Interdigital Announces Financial Results for Second Quarter 2024

Company Release - 8/1/2024

Company delivers Q2 results far above outlook and all-time record first half, and raises FY 2024 guidance

WILMINGTON, Del., Aug. 01, 2024 (GLOBE NEWSWIRE) -- InterDigital, Inc. (Nasdaq: IDCC), a mobile, video, and AI technology research and development company, today announced results for the quarter ended June 30, 2024.

“Our performance in the second quarter far exceeded the outlook and highlights how we continue to execute on our strategy and strengthen our innovation pipeline to support long-term growth,” commented Liren Chen, CEO and President, InterDigital. “Given our all-time record revenue for the first half of the year and our increasing momentum across the business, we are raising our full-year revenue guidance by $70 million to between $690 million and $740 million.”

2024 Financial Highlights, as compared to Second Quarter 2023:

  Three Months Ended
June 30,
 
 (in millions, except per share data) 2024   2023
  Change
 
 GAAP Results:            
 Revenues $223.5   $101.6   120%  
 Operating Expenses $89.6   $78.2   15%  
 Net income 1 $109.7   $21.8   403%  
 Net income 1 margin 49%   21%   28 ppt  
 Diluted EPS 1 $3.93   $0.79   397%  
             
 Non-GAAP Results:            
 Adjusted EBITDA 2 $157.7   $53.6   194%  
 Adjusted EBITDA margin 2 71%   53%   18 ppt  
 Non-GAAP Net income 3 $118.9   $35.6   234%  
 Non-GAAP EPS 3 $4.57   $1.30   252%  
             
 Additional Information:            
 Revenue by type:            
 Recurring revenues $95.9   $99.1   (3)%  
 Catch-up revenues $127.6   $2.5   4,966%  
 Revenue by program:            
 Smartphone $199.2   $88.6   125%  
 CE, IoT/Auto $23.7   $12.4   91%  
 Other $0.5   $0.6   (5)%  
   

Return of Capital to Shareholders

 (in millions, except per share data) Share Repurchases   Dividends Declared   Total Return
of Capital
 
Shares   Value   Per Share   Value  
 Second quarter 2024 0.3   $35.1   $0.40   $10.1   $45.2  
   

Near Term Outlook

The Company raised its full year 2024 outlook and provided an initial outlook for third quarter 2024 in the table below. The outlook for third quarter 2024 is based on existing licenses only, and any new agreements that might be reached over the balance of the third quarter would be additive. The outlook for full year 2024 includes both existing licenses and the potential for new agreements over the balance of the year.

      Full Year 2024
 (in millions, except per share data) Q3 2024   Current   Prior  
 Revenue $94 - $98   $690 - $740   $620 - $670  
 Adjusted EBITDA 2 $36 - $39   $378 - $416   $310 - $345  
 Diluted EPS 1 $0.20 - $0.30   $7.17 - $8.32   $4.95 - $6.15  
 Non-GAAP EPS 3 $0.70 - $0.80   $9.70 - $10.95   $7.45 - $8.76  
   

Conference Call Information

InterDigital will host a conference call on Thursday, August 1, 2024 at 10:00 a.m. ET to discuss its second quarter 2024 financial performance and other company matters.

For a live Internet webcast of the conference call, visit www.interdigital.com and click on the “Webcast” link on the Investors page. The company encourages participants to take advantage of the Internet option.

For telephone access to the conference call, visit www.interdigital.com and click on the “Dial In Registration” link on the Investors page. Registration is necessary to obtain a dial in phone number and PIN to join.

An Internet replay of the conference call will be available on InterDigital’s website under Events in the Investors section. The replay will be available for one year.

About InterDigital®

InterDigital is a global research and development company focused primarily on wireless, video, artificial intelligence (“AI”), and related technologies. We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today’s most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. Founded in 1972, InterDigital is listed on Nasdaq.

InterDigital is a registered trademark of InterDigital, Inc.

For more information, visit the InterDigital website: www.interdigital.com.

