Samsung TV deal boosts InterDigital’s Q1 revenue by 30%
- 현동 김
- May 4, 2024
- 3 min read
Angela Morris
03 May 2024
Shutterstock/Peiling Lee
InterDigital had a stunning start to 2024, with a year-over-year revenue boost of 30% primarily from a patent licence with Samsung for smart TVs. Financials show it contributed up to $160.4 million in catch-up revenue in InterDigital’s consumer electronics, IoT, and automotive licensing programme.
“Our Q1 revenue was one of the highest in our history and an all-time high for CE and auto licensing. In the quarter, we have made great progress on multiple fronts in our business. We signed seven new licence agreements,” CEO Liren Chen said on InterDigital’s earnings call on Thursday.
Along with its earnings, InterDigital noted it won an injunction against Lenovo in Germany prohibiting it from selling 4G and 5G devices in that major market. The Regional Court in Munich found that Lenovo infringes InterDigital’s 4G and 5G patents and found the patent holder complied with FRAND and that the Chinese device maker was an unwilling licensee who violated FRAND principles. Lenovo can appeal.
“The strength of our portfolio and the quality of our standards contributions have once again been recognised by a court,” commented Josh Schmidt, InterDigital’s chief legal officer, in a statement. “Following the court’s finding that Lenovo’s behavior constitutes hold-out, we hope Lenovo reverses course and finally takes a fair and reasonable licence.”
The Delaware-based R&D firm and patent licensor announced revenue of $263.5 million, which is higher than its previous quarterly guidance, said its earnings release.
An earnings presentation showed its consumer electronics, IoT, and automotive licensing programme’s income jumped by 1,035% to $182.5 million, the bulk of it from the $160.4 million in catch-up payments from the Samsung deal. It was struck with an InterDigital-Sony joint licensing programme to cover TVs and computer monitors with a licence to Wi-Fi, video codec, and ATSC 3.0 portfolios. Revenue share costs for the Samsung deal were primarily responsible for an increase in InterDigital’s operating expenses because of $67.9 million in revenue-share costs, reveals the company’s 10-Q.
“With our landmark consumer electronics agreement with Samsung, we signed agreements with a cumulative value of almost $2.7 billion over the last three years, giving us an incredibly strong base from which to drive additional growth opportunities,” Chen stated, adding that InterDigital is also working to get TV makers LG, TCL, and Hisense under licence.
InterDigital’s adjusted EBITDA for Q1 was $130.4 million with a 50% margin.
“These results demonstrate the power of our business model. Our investments in fundamental technologies drive top-line growth, while the reuse of those technologies across multiple verticals delivers high margins and drives cash flow,” CFO Rich Brezski told analysts on the call.
Its earnings release breaks down revenue by type (recurring or catch-up), and by licensing programme. As shown in Figure 1, 63% of the revenue was in the form of catch-up payments totalling $166.7 million. The consumer electronics, IoT, and automotive licensing programme contributed $182.5 million or 69% of InterDigital’s quarterly revenue.
Huawei’s patent licence agreement with InterDigital expired at the end of 2023 and it’s primarily responsible for a year-on-year decline in recurring revenue, Brezski noted.
InterDigital estimates it will earn from $93 million to $97 million in the second quarter. Its full-year guidance ranges from $620 million to $670 million.
The company also briefed analysts on legal victories it secured during the quarter, including the German injunction against Lenovo and in its global dispute against Oppo, where InterDigital received positive decisions from courts in Germany and India.
InterDigital and Samsung are in arbitration to agree to terms for a wireless renewal, with a hearing scheduled this summer and decision by end-of-year. Brezski mentioned the previous licence earned nearly $80 million a year as a conservative estimate. Chen added that the value of InterDigital’s portfolio has increased since then because it’s added 5G and advanced video technology that has benefitted Samsung.
Angela Morris
Deputy editor
IAM
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