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What changed in InterDigital, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of InterDigital, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+348 added−377 removedSource: 10-K (2025-02-06) vs 10-K (2024-02-15)

Top changes in InterDigital, Inc.'s 2024 10-K

348 paragraphs added · 377 removed · 263 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

75 edited+36 added−38 removed47 unchanged
Biggest changeWe are also a party to leases for several smaller research and/or office spaces, including in Brussels, Belgium; Espoo, Finland; Indianapolis, Indiana, USA; Melville, New York, USA; Paris, France, and Beijing, China. In addition, we own an administrative office space in Washington, District of Columbia, USA.
Biggest changeOur research and development activities are conducted primarily in facilities located in Conshohocken, Pennsylvania; New York, New York; Los Altos, California; Montreal, Canada; London, United Kingdom; and Rennes, France. We are also a party to leases for several smaller research and/or office spaces, including in Melville, New York; Indianapolis, Indiana; Brussels, Belgium; Espoo, Finland; Paris, France, and Beijing, China.
Our video technology portfolio combines patents and applications that InterDigital obtained through the acquisitions of the patent licensing business and research and innovation unit of visual technology industry leader Technicolor SA and patents and applications created by internal development.
Our video technology portfolio combines patents and applications that InterDigital obtained through the acquisitions of the research and innovation unit and patent licensing business of visual technology industry leader Technicolor SA and patents and applications created by internal development.
We encourage you to review our most recent Corporate Sustainability Report (located on our website) for more detailed information regarding our Corporate Sustainability and ESG governance, goals, priorities, accomplishments and initiatives, as well as the Corporate Governance section of our most recent Proxy Statement, and our Corporate Governance Principles and Practices (located on our website), for additional information regarding governance matters, including Board and Committee leadership, oversight, roles and responsibilities, and Director independence, tenure, refreshment and diversity.
We encourage you to review our most recent Corporate Sustainability Report (located on our website) for more detailed information regarding our Corporate Sustainability governance, goals, priorities, accomplishments and initiatives, as well as the Corporate Governance section of our most recent Proxy Statement, and our Corporate Governance Principles and Practices (located on our website), for additional information regarding governance matters, including Board and Committee leadership, oversight, roles and responsibilities, and Director independence, tenure, refreshment and diversity.
The horizontal technologies we develop are essential to support a variety of use cases across several vertical market segments that use connected devices such as automobiles and autonomous vehicles, wearables, smart factories and smart homes, robots, drones and many other connected consumer electronic products including mobile phones and tablets.
The horizontal technologies we develop are essential to support a variety of use cases across several vertical market segments that use connected devices such as mobile phones, automobiles and autonomous vehicles, wearables, smart factories and smart homes, robots, drones and many other connected consumer electronic products including tablets and PCs.
Wireless industry standards are formal requirements and guidelines for engineers, designers, manufacturers and service providers that regulate and define the use of the radio frequency spectrum in conjunction with providing detailed specifications for wireless communications products.
Wireless industry standards, for example, are formal requirements and guidelines for engineers, designers, manufacturers and service providers that regulate and define the use of the radio frequency spectrum in conjunction with providing detailed specifications for wireless communications products.
Corporate Information The ultimate predecessor company of InterDigital, Inc. was incorporated in 1972 under the laws of the Commonwealth of Pennsylvania and conducted its initial public offering in November 1981. Our headquarters are located in Wilmington, Delaware, USA.
Corporate Information The ultimate predecessor company of InterDigital, Inc. was incorporated in 1972 under the laws of the Commonwealth of Pennsylvania and conducted its initial public offering in November 1981. Our headquarters are located in Wilmington, Delaware.
We intend to grow our licensing revenue base by adding licensees in the existing product markets that we serve, and by expanding our licensing activities into video streaming and other cloud-based services.
We intend to grow our licensing revenue base by adding licensees in the existing product markets that we serve, expanding our licensing activities into video streaming and other cloud-based services and expanding into new product markets.
However, numerous companies also claim that they hold patents that are or may be essential or may become essential to standards-based technology deployed on wireless products, other consumer electronics devices or services.
However, numerous companies also claim that they hold patents that are or may be essential or may become essential to standards-based technology deployed on wireless products, other consumer electronics devices and services.
Binding arbitration to resolve the terms and conditions of a worldwide FRAND license to our relevant portfolio of SEPs is an efficient and cost-effective mechanism, as it allows the parties to avoid piecemeal litigation in multiple jurisdictions and ensures that an enforceable patent license agreement that is consistent with FRAND commitments will be in place at the end of the arbitration process.
Binding arbitration to resolve the terms and conditions of a worldwide FRAND license to our patent portfolio is an efficient and cost-effective mechanism, as it allows the parties to avoid piecemeal litigation in multiple jurisdictions and ensures that an enforceable patent license agreement that is consistent with FRAND commitments will be in place at the end of the arbitration process.
InterDigital is also a leader in key video technologies, including emerging technologies such as immersive video and AI-based video coding. Our current research efforts are focused on a variety of areas related to future technology and devices, including cellular wireless technology, advanced video coding and transmission, and AI.
InterDigital is also a leader in key video technologies, including 2D video coding and emerging technologies such as immersive video and AI-based video coding. Our current research efforts are focused on a variety of areas related to future technology and devices, including cellular wireless and WiFi technologies, advanced video coding and transmission, and AI.
The Avanci licensing programs in specific product segments for the IoT industry will provide access to the entire applicable standards-essential wireless patent portfolios held by all of the platform participants, as well as any additions to their portfolios during the term of the license.
The Avanci licensing programs in specific product segments for the IoT industry will provide access to the entire applicable standards-essential cellular patent portfolios held by all of the platform participants, as well as any additions to their portfolios during the term of the license.
Our heritage of innovation has produced technologies that fundamentally improve efficiency and power consumption across billions of devices, network infrastructure, and delivered services. Our ESG principles continue this legacy and shape our pursuit of a more sustainable, representative, diverse, and equitable world.
Our heritage of innovation has produced technologies that fundamentally improve efficiency and power consumption across billions of devices, network infrastructure, and delivered services. Our sustainability principles continue this legacy and shape our pursuit of a more sustainable, representative, diverse, and equitable world.
We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles and providers of cloud-based services such as video streaming.
We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, internet of things ("IoT") devices, cars and other motor vehicles and providers of cloud-based services such as video streaming.
Our Revenue Sources Device-based Licensing Revenue Companies making, importing, using or selling products compliant with the standards covered by our patent portfolio, including all manufacturers of mobile handsets, tablets and other devices, and many consumer electronics products, such as televisions, personal computers and other devices, require a license under our patents.
Our Revenue Sources Device-based Licensing Revenue Companies making, importing, using or selling products compliant with the standards covered by our patent portfolio, including all manufacturers of smartphones, tablets and other devices, and many consumer electronics products, such as televisions, personal computers and other devices, require a license under our patents.
The foregoing discussion includes information regarding Human Capital matters that we believe may be of interest to shareholders generally. We recognize that certain other stakeholders (such as customers, employees and non-governmental organizations), as well as certain of our shareholders, may be interested in more detailed information on these topics.
The foregoing discussion includes information regarding sustainability matters that we believe may be of interest to our shareholders generally. We recognize that certain other stakeholders (such as customers, employees and non-governmental organizations), as well as certain of our shareholders, may be interested in more detailed information on these topics.
Patent Portfolio As of December 31, 2023, our patent portfolio consisted of more than 30,000 patents and patent applications worldwide. The patents and applications comprising our portfolio relate predominantly to cellular wireless standards, including 3G, 4G and 5G technologies, other wireless standards, including 802.11 (Wi-Fi) technology, and a variety of video technologies and standards, such as HEVC and VVC.
Patent Portfolio As of December 31, 2024, our patent portfolio consisted of more than 33,000 patents and patent applications worldwide. The patents and applications comprising our portfolio relate predominantly to cellular wireless standards, including 3G, 4G and 5G technologies, other wireless standards, including 802.11 (Wi-Fi) technology, and a variety of video technologies and standards, such as HEVC and VVC.
Geographic Concentrations See Note 4, " Geographic/Customer Concentration ," in the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K for financial information about geographic areas for the last three years.
Geographic Concentrations See Note 4, " Segment and Concentration Information ," in the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K for financial information about geographic areas for the last three years.
We believe that licenses under a number of our patents are required to manufacture and sell 3G, 4G, 5G and other wireless products, as well as other consumer electronics devices, and to implement certain technology services.
We believe that licenses under a number of our patents are required to manufacture and sell wireless products, as well as other consumer electronics devices, and to implement certain technology services.
We are developing evolutionary and revolutionary solutions that enable connectivity in both licensed and unlicensed spectrum, terrestrial and non-terrestrial networks to provide ubiquitous coverage, across a large range of frequencies up to the terahertz (THz) wave bands. Segments outside of 3GPP primarily fall within the scope of the IEEE 802 and IETF standards.
We are developing evolutionary and revolutionary solutions that enable connectivity in both licensed and unlicensed spectrum, terrestrial and non-terrestrial networks to provide ubiquitous coverage, across a large range of frequencies up to the terahertz (THz) wave bands. Segments outside of 3GPP primarily fall within the scope of the IEEE 802 for WiFi devices and IETF standards for Internet protocols.
In 2023, we began recognizing revenue for Samsung at a conservative level consistent with the revenue we recognized from our patent license agreement that expired on December 31, 2022. We believe that it is likely the arbitration award will exceed the conservative estimate and require a true-up at that time. We expect resolution in late 2024.
In 2023, we began recognizing revenue for Samsung at a conservative level consistent with the revenue we recognized from our patent license agreement that expired on December 31, 2022. We believe that it is likely the arbitration award will exceed the conservative estimate and require a true-up at the time of the award.
As of December 31, 2023, InterDigital's wholly owned subsidiaries held a portfolio of more than 30,000 patents and patent applications related to wireless communications, video coding, display technology, and other areas relevant to communications and entertainment products and services.
As of December 31, 2024, InterDigital's wholly owned subsidiaries held a portfolio of more than 33,000 patents and patent applications related to wireless communications, video coding, display technology, and other areas relevant to communications and entertainment products and services.
New wireless standards are typically adopted with each new generation of products, are often compatible with previous generations and are defined to ensure equipment interoperability and regulatory compliance.
New standards and specifications are typically adopted with each new generation of products and services, are often compatible with previous generations and are defined to ensure equipment interoperability and regulatory compliance.
Those efforts have focused on H.265/High Efficiency Video Coding ("HEVC") versions 1 to 4, as well as development of the VCC/H.266 and the MPEG Immersive (MPEG-I) standards suite for the future.
Those efforts have focused on H264/Advanced Video Coding, H.265/High Efficiency Video Coding ("HEVC") versions 1 to 4, as well as development of the H.266/VCC and the MPEG Immersive (MPEG-I) standards suite.
Our issued patents expire at differing times ranging from 2024 through 2043. We generally receive newly issued patents on a weekly basis, which further extend the coverage of newly developed technologies and expiration dates of our patents.
Our issued patents expire at differing times ranging from 2025 through 2044. We generally receive newly-issued patents on a weekly basis, which further extend the coverage of newly developed technologies and expiration dates of our patents.
In addition, certain manufacturers have sought to limit aggregate licensing fees or rates for SEPs. Environmental, Social and Governance ("ESG") We believe our innovation provides the framework for a future increasingly shaped by the profound convergence of wireless, video, and AI technologies.
In addition, certain manufacturers have sought to limit aggregate licensing fees or rates for SEPs. Sustainability We believe our innovation provides the framework for a future increasingly shaped by the profound convergence of wireless, video, and AI technologies.
As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today's most advanced Wi-Fi technologies.
As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today's most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology used in video-enabled products and services.
Our patented inventions have been implemented in a wide variety of products, including smartphones, other wireless communication devices and infrastructure equipment, such as tablets, and base stations, consumer electronics and Internet of Things ("IoT") products, such as televisions, laptops, gaming consoles, set-top boxes, streaming devices and connected automobiles.
Our patented inventions have been implemented in a wide variety of products, including smartphones, tablets, base stations, televisions, laptops, gaming consoles, set-top boxes, streaming devices, connected automobiles, and other consumer electronics and IoT products.
We have a rich history in developing advanced technologies that address the challenges of video as it relates to mobile. Specifically, in the area of video research, we have a long history of research and innovation in technologies that provide the basis for nearly all of the modern video codecs.
We have a rich history in developing advanced technologies that address the challenges of video products and services. Specifically, in the area of video research, we have a long history of research and innovation in technologies that provide the basis for nearly all of the modern video codecs.
Our Board of Directors has oversight over environmental, social and other sustainability matters, including diversity initiatives, in conjunction with the committees of the Board. In addition, our Chief Financial Officer oversees a committee of senior executives that steers the process of setting purpose, strategies, policies and goals related to economic, environmental and social topics.
Our Nominating and Corporate Governance Committee has primary oversight over environmental, social and other sustainability matters, which it exercises in conjunction with the committees of the Board. In addition, our Chief Financial Officer oversees a committee of senior executives that steers the process of setting purpose, strategies, policies and goals related to economic, environmental and social topics.
We have successfully entered into patent license agreements with many of the leading mobile communications and consumer electronics companies globally, including Amazon Technologies, Inc. ("Amazon"), Apple Inc. ("Apple"), Lenovo Group Limited ("Lenovo"), Google LLC ("Google"), LG Electronics, Inc. ("LG"), Samsung Electronics Co., Ltd. ("Samsung"), Sony Corporation of America ("Sony"), and Xiaomi Corporation ("Xiaomi"), among others.
We have successfully entered into patent license agreements with many of the leading mobile communications and consumer electronics companies globally, including Amazon Technologies, Inc. ("Amazon"), Apple Inc. ("Apple"), Lenovo Group Limited ("Lenovo"), Google LLC ("Google"), LG Electronics, Inc. ("LG"), Guangdong OPPO Mobile Telecommunications Corp., Ltd. ("OPPO"), Samsung Electronics Co., Ltd.
Collectively, the Video Services market is expected to grow from $350 billion of annual revenue in 2023 to $480 billion of annual revenue by 2027. Overview of Standardization To achieve economies of scale and support interoperability among different participants, many wireless and consumer electronics products have been designed to operate in accordance with certain industry standards.
Collectively, the Video Services market is expected to grow from approximately $370 billion of annual revenue in 2024 to approximately $500 billion of annual revenue by 2027. 7 Table of Contents Overview of Standardization To achieve economies of scale and support interoperability among different participants, many wireless and consumer electronics products have been designed to operate in accordance with certain industry standards and common technical specifications.
Our wireless portfolio has largely been built through internal development, supplemented by joint development projects with other companies, and select acquisitions of patents and companies.
Our wireless portfolio has largely been built through internal investment in a world-class research team, supplemented by joint development projects with other companies, and select acquisitions of patents and companies.
Our Strategy Our strategy is to continue to be a leading innovator, designer and developer of fundamental, horizontal technologies and to receive fair compensation from the companies that implement our patented innovations in their products and services across licensing programs.
Our Strategy Our strategy is to continue to be a leading innovator, designer and developer of fundamental, horizontal technologies and to receive fair compensation for this research by licensing our technology to the companies that benefit from including our patented innovations in their products and services.
In 2023, 2022, and 2021, our research and innovation costs were $78.3 million, $74.3 million, and $89.4 million, respectively, and the largest portion of this expense has been personnel costs. Wireless Technology We have a long history of developing cellular technologies, including those related to CDMA and TDMA and OFDM/OFDMA and MIMO.
In 2024 and 2023, our research and portfolio development costs were $196.9 million and $195.3 million, respectively, and the largest portion of this expense has been personnel costs. Wireless Technology We have a long history of developing cellular technologies, including those related to CDMA and TDMA and OFDM/OFDMA and MIMO.
In such cases, we seek payment for the amount owed and enter into negotiations with the licensee to resolve the discrepancy. 6 Table of Contents For a discussion of our revenue recognition policies with respect to patent license agreements, see “Item 7.
From time to time, these audits reveal underreporting or underpayments under the applicable agreements. In such cases, we seek payment for the amount owed and enter into negotiations with the licensee to resolve the discrepancy. For a discussion of our revenue recognition policies with respect to patent license agreements, see “Item 7.
In addition, our patented inventions have been implemented in a wide variety of services, such as video streaming and other cloud-based services. InterDigital derives revenues primarily from licensing our patented innovations. In 2023 and 2022, our total revenues were $549.6 million and $457.8 million, respectively.
Our patented inventions have also been implemented in a wide variety of services, such as video streaming, user generated content sharing, video conferencing, video gaming, and other cloud-based services. InterDigital derives revenues primarily from licensing our patented innovations. In 2024 and 2023, our total revenues were $868.5 million and $549.6 million, respectively.
Compensation & Benefits Our compensation program is rooted in market competitive base salaries and incentives that reward contributions that advance the Company’s strategy and mission. We provide a total compensation package that is targeted to be competitive with the markets in which we compete for talent, while allowing individual pay to vary equitably based on performance, skills and experience.
Compensation & Benefits Our compensation program is designed to be market competitive, offering base salaries and incentives that reward individual contributions aligned with the Company’s strategy and mission. We provide a total compensation package that is competitive with the markets in which we operate, with individual pay differentiated based on performance, skills and experience.
To execute our strategy, we intend to: • Grow and enhance our patent portfolio through continued investment in advanced research and development.
To execute our strategy, we intend to: • Continue to invest in advanced research to grow and enhance our patent portfolio.
Competition With respect to our technology development activities and resulting commercialization efforts, we face competition from companies, including in-house development teams at other wireless and video technology companies, consumer electronics device companies, semiconductor companies, wireless operators, video streaming and cloud service companies, and other technology providers, developing other and similar technologies that are competitive with our technologies that we may market or set forth into the standards-setting arena. 9 Table of Contents Due to the exclusionary nature of patent rights, we do not compete, in a traditional sense, with other patent holders for patent licensing relationships or sale transactions.
Competition With respect to our technology development activities and resulting commercialization efforts, we face competition from companies, including in-house development teams at other wireless and video technology companies, consumer electronics device companies, semiconductor companies, wireless operators, video streaming and cloud service companies, and other technology providers, developing other and similar technologies that are competitive with our technologies that we may market or set forth into the standards-setting arena.
Nothing on our website, including the aforementioned reports and documents, or sections thereof, shall be deemed incorporated by reference into this Annual Report. Human Capital Overview We strive to make InterDigital an exceptional place to work for all employees.
Nothing on our website, including the aforementioned reports and documents, or sections thereof, shall be deemed incorporated by reference into this Annual Report. Human Capital Overview We are committed to making InterDigital an exceptional place to work, fostering a workplace where all employees feel valued, respected, included, and challenged.
We continue to invest in processes to help the organization assess and develop talent, including a formalized annual performance evaluation program, an annual critical skills and potential analysis, and succession planning for the organization’s most critical and senior roles. All employees receive an annual performance review.
We continue to invest in processes to assess and develop talent, including a formalized annual performance evaluation program, critical skills and potential analysis, and succession planning for key and senior roles. All employees undergo an annual performance review and participate in our engagement survey efforts.
Additionally, 5G technology has significant potential societal benefits, including promoting productivity-led economic growth, increasing medical diagnostic capabilities, creating more sustainable cities and communities, improving remote education, and reducing inequalities in education and income.
Additionally, 5G technology has significant potential societal benefits, including promoting productivity-led economic growth, increasing medical diagnostic capabilities, creating more sustainable cities and communities, improving remote education, and reducing inequalities in education and income. We believe that the benefits to be derived from 5G are substantial and will be felt throughout society.
When we include claims of infringement in a patent infringement lawsuit, a favorable ruling for the Company can result in the payment of monetary damages for past manufacture, use and/or sale of the patented invention, the setting of terms and conditions for a license, issuance by the court of an injunction enjoining the infringer from manufacturing, using and/or selling infringing products and/or a declaration of FRAND compliance.
When we include claims of infringement in a patent infringement lawsuit, a favorable ruling for the Company can result in the payment of monetary damages for past manufacture, use and/or sale of the patented invention, the setting of terms and conditions for a license, issuance by the court of an injunction enjoining the infringer from manufacturing, using and/or selling infringing products and/or a declaration of FRAND compliance. 9 Table of Contents Contractual Arbitration Proceedings We and our licensees, in the normal course of business, may have disagreements as to the rights and obligations of the parties under applicable agreements.
The party securing an arbitration award may seek to have that award confirmed as a judgment through an enforcement proceeding. The purpose of such a proceeding is to secure a judgment that can be used for, if need be, seizing assets of the other party.
The purpose of such a proceeding is to secure a judgment that can be used for, if need be, seizing assets of the other party.
We provide holistic benefits and maintain company policies that promote a culture of wellness. We recently increased our paid parental leave from eight to twelve weeks and have kept employees connected to volunteer opportunities that benefited both their mental health and communities through our ‘Charity Day’ paid time off program.
We offer a minimum of twelve weeks of paid parental leave globally and have kept employees connected to volunteer opportunities that benefited both their mental health and communities through our ‘Charity Day’ paid time off program.
The license covers Xiaomi’s cellular-enabled mobile devices under our standard essential patents related to 3G, 4G, 5G, WiFi and HEVC and extends through December 31, 2025. 8 Table of Contents Patent Infringement and Declaratory Judgment Proceedings From time to time, if we believe a party is required to license our patents in order to manufacture, use and/or sell certain products and such party refuses to do so, we may agree with such party to have royalty rates, or other terms, set by third party adjudicators (such as arbitrators) or, in certain circumstances, we may institute legal action against them.
Patent Infringement and Declaratory Judgment Proceedings From time to time, if we believe a party is required to license our patents in order to manufacture, use and/or sell certain products and such party refuses to do so, we may agree with such party to have royalties or other terms set by third party adjudicators (such as arbitrators) or, in certain circumstances, we may institute legal action against them.
We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. InterDigital is one of the largest pure research and development and licensing companies in the world, with one of the most significant patent portfolios of fundamental wireless and video technologies.
Our AI research effort is focused on the intersection of AI with both wireless and video technologies. InterDigital is one of the largest pure research and development and licensing companies in the world, with one of the most significant patent portfolios of fundamental wireless and video technologies.
Almost all of our patent license agreements provide for the payment of royalties based on sales of licensed products designed to operate in accordance with particular standards (convenience-based licenses), as opposed to the payment of royalties if the manufacture, sale or use of the licensed product infringes one of our patents (infringement-based licenses).
Almost all of our patent license agreements provide for the payment of royalties based on sales of licensed products designed to operate in accordance with particular standards (convenience-based licenses), as opposed to the payment of royalties if the manufacture, sale or use of the licensed product infringes one of our patents (infringement-based licenses). 6 Table of Contents Our variable royalty license agreements typically contain provisions that give us the right to audit our licensees' books and records to ensure compliance with the licensees' reporting and payment obligations under those agreements.
Arbitration proceedings can be resolved through an award rendered by the arbitrators or by settlement between the parties. Parties to arbitration might have the right to have the award reviewed in a court of competent jurisdiction; however, based on public policy favoring the use of arbitration, it is generally difficult to have arbitration awards vacated or modified.
Parties to arbitration might have the right to have the award reviewed in a court of competent jurisdiction; however, based on public policy favoring the use of arbitration, it is generally difficult to have arbitration awards vacated or modified. The party securing an arbitration award may seek to have that award confirmed as a judgment through an enforcement proceeding.
Other patent holders do not have the same rights to the inventions and technologies encompassed by our patent portfolio. In any device, piece of equipment, or service that contains intellectual property, the manufacturer or implementer may need to obtain licenses from multiple holders of intellectual property.
In any device, piece of equipment, or service that contains intellectual property, the manufacturer or implementer may need to obtain licenses from multiple holders of intellectual property.
Those areas of research include: energy-efficient deep learning, aimed at reducing the energy-intensive rollout of AI; deep video compression, seeking to design novel video codecs based on deep learning techniques and optimized for different use cases (e.g., for machine consumption); and AI for dynamic wireless environments, which could help enhance and optimize wireless systems, particularly when channel characteristics are highly dynamic.
Those areas of research include: energy-efficient deep learning aimed at reducing the energy-intensive rollout of AI; design of novel video codecs based on deep learning techniques and optimized for different use cases (e.g., for machine consumption); and the integration of AI into current and next generation 3GPP wireless systems.
However, the definitions may evolve or change over time, including after we have characterized certain transactions. Business Activities 2023 Patent Licensing Activity During 2023, we entered into eight patent license agreements as discussed below. Direct Licenses In 2023, we signed a multi-year, worldwide, non-exclusive, royalty bearing license with Lenovo, covering InterDigital’s HEVC patents (the "Lenovo HEVC PLA").
However, the definitions may evolve or change over time, including after we have characterized certain transactions. Business Activities 2024 Patent Licensing Activity During 2024, we entered into fourteen patent license agreements as discussed below. Direct Licenses In January 2024, we signed a patent license agreement with Samsung Electronics (the "Samsung TV agreement").
We have published white papers exploring how 5G and the emerging IoT ecosystem might shape sustainability efforts for the ICT industry. While the proliferation of connected devices can drive increases in energy consumption, innovative solutions can mitigate these outcomes to help lower our carbon footprint and engage more sustainably.
While the proliferation of connected devices can drive increases in energy consumption, innovative solutions can mitigate these outcomes to help lower our carbon footprint and engage more sustainably.
The consumer electronics industry also implements many of the same standards, including standards related to Wi-Fi and increasingly, cellular technologies, as well as a broad range of video coding standards that enable the efficient transmission and rendering of video content. 7 Table of Contents SDOs, which facilitate and govern the development of standards, typically ask participating companies to declare formally whether they believe they hold patents or patent applications essential or potentially essential to a particular standard and whether they are willing to license those patents on either a royalty-bearing basis on fair, reasonable and nondiscriminatory terms or on a royalty-free basis.
SDOs, which facilitate and govern the development of standards, typically ask participating companies to declare formally whether they believe they hold patents or patent applications essential or potentially essential to a particular standard and whether they are willing to license those patents on either a royalty-bearing basis on fair, reasonable and nondiscriminatory terms or on a royalty-free basis.
We believe that our workplace culture, values, and competitive employee compensation are critical to maintaining low levels of attrition, thereby enabling us to attract and retain talent. For the year ended December 31, 2023, our voluntary attrition percentage was less than 3%.
We believe our workplace culture, values, and competitive compensation and benefits are critical to maintaining low levels of attrition, thereby enabling us to attract and retain top talent.
Our employees based in France are represented by works councils and subject to collective bargaining agreements. None of our employees based in the United States or Canada are unionized or subject to collective bargaining agreements. Management believes that its relations with our employees and works councils are strong and healthy.
None of our employees based in the United States or Canada are unionized or subject to collective bargaining agreements.
We encourage you to review the “Workforce” section of our most recent Corporate Sustainability Report (located on our website) for more detailed information regarding our Human Capital programs and initiatives. Nothing on our website, including our Consolidated EEO-1 reports and our Corporate Sustainability Report or sections thereof, shall be deemed incorporated by reference into this Annual Report.
Nothing on our website, including the Consolidated EEO-1 reports and our Corporate Sustainability Report, or any sections thereof, shall be deemed incorporated by reference into this Annual Report.
InterDigital ranks among the industry leaders for ETSI-disclosed patents and applications as potentially essential to 5G standards. 5G technology is designed to efficiently use energy throughout its ecosystem and will play a significant role in promoting and attaining sustainability goals.
InterDigital ranks among the industry leaders for highest patent quality for 5G and video codec patents. 5G technology is designed to efficiently use energy throughout its ecosystem and will play a significant role in promoting and attaining sustainability goals. We have published white papers exploring how 5G and the emerging IoT ecosystem might shape sustainability efforts for the ICT industry.
In 2022, we renewed a multi-year, royalty-bearing, worldwide and non-exclusive patent license agreement with Apple (the “Apple PLA”). The agreement sets forth terms covering the sale by Apple of its products and services, including, but not limited to, its 3G, 4G, and 5G cellular and wireless-enabled products. The term of the Apple PLA extends through September 30, 2029.
The agreement sets forth terms covering Apple's business, including its sale of 3G, 4G, and 5G cellular and wireless-enabled products. The term of the Apple PLA extends through September 30, 2029. In 2024, we entered into the above-noted patent license agreement with OPPO.
While our business activities do not entail the same concerns related to manufacturing or raw materials sourcing and disposal, our corporate sustainability strategy addresses the following: • investing in best practices to track and reduce our carbon footprint, including environmental considerations, tracking, and reporting related to data center needs; • implemented a hybrid work program, allowing employees to work from for home part of the week; • investigating and reducing unnecessary energy consumption; and • selected a location for our new Rennes office that is certified by BREEM (Building Research Establishment Environmental Assessment Method), a sustainability assessment method.
While our business activities do not entail the same concerns related to manufacturing or raw materials sourcing and disposal, our corporate sustainability strategy addresses the following: • investing in best practices to track and reduce our carbon footprint, including environmental considerations, and reporting related to data center needs; • investigating and reducing unnecessary energy consumption; • continuing to manage our environmental footprint with our office improvements; and • supporting our employee community in reducing commuting impact through embracing a hybrid office schedule and offering mobility programs.
Our patent license agreements typically provide for private confidential arbitration as the mechanism for resolving disputes with our licensees. In arbitration, licensees may seek to assert various claims, defenses, or counterclaims, such as claims based on waiver, promissory estoppel, breach of contract, fraudulent inducement to contract, antitrust, and unfair competition.
In arbitration, licensees may seek to assert various claims, defenses, or counterclaims, such as claims based on waiver, promissory estoppel, breach of contract, fraudulent inducement to contract, antitrust, and unfair competition. Arbitration proceedings can be resolved through an award rendered by the arbitrators or by settlement between the parties.
In addition to smartphones there is a large universe of other consumer electronic devices and ecosystems, with a mix of mature and emerging, as well as consolidated and fragmented, device segments. After smartphones, televisions represent one of the largest markets with more than 200 million units shipped globally.
Continued growth beyond 2024 is anticipated due in part to the introduction of new technologies and form factors. In addition to smartphones there is a large universe of other consumer electronic devices and ecosystems, with a mix of mature and emerging, as well as consolidated and fragmented, device segments.
Video Services, a rapidly growing market, encompass a wide range of consumer video entertainment platforms, including Subscription Video on Demand (SVOD), Advertising-Based Video on Demand (AVOD), Virtual Multichannel Video Programming Distributor (vMVPD), Free Ad-Supported Streaming TV (FAST), and social media platforms.
Automobiles represent a significant opportunity within the IoT market, with approximately 60 million connected vehicles shipped in 2024, which is expected to grow significantly in the future. Video Services, a rapidly growing market, encompass a wide range of consumer video entertainment platforms, including SVOD, AVOD, Virtual Multichannel Video Programming Distributor ("vMVPD"), Free Ad-Supported Streaming TV ("FAST"), and social media platforms.
Service-based Licensing Revenue Opportunities We also believe that companies providing certain video streaming and other cloud services require a license under our patents and we intend to seek license agreements with such companies. Overview of Patent Licenses The majority of our revenue is generated from fixed-fee patent license agreements, with a smaller portion coming from variable royalty agreements.
("Samsung"), Sony Corporation of America ("Sony"), and Xiaomi Corporation ("Xiaomi"), among others. Service-based Licensing Revenue Opportunities We also believe that companies providing video streaming and certain other cloud services require a license under our patents, and we will seek to license our relevant assets to such companies.
In 2022, we agreed to renew our patent license agreement with Samsung and enter into binding arbitration to determine the final terms of the license, including the amount payable by Samsung under the new agreement.
Additional information regarding revenue concentrations is provided in this Annual Report in Note 4, " Segment and Concentration Information " in the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K. 8 Table of Contents In 2022, we agreed to renew our patent license agreement with Samsung and enter into binding arbitration to determine the final terms of the license, including the amount payable by Samsung under the new agreement.
Contractual Arbitration Proceedings We and our licensees, in the normal course of business, may have disagreements as to the rights and obligations of the parties under applicable agreements. For example, we could have a disagreement with a licensee as to the amount of reported sales and royalties.
For example, we could have a disagreement with a licensee as to the amount of reported sales and royalties. Our patent license agreements typically provide for private confidential arbitration as the mechanism for resolving disputes with our licensees.
We are committed to driving positive progress towards reducing the environmental footprint that the deployment of 5G, wireless networks, and other video technologies will bring.
Among other things, this means aligning our standards to the United Nations’ Sustainable Development Goals and its underlying principles around the environment, the workforce, anti-corruption, and human rights. 10 Table of Contents We are committed to driving positive progress towards reducing the environmental footprint that the deployment of 5G, wireless networks, and other video technologies will bring.
The market is expected to maintain this momentum in 2024 due to the continued global uptake of 5G smartphones as well as the migration from feature phones to smartphones in emerging regions.
The smartphone market, with an estimated 1.2 billion units shipped worldwide in 2024, is driven by several large, global brands. The market rebounded in 2024 after several stagnant years due to the continued global uptake of 5G smartphones as well as the migration from feature phones to smartphones in emerging regions.
Our talent programs are instrumental in our ability to attract the right talent to the organization by offering learning opportunities and career advancement. Our Leadership Essentials competency development model is available to all employees and provides a comprehensive suite of tools and resources for growth across four key areas; thought leadership, results leadership, people leadership and self-leadership.
These values are now integrated into our learning practices and will be incorporated into future goal setting and performance management practices. Our Leadership Development model, available to all employees, provides a comprehensive suite of tools and resources for growth across four key areas; thought leadership, results leadership, people leadership, and self-leadership.
Other key consumer electronics device categories include tablets and personal computers, set-top-boxes and streaming media players, gaming consoles, wearables and smart home products. IoT/Automotive is an important and relatively new market that is expected to result in a significant increase in the number of connected devices worldwide and unlock new business capabilities.
IoT/Automotive is an important and relatively new market that is expected to result in a significant increase in the number of connected devices worldwide and unlock new business capabilities. Total global cellular IoT device shipments are expected to grow from approximately 450 million in 2024 to approximately 700 million by 2028.
Our total rewards plans include base salary, short- and long-term incentives, healthcare benefits, retirement savings plans, physical and mental well-being programs, hybrid-work schedules, monetary and social recognition in each of our locations around the globe.
Our total rewards plans include base salary, short- and long-term incentives, healthcare benefits, retirement savings plans, well-being programs, hybrid work arrangements, and both monetary and social recognition across our global locations. In addition to comprehensive health benefits, employees may have access to location-specific perks, such as subsidized fitness programs, commuter benefits, wellness incentives, tuition reimbursement, and professional development opportunities.
We recognize that certain other stakeholders (such as customers, employees and non-governmental organizations), as well as certain of our shareholders, may be interested in more detailed information on these topics.
The foregoing discussion includes information regarding Human Capital matters intended to address topics of interest to shareholders generally. We recognize that other stakeholders including customers, employees, organizations, and some shareholders, may seek more detailed insights on these topics.
We conducted an engagement survey in 2023 that provided direct insight and guidance from our employees on what our strengths in building an innovative and inclusive culture are, and how we can continue to be a winning team.
In 2024, we conducted an engagement pulse survey to supplement our broader 2023 survey efforts, providing additional insights into our strengths in fostering an innovative and inclusive culture, and areas for continued improvement to be a winning team.
We are committed to sustainable business principles, to thinking long-term, and to making strategic decisions that adhere to our mission and values. Among other things, this means supporting the United Nations Global Compact and its underlying principles around the environment, the workforce, anti-corruption, and human rights.
We are committed to sustainable business principles, to thinking long-term, and to making strategic decisions that adhere to our mission and values. We strive to focus and make progress on initiatives that matter most to our business, our employees, communities, and external stakeholders.
Our Human Capital Committee (formerly known as the Compensation Committee) is responsible for overseeing our policies and strategies related to our culture and human capital, including diversity, equity and inclusion. As of December 31, 2023, we had approximately 450 employees worldwide, of whom approximately 230 were based outside of the U.S, and nearly all of whom were full-time.
As of December 31, 2024, we had approximately 430 employees worldwide, of whom approximately 220 employees based outside of the United States, nearly all of whom were full-time. Our employees in France are represented by works councils and are subject to collective bargaining agreements.
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We continue to grow a portfolio of technology related to Wi-Fi, Internet Standards, and Edge Computing, that includes, for example, improvements to the IEEE 802.11 PHY and MAC to increase peak data rates (802.11be - Extremely High Throughput), cloud gaming, security, and terminal mobility for edge services. 5 Table of Contents Advanced Video Coding and Transmission Technology An important and growing segment of wireless traffic is devoted to video streaming.
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Our IEEE 802 standards-based inventions are used in devices that are certified for WiFi 4/5/6/7 and provide improvements in spectral efficiency, higher throughput, reduced latency, energy efficiency and many other features.
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Our variable royalty license agreements typically contain provisions that give us the right to audit our licensees' books and records to ensure compliance with the licensees' reporting and payment obligations under those agreements. From time to time, these audits reveal underreporting or underpayments under the applicable agreements.
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We continue to participate and develop new technologies towards WiFi 8 through our leadership positions in IEEE 802 and WiFi Alliance. 5 Table of Contents Advanced Video Coding and Transmission Technology An important and growing segment of wireless traffic is devoted to video streaming.
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Overview of Smartphone, Consumer Electronics, IoT, and Video Services Industries The primary markets for our wireless and video technologies are the smartphone, consumer electronics, IoT/Automotive, and Video Services markets. The smartphone market, with an estimated 1.2 billion units shipped worldwide in 2023, is driven by several large, global brands.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAccordingly, our tax rate could be adversely affected by several factors, many of which are outside of our control, including: changing tax laws, regulations and interpretations thereof; changes in tax rates; and assessments and any related tax, interest or penalties. If we are deemed to owe additional taxes, our business, financial condition, and results of operations could be adversely affected.
Biggest changeIn such case, our income tax provision, results of operations and cash flows in the period or periods in which that determination is made could be negatively affected. 21 Table of Contents Our tax rate could be adversely affected by several factors beyond our control, including changes in tax laws, regulations, interpretations, tax rates, assessments and any related tax, interest or penalties.
However, if a third party implementer is unwilling to take a license on reasonable terms or in a reasonable time frame, or at all, we have in the past commenced, and may in the future commence, legal or administrative actions against such third parties to enforce our intellectual property rights.
If a third party implementer is unwilling to take a license on reasonable terms or in a reasonable time frame, or at all, we have in the past commenced, and may in the future commence, legal or administrative actions against such third parties to enforce our intellectual property rights.
From time to time, we intend to make strategic decisions about our patent portfolio, whether through a formal portfolio review or opportunistic dispositions. Cost savings expectations of any portfolio review are inherently uncertain and, therefore, we cannot provide assurance that we will achieve any expected, or any actual cost savings from any such action.
From time to time, we make strategic decisions about our patent portfolio, whether through a formal portfolio review or opportunistic dispositions. Cost savings expectations of any portfolio review are inherently uncertain and, therefore, we cannot provide assurance that we will achieve any expected, or any actual cost savings from any such action.
A significant portion of our licensees, potential licensees and customers are international, and our licensees, potential licensees and customers sell their products to markets throughout the world. In addition, in recent years, we have expanded, and we may continue to expand, our international operations, opening offices in China, France, Belgium and Finland.
A significant portion of our licensees, potential licensees and customers are international, and our licensees, potential licensees and customers sell their products to markets throughout the world. In addition, in recent years, we have expanded, and we may continue to expand, our international operations, opening offices in China, France and Finland.
It is possible that courts or regulators could decide to set or otherwise determine the FRAND consistency of such terms or the manner in which such terms are determined, including by determining a worldwide royalty rate for our SEPs.
It is possible that courts or regulators could decide to set or otherwise determine the FRAND consistency of such terms or the manner in which such terms are determined, including by determining a worldwide royalty for our SEPs.
Although we continue to participate in worldwide standards bodies and contribute our intellectual property to future-generation wireless and video coding standards, including standards that will define 5G, our technologies might not be adopted by the relevant standards.
Although we continue to participate in worldwide standards bodies and contribute our intellectual property to future-generation wireless and video coding standards, including standards that will define 5G and beyond, our technologies might not be adopted by the relevant standards.
Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations under the 2024 Notes and the 2027 Notes.
Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations under the 2027 Notes.
The convertible note hedge transactions and warrant transactions that we entered into in connection with the offering of the 2024 Notes and the 2027 Notes may affect the value of the such notes, and the market price of our common stock.
The convertible note hedge transactions and warrant transactions that we entered into in connection with the offering of the 2027 Notes may affect the value of the such notes, and the market price of our common stock.
Royalty rates could decrease for future license agreements due to downward product pricing pressures and competition over patent royalties. Royalty payments to us under future license agreements could be lower than anticipated.
Royalties could decrease for future license agreements due to downward product pricing pressures and competition over patent royalties. Royalty payments to us under future license agreements could be lower than anticipated.
Certain licensees and others in the wireless and consumer electronics industries, individually and collectively, are demanding that royalty rates for patents be lower than historic royalty rates and/or that such rates should be applied to royalty bases smaller than the selling price of an end product (such as the “smallest salable patent practicing unit”).
Certain licensees and others in the wireless and consumer electronics industries, individually and collectively, are demanding that royalties for patents be lower than historic royalties and/or should be applied to royalty bases smaller than the selling price of an end product (such as the “smallest salable patent practicing unit”).
We expect to continue to pay quarterly cash dividends on our common stock at the rate set forth in our current dividend policy.
We expect to pay quarterly cash dividends on our common stock at the rate set forth in our current dividend policy.
In the event of successful challenges by current or prospective licensees based on these doctrines that result in a material decrease to our patent licensing revenue, our financial condition and operating results may be materially adversely affected. 21 Table of Contents Our use of open source software could materially adversely affect our business, financial condition, operating results and cash flow.
In the event of successful challenges by current or prospective licensees based on these doctrines that result in a material decrease to our patent licensing revenue, our financial condition and operating results may be materially adversely affected. Our use of open source software could materially adversely affect our business, financial condition, operating results and cash flow.
Our shareholders may not receive the level of dividends provided for in our dividend policy or any dividend at all, and any decrease in or suspension of the dividend could cause our stock price to decline. Our current dividend policy contemplates the payment of a regular quarterly cash dividend of $0.40 per share on our outstanding common stock.
Our shareholders may not receive the level of dividends provided for in our dividend policy or any dividend at all, and any decrease in or suspension of the dividend could cause our stock price to decline. Our dividend policy contemplates the payment of a regular quarterly cash dividend of $0.60 per share on our outstanding common stock.
Upon the occurrence of certain transactions constituting a fundamental change under the indentures, holders of the notes will have the right, at their option, to require us to repurchase all of their applicable notes or any portion of the principal amount of such notes at a price of 100% of the principal amount of the notes being repurchased, plus accrued and unpaid interest.
