Q2 2026 InterDigital Inc Earnings Call

July 30, 2026

Operator: Thank you for standing by. My name is Kathleen, and I will be your conference operator for today. At this time, I would like to welcome everyone to the InterDigital Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, just press the star one again. Thank you. Now I would like to turn the call over to Raiford Garrabrant, Vice President, Investor Relations. Please go ahead, sir.

Speaker #1: standing by. My name is Thank you for Kathleen, and I will be your conference operator for today. At this time, I would like to welcome everyone to the InterDigital Q2 2026 earnings call.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press * followed by the number 1 on your telephone keypad.

Operator: If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, just press the star one again. Thank you. Now I would like to turn the call over to Raiford Garrabrant, Vice President, Investor Relations. Please go ahead, sir.

Speaker #1: And if you would like to withdraw your question, just press the *1 again. Thank you. And now, I would like to turn the call over to Raiford Garrabrant, Vice President Investor Relations.

Speaker #1: Please go ahead, sir.

Speaker #2: Thank you, Kathleen. And good morning, everyone. Welcome to InterDigital Q2 2026 earnings conference call. I am Raiford Garrabrant, VP of Investor Relations for InterDigital.

Raiford Garrabrant: Thank you, Kathleen, and good morning, everyone. Welcome to InterDigital's Q2 2026 Earnings Conference Call. I am Raiford Garrabrant, VP of Investor Relations for InterDigital. With me on today's call are Liren Chen, our President and CEO, and Rich Brezski, our CFO. Consistent with prior calls, we will offer some highlights about Q2 and the company and then open the call up for questions. For additional details, you can access our earnings release and slide presentation that accompany this call on our investor relations website. Before we begin our remarks, I need to remind you that in this call, we will make forward-looking statements regarding our current beliefs, plans, and expectations, which are not guarantees of future performance and are made only as of the date hereof.

Speaker #2: With me on today's call are Liron Chen, our President and CEO, and Rich Breski, our CFO. Consistent with prior calls, we will offer some highlights about the quarter and the company, and then open the call up for questions.

Speaker #2: For additional details, you can access our earnings release and the slide presentation that accompanied this call on our investor relations website. During this call, we will make forward-looking statements regarding our current beliefs, plans, and expectations, which are not guarantees of future performance and are made only as of the date hereof.

Speaker #2: Forward-looking statements are subject to risks and uncertainties, but could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements.

Raiford Garrabrant: Forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those described in the Risk Factors sections of our 2025 annual report on Form 10-K and in our other SEC filings. Today's presentation may contain references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the supplemental materials posted to the investor relations section of our website. With that taken care of, I will turn the call over to Liren.

Speaker #2: These risks and uncertainties include those described in the risk factors sections of our 2025 annual report on Form 10-K and in our other SEC filings.

Speaker #2: In addition, today's presentation may contain references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the supplemental materials posted to the Investor Relations section of our website.

Speaker #2: With that taken care of, I will turn the call over to Liron.

Speaker #3: Thank you, Raiford. Good morning, everyone. Thanks for joining us today. We have delivered an outstanding quarter, with continued momentum across each part of our business.

Liren Chen: Thank you, Raiford. Good morning, everyone. Thanks for joining us today. We have delivered an outstanding quarter with continued momentum across each part of our business. We achieved revenue of $260 million, adjusted EBITDA of $184 million, and non-GAAP EPS of $4.62. All far exceeded the top in our guidance. We also increased our annualized recurring revenue to a record of $626 million, an increase of 13% year over year, keeping us well on track to reach our goal of $1 billion plus ARR by 2030. Building on the strength of our Q2 result, the increased business momentum, and the opportunity to drive more progress over the balance of this year, we have raised our 2026 full year guidance to between $775 and 845 million, up $85 million at the midpoint.

Speaker #3: We achieved revenue of $260 million at just a EBITDA of $184 million, and non-GAAP EPS of $4.62, all far exceeding the top in our guidance.

Speaker #3: We also increased our annualized recurring revenue to a record of $626 million, and increase of 13% year over year, keeping us well on track to reach our goal of $1 billion-plus ARR by 2030.

Speaker #3: Building on the strengths of our Q2 results, the increased business momentum, and the opportunity to drive more progress over the balance of this year, we have raised our 2026 full-year guidance to between $775 million and $845 million.

Speaker #3: Up 85 million at the midpoint. Thus, increased quarters reached will cover our financial performance in more detail. The highlights of the quarter were the important milestones we achieved in our streaming and cloud service licensing program, our cover our new agreement with Amazon First, thus we have previously announced we have agreed to enter into a patent license agreement with Amazon covering Amazon's devices and services including Amazon's Prime Value, with the final terms to be determined through arbitration.

Liren Chen: The highlights of Q2 were the important milestones we achieved in our streaming and cloud service licensing program. I'll cover our new agreement with Amazon first. As we have previously announced, we have agreed to enter into a patent license agreement with Amazon, covering Amazon's devices and services, including Amazon's Prime Video, with the final terms to be determined through arbitration. We expect the process will take roughly 18 months to 24 months to complete. As part of the agreement, we have resolved all pending litigations between us. The Amazon agreement is an important milestone in our goal to drive growth through our streaming and cloud service licensing program and to hit our goal of 300 million-plus in ARR from this program by 2030. This is also a clear recognition of the value of foundational video technology in both devices and services.

Speaker #3: We expect the process will take roughly 18 months to 24 months to complete. As part of the agreement, we have resolved all pending litigations between us.

Speaker #3: The Amazon agreement is an important milestone in our goal to drive growth through our streaming and cloud service licensing program and to hit our goal of $300 million-plus in ARR from this program by 2030.

Speaker #3: This is also a clear recognition of the value of our foundational technology in both devices and services. Thus, as I have said many times, our preference is always to conclude license agreements through bilateral negotiation and, when disputes do arise, to use binding arbitration to decide the final terms of an agreement.

Liren Chen: As I have said many times, our preference is always to conclude license agreements through bilateral negotiation, and when disputes do arise, to use binding arbitration to decide the final terms of an agreement. This is the path we have followed recently in our arbitration with both Samsung and Lenovo. Staying on the streaming and cloud service licensing program, we continue to make excellent progress in our enforcement effort against Disney. During the quarter, we were awarded our first injunction against Disney from the European Unified Patent Court. The court ruled that Disney infringed one of our patents covering video encoding technology related to HEVC and confirmed the validity of our patent. In addition, the court found that Disney was an unwilling licensee. The UPC is a pan-European court, and the injunction applies across 11 EU countries, including major markets like France, Germany, Italy, and Netherlands.

Speaker #3: This is the path we have followed recently in our arbitration with both Samsung and Lenovo. Staying on the streaming and cloud service licensing program, we continue to make excellent progress in our enforcement effort against Disney.

Speaker #3: During the quarter, we will awarded our first injunction against Disney from European Unified Patent Court. The court ruled that Disney infringed one of our patents covering video including technology related to HEVC and confirmed the validity of our patent.

Speaker #3: In addition, the court found that Disney was an unwitting licensee. The UPC is a pan-European court, and the injunction applies clause 11 EU countries including major markets like France, Germany, Italy, and Netherlands.

Speaker #3: Last week, we received our second injunction against Disney from UPC covering another patent that covers video coding encoding related to HEVC. Thus, with the first UPC injunction, this decision applied across the same 11 countries in the EU.

Liren Chen: Last week, we received our second injunction against Disney from UPC, covering another patent that covers video coding encoding related to HEVC. As with the first UPC injunction, this decision applies across the same 11 countries in the EU. In this decision, the court was highly critical of Disney's conduct, again found Disney was an unwilling licensee, and found that InterDigital has acted in a fair manner in the licensing negotiations. We are working with the court to enforce them. We believe they are important steps to reach a long-term license agreement with Disney on fair terms that reflect the value of the technology that enabled Disney to build one of the world's leading streaming business.

Speaker #3: In this decision, the court was highly critical of Disney's conduct, found Disney was an unwitting licensee, and found that InterDigital has acted actively and in a fair manner in the licensing negotiations.

Speaker #3: These are the latest injunctions that we have went against Disney, and we are working with the court to enforce them. We believe they are important step to reach a long-term license agreement with Disney on fair terms that reflects the value of our technology that enable Disney to build one of the world's leading streaming business.

Speaker #3: Our recent round of success against Disney is also an indication of the quality of our research and our patent portfolio, as multiple courts have found our patent to be valid and infringed.

Liren Chen: Our recent round of success against Disney is also an indication of the quality of our research and our patent portfolio, as multiple courts have found our patent to be valid and infringed. While we always prefer a completed license agreement through bilateral negotiation, when we do enforce our patents, we have a strong track record of reaching agreement in the end. As we continue to build momentum across our licensing program, in Q2, we signed a new IoT licensing agreement with a leading fintech company in the payment space. The agreement covers a licensed point-of-sale devices under our cellular and Wi-Fi patents. After the end of the quarter, we closed another new license with KEBA to cover the company's EV chargers, also under our cellular and Wi-Fi patents.

Speaker #3: While we always prefer completing license agreement, through bilateral negotiation, when we do enforce our patents, we have a strong track record of reaching agreement in the end.

Speaker #3: As we continue to build momentum across our licensing program, in the second quarter, we signed a new IoT licensing agreement with the leading fintech company in the payment space.

Speaker #3: The agreement covers a license for point-of-sale devices and our cellular and Wi-Fi patents. After the end of the quarter, we closed another new license with Kebum to cover the company's EV chargers, also under our cellular and Wi-Fi patents.

Speaker #3: Both agreement are good demonstration of the reach of our technology and the range of industry that depends on the standard we help build. While this connectivity is now embedded in an expanding number of verticals, and this deals a sign of broader IoT opportunity ahead of us.

Liren Chen: Both agreements are good demonstrations of the reach of our technology and the range of industry that depends on the standard we help build. These deals are a sign of broader IoT opportunity ahead of us. We believe this trend will only continue with the development and rolling out of 6G, which is why we continue to invest in our research engine and in our leadership of global standards. The quality of research across wireless, radio, and AI, combined with our standard leadership, continue to be a major competitive advantage for us. In Q2, one of our senior wireless engineers was elected vice chair of a key working group in 3GPP, which is the standard organization that leads the development of each generation of mobile, including 6G.

Speaker #3: We believe this trend will only continue with the development and rollout of 6G, which is why we continue to invest in our research engine and in our leadership of global standards.

Speaker #3: The quality of research across various video and AI combined with our standard leadership continue to be major competitive advantage for us. In the second quarter, one of our senior virus engineers was elected vice chair of a key working group in 3GPP which is the standard organization that leads the development of each generation of mobile including 6G.

Liren Chen: The quality of research across wireless, radio, and AI, combined with our standard leadership, continue to be a major competitive advantage for us. In Q2, one of our senior wireless engineers was elected vice chair of a key working group in 3GPP, which is the standard organization that leads the development of each generation of mobile, including 6G.

Speaker #3: Our two top standard leadership position is now well over 100, and we remain one of the only three company in the world, and the only US company with multiple chair position across 3GPP.

Liren Chen: Our total standard leadership position is now well over 100, and we remain one of the only three company in the world, and the only US company with multiple chair position across 3GPP. These positions help inform the direction of research and place us in an even stronger position to define key technology standard across wireless, video, and AI. I was also pleased to see that during the quarter, we were recognized by Business Insider as one of America's high-growth companies. This award recognizing the progress we have made in recent years and the momentum we are carrying into the H2 of 2026. With that, I'll hand it over to Rich, who will walk you through the numbers in more detail.

Speaker #3: This positions help inform the direction of research and place us in an even stronger position to define key technology standard across various video and AI.

Speaker #3: I was also pleased to see that during the quarter, we were recognized by business insider as one of America's high growth companies. This award recognizing the progress we have made in recent years and the momentum we are carrying into the second half of 2026.

Liren Chen: I was also pleased to see that during the quarter, we were recognized by Business Insider as one of America's high-growth companies. This award recognizing the progress we have made in recent years and the momentum we are carrying into the H2 of 2026. With that, I'll hand it over to Rich, who will walk you through the numbers in more detail.

Speaker #3: With that, I'll hand it over to Rich, who will walk you through the numbers in more detail.

Speaker #1: Thanks, Laren. I'm thrilled to report that Q2 was another outstanding quarter for InterDigital. And an important milestone in the expansion of our licensing programs.

Rich Brezski: Thanks, Liren. I'm thrilled to report that Q2 was another outstanding quarter for InterDigital and an important milestone in the expansion of our licensing programs. Our results were well above the guidance we provided on our last call, and they included quantifiable progress towards our goal of $300 million plus of ARR from streaming and cloud services by 2030. This milestone was driven by our new agreement with Amazon. As Liren discussed, Amazon has agreed to enter into a patent license agreement covering both services and devices, including Prime Video, with the final terms to be determined through binding arbitration. The agreement also resolves the pending litigation between the parties. Total revenue for the quarter was $260.2 million, compared with our Q2 guidance range of $139 million to $143 million.

Speaker #1: Our results were well above the guidance we provided on our last call, and they included quantifiable progress toward our goal of $300 million-plus in ARR from streaming and cloud services by 2030.

Speaker #1: This milestone was driven by our new agreement with Amazon, as Laren discussed, Amazon has agreed to enter into a patent license agreement covering both services and devices including Prime Video, with the final terms to be determined through binding arbitration.

Rich Brezski: As Liren discussed, Amazon has agreed to enter into a patent license agreement covering both services and devices, including Prime Video, with the final terms to be determined through binding arbitration. The agreement also resolves the pending litigation between the parties. Total revenue for the quarter was $260.2 million, compared with our Q2 guidance range of $139 million to $143 million.

Speaker #1: The agreement also resolves the pending litigation between the parties. Total revenue for the quarter was $260.2 million compare with our Q2 guidance range of $139 million to $143 million.

Speaker #1: Revenue included $103.7 million of ketchup revenue while annualized recurring revenue or ARR increased 13% year over year to a record $625.7 million. Looking at revenue by program, smartphone revenue was $122.7 million CE IoT and auto revenue was $27.5 million and streaming and cloud services contributed $110 million.

Rich Brezski: Revenue included $103.7 million of catch-up revenue, while annualized recurring revenue, or ARR, increased 13% year over year to a record $625.7 million. Looking at revenue by program, smartphone revenue was $122.7 million, CE, IoT, and Auto revenue was $27.5 million, and streaming and cloud services contributed $110 million. Let me take a second to discuss revenue recognition for Amazon. While Amazon has agreed to enter into a patent license agreement, the final terms, including the value of the agreement, will be determined through arbitration. Under GAAP, we recognize revenue in this circumstance based on a conservative estimate of the consideration we expect to be entitled. While the final outcome of the arbitration cannot be assured at this stage, I currently expect that any adjustment to revenue at the conclusion of the process is more likely to increase rather than reduce recognized revenue.

Speaker #1: Let me take a second to discuss revenue recognition for Amazon. While Amazon has agreed to enter into a patent license agreement, the final terms including the value of the agreement will be determined through arbitration.

Speaker #1: Under GAAP, we recognize revenue in this circumstance based on a conservative estimate of the consideration we expect to be entitled. While the final outcome of the arbitration cannot be assured at this stage, we currently expect that any adjustment to revenue at the conclusion of the process is more likely to increase rather than reduce recognized revenue.

Speaker #1: This is similar to the approach we took in 2023 after Samsung agreed to take a new license effective January 1st, 2023, while the final terms were still being determined through binding arbitration.

Rich Brezski: This is similar to the approach we took in 2023 after Samsung agreed to take a new license effective 1 January 2023, while the final terms were still being determined through binding arbitration. In that case, we recorded revenue based on a conservative estimate during the arbitration period and then recorded an adjustment once the final arbitration decision was received. With respect to Amazon, if the final arbitration award differs from the cumulative revenue recognized during the arbitration process, we will record the resulting adjustment when the award is finalized. Turning to profitability, adjusted EBITDA for the quarter was $184.1 million, compared with our guidance range of $67 million to $73 million. Our adjusted EBITDA margin was 71%, compared with the roughly 50% margin implied in our prior outlook.

Speaker #1: In that case, we recorded revenue based on a conservative estimate during the arbitration period, and then recorded an adjustment once the final arbitration decision was received.

Speaker #1: With respect to Amazon, if the final arbitration award differs from the cumulative revenue recognized during the arbitration process, we will record the resulting adjustment when the award is finalized.

Speaker #1: Turning to profitability, adjusted EBITDA for the quarter was $184.1 million, compared with our guidance range of $67 million to $73 million. Our adjusted EBITDA margin was 71%, compared with the roughly 50% margin implied in our prior outlook.

Speaker #1: Operating expenses increased 25.8 million year over year primarily due to an increase in intellectual property enforcement costs and performance-based compensation driven by business success.

Rich Brezski: Operating expenses increased $25.8 million year-over-year, primarily due to an increase in intellectual property enforcement costs and performance-based compensation driven by business success. GAAP diluted EPS for the quarter was $3.40, compared with our guidance range of $0.80 to $0.97. Non-GAAP EPS was $4.62, compared with our guidance range of $1.41 to $1.60. Cash generation was strong, with cash from operations of $82.5 million and free cash flow of $66.6 million. As we noted on our last call, we expect a collection of accounts receivable from new agreements signed in Q1 to drive strong cash flow in Q2, and our Q2 cash generation was consistent with that expectation. Consistent with our capital allocation priorities, we continued to invest for growth, maintain a fortress balance sheet, and return excess capital to shareholders.

Speaker #1: GAAP diluted for EPS for the quarter was $3.40 compare with our guidance range of $0.80 to $0.97. Non-GAAP EPS was $4.62 compare with our guidance range of $1.41 to $1.60.

Speaker #1: Cash generation was strong with cash from operations of $82.5 million and free cash flow of $66.6 million. As we noted on our last call, we expected collection of accounts receivable from new agreements signed in Q1 to drive strong cash flow in Q2.

Speaker #1: And our second quarter cash generation was consistent with that expectation. Consistent with our capital allocation priorities, we continue to invest for growth, maintain a fortress balance sheet, and return excess capital to shareholders.

Speaker #1: During the quarter, we returned $41.1 million to shareholders through $23 million of share repurchases and $18 million of dividends. We ended the quarter with cash, cash equivalents, and short-term investments of $1.1 billion.

Rich Brezski: During the quarter, we returned $41.1 million to shareholders through $23 million of share repurchases and $18 million of dividends. We ended the quarter with cash equivalents and short-term investments of $1.1 billion. Our Q2 results again demonstrate the leverage in our subscription-based licensing model. The long-term fixed-fee nature of most of our agreements provides visibility into our business, supports ongoing investment in research and portfolio development, and gives us the flexibility to pursue opportunities across our licensing programs while continuing to return capital to shareholders. Looking forward to Q3, we expect $154 to $158 million of revenue from existing contracts. Any revenue from any new agreements or enforcement decisions over the balance of the quarter would be additive to these amounts. Based only on existing contracts, we expect adjusted EBITDA margin of about 57%, and non-GAAP diluted earnings per share of $1.94 to $2.13.

Speaker #1: Our Q2 results again demonstrate the leverage in our subscription-based licensing model. The long-term fixed fee nature of most of our agreements provides visibility into our business, supports ongoing investment in research and portfolio development, and gives us the flexibility to pursue opportunities across our licensing programs while continuing to return capital to shareholders.

Speaker #1: Looking forward to Q3, we expect $154 to $158 million of revenue from existing contracts. Any revenue from new agreements or enforcement decisions over the balance of the quarter would be additive to these amounts.

Speaker #1: Based only on existing contracts, we expect adjusted EBITDA margin of about $57% and non-GAAP diluted earnings per share of $1.94 to $2.13. In addition, we expect another strong quarter of free cash flow in Q3 driven by scheduled payments due under existing agreements.

Rich Brezski: We expect another strong quarter of free cash flow in Q3, driven by scheduled payments due under existing agreements. As Liren noted, we are increasing our full-year 2026 guidance. We now expect revenue in the range of $775 million to $845 million, up from our prior range of $675 million to $775 million. That is an increase of $85 million at the midpoint. We now expect full-year 2026 adjusted EBITDA in the range of $469 million to $529 million, with non-GAAP EPS in a range of $10.85 to $12.81. As we have said before, we continue to think about the full year through a multi-path approach with different combinations of existing contracts, renewals, new agreements, and enforcement outcomes that can deliver financial results within our guided ranges. With that, I'll turn it back to Raiford.

Speaker #1: As Laren noted, we are increasing our full year 2026 guidance. We now expect revenue in the range of $775 million to $845 million up from our prior range of $675 million to $775 million.

Speaker #1: That is an increase of 85 million dollars at the midpoint. We now expect full year 2026 adjusted EBITDA in the range of $469 million to $529 million with non-GAAP EPS in a range of $10.85 to $12.81.

Speaker #1: As we have said before, we continue to think about the full year through a multi-path approach with different combinations of existing contracts, renewals, new agreements, and enforcement outcomes that can deliver financial results within our guided ranges.

Speaker #1: With that, I'll turn it back to Raiford.

Speaker #2: Thanks, Rich. Before we move to Q&A, I'd like to mention that we'll be attending a number of investor events in Q3, including the Jeffries Semiconductor IT Hardware and Communications Hardware Conference in Chicago, the Midwest Ideas Conference in Chicago, and the Sadote Small Cap Conference, which is virtual.

Raiford Garrabrant: Thanks, Rich. Before we move to Q&A, I'd like to mention that we'll be attending a number of investor events in Q3, including the Jefferies Semiconductor, IT Hardware, and Communications Hardware Conference in Chicago, the Midwest IDEAS Conference in Chicago, and the Sidoti Small Cap Conference, which is virtual. Please reach out to your representatives at those firms if you'd like to schedule a meeting. We are ready to take questions.

Speaker #2: Please reach out to your representatives at those firms if you'd like to schedule a meeting. Now, we are ready to take questions.

Speaker #3: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press the star one again. Your first question comes from the line of Scott Searle from Roth Capital. Please go ahead.

Speaker #3: And if you would like to withdraw your question, simply press the star one again. And your first question comes from the line of Scott.

Speaker #3: Sir, from Roth Capital. Please go ahead.

Speaker #1: Hey, good morning. Thanks for taking my questions. Congrats on the quarter and congrats on the progress that you're making on the streaming side of the equation.

Scott Searle: Hey, good morning. Thanks for taking my questions. Congrats on the quarter and congrats on the progress that you're making on the streaming side of the equation, particularly with Amazon.

Speaker #1: Particularly with Amazon.

Liren Chen: Thanks, Scott.

Speaker #2: Thanks, Scott. Laren, maybe just to dive in on that front, you've had some important milestones with Disney as well now with two separate injunctions ordered by UPC.

Scott Searle: Liren, maybe just to dive in on that front. You've had some important milestones with Disney as well now with two separate injunctions awarded by UPC. Can you take us through the timelines and the next steps? It sounds like you are working with the courts in terms of that injunction and otherwise, but what are the various avenues here to move forward, if you could give us some idea? From a broader perspective, a couple of years ago when you guys articulated the opportunity for streaming services, you estimated the market at $300 million, which you guys have reiterated today, and I think that was more of a baseline kind of opportunity.

Speaker #2: Can you take us through the timelines in the next steps? It sounds like you are working with the courts in terms of that injunction.

Speaker #2: And otherwise, but what are the various avenues here to move forward if you could give us some idea? And then from a broader perspective, a couple of years ago when you guys articulated the opportunity for streaming services, you estimated the market at $300 million, which you guys have reiterated today.

Speaker #2: And I think that was more of a baseline kind of opportunity. I'm wondering now, as you're getting in and starting to get some of those data points with the baseline from Amazon, in terms of what you're seeing from a RevRec standpoint as well as the expansion of the marketplace, is that opportunity actually expanding beyond the $300 million that you guys initially talked about?

Scott Searle: I'm wondering now as you're getting in and you're starting to get some of those data points with the baseline from Amazon in terms of what you're seeing from a rev rec standpoint, as well as the expansion of the marketplace. Is that opportunity actually expanding beyond the $300 million that you guys initially talked about?

Speaker #1: Yeah. Hey, Scott. Good morning. Yes. So let me explain the UPC process as well as the broader view for the overall market. So as I mentioned in my preparatory mark, we have done very well in our enforcement campaign as you are aware, we have received multiple injunctions from different jurisdictions with the latest one being UPC, one received during the Q2, one received frankly only last week.

Liren Chen: Yeah. Hey, Scott. Good morning. Yes. Let me explain the UPC process as well as the broader view for the overall market. As I mentioned in my prepared remark, we have done very well in our enforcement campaign. As you are aware, we have received multiple injunctions from different jurisdiction, with the latest one being UPC, one received during the Q2, one received, frankly, only last week. We, in the process of enforcing them, and there's a process in those court system for us to go through the process. We do feel our patents are extraordinarily important. As you are aware, both the patent we received for the UPC injunction are related to the core features of encoding technique related to HEVC that we believe to have a lot of value.

Speaker #1: So we're in the process of enforcing them and there's a process in those court system for us to go through the process. We do feel our patents are extraordinarily important as you are aware, both the patent we received for the UPC injunction are related to the core features of encoding technique related to HEVC that we believe drive a lot of value.

Speaker #1: And I do feel this is a—I'm, by the court, also found Amazon to be an unwitting licensee. We are conducting our license, commented before, as we frankly commented in our press release. We do believe the right outcome is for Amazon to take a license that's fair to both parties.

Rich Brezski: I do feel. By the way, the court also found Amazon to be unwitting licensee. Now we are conducting our license fairly. As I commented before, as we frankly commented in our press release, we do believe the right outcome is for Amazon to take license. That's fair to both parties.

Scott Searle: Disney.

Speaker #1: And for Disney, I'm sorry. And we absolutely think we are on track to do so. Okay. Regarding the broader picture for the licensing opportunity in streaming and cloud services, notice that when we disclose this opportunity in the investor day, we said we believe this opportunity will be a $200 million $300 million plus ARR by 2030, but we do emphasize there's a plus sign to it.

Liren Chen: For Disney, I'm sorry. We absolutely think we are on track to do so. Okay. Regarding the broader picture for the licensing opportunity in streaming and cloud services, notice that when we disclose this opportunity in the investor day, we said we believe this opportunity will be a $300 million-plus ARR by 2030, we do emphasize there's a plus sign to it. This is not an endpoint. This is essentially a milestone point we see. We believe we are executing really well. Obviously, there's still multiple years in this journey, and we have to keep on focusing on doing everything we can to execute on our strategy.

Speaker #1: So this is not an endpoint. This is essentially a milestone point. We believe we are executing really well. Obviously, there are still multiple years in this journey.

Speaker #1: And we have to keep on focusing on doing everything we can to execute on our strategy.

Speaker #2: Very, very helpful. And if I could just to follow to follow up in terms of the level of engagement that you have now with Amazon on the board of the books, how are the conversations proceeding with other large streaming vendors?

Liren Chen: Very helpful. If I could just to follow up in terms of the level of engagement that you have now with Amazon on the broader business, how are the conversations proceeding with other large streaming vendors? Is this a wait and see for them to see the final outcome and potentially the pricing as it relates to Amazon, or they continue on their own parallel tracks? A quick question for Rich. Just in terms of the OPEX costs, I believe this quarter, the enforcement costs were pretty high, up substantially I think from Q1. Given the progress that you've made now with Amazon, some of the wins you've had with Disney, how should we be thinking about litigation and enforcement costs as well as the broader OPEX as we're going into H2 of this year? Thanks.

Speaker #2: Is this a wait-and-see for them to see the final outcome and potentially the pricing as it relates to Amazon? Or are they continuing on their own, parallel tracks?

Speaker #2: And a quick question for Rich. Just in terms of the opex costs, I believe this quarter the enforcement costs were pretty high, up substantially, I think from the first quarter.

Speaker #2: But given the progress that you've made now with Amazon, some of the wins you've had with Disney, how should we be thinking about litigation and enforcement costs as well as the broader opex as we're going into the second half of this year?

Speaker #2: Thanks.

Speaker #1: Hey, Scott. Let me take the first half. We are proceeding well with other negotiations. So, frankly, we have a strategy to approach all the major customers.

Liren Chen: Hey, Scott. Let me take the H1. We are proceeding well with other negotiation. Frankly, we have a strategy to approach all the major customers in both the SVOD as well as the AVOD space. We are proceeding well. I do believe people are paying attention to our progress with the Amazon discussion as well as the Disney progress, and I'm hoping to report more progress as we are proceeding with the other negotiations in coming weeks and in coming quarters.

Speaker #1: In both the SBOT as well as ABOT space. So, we are proceeding well. I do believe people are paying attention to our progress with the Amazon discussion as well as the Disney progress.

Speaker #1: And I'm hoping to report more progress as we proceeding with all the negotiations in coming weeks. Incoming quarters.

Speaker #2: Yeah. And Scott, regarding the Amazon moving to arbitration and the outlook for enforcement costs, certainly one of the benefits of arbitration is it kind of ring-fences things.

