InterDigital (IDCC) AI Stock Analysis

• Market Cap: $5.48B
• Dividend Yield: 0.9%
• Average Volume (3M): 301.94K
• Price to Earnings (P/E): 16.8
• Beta (1Y): 0.92
• Revenue Growth: 33.52%
• EPS Growth: 109.68%
• Country: US
• Employees: 430
• Sector: Technology
• Sector Strength: 77
• Industry: Software - Application
• EPS (TTM): 3.45
• Shares Outstanding: 25,936,735
• 10 Day Avg. Volume: 248,727
• 30 Day Avg. Volume: 301,941
• PEG Ratio: 1.52
• Price to Book (P/B): 5.82
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 38.02
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 1.73
• Enterprise Value/Gross Profit: 7.31
• Enterprise Value/Ebitda: 2.78
• 1Y Price Target: $235.50
• Price Target Upside: 11.37% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

• Rating: 79 Outperform
• Price Target: ―

InterDigital showcases strong financial performance with robust profitability and strategic licensing agreements. The positive earnings call sentiment and upward stock trend are offset by challenges such as declining cash flow and unresolved arbitration issues. Overall, the company is positioned well but faces certain risks.

Positive Factors

Growth Strategy

InterDigital now has over 50% of the PC market under contract, reflecting progress in executing its growth strategy in the consumer electronics segment.

Recurring Revenue

InterDigital reported solid first-quarter results with 30% recurring revenue growth, driven largely by the new licensing deal it signed with vivo for its smartphones.

Negative Factors

External Risks

Upcoming catalysts include results from the arbitration hearing with Samsung, potential new deals with Honor, Transsion, or Huawei, and potential new deals with other streaming service providers.

Market Dependency

More than 90% of InterDigital's revenue is tied to long-term fixed-fee arrangements that are not impacted by units shipped or sold in any particular period, offering resilience to its business model.

InterDigital Business Overview & Revenue Model

Company Description

InterDigital, Inc., together with its subsidiaries, designs and develops technologies that enable and enhance wireless communications in the United States, China, South Korea, Japan, Taiwan, and Europe. It provides technology solutions for use in digital cellular and wireless products and networks, including 2G, 3G, 4G, 5G, and IEEE 802-related products and networks. The company develops cellular technologies, such as technologies related to CDMA, TDMA, OFDM/OFDMA, and MIMO for use in 2G, 3G, 4G, and 5G wireless networks, as well as mobile terminal devices; and 3GPP technology portfolio in 5G NR, beyond 5G (B5G), extended reality over wireless, and cellular Internet of Things (IoT) areas, as well as technologies for automobiles, wearables, smart homes, drones, and other connected consumer electronic products. It also provides video coding and transmission technologies; and engages in the research and development of artificial intelligence. The company's patented technologies are used in various products that include cellular phones, tablets, notebook computers, and wireless personal digital assistants; wireless infrastructure equipment, which comprise base stations; components, dongles, and modules for wireless devices; and IoT devices and software platforms. As of December 31, 2021, it had a portfolio of approximately 27,500 patents and patent applications related to wireless communications, video coding, display technology, and other areas. InterDigital, Inc. was incorporated in 1972 and is headquartered in Wilmington, Delaware.

How the Company Makes Money

InterDigital makes money primarily through licensing its extensive portfolio of patents and technologies to other companies in the telecommunications and technology industries. The company's revenue model is centered on collecting royalties from licensing agreements with major mobile device manufacturers, network equipment vendors, and other technology companies. These licensing agreements often involve long-term contracts and can be based on a percentage of the licensee's sales or a fixed annual fee. Additionally, InterDigital engages in collaborative partnerships and research agreements that not only enhance its technological offerings but also contribute to its revenue streams.

InterDigital Financial Statement Overview

Summary

InterDigital exhibits strong profitability and financial stability with high profit margins and effective use of equity. However, the decline in revenue and free cash flow growth rates poses potential challenges for future growth.

Income Statement

InterDigital's income statement shows strong profitability with a high gross profit margin of 91.1% and a net profit margin of 48.1% for TTM, indicating efficient cost management and strong bottom-line performance. However, the revenue growth rate is negative at -6.1% compared to the previous year, which may be a concern for future growth. The EBIT margin of 57.3% and EBITDA margin of 67% reflect robust operational efficiency.

Balance Sheet

The balance sheet of InterDigital highlights financial stability with a debt-to-equity ratio of 0.50, indicating moderate leverage. A strong equity ratio of 50.3% suggests good financial health and asset financing primarily through equity. Return on equity (ROE) is impressive at 41.9%, showcasing effective utilization of shareholder funds to generate profits.

Cash Flow

InterDigital's cash flow statement reflects a decline in free cash flow growth rate by -45.6% over the past year, which is a concern. However, the operating cash flow to net income ratio of 0.51 indicates decent cash conversion from profits. The free cash flow to net income ratio stands at 0.37, suggesting sufficient cash management despite the decline in free cash flow.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
815.48M	868.52M	549.59M	457.79M	425.41M	358.99M
	Gross Profit
742.83M	699.28M	470.19M	386.38M	360.78M	188.81M
	EBIT
467.61M	439.51M	221.62M	150.52M	71.21M	55.17M
	EBITDA
546.36M	544.75M	357.22M	225.63M	160.97M	153.13M
	Net Income Common Stockholders
392.56M	358.61M	214.07M	93.69M	55.30M	44.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.01B	958.21M	1.01B	1.20B	941.63M	926.65M
	Total Assets
1.81B	1.84B	1.77B	1.90B	1.63B	1.62B
	Total Debt
625.95M	487.54M	625.16M	660.67M	484.21M	415.88M
	Net Debt
164.75M	-39.82M	188.08M	-32.81M	-457.41M	-57.60M
	Total Liabilities
1.18B	978.31M	1.19B	1.17B	875.24M	819.71M
	Stockholders Equity
624.29M	857.22M	581.55M	724.89M	745.24M	773.37M
Cash Flow		Free Cash Flow
144.60M	265.68M	169.11M	243.29M	90.84M	121.06M
	Operating Cash Flow
200.77M	271.53M	213.73M	286.04M	129.12M	163.47M
	Investing Cash Flow
152.18M	109.45M	-85.17M	-42.75M	-36.91M	-310.05M
	Financing Cash Flow
-266.02M	-272.39M	-388.76M	19.60M	-74.47M	-132.86M

InterDigital Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 211.46
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IDCC, the sentiment is Neutral. The current price of 211.46 is below the 20-day moving average (MA) of 212.68, above the 50-day MA of 207.48, and above the 200-day MA of 180.70, indicating a neutral trend. The MACD of 2.80 indicates Positive momentum. The RSI at 51.64 is Neutral, neither overbought nor oversold. The STOCH value of 23.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for IDCC.

InterDigital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IDCC	79 Outperform	$5.48B	16.77	50.29%	0.90%	33.52%	109.68%
PEGA	76 Outperform	$8.22B	46.72	39.29%	0.12%	14.29%	151.38%
CWAN	76 Outperform	$6.24B	13.24	58.14%	―	23.21%	―
CVLT	76 Outperform	$7.88B	105.90	25.23%	―	18.63%	-55.09%
QXO	73 Outperform	$9.59B	―	1.44%	―	0.22%	48.10%
VERX	69 Neutral	$6.26B	235.54	-19.65%	―	15.20%	-666.94%
Sector *	61 Neutral	$11.29B	10.17	-6.88%	2.97%	7.41%	-8.93%

InterDigital Corporate Events

InterDigital Corrects Q2 Revenue Guidance in Call

On May 1, 2025, InterDigital, Inc. hosted a conference call to discuss its first quarter 2025 financial performance. During the call, CFO Richard Brezski corrected a misstatement regarding Q2 revenue guidance, clarifying it as $165 to $170 million, aligning with the company’s earlier guidance. The company emphasized that this correction does not update or affirm previous guidance.

InterDigital’s Chief Licensing Officer Steps Down

Eeva Hakoranta will step down as Chief Licensing Officer of InterDigital on April 4, 2025, but will continue as a strategic advisor until July 4, 2025, to ensure a smooth transition. This change in leadership is part of InterDigital’s efforts to manage its operations effectively and may impact its strategic direction in the licensing domain.