InterDigital, Inc. (IDCC) | Investment Case

1. Company Snapshot

1.a. 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.

Show Full description

1.b. Last Insights on IDCC

Breaking News: InterDigital Inc reported an increase in stake by institutional investor Franklin Resources Inc, which acquired 846 shares, representing a 2.8% increase. Franklin Resources now owns 30611 shares of the wireless communications provider. There is no recent earnings release available. Analysts at various firms have given recommendations, with some recommending a buy, while others suggest holding or selling the stock. Specifically, some analysts have reiterated their hold rating on InterDigital.

1.c. Company Highlights

Last Price	350.79
Change Percentage	2.62%
Open	340.24
Previous Close	341.84
Market Cap ( Millions)	9031
Volume	268819
Year High	412.6
Year Low	169.58
M A 50	357.55
M A 200	264.37

FCF Yield	6.98%
Dividend Yield	0.67%
ROE	49.92%
Debt / Equity	44.34%
Net Debt / EBIDTA	-51.22%
Price To Book	8.23
Price Earnings Ratio	18.22
Price To FCF	14.32
Price To sales	9.73
EV / EBITDA	12.61

2. InterDigital's Q3 2025 Earnings: A Strong Performance

InterDigital reported a robust financial performance in Q3 2025, with revenue increasing 28% year-over-year to $165 million. Adjusted EBITDA and non-GAAP EPS saw significant growth, rising 62% and 56% respectively. The company's annualized recurring revenue (ARR) reached an all-time high of $588 million, representing a 49% year-over-year increase. Non-GAAP EPS came in at $1.93, beating analyst estimates of $1.79. The strong performance was driven by the Samsung arbitration result and new license agreements, including a license with Honor, a top smartphone manufacturer based in China.

Publication Date: Nov -03

                                    📋 Highlights
                                    Annualized Recurring Revenue (ARR) Growth::
                                                ARR surged 49% YoY to a record $588 million in Q3 2025, driven by new smartphone license agreements.
Q3 Revenue & Profit Margins::
                                                Revenue hit $165 million (+28% YoY), with adjusted EBITDA and non-GAAP EPS rising 62% and 56% respectively.
Smartphone Licensing Expansion::
                                                Signed a license with Honor, securing 8 of the top 10 smartphone vendors and ~85% market coverage under license.
Shareholder Returns::
                                                Dividend increased 17% to $0.70/share, with $130 million returned to shareholders in 2025 through dividends.
Full-Year Revenue Outlook::
                                                Expected $820–$824 million in full-year recurring revenue from existing contracts, with Q4 ARR of $144–$148 million.

                                

License Agreements and ARR Growth

The company's ARR growth was primarily driven by new agreements signed over the intervening year in its smartphone program, including license agreements with OPPO, Vivo, Lenovo, and Honor. InterDigital now has 8 of the top 10 smartphone vendors and around 85% of the total market under license. As Rich Brezski noted, "Our annualized recurring revenue, or ARR, increased 49% year-over-year to another all-time high of $588 million in Q3." This growth is expected to continue, with the company forecasting recurring revenue of $144 million to $148 million in Q4.

Valuation and Growth Expectations

InterDigital's valuation metrics indicate a premium valuation, with a P/E Ratio of 18.8 and an EV/EBITDA ratio of 13.01. The company's ROE stands at 49.92%, indicating strong profitability. However, analysts estimate a revenue decline of 19.8% for next year, which may impact the stock's performance. The dividend yield stands at 0.65%, providing some support to the stock. With a strong track record of enforcing its patents and a growing presence in new areas like EV charging, InterDigital's long-term prospects remain promising.

New Initiatives and Opportunities

InterDigital is expanding its presence in new areas, including consumer IoT and EV charging. The company has made progress in licensing its technology to major TV manufacturers, including Samsung, and is working with other players like LG, Hisense, and TCL. As Liren Chen noted, "Regarding the consumer electronic IoT space, this is really a class of multiple opportunities." The company's foray into EV charging is also showing promise, with potential for significant growth in this area.

3. NewsRoom

InterDigital Declares Regular Quarterly Cash Dividend

Dec -04

Source: globenewswire.com

Franklin Resources Inc. Acquires 846 Shares of InterDigital, Inc. $IDCC

Dec -01

Source: defenseworld.net

InterDigital awarded injunction against Disney by German court

Nov -24

Source: globenewswire.com

ERIC or IDCC: Which Is the Better Value Stock Right Now?

Nov -20

Source: zacks.com

InterDigital to Present at Three Upcoming Investor Conferences

Nov -12

Source: globenewswire.com

InterDigital enforces patents against Amazon

Nov -10

Source: globenewswire.com

ERIC vs. IDCC: Which Stock Is the Better Value Option?

Nov -04

Source: zacks.com

ERIC or IDCC: Which Is the Better Value Stock Right Now?

Nov -04

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.00%)

6. Segments

Wireless Communications Equipment

Expected Growth: 7.0%

The growth rate is higher than the global average due to the increasing demand for 5G infrastructure and the company's strong position in the wireless communications market. The adoption of 5G technologies is driving the growth of this segment, and the company's expertise in wireless technologies is expected to continue to drive revenue growth.

7. Detailed Products

5G Millimeter Wave (mmW) Technology

InterDigital's 5G mmW technology enables high-speed, low-latency wireless communication, ideal for applications requiring massive bandwidth and low latency.

Video Compression (VVC, HEVC, AVC)

InterDigital's video compression technologies, including VVC, HEVC, and AVC, enable efficient video encoding and decoding for various applications.

Artificial Intelligence (AI) and Machine Learning (ML) Solutions

InterDigital's AI and ML solutions enable intelligent decision-making, predictive analytics, and automation in various industries.

Internet of Things (IoT) Solutions

InterDigital's IoT solutions enable secure, efficient, and scalable connectivity for various IoT applications.

5G New Radio (5G NR) Technology

InterDigital's 5G NR technology enables fast, reliable, and low-latency wireless communication for various applications.

Wi-Fi and WiGig Solutions

InterDigital's Wi-Fi and WiGig solutions enable fast, reliable, and secure wireless connectivity for various applications.

Patent Licensing and Innovation

InterDigital's patent licensing and innovation enable companies to access and leverage its extensive portfolio of wireless and video technologies.

8. InterDigital, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

InterDigital, Inc. operates in the technology industry, where substitutes are readily available. However, the company's focus on 5G and IoT technologies provides a competitive edge, reducing the threat of substitutes.

Bargaining Power Of Customers

InterDigital, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's patented technologies provide a unique value proposition, limiting customers' ability to negotiate prices.

Bargaining Power Of Suppliers

InterDigital, Inc. is a technology company with a strong intellectual property portfolio, which reduces its dependence on suppliers. The company's suppliers have limited bargaining power due to the availability of alternative suppliers.

Threat Of New Entrants

The technology industry is highly competitive, and new entrants can easily disrupt the market. InterDigital, Inc. faces a high threat of new entrants, particularly from startups and established companies expanding into new markets.

Intensity Of Rivalry

The technology industry is highly competitive, and InterDigital, Inc. operates in a crowded market with many established players. The company faces intense rivalry from competitors, which can lead to pricing pressures and reduced market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	51.81%
Debt Cost	7.97%
Equity Weight	48.19%
Equity Cost	10.66%
WACC	9.26%
Leverage	107.50%

11. Quality Control: InterDigital, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

InterDigital

A-Score: 6.6/10

Value: 3.0

Growth: 8.8

Quality: 9.0

Yield: 3.0

Momentum: 10.0

Volatility: 6.0

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Value: 3.9

Growth: 6.1

Quality: 6.8

Yield: 2.0

Momentum: 7.0

Volatility: 9.7

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A-Score: 5.7/10

Value: 3.2

Growth: 8.1

Quality: 8.5

Yield: 0.0

Momentum: 7.5

Volatility: 6.7

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A-Score: 5.1/10

Value: 3.8

Growth: 8.3

Quality: 6.8

Yield: 0.0

Momentum: 4.0

Volatility: 7.7

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A-Score: 4.2/10

Value: 0.7

Growth: 6.9

Quality: 6.6

Yield: 0.0

Momentum: 7.0

Volatility: 4.0

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A-Score: 3.4/10

Value: 4.4

Growth: 7.1

Quality: 3.8

Yield: 0.0

Momentum: 0.5

Volatility: 4.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

6.67%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.26%

InterDigital, Inc. - US45867G1013

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on IDCC

1.c. Company Highlights

Better Quality

Higher Yield

Less Volatile

Earnings Beats

Revenues Beats

Higher Growth

Strong Momentum

Revenues Miss

Earnings Miss

2. InterDigital's Q3 2025 Earnings: A Strong Performance

License Agreements and ARR Growth

Valuation and Growth Expectations

New Initiatives and Opportunities

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.00%)

6. Segments

Wireless Communications Equipment

Expected Growth: 7.0%

7. Detailed Products

5G Millimeter Wave (mmW) Technology

Video Compression (VVC, HEVC, AVC)

Artificial Intelligence (AI) and Machine Learning (ML) Solutions

Internet of Things (IoT) Solutions

5G New Radio (5G NR) Technology

Wi-Fi and WiGig Solutions

Patent Licensing and Innovation

8. InterDigital, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: InterDigital, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

350.79$

Current Price

350.79$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA