InterDigital Q3 2026 profit rises to $80.2M
The regular quarterly cash dividend increases to $0.75 per share beginning with the payment in fourth quarter 2026.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
InterDigital, Inc. (IDCC) reported third-quarter 2026 revenue of $193.4 million, up 17% from $164.7 million a year earlier, and net income of $80.2 million versus $67.5 million. Revenue included amounts recognized under arbitration agreements with a top PC manufacturer and Amazon, plus nine other agreements signed in the prior twelve months. CE, IoT/Auto revenue grew 97% to $55.7 million, while smartphone revenue declined 10% to $122.6 million.
For the first nine months of 2026, revenue was $659.0 million versus $675.8 million and net income was $271.9 million versus $363.7 million. Operating cash flow was $249.0 million, compared with $481.1 million; management attributed the decline primarily to the timing of cash receipts and higher cash operating expenses, including revenue-share and intellectual-property enforcement costs. Cash, cash equivalents, restricted cash and short-term investments totaled $1.1 billion as of September 30, 2026.
InterDigital increased its regular quarterly cash dividend from $0.70 to $0.75 per share, beginning with the payment in fourth quarter 2026. The company reported $296.7 million of 2027 Notes principal outstanding as of September 30, 2026; holders had elected to convert $2.2 million, expected to settle in fourth quarter 2026.
3 points · 0 major0 major · 2 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate pointThird-quarter revenue rose 17% to $193.4 million.
- Moderate pointThird-quarter net income increased to $80.2 million from $67.5 million.
- Minor point. Forward-looking: it has not happened yet and may not happen.Quarterly dividend increased from $0.70 to $0.75 per share.
Negative
- Moderate pointNine-month net income was $271.9 million, versus $363.7 million in 2025.
- Moderate pointNine-month operating cash flow fell to $249.0 million from $481.1 million.
Filing Explained
The conversions already settled without net share issuance, but the remaining warrants leave conditional future dilution exposure.
During the first nine months of 2026, holders converted
The note hedges offset conversion shares, but 6.0 million related warrants remain outstanding at a
Key Figures
Revenue: $193.4 million
Net income: $80.2 million
Diluted earnings per share: $2.34
+5 more
8 metrics
Revenue
$193.4 million
Third quarter 2026; $164.7 million in third quarter 2025
Net income
$80.2 million
Third quarter 2026; $67.5 million in third quarter 2025
Diluted earnings per share
$2.34
Third quarter 2026; $1.93 in third quarter 2025
Nine-month revenue
$659.0 million
Nine months ended September 30, 2026; $675.8 million in 2025
Nine-month net income
$271.9 million
Nine months ended September 30, 2026; $363.7 million in 2025
Operating cash flow
$249.0 million
Nine months ended September 30, 2026; $481.1 million in 2025
Cash, cash equivalents, restricted cash and short-term investments
$1.1 billion
As of September 30, 2026
Quarterly cash dividend
$0.75 per share
Beginning with the dividend paid in fourth quarter 2026; previously $0.70 per share
Key Terms
catch-up revenue, contract assets, dynamic fixed-fee royalty payments, if-converted method, +1 more
5 terms
catch-up revenue financial
"Catch-up revenue represents revenue associated with reporting periods prior to the entry of the agreement"
contract assets financial
"Contract assets related to revenue recognized from three ongoing arbitrations"
Contract assets are amounts a company has earned by doing work or delivering goods under a customer agreement but has not yet billed or collected because certain contract conditions remain. Think of it as completed work sitting in a company’s toolbox waiting for an invoice trigger. For investors, growing contract assets signal future cash and revenue potential but also raise questions about timing, cash collection risk and the real strength of reported sales.
dynamic fixed-fee royalty payments financial
"revenue from dynamic fixed-fee royalty payments over the term of existing contracts"
if-converted method financial
"included in the diluted EPS calculation using the if-converted method"
An accounting rule used when calculating diluted earnings per share that imagines what would happen if all convertible securities—like convertible bonds, preferred shares, or options—had already been turned into common stock. It adjusts the company’s reported profit per share downward to show how earnings would be shared if ownership were spread across a larger number of shares, similar to checking how a pie’s slice size changes if more people join the table. This matters to investors because it reveals a more conservative view of each share’s claim on profits and potential future ownership dilution.
2027 Note Hedge Transactions financial
"shares received upon partial settlement of the 2027 Note Hedge Transactions"
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did IDCC report in Q3 2026?
InterDigital reported third-quarter 2026 revenue of $193.4 million, compared with $164.7 million in third quarter 2025. The company reported a 17% increase in total revenue.
How much net income did IDCC earn in Q3 2026?
InterDigital reported third-quarter 2026 net income of $80.2 million, compared with $67.5 million in third quarter 2025. Diluted earnings per share were $2.34, compared with $1.93.
Will IDCC's pending 2027 Notes conversion add shares?
As of September 30, 2026, holders had elected to convert $2.2 million principal amount of the 2027 Notes. InterDigital stated that the conversions would result in no incremental outstanding shares because of the offsetting impact of the 2027 Note Hedge Transactions.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended September 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from to
Commission File Number 1-33579
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of Principal Executive Offices and Zip Code)
(302 ) 281-3600
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | 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. Yes ☑ No ☐
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 (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
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.
| ☑ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Common Stock, par value $0.01 per share | |||||
| Title of Class | Outstanding at October 27, 2026 | ||||
INDEX
| PAGES | |||||
Part I — Financial Information: | 3 | ||||
Item 1 Financial Statements (unaudited): | 3 | ||||
Condensed Consolidated Balance Sheets — September 30, 2026 and December 31, 2025 | 3 | ||||
Condensed Consolidated Statements of Income — Three and Nine Months Ended September 30, 2026 and 2025 | 4 | ||||
Condensed Consolidated Statements of Comprehensive Income — Three and Nine Months Ended September 30, 2026 and 2025 | 5 | ||||
Condensed Consolidated Statements of Shareholders' Equity — Three and Nine Months Ended September 30, 2026 and 2025 | 6 | ||||
Condensed Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2026 and 2025 | 8 | ||||
Notes to Condensed Consolidated Financial Statements | 9 | ||||
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 | ||||
Item 3 Quantitative and Qualitative Disclosures About Market Risk | 34 | ||||
Item 4 Controls and Procedures | 35 | ||||
Part II — Other Information: | 36 | ||||
Item 1 Legal Proceedings | 36 | ||||
Item 1A Risk Factors | 36 | ||||
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds | 37 | ||||
Item 3 Defaults Upon Senior Securities | 37 | ||||
Item 4 Mine Safety Disclosures | 37 | ||||
Item 5 Other Information | 38 | ||||
Item 6 Exhibits | 38 | ||||
Signatures | 39 | ||||
InterDigital® is a registered trademark of InterDigital, Inc. All other trademarks, service marks and/or trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
| September 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Accounts receivable | |||||||||||
| Prepaid and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Patents, net | |||||||||||
| Deferred tax assets | |||||||||||
| Other non-current assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Shareholders' equity | |||||||||||
Current liabilities: | |||||||||||
| Current portion of long-term debt | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Accrued compensation and related expenses | |||||||||||
| Deferred revenue | |||||||||||
| Dividends payable | |||||||||||
| Other accrued expenses | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term deferred revenue | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Shareholders' equity: | |||||||||||
Preferred Stock, $ | |||||||||||
Common Stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Accumulated other comprehensive (loss) gain | ( | ||||||||||
Treasury stock, | ( | ( | |||||||||
| Total shareholders' equity | |||||||||||
| Total liabilities and shareholders' equity | $ | $ | |||||||||
The accompanying notes are an integral part of these statements.
3
Table of Contents
INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and portfolio development | |||||||||||||||||||||||
| Licensing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax provision | ( | ( | ( | ( | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Net income per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted-average number of common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Cash dividends declared per common share | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these statements.
4
Table of Contents
INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
Unrealized (loss) gain on investments, net of tax | ( | ( | |||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these statements.
5
Table of Contents
INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except per share data)
(unaudited)
| Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net change in unrealized gain on short-term investments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of common stock options | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net change in unrealized gain on short-term investments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of common stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net change in unrealized gain on short-term investments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Settlement of the 2027 Hedge | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2025 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
6
Table of Contents
| Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2025 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net change in unrealized loss on short-term investments | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Settlement of the 2027 Notes | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Settlement of the 2027 Hedge | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net change in unrealized loss on short-term investments | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Settlement of the 2027 Hedge | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net change in unrealized loss on short-term investments | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Settlement of the 2027 Notes | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Settlement of the 2027 Hedge | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these statements.
7
Table of Contents
INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Change in deferred revenue | |||||||||||
| Deferred income taxes | ( | ||||||||||
| Share-based compensation | |||||||||||
| Other | ( | ( | |||||||||
| (Increase) Decrease in assets: | |||||||||||
| Receivables and contract assets | ( | ||||||||||
| Prepaid and other assets | ( | ( | |||||||||
| (Decrease) Increase in liabilities: | |||||||||||
| Accounts payable | ( | ||||||||||
| Accrued compensation and other expenses | |||||||||||
| Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
| Purchases of short-term investments | ( | ( | |||||||||
| Proceeds from maturities and sales of short-term investments | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Capitalized patent costs | ( | ( | |||||||||
| Long-term investments | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
| Payments on long-term debt | ( | ( | |||||||||
| Net proceeds from exercise of stock options | |||||||||||
| Taxes withheld upon restricted stock unit vestings | ( | ( | |||||||||
| Repurchase of common stock | ( | ( | |||||||||
| Taxes paid on repurchase of common stock | ( | ||||||||||
| Dividends paid | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net (decrease) increase in cash, cash equivalents, and restricted cash | ( | ||||||||||
Cash, cash equivalents, and restricted cash, beginning of period | |||||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | $ | |||||||||
Refer to Note 1, "Basis of Presentation," for additional supplemental cash flow information. Additionally, refer to Note 3, "Cash, Concentration of Credit Risk and Fair Value of Financial Instruments" for a reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets.
The accompanying notes are an integral part of these statements.
8
Table of Contents
INTERDIGITAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(unaudited)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited, condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial position of InterDigital, Inc. (individually and/or collectively with its subsidiaries referred to as “InterDigital,” the “Company,” “we,” “us” or “our,” unless otherwise indicated) as of September 30, 2026, the results of our operations for the three and nine months ended September 30, 2026 and 2025 and our cash flows for the nine months ended September 30, 2026 and 2025. The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, accordingly, do not include all of the detailed schedules, information and notes necessary to state fairly the financial condition, results of operations and cash flows in conformity with United States generally accepted accounting principles (“GAAP”). The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP for year-end financial statements. Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (our “2025 Form 10-K”) as filed with the U.S. Securities and Exchange Commission (“SEC”) on February 5, 2026. Definitions of capitalized terms not defined herein appear within our 2025 Form 10-K. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. We have one reportable segment.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
Change in Accounting Policies
There have been no material changes or updates to our existing accounting policies from the disclosures included in our 2025 Form 10-K, except as indicated below in "New Accounting Guidance".
Reclassifications
Certain reclassifications have been made to prior year amounts to conform to the current year presentation.
Supplemental Cash Flow Information
The following table presents additional supplemental cash flow information for the nine months ended September 30, 2026 and 2025 (in thousands):
| Nine Months Ended September 30, | |||||||||||
| Supplemental cash flow information: | 2026 | 2025 | |||||||||
| Interest paid | $ | $ | |||||||||
| Income taxes paid, including foreign withholding taxes | |||||||||||
| Non-cash investing and financing activities: | |||||||||||
| Non-cash acquisition of patents | |||||||||||
| Dividend payable | |||||||||||
| (Increase) Decrease in accrued capitalized expenditures and patent costs | ( | ||||||||||
| Right-of-use assets obtained in exchange of operating lease liabilities | |||||||||||
Settlement of the 2027 Notes and Hedge Transactions | |||||||||||
| Unsettled repurchase of common stock | |||||||||||
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New Accounting Guidance
Accounting Standards Update: Induced Conversions of Convertible Debt Instruments
In November 2024, the FASB issued ASU 2024-04, "Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments". The amendments in ASU 2024-04 clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for fiscal years beginning after December 15, 2025, with early adoption allowed. We adopted this guidance as of January 1, 2026, and there was no impact of this adoption on our consolidated financial statements.
Accounting Standards Update: Targeted Improvements to the Accounting for Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other Internal-Use Software (Subtopic 350-40)". The amendments in ASU 2025-06 amend certain aspects of the accounting for and disclosure of software costs under ASC 350-40. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, with early adoption allowed. We adopted this guidance as of January 1, 2026, and there was no material impact of this adoption on our consolidated financial statements.
Accounting Standards Update: Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses". The amendments in ASU 2024-03 require disclosures about specific types of expenses included in the expense captions presented on the Consolidated Statements of Income, as well as disclosures about selling expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption allowed. We are currently evaluating the impact of adoption on our financial disclosures.
Accounting Standards Update: Interim Reporting (Topic 270): Narrow-Scope Improvements
In December 2025, the FASB issued ASU 2025-11 to amend the guidance in “Interim Reporting” (Topic 270). The amendments provide clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. We are currently evaluating the impact of adoption on our consolidated financial statements.
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2. REVENUE
Disaggregated Revenue
The following table presents the disaggregation of our revenue for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | Increase/(Decrease) | |||||||||||||||||||||
| Smartphone | $ | $ | $ | ( | ( | % | |||||||||||||||||
| CE, IoT/Auto | % | ||||||||||||||||||||||
Streaming and Cloud Services | N/M | ||||||||||||||||||||||
| Other | % | ||||||||||||||||||||||
| Total Revenue | $ | $ | $ | % | |||||||||||||||||||
Catch-up revenue (1), included above | $ | $ | $ | % | |||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | Increase/(Decrease) | |||||||||||||||||||||
| Smartphone | $ | $ | $ | ( | ( | % | |||||||||||||||||
| CE, IoT/Auto | % | ||||||||||||||||||||||
Streaming and Cloud Services | N/M | ||||||||||||||||||||||
| Other | ( | ( | % | ||||||||||||||||||||
| Total Revenue | $ | $ | $ | ( | ( | % | |||||||||||||||||
Catch-up revenue (1), included above | $ | $ | $ | ( | ( | % | |||||||||||||||||
(1) Catch-up revenue represents revenue associated with reporting periods prior to the entry of the agreement.
N/M indicates not meaningful.
During the nine months ended September 30, 2026, we recognized $152.2 million of revenue that had been included in deferred revenue as of the beginning of the period. As of September 30, 2026, we had contract assets of $70.1 million included within "Accounts receivable" and $163.0 million included within "Other non-current assets, net" in the condensed consolidated balance sheet. As of December 31, 2025, we had contract assets of $19.7 million included within "Accounts receivable" and $21.0 million included within "Other non-current assets, net" in the condensed consolidated balance sheet. Contract assets related to revenue recognized from three 202.0 million and $21.0 million as of September 30, 2026 and December 31, 2025, respectively.
Contracted Revenue
As of September 30, 2026, we expect to recognize the following revenue from dynamic fixed-fee royalty payments over the term of existing contracts (in thousands):
Revenue (1) | |||||
| Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total Revenue | $ | ||||
(1) This table includes estimated revenue related to our three ongoing arbitrations. In accordance with ASC 606, this estimate is limited to the amount of revenue we expect to recognize only to the extent we believe it is probable that a subsequent change in the estimate would not result in a significant revenue reversal.
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3. CASH, CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, Cash Equivalents, and Restricted Cash
Cash, cash equivalents, and restricted cash primarily consist of money market and demand accounts. The following table provides a reconciliation of total cash, cash equivalents, and restricted cash as of September 30, 2026, December 31, 2025, and September 30, 2025 to the captions within the condensed consolidated balance sheets and condensed consolidated statements of cash flows (in thousands):
| September 30, | December 31, | September 30, | |||||||||||||||
| 2026 | 2025 | 2025 | |||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Restricted cash included within prepaid and other current assets | |||||||||||||||||
Total cash, cash equivalents, and restricted cash | $ | $ | $ | ||||||||||||||
Concentration of Credit Risk and Fair Value of Financial Instruments
Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash equivalents, short-term investments, and accounts receivable. We place our cash equivalents and short-term investments only in highly rated financial instruments and in United States government instruments.
Our accounts receivable and contract assets are derived principally from patent license and technology solutions agreements. Three licensees comprised 72 % and 55 % of our accounts receivable and long-term contract asset balances as of September 30, 2026 and December 31, 2025, respectively. We perform ongoing credit evaluations of our licensees, who generally include large, multinational, wireless telecommunications and consumer electronics equipment manufacturers. We believe that the book values of our financial instruments approximate their fair values.
Fair Value Measurements
We use various valuation techniques and assumptions when measuring the fair value of our assets and liabilities. We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. This guidance established a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). The levels of the hierarchy are described below:
Level 1 Inputs — Level 1 includes financial instruments for which quoted market prices for identical instruments are available in active markets.
Level 2 Inputs — Level 2 includes financial instruments for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets with insufficient volume or infrequent transactions (less active markets) or model-driven valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data, including market interest rate curves, referenced credit spreads and pre-payment rates.
Level 3 Inputs — Level 3 includes financial instruments for which fair value is derived from valuation techniques including pricing models and discounted cash flow models in which one or more significant inputs are unobservable, including the Company’s own assumptions. The pricing models incorporate transaction details such as contractual terms, maturity and, in certain instances, timing and amount of future cash flows, as well as assumptions related to liquidity and credit valuation adjustments of marketplace participants.
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Recurring Fair Value Measurements
Our financial assets are generally included within short-term investments on our condensed consolidated balance sheets, unless otherwise indicated. Our financial assets and liabilities that are accounted for at fair value on a recurring basis are presented in the tables below as of September 30, 2026 and December 31, 2025 (in thousands):
| Fair Value as of September 30, 2026 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Money market and demand accounts (1) | $ | $ | $ | $ | |||||||||||||||||||
Commercial paper (2) | |||||||||||||||||||||||
| U.S. government securities | |||||||||||||||||||||||
Corporate bonds, asset backed and other securities | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value as of December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Money market and demand accounts (1) | $ | $ | $ | $ | |||||||||||||||||||
Commercial paper | |||||||||||||||||||||||
| U.S. government securities | |||||||||||||||||||||||
Corporate bonds, asset backed and other securities (3) | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
______________________________
(1) Primarily included within cash and cash equivalents.
(2) As of September 30, 2026, $18.2 million of commercial paper was included within cash and cash equivalents.
(3) As of December 31, 2025, $9.2 million of corporate bonds, asset backed and other securities was included within cash and cash equivalents.
Fair Value of Long-Term Debt
Convertible Notes
The principal amount, carrying value and related estimated fair value of the Company's convertible notes (the "Convertible Notes") reported as of September 30, 2026 and December 31, 2025, were as follows (in thousands). The aggregate fair value of the principal amount of the Convertible Notes is a Level 2 fair value measurement.
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Principal Amount | Carrying Value | Fair Value | Principal Amount | Carrying Value | Fair Value | ||||||||||||||||||||||||||||||
| 2027 Senior Convertible Long-Term Debt | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Technicolor Patent Acquisition Long-Term Debt
The carrying value and related estimated fair value of the Technicolor Patent Acquisition (as defined in Note 5, "Obligations") long-term debt reported as of September 30, 2026 and December 31, 2025 was as follows (in thousands). The aggregate fair value of the Technicolor Patent Acquisition long-term debt is a Level 3 fair value measurement.
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| Technicolor Patent Acquisition Long-Term Debt | $ | $ | $ | $ | |||||||||||||||||||
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4. OTHER ASSETS AND LIABILITIES
The amounts included in "Prepaid and other current assets" in the condensed consolidated balance sheet as of September 30, 2026 and December 31, 2025 were as follows (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Tax receivables | $ | $ | |||||||||
| Prepaid assets | |||||||||||
| Restricted cash | |||||||||||
| Other current assets | |||||||||||
| Total Prepaid and other current assets | $ | $ | |||||||||
The amounts included in "Other non-current assets, net" in the condensed consolidated balance sheet as of September 30, 2026 and December 31, 2025 were as follows (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Contract asset | $ | $ | |||||||||
| Tax receivables | |||||||||||
| Goodwill | |||||||||||
| Long-term investments | |||||||||||
| Right-of-use assets | |||||||||||
| Other non-current assets | |||||||||||
| Total Other non-current assets, net | $ | $ | |||||||||
The amounts included in "Other accrued expenses" in the condensed consolidated balance sheet as of September 30, 2026 and December 31, 2025 were as follows (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Accrued legal fees | $ | $ | |||||||||
| Other accrued expenses | |||||||||||
| Total Other accrued expenses | $ | $ | |||||||||
The amounts included in "Other long-term liabilities" in the condensed consolidated balance sheet as of September 30, 2026 and December 31, 2025 were as follows (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Deferred compensation liabilities | $ | $ | |||||||||
| Operating lease liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Total Other long-term liabilities | $ | $ | |||||||||
5. OBLIGATIONS
2027 Notes and Related Note Hedge and Warrant Transactions
On May 27, 2022, we issued $460.0 million in aggregate principal amount of 3.50 % Senior Convertible Notes due in 2027 (the "2027 Notes"). The net proceeds from the issuance of the 2027 Notes, after deducting the initial purchasers' transaction fees and offering expenses, were approximately $450.0 million. The 2027 Notes bear interest at a rate of 3.50 % per year, payable in cash on June 1 and December 1 of each year, commencing on December 1, 2022, and mature on June 1, 2027, unless earlier redeemed, converted or repurchased.
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The 2027 Notes will be convertible into cash up to the aggregate principal amount of the 2027 Notes to be converted and in respect of the remainder, if any, of the Company’s obligation in excess of the aggregate principal amount of the 2027 Notes being converted, pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. The initial conversion rate was 12.9041 shares of common stock per $1,000 principal amount of the 2027 Notes. Effective July 8, 2026, the conversion rate was adjusted to 13.0351 shares of common stock per $1,000 principal amount of the 2027 Notes (which is equivalent to a conversion price of approximately $76.72 per share), subject to further adjustment. From the period January 1, 2024 through December 31, 2026, the holders of the 2027 Notes have the right, but not the obligation, to convert any portion of the principal amount of the 2027 Notes. As such, the 2027 Notes are included in "Current portion of long-term debt" in our condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025.
The 2027 Notes are the Company’s senior unsecured obligations and rank equally in right of payment with any of the Company’s current and any future senior unsecured indebtedness. The 2027 Notes are effectively subordinated to all of the Company’s future secured indebtedness, if any, to the extent of the value of the related collateral, and the 2027 Notes are structurally subordinated to indebtedness and other liabilities, including trade payables, of the Company’s subsidiaries.
On May 24 and May 25, 2022, in connection with the offering of the 2027 Notes, we entered into convertible note hedge transactions ("2027 Note Hedge Transactions") that cover, subject to customary anti-dilution adjustments, approximately 5.9 million shares of common stock, in the aggregate, at a strike price that corresponds to the conversion price of the 2027 Notes, subject to adjustment, and are exercisable upon any conversion of the 2027 Notes. Also, on May 24 and May 25, 2022, we entered into privately negotiated warrant transactions ("2027 Warrant Transactions"), whereby we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 6.0 million shares of common stock. As of September 30, 2026, the warrants under the 2027 Warrant Transactions had a strike price of $105.30 per share, subject to adjustment, and mature beginning September 2027 through April 2028.
During the nine months ended September 30, 2026, we settled conversions totaling $163.2 million principal amount of the 2027 Notes. In connection therewith, we paid the $163.2 million principal amount in cash and issued 1.6 million shares to settle the conversion spread. These shares issued were offset by 1.6 million shares received upon partial settlement of the 2027 Note Hedge Transactions, resulting in no incremental outstanding shares resulting from the conversion. As of September 30, 2026, $296.7 million in principal of the 2027 Notes remains outstanding, of which holders had elected to convert $2.2 million principal amount, which will settle in fourth quarter 2026. No incremental outstanding shares will result from such conversions due to the offsetting impact of the 2027 Note Hedge Transactions, however the 2027 Warrant Transactions described above remain outstanding.
The following table reflects the carrying value of the 2027 Notes as of September 30, 2026 and December 31, 2025 (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| $ | $ | ||||||||||
| Less: Deferred financing costs | ( | ( | |||||||||
| Net carrying amount of the Convertible Notes | |||||||||||
| Less: Current portion of long-term debt | ( | ( | |||||||||
| Long-term net carrying amount of the Convertible Notes | $ | $ | |||||||||
The following table presents the amount of interest cost recognized, which is included within "Interest expense" in our condensed consolidated statements of income, for the three and nine months ended September 30, 2026 and 2025, relating to the contractual interest coupon and the amortization of deferred financing costs of the 2027 Notes (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Contractual coupon interest | $ | $ | $ | $ | |||||||||||||||||||
| Amortization of deferred financing costs | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
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Technicolor Patent Acquisition Long-Term Debt
On July 30, 2018, we completed our acquisition of the patent licensing business of Technicolor SA ("Technicolor"), a worldwide technology leader in the media and entertainment sector (the "Technicolor Patent Acquisition"). In conjunction with the Technicolor Patent Acquisition, we assumed Technicolor’s rights and obligations under a joint licensing program with Sony relating to digital televisions and standalone computer display monitors, which commenced in 2015 (the "Madison Arrangement"). An affiliate of CPPIB Credit Investments Inc. ("CPPIB Credit"), a wholly owned subsidiary of Canada Pension Plan Investment Board, is a third-party investor in the Madison Arrangement. CPPIB Credit made certain payments to Technicolor and Sony and agreed to contribute cash to fund certain capital reserve obligations under the arrangement in exchange for a percentage of future revenue, specifically through September 11, 2030 in regard to the Technicolor patents.
Upon our assumption of Technicolor’s rights and obligations under the Madison Arrangement, our relationship with CPPIB Credit meets the criteria in ASC 470-10-25 - Sales of Future Revenues or Various Other Measures of Income ("ASC 470"), which relates to cash received from an investor in exchange for a specified percentage or amount of revenue or other measure of income of a particular product line, business segment, trademark, patent, or contractual right for a defined period. Under this guidance, we recognized the fair value of our contingent obligation to CPPIB Credit, as of the acquisition date, as long-term debt in our condensed consolidated balance sheet. This initial fair value measurement was based on the perspective of a market participant and included significant unobservable inputs which are classified as Level 3 inputs within the fair value hierarchy. The fair value of the long-term debt as of September 30, 2026 and December 31, 2025 is disclosed within Note 3, "Cash, Concentration of Credit Risk and Fair Value of Financial Instruments." Our repayment obligations are contingent upon future royalty revenue generated from the Madison Arrangement and there are no minimum or maximum payments under the arrangement.
Under ASC 470, amounts recorded as debt are amortized under the interest method. At each reporting period, we will review the discounted expected future cash flows over the life of the obligation. The Company made an accounting policy election to utilize the catch-up method when there is a change in the estimated future cash flows, whereby we will adjust the carrying amount of the debt to the present value of the revised estimated future cash flows, discounted at the original effective interest rate, with a corresponding adjustment recognized as interest expense within “Interest expense” in the condensed consolidated statements of income. The effective interest rate as of the acquisition date was approximately 14.5 %. This rate represents the discount rate that equates the estimated future cash flows with the fair value of the debt as of the acquisition date and is used to compute the amount of interest to be recognized each period based on the estimated life of the future revenue streams. During the three and nine months ended September 30, 2026, we recognized $0.4 million and $1.4 million, respectively, of interest expense related to this debt, compared to $0.6 million and $1.4 million during the three and nine months ended September 30, 2025, respectively. These amounts were included within “Interest expense” in the condensed consolidated statements of income. Any future payments made to, or additional proceeds received from, CPPIB Credit will decrease or increase the long-term debt balance accordingly. We made $8.0 million and $1.3 million in payments to CPPIB Credit during the nine months ended September 30, 2026 and 2025, respectively.
Technicolor Contingent Consideration
As part of the Technicolor Patent Acquisition, we entered into a revenue-sharing arrangement with Technicolor that created a contingent consideration liability. Under the revenue-sharing arrangement, Technicolor receives 42.5 % of future cash receipts from new licensing efforts under the Madison Arrangement only, subject to certain conditions and hurdles. As of September 30, 2026 and December 31, 2025, the contingent consideration liability from the revenue-sharing arrangement was deemed not probable and is therefore not reflected within the condensed consolidated financial statements.
6. LITIGATION AND LEGAL PROCEEDINGS
ARBITRATIONS AND COURT PROCEEDINGS
Amazon
In June 2026, the Company reached an agreement with Amazon.com, Inc. and certain of its subsidiaries (“Amazon”) to suspend or withdraw all pending litigation and enter into binding arbitration to determine the final terms of a patent license agreement.
Dell
In September 2026, the Company reached an agreement with Dell Inc. ("Dell") to enter into binding arbitration to determine the final terms of a patent license agreement to certain of the Company’s patents.
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Disney
Brazil Proceedings
In February 2025, the Company and certain of its subsidiaries filed a claim in the Regional Business Court of Rio de Janeiro against The Walt Disney Co. and certain of its subsidiaries (“Disney”). The claim alleges infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, damages and injunctive relief to prevent further infringement of the asserted patents.
In March 2025, Disney filed an answer and asserted a rate-setting counterclaim.
In September 2025, the Court granted the Company’s preliminary injunction request as to both asserted patents. The Appellate Court initially granted Disney’s request to stay the preliminary injunction pending hearing of an appeal, but that stay was lifted. In May 2026, the Court affirmed the lower court’s preliminary injunction decision.
In October 2025, the Company filed another claim in the Regional Business Court of Rio de Janeiro against Disney. The claim alleges infringement of one of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, damages and injunctive relief to prevent further infringement of the asserted patent.
In September 2026, the Company filed two additional claims in the Regional Business Court of Rio de Janeiro against Disney. The claims each allege infringement of one
Central District of California Proceedings
In February 2025, the Company and certain of its subsidiaries filed a claim in the Federal District Court of the Central District of California against Disney. The claim alleges infringement of certain of the Company’s patents relating to video coding and video streaming technologies. The Company is seeking, among other relief, damages to prevent further infringement of the asserted patents.
In March 2025, Disney filed an answer and asserted multiple counterclaims against the Company. In March 2026, the court issued a claim construction decision holding that certain claims of a subset of the asserted patents were invalid for lack of sufficient definiteness; the balance of the decision was favorable. The Company is seeking reconsideration as to one of the claims held to be indefinite, and further intends to appeal such conclusions.
The case was stayed in June 2026 pending resolution of ex parte reexamination proceedings and the declaratory judgment action filed by Dolby referenced below. In October 2026, the Company filed a motion to consolidate the Disney and Dolby cases.
Delaware Proceedings
In August 2025, a subsidiary of Disney filed an antitrust complaint against the Company and certain of its subsidiaries, and Technicolor in the Federal District Court of the District of Delaware. The claims allege the Company has engaged in monopolistic conduct in the licensing of its patents relating to video coding and video streaming technologies. Disney is seeking, among other relief, injunctive relief to halt the licensing practices it views as unlawful, and damages.
In September 2025, the Company filed a motion to dismiss Disney’s complaint, or in the alternative, stay the case pending resolution of the Company’s cases against Disney in California, Europe, and Brazil. In October 2025, the Antitrust Division of the United States Department of Justice filed a Statement of Interest in the Delaware case. In September 2026, the Court held a hearing regarding the Company’s motion to dismiss or, in the alternative, stay. The Court granted the Company’s motion to stay and denied the motion to dismiss without prejudice.
Germany Proceedings
In February and April 2025, the Company and certain of its subsidiaries filed patent infringement claims in four separate proceedings in the Munich Regional Court against Disney. The claims allege infringement of certain of the Company’s patents relating to video coding and video streaming technologies. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.
In October 2025, the Court held a hearing and issued an order finding validity of and infringement by Disney of one of the Company’s patents. The order enjoined Disney from further infringement. Disney is currently appealing the Court’s determinations. In January 2026, the Court imposed fines of €550,000 for Disney’s violations of the injunction following a request for coercive measures from the Company. Disney appealed, and the fine was adjusted on appeal to €50,000 . Enforcement of the patent was stayed in May 2026 pending final decision from the Federal Patent Court on validity. The decision is currently expected in fourth quarter 2026.
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In November 2025, the Court held another hearing and issued another order finding infringement by Disney of another of the Company’s patents. The order also enjoined Disney from further infringement. In July 2026, the Court imposed fines of €150,000 for Disney’s violations of the injunction following a request for coercive measures from the Company. In September 2026, the Company filed a claim seeking damages for Disney’s infringement of the same patent.
In February 2026, the Court held another hearing and issued another order finding infringement by Disney of another of the Company’s patents. The order also enjoined Disney from further infringement. Hearings on validity and infringement of the remaining asserted patent have been scheduled for fourth quarter 2027.
In July 2026, the Company filed an additional suit asserting infringement of a patent relating to video streaming technologies. A hearing is scheduled for fourth quarter 2026.
UPC Proceedings
In February and April of 2025, the Company and certain of its subsidiaries filed patent infringement claims in four separate proceedings, two
The Mannheim Court held a hearing for one of the two asserted patents in May 2026, found infringement and issued an injunction in June 2026. In August 2026, the Company asserted the same patent against Disney seeking a preliminary injunction in the Mannheim Court against Disney’s use of a new video codec. A hearing has been scheduled for fourth quarter 2026. The Dusseldorf Court held a hearing on one of the asserted patents in June 2026, also found infringement and issued an injunction in July 2026. Each of these injunctions spans 11 EU countries. The Dusseldorf Court held an additional hearing on the second asserted patent in July 2026, and in September 2026 issued a decision finding infringement and issuing an injunction covering two EU countries.
In July 2026, the Company filed an additional suit asserting infringement of a patent relating to video streaming technologies in the Mannheim Local Divisional Court.
In August 2026, the Company filed an additional suit asserting infringement of a patent relating to video streaming technologies in the Düsseldorf Local Divisional Court.
Dolby
In March 2026, Dolby Laboratories filed two complaints in the Central District of California seeking declaratory judgment relief with respect to six of the Company’s patents. The first complaint seeks declarations of invalidity and noninfringement with respect to one of the Company’s video technology patents that is also currently being asserted against Disney. The second complaint seeks declarations of noninfringement with respect to five of the Company’s video technology patents that have been asserted against Amazon, Hisense and TCL.
In April 2026, the Company filed a motion to dismiss the first complaint; that motion was denied. The Company filed a motion to dismiss the second complaint, which was granted in July 2026. Dolby moved for reconsideration of the dismissal of the second complaint, which motion was denied. Dolby indicated it intends to appeal the dismissal. In October 2026, the Company filed a motion to consolidate the Disney and Dolby actions.
In July 2026, Dolby filed a motion to intervene in the Hisense and TCL USITC matter, and in August 2026, this motion was granted.
Hisense
Brazil Proceedings
In February 2026, the Company and certain of its subsidiaries filed a claim in the Regional Business Court of Rio de Janeiro against Hisense. The claim alleges infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, damages and injunctive relief to prevent further infringement of the asserted patents. In October 2026, the Court issued a preliminary injunction against Hisense.
In April 2026, Hisense filed an antitrust action against the Company in the Conselho Administrativo de Defesa Econômica, alleging that the Company has acted as an unwilling licensor. The Company submitted its answer to the complaint in May 2026.
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Germany Proceedings
In February 2026, the Company and certain of its subsidiaries filed patent infringement claims in the Munich Regional Court against Hisense. The claims allege infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents. The Munich Court has scheduled a hearing for first quarter 2027.
India Proceedings
In February 2026, the Company and certain of its subsidiaries filed patent infringement claims in the Delhi High Court against Hisense. The claims allege infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents, damages, and a declaration that the Company is Fair, Reasonable and Non-Discriminatory ("FRAND") compliant and that Hisense is an unwilling licensee with respect to the FRAND claims.
International Trade Commission and Companion District Court Proceedings
In February 2026, the Company and certain of its subsidiaries filed a companion patent infringement complaint against Hisense in the Federal District Court of the Northern District of Georgia. The claims allege infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, damages and injunctive relief to prevent further infringement of the asserted patents. The case is currently stayed pending resolution of the ITC case described below.
In February 2026, the Company and certain of its subsidiaries filed a complaint in the ITC alleging that Hisense (and TCL, as further described below) is engaged in unfair trade practices by selling for importation, importing, and selling after importation products that infringe six of the Company's patents. The products include certain video-capable electronic devices like smart TVs, monitor display devices, and components thereof that infringe certain claims of the asserted patents. As relief, the Company is seeking, among other relief, a limited exclusion order against Hisense barring from entry into the United States all of Hisense’s products that infringe the asserted patents and cease and desist orders prohibiting Hisense from importing, selling, offering for sale, marketing, advertising, and distributing, infringing products. The ITC has instituted the investigation. A hearing is scheduled for second quarter 2027, with a final determination currently expected by the end of 2027.
UPC Proceedings
In February 2026, the Company and certain of its subsidiaries filed patent infringement claims in the Mannheim Local Divisional Court of the UPC against Hisense Group Co., Ltd. and certain of its subsidiaries (“Hisense”). The claims allege infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents. The Mannheim Court has scheduled a hearing for third quarter 2027.
Lenovo
In fourth quarter 2024, the Company reached an agreement with Lenovo Group Limited and certain of its subsidiaries (“Lenovo”) to enter into binding arbitration to determine the final terms of a new patent license agreement, which will be effective from January 1, 2024. In November 2024, the Company filed a request for arbitration with the International Chamber of Commerce. The arbitration hearing was held in October 2026, and we expect a result in the first half of 2027.
Samsung
The Company reached an agreement with Samsung Electronics Co. Ltd. (“Samsung”) to enter into binding arbitration to determine the final terms of a renewed patent license agreement to certain of the Company’s patents, to be effective from January 1, 2023. In July 2025, a panel of International Chamber of Commerce arbitrators determined the royalties of the patent license between the Company and Samsung covering Samsung’s products other than digital televisions and computer display monitors, which have been licensed under a separate agreement. The panel set the total royalties at $1.05 billion for the eight-year patent license.
In December 2025, Samsung filed a request to the International Chamber of Commerce seeking to challenge the previously determined royalties. In July 2026, the Company filed jurisdictional objections. The jurisdiction hearing was held in September 2026.
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TCL
Brazil Proceedings
In February 2026, the Company and certain of its subsidiaries filed a claim in the Regional Business Court of Rio de Janeiro against TCL. The claim alleges infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, damages and injunctive relief to prevent further infringement of the asserted patents. In October 2026, the Court issued a preliminary injunction against TCL.
In July 2026, the Company and certain of its subsidiaries were served with two complaints filed by TCL in the Shenzhen Intermediate People’s Court. The first suit seeks, among other things, a declaration that the Company’s proposed licensing terms for its HEVC portfolio does not comply with FRAND principles, and for the court to determine global FRAND licensing terms for the Company’s HEVC portfolio applicable to TCL’s television products. The second suit seeks, among other things, a declaration that the Company has abused a dominant market position in licensing its Chinese SEPs, and compensation for alleged economic losses caused by this abuse of dominant market position. The Company filed jurisdictional challenges in both matters which are currently pending.
Germany Proceedings
In February 2026, the Company and certain of its subsidiaries filed patent infringement claims in the Munich Regional Court against TCL. The claims allege infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents. The Munich Court has scheduled a hearing for first quarter 2027.
India Proceedings
In February 2026, the Company and certain of its subsidiaries filed patent infringement claims in the Delhi High Court against TCL. The claims allege infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents, damages, and a declaration that the Company is FRAND compliant and that TCL is an unwilling licensee with respect to the FRAND claims.
International Trade Commission and Companion District Court Proceedings
In February 2026, the Company and certain of its subsidiaries filed a companion patent infringement complaint against TCL in the Federal District Court of the Eastern District of Texas. The claims allege infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, damages and injunctive relief to prevent further infringement of the asserted patents. The case is currently stayed pending resolution of the ITC case described below.
In February 2026, the Company and certain of its subsidiaries filed a complaint in the ITC, referenced above with respect to Hisense, alleging that TCL is engaged in unfair trade practices by selling for importation, importing, and selling after importation products that infringe six of the Company's patents. The products include certain video-capable electronic devices like smart TVs, monitor display devices, and components thereof that infringe certain claims of the asserted patents. As relief, the Company is seeking, among other relief, a limited exclusion order against TCL barring from entry into the United States all of TCL’s products that infringe the asserted patent and cease and desist orders prohibiting TCL from importing, selling, offering for sale, marketing, advertising, and distributing, infringing products. The ITC has instituted the investigation. An evidentiary hearing is scheduled for second quarter 2027, with a final determination currently expected by the end of 2027.
UPC Proceedings
In February 2026, the Company and certain of its subsidiaries filed patent infringement claims in the Munich Local Divisional Court of the UPC against TCL Technology Group Corp. and certain of its subsidiaries (“TCL”). The claims allege infringement of certain of the Company’s patents relating to video coding technologies. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.
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Tesla
In December 2023, Tesla, Inc. ("Tesla") and certain of its subsidiaries filed a claim in the UK High Court against the Company and Avanci. The claim alleges invalidity of three of the Company’s patents relating to 5G standards: European Patent (UK) Nos. 3,718,369, 3,566,413, and 3,455,985. Tesla sought, among other relief, a declaration that the patents at issue are invalid, not essential, and not infringed, revocation of the patents at issue, a declaration that the terms of the Avanci 5G Connected Vehicle platform license are not FRAND, and a determination of FRAND terms for a license between Tesla and Avanci covering Avanci’s 5G Connected Vehicle platform. In March 2024, the Company filed a jurisdiction challenge; the jurisdiction challenge was heard during May and June 2024, and in July 2024 the UK High Court issued a judgment dismissing Tesla’s FRAND claims against the Company and Avanci, and maintaining Tesla’s patent claims against the Company. The patent claims against the Company were further stayed by the UK High Court. An appeal hearing was held in December 2024, and the UK Court of Appeal upheld the lower court's decision. Tesla’s appeal to the Supreme Court was granted. The Supreme Court heard the appeal in April 2026. In July 2026, the Supreme Court reversed the decision of the lower courts finding that there was an issue to be tried regarding Tesla’s FRAND claims against the Company and Avanci, and that the UK High Court has jurisdiction to hear those claims. A trial has been scheduled for March 2028.
Transsion
Brazil Proceedings
In September 2025, the Company and certain of its subsidiaries filed a claim in the Regional Business Court of Rio de Janeiro against Transsion and distributors. The claim alleges infringement of certain of the Company’s patents relating to cellular SEP technologies. The Company is seeking, among other relief, damages and injunctive relief to prevent further infringement of the asserted patents. In March 2026, the Court issued a preliminary injunction enjoining Transsion from selling 5G-compliant devices in Brazil. Transsion appealed this decision, and the appeal was denied. The Company expects a decision on the permanent injunction regarding 5G-compliant Transsion devices later this year. In August 2026, the Company and certain of its subsidiaries filed additional claims alleging infringement of the Company’s patents relating to additional cellular SEP technologies against Transsion and distributors.
India Proceedings
In September and October 2025, the Company and certain of its subsidiaries filed patent infringement claims in the Delhi High Court against Transsion. The claims allege infringement of certain of the Company’s patents relating to cellular SEP technologies and video coding technologies. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents, damages, and a declaration that the Company is FRAND compliant and that Transsion is an unwilling licensee with respect to the FRAND claims.
UPC Proceedings
In September 2025, the Company and certain of its subsidiaries filed patent infringement claims in the Munich Local Divisional Court of the UPC against Transsion Holdings Pvt Ltd and certain of its subsidiaries (“Transsion”) and distributors. The claims allege infringement of certain of the Company’s patents relating to cellular SEP technologies and video coding technologies. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents. The Munich Court has scheduled a hearing for first quarter 2027.
China Proceedings
In September 2026, Transsion filed a declaratory judgment action against the Company and certain of its subsidiaries in the Shenzhen Intermediate People’s Court. The action seeks, among other things, a Court determination for FRAND global licensing terms to the Company’s cellular SEPs for Transsion’s smart terminal products.
OTHER
We are party to certain other disputes and legal actions in the ordinary course of business, including arbitrations and legal proceedings with licensees regarding the terms of their agreements and the negotiation thereof. We do not currently believe that these matters, even if adversely adjudicated or settled, would have a material adverse effect on our financial condition, results of operations or cash flows. None of the preceding matters have met the requirements for accrual or disclosure of a potential range as of September 30, 2026, except as noted above.
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7. INCOME TAXES
In the nine months ended September 30, 2026 and 2025, the Company had an estimated effective tax rate of 15.7 % and 13.3 %, respectively. The change in effective tax rate was primarily due to a lower proportion of income qualifying for the Foreign-Derived Deduction Eligible Income ("FDDEI") benefit. During the nine months ended September 30, 2026 and 2025, the Company recorded discrete net benefits of $11.5 million and $9.3 million, respectively, primarily related to share-based compensation.
The One Big Beautiful Bill Act (the “OBBBA”) was signed into law on July 4, 2025. The OBBBA contains significant tax law changes with various effective dates affecting business taxpayers. The tax law changes affecting the Company primarily involve changes to the timing and amount of certain tax deductions, including those related to FDDEI, Net CFC Tested Income (NCTI), depreciation, R&D expenditures, and interest expense. The OBBBA did not have a material impact on our financial statements in third quarter 2026.
The effective tax rate reported in any given year will continue to be influenced by a variety of factors, including timing differences between the recognition of book and tax revenue, the level of pre-tax income or loss, the foreign vs. domestic classification of the Company’s customers, and any discrete items that may occur.
During the nine months ended September 30, 2026 and 2025, the Company paid approximately $42.9 million and $78.6 million, respectively, in foreign source creditable withholding tax.
8. NET INCOME PER SHARE
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
| Weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
Dilutive effect of stock options and RSUs | |||||||||||||||||||||||
Dilutive effect of warrants | |||||||||||||||||||||||
Dilutive effect of convertible securities | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Dilutive effect of stock options and RSUs | ( | ( | ( | ( | |||||||||||||||||||
Dilutive effect of warrants | ( | ( | ( | ( | |||||||||||||||||||
Dilutive effect of convertible securities | ( | ( | ( | ( | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
Shares of common stock issuable upon the exercise or conversion of certain securities have been excluded from our computation of EPS because the strike price or conversion rate, as applicable, of such securities was greater than the average market price of our common stock and, as a result, the effect of such exercise or conversion would have been anti-dilutive. Set forth below are the securities and the weighted-average number of shares of common stock underlying such securities that were excluded from our computation of EPS for the periods presented (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Warrants | |||||||||||||||||||||||
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Convertible Notes and Warrants
Refer to Note 5, "Obligations," for information about the Company's convertible notes and warrants and related conversion and strike prices. During periods in which the average market price of the Company's common stock is above the applicable conversion price of the Company's convertible notes, or above the strike price of the Company's outstanding warrants, the impact of conversion or exercise, as applicable, would be dilutive and such dilutive effect is reflected in diluted EPS. As a result, in periods where the average market price of the Company's common stock is above the conversion price or strike price, as applicable, under the if-converted method for the convertible notes and treasury stock method for the warrants, the Company calculates the number of shares issuable under the terms of the convertible notes and the warrants based on the average market price of the stock during the period, and includes that number in the total diluted shares outstanding for the period.
9. SEGMENT PERFORMANCE MEASURES AND EXPENSES
Our Chief Executive Officer, who is our chief operating decision maker (“CODM”), assesses company-wide performance and allocates resources based on consolidated financial information. Consequently, we view the entire organization as one reportable segment and the strategic purpose of all operating activities is to support that one segment. Our CODM evaluates company-wide performance based on multiple performance measures, including, but not limited to, net income. Our CODM does not generally evaluate our performance using asset or historical cash flow information.
The table below provides the calculation of net income, which is the performance measure that is most consistent with GAAP, and the significant operating expenses included in this performance measure (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
Less: | |||||||||||||||||||||||
Departmental expenses (1) | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
Intellectual property enforcement | |||||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||
| Revenue share costs | |||||||||||||||||||||||
Other non-operating income, net (2) | ( | ( | ( | ( | |||||||||||||||||||
| Income tax provision | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
(1) Includes personnel costs, consulting costs, outside services, administrative costs, and other operating expenses.
10. OTHER INCOME, NET
The amounts included in "Other income, net" in the condensed consolidated statements of income for the three and nine months ended September 30, 2026 and 2025 were as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Interest and investment income | $ | $ | $ | $ | |||||||||||||||||||
| Other non-operating (expense) income, net | ( | ( | |||||||||||||||||||||
| Other income, net | $ | $ | $ | $ | |||||||||||||||||||
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
The following discussion should be read in conjunction with the unaudited, condensed consolidated financial statements and notes thereto contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, in addition to our 2025 Form 10-K, other reports filed with the SEC and the Statement Pursuant to the Private Securities Litigation Reform Act of 1995 — Forward-Looking Statements below.
Throughout the following discussion and elsewhere in this Quarterly Report on Form 10-Q, we refer to “catch-up revenue.” “Catch-up revenue” primarily represents revenue associated with reporting periods prior to the entry of the agreement.
New Agreements
During third quarter 2026, we entered into an arbitration agreement with a top PC manufacturer to determine the final terms of a new patent license covering certain of our patents. During third quarter 2026, we began recognizing revenue based on a conservative estimate, consistent with Generally Accepted Accounting Principles in the United States ("GAAP"), in respect of this agreement.
Additionally, we signed a new patent license agreement with KEBA Energy Automation GmbH. The agreement covers certain KEBA EV charger products under InterDigital’s global patent portfolio related to the 3G, 4G and Wi-Fi standards.
Disney UPC Injunctions
During the third quarter of 2026, the Dusseldorf Local Division of the Unified Patent Court (“UPC”) issued two additional injunctions against Disney. In July 2026, the court found that Disney infringed an InterDigital patent covering certain video encoding techniques related to HEVC. In September 2026, the court found that Disney infringed an InterDigital patent that covers technology that enables seamless viewing when sharing video content between different devices. Both rulings confirmed the validity of the patents and issued injunctions spanning across multiple countries in the European Union. Disney may appeal each decision. In their rulings, both UPC tribunals concluded that Disney is an "unwilling licensee" based on its conduct.
These decisions represent the second and third injunctions that InterDigital has received from the UPC against Disney. The first UPC injunction related to patents covering certain video encoding techniques associated with HEVC. Outside of the UPC, InterDigital has been awarded injunctions from national courts in Germany and Brazil for Disney’s infringement of InterDigital’s intellectual property related to high dynamic range (HDR) technology, the dynamic overlaying of multiple video streams, and additional encoding technologies related to HEVC and AVC.
For more information on these proceedings, see Note 6, “Litigation and Legal Proceedings,” to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Notes, Hedge, and Warrant Transactions
During third quarter 2026, the 2027 Notes had a dilutive impact of 3.5 million shares, which is offset from an economic standpoint by the 2027 Note Hedge Transactions and would result in no incremental outstanding shares after conversion. However, under GAAP, we are required to exclude the impact of the shares received from the 2027 Note Hedge Transactions counterparties from the calculation of weighted-average diluted shares outstanding.
From the period January 1, 2024 through December 31, 2026, the holders of the 2027 Notes have the right, but not the obligation, to convert any portion of the principal amount of the 2027 Notes. As of September 30, 2026, $296.7 million in principal of the 2027 Notes remains outstanding, of which holders had elected to convert $2.2 million principal amount, which will settle in fourth quarter 2026. No incremental outstanding shares will result from such conversions.
As of September 30, 2026, 6.0 million warrants remain outstanding related to the 2027 Warrant Transactions at a strike price of $105.30 per share, subject to adjustment, which mature on a net-share basis beginning September 2027 through April 2028. Refer to "Financial Position, Liquidity, and Capital Resources — Convertible Notes" for further information regarding how changes in our stock price would affect the number of shares issuable related to the 2027 Warrant Transactions. For example, if the share price averaged $325 between September 2027 and April 2028, we would issue 4.1 million shares of common stock related to the 2027 Warrant Transactions.
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Return of Capital
In September 2026, we announced an increase to our regular quarterly cash dividend from $0.70 per share to $0.75 per share, beginning with the dividend paid in fourth quarter 2026. During third quarter 2026, we repurchased $18.7 million of common stock and declared $19.3 million in cash dividends, or $0.75 per share, representing a total of $38.0 million in share repurchases and dividends declared. We also reduced our debt through $83.2 million principal payments on conversions of the 2027 Notes.
As of October 29, 2026, there was $66.9 million remaining under the share repurchase authorization, which we plan to utilize to periodically repurchase additional common shares. See Part II — Other Information, Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds—Issuer Purchases of Equity Securities of this Quarterly Report on Form 10-Q.
Cash and Short-term Investments
As of September 30, 2026, we had $1.1 billion of cash, cash equivalents, restricted cash, and short-term investments and approximately $1.8 billion of cash payments due under contracted fixed price agreements, which includes our conservative estimates of the minimum cash receipts that we expect to receive under our three ongoing arbitrations.
95% of our third quarter 2026 revenue came from fixed-fee agreements. Such agreements often have prescribed payment schedules that are uneven and sometimes front-loaded, resulting in timing differences between when we collect the cash payments and recognize the related revenue.
The following table reconciles the timing differences between cash receipts and recognized revenue during the three and nine months ended September 30, 2026 and 2025, including the resulting operating cash flow (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Cash vs. Non-cash revenue: | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
Fixed-fee cash receipts (1) | $ | 225,698 | $ | 492,020 | $ | 524,918 | $ | 676,739 | |||||||||||||||
Other cash receipts (2) | 9,801 | 8,390 | 28,894 | 41,834 | |||||||||||||||||||
| Change in deferred revenue | 8,914 | (119,991) | (98,694) | (48,785) | |||||||||||||||||||
| Change in receivables and contract assets | (56,831) | (222,066) | 188,354 | (12,661) | |||||||||||||||||||
| Other | 5,847 | 6,329 | 15,543 | 18,658 | |||||||||||||||||||
| Total Revenue | $ | 193,429 | $ | 164,682 | $ | 659,015 | $ | 675,785 | |||||||||||||||
| Net cash provided by operating activities | $ | 150,356 | $ | 395,930 | $ | 248,973 | $ | 481,059 | |||||||||||||||
(1) Fixed-fee cash receipts are comprised of cash receipts from Dynamic Fixed-Fee Agreement royalties, including the associated catch-up revenue.
(2) Other cash receipts are primarily comprised of cash receipts related to our variable patent royalty revenue and catch-up revenue.
When we collect payments on a front-loaded basis, we recognize a deferred revenue liability equal to the cash received and accounts receivable recorded which relate to revenue expected to be recognized in future periods. That liability is then reduced as we recognize revenue over the balance of the agreement. The following table shows the projected amortization of our current and long-term deferred revenue as of September 30, 2026 (in thousands):
| Deferred Revenue | |||||
| Remainder of 2026 | $ | 116,506 | |||
| 2027 | 236,157 | ||||
| 2028 | 78,159 | ||||
| 2029 | 1,206 | ||||
| 2030 | 1,270 | ||||
| Thereafter | — | ||||
| Total | $ | 433,298 | |||
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Revenue
Third quarter 2026 revenue of $193.4 million includes $36.2 million of catch-up revenue, while third quarter 2025 revenue of $164.7 million includes $17.7 million of catch-up revenue. The $28.7 million increase in total revenue was driven by higher catch-up revenue and recurring revenue recognized from eleven patent license agreements signed since third quarter 2025. In third quarter 2026, revenue (in descending order) from Dell, Apple, and Samsung each comprised 10% or more of our consolidated revenue. Refer to "Results of Operations — Third Quarter 2026 Compared to Third Quarter 2025" for further discussion of our 2026 revenue.
Smartphone, CE, IoT/Auto, and Streaming and Cloud Services are the Company's licensing programs. The Smartphone revenue grouping consists primarily of smartphones and also includes other wireless communication devices and infrastructure equipment, such as tablets, and base stations. The CE, IoT/Auto revenue grouping consists of consumer electronics and IoT products, such as televisions, laptops, gaming consoles, set-top boxes, streaming devices, and connected automobiles. The Streaming and Cloud Services revenue grouping consists of SVOD, AVOD, global pay-TV, video conferencing, cloud gaming, and other cloud-based services.
Impact of Macroeconomic and Geopolitical Factors
We have been actively monitoring the impact of the current macroeconomic environment in the U.S. and globally characterized by market volatility, inflation, supply chain issues, recent increases in interest rates, tariffs and other potential trade-related sanctions, and the potential for a recession. These market factors, as well as the impacts of global conflicts, have not had a material impact on our business to date. However, if these conditions continue or worsen, they could have an adverse effect on our operating results and our financial condition.
Comparability of Financial Results
When comparing third quarter 2026 financial results against other periods, the following items should be taken into consideration:
Revenue
•Our third quarter 2026 revenue includes $36.2 million of catch-up revenue primarily related to the arbitration agreement signed with a top PC manufacturer in third quarter 2026.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our significant accounting policies are described in Note 2, "Summary of Significant Accounting Policies and New Accounting Guidance", in the notes to condensed consolidated financial statements included in our 2025 Form 10-K. A discussion of our critical accounting policies, and the estimates related to them, are included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Form 10-K. There have been no material changes to our existing critical accounting policies from the disclosures included in our 2025 Form 10-K. Refer to Note 1, “Basis of Presentation,” in the notes to condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for updates related to new accounting pronouncements and changes in accounting policies.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash, cash equivalents, and short-term investments, as well as cash generated from operations. We believe we have the ability to obtain additional liquidity through debt and equity financings. From time to time, we may engage in a variety of transactions to augment our liquidity position as our business dictates and to take advantage of favorable interest rate environments or other market conditions, including the incurrence or issuance of debt and the refinancing or restructuring of existing debt. Based on our past performance and current expectations, we believe our available sources of funds, including cash, cash equivalents, short-term investments, and cash generated from our operations, will be sufficient to finance our operations, capital requirements, debt obligations, existing share repurchase program, dividend program, and other contractual obligations discussed below in both the short-term over the next twelve months, and the long-term beyond twelve months.
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Cash, cash equivalents, restricted cash, and short-term investments
As of September 30, 2026 and December 31, 2025, we had the following amounts of cash, cash equivalents, restricted cash, and short-term investments (in thousands):
| September 30, 2026 | December 31, 2025 | Increase/(Decrease) | |||||||||||||||
| Cash and cash equivalents | $ | 639,193 | $ | 738,960 | $ | (99,767) | |||||||||||
| Restricted cash included within prepaid and other current assets | 7,508 | 15,308 | (7,800) | ||||||||||||||
| Short-term investments | 483,410 | 504,200 | (20,790) | ||||||||||||||
Total cash, cash equivalents, restricted cash, and short-term investments | $ | 1,130,111 | $ | 1,258,468 | $ | (128,357) | |||||||||||
The net decrease in cash, cash equivalents, restricted cash, and short-term investments was attributable to cash used in financing activities of $338.8 million and cash used in investing activities of $43.4 million, excluding sales and purchases of short-term investments, partially offset by cash provided by operating activities of $249.0 million. Refer to the sections below for further discussion of these items.
Cash flows provided by operating activities
Cash flows provided by operating activities in the first nine months 2026 and 2025 (in thousands) were as follows:
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Net cash provided by operating activities | $ | 248,973 | $ | 481,059 | $ | (232,086) | |||||||||||
Our cash flows provided by operating activities are principally derived from cash receipts from patent license agreements, offset by cash operating expenses and income tax payments. The $232.1 million change in cash provided by operating activities was primarily driven by lower cash receipts due to the timing of receipts under new and existing agreements and due to higher cash operating expenses, including increased revenue share and intellectual property enforcement costs. The table below sets forth the significant items comprising our cash flows provided by operating activities during the nine months ended September 30, 2026 and 2025 (in thousands):
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Total Cash Receipts | $ | 553,812 | $ | 718,573 | $ | (164,761) | |||||||||||
| Cash Outflows: | |||||||||||||||||
Cash operating expenses (1) | (232,039) | (174,518) | (57,521) | ||||||||||||||
Income taxes paid (2) | (55,000) | (92,711) | 37,711 | ||||||||||||||
| Total cash outflows | (287,039) | (267,229) | (19,810) | ||||||||||||||
| Other working capital adjustments | (17,800) | 29,715 | (47,515) | ||||||||||||||
| Cash flows provided by operating activities | $ | 248,973 | $ | 481,059 | $ | (232,086) | |||||||||||
______________________________
(1) Cash operating expenses include operating expenses less depreciation and disposals of fixed assets, amortization of patents, and non-cash compensation. Amount includes revenue share costs of $29.3 million and $7.6 million in first nine months 2026 and 2025, respectively.
(2) Income taxes paid include foreign withholding taxes.
Cash flows from investing and financing activities
Net cash used in investing activities for first nine months 2026 was $17.7 million, a $19.2 million change from $36.9 million in first nine months 2025. During first nine months 2026, we sold $25.8 million of short-term marketable securities, net of purchases, and capitalized $45.2 million of patent costs and capital expenditures. During first nine months 2025, we sold $18.3 million of short-term marketable securities, net of purchases, and capitalized $55.3 million of patent costs and capital expenditures.
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Net cash used in financing activities for first nine months 2026 was $338.8 million, a change of $191.8 million from $147.0 million in first nine months 2025. This change was primarily attributable to an $163.2 million payment related to partial conversions of the 2027 Notes in first nine months 2026. The change also reflects higher cash outflows in 2026, including a $19.5 million increase in taxes withheld on restricted stock unit vestings due to a higher share price at vesting and a $11.5 million increase in dividends paid following the increases in the declared dividend from $0.60 to $0.70. In addition, during first nine months 2025, we received $7.3 million due to the exercise of stock options. These changes were offset by a $16.8 million decrease in repurchases of common stock.
Other
Our combined short-term and long-term deferred revenue balance as of September 30, 2026 was approximately $433.3 million, a net increase of $103.7 million from December 31, 2025. This increase in deferred revenue was primarily due to cash receipts on new and existing patent license agreements, partially offset by amortization of deferred revenue recognized in the period.
Based on current license agreements, we expect the amortization of dynamic fixed-fee royalty payments to reduce the September 30, 2026 deferred revenue balance of $433.3 million by $294.9 million over the next twelve months.
Convertible Notes
See Note 5, “Obligations” to the Notes to condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for definitions of capitalized terms below.
From January 1, 2024 through December 31, 2026, the holders of the 2027 Notes have the right, but not the obligation, to convert any portion of the principal amount of the 2027 Notes.
Our 2027 Notes are included in the diluted earnings per share ("diluted EPS") calculation using the if-converted method in accordance with GAAP. Under the if-converted method, we assume that conversion of convertible securities occurs at the beginning of the reporting period. The 2027 Notes are convertible into cash up to the aggregate principal amount of the 2027 Notes to be converted and any value in excess of the principal amount (the "conversion spread") may be settled in cash, shares of the Company’s common stock, or a combination thereof. As the principal amount is required to be paid in cash and only the conversion spread may result in shares being issued, we only include the net number of incremental shares that would be issued upon conversion. We calculate the number of shares of our common stock issuable under the terms of the 2027 Notes based on the average market price of our common stock during the applicable reporting period and include that number in the weighted‑average diluted shares outstanding for the period.
At the time we issued the 2027 Notes, we entered into the 2027 Note Hedge Transactions and 2027 Warrant Transactions (collectively, the "2027 Call Spread Transactions") that together were designed to have the economic effect of reducing potential dilution upon conversion of the 2027 Notes by, in effect, increasing the conversion price of the 2027 Notes on an economic basis. However, under GAAP, since the impact of the 2027 Note Hedge Transactions is anti-dilutive, we exclude from the calculation of diluted EPS the shares of our common stock that we would receive from the counterparties upon settlement of the 2027 Note Hedge Transactions.
During periods in which the average market price of our common stock is above the applicable conversion price of the 2027 Notes (conversion price of approximately $76.72 per share, subject to adjustment), or above the strike price of the warrants (strike price of $105.30 per share, subject to adjustment), the impact of conversion of the 2027 Notes or exercise of the warrants, as applicable, would be dilutive and such dilutive effect is reflected in diluted earnings per share. In those periods, we calculate the incremental shares associated with the 2027 Notes (under the if‑converted method) or the warrants based on the average market price of our common stock during the period and include those incremental shares in weighted‑average diluted shares outstanding.
Changes in the price per share of our common stock can have a significant impact on the number of shares that we must include in the diluted EPS calculation. As described in Note 5, "Obligations" in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, the 2027 Notes are convertible into cash up to the aggregate principal amount of 2027 Notes to be converted and any remaining obligations may be settled in cash, shares of the Company’s common stock or a combination thereof ("net share settlement"). Assuming net share settlement upon conversion, the following table illustrates how changes in our stock price would affect the shares issuable under the 2027 Notes and related warrant transactions, the incremental shares included in diluted EPS under the if‑converted method (“Total Incremental Shares”), the shares deliverable to us under the 2027 Note Hedge Transactions, and the resulting net incremental shares, based on $296.7 million aggregate principal amount outstanding and approximately 6.0 million related warrants as of September 30, 2026 (in thousands):
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| 2027 Notes | |||||||||||||||||
| Market Price Per Share | Shares Issuable Upon Conversion of the 2027 Notes | Shares Issuable Upon Exercise of the 2027 Warrant Transactions | Total If-Converted Method Incremental Shares | Shares Deliverable to InterDigital Upon Settlement of the 2027 Note Hedge Transactions | Incremental Shares Issuable (1) | ||||||||||||
| A | B | C=A+B | D | E=C-D | |||||||||||||
| $105 | 1,042 | — | 1,042 | (1,042) | — | ||||||||||||
| $125 | 1,494 | 945 | 2,439 | (1,494) | 945 | ||||||||||||
| $150 | 1,890 | 1,787 | 3,677 | (1,890) | 1,787 | ||||||||||||
| $175 | 2,172 | 2,388 | 4,560 | (2,172) | 2,388 | ||||||||||||
| $200 | 2,384 | 2,839 | 5,223 | (2,384) | 2,839 | ||||||||||||
| $225 | 2,549 | 3,190 | 5,739 | (2,549) | 3,190 | ||||||||||||
| $250 | 2,681 | 3,471 | 6,152 | (2,681) | 3,471 | ||||||||||||
| $275 | 2,789 | 3,700 | 6,489 | (2,789) | 3,700 | ||||||||||||
| $300 | 2,879 | 3,892 | 6,771 | (2,879) | 3,892 | ||||||||||||
| $325 | 2,955 | 4,053 | 7,008 | (2,955) | 4,053 | ||||||||||||
| $350 | 3,020 | 4,192 | 7,212 | (3,020) | 4,192 | ||||||||||||
| $375 | 3,077 | 4,312 | 7,389 | (3,077) | 4,312 | ||||||||||||
| $400 | 3,126 | 4,418 | 7,544 | (3,126) | 4,418 | ||||||||||||
| $425 | 3,170 | 4,511 | 7,681 | (3,170) | 4,511 | ||||||||||||
| $450 | 3,209 | 4,593 | 7,802 | (3,209) | 4,593 | ||||||||||||
| $475 | 3,243 | 4,667 | 7,910 | (3,243) | 4,667 | ||||||||||||
| $500 | 3,275 | 4,733 | 8,008 | (3,275) | 4,733 | ||||||||||||
______________________________
(1) Represents incremental shares issuable upon concurrent conversion of convertible notes, exercise of warrants and settlement of the hedge agreements.
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RESULTS OF OPERATIONS
Third Quarter 2026 Compared to Third Quarter 2025
Revenue
The following table compares third quarter 2026 revenue to third quarter 2025 revenue (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | Increase/(Decrease) | |||||||||||||||||||||
| Smartphone | $ | 122,631 | $ | 136,407 | $ | (13,776) | (10) | % | |||||||||||||||
| CE, IoT/Auto | 55,712 | 28,219 | 27,493 | 97 | % | ||||||||||||||||||
Streaming and Cloud Services | 15,000 | — | 15,000 | N/M | |||||||||||||||||||
| Other | 86 | 56 | 30 | 54 | % | ||||||||||||||||||
| Total Revenue | $ | 193,429 | $ | 164,682 | $ | 28,747 | 17 | % | |||||||||||||||
Catch-up revenue(1), included above | $ | 36,208 | $ | 17,678 | $ | 18,530 | 105 | % | |||||||||||||||
(1) Catch-up revenue represents revenue associated with reporting periods prior to the entry of the agreement.
N/M indicates not meaningful.
Total revenue of $193.4 million increased compared to third quarter 2025, primarily due to revenue recognized from the top PC manufacturer and Amazon arbitration agreements and nine other agreements signed over the last twelve months. The increase was partially offset by catch-up revenue recognized in third quarter 2025 primarily resulting from the Honor agreement and the expiration of the Samsung TV agreement at the end of 2025.
In third quarter 2026 and 2025, 54% of our total revenue was attributable to licensees that individually accounted for 10% or more of our total revenue. In third quarter 2026 and 2025, the following licensees accounted for 10% or more of our total revenue:
| Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Customer A | 20% | —% | |||||||||
| Customer B | 17% | 20% | |||||||||
| Customer C | 17% | 23% | |||||||||
| Customer D | <10% | 11% | |||||||||
Operating Expenses
The following table summarizes the changes in operating expenses between third quarter 2026 and third quarter 2025 by category (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | Increase/(Decrease) | |||||||||||||||||||||
| Research and portfolio development | $ | 56,692 | $ | 53,068 | $ | 3,624 | 7 | % | |||||||||||||||
| Licensing | 24,371 | 19,715 | 4,656 | 24 | % | ||||||||||||||||||
| General and administrative | 13,001 | 16,091 | (3,090) | (19) | % | ||||||||||||||||||
Total operating expenses | $ | 94,064 | $ | 88,874 | $ | 5,190 | 6 | % | |||||||||||||||
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Operating expenses increased to $94.1 million in third quarter 2026 compared to $88.9 million in third quarter 2025. The $5.2 million increase in total operating expenses was primarily due to changes in the following items (in thousands):
| Increase/(Decrease) | |||||
| Intellectual property enforcement, net | $ | 4,809 | |||
| Share-based compensation | 4,015 | ||||
| Revenue share costs | (1,517) | ||||
| Other | (2,117) | ||||
Total increase in operating expenses | $ | 5,190 | |||
The $5.2 million increase in operating expenses was driven by a $4.8 million increase in intellectual property enforcement costs related to ongoing proceedings and a $4.0 million increase in performance related share-based compensation costs due to recent business successes. These increases were offset by a $1.5 million decrease in revenue share costs due to the expiration of the Samsung TV agreement.
Research and portfolio development expense: Research and portfolio development expense increased compared to third quarter 2025 primarily due to increased share-based compensation costs and depreciation.
Licensing expense: Licensing expense increased compared to third quarter 2025 primarily due to the above-noted change in intellectual property enforcement and share-based compensation costs, partially offset by the decreased revenue share costs.
General and administrative expense: General and administrative expense decreased compared to third quarter 2025 primarily due to lower personnel-related costs and other corporate expenses, partially offset by increased share-based compensation expenses.
Non-Operating Income, net
The following table compares third quarter 2026 non-operating income, net to third quarter 2025 (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | Increase/(Decrease) | |||||||||||||||||||||
| Interest expense | $ | (8,956) | $ | (10,019) | $ | 1,063 | 11 | % | |||||||||||||||
| Interest and investment income | 10,176 | 9,484 | 692 | 7 | % | ||||||||||||||||||
| Other non-operating (expense) income, net | (1,078) | 704 | (1,782) | (253) | % | ||||||||||||||||||
| Total non-operating income, net | $ | 142 | $ | 169 | $ | (27) | (16) | % | |||||||||||||||
The change in other non-operating (expense) income, net was primarily due to fair value adjustments on our investments, which resulted in a $0.1 million net loss in third quarter 2026 compared with a $1.7 million net gain in third quarter 2025.
Income Taxes
In third quarter 2026 and 2025, based on the statutory federal tax rate net of discrete federal and state taxes, we had an effective tax rate of 19.4% and 11.2%, respectively. The change in effective tax rate was primarily due to a lower proportion of income qualifying for the Foreign-Derived Deduction Eligible Income ("FDDEI") benefit.
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First Nine Months 2026 Compared to First Nine Months 2025
Revenue
The following table compares first nine months 2026 revenue to first nine months 2025 revenue (in thousands):
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | Increase/(Decrease) | |||||||||||||||||||||
| Smartphone | $ | 368,722 | $ | 555,482 | $ | (186,760) | (34) | % | |||||||||||||||
| CE, IoT/Auto | 165,073 | 119,817 | 45,256 | 38 | % | ||||||||||||||||||
Streaming and Cloud Services | 125,000 | — | 125,000 | N/M | |||||||||||||||||||
| Other | 220 | 486 | (266) | (55) | % | ||||||||||||||||||
| Total Revenue | $ | 659,015 | $ | 675,785 | $ | (16,770) | (2) | % | |||||||||||||||
Catch-up revenue(1), included above | $ | 203,576 | $ | 264,791 | $ | (61,215) | (23) | % | |||||||||||||||
(1) Catch-up revenue represents revenue associated with reporting periods prior to the entry of the agreement.
N/M indicates not meaningful.
Total revenue of $659.0 million decreased $16.8 million compared with the first nine months of 2025, primarily due to catch-up revenue recognized in first nine months 2025 under the Samsung arbitration and the vivo, HP, and Honor agreements. Additionally, the expiration of the Samsung TV agreement contributed to the decrease. These decreases were mostly offset by revenue recognized from the Amazon and top PC manufacturer arbitration agreements and LG TV agreement, as well as revenue from fourteen other new patent license agreements signed in the last eighteen months.
In first nine months 2026 and 2025, 49% and 64% of our total revenue, respectively, was attributable to companies that individually accounted for 10% or more of our total revenue. In first nine months 2026 and 2025, the following companies accounted for 10% or more of our total revenue:
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Customer E | 19% | —% | |||||||||
| Customer B | 15% | 15% | |||||||||
| Customer C | 15% | 33% | |||||||||
| Customer F | <10% | 16% | |||||||||
Operating Expenses
The following table summarizes the changes in operating expenses between first nine months 2026 and first nine months 2025 by category (in thousands):
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | Increase/(Decrease) | |||||||||||||||||||||
| Research and portfolio development | $ | 168,934 | $ | 154,172 | $ | 14,762 | 10 | % | |||||||||||||||
| Licensing | 111,215 | 61,301 | 49,914 | 81 | % | ||||||||||||||||||
| General and administrative | 58,001 | 47,245 | 10,756 | 23 | % | ||||||||||||||||||
| Total operating expenses | $ | 338,150 | $ | 262,718 | $ | 75,432 | 29 | % | |||||||||||||||
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Operating expenses increased 29% to $338.2 million in first nine months 2026 from $262.7 million in first nine months 2025. The $75.4 million increase in total operating expenses was primarily due to changes in the following items (in thousands):
| Increase/(Decrease) | |||||
| Intellectual property enforcement | $ | 28,790 | |||
| Revenue share | 21,706 | ||||
| Share-based compensation | 17,123 | ||||
| Other | 7,813 | ||||
Total change in operating expenses | $ | 75,432 | |||
The $75.4 million increase in operating expenses was primarily driven by a $28.8 million increase in intellectual property enforcement costs related to ongoing proceedings, a $21.7 million increase in revenue share costs primarily associated with catch-up revenue recognized under the LG TV agreement signed during first nine months of 2026, and a $17.1 million increase in performance related share-based compensation costs related to recent business successes.
Research and portfolio development expense: Research and portfolio development expense increased compared to first nine months 2025 primarily due to increases in share-based compensation costs, personnel-related costs, and depreciation costs.
Licensing expense: Licensing expense increased by $49.9 million compared to first nine months 2025 primarily driven by the above-noted increased revenue share costs and intellectual property enforcement costs.
General and administrative expense: General and administrative expense increased $10.8 million primarily due to the above-noted increase in share-based compensation.
Non-Operating Income, net
The following table compares first nine months 2026 non-operating income, net to first nine months 2025 (in thousands):
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | Increase/(Decrease) | |||||||||||||||||||||
| Interest expense | $ | (26,606) | $ | (29,427) | $ | 2,821 | 10 | % | |||||||||||||||
| Interest and investment income | 30,805 | 27,576 | 3,229 | 12 | % | ||||||||||||||||||
| Other non-operating (expense) income, net | (2,385) | 8,014 | (10,399) | (130) | % | ||||||||||||||||||
| Total non-operating income, net | $ | 1,814 | $ | 6,163 | $ | (4,349) | (71) | % | |||||||||||||||
The change in other non-operating (expense) income, net was primarily due to a foreign currency translation net loss arising from translation of our foreign subsidiaries of $5.3 million in first nine months 2026, compared to a $5.9 million net gain in first nine months 2025.
Income Taxes
In first nine months 2026 and 2025, we had an effective tax rate of 15.7% and 13.3%, respectively. The change in effective tax rate was primarily due to a lower proportion of income qualifying for the FDDEI benefit.
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STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 — FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include certain information regarding our current beliefs, plans and expectations, including, without limitation, the matters set forth below. Words such as "believe," “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “forecast,” "goal," "could," "would," "should," "if," "may," "might," "future," "target," "trend," "seek to," "will continue," "predict," "likely," "in the event," and variations of any such words or similar expressions contained herein are intended to identify such forward-looking statements. Forward-looking statements are made on the basis of management’s current views and assumptions and are not guarantees of future performance. Although the forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements concerning our business, results of operations and financial condition are inherently subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, the risks and uncertainties described in Part I, Item 1A of our 2025 Form 10-K and in this Quarterly Report on Form 10-Q and the risks and uncertainties set forth below:
•unanticipated delays or difficulties in the execution of patent license agreements on acceptable terms or at all;
•our ability to expand our revenue opportunities by entering into licensing arrangements with streaming and cloud-based service providers;
•the initiation of new legal proceedings or the resolution of ongoing legal proceedings, including any awards or judgments relating to such proceedings, and changes in the schedules or costs associated therewith;
•our ability to successfully integrate Deep Render and to recognize the anticipated benefits of the transaction;
•our ability to maintain a strong patent portfolio and make strategic decisions related to our intellectual property protection;
•the failure of markets for our technologies to materialize to the extent that we expect;
•our continued ability to develop new technologies;
•changes in our interpretations of, and assumptions and calculations with respect to the impact on us of, the One Big Beautiful Bill Act, the 2017 Tax Cuts and Jobs Act and other U.S. and non-U.S. tax laws;
•the timing and impact of potential regulatory, administrative and legislative matters;
•the potential effects of macroeconomic conditions or global conflicts;
•our ability to hire and retain key personnel;
•operational risks, including cybersecurity events, human failures or other difficulties with our information technology systems; and
•risks related to any new accounting standards or our estimates, assumptions and the application of relevant accounting standards, including with respect to revenue recognition.
You should carefully consider these factors before making any investment decision with respect to our common stock. These factors, individually or in the aggregate, may cause our actual results to differ materially from our expected and historical results. You should understand that it is not possible to predict or identify all such factors. In addition, you should not place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in quantitative and qualitative market risk from the disclosures included in our 2025 Form 10-K.
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Item 4. CONTROLS AND PROCEDURES.
The Company’s principal executive officer and principal financial officer, with the assistance of other members of management, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2026, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
See Note 6, “Litigation and Legal Proceedings,” to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of legal proceedings, which is incorporated herein by reference.
Item 1A. RISK FACTORS.
Reference is made to Part I, Item 1A, “Risk Factors” included in our 2025 Form 10-K for information concerning risk factors, which should be read in conjunction with the factors set forth in the Statement Pursuant to the Private Securities Litigation Reform Act of 1995 -- Forward-Looking Statements in Part I, Item 2 of this Quarterly Report on Form 10-Q. Except as set forth below, there have been no material changes with respect to the risk factors disclosed in our 2025 Form 10-K. You should carefully consider such factors, which could materially affect our business, financial condition or future results. The risks described in the 2025 Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Artificial intelligence may adversely affect our ability to develop, protect, license and enforce our intellectual property.
The increasing development and use of artificial intelligence may affect our ability to invent, obtain patent protection for our inventions, contribute to industry standards and license or enforce our patents. Because the development of our patent portfolios and licensing programs can occur over periods of ten years or more, changes caused by AI may affect the value of research investments and patent assets long after those investments are made. Patent laws and practice concerning inventions developed with the assistance of AI continue to evolve. If our use of AI in research were to impact patentability, we could be unable to obtain patents on certain inventions or patents we obtain could later be challenged or invalidated. In addition, AI may substantially increase the volume and speed at which technical information, patent applications and other potentially relevant prior art are generated, which could make it more difficult or costly to obtain patents with commercially meaningful scope. Use of third-party AI tools in research, patent prosecution or other areas also could create risks relating to confidentiality, data security, contractual rights or ownership.
AI could also affect our ability to license and enforce our patent rights. Prospective licensees may use AI tools to challenge our intellectual property or design around patents more rapidly and at lower cost. At the same time, increasing use of AI in cloud-based, software-based or dynamically changing systems may make infringement more difficult to assert. AI is also likely to increase the pace of technological advancement and the ability of other industry participants to develop competing technologies or identify alternatives to patented technologies. These developments could reduce the likelihood that our technologies are incorporated into industry standards, shorten the period during which our patented technologies remain commercially significant, or reduce the value or essentiality of our patents.
Although we are investing in AI-related research, there can be no assurance that such research will result in commercially valuable patents, that such patents will become essential to widely adopted standards, or that we will be able to establish successful licensing programs around AI-enabled technologies. Even if we are successful at developing AI-related technologies, our relative standing within the AI industry may not be as high as we have historically been in wireless and video. Any of these factors could materially and adversely affect our financial results, competitive position and long-term results of operations.
Scrutiny by antitrust authorities may affect our strategies for patent prosecution, licensing and enforcement and may increase our costs of doing business and/or lead to monetary fines, penalties or other remedies or sanctions.
Domestic and foreign antitrust authorities regularly review their policies with respect to the use of SEPs, including the enforcement of such patents against competitors and others. Such scrutiny has in the past resulted in enforcement actions against Qualcomm and other licensing companies, and could lead to investigations of, or enforcement actions against, us. For example, the Korean Fair Trade Commission recently advised us that it was opening an investigation into our licensing practices at the request of TCL. Additionally, potential licensees may initiate antitrust complaints against us, such as the complaint that Disney filed against us. Such investigations, inquiries and/or enforcement actions could impact the availability of injunctive and monetary relief, which may adversely affect our strategies for patent prosecution, licensing and enforcement and increase our costs of operation. They could also result in reputational harm, monetary fines, penalties or other remedies or sanctions that could adversely affect our business and financial condition. Even if we eventually prevail, regulatory inquiries or actions require significant attention and resources.
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Our operating results may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below expectations.
Our operating results may fluctuate from quarter to quarter as a result of a number of factors, many of which are outside of our control and may be difficult to predict. In particular, the timing of revenue recognition may cause our revenue and earnings to fluctuate, and, in accordance with GAAP, there is significant judgment in the application of our revenue recognition principles. In particular, the relevant accounting principles under ASC 606, Revenue From Contracts with Customers, sometimes require us to recognize revenue before the actual amount is certain, which could add to uncertainty in our revenue guidance. For example, in some cases, ASC 606 requires us to recognize revenue based on a conservative estimate when we reach an agreement to arbitrate the terms of a license agreement, which can occur months or years before a final award has been determined. When the final terms become known, we record an adjustment to revenue. If a final award is lower than our estimate, the adjustment would reduce our revenue in that period. To the extent we have multiple arbitrations that cover related technologies and products or services, the impact of any such downward adjustments could be amplified.
The variability and unpredictability of our results of operations or other operating metrics could result in our failure to meet our expectations or those of industry or financial analysts. If we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could fall substantially.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Issuer Purchases of Equity Securities
The following table provides information regarding the Company’s purchases of its common shares during third quarter 2026.
| Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs (3) | |||||||||||||||||||
| July 1, 2026 - July 31, 2026 | — | $ | — | — | $ | 96,068,318 | |||||||||||||||||
| August 1, 2026 - August 31, 2026 | 24,000 | $ | 343.59 | 24,000 | $ | 87,821,325 | |||||||||||||||||
| September 1, 2026 - September 30, 2026 | 31,500 | $ | 333.10 | 31,500 | $ | 77,327,723 | |||||||||||||||||
| Total | 55,500 | $ | 337.64 | 55,500 | |||||||||||||||||||
(1) Total number of shares purchased during each period reflects share purchase transactions that were completed (i.e., settled) during the period indicated.
(2) Shares were purchased pursuant to the Company’s share repurchase program (the “Share Repurchase Program”), $300 million of which was authorized by the Company’s Board of Directors in June 2014, with an additional $100 million authorized by the Company’s Board of Directors in each of June 2015, September 2017, December 2018, May 2019, and May 2022, respectively, an additional $333 million in December 2022, and an additional $235 million in December 2023. The Share Repurchase Program has no expiration date.
(3) Amounts shown in this column reflect the amounts remaining under the Share Repurchase Program at the end of the period.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. MINE SAFETY DISCLOSURES.
Not applicable.
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Item 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During third quarter 2026, the following Section 16 officers and directors adopted , modified or terminated
| Name | Title | Action | Date | Trading Arrangement | Maximum Shares to be Sold | Expiration Date | |||||||||||||||||
| Rule 10b5-1 | Non-Rule 10b5-1 | ||||||||||||||||||||||
| X | |||||||||||||||||||||||
| X | |||||||||||||||||||||||
| X | |||||||||||||||||||||||
| X | |||||||||||||||||||||||
Item 6. EXHIBITS.
The following is a list of exhibits filed with this Quarterly Report on Form 10-Q:
| Exhibit Number | Exhibit Description | |||||||
| 31.1 | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. | |||||||
| 31.2 | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. | |||||||
| 32.1+ | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350. | |||||||
| 32.2+ | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350. | |||||||
| 101.INS | Inline Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | Inline Schema Document | |||||||
| 101.CAL | Inline Calculation Linkbase Document | |||||||
| 101.DEF | Inline Definition Linkbase Document | |||||||
| 101.LAB | Inline Labels Linkbase Document | |||||||
| 101.PRE | Inline Presentation Linkbase Document | |||||||
| 104 | Inline Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101) | |||||||
______________________________
| + | This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or Securities Exchange Act, except to the extent that InterDigital, Inc. specifically incorporates it by reference. | |||||||
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Table of Contents
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.
| INTERDIGITAL, INC. | ||||||||
| Date: October 29, 2026 | /s/ LIREN CHEN | |||||||
Liren Chen | ||||||||
President and Chief Executive Officer | ||||||||
| Date: October 29, 2026 | /s/ RICHARD J. BREZSKI | |||||||
Richard J. Brezski | ||||||||
| Chief Financial Officer | ||||||||
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