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Wednesday, February 15, 2023 5:58:48 PM
and this is after they start their question off with Great Qtr
Strong 4Q, yet long-term growth remains a concern
Solid 4Q results with revenues up 5% YoY to $117mn, above our $114mn, driven by
strength in recurring revenues, which reached $104mn and beat our expectations by
~$2mn. Gross and operating margins of 61%/33% came in above our 59%/31% from
lower-than-expected licensing and research and portfolio development costs. The margin
outperformance also drove EPS of $1.08c to beat our 93c estimates. Management
provided 1Q23 guidance for recurring revenues to decline -3% YoY to $96mn due to a
$15mn impact from expired agreements and an assumption of flat contribution from
Samsung, which is now in arbitration. We note that InterDigital’s stock is up ~50% YTD,
largely from the recent share buyback plan and the Dutch auction mechanism. Despite
the solid results, we reiterate our Underperform as we believe the long-term growth
outlook remains challenged. Even if smartphone recurring revenues reach management’s
$500mn target, the growth rate would then decline to low-single digits, as smartphones
account for 77% of total revenues. Higher estimates prompt a higher PO, up from $50
to $55, based on 16x 2024E EPS, vs. 16x 2023 EPS previously, as we roll our model
forward.
Weak smartphone revenues offset by non-handsets
Recurring revenues from smartphones fell -3% YoY to $89mn due to tough comps from
elevated revenue recognition in the final year of the prior Apple agreement. Ex-handsets,
IDCC is performing well, with Consumer Electronics (CE) and IoT/autos revenue up 50%
YoY in 4Q to $15mn and benefitting from new long-term agreements with Panasonic
and LG. Management also highlighted that 80% of all connected cars are currently
licensed under InterDigital’s 3G/4G portfolio, which contributed to CE and IoT/autos
reaching +$100mn in total FY22 revenues (recurring and non-recurring). However,
Smartphones account for the majority of recurring revenues, at 87% of total in FY22,
and while this segment grew 12% YoY in 2022, the growth could decline materially once
the company reaches 80-85% penetration after reaching licensing deals with Chinese
vendors Lenovo, Oppo, and Vivo. Lastly, InterDigital is in the process of reaching a new
agreement with Samsung through binding arbitration and management expects the
process to conclude around mid-2024.
Recent IDCC News
- UK Court of Appeal rules in favor of InterDigital in dispute with Lenovo • GlobeNewswire Inc. • 07/12/2024 01:10:00 PM
- InterDigital Announces Convertibility of 3.50% Senior Convertible Notes Due 2027 • GlobeNewswire Inc. • 07/03/2024 08:00:00 AM
- InterDigital signs license agreement with Google • GlobeNewswire Inc. • 07/02/2024 08:00:00 AM
- Form 11-K - Annual report of employee stock purchase, savings and similar plans • Edgar (US Regulatory) • 06/20/2024 12:30:40 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/12/2024 08:10:56 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/12/2024 08:10:42 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/12/2024 08:10:29 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/11/2024 09:26:41 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/11/2024 08:51:28 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/11/2024 08:42:45 PM
- InterDigital and Philips to Showcase Volumetric Streaming Technologies Empowering Immersive Sports Experiences at AWE USA 2024 • GlobeNewswire Inc. • 06/11/2024 08:00:00 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 06/10/2024 08:30:24 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/10/2024 08:09:07 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/10/2024 08:06:53 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/10/2024 08:04:08 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/10/2024 08:01:44 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/07/2024 08:13:30 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/07/2024 08:10:01 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/07/2024 08:07:53 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/07/2024 08:06:54 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/07/2024 08:05:55 PM
- InterDigital Declares Regular Quarterly Cash Dividend • GlobeNewswire Inc. • 06/06/2024 08:30:00 PM
- InterDigital to Present at Upcoming Conferences • GlobeNewswire Inc. • 05/30/2024 12:30:00 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 05/06/2024 08:06:54 PM
- InterDigital Announces Financial Results for First Quarter 2024 • GlobeNewswire Inc. • 05/02/2024 12:30:08 PM
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