What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-04-30 · 159 added, 91 removed, 152 unchanged (62% of the section changed)

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New Agreements

During first quarter 2026, we entered into six patent license agreements, including agreements with Xiaomi, LG Electronics, Sony, Buffalo Americas, Inc., and Metz.

The agreement with Xiaomi has a term of five years and covers Xiaomi's cellular products, including its smartphones and other cellular-enabled devices, under InterDigital's standard essential cellular, WiFi, and HEVC patents.

The agreement with LG Electronics (the "LG TV agreement") licenses LG’s digital TVs and computer display monitors under InterDigital´s joint licensing program with Sony and includes licenses to technologies including ATSC 3.0, Wi-Fi and video codecs.

The agreement with Sony covers all of Sony’s end user devices under InterDigital's global patent portfolio, including InterDigital's standard essential cellular, Wi-Fi, and video patents.

Injunction Awards

During first quarter 2026, we were awarded injunctions in our intellectual property enforcement actions against Disney and Transsion.

In Germany, the Munich Regional Court granted an injunction relating to Disney’s infringement of an InterDigital patent related to HEVC compression technology, representing the fifth injunction we have obtained in proceedings involving Disney.

In Brazil, the Third Regional Business Court of Rio de Janeiro granted a preliminary injunction relating to Transsion’s infringement of two InterDigital 5G patents and found that our licensing offer was fair, reasonable, and non-discriminatory (FRAND).

During second quarter 2026, we entered into an agreement with Amazon, covering Amazon’s services and devices, including Amazon Prime Video.

The parties have agreed to resolve all pending litigation and will enter into binding arbitration to determine the final terms of the new patent license agreement.

We believe this agreement advances our longer-term strategy to expand our video streaming services licensing program.

During second quarter 2026, we began recognizing revenue based on a conservative estimate, consistent with Generally Accepted Accounting Principles in the United States ("GAAP"), in respect of this agreement.

Additionally, we signed a new IoT patent license agreement with a fintech company in the payments space.

The agreement covers the licensee’s point-of-sale devices under InterDigital’s global patent portfolio related to the cellular 3G and 4G standards, and the Wi-Fi 5 and Wi-Fi 6 standards.

Disney UPC Injunctions

In rulings in June and July 2026, respectively, the Mannheim and Dusseldorf Local Divisions of the Unified Patent Court (the "UPC") ruled that we are entitled to injunctions over Disney’s infringement of InterDigital patents covering certain video encoding techniques related to HEVC and confirmed the validity of the patents.

The UPC is a pan-European patent court which issues decisions that apply across multiple countries in the European Union (EU).

The injunctions against Disney each span 11 EU countries, including France, Germany, and Italy.

In their rulings, both UPC tribunals concluded that Disney is an "unwilling licensee" based on its conduct.

Disney can appeal the decisions.

Other injunctions have been issued by courts in Germany and Brazil for Disney’s infringement of InterDigital’s intellectual property related to high dynamic range technology, the dynamic overlaying of multiple video streams, and additional compression technologies related to HEVC and AVC.

For more information on these proceedings, see Note 6, “ Litigation and Legal Proceedings ,” to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Notes, Hedge, and Warrant Transactions

During first quarter 2026, the 2027 Notes had a dilutive impact of 4.4 million shares, which are offset from an economic standpoint by the 2027 Note Hedge Transactions and would result in no incremental outstanding shares after conversion.

However, under Generally Accepted Accounting Principles in the United States ("GAAP"), we are required to exclude the impact of the shares received from the 2027 Note Hedge Transactions counterparties from the calculation of weighted-average diluted shares outstanding.

During the period from January 1, 2024 through June 30, 2026, holders of the 2027 Notes have the right, but not the obligation, to convert any portion of the principal amount of the 2027 Notes.

In December 2025, holders elected to convert $80.0 million principal amount of the 2027 Notes, which was settled in the first quarter of 2026.

We paid the $80.0 million principal amount in cash and issued 0.8 million shares to settle the conversion spread.

These shares issued were offset by 0.8 million shares received upon partial settlement of the 2027 Note Hedge Transactions, resulting in no incremental outstanding shares resulting from the conversion.

As of March 31, 2026, 6.0 million warrants remain outstanding related to the 2027 Warrant Transactions at a weighted-average strike price of $105.55 per share, subject to adjustment, which mature on a net-share basis beginning September 2027 through April 2028.

During second quarter 2026, the 2027 Notes had a dilutive impact of 3.7 million shares, which is offset from an economic standpoint by the 2027 Note Hedge Transactions and would result in no incremental outstanding shares after conversion.

However, under GAAP, we are required to exclude the impact of the shares received from the 2027 Note Hedge Transactions counterparties from the calculation of weighted-average diluted shares outstanding.

From the period January 1, 2024 through September 30, 2026, 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.

As of June 30, 2026, $380.0 million in principal of the 2027 Notes remains outstanding, of which holders had elected to convert $80.3 million principal amount, which will settle in third quarter 2026.

No incremental outstanding shares will result from such conversions.

As of June 30, 2026, 6.0 million warrants remain outstanding related to the 2027 Warrant Transactions at a strike price of $105.43 per share, subject to adjustment, which mature on a net-share basis beginning September 2027 through April 2028.

Refer to " Financial Position, Liquidity, and Capital Resources — Convertible Notes " for further information regarding how changes in our stock price would affect the number of shares issuable related to the 2027 Warrant Transactions.

For example, if the share price were $350, we would issue 4.2 million shares of common stock related to the 2027 Warrant Transactions.

For example, if the share price averaged $275 between September 2027 and April 2028, we would issue 3.7 million shares of common stock related to the 2027 Warrant Transactions.

Return of Capital

In March 2026, we announced a regular quarterly cash dividend of $0.70 per share, which is a 17% increase compared to the dividend declared in first quarter 2025.

During first quarter 2026, we returned $26.3 million to shareholders, including $18.1 million, or $0.70 per share, of cash dividends declared and $8.2 million through the repurchase of shares of common stock.

We also reduced our debt by $88.0 million, including the $80.0 million principle payment on the conversion of the 2027 Notes.

As of April 30, 2026, there was $108.0 million remaining under the share repurchase authorization, which we plan to utilize to periodically repurchase additional common shares.

In June 2026, we announced a regular quarterly cash dividend of $0.70 per share, which is a 17% increase compared to the dividend declared in second quarter 2025.

During second quarter 2026, we returned $41.0 million to shareholders, including $23.0 million through the repurchase of shares of common stock and $18.1 million, or $0.70 per share, of cash dividends declared.

As of June 30, 2026, there was $96.1 million remaining under the share repurchase authorization, which we plan to utilize to periodically repurchase additional common shares.

See Part II, Item 2 - 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, 2026, we had $1.1 billion of cash, restricted cash, and short-term investments and approximately $1.7 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.

94% of our first quarter 2026 revenue came from fixed-fee agreements.

Cash and Short-term Investments

As of June 30, 2026, we had $1.1 billion of cash, restricted cash, and short-term investments and approximately $1.9 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 and Amazon arbitrations.

93% of our second quarter 2026 revenue came 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, 2026 and 2025, 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, 2026 and 2025, including the resulting operating cash flow (in thousands):

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

Non-cash revenue:

2026 2025 2026 2025

Fixed-fee cash receipts (a)

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Other cash receipts (b)

12,049 9,193 19,093 33,444

Change in deferred revenue (21,747) 32,456 (107,608) 71,206

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Total Revenue $ 260,170 $ 300,596 $ 465,586 $ 511,103

Net cash provided by (used in) operating activities

$ 16,081 $ (19,989)

Net cash provided by operating activities $ 82,536 $ 105,118 $ 98,617 $ 85,129

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

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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, 2026 (in thousands):

The following table shows the projected amortization of our current and long-term deferred revenue as of June 30, 2026 (in thousands):

Deferred Revenue

Remainder of 2026 $ 210,820

Total Revenue $ 420,465

First quarter 2026 revenue of $205.4 million includes $63.6 million of catch-up revenue, while first quarter 2025 revenue of $210.5 million includes $84.8 million of catch-up revenue.

The $5.1 million decrease in total revenue was driven by lower catch-up revenue, partially offset by recurring revenue recognized from thirteen patent license agreements signed since first quarter 2025.

In first quarter 2026, revenue (in descending order) from LG, Apple, and Samsung each comprised 10% or more of our consolidated revenue.

Refer to " Results of Operations — First Quarter 2026 Compared to First Quarter 2025 " for further discussion of our 2026 revenue.

Total $ 442,212

Second quarter 2026 revenue of $260.2 million includes $103.7 million of catch-up revenue, while second quarter 2025 revenue of $300.6 million includes $162.3 million of catch-up revenue.

The $40.4 million decrease in total revenue was driven by lower catch-up revenue, partially offset by recurring revenue recognized from thirteen patent license agreements signed since second quarter 2025.

In second quarter 2026, revenue (in descending order) from Amazon, Apple, and Samsung each comprised 10% or more of our consolidated revenue.

Refer to " Results of Operations — Second Quarter 2026 Compared to Second Quarter 2025 " for further discussion of our 2026 revenue.

Smartphone, CE, IoT/Auto, and Streaming and Cloud Services are the Company's licensing programs.

The Smartphone revenue grouping consists primarily of smartphones and also includes other wireless communication devices and infrastructure equipment, such as tablets, and base stations.

The CE, IoT/Auto revenue grouping consists of consumer electronics and IoT products, such as televisions, laptops, gaming consoles, set-top boxes, streaming devices, and connected automobiles.

The Streaming and Cloud Services revenue grouping consists of SVOD, AVOD, global pay-TV, video conferencing, cloud gaming, and other cloud-based services.

Impact of Macroeconomic and Geopolitical Factors

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Comparability of Financial Results

When comparing first quarter 2026 financial results against other periods, the following items should be taken into consideration:

• Our first quarter 2026 revenue includes $63.6 million of catch-up revenue primarily related to the new patent license agreements with LG and Sony signed in first quarter 2026.

When comparing second quarter 2026 financial results against other periods, the following items should be taken into consideration:

• Our second quarter 2026 revenue includes $103.7 million of catch-up revenue primarily related to the Amazon agreement signed in second quarter 2026.

Operating Expenses

• During first quarter 2026, we incurred $26.3 million of nonrecurring revenue share costs associated with the catch-up revenue recognized in the period.

• During second quarter 2026, we incurred $13.7 million of nonrecurring share-based compensation costs driven by business successes.

Other income, net

• During second quarter 2026, we recognized a gain of $1.0 million resulting from observable price changes of our long-term strategic investments, which was included within “Other income, net” in the condensed consolidated statement of income.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

As of March 31, 2026 and December 31, 2025, we had the following amounts of cash and cash equivalents, restricted cash, and short-term investments (in thousands):

March 31, 2026 December 31, 2025 Increase / (Decrease)

As of June 30, 2026 and December 31, 2025, we had the following amounts of cash and cash equivalents, restricted cash, and short-term investments (in thousands):

June 30, 2026 December 31, 2025 Increase/(Decrease)

Cash and cash equivalents $ 615,590 $ 738,960 $ (123,370)

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

Cash flows provided by (used in) operating activities

Cash flows provided by (used in) operating activities in the first quarter 2026 and 2025 (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 2026 and 2025 (in thousands) were as follows:

Six Months Ended June 30,

2026 2025 Change

Net cash provided by (used in) operating activities

$ 16,081 $ (19,989) $ 36,070

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

The $36.1 million change in cash provided by (used in) operating activities was primarily driven by higher cash receipts due to the timing of receipts under new and existing agreements and was partially offset by higher cash operating expenses, including increased revenue share and intellectual property enforcement costs.

The table below sets forth the significant items comprising our cash flows provided by (used in) operating activities during the three months ended March 31, 2026 and 2025 (in thousands):

Three Months Ended March 31,

Net cash provided by operating activities $ 98,617 $ 85,129 $ 13,488

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 $13.5 million change in cash provided by operating activities was primarily driven by higher cash receipts due to the timing of receipts under new and existing agreements and was partially offset by higher cash operating expenses, including increased revenue share and intellectual property enforcement costs.

The table below sets forth the significant items comprising our cash flows provided by operating activities during the six months ended June 30, 2026 and 2025 (in thousands):

Six Months Ended June 30,

2026 2025 Change

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Other working capital adjustments (24,400) 3,562 (27,962)

Cash flows provided by (used in) operating activities

$ 16,081 $ (19,989) $ 36,070

Cash flows provided by operating activities $ 98,617 $ 85,129 $ 13,488

______________________________

(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 $27.5 million and $2.6 million in first quarter 2026 and 2025, respectively.

Amount includes revenue share costs of $28.4 million and $5.2 million in first half 2026 and 2025, 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 2026 was $16.4 million, a $43.1 million change from $59.5 million in first quarter 2025.

During first quarter 2026, we sold $29.8 million of short-term marketable securities, net of purchases, and capitalized $15.1 million of patent costs and property and equipment purchases.

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.

Net cash used in financing activities for first quarter 2026 was $169.2 million, a change of $126.2 million from $43.0 million in first quarter 2025.

This change was primarily attributable to an $80.0 million payment related to the partial conversion of the 2027 Notes in first quarter 2026.

Net cash used in investing activities for first half 2026 was $17.2 million, a $5.0 million change from $22.2 million in first half 2025.

During first half 2026, we sold $12.1 million of short-term marketable securities, net of purchases, and capitalized $31.0 million of patent costs and capital expenditures.

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 capital expenditures.

Net cash used in financing activities for first half 2026 was $211.3 million, a change of $125.6 million from $85.6 million in first half 2025.

This change was primarily attributable to an $80.0 million payment related to the partial conversion of the 2027 Notes in first half 2026.

The change also reflects higher cash outflows in 2026, including a $22.6 million increase in taxes withheld on restricted stock unit vestings due to a higher share price at vesting and a $9.0 million increase in dividends paid following the increases in the declared dividend from $0.60 to $0.70.

In addition, during first quarter 2025, we received $7.3 million due to the exercise of stock options.

Our combined short-term and long-term deferred revenue balance as of March 31, 2026 was approximately $420.5 million, a net increase of $90.9 million from December 31, 2025.

In addition, during first half 2025, we received $7.3 million due to the exercise of stock options.

Our combined short-term and long-term deferred revenue balance as of June 30, 2026 was approximately $442.2 million, a net increase of $112.6 million from December 31, 2025.

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

Based on current license agreements, we expect the amortization of dynamic fixed-fee royalty payments to reduce the March 31, 2026 deferred revenue balance of $420.5 million by $261.1 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, 2026 deferred revenue balance of $442.2 million by $325.7 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 January 1, 2024 through June 30, 2026, 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 January 1, 2024 through September 30, 2026, 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 diluted earnings per share ("diluted EPS") calculation using the if-converted method in accordance with GAAP.

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We 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 weighted‑average diluted shares outstanding 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 potential dilution upon conversion of the 2027 Notes by, in effect, increasing the conversion price of the 2027 Notes on an economic basis.

At the time we issued the 2027 Notes, we entered into the 2027 Note Hedge Transactions and 2027 Warrant Transactions (collectively, the "2027 Call Spread Transactions") that together were designed to have the economic effect of reducing potential dilution upon conversion of the 2027 Notes by, in effect, increasing the conversion price of the 2027 Notes on an economic basis.

However, under GAAP, since the impact of the 2027 Note Hedge Transactions is anti-dilutive, we exclude from the calculation of diluted EPS the shares of our common stock that we would receive from the counterparties upon settlement of the 2027 Note Hedge Transactions.

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 $105.55 per share), the impact of conversion of the 2027 Notes or exercise of the warrants, as applicable, would be dilutive and such dilutive effect is reflected in diluted earnings per share.

During periods in which the average market price of our common stock is above the applicable conversion price of the 2027 Notes (conversion price of approximately $76.72 per share, subject to adjustment), or above the strike price of the warrants (strike price of $105.43 per share, subject to adjustment), the impact of conversion of the 2027 Notes or exercise of the warrants, as applicable, would be dilutive and such dilutive effect is reflected in diluted earnings per share.

In those periods, we calculate the incremental shares associated with the 2027 Notes (under the if‑converted method) or the warrants based on the average market price of our common stock during the period and include those incremental shares in weighted‑average diluted shares outstanding.

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As described in Note 5, "Obligations" in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, the 2027 Notes are convertible into cash up to the aggregate principal amount of 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 ("net share settlement").

Assuming net share settlement upon conversion, the following table illustrates how changes in our stock price would affect the shares issuable under the 2027 Notes and related warrant transactions, the incremental shares included in diluted EPS under the if‑converted method (“Total Incremental Shares”), the shares deliverable to us under the 2027 Note Hedge Transactions, and the resulting net incremental shares, based on $380.0 million aggregate principal amount outstanding and approximately 6.0 million related warrants as of March 31, 2026 (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)

A B C=A+B D E=C-D

$105 1,328 — 1,328 (1,328) —

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RESULTS OF OPERATIONS

First Quarter 2026 Compared to First Quarter 2025

The following table compares first quarter 2026 revenue to first quarter 2025 revenue (in thousands):

Three Months Ended March 31,

Second Quarter 2026 Compared to Second Quarter 2025

The following table compares second quarter 2026 revenue to second quarter 2025 revenue (in thousands):

Three Months Ended June 30,

2026 2025 Increase/(Decrease)

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CE, IoT/Auto 27,470 65,331 (37,861) (58) %

Streaming and Cloud Services

110,000 — 110,000 N/M

Other — 181 (181) (100) %

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

Total revenue of $205.4 million was relatively flat compared to first quarter 2025, decreasing slightly primarily due to lower catch-up revenue recognized from the LG TV and Sony agreements in first quarter 2026, as compared to catch-up revenue from vivo Mobile in first quarter 2025, and the expiration of the Samsung TV agreement.

This decrease was partially offset by new revenue from the Samsung arbitration decision and from thirteen new patent license agreements signed in the last twelve months.

In first quarter 2026 and 2025, 61% and 71%, respectively, of our total revenue was attributable to licensees that individually accounted for 10% or more of our total revenue.

In first quarter 2026 and 2025, the following licensees accounted for 10% or more of our total revenue:

Three Months Ended March 31,

N/M Not meaningful

Total revenue of $260.2 million decreased compared to second quarter 2025, primarily due to catch-up revenue from the Samsung arbitration and HP agreement recognized in second quarter 2025, partially offset by catch-up revenue from the Amazon agreement recognized in second quarter 2026.

This decrease was partially offset by revenue from thirteen new agreements signed in the last twelve months, including the Amazon agreement and the previously announced Xiaomi, Honor, and LG TV agreements.

In second quarter 2026 and 2025, 68% and 78%, respectively, of our total revenue was attributable to licensees that individually accounted for 10% or more of our total revenue.

In second quarter 2026 and 2025, the following licensees accounted for 10% or more of our total revenue:

Three Months Ended June 30,

Customer A 42% <10%

Customer B 13% 11%

Customer C 13% 52%

Customer D <10% 15%

Operating Expenses

The following table summarizes the changes in operating expenses between first quarter 2026 and first quarter 2025 by category (in thousands):

Three Months Ended March 31,

The following table summarizes the changes in operating expenses between second quarter 2026 and second quarter 2025 by category (in thousands):

Three Months Ended June 30,

2026 2025 Increase/(Decrease)

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$ 120,931 $ 95,169 $ 25,762 27 %

Operating expenses increased to $123.2 million in first quarter 2026 compared to $78.7 million in first quarter 2025.

Operating expenses increased to $120.9 million in second quarter 2026 compared to $95.2 million in second quarter 2025.

The $25.8 million increase in total operating expenses was primarily due to changes in the following items (in thousands):

Increase/(Decrease)

Revenue share $ 24,849

Intellectual property enforcement, net $ 13,454

Personnel-related costs

Share-based compensation 12,267

Total increase in operating expenses

The $44.5 million increase in operating expenses was driven by a $24.8 million increase in revenue share costs, primarily related to the catch-up revenue recognized on the LG TV agreement signed in first quarter 2026, and a $10.5 million increase in intellectual property enforcement costs related to the Disney, Amazon, and Transsion proceedings.

These enforcement costs are expected to continue through 2026 and could increase as these and other matters progress.

In addition, personnel-related costs increased $4.3 million primarily due to higher wages and employer-paid payroll taxes.

The $25.8 million increase in operating expenses was driven by a $13.5 million increase in intellectual property enforcement costs related to ongoing proceedings and a $12.3 million increase in share-based compensation costs due to recent business successes.

Research and portfolio development expense:

Research and portfolio development expense increased compared to first quarter 2025 primarily due to the above noted increase in personnel-related costs.

Research and portfolio development expense increased slightly compared to second quarter 2025 primarily due to the above-noted share-based compensation costs and depreciation.

Licensing expense:

Licensing expense increased compared to first quarter 2025 primarily due to the above noted changes in revenue share and intellectual property enforcement costs.

Licensing expense increased compared to second quarter 2025 primarily due to the above-noted change in intellectual property enforcement costs.

General and administrative expense:

General and administrative expense increased compared to first quarter 2025 primarily due to the above noted increase in personnel-related costs.

Non-Operating Income (expense), net

The following table compares first quarter 2026 non-operating expense, net to first quarter 2025 non-operating income, net (in thousands):

Three Months Ended March 31,

General and administrative expense increased compared to second quarter 2025 primarily due to the above-noted increase in share-based compensation costs.

Non-Operating Income, net

The following table compares second quarter 2026 non-operating income, net to second quarter 2025 (in thousands):

Three Months Ended June 30,

2026 2025 Increase/(Decrease)

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Interest and investment income 10,100 8,828 1,272 14 %

Other (expense) income, net

(3,929) 994 (4,923) (495) %

Total non-operating (expense) income, net

Other non-operating income, net 2,622 6,316 (3,694) (58) %

Total non-operating income, net $ 4,139 $ 5,607 $ (1,468) (26) %

The change in non-operating income, net was primarily due to a foreign currency translation net loss arising from translation of our foreign subsidiaries of $1.5 million in second quarter 2026, compared to a $3.6 million net gain in second quarter 2025.

In second quarter 2026 and 2025, based on the statutory federal tax rate net of discrete federal and state taxes, we had an effective tax rate of 18.8% and 14.4%, respectively.

The change in effective tax rate is primarily due to an increase in the amount of non-deductible officer’s compensation.

First Half 2026 Compared to First Half 2025

The following table compares first half 2026 revenue to first half 2025 revenue (in thousands):

Six Months Ended June 30,

2026 2025 Increase/(Decrease)

Smartphone $ 246,091 $ 419,075 $ (172,984) (41) %

CE, IoT/Auto 109,361 91,598 17,763 19 %

Streaming and Cloud Services

110,000 — 110,000 N/M

Other 134 430 (296) (69) %

Total Revenue $ 465,586 $ 511,103 $ (45,517) (9) %

Catch-up revenue (a) , included above

$ 167,368 $ 247,113 $ (79,745) (32) %

The change in non-operating (expense) income, net was primarily due to a foreign currency translation net loss arising from translation of our foreign subsidiaries of $2.9 million in first quarter 2026, compared to a $2.2 million net gain in first quarter 2025.

In first quarter 2026 and 2025, based on the statutory federal tax rate net of discrete federal and state taxes, we had an effective tax rate of 5.6% and 12.6%, respectively.

The change in effective tax rate was primarily due to an increase in the amount of tax benefits related to share-based compensation.

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

N/M Not meaningful

Total revenue of $465.6 million decreased $45.5 million from first half 2025 primarily due to catch-up revenue from the Samsung arbitration and vivo and HP agreements recognized in first half 2025, partially offset by catch-up revenue from the Amazon agreement and the LG TV agreement recognized in first half 2026.

This decrease was partially offset by revenue from fifteen new agreements signed in the last fifteen months, including the Amazon agreement and the previously announced Xiaomi, Honor, LG TV, and HP agreements.

In first half 2026 and 2025, 65% and 69% of our total revenue, respectively, was attributable to companies that individually accounted for 10% or more of our total revenue.

In first half 2026 and 2025, the following companies accounted for 10% or more of our total revenue:

Six Months Ended June 30,

Customer A 24% <10%

Customer B 14% 13%

Customer C 14% 36%

Customer E 13% <10%

Customer F <10% 20%

Operating Expenses

The following table summarizes the changes in operating expenses between first half 2026 and first half 2025 by category (in thousands):

Six Months Ended June 30,

2026 2025 Increase/(Decrease)

Research and portfolio development $ 112,242 $ 101,104 $ 11,138 11 %

Licensing 86,844 41,586 45,258 109 %

General and administrative 45,000 31,154 13,846 44 %

Total operating expenses $ 244,086 $ 173,844 $ 70,242 40 %

Operating expenses increased 40% to $244.1 million in first half 2026 from $173.8 million in first half 2025.

The $70.2 million increase in total operating expenses was primarily due to changes in the following items (in thousands):

Increase/(Decrease)

Intellectual property enforcement $ 23,981

Revenue share 23,223

Share-based compensation 13,108

Total change in operating expenses

The $70.2 million increase in operating expenses was driven by a $23.2 million increase in revenue share costs due to catch-up revenue recognized on the LG TV agreement signed in first half 2026 and by a $13.1 million increase in share-based compensation costs driven by recent business successes.

Additionally, intellectual property enforcement costs increased $24.0 million primarily related to ongoing proceedings.

Research and portfolio development expense:

Research and portfolio development expense increased compared to first half 2025 primarily due to increases in personnel-related costs and depreciation costs.

Licensing expense:

Licensing expense increased by $45.3 million compared to first half 2025 primarily driven by the above-noted increased revenue share costs and intellectual property enforcement costs.

General and administrative expense:

General and administrative expense increased $13.8 million primarily due to the above-noted increase in share-based compensation.

Non-Operating Income, net

The following table compares first half 2026 non-operating income, net to first half 2025 (in thousands):

Six Months Ended June 30,

2026 2025 Increase/(Decrease)

Interest expense $ (17,650) $ (19,408) $ 1,758 9 %

Interest and investment income 20,629 18,092 2,537 14 %

Other non-operating (expense) income, net (1,307) 7,310 (8,617) (118) %

Total non-operating income, net $ 1,672 $ 5,994 $ (4,322) (72) %

The change in non-operating income, net was primarily due to a foreign currency translation net loss arising from translation of our foreign subsidiaries of $4.4 million in first half 2026, compared to a $5.8 million net gain in first half 2025.

In first half 2026 and 2025, we had an effective tax rate of 14.1% and 13.7%, respectively.

The change in effective tax rate is due to an increase in the amount of non-deductible officer’s compensation.

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

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• operational risks, including cybersecurity events, human failures or other difficulties with our information technology systems;

• risks related to any new accounting standards or our assumptions and application of relevant accounting standards, including with respect to revenue recognition.

• risks related to any new accounting standards or our estimates, assumptions and the 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.

6 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