Adeia (NASDAQ: ADEA) boosts Q1 profit on $104.8M revenue and major IP deals
Adeia Inc. reported stronger results for the quarter ended March 31, 2026. Revenue rose to $104.8 million from $87.7 million, driven mainly by new multi‑year license agreements with AMD and Microsoft, partly offset by lower Pay‑TV royalties.
Net income nearly doubled to $22.8 million from $11.8 million, with diluted EPS increasing to $0.20 from $0.10. Non‑recurring revenue jumped to $38.5 million while recurring revenue fell to $66.3 million, reflecting a heavier mix of up‑front license fees. Adeia generated $58.5 million of operating cash flow, paid down $28.1 million of term‑loan debt to $398.6 million, repurchased $10.0 million of stock, and paid $5.5 million in dividends, ending with $115.8 million in cash, cash equivalents and marketable securities.
Positive
- Revenue and earnings growth: Q1 2026 revenue increased about 20% to $104.8 million and net income nearly doubled to $22.8 million, with diluted EPS rising to $0.20 from $0.10.
- Strong cash generation and de‑leveraging: Operating cash flow was $58.5 million, and Adeia paid down $28.1 million of Term Loan B principal, reducing outstanding debt to $398.6 million.
- Large contracted backlog: Remaining revenue under contracts with performance obligations totaled $437.2 million as of March 31, 2026, supporting future revenue visibility.
Negative
- None.
Insights
Adeia delivered higher Q1 revenue and profit, but with a larger non‑recurring mix.
Adeia grew revenue about 20% to $104.8M, mainly from new multi‑year licenses with AMD and Microsoft. Net income rose to $22.8M, and operating margin expanded to 33%, helped by higher non‑recurring fees.
Recurring revenue declined to $66.3M while non‑recurring revenue climbed to $38.5M, so near‑term results lean more on up‑front payments than ongoing royalties. Cash from operations was steady at $58.5M, supporting debt reduction and capital returns.
The company reduced Term Loan B principal to $398.6M and ended Q1 with $115.8M in cash and securities. It also repurchased $10.0M of shares and paid $5.5M in dividends. Remaining contracted performance obligations of $437.2M as of March 31, 2026 provide multi‑year revenue visibility.
Key Figures
Key Terms
non-recurring revenue financial
Term Loan B financial
performance obligations financial
available-for-sale financial
stock-based compensation expense financial
Earnings Snapshot
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
For the quarterly period ended
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Commission File Number:
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(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares outstanding of the registrant’s common stock as of April 24, 2026 was
ADEIA INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026
TABLE OF CONTENTS
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PART I |
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Item 1. |
Financial Statements (unaudited) |
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Condensed Consolidated Statements of Income – Three Months Ended March 31, 2026 and 2025 |
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Condensed Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2026 and 2025 |
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Condensed Consolidated Balance Sheets – March 31, 2026 and December 31, 2025 |
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Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2026 and 2025 |
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Condensed Consolidated Statements of Equity – Three Months Ended March 31, 2026 and 2025 |
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Notes to Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
Controls and Procedures |
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PART II |
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Item 1. |
Legal Proceedings |
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Item 1A. |
Risk Factors |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3. |
Defaults Upon Senior Securities |
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Item 4. |
Mine Safety Disclosures |
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Item 5. |
Other Information |
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Item 6. |
Exhibits |
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Signatures |
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ADEIA INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
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March 31, |
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March 31, |
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Revenue |
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Operating expenses: |
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Research and development |
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Selling, general and administrative |
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Amortization expense |
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Litigation expense |
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Total operating expenses |
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Operating income |
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Interest expense |
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Other income and expense, net |
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Income before income taxes |
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Provision for income taxes |
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Net income |
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Net income per share: |
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Basic |
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Diluted |
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Weighted average number of shares used in per share calculations |
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Diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ADEIA INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
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March 31, |
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March 31, |
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Net income |
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Other comprehensive income (loss), net of tax: |
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Net unrealized gain (losses) on available-for-sale debt securities |
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Other comprehensive income (loss), net of tax |
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Total comprehensive income |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ADEIA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for par value)
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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Marketable securities |
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Total cash, cash equivalents, and marketable securities |
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Accounts receivable, net of allowance for credit losses of $ |
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Unbilled contracts receivable, net |
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Other current assets |
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Total current assets |
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Long-term unbilled contracts receivable |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Intangible assets, net |
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Goodwill |
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Other long-term assets |
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Total assets |
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable |
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Accrued liabilities |
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Current portion of long-term debt |
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Deferred revenue |
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Total current liabilities |
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Deferred revenue, less current portion |
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Long-term debt, net |
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Noncurrent operating lease liabilities |
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Long-term income tax payable |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 14) |
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Stockholders’ equity: |
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Preferred stock: $ |
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Common stock: $ |
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Additional paid-in capital |
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Treasury stock at cost (2026: |
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Accumulated other comprehensive income (loss) |
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Retained earnings |
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Total stockholders’ equity |
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Total liabilities and equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
ADEIA INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
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Three Months Ended |
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March 31, 2026 |
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March 31, 2025 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash from operating activities: |
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Depreciation of property and equipment |
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Amortization of intangible assets |
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Stock-based compensation expense |
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Deferred income taxes |
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Amortization of debt issuance costs |
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Other |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Unbilled contracts receivable |
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Other assets |
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Accounts payable |
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Accrued and other liabilities |
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Deferred revenue |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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Purchases of intangible assets |
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Purchases of short-term investments |
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Proceeds from maturities of investments |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Payment of dividends |
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Principal payments on debt agreements |
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Proceeds from employee stock purchase program and exercise of stock options |
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Repurchases of common stock for tax withholdings on equity awards |
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Repurchases of common stock |
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Net cash used in financing activities |
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Net (decrease) increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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Supplemental disclosure of cash flow information: |
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Interest paid |
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$ |
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$ |
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Income taxes paid, net of refunds |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
ADEIA INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except per share amount)
(unaudited)
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Total Company Stockholders' Equity |
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Common Stock |
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Treasury Stock |
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Three Months Ended March 31, 2026 |
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Shares |
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Amount |
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Additional |
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Shares |
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Amount |
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Accumulated |
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Retained Earnings |
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Total |
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Balance at January 1, 2026 |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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( |
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— |
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Cash dividends paid on common stock ($ |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock in connection with exercise of stock options |
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— |
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Issuance of restricted stock, net of shares canceled |
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— |
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Withholding taxes related to net share settlement of restricted awards |
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Repurchases of common stock |
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Stock-based compensation expense |
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Balance at March 31, 2026 |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
ADEIA INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except per share amount)
(unaudited)
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Total Company Stockholders' Equity |
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Common Stock |
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Treasury Stock |
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Three Months Ended March 31, 2025 |
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Shares |
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Amount |
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Additional |
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Shares |
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Amount |
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Accumulated |
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Retained Earnings |
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Total |
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Balance at January 1, 2025 |
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$ |
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$ |
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$ |
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$ |
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Net income |
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Other comprehensive income |
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Cash dividends paid on common stock ($ |
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Issuance of common stock in connection with exercise of stock options |
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Issuance of restricted stock, net of shares canceled |
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Withholding taxes related to net share settlement of restricted awards |
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Repurchases of common stock |
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Stock-based compensation expense |
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— |
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Balance at March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
ADEIA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 – THE COMPANY AND BASIS OF PRESENTATION
Adeia Inc. (the “Company”), a Delaware corporation, is one of the industry’s largest intellectual property (“IP”) licensing platforms, with a diverse portfolio of media and semiconductor IP consisting of approximately
The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. The amounts as of December 31, 2025 have been derived from the Company’s annual audited Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2025, filed on February 26, 2026 (the “Form 10-K”). These Condensed Consolidated Financial Statements should be read in conjunction with the annual audited Consolidated Financial Statements and notes thereto included in the Form 10-K as of and for the year ended December 31, 2025.
The Company’s consolidated financial statements include the accounts of Adeia Inc. and its wholly-owned subsidiaries. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments necessary (consisting of normal recurring adjustments) to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026 or any future period and the Company makes no representations related thereto.
The Company’s fiscal year ends on December 31 and employs a calendar month-end reporting period for its quarterly reporting. The Company operates under
Certain prior fiscal year balances have been reclassified to conform to the current fiscal year presentation.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There have been no significant changes in the Company’s significant accounting policies during the three months ended March 31, 2026, as compared to the significant accounting policies described in the Form 10-K.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The accounting estimates and assumptions that require management’s most significant, challenging, and subjective judgment include identifying the performance obligations in the contract, determining standalone selling price used to allocate consideration in a contract with multiple performance obligations, estimating the fair value of noncash consideration, estimating variable consideration relating to potential future price adjustments as a result of legal contract disputes, estimating quarterly royalties prior to receiving the royalty reports from the licensee, measurement of the fair value of acquired intangible assets, the assessment of the recoverability of goodwill, the assessment of useful lives and recoverability of other intangible assets and long-lived assets, recognition and measurement of current and deferred income tax assets and liabilities, the assessment of unrecognized tax benefits and purchase accounting resulting from business combinations, among others. Actual results experienced by the Company may differ from management’s estimates. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known.
9
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. In the
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. In the
Recently Issued Accounting Pronouncements Not Yet Adopted
NOTE 3 – REVENUE
Revenue Recognition
General
Revenue is recognized when control of the IP rights is transferred to a customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for the licensing of the Company’s IP, which may include various combinations of IP rights and services which are generally capable of being distinct and accounted for as separate performance obligations. In situations where foreign taxes are withheld by the Company’s licensee, revenue is recognized gross of withholding taxes that are remitted directly by the licensee to a local tax authority.
Some of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the individual performance obligations are separately accounted for if they are distinct. In a contract with multiple performance obligations, the transaction price is allocated among the separate performance obligations based on their relative standalone selling prices. The determination of standalone selling price considers market conditions, the size and scope of the contract, customer and geographic information, and other factors. When observable prices are not available, standalone selling price for separate performance obligations is based on the adjusted market assessment approach to estimate the price that a customer in the relevant market would be willing to pay for licensing the Company’s IP rights. The allocation of transaction price among performance obligations in a contract may impact the amount and timing of revenue recognized in the Consolidated Statements of Income during a given period.
In certain contracts with customers, the Company receives noncash consideration in the form of patents, and the fair value of those assets is included in the transaction price for revenue recognition purposes. The Company measures fair value at contract inception using one of, or a combination of, an analysis of comparable market transactions (the market approach), and/or an analysis of the costs that would be required to develop and maintain a comparable set of patents (the cost approach).
When a contract with a customer includes variable consideration, an estimate of the consideration which the Company expects to be entitled to for transferring the promised IP rights or services is made at contract inception and in each subsequent reporting period until the uncertainty associated with the variable consideration is resolved.
The amount of variable consideration is estimated by considering all available information (historical, current, and forecast) and is updated as additional information becomes available.
10
The estimate of variable consideration is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. When the uncertainty associated with variable consideration relates to potential price adjustments as a result of a legal contract dispute, the Company estimates variable consideration using the expected value method or the most likely amount method, whichever is more appropriate in the circumstances, and considers all available information, including historical data and experience. Estimating variable consideration related to potential future price adjustments requires significant judgment in evaluating the possible outcomes. Subsequent changes in the transaction price resulting from changes in the estimate of variable consideration are allocated to the performance obligations in the contract on the same basis as at contract inception.
When variable consideration is in the form of a sales-based or usage-based royalty in exchange for a license of IP, revenue is recognized at the later of when the subsequent sale or usage occurs or the performance obligation to which some or all of the sales-based or usage-based royalty has been allocated has been satisfied or partially satisfied.
Description of Revenue-Generating Activities
IP License Arrangements
The Company licenses (i) its media patent portfolio (“Media IP licensing”) to multichannel video programming distributors, over-the-top video service providers, consumer electronics manufacturers, social media, and other new media companies and (ii) its semiconductor technologies and associated patent portfolio (“Semiconductor IP licensing”) to memory, logic, sensors, radio frequency component, and foundry companies. The Company generally licenses its IP portfolios under
Variable-based Media IP or Semiconductor IP royalty licensing
The Company recognizes revenue from variable based contracts based on the customer’s sale or usage of the IP during the period in which the licensee’s sales or production are estimated to have occurred, which results in an adjustment to revenue when actual sales or production are subsequently reported by the licensee, which is generally in the month or quarter following usage or shipment. Estimating customers’ monthly or quarterly royalties prior to receiving the royalty reports requires the Company to make significant assumptions and judgments related to forecasted trends and growth rates used to estimate quantities shipped or manufactured by customers, which could have a material impact on the amount of revenue it reports on a quarterly basis.
Fixed-fee Media IP licensing
The Company’s long-term fixed-fee Media IP licensing contracts provide its customers with rights to future patented technologies over the term of the contract that are highly interdependent or highly interrelated to the patented technologies provided at the inception of the contract. The Company treats these rights as a single performance obligation with revenue recognized on a straight-line basis over the term of the fixed-fee license contract. The transaction price is adjusted for the effect of any significant financing components calculated using borrower-specific, risk-adjusted interest rates, with the related interest income or expense being recognized over time on an effective rate basis.
Fixed-fee or minimum guarantee Semiconductor IP licensing
On occasion, the Company enters into Semiconductor IP licenses that have a fixed fee or a minimum guarantee, whereby licensees pay a fixed fee for the right to incorporate the Company’s IP technologies in the licensee’s products over the license term. In contracts with a minimum guarantee, the fixed fee component corresponds to a minimum number of units or dollars that the customer must produce or pay, with additional per-unit fees for any units or dollars exceeding the minimum.
The Company generally recognizes the full fixed fee as revenue at the beginning of the license term when the customer has the right to use the IP and begins to benefit from the license, adjusted for the effect of any significant financing components calculated using borrower-specific, risk-adjusted interest rates, with the related interest income or expense being recognized over time on an effective rate basis. For minimum guarantee contracts where the customer exceeds the minimum, the Company recognizes revenue relating to any additional per-unit fees in the periods it believes the customer has exceeded the minimum and adjusts the revenue based on actual usage once that is reported by the customer.
11
IP license contracts with multiple performance obligations
At times, the Company enters into long-term license contracts with more than one performance obligation, which may include releases from past patent infringement claims or one or more prospective licenses. In these arrangements, the Company allocates the transaction price between releases for past patent infringement claims and prospective licenses based on their relative standalone selling prices. Determination of standalone selling price requires significant management judgment.
In determining the standalone selling price of each performance obligation, the Company considers such factors as the customer’s revenues, the number of past and projected future subscribers, units shipped, and units manufactured, as well as the per-subscriber or per-unit licensing rates the Company generally receives from licensees of comparable sizes in comparable markets and geographies.
As a release from past patent infringement claims is generally satisfied at execution of the contract, the transaction price allocated to the release from past patent infringement claims is generally recognized in the period the contract is executed. Transaction price allocated to prospective Media IP licenses is recognized ratably over the license term, and transaction price allocated to prospective Semiconductor IP licenses is recognized upon execution of the contract.
Practical Expedients and Exemptions
The Company applies a practical expedient to not perform an evaluation of whether a contract includes a significant financing component when the timing of revenue recognition differs from the timing of cash collection by
The Company applies a practical expedient to expense costs to obtain a contract with a customer as incurred as a component of selling, general and administrative expenses when the amortization period would have been
The Company applies a practical expedient when disclosing revenue expected to be recognized from unsatisfied performance obligations to exclude contracts with customers with an original duration of less than
Revenue Details
Revenue Disaggregation
The following information depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors by disaggregating revenue by category, market vertical and geographic location (presented in “Note 15 – Segment Information”). This information includes revenue recognized from contracts with customers and revenue from other sources, including sales-based or usage-based royalty revenues and fees associated with releases for past infringement.
Recurring and non-recurring revenue
Recurring revenue includes the following: (i) for fixed-fee Media IP license agreements, revenue associated with rights to existing and future patented technologies during reporting periods beginning with the reporting period in which the agreement is executed through the end of the term of the agreement, which are recognized on a straight-line basis; and (ii) for variable based Media IP or Semiconductor IP royalty license agreements, revenue associated with sales-based or usage-based royalties in exchange for a license of IP, which are recognized in the period such subsequent sales or usage occurs.
Non-recurring revenue includes the following: (i) for fixed-fee or minimum guarantee Semiconductor IP license agreements, revenue in the amount of such fixed fee or minimum guarantee associated with the right to use the IP, which is recognized upon execution of the agreement; and (ii) for all license agreements, revenue in the amount of the fees associated with releases for past patent infringement or licenses, in each case with respect to reporting periods prior to the execution of the agreement, which is recognized upon execution of the agreement.
12
Revenue disaggregated by recurring and non-recurring nature was as follows (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Recurring revenue |
|
$ |
|
|
$ |
|
||
Non-recurring revenue |
|
|
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
Revenue by market vertical
Revenue disaggregated by market vertical was as follows (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Media |
|
$ |
|
|
$ |
|
||
Semiconductor |
|
|
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
Contract Balances
Contracts Assets
Contract assets primarily consist of unbilled contracts receivable that are expected to be received from customers in future periods, where the revenue recognized to date exceeds the amount billed. The amount of unbilled contracts receivable may not exceed their net realizable value and are classified as long-term assets if the payments are expected to be received more than one year from the reporting date. Contract assets also include the incremental costs of obtaining a contract with a customer, principally sales commissions when the renewal commission is not commensurate with the initial commission.
Contract assets were recorded in the Condensed Consolidated Balance Sheets as follows (in thousands):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Unbilled contracts receivable |
|
$ |
|
|
$ |
|
||
Other current assets |
|
|
|
|
|
|
||
Long-term unbilled contracts receivable |
|
|
|
|
|
|
||
Other long-term assets |
|
|
|
|
|
|
||
Total contract assets |
|
$ |
|
|
$ |
|
||
Contract Liabilities
Contract liabilities are comprised of deferred revenue related to multi-period licensing arrangements for which the Company is paid in advance, while the underlying performance obligation is satisfied at a future date or over time.
Allowance for Credit Losses
The allowance for credit losses represents the Company’s best estimate of lifetime expected credit losses inherent in accounts receivable and unbilled contracts receivable. The Company’s long-term unbilled contracts receivable is derived from fixed-fee or minimum-guarantee Semiconductor IP licensing and is primarily comprised of contracts with large, well-capitalized companies. It is generally considered to be of high credit quality due to past collection history and the nature of the customers.
The Company’s allowance for credit losses at March 31, 2026 and December 31, 2025 was $
13
Additional Disclosures
The following table presents additional revenue and contract disclosures (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Revenue recognized in the period from: |
|
|
|
|
|
|
||
Amounts included in deferred revenue at the beginning of the period |
|
$ |
|
|
$ |
|
||
Performance obligations satisfied in previous periods (1) |
|
$ |
|
|
$ |
|
||
Remaining revenue under contracts with performance obligations represents the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) under certain of the Company’s fixed fee arrangements.
Revenue related to remaining performance obligations from contracts greater than one year in length is shown below (in thousands):
|
|
As of |
|
|
Revenue from contracts with performance obligations expected to be satisfied in: |
|
|
|
|
2026 (remaining 9 months) |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
NOTE 4 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS
Other current assets consisted of the following (in thousands):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Prepaid income taxes |
|
$ |
|
|
$ |
|
||
Prepaid expenses |
|
|
|
|
|
|
||
Prepaid insurance |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other current assets |
|
$ |
|
|
$ |
|
||
Property and equipment, net, consisted of the following (in thousands):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Equipment, furniture and other |
|
$ |
|
|
$ |
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Property and equipment, gross |
|
|
|
|
|
|
||
Less: Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Total property and equipment, net |
|
$ |
|
|
$ |
|
||
14
Other long-term assets consisted of the following (in thousands):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Long-term deferred tax assets |
|
$ |
|
|
$ |
|
||
Other assets |
|
|
|
|
|
|
||
Total other long-term assets |
|
$ |
|
|
$ |
|
||
Accrued liabilities consisted of the following (in thousands):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Employee compensation and benefits |
|
$ |
|
|
$ |
|
||
Accrued legal expenses |
|
|
|
|
|
|
||
Current portion of guarantee (1) |
|
|
|
|
|
|
||
Other accrued expenses |
|
|
|
|
|
|
||
Current portion of operating lease liabilities |
|
|
|
|
|
|
||
Accrued income taxes |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued liabilities |
|
$ |
|
|
$ |
|
||
(1)
Other long-term liabilities consisted of the following (in thousands):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Long-term portion of guarantee (1) |
|
$ |
|
|
$ |
|
||
(1)
NOTE 5 – FINANCIAL INSTRUMENTS
The Company has investments in debt securities, which include corporate bonds and notes, treasury and agency notes and bills, commercial paper, and in equity securities consisting of money market funds. The Company classifies its debt securities as available-for-sale (“AFS”), which are accounted for at fair value with credit related losses recognized as a provision for credit losses in its Condensed Consolidated Statements of Income and all non-credit related unrealized gains and losses recognized in accumulated other comprehensive income or loss on the Condensed Consolidated Balance Sheets. Under ASU 2016-01 (Topic 321), equity securities are measured at fair value with unrealized gains and losses recognized in other income and expense, net, in the Condensed Consolidated Statements of Income.
15
The following is a summary of marketable securities at March 31, 2026 and December 31, 2025 (in thousands):
|
|
March 31, 2026 |
|
|||||||||||||||||
|
|
Cost |
|
|
Gross |
|
|
Gross |
|
|
Allowance for Credit Losses |
|
|
Estimated |
|
|||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial paper |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Corporate bonds and notes |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Treasury and agency notes and bills |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Total debt securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Reported in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
|
|
December 31, 2025 |
|
|||||||||||||||||
|
|
Cost |
|
|
Gross |
|
|
Gross |
|
|
Allowance for Credit Losses |
|
|
Estimated |
|
|||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial paper |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Corporate bonds and notes |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Treasury and agency notes and bills |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total debt securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Reported in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
At March 31, 2026 and December 31, 2025, the Company had $
Debt Securities
The gross realized gains and losses on sales of marketable debt securities were immaterial during the three months ended March 31, 2026 and 2025. Unrealized gains and losses on AFS debt securities were immaterial as of March 31, 2026 and December 31, 2025. The Company evaluated whether the decline in fair value has resulted from credit losses or other factors and concluded these amounts were related to temporary fluctuations in value of AFS securities and were due primarily to changes in interest rates and market conditions of the underlying securities. The Company did
The estimated fair value of marketable debt securities by contractual maturity at March 31, 2026 is shown below (in thousands). Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.
16
|
|
Amortized |
|
Estimated |
|
||
Due in one year or less |
|
$ |
|
$ |
|
||
Due in one to two years |
|
|
|
|
|
||
Due in two to three years |
|
|
|
|
|
||
Total |
|
$ |
|
$ |
|
||
NOTE 6 – FAIR VALUE
The Company follows the authoritative guidance for fair value measurement and the fair value option for financial assets and financial liabilities. The Company carries its financial instruments at fair value with the exception of its long-term debt. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
Level 1 |
Quoted prices in active markets for identical assets. |
|
|
Level 2 |
Observable market-based inputs or unobservable inputs that are corroborated by market data. |
|
|
Level 3 |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
When applying fair value principles in the valuation of assets, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculates the fair value of its Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments, where available, or based on other observable inputs. There were no significant transfers into or out of Level 1 or Level 2 that occurred between December 31, 2025 and March 31, 2026.
The following sets forth the fair value, and classification within the hierarchy, of the Company’s assets required to be measured at fair value on a recurring basis as of March 31, 2026 (in thousands):
|
|
Fair Value |
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds - equity securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Corporate bonds and notes - debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper - debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Treasury and agency notes and bills - debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
17
The following sets forth the fair value, and classification within the hierarchy, of the Company’s assets required to be measured at fair value on a recurring basis as of December 31, 2025 (in thousands):
|
|
Fair Value |
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds - equity securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Corporate bonds and notes - debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial paper - debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Treasury and agency notes and bills - debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financial Instruments Not Recorded at Fair Value
The Company’s long-term debt is carried at amortized cost and is measured at fair value on a quarterly basis for disclosure purposes. The fair value of the Company’s long-term debt approximates its carrying value as of each of the periods described below.
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Carrying |
|
|
Estimated |
|
|
Carrying |
|
|
Estimated |
|
||||
Long-term debt, net (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1)
If reported at fair value in the Condensed Consolidated Balance Sheets, the Company’s debt would be classified within Level 2 of the fair value hierarchy. The fair value of the debt was estimated based on the quoted market prices for the same or similar issues.
18
NOTE 7 – GOODWILL AND IDENTIFIED INTANGIBLE ASSETS
Goodwill
The carrying value of goodwill at March 31, 2026 and December 31, 2025 was $
Identified Intangible Assets
Identified intangible assets consisted of the following (in thousands):
|
|
Average |
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||||||||||||||||
|
|
Life |
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
||||||
Finite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Acquired patents / core technology |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Customer contracts and related relationships |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Existing technology / content database |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|||||
Trademarks/trade name |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|||||
Total intangible assets |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
As of March 31, 2026, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):
|
|
Amounts |
|
|
2026 (remaining 9 months) |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
NOTE 8 – DEBT
The outstanding amounts of debt were as follows (in thousands):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Long-term debt |
|
$ |
|
|
$ |
|
||
Unamortized debt discount and issuance costs |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Less: current portion, net of debt discount and issuance costs |
|
|
( |
) |
|
|
( |
) |
Total long-term debt, net of current portion |
|
$ |
|
|
$ |
|
||
Term Loan B
The 2020 Credit Agreement dated June 1, 2020 (the “2020 Credit Agreement”), provides for a senior secured term loan B facility (the “Term Loan B”) with maturity on
19
On May 20, 2024, the Company entered into Amendment No. 3 (“Amendment No. 3”) to the 2020 Credit Agreement, which provided for a repricing of the entire outstanding aggregate principal amount of $
On January 30, 2025, the Company entered into Amendment No. 4 (“Amendment No. 4”) to the 2020 Credit Agreement, which provided for a repricing of the outstanding aggregate principal amount of $
The obligations under the 2020 Credit Agreement, as amended, continue to be guaranteed by the Company’s wholly-owned material domestic subsidiaries (collectively, the “Guarantors”) and continue to be secured by a lien on substantially all assets of the Company and the Guarantors.
The 2020 Credit Agreement, as amended, contains customary events of default, representations, warranties, and affirmative and negative covenants. It also requires the Company to maintain a total net leverage ratio of no greater than 3.00x to access a basket for restricted payments (including dividends and share repurchases). As of March 31, 2026, the Company was in compliance with all requirements under the 2020 Credit Agreement, as amended.
The 2020 Credit Agreement, as amended, also requires the Company to 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 the Company made during the year ended December 31, 2025, no excess cash flow payments are required for 2026.
Interest Expense and Expected Principal Payments
At March 31, 2026, the Company had $
As of March 31, 2026, future minimum principal payments for long-term debt, excluding any additional principal payment required by the excess cash flow provision, are summarized as follows (in thousands):
|
|
Amounts |
|
|
2026 (remaining 9 months) |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Total |
|
$ |
|
|
20
NOTE 9 – NET INCOME PER SHARE
The following table sets forth the computation of net income per share (in thousands, except per share amounts):
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Numerator: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Denominator: |
|
|
|
|
|
|
||
Weighted average shares of common stock outstanding |
|
|
|
|
|
|
||
Add: Effect of dilutive securities associated with options |
|
|
|
|
|
|
||
Add: Effect of dilutive securities associated with restricted stock awards and units |
|
|
|
|
|
|
||
Add: Effect of dilutive securities associated with employee stock purchase program |
|
|
|
|
|
|
||
Weighted average common shares – dilutive |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Basic net income per share |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Diluted net income per share |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Anti-dilutive employee stock-based awards, excluded |
|
|
|
|
|
|
||
Basic net income per share is computed using the weighted average number of shares of common stock outstanding during the period, excluding any unvested restricted stock awards that are subject to repurchase. Diluted net income per share is computed using the treasury stock method to calculate the weighted average number of shares of common stock and, if dilutive, potential common shares outstanding during the period. Potentially dilutive common shares include unvested restricted stock awards and incremental common shares issuable upon the exercise of stock options, less shares repurchased from assumed proceeds. The assumed proceeds calculation includes actual proceeds to be received from the employee upon exercise and the average unrecognized stock compensation cost during the period.
NOTE 10 – STOCKHOLDERS’ EQUITY
Equity Incentive Plans
The 2020 EIP
On June 1, 2020, the Company adopted the 2020 Equity Incentive Plan (the “2020 EIP”). Under the 2020 EIP, the Company may grant equity-based awards to employees, non-employee directors, and consultants for services rendered to the Company (or any parent or subsidiary) in the form of stock options, stock awards, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents and performance awards (or any combination thereof).
At the Company’s 2024 Annual Stockholders Meeting on May 9, 2024, the Company’s stockholders approved an amendment and restatement of the 2020 EIP, which provided for (i) an increase of the number of shares reserved for issuance by
The 2020 EIP provides for option grants designed as either incentive stock options or non-statutory options. Options generally are granted with an exercise price not less than the value of the common stock on the grant date and have a term of
21
The vesting criteria for restricted stock awards and restricted stock units is generally the passage of time or meeting certain performance-based objectives, and continued employment through the vesting period, which is generally
Assumed Plans
On June 1, 2020, the Company assumed all then-outstanding stock options, awards, and shares available and reserved for issuance under all legacy Equity Incentive Plans of TiVo (collectively, the “Assumed Plans”). Stock options assumed from the Assumed Plans generally have vesting periods of
Restricted Stock Awards
Information with respect to outstanding restricted stock awards (including both time-based vesting and performance-based vesting) as of March 31, 2026 is as follows (in thousands, except per share amounts):
|
|
Restricted Stock Awards |
|
|||||||||||||
|
|
Number of |
|
|
Number of |
|
|
Total |
|
|
Weighted |
|
||||
Balance at December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Awards granted |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Awards vested / earned |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
$ |
|
|
Awards canceled / forfeited |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
$ |
|
||
Balance at March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Performance Awards
Performance awards may be granted to employees or consultants based upon, among other things, the contributions, responsibilities and other compensation of the particular employee or consultant. The value and the vesting of such performance awards are generally linked to one or more performance goals or certain market conditions determined by the Company, in each case on a specified date or dates or over any period or periods determined by the Company, and may range from
Employee Stock Purchase Plans
The 2020 Employee Stock Purchase Plan (the “2020 ESPP”) provides eligible employees with the opportunity to acquire an ownership interest in the Company. The 2020 ESPP is implemented through consecutive overlapping 24-month offering periods, each of which is comprised of four six-month purchase periods. Participants may contribute up to
As of March 31, 2026, there were
22
Dividends
Stockholders of the Company’s common stock are entitled to receive dividends if and when declared by the Company’s Board of Directors. For the periods ended March 31, 2026 and 2025, dividends declared were $
The capacity to pay dividends in the future depends on many factors, including the Company’s financial condition, results of operations, capital requirements, capital structure, industry practice and other business conditions that the Board of Directors considers relevant.
Stock Repurchase Programs
In October 2024, the Company’s Board of Directors approved an increase of the existing share repurchase authorization up to a total of $
No expiration date has been specified for this plan. As of March 31, 2026, the total remaining amount available for repurchase under this plan was $
The Company accounts for stock repurchases using the cost method and records retirement of treasury stock as a reduction of the cumulative treasury stock paid-in capital balance. Once the cumulative balance is reduced to zero, any remaining difference resulting from the retirement of treasury stock is recorded as a reduction of retained earnings.
The Company issues restricted stock awards as part of the equity incentive plans described above. For the majority of restricted awards, shares are withheld to satisfy required withholding taxes at the vesting date. Shares withheld to satisfy required withholding taxes in connection with the vesting of restricted awards are treated as common stock repurchases in the Condensed Consolidated Financial Statements because they reduce the number of shares that would have been issued on vesting. However, these withheld shares are not included in common stock repurchases under the Company’s authorized share repurchase plan.
NOTE 11 – STOCK-BASED COMPENSATION EXPENSE
The effect of recording stock-based compensation expense for the three months ended March 31, 2026 and 2025 is as follows (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Research and development |
|
$ |
|
|
$ |
|
||
Selling, general and administrative |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
The Company uses a Monte Carlo simulation to determine the grant date fair value of performance stock awards subject to market conditions, or market-based PSUs.
|
|
Three Months Ended |
|
|||
|
|
2026 |
|
2025 |
|
|
Expected life (years) |
|
|
|
|
||
Risk-free interest rate |
|
|
|
% |
||
Dividend yield |
|
|
|
% |
||
Expected volatility |
|
|
|
% |
||
23
Grants under the 2020 ESPP occur in June and December, as discussed in “Note 10 – Stockholders’ Equity”. There were
NOTE 12 – INCOME TAXES
The Company’s income tax provision and effective tax rate for interim periods are based on its estimated annual effective tax rate adjusted for discrete items during the period. For the three months ended March 31, 2026 and 2025, the Company recorded income tax expense of $
NOTE 13 – LEASES
The Company leases office and research facilities, and office equipment under operating leases which expire through 2032. The Company’s leases have remaining lease terms of two to seven years, some of which may include options to extend the leases for five years or longer, and some of which may include options to terminate the leases within the next five years or less. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets; expense for these leases is recognized on a straight-line basis over the lease term. Variable lease payments are expensed as incurred and are not included within the lease liability and right-of-use assets calculation. As a practical expedient, the Company elected, for all office and facility leases, not to separate non-lease components (e.g., common-area maintenance costs) from lease components (e.g., fixed payments including rent) and instead to account for each separate lease component and its associated non-lease components as a single lease component.
As most of the leases do not provide an implicit rate, the Company generally, for purposes of discounting lease payments, uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date.
The components of operating lease costs were as follows (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Fixed lease cost |
|
$ |
|
|
$ |
|
||
Variable lease cost |
|
|
|
|
|
|
||
Total operating lease cost |
|
$ |
|
|
$ |
|
||
Other information related to leases was as follows (in thousands, except lease term and discount rate):
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Weighted-average remaining lease term (years): |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|
||
Weighted-average discount rate: |
|
|
|
|
|
|
||
Operating leases |
|
|
% |
|
|
% |
||
24
Future minimum lease payments and related lease liabilities as of March 31, 2026 were as follows (in thousands):
|
|
Operating Lease Payments (1) |
|
|
2026 (remaining 9 months) (2) |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total lease payments |
|
|
|
|
Less: imputed interest |
|
|
( |
) |
Present value of lease liabilities: |
|
$ |
|
|
|
|
|
|
|
Less: current obligations under leases (accrued liabilities) |
|
|
|
|
Noncurrent operating lease liabilities |
|
$ |
|
|
(1)
(2)
NOTE 14 – COMMITMENTS AND CONTINGENCIES
Purchase and Other Contractual Obligations
In the ordinary course of business, the Company enters into contractual agreements with third parties that include non-cancelable payment obligations, for which it is liable in future periods. These arrangements primarily include unconditional purchase obligations to service providers. As of March 31, 2026, the Company’s total future unconditional purchase obligations were approximately $
Guarantee
Prior to the Separation, Adeia Media LLC, a subsidiary of the Company (“Adeia Media”), and a subsidiary of Xperi Inc.(“Xperi Sub”) entered into an agreement (the “Specified Agreement”) with a third party pursuant to which Adeia Media guarantees the performance of Xperi Sub under the Specified Agreement, including its payment obligations to such third party. In connection with the Separation, Adeia Media and Xperi Sub entered into a separate cross business agreement (the “Cross Business Agreement”) effective as of October 1, 2022, under which Adeia Media agreed to make guarantee payments to Xperi Sub in amounts based on certain of its operating expenses and other minimum performance obligations under the Specified Agreement through 2031. Consequently, on October 1, 2022, the Company recognized a guarantee liability pursuant to ASC 460 “Guarantees” of $
Contingencies
At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of losses is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.
25
Litigation related
The Company is unable to predict the final outcome of lawsuits, including patent infringement lawsuits, to which it is a party and therefore cannot determine the likelihood of loss nor estimate a range of possible losses. An adverse decision in any of these proceedings could significantly harm the Company's business and consolidated financial position, results of operations or cash flows.
The Company and its subsidiaries are involved in litigation matters and claims in the normal course of business. In the past, the Company and its subsidiaries have litigated to enforce their respective patents and other intellectual property rights, to enforce the terms of license agreements, to protect trade secrets, and to defend the Company’s patents against claims of invalidity. The Company expects it or its subsidiaries will be involved in similar legal proceedings in the future, including proceedings regarding infringement of its patents, and proceedings to ensure proper and full payment of royalties by licensees under the terms of its license agreements.
NOTE 15 – SEGMENT INFORMATION
The Company has
The accounting policies of the IP Licensing segment are the same as those described in Note 2 – Summary of Significant Accounting Policies. The Company’s Chief Executive Officer is also the chief operating decision maker (“CODM”) as defined by the authoritative guidance on segment reporting.
The CODM uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the IP Licensing segment or into other parts of the entity, such as for acquisitions or to return value to shareholders.
The following table presents information with respect to the Company’s IP Licensing segment revenue, significant expenses and income (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Revenue |
|
$ |
|
|
$ |
|
||
Less: |
|
|
|
|
|
|
||
Personnel related expense |
|
|
|
|
|
|
||
Patent portfolio expense |
|
|
|
|
|
|
||
Patent related technical sales support expense |
|
|
|
|
|
|
||
Amortization expense |
|
|
|
|
|
|
||
Outside services expense |
|
|
|
|
|
|
||
Litigation expense |
|
|
|
|
|
|
||
Interest expense |
|
|
|
|
|
|
||
Other segment items (1) |
|
|
|
|
|
|
||
Provision for income taxes |
|
|
|
|
|
|
||
Segment net income |
|
$ |
|
|
$ |
|
||
(1)
26
Revenue by Geography and Customer Concentration
While the Company’s revenue is primarily derived in North America, a portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., and it is expected that this revenue will continue to account for a portion of total revenue in future periods. Revenue is attributed to geographic locations based on the billing address of each customer. The table below lists the revenue by geography for the periods indicated (in thousands, except for percentages):
|
|
Three Months Ended |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||
U.S. |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe and Middle East |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
For the three months ended March 31, 2026 and 2025, there were
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Customer A |
|
|
% |
|
* |
|
||
Customer B |
|
|
% |
|
* |
|
||
Customer C |
|
* |
|
|
|
% |
||
Customer D |
|
* |
|
|
|
% |
||
* denotes less than 10% of total revenue.
At March 31, 2026, the Company had one customer representing
Other Geography Information
At March 31, 2026 and December 31, 2025, property and equipment, net, was all located in the U.S.
NOTE 16 – SUBSEQUENT EVENTS
Declaration of Cash Dividends
On
27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion is intended to promote understanding of the results of operations and financial condition and should be read in conjunction with our condensed consolidated financial statements and notes thereto, and with our audited financial statements and notes thereto for the year ended December 31, 2025 found in the Form 10-K filed by us on February 26, 2026 (the “Form 10-K”). This section of this Form 10-Q generally discusses quarter over quarter comparisons of 2026 against 2025.
This quarterly report on Form 10-Q (this “Quarterly Report”) contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on information available to the Company as of the date hereof, as well as the Company’s current expectations, assumptions, estimates and projections that involve risks and uncertainties. In this context, forward-looking statements often address expected future business, financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “see,” “will,” “may,” “would,” “might,” “potentially,” “estimate,” “continue,” “target,” similar expressions or the negatives of these words or other comparable terminology that convey uncertainty of future events or outcomes. All forward-looking statements by their nature address matters that involve risks and uncertainties, many of which are beyond the Company’s control, and are not guarantees of future results. Forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to: the Company’s ability to implement its business strategy; the Company’s ability to enter into new and renewal license agreements with customers on favorable terms; the Company’s ability to retain and hire key personnel; uncertainty as to the long-term value of the Company’s common stock; the Company’s ability to pay dividends on a consistent basis or at all; legislative, regulatory, geopolitical and economic developments affecting the Company’s business; general economic and market developments and conditions; the Company’s ability to grow and expand its patent portfolios and expand into additional addressable markets; changes in technology and development of new technology in the industries in which the Company operates; the evolving legal, regulatory and tax regimes under which the Company operates; unforeseen liabilities and expenses; the Company’s ability to carry out its share repurchase program and the timing of any such repurchases; risks associated with the Company’s indebtedness; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, natural disasters and global health pandemics, each of which may have an adverse impact on the Company’s business, results of operations, and financial condition.
Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and changes in condition, significance, value and effect, including those discussed under the heading “Risk Factors” hereof and other documents we file from time to time with the Securities and Exchange Commission (the “SEC”), such as our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report, other than as required by law. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
Business Overview
Adeia Inc. (formerly known as Xperi Holding Corporation) (“Adeia”, “we”) is a technology company and an innovation incubator. We have spent decades investing in advanced research and development to create market-leading technologies for the entertainment, media, consumer electronics, and semiconductor industries. Our innovative solutions support practically every aspect of consumers’ day-to-day interaction with media, consumer electronics and entertainment, enabling our customers to build customized, next-generation solutions for users around the globe. We believe our commitment to and investment in innovation has resulted in a leading IP licensing platform in these industries, with an extensive portfolio of media and semiconductor IP and approximately 13,750 media and semiconductor patent assets worldwide. In order to serve an increasingly connected world, we invent, develop, acquire and license fundamental innovations that enhance billions of devices and shape the way millions of people explore and experience entertainment and technology across a variety of platforms.
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Our innovations address one of the biggest consumer trends in entertainment today – the massive proliferation of entertainment content and the rapidly changing habits of how consumers are finding, engaging with and enjoying entertainment and evolving technology, such as artificial intelligence (“AI”).
Headquartered in Silicon Valley with more than 35 years of operating experience, we have approximately 150 full-time employees, with substantially all of our employees located in the U.S.
Macroeconomic Conditions
Macroeconomic conditions due to inflation, geopolitical instability and global health events have in the past, and may in the future have, an adverse impact on our business. For example, such conditions may cause volatility in the markets we serve, particularly the broad consumer electronics market. Impacts from adverse macroeconomic conditions may negatively impact our financial condition and results of operations, which could result in an impairment of our long-lived assets, including goodwill, and increased credit losses.
Although a significant portion of our revenue is derived from fixed-fee and minimum-guarantee arrangements from large, well-capitalized customers, our per-unit and variable-fee based revenue will continue to be susceptible to global health concerns, outbreaks, pandemics, armed conflict, geopolitical factors, trade regulations and tariffs, market volatility, labor shortages, supply chain disruptions, microchip shortages, changes in demand for semiconductors and market downturns.
Reportable Segments
We operate and report in one segment: IP Licensing. We believe that this structure reflects our current operational and financial management and provides the best structure for us to focus on growth opportunities. Our Chief Executive Officer has been determined to be the Chief Operating Decision Maker (“CODM”) in consideration with the authoritative guidance on segment reporting.
We primarily license our innovations to leading companies in the broader media entertainment and semiconductor industries, and those companies developing new technologies that will help drive these industries forward. Licensing arrangements include access to one or more of our foundational patent portfolios and may also include access to some portions of our industry-leading technologies and know-how.
Key Metrics
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, 2026, as compared to the same period in 2025:
Results of Operations
Revenue
We derive the majority of our revenue from the licensing of our IP rights to customers. For our revenue recognition policy, including descriptions of revenue-generating activities, refer to “Note 3 – Revenue” of the Notes to Condensed Consolidated Financial Statements.
29
The following table presents our operating results for the periods indicated as a percentage of revenue:
|
|
Three Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Revenue |
|
|
100 |
% |
|
|
100 |
% |
Operating expenses: |
|
|
|
|
|
|
||
Research and development |
|
|
17 |
|
|
|
19 |
|
Selling, general and administrative |
|
|
29 |
|
|
|
32 |
|
Amortization expense |
|
|
15 |
|
|
|
16 |
|
Litigation expense |
|
|
6 |
|
|
|
7 |
|
Total operating expenses |
|
|
67 |
|
|
|
74 |
|
Operating income |
|
|
33 |
|
|
|
26 |
|
Interest expense |
|
|
(8 |
) |
|
|
(12 |
) |
Other income and expense, net |
|
|
2 |
|
|
|
2 |
|
Income before income taxes |
|
|
27 |
|
|
|
16 |
|
Provision for income taxes |
|
|
5 |
|
|
|
2 |
|
Net income |
|
|
22 |
% |
|
|
14 |
% |
The following table sets forth our revenue for the three months ended March 31, 2026 and 2025 (in thousands, except for percentages):
|
|
Three Months Ended |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Increase |
|
|
% Change |
|
||||
Revenue |
|
$ |
104,772 |
|
|
$ |
87,670 |
|
|
$ |
17,102 |
|
|
|
20 |
% |
The increase in revenue during the three months ended March 31, 2026, as compared to the same period in 2025, was primarily attributable to the execution of two new multi-year license agreements with AMD and Microsoft in 2026; partially offset by declines in royalty revenue from certain Pay-TV customers.
Recurring revenue for the three months ended March 31, 2026 and 2025 were $66.3 million and $84.4 million, respectively. The decrease of $18.1 million was driven primarily by declines in royalty revenue from certain Pay-TV customers; partially offset by the execution of license agreements with new customers from April 1, 2025 to March 31, 2026.
Non-recurring revenues for the three months ended March 31, 2026 and 2025 were $38.5 million and $3.3 million, respectively. The increase of $35.2 million was primarily attributable to the execution of three new license agreements in the first quarter of 2026, including AMD and another new customer for access to our semiconductor IP portfolio, and Microsoft for access to our media portfolio.
Research and Development (in thousands, except for percentages):
Research and development (“R&D”) costs consist primarily of personnel costs, stock-based compensation, outside engineering consulting expenses associated with new IP development, as well as costs related to patent applications and examinations, reverse engineering, materials, supplies and an allocation of facilities costs. All R&D costs are expensed as incurred. We intend to make a continued investment in our R&D efforts because we believe they are essential to grow our patent portfolios to maintain and improve our competitiveness.
|
|
Three Months Ended |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Increase |
|
|
% Change |
|
||||
Research and development |
|
$ |
18,202 |
|
|
$ |
16,467 |
|
|
$ |
1,735 |
|
|
|
11 |
% |
The increase in R&D costs during the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to an increase in patent portfolio expenses and an increase in personnel related costs as a result of increased headcount.
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Selling, General and Administrative (in thousands, except for percentages):
Selling, general and administrative (“SG&A”) expenses consist primarily of personnel costs, sales commission, advertising, branding activities, stock-based compensation, professional services, facilities costs, and expenses related to our executive finance, human resource, legal, and information technology organizations.
|
|
Three Months Ended |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Increase |
|
|
% Change |
|
||||
Selling, general and administrative |
|
$ |
29,834 |
|
|
$ |
28,432 |
|
|
$ |
1,402 |
|
|
|
5 |
% |
The increase in SG&A expense during the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to an increase in personnel related costs as a result of increased headcount and an increase in advertising expense, partially offset by lower outside services.
Amortization Expense (in thousands, except for percentages):
|
|
Three Months Ended |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Increase |
|
|
% Change |
|
||||
Amortization expense |
|
$ |
15,931 |
|
|
$ |
14,082 |
|
|
$ |
1,849 |
|
|
|
13 |
% |
The increase in amortization expense during the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to patents acquired in 2025, partially offset by certain intangible assets becoming fully amortized during 2025.
Litigation Expense (in thousands, except for percentages):
|
|
Three Months Ended |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Increase |
|
|
% Change |
|
||||
Litigation expense |
|
$ |
5,973 |
|
|
$ |
5,854 |
|
|
$ |
119 |
|
|
|
2 |
% |
Our litigation expense for the three months ended March 31, 2026, was relatively consistent with the same period in 2025. Higher expenses driven by increased activity in certain matters that have settled were offset by expenses associated with new litigation matters. See Part II, Item 1 – Legal Proceedings for additional information regarding these matters.
We expect that litigation expense will continue to be a significant portion of our operating expenses, as it is used to enforce and protect our IP and contract rights. Litigation expense may fluctuate between periods because of planned or ongoing litigation, as described in Part II, Item 1 – Legal Proceedings.
Interest Expense (in thousands, except for percentages):
|
|
Three Months Ended |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Decrease |
|
|
% Change |
|
||||
Interest expense |
|
$ |
8,546 |
|
|
$ |
10,649 |
|
|
$ |
(2,103 |
) |
|
|
(20 |
)% |
The decrease in interest expense during the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to lower debt balance and lower variable interest rates.
Other Income and Expense, Net (in thousands, except for percentages):
|
|
Three Months Ended |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Decrease |
|
|
% Change |
|
||||
Other income and expense, net |
|
$ |
1,693 |
|
|
$ |
1,712 |
|
|
$ |
(19 |
) |
|
|
(1 |
)% |
31
Other income and expense, net during the three months ended March 31, 2026, as compared to the same period in 2025, was relatively consistent.
Provision for Income Taxes (in thousands, except for percentages):
|
|
Three Months Ended |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Increase |
|
|
% Change |
|
||||
Provision for income taxes |
|
$ |
5,206 |
|
|
$ |
2,084 |
|
|
$ |
3,122 |
|
|
|
150 |
% |
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, 2026, we recorded income tax expense of $5.2 million on pretax income of $28.0 million, which resulted in an effective tax rate of 18.6%. The effective tax rate varies from the 21% U.S. federal tax rate primarily due to excess tax benefits related to stock-based compensation.
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 increase in income tax expense for the three months ended March 31, 2026, as compared to the same period in the prior year was primarily due to an increase to pretax income.
We periodically evaluate the realizability of our net deferred tax assets based on all available evidence, both positive and negative. After considering the evidence to assess the recoverability of our net deferred tax assets, we concluded that it was more-likely-than-not that we would realize our federal and certain state deferred tax assets.
Liquidity and Capital Resources
The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents as of and for the three months ended March 31, 2026 and 2025:
|
|
As of |
|
|||||
(in thousands) |
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Cash and cash equivalents |
|
$ |
53,325 |
|
|
$ |
73,136 |
|
Marketable securities |
|
|
62,437 |
|
|
|
63,597 |
|
Total cash, cash equivalents and marketable securities |
|
$ |
115,762 |
|
|
$ |
136,733 |
|
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net cash provided by operating activities |
|
$ |
58,488 |
|
|
$ |
57,139 |
|
Net cash used in investing activities |
|
$ |
(4,888 |
) |
|
$ |
(6,172 |
) |
Net cash used in financing activities |
|
$ |
(73,411 |
) |
|
$ |
(45,608 |
) |
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 $115.8 million at March 31, 2026, a decrease of $21.0 million from $136.7 million at December 31, 2025. This decrease primarily resulted from $58.5 million of cash generated from operations, partially offset by $28.1 million in repayment of our long-term debt, $29.8 million in repurchases of common stock associated with tax withholdings on equity awards, $10.0 million in repurchases of common stock, $5.5 million in dividends paid, and $5.5 million in purchases of intangible assets.
The primary objectives of our investment activities are to preserve principal and to maintain liquidity, while at the same time capturing a market rate of return. To achieve these objectives, we maintain a diversified portfolio of securities including money market funds and debt securities such as corporate bonds and notes, municipal bonds and notes, commercial paper, treasury and agency notes and bills and certificates of deposit. Our marketable debt securities are classified as available-for-sale (“AFS”) with credit losses recognized as a credit loss expense and non-credit related unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income or loss
For information about our material cash requirements, see “Liquidity and Capital Resources” in Part II, Item 7 of our Annual
32
Report on Form 10-K for the year ended December 31, 2025. Other than the principal payments of $28.1 million made by us under the existing Term Loan B during the three months ended March 31, 2026, our cash requirements have not materially changed since December 31, 2025. We expect to continue to make additional payments on our existing debt from cash generated from operations.
In addition to the cash requirements outlined above, we have returned cash to stockholders through both quarterly dividend payments and repurchases of our common stock under our stock repurchase plan.
We believe that based on current levels of operations and anticipated growth, our cash from operations, together with cash and cash equivalents currently available, will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months and thereafter for the foreseeable future. Poor financial results, unanticipated expenses, unanticipated acquisitions of technologies or businesses, or unanticipated strategic investments could give rise to additional financing requirements sooner than we expect. There can be no assurance that equity or debt financing will be available when needed or, if available, that such financing will be on terms satisfactory to us. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness could result in increased debt service obligations and may include covenants that would restrict our operations.
Quarterly Dividends
In March 2026 and 2025, we paid a quarterly dividend of $0.05 per share. In April 2026, our Board authorized payment of a quarterly cash dividend of $0.05 per share, to be paid in June 2026.
Stock Repurchase Plan
In October 2024, our Board of Directors approved an increase to 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, 2026, we repurchased a total of approximately 0.4 million shares of common stock, at an average price of $22.45 per share for a total cost of $10.0 million. During the three months ended March 31, 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. As of March 31, 2026, the total remaining amount available for repurchase under this plan was $150.0 million.
We may continue to execute authorized repurchases from time to time under our existing stock repurchase plan. The amount and timing of any repurchases under the stock repurchase plan depend on a number of factors, including, but not limited to, the trading price, volume and availability of our common shares. There is no guarantee that such repurchases under the stock repurchase plan will enhance the value of our common stock.
Cash Flows from Operating Activities
Cash flows provided by operations were $58.5 million for the three months ended March 31, 2026, primarily due to our net income of $22.8 million being adjusted for non-cash items of amortization of intangible assets of $15.9 million, stock-based compensation expense of $8.8 million, and $11.8 million in changes in operating assets and liabilities including payment during the period of employee bonuses earned in 2025.
Cash flows provided by operations were $57.1 million for the three months ended March 31, 2025, 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.
Cash Flows from Investing Activities
Net cash used in investing activities was $4.9 million for the three months ended March 31, 2026, primarily due to purchases of short-term investments in marketable securities of $9.0 million, purchases of intangible assets of $5.5 million, and proceeds from maturities of marketable securities of $10.1 million.
Net cash used in investing activities was $6.2 million for the three months ended March 31, 2025, primarily due 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.
33
Capital Expenditures
Our capital expenditures for property and equipment consist primarily of leasehold improvements, purchases of computer hardware and software, information systems, and production and test equipment. During the three months ended March 31, 2026 and 2025, we spent $0.4 million and $0.2 million on capital expenditures, respectively. Our capital expenditures for intangible assets consists primarily of acquired patents. During the three months ended March 31, 2026 and 2025, we spent $5.5 million and $5.4 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.
Cash Flows from Financing Activities
Net cash used in financing activities was $73.4 million for the three months ended March 31, 2026, primarily due to $28.1 million in repayment of indebtedness, $5.5 million in dividends paid, $29.8 million in repurchases of common stock for tax withholdings on equity awards, and $10.0 million in repurchases of common stock.
Net cash used in financing activities was $45.6 million for the three months ended March 31, 2025, primarily 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.
Long-term Debt
The 2020 Credit Agreement dated June 1, 2020 (the “2020 Credit Agreement”), provides for a senior secured term loan B facility (the “Term Loan B”) with maturity on June 8, 2028.
On May 20 2024, we entered into Amendment No. 3 (“Amendment No. 3”) to the 2020 Credit Agreement, which provided for a repricing of the entire outstanding aggregate principal amount of $561.1 million. Amendment No. 3 also reduced interest margins (50 basis points) from SOFR plus a margin of 3.50% to SOFR plus a margin of 3.00% per annum or base rate plus a margin of 2.00% per annum. In addition, Amendment No. 3 lowered the excess cash flow mandatory payment thresholds and credit spread adjustment provision.
On January 30, 2025, we entered into Amendment No. 4 (“Amendment No. 4”) to the 2020 Credit Agreement, which provided for a repricing of the entire outstanding aggregate principal amount of $487.1 million. Amendment No. 4 further reduced the interest margins (50 basis points) to SOFR plus a margin of 2.50% per annum or base rate plus a margin of 1.50% per annum.
The obligations under the 2020 Credit Agreement, as amended, continue to be guaranteed by our wholly-owned material domestic subsidiaries (collectively, the “Guarantors”) and continue to be secured by a lien on substantially all our assets and those of the Guarantors.
As of March 31, 2026, $398.6 million was outstanding under the term loan B facility. In addition, we had $7.4 million of unamortized debt discount and issuance costs recorded as a reduction from the carrying amount of the debt. The interest rate on the Term Loan B, including the amortization of debt discount and issuance costs, was 7.3% and 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 2026, $24.4 million in 2027, with the remaining principal balance of $356.0 million due June 8, 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, 2025, no excess cash flow payment is required in 2026. The term loan B facility contains customary covenants, and as of March 31, 2026, we were in full compliance with such covenants.
34
Critical Accounting Policies and Estimates
During the three months ended March 31, 2026, 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.
Recent Accounting Pronouncements
See “Note 2 – Summary of Significant Accounting Policies” of the Notes to Condensed Consolidated Financial Statements for a full description of recent accounting pronouncements including the respective expected dates of adoption.
35
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For a discussion of our market risk, see Part II, Item 7A – Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K.
Item 4. Controls and Procedures
Attached as exhibits to this Form 10-Q are certifications of Adeia Inc.’s Chief Executive Officer and Chief Financial Officer, which are required in accordance with Rule 13a-14 of the Exchange Act. This “Controls and Procedures” section includes information concerning the controls and controls evaluation referred to in the certifications and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.
Evaluation of Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the evaluation date). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the evaluation date that our disclosure controls and procedures were effective to provide reasonable assurance that the information relating to Adeia Inc., including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to Adeia Inc.’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during the last fiscal quarter covered by this Quarterly Report on Form 10-Q that materially affected or are reasonably likely to materially affect our internal control over financial reporting.
36
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the normal course of our business, we are involved in legal proceedings. In the past, we have litigated to enforce our patents, to enforce the terms of license agreements, and to defend our patents against claims of invalidity. We expect to continue to be involved in similar legal proceedings in the future, including proceedings regarding infringement of our patents and proceedings to ensure proper and full payment of royalties by licensees under the terms of our license agreements.
We cannot predict the outcome of any of the proceedings described below, other than to the extent such proceedings have concluded. An adverse decision in any of these proceedings could significantly harm our business and our consolidated financial position, results of operations, and cash flows.
Patent Infringement Litigation
In the ordinary course of our business, we engage in litigation to protect our IP from infringement. While litigation is never our preference, and we prefer to reach mutually agreeable commercial licensing arrangements with third parties, it is sometimes a necessary step to effectively protect our investment in our IP. As a result of these lawsuits, defendants have often filed Inter Partes Review (“IPR”) petitions with the U.S. Patent Office’s Patent Trial and Appeal Board (and other similar post-grant proceedings outside of the U.S.) seeking to invalidate one or more of our patents. We are currently engaged in multiple lawsuits with several third parties.
Videotron Patent Infringement Litigation
On May 21, 2021, Adeia Guides Inc. (formerly known as Rovi Guides, Inc.) (“Adeia Guides”) filed a patent infringement complaint against Videotron Ltd. (“Videotron”) in Toronto, Canada, alleging infringement of four patents (the “Videotron Litigation”). The trial commenced on February 3, 2025. On October 24, 2025, the Federal Court of Canada issued a decision in the case and awarded Adeia Guides a permanent injunction, finding that Videotron’s Helix, illico+ and illico video platforms infringe an Adeia Guides patent. The Court also ruled that Videotron’s Helix video platform infringes an additional Adeia Guides patent and awarded Adeia Guides damages for both patents. Two other patents asserted in the case were found invalid. On November 24, 2025, Adeia Guides filed a Notice of Appeal with the Federal Court of Appeal of Canada appealing portions of the decision of the Federal Court of Canada. On December 4, 2025, Videotron filed a Notice of Cross-Appeal. No date has been set yet for a hearing on the appeal.
Bell Patent Infringement Litigation
On July 27, 2021, Adeia Guides and Adeia Media Holdings LLC (formerly known as TiVo LLC) (together, “Adeia Media”) filed a patent infringement complaint against Bell Canada and four of its affiliates, Telefonaktiebolaget L M Ericsson, Ericsson Canada Inc., and MK Systems USA Inc. and MK Mediatech Canada Inc. (collectively, “Defendants”) in Toronto, Canada, alleging infringement of four patents (the “Bell Litigation”). On September 30, 2022, Defendants filed a motion for bifurcation, asking the Federal Court of Canada to bifurcate the case into two phases: a first phase related to liability and injunction and second phase addressing damages if liability is found. On February 15, 2023, the Court issued an order granting the motion for bifurcation in which the Court bifurcated the liability and injunction phase from the damages quantification phase of the case. The trial commenced on April 28, 2025. Closing arguments were held June 2-4, 2025. There is no set deadline for the Federal Court of Canada to issue a decision.
Shaw Breach of Contract Litigation
On October 2, 2023, Adeia Guides Inc., Adeia Media Solutions Inc., and Adeia Media Holdings LLC (collectively, “Adeia Media”) filed a complaint against Shaw Cablesystems G.P. and Shaw Satellite G.P. (together “Shaw”) in the United States District Court for the Southern District of New York, alleging breach of contract by Shaw for failure to pay royalties owed to Adeia Media under the license agreement between the parties. On October 8, 2024, Shaw filed a motion to dismiss the complaint. On September 29, 2025, the Court denied Shaw’s motion to dismiss Adeia Media Companies’ breach of contract claim and granted Shaw’s motion to dismiss the declaratory relief claim as duplicative. On October 14, 2025, Shaw filed its answer to the complaint. Discovery is ongoing. The trial date has not been set.
37
Disney Patent Infringement Litigation
U.S Litigation
On November 7, 2024, Adeia Technologies, Inc., Adeia Guides Inc., and Adeia Media Holdings LLC (collectively “Adeia”) filed a complaint against The Walt Disney Company, Disney Media and Entertainment Distribution LLC, Disney DTC LLC, Disney Streaming Services LLC, Disney Entertainment & Sports LLC, Disney Platform Distribution, Inc., BAMTech, LLC, Hulu, LLC, and ESPN, Inc. (collectively, “Disney U.S. Defendants”) in the United States District Court for the District of Delaware, alleging infringement of six patents (“U.S. Asserted Patents”). On December 29, 2025, the Court granted the parties’ Joint Stipulation and Order of Dismissal, dismissing the case with prejudice.
On October 31, 2025, Disney U.S. Defendants filed three petitions for IPR before the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office – one petition against each of three of the U.S. Asserted Patents. On November 5, 2025, Disney U.S. Defendants filed two petitions for IPR – one petition against each of two additional U.S. Asserted Patents. On November 7, 2025, Disney U.S. Defendants filed one petition for IPR against the last of the six U.S. Asserted Patents. On December 24, 2025, following the settlement between the parties, Disney U.S. Defendants filed an Unopposed Motion to Dismiss the Proceeding Pre-Institution in each of the six IPRs. The PTAB has terminated all six IPR petitions.
European Litigation
On November 7, 2024, Adeia Solutions LLC filed a complaint against The Walt Disney Company Benelux (B.V.), Disney Interactive Studios, Inc., and The Walt Disney Company Limited (collectively, “Disney Europe Defendants”) in the Regional Court of Munich, Germany, alleging infringement of one patent (“German Patent”). On December 23, 2025, Adeia Solutions LLC filed a request to withdraw the complaint following settlement between the parties. The Court has terminated the case.
On June 23, 2025, The Walt Disney Company Benelux (B.V.) filed a nullity action in the German Federal Patent Court, challenging the validity of the German Patent. On December 24, 2025, The Walt Disney Company Benelux (B.V.) filed a brief requesting withdrawal of the nullity action following settlement between the parties. The Court has terminated the case.
On November 7, 2024, Adeia Guides Inc. (“Adeia Guides”) filed a complaint against the Disney Europe Defendants in the Unified Patent Court (“UPC”) Munich Local Division, Germany, alleging infringement of one patent. On December 23, 2025, Adeia Guides filed a request to withdraw the complaint following settlement between the parties. The Court has terminated the case.
On November 7, 2024, Adeia Guides filed a complaint against the Disney Europe Defendants in the UPC The Hague Local Division, The Netherlands, alleging infringement of one patent. On December 23, 2025, Adeia Guides filed a request to withdraw the complaint following settlement between the parties. The Court has terminated the case.
Brazil Litigation
On November 11, 2024, Adeia Inc. and Adeia Guides Inc. (collectively, “Adeia Brazil Plaintiffs”) filed a complaint against The Walt Disney Company (Brasil) LTDA (“Disney Brazil”) in Rio de Janeiro State Court, Brazil, (“Trial Court”) alleging infringement of four patents (the “Brazil Asserted Patents”) and seeking a preliminary injunction against Disney Brazil for infringement of one of the four Brazil Asserted Patents. On December 23, 2025, Adeia Brazil Plaintiffs filed a request to terminate the case following settlement between the parties. The Court has terminated the case.
On January 27, 2025, Disney Brazil filed a patent invalidity lawsuit against Adeia Inc. and Adeia Guides Inc. (collectively, “Adeia Brazil Invalidity Defendants”) at the Brazilian Patent and Trademark Office in Rio de Janeiro Federal Court, Brazil, alleging the Brazil Asserted Patents are invalid. On December 23, 2025, Disney Brazil filed a request to terminate the proceeding following settlement between the parties. The Court has yet to rule on the request to terminate the case.
AMD Patent Infringement Litigation
On November 3, 2025, Adeia Semiconductor Bonding Technologies Inc., Adeia Semiconductor Inc., and Adeia Semiconductor Solutions LLC (collectively, “Adeia Semi”) filed a patent infringement complaint against Advanced Micro Devices, Inc. (“AMD”) in the United States District Court for the Western District of Texas (“WDTX 1 Litigation”), alleging infringement of six patents. On January 8, 2026, AMD filed a Motion to Dismiss the complaint. On January 22, 2026, Adeia Semi filed its opposition to AMD’s Motion to Dismiss. On January 29, 2026, AMD filed its reply on the Motion to Dismiss. On March 10, 2026, following the settlement between the parties, the Court dismissed the case with prejudice.
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On November 3, 2025, Adeia Semiconductor Bonding Technologies Inc. filed a separate patent infringement complaint against AMD in the United States District Court for the Western District of Texas (“WDTX 2 Litigation”), alleging infringement of four patents. On January 9, 2026, the Court granted AMD’s unopposed motion to stay the proceedings pending a final resolution of the ITC Litigation No. 337-TA-1465 (see below). On March 10, 2026, following the settlement between the parties, the Court dismissed the case with prejudice.
On November 17, 2025, Adeia Semiconductor Bonding Technologies Inc. filed a patent infringement complaint against Advanced Micro Devices, Inc., Lenovo (United States) Inc., Lenovo Group Limited, Lenovo Information Products (Shenzhen) Co., Ltd., and Super Micro Computer, Inc. in the International Trade Commission (“ITC Litigation”), alleging infringement of the same four patents asserted in the WDTX 2 Litigation. On December 16, 2025, the ITC issued a Notice of Institution of Investigation, assigning the case Investigation No. 337-TA-1465. On March 31, 2026, following the settlement between the parties, the Administrative Law Judge granted the parties’ motion to terminate the ITC Litigation.
DIRECTV Litigation
NDCA Declaratory Judgment Action
On December 29, 2025, DIRECTV LLC (“DIRECTV”) filed a complaint against Adeia Inc, Adeia Guides Inc., Adeia Media Holdings LLC, Adeia Technologies Inc. and Adeia Media Solutions Inc. (collectively, “Adeia Media”) in the United States District Court for the Northern District of California seeking a declaratory judgment of noninfringement of seven Adeia Media patents and a declaratory judgement of invalidity of three different Adeia Media patents (“NDCA DJ Action”). On March 13, 2026, Adeia Media filed a motion to dismiss the NDCA DJ Action. A hearing on the motion to dismiss is scheduled for June 18, 2026. The trial date has not been set.
SDNY Breach of Contract and Misappropriation of Trade Secrets Action
On January 12, 2026, Adeia Media filed a complaint against DIRECTV in the United States District Court for the Southern District of New York alleging Breach of Contract and Misappropriation of Trade Secrets Pursuant to The Defend Trade Secrets Act (“DTSA”). DIRECTV’s response to the complaint is due March 27, 2026. On January 15, 2026, Adeia Media filed a Motion for Preliminary Injunction (“PI Motion”), requesting that the Court order DIRECTV to withdraw the NDCA DJ Action and cease its misuse of Adeia Media’s confidential information. The PI Motion is fully briefed and awaiting a decision by the Court. On April 23, 2026, the Court granted DIRECTV’s request file a motion to dismiss the trade secret misappropriation claim under the DTSA on or before June 4, 2026. The trial date has not been set.
DISH Litigation
Colorado Patent Infringement Litigation
Adeia Technologies Inc., Adeia Media Holdings Inc., and Adeia Media Solutions Inc. (collectively “Adeia”) filed a complaint against DISH Network Corp., DISH Media Sales LLC, DISH DBS Corp., EchoStar Corp., Sling TV LLC, and Sling TV Holding LLC (collectively, the “DISH Defendants”) in the United States District Court for the District of Colorado on April 1, 2026 (EDT), from and after which time the DISH Defendants were unlicensed to Adeia’s patents, alleging the DISH Defendants infringe five patents. The trial date has not been set.
NDCA Declaratory Judgment Action
DISH Network LLC and Sling TV LLC filed a complaint against Adeia Inc, Adeia Guides Inc., Adeia Media Holdings Inc., Adeia Technologies Inc., and Adeia Media Solutions Inc. (collectively, “Adeia Media”) in the United States District Court for the Northern District of California on April 1, 2026 seeking a declaratory judgment of noninfringement and/or invalidity of ten Adeia Media patents. The trial date has not been set.
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Item 1A. Risk Factors
There were no material changes to the risk factors previously disclosed in Part 1, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated by reference herein.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Items 2(a) and 2(b) are not applicable.
(c) Stock Repurchases
The following table summarizes repurchases of our common stock during the three months ended March 31, 2026:
|
|
Total number of |
|
|
Average price |
|
|
Total number of |
|
|
Approximate |
|
||||
(in thousands, except share price) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
January 1, 2026 – January 31, 2026 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
February 1, 2026 – February 28, 2026 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
March 1, 2026 – March 31, 2026 |
|
|
445,618 |
|
|
|
22.45 |
|
|
|
445,618 |
|
|
|
149,952 |
|
Total |
|
|
445,618 |
|
|
$ |
22.45 |
|
|
|
445,618 |
|
|
$ |
149,952 |
|
(1) 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. There is no guarantee that such repurchases under the program will enhance the value of our stock. As of March 31, 2026, the total remaining amount available for repurchase under the Plan was $150.0 million.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended March 31, 2026, there were
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Item 6. Exhibits
Exhibit Number |
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Exhibit Title |
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10.1 |
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Amendment No. 4 to Credit Agreement, dated as of January 30, 2025, among Adeia Inc., the subsidiaries of Adeia Inc. party thereto, Bank of America, N.A. as administrative agent and collateral agent, and the lenders party thereto (including Conformed Credit Agreement giving effect to Amendments) filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 30, 2025, and incorporated herein by reference) |
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|
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31.1 |
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Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 |
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|
31.2 |
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Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 |
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|
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32.1 |
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Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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101.INS |
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Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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|
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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|
|
104 |
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: May 6, 2026
ADEIA INC. |
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By: |
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/s/ Keith A. Jones |
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|
Keith A. Jones Chief Financial Officer |
42