InterDigital Q2 Earnings Beat Estimates Despite Lower Y/Y Revenues

Net Income

On a GAAP basis, net income in the reported quarter declined to $116.4 million or $3.40 per share from $180.6 million or $5.35 per share in the prior-year quarter, primarily due to lower net sales and higher operating expenses, including increased intellectual property enforcement costs and share-based compensation.

Non-GAAP net income was $141.4 million or $4.62 per share compared with $195.3 million or $6.52 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $1.60 per share.

Revenues

Quarterly revenues decreased to $260.2 million from the year-ago quarter’s tally of $300.6 million. However, the top line beat the Zacks Consensus Estimate of $144 million.

In the second quarter, smartphone revenues declined to $122.7 million from $235.1 million a year ago, owing to the timing of licensing revenue recognition. CE, IoT/Auto group revenues declined 58% year over year to $27.5 million due to lower licensing agreements. Streaming and Cloud Services generated $110 million in revenues during the quarter, driven by the new Amazon licensing agreement covering streaming services and devices.

Annualized recurring revenues increased 13% year over year to $625.7 million, while catch-up revenues declined to $103.7 million from $162.3 million a year ago.

Other Details

Adjusted EBITDA declined to $184.1 million from the prior-year figure of $236.7 million. Total operating expenses increased to $120.9 million from $95.2 million in the year-ago quarter, reflecting higher IP enforcement costs and share-based compensation. Operating income decreased to $139.2 million from $205.4 million in the year-earlier quarter due to high operating expenses.

Cash Flow & Liquidity

In the second quarter, InterDigital generated $82.5 million in cash from operations compared with $105.1 million in the year-earlier quarter. During the first six months of 2026, the company generated $98.6 million in cash compared with $85.1 million in the year-ago period. As of June 30, 2026, it had $1.11 billion in cash, cash equivalents and short-term investments, with $72.4 million of long-term debt and other liabilities.

Outlook

For the third quarter of 2026, InterDigital estimates revenues between $154 million and $158 million. Adjusted EBITDA is estimated in the band of $86-$92 million. Non-GAAP earnings are expected to be in the range of $1.94-$2.13 per share.

For 2026, the company currently expects revenues in the range of $775-$845 million, up from the earlier projection of $675-$775 million. Adjusted EBITDA is currently projected to be in the range of $469-$529 million, up from the earlier guidance of $381-$477 million. IDCC expects non-GAAP earnings in 2026 in the band of $10.85-$12.81 per share compared with $8.74-$11.84 in the previous quarter.

Zacks Rank

InterDigital stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Upcoming Releases

Arista Networks Inc. ANET is scheduled to release second-quarter 2026 earnings on Aug. 4. The Zacks Consensus Estimate for earnings is pegged at 89 cents per share, suggesting growth of 21.92% from the year-ago reported figure.

Arista has a long-term earnings growth expectation of 19.86%. The company delivered an average earnings surprise of 8.31% in the last four reported quarters.

Motorola Solutions, Inc. MSI is set to release second-quarter 2026 earnings Aug. 5. The Zacks Consensus Estimate for earnings is pegged at $3.86 per share, implying growth of 8.12% from the year-ago reported figure.

Motorola has a long-term earnings growth expectation of 9.47%. The company delivered an average earnings surprise of 5.17% in the last four reported quarters.

HubSpot, Inc. HUBS is scheduled to release second-quarter 2026 earnings on Aug. 5. The Zacks Consensus Estimate for earnings is pegged at $3.02 per share, suggesting growth of 37.9% from the year-ago reported figure.

HubSpot has a long-term earnings growth expectation of 20.84%. The company delivered an average earnings surprise of 4.97% in the last four reported quarters.

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