North Wilmington-based InterDigital, Inc., a mobile technology research and development company, reported a loss in the first quarter, due in large part to costs associated with the acquisition of a patent licensing business and stock buybacks.
Shares of the company rose more than 6 percent during the week.
- First quarter 2019 recurring revenue was $74.2 million, a 16 percent increase compared to recurring revenue of $64.1 million in the first quarter of 2018. InterDigital recorded a $5.5 million net charge that was recorded in first quarter 2019, driven by the restructuring of an existing license agreement with a long-term customer.
- First quarter 2019 operating expenses were $68.8 million, compared to $57.3 million in the first quarter of 2018. The increase in operating expenses was primarily driven by $12.1 million in costs related to the acquisition of Technicolor SA’s patent licensing business and the pending acquisition of Technicolor’s
- First quarter 2019 net loss was $2.8 million, compared to net income of $30.2 million in the first quarter of 2018.
- From January 1, 2019 through March 31, 2019, the company repurchased 1.6 million shares of common stock under its stock repurchase program for a total cost of $109
- In first quarter 2019, the company recorded $30.8 million of cash used in operating activities, compared to $0.6 million in the first quarter of 2018. The company used $40.8 million of free cash flow in first quarter 2019, compared to $9 million of free cash flow used in first quarter 2018. These decreases were primarily driven by the timing of cash collections under fixed-fee agreements. Ending cash and short-term investments totaled $800 million.
- In the first quarter 2019, the company recognized a tax benefit of $1.8 million, for an effective tax rate of 29.9 percent. This is compared to a tax benefit of $4.9 million and an effective tax rate benefit of 20.6% during first quarter 2018.
“Our growth in recurring revenue, as well as the start of meaningful contribution from the consumer electronics business, underscores the tremendous growth potential of the new, more diversified InterDigital that we’ve built over the past year,” said William J. Merritt, CEO. “That growth, combined with the careful cost control that we continue to exhibit and that has been a hallmark of our company for many years, sets the stage for a significant increase in profitability and shareholder value.”
Interdigital does research into cellular networks and other areas and holds a large number of patents.
At times, the company, which has been around since the 1970s, has been accused of being a patent troll, a term used to describe companies that make money by acquiring and then engaging in patent litigation. Interdigital points to its internal research and development work as evidence that it does not fit that description.