0001405495false00014054952023-08-032023-08-03


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 3, 2023
______________

INTERDIGITAL, INC.
(Exact name of Registrant as Specified in Charter)
Pennsylvania1-3357982-4936666
(State or Other Jurisdiction of Incorporation)(Commission File Number)(IRS Employer Identification No.)
200 Bellevue Parkway, Suite 300
Wilmington, DE 19809-3727
(Address of principal executive offices, Zip code)

302-281-3600
Registrant's telephone number, including area code
Not Applicable
Former Name or Former Address, if Changed Since Last Report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading
Symbol(s)		 Name of each exchange
on which registered
Common Stock, par value $0.01 per share IDCC NASDAQ Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02.    Results of Operations and Financial Condition.

On August 3, 2023, InterDigital, Inc. issued a press release announcing its results of operations and financial condition for the fiscal quarter ended June 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1.

The information in this report, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.


Item 9.01.    Financial Statements and Exhibits.

(d)    Exhibits.

99.1
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



    
INTERDIGITAL, INC.
By: /s/ Joshua D. Schmidt
Joshua D. Schmidt
Chief Legal Officer and
Corporate Secretary


Date: August 3, 2023




INTERDIGITAL ANNOUNCES FINANCIAL RESULTS FOR SECOND QUARTER 2023
Continued business success drives high margins and fuels return of capital to shareholders
WILMINGTON, DE. - August 3, 2023 - InterDigital, Inc. (Nasdaq: IDCC), a mobile and video technology research and development company, today announced results for the quarter ended June 30, 2023.
"This was another strong quarter for the business where we added to our recent momentum," commented Liren Chen, President and CEO, InterDigital. "The UK High Court increased the Lenovo license to $184.9 million, which bolstered our cash balance to approximately $1 billion. Our financial strength, combined with our innovation leadership, puts us in a strong position to build on our recent progress and deliver considerable value to our shareholders."
Second Quarter 2023 Financial Highlights, as compared to Second Quarter 2022:
GAAP
•Total revenue was $101.6 million. This was 19% lower due to catch-up revenues that were recognized in second quarter 2022 from two previously announced license agreements.
•Recurring revenue was $99.1 million and decreased 1%.
•Operating expenses were $78.2 million and increased 5% due primarily to higher research and portfolio development costs.
•Non-operating income1 was $2.2 million, as compared to non-operating expense1 of $21.3 million, driven primarily by our 2022 debt refinancing.
•Net income2 was $21.8 million and increased 3%; net income2 margin was 21%.
•Diluted earnings per share was $0.79 and increased 14%.
•During second quarter 2023, we repurchased $42.5 million, or 0.5 million shares, under our share repurchase program.
Non-GAAP
•Adjusted EBITDA3 was $53.6 million and decreased 31% due to lower catch-up revenues noted above; Adjusted EBITDA margin3 was 53%.
•Non-GAAP net income4 was $35.6 million and decreased 11%.
•Non-GAAP diluted earnings per share4 was $1.30 and was flat.
Near Term Outlook
The table below presents guidance of the Company's expectations for third quarter 2023. The revenue range covers existing licenses and does not include any new agreements we may sign over the balance of the third quarter.
Q3 2023
Revenue$97M - $100M
Operating expenses$78M - $81M
Net income 2
$17M - $20M
Adjusted EBITDA 3
$47M- $50M
Diluted earnings per share$0.60 - $0.70
Weighted-average diluted shares (a)
28.2M
Non-GAAP diluted earnings per share 4
$1.10 - $1.20
Non-GAAP weighted-average diluted shares 4 (a)
27.0M
(a) Based on share repurchases through July 31, 2023, excluding any additional repurchases that may occur during the remainder of third quarter 2023.


Conference Call Information
InterDigital will host a conference call on Thursday, August 3, 2023 at 10:00 a.m. ET to discuss its second quarter 2023 financial performance and other company matters.
For a live Internet webcast of the conference call, visit www.interdigital.com and click on the “Webcast” link 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 the “Dial In Registration” link 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 Investors 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.
For additional financial measures, refer to our second quarter 2023 Form 10-Q and the financial metrics tracker, which are available on the Investor Relations section of our website.


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 to materialize to the extent or at the rate that we expect; (vii) unexpected delays or difficulties related to the development of our technologies; (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 or related legal proceedings, including appeals, changes in the schedules or costs associated with such proceedings or adverse rulings; (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 macroeconomic uncertainty could have on our financial position, results of operations and cash flows; (xvi) changes in our business strategy; (vii) changes or inaccuracies in our expectations with respect to royalty payments by our customers and (xviii) risks related to our assumptions and application of relevant accounting standards, including with respect to revenue recognition.
We undertake no duty to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.



Footnotes
1    Non-operating income and Non-operating expense are defined as interest expense plus other income (expense), net.
2    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.
3    Adjusted EBITDA and Adjusted EBITDA margin are supplemental non-GAAP financial measures that InterDigital believes provide 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 include restructuring costs, impairment charges and other non-recurring items. Adjusted EBITDA margin is Adjusted EBITDA over total revenues. These non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. A detailed reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure is provided below.
4    Non-GAAP net income, Non-GAAP diluted earnings per share, and Non-GAAP weighted-average diluted shares are supplemental non-GAAP financial measures that InterDigital believes provides investors with important insight into the Company's ongoing business performance. InterDigital defines Non-GAAP net income as net income attributable to InterDigital, Inc. plus share-based compensation, acquisition related amortization, depreciation and amortization, restructuring costs, impairment charges and one-time adjustments, losses on extinguishments of long-term debt, the related income tax effect of the preceding items, and adjustments to income taxes. Non-GAAP diluted earnings per share is defined as Non-GAAP net income divided by Non-GAAP weighted average number of common shares outstanding — diluted, which adjusts the weighted average number of common shares outstanding for the dilutive effect of the Convertible Notes, offset by our hedging arrangements. InterDigital’s computation of these non-GAAP financial measures might not be comparable to similarly named measures reported by other companies. The presentation of these financial measures, which are 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 each of these metrics to its 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,
2023202220232022
REVENUES:
Recurring revenues:
Smartphone$85,075 $87,484 $172,506 $175,182 
CE, IoT/Auto13,432 11,945 27,518 23,135 
Other566 672 622 911 
Total recurring revenues99,073 100,101 200,646 199,228 
Catch-up revenues2,518 24,556 103,318 26,747 
Total revenues101,591 124,657 303,964 225,975 
OPERATING EXPENSES:  
Research and portfolio development49,878 45,177 99,307 89,354 
Licensing16,644 17,326 38,012 32,856 
General and administrative11,693 9,516 24,008 20,400 
Restructuring activities— 2,738 — 3,280 
Total Operating expenses78,215 74,757 161,327 145,890 
Income from operations23,376 49,900 142,637 80,085 
INTEREST EXPENSE(12,141)(6,272)(24,228)(11,787)
OTHER INCOME (EXPENSE), NET14,387 (15,016)27,578 (16,021)
Income before income taxes25,622 28,612 145,987 52,277 
INCOME TAX PROVISION(4,329)(8,028)(21,174)(13,989)
NET INCOME$21,293 $20,584 $124,813 $38,288 
Net loss attributable to noncontrolling interest(490)(485)(2,229)(775)
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.$21,783 $21,069 $127,042 $39,063 
NET INCOME PER COMMON SHARE — BASIC$0.81 $0.69 $4.58 $1.28 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC26,768 30,413 27,754 30,557 
NET INCOME PER COMMON SHARE — DILUTED$0.79 $0.69 $4.46 $1.26 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED27,655 30,710 28,494 30,992 
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,
 2023202220232022
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income$21,293 $20,584 $124,813 $38,288 
Non-cash adjustments(28,279)(30,697)(32,283)(52,780)
Working capital changes(38,454)(23,655)(165,822)(37,248)
Net cash used in operating activities(45,440)(33,768)(73,292)(51,740)
CASH FLOWS FROM INVESTING ACTIVITIES:  
Net (purchases) sales of short-term investments(40,046)46,989 (46,028)164,800 
Capitalized patent costs and purchases of property and equipment(13,036)(11,876)(21,517)(22,085)
Net cash (used in) provided by investing activities(53,082)35,113 (67,545)142,715 
CASH FLOWS FROM FINANCING ACTIVITIES:  
Net proceeds from debt refinancing— 139,989 (100)139,989 
Repurchase of common stock(42,489)(74,445)(245,870)(74,445)
Dividends paid(9,449)(10,803)(19,833)(21,544)
Other(1,378)(707)(5,649)(3,007)
Net cash (used in) provided by financing activities(53,316)54,034 (271,452)40,993 
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(151,838)55,379 (412,289)131,968 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD442,710 789,813 703,161 713,224 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD$290,872 $845,192 $290,872 $845,192 


SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
JUNE 30, 2023DECEMBER 31, 2022
ASSETS  
Cash, cash equivalents and short-term investments$840,723 $1,201,777 
Accounts receivable236,794 53,182 
Prepaid and other current assets114,630 89,716 
Property & equipment and patents, net348,673 365,337 
Other long-term assets, net219,359 190,093 
TOTAL ASSETS$1,760,179 $1,900,105 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current portion of long-term debt$125,628 $— 
Accounts payable, accrued liabilities, taxes payable & dividends payable148,226 82,287 
Current deferred revenue172,650 189,059 
Long-term deferred revenue172,582 237,580 
Long-term debt & other long-term liabilities540,737 660,666 
TOTAL LIABILITIES1,159,823 1,169,592 
TOTAL INTERDIGITAL, INC. SHAREHOLDERS' EQUITY595,217 724,895 
Noncontrolling interest5,139 5,618 
TOTAL EQUITY600,356 730,513 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,760,179 $1,900,105 


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, except Q3 Outlook):
For the Three Months Ended June 30,For the Six Months Ended June 30,Q3 Outlook
(in millions)
20232022202320222023
Net income attributable to InterDigital, Inc.$21,783 $21,069 $127,042 $39,063 $17 - $20
Net loss attributable to non-controlling interest(490)(485)(2,229)(775)(1)
Income tax provision4,329 8,028 21,174 13,989 3
Other income (expense), net & interest expense(2,246)21,288 (3,350)27,808 (2)
Depreciation and amortization19,645 21,154 39,171 40,436 20
Share-based compensation8,740 3,977 16,530 9,363 10
Other items (a)
1,800 2,738 10,037 3,280 —
Adjusted EBITDA 3
$53,561 $77,769 $208,375 $133,164 $47 - $50
(a)    Other items in the above table includes $1.8 million and $7.5 million of one-time charges for net litigation fee reimbursement during the three and six months ended June 30, 2023, respectively. The six months ended June 30, 2023 also includes a $2.5 million one-time impairment on our patents held for sale. Additionally, Other items includes $2.7 million and $3.3 million of restructuring costs during the three and six months ended June 30, 2022, respectively.


The table below presents a reconciliation of Non-GAAP net income to Net income attributable to InterDigital, Inc., the most directly comparable GAAP financial measure (in thousands, except Q3 Outlook):
For the Three Months Ended June 30,For the Six Months Ended June 30,Q3 Outlook
(in millions)
20232022202320222023
Net income attributable to InterDigital, Inc.$21,783 $21,069 $127,042 $39,063 $17 - $20
Share-based compensation8,740 3,977 16,530 9,363 10
Acquisition related amortization10,262 10,820 20,530 20,906 10
Other operating items (a)
1,800 2,738 10,037 3,280 —
Other non-operating items (b)
(3,100)9,590 (3,258)9,590 (4)
Related income tax and noncontrolling interest effect of above items(3,717)(5,696)(10,456)(9,059)(3)
Adjustments to income taxes(136)(2,475)(1,178)(2,313)—
Non-GAAP net income 4
$35,632 $40,023 $159,247 $70,830 $30 - $33
Weighted average dilutive shares - GAAP27,655 30,710 28,494 30,992 28.2
Less: Dilutive impact of the Convertible Notes255 — 128 — 1.2
Weighted average dilutive shares - Non-GAAP 4
27,400 30,710 28,366 30,992 27.0
Non-GAAP net income per diluted share 4
$1.30 $1.30 $5.61 $2.29 $1.10 - $1.20
(a)    Other operating items in the above table includes $1.8 million and $7.5 million one-time charges for net litigation fee reimbursement during the three and six months ended June 30, 2023, respectively. The six months ended June 30, 2023 also includes a $2.5 million one-time impairment on our patents held for sale. Additionally, Other operating items includes $2.7 million and $3.3 million of restructuring costs during the three and six months ended June 30, 2022, respectively.
(b)    Other non-operating items includes $3.1 million and $3.3 million of gains from fair value changes of our long-term strategic investments during the three and six months ended June 30, 2023, respectively. Other non-operating items for the three and six months ended June 30, 2022 includes a $11.2 million loss on extinguishment of long-term debt, partially offset by a $1.6 million gain from fair value changes of our long-term strategic investments.


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

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Aug. 03, 2023
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