New license agreements drive 30% increase in YoY revenue and record quarter for Consumer Electronics
Company reaffirms full year 2024 guidance
WILMINGTON, Del., May 02, 2024 (GLOBE NEWSWIRE) -- InterDigital, Inc. (Nasdaq: IDCC), a mobile, video, and AI technology research and development company, today announced results for the quarter ended March 31, 2024.
"InterDigital made significant progress in first quarter towards our 2024 revenue guidance of $620 million to $670 million,” commented Liren Chen, President and CEO, InterDigital. “Revenue was $264 million for the quarter, one of the highest quarters in our history, and included an all-time high for our CE and IoT licensing program. With our landmark consumer electronics agreement with Samsung, we signed agreements with a cumulative value of almost $2.7 billion over the last three years, giving us an incredibly strong base from which to drive additional growth opportunities.”
First Quarter 2024 Financial Highlights, as compared to First Quarter 2023:
| Three Months Ended
March 31, | |||||
| (in millions, except per share data) | 2024 | 2023 | Change | ||
| GAAP Results: | |||||
| Revenues | $263.5 | $202.4 | 30% | ||
| Operating Expenses (a) | $159.8 | $83.1 | 92% | ||
| Net income 1 | $81.7 | $105.3 | (22)% | ||
| Net income 1 margin | 31% | 52% | (21) ppt | ||
| Diluted EPS 1 | $2.88 | $3.58 | (20)% | ||
| Non-GAAP Results: | |||||
| Adjusted EBITDA 2 | $130.4 | $154.8 | (16)% | ||
| Adjusted EBITDA margin 2 | 49% | 76% | (27) ppt | ||
| Non-GAAP Net income 3 | $94.5 | $123.6 | (24)% | ||
| Non-GAAP EPS 3 | $3.58 | $4.21 | (15)% | ||
| Additional Information: | |||||
| Revenue by type: | |||||
| Recurring revenues | $96.9 | $101.6 | (5)% | ||
| Catch-up revenues | $166.7 | $100.8 | 65% | ||
| Revenue by program: | |||||
| Smartphone | $80.3 | $186.2 | (57)% | ||
| CE, IoT/Auto | $182.5 | $16.1 | 1,035% | ||
| Other | $0.7 | $0.1 | 1,184% | ||
| (a) Includes revenue share costs of $69.0 million and $1.1 million in first quarter 2024 and 2023, respectively. | |||||
Return of Capital to Shareholders
| (in millions, except per share data)
| Share Repurchases | Dividends Declared | Total Return
of Capital | ||||||||||
| Shares | Value | Per Share | Value | ||||||||||
| First quarter 2024 | 0.3 | $29.0 | $0.40 | $10.2 | $39.2 | ||||||||
Near Term Outlook
The Company has reaffirmed its full year 2024 outlook and provided an initial outlook for second quarter 2024 in the table below. The outlook for second quarter 2024 is based on existing licenses only, and any new agreements that might be reached over the balance of the second 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.
| (in millions, except per share data) | Q2 2024 | Full Year 2024 | |
| Revenue | $93 - $97 | $620 - $670 | |
| Adjusted EBITDA 2(a) | $35.5 - $38.0 | $310 - $345 | |
| Diluted EPS 1(a) | $0.20 - $0.30 | $4.95 - $6.15 | |
| Non-GAAP EPS 3(a) | $0.70 - $0.80 | $7.45 - $8.76 | |
| (a) Includes revenue share costs of $3 million for Q2 2024 and $80 million to $90 million for full year 2024. | |||
Conference Call Information
InterDigital will host a conference call on Thursday, May 2, 2024 at 10:00 a.m. ET to discuss its first 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 first 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 and identify and acquire technology and patent portfolios that align with our roadmap; (vii) our ability to commercialize our technologies and enter into customer agreements; (viii) the failure of the markets for our current or new technologies to materialize to the extent or at the rate that we expect; (ix) 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; (x) risks associated with our capital allocation strategies, including risks associated with our planned dividend payments and share repurchases; (xi) 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; (xii) risks related to the potential impact of new accounting standards on our financial position, results of operations or cash flows; (xiii) failure to accurately forecast the impact of our restructuring activities on our financial statements and our business; (xiv) the timing and impact of potential administrative and legislative matters; (xv) changes or inaccuracies in market projections; (xvi) our ability to obtain liquidity though debt and equity financings; (xvii) the potential effects that macroeconomic uncertainty could have on our financial position, results of operations and cash flows; (xviii) impacts from acts of terrorism, war or political or civil unrest, or any responses thereto, in the United States or elsewhere; (xix) changes in our business strategy; (xx) changes or inaccuracies in our expectations with respect to royalty payments by our customers and (xxi) 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) | |||||||
| For the Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| Revenues | $ | 263,542 | $ | 202,373 | |||
| Operating expenses: | |||||||
| Research and portfolio development | 49,375 | 49,429 | |||||
| Licensing | 96,589 | 21,368 | |||||
| General and administrative | 13,840 | 12,315 | |||||
| Total operating expenses | 159,804 | 83,112 | |||||
| Income from operations | 103,738 | 119,261 | |||||
| Interest expense | (11,922 | ) | (12,087 | ) | |||
| Other income, net | 9,247 | 13,191 | |||||
| Income before income taxes | 101,063 | 120,365 | |||||
| Income tax provision | (19,411 | ) | (16,845 | ) | |||
| Net income | $ | 81,652 | $ | 103,520 | |||
| Net loss attributable to noncontrolling interest | — | (1,739 | ) | ||||
| Net income attributable to InterDigital Inc. | $ | 81,652 | $ | 105,259 | |||
| Net income per common share — Basic | $ | 3.20 | $ | 3.66 | |||
| Weighted average number of common shares outstanding — Basic | 25,510 | 28,780 | |||||
| Net income per common share — Diluted | $ | 2.88 | $ | 3.58 | |||
| Weighted average number of common shares outstanding — Diluted | 28,341 | 29,372 | |||||
| Cash dividends declared per common share | $ | 0.40 | $ | 0.35 | |||
| SUMMARY CONSOLIDATED CASH FLOWS
(in thousands) (unaudited) | |||||||
| For the Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 81,652 | $ | 103,520 | |||
| Non-cash adjustments | 8,459 | (4,004 | ) | ||||
| Working capital changes | (39,338 | ) | (127,368 | ) | |||
| Net cash provided by (used in) operating activities | 50,773
| (27,852 | ) | ||||
| Cash flows from investing activities: | |||||||
| Net sales (purchases) of short-term investments | 24,616
| (5,982 | ) | ||||
| Capitalized patent costs and purchases of property and equipment | (9,417 | ) | (8,481 | ) | |||
| Long-term investments | 1,576 | — | |||||
| Net cash provided by (used in) investing activities | 16,775
| (14,463 | ) | ||||
| Cash flows from financing activities: | |||||||
| Repurchase of common stock | (28,868 | ) | (203,381 | ) | |||
| Dividends paid | (10,226 | ) | (10,384 | ) | |||
| Other | (10,225 | ) | (4,371 | ) | |||
| Net cash used in financing activities | (49,319 | ) | (218,136 | ) | |||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 18,229 | (260,451 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 442,961 | 703,161 | |||||
| Cash, cash equivalents and restricted cash, end of period | $ | 461,190 | $ | 442,710 | |||
| SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited) | |||||
| MARCH 31, 2024 | DECEMBER 31, 2023 | ||||
| Assets | |||||
| Cash, cash equivalents and short-term investments | $ | 984,635 | $ | 1,006,356 | |
| Accounts receivable | 145,629 | 117,292 | |||
| Prepaid and other current assets | 85,172 | 43,976 | |||
| Property & equipment and patents, net | 318,216 | 324,567 | |||
| Other long-term assets, net | 273,369 | 278,623 | |||
| Total assets | $ | 1,807,021 | $ | 1,770,814 | |
| Liabilities and Shareholders' equity | |||||
| Current portion of long-term debt | $ | 579,369 | $ | 578,752 | |
| Current deferred revenue | 155,966 | 153,597 | |||
| Other current liabilities | 168,484 | 148,779 | |||
| Long-term deferred revenue | 193,955 | 223,866 | |||
| Long-term debt & other long-term liabilities | 84,956 | 84,271 | |||
| Total liabilities | 1,182,730 | 1,189,265 | |||
| Total shareholders' equity | 624,291 | 581,549 | |||
| Total liabilities and shareholders' equity | $ | 1,807,021 | $ | 1,770,814 | |
| RECONCILIATION OF NON-GAAP MEASURES | ||||||||||
| The table below presents a reconciliation of Adjusted EBITDA to net income attributable to InterDigital, Inc., the most directly comparable GAAP financial measure: | ||||||||||
| For the Three Months Ended March 31, | Outlook | |||||||||
| (in thousands) | (in millions) | |||||||||
| 2024 | 2023 | Q2 2024 | Full Year 2024 | |||||||
| Net income attributable to InterDigital, Inc. | $ | 81,652 | $ | 105,259 | $5.5 - $8.0 | $140 - $175 | ||||
| Net loss attributable to non-controlling interest | — | (1,739 | ) | — | — | |||||
| Income tax provision | 19,411 | 16,845 | 1.5 | 40 - 50 | ||||||
| Other income (expense) & interest expense | 2,675 | (1,104 | ) | 0.5 | 5 - 15 | |||||
| Depreciation and amortization | 17,240 | 19,526 | 18.0 | 73 | ||||||
| Share-based compensation | 9,386 | 7,790 | 10.0 | 42 | ||||||
| Other items (a) | — | 8,237 | — | — | ||||||
| Adjusted EBITDA 2 | $ | 130,364 | $ | 154,814 | $35.5 - $38.0 | $310 - $345 | ||||
| (a) Other items in the above table includes a $5.7 million one-time charge for a net litigation fee reimbursement and a $2.5 million one-time impairment on our patents held for sale during the three months ended March 31, 2023. | ||||||||||
The table below presents a reconciliation of Non-GAAP net income to net income attributable to InterDigital, Inc., the most directly comparable GAAP financial measure:
| For the Three Months Ended March 31, | Outlook | ||||||||||
| (in thousands, except for per share data) | (in millions, except for per share data) | ||||||||||
| 2024 | 2023 | Q2 2024 | Full Year 2024 | ||||||||
| Net income attributable to InterDigital, Inc. | $ | 81,652 | $ | 105,259 | $5.5 - $8.0 | $140 - $175 | |||||
| Share-based compensation | 9,386 | 7,790 | 10.0 | 42 | |||||||
| Acquisition related amortization | 8,421 | 10,268 | 8.0 | 33 | |||||||
| Other operating items (a) | — | 8,237 | — | — | |||||||
| Other non-operating items (b) | 674 | (158 | ) | (1.0) | — | ||||||
| Related income tax and noncontrolling interest effect of above items | (3,881 | ) | (6,739 | ) | (4.0) | (16) | |||||
| Adjustments to income taxes | (1,708 | ) | (1,042 | ) | — | — | |||||
| Non-GAAP net income 3 | $ | 94,544 | $ | 123,615 | $18.5 - $21.0 | $199 - $234 | |||||
| Weighted average dilutive shares - GAAP | 28,341 | 29,372 | 27.8 | 28.3 | |||||||
| Less: Dilutive impact of the Convertible Notes | 1,942 | — | 1.5 | 1.6 | |||||||
| Weighted average dilutive shares - Non-GAAP 3 | 26,399 | 29,372 | 26.3 | 26.7 | |||||||
| Non-GAAP EPS 3 | $ | 3.58 | $ | 4.21 | $0.70 - $0.80 | $7.45 - $8.76 | |||||
| (a) Other items in the above table includes a $5.7 million one-time charge for a net litigation fee reimbursement and a $2.5 million one-time impairment on our patents held for sale during the three months ended March 31, 2023.
(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 |
