InterDigital, Inc.

InterDigital, Inc. is a global research and development company focused primarily on wireless, video, artificial intelligence, and related technologies. The company designs and develops foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services, licensing its innovations worldwide to makers of wireless communications devices, consumer electronics, internet of things devices, cars and other motor vehicles, and providers of cloud-based services such as video streaming. As of December 31, 2025, InterDigital's wholly owned subsidiaries held a portfolio of more than 38,000 patents and patent applications related to wireless communications, video coding, display technology, and other areas relevant to communications and entertainment products and services. The company has contributed technology to wireless standards including the 3G, 4G, 5G, and the development of 6G cellular standards and the IEEE 802.11 suite of standards, as well as to video standards including those established by ISO/IEC Moving Picture Expert Group, the ITU-T Video Coding Expert Group, the Joint Collaborative Team on Video Coding, and the Joint Video Expert Team.

InterDigital faces competition from companies developing other and similar technologies that are competitive with its technologies, including in the standards-setting arena. Due to the exclusionary nature of patent rights, the company does not compete in a traditional sense with other patent holders for patent licensing relationships or sale transactions. In licensing its patent portfolio, InterDigital competes with other patent holders for a share of the royalties that certain licensees may argue to be the total royalty that is supported by certain products or services. The company now has eight of the ten largest smartphone vendors based on shipments and approximately 85% of the entire global smartphone market under license. As of December 31, 2025, InterDigital has approximately 60% of the tablets and personal computers market and 35% of the television market under license. Through Avanci, InterDigital's cellular standard essential patents are made available to certain product verticals in the IoT area, and Avanci has signed patent license agreements with BMW Group, Audi, Ford, Toyota, BYD, and Volvo Cars, among others, collectively representing over 80% of annual connected car shipments.

InterDigital derives revenue primarily from licensing its patented innovations. The majority of revenue is generated from fixed-fee patent license agreements, with a smaller portion coming from variable royalty agreements and hybrid agreements that have both a fixed-fee and variable component. Upon entering into a new patent license agreement, consideration should be paid for sales made prior to the period in which the agreement was executed, to the extent those past sales were previously unlicensed (i.e., catch-up revenue), in addition to royalties or license fees on licensed products and services sold during the term of the agreement. In 2025, fixed-fee agreements accounted for 93% of revenue. The company is part of a joint licensing program with Sony relating to digital televisions and standalone computer display monitors (the Madison Arrangement), acting as exclusive licensing agent, and joined Avanci, the industry's first marketplace for the licensing of cellular standards-essential technology for the IoT.

The Smartphone revenue grouping consists primarily of smartphones and also includes other wireless communication devices and infrastructure equipment, such as tablets and base stations. In 2025, Smartphone revenue was $678.855 million ¹, compared to $597.540 million ² in 2024. The CE, IoT/Auto revenue grouping consists of consumer electronics and IoT products, such as televisions, laptops, gaming consoles, set-top boxes, streaming devices, and connected automobiles. In 2025, CE, IoT/Auto revenue was $154.631 million ³, compared to $268.680 million ⁴ in 2024. Other revenue, which includes revenue from non-patent licensing sources, was $0.529 million ⁵ in 2025, compared to $2.296 million ⁶ in 2024. The company does not yet have revenue from Video Services, but a Video Services grouping would consist of SVOD, AVOD, global pay-TV, video conferencing, cloud gaming, and other cloud-based services.

During 2025, InterDigital entered into eight patent license agreements. The company signed new multi-year, worldwide, non-exclusive, royalty-bearing license agreements with two major Chinese smartphone vendors, vivo and Honor. In April 2025, InterDigital signed a new multi-year license agreement with HP Inc., licensing HP personal computers to InterDigital's Wi-Fi and video decoding technologies. Additionally, the company entered into device licenses covering its technologies with a significant social media company, along with Eaton, Seiko Solutions Inc., Sharp, and Teltronic. On July 28, 2025, a panel of International Chamber of Commerce arbitrators determined the royalties of the patent license agreement covering Samsung's products, other than digital televisions and computer display monitors, setting the total royalties at $1.05 billion ⁷ for the eight-year patent license, which commenced on January 1, 2023 and runs through December 31, 2030. In 2025, the agreement contributed $118 million ⁸ of catch-up revenue due to a true-up of the $78 million ⁹ per year the company had been recognizing. In October 2025, InterDigital acquired AI startup Deep Render for cash considerations. In December 2025, certain holders elected to convert $80.0 million ¹⁰ of principal of the 2027 Notes, which will settle in first quarter 2026. During 2025, the company repurchased 385,000 ¹¹ shares for $102.319 million ¹² under its Share Repurchase Program. In September 2025, the company announced a second dividend increase during 2025, increasing the quarterly cash dividend by $0.10 ¹³ per share to $0.70 ¹⁴ per share, and combined with previous increases, the company has increased the dividend by 75% ¹⁵ since the start of 2024.

In 2025, total revenue was $834.015 million ¹⁶, compared to $868.516 million ¹⁷ in 2024, a decrease of 4% ¹⁸. Net income attributable to InterDigital, Inc. was $406.644 million ¹⁹ in 2025, compared to $358.614 million ²⁰ in 2024. Diluted earnings per share was $11.80 ²¹ in 2025, compared to $12.07 ²² in 2024. The decrease in total revenue was primarily due to larger catch-up revenue in 2024 resulting primarily from the Samsung TV and OPPO agreements, as well as the Lenovo UK ruling and arbitration agreement, partially offset by catch-up revenue on the Samsung arbitration decision and the vivo agreement in 2025. Operating expenses decreased 13% ²³ to $373.162 million ²⁴ in 2025 from $429.004 million ²⁵ in 2024. Net cash provided by operating activities was $544.450 million ²⁶ in 2025, compared to $271.528 million ²⁷ in 2024.

A key growth vector is the expansion of licensing activities into video streaming and other cloud-based services. The company launched its Video Services licensing program with an initial focus on the subscription-based video on demand and advertisement-based video on demand markets. The Video Services market is expected to grow from approximately $475 billion ²⁸ of annual revenue in 2025 to approximately $675 billion ²⁹ of annual revenue by 2029. In 2025, InterDigital initiated patent infringement actions involving major streaming ecosystem participants, including Disney and Amazon, relating to certain video technologies, and was awarded injunctions against Disney video streaming services by courts in Brazil and Germany. Another growth vector is the IoT/Automotive market, which is expected to result in a significant increase in the number of connected devices worldwide. Total global cellular IoT device shipments are expected to grow from approximately 550 million ³⁰ in 2025 to approximately 800 million ³¹ by 2029. Automobiles represent a significant opportunity within the IoT market, with approximately 65 million ³² connected passenger vehicles shipped in 2025, which is expected to grow significantly in the future. The company also intends to grow its licensing revenue base by adding licensees in existing product markets and expanding into new product markets.The filing does not contain a specific operational outlook with quantified targets for supply chain, manufacturing capacity, technology infrastructure investments, or headcount strategy.

In 2025, research and portfolio development costs were $211.432 million ³³. Capitalized patent costs were $54.627 million ³⁴ in 2025. Purchases of property and equipment were $15.888 million ³⁵ in 2025. As of December 31, 2025, there was $127.2 million ³⁶ remaining under the Share Repurchase Program authorization. The company's dividend policy contemplates the payment of a regular quarterly cash dividend of $0.70 ³⁷ per share on its outstanding common stock.

The filing identifies several headwinds and constraints. The market for licensing video and cloud-based services is not as developed as device-based licensing programs, and because the services licensing market is less developed, holdout behavior may be more likely than in device licensing. Service providers may also opt to use alternative technologies for which the company has little or no patent coverage. The company faces challenges in renewing existing license agreements, and delays in renegotiating and renewing a license agreement prior to its expiration cause gaps in time during which the company may be unable to recognize revenue from that licensee. The company also faces challenges in entering into new patent license agreements, as most implementers of its technology do not voluntarily seek to enter into license agreements before they commence manufacturing and/or selling devices that use its patented inventions. The imposition of tariffs by the United States could materially harm the company's business, and companies headquartered in China currently comprise a substantial portion of customers that utilize its patented inventions in their devices and services.

The company faces material risks from its plans to expand revenue opportunities into video and cloud-based services, a market that is not as developed as device-based licensing, and where the company has not yet entered into its first video services license, making the expected revenue uncertain and inherently subject to risk. Challenges in entering into new license agreements and renewing existing ones could cause revenue and cash flow to decline, as the process of identifying users of inventions and negotiating with reluctant prospective licensees requires significant time, effort, and expense. Royalties or other terms under patent license agreements could be subject to determination through arbitration or other third-party adjudications, and unfavorable determinations could significantly devalue the patent portfolio; for example, the Samsung arbitration set total royalties at $1.05 billion ³⁸ for an eight-year license, and any court or arbitration tribunal decision setting a worldwide royalty rate that is unfavorable could negatively impact pricing with other licensees. The company is subject to risks resulting from customer concentration, as in 2025, Samsung, Apple, and vivo each comprised 10% or more of consolidated revenue, and the inability to renew one or more of such license agreements on favorable terms could materially adversely affect future revenue and cash flow. Setbacks in defending and enforcing patent rights, including challenges to the infringement, validity, and enforceability of patents, could result in the loss of patent licensing revenue from existing licensees and substantially impair the ability to secure new patent licensing arrangements.

Management's message emphasizes the company's strategy to continue as a leading innovator and to receive fair compensation for its research by licensing its technology. Key themes include the successful resolution of the Samsung arbitration, which set total royalties at $1.05 billion ³⁹ for the eight-year patent license, representing a 67% increase ⁴⁰ from the previous license agreement, and the expansion into video services licensing with enforcement actions against Disney and Amazon. Strategic priorities emphasized for the period ahead include continuing to invest in advanced research to grow and enhance the patent portfolio, growing patent-based revenue by adding licensees in existing product markets and expanding into video streaming and other cloud-based services, and pursuing strategic research partnerships with other technology companies. Management also highlighted the return of capital to shareholders, noting that since 2014, the company has repurchased $1.2 billion ⁴¹ of shares at an average price of $62.50 ⁴², adjusted for dividends, and has paid $504.6 million ⁴³ in dividends, bringing total return of capital over this period to more than $1.7 billion ⁴⁴.