InterDigital, Inc.

Previous wording

Throughout the following discussion and elsewhere in this Quarterly Report on 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.

Current wording

Throughout the following discussion and elsewhere in this Quarterly Report on Form 10-Q, we refer to “catch-up revenue.” “Catch-up revenue” primarily represents revenue associated with reporting periods prior to the entry of the agreement.

Previous wording

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.

Current wording

During third quarter 2026, we entered into an arbitration agreement with a top PC manufacturer to determine the final terms of a new patent license covering certain of our patents. During third 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.

Previous wording

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.

Current wording

Additionally, we signed a new patent license agreement with KEBA Energy Automation GmbH. The agreement covers certain KEBA EV charger products under InterDigital’s global patent portfolio related to the 3G, 4G and Wi-Fi standards.

Previous wording

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.

Current wording

During the third quarter of 2026, the Dusseldorf Local Division of the Unified Patent Court (“UPC”) issued two additional injunctions against Disney. In July 2026, the court found that Disney infringed an InterDigital patent covering certain video encoding techniques related to HEVC. In September 2026, the court found that Disney infringed an InterDigital patent that covers technology that enables seamless viewing when sharing video content between different devices. Both rulings confirmed the validity of the patents and issued injunctions spanning across multiple countries in the European Union. Disney may appeal each decision. In their rulings, both UPC tribunals concluded that Disney is an "unwilling licensee" based on its conduct.

Previous wording

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.

Current wording

These decisions represent the second and third injunctions that InterDigital has received from the UPC against Disney. The first UPC injunction related to patents covering certain video encoding techniques associated with HEVC. Outside of the UPC, InterDigital has been awarded injunctions from national courts in Germany and Brazil for Disney’s infringement of InterDigital’s intellectual property related to high dynamic range (HDR) technology, the dynamic overlaying of multiple video streams, and additional encoding technologies related to HEVC and AVC.

Previous wording

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.

Current wording

During third quarter 2026, the 2027 Notes had a dilutive impact of 3.5 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.

Previous wording

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.

Current wording

From the period January 1, 2024 through December 31, 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 September 30, 2026, $296.7 million in principal of the 2027 Notes remains outstanding, of which holders had elected to convert $2.2 million principal amount, which will settle in fourth quarter 2026. No incremental outstanding shares will result from such conversions.

Previous wording

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

Current wording

As of September 30, 2026, 6.0 million warrants remain outstanding related to the 2027 Warrant Transactions at a strike price of $105.30 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 averaged $325 between September 2027 and April 2028, we would issue 4.1 million shares of common stock related to the 2027 Warrant Transactions.

Previous wording

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.

Current wording

As of October 29, 2026, there was $66.9 million remaining under the share repurchase authorization, which we plan to utilize to periodically repurchase additional common shares. See Part II—Other Information, Item 2— Unregistered Sales of Equity Securities and Use of Proceeds—Issuer Purchases of Equity Securities of this Quarterly Report on Form 10-Q.

Previous wording

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.

Current wording

As of September 30, 2026, we had $1.1 billion of cash, cash equivalents, restricted cash, and short-term investments and approximately $1.8 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 our three ongoing arbitrations.

Previous wording

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.

Current wording

95% of our third 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.

Previous wording

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):

Current wording

The following table reconciles the timing differences between cash receipts and recognized revenue during the three and nine months ended September 30, 2026 and 2025, including the resulting operating cash flow (in thousands):

Previous wording

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.

Current wording

Third quarter 2026 revenue of $193.4 million includes $36.2 million of catch-up revenue, while third quarter 2025 revenue of $164.7 million includes $17.7 million of catch-up revenue. The $28.7 million increase in total revenue was driven by higher catch-up revenue and recurring revenue recognized from eleven patent license agreements signed since third quarter 2025. In third quarter 2026, revenue (in descending order) from Dell, Apple, and Samsung each comprised 10% or more of our consolidated revenue. Refer to "Results of Operations — Third Quarter 2026 Compared to Third Quarter 2025" for further discussion of our 2026 revenue.

Previous wording

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, tariffs and other potential trade-related sanctions, and the potential for a recession. These market factors, as well as the impacts of global 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.

Current wording

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, recent increases in interest rates, tariffs and other potential trade-related sanctions, and the potential for a recession. These market factors, as well as the impacts of global 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.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

•Our third quarter 2026 revenue includes $36.2 million of catch-up revenue primarily related to the arbitration agreement signed with a top PC manufacturer in third quarter 2026.

Previous wording

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.

Current wording

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 share 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.

Previous wording

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):

Current wording

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

Previous wording

The net decrease in cash, cash equivalents, restricted cash, and short-term investments was attributable to cash used in financing activities of $211.3 million and cash used in investing activities of $29.3 million, excluding sales and purchases of short-term investments, partially offset by cash provided by operating activities of $98.6 million. Refer to the sections below for further discussion of these items.

Current wording

The net decrease in cash, cash equivalents, restricted cash, and short-term investments was attributable to cash used in financing activities of $338.8 million and cash used in investing activities of $43.4 million, excluding sales and purchases of short-term investments, partially offset by cash provided by operating activities of $249.0 million. Refer to the sections below for further discussion of these items.

Previous wording

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

Current wording

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

Previous wording

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):

Current wording

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 $232.1 million change in cash provided by operating activities was primarily driven by lower cash receipts due to the timing of receipts under new and existing agreements and due to 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 nine months ended September 30, 2026 and 2025 (in thousands):

Previous wording

(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 $28.4 million and $5.2 million in first half 2026 and 2025, respectively.

Current wording

(1) 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 $29.3 million and $7.6 million in first nine months 2026 and 2025, respectively.

Previous wording

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.

Current wording

Net cash used in investing activities for first nine months 2026 was $17.7 million, a $19.2 million change from $36.9 million in first nine months 2025. During first nine months 2026, we sold $25.8 million of short-term marketable securities, net of purchases, and capitalized $45.2 million of patent costs and capital expenditures. During first nine months 2025, we sold $18.3 million of short-term marketable securities, net of purchases, and capitalized $55.3 million of patent costs and capital expenditures.

Previous wording

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

Current wording

Net cash used in financing activities for first nine months 2026 was $338.8 million, a change of $191.8 million from $147.0 million in first nine months 2025. This change was primarily attributable to an $163.2 million payment related to partial conversions of the 2027 Notes in first nine months 2026. The change also reflects higher cash outflows in 2026, including a $19.5 million increase in taxes withheld on restricted stock unit vestings due to a higher share price at vesting and a $11.5 million increase in dividends paid following the increases in the declared dividend from $0.60 to $0.70. In addition, during first nine months 2025, we received $7.3 million due to the exercise of stock options. These changes were offset by a $16.8 million decrease in repurchases of common stock.

Previous wording

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.

Current wording

Our combined short-term and long-term deferred revenue balance as of September 30, 2026 was approximately $433.3 million, a net increase of $103.7 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.

Previous wording

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.

Current wording

Based on current license agreements, we expect the amortization of dynamic fixed-fee royalty payments to reduce the September 30, 2026 deferred revenue balance of $433.3 million by $294.9 million over the next twelve months.

Previous wording

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.

Current wording

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 $105.30 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.

Previous wording

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 diluted EPS calculation. 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 June 30, 2026 (in thousands):

Current wording

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 diluted EPS calculation. 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 $296.7 million aggregate principal amount outstanding and approximately 6.0 million related warrants as of September 30, 2026 (in thousands):

Previous wording

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

Current wording

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

Previous wording

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:

Current wording

In third quarter 2026 and 2025, 54% of our total revenue was attributable to licensees that individually accounted for 10% or more of our total revenue. In third quarter 2026 and 2025, the following licensees accounted for 10% or more of our total revenue:

Previous wording

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

Current wording

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

Previous wording

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):

Current wording

Operating expenses increased to $94.1 million in third quarter 2026 compared to $88.9 million in third quarter 2025. The $5.2 million increase in total operating expenses was primarily due to changes in the following items (in thousands):

Previous wording

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.

Current wording

The $5.2 million increase in operating expenses was driven by a $4.8 million increase in intellectual property enforcement costs related to ongoing proceedings and a $4.0 million increase in performance related share-based compensation costs due to recent business successes. These increases were offset by a $1.5 million decrease in revenue share costs due to the expiration of the Samsung TV agreement.

Previous wording

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

Current wording

Research and portfolio development expense: Research and portfolio development expense increased compared to third quarter 2025 primarily due to increased share-based compensation costs and depreciation.

Previous wording

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

Current wording

Licensing expense: Licensing expense increased compared to third quarter 2025 primarily due to the above-noted change in intellectual property enforcement and share-based compensation costs, partially offset by the decreased revenue share costs.

Previous wording

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

Current wording

General and administrative expense: General and administrative expense decreased compared to third quarter 2025 primarily due to lower personnel-related costs and other corporate expenses, partially offset by increased share-based compensation expenses.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

In third 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 19.4% and 11.2%, respectively. The change in effective tax rate was primarily due to a lower proportion of income qualifying for the Foreign-Derived Deduction Eligible Income ("FDDEI") benefit.

Previous wording

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

Current wording

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

Previous wording

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:

Current wording

In first nine months 2026 and 2025, 49% and 64% of our total revenue, respectively, was attributable to companies that individually accounted for 10% or more of our total revenue. In first nine months 2026 and 2025, the following companies accounted for 10% or more of our total revenue: