Item 2. Management’s Discussion and Analysis
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .
OVERVIEW
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 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.
Return of Capital to Shareholders
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 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 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,
Cash vs. Non-cash revenue: 2025 2024 2025 2024
Fixed fee cash receipts (a)
$ 162,140 $ 33,705 $ 184,719 $ 224,690
Other cash receipts (b)
9,193 14,583 33,444 25,356
Change in deferred revenue 32,456 26,866 71,206 54,408
Change in receivables 84,439 78,011 200,405 106,348
Other 12,368 70,328 21,329 76,233
Total Revenue $ 300,596 $ 223,493 $ 511,103 $ 487,035
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.
20
Table of Contents
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 June 30, 2025 (in thousands):
Deferred Revenue
Remainder of 2025 $ 107,702
2026 141,117
2027 39,486
2028 1,141
2029 1,206
Thereafter 1,270
Total Revenue $ 291,922
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
We have been actively monitoring the impact of the current macroeconomic environment in the U.S. and globally characterized by market volatility, inflation, supply chain issues, high interest rates, labor shortages, tariffs and other potential trade-related sanctions, and the potential for a recession. These market factors, as well as the impacts of the Ukraine-Russia and Middle East conflicts, have not had a material impact on our business to date. However, if these conditions continue or worsen, they could have an adverse effect on our operating results and our financial condition.
Comparability of Financial Results
When comparing second quarter 2025 financial results against other periods, the following items should be taken into consideration:
Revenue
• 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
Our significant accounting policies are described in Note 2, " Summary of Significant Accounting Policies and New Accounting Guidance ", in the notes to consolidated financial statements included in our 2024 Form 10-K. A discussion of our critical accounting policies, and the estimates related to them, are included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Form 10-K. There have been no material changes to our existing critical accounting policies from the disclosures included in our 2024 Form 10-K. Refer to Note 1, “ Basis of Presentation ,” in the notes to condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for updates related to new accounting pronouncements and changes in accounting policies.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash, cash equivalents, and short-term investments, as well as cash generated from operations. We believe we have the ability to obtain additional liquidity through debt and equity financings. From time to time, we may engage in a variety of transactions to augment our liquidity position as our business dictates and to take advantage of favorable interest rate environments or other market conditions, including the incurrence or issuance of debt and the refinancing or restructuring of existing debt. Based on our past performance and current expectations, we believe our available sources of funds, including cash, cash equivalents, short-term investments, and cash generated from our operations, will be sufficient to finance our operations, capital requirements, debt obligations, existing stock repurchase program, dividend program, and other contractual obligations discussed below in both the short-term over the next twelve months, and the long-term beyond twelve months.
21
Table of Contents
Cash, cash equivalents, restricted cash, and short-term investments
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)
Restricted cash included within prepaid and other current assets 10,942 24,187 (13,245)
Short-term investments 419,091 430,848 (11,757)
Total cash, cash equivalents, restricted cash, and short-term investments
$ 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 $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 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 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
Total Cash Receipts $ 218,163 $ 250,046 $ (31,883)
Cash Outflows:
Cash operating expenses a
(114,832) (195,734) 80,902
Income taxes paid b
(21,764) (16,920) (4,844)
Total cash outflows (136,596) (212,654) 76,058
Other working capital adjustments 3,562 (35,529) 39,091
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 $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 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.
22
Table of Contents
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.
Other
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 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 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. Under the if-converted method, we must assume that conversion of convertible securities occurs at the beginning of the reporting period. The 2027 Notes are convertible into cash up to the aggregate principal amount of the 2027 Notes to be converted and any remaining obligations may be settled in cash, shares of the Company’s common stock, or a combination thereof. As the principal amount must be paid in cash and only the conversion spread is settled in shares, we only include the net number of incremental shares that would be issued upon conversion. We must calculate the number of shares of our common stock issuable under the terms of the 2027 Notes based on the average market price of our common stock during the applicable reporting period and include that number in the total diluted shares figure for the period.
At the time we issued the 2027 Notes, we entered into the 2027 Call Spread Transactions that together were designed to have the economic effect of reducing the net number of shares that will be issued in the event of conversion of the 2027 Notes by, in effect, increasing the conversion price of the 2027 Notes from our economic standpoint. However, under GAAP, since the impact of the 2027 Note Hedge Transactions is anti-dilutive, we exclude from the calculation of fully diluted shares the number of shares of our common stock that we would receive from the counterparties to these agreements upon settlement.
During periods in which the average market price of our common stock is above the applicable conversion price of the 2027 Notes (initial conversion price of approximately $77.49 per share), or above the strike price of the warrants (weighted average strike price of $106.06 per share), the impact of conversion or exercise, as applicable, would be dilutive and such dilutive effect is reflected in diluted earnings per share. As a result, in periods where the average market price of our common stock is above the conversion price or strike price, as applicable, under the if-converted method, we calculate the number of shares issuable under the terms of the 2027 Notes and the 2027 Warrant Transactions based on the average market price of the stock during the period, and include that number in the total diluted shares outstanding for the period.
23
Table of Contents
Under the if-converted method, changes in the price per share of our common stock can have a significant impact on the number of shares that we must include in the fully diluted earnings per share calculation. 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 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):
2027 Notes
Market Price
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)
$105 1,582 — 1,582 (1,582) —
$120 2,129 701 2,830 (2,129) 701
$130 2,424 1,106 3,530 (2,424) 1,106
$140 2,677 1,453 4,130 (2,677) 1,453
$150 2,896 1,753 4,649 (2,896) 1,753
$160 3,087 2,016 5,103 (3,087) 2,016
$170 3,257 2,249 5,506 (3,257) 2,249
$180 3,407 2,455 5,862 (3,407) 2,455
$190 3,541 2,639 6,180 (3,541) 2,639
$200 3,662 2,806 6,468 (3,662) 2,806
$210 3,772 2,956 6,728 (3,772) 2,956
$220 3,872 3,093 6,965 (3,872) 3,093
$230 3,962 3,217 7,179 (3,962) 3,217
$240 4,046 3,332 7,378 (4,046) 3,332
$250 4,122 3,437 7,559 (4,122) 3,437
$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.
24
Table of Contents
RESULTS OF OPERATIONS
Second Quarter 2025 Compared to Second Quarter 2024
Revenue
The following table compares second quarter 2025 revenue to second quarter 2024 revenue (in thousands):
Three Months Ended June 30,
2025 2024 Increase/(Decrease)
Smartphone $ 235,084 $ 199,225 $ 35,859 18 %
CE, IoT/Auto 65,331 23,729 41,602 175 %
Other 181 539 (358) (66) %
Total Revenue $ 300,596 $ 223,493 $ 77,103 34 %
Catch-up revenue (a) , included above
$ 162,328 $ 127,551 $ 34,777 27 %
(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,
2025 2024
Customer A
52% 11%
Customer B
15% —%
Customer C
11% 15%
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 %
25
Table of Contents
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
$ 4,084
Net litigation fee reimbursement 3,200
Depreciation and amortization
2,089
Intellectual property enforcement (6,582)
Other 2,791
Total increase in operating expenses
$ 5,582
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.
Income taxes
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.
26
Table of Contents
First Half 2025 Compared to First Half 2024
Revenue
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 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,
2025 2024
Customer A
36% 43%
Customer E
20% —%
Customer C
13% 14%
Customer D
<10% 25%
Operating Expenses
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)
Research and portfolio development $ 101,104 $ 99,520 $ 1,584 2 %
Licensing 41,586 121,745 (80,159) (66) %
General and administrative 31,154 28,126 3,028 11 %
Total operating expenses $ 173,844 $ 249,391 $ (75,547) (30) %
27
Table of Contents
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):
Increase/(Decrease)
Revenue share $ (66,495)
Intellectual property enforcement (18,865)
Depreciation and amortization
3,062
Performance-based compensation
2,829
Net litigation fee reimbursement 2,717
Other 1,205
Total decrease in operating expenses $ (75,547)
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 increased slightly compared to first half 2024 primarily due to the above noted increase in depreciation and amortization.
Licensing expense: 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 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 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)
Interest expense $ (19,408) $ (23,405) $ 3,997 17 %
Interest and investment income 18,092 21,903 (3,811) (17) %
Other income (expense), net
7,310 (974) 8,284 851 %
Total non-operating income (expense), net
$ 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.
Income taxes
In first half 2025 and 2024, we had an effective tax rate of 13.7% and 18.6%, 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.
28
Table of Contents
STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 — FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include certain information in regarding our current beliefs, plans and expectations, including, without limitation, the matters set forth below. Words such as "believe," “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “forecast,” "goal," "could," "would," "should," "if," "may," "might," "future," "target," "trend," "seek to," "will continue," "predict," "likely," "in the event," and variations of any such words or similar expressions contained herein are intended to identify such forward-looking statements. Forward-looking statements are made on the basis of management’s current views and assumptions and are not guarantees of future performance. Although the forward-looking statements in this Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements concerning our business, results of operations and financial condition are inherently subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, the risks and uncertainties described in Part I, Item 1A of our 2024 Form 10-K and the risks and uncertainties set forth below:
• unanticipated delays or difficulties in the execution of patent license agreements on acceptable terms or at all;
• our ability to expand our revenue opportunities by entering into licensing arrangements with streaming and cloud-based service providers;
• the resolution of legal proceedings, including any awards or judgments relating to such proceedings, and changes in the schedules or costs associated therewith;
• our ability to maintain a strong patent portfolio and make strategic decisions related to our intellectual property protection;
• the failure of markets for our technologies to materialize to the extent that we expect;
• our continued ability to develop new technologies;
• changes in our interpretations of, and assumptions and calculations with respect to the impact on us of, the 2017 Tax Cuts and Jobs Act and other U.S. and non-U.S. tax laws;
• the timing and impact of potential regulatory, administrative and legislative matters;
• the potential effects of macroeconomic conditions or trade conflicts;
• our ability to hire and retain key personnel;
• operational risks, including cybersecurity events, human failures or other difficulties with our information technology systems; and
• risks related to any new accounting standards or our assumptions and application of relevant accounting standards, including with respect to revenue recognition.
You should carefully consider these factors before making any investment decision with respect to our common stock. These factors, individually or in the aggregate, may cause our actual results to differ materially from our expected and historical results. You should understand that it is not possible to predict or identify all such factors. In addition, you should not place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this Form 10-Q. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .
There have been no material changes in quantitative and qualitative market risk from the disclosures included in our 2024 Form 10-K.
29
Table of Contents
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.