InterDigital, Inc. (NASDAQ:IDCC), a mobile and video technology
research and development company, today announced results for the
quarter ended March 31, 2022.
“This was another excellent quarter, once again showing the
continuing licensing momentum and the strength of our recurring
revenue base at a time when our technology is more important than
ever,” said Liren Chen, CEO and President of InterDigital. “I am
particularly pleased with our strong outlook for second quarter
2022 with additional revenue expected from our auto and IoT
licensing programs. Our second quarter expectations also highlight
the operating leverage within our business model as we project a
significant increase in revenue without a material increase in
expenses.”
First Quarter 2022 Financial Highlights
- Total revenue of $101.3 million
increased 23% from $82.4 million in first quarter 2021. Recurring
revenue was $99.1 million, compared to recurring revenue of $78.6
million in first quarter 2021. The increase in both total and
recurring revenue was primarily driven by previously disclosed new
patent license agreements, as well as a new agreement with Sharp
signed in first quarter 2022.
- Operating expenses were $71.1
million, compared to $70.4 million in first quarter 2021.
Litigation and share-based compensation costs were up $7.6 million,
while all other operating expenses were collectively down $6.8
million benefiting from the cost-savings actions taken in
2021.
- Income from operations increased
152% to $30.2 million, compared to $12.0 million in first quarter
2021.
- Net income1 was $18.0 million, or
$0.58 per diluted share, compared to net income of
$5.6 million, or $0.18 per diluted share, in first quarter
2021.
- Adjusted EBITDA2 increased 63% to $55.4
million, compared to $34.0 million in first quarter 2021.
Near Term OutlookBased both on existing
licenses and license agreements that we currently expect to be
executed in second quarter 2022, the company expects revenue for
the quarter to be between $114 to $120 million, including
approximately $97 to $101 million of recurring revenue. This
revenue guidance does not include the potential impact of any
additional new patent license, technology solutions or patent sale
agreements that may be signed, or any arbitration or dispute
resolutions that may occur, during the balance of second quarter
2022.
The company expects its second quarter operating expenses will
be in the range of $73 to $77 million, plus $3 to $4 million of
restructuring charges.
Conference Call Information
InterDigital will host a conference call on Thursday, May 5,
2022 at 10:00 a.m. ET to discuss its first 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, dial (800) 304-0389
within the United States or +1 (313) 209-5140 from outside the
United States. Please call by 9:50 a.m. ET on May 5th and give the
operator conference ID number 3231935.
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 May 5th
through 1:00 p.m. ET May 10th. To access the recorded replay, call
(888) 203-1112 or +1 (719) 457-0820 and use the replay code
3231935.
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 corresponding
macroeconomic uncertainty 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
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 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 March 31, |
|
|
2022 |
|
|
|
2021 |
|
REVENUES: |
|
|
|
Variable patent royalty revenue |
$ |
9,045 |
|
|
$ |
7,096 |
|
Fixed-fee royalty revenue |
|
89,843 |
|
|
|
69,296 |
|
Current patent royalties |
|
98,888 |
|
|
|
76,392 |
|
Non-current patent royalties |
|
2,191 |
|
|
|
3,781 |
|
Total patent royalties |
|
101,079 |
|
|
|
80,173 |
|
Current technology solutions revenue |
|
239 |
|
|
|
2,190 |
|
Total Revenue |
$ |
101,318 |
|
|
$ |
82,363 |
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
Patent administration and licensing |
|
42,095 |
|
|
|
36,574 |
|
Development |
|
17,612 |
|
|
|
22,583 |
|
Selling, general and administrative |
|
10,884 |
|
|
|
11,217 |
|
Restructuring activities |
|
542 |
|
|
|
— |
|
Total Operating expenses |
|
71,133 |
|
|
|
70,374 |
|
|
|
|
|
Income from operations |
|
30,185 |
|
|
|
11,989 |
|
|
|
|
|
INTEREST EXPENSE |
|
(5,515 |
) |
|
|
(6,990 |
) |
OTHER (EXPENSE) INCOME,
NET |
|
(1,005 |
) |
|
|
724 |
|
Income before income taxes |
|
23,665 |
|
|
|
5,723 |
|
INCOME TAX PROVISION |
|
(5,961 |
) |
|
|
(1,765 |
) |
NET INCOME |
$ |
17,704 |
|
|
$ |
3,958 |
|
Net loss attributable to noncontrolling interest |
|
(290 |
) |
|
|
(1,613 |
) |
NET INCOME ATTRIBUTABLE TO
INTERDIGITAL, INC. |
$ |
17,994 |
|
|
$ |
5,571 |
|
NET INCOME PER COMMON SHARE —
BASIC |
$ |
0.59 |
|
|
$ |
0.18 |
|
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING — BASIC |
|
30,703 |
|
|
|
30,836 |
|
NET INCOME PER COMMON SHARE —
DILUTED |
$ |
0.58 |
|
|
$ |
0.18 |
|
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING — DILUTED |
|
31,275 |
|
|
|
31,195 |
|
CASH DIVIDENDS DECLARED PER
COMMON SHARE |
$ |
0.35 |
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
SUMMARY CONSOLIDATED CASH
FLOWS(in thousands)(unaudited)
|
For the Three Months Ended March 31, |
|
|
2022 |
|
|
|
2021 |
|
Income before income
taxes |
$ |
23,665 |
|
|
$ |
5,723 |
|
Taxes paid |
|
(3,349 |
) |
|
|
(4,328 |
) |
Non-cash expenses |
|
26,166 |
|
|
|
23,833 |
|
Change in deferred
revenue |
|
(50,741 |
) |
|
|
(23,429 |
) |
Change in operating working
capital, deferred charges and other |
|
(13,713 |
) |
|
|
(11,641 |
) |
Purchases of property and
equipment and capitalized patent costs |
|
(10,209 |
) |
|
|
(9,989 |
) |
FREE CASH FLOW2 |
|
(28,181 |
) |
|
|
(19,831 |
) |
|
|
|
|
Long-term investments |
|
— |
|
|
|
(1,091 |
) |
Net proceeds from exercise of
stock options |
|
1,226 |
|
|
|
737 |
|
Repurchase of common
stock |
|
— |
|
|
|
(5,750 |
) |
Non-controlling interest
contribution |
|
1,500 |
|
|
|
— |
|
Non-controlling interest
distribution |
|
— |
|
|
|
(1,109 |
) |
Taxes withheld upon restricted
stock unit vestings |
|
(5,026 |
) |
|
|
(2,962 |
) |
Dividends paid |
|
(10,741 |
) |
|
|
(10,786 |
) |
Unrealized loss on short-term
investments |
|
(1,330 |
) |
|
|
(560 |
) |
NET DECREASE IN CASH, CASH
EQUIVALENTS, RESTRICTED CASH AND SHORT-TERM INVESTMENTS |
$ |
(42,552 |
) |
|
$ |
(41,352 |
) |
|
|
|
|
|
|
|
|
SUMMARY CONSOLIDATED BALANCE
SHEETS(in thousands)(unaudited)
|
MARCH 31, 2022 |
|
DECEMBER 31, 2021 |
ASSETS |
|
|
|
Cash, cash equivalents and short-term investments |
$ |
899,220 |
|
$ |
941,627 |
Accounts receivable, net |
|
23,638 |
|
|
31,113 |
Prepaid and other current
assets |
|
78,355 |
|
|
77,545 |
Property & equipment and
patents, net |
|
394,601 |
|
|
376,962 |
Other long-term assets,
net |
|
200,213 |
|
|
200,909 |
TOTAL ASSETS |
$ |
1,596,027 |
|
$ |
1,628,156 |
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Accounts payable, accrued liabilities, taxes payable &
dividends payable |
$ |
69,986 |
|
$ |
79,888 |
Current deferred revenue |
|
238,626 |
|
|
291,673 |
Long-term deferred revenue |
|
51,869 |
|
|
19,463 |
Long-term debt & other long-term liabilities |
|
474,880 |
|
|
484,215 |
TOTAL LIABILITIES |
|
835,361 |
|
|
875,239 |
TOTAL INTERDIGITAL, INC.
SHAREHOLDERS' EQUITY |
|
753,706 |
|
|
745,239 |
Noncontrolling interest |
|
6,960 |
|
|
7,678 |
TOTAL EQUITY |
|
760,666 |
|
|
752,917 |
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
$ |
1,596,027 |
|
$ |
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 March 31, |
|
|
2022 |
|
|
|
2021 |
|
Net Income
attributable to InterDigital, Inc. |
$ |
17,994 |
|
|
$ |
5,571 |
|
Net loss attributable to non-controlling interest |
|
(290 |
) |
|
|
(1,613 |
) |
Income tax provision |
|
5,961 |
|
|
|
1,765 |
|
Other income (expense) & interest expense |
|
6,520 |
|
|
|
6,266 |
|
Depreciation and amortization |
|
19,282 |
|
|
|
19,861 |
|
Share-based compensation |
|
5,386 |
|
|
|
2,153 |
|
Other items(a) |
|
542 |
|
|
|
— |
|
Adjusted
EBITDA |
$ |
55,395 |
|
|
$ |
34,003 |
|
|
|
|
|
|
|
|
|
(a) Other items in the above table includes $0.5 million of
restructuring costs in the first quarter 2022.
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 March 31, |
|
|
2022 |
|
|
|
2021 |
|
Net cash used in operating
activities |
$ |
(17,972 |
) |
|
$ |
(9,842 |
) |
Purchases of property and
equipment |
|
(337 |
) |
|
|
(387 |
) |
Capitalized patent costs |
|
(9,872 |
) |
|
|
(9,602 |
) |
Free cash flow |
$ |
(28,181 |
) |
|
$ |
(19,831 |
) |
|
|
|
|
|
|
|
|
CONTACT: |
InterDigital, Inc. |
|
Email:
investor.relations@interdigital.com |
|
+1 (302) 300-1857 |
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