Adeia Inc.

Previous wording

Adeia Inc. (“Adeia”, “we”) is a leading IP licensing platform in the consumer and entertainment space, with a diverse portfolio of media and semiconductor intellectual property and more than 12,750 patents and patent applications worldwide. In order to serve an increasingly connected world, we invent, develop, and license fundamental innovations that enhance billions of devices and shape the way millions of people explore and experience entertainment. Our inventions are key enabling technologies that drive how consumers interact with entertainment and devices at home and on the go around the world. Our foundational technologies help elevate content and improve how audiences connect with it in a way that is more intelligent, immersive and personal. Our innovative solutions help power smart devices, entertainment experiences and more, and have created a unified ecosystem that reaches highly-engaged consumers and uncovered new business opportunities.

Current wording

Adeia Inc. (“Adeia”, “we”) is a leading IP licensing platform in the consumer and entertainment space, with a diverse portfolio of media and semiconductor intellectual property and more than 13,000 patents and patent applications worldwide. In order to serve an increasingly connected world, we invent, develop, and license fundamental innovations that enhance billions of devices and shape the way millions of people explore and experience entertainment. Our inventions are key enabling technologies that drive how consumers interact with entertainment and devices at home and on the go around the world. Our foundational technologies help elevate content and improve how audiences connect with it in a way that is more intelligent, immersive and personal. Our innovative solutions help power smart devices, entertainment experiences and more, and have created a unified ecosystem that reaches highly-engaged consumers and uncovered new business opportunities.

Previous wording

In evaluating our financial condition and operating performance, we primarily focus on revenue and cash flows from operations. For the three months ended March 31, 2025, as compared to the same period in 2024:

Current wording

In evaluating our financial condition and operating performance, we primarily focus on revenue and cash flows from operations. For the three and six months ended June 30, 2025, as compared to the same period in 2024:

Previous wording

Recurring revenues increased by $1.6 million, or 2.0% from $82.8 million in 2024 to $84.4 million in 2025.

Current wording

Recurring revenues increased by $2.8 million, or 3.4% from $82.3 million in 2024 to $85.1 million in 2025.

Previous wording

We made $17.1 million in principal payments towards our term loan, bringing the outstanding balance to $470.0 million as of March 31, 2025.

Current wording

We made $11.1 million in principal payments towards our term loan, bringing the outstanding balance to $458.9 million as of June 30, 2025.

Previous wording

Non-recurring revenues increased by $2.7 million, or 418.4% from $0.6 million in 2024 to $3.3 million in 2025.

Current wording

Recurring revenues increased by $4.5 million, or 2.7% from $165.0 million in 2024 to $169.5 million in 2025.

Previous wording

Cash provided by operating activities decreased by $10.1 million, or 15.0% from $67.2 million in 2024 to $57.1 million in 2025.

Current wording

Cash provided by operating activities decreased by $10.4 million, or 11.5% from $90.7 million in 2024 to $80.3 million in 2025.

Previous wording

We repurchased $10.0 million of our common stock in 2025.

Current wording

We repurchased $10.0 million of our common stock in the first quarter of 2025.

Previous wording

The following table sets forth our revenue for the three months ended March 31, 2025 and 2024 (in thousands, except for percentages):

Current wording

The following table sets forth our revenue for the three and six months ended June 30, 2025 and 2024 (in thousands, except for percentages):

Previous wording

Recurring revenue for the three months ended March 31, 2025 and 2024 were $84.4 million and $82.8 million, respectively. The increase of $1.6 million was driven primarily by the execution of license agreements with new customers in 2024, partially offset by declines in royalty revenue from certain Pay-TV customers.

Current wording

Recurring revenue for the three months ended June 30, 2025 and 2024 were $85.1 million and $82.3 million, respectively. The increase of $2.8 million was driven primarily by the execution of license agreements with new customers in the second half of 2024 and the first half of 2025, partially offset by declines in royalty revenue from certain Pay-TV customers.

Previous wording

Non-recurring revenues for the three months ended March 31, 2025 and 2024 were $3.3 million and $0.6 million, respectively. The increase of $2.7 million was primarily attributable to the execution of two multi-year license agreements with new customers for access to our media portfolio in the first quarter of 2025.

Current wording

Non-recurring revenues for the three months ended June 30, 2025 and 2024 were $5.1 million and $0.6 million, respectively. The decrease of $4.4 million was primarily attributable to the execution of the settlement agreement and multi-year renewal with X Corp. in the second quarter of 2024, which resulted in non-recurring revenue in that quarter that did not recur in 2025.

Previous wording

The increase in revenue during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily attributable to the execution of a multi-year license agreement with Amazon for access to our media portfolio that occurred in the fourth quarter of 2024, and the execution of two multi-year license agreements with new customers for access to our media portfolio executed in the first quarter of 2025, for which a portion of revenue was recognized up-front in such quarter. Increases were partially offset by declines in royalty revenue from certain Pay-TV customers.

Current wording

The increase in revenue during the six months ended June 30, 2025, as compared to the same period in 2024, was primarily attributable to the execution of license agreements with new customers in the second half of 2024 and the first half of 2025. Increases were partially offset by the execution of the settlement agreement and multi-year renewal with X Corp. in the second quarter of 2024.

Previous wording

The increase in R&D expense during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to an increase in patent portfolio expenses, patent technical sales support expenses, and an increase in personnel related costs as a result of increased headcount.

Current wording

The increase in R&D expense during the three and six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to an increase in patent portfolio expenses, patent technical support expenses, and an increase in personnel related costs as a result of increased headcount.

Previous wording

The increase in SG&A expense during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to an increase in personnel related costs as a result of increased headcount and an increase in certain administrative costs associated with the repricing of our credit facility, partially offset by lower advertising expense and outside services.

Current wording

The increase in SG&A expense during the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to increases in personnel related costs as a result of increased headcount, advertising expense, and certain administrative costs associated with the repricing of our credit facility in the first quarter of 2025, partially offset by a decrease in outside services.

Previous wording

The decrease in amortization expense during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to certain intangible assets becoming fully amortized during 2024. The decrease was partially offset by an increase in amortization expense as a result of patents acquired in 2024.

Current wording

The decrease in amortization expense during the three and six months ended June 30, 2025, as compared to the same periods in 2024, was primarily due to certain intangible assets becoming fully amortized during 2024. The decrease was partially offset by an increase in amortization expense as a result of patents acquired in the second half of 2024 and first half of 2025.

Previous wording

The increase in litigation expense during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to increased activity in current litigation matters. See Part II, Item 1 –Legal Proceedingsfor additional information regarding these matters.

Current wording

The increase in litigation expense during the three and six months ended June 30, 2025, as compared to the same periods in 2024, was primarily due to increased activity in current litigation matters. See Part II, Item 1 –Legal Proceedingsfor additional information regarding these matters.

Previous wording

The decrease in interest expense during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to lower debt balance, the reduction of the interest rate margin resulting from the repricing of our Term Loan B during the second quarter of 2024 and the first quarter of 2025, and the Federal Reserve interest rate cut during the third quarter of 2024.

Current wording

The decrease in interest expense during the three and six months ended June 30, 2025, as compared to the same periods in 2024, was primarily due to lower debt balance, the reduction of the interest rate margin resulting from the repricing of our Term Loan B during the second quarter of 2024 and the first quarter of 2025, and the Federal Reserve interest rate cut during the third quarter of 2024.

Previous wording

The increase in other income and expense, net during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to an increase in interest income from significant financing components from certain revenue contracts.

Current wording

The increase in other income and expense, net during the three and six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to an increase in interest income from significant financing components from certain revenue contracts.

