Second quarter 2026
Filed Jul 30, 2026First Streaming and Cloud Services agreement drives Q2 results above outlook; annualized recurring revenue at all-time high of $626 million, up 13% YoY; Company raises full year 2026 revenue outlook by $85 million.
Revenue, net income, diluted EPS, adjusted EBITDA, and non-GAAP earnings declined year over year, principally alongside lower catch-up revenue. However, annualized recurring revenue reached a record $625.7 million, Streaming and Cloud Services contributed $110.0 million, and the company raised its full-year outlook.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $260.2 million | – | (13)% |
| Operating expensesGAAP | $120.9 million | – | 27% |
| Net incomeGAAP | $116.4 million | – | (36)% |
| Net income marginGAAP | 45% | – | (15) ppt |
| Diluted EPSGAAP | $3.40 | – | (36)% |
| Adjusted EBITDAnon-GAAP | $184.1 million | – | (22)% |
| Adjusted EBITDA marginnon-GAAP | 71% | – | (8) ppt |
| Non-GAAP Net incomenon-GAAP | $141.4 million | – | (28)% |
| Non-GAAP EPSnon-GAAP | $4.62 | – | (29)% |
| Annualized recurring revenueother | $625.7 million | – | 13% |
| Catch-up revenueother | $103.7 million | – | (36)% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| SmartphoneRevenue by program. | $122.7 million | – | (48)% |
| CE, IoT/AutoRevenue by program; the company signed a new IoT license agreement with a leading fintech company covering point-of-sale devices. | $27.5 million | – | (58)% |
| Streaming and Cloud ServicesFirst Streaming and Cloud Services agreement, including an agreement with Amazon covering Amazon’s services and devices, including Amazon Prime Video, with final terms to be determined by binding arbitration. | $110.0 million | – | N/M |
| OtherRevenue by program. | $— | – | (100)% |
Q3 2026 and Full Year 2026 outlook
- RevenueQ3 2026: $154 - $158; Full Year 2026: $775 - $845
- NoteAdjusted EBITDA: Q3 2026 $86 - $92; Full Year 2026 $469 - $529
- NoteDiluted EPS: Q3 2026 $1.25 - $1.42; Full Year 2026 $7.91 - $9.67
- NoteNon-GAAP EPS: Q3 2026 $1.94 - $2.13; Full Year 2026 $10.85 - $12.81
- NotePrior Full Year 2026 revenue outlook: $675 - $775
- NotePrior Full Year 2026 Adjusted EBITDA outlook: $381 - $477
- NotePrior Full Year 2026 Diluted EPS outlook: $5.77 - $8.51
- NotePrior Full Year 2026 Non-GAAP EPS outlook: $8.74 - $11.84
Capital returns
- Second quarter 2026 share repurchases: <0.1 million shares; $23.0 million value.
- Second quarter 2026 dividends declared: $0.70 per share; $18.1 million value.
- Second quarter 2026 total return of capital: $41.1 million.
What drove it
- Revenue included $103.7 million of catch-up revenue, compared with $162.3 million of catch-up revenue in second quarter 2025.
- Annualized recurring revenue increased 13% year-over-year from $553.1 million to $625.7 million.
- The Amazon agreement covers Amazon’s services and devices, including Amazon Prime Video, with final terms to be determined by binding arbitration.
- InterDigital was awarded two injunctions against Disney from Europe’s Unified Patent Court covering eleven countries.
Concerns
- Catch-up revenue was $103.7 million, compared with $162.3 million in second quarter 2025.
- Smartphone revenue was $122.7 million, down (48)% year over year.
- CE, IoT/Auto revenue was $27.5 million, down (58)% year over year.
- Operating expenses increased $25.8 million primarily due to increases in intellectual property enforcement costs and share-based compensation driven by business successes.
- The outlook for third quarter 2026 covers existing licenses and does not include any new agreements or enforcement action results the company may sign or receive over the balance of the third quarter.
What to watch
- Final terms of the Amazon agreement, which are to be determined by binding arbitration.
- Expected contributions from new agreements and/or enforcement actions included in the full-year 2026 outlook.
- Settlement in third quarter 2026 of holders’ elected conversion of $80.3 million principal amount of the 2027 Notes.
- Intellectual property enforcement costs and share-based compensation.
Balance sheet and cash flow
- As of June 30, 2026, $380.0 million in principal of the 2027 Notes remains outstanding.
- Holders have elected to convert $80.3 million principal amount, which will settle in third quarter 2026.
- The current conversion rate of the Notes is 13.0351 shares of InterDigital’s Common Stock per $1,000 principal amount of the Notes.
- Warrants to acquire 6.0 million shares of common stock remain outstanding at a strike price of $105.43, subject to adjustment, and mature on a net-share basis beginning September 2027 through April 2028.
Analysis
InterDigital reported second-quarter 2026 GAAP revenue of $260.2 million, down (13)% from $300.6 million in second quarter 2025. The year-over-year comparison included lower catch-up revenue of $103.7 million versus $162.3 million. Revenue by program was led by Smartphone at $122.7 million and Streaming and Cloud Services at $110.0 million, while CE, IoT/Auto contributed $27.5 million.
The recurring revenue base strengthened despite the reported revenue decline. Annualized recurring revenue increased 13% year over year to $625.7 million from $553.1 million, which the company described as an all-time high. The first Streaming and Cloud Services agreement drove the quarter, and the Amazon agreement covers Amazon’s services and devices, including Amazon Prime Video, although final terms will be determined through binding arbitration.
Profitability declined from the prior-year quarter. GAAP net income was $116.4 million, down (36)%, and diluted EPS was $3.40, down (36)%. Adjusted EBITDA was $184.1 million, down (22)%, with adjusted EBITDA margin of 71% compared with 79%. Operating expenses increased to $120.9 million from $95.2 million, primarily due to intellectual property enforcement costs and share-based compensation driven by business successes.
Capital returns totaled $41.1 million during the second quarter, consisting of $23.0 million of share repurchases and $18.1 million of dividends declared at $0.70 per share. As of June 30, 2026, $380.0 million principal of the 2027 Notes remained outstanding, and holders had elected to convert $80.3 million principal amount for settlement in the third quarter. The company stated that no incremental outstanding shares will result from those conversions due to hedging arrangements.
Management raised full-year 2026 revenue guidance to $775 - $845 from $675 - $775 and raised full-year Adjusted EBITDA guidance to $469 - $529 from $381 - $477. It also initiated third-quarter revenue outlook of $154 - $158. The third-quarter outlook covers existing licenses only, while the full-year outlook includes expected contributions from new agreements and/or enforcement actions over the balance of the year.
Management, verbatim
We have delivered another outstanding quarter, with continued momentum across our business, including our new agreement with Amazon, driving annualized recurring revenue 1 to a record $626 million.
Liren Chen, InterDigital CEO and President
Building on the strength of our second quarter results, the increased business momentum, and the opportunity to make more progress over the balance of this year, we have raised the full year 2026 guidance to between $775 million and $845 million, an increase of $85 million at the midpoint.
Liren Chen, InterDigital CEO and President
Not in the filing
stated, not guessed- Gross profit and gross margin.
- Operating income and operating margin.
- Cash balance.
- Operating cash flow.
- Free cash flow.
- Q2 2026 tax rate.
- Prior-quarter comparisons for reported metrics.
- Q2 2026 performance versus prior-quarter guidance or prior full-year guidance, because a previous earnings release outlook was not provided.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.