InterDigital(IDCC) - 2025 Q2 - Quarterly Results

Executive Summary Q2 2025 Performance Overview InterDigital achieved better-than-expected Q2 2025 financial results, driven by the Samsung arbitration decision and a new HP licensing agreement - Q2 2025 results exceeded expectations, primarily driven by the Samsung arbitration decision and a new HP licensing agreement[1] - The agreement with Samsung is InterDigital's largest licensing agreement ever, with a total contract value exceeding $1 billion over eight years[2] - Since 2021, the company has signed licensing agreements with a total contract value exceeding $4 billion, demonstrating accelerating momentum for its 'IP-as-a-Service' business model[2] Key Financial Metrics Overview | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Annualized Recurring Revenue (ARR) | $553.1 million USD | $383.8 million USD | 44% | | Full-Year Revenue Guidance Midpoint (Revised) | $820 million USD | - | +$110 million USD | Second Quarter 2025 Financial Highlights GAAP Results The company's Q2 2025 GAAP revenue grew 34% to $300.6 million, with net income and diluted EPS significantly increasing by 65% and 36% respectively Q2 2025 GAAP Financial Performance | Metric (million USD, except per share data) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $300.6 million USD | $223.5 million USD | 34% | | Operating Expenses | $95.2 million USD | $89.6 million USD | 6% | | Net Income | $180.6 million USD | $109.7 million USD | 65% | | Net Income Margin | 60% | 49% | 11 ppt | | Diluted EPS | $5.35 per share | $3.93 per share | 36% | - Revenue growth of 34% was primarily driven by the conclusion of Samsung arbitration and a new licensing agreement with HP[4] Non-GAAP Results Non-GAAP performance was also strong, with adjusted EBITDA growing 50% and non-GAAP diluted EPS reaching a record high Q2 2025 Non-GAAP Financial Performance | Metric (million USD, except per share data) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $236.7 million USD | $157.7 million USD | 50% | | Adjusted EBITDA Margin | 79% | 71% | 8 ppt | | Non-GAAP Net Income | $195.3 million USD | $118.9 million USD | 64% | | Non-GAAP Diluted EPS | $6.52 per share | $4.57 per share | 43% | - Non-GAAP diluted EPS reached a record high of $6.52[4] Revenue Breakdown Annualized recurring revenue increased by 44% year-over-year, with significant growth in consumer electronics, IoT, and automotive sectors Q2 2025 Revenue Breakdown | Revenue Type (million USD) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Annualized Recurring Revenue | $553.1 million USD | $383.8 million USD | 44% | | Catch-up Revenue | $162.3 million USD | $127.6 million USD | 27% | | Revenue by Category (million USD) | | | | | Smartphones | $235.1 million USD | $199.2 million USD | 18% | | Consumer Electronics, IoT/Auto | $65.3 million USD | $23.7 million USD | 175% | | Other | $0.2 million USD | $0.5 million USD | (66)% | Return of Capital to Shareholders Share Repurchases and Dividends In Q2 2025, the company returned $41.7 million in capital to shareholders through share repurchases and cash dividends Q2 2025 Capital Return Summary | Metric (million USD, except per share data) | Shares (millions) | Value (million USD) | Per Share | Total Return (million USD) | | :--- | :--- | :--- | :--- | :--- | | Share Repurchases | 0.1 million | $26.2 million USD | - | - | | Dividends | - | $15.5 million USD | $0.60 per share | - | | Total Capital Returned | - | - | - | $41.7 million USD | 2027 Convertible Notes Information 2027 Notes Convertibility Details The company's 3.50% 2027 senior convertible notes are convertible during the calendar quarter ending September 30, 2025, with a conversion rate of 12.9041 shares per $1,000 principal amount - The 3.50% 2027 senior convertible notes are convertible during the calendar quarter ending September 30, 2025[6] - The current conversion rate is 12.9041 shares of InterDigital common stock per $1,000 principal amount[6] - The company has increased the economic conversion price of the notes from $77.49 to $106.06 through a call spread transaction, aiming to reduce the net shares issued upon conversion[8] Near Term Outlook Q3 2025 and Full Year 2025 Guidance The company has updated its full-year 2025 outlook and provided preliminary Q3 2025 guidance, with the full-year outlook including existing licenses and anticipated new agreements - The company has raised its full-year 2025 outlook and provided preliminary Q3 2025 outlook[9] - The Q3 2025 outlook only covers existing licenses and does not include new agreements or enforcement action outcomes that may be signed[9] Q3 2025 and Full Year 2025 Financial Outlook | Metric (million USD, except per share data) | Q3 2025 | Full Year 2025 (Current) | Full Year 2025 (Prior) | | :--- | :--- | :--- | :--- | | Revenue | $136 - $140 million USD | $790 - $850 million USD | $660 - $760 million USD | | Adjusted EBITDA | $69 - $75 million USD | $551 - $569 million USD | $400 - $495 million USD | | Diluted EPS | $0.94 - $1.11 per share | $10.94 - $11.47 per share | $6.79 - $9.67 