WILMINGTON, DE — InterDigital, Inc. (Nasdaq: IDCC) announced results for the fourth quarter and full year ended December 31, 2022.
“We are thrilled to have delivered another excellent performance in 2022, highlighted by record setting level of recurring revenue of almost $404 million, Samsung’s recent agreement for binding arbitration to take a new license following Apple’s renewal in third quarter, and outstanding performance in consumer electronics, IoT/Auto licensing,” commented Liren Chen, President and CEO, InterDigital. “Building on the strength of last year and looking ahead to 2023 and beyond, I believe we are well positioned to deliver further growth in our smartphone core, build on our increasing momentum in consumer electronics and IoT/Auto, and capitalize on new opportunities in services that are built on our foundational innovations.”
Fourth Quarter 2022 Financial Highlights, as compared to Fourth Quarter 2021:
- Total revenue was $117.1 million and increased 5%.
- Recurring revenue was $103.6 million and increased 2%.
- Operating expenses were $78.5 million and decreased 9%. The decrease was primarily driven by a reduction of non-recurring costs from restructuring activities.
- Net income1 was $32.4 million and increased 48%.
- Diluted earnings per share was $1.08 and increased 54%.
- Adjusted EBITDA2 was $64.9 million and increased 8%.
Full Year 2022 Financial Highlights, as compared to Full Year 2021:
- Total revenue was $457.8 million and increased 8%. Total Smartphone revenue of $353.2 million was flat, while CE, IoT/Auto revenue was $103.5 million and increased 51%.
- Recurring revenue was $403.9 million and increased 15%. Smartphone recurring revenue was $351.1 million, and increased 11%, and CE, IoT/Auto recurring revenue was $51.7 million and increased 63%.
- Operating expenses were $307.3 million and decreased 13%. The decrease was primarily driven by cost-savings actions the company initiated in 2021 and reduction of the related non-recurring costs.
- Net income1 was $93.7 million and increased 69%.
- Diluted earnings per share was $3.07 and increased 73%.
- Adjusted EBITDA2 was $254.5 million and increased 22%.
Near-Term Outlook
The company expects recurring revenue for first quarter 2023 will be between $94 and $98 million. This range covers existing agreements and includes a conservative estimate that the company will recognize under its binding arbitration agreement with Samsung. It does not include the potential impact of any new agreements that may be signed during the balance of first quarter 2023.
The company expects first quarter 2023 operating expenses will be in the range of $75 to $79 million. In addition, the company expects non-operating expenses, comprised of interest expense and other income (expense), will be in the range of $1 to $3 million and the effective tax rate will be approximately 25%.
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 in the Company’s original release.
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 in the Company’s original release.
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