• InterDigital Reports Fourth Quarter and Full Year 2023 Financial Results

    Source: Nasdaq GlobeNewswire / 15 Feb 2024 08:30:36   America/New_York

    Revenue growth of 20%, significant margin expansion and record return of capital highlight 2023 results

    Full year 2024 revenue expected in a range of $620 million to $670 million

    WILMINGTON, Del., Feb. 15, 2024 (GLOBE NEWSWIRE) -- InterDigital, Inc. (Nasdaq: IDCC), a mobile, video, and AI technology research and development company, today announced results for the fourth quarter and full year ended December 31, 2023.

    “InterDigital delivered significant growth in 2023, driven by accelerating innovation and licensing momentum,” commented Liren Chen, President and CEO, InterDigital. “Revenue increased 20%, profit margins expanded significantly, and we returned a record amount of capital to shareholders. Our momentum has continued into 2024 with our recently announced landmark agreement that licenses Samsung TVs to our video IP. Based on the strength of contracted revenue and the potential for new agreements, we are guiding to another year of strong growth, with FY24 revenue expected in a range of $620 million to $670 million."

    Fourth Quarter and Full Year 2023 Results

     Three Months Ended
    December 31,
     Twelve Months Ended
    December 31,
    (in millions, except per share data)2023 2022 Change 2023 2022 Change
    GAAP Results:           
    Revenues$105.5 $117.1 (10)% $549.6 $457.8 20%
    Operating Expenses$80.2 $78.5 2% $328.0 $307.3 7%
    Net income1$39.1 $32.4 21% $214.1 $93.7 128%
    Net income1margin37% 28% 9 ppt 39% 20% 19 ppt
    Diluted earnings per share1$1.41 $1.08 31% $7.62 $3.07 148%
                
    Non-GAAP Results:           
    Adjusted EBITDA2$53.3 $64.9 (18)% $345.2 $254.5 36%
    Adjusted EBITDA margin251% 55% (4) ppt 63% 56% 7 ppt
    Non-GAAP Net income3$37.5 $48.6 (23)% $254.4 $154.8 64%
    Non-GAAP diluted earnings per share3$1.41 $1.62 (13)% $9.23 $5.08 82%
                
    Additional Information:           
    Revenue by type:           
    Recurring revenues$103.3 $103.6 —% $408.4 $403.9 1%
    Catch-up revenues$2.2 $13.5 (83)% $141.2 $53.9 162%
    Revenue by program:           
    Smartphone$88.1 $88.7 (1)% $467.3 $353.2 32%
    CE, IoT/Auto$17.1 $28.2 (39)% $80.9 $103.5 (22)%
    Other$0.3 $0.2 76% $1.4 $1.1 27%


    Return of Capital to Shareholders

    (in millions, except per share data)

    Share Repurchases Dividends Declared Total Return
    of Capital
    Shares Value Per Share Value 
    Fourth quarter 20230.5 $37.0 $0.40 $10.2 $47.2
    Fiscal year 20234.4 $339.7 $1.50 $39.3 $379.0


    Near-Term Outlook

    The table below presents guidance of the Company's current outlook for first quarter and full year 2024. The outlook for first quarter 2024 covers existing licenses and does not include any new agreements we may sign over the balance of the first quarter.   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)Q1 2024 Full Year 2024
    Revenue$245 - $255 $620 - $670
    Adjusted EBITDA2(a)$116 - $131 $310 - $345
    Diluted earnings per share1(a)(b)$2.40 - $2.95 $4.95 - $6.15
    Non-GAAP diluted earnings per share3(a)(c)$3.02 - $3.58 $7.45 - $8.76

    (a) Includes revenue share costs of $66 million to $69 million for Q1 2024 and $80 million to $90 million in the outlook for full year 2024.
    (b) Based on 28.3 million weighted-average diluted shares as of January 31, 2024 and does not factor in any additional repurchases that may occur during the remainder of either period.
    (c) Based on 26.5 million and 26.7 million weighted-average diluted shares for Q1 2024 and full year 2024, respectively.

    Conference Call Information

    InterDigital will host a conference call on Thursday, February 15, 2024 at 10:00 a.m. ET to discuss its fourth quarter and full year 2023 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 Annual Report on Form 10-K for the year ended December 31, 2023 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 diluted earnings per share, 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 diluted earnings per share 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.



    CONSOLIDATED STATEMENTS OF INCOME
    (in thousands except per share data)
    (unaudited)
     Three Months Ended
    December 31,
     Twelve Months Ended
    December 31,
      2023   2022   2023   2022 
    REVENUES$105,518  $117,055  $549,588  $457,794 
    OPERATING EXPENSES:       
    Research and portfolio development 45,725   45,732   195,285   185,202 
    Licensing 19,863   20,170   79,397   71,419 
    General and administrative 14,605   12,559   53,291   47,377 
    Restructuring activities          3,280 
    Total Operating expenses 80,193   78,461   327,973   307,278 
            
    Income from operations 25,325   38,594   221,615   150,516 
            
    INTEREST EXPENSE (7,906)  (10,050)  (44,817)  (29,496)
    OTHER INCOME (EXPENSE), NET 15,509   11,652   57,812   (3,457)
    Income before income taxes 32,928   40,196   234,610   117,563 
    INCOME TAX BENEFIT (PROVISION) 6,158   (8,190)  (23,557)  (25,502)
    NET INCOME$39,086  $32,006  $211,053  $92,061 
    Net loss attributable to noncontrolling interest    (402)  (3,016)  (1,632)
    NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.$39,086  $32,408  $214,069  $93,693 
    NET INCOME PER COMMON SHARE — BASIC$1.52  $1.09  $7.97  $3.11 
    WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC 25,676   29,664   26,860   30,106 
    NET INCOME PER COMMON SHARE — DILUTED$1.41  $1.08  $7.62  $3.07 
    WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED 27,640   30,031   28,102   30,485 
    CASH DIVIDENDS DECLARED PER COMMON SHARE$0.40  $0.35  $1.50  $1.40 


    SUMMARY CONSOLIDATED CASH FLOWS
    (in thousands)
    (unaudited)
     Three Months Ended
    December 31,
     Twelve Months Ended
    December 31,
      2023   2022   2023   2022 
    CASH FLOWS FROM OPERATING ACTIVITIES:       
    Net income$39,086  $32,006  $211,053  $92,061 
    Non-cash adjustments (63,835)  (28,238)  3,876   221,567 
    Working capital changes 1,164   352,740   (1,196)  (27,589)
    Net cash (used in) provided by operating activities (23,585)  356,508   213,733   286,039 
    CASH FLOWS FROM INVESTING ACTIVITIES:       
    Net sales (purchases) of short-term investments 5,039   (179,893)  (38,667)  (271,953)
    Capitalized patent costs and purchases of property and equipment (13,467)  (11,614)  (44,626)  (42,753)
    Long-term investments (2,444)     (1,877)   
    Net cash used in investing activities (10,872)  (191,507)  (85,170)  (314,706)
    CASH FLOWS FROM FINANCING ACTIVITIES:       
    Net proceeds from debt refinancing    (307)  (100)  138,886 
    Repurchase of common stock (36,976)     (339,704)  (74,445)
    Dividends paid (10,348)  (10,382)  (39,454)  (42,306)
    Other (970)  (136)  (9,505)  (3,531)
    Net cash (used in) provided by financing activities (48,294)  (10,825)  (388,763)  18,604 
    NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (82,751)  154,176   (260,200)  (10,063)
    CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD 525,712   548,985   703,161   713,224 
    CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD$442,961  $703,161  $442,961  $703,161 



    SUMMARY CONSOLIDATED BALANCE SHEETS

    (in thousands)
    (unaudited)
     December 31,
    2023
     December 31,
    2022
    ASSETS   
    Cash, cash equivalents and short-term investments$1,006,356 $1,201,777
    Accounts receivable 117,292  53,182
    Prepaid and other current assets 43,976  89,716
    Property & equipment and patents, net 324,567  365,337
    Other long-term assets, net 278,623  190,093
    TOTAL ASSETS$1,770,814 $1,900,105
    LIABILITIES AND SHAREHOLDERS’ EQUITY   
    Current portion of long-term debt$578,752 $
    Accounts payable, accrued liabilities, taxes payable & dividends payable 148,779  82,287
    Current deferred revenue 153,597  189,059
    Long-term deferred revenue 223,866  237,580
    Long-term debt & other long-term liabilities 84,271  660,666
    TOTAL LIABILITIES 1,189,265  1,169,592
        
    TOTAL INTERDIGITAL, INC. SHAREHOLDERS' EQUITY 581,549  724,895
    Noncontrolling interest   5,618
    TOTAL EQUITY 581,549  730,513
        
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,770,814 $1,900,105


    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 (in thousands, except Outlook):

     Three Months Ended
    December 31,
     Twelve Months Ended
    December 31,
     Outlook
    (in millions)
      2023   2022   2023   2022  Q1 2024 Full Year 2024
    Net income attributable to InterDigital, Inc.$39,086  $32,408  $214,069  $93,693  $68 - $83 $140 - $175
    Net loss attributable to non-controlling interest    (402)  (3,016)  (1,632)  
    Income tax provision (6,158)  8,190   23,557   25,502  22 40 - 50
    Other income (expense), net & interest expense (7,603)  (1,602)  (12,995)  32,953  1 5 - 15
    Depreciation and amortization 19,094   19,422   77,792   78,571  18 73
    Share-based compensation 8,876   6,918   35,741   22,127  7 42
    Other items(a)       10,037   3,280   
    Adjusted EBITDA2$53,295  $64,934  $345,185  $254,494  $116 - $131 $310 - $345

    (a) Other items in the above table includes a $7.5 million net litigation fee reimbursement and a $2.5 million impairment on the sale by our joint venture, Convida Wireless ("Convida") of a portion of its patent portfolio during year ended December 31, 2023 and $3.3 million of restructuring costs during the year ended December 31, 2022.

    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 (in thousands, except Outlook):

     Three Months Ended
    December 31,
     Twelve Months Ended
    December 31,
     Outlook (in millions)
      2023   2022   2023   2022  Q1 2024 Full Year 2024
    Net income attributable to InterDigital, Inc.$39,086  $32,408  $214,069  $93,693  $68 - $83 $140 - $175
    Share-based compensation 8,876   6,918   35,741   22,127  7  42 
    Acquisition related amortization 10,145   10,788   40,937   42,506  8  33 
    Other operating items(a)       10,037   3,280     
    Other non-operating items(b) (4,745)  2,939   (14,115)  12,529     
    Related income tax and noncontrolling interest effect of above items (2,998)  (4,335)  (16,496)  (16,892) (3) (16)
    Adjustments to income taxes (12,892)  (124)  (15,776)  (2,407)    
    Non-GAAP net income3$37,472  $48,594  $254,397  $154,836  $80 - $95 $199 - $234
                
    Weighted average dilutive shares - GAAP 27,640   30,031   28,102   30,485  28.3  28.3 
    Less: Dilutive impact of the Convertible Notes 1,154      538     1.8  1.6 
    Weighted average dilutive shares - Non-GAAP3 26,486   30,031   27,564   30,485  26.5  26.7 
                
    Non-GAAP diluted earnings per share3$1.41  $1.62  $9.23  $5.08  $3.02 - $3.58 $7.45 - $8.76

    (a) Other items in the above table includes a $7.5 million net litigation fee reimbursement and a $2.5 million impairment on the sale by our joint venture, Convida of a portion of its patent portfolio during year ended December 31, 2023 and $3.3 million of restructuring costs during the year ended December 31, 2022.

    (b) Other non-operating items includes $1.0 million and $10.4 million of gains during the three and twelve months ended December 31, 2023 and losses of $2.9 million and $1.3 million during the periods ended three and twelve months ended December 31, 2022, respectively, from fair value changes of our long-term strategic investments. Other non-operating items for the three and twelve months ended December 31, 2023 also includes a $4.0 million gain related to a revaluation of our long-term debt recognized in conjunction with our acquisition of the patent licensing business of Technicolor SA and a $0.3 million loss on the deconsolidation of Convida. Other non-operating items for the twelve months ended December 31, 2022 also includes a $11.2 million loss on extinguishment of long-term debt.

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

     


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