Sign in
II

InterDigital, Inc. (IDCC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a broad-based beat: revenue $300.6M (+34% YoY), Non-GAAP EPS $6.52, and Adjusted EBITDA $236.7M, all above guidance, driven by the Samsung arbitration conclusion ($119M catch-up recognized) and a new HP license; ARR reached a record $553.1M (+44% YoY) .
  • Against S&P Global consensus, Q2 revenue and EPS were significant beats: revenue $300.6M vs $192.9M consensus; EPS $6.52 vs $3.38 consensus; EBITDA outperformed as well; estimates will need to adjust higher for run-rate and ARR progress due to the Samsung uplift and HP catch-ups* .
  • FY 2025 guidance raised: revenue to $790–$850M (midpoint +$110M to $820M), Adjusted EBITDA to $551–$569M, Non-GAAP EPS to $14.17–$14.77; Q3 2025 revenue guided to $136–$140M, with margins normalizing as catch-up revenue steps down .
  • Stock-reaction catalysts: largest license in company history (Samsung >$1B TCV, ARR +$131M annually), smartphone program now ~80% market coverage, dividend increased to $0.60, and recurring revenue visibility, balanced by a Q3 guide below consensus and continued streaming enforcement timing uncertainty .

What Went Well and What Went Wrong

What Went Well

  • Largest license ever: “Our agreement with Samsung is … worth more than $1 billion … over eight years” with ARR +$131M annually and $119M Q2 catch-up; management raised FY revenue guidance midpoint by $110M to $820M .
  • ARR and smartphone coverage: ARR $553M (+44% YoY); smartphone ARR $465M (+58% YoY), “almost 80% of the global smartphone market under license” .
  • Capital returns and FCF trajectory: Q2 returned $42M (buybacks $26M; dividends $16M); CFO indicated FY 2025 free cash flow could exceed $400M, nearly double FY 2024 .

What Went Wrong

  • Q3 2025 guide below consensus: company guided revenue to $136–$140M, implying a post-catch-up normalization; consensus for Q3 revenue was higher and will need recalibration* .
  • Streaming licensing timing remains uncertain: “we are in continuous dialogue … and as of today, we don’t have any real concrete progress to report yet,” with multi-jurisdictional Disney enforcement ongoing .
  • Working capital volatility: Q2 operating cash flow benefited from strong earnings, but working capital changes were a $94.4M headwind; convertibility window for 2027 notes (potential share issuance mechanics) adds capital-structure complexity .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$252.8 $210.5 $300.6
Diluted EPS ($USD)$4.09 $3.45 $5.35
Non-GAAP EPS ($USD)$5.15 $4.21 $6.52
Adjusted EBITDA ($USD Millions)$198.1 $159.1 $236.7
Adjusted EBITDA Margin %78% 76% 79%
Net Income Margin %53% 55% 60%
MetricQ2 2024Q2 2025
Revenue ($USD Millions)$223.5 $300.6
Diluted EPS ($USD)$3.93 $5.35
Non-GAAP EPS ($USD)$4.57 $6.52
Adjusted EBITDA ($USD Millions)$157.7 $236.7
Adjusted EBITDA Margin %71% 79%
Net Income ($USD Millions)$109.7 $180.6
Net Income Margin %49% 60%

Segment and KPI detail:

MetricQ4 2024Q1 2025Q2 2025
Smartphone Revenue ($USD Millions)$230.6 $184.0 $235.1
CE, IoT/Auto Revenue ($USD Millions)$21.8 $26.3 $65.3
Other Revenue ($USD Millions)$0.4 $0.2 $0.2
Catch-up Revenue ($USD Millions)—$84.8 $162.3
Annualized Recurring Revenue (ARR) ($USD Millions)—$502.9 $553.1
Smartphone ARR ($USD Millions)—$416.0 $465.0

Estimate comparison (Q2 2025):

MetricConsensus (Q2 2025)Actual (Q2 2025)
Revenue ($USD Millions)$192.9*$300.6
Primary EPS ($USD)$3.38*$6.52
EBITDA ($USD Millions)$138.8*$236.7

Values marked with * were retrieved from S&P Global.

Drivers and reconciliations:

  • Samsung arbitration recognized $152M revenue in Q2 (recurring $33M + catch-up $119M) per CFO, explaining the outsized beat and ARR uplift .
  • Non-GAAP definitions and Adjusted EBITDA reconciliation are provided in the release; margin expansion reflects high incremental contribution from catch-up revenue and licensing economics .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q3 2025—$136–$140 New
Adjusted EBITDA ($USD Millions)Q3 2025—$69–$75 New
Diluted EPS ($USD)Q3 2025—$0.94–$1.11 New
Non-GAAP EPS ($USD)Q3 2025—$1.52–$1.72 New
Net Income ($USD Millions)Q3 2025—$32–$38 New
Income Tax Provision ($USD Millions)Q3 2025—8 New
Other Income (Net) & Interest Expense ($USD Millions)Q3 2025—— New
MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$660–$760 $790–$850 Raised
Adjusted EBITDA ($USD Millions)FY 2025$400–$495 $551–$569 Raised
Diluted EPS ($USD)FY 2025$6.79–$9.67 $10.94–$11.47 Raised
Non-GAAP EPS ($USD)FY 2025$9.69–$12.92 $14.17–$14.77 Raised
Net Income ($USD Millions)FY 2025$224–$319 $372–$390 Raised
Income Tax Provision ($USD Millions)FY 202556 65 Raised
Other Income (Net) & Interest Expense ($USD Millions)FY 2025(2) (6) Lower OI&E
Dividend per Share ($USD)Ongoing$0.45 (Q1 prior) $0.60 (from Q2) Raised