For additional financial measures, refer to our second quarter 2024 Form 10-Q and the financial metrics tracker, which are available on the Investor Relations section of our website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding our current beliefs, plans and expectations. Words such as “believe,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “forecast,” “goal,” “could,” “would,” “should,” “if,” “may,” “might,” “future,” “target,” “trend,” “seek to,” “will continue,” “predict,” “likely,” “in the event,” and variations of any such words or similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are made on the basis of management’s current views and assumptions and are not guarantees of future performance. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results, and actual events that occur, to differ materially from results contemplated by the forward-looking statements. These risks and uncertainties include, but are not limited to: (i) unanticipated delays, difficulties or accelerations in the execution of patent license agreements; (ii) the resolution of current legal proceedings, including any awards or judgments relating to such proceedings, additional or related legal proceedings, including appeals, changes in the schedules or costs associated with such proceedings or adverse rulings; (iii) our ability to leverage our strategic relationships and secure new patent license agreements on acceptable terms; (iv) our ability to enter into sales and/or licensing partnering arrangements for certain of our patent assets; (v) our ability to expand our revenue opportunities by entering into licensing arrangements with video streaming and other cloud-based service providers; (vi) our ability to enter into partnerships with leading inventors and research organizations; (vii) our ability to identify and pursue strategic acquisitions of technology and patent portfolios and other strategic growth opportunities; (viii) our ability to commercialize our technologies and enter into customer agreements; (ix) the failure of the markets for our current or new technologies to materialize to the extent or at the rate that we expect; (x) our continued ability to develop new technologies and secure new patents, including the risk of unexpected delays or difficulties related to the development of our technologies; (xi) risks associated with our capital allocation strategies, including risks associated with our planned dividend payments and share repurchases; (xii) changes in our interpretations of, and assumptions and calculations with respect to the impact on us of, the 2017 Tax Cuts and Jobs Act, as well as further guidance that may be issued regarding such act; (xiii) risks related to the potential impact of new accounting standards on our financial position, results of operations or cash flows; (xiv) failure to accurately forecast the impact of our restructuring activities on our financial statements and our business; (xv) the timing and impact of potential regulatory, administrative and legislative matters; (xvi) changes or inaccuracies in market projections; (xvii) our ability to obtain liquidity though debt and equity financings; (xviii) the potential effects that macroeconomic uncertainty could have on our financial position, results of operations and cash flows; (xix) impacts from acts of terrorism, war or political or civil unrest, or any responses thereto, in the United States or elsewhere; (xx) changes in our business strategy; (xxi) changes or inaccuracies in our expectations with respect to royalty payments by our customers and (xxii) risks related to our assumptions and application of relevant accounting standards, including with respect to revenue recognition.

We undertake no duty to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.

Footnotes

1        Throughout this press release, net income and diluted earnings per share (“EPS”) are attributable to InterDigital, Inc. (e.g., after adjustments for non-controlling interests), unless otherwise stated. Net income margin is net income attributable to InterDigital, Inc. over total revenues.

2        Adjusted EBITDA and Adjusted EBITDA margin are supplemental non-GAAP financial measures that InterDigital believes provide investors with important insight into the Company's ongoing business performance. InterDigital defines Adjusted EBITDA as net income attributable to InterDigital Inc. plus net loss attributable to non-controlling interest, income tax (provision) benefit, other income (expense) & interest expense, depreciation and amortization, share-based compensation, and other items. Other items include restructuring costs, impairment charges and other non-recurring items. Adjusted EBITDA margin is Adjusted EBITDA over total revenues. These non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The presentation of these financial measures, which are not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure is provided below.

3        Non-GAAP net income, Non-GAAP EPS, and Non-GAAP weighted-average diluted shares are supplemental non-GAAP financial measures that InterDigital believes provides investors with important insight into the Company's ongoing business performance. InterDigital defines Non-GAAP net income as net income attributable to InterDigital, Inc. plus share-based compensation, acquisition related amortization, depreciation and amortization, restructuring costs, impairment charges and one-time adjustments, losses on extinguishments of long-term debt, the related income tax effect of the preceding items, and adjustments to income taxes. Non-GAAP EPS is defined as Non-GAAP net income divided by Non-GAAP weighted average diluted shares, which adjusts the weighted average number of common shares outstanding for the dilutive effect of the Company's convertible notes, offset by our hedging arrangements. InterDigital’s computation of these non-GAAP financial measures might not be comparable to similarly named measures reported by other companies. The presentation of these financial measures, which are not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of each of these metrics to its most directly comparable GAAP financial measure is provided below.

SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited)
 
   
  Three Months Ended
June 30,
  Six Months Ended
June 30,

 
  2024   2023   2024   2023  
 Revenues $ 223,493     $ 101,591     $ 487,035     $ 303,964    
 Operating expenses:                                
 Research and portfolio development   50,145       49,878       99,520       99,307    
 Licensing   25,156       16,644       121,745       38,012    
 General and administrative   14,286       11,693       28,126       24,008    
 Total operating expenses   89,587       78,215       249,391       161,327    
                                 
 Income from operations   133,906       23,376       237,644       142,637    
                                 
 Interest expense   (11,483 )     (12,141 )     (23,405 )     (24,228 )  
 Other income, net   11,682       14,387       20,929       27,578    
 Income before income taxes   134,105       25,622       235,168       145,987    
 Income tax provision   (24,441 )     (4,329 )     (43,852 )     (21,174 )  
 Net income $ 109,664     $ 21,293     $ 191,316     $ 124,813    
 Net loss attributable to noncontrolling interest         (490 )           (2,229 )  
 Net income attributable to InterDigital, Inc. $ 109,664     $ 21,783     $ 191,316     $ 127,042    
 Net income per common share — Basic $ 4.35     $ 0.81     $ 7.54     $ 4.58    
 Weighted average number of common shares outstanding — Basic   25,207       26,768       25,359       27,754    
 Net income per common share — Diluted $ 3.93     $ 0.79     $ 6.80     $ 4.46    
 Weighted average number of common shares outstanding — Diluted   27,910       27,655       28,125       28,494    
                                 
 Cash dividends declared per common share $ 0.40     $ 0.35     $ 0.80     $ 0.70    
   

 

SUMMARY CONSOLIDATED CASH FLOWS
(in thousands)
(unaudited)
 
   
  Three Months Ended
June 30,
  Six Months Ended
June 30,

 
  2024   2023   2024   2023  
 Cash flows from operating activities:                                
 Net income $ 109,664     $ 21,293     $ 191,316     $ 124,813    
 Non-cash adjustments   13,706       (28,279 )     22,165       (32,283 )  
 Working capital changes   (172,280 )     (38,454 )     (211,618 )     (165,822 )  
 Net cash provided by (used in) operating activities   (48,910 )     (45,440 )     1,863       (73,292 )  
 Cash flows from investing activities:                                
 Net sales (purchases) of short-term investments   94,286       (40,046 )     118,902       (46,028 )  
 Capitalized patent costs and purchases of property and equipment   (13,181 )     (13,036 )     (22,598 )     (21,517 )  
 Long-term investments   (382 )           1,194          
 Net cash provided by (used in) investing activities   80,723       (53,082 )     97,498       (67,545 )  
 Cash flows from financing activities:                                
 Payments on long-term debt   (137,479 )           (139,069 )        
 Repurchase of common stock   (34,802 )     (42,489 )     (63,670 )     (245,870 )  
 Dividends paid   (10,147 )     (9,449 )     (20,373 )     (19,833 )  
 Other   (1,580 )     (1,378 )     (10,215 )     (5,749 )  
 Net cash used in financing activities   (184,008 )     (53,316 )     (233,327 )     (271,452 )  
 Net decrease in cash, cash equivalents and restricted cash   (152,195 )     (151,838 )     (133,966 )     (412,289 )  
 Cash, cash equivalents and restricted cash, beginning of period   461,190       442,710       442,961       703,161    
 Cash, cash equivalents and restricted cash, end of period $ 308,995     $ 290,872     $ 308,995     $ 290,872    
   

 

SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
  JUNE 30, 2024   DECEMBER 31,
2023

 
 Assets            
 Cash, cash equivalents and short-term investments $ 760,343   $ 1,006,356  
 Accounts receivable   223,640     117,292  
 Prepaid and other current assets   73,135     43,976  
 Property & equipment and patents, net   313,634     324,567  
 Other long-term assets, net   265,543     278,623  
 Total assets $ 1,636,295   $ 1,770,814  
 Liabilities and Shareholders' equity            
 Current portion of long-term debt $ 453,766   $ 578,752  
 Current deferred revenue   156,792     153,597  
 Other current liabilities   88,789     148,779  
 Long-term deferred revenue   166,263     223,866  
 Long-term debt & other long-term liabilities   73,908     84,271  
 Total liabilities   939,518     1,189,265  
 Total shareholders' equity   696,777     581,549  
 Total liabilities and shareholders' equity $ 1,636,295   $ 1,770,814  
   

 

RECONCILIATION OF NON-GAAP MEASURES  
   

The following tables present InterDigital's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the second quarter and year-to-date periods ended June 30, 2024 and 2023:

  Three Months Ended
June 30,
(in thousands)
  Six Months Ended
June 30,
(in thousands)

