InterDigital (IDCC) Q2 2025 Earnings Call Transcript

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Date

Thursday, July 31, 2025, at 10 a.m. ET

Call participants

President and Chief Executive Officer — Liren Chen
Chief Financial Officer — Rich Brezski
Vice President, Investor Relations — Raiford Garrabrant

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Takeaways

Samsung license agreement: Arbitration with Samsung resulted in an eight-year license valued at over $1 billion in total payments, lasting through February 19, 2030, equating to $131 million annually under the agreement, representing a 67% increase from the prior contract.
Quarterly revenue: Revenue reached $300 million for the second quarter of 2025, up from $224 million in the prior year, supported by $152 million from the Samsung arbitration award (GAAP revenue), which included $33 million recurring and $119 million catch-up revenue.
Annualized recurring revenue (ARR): ARR climbed 44% year over year to a record $553 million, primarily from increased licensing coverage in the smartphone segment.
Smartphone program ARR: Smartphone program annualized recurring revenue (ARR) increased 58% year over year to $465 million, nearing the $500 million smartphone annualized recurring revenue (ARR) target for the second quarter of 2027, with nearly 80% of the global smartphone market now under license.
Consumer electronics (CE) and IoT revenue: CE and IoT program revenue reached $65 million, up 175%, following the HP licensing agreement, with over 50% of the PC market now under license.
Total contract value secured since 2021: The cumulative value of signed licenses, including Samsung and HP, has surpassed $4 billion since 2021.
Adjusted EBITDA: Adjusted EBITDA was $237 million, yielding an adjusted EBITDA margin of 79%, compared to 71% in the prior year.
Non-GAAP EPS: Non-GAAP EPS hit a record $6.52, exceeding the $2.67 to $2.90 non-GAAP EPS guidance range.
Cash generation: Operating cash flow was $105 million; free cash flow was $92 million; $42 million returned to shareholders via $26 million in buybacks and $16 million in dividends.
Full-year 2025 guidance raised: New revenue outlook is $790 million to $850 million for full year 2025, up $110 million at the midpoint; adjusted EBITDA is guided to $551 million to $569 million, with non-GAAP EPS expected at $14.17 to $14.77.
Third quarter 2025 recurring revenue guidance: Expected recurring revenue is $136 million to $140 million from existing agreements, excluding any future deals this quarter.
Portfolio quality: Ranked number two globally in IP portfolio quality and quantity among telecommunications leaders, according to recent IEEE benchmarking.
6G and AI initiatives: Leadership in 6G research and standard development is advancing, with potential monetization from broader verticals such as industrial IoT, smart cities, healthcare, and vehicles.
No incremental costs with Samsung agreement: CFO Brezski stated, "There really isn't any incremental cost as a result of this agreement ... incremental value from renewals are 100% gross margin."

Summary

The completion of a landmark eight-year license agreement with InterDigital (IDCC 0.31%) and Samsung resulted in a step-change in both recurring and catch-up revenue, substantially surpassing prior guidance. Management indicated that the Samsung deal alone significantly increases annualized recurring revenue (ARR), directly impacting ARR metrics and forward-looking guidance for the second quarter of 2025 and fiscal 2025 (ending Dec. 31, 2025). The company further expanded its licensing reach both in smartphones and PCs, achieving record contract value and demonstrating strong execution of its licensing-driven growth model. Looking to future opportunities, management highlighted progress in 6G technology and standards, with expectations that demand from new verticals could support continued long-term expansion of its licensing programs.

CEO Chen emphasized the company's position with both Apple and Samsung, the world's top device makers, now under license for core smartphone technology.
Management signaled strong progress in resolving ongoing disputes, notably with Lenovo, stating, "arbitration with Lenovo, which is processing in a timely fashion and according to plan."
Recent licensing agreements with Chinese OEMs, including Oppo and Vivo, further increased the share of the addressable smartphone market under contract to roughly 80%, enhancing recurring revenue visibility.
CFO Brezski explained that the updated full-year guidance is based on a "multi-path approach" that factors in several scenarios, with incremental catch-up revenue possible in coming quarters.
Net share repurchases and dividend payouts continued as primary capital allocation priorities, supported by higher free cash flow.
Management noted ongoing multipartite patent litigation involving major streaming companies, including Disney, but reported no impact on current business dialogues with other potential customers.
The tax rate is expected to remain in the mid- to high-teens on a long-term basis, with a possible slight reduction subject to further evaluation of tax legislation impacts.

Industry glossary

Catch-up revenue: Contractually owed payments recognized when favorable arbitration, litigation, or licensing outcomes retroactively adjust revenue for prior periods not previously accounted at the higher agreed rates.
Annualized recurring revenue (ARR): The annualized value of recurring licensing fees under current contracts, providing a point-in-time measure of the run-rate business from existing agreements.
3GPP: The 3rd Generation Partnership Project, an organization that develops standards for mobile communication systems globally, including 5G and 6G protocols.

Full Conference Call Transcript

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 the call up for questions. For additional details, you can access our earnings release and 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.

These risks and uncertainties include those described in the Risk Factors section of our 2024 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 and the financial metrics tracker posted to the investor relations section of our website. With that taken care of, I will turn the call over to Liren Chen.

Liren Chen: Thank you, Raiford. Good morning, everyone. Thanks for joining us today. This week, we announced the conclusion of our arbitration with Samsung, which finalized the largest agreement we have signed in our company history. Under the terms of our eight-year license, lasting through February 19, 2030, Samsung will pay us more than $1 billion, which equals $131 million per year and is an increase of 67% compared to our previous agreement. This excellent result demonstrates once again the value of foundational research, the strength of our IP portfolio, and the momentum we have built in our licensing programs. It also increased our annualized recurring revenue to an all-time record of $553 million, an increase of 44% year over year.

Our new long-term sign-on agreement helped us deliver revenue, adjusted EBITDA, and non-GAAP EPS far exceeding the top end of our guidance. Building on the strength of our second quarter result, the increased business momentum, and the opportunity to make more progress over the balance of this year, we have raised the full year 2025 guidance to between $790 million and $850 million, up $110 million at midpoint. Rich will cover the numbers in more detail in his section. We are delighted with the result of this arbitration. It's another validation of how foundational our innovation is to our connected world. Samsung is the world's largest smartphone manufacturer and one of our longest licensees, dating back almost thirty years.

We look forward to continuing our collaboration with Samsung as we keep on driving innovation forward and sharing our technology through the standard process and through our licensing programs. It's worth noting that the new agreement does not cover Samsung Digital TV and display monitors, which are part of a separate license that we announced early last year. Our new license means that the world's two leading device manufacturers, Apple and Samsung, are under license. Following the recent agreement with major Chinese OEMs, including Oppo and Vivo, we have clear momentum in our smartphone program where we have almost 80% of the global market under license and ARR from the smartphone program of $465 million, which is another all-time record.

Staying with our smartphone program, we continue to make progress in our arbitration with Lenovo, which is processing in a timely fashion and according to plan. In our consumer electronics and IoT program, the new license agreement with HP, which we signed at the start of the second quarter, is another good example of the progress we are making in growing revenue outside the smartphone program. The agreement licenses HP personal computers to our Wi-Fi and video decoding technology, and we now have more than 50% of the PC market under license. With the HP contract, revenue from our CE and IoT program increased 175% in the second quarter to about $65 million.

Counting the HP and Samsung agreements, the total contract value of licenses that we have signed since 2021 is now more than $4 billion, demonstrating the accelerating momentum of our IP as a service business model. On the research front, the development of 6G is picking up steam, and our engineers are at the forefront of developing the foundational technology for the next generation of mobile. Our engineers are also leading the development of the 6G standard, with multiple working group chair positions for 3GPP.

The wider integration of AI into cellular networks and the development of new technology such as integrated sensing and communication offers what could be an exciting new monetization opportunity for service providers and device manufacturers and make our patent portfolio even more valuable. We believe 6G will also further the penetration of cellular wireless in new verticals such as industrial IoT, smart city, healthcare, and automobile, where connectivity is increasingly important and we are creating new licensing opportunities for us. We excel not only in converting our innovation into a broad patent portfolio but also into one of the highest quality portfolios in the world.

Recently, we ranked number two among all the global leaders in telecoms in terms of both quality and quantity of our IP portfolio, by an IEEE report. With our research leadership, and the breadth and depth our portfolio reflects, we are in a strong position to deliver value for our customers well into the next decade. Our long-term success is also underpinned by our ability to acquire, retain, and enhance our people. We continue to advance our talent strategy, placing an emphasis on mentorship, ongoing training, and leadership development. We believe that the long-term stability of our business and the continued success put us in an excellent position as a destination for premier talents in our industry.

You can find more information in our 2025 Corporate Sustainability Report on our website. And with that, I hand you over to Rich.

Rich Brezski: Thanks, Liren. Q2 was an exceptional quarter for InterDigital, Inc. as we delivered all-time record levels of annualized recurring revenue and non-GAAP EPS. The results for the quarter far exceeded the top end of our guidance range, with the upside driven by the favorable conclusion of our arbitration with Samsung, which we just received this week. This conclusion also resulted in a significant step up in ARR, catch-up revenue, and full-year guidance for Q2 2025. I'll provide more detail on each of these items in a moment. Revenue for the quarter was $300 million, which far exceeded the top end of our guidance of $170 million and was driven by the Samsung arbitration award and HP license agreement.

This compares to revenue of $224 million in Q2 of last year, when favorable court rulings in our enforcement against Lenovo helped generate $128 million in catch-up revenue. Let me take a second to discuss the impact of the Samsung arbitration award. Since entering into the agreement, we have been accruing revenue at the level of the prior agreement, which was $78 million per year. We received the arbitration decision just a few days ago in Q3, but since we had not yet closed the books on Q2, GAAP requires us to update our Q2 estimate based on the final decision. As a result, the award contributed $152 million of revenue to Q2.

The $152 million of revenue was comprised of $33 million of recurring revenue and $119 million of catch-up revenue to true up the prior nine quarters from January 1, 2023, to March 31, 2025. Turning to annualized recurring revenue, our ARR increased 44% year over year to an all-time high of $553 million in Q2. This was driven primarily by momentum in our smartphone program, where recent patent license agreements with Oppo, Vivo, and Lenovo increased our share of the smartphone market under license from about 50% to roughly 80%.

These agreements, together with our excellent Samsung arbitration result, increased our smartphone ARR 58% year over year, from $294 million in Q2 last year to $465 million in Q2 this year. With smartphone ARR at $465 million, we are now drawing near our smartphone ARR goal of $500 million by Q2 2027. In CE and IoT, the HP agreement is just the latest example of the significant growth opportunities that exist beyond the smartphone market, and we believe we can more than double the ARR from CE and IoT by Q2 2030.

Through the growth in smartphone and CE IoT, together with our massive opportunity in video services, we are making good progress toward our goal of $1 billion plus in ARR across all programs by Q2 2030. And it's important to remember that while ARR is a great metric to track the growth in our business, there is economic value above ARR alone. Over the last ten years, we have recognized $1.5 billion of catch-up revenue. This has been tremendously valuable because we use the majority of that money to fund share repurchases over that time period.

Today, we continue to have a lot of catch-up opportunity remaining, which tends to be 100% gross margin as we pursue our goal of $1 billion of ARR by Q2 2030. Our adjusted EBITDA for the quarter was $237 million and equates to an adjusted EBITDA margin of 79%, up from 71% in Q2 last year. Non-GAAP EPS also came in at an all-time high of $6.52 for Q2, well above the high end of our guidance range of $2.67 to $2.90, and powered by the strength of our financial model where a high percentage of incremental revenue falls to the bottom line.

Cash from operations was a robust $105 million in Q2, resulting in free cash flow of $92 million. Consistent with our capital allocation priorities, we continue to maintain a fortress balance sheet, invest for growth, and return excess capital to shareholders. In Q2, we returned $42 million to shareholders through $26 million in buybacks and $16 million through our recently increased dividend. In July, we bought back another $15 million of stock and made another $16 million dividend payment, bringing total return of capital to almost $90 million year to date.

In just the last three and a half years, we have repurchased more than $500 million of stock, and we expect to continue to buy back shares over the remainder of this year. Looking forward to Q3, we expect recurring revenue will include $136 million to $140 million of revenue from existing contracts, including the new run rate related to Samsung. Any revenue from any new agreements we may sign over the balance of the quarter would be additive to these amounts. Based only on existing contracts, we expect an adjusted EBITDA margin of about 52% and non-GAAP diluted earnings per share of $1.52 to $1.72.

As Liren noted, we are increasing our full-year 2025 guidance based not only on our excellent results but also on the opportunity to continue our progress. We now expect revenue in the range of $790 million to $850 million, with adjusted EBITDA in a range of $551 million to $569 million and non-GAAP earnings per share of $14.17 to $14.77. In addition, I'll note that we previously communicated that we expected double-digit growth in free cash flow for 2025 over the $212 million level we reported in 2024.

Based on our updated expectations for strong free cash flow over the second half of the year, we now believe our free cash flow for full-year 2025 could exceed $400 million, close to double 2024 levels. With that, I'll turn it back to Raiford.

