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InterDigital (IDCC) Q2 Earnings Beat, Top Line Declines Y/Y
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InterDigital, Inc. (IDCC - Free Report) reported modest second-quarter 2023 results, with both the bottom line and top line beating the respective Zacks Consensus Estimate. The company reported lower revenues year over year, owing to lower catch-up revenues and a net sales decline in smartphones.
Net Income
Quarterly net income was $21.8 million or 79 cents per share compared with $21.1 million or 69 cents per share in the year-earlier quarter. The bottom line improved despite top-line contraction due to lower income tax provisions.
Non-GAAP net income was $35.6 million or $1.30 per share, down from $40 million or $1.30 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 9 cents.
InterDigital, Inc. Price, Consensus and EPS Surprise
Net sales in the quarter declined to $101.6 million from $124.7 million in the year-ago quarter. The 19% year-over-year decline in net sales was induced by lower catch-up revenues, owing to two license agreements announced in the second quarter of 2022. The top line marginally beat the consensus estimate of $101.2 million.
Total recurring revenues in the second quarter were $99.1 million, down from $100.1 million reported in the prior-year quarter. The top line surpassed our estimate of $78.2 million. Smartphone revenues declined to $85.1 million from $87.5 million in the year-ago period. However, net sales from CE, loT/Auto improved to $13.4 million from $11.9 million in the year-ago quarter.
Total catch-up revenues declined to $2,518 million from the prior-year quarter’s figure of $24,556 million. Net sales fell short of our revenue estimate of $22.2 million.
Other Details
Adjusted EBITDA declined 31% year over year to $53.6 million, owing to lower catch-up revenues. Total operating expenses rose 5% year over year to $78.2 million due to higher expenses related to research and portfolio development. Operating income decreased to $23.4 million from $49.9 million.
Cash Flow & Liquidity
In the second quarter of 2023, InterDigital utilized $45.4 million of cash for operating activities compared with cash utilization of $33.8 million in the year-earlier period. The company utilized $73.3 million of cash from operating activities in the first six months of 2023 compared with $51.7 million cash utilization in the prior-year period.
As of Jun 30, 2023, the company had $840.7 million in cash and cash equivalents with $540.7 million of long-term debt and other long-term liabilities. With the U.K. high court verdict increasing the Lenovo license fee to $184.9 million, the company’s cash balance has significantly improved. Management expects that a cash balance of around $1 billion will support innovation and drive greater value to shareholders.
Outlook
For the third quarter of 2023, InterDigital estimates revenues to be between $97 million and $100 million. Total operating expenses are projected in the range of $78-$81 million. Net income is expected in the range of $17-$20 million or 60-70 cents per share. Non-GAAP earnings are expected to be within $1.10-$1.20 per share.
Zacks Rank & Other Stocks to Consider
InterDigital currently sports a Zacks Rank #1 (Strong Buy).
Akamai Technologies, Inc. (AKAM - Free Report) , currently carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It delivered an earnings surprise of 6.06% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Akamai is a global provider of content delivery networks and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
Workday Inc. (WDAY - Free Report) , sporting a Zacks Rank #1 at present, delivered an earnings surprise of 13.05%, on average, in the trailing four quarters.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, which makes it easier for organizations to provide analytical insights and decision support.
Motorola Solutions, Inc. (MSI - Free Report) , currently carrying a Zacks Rank #2, delivered an earnings surprise of 6.90%, on average, in the trailing four quarters.
It is a leading communications equipment manufacturer and has strong market positions in bar code scanning, wireless infrastructure gear, and government communications. Motorola Solutions generally provides services and solutions to the government segments and public safety programs together with large enterprises and wireless infrastructure service providers.
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InterDigital (IDCC) Q2 Earnings Beat, Top Line Declines Y/Y
InterDigital, Inc. (IDCC - Free Report) reported modest second-quarter 2023 results, with both the bottom line and top line beating the respective Zacks Consensus Estimate. The company reported lower revenues year over year, owing to lower catch-up revenues and a net sales decline in smartphones.
Net Income
Quarterly net income was $21.8 million or 79 cents per share compared with $21.1 million or 69 cents per share in the year-earlier quarter. The bottom line improved despite top-line contraction due to lower income tax provisions.
Non-GAAP net income was $35.6 million or $1.30 per share, down from $40 million or $1.30 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 9 cents.
InterDigital, Inc. Price, Consensus and EPS Surprise
InterDigital, Inc. price-consensus-eps-surprise-chart | InterDigital, Inc. Quote
Revenues
Net sales in the quarter declined to $101.6 million from $124.7 million in the year-ago quarter. The 19% year-over-year decline in net sales was induced by lower catch-up revenues, owing to two license agreements announced in the second quarter of 2022. The top line marginally beat the consensus estimate of $101.2 million.
Total recurring revenues in the second quarter were $99.1 million, down from $100.1 million reported in the prior-year quarter. The top line surpassed our estimate of $78.2 million. Smartphone revenues declined to $85.1 million from $87.5 million in the year-ago period. However, net sales from CE, loT/Auto improved to $13.4 million from $11.9 million in the year-ago quarter.
Total catch-up revenues declined to $2,518 million from the prior-year quarter’s figure of $24,556 million. Net sales fell short of our revenue estimate of $22.2 million.
Other Details
Adjusted EBITDA declined 31% year over year to $53.6 million, owing to lower catch-up revenues. Total operating expenses rose 5% year over year to $78.2 million due to higher expenses related to research and portfolio development. Operating income decreased to $23.4 million from $49.9 million.
Cash Flow & Liquidity
In the second quarter of 2023, InterDigital utilized $45.4 million of cash for operating activities compared with cash utilization of $33.8 million in the year-earlier period. The company utilized $73.3 million of cash from operating activities in the first six months of 2023 compared with $51.7 million cash utilization in the prior-year period.
As of Jun 30, 2023, the company had $840.7 million in cash and cash equivalents with $540.7 million of long-term debt and other long-term liabilities. With the U.K. high court verdict increasing the Lenovo license fee to $184.9 million, the company’s cash balance has significantly improved. Management expects that a cash balance of around $1 billion will support innovation and drive greater value to shareholders.
Outlook
For the third quarter of 2023, InterDigital estimates revenues to be between $97 million and $100 million. Total operating expenses are projected in the range of $78-$81 million. Net income is expected in the range of $17-$20 million or 60-70 cents per share. Non-GAAP earnings are expected to be within $1.10-$1.20 per share.
Zacks Rank & Other Stocks to Consider
InterDigital currently sports a Zacks Rank #1 (Strong Buy).
Akamai Technologies, Inc. (AKAM - Free Report) , currently carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It delivered an earnings surprise of 6.06% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Akamai is a global provider of content delivery networks and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
Workday Inc. (WDAY - Free Report) , sporting a Zacks Rank #1 at present, delivered an earnings surprise of 13.05%, on average, in the trailing four quarters.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, which makes it easier for organizations to provide analytical insights and decision support.
Motorola Solutions, Inc. (MSI - Free Report) , currently carrying a Zacks Rank #2, delivered an earnings surprise of 6.90%, on average, in the trailing four quarters.
It is a leading communications equipment manufacturer and has strong market positions in bar code scanning, wireless infrastructure gear, and government communications. Motorola Solutions generally provides services and solutions to the government segments and public safety programs together with large enterprises and wireless infrastructure service providers.