What changed in this filing

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Item 1. Financial Statements

2025-05-06 compared with 2024-11-12 · 163 added, 249 removed, 541 unchanged (43% of the section changed)

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating expenses:

7 unchanged sentences

Other income and expense, net

Loss on debt extinguishment

Income before income taxes

Provision for (benefit from) income taxes

Provision for income taxes

Net income per share:

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Other comprehensive income (loss), net of tax:

Change in foreign currency translation adjustment

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

4 unchanged sentences

(in thousands, except for par value)

September 30,

Current assets:

1 unchanged sentence

Marketable securities

Accounts receivable, net of allowance for credit losses of $ 713 and $ 1,463 , respectively

Total cash, cash equivalents, and marketable securities

Accounts receivable, net of allowance for credit losses of $ 713

and $ 713 , respectively

Unbilled contracts receivable, net

35 unchanged sentences

15,880 shares)

Accumulated other comprehensive loss

Accumulated deficit

Accumulated other comprehensive income (loss)

Retained earnings

Total stockholders’ equity

3 unchanged sentences

(in thousands)

Nine Months Ended

September 30, 2024

September 30, 2023

Three Months Ended

March 31, 2025

March 31, 2024

Cash flows from operating activities:

3 unchanged sentences

Deferred income taxes

Loss on debt extinguishment

Amortization of debt issuance costs

5 unchanged sentences

Deferred revenue

Net cash from operating activities

Net cash provided by operating activities

Cash flows from investing activities:

3 unchanged sentences

Proceeds from maturities of investments

Net cash from investing activities

Net cash used in investing activities

Cash flows from financing activities:

Dividends paid

Repayment of debt

Payment of dividends

Principal payments on debt agreements

Proceeds from employee stock purchase program and exercise of stock options

Repurchases of common stock for tax withholdings on equity awards

Net cash from financing activities

Net increase (decrease) in cash and cash equivalents

Repurchases of common stock

Net cash used in financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

7 unchanged sentences

(in thousands, except per share amount)

Three Months Ended September 30, 2024

Paid-In Capital

Total Company Stockholders' Equity

Treasury Stock

Other Comprehensive Income (Loss)

Stockholders' Equity

Balance at July 1, 2024

Other comprehensive income

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

Issuance of common stock in connection with exercise of stock options

Issuance of common stock in connection with employee stock purchase plan

Issuance of restricted stock, net of shares canceled

Withholding taxes related to net share settlement of restricted awards

Stock-based compensation expense

Balance at September 30, 2024

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Paid-In Capital

Treasury Stock

Other Comprehensive Income (Loss)

Retained Earnings

Stockholders' Equity

3 unchanged sentences

Issuance of common stock in connection with exercise of stock options

Issuance of common stock in connection with employee stock purchase plan

Issuance of restricted stock, net of shares canceled

Withholding taxes related to net share settlement of restricted awards

Repurchases of common stock

Stock-based compensation expense

Balance at September 30, 2024

Balance at March 31, 2025

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

3 unchanged sentences

Treasury Stock

Comprehensive Income (Loss)

Stockholders' Equity

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 exercise of stock options

Issuance of restricted stock, net of shares canceled

Withholding taxes related to net share settlement of restricted awards

Stock-based compensation expense

Balance at September 30, 2023

Total Company Stockholders' Equity

Paid-In Capital

Treasury Stock

Three Months Ended March 31, 2024

Comprehensive Loss

Stockholders' Equity

Nine Months Ended September 30, 2023

Balance at January 1, 2024

2 unchanged sentences

Issuance of common stock in connection with exercise of stock options

Issuance of common stock in connection with employee stock purchase plan

Issuance of restricted stock, net of shares canceled

1 unchanged sentence

Stock-based compensation expense

Balance at September 30, 2023

Balance at March 31, 2024

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

2 unchanged sentences

(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 12,750 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.

(“Xperi Inc.”).

The Separation was structured as a spin-off, which was achieved through the Company’s distribution of 100 percent of the outstanding shares of Xperi Inc.’s common stock to holders of the Company’s common stock as of the close of business on the record date of September 21, 2022 (the “Record Date”).

