tiprankstipranks
InterDigital Announces Financial Results for Second Quarter 2022
Press Releases

InterDigital Announces Financial Results for Second Quarter 2022

WILMINGTON, Del., Aug. 04, 2022 (GLOBE NEWSWIRE) —  InterDigital, Inc. (NASDAQ:IDCC), a mobile and video technology research and development company, today announced results for the quarter ended June 30, 2022.

“Our success in executing across all parts of the business helped us to again deliver an excellent financial performance in the second quarter as we saw outstanding growth in revenue and net income driven by several new license agreements,” said Liren Chen, President and CEO of InterDigital. “While we continue to see considerable upside in our core smartphone market, our recent track record demonstrates our success in converting opportunities outside of the smartphone space into new revenue.”

Second Quarter 2022 Financial Highlights

  • Total revenue of $124.7 million increased 42% from $87.7 million in second quarter 2021. Recurring revenue was $100.1 million, compared to recurring revenue of $78.1 million in second quarter 2021. The year-over-year increase was driven by new patent license agreements, including two agreements signed in second quarter 2022. Second quarter 2022 revenue included record levels of combined revenue from the consumer electronics, automotive, and IoT markets.
  • Operating expenses were $74.8 million, compared to $90.9 million in second quarter 2021. The majority of this decrease was driven by the benefits realized from restructuring actions the company initiated in 2021.
  • Income from operations was $49.9 million as compared to an operating loss of $3.1 million in second quarter 2021.
  • Net income1 was $21.1 million, or $0.69 per diluted share, compared to net income of $1.6 million, or $0.05 per diluted share, in second quarter 2021. Second quarter 2022 net income was impacted by a one-time $11.2 million refinancing charge.
  • Adjusted EBITDA2 increased 119% to $77.8 million compared to $35.6 million in second quarter 2021.
  • The company repurchased 1.2 million shares of its common stock for $74.4 million in connection with a refinancing of its convertible debt.

Near Term Outlook

The company expects recurring revenue for third quarter to be between $96 and $100 million. This revenue guidance covers existing agreements and does not include the potential impact of any additional new patent licenses, technology solutions or patent sale agreements that may be signed, or any arbitration or dispute resolutions that may occur, during the balance of third quarter 2022.

The company expects third quarter operating expenses will be in the range of $76 to $80 million. In addition, the company expects non-operating expenses, comprised of interest expense and other income (expense), will be in the range of $6 to $8 million and the effective tax rate will be in the range of 25% to 27%.

Conference Call Information

InterDigital will host a conference call on Thursday, August 4, 2022 at 10:00 a.m. ET to discuss its second quarter 2022 financial performance and other company matters.

For a live Internet webcast of the conference call, visit www.interdigital.com and click on the link to the live webcast on the Investors page. The company encourages participants to take advantage of the Internet option.

For telephone access to the conference call, visit www.interdigital.com and click on “Dial In Registration” on the Investors page. Registration is necessary to obtain a dial in phone number and PIN to join.

An Internet replay of the conference call will be available on InterDigital’s website under Events in the Investor’s section. The replay will be available for one year.

About InterDigital®

InterDigital develops mobile and video technologies that are at the core of devices, networks, and services worldwide. We solve many of the industry’s most critical and complex technical challenges, inventing solutions for more efficient broadband networks, better video delivery, and richer multimedia experiences years ahead of market deployment. InterDigital has licenses and strategic relationships with many of the world’s leading technology companies. Founded in 1972, InterDigital is listed on Nasdaq.

InterDigital is a registered trademark of InterDigital, Inc.

For more information, visit the InterDigital website: www.interdigital.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding our current beliefs, plans and expectations, including, without limitation, our belief that we will continue to be able to execute strongly on our business during the ongoing COVID-19 pandemic. Words such as “believe,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “forecast,” “goal,” “could,” "would," "should," "if," "may," "might," "future," "target," "trend," "seek to," "will continue," "predict," "likely," "in the event," and variations of any such words or similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are made on the basis of management’s current views and assumptions and are not guarantees of future performance. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results, and actual events that occur, to differ materially from results contemplated by the forward-looking statements. These risks and uncertainties include, but are not limited to: (i) unanticipated delays, difficulties or accelerations in the execution of patent license agreements; (ii) our ability to leverage our strategic relationships and secure new patent license agreements on acceptable terms; (iii) our ability to enter into sales and/or licensing partnering arrangements for certain of our patent assets; (iv) our ability to enter into partnerships with leading inventors and research organizations and identify and acquire technology and patent portfolios that align with our roadmap; (v) our ability to commercialize our technologies and enter into customer agreements; (vi) the failure of the markets for our current or new technologies and products to materialize to the extent or at the rate that we expect; (vii) unexpected delays or difficulties related to the development of our technologies and products; (viii) changes in our interpretations of, and assumptions and calculations with respect to the impact on us of, the 2017 Tax Cuts and Jobs Act, as well as further guidance that may be issued regarding such act; (ix) risks related to the potential impact of new accounting standards on our financial position, results of operations or cash flows; (x) failure to accurately forecast the impact of our restructuring activities on our financial statements and our business; (xi) the resolution of current legal proceedings, including any awards or judgments relating to such proceedings, additional legal or regulatory proceedings, changes in the schedules or costs associated with legal proceedings or adverse rulings in such proceedings; (xii) the timing and impact of potential administrative and legislative matters; (xiii) changes or inaccuracies in market projections; (xiv) our ability to obtain liquidity though debt and equity financings; (xv) the potential effects that the ongoing COVID-19 pandemic and/or general economic or other conditions could have on our financial position, results of operations and cash flows; and (xvi) changes in our business strategy.

