InterDigital, Inc. (NASDAQ: IDCC)

Sector: Technology Industry: Software - Application CIK: 0001405495
Market Cap 7.95 Bn
P/B 7.23
P/E 16.00
P/S 8.56
ROIC (Qtr) 32.65
Div Yield % 0.99
Rev 1y % (Qtr) 27.98
Total Debt (Qtr) 473.40 Mn
Debt/Equity (Qtr) 0.43

About

InterDigital, Inc., often recognized by its ticker symbol IDCC, operates within the technology industry, specifically focusing on wireless, video, artificial intelligence (AI), and related technologies. The company is a renowned research and development entity, known for designing and developing fundamental technologies that enable immersive experiences in various communication and entertainment products and services. InterDigital's primary business activities revolve around the development of cutting-edge technologies, particularly in the realms...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 673.09M provides robust 1.42x coverage of total debt 473.40M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 673.09M provides strong 13.88x coverage of stock compensation 48.48M, indicating sustainable incentive practices.
  • Operating cash flow of 673.09M provides exceptional 16.51x coverage of interest expenses 40.76M, showing strong debt service capability.
  • Strong tangible asset base of 1.83B provides 3.86x coverage of total debt 473.40M, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 673.09M provides 9.83x coverage of SG&A expenses 68.44M, showing efficient operational cost management.

Bear case

  • Operating cash flow of 673.09M barely covers its investment activities of (66.84M), with a coverage ratio of -10.07, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 673.09M provides thin coverage of dividend payments of (54.02M) with a -12.46 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 590.28M represents just -160.79x of debt issuance (3.67M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 673.09M is outpaced by equity issuance of (59.32M) (-11.35 ratio), indicating concerning reliance on equity markets for funding operations.
  • Short-term investments of 422.87M exceed receivables of 160.64M by 2.63x, indicating potentially inefficient capital allocation given collection cycle needs.

Geographical Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 288.31 Bn 34.60 6.72 10.73 Bn
2 CRM Salesforce, Inc. 248.32 Bn 34.38 6.16 11.14 Bn
3 SHOP Shopify Inc. 212.27 Bn 119.19 19.85 1.12 Bn
4 INTU Intuit Inc. 180.73 Bn 43.89 9.30 6.78 Bn
5 UBER Uber Technologies, Inc 178.38 Bn 10.72 3.60 12.19 Bn
6 NOW ServiceNow, Inc. 146.98 Bn 84.91 11.60 2.40 Bn
7 ADBE Adobe Inc. 144.48 Bn 20.77 6.23 6.64 Bn
8 ADP Automatic Data Processing Inc 108.20 Bn 26.16 5.18 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.69 2.65
EV to Cash from Ops. EV/CFO 11.74 13.37
EV to Debt EV to Debt 16.69 57.69
EV to EBIT EV/EBIT 12.89 19.12
EV to EBITDA EV/EBITDA 12.14 15.00
EV to Free Cash Flow [EV/FCF] EV/FCF 13.39 14.69
EV to Market Cap EV to Market Cap 0.99 -92.28
EV to Revenue EV/Rev 8.51 4.60
Price to Book Value [P/B] P/B 7.23 4.26
Price to Earnings [P/E] P/E 16.00 -136.90
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 9.20 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 10.90 4.25
Dividend per Basic Share Div per Share (Qtr) 2.35 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 10.27 2.52
Interest Coverage Int. cover (Qtr) 15.04 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -69.35 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 109.50 9,763.58
Dividend Growth (1y) % Div 1y % (Qtr) 42.42 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 77.09 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 74.22 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) 74.50 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) 85.01 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) 84.70 123.84
FCF Growth (1y) % FCF 1y % (Qtr) 8,322.92 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 79.61 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.43 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.07 0.02
Cash Ratio Cash Ratio (Qtr) 1.07 3.75
Current Ratio Curr Ratio (Qtr) 1.89 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 0.43 0.17
Interest Cover Ratio Int Coverage (Qtr) 15.04 -52.32
Times Interest Earned Times Interest Earned (Qtr) 15.04 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 74.10 -100.06
EBIT Margin % EBIT Margin % (Qtr) 66.02 -164.24
EBT Margin % EBT Margin % (Qtr) 61.63 -116.94
Gross Margin % Gross Margin % (Qtr) 69.40 58.20
Net Profit Margin % Net Margin % (Qtr) 53.50 -121.65