company was started.

It was founded all the way back in 1972 with the idea by the founder of wireless digital telephony. Digital wireless for the purpose not just of voice communications, but also supporting wireless transactions. Very forward-looking back in 1972, and we remain very forward-looking today. For the first decades, the company was involved in groundbreaking research about wireless digital telephony, but frankly had difficulty monetizing that through a number of different product models. It was not until the 90s the company started, there was a developing 2G standard, which was the first digital wireless standard. 1G was analog. Nobody called it 1G, they just called it cell phones. Then they said, "Okay, now we have 2G," which was digital. Because of the decades of research, InterDigital at the time was in a great position to contribute technology. This is how you do it.

This is how the standard should work. There were others, Qualcomm and others participated in that process, but we had very fundamental technology that we contributed to the standard. When I joined the company back in 2003, the bear case was, well, small company with great groundbreaking research, but now this is becoming a big market, how will this small company ever survive the transition from 2G to 3G? Not only did we survive this transition from 2G to 3G to 4G to 5G, but we've only gotten stronger as we've moved forward in time. There is an advantage when you worked on 2G and you're now developing 3G and so on down the line because these devices are all backwards compatible. I have an iPhone, 5G iPhone. I'm not always on a 5G network.

I'll get handed off from a 5G tower to a 4G tower. How are you going to develop 5G if you don't understand 4G? How are you going to develop 3G if you didn't understand 2G? That was one of the reasons that we've been able to be successful, aside from the fact that we have some of the best engineers in the world working on this stuff. We also work in Wi-Fi, and that's been a legacy area for us as well. Video, we started our own internal programs maybe 15 or more years ago, but they were relatively small. It was enough, though, to recognize that video was going to be very important to our ecosystem.

In 2018 and 2019, when we had the opportunity to acquire Technicolor's research team and their entire patent portfolio, we jumped at it and wound up acquiring most of their portfolio and most of, if not all of that research team. We now have one of the leading organizations that addresses both wireless video and along with the video team, we had an AI lab that we picked up from Technicolor out in the Silicon Valley. We're a leader in these very fundamental technologies that are only becoming more important in our lives as we move forward in time. Let me talk for a minute about video. One of the real exciting things going on with the company is we're moving from smartphone to consumer electronics and IoT, and now the latest vertical that we're addressing is streaming.

Because all the streaming models use our technology to deliver their video content to you. Let me explain why our technology is important. In an uncompressed format, a 4K movie, like Wicked: For Good is the example here, would be a massive amount of data. So much data that it would take days or weeks to download and stream that 4K film. Instead, we can do it in minutes because we compress through InterDigital's contributions to video standards. We compress that bit stream into a small fraction of the data requirement so you can more efficiently and faster transmit it over all mediums, including wireless networks.

Just to visualize that, what we show here is a block diagram. If you look in the uncompressed format, we blow up just one block, one small portion of one block to show you which some of the different codecs, how they work. HEVC, instead of being 11,600 gigabytes, is just 14. That's what enables streaming high definition, these video codecs, of which we are a key contributor to the standards. I mentioned already standards and the importance of them, and it goes well beyond cellular, not necessarily for InterDigital, but it goes well beyond cellular and video. We have standards in all aspects of our lives. If we think about the power coming through the outlets, that's a standardized voltage. If we think about the light bulbs in the ceiling, if one goes out, you don't need to go and be brand specific.

You get the right bulb and plug it in because that's a standard fitting. Throughout our lives, we're dealing with standards, and they're very, very important when you deal with complex technology because that's what enables you to go to the store and buy an iPhone or a Samsung Galaxy or a Lenovo phone. They're all going to work together on a wireless network, whether it's Verizon or AT&T, whether the base station is Nokia or Ericsson. It's a multi-manufacturer environment, the most complex communication system ever devised by mankind, and it all works together because of standards and because of the work that InterDigital's researchers have done to promote and solve the problems of these standards. We have very strong leadership in the standards. We participate in over 100 standards organizations. This is just a visual representation of some of the key standards.