InterDigital, Inc. (NASDAQ:IDCC), a mobile and video technology
research and development company, today announced results for the
quarter ended June 30, 2021.
Second Quarter 2021 Financial Highlights
- Recurring revenue was $78.1 million, compared to recurring
revenue of $85.2 million in second quarter 2020. Total
revenue was $87.7 million, compared to $104.5 million in second
quarter 2020. As previously disclosed, second quarter 2020
included recurring revenue from a handset manufacturer that has
since exited the business, and non-current patent royalties from a
fixed-fee patent license agreement. Second quarter 2021 revenue did
not include any impact from the company's recently announced
agreement with Xiaomi which was executed in third quarter
2021.
- Operating expenses were $90.9 million, compared to $72.6
million in second quarter 2020. The increase was primarily driven
by non-recurring charges of $15.2 million, substantially related to
the company's recently announced restructuring plans.
- Operating income (loss) decreased to a loss of $3.1 million,
compared to income of $31.9 million in second quarter 2020.
- Net income1 was $1.6 million, or $0.05 per diluted share,
compared to net income of $22.3 million, or $0.72 per diluted
share, in second quarter 2020.
“I am pleased with the team’s strong focus on execution during
the quarter, which led to the recent signing of our long-term
agreement with Xiaomi, one of the largest smartphone vendors
worldwide. This agreement, along with the recent verdict from the
UK’s High Court that Lenovo has infringed one of the company’s
patents, reinforces both our technology leadership and the
strengths of our patent portfolio,” said Liren Chen, President and
CEO of InterDigital. “With Xiaomi coming on board as a new
licensee, and the continued efforts to license additional
companies, we now have 55% of the worldwide smartphone market under
license and are well positioned for continued growth.”
Additional Highlights
- The company used $27.3 million of cash in operating activities,
compared to $69.8 million cash provided by operating activities in
second quarter 2020, and used $38.4 million of free cash flow2,
compared to generating $60.0 million in second quarter 2020. These
changes were primarily driven by timing of collections under
fixed-fee agreements. Cash and cash equivalents, restricted cash
and short-term investments totaled $837.7 million on June 30,
2021.
- The company repurchased $5.4 million, or 0.1 million shares,
during second quarter 2021.
Conference Call Information
InterDigital will host a conference call on Thursday, August
5th, 2021 at 10:00 a.m. ET to discuss its second quarter 2021
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, dial (866) 269-4260 within the
United States or +1 (323) 289-6581 from other locations. Please
call by 9:50 a.m. ET on August 5th and give the operator conference
ID number 8536688.An Internet replay of the conference call will be
available on InterDigital’s website in the Investors section. In
addition, a telephone replay will be available from 1:00 p.m. ET on
August 5th through 1:00 p.m. ET on August 10th. To access the
recorded replay, call (888) 203-1112 or +1 (719) 457-0820 and use
the replay code 8536688.
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,” “see,” and
variations of any such words or similar expressions are intended to
identify such forward-looking statements.
Forward-looking statements are subject to risks and
uncertainties. Actual outcomes could differ materially from those
expressed in or anticipated by such forward-looking statements due
to a variety of factors, including, without limitation, those
identified in this press release, as well as the following: (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) failure to accurately forecast the impact
of our restructuring activities on our financial statements and our
business; (x) the resolution of current legal or regulatory
proceedings, including any awards or judgments relating to such
proceedings, additional legal or regulatory proceedings, changes in
the schedules or costs associated with legal or regulatory
proceedings or adverse rulings in such legal or regulatory
proceedings; (xi) the timing and impact of potential administrative
and legislative matters; (xii) changes or inaccuracies in market
projections; (xiii) the potential effects that the ongoing COVID-19
pandemic and/or corresponding macroeconomic uncertainty could have
on our financial position, results of operations and cash flows;
and (ix) changes in our business strategy.
We undertake no duty to update publicly any forward-looking
statement, whether as a result of new information, future events or
otherwise, except as may be required by applicable law, regulation
or other competent legal authority.
Footnotes
1 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 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 at the end of this press release.
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, |
| |
2021 |
|
2020 |
|
2021 |
|
2020 |
| REVENUES: |
|
|
|
|
|
|
|
|
Variable patent royalty revenue |
$ |
7,323 |
|
|
|
$ |
4,597 |
|
|
|
$ |
14,419 |
|
|
|
$ |
10,543 |
|
|
|
Fixed-fee royalty revenue |
69,296 |
|
|
|
77,338 |
|
|
|
138,592 |
|
|
|
143,685 |
|
|
|
Current patent royalties |
76,619 |
|
|
|
81,935 |
|
|
|
153,011 |
|
|
|
154,228 |
|
|
|
Non-current patent royalties |
9,586 |
|
|
|
19,249 |
|
|
|
13,367 |
|
|
|
19,954 |
|
|
|
Total patent royalties |
86,205 |
|
|
|
101,184 |
|
|
|
166,378 |
|
|
|
174,182 |
|
|
|
Current technology solutions revenue |
1,530 |
|
|
|
3,314 |
|
|
|
3,720 |
|
|
|
6,526 |
|
|
|
Total Revenue |
$ |
87,735 |
|
|
|
$ |
104,498 |
|
|
|
$ |
170,098 |
|
|
|
$ |
180,708 |
|
|
| |
|
|
|
|
|
|
|
| OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
Patent administration and licensing |
40,970 |
|
|
|
38,695 |
|
|
|
77,544 |
|
|
|
78,803 |
|
|
|
Development |
21,870 |
|
|
|
22,092 |
|
|
|
44,453 |
|
|
|
40,910 |
|
|
|
Selling, general and administrative |
14,799 |
|
|
|
11,794 |
|
|
|
26,016 |
|
|
|
24,397 |
|
|
|
Restructuring activities |
13,245 |
|
|
|
— |
|
|
|
13,245 |
|
|
|
— |
|
|
|
Total Operating expenses |
90,884 |
|
|
|
72,581 |
|
|
|
161,258 |
|
|
|
144,110 |
|
|
| |
|
|
|
|
|
|
|
|
Income (loss) from operations |
(3,149 |
) |
|
|
31,917 |
|
|
|
8,840 |
|
|
|
36,598 |
|
|
| |
|
|
|
|
|
|
|
| INTEREST EXPENSE |
(6,666 |
) |
|
|
(9,971 |
) |
|
|
(13,656 |
) |
|
|
(20,516 |
) |
|
| OTHER INCOME, NET |
3,039 |
|
|
|
3,789 |
|
|
|
3,763 |
|
|
|
9,812 |
|
|
|
Income (loss) before income taxes |
(6,776 |
) |
|
|
25,735 |
|
|
|
(1,053 |
) |
|
|
25,894 |
|
|
| INCOME TAX PROVISION |
(21 |
) |
|
|
(5,144 |
) |
|
|
(1,786 |
) |
|
|
(6,964 |
) |
|
| NET INCOME (LOSS) |
$ |
(6,797 |
) |
|
|
$ |
20,591 |
|
|
|
$ |
(2,839 |
) |
|
|
$ |
18,930 |
|
|
|
Net loss attributable to noncontrolling interest |
(8,415 |
) |
|
|
(1,660 |
) |
|
|
(10,028 |
) |
|
|
(3,437 |
) |
|
| NET INCOME ATTRIBUTABLE TO
INTERDIGITAL, INC. |
$ |
1,618 |
|
|
|
$ |
22,251 |
|
|
|
$ |
7,189 |
|
|
|
$ |
22,367 |
|
|
| NET INCOME PER COMMON SHARE —
BASIC |
$ |
0.05 |
|
|
|
$ |
0.72 |
|
|
|
$ |
0.23 |
|
|
|
$ |
0.73 |
|
|
| WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING — BASIC |
30,804 |
|
|
|
30,757 |
|
|
|
30,820 |
|
|
|
30,740 |
|
|
| NET INCOME PER COMMON SHARE —
DILUTED |
$ |
0.05 |
|
|
|
$ |
0.72 |
|
|
|
$ |
0.23 |
|
|
|
$ |
0.72 |
|
|
| WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING — DILUTED |
31,189 |
|
|
|
31,045 |
|
|
|
31,192 |
|
|
|
30,982 |
|
|
| 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, |
| |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Income before income taxes |
$ |
(6,776 |
) |
|
|
$ |
25,735 |
|
|
|
$ |
(1,053 |
) |
|
|
$ |
25,894 |
|
|
| Taxes paid |
(465 |
) |
|
|
(11,560 |
) |
|
|
(4,793 |
) |
|
|
(13,788 |
) |
|
| Non-cash expenses |
35,557 |
|
|
|
29,847 |
|
|
|
59,390 |
|
|
|
50,146 |
|
|
| Change in deferred
revenue |
(63,230 |
) |
|
|
16,829 |
|
|
|
(86,659 |
) |
|
|
(22,683 |
) |
|
| Increase (decrease) in
operating working capital, deferred charges and other |
7,655 |
|
|
|
8,904 |
|
|
|
(3,986 |
) |
|
|
3,301 |
|
|
| Purchases of property and
equipment and capitalized patent costs |
(11,176 |
) |
|
|
(9,761 |
) |
|
|
(21,165 |
) |
|
|
(17,620 |
) |
|
| FREE CASH FLOW 2 |
(38,435 |
) |
|
|
59,994 |
|
|
|
(58,266 |
) |
|
|
25,250 |
|
|
| |
|
|
|
|
|
|
|
| Long-term investments |
— |
|
|
|
— |
|
|
|
(1,091 |
) |
|
|
— |
|
|
| Non-controlling interest
distribution |
— |
|
|
|
— |
|
|
|
(1,109 |
) |
|
|
— |
|
|
| Dividends paid |
(10,739 |
) |
|
|
(10,762 |
) |
|
|
(21,525 |
) |
|
|
(21,509 |
) |
|
| Taxes withheld upon restricted
stock unit vestings |
(711 |
) |
|
|
(755 |
) |
|
|
(3,673 |
) |
|
|
(1,480 |
) |
|
| Payments on long-term
debt |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(94,909 |
) |
|
| Repurchase of common
stock |
(5,391 |
) |
|
|
— |
|
|
|
(11,141 |
) |
|
|
(349 |
) |
|
| Net proceeds from exercise of
stock options |
3,632 |
|
|
|
1,014 |
|
|
|
4,369 |
|
|
|
1,792 |
|
|
| Unrealized gain (loss) on
short-term investments |
(115 |
) |
|
|
1,909 |
|
|
|
(675 |
) |
|
|
1,135 |
|
|
| NET INCREASE (DECREASE) IN
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND SHORT-TERM
INVESTMENTS |
$ |
(51,759 |
) |
|
|
$ |
51,400 |
|
|
|
$ |
(93,111 |
) |
|
|
$ |
(90,070 |
) |
|
SUMMARY CONSOLIDATED BALANCE
SHEETS(in thousands)(unaudited)
| |
JUNE 30, 2021 |
|
DECEMBER 31, 2020 |
| ASSETS |
|
|
|
|
Cash, cash equivalents and short-term investments |
$ |
835,903 |
|
|
$ |
926,647 |
|
| Accounts receivable, net |
12,003 |
|
|
16,008 |
|
| Prepaid and other current
assets |
74,797 |
|
|
59,894 |
|
| Property & equipment and
patents, net |
396,152 |
|
|
434,973 |
|
| Other long-term assets,
net |
178,228 |
|
|
178,753 |
|
| TOTAL ASSETS |
$ |
1,497,083 |
|
|
$ |
1,616,275 |
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Accounts payable, accrued liabilities, taxes payable &
dividends payable |
$ |
75,322 |
|
|
$ |
75,827 |
|
|
Current deferred revenue |
158,899 |
|
|
219,935 |
|
|
Long-term deferred revenue |
82,446 |
|
|
108,069 |
|
|
Long-term debt & other long-term liabilities |
464,171 |
|
|
415,878 |
|
| TOTAL LIABILITIES |
780,838 |
|
|
819,709 |
|
| TOTAL INTERDIGITAL, INC.
SHAREHOLDERS' EQUITY |
704,185 |
|
|
773,369 |
|
| Noncontrolling interest |
12,060 |
|
|
23,197 |
|
| TOTAL EQUITY |
716,245 |
|
|
796,566 |
|
| TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
$ |
1,497,083 |
|
|
$ |
1,616,275 |
|
RECONCILIATION OF FREE CASH FLOW TO NET
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
In the summary consolidated cash flows and throughout this
release, the company refers to free cash flow. The table below
presents a reconciliation of this non-GAAP financial measure to net
cash provided by (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, |
| |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Net cash provided by (used in) operating activities |
$ |
(27,259 |
) |
|
|
$ |
69,755 |
|
|
|
$ |
(37,101 |
) |
|
|
$ |
42,870 |
|
|
| Purchases of property and
equipment |
(550 |
) |
|
|
(2,168 |
) |
|
|
(937 |
) |
|
|
(3,771 |
) |
|
| Capitalized patent costs |
(10,626 |
) |
|
|
(7,593 |
) |
|
|
(20,228 |
) |
|
|
(13,849 |
) |
|
| Free cash flow |
$ |
(38,435 |
) |
|
|
$ |
59,994 |
|
|
|
$ |
(58,266 |
) |
|
|
$ |
25,250 |
|
|
|
CONTACT: |
InterDigital, Inc. |
| |
Tiziana Figliolia |
| |
Email:
tiziana.figliolia@interdigital.com |
| |
+1 (302) 300-1857 |
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