Adeia(ADEA) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Presents Adeia Inc.'s unaudited condensed consolidated financial statements for Q2 2025 and 2024, with notes on policies, revenue, and debt Condensed Consolidated Statements of Income Condensed Consolidated Statements of Income (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Revenue | $85,735 | $87,350 | $173,405 | $170,755 | | Operating income | $16,405 | $23,642 | $39,240 | $43,006 | | Income before income taxes | $7,623 | $11,321 | $21,521 | $17,910 | | Net income | $16,722 | $8,382 | $28,536 | $9,281 | | Basic net income per share | $0.15 | $0.08 | $0.26 | $0.09 | | Diluted net income per share | $0.15 | $0.07 | $0.25 | $0.08 | Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $16,722 | $8,382 | $28,536 | $9,281 | | Other comprehensive income (loss), net of tax | $1 | $(25) | $45 | $(88) | | Total comprehensive income | $16,723 | $8,357 | $28,581 | $9,193 | Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Cash and cash equivalents | $84,247 | $78,825 | | Marketable securities | $32,232 | $31,567 | | Total cash, cash equivalents, and marketable securities | $116,479 | $110,392 | | Total current assets | $267,286 | $258,376 | | Total assets | $1,082,893 | $1,097,961 | | Total current liabilities | $86,532 | $73,106 | | Total liabilities | $679,977 | $701,390 | | Total stockholders' equity | $402,916 | $396,571 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $80,256 | $90,690 | | Net cash used in investing activities | $(6,159) | $(8,241) | | Net cash used in financing activities | $(68,675) | $(70,555) | | Net increase in cash and cash equivalents | $5,422 | $11,894 | | Cash and cash equivalents at end of period | $84,247 | $66,454 | Condensed Consolidated Statements of Equity Condensed Consolidated Statements of Equity (Six Months Ended June 30, 2025, in thousands) | Category | Common Stock (Shares) | Common Stock (Amount) | Additional Paid-In Capital | Treasury Stock (Shares) | Treasury Stock (Amount) | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders' Equity | | :------------------------------------ | :-------------------- | :-------------------- | :------------------------- | :---------------------- | :---------------------- | :-------------------------------------------- | :---------------- | :------------------------- | | Balance at January 1, 2025 | 108,072 | $125 | $648,914 | 15,880 | $(255,301) | $(1) | $2,834 | $396,571 | | Net income | — | — | — | — | — | — | $28,536 | $28,536 | | Other comprehensive income | — | — | — | — | — | $45 | — | $45 | | Cash dividends paid ($0.10 per share) | — | — | — | — | — | — | $(10,857) | $(10,857) | | Issuance of common stock (options) | 15 | — | $186 | — | — | — | — | $186 | | Issuance of common stock (ESPP) | 144 | — | $1,206 | — | — | — | — | $1,206 | | Issuance of restricted stock, net | 3,231 | $2 | — | — | — | — | — | $2 | | Withholding taxes on equity awards | (1,377) | — | — | 1,377 | $(19,706) | — | — | $(19,706) | | Repurchases of common stock | (760) | — | — | 760 | $(10,011) | — | — | $(10,011) | | Stock-based compensation expense | — | — | $16,944 | — | — | — | — | $16,944 | | Balance at June 30, 2025 | 109,325 | $127 | $667,250 | 18,017 | $(285,018) | $44 | $20,513 | $402,916 | Notes to Condensed Consolidated Financial Statements NOTE 1 – THE COMPANY AND BASIS OF PRESENTATION - Adeia Inc. is a leading intellectual property (IP) licensing platform with a diverse portfolio of over 13,000 patents and patent applications worldwide, operating as a single reportable segment: IP Licensing[24][27] NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - There have been no significant changes in the Company's accounting policies during the three and six months ended June 30, 2025, compared to those described in the Form 10-K[28] - The Company adopted ASU 2020-04 (Reference Rate Reform) in Q2 2023 and ASU 2023-07 (Segment Reporting) in Q4 2024, neither of which had a material impact on the financial statements[30][31] - The Company is currently evaluating the impact of ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures), effective for fiscal years beginning after December 15, 2024, and December 15, 2026, respectively[32][33] NOTE 3 – REVENUE - Revenue is recognized upon transfer of control of IP rights, reflecting the consideration expected, and includes various combinations of IP rights and services[34] - The Company licenses its Media IP and Semiconductor IP portfolios through per-unit/per-subscriber royalty, fixed-fee, or minimum guarantee models[39] Revenue Disaggregated by Recurring and Non-Recurring Nature (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Recurring revenue | $85,097 | $82,269 | $169,506 | $165,045 | | Non-recurring revenue | $638 | $5,081 | $3,899 | $5,710 | | Total revenue | $85,735 | $87,350 | $173,405 | $170,755 | Revenue by Market Vertical (in thousands) | Market Vertical | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Media | $81,041 | $83,626 | $165,027 | $164,063 | | Semiconductor | $4,694 | $3,724 | $8,378 | $6,692 | | Total revenue | $85,735 | $87,350 | $173,405 | $170,755 | Total Contract Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Unbilled contracts receivable | $107,015 | $104,047 | | Other current assets | $597 | $711 | | Long-term unbilled contracts receivable | $47,933 | $62,767 | | Other long-term assets | $970 | $919 | | Total contract assets | $156,515 | $168,444 | Remaining Revenue Under Contracts with Performance Obligations (in thousands) | Year | Amounts | | :------------------------ | :-------- | | 2025 (remaining 6 months) | $94,446 | | 2026 | $91,357 | | 2027 | $76,166 | | 2028 | $66,191 | | 2029 | $58,816 | | Thereafter | $17,732 | | Total | $404,708 | NOTE 4 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS Other Current Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------ | :-------------- | :---------------- | | Prepaid income taxes | $7,077 | $2,934 | | Prepaid expenses | $3,281 | $2,287 | | Prepaid insurance | $1,097 | $1,124 | | Other | $3,711 | $3,447 | | Total other current assets | $15,166 | $9,792 | Property and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Equipment, furniture and other | $17,781 | $17,376 | | Leasehold improvements | $6,293 | $6,293 | | Total property and equipment | $24,074 | $23,669 | | Less: accumulated depreciation | $(18,388) | $(17,391) | | Total property and equipment, net | $5,686 | $6,278 | Accrued Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Employee compensation and benefits | $5,999 | $11,461 | | Current portion of guarantee | $3,850 | $3,850 | | Accrued expenses | $6,380 | $2,936 | | Current portion of operating lease liabilities | $518 | $481 | | Accrued income taxes | $0 | $325 | | Other | $2,424 | $3,674 | | Total accrued liabilities | $19,171 | $22,727 | NOTE 5 – FINANCIAL INSTRUMENTS Summary of Marketable Securities (Fair Value, in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Commercial paper | $2,760 | $2,689 | | Corporate bonds and notes | $25,000 | $25,762 | | Treasury and agency notes and bills | $4,472 | $3,616 | | Money market funds | $5,025 | $4,322 | | Total marketable securities | $37,257 | $36,389 | - Total cash, cash equivalents, and marketable securities increased to $116.5 million at June 30, 2025, from $110.4 million at December 31, 2024[66] Estimated Fair Value of Marketable Debt Securities by Contractual Maturity at June 30, 2025 (in thousands) | Maturity | Estimated Fair Value | | :------------------ | :------------------- | | Due in one year or less | $16,182 | | Due in one to two years | $8,301 | | Due in two to three years | $7,749 | | Total | $32,232 | NOTE 6 – FAIR VALUE - The Company classifies its financial instruments into Level 1 (quoted prices in active markets) and Level 2 (observable market-based inputs) for fair value measurement, with no significant transfers between levels[70][71][73] Fair Value Hierarchy of Assets at June 30, 2025 (in thousands) | Asset Category | Fair Value | Level 1 | Level 2 | Level 3 | | :------------------------------------ | :--------- | :-------- | :-------- | :-------- | | Money market funds - equity securities | $5,025 | $5,025 | $0 | $0 | | Corporate bonds and notes - debt securities | $25,000 | $0 | $25,000 | $0 | | Commercial paper - debt securities | $2,760 | $0 | $2,760 | $0 | | Treasury and agency notes and bills - debt securities | $4,472 | $0 | $4,472 | $0 | | Total Assets | $37,257 | $5,025 | $32,232 | $0 | - The fair value of the Company's long-term debt approximates its carrying value and would be classified within Level 2 of the fair value hierarchy[75][76] NOTE 7 – GOODWILL AND IDENTIFIED INTANGIBLE ASSETS - The carrying value of goodwill remained at $313.7 million at June 30, 2025, with no impairment charges recognized during the three and six months ended June 30, 2025 and 2024[77] Identified Intangible Assets, Net (in thousands) | Category | June 30, 2025 Net | December 31, 2024 Net | | :-------------------------------- | :---------------- | :------------------ | | Acquired patents / core technology | $277,525 | $301,177 | | Customer contracts and related relationships | $0 | $0 | | Existing