Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Thursday, Feb. 5, 2026 at 10 a.m. ET

CALL PARTICIPANTS

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

Need a quote from a Motley Fool analyst? Email [email protected]

TAKEAWAYS

  • Full-Year Revenue -- $834 million, the second-highest in company history.
  • Annualized Recurring Revenue (ARR) -- $582 million, up 24% year over year.
  • Adjusted EBITDA -- $589 million for the year, a record high and nearly three times the 2021 figure.
  • Non-GAAP EPS -- $15.31 per share for the year, more than four times 2021's $3.73 per share.
  • Smartphone Licensing Revenue -- Just below $680 million, up 14% year over year to an all-time high.
  • Smartphone Market Coverage -- Eight of the top ten global smartphone manufacturers under license, covering approximately 85% of the market.
  • Samsung Smartphone Licensing Contract -- Renewed and extended through 2030 as the most valuable license in company history.
  • New Smartphone Licensees -- Agreements signed with Vivo and Honor in 2025; renewal with Xiaomi secured in early 2026.
  • CE and IoT Licensing Progress -- New agreements with HP (covering about half the global PC market) and LG Electronics for digital TVs and computer display monitors.
  • CE Device Licensing -- Fourth-quarter agreement signed with a major social media company for video coding and Wi-Fi patents.
  • Total Contract Value Since 2021 -- Over 50 license agreements signed, exceeding $4.6 billion in contract value.
  • Patent Portfolio Size -- Surpassed 38,000 granted patents and applications in 2025, growing 14% year over year.
  • Litigation Developments -- Two preliminary injunctions obtained in Brazil and two in Germany against Disney; multi-jurisdictional enforcement initiated against Amazon in Q4.
  • Q4 Revenue -- $158 million, including $13 million of catch-up revenue, exceeding stated outlook.
  • Q4 Adjusted EBITDA -- $88 million with a 56% margin, both above guidance.
  • Q4 GAAP EPS -- $1.20, and non-GAAP EPS $2.12, both surpassing guidance highs.
  • Q4 Cash Generation -- $63 million cash from operations and $48 million free cash flow.
  • DeepRender Acquisition -- AI startup acquired in Q4 to enhance AI and video compression research capabilities.
  • 2026 Full-Year Outlook -- Revenue guidance of $675 million to $775 million, adjusted EBITDA of $381 million to $477 million, and non-GAAP EPS of $8.74 to $11.84.
  • Q1 2026 Outlook -- Revenue of $194 million to $200 million from existing contracts, with $55 million to $60 million as catch-up sales; adjusted EBITDA margin of 52% to 55%; non-GAAP EPS of $2.39 to $2.68.
  • ARR Expirations and Renewals -- About two-thirds of $92 million in year-end expirations have been renewed going into 2026, including Xiaomi and LG agreements.
  • 2026 ARR Target -- On pace to reach $1 billion by 2030, driven by additional renewals and new agreements.
  • Litigation Expenses -- $19 million in Q4 2025, the highest in recent memory, with expectations for further increases in Q1 and full-year 2026.
  • Standard Leadership -- Senior engineer re-elected chair of a key 3GPP working group for 6G and multiple leadership roles in AI standard groups maintained.
  • Third-Party Recognition -- Named by Newsweek, Fortune, Time, and Forbes for growth, innovation, and mid-cap performance achievements.

SUMMARY

InterDigital (IDCC +13.04%) posted record adjusted EBITDA and non-GAAP EPS for 2025, underpinned by robust execution in its licensing segments and strategic expansion into AI and standard-setting leadership. The company extended its reach across the smartphone industry, securing long-term agreements with eight of the top ten handset vendors, while advancing consumer electronics and IoT licensing, including new deals with HP and LG Electronics. Material steps were taken in enforcement activities, with preliminary injunction victories against Disney and the launch of enforcement actions against Amazon, highlighting both licensing discipline and legal intensity. The DeepRender acquisition marks further investment in AI-driven technology and video compression leadership. Forward guidance reflects expectations for continued strong financial performance, bolstered by ongoing contract renewals and aggressive pursuit of new agreements and arbitration outcomes.

