What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-07 · 144 added, 120 removed, 646 unchanged (29% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating expenses:

9 unchanged sentences

Income before income taxes

Provision for income taxes

Provision for (benefit from) income taxes

Net income per share:

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Other comprehensive income (loss), net of tax:

Change in foreign currency translation adjustment

Net unrealized losses on available-for-sale debt securities

Other comprehensive loss, net of tax

Net unrealized gain (losses) on available-for-sale debt securities

Other comprehensive income (loss), net of tax

Total comprehensive income

2 unchanged sentences

(in thousands, except for par value)

September 30,

Current assets:

46 unchanged sentences

(in thousands)

Six Months Ended

June 30, 2024

June 30, 2023

Nine Months Ended

September 30, 2024

September 30, 2023

Cash flows from operating activities:

34 unchanged sentences

(in thousands, except per share amount)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Paid-In Capital

Treasury Stock

Other Comprehensive Loss

Other Comprehensive Income (Loss)

Stockholders' Equity

Balance at April 1, 2024

Other comprehensive loss

Balance at July 1, 2024

Other comprehensive income

Cash dividends paid on common stock ($ 0.05 per share)

4 unchanged sentences

Stock-based compensation expense

Balance at June 30, 2024

Six Months Ended June 30, 2024

Balance at September 30, 2024

Nine Months Ended September 30, 2024

Paid-In Capital

Treasury Stock

Other Comprehensive Loss

Other Comprehensive Income (Loss)

Stockholders' Equity

Balance at January 1, 2024

Other comprehensive loss

Other comprehensive income

Cash dividends paid on common stock ($ 0.15 per share)

4 unchanged sentences

Stock-based compensation expense

Balance at June 30, 2024

Balance at September 30, 2024

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

Total Company Stockholders' Equity

Three Months Ended June 30, 2023

Treasury Stock

Comprehensive Loss

Comprehensive Income (Loss)

Stockholders' Equity

Balance at April 1, 2023

Other comprehensive loss

Three Months Ended September 30, 2023

Balance at July 1, 2023

Other comprehensive income

Cash dividends paid on common stock ($ 0.05 per share)

Issuance of common stock in connection with employee stock purchase plan

Issuance of common stock in connection with exercise of stock options

Issuance of restricted stock, net of shares canceled

1 unchanged sentence

Stock-based compensation expense

Balance at June 30, 2023

Balance at September 30, 2023

Total Company Stockholders' Equity

Six Months Ended June 30, 2023

Paid-In Capital

2 unchanged sentences

Stockholders' Equity

Nine Months Ended September 30, 2023

Balance at January 1, 2023

6 unchanged sentences

Stock-based compensation expense

Balance at June 30, 2023

Balance at September 30, 2023

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

NOTE 1 – THE COMPANY AND BASIS OF PRESENTATION

(the “Company”), a Delaware corporation, is one of the industry’s largest intellectual property (“IP”) licensing platforms, with a diverse portfolio of media and semiconductor IP consisting of over 11,500 patents and patent applications worldwide.

(the “Company”), a Delaware corporation, is one of the industry’s largest intellectual property (“IP”) licensing platforms, with a diverse portfolio of media and semiconductor IP consisting of more than 11,750 patents and patent applications worldwide.

On October 1, 2022, the Company completed the previously announced separation (“the Separation”) of its product business into a separate, independent, publicly-traded company, Xperi Inc.

12 unchanged sentences

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments necessary (consisting of normal recurring adjustments) to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented.

The results of operations for the three months and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024 or any future period and the Company makes no representations related thereto.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024 or any future period and the Company makes no representations related thereto.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no significant changes in the Company’s significant accounting policies during the three and six months ended June 30, 2024, as compared to the significant accounting policies described in the Form 10-K.

There have been no significant changes in the Company’s significant accounting policies during the three and nine months ended September 30, 2024, as compared to the significant accounting policies described in the Form 10-K.

Use of Estimates

45 unchanged sentences

The Company generally licenses its IP portfolios under three models:

(i) fixed-fee Media IP licensing, (ii) fixed-fee or minimum guarantee Semiconductor IP licensing, and (iii) per-unit or per-subscriber Media IP or Semiconductor IP royalty licensing.

(i) per-unit or per-subscriber Media IP or Semiconductor IP royalty licensing, (ii) fixed-fee Media IP licensing, and (iii) fixed-fee or minimum guarantee Semiconductor IP licensing.

Per-unit or per-subscriber Media IP or Semiconductor IP royalty licensing

The Company recognizes revenue from per-unit or per-subscriber IP royalty licenses in the period in which the licensee’s sales or production are estimated to have occurred, which results in an adjustment to revenue when actual sales or production are subsequently reported by the licensee, which is generally in the month or quarter following usage or shipment.

Estimating customers’ monthly or quarterly royalties prior to receiving the royalty reports requires the Company to make significant assumptions and judgments related to forecasted trends and growth rates used to estimate quantities shipped or manufactured by customers, which could have a material impact on the amount of revenue it reports on a quarterly basis.

Fixed-fee Media IP licensing

7 unchanged sentences

For minimum guarantee contracts where the customer exceeds the minimum, the Company recognizes revenue relating to any additional per-unit fees in the periods it believes the customer has exceeded the minimum and adjusts the revenue based on actual usage once that is reported by the customer.

Per-unit or per-subscriber Media IP or Semiconductor IP royalty licensing

IP license contracts with multiple performance obligations

23 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Recurring revenue

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Semiconductor

6 unchanged sentences

Contract assets were recorded in the Condensed Consolidated Balance Sheets as follows (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

10 unchanged sentences

It is generally considered to be of high credit quality due to past collection history and the nature of the customers.

The allowance for credit losses at June 30, 2024 and December 31, 2023 wa s $ 0.7 million and $ 1.5 million, respectively and is presented as part of accounts receivable, net in the Condensed Consolidated Balance Sheets.

The allowance for credit losses at September 30, 2024 and December 31, 2023 wa s $ 0.7 million and $ 1.5 million, respectively and is presented as part of accounts receivable, net in the Condensed Consolidated Balance Sheets.

Additional Disclosures

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Revenue recognized in the period from:

2 unchanged sentences

(1) Performance obligations satisfied in previous periods consist mainly of fees associated with releases for past patent infringement, settlements of litigation during the period, and revenue from past royalties owed pursuant to expired or terminated IP license agreements.

For long-term and multi-year revenue contracts, the Company recorded revenue from the releases for past infringement during the three months and six months ended June 30, 2024 and 2023 and expects to record revenue from the prospective license in future periods.

For long-term and multi-year revenue contracts, the Company recorded revenue from the releases for past infringement during the three and nine months ended September 30, 2024 and 2023 and expects to record revenue from the prospective license in future periods.

Remaining revenue under contracts with performance obligations represents the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) under certain of the Company’s fixed fee arrangements (in thousands).

June 30, 2024

September 30, 2024

Revenue from contracts with performance obligations expected to be satisfied in:

2 unchanged sentences

Other current assets consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

4 unchanged sentences

Property and equipment, net, consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

5 unchanged sentences

Other long-term assets consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

2 unchanged sentences

Accrued liabilities consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

7 unchanged sentences

Other long-term liabilities consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

NOTE 5 – FINANCIAL INSTRUMENTS

The Company has investments in debt securities, which include corporate bonds and notes, treasury and agency notes and bills, commercial paper, certificates of deposit, and in equity securities consisting of money market funds.

The Company has investments in debt securities, which include corporate bonds and notes, treasury and agency notes and bills, commercial paper, and in equity securities consisting of money market funds.

The Company classifies its debt securities as available-for-sale (“AFS”), which are accounted for at fair value with credit related losses recognized as a provision for credit losses in its Consolidated Statements of Income and all non-credit related unrealized gains and losses recognized in accumulated other comprehensive income or loss on the Consolidated Balance Sheets.

Under ASU 2016-01 (Topic 321), equity securities are measured at fair value with unrealized gains and losses recognized in other income and expense, net, in the Consolidated Statements of Income.

The following is a summary of marketable securities at June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024

The following is a summary of marketable securities at September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

Allowance for Credit Losses

23 unchanged sentences

Total marketable securities

At June 30, 2024 and December 31, 2023, the Company ha d $ 94.5 mil lion and $ 83.6 million, respectively, in cash and cash equivalents and short-term investments.

At September 30, 2024 and December 31, 2023, the Company had $ 89.2 million and $ 83.6 million, respectively, in cash and cash equivalents and short-term investments.

A portion of these amounts was held in marketable securities, as shown above.

The remaining balances o f $ 59.0 mi llion and $ 48.8 million at June 30, 2024 and December 31, 2023, respectively, consisted of cash held in operating accounts not included in the tables above.

The remaining balances of $ 53.0 million and $ 48.8 million at September 30, 2024 and December 31, 2023, respectively, consisted of cash held in operating accounts not included in the tables above.

Debt Securities

The gross realized gains and losses on sales of marketable debt securities were immaterial during the three months and six months ended June 30, 2024 and 2023.

Unrealized losses on AFS debt securities were immaterial as of June 30, 2024 and December 31, 2023.

The gross realized gains and losses on sales of marketable debt securities were immaterial during the three and nine months ended September 30, 2024 and 2023.

Unrealized losses on AFS debt securities were immaterial as of September 30, 2024 and December 31, 2023.

The Company evaluated whether the decline in fair value has resulted from credit losses or other factors and concluded these amounts were related to temporary fluctuations in value of AFS securities and were due primarily to changes in interest rates and market conditions of the underlying securities.

The Compan y did no t rec ognize a provision for credit losses related to its AFS debt securities during the three months and six months ended June 30, 2024 and 2023, respectively.

The estimated fair value of AFS debt securities by contractual maturity at June 30, 2024 is shown below (in thousands).

The Compan y did no t rec ognize a provision for credit losses related to its AFS debt securities during the three and nine months ended September 30, 2024 and 2023, respectively.

The estimated fair value of AFS debt securities by contractual maturity at September 30, 2024 is shown below (in thousands).

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.

14 unchanged sentences

The Company calculates the fair value of its Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments, where available, or based on other observable inputs.

There were no significant transfers into or out of Level 1 or Level 2 that occurred between December 31, 2023 and June 30, 2024.

The following sets forth the fair value, and classification within the hierarchy, of the Company’s assets required to be measured at fair value on a recurring basis as of June 30, 2024 (in thousands):

There were no transfers into or out of Level 1 or Level 2 that occurred between December 31, 2023 and September 30, 2024.

The following sets forth the fair value, and classification within the hierarchy, of the Company’s assets required to be measured at fair value on a recurring basis as of September 30, 2024 (in thousands):

Active Markets

2 unchanged sentences

Commercial paper - debt securities (1)

Corporate bonds and notes - debt securities (2)

Treasury and agency notes and bills - debt securities (1)

Corporate bonds and notes - debt securities (2)

Money market funds - equity securities (3)

18 unchanged sentences

The carrying amounts and estimated fair values are as follows (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

2 unchanged sentences

Total long-term debt, net

(1) Carrying amounts of long-term debt are net of unamortized debt discount and issuance costs of $ 13.5 m illion and $ 15.6 million as of June 30, 2024 and December 31, 2023, respectively.

(1) Carrying amounts of long-term debt are net of unamortized debt discount and issuance costs of $ 12.7 m illion and $ 15.6 million as of September 30, 2024 and December 31, 2023, respectively.

See “Note 8 – Debt ” for additional information.

2 unchanged sentences

NOTE 7 – GOODWILL AND IDENTIFIED INTANGIBLE ASSETS

The carrying value of goodwill at June 30, 2024 and December 31, 2023 wa s $ 313.7 million.

There were no changes t o the carrying value of goodwill from January 1, through June 30, 2024.

The carrying value of goodwill at September 30, 2024 and December 31, 2023 wa s $ 313.7 million.

There were no changes t o the carrying value of goodwill from January 1, through September 30, 2024.

Goodwill at each reporting unit is evaluated for potential impairment annually, as of the beginning of the fourth quarter, and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable.

The process of evaluating goodwill for potential impairment is subjective and requires significant estimates, assumptions and judgments particularly related to the identification of reporting units, the assignment of assets and liabilities to reporting units and estimating the fair value of each reporting unit.

No impairment charges were recognized for the three months and six months ended June 30, 2024 and 2023.

No impairment charges were recognized during the three and nine months ended September 30, 2024 and 2023.

Identified Intangible Assets

Identified intangible assets consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

5 unchanged sentences

Total intangible assets

As of June 30, 2024, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):

As of September 30, 2024, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):

2024 (remaining 3 months)

1 unchanged sentence

The outstanding amounts of debt were as follows (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

8 unchanged sentences

The 2020 Credit Agreement initially provided for a five-year senior secured term loan B facility in an aggregate principal amount of $ 1,050 million (the “2020 Term Loan B Facility”).

In connection with Amendment No.

1, the Company made a voluntary prepayment of $ 50.6 million of the term loan outstanding under the 2020 Credit Agreement using cash on hand.

Amendment No.

7 unchanged sentences

3 (“Amendment No.

3”) to the 2020 Credit Agreement, which provided for, among other things, (i) a repricing of the 2020 Term Loan B Facility through a refinancing of the entire amount of the 2021 Refinanced Term Loan B with a new tranche of term loans (the “2024 Term Loan B”) in an aggregate principal amount of $ 561.1 million, (ii) a reduction of the interest rate margin applicable to such loans to (x) in the case of SOFR loans,

SOFR plus a margin of 3.00 % per annum and (y) in the case of base rate loans, 2.00 % per annum, (iii) a reduction in the excess cash flow mandatory payment thresholds and (iv) a prepayment premium of 1.00 % in connection with any repricing transaction with respect to the 2024 Term Loan B within six months of the closing date of Amendment No.

and (iv) a prepayment premium of 1.00 % in connection with any repricing transaction with respect to the 2024 Term Loan B within six months of the closing date of Amendment No.

The 2024 Term Loan B will mature on June 8, 2028 , the same date upon which the 2021 Refinanced Term Loan B matured prior to giving effect to Amendment No.

7 unchanged sentences

The 2020 Credit Agreement, as amended, requires the Company to maintain a total net leverage ratio of no greater than 3.00x in order access an annual basket from which to make restricted payments (such as dividend payments and share repurchases).

The Company was in compliance with all requirements as of June 30, 2024.

The Company was in compliance with all requirements as of September 30, 2024.

The 2020 Credit Agreement, as amended, also requires the Company to continue to make cash payments on an annual basis based on certain leverage ratios and excess cash flow generated for the immediately preceding fiscal year.

1 unchanged sentence

Interest Expense and Expected Principal Payments

At June 30, 2024, the Company had $ 549.1 million in total debt outstanding.

At September 30, 2024, the Company had $ 537.1 million in total debt outstanding.

There were also $ 12.7 million of unamortized debt discount and issuance costs recorded as a reduction from the carrying amount of the debt.

The interest rate on the 2024 Term Loan B as of June 30, 2024, including the amortization of debt discount and issuance costs, was 9.6 % and interest is payable monthly.

Interest expens e was $ 12.9 million and $ 25.4 million for the three and six months ended June 30, 2024, respectively .

Interest expense was $ 15.4 million and $ 31.3 million for the three and six months ended June 30, 2023, respectively.

Amortized debt discount and issuance costs, which were included in interest expense, amounted to $ 0.9 million and $ 1.6 million for the three and six months ended June 30, 2024, respectively, and $ 1.1 million and $ 2.2 million for the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, future minimum principal payments for long-term debt, excluding any additional principal payment required by the excess cash flow provision, are summarized as follows (in thousands):

The interest rate on the 2024 Term Loan B as of September 30, 2024, including the amortization of debt discount and issuance costs, was 9.2 % and interest is payable monthly.

Interest expense was $ 12.5 million and $ 39.6 million for the three and nine months ended September 30, 2024, respectively.

Interest expense was $ 15.5 million and $ 46.8 million for the three and nine months ended September 30, 2023, respectively.

Amortized debt discount and issuance costs, which were included in interest expense, amounted to $ 0.9 million and $ 2.4 million for the three and nine months ended September 30, 2024, respectively, and $ 1.0 million and $ 3.3 million for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, future minimum principal payments for long-term debt, excluding any additional principal payment required by the excess cash flow provision, are summarized as follows (in thousands):

2024 (remaining 3 months)

2 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Weighted average shares of common stock outstanding

16 unchanged sentences

stock awards, restricted stock awards, restricted stock units, performance awards and dividend equivalents) prior to May 9, 2024 are counted against shares available for issuance on a 1.5 to 1 ratio).

As of June 30, 2024, there wer e approximately 8.1 mi llion shares reserved for future grants under the 2020 EIP.

As of September 30, 2024, there wer e approximately 8.1 million shares reserved for future grants under the 2020 EIP.

The 2020 EIP provides for option grants designed as either incentive stock options or non-statutory options.

13 unchanged sentences

Options canceled / forfeited / expired

Balance at June 30, 2024

Vested and exercisable at June 30, 2024

Balance at September 30, 2024

Vested and exercisable at September 30, 2024

Restricted Stock Awards

Information with respect to outstanding restricted stock units (including both time-based vesting and performance-based vesting) as of June 30, 2024 is as follows (in thousands, except per share amounts):

Information with respect to outstanding restricted stock units (including both time-based vesting and performance-based vesting) as of September 30, 2024 is as follows (in thousands, except per share amounts):

Restricted Stock Awards

5 unchanged sentences

Awards canceled / forfeited

Balance at June 30, 2024

Balance at September 30, 2024

Performance Awards

13 unchanged sentences

All participants in the terminated offering will be transferred to the new offering period.

Due to the fair market value per share of Company’s common stock on November 30, 2023 as compared to the fair market value per share on June 1, 2023, the offering period was automatically terminated and a new 24-month offering period began on December 1, 2023 and will end on November 30, 2025.

At the 2022 Annual Stockholders Meeting on April 29, 2022, the Company’s stockholders approved an amendment to the 2020 ESPP and increased by 6.0 million the number of shares reserved for issuance.

As of June 30, 2024, the re were approximately 5.2 million shares reserved for grant under the Company’s 2020 ESPP.

As of September 30, 2024, the re were approximately 5.2 million shares reserved for grant under the Company’s 2020 ESPP.

Modification of Equity Awards

8 unchanged sentences

Stockholders of the Company’s common stock are entitled to receive dividends when declared by the Company’s board of directors (the “Board”).

During the period ended June 30, 2024 and 2023, quarterly dividends declared were $ 0.05 per common share, respectively.

During the periods ended September 30, 2024 and 2023, quarterly dividends declared were $ 0.05 per common share, respectively.

The capacity to pay dividends in the future depends on many factors, including the Company’s financial condition, results of operations, capital requirements, capital structure, industry practice and other business conditions that the Board considers relevant.

2 unchanged sentences

On April 22, 2021, the Board authorized an additional $ 100.0 million of purchases under the existing stock repurchase plan.

There were no shares repurchased during the three and six months ended June 30, 2024.

As of June 30, 2024, the Company had repurchased a total of approximately 10.0 million shares of common stock, since inception of the plan, at an average price of $ 17.24 per share for a total cost of $ 172.2 million.

There were no shares repurchased during the three and nine months ended September 30, 2024.

As of September 30, 2024, the Company had repurchased a total of approximately 10.0 million shares of common stock, since inception of the plan, at an average price of $ 17.24 per share for a total cost of $ 172.2 million.

The shares repurchased are recorded as treasury stock and are accounted for under the cost method.

No expiration date has been specified for this plan.

As of June 30, 2024, the total remaining amount available for repurchase under this plan w as $ 77.8 million.

As of September 30, 2024, the total remaining amount available for repurchase under this plan w as $ 77.8 million.

The Company may execute authorized repurchases from time to time under the plan.

5 unchanged sentences

However, these withheld shares are not included in common stock repurchases under the Company’s authorized share repurchase plan.

During the three months ended June 30, 2024 and 2023, the Company withhel d 0.1 m illion an d 0.1 m illion shares of common stock to satisfy $ 1.4 million and $ 0.9 million of required withholding taxes, respectively.

During the six months ended June 30, 2024 and 2023, the Company withh eld 0.8 m illion and 0.8 million shares of common stock to satisfy $ 9.1 mi llion and $ 7.5 million of required withholding taxes, respectively.

NOTE 11 – STOCK-BASED COMPENSATION EXPENSE

The effect of recording stock-based compensation (“SBC”) expense for the three and six months ended June 30, 2024 and 2023 is as follows (in thousands):

The effect of recording stock-based compensation (“SBC”) expense for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands):

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

1 unchanged sentence

Total stock-based compensation expense

There were no options granted during the three and six months ended June 30, 2024 and 2023 .

There were no options granted during the three and nine months ended September 30, 2024 and 2023.

The Company uses a Monte Carlo simulation to determine the grant date fair value of performance stock awards subject to market conditions, or market-based PSUs.

The following assumptions were used to value the restricted stock units subject to market conditions granted during the six months ended June 30, 2024 and 2023:

The following assumptions were used to value the restricted stock units subject to market conditions granted during the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

Expected life (years)

Risk-free interest rate

3.6 % - 4.5 %

Dividend yield

1.9 % - 2.3 %

Expected volatility

63.3 % - 68.5 %

Grants under the 2020 ESPP occur in June and December, as discussed in “Note 10 – Stockholders’ Equity ”.

The following assumptions were used to value the shares for these grants.

The following assumptions were used to value the shares for these grants during the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

Expected life (years)

4 unchanged sentences

The Company’s income tax provision and effective tax rate for interim periods are based on its estimated annual effective tax rate adjusted for discrete items during the period.

For the three and six months ended June 30, 2024, the Company recorded income tax expense of $ 2.9 million and $ 8.6 million, respectively.

For the three and six months ended June 30, 2023, the Company recorded income tax expense of $ 2.4 million and $ 14.2 million, respectively.

For the three and nine months ended September 30, 2024, the Company recorded income tax benefit of $( 2.5 ) million and expense of $ 6.1 million, respectively.

For the three and nine months ended September 30, 2023, the Company recorded income tax expense of $ 1.7 million and $ 15.9 million, respectively.

The effective tax rate varies from the 21 % U.S.

federal tax rate primarily due to unrealized foreign exchange gain or loss on prior year South Korea withholding tax refund claims.

The decrease in income tax expense for the six months ended June 30, 2024, as compared to the same period in the prior year was primarily due to a year to date decrease in pretax income.

The decrease in income tax expense for the nine months ended September 30, 2024, as compared to the same period in the prior year was primarily due to certain unrealized foreign exchange benefits associated with South Korea withholding tax refund claims.

NOTE 13 – LEASES

The Company leases office and research facilities and office equipment under operating leases which expire through 2032 .

The Company’s leases have remaining lease terms of one to eight years , some of which may include options to extend the leases for five years or longer, and some of which may include options to terminate the leases within the next five years or less.

The Company’s leases have remaining lease terms of less than one year to eight years , some of which may include options to extend the leases for five years or longer, and some of which may include options to terminate the leases within the next five years or less.

Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets;

5 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Fixed lease cost

3 unchanged sentences

Three Months Ended

September 30,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

ROU assets obtained in exchange for new lease liabilities:

Operating leases

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

Operating leases

Future minimum lease payments and related lease liabilities as of June 30, 2024 were as follows (in thousands):

Future minimum lease payments and related lease liabilities as of September 30, 2024 were as follows (in thousands):

Operating Lease Payments (1)

10 unchanged sentences

These arrangements primarily include unconditional purchase obligations to service providers.

As of June 30, 2024, the Company’s total future unconditional purchase obligations were approximately $ 3.0 million, including $ 1.2 milli on due in the remainder of 2024, $ 1.6 million due in 2025 and $ 0.2 million due thereafter.

As of September 30, 2024, the Company’s total future unconditional purchase obligations were approximately $ 6.0 million, including $ 1.6 million due in the remainder of 2024, $ 2.3 million due in 2025 and $ 2.1 million due thereafter.

Prior to the Separation, Adeia Media LLC, a subsidiary of the Company (“Adeia Media”), and a subsidiary of Xperi Inc.

4 unchanged sentences

The maximum potential amount of future payments subject to the guarantee is approximately $ 7.5 million per annum between 2024 and 2031 .

As of June 30, 2024 and December 31, 2023, the balance of the guarantee liability wa s $ 18.5 m illion.

The Company made no guarantee payment during the three and six months ended June 30, 2024.

During the three months and six months ended June 30, 2023, the Company made guarantee payments of $ 0.6 million and $ 1.1 million, respectively.

The Company recognized other income of $ 0.3 million during the six months ended June 30, 2023 in the Condensed Consolidated Statement of Operations as a result of a change in the carrying value of the guarantee liability.

As of September 30, 2024 and December 31, 2023, the balance of the guarantee liability wa s $ 17.1 million and 18.5 m illion, respectively.

Indemnifications

20 unchanged sentences

and Videotron G.P.

(together, “Videotron”) in Toronto, Canada, alleging infringement of six patents (“Videotron 1”).

(together, “Videotron”) in Toronto, Canada, alleging infringement of six patents.

On June 10, 2022, the Federal Court of Canada issued its decision in the case finding in favor of Videotron and its legacy “illico” platform.

7 unchanged sentences

On August 6, 2024, the Federal Court of Appeal of Canada issued a judgment in the appeal in which it dismissed the appeal.

On January 19, 2018, Adeia Media filed a patent infringement complaint against Bell Canada (and four of its affiliates) (collectively, “Bell”) in Toronto, Canada, alleging infringement of six patents (“Bell 1”).

On February 2, 2018, Adeia Media filed a patent infringement complaint against Telus Corporation (and two of its affiliates) (collectively, “Telus”) in Toronto, Canada, alleging infringement of the same six patents (“Telus 1”).

Bell 1and Telus 1 were heard together for purposes of pre-trial and trial proceedings.

Bell 1 and Telus 1 (each as defined herein) were heard together for purposes of pre-trial and trial proceedings.

On October 7, 2022, the Federal Court of Canada issued its decision in the two cases finding in favor of Bell and Telus and their respective IPTV services, Bell Fibe TV and Telus Optik TV.

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On August 6, 2024, the Federal Court of Appeal of Canada issued a judgment in the appeal in which it dismissed the appeal.

The Company is unable to predict the final outcome of other lawsuits, including other patent infringement lawsuits in Canada, to which it is a party and therefore cannot determine the likelihood of loss nor estimate a range of possible losses.

The Company is unable to predict the final outcome of other lawsuits, including other patent infringement lawsuits, to which it is a party and therefore cannot determine the likelihood of loss nor estimate a range of possible losses.

An adverse decision in any of these proceedings could significantly harm the Company's business and consolidated financial position, results of operations or cash flows.

The Company and its subsidiaries are involved in litigation matters and claims in the normal course of business.

In the past, the Company and its subsidiaries have litigated to enforce their respective patents and other intellectual property rights, to enforce the terms of license agreements, to protect trade secrets, to determine the validity and scope of the proprietary rights of others and to defend itself or its customers against claims of infringement or invalidity.

In the past, the Company and its subsidiaries have litigated to enforce their respective patents and other intellectual property rights, to enforce the terms of license agreements, to protect trade secrets, and to defend the Company’s patents against claims of invalidity.

The Company expects it or its subsidiaries will be involved in similar legal proceedings in the future, including proceedings regarding infringement of its patents, and proceedings to ensure proper and full payment of royalties by licensees under the terms of its license agreements.

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Europe and Middle East

For the three and six months ended June 30, 2024 and 2023, there wer e two and three customers, respectively, that each accounted for 10% or more of total revenue.

For the three months ended September 30, 2024 and 2023, there were two and four customers, respectively, that each accounted for 10% or more of total revenue.

For the nine months ended September 30, 2024 and 2023, there were two and two customers, respectively, that each accounted for 10% or more of total revenue.

The following table sets forth revenue generated from customers which comprise 10% or more of total revenue for the periods indicated:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

* denotes less than 10% of total revenue.

As of June 30, 2024, the Company had one customer repre senting 69 % of aggr egate accounts receivable.

As of September 30, 2024, the Company had two customers repre senting 41 % and 35 % of aggr egate accounts receivable, respectively.

At December 31, 2023, the Company had two customers representing 42 % and 28 % of aggregate accounts receivable, respectively.

As of June 30, 2024 and December 31, 2023, property and equipment, net, was all located in the U.S.

As of September 30, 2024 and December 31, 2023, property and equipment, net, was all located in the U.S.

NOTE 16 – SUBSEQUENT EVENTS

Declaration of Cash Dividends

On July 24, 2024 , the Board declared a cash dividend of $ 0.05 per share of common stock, payable on September 17, 2024 to the stockholders of record at the close of business on August 27, 2024 .

On October 23, 2024 , the Board declared a cash dividend of $ 0.05 per share of common stock, payable on December 18, 2024 to the stockholders of record at the close of business on November 27, 2024 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements