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InterDigital (IDCC) Earnings & Revenues Beat Estimates in Q2

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InterDigital, Inc. (IDCC - Free Report) kept its earnings steak alive in the second quarter of 2018, reporting better-than-expected results. Strength in licensing activities and continued operating expense discipline led to the strong performance.

Adjusted earnings for the quarter came in at 30 cents per share (under the revenue recognition standard "ASC 606"), which surpassed the Zacks Consensus Estimate of 22 cents. Notably, the bottom-line figure for the year-ago quarter was $1.46 (under the revenue recognition standard, "ASC 605").

Inside the Headlines

In the reported quarter, the company’s revenues totaled $69.6 million, down 48.8% year over year. However, the reported figure surpassed the Zacks Consensus Estimate of $63.8 million. The year-over-year decline was due to adoption of a new revenue recognition standard (ASC 606) that impacted its revenue recognition from certain of its fixed-fee and per-unit license agreements.

InterDigital, Inc. Price, Consensus and EPS Surprise

InterDigital, Inc. Price, Consensus and EPS Surprise | InterDigital, Inc. Quote

While revenues from patent royalties came in at $68.9 million, the same from current technology solutions totaled $0.7 million.

Liquidity & Costs

As of Jun 30, 2018, InterDigital’s cash & short-term investments were $1,100.6 million compared with $1,158 million as of Dec 31, 2017.

The company’s operating expenses came in at $53.9 million, reflecting a decline of 1.7% year over year. Notably, adoption of ASC 606 did not have any impact on operating expenses in the reported quarter.

Selling and administrative expenses, as a percentage of total operating expenses, were 21.5% compared with 22.8% in the year-ago quarter.

Balance Sheet

For the first six months of 2018, net cash provided by operating activities was $6.2 million compared with $6.4 million of net cash used in the prior-year period. As of Jun 30, 2018, the company’s long-term debt & other long-term liabilities came in at $301.8 million compared with $295.2 million as of Dec 31, 2017.

Notable Development

In July, InterDigital completed the buyout of the patent licensing business of Technicolor, a global technology leader in the media and entertainment sector. This deal is expected to provide InterDigital with an enhanced portfolio of video technologies besides opening up new opportunities in the consumer electronics market. In fact, the company expects the Technicolor video coding assets to eventually add about 10% to the revenue base of InterDigital’s core terminal unit licensing business.

Zacks Rank & Stocks to Consider

InterDigital currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are Comtech Telecommunications Corp. (CMTL - Free Report) , Motorola Solutions, Inc. (MSI - Free Report) and QUALCOMM Incorporated (QCOM - Free Report) . While Comtech Telecommunications sports a Zacks Rank #1 (Strong Buy), Motorola Solutions and QUALCOMM carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Comtech Telecommunications surpassed estimates in each of the trailing four quarters with an average beat of 123.70%.

Motorola Solutions exceeded estimates in each of the trailing four quarters with an average beat of 11.81%.

QUALCOMM surpassed estimates in each of the trailing four quarters with an average beat of 19.75%.

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