InterDigital, Inc.

What they do

InterDigital designs and develops foundational wireless, video, AI and related technologies, and licenses the resulting patents to makers of wireless devices, consumer electronics, IoT products and vehicles, as well as cloud-based service providers such as video streaming services. As of December 31, 2025, its wholly owned subsidiaries held more than 38,000 patents and patent applications. Revenue comes primarily from patent licensing, including fixed-fee agreements with uneven payment schedules. In 2025 and 2024, total revenue was $834.0 million and $868.5 million, respectively.

Revenue drivers

• Smartphone — Licensing of wireless patents to handset makers; Q2 2026 revenue was $122.7 million, down 48% from $235.1 million in Q2 2025.
• Streaming and Cloud Services — Licensing video and cloud-based services such as video streaming; contributed $110.0 million in Q2 2026 versus none in Q2 2025, driven by the new Amazon agreement.
• CE, IoT Auto — Licensing to consumer electronics, IoT and automotive customers; Q2 2026 revenue was $27.5 million, down 58% from $65.3 million a year earlier.
• Catch-up revenue — Revenue tied to periods prior to execution of variable and dynamic fixed-fee license agreements; $103.7 million in Q2 2026 versus $162.3 million in Q2 2025.

Recent performance

Second quarter 2026 revenue was $260.2 million, down 13% from $300.6 million in Q2 2025. Net income was $116.4 million, or $3.40 diluted EPS, versus $180.6 million and $5.35 a year earlier. Operating expenses rose 27% to $120.9 million, primarily on higher intellectual property enforcement costs and share-based compensation. Annualized recurring revenue reached a record $625.7 million, up 13% year over year from $553.1 million. The quarter included $103.7 million of catch-up revenue and the first Streaming and Cloud Services revenue of $110.0 million.

Strategy

InterDigital aims to remain a leading developer of fundamental horizontal technologies and to be paid for them through licensing. It is expanding beyond device-based licensing into video and cloud-based service providers, with the Amazon agreement covering Amazon's services and devices including Prime Video as the first streaming and cloud services deal. It continues to enforce its patents in court, winning UPC injunctions against Disney in June and July 2026 covering eleven EU countries each. It also invests internally in wireless, video and AI research and made the Deep Render acquisition, which it must integrate successfully. It returns capital through dividends and buybacks, spending $41.0 million in Q2 2026.

Risks

• Services licensing execution — The market for licensing video and cloud-based services is less developed than device licensing, and the company had not entered its first video services license before the Amazon agreement, making expected revenue uncertain.
• Litigation and enforcement — The company depends on resolving legal proceedings and enforcement actions, including the Amazon and Lenovo arbitrations and the Disney UPC injunctions, whose schedules and outcomes are uncertain.
• Revenue concentration and timing — 93% of Q2 2026 revenue came from fixed-fee agreements, which have uneven and sometimes front-loaded payment schedules, creating timing differences between cash collection and revenue recognition.
• Customer holdout and alternatives — Service providers may delay negotiations or adopt alternative technologies with little or no InterDigital patent coverage, which could limit the services licensing program.

Outlook

Management raised full year 2026 revenue guidance to between $775 million and $845 million, an increase of $85 million at the midpoint, and issued Q3 2026 revenue guidance of $154 million to $158 million. Q3 guidance covers existing licenses only and excludes new agreements or enforcement results. Full year 2026 guidance includes expected contributions from new agreements and enforcement actions. Full year 2026 diluted EPS guidance is $7.91 to $9.67, and non-GAAP EPS guidance is $10.85 to $12.81.