InterDigital Q1 Earnings Beat Estimates Despite Lower Revenues

InterDigital, Inc. IDCC reported strong first-quarter 2025 results, with both the top and bottom lines beating the Zacks Consensus Estimate. However, the company generated lower revenues year over year, owing to weakness in the consumer electronics and IoT markets. Solid licensing momentum in the smartphone business is a tailwind. IDCC is also advancing its leadership position in AI (artificial intelligence) applications for wireless and video technology.

IDCC’s Net Income

Quarterly net income increased to $115.6 million or $3.45 per share from $81.7 million or $2.88 per share in the year-earlier quarter. The improvement is primarily attributed to lower operating expenses.

Non-GAAP net income was $125.7 million or $4.21 per share, up from $94.5 million or $3.58 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $3.72. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

IDCC’s Revenues

Net sales in the quarter declined to $210.5 million from $263.5 million in the year-ago quarter. The year-over-year decline was induced by lower catch-up revenues in the consumer electronics and IoT market during the quarter. The top line beat the consensus estimate of $204 million.

In the first quarter, Smartphone revenues increased 129% year over year to $184 million. A new license agreement signed by major smartphone maker Vivo boosted the top line during the quarter. Revenues from CE, IoT/Auto group fell to $26.3 million from $182.5 million in the prior year quarter.

Annualized recurring revenue increased to $502.9 million, up 30% year over year, while catch-up revenues fell to $84.8 million from $166.7 million a year ago.

IDCC’s Other Details

Adjusted EBITDA rose to $159.1 million from $130.4 million in the year-ago quarter. Total operating expenses declined to $78.7 million from $159.8 million in the year-ago quarter. Operating income increased to $131.8 million from $103.8 million in the year-earlier quarter.

IDCC’s Cash Flow & Liquidity

In the first quarter, InterDigital used $19.98 million cash in operations against a cash generation of $50.8 million in the year-earlier quarter.

As of March 31, 2025, it had $883.3 million in cash, cash equivalents and short-term investments, with $71.4 million of long-term debt and other liabilities compared.

IDCC’s Guidance

For 2025, the company expects revenues in the range of $660-$760 million, while adjusted EBITDA is forecasted at $400-$495 million. IDCC expects non-GAAP earnings in the band of $9.69-$12.92.

For the second quarter of 2025, InterDigital estimates revenues to be between $165 million and $170 million. Adjusted EBITDA is estimated in the band of $107-$114 million. Non-GAAP earnings are expected to be within $2.67-$2.90 per share.

IDCC’s Zacks Rank & Other Stocks to Consider

InterDigital currently sports a Zacks Rank #1 (Strong Buy).

Ubiquiti Inc.UI carries a Zacks Rank #2 (Buy) at present. The company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. In the trailing four quarters, Ubiquiti delivered an earnings surprise of 7.48%. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Ubiquiti’s excellent global business model, which is flexible and adaptable to evolving market changes, helps it overcome challenges and maximize growth. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques. 
 
Ericsson ERIC carries a Zacks Rank #2 at present. Ericsson is well-positioned to cash in on the market momentum with its competitive 5G product portfolio. The company continues to execute its strategy to become a leading mobile infrastructure provider and establish a focused enterprise business. In the last reported quarter, Ericsson delivered an earnings surprise of 33.33%.

BlackBerry Limited BB carries a Zacks Rank #2 at present. The company provides intelligent security software and services to enterprises and governments around the world. The company uses machine learning and artificial intelligence (AI) to provide cutting-edge solutions for cybersecurity, safety, and data privacy. BlackBerry is a well-known name in the areas of endpoint security and management, encryption and embedded systems. In the last reported quarter, BlackBerry delivered an earnings surprise of 50%.

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