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InterDigital, Inc. (IDCC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record results: revenue $252.8M (+140% y/y), diluted EPS $4.09 (+190% y/y), Adjusted EBITDA $198.1M (+272% y/y), with performance above the company’s Q4 outlook; upside was driven by $136M catch-up from OPPO, Lenovo and ZTE agreements .
  • Management introduced FY25 guidance (revenue $660–$760M; Non-GAAP EPS $9.69–$12.92) and increased the quarterly dividend 33% to $0.60; Q1 2025 outlook was later raised on Mar 6 after signing a major Chinese smartphone license (revenue $202–$206M; Non-GAAP EPS $3.66–$3.90) .
  • Strategic catalysts include Disney streaming enforcement actions (multi-jurisdiction litigation), pending Samsung mobile arbitration decision, and continuing smartphone and CE/IoT license momentum; management targets ARR growth and strong free cash flow in 2025 .
  • S&P Global consensus estimates were unavailable at time of request; comparisons reference company outlook and actuals; estimate-driven beats/misses will be reassessed when access is restored (S&P Global data unavailable).

What Went Well and What Went Wrong

  • What Went Well

    • Record quarter and year: Q4 revenue $252.8M and FY revenue $868.5M, with Non-GAAP EPS $5.15 in Q4 and $14.97 for FY; Adjusted EBITDA margin reached 78% in Q4 and 63% for FY .
    • Licensing momentum: OPPO license, ZTE renewal, binding arbitration agreement with Lenovo; ~70% of global smartphone market now under license. CEO: “We have now licensed top 4 largest smartphone manufacturers, and approximately 70% of annual smartphone shipment worldwide.” .
    • Cash generation and capital returns: Q4 operating cash flow $192M; Q4 free cash flow $169M; nearly $1.9B cumulative capital returned since 2011; dividend raised to $0.60 .

  • What Went Wrong

    • Q3 sequential softness from lower catch-ups and Huawei expiration before rebounding in Q4; Q3 revenue $128.7M (-8% y/y), Adjusted EBITDA $64.8M (-22% y/y) .
    • Non-GAAP EPS in Q4 came in below guidance due to higher convert-related dilution at a higher share price and lower-than-expected non-GAAP adjustments, despite strong GAAP EPS (CFO commentary) .
    • Streaming monetization still early; management initiated Disney litigation and does not expect material 2025 revenue from services, indicating timeline/visibility risk .

Financial Results

Core P&L vs prior quarters

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$223.5 $128.7 $252.8
Diluted EPS ($USD)$3.93 $1.14 $4.09
Adjusted EBITDA ($USD Millions)$157.7 $64.8 $198.1
Adjusted EBITDA Margin (%)71% 50% 78%
Non-GAAP EPS ($USD)$4.57 $1.63 $5.15

Narrative comparisons:

  • Q4 vs Q3: strength driven by $136M catch-up from OPPO/Lenovo/ZTE and recurring revenue growth (Q4 recurring revenue $117M, +13% y/y) .
  • Q4 vs prior year: revenue +140% y/y to $252.8M; Adjusted EBITDA +272% y/y to $198.1M; Non-GAAP EPS +265% y/y to $5.15 .

Results vs Company Outlook (Q4)

MetricQ4 2024 Outlook (10/31/24)Q4 2024 ActualOutcome
Revenue ($USD Millions)$239–$249 $252.8 Beat
Adjusted EBITDA ($USD Millions)$180–$190 $198.1 Beat
Diluted EPS ($USD)$3.72–$3.98 $4.09 Beat
Non-GAAP EPS ($USD)$5.42–$5.70 $5.15 Miss (non-GAAP adj/dilution)

Driver: late-quarter license signings (OPPO, ZTE) and Lenovo arbitration outcome recognition drove catch-up revenue above prior outlook; non-GAAP EPS shortfall due to higher convert dilution and lower non-GAAP adjustments (CFO) .

Segment/program breakdown

Program Revenue ($USD Millions)Q2 2024Q3 2024Q4 2024
Smartphone$199.2 $87.4 $230.6
CE, IoT/Auto$23.7 $40.6 $21.8
Other$0.5 $0.6 $0.4

Notes: Q4 smartphone +162% y/y; CE/IoT/Auto +28% y/y; Q3 saw CE/IoT strength while smartphone reflected lower catch-ups and Huawei expiration .

KPIs and balance sheet

KPIQ2 2024Q3 2024Q4 2024
Recurring Revenue ($USD Millions)$95.9 $98.6 $117.0
Catch-up Revenue ($USD Millions)$127.6 $30.0 $136.0
ARR ($USD Millions)——$468
Free Cash Flow ($USD Millions)—$65 $169
Cash, cash eq. + short-term investments ($USD Millions)$760 $813 $958
Weighted avg diluted shares (GAAP, Millions)27.910 30.034 32.561
Dividend per share ($)$0.40 $0.45 $0.45 (raised to $0.60 in Feb-25)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025$112–$116 $202–$206 Raised
Adjusted EBITDA ($USD Millions)Q1 2025$53–$60 $143–$150 Raised
Diluted EPS ($USD)Q1 2025$0.58–$0.79 $2.78–$2.99 Raised
Non-GAAP EPS ($USD)Q1 2025$1.19–$1.42 $3.66–$3.90 Raised
Revenue ($USD Millions)FY 2025$660–$760 $660–$760 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$400–$495 $400–$495 Maintained
Diluted EPS ($USD)FY 2025$6.79–$9.67 $6.79–$9.67 Maintained
Non-GAAP EPS ($USD)FY 2025$9.69–$12.92 $9.69–$12.92 Maintained
Dividend per share ($)Regular Quarterly$0.45 $0.60 (effective Q2 2025) Raised
Weighted avg diluted shares (GAAP, Millions)Q1 202533.0 33.8 Increased
2027 Convert NotesQ1 2025Convertible window; 12.9041 shares per $1,000 note Same; call spread raises econ. conversion price to ~$106.22 Informational

Why changes: Q1 raised on new multi-year Chinese smartphone license, lifting ARR by ~$40M to ~$500M; FY maintained pending additional agreements/arbitration timing .

