InterDigital Reports 8% Decline in Q3 Revenues, 39% Increase in Nine-Month Revenues

InterDigital, Inc. reported its financial results for the third quarter and the nine months ended September 30, 2024, highlighting significant changes in revenue, profitability, and strategic developments compared to the previous fiscal period.

For Q3 2024, total revenues decreased by 8% to $128.7 million from $140.1 million in Q3 2023. Recurring revenues also fell by 6% to $98.6 million, primarily due to the expiration of agreements with Huawei and others. Smartphone revenues dropped 16% to $74.2 million, while revenues from CE, IoT/Auto increased by 52% to $23.8 million. Catch-up revenues decreased by 16% to $30.0 million, attributed to past patent royalties and static agreements. In contrast, total revenues for the nine months ended September 30, 2024, rose by 39% to $615.7 million, compared to $444.1 million in the same period of 2023, driven by a 133% increase in catch-up revenues.

Operating expenses for Q3 2024 increased by 3% to $89.3 million, influenced by a rise in licensing expenses and revenue share costs related to TPV and Samsung agreements. For the nine-month period, operating expenses surged by 37% to $338.7 million, primarily due to increased revenue share costs, performance-based compensation, and intellectual property enforcement costs associated with ongoing legal proceedings.

Net income for Q3 2024 was $34.2 million, down from $47.2 million in Q3 2023, while net income for the nine months increased to $225.5 million from $172.0 million in the prior year. Basic earnings per share for Q3 2024 were $1.36, compared to $1.82 in Q3 2023, while diluted EPS also saw a decline.

On the balance sheet, total assets decreased to $1.725 billion as of September 30, 2024, from $1.771 billion at the end of 2023. Cash and cash equivalents fell to $401.1 million, down from $437.1 million. However, shareholders' equity increased to $722.5 million, up from $581.5 million, reflecting a rise in retained earnings.

Strategically, InterDigital entered into new patent license agreements with Oppo and Lenovo, with revenue expected to be recognized starting in Q4 2024. The company also continued its share repurchase program, returning $14.5 million to shareholders in Q3 2024, including an increase in cash dividends from $0.40 to $0.45 per share. The effective tax rate for the nine months ended September 30, 2024, was 18.4%, up from 14.7% in the previous year, influenced by changes in foreign income deductions.