InterDigital, Inc. (IDCC)·Q3 2025 Earnings Summary

Executive Summary

• IDCC delivered a strong Q3 2025: revenue $164.7M (+28% YoY), GAAP diluted EPS $1.93 (+69% YoY), and non‑GAAP EPS $2.55 (+56% YoY), all above the increased Q3 outlook; Adjusted EBITDA was $104.9M (64% margin, +14 ppt YoY) .
• Annualized recurring revenue reached an all-time high $588M (+49% YoY), with smartphone ARR $491M and CE/IoT/Auto ARR $97M; catch‑up revenue was $17.7M (down 41% YoY), reflecting a more subscription-like revenue mix .
• Management raised and narrowed FY25 guidance to revenue $820–$824M, non‑GAAP EPS $14.57–$14.83, and Adjusted EBITDA $569–$577M, and issued Q4 guidance of revenue $144–$148M and non‑GAAP EPS $1.38–$1.63 based on existing contracts only .
• Stock-relevant catalysts: Brazil court preliminary injunction against Disney (compliance deadline Nov 30), continued enforcement against Transsion, Deep Render acquisition to accelerate AI‑native video research, and a 17% dividend increase to $0.70/share with $53M Q3 capital returns; 2027 converts are convertible in Q4 2025 .

What Went Well and What Went Wrong

What Went Well

• “Another outstanding quarter”: Revenue and EPS exceeded the top end of the increased outlook, supported by new license agreements (Honor, Sharp, TCL) and strengthened ARR visibility .
• Licensing coverage expanded: Eight of the top ten smartphone vendors and ~85% of the global smartphone market are now under license, with smartphone ARR at $491M, nearing the $500M mid‑term goal .
• Strategic initiatives: Acquisition of Deep Render to accelerate AI‑native video research; continued leadership in standards (3GPP positions), and U.S. government project to lead spectrum coexistence demonstrations .

What Went Wrong

• CE/IoT/Auto revenue declined YoY in Q3: $28.2M vs. $40.6M (-31%), reflecting program mix and timing, despite EV charging license momentum .
• Catch‑up revenue normalized: $17.7M in Q3 vs. $30.0M YoY (-41%), reducing quarter-to-quarter volatility but limiting upside from one‑time items .
• Ongoing legal complexity: Multi‑jurisdictional enforcement (Disney, Transsion) introduces timeline uncertainty; while Brazil PI stands, management cannot speculate on Disney’s next steps ahead of the Nov 30 compliance date .

Financial Results

Quarterly Performance vs Prior Periods

Notes:

• Q2 benefitted from Samsung arbitration: $119M catch‑up and $33M recurring recognized in Q2 .
• Q3 normalized to recurring-heavy profile, with ARR at record levels .

Actuals vs S&P Global Consensus

Values retrieved from S&P Global.*
Company actuals: .

Segment Breakdown (Revenue by Program)

KPIs and Mix

Guidance Changes

Note: Q4 guidance based on existing agreements only; new Q4 agreements would be additive .

Earnings Call Themes & Trends

Management Commentary

• CEO: “This was another outstanding quarter… annualized recurring revenue up 49% year‑over‑year to an all‑time high of almost $590 million” .
• CFO: “Adjusted EBITDA… equates to an adjusted EBITDA margin of 64%, an increase of 14 points… free cash flow to $381 million for the quarter and $425 million year to date” .
• CEO on Deep Render: “We added a lot of really strong expertise to speed up our AI capability for native AI video research… strengthen our position for the next video compression standard” .
• CEO on Disney: “The injunction is currently in effect… the court has given Disney until the end of November to comply” .

Q&A Highlights

• CE/IoT/Auto outlook: Smart TVs remain the largest opportunity (Samsung licensed); active work with LG, Hisense, TCL; EV charging license expanding ARR beyond smartphones .
• Deep Render integration: AI‑native end‑to‑end video codec strategy; multiple monetization options (IP licensing; standards influence) under evaluation .
• Disney enforcement: Brazil PI affirmed; Nov 30 compliance deadline; multi‑jurisdictional trials in Germany, UPC, U.S. into mid‑2026; industry attention strengthening negotiating position .
• Transsion litigation: Multi‑jurisdiction enforcement launched (UPC, India, Brazil) to address ~100M annual devices; aim for bilateral resolution over time .

Estimates Context

• Q3 2025 results beat consensus on revenue ($164.68M vs $153.35M) and EPS ($2.55 vs $2.05) following incremental licenses; prior quarters also beat materially (Q2: arbitration-driven upside; Q1: vivo license) .
• Consensus breadth remained modest (4–5 estimates), suggesting potential for estimate dispersion; ARR progression supports upward revisions to out‑quarters. Values retrieved from S&P Global.*

Key Takeaways for Investors

• Recurring visibility: ARR at $588M (+49% YoY) with smartphone ARR at $491M and CE/IoT/Auto ARR at $97M, underpinning multi‑year EPS and cash flow compounding .
• Catalysts: Disney Brazil PI compliance by Nov 30 and broader multi‑jurisdiction trials; Transsion enforcement could add ARR and catch‑up revenue; watch for additional CE/IoT/Auto licenses .
• Q4 setup: Guidance implies normalization to recurring ($144–$148M revenue; non‑GAAP EPS $1.38–$1.63) with upside if new agreements land before year‑end .
• Capital returns: Dividend raised 17% to $0.70/share; $53M returned in Q3 and additional buybacks in Oct; strong FCF supports ongoing buybacks .
• Strategic AI optionality: Deep Render enhances AI‑native video IP and standard‑setting influence, creating future licensing vectors in video services .
• Balance sheet and converts: 2027 notes convertibility window in Q4 2025; call spread reduces net share issuance economics, mitigating dilution risk .
• Medium‑term thesis: Licensing momentum in smartphones and CE/IoT, plus video services enforcement, supports FY25 raised guidance (non‑GAAP EPS $14.57–$14.83) and ARR path toward $1B by 2030 .

Citations:
Financials, ARR, segments, and guidance: .
Samsung arbitration details: .
Call coverage and quotes: .