Each Company stockholder of record received four shares of Xperi Inc.

common stock for every ten shares of Company common stock that it held on the Record Date.

Following the Separation, the Company retains no ownership in Xperi Inc., which is now listed under the ticker symbol “XPER” on the New York Stock Exchange.

Effective at the open of business on October 3, 2022, the Company’s shares of common stock, par value $ 0.001 per share, began trading on the Nasdaq Global Select Market under the new ticker symbol “ADEA”.

Additionally, as a result of the Separation, the Company changed its operational structure in the fourth quarter of 2022, resulting in one reportable segment, IP Licensing.

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information.

1 unchanged sentence

These Condensed Consolidated Financial Statements should be read in conjunction with the annual audited Consolidated Financial Statements and notes thereto included in the Form 10-K as of and for the year ended December 31, 2024.

The Company’s consolidated financial statements include the accounts of Adeia Inc.

and our wholly-owned subsidiaries.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

1 unchanged sentence

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 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.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2025 or any future period and the Company makes no representations related thereto.

The Company’s fiscal year ends on December 31 and employs a calendar month-end reporting period for its quarterly reporting.

The Company operates under one reportable segment, IP Licensing.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

There have been no significant changes in the Company’s significant accounting policies during the three months ended March 31, 2025, as compared to the significant accounting policies described in the Form 10-K.

Use of Estimates

3 unchanged sentences

Actual results experienced by the Company may differ from management’s estimates.

These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known.

These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known.

Recently Adopted Accounting Pronouncements

8 unchanged sentences

The adoption did no t have a material impact to the Company’s Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

1 unchanged sentence

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-07.

In the fourth quarter of 2024 , the Company adopted ASU 2023-07 on a retrospective basis, and the adoption did no t have a material impact to the Company’s Condensed Consolidated Financial Statements.

See “Note 15 – Segment Information ” for further detail.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

2 unchanged sentences

The Company is currently evaluating the impact of adopting ASU 2023-09.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregated information about certain income statement expense line items on an annual and interim basis.

ASU 2024-03 will be effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

The new standard permits early adoption and can be applied prospectively or retrospectively.

The Company is currently evaluating the impact of adopting ASU 2024-03.

NOTE 3 – REVENUE

Revenue Recognition

Revenue is recognized when control of the intellectual property (“IP”) rights is transferred to a customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for the licensing of the Company’s IP, which may include various combinations of IP rights and services which are generally capable of being distinct and accounted for as separate performance obligations.

Revenue is recognized when control of the IP rights is transferred to a customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for the licensing of the Company’s IP, which may include various combinations of IP rights and services which are generally capable of being distinct and accounted for as separate performance obligations.

In situations where foreign withholding taxes are withheld by the Company’s licensee, revenue is recognized gross of withholding taxes that are remitted directly by the licensee to a local tax authority.

32 unchanged sentences

In these arrangements, the Company allocates the transaction price between releases for past patent infringement claims and prospective licenses based on their relative standalone selling prices, which requires significant management judgment.

In determining the standalone selling price of each performance obligation, the Company considers such factors as the number of past and projected future subscribers, units shipped, and units manufactured, as well as the per-subscriber or per-unit licensing rates the Company generally receives from licensees of comparable sizes in comparable markets and geographies.

In determining the standalone selling price of each performance obligation, the Company considers such factors as the customer’s revenues, the number of past and projected future subscribers, units shipped, and units manufactured, as well as the per-subscriber or per-unit licensing rates the Company generally receives from licensees of comparable sizes in comparable markets and geographies.

As a release from past patent infringement claims is generally satisfied at execution of the contract, the transaction price allocated to the release from past patent infringement claims is generally recognized in the period the contract is executed.

8 unchanged sentences

Revenue Disaggregation

The following information depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors by disaggregating revenue by category, market vertical and geographic location (presented in “Note 15 – Segment and Geographic Information ”).

This information includes revenue recognized from contracts with customers and revenue from other sources, including sales-based or usage-based royalty revenues and fees associated with releases for past infringement.

8 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Recurring revenue

4 unchanged sentences

Three 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):

September 30, 2024

March 31, 2025

December 31, 2024

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 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.

The allowance for credit losses at March 31, 2025 and December 31, 2024 wa s $ 0.7 million and is presented as part of accounts receivable, net in the Condensed Consolidated Balance Sheets.

Additional Disclosures

1 unchanged sentence

Three Months Ended

September 30,

Nine Months Ended

September 30,

Revenue recognized in the period from:

1 unchanged sentence

Performance obligations satisfied in previous periods (1)

(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 and nine months ended September 30, 2024 and 2023 and expects to record revenue from the prospective license in future periods.

(1) Performance obligations satisfied in previous periods consist mainly of fees associated with releases for past patent infringement 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 ended March 31, 2025 and 2024 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).

September 30, 2024

March 31, 2025

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

2 unchanged sentences

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

September 30, 2024

March 31, 2025

December 31, 2024

4 unchanged sentences

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

September 30, 2024

March 31, 2025

December 31, 2024

2 unchanged sentences

Total property and equipment

accumulated depreciation and amortization

accumulated depreciation

Total property and equipment, net

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

September 30, 2024

March 31, 2025

December 31, 2024

2 unchanged sentences

Accrued liabilities consisted of the following (in thousands):

September 30, 2024

March 31, 2025

December 31, 2024

Employee compensation and benefits

Accrued expenses

Current portion of guarantee (1)

Accrued expenses

Current portion of operating lease liabilities

3 unchanged sentences

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

September 30, 2024

March 31, 2025

December 31, 2024

4 unchanged sentences

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 September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

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 Condensed Consolidated Statements of Income and all non-credit related unrealized gains and losses recognized in accumulated other comprehensive income or loss on the Condensed 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 Condensed Consolidated Statements of Income.

The following is a summary of marketable securities at March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

Allowance for Credit Losses

14 unchanged sentences

Commercial paper

Treasury and agency notes and bills

Corporate bonds and notes

Treasury and agency notes and bills

Total debt securities

5 unchanged sentences

Total marketable securities

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.

At March 31, 2025 and December 31, 2024, the Company had $ 116.5 million and $ 110.4 million, respectively, in cash and cash equivalents and marketable securities.

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

The remaining balances of $ 79.6 million and $ 74.0 million at March 31, 2025 and December 31, 2024, 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 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 gross realized gains and losses on sales of marketable debt securities were immaterial during the three months ended March 31, 2025 and 2024.

Unrealized losses on AFS debt securities were immaterial as of March 31, 2025 and December 31, 2024.

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 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).

The Compan y did no t rec ognize a provision for credit losses related to its AFS debt securities during the three months ended March 31, 2025 and 2024, respectively.

The estimated fair value of marketable debt securities by contractual maturity at March 31, 2025 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 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):

There were no significant transfers into or out of Level 1 or Level 2 that occurred between December 31, 2024 and March 31, 2025.

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 March 31, 2025 (in thousands):

Active Markets

1 unchanged sentence

Marketable securities

Money market funds - equity securities (1)

Corporate bonds and notes - debt securities (2)

Commercial paper - debt securities (3)

Treasury and agency notes and bills - debt securities (3)

Corporate bonds and notes - debt securities (2)

Money market funds - equity securities (3)

(1) Reported as AFS debt securities in the Condensed Consolidated Balance Sheet as these were purchased with original maturities of more than three months at date of purchase;

otherwise reported as cash and cash equivalents.

(2) Reported as AFS debt securities in the Condensed Consolidated Balance Sheet.

(1) Reported as cash and cash equivalents in the Condensed Consolidated Balance Sheet.

(2) Reported as marketable securities in the Condensed Consolidated Balance Sheet.

(3) Reported as marketable securities in the Condensed Consolidated Balance Sheet as these were purchased with original maturities of more than three months at date of purchase;

otherwise reported as cash and cash equivalents.

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 December 31, 2024 (in thousands):

2 unchanged sentences

Marketable securities

Money market funds - equity securities (1)

Corporate bonds and notes - debt securities (2)

Commercial paper - debt securities (3)

Treasury and agency notes and bills - debt securities (3)

Corporate bonds and notes - debt securities (2)

Money market funds - equity securities (3)

(1) Reported as AFS debt securities in the Condensed Consolidated Balance Sheet as these were purchased with original maturities of more than three months at date of purchase;

otherwise reported as cash and cash equivalents.

(2) Reported as AFS debt securities in the Condensed Consolidated Balance Sheet.

(1) Reported as cash and cash equivalents in the Condensed Consolidated Balance Sheet.

(2) Reported as marketable securities in the Condensed Consolidated Balance Sheet.

(3) Reported as marketable securities in the Condensed Consolidated Balance Sheet as these were purchased with original maturities of more than three months at date of purchase;

otherwise reported as cash and cash equivalents.

Financial Instruments Not Recorded at Fair Value

The Company’s long-term debt is carried at amortized cost and is measured at fair value on a quarterly basis for disclosure purposes.

The fair value of the Company’s long-term debt approximates its carrying value as of each of the periods described below.

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

September 30, 2024

March 31, 2025

December 31, 2024

2021 Refinanced Term Loan B (1)

2024 Term Loan B (1)

Total long-term debt, net

(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.

Long-term debt, net (1)

(1) Carrying amount s of long-term debt are net of unamortized debt discount and issuance costs of $ 10.8 million and $ 11.6 million as of March 31, 2025 and December 31, 2024, respectively.

See “Note 8 – Debt ” fo r additional information.

If reported at fair value in the Condensed Consolidated Balance Sheets, the Company’s debt would be classified within Level 2 of the fair value hierarchy.

1 unchanged sentence

NOTE 7 – GOODWILL AND IDENTIFIED INTANGIBLE ASSETS

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.

The carrying value of goodwill at March 31, 2025 and December 31, 2024 wa s $ 313.7 million.

There were no changes t o the carrying value of goodwill from January 1, through March 31, 2025.

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 during the three and nine months ended September 30, 2024 and 2023.

No impairment charges were recognized during the three months ended March 31, 2025 and 2024.

Identified Intangible Assets

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

September 30, 2024

March 31, 2025

December 31, 2024

5 unchanged sentences

Total intangible assets

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

As of March 31, 2025, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):

2025 (remaining 9 months)

1 unchanged sentence

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

September 30, 2024

March 31, 2025

December 31, 2024

2021 Refinanced Term Loan B

2024 Term Loan B

Long-term debt

Unamortized debt discount and issuance costs

14 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.

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.

On January 30, 2025, the Company entered into Amendment No.

4 (“Amendment No.

4”) 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 2024 Term Loan B (the “2025 Term Loan B”) in an aggregate principal amount of $ 487.1 million, (ii) a reduction of the interest rate margin applicable to such loans to (x) in the case of SOFR loans, 2.50 % per annum and (y) in the case of base rate loans, 1.50 % per annum and (iii) a prepayment premium of 1.00 % in connection with any repricing transaction with respect to the 2025 Term Loan B within six months of the closing date of Amendment No.

The 2025 Term Loan B will mature on June 8, 2028 , the same date upon which the 2024 Term Loan B matured prior to giving effect to Amendment No.

The obligations under the 2020 Credit Agreement, inclusive of any changes by Amendment No.

1, Amendment No.

2, Amendment No.

3 and Amendment No.

2 unchanged sentences

The 2020 Credit Agreement, as amended, also contains customary representations and warranties and affirmative and negative covenants that, among other things and subject to certain exceptions, restrict the ability of the Company and its subsidiaries to create or incur certain liens, incur or guarantee additional indebtedness, merge or consolidate with other companies, transfer or sell assets and make restricted payments.

The Separation did not require the Company to obtain any waivers under the 2020 Credit Agreement, and the Company completed the Separation in compliance with all of the covenants contained in the 2020 Credit Agreement.

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 September 30, 2024.

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

The Company was in compliance with all requirements under the 2020 Credit Agreement as of March 31, 2025.

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

At March 31, 2025 , the Company had $ 470.0 million in total debt outstanding.

There were also $ 10.8 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 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):

The interest rate on the Term Loan B as of March 31, 2025 , including the amortization of debt discount and issuance costs, was 7.9 % and interest is payable monthly.

Interest expense was $ 9.3 million and $ 14.0 million for the three months ended March 31, 2025 and 2024 , respectively.

Amortized debt discount and issuance costs, which were included in interest expense, amounted to $ 0.8 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, 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):

2025 (remaining 9 months)

2 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Weighted average shares of common stock outstanding

14 unchanged sentences

Under the 2020 EIP, the Company may grant equity-based awards to employees, non-employee directors, and consultants for services rendered to the Company (or any parent or subsidiary) in the form of stock options, stock awards, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents and performance awards (or any combination thereof).

At the Company’s 2024 Annual Stockholders Meeting on May 9, 2024, the Company’s stockholders approved an amendment and restatement of the 2020 EIP, which provided for (i) an increase of the number of shares reserved for issuance by 8,900,000 (from an initial share reserve of 16,800,000 under the prior 2020 EIP to 25,700,000 under the amended and restated 2020 EIP) and (ii) the removal of the “fungible share ratio” for future awards, such that all equity awards granted on or after May 9, 2024 will count on a one-to-one basis against the number of shares authorized for issuance under the 2020 EIP (whereas each share granted pursuant to “full value”

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

As of March 31, 2025, there wer e approximately 5.8 mi llion 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 September 30, 2024

Vested and exercisable at September 30, 2024

Balance at March 31, 2025

Vested and exercisable at March 31, 2025

Restricted Stock Awards

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):

Information with respect to outstanding restricted stock units (including both time-based vesting and performance-based vesting) as of March 31, 2025 is as follows (in thousands, except per share amounts):

Restricted Stock Awards

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Awards canceled / forfeited

Balance at September 30, 2024

Balance at March 31, 2025

Performance Awards

2 unchanged sentences

For performance awards subject to a market vesting condition (“market-based PSUs”), the fair value per award is fixed at the grant date and the amount of compensation expense is not adjusted during the performance period regardless of changes in the level of achievement of the market condition.

For performance-based awards incorporating a market condition, where the ultimate number of shares to be earned depends on the achievement of both performance and market conditions, the fair value is estimated on the date of grant using a Monte Carlo simulation model and the amount of compensation expense is adjusted if and when it is probable that the performance condition will be achieved.

Employee Stock Purchase Plans

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The first offering period commenced on September 1, 2020 and ended on August 31, 2022.

Due to the Separation, the next offering period under the 2020 ESPP plan commenced on December 1, 2022.

The next offering period under the 2020 ESPP plan commenced on December 1, 2022.

Each subsequent offering period under the 2020 ESPP will be twenty-four months long and will commence on each December 1 with four six-month purchase periods.

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

Modification of Equity Awards

In connection with the Separation and under the provisions of the existing plans described above, the Company’s outstanding stock options and equity awards were converted to units denominated in the equity of the Company, Xperi Inc., or both.

The number of units and exercise prices of outstanding stock options and equity awards were converted based on the conversion ratios established in the Employee Matters Agreement that the Company entered into in connection with the Separation.

The intent of the conversion ratios was to preserve the value of the awards immediately before and after the Separation.

Upon the Separation, employees holding stock options and equity awards denominated in the Company’s pre-Separation stock received a number of otherwise-similar stock options and awards in post-Separation Company’s stock and/or Xperi Inc.’s stock based on the conversion ratios outlined for each group of employees.

For purposes of the vesting of these equity awards, continued employment or service with the Company or with Xperi Inc.

is treated as continued employment for purposes of both the Company’s and Xperi Inc.’s equity awards and the vesting terms of each converted grant remained unchanged.

There were no changes to the plan terms described above with the exception that the price on the grant date, or October 1, 2022 was adjusted to exclude the value of Xperi Inc.

based on the conversion ratios applied to other equity awards.