Earnings Call Themes & Trends

TopicQ2 2024 MentionsQ3 2024 MentionsQ4 2024 Current PeriodTrend
AI/technology initiativesConcordia collaboration on AI-enabled immersive media over 5G Awards in immersive video/video processing; standard leadership FierceWireless award for AI-empowered 6G receiver; multiple standards leadership roles Increasing visibility/awards
Smartphone licensing momentumGoogle license; Lenovo wins (UK appeal + injunction); raised FY guide OPPO license highlighted; Q4 OPPO binding/Lenovo arbitration noted in Q3 outlook OPPO license, ZTE renewal; Lenovo arbitration recognition in revenue; ~70% market licensed Broadening coverage, higher catch-ups
Streaming/cloud servicesStrategy outlined; early stage Program building; no specific deals Initiated Disney litigation (Disney+, Hulu, ESPN+); no material 2025 revenue expected from services Enforcement initiated; monetization runway
CE/IoT/AutoCE/IoT revenue +91% y/y in Q2 CE/IoT recurring +52% y/y in Q3 CE/IoT +28% y/y in Q4; continued opportunity in TVs/PCs/Tablets Sustained growth across verticals
ARR/recurringRecord H1 revenue; ARR not yet reported Outlook above top end; recurring dynamics explained ARR presented ($468M in Q4); targeting double-digit ARR growth in 2025 ARR adopted; growth target
Regulatory/legalLenovo injunction (Germany); UK appeal Arbitration with Lenovo; OPPO litigations dismissed Disney multi-jurisdiction litigation; pending Samsung arbitration decision Heightened enforcement
Capital structure/dividends2024 converts repaid; dividend $0.40 Dividend increased to $0.45 Dividend increased to $0.60; convert window details and dilution sensitivity Returns rising; convert optionality

Management Commentary

  • CEO: “In 2024, we delivered the best business results in our history… our technology [is] more critical than ever to an ecosystem generating roughly $6 trillion in economic value every year” .
  • CEO on smartphone coverage: “We have now licensed top 4 largest smartphone manufacturers, and approximately 70% of annual smartphone shipment worldwide” .
  • CEO on streaming: “We initiated a multi-jurisdictional enforcement action against Disney… We believe our video technology underpins the viability of the video streaming industry” .
  • CFO: “Q4 revenue included catch-up revenue of $136 million related to our fourth quarter license agreements with OPPO, Lenovo and ZTE… Adjusted EBITDA margin of 78%” .
  • CFO on ARR: “In Q4, we had $117 million of recurring revenue… multiply by 4, and you get $468 million of ARR, which is by far a record level… targeting double-digit growth in ARR by end of 2025” .

Q&A Highlights

  • Disney litigation timing and scope: Management engaged Disney for >2.5 years; litigation now necessary; timing uncertain; open to negotiation during litigation .
  • 2025 revenue construction: Guidance reflects multi-path outcomes across renewals and new agreements; services not expected to be material in 2025; aiming double-digit ARR growth .
  • Samsung arbitration: Last hearing Oct; decision expected after New Year; management believes valuation should reflect higher portfolio value vs prior contract, but outcome rests with arbitrator .
  • Convert/dilution and capital structure: Dilution depends on stock price; hedge reduces net dilution; with >$500M net cash, company has greater optionality going forward .
  • Geopolitics: Standards are global and open; company actively engages policymakers; sees strong multi-country support for IP licensing model .

Estimates Context

  • S&P Global Wall Street consensus estimates were unavailable at time of request due to access limits. We therefore benchmarked Q4 results against the company’s Q4 outlook and will reassess beats/misses vs consensus once S&P Global data access is restored (S&P Global data unavailable).
  • Given the late-quarter license signings, consensus may need upward revisions for FY25 recurring and catch-up assumptions; caution that Q1 guidance excluded late-quarter agreements before the Mar 6 update .

Key Takeaways for Investors

  • Licensing momentum is the core driver; Q4 upside came from OPPO/Lenovo/ZTE catch-ups, with smartphone coverage near ~70% of shipments and a major Chinese vendor added in March—supports recurring base and 2025 ARR growth .
  • Near-term catalysts: Samsung arbitration decision; progress on Disney litigation/streaming monetization; additional smartphone/TV renewals; watch for Q1 report reflecting raised outlook .
  • Capital returns remain robust: dividend lifted to $0.60 and buyback capacity in place; strong FCF and near-$1B cash underpin optionality on converts and enforcement strategy .
  • Non-GAAP EPS sensitivity to converts: Dilution varies with share price; hedge mitigates issuance; monitor share count vs guidance (33.8M GAAP diluted in updated Q1) .
  • CE/IoT and video services expand TAM: CE/IoT shows durable growth; services are a longer runway—litigation suggests conviction in portfolio value but timing/quantum uncertain .
  • Expect ARR and FCF to trend higher in 2025 via renewals/new agreements; management reiterated multi-path framework to reach guided ranges .
  • Tactical trading: Stock likely responds to arbitration outcomes, new licenses, and litigation developments; Q1 raised outlook suggests strong early 2025 prints .