Raiford Garrabrant: Thanks, Rich. Before we move to Q&A, I'd like to mention that we'll be attending a number of investor events in Q3, including the Jefferies Tech Conference, the Evercore Tech Conference, and the Midwest Ideas Conference, all in Chicago, as well as the Sidoti Conference, which is virtual. Please reach out to your representatives at those firms if you'd like to schedule a meeting. At this point, Demi, we are ready to take questions.

Operator: You have dialed in and would like to ask a question. Please press 1 on your telephone keypad to raise your hand and join the queue. Again, press 1 to join the queue. Your first question comes from the line of Anja Soderstrom with Sidoti. Your line is open.

Anja Soderstrom: Hi. Thank you for taking my question and congratulations on the strong quarter here and outlook. I'm just curious, the tax rate was a little bit lower. How should we think about that going forward given this new revenue contribution?

Rich Brezski: Yes. Thanks, Anja, for your comment. The tax rate was a little bit lower. We are still evaluating the impacts of the new tax legislation, but generally think that they're a net positive. We see our kind of long-term tax rate still in the mid to high teens, but maybe a tick below what we might have thought otherwise. But we continue to evaluate that.

Anja Soderstrom: Okay. Thank you. And, also, there were some noise earlier this week or last week about some potential legislation that there would be some sort of tariffs or something on the IP. Do you have any comments around that or do you have anything built into your contract where you can pass that on?

Liren Chen: I believe you're referring to a Wall Street Journal article. Yeah. Anja, hey. This is Liren. Regarding a potential proposal, we actually don't know any details. We are not exactly certain, you know, where it will go. So without any details for now, the proposal for IP, we don't think it's appropriate for us to comment. We are watching the situation pretty carefully, and we have a very healthy open dialogue with key policymakers in Washington, D.C.

Anja Soderstrom: Okay. Thank you. And then also your updated guidance for the full year. That assumes some more catch-up payment. Potentially. Right?

Rich Brezski: Yeah, Anja. So, when we look at our guidance and the updated guidance is no different than we've done in the past. We typically look at what we call a multi-path approach. So there's different combinations of different opportunities that we think we could bring across the line. And some of those opportunities would include catch-up. That's right.

Anja Soderstrom: Okay. Thank you. That was all for me. Thanks.

Operator: Next question comes from the line of Scott Searle with ROTH Capital. Your line is open.

Scott Searle: Hey. Good morning. Thanks for taking my questions, and congrats on getting Samsung across the finish line. Thanks, Scott. You know, looking at the wireless market now, you've got 80% of the market under license. You're approaching your $500 million target. I'm wondering how you're thinking about the long-term opportunity now with wireless. You're starting to talk a little bit about 6G, about some AI related to that as well. Are there other avenues to monetize within the wireless market and or in adjacencies, you know, whether it be Wi-Fi, Bluetooth, other connectivity protocols that you guys are thinking about to drive a figure higher than that $500 million ARR target?

Liren Chen: Yes. Scott. Good morning. Yes, if you look at our smartphone here, we are currently at about 80% market penetration. Our ARR, as we just reported, is about $465 million. We still have three major accounts we are working on trying to get them signed regarding the top 10 customers. So we feel very good about where we are, but as Rich commented here, we feel we are very close to reaching our target on the smartphone side. Regarding the future of wireless, we are very optimistic about the strengths of our portfolio, but more importantly about the way we are leading 6G development.

As I commented in my remarks, we believe 6G will open up not just enabling more smartphone growth, but also open up adjacent areas for vertical streams. Smart city, industrial IoT, healthcare, and a bunch of other industries where connectivity clearly will drive a lot of more workload options here. So we are optimistic this will open up new opportunities for us. But as of now, we don't put a number to them yet.

Scott Searle: Liren, just to follow-up on those comments, are you starting to invest pretty actively in some of those verticals and particularly smart city, industrial IoT, and healthcare? Or should we be expecting some incremental dollars in R&D going in that direction? And then just the quick update on the streaming opportunity with the over-the-top players. Can you give us an update in terms of engagements that you're seeing at that level, level of, you know, ongoing dialogue? And maybe if there's any update as it relates to the Disney litigation. Thanks.