Previous wording

Provision for Income Taxes

Current wording

Provision for Income Taxes (in thousands, except for percentages):

Previous wording

Our income tax provision for interim periods is based on the estimated annual effective tax rate adjusted for discrete items during the period. For the three months ended March 31, 2025, we recorded income tax expense of $2.1 million on pretax income of $13.9 million, which resulted in an effective tax rate of 15.0%. The effective tax rate varies from the 21% U.S. federal tax rate primarily due to stock-based compensation windfall and unrealized benefits associated with South Korea withholding tax refund claims.

Current wording

Our income tax provision for interim periods is based on the estimated annual effective tax rate adjusted for discrete items during the period. For the three months ended June 30, 2025, we recorded an income tax benefit of $9.1 million on pretax income of $7.6 million, and for the six months ended June 30, 2025, we recorded an income tax benefit of $7.0 million on pretax income of $21.5 million, which resulted in effective tax rates of (119.4)% and (32.6)%, respectively, for the three and six months ended June 30, 2025. The effective tax rate varies from the 21% U.S. federal tax rate primarily due to unrealized benefits associated with South Korea withholding tax refund claims.

Previous wording

For the three months ended March 31, 2024, we recorded income tax expense of $5.7 million on pretax income of $6.6 million, which resulted in an effective tax rate of 86.4%.

Current wording

For the three months ended June 30, 2024, we recorded income tax expense of $2.9 million on pretax income of $11.3 million, and for the six months ended June 30, 2024, we recorded an income tax expense of $8.6 million on pretax income of $17.9 million, which resulted in effective tax rates of 26.0% and 48.2%, respectively, for the three and six months ended June 30, 2024.

Previous wording

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

Current wording

The decrease in income tax expense for the three and six months ended June 30, 2025, as compared to the same periods in the prior year was primarily due to unrealized benefits associated with South Korea withholding tax refund claims.

Previous wording

The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents for the three months ended March 31, 2025 and 2024.

Current wording

The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents for the six months ended June 30, 2025 and 2024.

Previous wording

Our primary sources of liquidity and capital resources are our operating cash flows and our short-term investments in marketable securities. Cash, cash equivalents and marketable securities were $116.5 million at March 31, 2025, an increase of $6.1 million from $110.4 million at December 31, 2024. This increase primarily resulted from $57.1 million of cash generated from operations, partially offset by $17.1 million in repayment of our long-term debt, $12.0 million in repurchases of common stock associated with tax withholdings on equity awards, $11.3 million in repurchases of common stock, $5.4 million in dividends paid, and $5.4 million in purchases of intangible assets.

Current wording

Our primary sources of liquidity and capital resources are our operating cash flows and our short-term investments in marketable securities. Cash, cash equivalents and marketable securities were $116.5 million at June 30, 2025, an increase of $6.1 million from $110.4 million at December 31, 2024. This increase primarily resulted from $80.3 million of cash generated from operations, partially offset by $28.2 million in repayment of our long-term debt, $19.7 million in repurchases of common stock associated with tax withholdings on equity awards, $11.3 million in repurchases of common stock, $10.9 million in dividends paid, and $5.4 million in purchases of intangible assets.

Previous wording

For information about our material cash requirements, see “Liquidity and Capital Resources” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. Other than the principal payments of $17.1 million made by us under the existing Term Loan B during the three months ended March 31, 2025, our cash requirements have not materially changed since December 31, 2024. We expect to continue to make additional payments on our existing debt from cash generated from operations.

Current wording

For information about our material cash requirements, see “Liquidity and Capital Resources” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. Other than the principal payments of $28.2 million made by us under the existing Term Loan B during the six months ended June 30, 2025, our cash requirements have not materially changed since December 31, 2024. We expect to continue to make additional payments on our existing debt from cash generated from operations.

Previous wording

In October 2024, our Board approved an increase of the existing share repurchase authorization up to a total of $200.0 million. The stock repurchases may be made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions, or pursuant to a Rule 10b5-1 plan. During the three months ended March 31, 2025, the Company repurchased a total of approximately 0.8 million shares of common stock, at an average price of $13.19 per share for a total cost of $10.0 million. The Company did not repurchase any shares during the three months ended March 31, 2024. As of March 31, 2025, the total remaining amount available for repurchase under this plan was $170.0 million.

Current wording

In October 2024, our Board approved an increase of the existing share repurchase authorization up to a total of $200.0 million. The stock repurchases may be made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions, or pursuant to a Rule 10b5-1 plan. During the six months ended June 30, 2025, we repurchased a total of approximately 0.8 million shares of common stock, at an average price of $13.19 per share for a total cost of $10.0 million. These purchases occurred during the three months ended March 31, 2025 and no repurchases were made during the three months ended June 30, 2025. We did not repurchase any shares during the six months ended June 30, 2024. As of June 30, 2025, the total remaining amount available for repurchase under this plan was $170.0 million.

Previous wording

Cash flows provided by operations were $57.1 million for the three months ended March 31, 2025, which were primarily due to our net income of $11.8 million being adjusted for non-cash items of amortization of intangible assets of $14.1 million, stock-based compensation expense of $8.2 million, and $25.8 million in changes in operating assets and liabilities including payment during the period of employee bonuses earned in 2024.

Current wording

Cash flows provided by operations were $80.3 million for the six months ended June 30, 2025, primarily due to our net income of $28.5 million being adjusted for non-cash items of amortization of intangible assets of $28.3 million, stock-based compensation expense of $16.9 million, and $9.0 million in changes in operating assets and liabilities including payment during the period of employee bonuses earned in 2024.

Previous wording

Cash flows provided by operations were $67.2 million for the three months ended March 31, 2024, which were primarily due to our net income of $0.9 million being adjusted for non-cash items of amortization of intangible assets of $23.2 million, amortization of debt issuance costs of $0.8 million, stock-based compensation expense of $5.1 million and $34.8 million in changes in operating assets and liabilities including payment during the period of employee bonuses earned in 2023.

Current wording

Cash flows provided by operations were $90.7 million for the six months ended June 30, 2024, primarily due to our net income of $9.3 million being adjusted for non-cash items of amortization of intangible assets of $43.2 million, amortization of debt issuance costs of $1.6 million, stock-based compensation expense of $11.7 million, depreciation of property and equipment of $1.0 million and $24.5 million in changes in operating assets and liabilities including payment during the period of employee bonuses earned in 2023.

Previous wording

Net cash used in investing activities was $6.2 million for the three months ended March 31, 2025, which primarily related to purchases of short-term investments in marketable securities of $7.2 million, purchases of intangible assets of $5.4 million, and proceeds from maturities of marketable securities of $6.6 million.

Current wording

Net cash used in investing activities was $6.2 million for the six months ended June 30, 2025, primarily due to purchases of short-term investments in marketable securities of $13.0 million, purchases of intangible assets of $5.4 million, and proceeds from maturities of marketable securities of $12.6 million.

Previous wording

Net cash used in investing activities was $11.0 million for the three months ended March 31, 2024, which primarily related to purchases of short-term investments in marketable securities of $11.2 million, purchases of property and equipment of $0.8 million, purchases of intangible assets of $8.5 million, and proceeds from maturities of marketable securities of $9.5 million.

Current wording

Net cash used in investing activities was $8.2 million for the six months ended June 30, 2024, primarily due to purchases of short-term investments of $18.7 million, purchases of property and equipment of $1.2 million, purchases of intangible assets of $8.5 million, and proceeds from maturities of investments of $20.2 million.

Previous wording

Our capital expenditures for property and equipment consist primarily of leasehold improvements, purchases of computer hardware and software, information systems, and semiconductor production and test equipment. During the three months ended March 31, 2025 and 2024, we spent $0.2 million and $0.8 million on capital expenditures, respectively, and we expect capital expenditures in the remainder of 2025 to be approximately $1.0 million. Our capital expenditures for intangible assets consists primarily of acquired patents. During the three months ended March 31, 2025, we spent $5.4 million on purchases of intangible assets. These expenditures are expected to be financed with cash from operations, existing cash and cash equivalents and marketable securities. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs.

Current wording

Our capital expenditures for property and equipment consist primarily of leasehold improvements, purchases of computer hardware and software, information systems, and semiconductor production and test equipment. During the six months ended June 30, 2025 and 2024, we spent $0.4 million and $1.2 million on capital expenditures, respectively. Our capital expenditures for intangible assets consists primarily of acquired patents. During the six months ended June 30, 2025 and 2024, we spent $5.4 million and $8.5 million on purchases of intangible assets, respectively. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs.

Previous wording

Net cash used in financing activities was $45.6 million for the three months ended March 31, 2025 due to $17.1 million in repayment of indebtedness, $5.4 million in dividends paid, $12.0 million in repurchases of common stock for tax withholdings on equity awards, and $10.0 million in repurchases of common stock.

Current wording

Net cash used in financing activities was $68.7 million for the six months ended June 30, 2025 due to $28.2 million in repayment of indebtedness, $10.9 million in dividends paid, $19.7 million in repurchases of common stock for tax withholdings on equity awards, and $11.3 million in repurchases of common stock.

Previous wording

Net cash used in financing activities was $52.8 million for the three months ended March 31, 2024 due to $40.1 million in repayment of indebtedness, $5.4 million in dividends paid, $7.7 million in repurchases of common stock for tax withholdings on equity awards, partially offset by $0.5 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans.

Current wording

Net cash used in financing activities was $70.5 million for the six months ended June 30, 2024 due to $52.1 million in repayment of indebtedness, $10.9 million in dividends paid, $9.1 million in repurchases of common stock for tax withholdings on equity awards, partially offset by $1.6 million in proceeds from purchases through our employee stock purchase program and exercise of stock options.

Previous wording

At March 31, 2025, $470.0 million was outstanding under the term loan B facility with an interest rate, including unamortized debt discount and issuance costs of $10.8 million. Interest is payable monthly. Under the existing loan agreement, we have future minimum principal payments for our debt of $18.3 million in the remainder of 2025, $24.4 million each year from 2026 through 2027, with the remaining principal balance of $403.0 million due in 2028. The 2020 Credit Agreement, as amended, also requires that we continue to make cash payments on an annual basis based on certain leverage ratios and excess cash flow generated for the immediately preceding fiscal year. The cash payments are applied to the remaining principal balance due at final maturity. Based on certain leverage ratios and the voluntary prepayments we made during the year ended December 31, 2024, no excess cash flow payment is required in 2025. The term loan B facility contains customary covenants, and as of March 31, 2025, we were in full compliance with such covenants.

Current wording

As of June 30, 2025, $458.9 million was outstanding under the term loan B facility with an interest rate, including unamortized debt discount and issuance costs of $10.0 million. Interest is payable monthly. Under the existing loan agreement, we have future minimum principal payments for our debt of $12.2 million in the remainder of 2025, $24.4 million each year from 2026 through 2027, with the remaining principal balance of $398.0 million due in 2028. The 2020 Credit Agreement, as amended, also requires that we continue to make cash payments on an annual basis based on certain leverage ratios and excess cash flow generated for the immediately preceding fiscal year. The cash payments are applied to the remaining principal balance due at final maturity. Based on certain leverage ratios and the voluntary prepayments we made during the year ended December 31, 2024, no excess cash flow payment is required in 2025. The term loan B facility contains customary covenants, and as of June 30, 2025, we were in full compliance with such covenants.

Previous wording

During the three months ended March 31, 2025, there were no significant changes in our critical accounting policies and estimates. See “Note 2 –Summary of Significant Accounting Policies” of Notes to Condensed Consolidated Financial Statements for additional detail. For a discussion of our critical accounting policies and estimates, see Part II, Item 7 –Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K.

Current wording

During the six months ended June 30, 2025, there were no significant changes in our critical accounting policies and estimates. See “Note 2 –Summary of Significant Accounting Policies” of Notes to Condensed Consolidated Financial Statements for additional detail. For a discussion of our critical accounting policies and estimates, see Part II, Item 7 –Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K.