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InterDigital, Inc. (IDCC) Q1 2024 Earnings Call Transcript
May 02, 2024 3:03 PM ETInterDigital, Inc. (IDCC) Stock
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Q1: 2024-05-02 Earnings Summary

EPS of - misses by $2.76 | Revenue of - (-100.00% Y/Y) misses by $213.85M
nterDigital, Inc. (NASDAQ:IDCC) Q1 2024 Earnings Conference Call May 2, 2024 10:00 AM ET

Company Participants

Raiford Garrabrant - Head, Investor Relations
Liren Chen - President and Chief Executive Officer
Rich Brezski - Chief Financial Officer

Conference Call Participants

Arjun Bhatia - William Blair
Anja Soderstrom - Sidoti
Scott Searle - ROTH MKM

Operator

Good day and thank you for standing by. Welcome to the InterDigital First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Raiford Garrabrant, Head of Investor Relations. Please go ahead.

Raiford Garrabrant

Good morning to everyone and welcome to InterDigital’s first quarter 2024 earnings conference call. I am Raiford Garrabrant, Head of Investor Relations for InterDigital. With me on today’s call are Liren Chen, our President and CEO; and Rich Brezski, our CFO. Consistent with prior calls, we will offer some highlights about the quarter and the company and then open up the call for questions. For additional details, you can access our earnings release and a slide presentation that accompany this call on our Investor Relations website.

Before we begin our remarks, I need to remind you that in this call, we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and are made only as of the date hereof. Forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those described in the Risk Factors section of our 2023 annual report on Form 10-K and in our other SEC filings. In addition, today’s presentation may contain references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the supplemental materials posted to the Investor Relations section of our website.

With that taken care of, I will turn the call over to Liren.

Liren Chen

Thank you, Raiford. Good morning, everyone. Thank you for joining us today. On our last call, we provided annual guidance for 2024 revenue of between $620 million and $670 million. This guidance highlights the increasing momentum of our business and the multiple growth opportunity that we have identified and expect to achieve through the rest of the year. Today, I am pleased to share that we have made significant headwinds in achieving our goal and reconfirm our 2024 annual guidance. Revenue for the first quarter were $264 million, up by 30% year-over-year and above the high-end of our guidance. Our Q1 revenue was one of the highest in our history and an all-time high for our CE and our IT licensing program.

Through the quarter, we have made great progress on multiple fronts of our business. We signed 7 new license agreements. We enhanced our position as a leader in the application of AI in both wireless and video and we received several positive core decisions, which we believe will help us to advance negotiations with certain unlicensed smartphone OEMs. We began the quarter with a new landmark license with Samsung TV business. The agreement covers patents and our joint licensing program with Sony and introduced our own pattern across a range of video and Wi-Fi technologies. Samsung is a market leader in TV and this agreement highlights both the value of video and Wi-Fi innovation and the growth we continue to build in licensing the consumer electronics sector. I would emphasize that this new agreement is separate to the Samsung smartphone license. We announced at the start of 2023 that Samsung and InterDigital has agreed to renew the license for their smart TV to our portfolio.

The final term of the smartphone license includes how much spent on mass payouts are still the subject of arbitration hearing, which is on track to be held this summer with the final resolution expected by end of this year. The 7 new agreements that we signed in the first quarter reflect the momentum we continue to see across all our licensing programs and our strength in consumer electronics and our IT in particular. The revenue and recurring revenue in Q1 from our CE and our IT program were both record highs. With Samsung and other agreements that we closed in the quarter, we have increased the cumulative value of contracts that we have signed over the last 3 years to almost $2.7 billion, giving us an incredible strong base from which to drive new long-term agreements and pursue additional growth opportunities.

Staying on license, we are making significant progress in our effort to ensure that we received further compensation for our innovation from unlicensed smartphone OEMs. Earlier today, a German court issued a very positive decision for us in our dispute with Lenovo. The court ruled that Lenovo infringed one of our 4G and 5G standard essential patents that InterDigital has acted in a friend manner that Lenovo is an on-leading licensee who engaged in hold out and should therefore be enjoined in the German market. The injunction means that Lenovo will be prohibited from selling 4G and 5G contract devices in Germany. Also, as part of our dispute with OPPO, a German court also wrote that OPPO infringed Interdigital’s 4G and 5G standard issuance of patent in sued. The Interdigital has acted in a friend manner that OPPO is an on-leading licensee, the court also awarded injunction against OPPO. In India, in another trial against OPPO, we received yet another positive decision, but OPPO was ordered to pay royalties in the form of a security deposit to the court. The Indian court also heavily criticized and fined OPPO for delaying tactics during our negotiations and ordered as the trial be concluded before end of the year. We are encouraged by this recent development in our cases and we believe we have built significant momentum in our negotiations with both companies. As I have said many times before, we always prefer to sign long-term license through amicable negotiations, but we are ready to enforce our patent rights, if necessary.

Our strength as the fundamental innovator in critical technology, continue to underpin our progress. Our research team has long been recognized by the world leaders in the development of wireless and video technology. And increasingly, our leadership in AI is coming to the forefront. In Q1, one of our senior engineers was appointed to hedge the AI and machine learning standing committee of IEEE, the standard development automation, which leads the evolution of Wi-Fi. At this year’s Mobile World Congress in Barcelona, we showcased two demonstrations, which has AI at their heart. One was in partnership with Keysight, which use a newer network developed by our genres to demonstrate the application of AI in our 6G network. And a second combined advanced video compression and AI to significantly reduce energy consumption of streaming video while preserving picture quality.

Also at MWC, we demonstrated cutting-edge immersive video and haptic technology in a specific use case of eSports and showed our increasing leadership in integrated sensing and communications and emerging technology, which will be a pillar of 6G. Our research success continue to be reflected in the development of our global patent portfolio. Recently, we were confirmed among the top 25 companies globally that filed the most new pattern applications with European patent office last year. Our number of new applications filed with the EPO increased by 40% year-over-year in a clear indication of our success in translating our foundational innovation into patent assets. The strength of innovation and patent footprint give us an excellent platform to drive further growth in our existing licensing program and in green field opportunities such as cloud-based video services. And with our track record for delivering new license agreements with leading manufacturers such as Samsung, we believe we are in an excellent position to reach our financial target for the year.

With that, I’ll hand it over to Rich to talk you through the numbers in more details.

Rich Brezski

Thanks, Liren. Q1 was another outstanding quarter for InterDigital as our strong revenue growth drove both non-GAAP EPS and adjusted EBITDA to the high end of our guidance range. This growth was powered by new licensing agreements, most notably Samsung TV. These results support our long-term objective of delivering consistent revenue growth combined with strong margins. Total revenue increased 30% year-over-year with CE and IoT leading the way. Based on new licensing agreements reached in Q1, recurring revenue for CE and IoT reached an annualized run rate of almost $90 million, an increase of 57% year-over-year and has roughly doubled over the last 2 years. When combined with catch-up revenue of $160 million, CE and IoT total revenue for the quarter reached an all-time high at $183 million. This performance highlights our ability to deliver significant growth beyond the smartphone market.

Our adjusted EBITDA for the quarter of $130 million equates to an adjusted EBITDA margin close to 50%, consistent with our guidance. These results demonstrate the power of our business model. Our investments in fundamental technologies drive top line growth while the reuse of those technologies across multiple verticals delivers high margins and drives cash flow. Our strong performance in Q1 produced cash from operations of $51 million and free cash flow of $41 million. This strong cash flow, combined with a cash balance of nearly $1 billion, supports our continued return of capital to shareholders. In Q1, we repurchased approximately 300,000 shares for $29 million. We repurchased another 200,000 shares in April for a year-to-date total of roughly 0.5 million shares. Since we first paid our dividend in 2011, we have now returned approximately $1.8 billion to shareholders through share buybacks and dividends.

In that time, we reduced our outstanding share count by almost 45% from more than 45 million shares to just over 25 million shares. And with $246 million left on the current buyback authorization, we’re not done yet. Looking forward to Q2, we expect recurring revenue will include $93 million to $97 million of revenue from existing contracts plus any amounts we recognize from any new agreements we may sign over the balance of the quarter. Based only on existing contracts, we expect an adjusted EBITDA margin of about 38% and non-GAAP diluted earnings per share of $0.70 to $0.80. Any additional agreements would be additive to those totals. Our strong first quarter results have us on track to meet our full year 2024 targets, and we are reaffirming our prior guidance of revenue in the range of $620 million to $670 million.

We continue to expect an adjusted EBITDA margin of roughly 50% for the full year of 2024 and non-GAAP diluted earnings per share of $7.45 to $8.76. Before I conclude, I’d like to mention that we’ll be attending four conferences over the remainder of the second quarter, the Bank of America Global Tech Conference in San Francisco on June 4. And the William Blair Growth Stock Conference in Chicago on June 4, the IDEAS Investor Conference in New York on June 12 and the Roth 10th Annual London Conference on June 26 and 27. Please check with your representatives at those firms if you’d like to schedule a meeting.

With that, I’ll turn it back to Raiford.

Raiford Garrabrant

Thanks, Rich. At this point, operator, we are ready to take questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Arjun Bhatia of William Blair.

Arjun Bhatia

Alright. Thank you, guys. Appreciate you taking the question. To start, Liren, maybe a couple of questions on the Samsung side. More on the smartphone side, not necessarily on the TV side. But as you think about just going through arbitration here over the summer and looking at a potential outcome later this year, how should we think about maybe the range of outcomes that you’re considering that could result from that arbitration? I mean, is there a possibility that prices are going up and maybe how is your royalty rate is coming up? And how do you handicap that? And then for Rich, the same thing on the Samsung smartphone side, can you just remind us how you’re accounting for the license revenue in the recurring line from Samsung thus far? And might that be something that’s contributing to the decline in smartphone recurring revenue. Thank you.

Liren Chen

Take one or two simple questions. So, on the Samsung smartphone arbitration, as we have discussed in the prior call, since having our customer for the smartphone side for actually a long time since 1995 and before they release the variables, with guidance. The last contract was a 10-year agreement and which covered frankly, the previous generation technology and not including very valuable assets like 5G and a lot of the advanced video technology we have done. So that agreement acts for December 31, 2022, and both parties has agreed through negotiations that they will renew the agreement without disruption and that we frankly couldn’t get a pricing agreed upon in time.

So we both agreed to do a binding arbitration that started January 1, 2023. We are, frankly, well into the process. The panel has been assembled and the hearing has been confirmed this summer and will be decided before the end of the year as the current projection. So regarding valuation for multiple reasons, we feel very confident that the value of portfolio has gone up, that Santa’s benefited more through the years compared to the time of the last agreement. So that obviously, we still need to have the arbitration to go through to confirm our belief.

And I’ll hand it over to Rich to comment on the revenue recognition side.

Rich Brezski

Yes. Thanks, Liren. On the rev rec, we’ve been recognizing since the first quarter of last year at level with the prior Samsung agreement, which is just shy of $80 million a year. That’s what we believe is a conservative estimate. We have effectively a license in place with Samsung, and we are just estimating what the ultimate outcome will be on a conservative basis. But because of the conservative nature of the GAAP requirement, we are certainly hopeful that we will have a positive true-up when it’s ultimately concluded. And as to the question on the decline in recurring revenue, I presume you mean ‘23 going into ‘24. So, based on what I just said, it’s not because of Samsung, but rather expiration of other agreements, most notably Huawei, which expired at the end of last year.

Arjun Bhatia

Yes. Perfect. Alright. Thank you. One more, if I can. It was interesting to hear the injunction against Lenovo and OPPO. And I am curious, in the past, Liren, to the extent you have experienced with these injunctions, how do you think they – or how have they may be changed behavior of some of these manufacturers in the past? I mean is it enough of an incentive to bring them to the negotiation table and say, hey, we want to strike a deal. Like how punitive can those injunctions be for these companies to get them to strike a deal with you?

Liren Chen

Yes. Hey Arjun. As we announced in a separate press this morning, the Court in Munich has issued a decision. In that decision, basically, the court decided that InterDigital has consistently act in good phase under the front obligation at all times. The court also said Lenovo has systematically actively in hold out, and frankly, it’s not in combined of the front obligation. So, as a result, the court has issued the injunction of a patent that’s standard essential for both 4G and 5G. And unless if something happens, Lenovo will be prohibited from selling devices with those features in German market. Regarding how the company may behave, I don’t want to spec on Samsung – on Lenovo, how they will proceed from here. I can see Germany is obviously a very major market and this injunction applied to a pretty wide range of devices beyond the cell phones. So, I hope with this decision that Lenovo will come back and frankly, take a licensing and fair terms from us. And I am definitely hopeful.

Arjun Bhatia

Alright. Appreciate the color. Thank you.

Operator

Thank you. [Operator Instructions] And our next question comes from Anja Soderstrom of Sidoti. Your line is open.

Anja Soderstrom

Hi. Thank you for taking my question. Can you just – you talked about this in the past, but maybe go over again the different opportunities you have to reach your guidance for 2024.

Liren Chen

Yes. Hey. Good morning. This is Liren. So, we have multiple passes. On the smartphone side, just for example, we have OPPO negotiation where we will, as Rich just mentioned here, have has expired, which we are bringing renewed discussion with them. And then Lenovo was licensed through the UK court decision for the cellular side until end of last year. Now, the unlicensed as we announced this morning, we received court injunctions, and we hope to be able to, frankly, sign a long-term agreement with them. So, that’s just on the smartphone side. On the CE side, as we mentioned in the prepared remarks, we signed Samsung TV, which is the largest vendor in TV space. We are working diligently on the next multiple layers of TV vendors include LG, TCL and Hisense. So, on top of all the stuff here, we are also working on the Samsung arbitration, and we expect that to be finished before the end of the year. And if we are able to get a favorable judgment beyond the revenue recognition that will be a positive true-up pass.

Anja Soderstrom

Okay. Thank you. And when it comes to Huawei, how constructive are those discussions given you fairly recently signed an agreement with them?

Liren Chen

Yes. Probably negotiation is proceeding according to plan. And our last agreement expired the end of the year, and frankly, Huawei business has gone through a certain amount of period of up and down. So, we are currently in negotiation with them, and we are hopeful we will get a long-term deal down with us soon.

Anja Soderstrom

Okay. Thank you. That was all for me.

Operator

Thank you. [Operator Instructions] And our next question comes from Scott Searle of ROTH MKM. Your line is open.

Scott Searle

Hey. Good morning. Thanks for taking the questions. I apologize in advance, I was on the call late, so if you already covered this, but. Liren, in regard to the Lenovo injunction, what is the actual process and procedure there in terms of how that’s going to be implemented? And are there additional costs associated with it? I believe that there is an appeal period from their standpoint. So, can you walk us through the milestones timeline and the cost element?

Liren Chen

Yes. Hi Scott. Good morning. So, we don’t – I am not certain you were on the call when we were describing it earlier. So basically, the court has decided that we have acted in front manner consistently all the time. The Lenovo has systematic conduct sold out and their non-infant obligation and they are frankly, on-leading licensee. As a result, the court has issued injunction against them that covers devices with 4G and 5G features built in. So, there will be some procedure stuff which we are frankly working through and our intention is to enforce this injunction as quickly as we can. And you are also teat this is what they call a first insulin decision, which is automatically appealable. So, I don’t want to speculate on the Lenovo’s legal strategy, but that’s frankly up to them.

Scott Searle

Got it. And Liren, just to quickly follow-up on that front. This is in Germany, will that extend to the rest of the EU, or what is the plan there in terms of how you implement across the pan-European marketplace?

Liren Chen

Yes. Scott, this is the case that – this is a German pattern, and it’s a German court. So, just the decision will be limited to the German market. As you are aware, Scott, we do have other cases, including our PC, ITC in U.S. against them in different technology area. But this particular decision is Germany only.

Scott Searle

Got it. And two others, if I could, just the latest update in terms of video IPs licensing into the streaming and services model. Are there any updated thoughts, timelines in terms of how that’s evolving and the impact in ‘24 and ‘25?

Liren Chen

Yes. Hey Scott, we do view the video cloud service licensing as a very, very good, greenfield opportunity. We are proceeding according to plan, which we believe we have very valuable IP asset and frankly, very strong technology leadership. Regarding our direct financial impact, as of now, we are not projecting material impact to 2024. And if we have more update, we will share with you timely.

Scott Searle

Got it. And lastly, if I could, you have maintained the guidance range for the year of $620 million to $670 million. I am wondering if some things have kind of moved around in terms of higher probability versus lower probability. I am not sure if you can address it, but just kind of – I know there are multiple paths to get to that range if there are certain things that have materialized and become a little bit more confident about. Thanks.

Liren Chen

Yes. Hey Scott. As I said in my prepared remarks, when we issued the guidance beginning of the year, we feel very strongly that our business momentum has increased, and we have identified multiple past recent results. And now we have delivered a resounding strong quarter in Q1 for both the top line or adjusted EBITDA and EPS, and especially in the record recency and our key space. So, we feel very good about where we are, and we are on track to deliver the results. And as of now, we are not either predict the rest of the quarter other than we feel very confident about our ability to deliver for the year.

Scott Searle

Great. Thank you.

Operator

Thank you. This concludes the question-and-answer session. At this time, I would like to turn it back to Liren Chen for closing remarks.

Liren Chen

Thank you, operator. Before we close, I would like to thank all of our employees for their dedication and contribution to InterDigital as well as our many partners and licensees for an outstanding start to 2024. Thanks to everyone who joined our call today and we look forward to updating you on our progress next quarter.

Operator

This concludes today’s conference call. Thank you for participating and you may now disconnect.

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nterDigital, Inc. (NASDAQ:IDCC) Q1 2024 Earnings Conference Call May 2, 2024 10:00 AM ET

Company Participants

Raiford Garrabrant - Head, Investor Relations
Liren Chen - President and Chief Executive Officer
Rich Brezski - Chief Financial Officer

Conference Call Participants

Arjun Bhatia - William Blair
Anja Soderstrom - Sidoti
Scott Searle - ROTH MKM

Operator

Good day and thank you for standing by. Welcome to the InterDigital First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Raiford Garrabrant, Head of Investor Relations. Please go ahead.

Raiford Garrabrant

Good morning to everyone and welcome to InterDigital’s first quarter 2024 earnings conference call. I am Raiford Garrabrant, Head of Investor Relations for InterDigital. With me on today’s call are Liren Chen, our President and CEO; and Rich Brezski, our CFO. Consistent with prior calls, we will offer some highlights about the quarter and the company and then open up the call for questions. For additional details, you can access our earnings release and a slide presentation that accompany this call on our Investor Relations website.

Before we begin our remarks, I need to remind you that in this call, we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and are made only as of the date hereof. Forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those described in the Risk Factors section of our 2023 annual report on Form 10-K and in our other SEC filings. In addition, today’s presentation may contain references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the supplemental materials posted to the Investor Relations section of our website.

With that taken care of, I will turn the call over to Liren.

Liren Chen

Thank you, Raiford. Good morning, everyone. Thank you for joining us today. On our last call, we provided annual guidance for 2024 revenue of between $620 million and $670 million. This guidance highlights the increasing momentum of our business and the multiple growth opportunity that we have identified and expect to achieve through the rest of the year. Today, I am pleased to share that we have made significant headwinds in achieving our goal and reconfirm our 2024 annual guidance. Revenue for the first quarter were $264 million, up by 30% year-over-year and above the high-end of our guidance. Our Q1 revenue was one of the highest in our history and an all-time high for our CE and our IT licensing program.

Through the quarter, we have made great progress on multiple fronts of our business. We signed 7 new license agreements. We enhanced our position as a leader in the application of AI in both wireless and video and we received several positive core decisions, which we believe will help us to advance negotiations with certain unlicensed smartphone OEMs. We began the quarter with a new landmark license with Samsung TV business. The agreement covers patents and our joint licensing program with Sony and introduced our own pattern across a range of video and Wi-Fi technologies. Samsung is a market leader in TV and this agreement highlights both the value of video and Wi-Fi innovation and the growth we continue to build in licensing the consumer electronics sector. I would emphasize that this new agreement is separate to the Samsung smartphone license. We announced at the start of 2023 that Samsung and InterDigital has agreed to renew the license for their smart TV to our portfolio.

The final term of the smartphone license includes how much spent on mass payouts are still the subject of arbitration hearing, which is on track to be held this summer with the final resolution expected by end of this year. The 7 new agreements that we signed in the first quarter reflect the momentum we continue to see across all our licensing programs and our strength in consumer electronics and our IT in particular. The revenue and recurring revenue in Q1 from our CE and our IT program were both record highs. With Samsung and other agreements that we closed in the quarter, we have increased the cumulative value of contracts that we have signed over the last 3 years to almost $2.7 billion, giving us an incredible strong base from which to drive new long-term agreements and pursue additional growth opportunities.

Staying on license, we are making significant progress in our effort to ensure that we received further compensation for our innovation from unlicensed smartphone OEMs. Earlier today, a German court issued a very positive decision for us in our dispute with Lenovo. The court ruled that Lenovo infringed one of our 4G and 5G standard essential patents that InterDigital has acted in a friend manner that Lenovo is an on-leading licensee who engaged in hold out and should therefore be enjoined in the German market. The injunction means that Lenovo will be prohibited from selling 4G and 5G contract devices in Germany. Also, as part of our dispute with OPPO, a German court also wrote that OPPO infringed Interdigital’s 4G and 5G standard issuance of patent in sued. The Interdigital has acted in a friend manner that OPPO is an on-leading licensee, the court also awarded injunction against OPPO. In India, in another trial against OPPO, we received yet another positive decision, but OPPO was ordered to pay royalties in the form of a security deposit to the court. The Indian court also heavily criticized and fined OPPO for delaying tactics during our negotiations and ordered as the trial be concluded before end of the year. We are encouraged by this recent development in our cases and we believe we have built significant momentum in our negotiations with both companies. As I have said many times before, we always prefer to sign long-term license through amicable negotiations, but we are ready to enforce our patent rights, if necessary.

Our strength as the fundamental innovator in critical technology, continue to underpin our progress. Our research team has long been recognized by the world leaders in the development of wireless and video technology. And increasingly, our leadership in AI is coming to the forefront. In Q1, one of our senior engineers was appointed to hedge the AI and machine learning standing committee of IEEE, the standard development automation, which leads the evolution of Wi-Fi. At this year’s Mobile World Congress in Barcelona, we showcased two demonstrations, which has AI at their heart. One was in partnership with Keysight, which use a newer network developed by our genres to demonstrate the application of AI in our 6G network. And a second combined advanced video compression and AI to significantly reduce energy consumption of streaming video while preserving picture quality.

Also at MWC, we demonstrated cutting-edge immersive video and haptic technology in a specific use case of eSports and showed our increasing leadership in integrated sensing and communications and emerging technology, which will be a pillar of 6G. Our research success continue to be reflected in the development of our global patent portfolio. Recently, we were confirmed among the top 25 companies globally that filed the most new pattern applications with European patent office last year. Our number of new applications filed with the EPO increased by 40% year-over-year in a clear indication of our success in translating our foundational innovation into patent assets. The strength of innovation and patent footprint give us an excellent platform to drive further growth in our existing licensing program and in green field opportunities such as cloud-based video services. And with our track record for delivering new license agreements with leading manufacturers such as Samsung, we believe we are in an excellent position to reach our financial target for the year.

With that, I’ll hand it over to Rich to talk you through the numbers in more details.

Rich Brezski

Thanks, Liren. Q1 was another outstanding quarter for InterDigital as our strong revenue growth drove both non-GAAP EPS and adjusted EBITDA to the high end of our guidance range. This growth was powered by new licensing agreements, most notably Samsung TV. These results support our long-term objective of delivering consistent revenue growth combined with strong margins. Total revenue increased 30% year-over-year with CE and IoT leading the way. Based on new licensing agreements reached in Q1, recurring revenue for CE and IoT reached an annualized run rate of almost $90 million, an increase of 57% year-over-year and has roughly doubled over the last 2 years. When combined with catch-up revenue of $160 million, CE and IoT total revenue for the quarter reached an all-time high at $183 million. This performance highlights our ability to deliver significant growth beyond the smartphone market.

Our adjusted EBITDA for the quarter of $130 million equates to an adjusted EBITDA margin close to 50%, consistent with our guidance. These results demonstrate the power of our business model. Our investments in fundamental technologies drive top line growth while the reuse of those technologies across multiple verticals delivers high margins and drives cash flow. Our strong performance in Q1 produced cash from operations of $51 million and free cash flow of $41 million. This strong cash flow, combined with a cash balance of nearly $1 billion, supports our continued return of capital to shareholders. In Q1, we repurchased approximately 300,000 shares for $29 million. We repurchased another 200,000 shares in April for a year-to-date total of roughly 0.5 million shares. Since we first paid our dividend in 2011, we have now returned approximately $1.8 billion to shareholders through share buybacks and dividends.

In that time, we reduced our outstanding share count by almost 45% from more than 45 million shares to just over 25 million shares. And with $246 million left on the current buyback authorization, we’re not done yet. Looking forward to Q2, we expect recurring revenue will include $93 million to $97 million of revenue from existing contracts plus any amounts we recognize from any new agreements we may sign over the balance of the quarter. Based only on existing contracts, we expect an adjusted EBITDA margin of about 38% and non-GAAP diluted earnings per share of $0.70 to $0.80. Any additional agreements would be additive to those totals. Our strong first quarter results have us on track to meet our full year 2024 targets, and we are reaffirming our prior guidance of revenue in the range of $620 million to $670 million.

We continue to expect an adjusted EBITDA margin of roughly 50% for the full year of 2024 and non-GAAP diluted earnings per share of $7.45 to $8.76. Before I conclude, I’d like to mention that we’ll be attending four conferences over the remainder of the second quarter, the Bank of America Global Tech Conference in San Francisco on June 4. And the William Blair Growth Stock Conference in Chicago on June 4, the IDEAS Investor Conference in New York on June 12 and the Roth 10th Annual London Conference on June 26 and 27. Please check with your representatives at those firms if you’d like to schedule a meeting.

With that, I’ll turn it back to Raiford.

Raiford Garrabrant

Thanks, Rich. At this point, operator, we are ready to take questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Arjun Bhatia of William Blair.

Arjun Bhatia

Alright. Thank you, guys. Appreciate you taking the question. To start, Liren, maybe a couple of questions on the Samsung side. More on the smartphone side, not necessarily on the TV side. But as you think about just going through arbitration here over the summer and looking at a potential outcome later this year, how should we think about maybe the range of outcomes that you’re considering that could result from that arbitration? I mean, is there a possibility that prices are going up and maybe how is your royalty rate is coming up? And how do you handicap that? And then for Rich, the same thing on the Samsung smartphone side, can you just remind us how you’re accounting for the license revenue in the recurring line from Samsung thus far? And might that be something that’s contributing to the decline in smartphone recurring revenue. Thank you.

Liren Chen

Take one or two simple questions. So, on the Samsung smartphone arbitration, as we have discussed in the prior call, since having our customer for the smartphone side for actually a long time since 1995 and before they release the variables, with guidance. The last contract was a 10-year agreement and which covered frankly, the previous generation technology and not including very valuable assets like 5G and a lot of the advanced video technology we have done. So that agreement acts for December 31, 2022, and both parties has agreed through negotiations that they will renew the agreement without disruption and that we frankly couldn’t get a pricing agreed upon in time.

So we both agreed to do a binding arbitration that started January 1, 2023. We are, frankly, well into the process. The panel has been assembled and the hearing has been confirmed this summer and will be decided before the end of the year as the current projection. So regarding valuation for multiple reasons, we feel very confident that the value of portfolio has gone up, that Santa’s benefited more through the years compared to the time of the last agreement. So that obviously, we still need to have the arbitration to go through to confirm our belief.

And I’ll hand it over to Rich to comment on the revenue recognition side.

Rich Brezski

Yes. Thanks, Liren. On the rev rec, we’ve been recognizing since the first quarter of last year at level with the prior Samsung agreement, which is just shy of $80 million a year. That’s what we believe is a conservative estimate. We have effectively a license in place with Samsung, and we are just estimating what the ultimate outcome will be on a conservative basis. But because of the conservative nature of the GAAP requirement, we are certainly hopeful that we will have a positive true-up when it’s ultimately concluded. And as to the question on the decline in recurring revenue, I presume you mean ‘23 going into ‘24. So, based on what I just said, it’s not because of Samsung, but rather expiration of other agreements, most notably Huawei, which expired at the end of last year.

Arjun Bhatia

Yes. Perfect. Alright. Thank you. One more, if I can. It was interesting to hear the injunction against Lenovo and OPPO. And I am curious, in the past, Liren, to the extent you have experienced with these injunctions, how do you think they – or how have they may be changed behavior of some of these manufacturers in the past? I mean is it enough of an incentive to bring them to the negotiation table and say, hey, we want to strike a deal. Like how punitive can those injunctions be for these companies to get them to strike a deal with you?

Liren Chen

Yes. Hey Arjun. As we announced in a separate press this morning, the Court in Munich has issued a decision. In that decision, basically, the court decided that InterDigital has consistently act in good phase under the front obligation at all times. The court also said Lenovo has systematically actively in hold out, and frankly, it’s not in combined of the front obligation. So, as a result, the court has issued the injunction of a patent that’s standard essential for both 4G and 5G. And unless if something happens, Lenovo will be prohibited from selling devices with those features in German market. Regarding how the company may behave, I don’t want to spec on Samsung – on Lenovo, how they will proceed from here. I can see Germany is obviously a very major market and this injunction applied to a pretty wide range of devices beyond the cell phones. So, I hope with this decision that Lenovo will come back and frankly, take a licensing and fair terms from us. And I am definitely hopeful.

Arjun Bhatia

Alright. Appreciate the color. Thank you.

Operator

Thank you. [Operator Instructions] And our next question comes from Anja Soderstrom of Sidoti. Your line is open.

Anja Soderstrom

Hi. Thank you for taking my question. Can you just – you talked about this in the past, but maybe go over again the different opportunities you have to reach your guidance for 2024.

Liren Chen

Yes. Hey. Good morning. This is Liren. So, we have multiple passes. On the smartphone side, just for example, we have OPPO negotiation where we will, as Rich just mentioned here, have has expired, which we are bringing renewed discussion with them. And then Lenovo was licensed through the UK court decision for the cellular side until end of last year. Now, the unlicensed as we announced this morning, we received court injunctions, and we hope to be able to, frankly, sign a long-term agreement with them. So, that’s just on the smartphone side. On the CE side, as we mentioned in the prepared remarks, we signed Samsung TV, which is the largest vendor in TV space. We are working diligently on the next multiple layers of TV vendors include LG, TCL and Hisense. So, on top of all the stuff here, we are also working on the Samsung arbitration, and we expect that to be finished before the end of the year. And if we are able to get a favorable judgment beyond the revenue recognition that will be a positive true-up pass.

Anja Soderstrom

Okay. Thank you. And when it comes to Huawei, how constructive are those discussions given you fairly recently signed an agreement with them?

Liren Chen

Yes. Probably negotiation is proceeding according to plan. And our last agreement expired the end of the year, and frankly, Huawei business has gone through a certain amount of period of up and down. So, we are currently in negotiation with them, and we are hopeful we will get a long-term deal down with us soon.

Anja Soderstrom

Okay. Thank you. That was all for me.

Operator

Thank you. [Operator Instructions] And our next question comes from Scott Searle of ROTH MKM. Your line is open.

Scott Searle

Hey. Good morning. Thanks for taking the questions. I apologize in advance, I was on the call late, so if you already covered this, but. Liren, in regard to the Lenovo injunction, what is the actual process and procedure there in terms of how that’s going to be implemented? And are there additional costs associated with it? I believe that there is an appeal period from their standpoint. So, can you walk us through the milestones timeline and the cost element?

Liren Chen

Yes. Hi Scott. Good morning. So, we don’t – I am not certain you were on the call when we were describing it earlier. So basically, the court has decided that we have acted in front manner consistently all the time. The Lenovo has systematic conduct sold out and their non-infant obligation and they are frankly, on-leading licensee. As a result, the court has issued injunction against them that covers devices with 4G and 5G features built in. So, there will be some procedure stuff which we are frankly working through and our intention is to enforce this injunction as quickly as we can. And you are also teat this is what they call a first insulin decision, which is automatically appealable. So, I don’t want to speculate on the Lenovo’s legal strategy, but that’s frankly up to them.

Scott Searle

Got it. And Liren, just to quickly follow-up on that front. This is in Germany, will that extend to the rest of the EU, or what is the plan there in terms of how you implement across the pan-European marketplace?

Liren Chen

Yes. Scott, this is the case that – this is a German pattern, and it’s a German court. So, just the decision will be limited to the German market. As you are aware, Scott, we do have other cases, including our PC, ITC in U.S. against them in different technology area. But this particular decision is Germany only.

Scott Searle

Got it. And two others, if I could, just the latest update in terms of video IPs licensing into the streaming and services model. Are there any updated thoughts, timelines in terms of how that’s evolving and the impact in ‘24 and ‘25?

Liren Chen

Yes. Hey Scott, we do view the video cloud service licensing as a very, very good, greenfield opportunity. We are proceeding according to plan, which we believe we have very valuable IP asset and frankly, very strong technology leadership. Regarding our direct financial impact, as of now, we are not projecting material impact to 2024. And if we have more update, we will share with you timely.

Scott Searle

Got it. And lastly, if I could, you have maintained the guidance range for the year of $620 million to $670 million. I am wondering if some things have kind of moved around in terms of higher probability versus lower probability. I am not sure if you can address it, but just kind of – I know there are multiple paths to get to that range if there are certain things that have materialized and become a little bit more confident about. Thanks.

Liren Chen

Yes. Hey Scott. As I said in my prepared remarks, when we issued the guidance beginning of the year, we feel very strongly that our business momentum has increased, and we have identified multiple past recent results. And now we have delivered a resounding strong quarter in Q1 for both the top line or adjusted EBITDA and EPS, and especially in the record recency and our key space. So, we feel very good about where we are, and we are on track to deliver the results. And as of now, we are not either predict the rest of the quarter other than we feel very confident about our ability to deliver for the year.

Scott Searle

Great. Thank you.

Operator

Thank you. This concludes the question-and-answer session. At this time, I would like to turn it back to Liren Chen for closing remarks.

Liren Chen

Thank you, operator. Before we close, I would like to thank all of our employees for their dedication and contribution to InterDigital as well as our many partners and licensees for an outstanding start to 2024. Thanks to everyone who joined our call today and we look forward to updating you on our progress next quarter.

Operator

This concludes today’s conference call. Thank you for participating and you may now disconnect.

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InterDigital Announces Financial Results for First Quarter 2024

Source: GlobeNewswire Inc.?

InterDigital, Inc. (Nasdaq: IDCC), a mobile, video, and AI technology research and development company, today announced results for the quarter ended March 31, 2024.

"InterDigital made significant progress in first quarter towards our 2024 revenue guidance of $620 million to $670 million,” commented Liren Chen, President and CEO, InterDigital. “Revenue was $264 million for the quarter, one of the highest quarters in our history, and included an all-time high for our CE and IoT licensing program. With our landmark consumer electronics agreement with Samsung, we signed agreements with a cumulative value of almost $2.7 billion over the last three years, giving us an incredibly strong base from which to drive additional growth opportunities.”

First Quarter 2024 Financial Highlights, as compared to First Quarter 2023:

Three Months Ended
March 31,(in millions, except per share data)2024 2023 ChangeGAAP Results:     Revenues$263.5 $202.4 30%Operating Expenses (a)$159.8 $83.1 92%Net income 1$81.7 $105.3 (22)%Net income 1 margin31% 52% (21) pptDiluted EPS 1$2.88 $3.58 (20)%      Non-GAAP Results:     Adjusted EBITDA 2$130.4 $154.8 (16)%Adjusted EBITDA margin 249% 76% (27) pptNon-GAAP Net income 3$94.5 $123.6 (24)%Non-GAAP EPS 3$3.58 $4.21 (15)%      Additional Information:     Revenue by type:     Recurring revenues$96.9 $101.6 (5)%Catch-up revenues$166.7 $100.8 65%Revenue by program:     Smartphone$80.3 $186.2 (57)%CE, IoT/Auto$182.5 $16.1 1,035%Other$0.7 $0.1 1,184%      (a) Includes revenue share costs of $69.0 million and $1.1 million in first quarter 2024 and 2023, respectively.



Return of Capital to Shareholders

(in millions, except per share data)

Share Repurchases Dividends Declared Total Return
of Capital
Shares Value Per Share Value First quarter 20240.3 $29.0 $0.40 $10.2 $39.2

Near Term Outlook

The Company has reaffirmed its full year 2024 outlook and provided an initial outlook for second quarter 2024 in the table below. The outlook for second quarter 2024 is based on existing licenses only, and any new agreements that might be reached over the balance of the second quarter would be additive. The outlook for full year 2024 includes both existing licenses and the potential for new agreements over the balance of the year.

(in millions, except per share data)Q2 2024 Full Year 2024Revenue$93 - $97 $620 - $670Adjusted EBITDA 2(a)$35.5 - $38.0 $310 - $345Diluted EPS 1(a)$0.20 - $0.30 $4.95 - $6.15Non-GAAP EPS 3(a)$0.70 - $0.80 $7.45 - $8.76    (a) Includes revenue share costs of $3 million for Q2 2024 and $80 million to $90 million for full year 2024.

Conference Call Information

InterDigital will host a conference call on Thursday, May 2, 2024 at 10:00 a.m. ET to discuss its first quarter 2024 financial performance and other company matters.

For a live Internet webcast of the conference call, visit www.interdigital.com and click on the “Webcast” link on the Investors page. The company encourages participants to take advantage of the Internet option.

For telephone access to the conference call, visit www.interdigital.com and click on the “Dial In Registration” link on the Investors page. Registration is necessary to obtain a dial in phone number and PIN to join.

An Internet replay of the conference call will be available on InterDigital’s website under Events in the Investors section. The replay will be available for one year.

About InterDigital®

InterDigital is a global research and development company focused primarily on wireless, video, artificial intelligence (“AI”), and related technologies. We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today’s most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. Founded in 1972, InterDigital is listed on Nasdaq.

InterDigital is a registered trademark of InterDigital, Inc.

For more information, visit the InterDigital website: www.interdigital.com.

For additional financial measures, refer to our first quarter 2024 Form 10-Q and the financial metrics tracker, which are available on the Investor Relations section of our website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding our current beliefs, plans and expectations. Words such as “believe,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “forecast,” “goal,” “could,” "would," "should," "if," "may," "might," "future," "target," "trend," "seek to," "will continue," "predict," "likely," "in the event," and variations of any such words or similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are made on the basis of management’s current views and assumptions and are not guarantees of future performance. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results, and actual events that occur, to differ materially from results contemplated by the forward-looking statements. These risks and uncertainties include, but are not limited to: (i) unanticipated delays, difficulties or accelerations in the execution of patent license agreements; (ii) the resolution of current legal proceedings, including any awards or judgments relating to such proceedings, additional or related legal proceedings, including appeals, changes in the schedules or costs associated with such proceedings or adverse rulings; (iii) our ability to leverage our strategic relationships and secure new patent license agreements on acceptable terms; (iv) our ability to enter into sales and/or licensing partnering arrangements for certain of our patent assets; (v) our ability to expand our revenue opportunities by entering into licensing arrangements with video streaming and other cloud-based service providers; (vi) our ability to enter into partnerships with leading inventors and research organizations and identify and acquire technology and patent portfolios that align with our roadmap; (vii) our ability to commercialize our technologies and enter into customer agreements; (viii) the failure of the markets for our current or new technologies to materialize to the extent or at the rate that we expect; (ix) our continued ability to develop new technologies and secure new patents, including the risk of unexpected delays or difficulties related to the development of our technologies; (x) risks associated with our capital allocation strategies, including risks associated with our planned dividend payments and share repurchases; (xi) changes in our interpretations of, and assumptions and calculations with respect to the impact on us of, the 2017 Tax Cuts and Jobs Act, as well as further guidance that may be issued regarding such act; (xii) risks related to the potential impact of new accounting standards on our financial position, results of operations or cash flows; (xiii) failure to accurately forecast the impact of our restructuring activities on our financial statements and our business; (xiv) the timing and impact of potential administrative and legislative matters; (xv) changes or inaccuracies in market projections; (xvi) our ability to obtain liquidity though debt and equity financings; (xvii) the potential effects that macroeconomic uncertainty could have on our financial position, results of operations and cash flows; (xviii) impacts from acts of terrorism, war or political or civil unrest, or any responses thereto, in the United States or elsewhere; (xix) changes in our business strategy; (xx) changes or inaccuracies in our expectations with respect to royalty payments by our customers and (xxi) risks related to our assumptions and application of relevant accounting standards, including with respect to revenue recognition.

We undertake no duty to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.

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. Net income margin is net income attributable to InterDigital, Inc. over total revenues.

2        Adjusted EBITDA and Adjusted EBITDA margin are supplemental non-GAAP financial measures that InterDigital believes provide 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 include restructuring costs, impairment charges and other non-recurring items. Adjusted EBITDA margin is Adjusted EBITDA over total revenues. These non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The presentation of these financial measures, which are 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 the most directly comparable GAAP financial measure is provided below.

3        Non-GAAP net income, Non-GAAP EPS, and Non-GAAP weighted-average diluted shares are supplemental non-GAAP financial measures that InterDigital believes provides investors with important insight into the Company's ongoing business performance. InterDigital defines Non-GAAP net income as net income attributable to InterDigital, Inc. plus share-based compensation, acquisition related amortization, depreciation and amortization, restructuring costs, impairment charges and one-time adjustments, losses on extinguishments of long-term debt, the related income tax effect of the preceding items, and adjustments to income taxes. Non-GAAP EPS is defined as Non-GAAP net income divided by Non-GAAP weighted average diluted shares, which adjusts the weighted average number of common shares outstanding for the dilutive effect of the Company's convertible notes, offset by our hedging arrangements. InterDigital’s computation of these non-GAAP financial measures might not be comparable to similarly named measures reported by other companies. The presentation of these financial measures, which are 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 each of these metrics to its most directly comparable GAAP financial measure is provided below.

SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited)  For the Three Months Ended March 31,  2024   2023 Revenues$263,542  $202,373 Operating expenses:   Research and portfolio development 49,375   49,429 Licensing 96,589   21,368 General and administrative 13,840   12,315 Total operating expenses 159,804   83,112     Income from operations 103,738   119,261     Interest expense (11,922)  (12,087)Other income, net 9,247   13,191 Income before income taxes 101,063   120,365 Income tax provision (19,411)  (16,845)Net income$81,652  $103,520 Net loss attributable to noncontrolling interest —   (1,739)Net income attributable to InterDigital Inc.$81,652  $105,259 Net income per common share — Basic$3.20  $3.66 Weighted average number of common shares outstanding — Basic 25,510   28,780 Net income per common share — Diluted$2.88  $3.58 Weighted average number of common shares outstanding — Diluted 28,341   29,372 Cash dividends declared per common share$0.40  $0.35

SUMMARY CONSOLIDATED CASH FLOWS
(in thousands)
(unaudited)   For the Three Months Ended March 31,  2024   2023 Cash flows from operating activities:   Net income$81,652  $103,520 Non-cash adjustments 8,459   (4,004)Working capital changes (39,338)  (127,368)Net cash provided by (used in) operating activities 50,773
   (27,852)Cash flows from investing activities:   Net sales (purchases) of short-term investments 24,616
   (5,982)Capitalized patent costs and purchases of property and equipment (9,417)  (8,481)Long-term investments 1,576   — Net cash provided by (used in) investing activities 16,775
   (14,463)Cash flows from financing activities:   Repurchase of common stock (28,868)  (203,381)Dividends paid (10,226)  (10,384)Other (10,225)  (4,371)Net cash used in financing activities (49,319)  (218,136)Net increase (decrease) in cash, cash equivalents and restricted cash 18,229   (260,451)Cash, cash equivalents and restricted cash, beginning of period 442,961   703,161 Cash, cash equivalents and restricted cash, end of period$461,190  $442,710

SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)  MARCH 31, 2024 DECEMBER 31, 2023Assets   Cash, cash equivalents and short-term investments$984,635 $1,006,356Accounts receivable 145,629  117,292Prepaid and other current assets 85,172  43,976Property & equipment and patents, net 318,216  324,567Other long-term assets, net 273,369  278,623Total assets$1,807,021 $1,770,814Liabilities and Shareholders' equity   Current portion of long-term debt$579,369 $578,752Current deferred revenue 155,966  153,597Other current liabilities 168,484  148,779Long-term deferred revenue 193,955  223,866Long-term debt & other long-term liabilities 84,956  84,271Total liabilities 1,182,730  1,189,265Total shareholders' equity 624,291  581,549Total liabilities and shareholders' equity$1,807,021 $1,770,814

RECONCILIATION OF NON-GAAP MEASURESThe table below presents a reconciliation of Adjusted EBITDA to net income attributable to InterDigital, Inc., the most directly comparable GAAP financial measure:     For the Three Months Ended March 31, Outlook (in thousands) (in millions)  2024  2023  Q2 2024 Full Year 2024Net income attributable to InterDigital, Inc.$81,652 $105,259  $5.5 - $8.0 $140 - $175Net loss attributable to non-controlling interest —  (1,739) — —Income tax provision 19,411  16,845  1.5 40 - 50Other income (expense) & interest expense 2,675  (1,104) 0.5 5 - 15Depreciation and amortization 17,240  19,526  18.0 73Share-based compensation 9,386  7,790  10.0 42Other items (a) —  8,237  — —Adjusted EBITDA 2$130,364 $154,814  $35.5 - $38.0 $310 - $345 (a)    Other items in the above table includes a $5.7 million one-time charge for a net litigation fee reimbursement and a $2.5 million one-time impairment on our patents held for sale during the three months ended March 31, 2023.

The table below presents a reconciliation of Non-GAAP net income to net income attributable to InterDigital, Inc., the most directly comparable GAAP financial measure:

For the Three Months Ended March 31, Outlook (in thousands, except for per share data) (in millions, except for per share data)  2024   2023  Q2 2024 Full Year 2024Net income attributable to InterDigital, Inc.$81,652  $105,259  $5.5 - $8.0 $140 - $175Share-based compensation 9,386   7,790  10.0 42Acquisition related amortization 8,421   10,268  8.0 33Other operating items (a) —   8,237  — —Other non-operating items (b) 674   (158) (1.0) —Related income tax and noncontrolling interest effect of above items (3,881)  (6,739) (4.0) (16)Adjustments to income taxes (1,708)  (1,042) — —Non-GAAP net income 3$94,544  $123,615  $18.5 - $21.0 $199 - $234        Weighted average dilutive shares - GAAP 28,341   29,372  27.8 28.3Less: Dilutive impact of the Convertible Notes 1,942   —  1.5 1.6Weighted average dilutive shares - Non-GAAP 3 26,399   29,372  26.3 26.7        Non-GAAP EPS 3$3.58  $4.21  $0.70 - $0.80 $7.45 - $8.76            (a)    Other items in the above table includes a $5.7 million one-time charge for a net litigation fee reimbursement and a $2.5 million one-time impairment on our patents held for sale during the three months ended March 31, 2023.
(b)    Other non-operating items includes net (gains) or losses from observable price changes of our long-term strategic investments.

CONTACT:InterDigital, Inc. Email: investor.relations @diplomat2

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Form 144 - Report of proposed sale of securities

InterDigital Announces Financial Results for First Quarter 2024

InterDigital awarded injunction against Lenovo

InterDigital’s Doug Castor Elected Co-Chair of the ATIS Next G Alliance Steering Group

New Report Pins 6G Success on Novel Benchmarks Extending Beyond Speed, Latency, and Mobility

InterDigital Announces Date for First Quarter 2024 Financial Results

InterDigital and Concordia University Announce Research Collaboration on AI-enabled Immersive Media Delivery over 5G Networks

InterDigital Announces Convertibility of 3.50% Senior Convertible Notes Due 2027

InterDigital to Showcase Innovations in High Definition and Sustainable Video Streaming Alongside Partners at NAB 2024

InterDigital Declares Regular Quarterly Cash Dividend

InterDigital’s Xiaofei Wang Appointed Chair of the IEEE 802.11 Artificial Intelligence and Machine Learning (AIML) Standing Committee

Interdigital to Speak at the 36th Annual Roth Conference

Form 4 - Statement of changes in beneficial ownership of securities

Form 144 - Report of proposed sale of securities

InterDigital’s Atle Monrad Elected Chair of 3GPP’s SA6 Working Group

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