InterDigital Raises Q4 Revenue Guidance On Licensee Addition
Zacks Investment Research | Jan 06, 2020 08:21PM ET
InterDigital, Inc. (NASDAQ:IDCC) recently raised revenue guidance for fourth-quarter 2019 to better reflect incremental revenues from a new licensee. After missing top-line estimates in the third quarter, the higher revenue expectations for the to-be-reported quarter reflect operating leverage of the company’s business model.
Management currently expects fourth-quarter revenues to lie within $92 million to $100 million, up from prior expectations of $83-$95 million. The improved outlook includes recurring revenues in the range of $74 million to $77 million compared with previous expectations of $74 million to $78 million.
InterDigital expects operating expenses to increase $11-$14 million on a sequential basis. The revised guidance is primarily attributable to a new consumer electronics licensee, which the company signed in the second half of December.
Notably, InterDigital’s commitment toward licensing its broad portfolio of technologies to wireless terminal equipment makers, which allows it to expand its core market capability, is laudable. The company has leading companies such as Huawei, Samsung (KS:005930), LG and Apple (NASDAQ:AAPL) under its licensing agreement. Consequently, it expects to generate healthy revenues from patent licensing in the forthcoming quarters as well.
InterDigital’s global footprint, diversified product portfolio and ability to penetrate in different markets are impressive. Apart from the company’s strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive considerable value, considering the massive size of the market it licenses. Furthermore, the company remains committed to pursuing strategic acquisitions in order to drive its product portfolio and boost organic growth.
However, the stock has lost 19.8% over the past year, while the Zacks Investment Research
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