Rich Brezski: Yeah, Scott, regarding the Amazon moving to arbitration and the outlook for enforcement costs. Certainly, one of the benefits of arbitration is it kind of ring-fences things. It can be more efficient. That's definitely a benefit, and we expect that to impact what we otherwise would've expected from a multi-jurisdictional litigation campaign against Amazon. At the same time, we have a number of other enforcement actions ongoing. While I think it's helpful, I don't wanna oversell it that expenses would come down too much in that area while we have these other cases ongoing.

Speaker #2: It can be more efficient so that's definitely a benefit. And we expect that to impact what we otherwise would have expected from a multi-jurisdictional litigation campaign against Amazon.

Speaker #2: At the same time, we have a number of other enforcement actions ongoing. So why I think it's helpful, I don't want to oversell it that expenses would come down too much in that area.

Speaker #2: While we have these other cases ongoing. Great. Thank you. I'll get back in the queue.

Scott Searle: Great. Thank you. I'll get back in the queue.

Speaker #3: And your next question comes from the line of Arjun of William Blair. Please go ahead.

Operator: Your next question comes from the line of Arjun of William Blair. Please go ahead.

Speaker #2: Yep. Perfect. Thank you. And congrats to you guys on the Amazon deal. I know that's an important milestone. For the company. Learn, maybe if I can kind of touch on a few of the points that you were talking about in the prior set of questions.

[Company Representative] (William Blair): Perfect. Thank you. Congrats to you guys on the Amazon deal. I know that's an important milestone for the company. Liren, maybe if I can kind of touch on a few of the points that you were talking about in the prior set of questions. Do you have a sense now that sort of with Amazon having reached an agreement with final terms still to be determined, the positive sort of results you're seeing with Disney litigation, do you sense that you could sort of push on the pedal a little bit more to litigate against other streaming services where maybe they're not coming to the table to negotiate? Or how do you view sort of your position in this market now, given that you have some positive outcomes and certainly courts and Amazon as a counterparty has agreed to the sort of legitimacy of your IP?

[Analyst] (William Blair): Perfect. Thank you. Congrats to you guys on the Amazon deal. I know that's an important milestone for the company. Liren, maybe if I can kind of touch on a few of the points that you were talking about in the prior set of questions. Do you have a sense now that sort of with Amazon having reached an agreement with final terms still to be determined, the positive sort of results you're seeing with Disney litigation, do you sense that you could sort of push on the pedal a little bit more to litigate against other streaming services where maybe they're not coming to the table to negotiate?

Speaker #2: Do you have a sense now that sort of the with Amazon having reached an agreement with final terms still to be determined, the positive sort of results you're seeing with Disney litigation?

Speaker #2: Do you sense that you could sort of push on the pedal a little bit more to litigate against other streaming services, where maybe they're not coming to the table to negotiate? Or how do you view sort of your position in this market now, given that you have some positive outcomes and certainly courts and Amazon as a counterparty have agreed to the legitimacy of your IP?

[Analyst] (William Blair): Or how do you view sort of your position in this market now, given that you have some positive outcomes and certainly courts and Amazon as a counterparty has agreed to the sort of legitimacy of your IP?

Speaker #1: Yeah. Hey, Arjun, good morning. As I commented earlier, we feel really good about where we are. Obviously, the Amazon agreement we reached is a major milestone.

Liren Chen: Hey, Arjun. Good morning. As I commented earlier, we feel really good about where we are. Obviously, the Amazon agreement we reached is a major milestone, we have been proceeding well with Disney. I do believe the rest of the industry is paying attention. As of now, I don't have status to update on our litigation or enforcement strategy. As I commented before, we always prefer to get deal done through bilateral negotiation, we are patient and frankly fairly balancing those negotiations. As of now, I don't have an update on other litigation possibilities.

Speaker #1: And we have been proceeding well with Disney. I do believe the rest of industry is paying attention. As of now, I don't have status to update on our litigation or enforcement strategy.

Speaker #1: As I commented before, we always prefer to get a deal done through bilateral negotiation. We are patient and, frankly, fairly balanced in those negotiations. As of now, I don't have an update on other litigation possibilities.

Speaker #2: Okay, that's fair enough. And then, Rich, I had a couple of questions for you just on the Amazon RevRack dynamics that you laid out.

[Company Representative] (William Blair): Okay. That's fair enough. Then Rich, I had a couple questions for you just on the Amazon rev rec dynamics that you laid out. Is there an initial agreement or initial terms with Amazon or what you're recognizing in the sort of $60 million recurring revenue and the catch up? Are those all purely estimates, or are there some terms that you've agreed with on Amazon initially that get finalized in arbitration?

[Analyst] (William Blair): Okay. That's fair enough. Then Rich, I had a couple questions for you just on the Amazon rev rec dynamics that you laid out. Is there an initial agreement or initial terms with Amazon or what you're recognizing in the sort of $60 million recurring revenue and the catch up? Are those all purely estimates, or are there some terms that you've agreed with on Amazon initially that get finalized in arbitration?

Speaker #2: Is there an initial agreement or initial terms with Amazon, or what you’re recognizing in the sort of $60 million recurring revenue and the catch-up?

Speaker #2: Are those all purely estimates, or are there some terms that you've agreed on with Amazon initially that get finalized in arbitration? Yeah. Arjun, some of those details at this stage are confidential.

Rich Brezski: Yeah, Arjun. Some of those details at this stage are confidential. I'll go back and emphasize some of the comments I made that we are basing that revenue on an estimate while we're in arbitration with some terms, including the final value of the license agreement to be determined by that arbitration. That's similar to, at that high level, the situation we were in a couple years ago with Samsung.

Speaker #2: So I'll go back to mine and emphasize some of the comments I made—that we are basing that revenue on an estimate while we're in arbitration, with some terms, including the final value of the license agreement, to be determined by that arbitration.

Speaker #2: And that's similar to at that high level, the situation we're in a couple of years ago with Samsung. Okay. Got it. And that it would include presumably the catch-up payment or the catch-up revenue that you've pointed out this quarter.

[Company Representative] (William Blair): Okay. Got it. That it would include presumably the catch up payment or the catch up revenue that you pointed out this quarter, like that is also subject to arbitration. Is that correct?

[Analyst] (William Blair): Okay. Got it. That it would include presumably the catch up payment or the catch up revenue that you pointed out this quarter, like that is also subject to arbitration. Is that correct?

Speaker #2: That is also subject to arbitration. Is that correct? Yeah. Well, again, it's the value of the agreement. So that would be part of that value.

Rich Brezski: Yeah. Well, again, it's the value of the agreement. That would be part of that value.

Speaker #2: Okay. All right. Got it. And then just final one, maybe Learn for you on Disney. Some of these some of the recent injunctions from UPC sound fairly material, meaning if it's related to video encoding and HEVC, and there's an injunction, it seems like it may result in significantly sort of degraded service from Disney.

[Company Representative] (William Blair): Okay. All right. Got it. Just final one, maybe, Liren, for you on Disney. Some of the recent injunctions from UPC sound fairly material. Meaning if it's related to video encoding and HEVC, and there's an injunction, it seems like it may result in significantly sort of degraded service from Disney. What is their sort of response to how this is now playing out in the courts and do you expect that these are more material than prior injunctions that you've had with Disney earlier in 2026?

[Analyst] (William Blair): Okay. All right. Got it. Just final one, maybe, Liren, for you on Disney. Some of the recent injunctions from UPC sound fairly material. Meaning if it's related to video encoding and HEVC, and there's an injunction, it seems like it may result in significantly sort of degraded service from Disney. What is their sort of response to how this is now playing out in the courts and do you expect that these are more material than prior injunctions that you've had with Disney earlier in 2026?

Speaker #2: What is their sort of response to how this is now playing out in the courts, and do you expect that these are more material than prior injunctions that you've had with Disney earlier in 2026?

Speaker #1: Yeah. Hey, Arjun. As you all were, when we started the enforcement campaign, we had a comprehensive strategy. We intentionally picked patents covering different areas of technology.

Liren Chen: Yeah. Hey, Arjun. As you are aware, when we started the enforcement campaign, we had a comprehensive strategy. We intentionally picked, patent cover in different area technology, and asserted them in various different jurisdictions. We are very happy with the win we have. As I mentioned earlier, we are in the process of enforcing them. By the way, we also noticed there's from third-party report, certain key services are being disrupted in European market, including 4K HD content, which I believe are very important features to their premium tier customers. By the way, we also noticed there's report of consumer protection agents investigation that's being either triggered or discussed. I do believe those are important services, which again, reflect on the foundational nature of our technology and our patent. Frankly indicated the fair value that we are trying to receive.

Speaker #1: And asserted the mean various different jurisdictions. And we are very happy with the win we have. And as I mentioned earlier, we are in the process enforcing them.

Speaker #1: By the way, we also noticed search from third-party report certain key services are being disrupted in European market, including 4K, HD content, which I believe are very important features to their premium tier customers.

Speaker #1: And so, by the way, we also noticed there's a report of consumer protection agents' investigation that's being either triggered or discussed. So I do believe those are important services which, again, reflect on the foundational nature of our technology and our patent and, frankly, indicate the fair value that we are trying to receive.

Speaker #2: Okay, perfect. That's it for me. Congrats again, guys. Thanks, Arjun.

[Company Representative] (William Blair): Okay, perfect. That's it for me. Congrats again, guys.

[Analyst] (William Blair): Okay, perfect. That's it for me. Congrats again, guys.

Rich Brezski: Thanks.

Rich Brezski: Thanks, Arjun.

Operator: Your next question comes from the line of Kevin Garrigan of Jefferies. Please go ahead.

Speaker #3: And next question comes from the line of Kevin Carrigan of Jefferies. Please go ahead.

Speaker #4: Yeah. Hey, good morning, team. And let me echo my congrats. Hey, just looking at your guide, for Flapper Q3, step up in Q4. And I know you came into the year with 92 million of renewals.

Kevin Garrigan: Good morning, team, and let me echo my congrats. Just looking at your guide for flat Q3, step up in Q4. I know you came into the year with $92 million of renewals. I think you had said two-thirds of that was already renewed. If I'm right, you're expecting to final one-third of those renewals really in Q4. Can you just remind us which end markets those renewals are across?

Speaker #4: I think you had said two-thirds of that was already renewed. So if I'm right, you're expecting the final one-third of those renewals really in Q4.

Speaker #4: And can you just remind us which end markets those renewals are across?

Speaker #2: Yeah. So Kevin, when we talk about our full-year guidance, I mentioned that we have a multipath approach, which could include renewals, or if for whatever reason we don't execute on those renewals, we have other opportunities as well.

Rich Brezski: Kevin, when we talk about our full-year guidance, I mentioned that we have a multi-path approach, which could include renewals, or if for whatever reason we don't execute on those renewals, we have other opportunities as well. We see a couple of different paths to get there. We're not locked in on any one. We're working across all those opportunities.

Speaker #2: So, we see a couple of different paths to get there. We're not locked in on any one. We're working across all those opportunities.

Speaker #4: Yep. Okay. Got it. And then with Amazon being the first streaming agreement, whatever the terms kind of come to be, is this the framework for how we should think about terms for other streaming agreements?

Kevin Garrigan: Yep. Okay. Got it. Then with Amazon being the first streaming agreement, whatever the terms come to be, is this the framework for how we should think about terms for other streaming agreements?

Speaker #2: Yeah. So I think in terms of at this point, we're really just estimating the revenue. Based on the eventual arbitration outcome, and as far as getting into the terms, I can't really say more than what we've commented on at this point.

Rich Brezski: I think, at this point, we're really just estimating the revenue, based on the eventual arbitration outcome. As far as getting into the terms, I can't really say more than what we've commented on at this point.

Speaker #4: Okay. Got it. Thanks, guys. And congrats again.

Kevin Garrigan: Okay. Got it. Thanks, guys, and congrats again.

Speaker #2: Thanks, Kevin.

Rich Brezski: Thanks, Kevin.

Speaker #3: And your next question comes from the line of Andrew Soderstrom. Andrew Soderstrom. Please go ahead.

Operator: Your next question comes from the line of Anja Soderstrom. Anja Soderstrom, please go ahead.

Speaker #5: Thank you. And thank you for taking my questions and congrats on the great quarter and the Amazon agreement. Hopefully, other will follow suit soon.

Anja Soderstrom: Thank you. Thank you for taking my questions and congrats on the great quarter and the Amazon agreement. Hopefully other will follow suit soon. Most of my questions have been addressed, but I'm curious about the capital allocation. I saw you were light on the buybacks for the quarter, and you also have some short-term debt coming due. How should we think about your capital allocation priorities?

Speaker #5: Most of my questions have been addressed, but I'm curious about the capital allocation. I saw you were light on the buybacks for the quarter, and you also have some short-term debt coming due.

Speaker #5: How should we think about your capital allocation priorities?

Speaker #2: Yeah. So, Anya, when we think about capital allocation, we think we have a great business. We want to keep investing in it, so that's certainly paramount.

Rich Brezski: Anja, when we think about capital allocation, we think we have a great business. We want to keep investing in it. That's certainly paramount. We want to make sure that we keep a strong balance sheet because we do have these enforcement actions against very large companies. We do want to return capital to shareholders. We continued to do so in Q2. As far as the level and timing, that's always subject to a number of different factors. I always say, if you broaden the aperture, we're always doing quite a bit there. If you focus on any small window, you're not necessarily going to get the whole picture. In terms of the debt, back in Q1, we had about $80 million of early conversions and paid that off.

Speaker #2: We want to make sure that we keep a strong balance sheet, because we do have these enforcement actions against very large companies. And we do want to return capital to shareholders—we did so, and we continue to do so, in Q2.

Speaker #2: As far as the level and timing, that's always subject to a number of different factors. I always say if you're brought in the aperture, we're always doing quite a bit there.

Speaker #2: If you focus on any small window, you're not necessarily going to get the whole picture. And then in terms of the debt, back in Q1, we had about $80 million of early conversions and paid that off.

Speaker #2: You'll see in the Q that we talked about another $83 million that's in the process. And it's expected to close in terms of early conversions.

Rich Brezski: You'll see in the Q that we talked about another $83 million that's in the process and is expected to close in terms of early conversions in the next quarter. It's something, part of our capital structure that we're always looking at. Those conversions are actually driven by the debt holders. We're happy to remove the debt.

Speaker #2: In the next quarter. So it's something, as part of our capital structure, that we're always looking at. Those conversions are actually driven by the debt holders.

Speaker #2: But we're happy to remove the debt.

Speaker #5: Okay. Thank you. And I'll also just curious with the Amazon arbitration, process you said you expected to take 18 to 24 months. What's the how do you come up with that timeframe?

Operator 1: Okay. Thank you. I'm also just curious with the Amazon arbitration process, you said you expected to take 18 to 24 months. How do you come up with that timeframe, and can you remind me how long the arbitration took for Samsung?

Anja Soderstrom: Okay. Thank you. I'm also just curious with the Amazon arbitration process, you said you expected to take 18 to 24 months. How do you come up with that timeframe, and can you remind me how long the arbitration took for Samsung?

Speaker #5: And can you remind me how long the arbitration took for Samsung?

Speaker #1: Yeah, so, Anya, this learn—so generally speaking, these processes work like this, right? We are currently trying to get some of the terms resolved.

Liren Chen: Anja, this is Liren. Generally speaking, this process works like this. We are currently trying to get some of the term resolved. Whatever term we could not agree upon go to the arbitration. There will be a process to select the arbitrator. I think we discussed this in the prior call before. Both party come up with one arbitrator and collectively they pick the third one, and that process can take a little bit of time. Afterwards, both parties will present their evidence to the arbitrator, and that process can, generally speaking, take roughly 12 to 18 months. If we add the front end of the process combined with the whole thing, we are currently estimating to be about 18 to 24 months.

Speaker #1: And then whatever term we could not agree upon go to the arbitration. And then there will be a process to select the arbitrator. I think we described this in the protocol before.

Speaker #1: Either party or both parties come up with one arbitrator, and collectively they pick the third one. That process can take a little bit of time.

Speaker #1: And afterwards, both parties will present their evidence to the arbitrator, and that process can, generally speaking, take roughly 12 to 18 months. So, if we add the front end of the process, combined with the whole thing, we are currently estimating it to be about 18 to 24 months.

Speaker #1: And that's pretty much aligned with our Samsung experience. And that's also well aligned with our Lenovo experience regarding timeline.

Liren Chen: That's pretty much aligned with our Samsung experience, and that's also well aligned with our Lenovo experience regarding timeline.

Speaker #5: Okay. Thank you. That was all for me.

Operator 1: Okay. Thank you. That was all for me.

Anja Soderstrom: Okay. Thank you. That was all for me.

Speaker #1: Thank you.

Liren Chen: Thank you.

Speaker #3: And there are no further questions at this time. I will now turn the conference back over to Lirin Chen our CEO for the closing remarks.

Operator: There are no further questions at this time. I will now turn the conference back over to Liren Chen, our CEO, for the closing remarks.

Speaker #1: Thank you, Kathleen. Before we close, I'd like to again thank our colleagues for their dedication and contribution to InterDigital, as well as our many partners and customers for a strong quarter.

Liren Chen: Thank you, Kathleen. Before we close, I'd like to again thank all our colleagues for their dedication and contribution to InterDigital, as well as our many partners and customers for a strong quarter. Thank you all for everyone who joined the call today, and we look forward to updating you on our progress next quarter.

Speaker #1: Thank you all, and thank you to everyone who joined the call today. We look forward to updating you on our progress next quarter.

Operator: Ladies and gentlemen, that concludes today's call. Thank you everyone for joining. You may now disconnect.

Q2 2026 InterDigital Inc Earnings Call

Request DemoDemo

InterDigital

Earnings