InterDigital (IDCC)·Q4 2025 Earnings Summary

InterDigital Crushes Q4 as Smartphone ARR Hits Record, Stock Jumps 6% After Hours

February 5, 2026 · by Fintool AI Agent

InterDigital delivered a comprehensive beat across all metrics in Q4 2025, driving the stock up 5.7% in after-hours trading to $331.60. The wireless and video technology licensing company exceeded the high end of guidance on revenue, earnings, and EBITDA, capping a record year that saw annualized recurring revenue (ARR) surge 24% year-over-year to $582 million.

Did InterDigital Beat Earnings?

InterDigital crushed expectations on every metric, significantly exceeding its own guidance:

The year-over-year comparisons show a 37% revenue decline, but this is entirely due to lapping $135.8 million of catch-up revenue in Q4 2024 (primarily from the OPPO license and Lenovo arbitration) versus just $12.6 million in Q4 2025.

8-Quarter Beat Streak: InterDigital has beaten estimates in every quarter over the past two years, demonstrating management's ability to consistently under-promise and over-deliver.

What Was the Stock Reaction?

The stock closed at $313.87 on February 4, 2026, then jumped 5.7% to $331.60 in after-hours trading following the earnings release. This reaction reflects:

1. Comprehensive beat — Every metric exceeded the high end of guidance
2. Strong Q1 guidance — Revenue of $194-200M includes $57M catch-up from new LG Electronics license
3. Record FY 2025 — Net income, EBITDA, EPS, and free cash flow all hit all-time highs

The stock is trading near its 52-week high of $412.60 and well above the 200-day moving average of $289.75.

What Drove the Record Year?

Full year 2025 delivered record profitability despite slightly lower revenue:

Key drivers of margin expansion:

• Operating expenses declined $55.8M year-over-year, primarily from lower revenue-share costs
• Higher recurring revenue base improved operating leverage
• ARR grew 24% to $582.4M, providing more predictable revenue streams

What Changed From Last Quarter?

Smartphone Licensing Momentum: Record smartphone revenue of $678.9 million for FY 2025 (+14% YoY), with smartphone ARR reaching an all-time high of $491 million (+29% YoY).

Major Licensing Wins in 2025:

• Samsung — Most valuable license in company history
• vivo and Honor — Top-ten smartphone vendors
• HP — World's largest PC manufacturer
• Xiaomi — License renewed
• LG Electronics — Multi-year agreement for digital TVs and monitors, with $57M catch-up in Q1 2026
• Significant Social Media Company — New CE device license agreement

Patent Portfolio Growth: Patent portfolio grew 14% to approximately 38,000 granted patents and applications, adding roughly 7 new patents per day.

Enforcement Progress: Awarded two preliminary injunctions in Brazil and two injunctions in Germany against Disney, with trials in US and UPC courts starting summer 2026. Launched enforcement proceedings against Amazon in Q4 2025 across four-plus jurisdictions plus ITC.

AI Research Expansion: Completed acquisition of AI startup Deep Render in Q4 2025 to strengthen engineering capabilities in AI and video compression for next-generation video codecs and 6G standards.

Industry Recognition: Named the #1 most successful mid-cap company in America for 2026 by Forbes based on long-term performance. Also recognized by Fortune (America's fastest growing companies), Newsweek (America's greatest companies), and Time (America's growth leaders).

What Did Management Guide?

InterDigital provided guidance for Q1 2026 and full year 2026:

Important context on FY 2026 guidance:

• Q1 guidance covers existing licenses only and excludes new agreements
• FY guidance includes expected contributions from new agreements not yet signed
• Q1 catch-up revenue of $55-60M primarily from LG Electronics license

Long-term 2030 Targets (reiterated):

• ARR target: $1B+
• Adjusted EBITDA: $600M+ at 60%+ margin

Key Management Commentary

"We finished the year with another strong quarter to cap an outstanding performance in 2025. Through the year we accelerated momentum across our licensing programs, including a record performance in smartphones; we significantly deepened our AI expertise and industry leadership in our research teams; and we drove double digit growth in our patent portfolio to help us deliver long-term value for shareholders."

— Liren Chen, President and CEO

Capital Return and Balance Sheet

InterDigital returned $169.4 million to shareholders in FY 2025 through dividends and buybacks:

Balance sheet strength:

• Cash, cash equivalents, and short-term investments: $1.24 billion (up from $958M)
• Total shareholders' equity: $1.10 billion (up from $857M)
• Cumulative capital return since 2011: over $2 billion

The company raised its dividend 56% in 2025, signaling confidence in sustainable cash generation.

What Are the Key Risks?

1. Catch-up revenue volatility — Revenue fluctuates significantly based on timing of new license agreements and arbitration outcomes. Q4 2025 had just $12.6M catch-up vs $135.8M in Q4 2024.

2. Licensing concentration — Top 3 smartphone vendors represent approximately 85% of the addressable smartphone market. Renewal timing creates earnings volatility.

3. Litigation uncertainty — Disney and Amazon enforcement actions are ongoing. Outcomes could take years and are unpredictable.

4. Streaming licensing ramp — The video/streaming services opportunity (target ~$300M+ ARR by 2027) remains largely untapped.

Q&A Highlights

On ARR and License Renewals (Scott Searle, Roth Capital): About $92 million of recurring revenue expired at the end of 2025. Management confirmed they have already renewed approximately two-thirds of this amount, including the Xiaomi renewal and the new LG Electronics agreement. CFO Rich Brezski noted they are "still working on other renewals" and expect additional deals to drive ARR increases through 2026.

On Litigation Timeline (Scott Searle, Roth Capital): CEO Liren Chen provided an update on the Disney and Amazon enforcement campaigns:

"We have more than a dozen patents asserted, and therefore, we still have a majority of the case coming to trial in even bigger jurisdictions like America, United States as well as UPC, and those are starting in the summertime and also second half of this year."

On Amazon, Chen noted the company actually initiated litigation first, and IDCC countered with assertions in Q4 2025 across "four-plus jurisdictions, plus ITC," covering both streaming services and devices.

On Litigation Expenses (Rich Brezski): Expenses are expected to increase in Q1 2026 due to: (1) revenue share on the New Madison agreement (roughly half of the $55-60M catch-up), and (2) increased litigation costs. Litigation expense is expected to be elevated throughout 2026, all of which is factored into guidance.

On the Social Media Company License (Kevin Garrigan, WestPark): Chen clarified the recently signed CE device agreement with a "significant social media company" is a device-focused deal covering radio and Wi-Fi assets. He noted it is "not a huge volume agreement" and does not apply to the service side.

On M&A Strategy (Olinda Lee, William Blair): Chen highlighted the company's open approach to M&A for expanding the patent portfolio:

"We believe strongly we have one of the most advanced R&D engine in the industry... But having said that, we are also having the luxury of having resources, having the industry reputation, that we engage leading companies like Deep Render, and it allows us to fill certain gaps in our research."

The Deep Render acquisition, completed in Q4, strengthens IDCC's AI and video compression research capabilities for next-generation standards.

On Streaming vs. Smartphone Litigation Differences (Olinda Lee): Chen explained that unlike smartphones where IDCC has decades-long relationships (including Samsung since the 1990s), streaming is a relatively new licensing category. While the fundamental technology has been used by streaming platforms for years, it "takes a bit extra time for us to demonstrate the strength of our portfolio, to convince them this should pay a fair price."

Forward Catalysts

Near-term:

• Q1 2026 results with LG catch-up revenue ($55-60M)
• Disney litigation rulings in US and UPC courts (starting summer 2026)
• Amazon enforcement proceedings across 4+ jurisdictions and ITC

Medium-term:

• Streaming/cloud services licensing expansion (SVoD/AVoD is a $475B TAM)
• Automotive 5G licensing opportunity (~85% of 4G market licensed, 5G driving value growth)
• Consumer electronics penetration (currently ~20-65% licensed depending on category)

Bottom Line

InterDigital delivered an exceptional Q4 and record FY 2025, demonstrating the power of its IP-as-a-service business model. The 24% growth in ARR to $582M provides a strong recurring revenue foundation, while landmark licenses with Samsung, vivo, Honor, and HP validate the company's technology leadership. With $1.24B in cash, a 71% EBITDA margin, and a clear path to $1B+ ARR by 2030, management has the resources and visibility to continue compounding value. The streaming video opportunity represents significant optionality if enforcement actions succeed.

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View InterDigital company profile · Read the full earnings call transcript