Sign in
II

InterDigital, Inc. (IDCC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue of $210.5M and Non-GAAP EPS of $4.21 were above the top end of the increased March guidance, driven by a new license with vivo Mobile and stronger variable royalties; Adjusted EBITDA reached $159.1M with a 76% margin.
  • Results beat Wall Street consensus: revenue $210.5M vs $205.3M*, and Non-GAAP EPS $4.21 vs $3.79*; both represent meaningful upside.*
  • Annualized recurring revenue reached a record $502.9M (+30% YoY); smartphone ARR was highlighted at ~$416M, underpinning momentum toward the 2027 $500M smartphone ARR target.
  • FY 2025 guidance reaffirmed (revenue $660–$760M; Adjusted EBITDA $400–$495M; Non-GAAP EPS $9.69–$12.92); Q2 2025 outlook introduced (revenue $165–$170M; Non-GAAP EPS $2.67–$2.90), with the HP PC license signed in April as a visible near-term driver.

What Went Well and What Went Wrong

What Went Well

  • New vivo smartphone license drove revenue above guidance and expanded coverage to seven of the ten largest vendors and ~80% of global smartphone shipments; management cited cumulative TCV >$3.6B since 2021. “We now have seven of the ten largest smartphone vendors and almost 80% of the entire global smartphone market under license.”
  • Record ARR and strong profitability: Adjusted EBITDA rose 22% YoY to $159.1M, margin expanded 27 ppt to 76% as revenue-share OpEx from last year’s catch-ups rolled off.
  • HP PC licensing in Q2 expanded CE/IoT coverage to “more than 50% of the PC market,” validating growth beyond smartphones.

What Went Wrong

  • Total revenue fell 20% YoY as catch-up revenues declined to $84.8M from $166.7M in Q1’24; CE/IoT/Auto revenue was down sharply YoY ($26.3M vs $182.5M) given last year’s large Samsung TV catch-up.
  • Cash from operations was -$19.99M and free cash flow was -$47M due to payment timing, a known quarterly volatility factor.
  • 2027 3.50% Senior Convertible Notes are convertible in Q2 2025; potential dilution remains a focus even with call spread hedges and strong balance sheet.

Financial Results

Core financials vs prior year, prior quarter, and guidance context

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$263.5 $252.8 $210.5
GAAP Diluted EPS ($)$2.88 $4.09 $3.45
Non-GAAP EPS ($)$3.58 $5.15 $4.21
Adjusted EBITDA ($USD Millions)$130.4 $198.1 $159.1
Adjusted EBITDA Margin (%)49% 78% 76%
Net Income Margin (%)31% 53% 55%

Segment revenue breakdown

Program Revenue ($USD Millions)Q1 2024Q4 2024Q1 2025
Smartphone$80.3 $230.6 $184.0
CE, IoT/Auto$182.5 $21.8 $26.3
Other$0.7 $0.4 $0.2

KPIs and cash returns

KPIQ1 2024Q1 2025
Annualized Recurring Revenue ($USD Millions)$387.5 $502.9
Catch-up Revenues ($USD Millions)$166.7 $84.8
Cash from Operations ($USD Millions)$50.8 $(20.0)
Free Cash Flow ($USD Millions)N/A$(47.0)
Dividends Declared per Share ($)$0.40 $0.60
Share Repurchases Value ($USD Millions)$28.9 $5.2

Q1 2025 results vs S&P Global consensus

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)$205.3*$210.5
EPS ($)$3.79*$4.21 (Non-GAAP)

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025$112–$116 $202–$206 (raised Mar 6) Raised
Adjusted EBITDA ($USD Millions)Q1 2025$53–$60 $143–$150 Raised
GAAP Diluted EPS ($)Q1 2025$0.58–$0.79 $2.78–$2.99 Raised
Non-GAAP EPS ($)Q1 2025$1.19–$1.42 $3.66–$3.90 Raised
Revenue ($USD Millions)Q2 2025—$165–$170 New
Adjusted EBITDA ($USD Millions)Q2 2025—$107–$114 New
GAAP Diluted EPS ($)Q2 2025—$1.90–$2.11 New
Non-GAAP EPS ($)Q2 2025—$2.67–$2.90 New
Revenue ($USD Millions)FY 2025$660–$760 $660–$760 (reaffirmed) Maintained
Adjusted EBITDA ($USD Millions)FY 2025$400–$495 $400–$495 (reaffirmed) Maintained
GAAP Diluted EPS ($)FY 2025$6.79–$9.67 $6.79–$9.67 (reaffirmed) Maintained
Non-GAAP EPS ($)FY 2025$9.69–$12.92 $9.69–$12.92 (reaffirmed) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Smartphone licensing coverageMomentum continuing; initial OPPO agreement announced entering Q4 and raising FY guidance OPPO signed; ~70% of shipments under license; Lenovo binding arbitration vivo signed; seven of top 10 vendors; ~80% market under license Strengthening
CE/IoT programStrong Q3 CE/IoT performance; guidance raised Samsung TV catch-ups drove 2024 CE/IoT to $269M HP PC license signed; >50% PC market under license Broadening
Streaming services licensingNot highlighted (PR)Disney enforcement initiated; monetization thesis and market TAM outlined Disney litigation timelines begin Q4’25 into early 2026; Nokia–Amazon cited as positive industry precedent Active enforcement, constructive backdrop
Standards leadership & AICompany-wide R&D leadership, 3GPP roles (ongoing) 33k+ assets, LexisNexis Top 100 Innovators; AI receiver design award Recognition fourth year in a row; showcased 6G, AI, immersive video at MWC Sustained leadership
Macro/tariffs/geopoliticsNot emphasized (PR)Engaging across jurisdictions; IP-positive policy stance “No impact to our business” from tariffs/geopolitics; fixed-fee model dampens shipment volatility Neutral-to-positive

Management Commentary

  • “We now have seven of the ten largest smartphone vendors and almost 80% of the entire global smartphone market under license.” — Liren Chen, President & CEO
  • “Our annualized recurring revenue is up 30% year over year at an all-time record of more than $0.5 billion.” — Liren Chen
  • “Adjusted EBITDA margin of 76%…largely attributable to a decrease in operating expense, as most of the $69 million in rev share we reported in Q1 2024 related to…Samsung TV.” — Rich Brezski, CFO
  • “Q2 guidance is set off existing contracts…does not include any arbitration results we may receive.” — Rich Brezski

Q&A Highlights

  • Q2 guidance composition: Based on existing contracts (including HP), excludes any new deals or arbitration outcomes; clarifies upside optionality from Samsung arbitration.
  • Convert note dynamics: Convert is current given price, maturities in 2027; management monitors capital structure and optionality; dilution treatment addressed in non-GAAP EPS denominator adjustment.
  • Streaming litigation: Disney cases scheduled to start in Q4’25 into early 2026; Nokia–Amazon streaming deal seen as constructive for licensing recognition across services.
  • CE/IoT momentum: Focus on smart TVs (LG, TCL, Hisense opportunities), PCs (>50% licensed via HP), automotive IoT—over 80% of 4G auto licensed, growing 5G sign-ups.
  • Tax rate and modeling: Lower tax rate in Q1 from stock-based comp vesting effects; guidance sensitivity table referenced for convert dilution assumptions.

Estimates Context

  • Q1 2025 beats: Revenue $210.5M vs $205.3M consensus*; Non-GAAP EPS $4.21 vs EPS consensus $3.79*. Results exceeded the raised March guidance ranges and broadly outperformed street expectations. *
  • Implications: Street models should reflect higher recurring base (ARR $503M) and stronger smartphone coverage; CE/IoT cadence is lumpy (catch-ups), but HP provides visible Q2 tailwind; convert dilution and tax rate sensitivity warrant non-GAAP denominator updates.*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Licensing engine delivering: vivo smartphone agreement and HP PC license expand coverage and recurring base; expect continued momentum across remaining top OEMs.
  • Profitability sustained: 76% Adjusted EBITDA margin and 55% net income margin reflect operating leverage as revenue-share costs normalize post large 2024 catch-ups.
  • Near-term catalysts: Q2 revenue guidance $165–$170M (HP), potential Samsung arbitration decision, and progress on CE/IoT TV licenses (LG, TCL, Hisense).
  • Streaming optionality: Disney enforcement timelines set; industry precedent (Nokia–Amazon) may accelerate licensing discussions; medium-term upside not yet in near-term guidance.
  • Balance sheet strength vs convert: Nearly $900M cash and hedged call spread reduce net dilution risk; management actively evaluates capital structure.
  • Free cash flow timing: Q1 outflows (-$47M FCF) are timing-related; management targets double-digit FCF growth for 2025 vs 2024.
  • Dividend and buybacks: Dividend increased to $0.60 and ongoing repurchases ($216M authorization remaining post-April) support shareholder returns.

Appendix Notes

  • Q1 2025 non-GAAP adjustments included share-based comp ($9.5M) and acquisition-related amortization ($8.7M); non-GAAP EPS computed using adjusted diluted shares (29.8M).
  • 2027 Convert: Convertible in Q2 2025; conversion rate 12.9041 shares per $1,000; call spread increases economic conversion price to ~$106.14.