Upon the occurrence of certain transactions constituting a fundamental change under the indenture, holders of the notes will have the right, at their option, to require us to repurchase all of their applicable notes or any portion of the principal amount of the notes at a price of 100% of the principal amount of the notes being repurchased, plus accrued and unpaid interest.
There is also increasing downward pricing pressure on certain wireless products, including handsets, and other consumer electronics devices that we believe implement our patented inventions, and some of our royalty rates are tied to the pricing of these devices.
There is also increasing downward pricing pressure on certain wireless products, including handsets, and other consumer electronics devices that we believe implement our patented inventions, and some of our royalties are tied to the pricing of these devices.
Any decrease in the amount of the dividend, or suspension or discontinuance of payment of a dividend, could cause our stock price to decline. 24 Table of Contents Securities analyst coverage or lack of coverage may have a negative impact on our common stock’s market price.
Any decrease in the amount of the dividend, or suspension or discontinuance of payment of a dividend, could cause our stock price to decline. Securities analyst coverage or lack of coverage may have a negative impact on our common stock’s market price.
Royalty rates, or other terms, under our patent license agreements could be subject to determination through arbitration or other third-party adjudications or regulatory or court proceedings, and arbitrators, judges or other third-party adjudicators or regulators could make unfavorable determinations.
Royalties or other terms under our patent license agreements could be subject to determination through arbitration or other third-party adjudications or regulatory or court proceedings, and arbitrators, judges or other third-party adjudicators or regulators could make unfavorable determinations.
Demands by certain licensees to reduce royalties due to pricing pressure or the number of patent holders seeking royalties on these technologies could result in a decrease in the royalty rates we receive for use of our patented inventions, thereby decreasing future revenue and cash flow. 17 Table of Contents Our technologies may not become patented, adopted by wireless or video standards or widely deployed.
Demands by certain licensees to reduce royalties due to pricing pressure or the number of patent holders seeking royalties on these technologies could result in a decrease in the royalties we receive for use of our patented inventions, thereby decreasing future revenue and cash flow. Our technologies may not become patented, adopted by wireless or video standards or widely deployed.
We earn a significant amount of our revenues from a limited number of licensees or customers, and we expect that a significant portion of our revenues will continue to come from a limited number of licensees or customers for the foreseeable future. For example, in 2023, Apple, Samsung, Lenovo, and Xiaomi each comprised 10% or more of our consolidated revenues.
We earn a significant amount of our revenues from a limited number of licensees or customers, and we expect that a significant portion of our revenues will continue to come from a limited number of licensees or customers for the foreseeable future. For example, in 2024, Samsung, Lenovo, Apple, and OPPO each comprised 10% or more of our consolidated revenues.
In connection with the offerings of the 2024 Notes and the 2027 Notes, we entered into convertible note hedge transactions with certain financial institutions (the “option counterparties”) and sold warrants to the respective option counterparties. These transactions will be accounted for as an adjustment to our shareholders’ equity.
In connection with the 2027 Notes issuance, we entered into convertible note hedge transactions with certain financial institutions (the “option counterparties”) and sold warrants to the respective option counterparties. These transactions will be accounted for as an adjustment to our shareholders’ equity.
Changes to or clarifications of our obligations to be prepared to offer licenses to SEPs on FRAND terms and conditions could require such terms, including our royalty rates, to be determined through third party adjudications.
Changes to or clarifications of our obligations to be prepared to offer licenses to SEPs on FRAND terms and conditions could require such terms, including our royalties, to be determined through third party adjudications.
Risks Related to Our Business Challenges relating to our ability to enter into new license agreements and renew existing license agreements could cause our revenue and cash flow to decline. We face challenges in entering into new patent license agreements.
Challenges relating to our ability to enter into new license agreements and renew existing license agreements could cause our revenue and cash flow to decline. We face challenges in entering into new patent license agreements.
Historically, we strive for the terms of our patent license agreements, including our royalty rates, to be reached through arms-length bilateral negotiations with our licensees. We could agree, as we did with Samsung pursuant to a binding arbitration agreement, to have royalty rates, and any other disputed terms, set by third party adjudicators (such as arbitrators).
Historically, we strive for the terms of our patent license agreements, including royalties, to be reached through arms-length bilateral negotiations with our licensees. We could agree, as we did with Samsung and Lenovo pursuant to binding arbitration agreements, to have royalties and any other disputed terms set by third party adjudicators (such as arbitrators).
We have no guarantee that the royalty rates or other terms set by arbitrators, courts or other third parties will be favorable to us.
We have no guarantee that the royalties or other terms set by arbitrators, courts or other third parties will be favorable to us.
We may also be required to issue additional shares upon conversion in the event of certain fundamental change transactions. These provisions could limit the price that some investors might be willing to pay in the future for shares of our common stock. Item 1B. UNRESOLVED STAFF COMMENTS. None.
We may also be required to issue additional shares upon conversion in the event of certain fundamental change transactions. These provisions could limit the price that some investors might be willing to pay in the future for shares of our common stock.
Any significant adverse findings as to the validity, infringement, enforceability or scope of our patents and/or any successful design-around of our patents could result in the loss of patent licensing revenue from existing licensees, through termination or modification of agreements or otherwise, and could substantially impair our ability to secure new patent licensing arrangements, either at all or on beneficial terms.
Any significant adverse findings as to the validity, infringement, enforceability or scope of our patents and/or any successful design-around of our patents could result in the loss of patent licensing revenue from existing licensees, through termination or modification of agreements or otherwise, and could substantially impair our ability to secure new patent licensing arrangements, either at all or on beneficial terms. 17 Table of Contents Macroeconomic conditions may harm our business.
Further, if wireless carriers consolidate with companies that utilize technologies that are competitive with our technologies or that are not covered by our patents, we could lose market opportunities, which could negatively impact our revenues and financial condition. We face competition from companies developing other or similar technologies.
Further, if wireless carriers consolidate with companies that utilize technologies that are competitive with our technologies or that are not covered by our patents, we could lose market opportunities, which could negatively impact our revenues and financial condition.
Implementing our business strategy requires specialized engineering and other technical talent, and these skills are in high demand among our competitors. The market for employees in our industry is extremely competitive, and competitors for talent, particularly engineering talent, increasingly attempt to hire, and to varying degrees have been successful in hiring, our employees or employment candidates.
Implementing our business strategy requires specialized engineering and other technical talent, and these skills are in high demand among our competitors. The market for employees in our industry is extremely competitive, and competitors for talent, particularly engineering talent, have and could in the future attempt to hire our employees or employment candidates.
We expend significant time and effort identifying users and potential users of our inventions and negotiating license agreements with companies that may be reluctant to take licenses.
Consequently, we approach companies and seek to establish license agreements for using our inventions. We expend significant time and effort identifying users and potential users of our inventions and negotiating license agreements with companies that may be reluctant to take licenses.
In addition, we cannot be certain that the integration of acquired companies, businesses, technology and/or intellectual property with our business will result in the realization of the full benefits that we anticipate will be realized from such acquisitions.
As a result, we may be unable to accomplish the integration smoothly or successfully. In addition, we cannot be certain that the integration of acquired companies, businesses, technology and/or intellectual property with our business will result in the realization of the full benefits that we anticipate will be realized from such acquisitions.
In addition, to the extent that any future security breach results in inappropriate disclosure of our employees’, licensees’, or customers’ confidential and /or personal information, we may incur liability or additional costs to remedy any damages caused by such breach.
In addition, to the extent that any future security breach results in inappropriate disclosure of our employees’, licensees’, or customers’ confidential and /or personal information, we may incur liability or additional costs to remedy any damages caused by such breach. We face risks from doing business and maintaining offices in international markets.
The U.S. and Chinese governments are regularly engaged in various trade discussions, and the U.S. State Department originally issued a travel advisory in January 2019 and reissued this travel advisory on January 11, 2023 advising U.S. citizens to exercise increased caution in China due to arbitrary enforcement of local laws.
State Department originally issued a travel advisory in January 2019 and reissued this travel advisory on January 11, 2023 advising U.S. citizens to exercise increased caution in China due to arbitrary enforcement of local laws.
Licensing of such technology may impose certain obligations on us if we were to distribute derivative works of the open source software. For example, these obligations may require us to make source code for derivative works available or license such derivative works under a particular type of license that is different from what we customarily use to license our technology.
For example, these obligations may require us to make source code for derivative works available or license such derivative works under a particular type of license that is different from what we customarily use to license our technology .
Such decisions could also cause serious reputational harm. Finally, adverse legal decisions related to our licensing practices could have an adverse effect on our ability to enter into license agreements, which, in turn, could cause our cash flow and revenue to decline. 16 Table of Contents We are subject to risks resulting from customer concentration.
Such decisions could also cause serious reputational harm. Finally, adverse legal decisions related to our licensing practices could have an adverse effect on our ability to enter into license agreements, which, in turn, could cause our cash flow and revenue to decline. 16 Table of Contents We face competition from companies developing other or similar technologies.
In such an event, the market price of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties we describe below are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also affect our business.
In such an event, the market price of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties we describe below are not the only ones facing us.
For example, in 2022, Samsung, Apple and Xiaomi collectively accounted for approximately 50% of worldwide smartphone shipments, and we anticipate a similar level of concentration in worldwide shipments for 2023 and beyond.
For example, in 2024, Samsung, Apple, and Xiaomi collectively accounted for over 50% of worldwide smartphone shipments, and we anticipate a similar level of concentration in worldwide shipments for future years.
Any potential changes in the law, the IPR policies of standards bodies or other developments that reduce the available forums or the types of relief available in such forums (such as injunctive relief), restrict permissible licensing practices (such as our ability to license on a worldwide portfolio basis) or that otherwise cause us to seek alternative forums (such as arbitration or state court), would make it more difficult for us to enforce our patents, whether in adversarial proceedings or in negotiations.
Further, legislation designed to reduce the value of SEPs and alter the U.S. patent system, including legislation designed to reduce the jurisdiction and remedial authority of the USITC, has periodically been introduced in Congress. 15 Table of Contents Any potential changes in the law, the IPR policies of standards bodies or other developments that reduce the available forums or the types of relief available in such forums (such as injunctive relief), restrict permissible licensing practices (such as our ability to license on a worldwide portfolio basis) or that otherwise cause us to seek alternative forums (such as arbitration or state court), would make it more difficult for us to enforce our patents, whether in adversarial proceedings or in negotiations.
Because we have historically depended on the availability of certain forms of legal process to enforce our patents and obtain fair and adequate compensation for our investments in research and development and the unauthorized use of our intellectual property, developments that undermine our ability to do so could have a negative impact on future licensing efforts. 15 Table of Contents Rulings in our legal proceedings, as well as those of third parties, may affect our strategies for patent prosecution, licensing and royalty rate setting and enforcement.
Because we have historically depended on the availability of certain forms of legal process to enforce our patents and obtain fair and adequate compensation for our investments in research and development and the unauthorized use of our intellectual property, developments that undermine our ability to do so could have a negative impact on future licensing efforts.
The integration of acquired companies or businesses may result in significant challenges, including, among others: successfully integrating new employees, technology and/or products; consolidating research and development operations; minimizing the diversion of management’s attention from ongoing business matters; and consolidating corporate and administrative infrastructures. As a result, we may be unable to accomplish the integration smoothly or successfully.
The integration of acquired companies or businesses may result in significant challenges, including, among others: successfully monetizing any acquired technology, in particular outside of our core licensing programs; integrating new employees, technology and/or products; consolidating research and development operations; minimizing the diversion of management’s attention from ongoing business matters; and consolidating corporate and administrative infrastructures.
The Phase One Trade Agreement takes steps to ease certain trade tensions between the U.S. and China, including tensions involving intellectual property theft and forced intellectual property transfers by China.
In January 2020, the U.S. and China entered into Phase One of the Economic and Trade Agreement, which took steps to ease certain trade tensions between the U.S. and China, including tensions involving intellectual property theft and forced intellectual property transfers by China.
If any analyst or analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease and we could lose visibility in the financial markets, which could cause our stock price and trading volume to decline.
If any analyst or analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease and we could lose visibility in the financial markets, which could cause our stock price and trading volume to decline. 23 Table of Contents Our indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations under such indebtedness.
We can provide no assurance as to the financial stability or viability of the option counterparties. 25 Table of Contents Provisions of the 2024 Notes and 2027 Notes could discourage an acquisition of us by a third party.
We can provide no assurance as to the financial stability or viability of the option counterparties. Provisions of the 2027 Notes could discourage an acquisition of us by a third party. Certain provisions of the 2027 Notes could make it more difficult or more expensive for a third party to acquire us.
Once identified, it is not feasible for us to seek licenses from all users of our patented technologies, so we may have to make strategic decisions with respect to which companies we should approach for license negotiations.
Once identified, it is not feasible for us to seek licenses from all users of our patented technologies, so we have to make strategic decisions with respect to which companies we should approach for license negotiations. Uncertainty related to entry into new license agreements could impact our forecasts and ultimately, revenue, cash flow and business.
Depending upon the payment structure of any new patent license agreements into which we may enter, such cash flow fluctuations may continue in the future. 19 Table of Contents Our revenue may be affected by the deployment of future-generation wireless standards in place of 3G, 4G and 5G technologies or future-generation video standards, by the timing of such deployment, or by the need to extend or modify certain existing license agreements to cover subsequently issued patents.
Our revenue may be affected by the deployment of future-generation wireless standards in place of 3G, 4G and 5G technologies or future-generation video standards, by the timing of such deployment, or by the need to extend or modify certain existing license agreements to cover subsequently issued patents.
We seek to detect and investigate all security incidents and to prevent their recurrence, but, in some cases, we might be unaware of an incident or its magnitude and effects.
Material security events could also require public disclosure, which could further harm our business or reputation. We seek to detect and investigate all security incidents and to prevent their recurrence, but, in some cases, we might be unaware of an incident or its magnitude and effects.
The market for licensing video and cloud-based services is not as developed as device-based licensing programs. As a result, video and cloud-based service providers do not have a significant volume of comparable agreements against which to compare our offers and may use this as a reason to delay our negotiations with such providers.
As a result, video and cloud-based service providers do not have a significant volume of comparable agreements against which to compare our offers and may use this as a reason to delay our negotiations with such providers. Additionally, our pricing models may not reflect the value of our technologies in the eyes of our customers.
If we are unable to recruit, retain, and motivate our employees, then we may not be able to innovate, execute on our strategy and grow our business as planned. Further, the cost and loss of efficiency related to turnover, particularly at senior levels, may be significant.
If we are unable to recruit, retain, and motivate our employees, then we may not be able to innovate, execute on our strategy and grow our business as planned.
A number of such competitors for talent are significantly larger than us and may be able to offer compensation, benefits or work arrangements perceived as more desirable than what we are able to offer.
Further, the increased availability of remote working arrangements has expanded the pool of companies that can compete for our employees and employment candidates. A number of such competitors for talent are significantly larger than us and may be able to offer compensation, benefits or work arrangements perceived as more desirable than what we are able to offer.
Our business is subject to a variety of domestic and international laws, rules and policies and other obligations regarding data protection. We may be affected by existing and proposed laws and regulations, as well as government policies and practices related to cybersecurity, privacy and data protection.
We may be affected by existing and proposed laws and regulations, as well as government policies and practices related to cybersecurity, privacy and data protection.
Litigation adversaries have and may continue to allege that we have not complied with certain commitments to standards-setting organizations and therefore that we are not entitled to the relief that we seek. For example, Lenovo and other parties have alleged that we have not complied with an obligation to offer a license to a party on FRAND terms and conditions.
Litigation adversaries have and may continue to allege that we have not complied with certain commitments to standards-setting organizations and therefore that we are not entitled to the relief that we seek.
In addition, to the extent that other terms and conditions for our patent license agreements are determined through such means, such terms and conditions could be less favorable than our historical terms and conditions, which may have an adverse effect on our licensing business. 14 Table of Contents We could continue to be involved in a number of costly litigation, arbitration and administrative proceedings to enforce or defend our intellectual property rights and to defend our licensing practices.
In addition, to the extent that other terms and conditions for our patent license agreements are determined through such means, such terms and conditions could be less favorable than our historical terms and conditions, which could have an adverse effect on our licensing business more broadly.
There can be no assurance that we will continue to have adequate staffing or that our development efforts will ultimately be successful. Moreover, certain of our technologies have not been tested for commercial use, and it is possible that they may not perform as expected.
Moreover, certain of our technologies have not been tested for commercial use, and it is possible that they may not perform as expected.
For example, in the past, the USITC and U.S. courts, including the U.S. Supreme Court, have taken actions that have been viewed as unfavorable to patentees, including us.
Rulings in our legal proceedings, as well as those of third parties, may affect our strategies for patent prosecution, licensing and royalty setting and enforcement. For example, in the past, the USITC and U.S. courts, including the U.S. Supreme Court, have taken actions that have been viewed as unfavorable to patentees, including us.
Our stock repurchase program, including the tender offer that we completed during 2023, may not return value to shareholders as it was designed to do because the market price of the stock may decline below the levels at which we repurchased shares of stock.
Our stock repurchase program may not return value to shareholders as it was designed to do because the market price of the stock may decline below the levels at which we repurchased shares of stock. Stock repurchase programs are intended to deliver shareholder value over the long term, but stock price fluctuations can reduce the effectiveness of such programs.
Such 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. Such inquiries and/or enforcement actions could also result in monetary fines, penalties or other remedies or sanctions that could adversely affect our business and financial condition.
Such scrutiny has in the past resulted in enforcement actions against Qualcomm and other licensing companies, and could lead to additional investigations of, or enforcement actions against, us. Such 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.
Stock repurchase programs are intended to deliver shareholder value over the long term, but stock price fluctuations can reduce the effectiveness of such programs. In addition, our Board of Directors could choose to suspend or terminate the stock repurchase program at any time or not to renew the program.
In addition, our Board of Directors could choose to suspend or terminate the stock repurchase program at any time or not to renew the program.
Our strategy is based on our own projections and on analyst, industry observer and expert projections, which are forward-looking in nature and are inherently subject to risks and uncertainties. We utilize these projections in various ways, including key strategic decisions that we regularly make regarding the direction of our business, research and licensing efforts.
We utilize these projections in various ways, including key strategic decisions that we regularly make regarding the direction of our business, research and licensing efforts.
Our technology development activities may experience delays. We may experience technical, financial, resource or other difficulties or delays related to the further development of our technologies. Delays may have adverse financial effects and may allow competitors with comparable technology offerings to gain an advantage over us in the marketplace or in the standards setting arena.
Delays may have adverse financial effects and may allow competitors with comparable technology offerings to gain an advantage over us in the marketplace or in the standards setting arena. There can be no assurance that we will continue to have adequate staffing or that our development efforts will ultimately be successful.
Companies headquartered in China currently comprise a substantial portion of the handset manufacturers that remain unlicensed to our patent portfolio. Our ability to renew license agreements with current licensees in China as well as license new manufacturers is, among other things, affected by the macroeconomic and geopolitical climate, as well as our business relationships and perceived reputation in China.
Our ability to renew license agreements with current licensees in China as well as license new manufacturers is, among other things, affected by the macroeconomic and geopolitical climate, as well as our business relationships and perceived reputation in China. The U.S. and Chinese governments are regularly engaged in various trade discussions, and the U.S.
An inflationary environment can increase our cost of labor, as well as our other operating costs, without a corresponding increase in our revenue, which may have a material adverse impact on our operating results and financial condition. 18 Table of Contents 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.
An inflationary environment can increase our cost of labor, as well as our other operating costs, without a corresponding increase in our revenue, which may have a material adverse impact on our operating results and financial condition.
Our plans to renew license agreements with current licensees as well as additional handset manufacturers in China may be adversely affected by a deterioration in United States-China trade and geopolitical relations, our customers facing economic uncertainty there or our failure to establish a positive reputation in China, which could materially adversely affect our long-term business, financial condition and operating results.
Our ability to license device manufacturers and service providers in China may be adversely affected by a deterioration in United States-China trade and geopolitical relations, our customers facing economic uncertainty there or our failure to establish a positive reputation in China.
Attempts by others to gain unauthorized access to information technology systems are becoming more sophisticated. These attempts, which in some cases could be related to industrial or other espionage, include covertly introducing malware to computers and networks and impersonating authorized users, among others.
These attempts, which in some cases could be related to industrial or other espionage, include covertly introducing malware to computers and networks and impersonating authorized users, among others. Advancements in technology, including artificial intelligence and machine learning, may continue to change the way bad actors seek to gain unauthorized access and disrupt systems, thereby increasing the risks of security breaches.
If we are not able to consummate any of these inorganic growth opportunities on a reasonable time frame, on terms that are attractive to us or at all, we may not be able to grow our business in line with our expectations and as such, our business, financial condition and operating results could be harmed.
If we are not able to consummate any of these inorganic growth opportunities on a reasonable time frame, on terms that are attractive to us or at all, we may not be able to grow our business in line with our expectations. 18 Table of Contents Additionally, acquisitions or other strategic transactions may increase our costs, including but not limited to accounting and legal fees, and may not generate financial returns or result in increased adoption or continued use of our technologies or of any technologies we may acquire.
To the extent that our patent royalty rates for our patent license agreements are determined through arbitration or other third party adjudications or regulatory or court proceedings rather than through bilateral negotiations, because such proceedings are inherently unpredictable and uncertain and there are currently few precedents for such determinations, it is possible that royalty rates may be lower than our comparable rates.
