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InterDigital (IDCC)
NASDAQ:IDCC
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InterDigital
(NASDAQ:IDCC)
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Rating:69Neutral
Price Target:
$338.00
▲(7.69% Upside)
Score is supported by strong financial performance (high margins and strong free cash flow growth) and a constructive earnings-call backdrop (ARR/revenue growth and meaningful arbitration/licensing wins). This is tempered by weak near-term technicals (price below key moving averages with bearish momentum indicators) and only moderate valuation support (P/E 22.653 with a low 0.76% yield).
Positive Factors
High and sustainable margins from licensing
InterDigital’s licensing-focused business yields very high gross and operating margins, reflecting low marginal costs and strong pricing power from standard-essential patents. Such structural margins support durable profitability and reinvestment into R&D over multiple years.
Strong free cash flow generation
Robust FCF growth and strong conversion of earnings to cash underpin financial flexibility, enabling dividend increases, buybacks, strategic M&A like Deep Render, and sustained R&D spending without heavy external financing.
Growing recurring revenue and major arbitration win
Rapid ARR expansion and the multi-year Samsung arbitration provide recurring, contractually-backed revenue visibility. A widening licensed base and landmark settlements enhance cash flow predictability and reinforce InterDigital’s role as a key IP monetizer in wireless/video tech.
Negative Factors
Ongoing multi-jurisdictional litigation (Disney)
Sustained litigation creates legal expense, enforcement uncertainty and potential disruptions to licensing cash flows. Multi-jurisdictional suits can delay revenue recognition, risk injunction-driven product removals, and require management focus away from commercial growth.
Enforcement difficulties with large platform (Tencent)
Failure to secure voluntary licensing from a major platform signals enforcement complexity in key markets. Protracted disputes with a large customer can constrain revenue upside in those regions and limit the company’s ability to monetize core patents efficiently.
Revenue lumpiness from reliance on arbitrations and settlements
While large arbitration outcomes boost near-term revenue, dependence on episodic adjudications and negotiated settlements makes cash flows lumpy and timing uncertain. This dependence increases forecasting risk and ties growth to legal/negotiation outcomes rather than purely commercial adoption.
InterDigital (IDCC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.08B
Dividend Yield0.66%
Average Volume (3M)227.16K
Price to Earnings (P/E)21.8
Beta (1Y)0.66
Revenue Growth28.75%
EPS Growth85.06%
CountryUS
Employees430
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.20
Shares Outstanding25,744,553
10 Day Avg. Volume255,171
30 Day Avg. Volume227,163
Financial Highlights & Ratios
PEG Ratio0.18
Price to Book (P/B)5.72
Price to Sales (P/S)5.65
P/FCF Ratio18.47
Enterprise Value/Market Cap0.96
Enterprise Value/Revenue8.32
Enterprise Value/Gross Profit9.23
Enterprise Value/Ebitda11.23
Forecast
1Y Price Target
$425.00Price Target Upside35.41% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
InterDigital Business Overview & Revenue Model
Company DescriptionInterDigital, Inc., together with its subsidiaries, designs and develops technologies that enable and enhance wireless communications in the United States, China, South Korea, Japan, Taiwan, and Europe. It provides technology solutions for use in digital cellular and wireless products and networks, including 2G, 3G, 4G, 5G, and IEEE 802-related products and networks. The company develops cellular technologies, such as technologies related to CDMA, TDMA, OFDM/OFDMA, and MIMO for use in 2G, 3G, 4G, and 5G wireless networks, as well as mobile terminal devices; and 3GPP technology portfolio in 5G NR, beyond 5G (B5G), extended reality over wireless, and cellular Internet of Things (IoT) areas, as well as technologies for automobiles, wearables, smart homes, drones, and other connected consumer electronic products. It also provides video coding and transmission technologies; and engages in the research and development of artificial intelligence. The company's patented technologies are used in various products that include cellular phones, tablets, notebook computers, and wireless personal digital assistants; wireless infrastructure equipment, which comprise base stations; components, dongles, and modules for wireless devices; and IoT devices and software platforms. As of December 31, 2021, it had a portfolio of approximately 27,500 patents and patent applications related to wireless communications, video coding, display technology, and other areas. InterDigital, Inc. was incorporated in 1972 and is headquartered in Wilmington, Delaware.
How the Company Makes MoneyInterDigital generates revenue primarily through the licensing of its extensive portfolio of patents and intellectual property related to wireless communication technologies. This includes licensing agreements with major mobile device manufacturers, network operators, and technology firms who utilize InterDigital's innovations in their products and services. The company also earns revenue from research and development contracts, collaborations with industry partners, and the sale of technology solutions that support the deployment and optimization of wireless networks. Strategic partnerships with key players in the telecommunications industry further enhance InterDigital's earning potential by facilitating the adoption of its technologies across diverse applications.
InterDigital Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q4-2025)
| Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational and financial momentum highlighted by record 2025 financials, substantial ARR growth (+24% YoY), expanded licensing across smartphones and CE, a growing high-quality patent portfolio (+14% YoY), and strategic AI capabilities (DeepRender acquisition). However, the company faces near-term headwinds from expirations that temporarily reduced ARR, elevated litigation costs and ongoing multi-jurisdictional enforcement risks, and a 2026 guidance range that is below 2025 results absent additional new deals or arbitration outcomes. On balance, the positives around record performance, recurring revenue growth, robust cash generation, and a deep pipeline and IP position outweigh the short-term risks tied to timing of renewals, litigation costs, and conservative near-term guidance.Q4-2025 Updates
Positive Updates
Record Full-Year Financials
Full-year 2025 revenue of $834 million (second-highest in company history); adjusted EBITDA of $589 million (record high); non-GAAP EPS of $15.31 (record high). Over four years (2021–2025) revenue roughly doubled, adjusted EBITDA nearly tripled, and non-GAAP EPS increased more than fourfold.
Strong Q4 Outperformance vs Outlook
Q4 2025 revenue of $158 million exceeded the high end of outlook ($144–$148M) and included $13 million of catch-up revenue. Q4 adjusted EBITDA was $88 million (vs outlook $68–$76M) with a 56% adjusted EBITDA margin. Q4 GAAP EPS $1.20 and non-GAAP EPS $2.12 both exceeded guidance ranges.
Annualized Recurring Revenue (ARR) Growth
ARR increased to $582 million, up 24% year over year, demonstrating growth in recurring licensing streams and momentum entering 2026.
Smartphone Licensing Momentum
Smartphone revenue reached an all-time high just below $680 million, up 14% year over year. Company licensed 8 of the top 10 smartphone manufacturers covering ~85% of the market and completed a long-term Samsung license extended to 2030; Xiaomi was renewed at the start of 2026.
Expanding CE/IoT and Video Licensing Footprint
Signed new CE/PC licenses including HP and LG, a CE device license with a significant social media company, and continued progress on video service licensing targeting major streaming platforms. Since 2021, over 50 license agreements signed with total contract value exceeding $4.6 billion.
IP Portfolio and R&D Strength
Patent portfolio grew ~14% year over year, surpassing 38,000 granted patents and applications. Acquisition of AI startup DeepRender (Q4) and leadership roles in standards (including 3GPP working group chair reelection) bolster AI, video, and 6G research capability.
Solid Cash Generation
Q4 cash from operations of $63 million and free cash flow of $48 million, supporting investment in R&D, M&A, and enforcement actions.
Recognition and Industry Awards
Multiple third-party recognitions in 2025 and early 2026 (Newsweek, Fortune, Time) and named Forbes' top most successful mid-cap company in America for 2026, highlighting long-term performance and market credibility.
Negative Updates
Guidance Below 2025 Levels
2026 full-year guidance of $675 million to $775 million revenue implies a decline from 2025's $834 million; guided non-GAAP EPS of $8.74 to $11.84 is below 2025's $15.31, indicating expected step-down absent new agreements/arbitration outcomes.
ARR Step-Down From Expirations
ARR experienced a step-down due to year-end expirations (~$92 million expired at end of 2025). Management has renewed about two-thirds of that amount so far but ARR has not fully recovered yet, creating short-term renewal risk.
Elevated and Increasing Litigation Costs
Litigation expense was elevated in the quarter (approximately $19 million noted) and management expects litigation costs to be higher in Q1 and broadly for 2026, which pressures operating expenses and margins absent offsetting revenue.
Ongoing Multi-Jurisdictional Enforcement Risks
Active enforcement campaigns against major streaming services (Disney, Hulu, ESPN+, Amazon) are multi-jurisdictional and lengthy. While early wins (preliminary injunctions in Brazil and Germany against Disney) are positive, major trials in larger jurisdictions (U.S., UPC) are pending and outcomes are uncertain.
Reliance on Catch-Up and Timing Uncertainty
Q1 2026 revenue guidance includes $55–$60 million of catch-up sales and management excluded potential new agreements/arbitration results from the quarterly guide due to timing uncertainty, reflecting reliance on timing-sensitive license/arbitration outcomes.
Streaming Licensing is Early-Stage and Time-Consuming
Management noted that licensing streaming platforms is a newer and slower cycle compared to longstanding smartphone relationships, meaning monetization of video/service IP may take longer and requires sustained enforcement/negotiation effort.
Company Guidance
Management guided 2026 total revenue of $675–$775 million, adjusted EBITDA of $381–$477 million, and non‑GAAP diluted EPS of $8.74–$11.84; for Q1 2026 they expect $194–$200 million of revenue from existing contracts (including $55–$60 million of catch‑up), a 52%–55% adjusted EBITDA margin on those contracts, and non‑GAAP diluted EPS of $2.39–$2.68. Management noted Q1 guidance excludes impacts from any new agreements or arbitration results (while the full‑year guide does include potential contributions from such outcomes), said roughly two‑thirds of the ~$92 million of ARR expirations at year‑end 2025 have been renewed, flagged higher litigation and R&D investment costs factored into the 2026 outlook, and reiterated the ARR growth trajectory toward $1 billion by 2030 from the current ARR of $582 million.InterDigital Financial Statement Overview
Summary
Strong profitability and efficiency (TTM gross margin 90.18%, net margin 53.50%, EBIT margin 66.02%, EBITDA margin 74.12%) and strong cash generation (TTM free cash flow growth 102.57%, FCF-to-net income 0.94). Balance sheet is solid with manageable leverage (debt-to-equity 0.44) and strong ROE (49.92%).Income Statement
InterDigital's income statement shows strong profitability with a high gross profit margin of 90.18% and a net profit margin of 53.50% in TTM (Trailing-Twelve-Months). The company has demonstrated consistent revenue growth, with a 4.03% increase in the latest period. EBIT and EBITDA margins are robust at 66.02% and 74.12%, respectively, indicating efficient operations. Overall, the income statement reflects a healthy financial performance with strong growth and profitability.85
Very Positive
Balance Sheet
The balance sheet of InterDigital is solid, with a debt-to-equity ratio of 0.44 in TTM, indicating manageable leverage. The return on equity is impressive at 49.92%, showcasing effective use of equity to generate profits. The equity ratio stands at 51.44%, reflecting a stable capital structure. While the company has reduced its debt levels over time, maintaining this trajectory will be crucial for sustained financial health.78
Positive
Cash Flow
InterDigital's cash flow statement is strong, with a significant free cash flow growth rate of 102.57% in TTM, highlighting excellent cash generation capabilities. The operating cash flow to net income ratio is 0.86, and the free cash flow to net income ratio is 0.94, indicating efficient conversion of income into cash. The company has shown consistent improvement in cash flow metrics, supporting its operational and financial stability.82
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 928.59M | 868.52M | 549.59M | 457.79M | 425.41M | 358.99M |
| Gross Profit | 837.36M | 699.28M | 470.19M | 386.38M | 360.78M | 188.81M |
| EBITDA | 688.25M | 544.75M | 357.22M | 225.63M | 160.97M | 153.13M |
| Net Income | 496.78M | 358.61M | 214.07M | 93.69M | 55.30M | 44.80M |
Balance Sheet | ||||||
| Total Assets | 2.14B | 1.84B | 1.77B | 1.90B | 1.63B | 1.62B |
| Cash, Cash Equivalents and Short-Term Investments | 1.26B | 958.21M | 1.01B | 1.20B | 941.63M | 929.75M |
| Total Debt | 487.75M | 490.94M | 625.16M | 626.99M | 444.37M | 394.20M |
| Total Liabilities | 1.04B | 978.31M | 1.19B | 1.17B | 875.24M | 819.71M |
| Stockholders Equity | 1.10B | 857.22M | 581.55M | 724.89M | 745.24M | 773.37M |
Cash Flow | ||||||
| Free Cash Flow | 630.46M | 265.68M | 169.11M | 243.29M | 90.84M | 121.06M |
| Operating Cash Flow | 673.09M | 271.53M | 213.73M | 286.04M | 129.12M | 163.47M |
| Investing Cash Flow | -66.84M | 109.45M | -85.17M | -314.71M | -36.91M | -310.05M |
| Financing Cash Flow | -168.41M | -272.39M | -388.76M | 18.60M | -74.47M | -132.86M |
InterDigital Technical Analysis
Negative
313.87
Price Trends
332.42
Negative
343.39
Negative
288.70
Positive
Market Momentum
-1.27
Negative
40.08
Neutral
29.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IDCC, the sentiment is Negative. The current price of 313.87 is below the 20-day moving average (MA) of 320.95, below the 50-day MA of 332.42, and above the 200-day MA of 288.70, indicating a neutral trend. The MACD of -1.27 indicates Negative momentum. The RSI at 40.08 is Neutral, neither overbought nor oversold. The STOCH value of 29.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IDCC.
InterDigital Risk Analysis
InterDigital disclosed 36 risk factors in its most recent earnings report. InterDigital reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
InterDigital Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $6.69B | 12.67 | 15.24% | ― | 9.46% | 34.09% | |
69 Neutral | $8.08B | 21.85 | 54.52% | 0.66% | 28.75% | 85.06% | |
67 Neutral | $6.66B | 27.02 | 51.96% | 0.16% | 17.00% | 120.21% | |
67 Neutral | $5.50B | 49.94 | 9.79% | ― | 18.99% | 66.43% | |
65 Neutral | $6.36B | -58.45 | -12.84% | ― | 16.98% | -265.85% | |
64 Neutral | $3.60B | 42.48 | 34.48% | ― | 22.02% | -55.25% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
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InterDigital Corporate Events
Business Operations and Strategy
InterDigital Renews Major Chinese Vendor Licensing Agreement
Positive
Jan 7, 2026
InterDigital has renewed a worldwide, non-exclusive, royalty-bearing license agreement with a major Chinese vendor for a five-year term, covering the vendor’s smartphones and other cellular-enabled devices under InterDigital’s standard essential cellular, WiFi, and HEVC patent portfolio. The agreement underscores the continued commercial relevance of InterDigital’s intellectual property and supports ongoing licensing revenue from a key market, reinforcing the company’s position as a significant patent licensor to global device manufacturers.
The most recent analyst rating on (IDCC) stock is a Buy with a $383.00 price target. To see the full list of analyst forecasts on InterDigital stock, see the IDCC Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.