InterDigital, Inc. Q3 FY2024 earnings call

• Strong Q3 results with revenue, adjusted EBITDA, and EPS exceeding guidance ranges.
• New license agreements signed in Q3 with TPV, Panasonic, and at the start of Q4 with Oppo and Lenovo (arbitration agreement).
• Innovation in advanced video technology (HEVC, VVC) and wireless, with record invention filings. Recognized for video technology awards at IBC.
• Investor Day target of $1 billion in annual recurring revenue by 2030, including $500 million by 2027 for smartphone program.
• Engineering and patent team continuing to drive growth through new inventions and strong portfolio positioning in 5G, video, WiFi, and AI.

In the third quarter, InterDigital delivered revenue of about $129 million, exceeding the top end of guidance. Recurring revenue was $99 million and catch-up revenue was $30 million. The consumer electronic and IoT licensing program saw growth, with revenue up 15% year-over-year. Revenue contribution from these segments was significant, driving the overall strong performance.

• Raised 2024 annual revenue guidance to $860 million, a $145 million increase from prior guidance.
• Q4 recurring revenue expected to be approximately $118 million, equating to an ARR of roughly $470 million, an increase of over $80 million in ARR.
• Full-year 2024 adjusted EBITDA expected to be $538 million with a 63% margin at the midpoint.
• Any new agreements in the remaining two months of 2024 would be additive to the guidance.

• Forward-looking statements subject to risks and uncertainties described in SEC filings, including those in the 2023 Annual Report on Form 10-K.
• Litigation and arbitration processes (e.g., Lenovo arbitration, Samsung binding arbitration) could impact outcomes and financial results.

Q: Scott Searle from ROTH Capital Partners asked about Q4 guidance, Lenovo arbitration, and Samsung arbitration.

A: Liren Chen mentioned Q4 guidance includes revenue from Oppo and Lenovo (arbitration), with revenue booked conservatively under accounting rules. Richard Brezski noted Samsung arbitration result expected soon after year-end.

Q: Arjun Bhatia from William Blair asked about impact of Oppo and Lenovo deals, pricing, and Q4 catch-up revenue.

A: Liren Chen said Oppo deal accelerates momentum for signing remaining Chinese manufacturers. Richard Brezski mentioned Q4 recurring revenue of ~$118 million is baked into full-year guide.

Q: Madeline Brooks from BofA asked about 2025 litigation and renegotiation.

A: Liren Chen said 2025 will build on strong 2024 recurring revenue, with Xiaomi contract up for renewal in two courses. Richard Brezski clarified major expiring agreements disclosed in filings.

Q: Anja Soderstrom from Sidoti asked about fixed fees and taxes with increased recurring revenue.

A: Liren Chen stated majority of large accounts are on fixed fees (under NDA). Richard Brezski said tax rate view remains mid-to-high teens, not dramatically changed by step-up in recurring revenue.