 
  2024   2023   2024   2023  
 Net income attributable to InterDigital, Inc. $ 109,664     $ 21,783     $ 191,316     $ 127,042    
 Net loss attributable to non-controlling interest         (490 )           (2,229 )  
 Income tax provision   24,441       4,329       43,852       21,174    
 Other income, net & interest expense   (199 )     (2,246 )     2,476       (3,350 )  
 Depreciation and amortization   17,376       19,645       34,616       39,171    
 Share-based compensation   9,655       8,740       19,041       16,530    
 Other items (a)   (3,200 )     1,800       (3,200 )     10,037    
 Adjusted EBITDA 2 $ 157,737     $ 53,561     $ 288,101     $ 208,375    
   

 

  Three Months Ended
June 30,
(in thousands, except
for per share data)
  Six Months Ended
June 30,
(in thousands, except
for per share data)

 
  2024   2023   2024   2023  
 Net income attributable to InterDigital, Inc. $ 109,664     $ 21,783     $ 191,316     $ 127,042    
Share-based compensation   9,655       8,740       19,041       16,530    
Acquisition related amortization   8,324       10,262       16,745       20,530    
Other operating items (a)   (3,200 )     1,800       (3,200 )     10,037    
Other non-operating items (b)   (2,200 )     (3,100 )     (1,526 )     (3,258 )  
Related income tax and noncontrolling interest
effect of above items
  (2,642 )     (3,717 )     (6,523 )     (10,456 )  
Adjustments to income taxes   (701 )     (136 )     (2,409 )     (1,178 )  
 Non-GAAP net income 3 $ 118,900     $ 35,632     $ 213,444     $ 159,247    
                                 
 Weighted average dilutive shares - GAAP   27,910       27,655       28,125       28,494    
Less: Dilutive impact of the Convertible Notes   1,871       255       1,906       128    
 Weighted average dilutive shares - Non-GAAP 3   26,039       27,400       26,219       28,366    
                                 
 Diluted EPS 1 $ 3.93     $ 0.79     $ 6.80     $ 4.46    
 Non-GAAP EPS 3 $ 4.57     $ 1.30     $ 8.14     $ 5.61    
   
(a)    Other items in the above tables include a one-time contra-expense of $3.2 million related to a litigation fee reimbursement during the three and six months ended June 30, 2024. The three and six months ended June 30, 2023 includes $1.8 million and $7.5 million, respectively, of one-time charges for net litigation fee reimbursements and the six months ended June 30, 2023 also includes a $2.5 million one-time impairment on our patents held for sale.  
(b)    Other non-operating items includes net (gains) or losses from observable price changes of our long-term strategic investments.  
   

The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial measures for the third quarter of fiscal 2024 and full year fiscal 2024 included in this release:

  Outlook
(in millions)

 
      Full Year 2024
 
  Q3 2024   Current   Prior
 
 Net income attributable to InterDigital, Inc. $6 - $9     $205 - $238     $140 - $175    
Income tax provision 2     55-60     40 - 50    
Other income, net & interest expense 2     7     5 - 15    
Depreciation and amortization 18     73     73    
Share-based compensation 9     42     42    
Other items (a) (1 )   (4 )      
 Adjusted EBITDA 2 $36 - $39     $378 - $416     $310 - $345    
 

 

  Outlook
(in millions, except for per share data)

 
      Full Year
 
  Q3 2024   Current   Prior
 
 Net income attributable to InterDigital, Inc. $6 - $9     $205 - $238     $140 - $175    
 Share-based compensation 9     42     42    
 Acquisition related amortization 8     33     33    
 Other operating items (a) (1 )   (4 )      
 Other non-operating items (b)     (2 )      
 Related income tax and noncontrolling interest
 effect of above items
(3 )   (14 )   (16 )  
 Adjustments to income taxes     (2 )      
 Non-GAAP net income 3 $19 - $22     $258 - $291     $199 - $234    
                   
 Weighted average dilutive shares - GAAP 28.9     28.6     28.3    
 Less: Dilutive impact of the Convertible Notes 2.1     2.0     1.6    
 Weighted average dilutive shares - Non-GAAP 3 26.8     26.6     26.7    
                   
 Diluted EPS 1 $0.20 - $0.30     $7.17 - $8.32     $4.95 - $6.15    
 Non-GAAP EPS 3 $0.70 - $0.80     $9.70 - $10.95     $7.45 - $8.76    
 
(a)    Other items in the above tables includes contra-expenses related to a litigation fee reimbursement.  
(b)    Other non-operating items includes net (gains) or losses from observable price changes of our long-term strategic investments.  
 

 

CONTACT: InterDigital, Inc.
  Email: investor.relations@interdigital.com
  +1 (302) 300-1857


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Source: InterDigital, Inc.