technology / content database | $0 | $0 | | Trademarks/trade name | $0 | $0 | | Total intangible assets | $277,525 | $301,177 | Estimated Future Amortization Expense of Finite-Lived Intangible Assets (in thousands) | Year | Amounts | | :------------------------ | :-------- | | 2025 (remaining 6 months) | $28,334 | | 2026 | $56,541 | | 2027 | $56,189 | | 2028 | $51,146 | | 2029 | $48,897 | | Thereafter | $36,418 | | Total | $277,525 | NOTE 8 – DEBT Outstanding Debt (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Long-term debt | $458,906 | $487,083 | | Unamortized debt discount and issuance costs | $(9,975) | $(11,627) | | Total long-term debt, net of current portion | $427,924 | $454,435 | - The Company repriced its Term Loan B in January 2025 (Amendment No. 4), reducing the interest rate margin for SOFR loans to 2.50% and for base rate loans to 1.50%, with maturity remaining June 8, 2028[84] - Interest expense decreased to $8.9 million (3M) and $18.2 million (6M) in 2025, from $12.9 million (3M) and $25.4 million (6M) in 2024, primarily due to lower debt balance and reduced interest rates[87] Future Minimum Principal Payments for Long-Term Debt as of June 30, 2025 (in thousands) | Year | Amounts | | :------------------------ | :-------- | | 2025 (remaining 6 months) | $12,177 | | 2026 | $24,354 | | 2027 | $24,354 | | 2028 | $398,021 | | Total | $458,906 | NOTE 9 – NET INCOME PER SHARE Net Income Per Share (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $16,722 | $8,382 | $28,536 | $9,281 | | Basic net income per share | $0.15 | $0.08 | $0.26 | $0.09 | | Diluted net income per share | $0.15 | $0.07 | $0.25 | $0.08 | | Weighted average shares (Basic) | 108,832 | 108,667 | 108,387 | 108,216 | | Weighted average shares (Diluted) | 112,179 | 112,536 | 112,597 | 112,757 | NOTE 10 – STOCKHOLDERS' EQUITY - The 2020 Equity Incentive Plan (EIP) was amended in May 2024, increasing shares reserved for issuance by 8.9 million to 25.7 million and removing the fungible share ratio. Approximately 5.0 million shares remained for future grants as of June 30, 2025[91] - Quarterly cash dividends of $0.05 per common share were declared for periods ended June 30, 2025 and 2024[101] - The Board approved an increase in share repurchase authorization to $200.0 million in October 2024. During the six months ended June 30, 2025, the Company repurchased 0.8 million shares for $10.0 million, with $170.0 million remaining available[103] Restricted Stock Awards Activity (in thousands, except per share amounts) | Category | Number of Shares Subject to Time-based Vesting | Number of Shares Subject to Performance-based Vesting | Total Number of Shares | Weighted Average Grant Date Fair Value Per Share | | :-------------------------- | :--------------------------------------------- | :---------------------------------------------------- | :--------------------- | :--------------------------------------------- | | Balance at December 31, 2024 | 6,380 | 2,247 | 8,627 | $10.98 | | Awards granted | 2,648 | 291 | 2,939 | $14.98 | | Awards vested / earned | (2,274) | (957) | (3,231) | $10.98 | | Awards canceled / forfeited | (147) | — | (147) | $10.32 | | Balance at June 30, 2025 | 6,607 | 1,581 | 8,188 | $12.43 | NOTE 11 – STOCK-BASED COMPENSATION EXPENSE Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Research and development | $1,422 | $1,093 | $2,656 | $1,902 | | Selling, general and administrative | $7,278 | $5,499 | $14,288 | $9,835 | | Total stock-based compensation expense | $8,700 | $6,592 | $16,944 | $11,737 | NOTE 12 – INCOME TAXES - The Company recorded income tax benefits of $9.1 million (3M) and $7.0 million (6M) for the periods ended June 30, 2025, compared to income tax expenses of $2.9 million (3M) and $8.6 million (6M) for the same periods in 2024[108] - The decrease in income tax expense in 2025 was primarily due to unrealized benefits associated with South Korea withholding tax refund claims[108] NOTE 13 – LEASES Components of Operating Lease Costs (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Fixed lease cost | $523 | $511 | $1,046 | $1,023 | | Variable lease cost | $190 | $207 | $257 | $482 | | Total operating lease cost | $713 | $718 | $1,303 | $1,505 | Future Minimum Lease Payments and Related Lease Liabilities as of June 30, 2025 (in thousands) | Year | Operating Lease Payments | | :------------------------ | :----------------------- | | 2025 (remaining 6 months) | $159 | | 2026 | $1,191 | | 2027 | $2,455 | | 2028 | $1,888 | | 2029 | $1,944 | | Thereafter | $5,828 | | Total lease payments | $13,465 | | Less: imputed interest | $(4,024) | | Present value of lease liabilities | $9,441 | | Less: current obligations under leases | $518 | | Noncurrent operating lease liabilities | $8,923 | NOTE 14 – COMMITMENTS AND CONTINGENCIES - Total future unconditional purchase obligations were approximately $4.8 million as of June 30, 2025, with $1.9 million due in the remainder of 2025[113] - A guarantee liability of $17.1 million was recognized as of June 30, 2025, related to Adeia Media's guarantee of Xperi Sub's performance under a specified agreement[114] - The Company provides indemnifications to licensees, customers, and partners, but cannot reasonably estimate potential losses; no claims have been filed to date[115] NOTE 15 – SEGMENT INFORMATION - The Company operates under one reportable segment: IP Licensing, deriving revenue from media and semiconductor patent portfolios primarily in North America[119] Revenue by Geography (in thousands, except for percentages) | Geography | Three Months Ended June 30, 2025 | % | Three Months Ended June 30, 2024 | % | Six Months Ended June 30, 2025 | % | Six Months Ended June 30, 2024 | % | | :------------------ | :------------------------------- | :-- | :------------------------------- | :-- | :------------------------------- | :-- | :------------------------------- | :-- | | U.S. | $67,908 | 79% | $71,608 | 82% | $139,423 | 80% | $140,047 | 75% | | Asia | $12,340 | 14% | $10,325 | 11% | $23,279 | 13% | $19,840 | 18% | | Canada | $3,093 | 4% | $3,376 | 4% | $6,223 | 4% | $6,573 | 4% | | Europe and Middle East | $1,930 | 2% | $1,586 | 2% | $3,551 | 2% | $3,389 | 2% | | Other | $464 | 1% | $455 | 1% | $929 | 1% | $906 | 1% | | Total | $85,735 | 100% | $87,350 | 100% | $173,405 | 100% | $170,755 | 100% | Customer Concentration (Revenue % of Total) | Customer | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Customer A | 20.0% | 19.7% | 19.8% | 20.1% | | Customer B | 10.4% | 11.4% | 10.5% | 11.9% | - At June 30, 2025, one customer represented 63% of aggregate accounts receivable, compared to two customers representing 52% and 11% at December 31, 2024[123] NOTE 16 – SUBSEQUENT EVENTS - On July 24, 2025, the Board declared a cash dividend of $0.05 per share of common stock, payable on September 16, 2025[125] - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, making certain 2017 tax provisions permanent. The Company is evaluating its impact for the third quarter financial statements[126] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes Adeia Inc.'s financial condition and operational performance for Q2 2025 and 2024, covering key metrics, revenue, expenses, and capital resources Business Overview - Adeia Inc. is a leading IP licensing platform in the consumer and entertainment space, with a diverse portfolio of over 13,000 media and semiconductor patents globally[130] - Headquartered in Silicon Valley with over 35 years of experience, the Company has approximately 150 employees, primarily located in the U.S[131] Macroeconomic Conditions - Macroeconomic conditions, including inflation, geopolitical instability, and global health events, may adversely impact the business, particularly the consumer electronics market, potentially leading to asset impairment and increased credit losses[132] - While a significant portion of revenue is derived from fixed-fee arrangements, per-unit and variable-fee based revenue remains susceptible to direct or indirect effects from macroeconomic events[133] Reportable Segments - The Company operates and reports in one segment: IP Licensing, with the Chief Executive Officer designated as the Chief Operating Decision Maker (CODM)[134] - Innovations are licensed to leading companies in the media entertainment and semiconductor industries, providing access to foundational patent portfolios and industry-leading technologies[135] Key Metrics Key Financial Metrics (Three Months Ended June 30, 2025 vs 2024) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :--------- | :--------- | :------- | :--------- | | Revenue | $85.7M | $87.3M | $(1.6)M | (1.8)% | | Recurring revenues | $85.1M | $82.3M | $2.8M | 3.4% | | Non-recurring revenues | $0.6M | $5.1M | $(4.4)M | (87.4)% | | Cash provided by operating activities | $23.1M | $23.5M | $(0.4)M | (1.5)% | | Principal payments on term loan | $11.1M | N/A | N/A | N/A | | Outstanding term loan balance | $458.9M | N/A | N/A | N/A | Key Financial Metrics (Six Months Ended June 30, 2025 vs 2024) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :--------- | :--------- | :------- | :--------- | | Revenue | $173.4M | $170.8M | $2.7M | 1.6% | | Recurring revenues | $169.5M | $165.0M | $4.5M | 2.7% | | Non-recurring revenues | $3.9M | $5.7M | $(1.8)M | (31.7)% | | Cash provided by operating activities | $80.3M | $90.7M | $(10.4)M | (11.5)% | | Principal payments on term loan | $28.2M | N/A | N/A | N/A | | Outstanding term loan balance | $458.9M | N/A | N/A | N/A | | Common stock repurchased | $10.0M | $0 | $10.0M | N/A | - The Company completed another repricing of its term loan in January 2025, further reducing its interest rate by 50 basis points[136] Results of Operations Revenue Revenue (in thousands, except for percentages) | Period | 2025 | 2024 | Change | % Change | | :------------------ | :--------- | :--------- | :------- | :--------- | | Three Months Ended June 30 | $85,735 | $87,350 | $(1,615) | (2)% | | Six Months Ended June 30 | $173,405 | $170,755 | $2,650 | 2% | - The decrease in revenue during the three months ended June 30, 2025, was primarily due to non-recurring revenue from a settlement and multi-year renewal with X Corp. in Q2 2024 that did not recur[137][139] - Recurring revenue increased by $2.8 million (3.4%) for Q2 2025 and $4.5 million (2.7%) for 6M 2025, driven by new customer license agreements, partially offset by declines in royalty revenue from certain Pay-TV customers[138][141] Research and Development Research and Development Expense (in thousands, except for percentages) | Period | 2025 | 2024 | Increase | % Change | | :------------------ | :--------- | :--------- | :------- | :--------- | | Three Months Ended June 30 | $15,857 | $14,799 | $1,058 | 7% | | Six Months Ended June 30 | $32,324 | $28,724 | $3,600 | 13% | - The increase in R&D expense was primarily due to higher patent portfolio expenses, patent technical support expenses, and increased personnel costs resulting from higher headcount[144] Selling, General and Administrative Selling, General and Administrative Expense (in thousands, except for percentages) | Period | 2025 | 2024 | Increase | % Change | | :------------------ | :--------- | :--------- | :------- | :--------- | | Three Months Ended June 30 | $32,129 | $24,617 | $7,512 | 31% | | Six Months Ended June 30 | $60,561 | $48,646 | $11,915 | 24% | - The increase in SG&A expense was mainly due to higher personnel-related costs from increased headcount, advertising expense, and administrative costs associated with the credit facility repricing in Q1 2025, partially offset by decreased outside services[146][147] Amortization Expense Amortization Expense (in thousands, except for percentages) | Period | 2025 | 2024 | Decrease | % Change | | :------------------ | :--------- | :--------- | :-------- | :--------- | | Three Months Ended June 30 | $14,170 | $20,030 | $(5,860) | (29)% | | Six Months Ended June 30 | $28,252 | $43,187 | $(14,935) | (35)% | - The decrease in amortization expense was primarily due to certain intangible assets becoming fully amortized during 2024, partially offset by an increase in amortization from patents acquired in the second half of 2024 and first half of 2025[148] Litigation Expense Litigation Expense (in thousands, except for percentages) | Period | 2025 | 2024 | Increase | % Change | | :------------------ | :--------- | :--------- | :------- | :--------- | | Three Months Ended June 30 | $7,174 | $4,262 | $2,912 | 68% | | Six Months Ended June 30 | $13,028 | $7,192 | $5,836 | 81% | - The increase in litigation expense was primarily due to increased activity in current litigation matters[149] - Litigation expense is expected to remain a significant portion of operating expenses as it is used to enforce and protect the Company's IP and contract rights[150] Interest Expense Interest Expense (in thousands, except for percentages) | Period | 2025 | 2024 | Decrease | % Change | | :------------------ | :--------- | :--------- | :-------- | :--------- | | Three Months Ended June 30 | $10,216 | $13,296 | $(3,080) | (23)% | | Six Months Ended June 30 | $20,865 | $27,471 | $(6,606) | (24)% | - The decrease in interest expense was primarily due to a lower debt balance, reduced interest rate margins from Term Loan B repricings in Q2 2024 and Q1 2025, and a Federal Reserve interest rate cut in Q3 2024[151] Other Income and Expense, Net Other Income and Expense, Net (in thousands, except for percentages) | Period | 2025 | 2024 | Increase | % Change | | :------------------ | :--------- | :--------- | :------- | :--------- | | Three Months Ended June 30 | $1,434 | $1,428 | $6 | 0% | | Six Months Ended June 30 | $3,146 | $2,828 | $318 | 11% | - The increase in other income and expense, net, was