If any court or arbitration tribunal decision sets a worldwide royalty rate that is unfavorable to us, our standard essential patent portfolio could be significantly devalued as it relates to the FRAND royalty an implementer should pay, which could in turn negatively impact pricing with other licensees. 14 Table of Contents To the extent that our patent royalties for our patent license agreements are determined through arbitration or other third party adjudications or regulatory or court proceedings rather than through bilateral negotiations, because such proceedings are inherently unpredictable and uncertain and there are currently few precedents for such determinations, it is possible that royalties may be lower than our accounting estimates and/or comparable licenses.
Macroeconomic conditions including rising inflation may result in increased costs of operations. A decline in economic conditions, such as a recession, economic downturn or inflationary conditions in the U.S. or elsewhere could adversely affect our business. In particular, inflation has accelerated in the U.S. and globally.
A decline in economic conditions, such as a recession, economic downturn or inflationary conditions in the U.S. or elsewhere could adversely affect our business. In particular, inflation has accelerated and remained high in the U.S. and globally. Trade tensions or restrictions on free trade, including the tariffs that have been proposed by President Trump, could exacerbate these effects.
In particular, in 2021, the IP Tribunal of the Supreme People’s Court of the People’s Republic of China (SPC) affirmed its position that in certain SEP licensing disputes, Chinese courts can set worldwide royalty rates, and in December 2023, the Chongqing First Intermediate People’s Court issued such a decision setting a worldwide rate for Nokia’s cellular patents in response to a complaint filed by Oppo.
Chinese courts have affirmed their position that in certain SEP licensing disputes, Chinese courts can set worldwide royalties, and in December 2023, one such court issued such a decision setting a worldwide royalty for Nokia’s cellular patents.
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 additional investigations of, or enforcement actions against, us.
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.
Any assets that we divest could turn out to be more valuable than we had anticipated and we may not realize the anticipated benefits of any strategic decision about our patent portfolio. It can be difficult for us to verify royalty amounts owed to us under our per-unit licensing agreements, and this may cause us to lose potential revenue.
Any assets that we divest could turn out to be more valuable than we had anticipated and we may not realize the anticipated benefits of any strategic decision about our patent portfolio. Due to cost constraints, we also regularly undertake strategic decisions in respect of where and how we file for patents.
Our plans to expand our revenue opportunities may not be successful. As part of our business strategy, we regularly seek to expand our revenue opportunities both organically and inorganically. For example, we are currently seeking to expand our licensing activities beyond device-based licensing revenue to certain video and cloud-based service providers.
Additional risks not presently known to us or that we currently deem immaterial may also affect our business. 13 Table of Contents Risks Related to Our Business Our plans to expand our revenue opportunities may not be successful. As part of our business strategy, we regularly seek to expand our revenue opportunities both organically and inorganically.
In such cases, our business, financial condition and operating results could be adversely affected, and our ability to secure new licensees and other business opportunities could be diminished. We rely on relationships with third parties to develop and deploy technology solutions.
In such cases, our business, financial condition and operating results could be adversely affected, and our ability to secure new licensees and other business opportunities could be diminished. 22 Table of Contents Our business is subject to a variety of domestic and international laws, rules and policies and other obligations regarding data protection.
While some companies seek licenses before they commence manufacturing and/or selling devices or services that use our patented inventions, most do not. Consequently, we approach companies and seek to establish license agreements for using our inventions.
This may be even more true with respect to video services licensing than device licensing since licensing efforts in this space are newer. While some companies seek licenses before they commence manufacturing and/or selling devices or services that use our patented inventions, the vast majority do not.
We are subject to examinations by the Internal Revenue Service ("IRS") and other taxing jurisdictions on various tax matters, including challenges to various positions we assert in our filings and foreign tax liability and withholding.
As a U.S. multinational company, we are subject to examination by the Internal Revenue Service (“IRS”) and other tax authorities, and we have ongoing tax audits in various jurisdictions. Any of these examinations could result in challenges to various positions we assert in our filings and could impact our tax liability, both for future and past tax years.
Additionally public interest and legislative pressure related to public companies' ESG practices continue to grow. If our ESG practices fail to meet the expectations of any of our stakeholders’ evolving standards, our reputation, brand and employee retention may be negatively impacted.
In particular, we are subject to both California and European Union reporting regimes on emissions and climate-related risks. Tracking and reporting the required metrics is costly and demands substantial attention. If our governance and reporting practices fail to meet the expectations of any of our stakeholders’ evolving standards, our reputation, brand and employee retention may be negatively impacted.
Additionally, our pricing models may not reflect the demand for our value of our technologies. Accordingly, we may not be able to enter into license agreements with these providers on terms that are favorable to us, or at all. We also seek to expand our business opportunities through targeted acquisitions, research partnerships, joint ventures and licensing platforms.
And, because this market is less developed, holdout behavior may be more likely than in device licensing. Service providers may also opt to use alternative technologies for which we have little or no patent coverage. Accordingly, we may not be able to enter into license agreements with these providers on terms that are favorable to us, or at all.
Environmental. social and governance (ESG) matters may expose us to reputational risks and legal liability. There is an increasing focus from investors, customers and employees as well as other stakeholders concerning ESG matters. Current and prospective investors are increasingly utilizing ESG data to inform their decisions including investment and voting using a multitude of evolving score and rating frameworks.
Our business is subject to evolving corporate governance and public disclosure regulations and expectations that could expose us to reputational risks and legal liability. There is significant focus from investors, customers and employees as well as other stakeholders concerning sustainability and governance matters.
In addition, market data upon which we rely is based on third party reports that may be inaccurate.
In addition, market data upon which we rely is based on third party reports that may be inaccurate. The inaccuracy of any of these projections and/or market data could adversely affect our business prospects, operating results and financial condition. Our strategic decisions about our patent portfolio involve risks, and the anticipated benefits of such actions may not be realized.
The occurrence of any of these events could have an adverse effect on our ability to enter into any renewal or new license agreements with Chinese handset manufacturers, which, in turn, could cause our long-term business, financial condition and operating results to be materially adversely affected.
China is a key market for us, and any of these factors could harm our ability to execute our business plans there and could in turn cause our long-term business, financial condition and operating results to be materially adversely affected. We may face setbacks in defending our patent licensing practices.
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Uncertainty related to entry into new license agreements could impact our forecasts and ultimately, revenue, cash flow and business. 13 Table of Contents We also face challenges in renewing our existing license agreements.
Added
In particular, we have expanded our licensing activities beyond device-based licensing revenue to certain video and cloud-based service providers. The market for licensing video and cloud-based services is not as developed as device-based licensing programs.
Removed
We currently face similar proceedings that Oppo initiated before the Guangzhou Intellectual Property Court to determine a worldwide rate for our 3G, 4G, 5G, 802.11 and HEVC SEPs.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditionally, InterDigital's team of dedicated cybersecurity experts/professionals maintain a comprehensive set of cybersecurity policies and standards, including a security incident response framework. The framework is a set of coordinated procedures and tasks that the InterDigital incident response team executes to ensure timely and accurate reporting and resolution of computer security incidents.
Biggest changeThe framework is a set of coordinated procedures and tasks that the InterDigital incident response team executes to ensure timely and accurate reporting and resolution of computer security incidents. The framework details who, how and when appropriate persons or committees, including the CIO, cybersecurity steering committee, and Audit Committee are kept informed on the status of potential cybersecurity incidents.
See Item 1A. “Risk Factors” for a discussion of cybersecurity risks. 26 Table of Contents
See Item 1A. “Risk Factors” for a discussion of cybersecurity risks. 25 Table of Contents
InterDigital evaluates cybersecurity risks as part of our overall enterprise risk management. A steering committee of senior executives meets quarterly to evaluate any changes to the Company’s exposure to cybersecurity risks, discuss potential mitigation plans and provide updates on mitigation efforts already underway.
InterDigital evaluates cybersecurity risks as part of our overall enterprise risk management. A cybersecurity steering committee of senior executives is responsible for assessing and managing cybersecurity risks. The steering committee meets annually to evaluate any changes to the Company’s exposure to cybersecurity risks, discuss potential mitigation plans and provide updates on mitigation efforts already underway.
Notwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. We identify nation state-sponsored threat actors and the rise in sophistication and proliferation of ransomware campaigns as top reasonable material risks to the business.
However, to date, cybersecurity threats have not materially affected us, including our business strategy, results of operations, or financial condition. We identify nation state-sponsored threat actors and the rise in sophistication and proliferation of criminal cyber threat actors and ransomware campaigns as top reasonable material risks to the business.
An independent third party, never used consecutively, performs annual multi-stage penetration testing of our IT environment. Our cybersecurity program is governed by the Audit Committee of our Board. The Audit Committee of the Board and the full Board each receive quarterly updates on cybersecurity risks identified through the enterprise risk management processes described above.
The Audit Committee of the Board and the full Board each receive quarterly updates on cybersecurity risks identified through the enterprise risk management processes described above. The comprehensive set of cybersecurity policies and standards maintained by the cybersecurity team includes a security incident response framework.
Our policies and standards were developed in collaboration with a wide range of disciplines, such as information technology, cybersecurity, legal, compliance and business. Our cybersecurity strategy and policies are continually reassessed to ensure they attempt to identify and proactively address the constant changes in the global threatscape, including through the use of tabletop exercises.
Our cybersecurity team also maintains a comprehensive set of cybersecurity policies and standards. We continually reassess and review our cybersecurity strategy and policies, including through tabletop exercises, to identify and proactively address the constant changes in the global threat landscape.
Removed
Our cybersecurity team keeps up to date on the latest threats and risks through multiple channels and is also involved in evaluating risks associated with any new proposed service providers.
Added
The steering committee is led by the Director of Cybersecurity & Networks, a cybersecurity professional with 20 years of experience and industry-recognized certifications.
Removed
The Company employs a Director of Cybersecurity & Networks, reporting directly to our CIO, who manages our cybersecurity team that is comprised entirely of security professionals with industry recognized top tier certifications. The cybersecurity team within IS is responsible for assessing and managing risks and informing/gaining feedback from the cybersecurity steering committee.
Added
The Director of Cybersecurity & Networks reports directly to the Chief Information Officer ("CIO") and manages our cybersecurity team, which uses multiple internal and external sources to keep up to date on the latest threats and risks and manages a process to evaluate cybersecurity risks associated with third-party service providers.
Removed
The framework details who, how and when appropriate persons or committees, including the Audit Committee are kept informed on the status of potential cybersecurity incidents. A summary of recent incidents is also presented by the Chief Information Officer (“CIO”) at each regular Audit Committee meeting.
Added
We also engage external vendors to assess the cybersecurity program as needed, including annual multi-stage penetration testing of our IT environment by independent third parties. The Audit Committee of our Board oversees risk from cybersecurity threats.
Removed
Decision makers such as the CIO, executive team, and Audit Committee are regularly kept up to date on cybersecurity trends. Ongoing collaboration with stakeholders throughout the business also helps to build continued awareness and visibility of future needs. We engage external vendors to assess the cybersecurity program as needed.