Notes: Q3 outlook covers existing licenses only; FY 2025 includes both existing licenses and expected contributions from new agreements over the balance of the year .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
AI/6G technology initiativesLeadership in standards; Investor Day targets; strong patent quality Showcased AI, 6G innovations at MWC “Leading the development of 6G standards”; AI integration into cellular; monetization opportunities Strengthening
Smartphone licensing coverage~70–80% coverage; Oppo, Lenovo arbitration vivo license signed; ~80% under license ~80% under license; Samsung arbitration concluded; smartphone ARR $465M Improving
CE/IoT/Auto programCE recurring +52% YoY; TPV/Panasonic HP license announced; >50% PC market under license HP license catch-up $44M recognized; CE/IoT/Auto revenue +175% YoY to $65.3M Accelerating
Streaming/cloud servicesFocus verticals; enforcement posture Guidance reaffirmed; ongoing dialogues No concrete progress yet; Disney multi-jurisdiction enforcement ongoing Stable to slow
Regulatory/legalArbitration and enforcement drive results Raised Q1 outlook; continued enforcement Samsung arbitration outcome; Lenovo arbitration progressing; Disney cases continue Positive on smartphone; streaming pending
Capital returns & FCFCash >$800M; dividend +13% to $0.45 Dividend increased to $0.60 ~$42M Q2 return; FY 2025 FCF could exceed $400M Strengthening

Management Commentary

  • “Our agreement with Samsung is the largest license InterDigital has ever signed, worth more than $1 billion in total contract value over eight years.” — Liren Chen, President & CEO .
  • “Our ARR increased 44% year over year to an all-time high of $553 million in Q2 … smartphone ARR 58% YoY to $465 million.” — Richard Brezski, CFO .
  • “We now expect … non-GAAP earnings per share of $14.17 to $14.77 … we believe our free cash flow for full year 2025 could exceed $400 million.” — CFO .
  • On streaming engagements: “we are in continuous dialogue … as of today, we don’t have any real concrete progress to report yet … Disney litigation … substance trial later this year and early next year.” — CEO .

Q&A Highlights

  • Tax rate outlook: management sees long-term tax rate in mid-to-high teens, potentially “a tick below” prior expectations given new legislation impacts under evaluation .
  • Recurring revenue baseline: Samsung quarterly recurring lifted to ~$33M from just under $20M; Q3 recurring revenue guidance $136–$140M reflects run-rate without additional catch-ups .
  • Streaming/Disney: litigation not slowing dialogues with other players; timelines are uncertain; company remains open to settlement while prepared to litigate .
  • Renewal economics: renewals can be higher value (Apple +15% in 2022; Samsung +67% uplift via arbitration), contingent on usage and portfolio scope .

Estimates Context

  • Q2 2025: InterDigital delivered a major beat versus consensus on revenue and EPS; Adjusted EBITDA also exceeded consensus (see table above)*.
  • Q3 2025 setup: Company’s Q3 revenue outlook ($136–$140M) is below S&P Global consensus ($153.3M), indicating potential for estimate downgrades unless additional agreements add catch-up revenue; company explicitly notes Q3 guidance excludes potential new agreements or enforcement proceeds .
    Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • The Samsung arbitration and HP license materially reset InterDigital’s run-rate and ARR; Q2 beats reflect both recurring increases and catch-up recognition .
  • FY 2025 guidance was raised across revenue, EBITDA, and EPS, signaling higher confidence in near-term execution .
  • Near-term normalization: Q3 guidance below consensus underscores expected step-down absent catch-ups; watch for incremental license wins and enforcement outcomes as potential upside levers .
  • Smartphone program is nearing $500M ARR target, with ~80% market coverage and favorable renewal comps; momentum likely supports medium-term valuation .
  • Streaming/cloud remains a longer-dated catalyst; Disney enforcement is progressing but timing remains uncertain; continued dialogues could broaden licensing in video services .
  • Capital allocation remains shareholder-friendly: increased dividend to $0.60 and ongoing buybacks, supported by strong expected FCF in 2H 2025 .
  • Note convertibility window for 2027 notes and call-spread structure (economic conversion price ~$106) when assessing potential dilution scenarios .