InterDigital Q3 Revenue Rises 17% as ARR Hits Record $629 Million

InterDigital Inc. (Nasdaq: IDCC) reported third-quarter 2026 revenue and earnings well above its guidance ranges, supported by sharp growth in its consumer electronics, Internet of Things and automotive licensing business. Annualized recurring revenue reached a record $629 million, while the company issued fourth-quarter and full-year forecasts based solely on revenue already under contract.

Revenue rose 17% year over year to $193.4 million, exceeding InterDigital’s outlook of $154 million to $158 million. Adjusted EBITDA increased 25% to $131.3 million, compared with guidance of $86 million to $92 million, and the adjusted EBITDA margin expanded to 68% from 64% a year earlier.

GAAP diluted earnings were $2.34 per share, above the company’s projected range of $1.25 to $1.42. Non-GAAP earnings increased 22% year over year to $3.11 per share, compared with InterDigital’s outlook of $1.94 to $2.13. Net income attributable to the company was $80 million, up from $68 million in the prior-year quarter.

InterDigital generated $136 million of free cash flow during the quarter. The company returned or allocated $121 million of capital through an $83 million reduction in debt and $38 million of share repurchases and declared dividends. It also increased its quarterly dividend to $0.75 per share from $0.70.

Licensing activity broadens beyond smartphones

Revenue from consumer electronics, IoT and automotive licensing climbed 97% year over year to $56 million, making diversification beyond smartphones a central feature of the quarter. InterDigital also reached an agreement through binding arbitration with a major PC manufacturer, bringing the number of licensed vendors among the five largest PC suppliers to four. The company separately signed an IoT license with electric-vehicle charging company KEBA.

InterDigital said its smartphone licensing coverage was about 85% of estimated 2026 shipments, with eight of the 10 largest original equipment manufacturers under license and the three largest licensed through the end of the decade. In automotive licensing, the company estimated that about 85% of the 4G market was licensed, while identifying 5G vehicles as an area for value growth.

The company’s licensing and enforcement activities also included two additional injunctions against Disney from Europe’s Unified Patent Court. InterDigital said it has obtained eight injunctions in the eight patent cases against Disney decided to date.

InterDigital’s annualized recurring revenue rose 7% from $588 million a year earlier to an all-time high of $629 million. The company defines ARR as quarterly revenue excluding catch-up revenue, multiplied by four. Management cautioned that the measure is not a forecast and that actual recurring revenue over any 12-month period can vary based on factors outside the company’s control.

Contracted revenue underpins 2026 outlook

For the fourth quarter, InterDigital expects revenue of $154 million to $160 million and adjusted EBITDA of $80 million to $88 million. The company projects GAAP diluted earnings of $1.04 to $1.27 per share and non-GAAP earnings of $1.72 to $1.98 per share.

Full-year 2026 revenue is expected to range from $813 million to $819 million, with adjusted EBITDA of $507 million to $515 million. InterDigital forecasts full-year GAAP diluted earnings of $8.93 to $9.16 per share and non-GAAP earnings of $11.99 to $12.25 per share.

The outlook, dated Oct. 29, is based only on contracted revenue. It excludes any new licensing agreements or results from enforcement actions that the company may secure during the remainder of the fourth quarter.

Over the longer term, InterDigital continues to target more than $1 billion of ARR by 2030, representing an intended compound annual growth rate of at least 10%, along with an adjusted EBITDA margin above 60%. Its strategy calls for deeper smartphone licensing penetration and higher value at renewals, broader coverage in consumer electronics, IoT and automotive markets, and increased penetration among streaming and cloud-service providers.

InterDigital said it plans to continue prioritizing organic investment in research and its intellectual-property portfolio while maintaining balance-sheet strength, evaluating strategic acquisitions and returning excess cash to shareholders.

The company noted that its forecasts remain subject to risks and uncertainties that could cause actual performance to differ materially. Its licensing results can also depend on the timing and outcome of new agreements, arbitration, litigation and other enforcement proceedings, none of which are included in the current outlook unless already contracted.