InterDigital, Inc. Net Income surged on 114% and Revenue surged on 12.6%
02/18/2021 • About InterDigital, Inc. (
$IDCC) • By InTwits
InterDigital, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- InterDigital, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's in pair with industry average of 7.3%
- CAPEX is quite volatile: $12m in 2020, $5m in 2019, $3m in 2018, $2m in 2017, $6m in 2016
- In the last 5 years the company invested considerably less than D&A: $27m vs. $176m
- The company has potentially unprofitable business model: ROIC is 4.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 12.6%. Revenue growth showed slowdown in 20Q4 - it was -11.1% YoY. During the last 5 years Revenue growth bottomed in 2018 at -42.3% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.1 pp from -6.2% to 0.91% in 2020. EBITDA Margin stuck to a declining trend at -9.8 pp per annum in 2016-2020.
Gross Margin increased slightly on 1.2 pp from 51.4% to 52.6% in 2020. Gross Margin declined at -8.8 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 2.4 pp from 16.1% to 13.6% in 2020. During the last 5 years SG&A as a % of Revenue topped in 2018 at 16.6% and was declining since that time.
Net Income margin increased on 5.9 pp from 6.6% to 12.5% in 2020. Net Income margin followed a declining trend at -9.4 pp per annum in 2016-2020.
Investments (CAPEX, working capital and M&A)
In 2020 InterDigital, Inc. had CAPEX/Revenue of 3.3%. CAPEX/Revenue increased on 2.9 pp from 0.39% in 2017 to 3.3% in 2020. For the last three years the average CAPEX/Revenue was 1.8%. During the last 5 years CAPEX as a % of Revenue bottomed in 2017 at 0.39% and was growing since that time.
Return on investment
The company operates at low ROIC (4.6%) and ROE (5.8%). ROIC increased slightly on 1.5 pp from 3.1% to 4.6% in 2020. ROE increased on 3.4 pp from 2.5% to 5.8% in 2020. ROIC stuck to a declining trend at -10.0 pp per annum in 2016-2020. ROE declined at -10.7 pp per annum in 2016-2020.
Leverage (Debt)
Debt level is -0.6x Net Debt / EBITDA and 2.8x Debt / EBITDA. Debt dropped on 16.5% while cash dropped on 36.5%.
InterDigital, Inc. has no short term refinancing risk: cash is higher than short term debt (14,936.1%).
Valuation and dividends
InterDigital, Inc.'s trades at EV/EBITDA 13.2x and P/E 43.5x.
Management team
The company's CEO is William J Merritt. William J Merritt has 13 years tenure with the company.
Financial and operational results
FY ended 12/31/2020
InterDigital, Inc. ($IDCC) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 665.9 | 532.9 | 307.4 | 318.9 | 359.0 | 12.6% |
| Gross Profit | 552.3 | 421.8 | 183.3 | 164.0 | 188.8 | 15.1% |
| SG&A | 46.3 | 49.6 | 51.0 | 51.3 | 49.0 | -4.5% |
| EBITDA | 490.1 | 358.5 | 128.7 | 119.7 | 141.7 | 18.3% |
| EBIT | 437.3 | 301.5 | 62.6 | | | |
| Interest expence | 21.1 | 17.8 | 36.0 | | | |
| Tax | 116.8 | 121.7 | -27.4 | | | |
| Net Income | 309.0 | 174.3 | 63.9 | 20.9 | 44.8 | 114.1% |
| Stock Based Compensation | 21.8 | 18.1 | 7.1 | | | |
Balance Sheet
|
|---|
| Cash | 404.1 | 433.0 | 475.1 | 745.5 | 473.5 | -36.5% |
| Accounts Receivable | 228.5 | 216.3 | 35.0 | | | |
| Accounts Payable | 14.1 | 10.3 | 19.4 | | | |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 97.6 | 3.2 | -96.8% |
| Long Term Debt | 272.0 | 285.1 | 317.4 | 374.7 | 391.0 | 4.4% |
Cash flow
|
|---|
| Capex | 5.9 | 2.1 | 2.6 | 4.5 | 11.8 | 161.5% |
| Dividends | 31.0 | 43.0 | 48.0 | | | |
| Acquisitions | 48.0 | | 143.0 | | | |
Ratios
|
|---|
| Revenue growth | 50.8% | -20.0% | -42.3% | 3.7% | 12.6% | |
| EBITDA growth | 91.2% | -26.8% | -64.1% | -7.0% | 18.3% | |
|
|---|
| Gross Margin | 82.9% | 79.1% | 59.6% | 51.4% | 52.6% | 1.2% |
| EBITDA Margin | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% | 1.9% |
| EBIT Margin | 65.7% | 56.6% | 20.4% | | |
| SG&A, % of revenue | 6.9% | 9.3% | 16.6% | 16.1% | 13.6% | -2.4% |
| SBC, % of revenue | 3.3% | 3.4% | 2.3% | | |
| Net Income Margin | 46.4% | 32.7% | 20.8% | 6.6% | 12.5% | 5.9% |
| CAPEX, % of revenue | 0.9% | 0.4% | 0.8% | 1.4% | 3.3% | 1.9% |
|
|---|
| ROIC | 42.7% | 27.3% | 5.1% | 3.1% | 4.6% | 1.5% |
| ROE | 49.4% | 21.9% | 7.2% | 2.5% | 5.8% | 3.4% |
| Net Debt/EBITDA | -0.3x | -0.4x | -1.2x | -2.3x | -0.6x | 1.7x |
| Interest expence / Average debt | 7.8% | 6.4% | 11.9% | | | |
People
|
|---|
| Insider ownership | 1.3% | 1.3% | 1.3% | | | |
| Employees | 360 | 350 | 390 | | | |
| Revenue/Employee, th. $ | 1,850 | 1,523 | 788 | | | |
InterDigital, Inc. ($IDCC) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 76 | 104 | 87 | 91 | | 11.0% | 38.2% | 20.6% | -11.1% |
| EBITDA | 24 | 53 | 36 | 23 | | 23.1% | 82.3% | 48.8% | -50.7% |
| Net Income | 0 | 22 | 24 | -1 | | - | 187.4% | 964.6% | -109.8% |
Balance Sheet
|
|---|
| Cash | 516 | 670 | 747 | 473 | | 2.5% | 26.1% | 1.5% | -36.5% |
| Short Term Debt | 0 | 0 | 0 | 3 | | -100.0% | -100.0% | -100.0% | -96.8% |
| Long Term Debt | 355 | 359 | 364 | 391 | | 1,009.7% | -0.1% | 1.0% | 4.4% |
Ratios
|
|---|
| Gross Margin | 47.4% | 63.0% | 53.9% | 43.8% | | -0.1% | 12.4% | 1.8% | -10.4% |
| EBITDA Margin | 31.3% | 50.8% | 41.2% | 25.5% | | 3.1% | 12.3% | 7.8% | -20.4% |
| Net Income Margin | 0.2% | 21.3% | 27.2% | -1.5% | | 4.2% | 11.1% | 24.1% | -15.0% |
Peers in Communications Equipment
Below we provide InterDigital, Inc. benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.6% | 3.5% | 3.7% | 2.1% |
|---|
| InterDigital, Inc. ($IDCC) | - | -20.0% | -42.3% | 3.7% | 12.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.7% | 41.0% | 40.5% | 43.2% | 44.9% |
|---|
| InterDigital, Inc. ($IDCC) | 82.9% | 79.1% | 59.6% | 51.4% | 52.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| AudioCodes Ltd. ($AUDC) | 8.0% | 8.1% | 10.8% | 0.3% | 18.4% |
| |
|---|
| Median (32 companies) | 5.5% | 6.0% | 4.6% | 3.1% | 8.8% |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 2.0% | 1.9% | 1.7% | 2.5% | 2.0% |
|---|
| InterDigital, Inc. ($IDCC) | 0.9% | 0.4% | 0.8% | 1.4% | 3.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.3% | -1.6% | 1.9% |
|---|
| InterDigital, Inc. ($IDCC) | 42.7% | 27.3% | 5.1% | 3.1% | 4.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (24 companies) | -0.9x | -0.8x | 0.2x | -0.1x | -0.3x |
|---|
| InterDigital, Inc. ($IDCC) | -0.3x | -0.4x | -1.2x | -2.3x | -0.6x |
