InterDigital, Inc. (IDCC) reported relatively modest fourth-quarter 2023 results, with both the bottom line and top line surpassing the respective Zacks Consensus Estimate. The company generated lower revenues year over year, owing to declining catch-up revenues. However, healthy improvement in profit margins and record return of capital to shareholders were positive factors.
Net Income
Quarterly net income improved to $39.1 million or $1.41 per share, up from $32.4 million or $1.08 per share in the year-earlier quarter. Despite top-line decline, income tax benefits led to higher net income.
Non-GAAP net income was $37.5 million or $1.41 per share, down from $48.6 million or $1.62 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $1.21.
In 2023, GAAP net income rose to $214.1 million or $7.62 per share from $93.7 million or $3.07 per share in 2022. Non-GAAP net income was $254.4 million or $9.23 per share, up from $154.8 million or $5.08 per share in the prior year.
Revenues
Net sales in the quarter declined to $105.5 million from $117.1 million in the year-ago quarter due to lower catch-up revenues. The top line beat the consensus estimate of $104 million.
In 2023, the company reported total revenues of $549.6 million, up from $457.8 million in 2022.
In the fourth quarter, total recurring revenues were $103.3 million, marginally down from $103.6 million in the year-ago quarter. Net sales surpassed the estimate. Smartphone revenues decreased 1% year over year to $88.1 million. Net sales from CE, loT/Auto declined to $17.1 million from $28.2 million in the year-ago quarter.
Total catch-up revenues decreased to $2.2 million from $13.5 million. Net sales fell short of the estimate.
Other Details
Adjusted EBITDA decreased 18% year over year to $53.3 million. Total operating expenses rose 2% year over year to $80.2 million due to higher general and administrative costs. Operating income fell to $25.3 million from $38.6 million in the year-earlier quarter.
Cash Flow & Liquidity
In the fourth quarter, InterDigital utilized $23.5 million of cash from operating activities against $356.5 million cash generated from operations in the year-earlier period. In 2023, the company generated $213.7 million of cash from operating activities compared to $286 million cash generated in 2022. As of Dec 31, 2023, it had $1 billion in cash and cash equivalents with $84.3 million of long-term debt and other long-term liabilities, compared to respective tallies of $1.2 billion or $660.7 million in 2022.
Outlook
For the first quarter of 2024, InterDigital estimates revenues to be between $245 million and $255 million. Adjusted EBITDA is expected in the band of $116-$131 million. Non-GAAP earnings are expected to be within $2.40-$2.95 per share.
For 2024, management anticipates revenues in the range of $620-$670 million. Adjusted EBITDA is forecasted at about $310-$345 million. Non-GAAP earnings per share are expected to fall between $7.45 and $8.76 per share.
Management expects positive momentum to drive the top line in 2024. The newly inked license agreement with Samsung will likely boost revenues in the upcoming quarter.
Zacks Rank & Other Stocks to Consider
InterDigital currently has a Zacks Rank #2 (Buy).
NVIDIA Corporation (NVDA), currently carrying a Zacks Rank #2, delivered a trailing four-quarter average earnings surprise of 18.99%. In the last reported quarter, it delivered an earnings surprise of 19.64%. NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit.
Arista Networks, Inc. (ANET), carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines.
Qualcomm Inc. (QCOM), carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 5.9%. In the last reported quarter, it delivered an earnings surprise of 15.55%.
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