  • CEO Chen stated, "We finished 2025 with a strong fourth quarter delivering revenue and EPS above the high end of our outlook," specifically attributing upside to new device licensing in consumer electronics.
  • The Q1 2026 revenue guidance is exclusively based on existing contracts and excludes potential contributions from new license agreements or arbitration awards for the quarter.
  • R&D investment remains broad and opportunistic, with management indicating ongoing consideration of selective M&A to deepen the patent portfolio beyond organic innovation.
  • Litigation strategy, as described by CEO Chen, centers on "multi-jurisdictional enforcement campaign." and does not depend on prevailing in every individual patent assertion.
  • Management expects increased litigation and related expenses throughout 2026, with such costs reflected in annual guidance.
  • InterDigital will showcase its latest advancements in 6G, AI, and immersive video applications at the upcoming Mobile World Congress, underlining its technology leadership and industry engagement.

INDUSTRY GLOSSARY

  • Annualized Recurring Revenue (ARR): Projected annual revenue from licenses or contracts that renew automatically or are expected to renew, providing base-level revenue visibility.
  • Catch-up Revenue: Revenue recognized in the current quarter pertaining to prior reporting periods, often as a result of newly executed contracts or settlements.
  • Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for non-recurring or non-cash charges, used to assess operating profitability.
  • 6G: Sixth-generation wireless standard, currently under global development, offering faster speeds, reduced latency, and enhanced connectivity, with emphasis on native integration of AI.
  • 3GPP: The 3rd Generation Partnership Project, a consortium of telecommunications standards organizations, responsible for developing mobile communication protocols including 4G, 5G, and 6G.

Full Conference Call Transcript

Liren Chen: Thank you, Rayford. Good morning, everyone. Thanks for joining us today. At the beginning of 2025, we set aggressive goals to grow our company, including building on the momentum of our smartphone licensing program to drive revenue growth with a special focus on increasing annualized recurring revenue and margin expansion, building a strong licensing pipeline by advancing our video service licensing program, expanding our AI research capability, and growing our standard leadership and patent portfolio at a critical stage in the development of 6Gs and the next-generation video codecs. I'm pleased to say that we have exceeded our goals on all these fronts.

We finished 2025 with a strong fourth quarter delivering revenue and EPS above the high end of our outlook, built strong momentum across our licensing programs, completed a key acquisition to strengthen our AI research, and added new inventions to our patent portfolio, reaching a new record-breaking high. This rounded off an excellent year where revenue for the full year was $834 million, the second-highest in our history. We increased our annualized recurring revenue to $582 million, up 24% year over year. Adjusted EBITDA was $589 million, and our non-GAAP EPS was more than $15, both at all-time highs.

Today, I will focus on progress throughout the year and why we believe we are well-positioned to drive shareholder value in 2026. Rich will then talk you through our fourth-quarter financial performance, and our 2026 outlook in more detail. In our smartphone program, we had a record-setting year in 2025. We completed the Samsung smartphone licensing contract, extending one of our longest customer relationships all the way to 2030. We signed new deals with two more top 10 global smartphone vendors, Vivo and Honor. With these additions, we have now licensed eight of the top 10 largest smartphone manufacturers, covering about 85% of the overall market.

Our new agreement with Samsung is the most valuable license in our history, continuing our win-win relationship that stretches back to the 1990s. In 2025, we also renewed agreements with Sharp and SAICL. For the year, our smartphone revenue was just below $680 million, up 14% year over year to an all-time high. This strong momentum has continued into 2026 as we renewed our license with Xiaomi at the beginning of the year. We now have the three largest smartphone vendors, Apple, Samsung, and Xiaomi, licensed through the end of the decade, providing a strong foundation for the company to build on future organic growth. In our CE and IoT program, we continue to make good progress.

In 2025, we signed a new agreement with HP, the world's largest PC manufacturer. We now have licensed about half of the global PC market. In the fourth quarter, we signed a CE device license agreement with a significant social media company covering our video coding and Wi-Fi patents. At the start of 2026, we completed a new license with LG Electronics, covering the company's digital TV and computer display monitors. LG is one of the top global TV manufacturers with strong sales in the premium part of the market. We are thrilled to add it to our CE licensing program.

Including the latest deals, we have now signed over 50 license agreements with a total contract value of more than $4.6 billion since 2021. We also continue to make good progress in our video service program and our focus on licensing some of the world's largest streaming platforms. We believe that this space continues to represent an excellent growth opportunity for us. Initially, our focus is on streaming services, but we also see opportunities in other video-driven platforms where our innovation in areas like video compression is central to the efficient processing and delivery of video content and to the consumer experience overall. At the beginning of 2025, we launched our enforcement campaign against Disney+, Hulu, and ESPN+ streaming services.

We received two preliminary injunctions in Brazil and two injunctions in Germany against Disney, and in the fourth quarter, we launched our enforcement proceedings against Amazon. These are important steps toward our goal of signing long-term agreements with both companies. As I've said many times before, we always prefer getting license deals done through bilateral negotiations, but we will rigorously pursue fair value for years of investment in our research and deepen the value of our intellectual property, which allows us to continue to invest in the next generation of technology. And when we enforce our patent rights, we have a strong track record of ultimately signing a license that's fair to both parties.

The central role we play in the connected world is only possible because we have built and continue to expand our research pipeline, which provides us with a strong foundation of assets to license today and which ensures that we have a platform that drives growth across licensing programs through 2030 and beyond. In 2025, we placed particular emphasis on deepening our AI expertise and strengthening our leadership in developing AI-based solutions for the next generation of standardized technologies.

Through our standard contributions and our technology leadership, we drive much deeper use of AI to make networks more efficient and reliable, to make video of better quality and more energy-efficient, and by leading the development of advanced wireless networks to better support the rapid growth use of AI across devices and services. Our recent acquisition of AI startup DeepRender, which we completed in Q4, is a perfect example of how we strengthened our engineering team to lead research in AI and video compression in the years to come. In our wireless research, we are already actively contributing to the 6G standard development, which is due to be the first native AI wireless standard.

AI impacting wireless and video growth means that the leadership position we hold in multiple standard groups becomes even more important. In 2025, one of our senior engineers was reelected chair of a key working group within 3GPP, the standard organization which is leading the development of 6G. We also hold multiple leadership positions in AI working groups in several other standard organizations. The strength of our research and our expertise in building a world-class patent portfolio to protect our innovations are key drivers behind our business success. In 2025, our portfolio grew by 14% year over year and surpassed 38,000 granted patents and applications.

Our portfolio is one of the largest across wireless, video, and AI, and more importantly, is also ranked as one of the highest quality in the world according to several independent third-party reports. Through 2025, our success was recognized by multiple third parties, including by Newsweek, which named us one of our market's greatest companies, by Fortune, which included us among America's fastest-growing companies, and by Time, which recognized us as one of America's growth leaders. More recently, another sign of our momentum at the start of 2026, Forbes recognized us as the number one most successful mid-cap company in America for 2026.

In this analysis, Forbes looked at long-term performance and this award reflects our success in building a foundation for the future and delivering even greater shareholder value going forward. Before I hand it over to Rich, I want to let you know that next month we'll be back at Mobile World Congress in Barcelona, where we'll be demonstrating some of our cutting-edge technology, including how 6G will reshape connectivity, our innovative application of AI, and how we are leading the development of more immersive video. We'll also present a demo alongside gaming technology pioneer, Razer, continuing our track record of showcasing cutting-edge innovation alongside industry partners. Please get in touch if you'd like to meet at the show.

And with that, I'll pass you over to Rich.

Rich Brezski: Thanks, Liren. Q4 was a strong finish to an excellent year as we delivered revenue, adjusted EBITDA, and non-GAAP EPS in Q4 that all exceeded the high end of our outlook. The upside was driven primarily by the new CE device license agreement with a significant social media company that Liren mentioned earlier. Total revenue of $158 million exceeded the high end of our outlook of $144 million to $148 million and included $13 million of catch-up revenue. ARR increased 24% year over year in Q4 to $582 million. Our adjusted EBITDA for the quarter of $88 million exceeded the high end of our outlook of $68 million to $76 million, resulting in an adjusted EBITDA margin of 56%.

GAAP EPS for the quarter of $1.20 exceeded the high end of our outlook of $0.72 to $0.95. Non-GAAP EPS of $2.12 for the quarter exceeded the high end of our outlook of $1.38 to $1.63. Cash generation for the quarter was robust, with cash from operations of $63 million and free cash flow of $48 million. Building on Liren's comments, I'll highlight a few key metrics from our full-year 2025 results and provide additional perspective on how each item has improved over the last four years. First, total revenue for full-year 2025 was a near-record at $834 million, roughly two times the 2021 levels of $425 million.

Next, adjusted EBITDA for full-year 2025 reached a record high of $589 million, almost three times the 2021 level of $208 million. Finally, for full-year 2025, we delivered record non-GAAP EPS of $15.31 per share, more than four times the $3.73 per share we reported in 2021. The dramatic gains in these metrics reflect both strong execution and the operating leverage in our business model. Over the past four years, roughly two times revenue growth has delivered nearly three times growth in adjusted EBITDA and more than four times growth in non-GAAP EPS. All of this was driven by our recurring long-term investment in research.

Turning to our outlook, we have guided to another very strong year in 2026, with expectations for total revenue in the range of $675 million to $775 million, adjusted EBITDA of $381 million to $477 million, and non-GAAP diluted earnings per share of $8.74 to $11.84. For Q1, we expect revenue will be $194 million to $200 million from existing contracts, including catch-up sales of $55 million to $60 million. Based only on existing contracts, we expect an adjusted EBITDA margin of 52% to 55% and non-GAAP diluted earnings per share of $2.39 to $2.68.

Entering 2026, we saw a step-down in ARR from year-end expirations, but we have already renewed about two-thirds of the $92 million that expired at the end of 2025, and we expect additional renewals and new agreements will drive further increases in ARR, keeping us on pace to reach $1 billion by 2030. Before I turn it back to Raiford, I want to reiterate that our quarterly guidance for Q1 2026 does not include the impact of any new agreements or arbitration results we may sign or receive over the balance of the first quarter. This is because it is harder to predict the timing of new agreements in short windows.

In contrast, our full-year guidance includes potential contributions from both new agreements and arbitration results. As was the case last year, we believe we can achieve financial results within our full-year guided range through different combinations of new agreements and arbitration results. With that, I'll turn it back to Raiford.

Raiford Garrabrant: Thanks, Rich. Before we move to Q and A, I'd like to mention that we'll be attending a number of investor events in Q1, including the ROTH Conference in Dana Point, California, and the Sidoti Conference, which is virtual. Please reach out to your representatives at those firms if you would like to schedule a meeting. Now we are ready to take questions.

Operator: At this time, I would like to remind everyone that in order to ask a question, you may press star then the number one on your telephone keypad. Also, we kindly ask to please limit your questions to one and one follow-up only so that everyone can have the chance to engage with our speakers today. Your first question comes from the line of Scott Searle with Roth Capital. Your line is open.

Scott Searle: Hey, good morning. Thanks for taking the questions. Congrats on a nice quarter and outlook. Rich, maybe just to dive in quickly on the guidance. I think I heard the number in terms of the $194 million to $200 million in the first quarter that's got $55 million to $60 million of catch-up. So it kind of implies that recurring has gone down, or at least the immediate outlook of contracts in hand is down sequentially from the December.

Now I know that there are expirations that go along with it, but I'm wondering if you could provide a little bit of color if that's the right ballpark in terms of where we're starting with recurring fees, and the outlook and expectation of resigning some of those contracts that I believe Xiaomi was one of them, but Samsung TV, etcetera. How should we be thinking about that over the course of the next couple of quarters?

Rich Brezski: Yes, Scott. That's right. So as we disclosed, you know, coming a year ago that we had roughly $90 million of expirations at the end of '25 and we updated that disclosure in the current K. But as noted, we did renew Xiaomi, so about two-thirds of that was covered. And then we also had the LG agreement, which is contributing recurring revenue as well. So net, you know, we haven't recovered all of it yet. We're still working on other renewals. And certainly, we look to get new agreements to drive further increases in ARR over the course of the year.

Scott Searle: Got you. Very helpful. And then I'll jump in on the litigation front. Wondering, Liren, if you could provide a little bit of color just in terms of potential timelines as it relates to Disney. You've had some positive outcomes in terms of Brazil and Germany. But is there an expected timeline of when you start to get some more, I guess, court feedback on that front? Similarly, the updated timeline with Amazon and, Rich, on the litigation cost front, I know it was elevated this past quarter. I think the number was about $19 million, which is the highest in recent memory.

But given the events and the litigation that's ongoing, how should we think about that going forward into the first, second quarter, and course of 2026? Thanks.

Liren Chen: Hey, Scott. Good morning. This is Liren. So on the litigation side, we could not be happier with where we are with the Disney case. As I said in my prepared remarks, we filed the litigations in '25 and already got really positive results from Brazil and Germany. Of the four patents being decided, we essentially won all of them in regard to the infringement. And we've already got preliminary injunctions in two different countries. But that's not all.

We have more than a dozen patents asserted, and therefore we still have a majority of the cases coming to trial in even bigger jurisdictions like the United States, as well as UPC, and those are starting in the summertime and also in the second half of this year. We have disclosed each of these cases in our 10-K filings. So we are confident about our case and we await the outcome of those decisions. Regarding our Amazon case, as I said in my prepared remarks, the assertion was frankly starting in Q4. As you might recall, Amazon was actually litigated in Salesforce, and so the case was filed on our side in Q4.

So it's trailing a little bit behind in terms of timing. But we are asserting multiple cases in four-plus jurisdictions plus ITC, and Amazon also has devices that we are also asserting against. So it will take time to go through each one of them. Again, there's more disclosure in our 10-K file.

Rich Brezski: Yeah. And, Scott, on litigation cost, well, the first thing I'd say is you can infer from our guidance that we have some uptick in expenses going into Q1. Without being too granular, let me give you broad strokes there. We have revenue share on the new Madison Agreement we signed, which is roughly almost half of the catch-up sales for Q1. And then, even accounting for that, expenses are still up a little bit, and that's mostly driven by an expectation for increased litigation expense. We do expect it to be higher in Q1 and broadly for 2026. That's all factored into the 2026 full-year guide as well.

And then, beyond that, we continue to invest in our research and portfolio, so we have some a little increase there as well.

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

Operator: Your next question comes from the line of Kevin Durden with Jefferies. Please go ahead.

Kevin Durden: Yeah. Hey. Good morning, guys. Congrats on the strong results and all the progress. Wondering if you can talk a little bit more about the consumer electronics device agreement with the social media company. Do you guys see that being a high-volume agreement?

Liren Chen: Yeah. Hey, Kevin. Good morning. This is Liren. Of that particular agreement, it's a device agreement, and it's licensed our video access and Wi-Fi. So it's actually not a huge volume agreement, neither do they apply to the service side. So that's as far as I can say on that agreement.

