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    IDCC
    Earnings call· Jun 2026(Q2 FY26)

    InterDigital Q2 FY26 earnings call IDCC

    Jul 30, 2026 Source

    Executive summary

    InterDigital Q2 FY26 — Record ARR and Raised Full-Year Guidance

    InterDigital delivered a strong second quarter, driven by significant progress in its streaming and cloud service licensing program, including a new agreement with Amazon and successful enforcement actions against Disney. The company raised its full-year guidance, reflecting continued business momentum and the leverage of its subscription-based licensing model. Management remains focused on executing its strategy to achieve its long-term ARR goals.

    Highlights

    5

    • Achieved revenue of $260 million, adjusted EBITDA of $184 million, and non-GAAP EPS of $4.62, all exceeding the top end of guidance.

    • Annualized Recurring Revenue (ARR) increased 13% year-over-year to a record $626 million.

    • Raised full-year 2026 guidance by $85 million at the midpoint, with revenue now expected between $775 million and $845 million.

    • Signed a new patent license agreement with Amazon covering devices and services, with final terms to be determined through arbitration.

    • Secured two injunctions against Disney from Europe's Unified Patent Court for patent infringement related to HEVC video encoding.

    Concerns

    1

    • Operating expenses increased $25.8 million year-over-year, primarily due to higher intellectual property enforcement costs and performance-based compensation.

    Guidance & targets

    8
    CategoryTargetConfidence
    Annualized Recurring Revenue (ARR)
    $1 billion plus
    high materiality
    High
    Streaming and cloud service licensing program ARR
    $300 million plus
    high materiality
    High
    Full-year 2026 revenue
    $775 million to $845 million
    high materiality
    High
    Full-year 2026 adjusted EBITDA
    $469 million to $529 million
    high materiality
    High
    Full-year 2026 non-GAAP EPS
    $10.85 to $12.81
    high materiality
    High
    Q3 Revenue from existing contracts
    $154 million to $158 million
    medium materiality
    High
    Q3 Adjusted EBITDA margin
    about 57%
    medium materiality
    High
    Q3 Non-GAAP diluted EPS
    $1.94 to $2.13
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Smartphone
    Revenue from smartphone licensing program.
    		$122.7 million———
    CE, IoT and auto
    Revenue from consumer electronics, IoT, and automotive licensing programs.
    		$27.5 million———
    Streaming and cloud services
    Revenue from streaming and cloud services licensing program, including initial recognition from Amazon agreement.
    		$110 million———

    Operational metrics

    11
    Adjusted EBITDA
    $184.1 millionexceeded guidance range of $67 million to $73 million
    Q2 FY26

    Adjusted EBITDA for the quarter.

    Non-GAAP EPS
    $4.62exceeded guidance range of $1.41 to $1.60
    Q2 FY26

    Non-GAAP diluted EPS for the quarter.

    Cash and investments balance
    $1.1 billion
    Q2 FY26 end

    Cash, cash equivalents and short-term investments at quarter end.

    Share repurchases
    $23 million
    Q2 FY26

    Amount of share repurchases executed during the quarter.

    Dividends paid
    $18 million
    Q2 FY26

    Amount of dividends paid during the quarter.

    Total capital returned to shareholders
    $41.1 million
    Q2 FY26

    Combined amount of share repurchases and dividends.

    Operating expenses
    increased $25.8 millionyear-over-year
    Q2 FY26

    Increase in operating expenses, with stated drivers.

    Standard leadership positions
    well over 100
    Q2 FY26

    Total number of standard leadership positions held by InterDigital.

    3GPP chair positions
    multiple
    Q2 FY26

    Number of chair positions held across 3GPP.

    Early debt conversions
    $80 million
    Q1 FY26

    Amount of early debt conversions in Q1.

    Early debt conversions
    $83 million
    Q3 FY26 expected

    Expected amount of early debt conversions in Q3.

    Industry KPIs

    3
    MetricValueDetails
    Revenue growth$260.2 millionUSD
    Arr net new arr$625.7 millionUSD
    Operating FCF margin rule of 4071%%

    Orderbook & backlog

    1
    Annualized Recurring Revenue (ARR)$625.7 millionQ2 FY26 end

    increased 13% year-over-year

    Deals & partnerships

    3
    AmazonPatent license agreement covering devices and services, including Prime Video

    Agreement resolves all pending litigations. Final terms, including value, to be determined through binding arbitration.

    Fintech companyIoT licensing agreement for point-of-sale devices, covering cellular and WiFi patents

    New IoT licensing agreement in the payment space.

    KEBALicense for EV chargers, covering cellular and WiFi patents

    New license closed after the end of the quarter for EV chargers.

    Risks & headwinds

    2
    Increased Operating ExpensesQ2 FY26

    increased $25.8 million year-over-year

    Arbitration Outcome Uncertainty for Amazon Agreement18 to 24 months

    final outcome cannot be assured

    Mitigation: Company expects any adjustment to revenue at conclusion of process is more likely to increase rather than reduce recognized revenue.

    What to watch in Q3 FY26

    4

    Amazon arbitration progress

    Next quarter
    CurrentArbitration process initiated, revenue recognized based on estimate
    TargetProgress update on arbitration timeline and potential for final terms

    Why it matters

    The arbitration will determine the final value of the significant Amazon patent license agreement, impacting future revenue.

    We expect the process will take roughly 18 months to 24 months to complete.

    Q&A highlights

    7

    What are the timelines and next steps for the Disney injunctions, and is the streaming market opportunity expanding beyond the initial $300M+ ARR by 2030 estimate?

    Liren Chen explained the UPC process, highlighting the importance of HEVC patents and the court's finding of Disney as an unwilling licensee. He reiterated the $300M+ ARR by 2030 goal for streaming, emphasizing the 'plus' sign, indicating it's a milestone, not an endpoint.

    “we do emphasize there's a plus sign to it. So this is not an endpoint. This is essentially a milestone point we see.”

    asked by Scott Searle · answered by Lawrence Chen

    2 min read5 chapters

    Detailed Narrative

    01

    Amazon Patent License Agreement

    InterDigital has agreed to enter into a patent license agreement with Amazon, covering Amazon's devices and services, including Prime Video. The final terms, including the value, will be determined through binding arbitration, a process expected to take 18 to 24 months. This agreement resolves all pending litigations between the parties. Revenue recognition for this agreement is based on a conservative estimate, with management anticipating potential upward adjustments upon arbitration conclusion.

    02

    Disney Enforcement Success

    The company achieved significant legal victories against Disney, securing two injunctions from Europe's Unified Patent Court. These injunctions, applying across 11 EU countries, found Disney infringed InterDigital's HEVC video encoding patents and was an unwilling licensee. The court also affirmed InterDigital's fair licensing conduct. These actions have reportedly led to disruptions in Disney's 4K HD content in European markets, underscoring the foundational nature of InterDigital's technology.

    03

    IoT Licensing Expansion

    InterDigital expanded its licensing reach into the Internet of Things (IoT) sector by signing new agreements. This includes a deal with a leading fintech company for point-of-sale devices and, post-quarter, with KEBA for EV chargers. Both agreements cover cellular and WiFi patents, demonstrating the broad applicability of InterDigital's technology across diverse and expanding verticals, signaling broader IoT opportunities ahead.

    04

    Research and Standard Leadership

    The company continues to invest in its research engine and leadership in global standards, particularly in wireless, video, and AI. A senior wireless engineer was elected Vice Chair of a key 3GPP working group, contributing to 6G development. InterDigital maintains over 100 standard leadership positions, including multiple chair positions in 3GPP, solidifying its competitive advantage in defining key technology standards.

    05

    Capital Allocation and Balance Sheet Strength

    InterDigital ended the quarter with a strong balance sheet, holding $1.1 billion in cash, cash equivalents, and short-term investments. The company returned $41.1 million to shareholders in Q2, comprising $23 million in share repurchases and $18 million in dividends. This capital allocation strategy balances ongoing investment in growth with maintaining a fortress balance sheet and returning excess capital to shareholders.

    AI-generated summary of the company’s earnings call. Not investment advice.