As of March 31, 2025, the re were approximately 5.0 million shares reserved for grant under the Company’s 2020 ESPP.

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

During the periods ended March 31, 2025 and 2024, 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.

Stock Repurchase Programs

On June 12, 2020 the Board authorized a new stock repurchase program providing for the repurchase of up to $ 150.0 million of the Company’s Common Stock dependent on market conditions, share prices and other factors.

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 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.

In October 2024, the Company’s Board approved an increase of the existing share repurchase authorization up to a total of $ 200.0 million.

During the three months ended March 31, 2025, the Company repurchased a total of approximately 0.8 million shares of common stock, at an average price of $ 13.19 per share for a total cost of $ 10.0 million.

The Company did no t repurchase any shares during the three months ended March 31, 2024.

As of March 31, 2025, the total remaining amount available for repurchase under this plan was $ 170.0 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 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.

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NOTE 11 – STOCK-BASED COMPENSATION EXPENSE

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):

The effect of recording stock-based compensation (“SBC”) expense for the three months ended March 31, 2025 and 2024 is as follows (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

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Total stock-based compensation expense

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

There were no options granted during the three months ended March 31, 2025 and 2024.

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 nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

There were no market-based PSUs granted during the three months ended March 31, 2024.

For the market-based PSUs granted during the three months ended March 31, 2025, the grant date fair value was estimated using a Monte Carlo simulation and the following assumptions:

Three Months Ended

March 31, 2025

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 during the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

Expected life (years)

Risk-free interest rate

Dividend yield

Expected volatility

There were no ESPP grants during the three months ended March 31, 2025 and 2024.

NOTE 12 – INCOME TAXES

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 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.

For the three months ended March 31, 2025 and 2024, the Company recorded income tax expense of $ 2.1 million and $ 5.7 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 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.

federal tax rate primarily due to stock-based compensation windfall and unrealized benefits associated with South Korea withholding tax refund claims.

The decrease in income tax expense for the three months ended March 31, 2025, as compared to the same period in the prior year was primarily due to stock-based compensation windfall and unrealized 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 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.

The Company’s leases have remaining lease terms of less than three years 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;

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Fixed lease cost

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Three Months Ended

September 30,

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

Operating cash flows from operating leases

September 30, 2024

March 31, 2025

December 31, 2024

3 unchanged sentences

Operating leases

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

Future minimum lease payments and related lease liabilities as of March 31, 2025 were as follows (in thousands):

Operating Lease Payments (1)

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(1) Future minimum lease payments exclude short-term leases as well as payments to landlords for variable common area maintenance, insurance and real estate taxes.

(2) Includes tenant improvements allowance of $ 1.1 million in 2025 and $ 1.3 million in 2026.

NOTE 14 – COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

These arrangements primarily include unconditional purchase obligations to service providers.

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.

As of March 31, 2025 , the Company’s total future unconditional purchase obligations were approximately $ 4.9 million, including $ 2.4 million due in the remainder of 2025, $ 1.3 million due in 2026 and $ 1.2 million due thereafter.

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

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The maximum potential amount of future payments subject to the guarantee is approximately $ 7.5 million per annum between 2025 and 2031 .

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.

As of March 31, 2025 and December 31, 2024, the balance of the guarantee liability wa s $ 17.1 m illion.

Indemnifications

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Litigation related

On June 23, 2017, Adeia Guides Inc.

(formerly known as Rovi Guides, Inc.) and Adeia Media Solutions Inc.

(formerly known as TiVo Solutions Inc.) (together, “Adeia Media”) filed a patent infringement complaint against Videotron Ltd.

and Videotron G.P.

(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.

Specifically, the Court found invalid each of the asserted claims related to the four remaining patents involved in the case.

In Canada, the prevailing party in patent litigation is entitled to reimbursement of certain of its costs and expenses.

Accordingly, the Company paid $ 2.5 million for expense reimbursement in the fourth quarter of 2022.

On September 12, 2022, Adeia Media filed a notice of appeal with the Federal Court of Appeal of Canada appealing the decision of the Federal Court of Canada.

On January 30, 2023, Adeia Media filed its opening memorandum of fact and law.

Videotron filed its memorandum of fact and law on April 17, 2023.

On November 28, 2023, the Federal Court of Appeal of Canada held a hearing on the appeal and took the matter under reserve.

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.

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.

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.

Specifically, the Court found invalid each of the asserted claims of the four remaining patents involved in the case.

In Canada, the prevailing party in patent litigation is entitled to reimbursement of certain of its costs and expenses.

Accordingly, the Company paid $ 2.8 million for expense reimbursement in the second quarter of 2023.

On November 7, 2022, Adeia Media filed a notice of appeal with the Federal Court of Appeal of Canada appealing the decision of the Federal Court of Canada.

On June 2, 2023, Adeia Media filed its opening memorandum of fact and law.

Bell and Telus filed a combined memorandum of fact and law on August 18, 2023.

On November 29, 2023, the Federal Court of Appeal of Canada held a hearing on the appeal and took the matter under reserve.

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, 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.

1 unchanged sentence

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.

NOTE 15 – SEGMENT AND GEOGRAPHIC INFORMATION

NOTE 15 – SEGMENT INFORMATION

The Company has one reportable segment:

Intellectual Property (“IP”) Licensing.

Reportable segments are identified based on the Company’s organizational structure and information reviewed by the Company’s chief operating decision maker (“CODM”) to evaluate performance and allocate resources.

The Company’s Chief Executive Officer is also the CODM as defined by the authoritative guidance on segment reporting.

A portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., and it is expected that this revenue will continue to account for a portion of total revenue in future periods.

The table below lists the geographic revenue for the periods indicated (in thousands):

IP Licensing.

The IP Licensing segment derives revenues from license agreements to (i) its media patent portfolio and (ii) its semiconductor technologies patent portfolio, see further discussion on revenue generating activities in Note 3 – Revenue .

The Company derives revenue primarily in North America and manages the business activities on a consolidated basis.

The accounting policies of the IP Licensing segment are the same as those described in Note 2 – Summary of Significant Accounting Policies .

The Company’s Chief Executive Officer is also the chief operating decision maker (“CODM”) as defined by the authoritative guidance on segment reporting.

The CODM assesses financial performance for the IP Licensing segment and decides how to allocate resources based on net income that also is reported on the statements of income as consolidated net income.

Net income is also used by the CODM to monitor budget versus actual results of the IP Licensing segment.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The CODM uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the IP Licensing segment or into other parts of the entity, such as for acquisitions or to return value to stockholders.

The following table presents information with respect to the Company’s IP Licensing segment revenue, significant expenses and income:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Personnel related expense

Patent portfolio expense

Patent related technical sales support expense

Amortization expense

Outside services expense

Litigation expense

Interest expense

Other segment items (1)

Provision for income taxes

Segment net income

(1) Other segment items include facilities and other related expenses, marketing and advertising expenses, depreciation expense, travel and entertainment expenses, other income and expense, and other overhead expenses.

Revenue by Geography and Customer Concentration

While the Company’s revenue is primarily derived in North America, a portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., and it is expected that this revenue will continue to account for a portion of total revenue in future periods.

Revenue is attributed to geographic locations based on the billing address of each customer.

The table below lists the revenue by geography for the periods indicated (in thousands):

Three Months Ended

Europe and Middle East

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.

For the three months ended March 31, 2025 and 2024, there wer e two an d three 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

September 30,

Nine Months Ended

September 30,

* denotes less than 10% of total revenue.

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

At March 31, 2025, the Company had one customer repre senting 63 % of aggr egate accounts receivable.

At December 31, 2024, the Company had two customers representing 52 % and 11 % of aggregate accounts receivable, respectively.

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

Other Geography Information

At March 31, 2025 and December 31, 2024, property and equipment, net, was all located in the U.S.

NOTE 16 – SUBSEQUENT EVENTS

Declaration of Cash Dividends

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 .

On May 1, 2025 , the Board declared a cash dividend of $ 0.05 per share of common stock, payable on June 17, 2025 to the stockholders of record at the close of business on May 27, 2025 .

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