Kevin Durden: Okay. Got it. That makes sense. And then just looking at a litigation question, I know you guys had a strong start to 2025, with positives on Disney, and you are working on Amazon. I mean, what do you guys kind of see as the biggest threats on the litigation front? Is it really just kind of the budgets that Disney and Amazon have?

Liren Chen: Can you clarify by "threat" do you mean threats to us?

Kevin Durden: I guess just the threat of them potentially not signing or the court cases not going your way.

Liren Chen: Gotcha. Yeah. Hey, Kevin. As I mentioned earlier, we are being very careful in terms of our litigation strategy. We always prefer negotiations for deal-making. However, on both cases here, after, frankly, lengthy negotiations, we decided it was the right thing to do to enforce our patent rights. But you can also probably tell in our disclosures here, it's a multi-jurisdictional enforcement campaign. In either case, we are asserting more than a dozen different patents even though there's potential risk for each patent litigation. I mean, any litigation carries its own inherent risk. But our patents are really high quality, and some of the patents have already been battle-tested in regard to durability and other issues.

So we are doing really, really well. Therefore, our whole litigation campaign does not really depend on winning every single patent assertion, but we feel very strong about the value of our portfolio, and we feel that the right thing for us to do is to get, you know, what is fair so we can keep on funding R&D. So that's our global enforcement campaign, broadly speaking. And you should know that in most of those cases, when we assert them, we ask both for past damages for the infringement as well as injunctions if we win.

Kevin Durden: Okay. Perfect. I appreciate the color. Thank you.

Operator: Your next question comes from the line of Alinda Lee with William Blair. Your line is open. Thank you.

Alinda Lee: With the focus on R&D, how should we think about M&A as part of the effort to expand and deepen the patent portfolio here?

Liren Chen: Yeah. Hey, good morning, Alinda. This is Liren. Yes, so we take a pretty broad approach in our R&D investment. As I said in prior calls, we believe strongly we have one of the most advanced R&D engines in the industry. We have some of the best innovators led by our CTO Rajesh Pankaj, who is widely recognized as one of the most brilliant minds in our industry. But having said that, though, we are also having the luxury of having resources, having the industry reputation that we engage leading companies like DeepRender, which allows us to fill certain gaps in our research, and frankly, allows us to accelerate some areas where we are quite strong already.

So we are pretty open-minded, and we have a fairly broad funnel. We are considering them, you know, as they come.

Alinda Lee: Yep. That makes sense. And then, from a litigation perspective for streaming services, is there anything that's fundamentally different from a litigation perspective as compared to the litigations with smartphones and also the CE and IoT?

Liren Chen: Yeah. Hey. That's a great question. So as I said earlier, we always prefer bilateral negotiations. And I'll say one of the differences in the smartphone industry is that we have been licensing for multiple decades, and we have some of the longest relationships, as I said earlier, including the Samsung relationship, which goes all the way to the 1990s. On the streaming platform side, this is a relatively new industry for us, even though our fundamental technology has been used by those vendors for many, many years now. But it does take a bit of extra time for us to demonstrate the strength of our portfolio, to convince them that this would be a fair price.

So I'd say we are in the early stage of this industry, so therefore, that's where I see that customer engagement takes a bit of extra time.

Alinda Lee: Got it. That makes sense. Thank you so much.

Operator: Thank you, everyone. And that concludes our Q&A session for today. I will now turn the call over back to Liren Chen, InterDigital's CEO, for the closing remarks. Please go ahead.

Liren Chen: Thank you, Gil. Before we close, I'd like to thank all our employees for their dedication and contributions to [COMPANYNAME], as well as our many partners and licensees for a very strong quarter and a record-breaking 2025. Thank you to everyone who joined today's call. And we look forward to updating you on our progress next quarter.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect. Have a nice day ahead, everyone, and keep safe always. Thank you.