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InterDigital, Inc. (NASDAQ:IDCC) reported strong third-quarter 2025 results on October 30, with revenue and earnings exceeding the company’s raised outlook. Despite the impressive performance, the stock experienced a pre-market decline of 2.84%, trading at $372, following a 1.23% gain in the previous session.
Quarterly Performance Highlights
InterDigital delivered exceptional financial results for Q3 2025, significantly surpassing the guidance that had already been raised in September. Revenue reached $164.7 million, exceeding the outlook of $155-159 million, while adjusted EBITDA of $104.9 million surpassed the $91-97 million guidance. The company reported diluted EPS of $1.93 and non-GAAP EPS of $2.55, both exceeding their respective outlooks.
As shown in the following comparison of actual results versus outlook:
Year-over-year growth was particularly impressive across key metrics. Revenue increased by 28% compared to Q3 2024, while adjusted EBITDA surged by 62%, with margins expanding 14 percentage points to reach 64%. Annualized Recurring Revenue (ARR) grew 49% year-over-year to an all-time high of $588 million, and non-GAAP EPS increased by 56%.
The following chart illustrates this strong year-over-year performance:
InterDigital’s financial highlights for the quarter included a free cash flow of $381 million and a 17% increase in the quarterly dividend to $0.70 per share. The company also returned $53 million to shareholders, including $35 million in share repurchases.
Strategic Initiatives
A major achievement during the quarter was the successful completion of the Samsung arbitration, resulting in a license agreement with the world’s largest smartphone manufacturer. The agreement covers more than 200 million mobile devices shipped annually, with a total contract value of $1.05 billion over eight years through 2030.
The Samsung deal represents a significant revenue boost for InterDigital:
InterDigital also announced the acquisition of Deep Render, a London-based AI startup specializing in video and image compression. Founded in 2018, Deep Render brings a team of AI specialists to InterDigital’s Research & Innovation team, strengthening the company’s capabilities in AI-native video research and compression standards.
On the licensing front, InterDigital signed new agreements with Honor, Sharp, and Seiko, expanding its coverage to include eight of the top ten smartphone vendors, representing approximately 85% of the global smartphone market. The company also secured a new license agreement with an EV charger company and was awarded a preliminary injunction against Disney in Brazil.
InterDigital appointed Julia Mattis as the new Chief Licensing Officer. Having joined the company in 2010, Mattis previously served as Interim Chief Licensing Officer, Head of Smartphone Licensing, and Chief Licensing Counsel. She has overseen many of InterDigital’s largest licenses and played a critical role in signing agreements worth more than $4 billion in total contract value since 2021.
Detailed Financial Analysis
InterDigital’s licensing momentum has driven significant growth in Total Contract Value (TCV), with more than 50 licenses with TCV exceeding $4 billion closed since the start of 2021. This success has translated into strong ARR growth, increasing from $406 million in 2021 to $588 million in 2025.
The following chart demonstrates this impressive licensing momentum:
The company has also demonstrated consistent revenue growth, margin expansion, and shareholder returns over time:
InterDigital’s capital allocation priorities include maintaining a strong balance sheet, investing organically in research and IP portfolio development, pursuing strategic acquisitions, and returning excess cash to shareholders. Since 2011, the company has returned nearly $1.9 billion cumulatively to shareholders, including approximately $1.4 billion in share repurchases.
Forward-Looking Statements
For Q4 2025, InterDigital expects revenue between $144-148 million and adjusted EBITDA between $68-76 million. For the full year 2025, the company projects revenue of $820-824 million and adjusted EBITDA of $569-577 million.
The detailed outlook is presented in the following table:
Looking further ahead, InterDigital has outlined a clear pathway to growth, targeting ARR of $1 billion or more by 2030. This growth is expected to come from three main segments: smartphones ($500+ million), CE/IoT/Auto ($200+ million), and streaming and cloud services ($300+ million).
The company’s long-term growth strategy is illustrated in this chart:
InterDigital is focusing on three attractive markets: smartphones (approximately 1.2 billion units, $460 billion market), CE/IoT/Auto (approximately 1.6 billion units, $400 billion market), and content and cloud services (approximately $475 billion market). The company sees significant growth opportunities in each segment, with particular emphasis on increasing penetration in smartphones, expanding market coverage in CE/IoT/Auto, and growing its video services licensing program for streaming and cloud services.
For its 2030 financial targets, InterDigital aims to achieve over $1 billion in ARR, maintain adjusted EBITDA margins above 60%, and generate more than $600 million in free cash flow.
Competitive Industry Position
InterDigital has established itself as a leader in wireless, video, and AI research. The company has an evergreen patent portfolio of approximately 34,000 assets, which has grown by more than 70% between 2017 and 2025. The portfolio continues to expand at a rate of about six new patents each day.
The company holds more than 100 leadership positions in various standard development organizations and is one of only three companies with multiple 3GPP Chair positions. InterDigital has been recognized as one of America’s greatest and fastest-growing companies by Newsweek, Fortune, and Time Magazine, and for the fourth consecutive year, LexisNexis has included InterDigital among the World’s 100 Most Innovative Businesses.
Despite the strong quarterly performance and positive outlook, InterDigital’s stock declined in pre-market trading. This reaction contrasts with the company’s financial results and may reflect broader market trends or investor concerns about future growth prospects. Nevertheless, the stock remains well within its 52-week range, with a high of $412.60 and a low of $145.29.
Full presentation:
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