Will Lower Revenues Affect InterDigital's Q1 Earnings Results?

InterDigital, Inc. IDCC is set to release  first-quarter 2025 results on May 01, before the opening bell. In the last reported quarter, adjusted earnings were $5.15 per share.

The Wilmington-based advanced mobile technologies provider is expected to witness revenue contraction year over year owing to fierce competition and macroeconomic challenges. However, solid licensing momentum in the consumer electronics market and product innovation are tailwinds.

Factors at Play

InterDigital’s commitment toward licensing its broad portfolio of technologies to wireless terminal equipment makers, which allows it to expand its core market capability, is laudable. The company has leading companies such as Huawei, Samsung, LG, Amazon, Zebra Technologies and Apple under its licensing agreement. 

During the quarter, InterDigital entered into a multi-year license agreement with HP Inc., one of the world's largest PC manufacturers. The agreement allows HP access to InterDigital’s patented Wi-Fi and video decoding technologies for personal computer products. This deal significantly expands InterDigital’s footprint in the PC industry, which now covers more than 50% of the market through its licensing agreements. It also reinforces the company's role as a key innovator in essential technology areas and supports its continued investment in advancing wireless, video, and artificial intelligence research. These developments are likely to have had a favorable effect on IDCC’s first-quarter performance.

In addition, the company aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT, and allied technology areas by leveraging its research and development capabilities, technological know-how, and rich industry experience. Apart from its strong portfolio of wireless technology solutions, the technologies related to sensors, user interface, and video are likely to drive considerable value, considering the massive size of the market it licenses. The company is poised to gain from future growth opportunities, fueled by the 5G rollout. Strategic acquisitions are anticipated to be accretive to InterDigital’s financials and contribute to the upcoming results. 

Overall Expectations

Our estimate for total recurring revenues is pegged at $63.4 million, implying 55.3% year-over-year growth. Our estimate for catch-up revenues is pegged at $51.3 million.

For the March quarter, the Zacks Consensus Estimate for revenues is pegged at $160.42 million, indicating a decline from $263.54 million reported in the prior-year quarter. The consensus estimate for adjusted earnings per share stands at $2.05, suggesting a decline from the prior-year quarter’s reported figure of $3.58. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for InterDigital this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $2.05 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 

InterDigital, Inc. Price and EPS Surprise

InterDigital, Inc. price-eps-surprise | InterDigital, Inc. Quote

Zacks Rank: InterDigital sports a Zacks Rank #1.

Stocks to Consider

Qorvo QRVO is set to release quarterly numbers on April 29. It has an Earnings ESP of +3.42% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

QUALCOMM Incorporated QCOM is set to release quarterly numbers on April 29. It has an Earnings ESP of +0.86% and carries a Zacks Rank #2.

CGI Group GIB is set to release quarterly numbers on April 30. It has an Earnings ESP of +0.89% and carries a Zacks Rank #2.

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This article originally published on Zacks Investment Research (zacks.com).

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