Liren Chen: Yeah. Hey, Scott. So the beauty of our business model is we invest in foundational technology. And then we build out, you know, a very strong and one of the most valuable portfolios in the industry. We make you license different verticals. We actually do not have to incur additional costs into these different verticals other than some licensing activity itself. So that's sort of the 6G development here. Regarding the streaming side here, we are in continuous dialogue with all the major players. And, you know, as of today, we don't have any, you know, real concrete progress to report yet. Regarding the Disney litigation, we have done a lot of work.

As you all were, it's a multi-jurisdictional enforcement activity. And we have done a lot of, you know, early-stage progress and frankly have got multiple wins on the procedure side. And we have a subsequent trial coming up later this year and early next year. You can actually see all the details in our 10-Q filing. That's on our website.

Scott Searle: Hey, Liren. Maybe just to quickly follow-up on that, and then I'll get back in the queue. But given the Disney litigation, is that slowing down dialogue with any of the other players out there? Are they waiting to see the outcome there before they more engage and continue in their process? And second, you know, the broad general timelines of when you would expect some sort of resolution. Is 2026 the time frame of when we could expect an initial deal? You know, anything from a timeline perspective would be helpful. Thanks.

Liren Chen: Yes. Hey, Scott, for the first half of your question here, we do not see Disney litigation that's impacting our dialogue with other potential customers here. Regarding the timeline for Disney, it's hard to predict exactly, you know, when a settlement may happen. We are always open for open dialogues even though sometimes via email enforcement activity. And but sometimes, you know, certain litigation takes longer time. And sometimes takes shorter. We have seen that on the smartphone side. So but always, when we started an enforcement here, we prepared to go all the way through but we are always open for business dialogue in the meantime.

Scott Searle: Great. Thanks so much. I'll get back in the queue.

Liren Chen: Thanks.

Operator: Next question comes from the line of Arjun Bhatia with William Blair. Your line is open.

Arjun Bhatia: Alright. Thank you. And I'll have my congrats on the Samsung outcome. Obviously, a big success there. Maybe if we can start there, Liren. I'm curious just if you reflect on the outcome what it says about your tech, your patent portfolio, because the 67% uplift, I think, is well above kind of what we were expecting. A lot of investors were expecting, and, obviously, the implied kind of royalty rates in that agreement, from an economic perspective, are quite strong.

So what does it say about, I guess, for your technology, how you're investing, and then what might it mean for some of the other negotiations you're having, with other smartphone OEMs or you might have in the future, like, channeling this year or, you know, even others that are not under contract yet.

Liren Chen: Thank you. Yeah. Hey, Arjun. Good morning. Regarding the Samsung arbitration result, as we have stated in our press release as well as our earnings remarks here, we are quite pleased with the readout. We believe it properly reflects the value of foundational research as well as our IP portfolio. And I do think our team has done a very good job, you know, conveying all the value of the portfolio with the arbitrator who, in our opinion, properly reached a conclusion. And we also want to thank the Samsung team, you know, for their professionalism in this process. Regarding the 67% increase compared to the prior agreement, we think that's very appropriate.

Consider the prior agreement was a ten-year agreement at the time didn't really factor in the value of our 5G portfolio as well as a lot of other innovations, you know, videos and AI research we continue to do. I do think this is a very valuable development for our program. And as you know, Arjun, in our program here, you know, a major license agreement tends to be used as a comparable license for other customers. When it's time for renewal, or sometimes when it's time to sign up the first customer for the first time. So we believe it will have a positive impact on our overall program. And we are really pleased about the outcome.

Arjun Bhatia: Perfect. That's great to hear. And then maybe Rich, to follow-up on that point a little bit. Just as we're thinking about the changes to the model, I think the way you come up with guidance, obviously, it's a bit unique, but I imagine there was some, whether directly or indirectly, some Samsung catch-up revenue baked into your prior guidance. Is it possible at all to quantify what that was and how we should kind of just reflect on the change in Q3 and Q4? Or, sorry, Q3, the Q3 guidance that you provided relative to what was previously implied in the back half numbers.

Rich Brezski: Yeah. I mean, the way I discuss it or describe it, Arjun, is under that multipath approach, we considered a range of potential outcomes for the Samsung result. And now that we've, you know, it's no longer a range. It's a point estimate. We have the result. Right? And that, along with, you know, the other progress that we've made puts us in a position to update the guidance based on the new multipath that we see going forward.

Arjun Bhatia: Okay. Understood. Very helpful. And then sorry. One last one. If I can. Just when you have a big, you know, win like this and a kind of a step function change in outcome, you just talk a little bit about what it means for your cost structure. Is there, like, a one-time fee that you kind of recognize in expenses that when you get an outcome like this or are those costs relatively fixed?

Rich Brezski: Yeah. So, Arjun, the thing that I love about our business is that, you know, we've made the investment that made this agreement possible over the last years or decades. Right? We've been investing, you know, for a long time. In smartphone, in 4G, 5G, in the video acquisition and continued video research thereafter. So that's what made that legacy investment as well as the ongoing investment we're already making and would be making anyway. Is what makes this agreement possible. So there really isn't any incremental cost as a result of this agreement. You know, we true up some performance accruals and things like that, but it's very, very small, you know, relative to the size of the agreement.

So it's, as I, you know, typically say, a lot of times new agreements or incremental value from renewals are 100% gross margin.

Arjun Bhatia: Alright. Perfect. Very helpful, and, congrats again to you and the team.

Rich Brezski: Take care. Great. Thanks.

Operator: Next question comes from the line of Tal Liani with Bank of America. Your line is open.

Tal Liani: Hi, guys. I'm trying to take the recurring revenue line and break it down just to understand. So this quarter, is $138 million. What was the contribution of Samsung to this, and what was the expectation? So going in did you have any expectations of Samsung to be in recurring revenue?

Rich Brezski: Yeah. So, we had been booking Samsung at the based on the prior agreement of $78 million. So we basically been booking, you know, just shy of $20 million a quarter. Based on the new agreement, it's now $33 million of recurring revenue in the quarter.

Tal Liani: Got it. As we go into the following quarter, assuming nothing else, or can you just the recurring revenue line, what should we assume going forward in terms of the growth trajectory? And, again, I know the way you guide is you don't add any other agreements. So based on the current agreement, what are the expected trends for recurring revenues?

Rich Brezski: Yes. So that's based on the current agreements, that's really what our guide is limited to at $136 million to $140 million. That's based on our existing recurring revenue. And then, you know, anything that we're able to sign or renew or whatever thereafter or above that would be added.

Tal Liani: Right. No. Sorry. This is for the following quarter, which is in line with the $138 million this quarter, so I understand it. If I try to forecast for next year and I again, based on the current agreements, what should how should recurring revenue trend if that's my baseline. So I'm trying to understand my baseline and then do some assumptions about anything else. So how is the recurring revenue line progresses if you don't get any other contract?

Liren Chen: Tal, let me take this question and see if that makes sense. So if you look at here we are, right? We are end of Q2. We are projecting new deals will be down for the rest of the year. But as Rich had commented here, we don't really know exactly which combination will be there. Therefore, as the year progresses, and then we will hopefully, by Q4, you know, have a very clear picture on where we are. Leading to next year, we also disclosed in our filings about, you know, a few contracts, you know, currently scheduled to expire. And you can see on our website.

And so if you take all those expiration contracts, that would be a starting point for next year. Assuming, you know, the current contracts expire. But as you know, we always try to get them renewed. And very often, we have success to get them renewed before they expire. So that's sort of the stepping function for starting off next year.

Tal Liani: And, normally, again, from historically, when contracts expire and you renew them, is there growth, or is there contract in the contract? Like, this time, it was Samsung. There was, like, you know, 40, no. More than forty fifth 60% growth or whatever with the recurring rate. Quarterly recurring revenue at the renewal of Samsung. What happens normally with renewals?

Liren Chen: Yeah. Totally. Actually depends on the situation of certain customers. Give you a couple of examples here. As you mentioned here, Samsung, the last contract was a very long-term contract. In effect in May. So this time through arbitration, we are able to get a 67% increase compared to the prior one. The other example is the Apple contract. As we have discussed before, the previous Apple contract was a longer term, but not as long as Samsung. So we renewed the Apple contract in September 2022, and that contract on average was 15% higher than the prior contract.

So it really depends on the situation, depends on, you know, where the vendor is, how stable their business, had they increased volume, had they used more of our, you know, technology. It's a combination of different factors, Tal. But based on these two examples here, we do have a success record in, you know, renewing at a higher value if that's appropriate.

Tal Liani: Got it. Perfect. Thank you so much.

Operator: And that concludes the question and answer session. I would now turn the call back over to Liren Chen, CEO, for closing remarks.

Liren Chen: Thank you, Demi. Before we close, I'd like to thank our employees for their dedication and contribution to InterDigital, Inc., as well as our many partners and licensees for a strong quarter. Thank you all to everyone who joined today's call. And we look forward to updating you on our progress next quarter.

Operator: Today's conference call, you may now disconnect.