We undertake no duty to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.

Footnotes

Throughout this press release, net income and diluted earnings per share (“EPS”) are attributable to InterDigital, Inc. (e.g., after adjustments for non-controlling interests), unless otherwise stated.

2 Adjusted EBITDA is a supplemental non-GAAP financial measure that InterDigital believes provides investors with important insight into the company’s ongoing business performance. InterDigital defines Adjusted EBITDA as net income attributable to InterDigital, Inc. plus net loss attributable to non-controlling interest, income tax (provision) benefit, other income (expense) & interest expense, depreciation and amortization, share-based compensation, and other items. Other items may include restructuring costs, impairment charges and other non-recurring items. InterDigital’s computation of Adjusted EBITDA might not be comparable to Adjusted EBITDA reported by other companies. The presentation of Adjusted EBITDA, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of Adjusted EBITDA to net income attributable to InterDigital, Inc., the most directly comparable GAAP financial measure, is provided below.

3 Free cash flow is a supplemental non-GAAP financial measure that InterDigital believes is helpful in evaluating the company’s ability to invest in its business, make strategic acquisitions and fund share repurchases, among other things. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company’s cash balance for the period. InterDigital defines free cash flow as net cash used in operating activities less purchases of property and equipment and capitalized patent costs. InterDigital’s computation of free cash flow might not be comparable to free cash flow reported by other companies. The presentation of free cash flow, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of free cash flow to net cash used in operating activities, the most directly comparable GAAP financial measure, is provided below.

SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited)

  For the Three Months Ended June 30,   For the Six Months Ended June 30,
    2022       2021       2022       2021  
REVENUES:              
Variable patent royalty revenue $ 7,673     $ 7,323     $ 16,718     $ 14,419  
Fixed-fee royalty revenue   91,756       69,296       181,599       138,592  
Current patent royalties   99,429       76,619       198,317       153,011  
Non-current patent royalties   24,556       9,586       26,747       13,367  
Total patent royalties   123,985       86,205       225,064       166,378  
Current technology solutions revenue   672       1,530       911       3,720  
Total Revenue $ 124,657     $ 87,735     $ 225,975     $ 170,098  
               
OPERATING EXPENSES:              
Patent administration and licensing   45,417       40,970       87,512       77,544  
Development   17,086       21,870       34,698       44,453  
Selling, general and administrative   9,516       14,799       20,400       26,016  
Restructuring activities   2,738       13,245       3,280       13,245  
Total Operating expenses   74,757       90,884       145,890       161,258  
               
Income (loss) from operations   49,900       (3,149 )     80,085       8,840  
               
INTEREST EXPENSE   (6,272 )     (6,666 )     (11,787 )     (13,656 )
OTHER (EXPENSE) INCOME, NET   (15,016 )     3,039       (16,021 )     3,763  
Income before income taxes   28,612       (6,776 )     52,277       (1,053 )
INCOME TAX PROVISION   (8,028 )     (21 )     (13,989 )     (1,786 )
NET INCOME $ 20,584     $ (6,797 )   $ 38,288     $ (2,839 )
Net loss attributable to noncontrolling interest   (485 )     (8,415 )     (775 )     (10,028 )
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC. $ 21,069     $ 1,618     $ 39,063     $ 7,189  
NET INCOME PER COMMON SHARE — BASIC $ 0.69     $ 0.05     $ 1.28     $ 0.23  
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC   30,413       30,804       30,557       30,820  
NET INCOME PER COMMON SHARE — DILUTED $ 0.69     $ 0.05     $ 1.26     $ 0.23  
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED   30,710       31,189       30,992       31,192  
CASH DIVIDENDS DECLARED PER COMMON SHARE $ 0.35     $ 0.35     $ 0.70     $ 0.70  


SUMMARY CONSOLIDATED CASH FLOWS
(in thousands)
(unaudited)

  For the Three Months Ended June 30,   For the Six Months Ended June 30,
    2022       2021       2022       2021  
Income before income taxes $ 28,612     $ (6,776 )   $ 52,277     $ (1,053 )
Taxes paid   (1,014 )     (465 )     (4,363 )     (4,793 )
Non-cash expenses   38,904       35,557       65,070       59,390  
Change in deferred revenue   (76,959 )     (63,230 )     (127,700 )     (86,659 )
Change in operating working capital, deferred charges and other   (23,311 )     7,655       (37,024 )     (3,986 )
Purchases of property and equipment and capitalized patent costs   (11,876 )     (11,176 )     (22,085 )     (21,165 )
FREE CASH FLOW3   (45,644 )     (38,435 )     (73,825 )     (58,266 )
               
Long-term investments                     (1,091 )
Proceeds from issuance of convertible senior notes   460,000             460,000        
Purchase of convertible bond hedge   (80,500 )           (80,500 )      
Proceeds from issuance of warrants   43,700             43,700        
Payments on long-term debt   (282,499 )           (282,499 )      
Proceeds from hedge unwind   11,851             11,851        
Payment for warrant unwind   (3,837 )           (3,837 )      
Payments of debt issuance costs   (8,726 )           (8,726 )      
Repurchase of common stock   (74,445 )     (5,391 )     (74,445 )     (11,141 )
Net proceeds from exercise of stock options         3,632       1,226       4,369  
Non-controlling interest contribution               1,500        
Non-controlling interest distribution                     (1,109 )
Taxes withheld upon restricted stock unit vestings   (707 )     (711 )     (5,733 )     (3,673 )
Dividends paid   (10,803 )     (10,739 )     (21,544 )     (21,525 )
Unrealized loss on short-term investments   (2,139 )     (115 )     (3,469 )     (675 )
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND SHORT-TERM INVESTMENTS $ 6,251     $ (51,759 )   $ (36,301 )   $ (93,111 )


SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

  JUNE 30, 2022   DECEMBER 31, 2021
ASSETS      
Cash, cash equivalents and short-term investments $ 900,609   $ 941,627
Accounts receivable, net   48,801     31,113
Prepaid and other current assets   86,393     77,545
Property & equipment and patents, net   382,948     376,962
Other long-term assets, net   198,744     200,909
TOTAL ASSETS $ 1,617,495   $ 1,628,156
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Accounts payable, accrued liabilities, taxes payable & dividends payable $ 64,490   $ 79,888
Current deferred revenue   168,461     291,673
Long-term deferred revenue   45,075     19,463
Long-term debt & other long-term liabilities   654,225     484,215
TOTAL LIABILITIES   932,251     875,239
TOTAL INTERDIGITAL, INC. SHAREHOLDERS’ EQUITY   678,769     745,239
Noncontrolling interest   6,475     7,678
TOTAL EQUITY   685,244     752,917
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,617,495   $ 1,628,156


RECONCILIATION OF NON-GAAP MEASURES

The table below presents a reconciliation of Adjusted EBITDA to net income attributable to InterDigital, Inc., the most directly comparable GAAP financial measure (in thousands):

  For the Three Months Ended June 30,   For the Six Months Ended June 30,
    2022       2021       2022       2021  
Net Income attributable to InterDigital, Inc. $ 21,069     $ 1,618     $ 39,063     $ 7,189  
Net loss attributable to non-controlling interest   (485 )     (8,415 )     (775 )     (10,028 )
Income tax provision   8,028       21       13,989       1,786  
Other income (expense) & interest expense   21,288       3,627       27,808       9,893  
Depreciation and amortization   21,154       19,689       40,436       39,550  
Share-based compensation   3,977       3,775       9,363       5,928  
Other items(a)   2,738       15,245       3,280       15,245  
Adjusted EBITDA $ 77,769     $ 35,560     $ 133,164     $ 69,563  
(a) Other items in the above table includes $2.7 million and $3.3 million of restructuring costs during the three and six months ended June 30, 2022, respectively, and $13.2 million of restructuring costs and $2.0 million of additional non-recurring personnel-related costs expenses related to new employee agreements during both the three and six months ended June 30, 2021.

The table below presents a reconciliation of free cash flow to net cash used in operating activities, the most directly comparable GAAP financial measure (in thousands):

  For the Three Months Ended June 30,   For the Six Months Ended June 30,
    2022       2021       2022       2021  
Net cash used in operating activities $ (33,768 )   $ (27,259 )   $ (51,740 )   $ (37,101 )
Purchases of property and equipment   (425 )     (550 )     (762 )     (937 )
Capitalized patent costs   (11,451 )     (10,626 )     (21,323 )     (20,228 )
Free cash flow3 $ (45,644 )   $ (38,435 )   $ (73,825 )   $ (58,266 )

CONTACT:   InterDigital, Inc.
    Email: investor.relations@interdigital.com
    +1 (302) 300-1857

        

 

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles