Monterey2000
2日前
Why we deserve fair compensation for our innovation from Disney
Feb 2025/ Posted By: Eeva Hakoranta, Chief Licensing Officer, InterDigital
The growth of the streaming industry over the last decade has had a profound impact on the way we all consume video content from our favorite TV shows and movies, to a growing range of live sporting events and more.
At InterDigital, we’re proud of the way our foundational innovation has enabled an entirely new industry to take shape and has allowed consumers to enjoy an incredible range of new entertainment options. We believe passionately in the power of innovation to change the way we live and work.
InterDigital has a history of more than five decades of investing in foundational research in video and other related technologies. In recent years we have invested around half of our recurring revenues in our research and portfolio development.
Our innovation underpins the viability of the entire streaming industry which is forecast by third parties to generate more than $400 billion in revenue in 2025 across subscription and advertising supported platforms, and on social media.
Without our contributions in areas such as advanced video compression, it would take days to download your favorite shows, and the load of uncompressed data would severely strain the Internet.
Uncompressed, a 4K movie with a run time of 130 minutes translates to 11,600 GB of data. At modern internet download speeds, it would take over 4½ days to download that movie. Compressed, using the latest technology of which InterDigital is a leading contributor, it is reduced to approximately 14 GB, and can be downloaded in a matter of minutes. Without compression, we’d be back to a world of movie rental stores and DVDs by mail.
Our engineers have also invented new ways to enhance the user experience for consumers everywhere and to improve picture quality to help us all enjoy an experience akin to a movie theatre in our own homes.
With our technology, consumers can stream not only at home but also on the morning commute, as they wait for a flight home, and on a weekend away with friends.
Earlier today, we initiated enforcement activities against The Walt Disney Company over their ongoing infringement of InterDigital’s intellectual property.
Disney’s move into streaming has been one of the company’s recent success stories, helping it to build a business of more than 250 million paying subscribers across brands like Disney+, ESPN+ and Hulu. With the help of our innovation, Disney has created a profitable business spread across its multiple platforms and, in its most recent financial results, reported annual revenue of around $25 billion from its streaming businesses.
As one of the world’s leading entertainment companies, Disney relies on the value of its intellectual property to protect the many popular brands in its movies, shows, and theme park experiences. This IP protection underpins Disney’s entire business model and enables it to keep investing in creating world-class content.
Much like Disney, InterDigital wants creativity and innovation to flourish and, much like Disney, we expect those who benefit from the use of our IP to pay for a license to it. Amicable negotiation is always our preferred path to signing new license agreements but, from time to time, enforcement is required to ensure we receive fair compensation for our groundbreaking research.
It is only by receiving fair compensation for the use of our technology that we can continue to invest in developing tomorrow’s technology today. For consumers and creators like Disney, the long-term success of the streaming industry depends on it.
Why we deserve fair compensation for our innovation from Disney
dws
2日前
Company Release - 2/3/2025WILMINGTON, Del., Feb. 03, 2025 (GLOBE NEWSWIRE) -- InterDigital, Inc. (Nasdaq: IDCC), a mobile, video and AI technology research and development company, today announced that it has initiated litigation against The Walt Disney Company, including Disney+, Hulu and ESPN+, over their ongoing infringement of InterDigital’s intellectual property.“Our video technologies enable Disney to efficiently stream content and enhance the user experience,” said Josh Schmidt, Chief Legal Officer, InterDigital. “We always prefer to sign license agreements through amicable negotiation, but we are committed to receiving fair compensation for our groundbreaking research, which allows us to continue to invest in the next generation of technology.”Cases have been initiated in United States Federal District Court in the Central District of California, in Rio de Janeiro State Court, Brazil, in the Munich Regional Court in Germany, and in the Local Divisions of Mannheim and Düsseldorf in the Unified Patent Court.InterDigital has been innovating in video and related innovation for decades and is a leader in the development of foundational technologies that have changed how we watch our favorite TV shows, movies and sporting events. For more information on this litigation and on our video research click here.About InterDigital®InterDigital is a global research and development company focused primarily on wireless, video, artificial intelligence (“AI”), and related technologies. We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today’s most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. Founded in 1972, InterDigital is listed on Nasdaq.
InterDigital is a registered trademark of InterDigital, Inc.For more information, visit: www.interdigital.com.InterDigital Contact:
Richard Lloyd
Email: richard.lloyd@interdigital.com
+1 (202) 349-1716
FISH21049
1週前
InterDigital, Inc.'s (NASDAQ:IDCC) Intrinsic Value Is Potentially 58% Above Its Share Price
editorial-team@simplywallst.com (Simply Wall St)
Sat, January 25, 2025 at 8:48 AM CST 6 min read
In This Article:
IDCC
+2.80%
Key Insights
Using the 2 Stage Free Cash Flow to Equity, InterDigital fair value estimate is US$280
InterDigital is estimated to be 37% undervalued based on current share price of US$177
The US$177 analyst price target for IDCC is 37% less than our estimate of fair value
In this article we are going to estimate the intrinsic value of InterDigital, Inc. (NASDAQ:IDCC) by taking the expected future cash flows and discounting them to their present value. We will use the Discounted Cash Flow (DCF) model on this occasion. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow.
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.
View our latest analysis for InterDigital
Crunching The Numbers
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we discount the value of these future cash flows to their estimated value in today's dollars:
10-year free cash flow (FCF) forecast
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Levered FCF ($, Millions)
US$158.8m
US$215.4m
US$259.1m
US$298.0m
US$331.6m
US$360.4m
US$385.1m
US$406.7m
US$425.8m
US$443.1m
Growth Rate Estimate Source
Analyst x2
Analyst x2
Est @ 20.30%
Est @ 15.00%
Est @ 11.28%
Est @ 8.68%
Est @ 6.86%
Est @ 5.59%
Est @ 4.70%
Est @ 4.08%
Present Value ($, Millions) Discounted @ 7.2%
US$148
US$187
US$210
US$226
US$234
US$237
US$237
US$233
US$227
US$221
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$2.2b
We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.6%. We discount the terminal cash flows to today's value at a cost of equity of 7.2%.
Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$443m× (1 + 2.6%) ÷ (7.2%– 2.6%) = US$9.9b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$9.9b÷ ( 1 + 7.2%)10= US$4.9b
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$7.1b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US$177, the company appears quite good value at a 37% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
The Assumptions
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at InterDigital as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.2%, which is based on a levered beta of 1.115. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for InterDigital
Strength
Debt is well covered by earnings.
Weakness
Earnings growth over the past year underperformed the Software industry.
Dividend is low compared to the top 25% of dividend payers in the Software market.
Opportunity
Good value based on P/E ratio and estimated fair value.
Threat
Debt is not well covered by operating cash flow.
Dividends are not covered by cash flow.
Annual earnings are forecast to decline for the next 4 years.
Looking Ahead:
Whilst important, the DCF calculation is only one of many factors that you need to assess for a company. The DCF model is not a perfect stock valuation tool. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. Can we work out why the company is trading at a discount to intrinsic value? For InterDigital, there are three pertinent items you should look at:
Risks: For instance, we've identified 2 warning signs for InterDigital that you should be aware of.
Future Earnings: How does IDCC's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
la-tsla-fan
2週前
As you know, my3s, my last post ran into the character limit set arbitrarily by Investorshub, and was therefore incomplete. I promised you some examples of how a short conspiracy works. Here are three,. I believe I learnt about the first one on this board, The second one is probably non-prosecutable because it is not clear what law is being broken.The third one requires a specific set of circumstances but was a real case.
The first example is a conspiracy between a set of traders. Trader 1 sells his/her holdings at market. Trader 2 buys these shares. and sells them again an even lower price. Trader 3 buys these shares and sells them at an even lower price. AND SO ON. At the end of the trading day, the conspirators get together and add up the winnings and./the losings and divide them up.
Here is the second example. This is a copy and paste from an answer on quota:
Market manipulators make the price of stock go down for exactly one reason: they want to be able to buy large amounts of it.
If a market manipulator starts buying large amounts straight away, their buying will move the stock price higher - that's not a good outcome, as by the time they've bought all the stock they wanted to buy, the price could have gone appreciably higher and the profit they were hoping to make has disappeared before they finished buying. That isn't what they want to happen; they want to buy it as cheaply as possible.
To do this, they will often sell some first to try to achieve several different outcomes. Consider this:
if the manipulator sells significant quantities of a stock and the price goes down, then other players will be spooked and will start to sell their stock as well. The manipulator can try to quietly buy back this stock without being noticed, and without pushing the price back up again
if the manipulator sells significant quantities of a stock (let's say 100,000 Apple shares) and the price DOESN'T go down, then that means someone else out there must be buying similar amounts of stock as it comes onto the market. Now that buyer won't be someone like you or I - we don't buy 100,000 Apple shares at market. It HAS to be another market manipulator. That's an important piece of information for the first manipulator to have - "some other big player wants this stock, so prices are likely to go higher..."
as the price of a stock starts to move higher (as the first manipulator keeps buying it, supply will start to become less, so the price will inevitably start to rise), you often find the manipulator then starts selling again. Why? Two reasons:
He wants to know if the other manipulators out there are still interested in buying the stock. If so, then the price shouldn't fall by much; the other manipulators will be buying up the stock that the 1st manipulator is selling. That's what the 1st manipulator wants to see happening; he needs other big players to help drive prices higher, as otherwise there will be no-one for him to sell to later on
The manipulator also wants to know if there's other unsophisticated stock holders out there who are on the point of selling, who could be convinced to sell if the price starts going down again. Price moves down; those unsophisticated stock owners sell their stock; manipulator gets to buy them without moving the market, and at a cheaper price than if the market had kept moving up. Once the manipulator has consumed all the supply of stock out there, anyone who wants to buy can only buy from the manipulator, who can then start to raise the price
You'll notice that I mentioned Apple (AAPL); that was just a stock I nominated at random, and I don't follow it or trade it. That said, let's look at what happened around the last low for AAPL in mid-2013
https://qph.cf2.quoracdn.net/main-qimg-7e8d8c11c9f78ef94cde62984819e922
Price is shown on the top, volume is shown on the bottom. I've marked a few key dates with letters.
At day A, the volume is high and the price is moving strongly down. Here we've got manipulators selling lots of stock to test the market, but not enough people are buying it. Over the next few days, volume is still high, but the price falls at a much lower rate - that means someone has started buying it.
At B, the price has moved up appreciably, but notice that the volume is dropping off. That means that less (including the manipulator/s) are interested in buying at that price. However, the volume being low indicates that whoever bought all that stock back at A is still holding on to it; they're not prepared to sell even though the price has gone several dollars higher.
At C, we've had a bit of a move down, but volume has increased significantly on this day yet the price has turned and closed up at the end of this day. That tells us that someone is absorbing all the stock that's being sold.
At D, the price is slowly edging down, but the volume is very low. That's not manipulators selling; the volume is too low. It has to be small players selling off because they think the price is headed lower. That's what the manipulators like to see, as they can buy the stock being sold as it comes onto the market without moving the price upward.
At E, we've got volume kicking in again so the manipulators have to be involved. Note how, on that day, the price gaps down at the open, then closes near the high: there would've been a bunch of small players spooked into selling after seeing that open price, and their stock was being bought by the manipulators. Note also that the low price at E is just a bit higher than the low price at A - the manipulators have clearly decided that's a good price to be buying, so they're not prepared to let the price go lower. Whoever thought AAPL was a good buy at A clearly still thinks it's a good buy.
At F, the manipulators are selling a bit, pushing the price down to see if there's any more potential sellers in the market who they can spook into selling their stock. Volume is low, which means the supply from non-manipulators has dried up - that's the final piece of the puzzle in place from the manipulators' perspective. They now hold all the stock that's in play, so they can start to drive prices higher again
Coming in to G and the next few days, the volume dries up and the market edges down again. Once more the volume is low, which means the supply of stock still isn't there
Finally at H, there's a huge gap up and the volume is high. We've already seen there's no more sellers and everybody suddenly wants to buy now, so prices are destined to go higher (which they did).
I could not copy and paste the Apple chart but I do have a link to it.
The third example involves what I think s the current method sock price manipulation by sing commentators and running negative and/or positive stories about a stock. Here is link to a case of successful prosecution: https://www.justice.gov/opa/pr/activist-short-seller-charged-16m-stock-market-manipulation-scheme.
I believe the third example above illustrates what is happening to Tsla stock right now. I believe tha manipulators have access to the news media and/or financial websites like YAHOO.com and others, including IBD. I believe the biggest offender is YAHOO. YAHOO knows that the average investor is too busy to really read the story. S/He just has enough time to scan the headline. Therefiore, yahoo's specialty seems to be misleading headlines. One special technique encouraged by he likes of NHTSA is storied s about "recalls', which turn out to be just OTA software updates. which Tesla does bit once a month ANYWAYS. The most egregious example of a misleading headline related to Tesla's Q3 auto delivery numbers. Here is the headline of he story 3 das before the delivery report: "Tesla to report Q3 deliveries Wednesday: What to expect". If you red he story, you find out that analyst expectation for the number are 461,000. Here is the headline after the deliveries: " Tesla Q3 Deliveries Rise Y/Y & Q/Q but Lag Estimates, Shares Fall".I swear that when I went to bed he night before the delivery numbers were announced, I was confident that Tesla would easily eclipse expectations. SO< I was shocked and ready to sell lout. HOEVER, what I saw in the story shocked me even more. TESLA had beat the true expectations but fallen short of a new figure for expectations of 463,000! It turned out that the new figure was obtained from a much smaller number of analysts than the original figure. HOWEVER, the damage was done! TESLA stock fell by over 2% on that day! The yahoo headline was placed right next to other headlines saying that TESLA had beaten expectations!
Monterey2000
2週前
InterDigital Announces Date for Fourth Quarter 2024 Financial Results
Company Release - 1/23/2025
WILMINGTON, Del., Jan. 23, 2025 (GLOBE NEWSWIRE) -- InterDigital, Inc. (Nasdaq: IDCC), a mobile, video and AI technology research and development company, today announced that the company will release its fourth quarter 2024 financial results before the market open on Thursday, February 6, 2025.
InterDigital executives will host a conference call that same day at 10:00 a.m. Eastern Time (ET) to discuss the company performance.
For a live webcast of the conference call visit www.interdigital.com and click on the “Webcast” link on the Investors page. The company encourages participants to take advantage of the webcast option.
For telephone access to the conference call, visit www.interdigital.com and click on the “Dial-In Registration” link on the Investors page. Registration is necessary to obtain a dial-in phone number and PIN to join.
A replay of the conference call will be available on InterDigital’s website under Events in the Investors section. The replay will be available for one year.
About InterDigital®
InterDigital is a global research and development company focused primarily on wireless, video, artificial intelligence (“AI”), and related technologies. We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today’s most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. Founded in 1972, InterDigital is listed on Nasdaq.
InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
InterDigital Contact:
investor.relations@interdigital.com
+1 (302) 300-1857
InterDigital Announces Date for Fourth Quarter 2024 Financial Results
Paullee
2週前
InterDigital Is Still A Solid Growth Pick In 2025
Jan. 22, 2025 10:04 AM ETInterDigital, Inc. (IDCC) Stock
Emmanuel Onwusah
18 Followers
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Summary
InterDigital's strategic licensing deals and leadership in AI-driven video technologies and wireless connectivity position it for sustained growth, despite analysts' pessimism.
The company's strong presence in the global smartphone market and new agreements with major OEMs like OPPO and Panasonic bolster its revenue prospects.
Financially, InterDigital is robust, with rising revenue, attractive valuation, and consistent free cash flow, making it an undervalued investment opportunity.
Potential risks include contract renewals and patent litigation costs, but the company's fundamentals and strategic initiatives suggest it will outperform expectations.
Wifi internet access concept, Business people connect WiFi technology. connect instantly via smartphone and high-speed hotspot. Fast internet wifi hotspot sharing. Working with various applications
Shutthiphong Chandaeng
Analysts' outlook around InterDigital, Inc. (NASDAQ:IDCC) seems a tad pessimistic, considering the company's stock has risen by 60% over the last year and is currently trading near its all-time high of $203, albeit it's dropped 12% since then and sits at around $171 per share. The general sentiment is that its growth will slow tremendously over the next few years, which isn't an opinion I share. I believe that IDCC is a good value company with the capability to sustain its growth and beat analysts' expectations over the next few years, and I'm confident that buying its stock is a reasonable bet.
InterDigital may not be one of the first names that come to mind when you think of AI companies, but it is at the top of the pile when it comes to AI and ML applications across video technologies. Also, the company is a major player in wireless connectivity-think Wi-Fi, 5G, and their underlying technology.
Why I'm Quietly Confident About InterDigital's Prospects
To date, InterDigital is a key provider of these technologies to the world's biggest smartphone OEMs, from Samsung and Apple to Xiaomi and now OPPO. Together, these companies allow InterDigital to provide technology licenses for over 70% of the global smartphone market, something that CEO Liren Chen was keen to point out during the company's last earnings call.
I'm convinced that this growth will carry into 2025, given that the AI craze is still on (the market for AI Audio and Video SoC was valued at $17.05 billion in 2024 and is projected to grow from USD 25.49 Billion in 2025 to $952.07 billion by 2034. That's a compound annual growth rate (CAGR) of 49.5% during the forecast period (2025 - 2034), according to Market Research Future. This is good news, and it's a big part of why I still believe that IDCC will experience mid-20s revenue growth.
This growth will come from several segments: smartphones, consumer electronics, and IoT. Now, let's look at these segments one after the other.
InterDigital's smartphone segment is a major part of its business despite the recent decline in revenue YoY for Q3 2024. In this case, smartphone-related revenue fell by 16% year-over-year. However, I'm not too concerned as I'm confident that the recent licensing agreement with OPPO Group is a significant win that strengthens InterDigital's position in the smartphone market. It also bears mentioning again that this move gives the company direct licensing access to over 70% of the global smartphone market.
Add to this, InterDigital's leadership in 5G and emerging 6G technologies. These place it in a strong negotiating position moving forward because smartphone manufacturers have to use advanced wireless connectivity solutions in their devices. To me, these suggest that the recent revenue dip in the smartphone segment may be temporary, and there is high upside potential over the next few quarters. Again, beating analysts' expectations in the upcoming earnings report would be a good place to start.
I'd now like to address the company's AI capabilities in terms of smartphone-related revenue. In the smartphone segment, InterDigital's AI-powered video compression technologies help reduce bandwidth consumption while maintaining high-quality streaming, addressing the increasing demand for content on mobile devices. This directly benefits consumers, content providers, and the OEMS. Regarding the latter, the capability is a significant value proposition for smartphone OEMs that need to improve user experience and reduce operational costs related to data transmission. Moreover, using AI-driven analytics in wireless connectivity allows for better network optimization, which is critical for the transition to 5G and upcoming 6G networks, giving InterDigital a strong position in future licensing negotiations.
IDDC Q3 2024 Earnings Report
IDDC Q3 2024 Earnings Report
When we then look at InterDigital's Consumer Electronics (CE) and Internet of Things (IoT) segments, there are even more promising signs of growth, with recurring revenue in these areas rising by an impressive 15% year-over-year to $41 million in Q3 2024. Clearly, the company is doing well to diversify beyond smartphones and tap into expanding markets like smart home devices, wearables, and connected vehicles. Furthermore, it has also signed new licensing deals with major players such as Panasonic and TPV while entering an arbitration agreement with Lenovo. Here's how Liren Chen, company CEO, put it in the Q3 earnings call:
Our new licensing agreement with TPV, a top 10 television vendor that sells devices and several different brands is an excellent example of our recent success in closing deals with leading CE manufacturers. The agreements include both our joint licensing program with Sony and InterDigital's valuable HEVC video assets.
In the third quarter, we also signed a new agreement with Panasonic, which covers our 4G and 5G cellular patents as well as our Wi-Fi and HEVC patents. Staying on the licensing front, as I mentioned earlier, we are off to a great start at the beginning of Q4. In addition to the OPPO agreement, we have signed a binding global arbitration agreement to set the terms of a new license agreement with Lenovo.
As part of arbitration agreement, both parties have also agreed to dismiss our pending litigations. As we have said before, binding arbitration can be an excellent mechanism for settling global licensing disputes, providing a more efficient way of reaching an agreement.
These deals show that the company is serious about the successful enforcement of its video coding patents and innovations in the TV and home network sectors, and its partners seem to understand this. Winning awards for the best immersive video technology and for best video processing technology at the 2024 International Broadcasting Convention don't hurt, of course. They also signify to me that being best in class is part of InterDigital's unique selling points.
The way I see it, InterDigital's deep involvement in wireless and video compression technologies, is key to the rapid growth of its IoT and CE segments. The company owns over 32,000 patents and various other IPs across numerous segments, including in HEVC and VVC video codecs, which improve streaming efficiency without compromising quality. These make it a top choice for the industry's biggest players, especially when we consider how it is also using AI to enhance its offerings in these technologies.
