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InterDigital (IDCC) Q4 Earnings Beat on Solid Revenue Growth

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InterDigital, Inc. IDCC reported healthy fourth-quarter 2021 results, with both the bottom line and top line beating the respective Zacks Consensus Estimate. The better-than-expected results were largely driven by patent licensing agreements inked during the quarter.

Net Income

Net income in the December quarter was $21.9 million or 70 cents per share against a net loss of $1.4 million or loss of 4 cents per share in the prior-year quarter, largely driven by higher revenues. The bottom line surpassed the Zacks Consensus Estimate of 30 cents.

In 2021, InterDigital recorded GAAP net income of $55.3 million or $1.77 per share compared with $44.8 million or $1.44 per share in 2020.

InterDigital, Inc. Price, Consensus and EPS Surprise

InterDigital, Inc. Price, Consensus and EPS Surprise
InterDigital, Inc. Price, Consensus and EPS Surprise

InterDigital, Inc. price-consensus-eps-surprise-chart | InterDigital, Inc. Quote

Quarter Details

Total revenues improved to $111.8 million from $90.8 million in the prior-year quarter, largely due to solid recurring revenues from fixed-fee royalties. The top line beat the consensus estimate of $102 million. In 2021, total revenues jumped to $425.4 million from $359 million in 2020.

While quarterly revenues from patent royalties equaled $111.4 million, the same from current technology solutions was $0.4 million. Recurring revenues were $101.6 million compared with $89.1 million a year ago.

During the quarter, InterDigital signed five new license agreements, including a renewal of its multi-year worldwide licensing agreement with Sony. This underscores the strength of its portfolio across several key technologies related to cellular wireless, including 3G, 4G, and 5G, WiFi, and HEVC video technology. In 2021, the company signed 13 new patent licensing agreements with diverse companies

Total operating expenses marginally decreased to $86.2 million from $87.7 million in the prior-year quarter, resulting in respective operating income of $25.6 million and $3.1 million a year ago.

Cash Flow & Liquidity

In 2021, InterDigital generated $130.4 million of cash from operating activities compared with $163.5 million in 2020, resulting in free cash flow of $94.5 million and $121.1 million, respectively. As of Dec 31, 2021, the company had $941.6 million in cash, cash equivalents and short-term investments with $484.2 million of long-term debt and other liabilities compared with respective tallies of $926.6 million and $415.9 million in the year-ago period.

Q1 View

For the first quarter of 2022, InterDigital expects revenues to be between $95 million and $100 million, comprising almost entirely of recurring revenues. Total operating expenses are expected to be in the vicinity of $80 million.

Zacks Rank & Stocks to Consider

InterDigital currently has a Zacks Rank #3 (Hold).

Clearfield, Inc. CLFD, sporting a Zacks Rank #1 (Strong Buy) is a solid pick for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered an earnings surprise of 50.7%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 102.7% since February 2021. Over the past year, Clearfield has gained a solid 73.6%.

Qualcomm Incorporated QCOM, carrying a Zacks Rank #2 (Buy) is another key pick. It has a long-term earnings growth expectation of 16.1% and delivered an earnings surprise of 12.2%, on average, in the trailing four quarters.

Earnings estimates for the current year for the stock have moved up 43.1% over the past year, while that for the next fiscal is up 48.6%. Qualcomm is likely to benefit in the long run from solid 5G traction and a surge in demand for essential products that are the building blocks of digital transformation in the cloud economy.

Knowles Corporation KN sports a Zacks Rank #1. It has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 21% since February 2021.

The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.


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