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InterDigital (IDCC)
NASDAQ:IDCC

InterDigital (IDCC) AI Stock Analysis

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InterDigital

(NASDAQ:IDCC)

Rating:78Outperform
Price Target:
$265.00
▲(17.24%Upside)
InterDigital's robust financial performance, driven by high profitability and strategic licensing agreements, is the key strength. Technical indicators support recent positive momentum. Valuation metrics are moderate, and earnings call insights reveal significant growth prospects. Despite some challenges like negative cash flow and pending arbitration, the overall outlook remains positive.
Positive Factors
Financial Performance
There is room for upside in profitability as the company aims for a long-term target of 60% EBITDA margin.
Growth Opportunities
InterDigital's growth opportunities include long-term expansion into cloud services and video streaming, as well as progress in core markets like smartphones and consumer electronics.
Partnerships
The stock is considered attractive due to the upside potential from new and expanding partnerships in the smartphone market, and opportunities in consumer electronics and video streaming platforms.
Negative Factors
Market Dependency
More than 90% of InterDigital's revenue is tied to long-term fixed-fee arrangements that are not impacted by units shipped or sold in any particular period, offering resilience to its business model.
Revenue Concentration
InterDigital now has agreements with 7 of the top 10 largest smartphone vendors, covering approximately 80% of the global smartphone market.

InterDigital (IDCC) vs. SPDR S&P 500 ETF (SPY)

InterDigital Business Overview & Revenue Model

Company DescriptionInterDigital, Inc. (IDCC) is a global technology research and development company specializing in wireless and video technologies. The company operates primarily in the telecommunications sector, focusing on the development of advanced mobile and video solutions. InterDigital's core products and services include technology licensing and partnerships that enable wireless communications, video standards, and related innovations. The company is known for its contributions to industry standards and the licensing of its extensive patent portfolio to leading technology companies worldwide.
How the Company Makes MoneyInterDigital makes money primarily through licensing its extensive portfolio of patents and technologies to other companies in the telecommunications and technology industries. The company's revenue model is centered on collecting royalties from licensing agreements with major mobile device manufacturers, network equipment vendors, and other technology companies. These licensing agreements often involve long-term contracts and can be based on a percentage of the licensee's sales or a fixed annual fee. Additionally, InterDigital engages in collaborative partnerships and research agreements that not only enhance its technological offerings but also contribute to its revenue streams.

InterDigital Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: 12.46%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, significant new licensing agreements, and record-high recurring revenue, despite challenges with cash flow and pending arbitration with Samsung. The positive developments and growth opportunities outweigh the lowlights.
Q1-2025 Updates
Positive Updates
Record-High Annual Recurring Revenue
InterDigital's annualized recurring revenue (ARR) for Q1 2025 increased 30% year-over-year to a record level of $503 million, driven by a new licensing agreement with Vivo.
Significant Licensing Agreements
InterDigital signed major licensing agreements with Vivo and HP, covering 80% of the global smartphone market and over 50% of the PC market, respectively.
Strong Financial Performance
Q1 2025 revenue, adjusted EBITDA, and non-GAAP EPS all exceeded the high end of guidance, with revenue reaching $211 million, adjusted EBITDA at nearly $160 million, and non-GAAP EPS at $4.21.
Dividend Increase
InterDigital increased its dividend by 50% since Q3 last year, reflecting strong financial health and commitment to returning capital to shareholders.
Negative Updates
Negative Cash Flow from Operations
Cash from operations and free cash flow were negative in Q1 2025, with outflows of $20 million and $47 million, respectively, attributed to the timing of payments from licensees.
Samsung Arbitration Pending
The arbitration with Samsung regarding mobile device licensing terms is still pending, with no resolution since the last hearing in October 2024.
Company Guidance
During the Q1 2025 earnings call, InterDigital reaffirmed its annual revenue guidance for 2025, projecting between $660 million and $760 million. The company reported Q1 revenue of $211 million, which exceeded its updated guidance of $206 million due to a new licensing agreement with Vivo Mobile, a major smartphone manufacturer, contributing significantly to an annualized recurring revenue (ARR) increase of 30% year-over-year, reaching a record $503 million. InterDigital's adjusted EBITDA margin rose to 76%, driven by decreased operating expenses, while non-GAAP EPS increased 18% year-over-year to $4.21, surpassing the previously guided range of $3.60 to $3.90. The company also highlighted its long-term licensing agreements, which account for over 90% of its revenue, and the addition of a multiyear licensing agreement with HP, covering more than 50% of the PC market. Looking forward, Q2 revenue is expected to be between $165 million and $175 million, with an adjusted EBITDA margin of about 65% and non-GAAP EPS ranging from $2.67 to $2.90.

InterDigital Financial Statement Overview

Summary
InterDigital exhibits strong profitability and financial stability with high profit margins and effective use of equity. However, the decline in revenue and free cash flow growth rates poses potential challenges for future growth.
Income Statement
85
Very Positive
InterDigital's income statement shows strong profitability with a high gross profit margin of 91.1% and a net profit margin of 48.1% for TTM, indicating efficient cost management and strong bottom-line performance. However, the revenue growth rate is negative at -6.1% compared to the previous year, which may be a concern for future growth. The EBIT margin of 57.3% and EBITDA margin of 67% reflect robust operational efficiency.
Balance Sheet
78
Positive
The balance sheet of InterDigital highlights financial stability with a debt-to-equity ratio of 0.50, indicating moderate leverage. A strong equity ratio of 50.3% suggests good financial health and asset financing primarily through equity. Return on equity (ROE) is impressive at 41.9%, showcasing effective utilization of shareholder funds to generate profits.
Cash Flow
72
Positive
InterDigital's cash flow statement reflects a decline in free cash flow growth rate by -45.6% over the past year, which is a concern. However, the operating cash flow to net income ratio of 0.51 indicates decent cash conversion from profits. The free cash flow to net income ratio stands at 0.37, suggesting sufficient cash management despite the decline in free cash flow.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue815.48M868.52M549.59M457.79M425.41M358.99M
Gross Profit742.83M699.28M470.19M386.38M360.78M188.81M
EBITDA546.36M544.75M357.22M225.63M160.97M153.13M
Net Income392.56M358.61M214.07M93.69M55.30M44.80M
Balance Sheet
Total Assets1.86B1.84B1.77B1.90B1.63B1.62B
Cash, Cash Equivalents and Short-Term Investments883.29M958.21M1.01B1.20B941.63M926.65M
Total Debt471.26M487.54M625.16M660.67M484.21M415.88M
Total Liabilities924.96M978.31M1.19B1.17B875.24M819.71M
Stockholders Equity936.88M857.22M581.55M724.89M745.24M773.37M
Cash Flow
Free Cash Flow144.60M265.68M169.11M243.29M90.84M121.06M
Operating Cash Flow200.77M271.53M213.73M286.04M129.12M163.47M
Investing Cash Flow152.18M109.45M-85.17M-42.75M-36.91M-310.05M
Financing Cash Flow-266.02M-272.39M-388.76M19.60M-74.47M-132.86M

InterDigital Technical Analysis

Technical Analysis Sentiment
Positive
Last Price226.04
Price Trends
50DMA
217.52
Positive
100DMA
212.66
Positive
200DMA
192.81
Positive
Market Momentum
MACD
2.10
Positive
RSI
54.24
Neutral
STOCH
31.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IDCC, the sentiment is Positive. The current price of 226.04 is above the 20-day moving average (MA) of 225.49, above the 50-day MA of 217.52, and above the 200-day MA of 192.81, indicating a bullish trend. The MACD of 2.10 indicates Positive momentum. The RSI at 54.24 is Neutral, neither overbought nor oversold. The STOCH value of 31.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$5.82B17.8150.29%1.07%33.52%109.68%
77
Outperform
$9.25B52.5439.29%0.22%14.29%151.35%
77
Outperform
$9.25B52.5439.29%0.22%14.29%151.35%
71
Outperform
$6.27B13.3058.14%23.21%
71
Outperform
$6.27B13.3058.14%23.21%
QXQXO
68
Neutral
$14.73B1.44%0.22%48.10%
QXQXO
68
Neutral
$14.73B1.44%0.22%48.10%
66
Neutral
$7.77B103.4625.23%18.63%-55.09%
66
Neutral
$7.77B103.4625.23%18.63%-55.09%
63
Neutral
$34.07B6.13-11.73%1.80%5.33%-18.31%
54
Neutral
$5.62B235.54-19.65%15.20%-666.94%
54
Neutral
$5.62B235.54-19.65%15.20%-666.94%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
IDCC
InterDigital
226.04
106.23
88.67%
CVLT
CommVault Systems
173.07
53.08
44.24%
CVLT
CommVault Systems
173.07
53.08
44.24%
PEGA
Pegasystems
54.68
26.19
91.93%
PEGA
Pegasystems
54.68
26.19
91.93%
QXO
QXO Inc
21.68
-24.32
-52.87%
QXO
QXO Inc
21.68
-24.32
-52.87%
VERX
Vertex
36.15
0.24
0.67%
VERX
Vertex
36.15
0.24
0.67%
CWAN
Clearwater Analytics Holdings
22.26
3.51
18.72%

InterDigital Corporate Events

Shareholder MeetingsBusiness Operations and Strategy
InterDigital Holds Annual Shareholders Meeting, Key Decisions Made
Neutral
Jun 16, 2025

On June 11, 2025, InterDigital, Inc. held its Annual Meeting of Shareholders where several key decisions were made. The shareholders elected directors for a one-year term, approved the 2025 Equity Incentive Plan, passed a resolution on executive compensation, and ratified PricewaterhouseCoopers LLP as the independent public accounting firm for the year ending December 31, 2025, reflecting continued confidence in the company’s strategic direction and governance.

The most recent analyst rating on (IDCC) stock is a Buy with a $160.00 price target. To see the full list of analyst forecasts on InterDigital stock, see the IDCC Stock Forecast page.

Financial Disclosures
InterDigital Corrects Q2 Revenue Guidance in Call
Neutral
May 2, 2025

On May 1, 2025, InterDigital, Inc. hosted a conference call to discuss its first quarter 2025 financial performance. During the call, CFO Richard Brezski corrected a misstatement regarding Q2 revenue guidance, clarifying it as $165 to $170 million, aligning with the company’s earlier guidance. The company emphasized that this correction does not update or affirm previous guidance.

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.Date of analysis: Jun 24, 2025