primarily due to an increase in interest income from significant financing components from certain revenue contracts[152] Loss on Debt Extinguishment - The Company recognized a $0.5 million loss on debt extinguishment during the three and six months ended June 30, 2024, related to the repricing of its Term Loan B; no such costs were incurred in 2025[153] Provision for Income Taxes Provision for (Benefit from) Income Taxes (in thousands, except for percentages) | Period | 2025 | 2024 | Decrease | % Change | | :------------------------------------ | :--------- | :--------- | :-------- | :--------- | | Three Months Ended June 30 | $(9,099) | $2,939 | $(12,038) | (410)% | | Six Months Ended June 30 | $(7,015) | $8,629 | $(15,644) | (181)% | - The Company recorded income tax benefits in 2025, resulting in effective tax rates of (119.4%) (3M) and (32.6%) (6M), primarily due to unrealized benefits from South Korea withholding tax refund claims[155][157] Liquidity and Capital Resources Selected Financial Information Related to Liquidity (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $84,247 | $78,825 | | Marketable securities | $32,232 | $31,567 | | Total cash, cash equivalents and marketable securities | $116,479 | $110,392 | Net Cash Flows (in thousands) | Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $80,256 | $90,690 | | Net cash used in investing activities | $(6,159) | $(8,241) | | Net cash used in financing activities | $(68,675) | $(70,555) | - Cash, cash equivalents, and marketable securities increased by $6.1 million to $116.5 million at June 30, 2025, driven by operating cash flows, partially offset by debt repayments, stock repurchases, and dividends[160] - The Company believes its cash from operations, along with current cash and cash equivalents, will be sufficient to satisfy anticipated cash requirements for at least the next 12 months and the foreseeable future[164] Quarterly Dividends - The Company paid quarterly cash dividends of $0.05 per share in June 2025 and authorized another $0.05 per share dividend in July 2025, payable in September 2025[165] Stock Repurchase Plan - The Board increased the share repurchase authorization to $200.0 million in October 2024. During the six months ended June 30, 2025, $10.0 million was used to repurchase 0.8 million shares, leaving $170.0 million available[166] Cash Flows from Operating Activities - Net cash provided by operating activities was $80.3 million for the six months ended June 30, 2025, primarily due to net income adjusted for non-cash items like amortization of intangible assets ($28.3 million) and stock-based compensation expense ($16.9 million)[168] - Net cash provided by operating activities was $90.7 million for the six months ended June 30, 2024, primarily due to net income adjusted for non-cash items like amortization of intangible assets ($43.2 million) and stock-based compensation expense ($11.7 million)[169] Cash Flows from Investing Activities - Net cash used in investing activities was $6.2 million for the six months ended June 30, 2025, mainly due to purchases of short-term investments ($13.0 million) and intangible assets ($5.4 million), partially offset by proceeds from maturities of investments ($12.6 million)[170] - Net cash used in investing activities was $8.2 million for the six months ended June 30, 2024, primarily due to purchases of short-term investments ($18.7 million) and intangible assets ($8.5 million), offset by proceeds from maturities of investments ($20.2 million)[171] Capital Expenditures Capital Expenditures (in millions) | Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | | Property and equipment | $0.4 | $1.2 | | Intangible assets | $5.4 | $8.5 | Cash Flows from Financing Activities - Net cash used in financing activities was $68.7 million for the six months ended June 30, 2025, primarily due to $28.2 million in debt repayment, $10.9 million in dividends paid, and $31.0 million in common stock repurchases (including tax withholdings)[174] - Net cash used in financing activities was $70.5 million for the six months ended June 30, 2024, mainly from $52.1 million in debt repayment, $10.9 million in dividends paid, and $9.1 million in stock repurchases for tax withholdings[175] Long-term Debt - As of June 30, 2025, $458.9 million was outstanding under the Term Loan B facility, with an interest rate of 7.8% (including unamortized debt discount and issuance costs)[180] - The Company entered Amendment No. 4 on January 30, 2025, repricing the Term Loan B to $487.1 million and reducing interest rate margins (SOFR loans to 2.50%, base