$46.00
$115.00
bear $46.00
base $88.00
bull $115.00
margin of safety $52.00
market price* $319.30
InterDigital earns money by licensing the patents behind wireless (3G/4G/5G), Wi-Fi and video-compression standards to companies that make phones, TVs, PCs and other connected devices. About 93% of 2025 revenue came from fixed-fee licenses, so revenue is contract-driven rather than tied to unit sales. The business spends about $210 million a year on research and portfolio development plus about $55 million a year on capitalized patent costs, and in return signs multi-year licenses. It has done this since the 1990s across several technology generations. How we measured earnings. We measure what the business produces for owners after stock-based pay, after the ongoing cost of maintaining its patent portfolio, and after stripping out the swings from receivables and deferred revenue timing. We treat capitalized patent costs as a real recurring cost, because the accounting amortization of patents is added back in cash flow. Reported figures look much higher than the underlying level: 2025 revenue of $834 million includes $277 million, and 2024 revenue of $868 million includes $460 million, of catch-up revenue, meaning back payments for earlier years that come from the Samsung arbitration award and from new licenses (vivo, Honor, HP, OPPO, Lenovo). That is real cash but it does not repeat. On the same basis the 2024 and 2025 earnings were about $13 and $11.5 per diluted share, and we do not treat them as the going level. Stripping catch-up revenue, the going level is about $195 million a year, or roughly $6.50 per share. That is consistent with 2022 and 2023 earnings of about $5.50 to $6.80 per share once the catch-up in 2023 is set aside, plus the contracts signed since. The share count of about 30 million we use is between basic shares (about 26 million) and the 34.5 million reported diluted count, which includes about 4 million shares from convertible notes that the company's hedge offsets. Base case, about $88 per share. Earnings hold at about $195 million a year for ten years. We credit no growth. What is secured: Samsung's eight-year license runs through 2030 at about $131 million a year, up 67% from before (the arbitration panel set total royalties at $1.05 billion); Xiaomi renewed for five years in January 2026; LG signed in January 2026; the company now licenses about 85% of the global smartphone market. We include the full-year effect of the Samsung step-up and deduct $31.7 million of recurring revenue from licenses that expired in 2025 and have not been renewed, and a further $15 million at risk in 2026. We leave out the full-year effect of licenses signed in 2025 and 2026 whose amounts are not disclosed. After year 10 we let earning power fade about 3% a year rather than end, because the company's record of renewing patent licenses through several technology generations is a named, ongoing mechanism, but patents expire and the record does not show growth. Last year's earnings per share fell about 12% from 2024 (in dollars they rose about 2%); the base case assumes no growth in the first year, so no reversal of the slowdown is assumed. Bear case, about $46 per share. Three customers were 61% of 2025 revenue (31%, 16% and 14%). In 2018 and 2019, when large license disputes and expiries hit, earnings fell to about $2 per share (about $65 to $70 million). The bear case has earnings at about $145 million for four years (expiring licenses not replaced, and higher enforcement costs from the Disney, Amazon and Transsion proceedings), then a large-renewal dispute cutting earnings to about $70 million for three years around the 2029 to 2030 contract expiries, then recovery only to about $100 million and fading 3% a year. The company has $460 million of 2027 convertible notes outstanding; it held about $754 million in cash at the end of 2025 plus short-term investments, so we do not see a solvency issue, and we do not subtract debt because interest is already in earnings. Bull case, about $115 per share. Earnings of about $240 million a year for ten years, then a 2% annual fade. That is the base level plus the full-year effect of licenses already signed but not yet reflected (vivo, Honor, HP, LG, Xiaomi renewal, and other 2025 signings) and renewals of the expiring licenses. It does not include revenue from video streaming (Disney, Amazon), because there is no licensed revenue there yet. What could make this wrong. The 2026 first half showed revenue of $466 million and net income of $192 million, which is strong, but the quarterly filing text was not available, so we could not separate recurring revenue from catch-up and left the level unchanged. If it proves recurring, value is higher. If the Samsung or another large licensee moves to litigation at renewal, the bear case applies. Amazon's UK proceeding seeking a court-set rate (partial trial September 2026) could set a lower video royalty than the company seeks.