InterDigital creates and deploys advanced AI algorithms, which then enable smarter video encoding for streaming services. This is incredibly valuable in the rapidly growing subscription-based video-on-demand (SVoD) and ad-supported video-on-demand (AVoD) markets. So, it has become an essential partner for content providers (think Netflix and Amazon) and device manufacturers (think Samsung and OPPO) alike. Additionally, its AI-powered solutions are applicable to several IoT-enabled systems like smart homes, industrial automation, and connected vehicles. Clearly, areas where intelligent data processing and real-time responsiveness are critical presents a great opportunity, and InterDigital's licensing agreements suggest it is on track to capture a larger share of this expanding market.
What Might Affect My Position?
The company's success in maintaining and expanding its licensing agreements is key to achieving sustained revenue growth over the coming years. Sure, it's great that it has the major market movers on board.
For now.
However, if InterDigital fails to renew key contracts, such as the soon-to-expire agreement with Xiaomi, it'll lose a significant chunk of its smartphone-licensing market share, along with the related revenue. That already happened with the expiration of its Huawei agreement, which significantly affected smartphone segment revenues in Q3 2024, and it underlines the inherent risk of relying heavily on a few large licensing deals.
IDDC Q3 2024 Earnings Report
Q3 2024 Revenue by Program (IDDC Q3 2024 Earnings Report)
Also, I believe that the company's ongoing arbitration with Lenovo presents both an opportunity and a risk if the negotiations don't deliver favorable terms for both sides, the expected revenue boost not meet analyst and market expectations. Needless to say, that won't be great for investor confidence.
Another challenge is the high litigation costs and legal complexities associated with enforcing patent rights. InterDigital holds over 32,000 patents across wireless (WiFi, 5G), video tech, and AI, in addition to being "one of just three companies in the world to rank in the top five in 5G, Wi-Fi, and advanced video compression when judged on both size and quality of our portfolio." This means that the company is a leader in these sectors and constantly has to factor in the legal costs and frameworks to maintain that extensive portfolio. Of course, while InterDigital has a strong track record of securing favorable rulings (arbitration is a good way to prevent even more expensive court cases), constantly needing to defend its intellectual property in several jurisdictions is a drain on its financial and managerial resources. So, although the company hasn't had too many extended cases recently, it's clear that prolonged legal battles could lead to cash burn, which then affects profitability.
Moreover, the market for 5G and video technologies is maturing, so slower growth fears will likely become a concern sooner rather than later. This is especially important when we remember that global smartphone shipments are only projected to grow at a modest 3% CAGR through 2028. Also, competition from well-funded rivals like Qualcomm and Broadcom, which have extensive resources and established relationships with OEMs, can pressure InterDigital's market share.
I also believe that it'd be wise to keep a close eye on InterDigital's diversification efforts, particularly in the consumer electronics and IoT segments. These areas have grown solidly over the last few years, but they only made up around 32% of revenue in Q3 2024. In my opinion, they may not be able to counterbalance any revenue dip in the smartphone segment.
Again, though, it's prudent for us to see the company's 10-K report that comes out in a month or so before making any judgments.
What About The Finances?
In a bit of a surprise, InterDigital's numbers for Q3 2024 came in strong and exceeded the company's guidance for the period, with reported revenues of $128.7 million. The consumer electronics and IoT licensing segment drove a lot of that growth, to be clear. Note, though, that the number represents an 8% drop from the $140.1 million in revenue it reported in the same period of 2023. As I mentioned earlier, that was largely due to the Huawei agreement expiring, combined with a decrease in its catch-up revenues.
However, IDCC raised its full-year revenue guidance by 20% (or $145 million) for a reason (or several). I think that revision is backed by the new licensing agreements and arbitration processes, and now we wait to see whether that was misplaced confidence.
IDDC Q3 2024 Earnings Report
IDDC Q3 2024 Earnings Report
Given that revenue has been rising nicely over the last few years, I believe that the company is on track to hit its target of $500 million in annual recurring revenue (ARR) for the smartphone program by 2027. Then, it's on for $1 billion in ARR by 2030. This means that all things being equal, around half of its recurring revenue should come from smartphone-related sales and licenses, and given its current agreements, that's entirely achievable.
So far, so good.
On to valuation. InterDigital's price-to-earnings (P/E GAAP) ratio currently is 18.4x, which is notably lower than the industry median of 30x. It's also less than half of Box Inc.'s 39x. Clearly, there's an undervaluation here, and I posit that's a strong indicator for a Buy. The way I see it, the market may not be fully pricing in the company's strategic growth drivers, such as its expanding licensing agreements and AI-driven innovations. Also, InterDigital's price-to-sales (P/S) ratio of 6x remains attractive compared to competitors like Box Inc.'s 4.2x. I think this further highlights its relative affordability if you want to start investing in the wireless connectivity and video compression sectors.
FCF Numbers for InterDigital Inc., IDCC (Seeking Alpha)
FCF Numbers for InterDigital Inc., IDCC (Seeking Alpha)
Conversely, from a free cash flow (FCF) perspective, InterDigital remains strong. The company has generated $745 million in free cash flow over the past six years, and it's also consistent when it comes to returning capital to shareholders through dividends and stock buybacks. For context, in 2023, it returned $379M via the aforementioned means.
Conclusion
I'm slightly bullish on InterDigital because of its strategic licensing deals, strong presence in AI-driven video technologies, and leadership in wireless connectivity. I believe that these factors give the company a good platform to keep growing despite analyst concerns. It has solid financials, and if you're looking at its market opportunities, those exist across several important sectors. Also, the metrics suggest that the company is undervalued relative to its peers and industry.
Note, though, that it'd be wise to remember potential risks like contract renewals and litigation costs. So, I'm staying vigilant but confident, as the company's fundamentals and strategic initiatives suggest it is on track to outperform expectations in the coming years.
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Emmanuel Onwusah
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dws
2週前
Company Release - 1/22/2025Research from Futuresource and InterDigital estimates that the TV and video streaming industry accounts for 4% of total global emissions - double that of the aviation industry, at 2%Sustainable solutions such as Pixel Value Reduction (PVR) technology have the potential to reap huge energy savings if applied to events such as the OlympicsWILMINGTON, Del., Jan. 22, 2025 (GLOBE NEWSWIRE) -- The overall demand for more entertainment and video communication services has highlighted the need for more sustainable solutions across the industry. According to a paperreleased today by InterDigital, Inc. (NASDAQ: IDCC), a mobile and video technology research and development company, and written by leading market research firm Futuresource, the video industry is rapidly emerging as a major emitter of greenhouse gas. Solutions like Pixel Value Reduction (PVR) can reap significant energy savings, especially around significant TV events such as the Olympics.The report, “Spotlight on Sustainability: Towards a greener TV and video value chain,” analyzes the carbon footprint created by the video entertainment industry, from the point of production to delivery, and consumption. The paper also examines emerging solutions to mitigate the environmental impact across the video value chain.One of the biggest challenges for the industry comes from Scope 3 emissions, which arise from indirect sources such as travel, accommodation, catering, and post-production. However, strides are being made in various areas:IP-based remote virtual production, for example, could lower the industry's carbon footprint by 6x less CO2 than on-site methods.TVs remain the most energy-intensive devices, but investments in AI and brightness-adjustment technologies mean that energy consumption of TVs are set to decline by 15% by 2028.Overall energy consumption for video entertainment devices – which includes TVs, set-top boxes, media streamers, gaming consoles, smartphones, and tablets – has declined by 17% since 2020, with another 12% reduction expected by 2028, as older devices are replaced with more energy-efficient alternatives.
InterDigital leads the industry in developing cutting-edge video compression standards and PVR technology to achieve lower energy consumption on a device without sacrificing the quality of the video content and experience. If PVR technology was applied to devices showing the recent Paris Olympics, roughly 48 million kWh of energy could have been saved, which is the equivalent of fueling 4,000 US homes for a year.“While everyone is aware of the contributions the airline industry makes to greenhouse gas emissions–accounting for 2% of all global greenhouse emissions per year–what isn’t common knowledge is the impact the TV and video streaming industry has. Which is in fact, double the emissions from the airline industry.”“It is the responsibility of the entire industry to make changes that will improve the sustainability of the TV and video sector,” said Lionel Oisel, InterDigital’s Head of Video Labs. “While change is being made, more can and should be done. Technologies like PVR have the potential to make significant energy savings, even when applied to special events like the Olympics. If this was applied universally, the benefits could be huge, and a game changer for the industry.”Cost savings and need for next-generation technologies to meet changing audience demands will drive sustainability strategies for TV and video companies. The research highlights several ways in which the industry is impacting the environment:Video as a proportion of all internet traffic continues to rise, with industry estimates placing at 80% of total traffic impacting the CO2 output from data centers.Since 2023, each hour of film production has equated to an average of 16.6 tCO2e of carbon, equivalent to the energy consumption of two homes per annum.In 2024, an estimated 54 MtCO2e of emissions were generated from TVs: this is roughly equivalent to the annual greenhouse gas emissions of 11.7 million passenger vehicles.Futuresource report that there are now 858 million 4K TVs installed in homes, yet the emissions generated per hour from 4K TVs are around 1.7x that of a 1080 HD TV.Major sporting events have a significant impact on the environment: this year’s Paris Olympics had an estimated media carbon footprint of 602.8 million tons, with an estimated 1.25 TWh of electricity consumed as a result of streaming across televisions, mobile phones and laptops.
To read the complete report, “Spotlight on Sustainability: Towards a greener TV and video value chain,” please click here.
Gamco
3週前
Access Advance Announces Video Distribution Patent Pool in Response to Market Demand
Pool Covers Internet Streaming of the HEVC, VVC, AV1, and VP9 Video Codecs in a Single License
January 16, 2025 06:00 PM Eastern Standard Time
BOSTON--(BUSINESS WIRE)--Responding to growing market demand for an industry solution for codec licensing in the video distribution market, Access Advance LLC (“Advance”) is pleased to announce the launch of its Video Distribution Patent (“VDP”) Pool.
The VDP Pool will build upon the success of Advance’s existing HEVC and VVC Advance Patent Pools, which are supported by a substantial majority of video codec implementers and patent owners. It will provide a single one-stop-shop license, covering internet streaming with all four of the most recently developed video codecs (i.e., HEVC, VVC, AV1, and VP9) available today, with fixed tiered pricing scaled to the size of the video distributor’s business. This structure provides simplicity and predictability to internet video distributors, allowing them to choose which codec(s) to use based on technical and business merits rather than royalty costs or the need to negotiate multiple licenses.
According to Peter Moller, CEO of Advance, “In recent years, the industry has increasingly sought to license video codec patents directly to content streaming providers, which have benefitted tremendously from their use of patented, efficient video codecs. Advance has been approached by market participants, from both internet video distributors and patent owners, who believe we are uniquely positioned to achieve a rapid aggregation of patents to clear substantial IP risk while establishing a framework for fair and reasonable rates.
Our patent pool approach not only balances the interests of both internet video distributors and patent owners but also takes into account the many different business models for internet video streaming. We expect our pool will quickly gain market support and help prevent the alternative of significant market disruption: litigation (where injunctive relief and large damages may be sought), and slower or stalled market adoption and innovation in video codecs due to fear and uncertainty over royalty rates.
With regards to royalty rates, we have met with many internet video distributors and patent owners over the past year to review and seek input on the program. Nevertheless, to prevent any confusion, we plan to dedicate the next two to three months to further engage with interested market players before announcing the rate structure to the public.”
The VDP Pool also offers substantial incentives for internet video distributors and patent owners that join the program on or prior to June 30, 2025. We encourage every market participant to learn more about the program, including available incentives and discounts, by emailing us at licensing@accessadvance.com.
About Access Advance:
Access Advance LLC is an independent licensing administrator company formed to lead the development, administration, and management of patent pools for licensing essential patents of the most important standards-based video codec technologies. Access Advance provides a transparent and efficient licensing mechanism for both patent owners and patent implementers.
Access Advance currently manages and administers the HEVC Advance Patent Pool for licensing over 25,500 patents essential to H.265/HEVC technology, and the separate and independent VVC Advance Patent Pool for licensing essential patents to VVC/H.266 technology. The HEVC Advance Patent Pool and the VVC Advance Patent Pool are elements of the Access Advance Video Codec Platform Initiative that seamlessly incorporates HEVC and VVC technologies into a single discounted royalty rate structure through the Multi-Codec Bridging Agreement for eligible Licensees whose products include both HEVC and VVC codecs. This innovation responds to the market’s desire for an even more efficient next-generation pool licensing structure. For more information, please visit www.accessadvance.com.
Contacts
Jonathan Karush+1.617.460.7815
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From Copilot:
The specific companies that have joined the Access Advance Video Distribution Patent (VDP) Pool have not been publicly disclosed yet. However, the pool is expected to include a substantial majority of video codec implementers and patent owners who have supported Access Advance’s previous HEVC and VVC patent pools1.
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