per share | | Non-GAAP Diluted EPS | $1.52 - $1.72 per share | $14.17 - $14.77 per share | $9.69 - $12.92 per share | Conference Call Information Call Details InterDigital will host a conference call on July 31, 2025, at 10:00 AM ET to discuss Q2 2025 financial results, accessible via webcast or phone registration - The conference call will be held on July 31, 2025, at 10:00 AM ET[11] - The webcast can be accessed or phone registration completed via the investor page at **www.interdigital.com**[11](index=11&type=chunk)[12] About InterDigital Company Profile InterDigital is a global R&D company focused on wireless, video, and AI technologies, licensing its innovations to various device manufacturers and service providers - InterDigital is a global R&D company primarily focused on wireless, video, artificial intelligence (AI), and related technologies[13] - The company generates revenue by licensing its innovative technologies to wireless communication device manufacturers, consumer electronics, IoT devices, automotive manufacturers, and cloud service providers[13] - The company is a leader in wireless technology, with its engineers designing and developing a wide range of innovations from early digital cellular systems to 5G and the most advanced Wi-Fi technologies[13] Forward-Looking Statements Risks and Uncertainties This press release contains forward-looking statements whose actual results may differ materially due to various risks and uncertainties, including licensing delays, legal outcomes, and market developments - Forward-looking statements are based on management's current views and assumptions and are not guarantees of future performance[16] - Key risks and uncertainties include unexpected delays or difficulties in executing patent licensing agreements, the ability to expand revenue opportunities, resolution of legal proceedings, ability to maintain a strong patent portfolio, failure of technology markets to materialize as expected, continued ability to develop new technologies, changes in tax law interpretation and calculation, timing and impact of regulatory, administrative, and legislative matters, potential impact of macroeconomic conditions or trade conflicts, ability to hire and retain key personnel, operational risks (including cybersecurity incidents), and risks associated with new accounting standards[16] Footnotes and Non-GAAP Definitions Annualized Recurring Revenue (ARR) Definition Annualized Recurring Revenue (ARR) is defined as quarterly total revenue less quarterly catch-up revenue, multiplied by four, providing insight into ongoing financial performance - Annualized Recurring Revenue (ARR) is defined as quarterly total revenue less quarterly catch-up revenue, multiplied by four[18] - ARR is not a forecast or projection, and actual recurring revenue will depend on various factors beyond the company's prediction or control[18] Non-GAAP Net Income and EPS Definition Non-GAAP net income and EPS are supplemental non-GAAP financial measures providing insight into ongoing operating performance, adjusted for items like share-based compensation and acquisition-related amortization - Non-GAAP net income is defined as net income attributable to InterDigital, Inc. plus share-based compensation, acquisition-related amortization, depreciation and amortization, restructuring costs, impairment charges and one-time adjustments, loss on extinguishment of long-term debt, related income tax effects of the foregoing, and income tax adjustments[19] - Non-GAAP EPS is defined as non-GAAP net income divided by non-GAAP weighted average diluted shares, which adjusts for the dilutive effect of convertible notes and offsets hedging arrangements[19] Adjusted EBITDA Definition Adjusted EBITDA and its margin are supplemental non-GAAP financial measures providing insight into ongoing operating performance, calculated by adjusting net income for various non-cash and non-operating items - Adjusted EBITDA is defined as net income attributable to InterDigital Inc. plus net loss attributable to non-controlling interests, income tax (provision) benefit, other income (expense) and interest expense, depreciation and amortization, share-based compensation, and other items (including restructuring costs, impairment charges, and other non-recurring items)[20] - Adjusted EBITDA margin is adjusted EBITDA divided by total revenue[20] Consolidated Financial Statements Summary Consolidated Statements of Income This section provides a summary of consolidated statements of income for Q2 and H1 2025 and 2024, detailing key financial data such as revenue, operating expenses, net income, and EPS Summary Consolidated Statements of Income (thousand USD, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $300,596 thousand USD | $223,493 thousand USD | $511,103 thousand USD | $487,035 thousand USD | | Total Operating Expenses | $95,169 thousand USD | $89,587 thousand USD | $173,844 thousand USD | $249,391 thousand USD | | Operating Income | $205,427 thousand USD | $133,906 thousand USD | $337,259 thousand USD | $237,644 thousand USD | | Net Income | $180,568 thousand USD | $109,664 thousand USD | $296,170 thousand USD | $191,316 thousand USD | | Diluted EPS | $5.35 per share | $3.93 per share | $8.81 per share | $6.80 per share | | Cash Dividends Per Share | $0.60 per share | $0.40 per share | $1.20 per share | $0.80 per share | Summary Consolidated Cash Flows This section provides a summary of consolidated cash flow statements for Q2 and H1 2025 and 2024, showing cash flows from operating, investing, and financing activities Summary Consolidated Statements of Cash Flows (thousand USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | $105,118 thousand USD | $(48,910) thousand USD | $85,129 thousand USD | $1,863 thousand USD | | Net Cash from Investing Activities | $(81,728) thousand USD | $80,723 thousand USD | $(22,220) thousand USD | $97,498 thousand USD | | Net Cash from Financing Activities | $(42,669) thousand USD | $(184,008) thousand USD | $(85,620) thousand USD | $(233,327) thousand USD | | Cash, Cash Equivalents, and Restricted Cash, End of Period | $528,836 thousand USD | $308,995 thousand USD | $528,836 thousand USD | $308,995 thousand USD | Summary Consolidated Balance Sheets This section provides a summary of consolidated balance sheets as of June 30, 2025, and December 31, 2024, outlining the composition of assets, liabilities, and stockholders' equity Summary Consolidated Balance Sheets (thousand USD) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, Cash Equivalents, and Short-Term Investments | $936,985 thousand USD | $958,208 thousand USD | | Accounts Receivable | $388,707 thousand USD | $188,302 thousand USD | | Total Assets | $1,984,709 thousand USD | $1,835,529 thousand USD | | Total Current Liabilities | $708,858 thousand USD | $725,810 thousand USD | | Total Liabilities | $897,925 thousand USD | $978,314 thousand USD | | Total Stockholders' Equity | $1,086,784 thousand USD | $857,215 thousand USD | Reconciliation of Non-GAAP Measures Adjusted EBITDA Reconciliation This section provides a reconciliation of GAAP net income to Adjusted EBITDA for Q2 and H1 2025 and 2024, detailing various adjustment items Adjusted EBITDA Reconciliation (thousand USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $180,568 thousand USD | $109,664 thousand USD | $296,170 thousand USD | $191,316 thousand USD | | Income Tax Provision | $30,466 thousand USD | $24,441 thousand USD | $47,083 thousand USD | $43,852 thousand USD | | Depreciation and Amortization | $19,465 thousand USD | $17,376 thousand USD | $37,678 thousand USD | $34,616 thousand USD | | Share-Based Compensation | $11,836 thousand USD | $9,655 thousand USD | $21,334 thousand USD | $19,041 thousand USD | | Adjusted EBITDA | $236,728 thousand USD | $157,737 thousand USD | $395,788 thousand USD | $288,101 thousand USD | Non-GAAP Net Income and EPS Reconciliation This section provides a reconciliation of GAAP net income to non-GAAP net income and diluted EPS to non-GAAP EPS for Q2 and H1 2025 and 2024, including adjustments for share-based compensation and acquisition-related amortization Non-GAAP Net Income and EPS Reconciliation (thousand USD, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $180,568 thousand USD | $109,664 thousand USD | $296,170 thousand USD | $191,316 thousand USD | | Share-Based Compensation | $11,836 thousand USD | $9,655 thousand USD | $21,334 thousand USD | $19,041 thousand USD | | Acquisition-Related Amortization | $8,900 thousand USD | $8,324 thousand USD | $17,550 thousand USD | $16,745 thousand USD | | Related Income Tax Impact | $(4,355) thousand USD | $(2,642) thousand USD | $(8,065) thousand USD | $(6,523) thousand USD | | Non-GAAP Net Income | $195,282 thousand USD | $118,900 thousand USD | $320,940 thousand USD | $213,444 thousand USD | | Diluted EPS | $5.35 per share | $3.93 per share | $8.81 per share | $6.80 per share | | Non-GAAP EPS | $6.52 per share | $4.57 per share | $10.74 per share | $8.14 per share | Outlook Reconciliation This section provides a reconciliation of GAAP and non-GAAP financial outlook for Q3 and full-year 2025, including metrics such as net income, adjusted EBITDA, and EPS Q3 2025 and Full Year 2025 Outlook Reconciliation (million USD, except per share data) | Metric | Q3 2025 | Full Year 2025 (Current) | Full Year 2025 (Prior) | | :--- | :--- | :--- | :--- | | Net Income | $32 - $38 million USD | $372 - $390 million USD | $224 - $319 million USD | | Adjusted EBITDA | $69 - $75 million USD | $551 - $569 million USD | $400 - $495 million USD | | Non-GAAP Net Income | $46 - $52 million USD | $428 - $446 million USD | $286 - $381 million USD | | Diluted EPS | $0.94 - $1.11 per share | $10.94 - $11.47 per share | $6.79 - $9.67 per share | | Non-GAAP EPS | $1.52 - $1.72 per share | $14.17 - $14.77 per share | $9.69 - $12.92 per share | Contact Information Investor Relations Contact Investors can contact InterDigital's investor relations department via the provided email and phone number - Investor Relations Email: investor.relations@interdigital.com[32] - Investor Relations Phone: +1 (302) 300-1857[32]