InterDigital Q1 Earnings Beat on Higher Revenues

InterDigital, Inc. IDCC reported strong first-quarter 2024 results, with both the bottom line and top line surpassing the respective Zacks Consensus Estimate. The company generated higher revenues year over year, driven by solid licensing momentum in consumer electronics.
The company inked several license agreements during the quarter, including a landmark deal with Samsung Electronics SSNLF. IDCC is also advancing its leadership position in AI applications for wireless and video technology.

Net Income

Quarterly net income was $81.7 million or $2.88 per share, down from $105.3 million or $3.58 per share in the year-earlier quarter. Despite top-line growth, higher operating expenses led to lower net income.
Non-GAAP net income was $94.5 million or $3.58 per share, down from $123.6 million or $4.21 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 21 cents.

Revenues

Net sales in the quarter rose to $263.5 million from $202.4 million in the year-ago quarter. The 30% year-over-year improvement was induced by solid net sales growth in CE, IoT/Auto licensing programs during the quarter. The top line beat the consensus estimate of $216 million.
In the first quarter, total recurring revenues were $96.9 million, down from $101.6 million in the year-ago quarter. Net sales marginally missed our estimate of $97.5 million. Smartphone revenues decreased 57% year over year to $80.3 million. Net sales from CE, loT/Auto increased to $182.5 million from $16.1 million in the year-ago quarter.
Total catch-up revenues improved to $166.7 million from $100.8 million. Net sales beat our estimate of $152.6 million.

Other Details

Adjusted EBITDA decreased 16% year over year to $130.4 million. Total operating expenses rose to $159.8 million from $83.1 million in the year-ago quarter. The increase in operating costs is primarily attributed to higher licensing-related expenses. Operating income fell to $103.7 million from $119.3 million in the year-earlier quarter.

Cash Flow & Liquidity

In the first quarter, InterDigital generated $50.8 million of cash from operating activities against a cash utilization of $27.9 million in the year-earlier quarter. As of Mar 31, 2024, it had $984.6 million in cash, cash equivalents and short-term investments, with $85 million of long-term debt and other long-term liabilities.

Outlook

For the second quarter of 2024, InterDigital estimates revenues to be between $93 million and $97 million. Adjusted EBITDA is expected in the band of $35-$38 million. Non-GAAP earnings are expected to be within 70-80 cents per share.
For 2024, management anticipates revenues in the range of $620-$670 million. Adjusted EBITDA is forecasted at about $310-$345 million. Non-GAAP earnings per share are expected between $7.45 and $8.76 per share.

Zacks Rank & Stocks to Consider

InterDigital currently has a Zacks Rank #3 (Hold).
Pinterest PINS, carrying a Zacks Rank #2 (Buy) at present, delivered a trailing four-quarter average earnings surprise of 38.78%. In the last reported quarter, it delivered an earnings surprise of 42.86%.
Pinterest is increasingly establishing a unique value proposition to advertisers that could provide a competitive advantage in the long haul. Through various innovations, it continues to dramatically improve the advertising platform, which appears to be one of the best ad platforms for consumer discretionary brands looking for ways to reach customers and stretch smaller ad budgets.
Arista Networks, Inc. ANET, carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 13.3%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Qualcomm Incorporated QCOM, carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 7.54%. In the last reported quarter, it delivered an earnings surprise of 6.09%.
Qualcomm Incorporated designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access technology. The products include CDMA-based integrated circuits and system software for wireless voice and data communications, as well as global positioning system products.

To read this article on Zacks.com click here.