What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-05-01 · 138 added, 71 removed, 147 unchanged (59% of the section changed)

1 unchanged sentence

The following discussion should be read in conjunction with the unaudited, condensed consolidated financial statements and notes thereto contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, in addition to our 2024 Form 10-K, other reports filed with the SEC and the Statement Pursuant to the Private Securities Litigation Reform Act of 1995 — Forward-Looking Statements below.

Throughout the following discussion and elsewhere in this Form 10-Q, we refer to “catch-up revenues.” For variable and dynamic fixed-fee license agreements, “catch-up revenues” primarily represents revenue associated with reporting periods prior to the execution of the license agreement.

New Agreement

In March 2025, we signed a new multi-year, worldwide, non-exclusive, royalty bearing license agreement with vivo Mobile, a major Chinese smartphone vendor.

We now have seven of the ten largest smartphone vendors and almost 80% of the entire global smartphone market under license.

Subsequent Events

Throughout the following discussion and elsewhere in this Form 10-Q, we refer to “catch-up revenue.” For variable and dynamic fixed-fee license agreements, “catch-up revenue” primarily represents revenue associated with reporting periods prior to the execution of the license agreement.

Samsung Arbitration and New Agreements

On July 28, 2025, a panel of International Chamber of Commerce arbitrators determined the royalties of the patent license between InterDigital Inc.

and Samsung Electronics Co., Ltd (“Samsung”) covering Samsung’s products other than digital televisions and computer display monitors, which have been licensed under a separate agreement.

The arbitration panel set the total royalties at $1.05 billion for the eight-year patent license, which commenced on January 1, 2023 and runs through December 31, 2030.

Under this agreement, InterDigital will recognize approximately $131 million of recurring revenue per year, a 67% increase from the previous license agreement.

In second quarter 2025, the agreement contributed $119 million of catch-up revenue in addition to $33 million of recurring revenue.

In April 2025, we signed a new multi-year license agreement with HP Inc.

The agreement licenses HP personal computers to InterDigital’s Wi-Fi and video decoding technologies.

No revenue related to this agreement was recognized in first quarter 2025.

Return of Capital to Shareholders

In February 2025, we announced an additional increase in the quarterly cash dividend by $0.15 per share to $0.60 per share, beginning with the quarterly dividend payable in second quarter 2025.

During first quarter 2025, we returned $20.8 million to shareholders, including $15.6 million, or $0.60 per share, of cash dividends declared and $5.2 million through the repurchase of shares of common stock.

As of April 30, 2025, there was $216.1 million remaining under the share repurchase authorization, which we plan to utilize to periodically repurchase additional common shares.

During second quarter 2025, we returned $41.7 million to shareholders, including $15.5 million, or $0.60 per share, of cash dividends declared and $26.2 million through the repurchase of shares of common stock.

As of July 31, 2025, there was $182.7 million remaining under the share repurchase authorization, which we plan to utilize to periodically repurchase additional common shares.

See Part II, Item II - Unregistered Sales of Equity Securities and Use of Proceeds—Issuer Purchases of Equity Securities of this Quarterly Report on Form 10-Q.

Cash & Short-term Investments

As of March 31, 2025, we had $894.8 million of cash, restricted cash, and short-term investments and over $1.6 billion of cash payments due under contracted fixed price agreements, which includes our conservative estimates of the minimum cash receipts that we expect to receive under the Samsung and Lenovo arbitrations.

92% of our first quarter 2025 revenues are from fixed-fee agreements.

As of June 30, 2025, we had $947.9 million of cash, restricted cash, and short-term investments and nearly $2.0 billion of cash payments due under contracted fixed price agreements, which includes our conservative estimates of the minimum cash receipts that we expect to receive under the Lenovo arbitration.

97% of our second quarter 2025 revenue is from fixed-fee agreements.

Such agreements often have prescribed payment schedules that are uneven and sometimes front-loaded, resulting in timing differences between when we collect the cash payments and recognize the related revenue.

The following table reconciles the timing differences between cash receipts and recognized revenue during the three months ended March 31, 2025 and 2024, including the resulting operating cash flow (in thousands):

Three Months Ended March 31,

The following table reconciles the timing differences between cash receipts and recognized revenue during the three and six months ended June 30, 2025 and 2024, including the resulting operating cash flow (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Non-cash revenue:

2025 2024 2025 2024

Fixed fee cash receipts (a)

6 unchanged sentences

Total Revenue $ 300,596 $ 223,493 $ 511,103 $ 487,035

Net cash (used in) provided by operating activities $ (19,989) $ 50,773

(a) Fixed fee cash receipts are comprised of cash receipts from Dynamic Fixed-Fee Agreement royalties, including the associated catch-up revenues.

(b) Other cash receipts are primarily comprised of cash receipts related to our variable patent royalty revenue and catch-up revenues.

Net cash provided by (used in) operating activities $ 105,118 $ (48,910) $ 85,129 $ 1,863

(a) Fixed fee cash receipts are comprised of cash receipts from Dynamic Fixed-Fee Agreement royalties, including the associated catch-up revenue.

(b) Other cash receipts are primarily comprised of cash receipts related to our variable patent royalty revenue and catch-up revenue.

When we collect payments on a front-loaded basis, we recognize a deferred revenue liability equal to the cash received and accounts receivable recorded which relate to revenue expected to be recognized in future periods.

That liability is then reduced as we recognize revenue over the balance of the agreement.

The following table shows the projected amortization of our current and long term deferred revenue as of March 31, 2025 (in thousands):

The following table shows the projected amortization of our current and long term deferred revenue as of June 30, 2025 (in thousands):

Deferred Revenue

2 unchanged sentences

Total Revenue $ 291,922

First quarter 2025 revenues of $210.5 million includes $84.8 million of catch-up revenues, while first quarter 2024 revenues of $263.5 million includes $166.7 million of catch-up revenues.

The $53.0 million decrease was primarily due to catch-up revenues from the Samsung TV agreement recognized in first quarter 2024, partially offset by revenues recognized from new agreements signed over the last twelve months.

In first quarter 2025, revenues (in descending order) from vivo Mobile, Apple, and Samsung each comprised 10% or more of our consolidated revenues.

Refer to " Results of Operations --First Quarter 2025 Compared to First Quarter 2024 " for further discussion of our 2025 revenue.

Second quarter 2025 revenue of $300.6 million includes $162.3 million of catch-up revenue, while second quarter 2024 revenue of $223.5 million includes $127.6 million of catch-up revenue.

The $77.1 million increase was primarily due to revenue from the Samsung arbitration decision and the HP agreement, and was partially offset by catch-up revenue from the Lenovo UK proceedings recognized in second quarter 2024.

In second quarter 2025, revenue (in descending order) from Samsung, HP, and Apple each comprised 10% or more of our consolidated revenue.

Refer to " Results of Operations --Second Quarter 2025 Compared to Second Quarter 2024 " for further discussion of our 2025 revenue.

Impact of Macroeconomic and Geopolitical Factors

4 unchanged sentences

Comparability of Financial Results

When comparing first quarter 2025 financial results against other periods, the following items should be taken into consideration:

• Our first quarter 2025 revenues include $84.8 million of catch-up revenues primarily related to a new patent license agreement with vivo Mobile signed in first quarter 2025.

When comparing second quarter 2025 financial results against other periods, the following items should be taken into consideration:

• Our second quarter 2025 revenue includes $162.3 million of catch-up revenue primarily related to the Samsung arbitration decision and the new patent license agreement with HP signed in second quarter 2025.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

9 unchanged sentences

Cash, cash equivalents, restricted cash, and short-term investments

As of March 31, 2025 and December 31, 2024, we had the following amounts of cash and cash equivalents, restricted cash, and short-term investments (in thousands):

March 31, 2025 December 31, 2024 Increase / (Decrease)

As of June 30, 2025 and December 31, 2024, we had the following amounts of cash and cash equivalents, restricted cash, and short-term investments (in thousands):

June 30, 2025 December 31, 2024 Increase / (Decrease)

Cash and cash equivalents $ 517,894 $ 527,360 $ (9,466)

3 unchanged sentences

$ 947,927 $ 982,395 $ (34,468)

The net decrease in cash, cash equivalents, restricted cash, and short-term investments was attributable to cash used in financing activities of $43.0 million, cash used in investing activities of $26.7 million, excluding sales and purchases of short-term investments, and cash used in operating activities of $20.0 million.

The net decrease in cash, cash equivalents, restricted cash, and short-term investments was attributable to cash used in financing activities of $85.6 million and cash used in investing activities of $40.2 million, excluding sales and purchases of short-term investments, partially offset by cash provided by operating activities of $85.1 million.

Refer to the sections below for further discussion of these items.

Cash flows (used in) provided by operating activities

Cash flows (used in) provided by operating activities in the first quarter 2025 and 2024 (in thousands) were as follows:

Three Months Ended March 31,

Cash flows provided by operating activities

Cash flows provided by operating activities in the first half 2025 and 2024 (in thousands) were as follows:

Six Months Ended June 30,

2025 2024 Change

Net cash (used in) provided by operating activities $ (19,989) $ 50,773 $ (70,762)

Our cash flows (used in) provided by operating activities are principally derived from cash receipts from patent license agreements, offset by cash operating expenses and income tax payments.

The $70.8 million change in net cash (used in) provided by operating activities was driven by lower cash receipts primarily due to large cash receipts in first quarter 2024 related to catch-up revenues from agreements signed in first quarter 2024 and due to timing of cash receipts under existing agreements.

This decrease was partially offset by lower cash operating expenses primarily due to lower revenue share and litigation costs recognized in first quarter 2025.

The table below sets forth the significant items comprising our cash flows provided by operating activities during the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Net cash provided by operating activities $ 85,129 $ 1,863 $ 83,266

Our cash flows provided by operating activities are principally derived from cash receipts from patent license agreements, offset by cash operating expenses and income tax payments.

The $83.3 million change in net cash provided by operating activities was driven by lower cash operating expenses primarily due to lower revenue share and litigation costs recognized in first half 2025.

This change was partially offset by lower cash receipts primarily due to large cash receipts in first half 2024 related to catch-up revenue.

The table below sets forth the significant items comprising our cash flows provided by operating activities during the six months ended June 30, 2025 and 2024 (in thousands):

Six Months Ended June 30,

2025 2024 Change

7 unchanged sentences

Other working capital adjustments 3,562 (35,529) 39,091

Cash flows (used in) provided by operating activities $ (19,989) $ 50,773 $ (70,762)

Cash flows provided by operating activities $ 85,129 $ 1,863 $ 83,266

______________________________

(a) Cash operating expenses include operating expenses less depreciation and disposals of fixed assets, amortization of patents, and non-cash compensation.

Amount includes revenue share costs of $2.6 million and $69.0 million in first quarter 2025 and 2024, respectively.

Amount includes revenue share costs of $5.2 million and $71.7 million in first half 2025 and 2024, respectively.

(b) Income taxes paid include foreign withholding taxes.

Cash flows from investing and financing activities

Net cash provided by investing activities for first quarter 2025 was $59.5 million, a $42.7 million change from $16.8 million in first quarter 2024.

During first quarter 2025, we sold $86.2 million of short-term marketable securities, net of purchases, and capitalized $26.7 million of patent costs and property and equipment purchases.

During first quarter 2024, we sold $24.6 million of short-term marketable securities, net of purchases, and capitalized $9.4 million of patent costs and property and equipment purchases.

Net cash used in financing activities for first quarter 2025 was $43.0 million, a change of $6.4 million from $49.3 million the first quarter 2024.

This change was primarily attributable to a $23.5 million increase of taxes withheld on restricted stock unit vestings primarily due to the increased share price at vesting, partially offset by a $23.6 million decrease in share repurchases and $7.3 million of proceeds from the exercise of stock options.

Our combined short-term and long-term deferred revenue balance as of March 31, 2025 was approximately $324.4 million, a net decrease of $35.8 million from December 31, 2024.

Net cash used in investing activities for first half 2025 was $22.2 million, a $119.7 million change from $97.5 million provided by investing activities in first half 2024.

During first half 2025, we sold $18.0 million of short-term marketable securities, net of purchases, and capitalized $40.2 million of patent costs and property and equipment purchases.

During first half 2024, we sold $118.9 million of short-term marketable securities, net of purchases, and capitalized $22.6 million of patent costs and property and equipment purchases.

Net cash used in financing activities for first half 2025 was $85.6 million, a change of $147.7 million from $233.3 million the first half 2024.

This change was primarily attributable to a $126.2 million payment made on maturity of the 2024 Notes in first half 2024, a $32.3 million decrease in share repurchases, and $7.3 million of proceeds from the exercise of stock options.

This change was partially offset by a $22.9 million increase of taxes withheld on restricted stock unit vestings primarily due to the increased share price at vesting.

Our combined short-term and long-term deferred revenue balance as of June 30, 2025 was approximately $291.9 million, a net decrease of $68.2 million from December 31, 2024.

This decrease in deferred revenue was primarily due amortization of deferred revenue recognized in the period, partially offset by cash receipts on new and existing patent license agreements.

Based on current license agreements, we expect the amortization of dynamic fixed-fee royalty payments to reduce the March 31, 2025 deferred revenue balance of $324.4 million by $175.3 million over the next twelve months.

Based on current license agreements, we expect the amortization of dynamic fixed-fee royalty payments to reduce the June 30, 2025 deferred revenue balance of $291.9 million by $178.3 million over the next twelve months.

Convertible Notes

See Note 5, “ Obligations ” to the Notes to condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for definitions of capitalized terms below.

From the period January 1, 2024 through June 30, 2025, the holders of the 2027 Notes have the right, but not the obligation, to convert any portion of the principal amount of the 2027 Notes.

From the period January 1, 2024 through September 30, 2025, the holders of the 2027 Notes have the right, but not the obligation, to convert any portion of the principal amount of the 2027 Notes.

Our 2027 Notes are included in the dilutive earnings per share calculation using the if-converted method.

9 unchanged sentences

As described in Note 5, " Obligations, " the 2027 Notes are convertible into cash up to the aggregate principal amount to be converted and any remaining obligations may be settled in cash, shares of the Company’s common stock or a combination thereof ("net share settlement").

Assuming net share settlement upon conversion, the following tables illustrate how, based on the $460.0 million aggregate principal amount of the 2027 Notes outstanding as of March 31, 2025, and the approximately 5.9 million warrants related to the 2027 Notes, changes in our stock price would affect (i) the number of shares issuable upon conversion of the 2027 Notes, (ii) the number of shares issuable upon exercise of the warrants subject to the 2027 Warrant Transactions, (iii) the number of additional shares deemed outstanding with respect to the 2027 Notes, after applying the if-converted method, for purposes of calculating diluted earnings per share ("Total If-Converted Method Incremental Shares"), (iv) the number of shares of our common stock deliverable to us upon settlement of the 2027 Note Hedge Transactions and (v) the number of shares issuable upon concurrent conversion of the 2027 Notes, exercise of the warrants subject to the 2027 Warrant Transactions, and settlement of the 2027 Note Hedge Transactions (in thousands):

Assuming net share settlement upon conversion, the following tables illustrate how, based on the $460.0 million aggregate principal amount of the 2027 Notes outstanding as of June 30, 2025, and the approximately 5.9 million warrants related to the 2027 Notes, changes in our stock price would affect (i) the number of shares issuable upon conversion of the 2027 Notes, (ii) the number of shares issuable upon exercise of the warrants subject to the 2027 Warrant Transactions, (iii) the number of additional shares deemed outstanding with respect to the 2027 Notes, after applying the if-converted method, for purposes of calculating diluted earnings per share ("Total If-Converted Method Incremental Shares"), (iv) the number of shares of our common stock deliverable to us upon settlement of the 2027 Note Hedge Transactions and (v) the number of shares issuable upon concurrent conversion of the 2027 Notes, exercise of the warrants subject to the 2027 Warrant Transactions, and settlement of the 2027 Note Hedge Transactions (in thousands):

Per Share Shares Issuable Upon Conversion of the 2027 Notes Shares Issuable Upon Exercise of the 2027 Warrant Transactions Total If-Converted Method Incremental Shares Shares Deliverable to InterDigital upon Settlement of the 2027 Note Hedge Transactions Incremental Shares Issuable (a)

15 unchanged sentences

$260 4,193 3,534 7,727 (4,193) 3,534

$270 4,259 3,624 7,883 (4,259) 3,624

$280 4,320 3,708 8,028 (4,320) 3,708

$290 4,376 3,785 8,161 (4,376) 3,785

$300 4,429 3,858 8,287 (4,429) 3,858

______________________________

(a) Represents incremental shares issuable upon concurrent conversion of convertible notes, exercise of warrants and settlement of the hedge agreements.

RESULTS OF OPERATIONS

First Quarter 2025 Compared to First Quarter 2024

The following table compares first quarter 2025 revenues to first quarter 2024 revenues (in thousands):

Three Months Ended March 31,

Second Quarter 2025 Compared to Second Quarter 2024

The following table compares second quarter 2025 revenue to second quarter 2024 revenue (in thousands):

Three Months Ended June 30,

2025 2024 Increase/(Decrease)

2 unchanged sentences

Other 181 539 (358) (66) %

Total Revenues

Total Revenue $ 300,596 $ 223,493 $ 77,103 34 %

Catch-up revenue (a) , included above

$ 162,328 $ 127,551 $ 34,777 27 %

Catch-up revenues (a) , included above

(a) Catch-up revenue represents revenue associated with reporting periods prior to the execution of the license agreement.

Total revenue of $300.6 million increased $77.1 million from second quarter 2024 primarily due to the Samsung arbitration decision and the new HP agreement.

Additionally, revenue from eight other new patent license agreements signed in the last twelve months, including the previously announced agreements with vivo Mobile and OPPO, and the Lenovo arbitration agreement contributed to the increase.

These increases were partially offset primarily by catch-up revenue recognized related to the Lenovo UK proceedings in second quarter 2024.

In second quarter 2025 and 2024, 78% and 80%, respectively, of our total revenue was attributable to licensees that individually accounted for 10% or more of our total revenue.

In second quarter 2025 and 2024, the following licensees accounted for 10% or more of our total revenue:

Three Months Ended June 30,

Customer D <10% 54%

Operating Expenses

The following table summarizes the changes in operating expenses between second quarter 2025 and second quarter 2024 by category (in thousands):

Three Months Ended June 30,

2025 2024 Increase/(Decrease)

Research and portfolio development $ 53,674 $ 50,145 $ 3,529 7 %

Licensing 23,909 25,156 (1,247) (5) %

General and administrative 17,586 14,286 3,300 23 %

Total Operating expenses $ 95,169 $ 89,587 $ 5,582 6 %

Operating expenses increased $5.6 million to $95.2 million in second quarter 2025 compared to $89.6 million in second quarter 2024.

The $5.6 million increase in total operating expenses was primarily due to changes in the following items (in thousands):

Increase/(Decrease)

Performance-based compensation

Net litigation fee reimbursement 3,200

Depreciation and amortization

Intellectual property enforcement (6,582)

Total increase in operating expenses

The $5.6 million increase in operating expenses was driven by an increase in performance-based compensation due to higher accrual rates driven by licensing successes and a $2.1 million increase in depreciation and amortization due to non-cash patent acquisitions and investments in internal infrastructure.

Additionally, the increase was due to a $3.2 million one-time contra expense for a net litigation fee reimbursement resulting from intellectual property enforcement successes received in second quarter 2024.

These increases were partially offset by a $6.6 million decrease in intellectual property enforcement costs primarily due to our fourth quarter 2024 resolution of the OPPO and Lenovo proceedings, as well as decreased activity related to the Samsung arbitration.

Research and portfolio development expense:

Research and portfolio development expense increased compared to second quarter 2024 primarily due to the increase in depreciation and amortization noted above, as well as the increase in performance-based compensation costs.

Licensing expense:

Licensing expense was relatively flat compared to second quarter 2024, with the above noted one-time net litigation fee reimbursement contra expense recognized in second quarter 2024 and increased performance-based compensation being offset by the above-noted decreased intellectual property enforcement costs.

General and administrative expense:

General and administrative expense increased compared to second quarter 2024 primarily due to the above noted increase in performance-based compensation.

Non-Operating Income, net

The following table compares second quarter 2025 non-operating income, net to second quarter 2024 (in thousands):

Three Months Ended June 30,

2025 2024 Increase/(Decrease)

Interest expense $ (9,537) $ (11,483) $ 1,946 17 %

Interest and investment income 8,828 10,125 (1,297) (13) %

Other income, net 6,316 1,557 4,759 306 %

Total non-operating income, net $ 5,607 $ 199 $ 5,408 2,718 %

The change in non-operating income, net was primarily due to a foreign currency translation net gain arising from translation of our foreign subsidiaries of $3.6 million in second quarter 2025, compared to a $0.9 million net loss in second quarter 2024.

In second quarter 2025 and 2024, based on the statutory federal tax rate net of discrete federal and state taxes, we had an effective tax rate of 14.4% and 18.2%, respectively.

The change in effective tax rate is due to an increase in the amount of Foreign Derived Intangible Income deduction benefit available to the Company and tax benefits related to share-based compensation.

In addition, the Company is subject to a decrease in the Global Intangible Low-Tax Income inclusion derived from the decrease in revenue in certain foreign jurisdictions.

First Half 2025 Compared to First Half 2024

The following table compares first half 2025 revenue to first half 2024 revenue (in thousands):

Six Months Ended June 30,

2025 2024 Increase/(Decrease)

Smartphone $ 419,075 $ 279,505 $ 139,570 50 %

CE, IoT/Auto 91,598 206,272 (114,674) (56) %

Other 430 1,258 (828) (66) %

Total Revenue $ 511,103 $ 487,035 $ 24,068 5 %

Catch-up revenue (a) , included above

$ 247,113 $ 294,229 $ (47,116) (16) %

(a) Catch-up revenues represent revenue associated with reporting periods prior to the execution of the license agreement.

Total revenues of $210.5 million decreased $53.0 million from first quarter 2024 primarily due to catch-up revenues from the Samsung TV agreement recognized in first quarter 2024, partially offset by catch-up revenues recognized from the new agreement with vivo Mobile signed in first quarter 2025.

Additionally, the decrease was partially offset by revenues from seven new patent license agreements signed in the last twelve months, including the vivo Mobile agreement and the previously announced OPPO agreement and the Lenovo arbitration agreement.

In first quarter 2025 and 2024, 71% and 84%, respectively, of our total revenue was attributable to licensees that individually accounted for 10% or more of our total revenue.

In first quarter 2025 and 2024, the following licensees accounted for 10% or more of our total revenue:

Three Months Ended

(a) Catch-up revenue represents revenue associated with reporting periods prior to the execution of the license agreement.

Total revenue of $511.1 million increased $24.1 million from first half 2024 primarily due to revenue recognized from the Samsung arbitration decision and the first half 2025 agreements with vivo Mobile and HP.

Additionally, eight other new patent license agreements signed in the last fifteen months contributed to the increase, including the previously announced OPPO agreement and the Lenovo arbitration agreement.

This increase was partially offset by catch-up revenue related to the Samsung TV agreement and the Lenovo UK proceedings recognized in first half 2024.

In first half 2025 and 2024, 69% and 82% of our total revenue, respectively, was attributable to companies that individually accounted for 10% or more of our total revenue.

In first half 2025 and 2024, the following companies accounted for 10% or more of our total revenue:

Six Months Ended June 30,

Operating Expenses

The following table summarizes the changes in operating expenses between first quarter 2025 and first quarter 2024 by category (in thousands):

Three Months Ended March 31,

The following table summarizes the changes in operating expenses between first half 2025 and first half 2024 by category (in thousands):

Six Months Ended June 30,

2025 2024 Increase/(Decrease)

3 unchanged sentences

Total operating expenses $ 173,844 $ 249,391 $ (75,547) (30) %

Operating expenses decreased to $78.7 million in first quarter 2025 from $159.8 million in first quarter 2024.

Operating expenses decreased 30% to $173.8 million in first half 2025 from $249.4 million in first half 2024.

The $75.5 million decrease in total operating expenses was primarily due to changes in the following items (in thousands):

2 unchanged sentences

Intellectual property enforcement (18,865)

Other (2,044)

Depreciation and amortization

Performance-based compensation

Net litigation fee reimbursement 2,717

Total decrease in operating expenses $ (75,547)

Operating expenses decreased $81.1 million primarily due to revenue share costs related to the catch-up revenues recognized from the Samsung TV agreement signed in first quarter 2024.

Additionally, intellectual property enforcement costs decreased $12.8 million primarily due to our fourth quarter 2024 resolution of the OPPO and Lenovo proceedings, as well as the Samsung arbitration.

The $75.5 million decrease in operating expenses was driven by a $66.5 million decrease in revenue share costs primarily related to the Samsung TV agreements signed in first half 2024 and a $18.9 million decrease in intellectual property enforcement costs primarily due to our fourth quarter 2024 resolution of the OPPO and Lenovo proceedings, as well as the Samsung arbitration.

This decrease in intellectual property enforcement costs was partially offset by one-time contra expenses for net litigation fee reimbursements of $0.5 million in first half 2025 compared to $3.2 million in first half 2024 resulting from intellectual property enforcement successes.

These decreases were offset by a $3.1 million increase in depreciation and amortization due to non-cash patent acquisitions and investments in internal infrastructure and a $2.8 million increase in performance-based compensation due to higher accrual rates driven by licensing successes.

Research and portfolio development expense:

Research and portfolio development expense was relatively flat compared to first quarter 2024.

Research and portfolio development expense increased slightly compared to first half 2024 primarily due to the above noted increase in depreciation and amortization.

Licensing expense:

Licensing expense decreased $78.9 million primarily driven by the above-noted decreases in revenue share costs and intellectual property enforcement costs.

Licensing expense decreased by $80.2 million primarily driven by the above-noted decreased revenue share costs and intellectual property enforcement costs, partially offset by the one-time net litigation fee reimbursement.

General and administrative expense:

General and administrative expense was relatively flat compared to first quarter 2024.

General and administrative expense increased compared to first half 2024 primarily due to the above noted increase in performance-based compensation.

Non-Operating Income (expense), net

The following table compares first quarter 2025 non-operating income, net to first quarter 2024 non-operating expense, net (in thousands):

Three Months Ended March 31,

The following table compares first half 2025 non-operating income, net to first half 2024 non-operating expense, net (in thousands):

Six Months Ended June 30,

2025 2024 Increase/(Decrease)

2 unchanged sentences

Other income (expense), net

7,310 (974) 8,284 851 %

Total non-operating income (expense), net

The change in non-operating income (expense), net was primarily due to a foreign currency translation net gain arising from translation of our foreign subsidiaries of $2.2 million in first quarter 2025, compared to a $2.4 million net loss in first quarter 2024.

In first quarter 2025 and 2024, based on the statutory federal tax rate net of discrete federal and state taxes, we had an effective tax rate of 12.6% and 19.2%, respectively.

$ 5,994 $ (2,476) $ 8,470 342 %

The change in non-operating income (expense), net was primarily due to a foreign currency translation net gain arising from translation of our foreign subsidiaries of $5.8 million in first half 2025, compared to a $3.3 million net loss in first half 2024.

In first half 2025 and 2024, we had an effective tax rate of 13.7% and 18.6%, respectively.

In addition, the Company is subject to a decrease in the Global Intangible Low-Tax Income inclusion derived from the increase in revenue in certain foreign jurisdictions.

In addition, the Company is subject to a decrease in the Global Intangible Low-Tax Income inclusion derived from the decrease in revenue in certain foreign jurisdictions.

STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 — FORWARD-LOOKING STATEMENTS

26 unchanged sentences

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 2. Management’s Discussion and Analysis