rate loans to 1.50%)[179] - No excess cash flow payment is required in 2025 due to leverage ratios and voluntary prepayments made in 2024. The Company was in full compliance with all debt covenants as of June 30, 2025[180] Critical Accounting Policies and Estimates - There were no significant changes in the Company's critical accounting policies and estimates during the six months ended June 30, 2025[181] Recent Accounting Pronouncements - Refer to Note 2 – Summary of Significant Accounting Policies for a full description of recent accounting pronouncements, including their respective expected dates of adoption[182] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the Annual Report on Form 10-K for a detailed discussion of the Company's market risk exposures, indicating no new material disclosures in this quarterly report - For a discussion of market risk, refer to Part II, Item 7A – Quantitative and Qualitative Disclosures About Market Risk in the Company's Annual Report on Form 10-K[184] Item 4. Controls and Procedures This section details the evaluation of Adeia Inc.'s disclosure controls and procedures, confirming their effectiveness as of June 30, 2025, and reports no material changes in internal control over financial reporting during the quarter Evaluation of Controls and Procedures - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance for timely and accurate SEC reporting[187] Changes in Internal Control over Financial Reporting - There were no changes in internal control over financial reporting during the last fiscal quarter that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting[188] PART II - OTHER INFORMATION Item 1. Legal Proceedings Details Adeia Inc.'s ongoing legal proceedings, including patent infringement and breach of contract cases, to protect its IP - The Company is involved in litigation to protect its IP from infringement, preferring commercial licensing but resorting to lawsuits when necessary[192] Patent Infringement Litigation - Videotron Patent Infringement Litigation: Trial commenced on February 3, 2025, with closing arguments held April 15-17, 2025. A decision from the Federal Court of Canada is pending[193] - Bell Patent Infringement Litigation: Trial commenced on April 28, 2025, with closing arguments held June 2-4, 2025. A decision from the Federal Court of Canada is pending[194] - Shaw Breach of Contract Litigation: Adeia Media Companies filed a complaint against Shaw in October 2023 for failure to pay royalties. Shaw filed a motion to dismiss in October 2024, which is pending[195] - Disney Patent Infringement Litigation: Multiple complaints filed in November 2024 across the U.S., Germany, and Brazil, alleging infringement of several patents. The U.S. trial is set for June 7-11, 2027[196][197][198][199][200] - Altice Declaratory Judgment of Noninfringement Litigation: Altice filed a complaint on June 27, 2025, seeking a declaratory judgment of noninfringement for ten of Adeia's patents[202] Item 1A. Risk Factors This section states that there were no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors previously disclosed in Part 1, Item 1A. of the Annual Report on Form 10-K for the year ended December 31, 2024[203] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is marked as 'Not applicable,' indicating no information to report regarding unregistered sales of equity securities or use of proceeds - Not applicable[204] Item 3. Defaults Upon Senior Securities This item is marked as 'Not applicable,' indicating no information to report regarding defaults upon senior securities - Not applicable[205] Item 4. Mine Safety Disclosures This item is marked as 'Not applicable,' indicating no information to report regarding mine safety disclosures - Not applicable[206] Item 5. Other Information This section reports that no Rule 10b5-1 plans or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by any director or officer during the three and six months ended June 30, 2025 - No Rule 10b5-1 plans or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by any director or officer during the three and six months ended June 30, 2025[207] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including joinder agreements, guaranty supplements, CEO and CFO certifications, and Inline XBRL documents - Exhibits include Joinder Agreement, Guaranty Supplement, CEO and CFO Certifications (Rule 13a-14(a) and 13a-14(b)), and Inline XBRL documents[208] Signatures - The report was duly caused to be signed on behalf of Adeia Inc. by Keith A. Jones, Chief Financial Officer, on August 7, 2025[212][213]