InterDigital (NASDAQ: IDCC) reported Q4 EPS of $0.44, $0.17 better than the analyst estimate of $0.27. Revenue for the quarter came in at $102.2 million versus the consensus estimate of $95.44 million.

Fourth Quarter 2019 Financial Highlights

• Fourth quarter 2019 total revenue was $102.2 million, compared to $75.3 million in fourth quarter 2018. Fourth quarter 2019 recurring revenue was $77.5 million, compared to $73.7 million in fourth quarter 2018. This increase was driven by new agreements signed in fourth quarter 2019. Additionally, fourth quarter 2019 included $24.7 million of past sales, which was primarily attributable to new deals signed in the quarter.
• Fourth quarter 2019 operating expenses were $76.9 million, compared to $71.5 million in fourth quarter 2018. The increase was primarily driven by $7.0 million in intellectual property enforcement and non-patent litigation costs. The additional costs associated with our May 2019 acquisition of Technicolor's R&I division were mostly offset in fourth quarter 2019 by cost savings initiatives.
• Fourth quarter 2019 net income1 was $13.8 million, or $0.44 per diluted share compared to net income1 of $2.1 million, or $0.06 per diluted share, in fourth quarter 2018.
• In fourth quarter 2019, the company recorded $17.5 million of cash provided by operating activities, compared to $29.8 million of cash used in operating activities in fourth quarter 2018. The company generated $8.7 million of free cash flow2 in fourth quarter 2019, compared to free cash flow used of $38.7 million in fourth quarter 2018. The increase was primarily driven by timing of collections under fixed-fee agreements. Ending cash and short-term investments totaled $924.7 million.
• From October 1, 2019 through December 31, 2019, the company repurchased 0.4 million shares of common stock under its stock repurchase program for a total cost of approximately $25.0 million. $71.8 million remains available for repurchase subsequent to the increase to the buyback authorization in May 2019.

“In fourth quarter we signed new wireless licenses agreements with key players like Google and ZTE, providing solid revenue growth for our core business and also serving as additional validation of our rate structure highlighted in our transparency effort launched in first quarter 2020,” said William J. Merritt, President and CEO of InterDigital. “In the same quarter, we also signed a new license on the consumer electronics side. That success, combined with ongoing licensing discussions with other consumer electronics customers, allowed us to target the annual licensing potential of our new consumer electronics business at $150 million in 3 to 5 years. With the combined revenue opportunity of our wireless and consumer electronics licensing platforms reaching $650 million, our focus as we enter 2020 is firmly on driving revenue growth while maintaining the operating leverage of the business by meeting our expense targets.”

GUIDANCE:

InterDigital sees Q1 2020 revenue of $73-75 million, versus the consensus of $77.62 million.

• The company expects total first quarter 2020 revenue to be between $73 million and $75 million, comprised almost entirely of recurring revenue.
• This revenue guidance does not include the potential impact of any new patent license, technology solutions or patent sale agreements that may be signed, or any arbitration or dispute resolutions that may occur, during the balance of first quarter 2020.

For earnings history and earnings-related data on InterDigital (IDCC) click here.