How did IDCC's Q4 earnings surprise investors?

InterDigital Corporation (IDCC) surprised investors with its strong Q4 2024 earnings, reflecting record-breaking revenue and robust financial metrics despite challenges:

1. **Revenue Surge**: InterDigital reported a 140% year-over-year increase in revenue for Q4 2024, reaching $253 million, significantly surpassing the estimated $244.23 million. This growth was fueled by new licensing agreements with major companies and a 58% increase in annual revenue to $869 million.
2. **Net Income and EPS**: The company posted a net income of $133.11 million for Q4 2024, marking a significant 241% rise compared to the previous year. The earnings per share (EPS) for the quarter was $4.09, which, although slightly below the estimated $4.12, reflected a 190% increase from the prior year. The annual EPS of $12.07 was close to the estimated $12.18.
3. **Analyst Consensus and Stock Reaction**: Prior to the earnings release, there were no available data on the analyst consensus rating for Q4 2024. However, following the announcement of earnings, InterDigital's stock surged, jumping 16.5% to close at $212.62, indicating investor confidence and market approval of the company's performance.
4. **Challenges and Outlook**: Despite the strong performance, InterDigital acknowledged challenges, including ongoing litigation with Disney, contract expirations, and uncertainties in arbitration outcomes. For 2025, the company guided total revenue of $660 million to $760 million, adjusted EBITDA of $400 million to $495 million, and non-GAAP EPS of $9.69 to $12.92, suggesting a positive outlook with anticipated continued growth.

In conclusion, InterDigital's Q4 2024 earnings exceeded investor expectations in terms of revenue and profitability, leading to a positive market reaction despite acknowledged challenges.