Added
The CIO also presents a summary of recent incidents at each regular Audit Committee meeting. Notwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth information with respect to our principal leased properties: Location Approximate Square Feet Principal Use Lease Expiration Date Wilmington, Delaware 7,190 Corporate headquarters November 2025 Rennes, France 33,000 Office and research space August 2031 Conshohocken, Pennsylvania 30,300 Office and research space September 2029 New York, New York 19,400 Office and research space July 2030 Montreal, Quebec 11,918 Office and research space June 2026 Los Altos, California 4,900 Office and research space November 2027 We are also a party to leases for several smaller research and/or office spaces, including in Brussels, Belgium; Espoo, Finland; Indianapolis, Indiana, USA; London, United Kingdom; Melville, New York, USA; Paris, France, and Beijing, China.
Biggest changeThe following table sets forth information with respect to our principal leased properties: Location Approximate Square Feet Principal Use Lease Expiration Date Wilmington, Delaware 7,190 Corporate headquarters November 2025 Rennes, France 33,000 Office and research space August 2031 Conshohocken, Pennsylvania 30,300 Office and research space September 2029 New York, New York 19,400 Office and research space July 2030 Montreal, Quebec 11,918 Office and research space June 2026 Los Altos, California 4,900 Office and research space November 2027 London, United Kingdom 3,700 Office and research space February 2031 We are also a party to leases for several smaller research and/or office spaces, including in Brussels, Belgium; Espoo, Finland; Indianapolis, Indiana, USA; Melville, New York, USA; Paris, France, and Beijing, China.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. LEGAL PROCEEDINGS. See Note 12, “ Litigation and Legal Proceedings ,” to the Notes to Consolidated Financial Statements included below in Part II, Item 8 of this Form 10-K for a description of our material legal proceedings, which is incorporated herein by reference. Item 4. MINE SAFETY DISCLOSURES. Not applicable. 27 Table of Contents PART II
Biggest changeItem 3. LEGAL PROCEEDINGS. See Note 12, “ Litigation and Legal Proceedings ,” to the Notes to Consolidated Financial Statements included below in Part II, Item 8 of this Form 10-K for a description of our material legal proceedings, which is incorporated herein by reference. Item 4. MINE SAFETY DISCLOSURES. Not applicable. 26 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends Cash dividends on outstanding common stock declared in 2023 and 2022 were as follows (in thousands, except per share data): 2023 Per Share Total Cumulative by Fiscal Year First quarter $ 0.35 $ 9,449 $ 9,449 Second quarter 0.35 9,273 18,722 Third quarter 0.40 10,348 29,070 Fourth quarter 0.40 10,226 39,296 $ 1.50 $ 39,296 2022 First quarter $ 0.35 $ 10,803 $ 10,803 Second quarter 0.35 10,380 21,183 Third quarter 0.35 10,382 31,565 Fourth quarter 0.35 10,384 41,949 $ 1.40 $ 41,949 We increased the quarterly cash dividend from $0.35 to $0.40 per share beginning with the dividend paid in fourth quarter 2023.
Biggest changeDividends Cash dividends on outstanding common stock declared in 2024 and 2023 were as follows (in thousands, except per share data): 2024 Per Share Total Cumulative by Fiscal Year First quarter $ 0.40 $ 10,155 $ 10,155 Second quarter 0.40 10,052 20,207 Third quarter 0.45 11,366 31,573 Fourth quarter 0.45 11,557 43,130 $ 1.70 $ 43,130 2023 First quarter $ 0.35 $ 9,449 $ 9,449 Second quarter 0.35 9,273 18,722 Third quarter 0.40 10,348 29,070 Fourth quarter 0.40 10,226 39,296 $ 1.50 $ 39,296 We increased the quarterly cash dividend by $0.05 per share in both 2023 and 2024 to raise the dividend payable from $0.35 to $0.45 per share.
We currently expect to continue to pay comparable dividends in the future; however, continued payment of cash dividends and changes in the Company's dividend policy will depend on the Company's earnings, financial condition, capital resources and capital requirements, alternative uses of capital, restrictions imposed by any existing debt, economic conditions and other factors considered relevant by our Board of Directors. 28 Table of Contents Performance Graph The following graph compares five-year total shareholder return on common stock with the cumulative total returns of the Nasdaq Telecommunications index and the Russell 2000 index.
We currently expect to continue to pay dividends in accordance with our dividend policy; however, continued payment of cash dividends and changes in the Company's dividend policy will depend on the Company's earnings, financial condition, capital resources and capital requirements, alternative uses of capital, restrictions imposed by any existing debt, economic conditions and other factors considered relevant by our Board of Directors. 27 Table of Contents Performance Graph The following graph compares five-year total shareholder return on common stock with the cumulative total returns of the Nasdaq Telecommunications index and the Russell 2000 index.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information The Nasdaq Global Select Market (“Nasdaq”) is the principal market for our common stock, which is traded under the symbol "IDCC." Holders As of February 13, 2024, there were 408 holders of record of our common stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information The Nasdaq Global Select Market (“Nasdaq”) is the principal market for our common stock, which is traded under the symbol "IDCC." Holders As of February 4, 2025, there were 389 holders of record of our common stock.
Period Total Number of Shares (or Units) Purchased (1) Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchases as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (3) October 1, 2023 - October 31, 2023 274,000 $ 79.73 274,000 $ 79,882,188 November 1, 2023 - November 30, 2023 160,504 $ 88.33 160,504 $ 65,701,580 December 1, 2023 - December 31, 2023 36,611 $ 96.90 36,611 $ 296,259,145 Total 471,115 $ 83.99 471,115 (1) Total number of shares purchased during each period reflects share purchase transactions that were completed (i.e., settled) during the period indicated.
Period Total Number of Shares (or Units) Purchased (1) Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchases as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (3) October 1, 2024 - October 31, 2024 — $ — — $ 229,532,849 November 1, 2024 - November 30, 2024 — $ — — $ 229,532,849 December 1, 2024 - December 31, 2024 — $ — — $ 229,532,849 Total — $ — — (1) Total number of shares purchased during each period reflects share purchase transactions that were completed (i.e., settled) during the period indicated.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2018 to 12/31/2023. 12/18 12/19 12/20 12/21 12/22 12/23 InterDigital, Inc. 100.00 83.89 95.89 115.54 81.73 182.79 Russell 2000 100.00 125.52 150.58 172.90 137.56 160.85 Nasdaq Telecommunications 100.00 118.74 130.71 133.51 97.62 108.00 The above performance graph shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of InterDigital under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. 29 Table of Contents Issuer Purchases of Equity Securities Repurchase of Common Stock The following table provides information regarding Company purchases of its common stock during fourth quarter 2023.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2019 to 12/31/2024. 12/19 12/20 12/21 12/22 12/23 12/24 InterDigital, Inc. 100.00 114.30 137.72 97.43 217.89 394.45 Russell 2000 100.00 119.96 137.74 109.59 128.14 142.93 Nasdaq Telecommunications 100.00 110.08 112.44 82.21 90.96 103.21 The above performance graph shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of InterDigital under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. 28 Table of Contents Issuer Purchases of Equity Securities Repurchase of Common Stock The following table provides information regarding Company purchases of its common stock during fourth quarter 2024.
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In February 2025, we announced an additional increase in the quarterly cash dividend by $0.15 per share, beginning with the quarterly dividend payable in second quarter 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAssuming net share settlement upon conversion, the following tables illustrate how, based on the $460.0 million aggregate principal amount of the 2027 Notes and the $126.2 million aggregate principal amount of the 2024 Notes outstanding as of December 31, 2023, and the approximately 5.9 million warrants related to the 2027 Notes and the 1.6 million warrants remaining related to the 2024 Notes, outstanding as of the same date, changes in our stock price would affect (i) the number of shares issuable upon conversion of the Convertible Notes, (ii) the number of shares issuable upon exercise of the warrants subject to the 2027 Warrant Transactions and 2024 Warrant Transactions (together, the "Warrant Transactions"), (iii) the number of additional shares deemed outstanding with respect to the Convertible Notes, after applying the if-converted method, for purposes of calculating diluted earnings per share ("Total If-Converted Method Incremental Shares"), (iv) the number of shares of our common stock deliverable to us upon settlement of the Note Hedge Transactions and (v) the number of shares issuable upon concurrent conversion of the Convertible Notes, exercise of the warrants subject to the Warrant Transactions, and settlement of the Note Hedge Transactions (in thousands): 2027 Notes Market Price Per Share Shares Issuable Upon Conversion of the 2027 Notes Shares Issuable Upon Exercise of the 2027 Warrant Transactions Total Treasury Stock Method Incremental Shares Shares Deliverable to InterDigital upon Settlement of the 2027 Note Hedge Transactions Incremental Shares Issuable (a) $80 186 — 186 (186) — $85 524 — 524 (524) — $90 825 — 825 (825) — $95 1,094 — 1,094 (1,094) — $100 1,336 — 1,336 (1,336) — $105 1,555 — 1,555 (1,555) — $110 1,754 197 1,951 (1,754) 197 $115 1,936 446 2,382 (1,936) 446 $120 2,103 675 2,778 (2,103) 675 $125 2,256 886 3,142 (2,256) 886 2024 Notes Market Price Per Share Shares Issuable Upon Conversion of the 2024 Notes Shares Issuable Upon Exercise of the 2024 Warrant Transactions Total Treasury Stock Method Incremental Shares Shares Deliverable to InterDigital upon Settlement of the 2024 Note Hedge Transactions Incremental Shares Issuable (a) $85 68 — 68 (68) — $90 150 — 150 (150) — $95 224 — 224 (224) — $100 290 — 290 (290) — $105 351 — 351 (351) — $110 405 8 413 (405) 8 $115 455 75 530 (455) 75 $120 501 137 638 (501) 137 $125 543 193 736 (543) 193 $130 582 246 828 (582) 246 (a) Represents incremental shares issuable upon concurrent conversion of convertible notes, exercise of warrants and settlement of the hedge agreements. 43 Table of Contents Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2023 (in thousands): Payments Due by Period Total Less Than 1 year 1-3 Years 3-5 Years Thereafter 2024 and 2027 Notes (a) $ 586,174 $ 126,174 $ — $ 460,000 $ — Contractual interest payments on the 2024 and 2027 Notes (a) 56,111 17,158 32,200 6,753 — Operating lease obligations 25,804 4,290 8,561 7,525 5,428 Defined benefit plan obligations (b) 4,304 399 202 567 3,136 Purchase obligations (c) 11,255 11,255 — — — Total contractual obligations $ 683,648 $ 159,276 $ 40,963 $ 474,845 $ 8,564 (a) The table above represents the payment made on the maturity dates of the 2024 and 2027 Notes.
Biggest changeAssuming net share settlement upon conversion, the following tables illustrate how, based on the $460.0 million aggregate principal amount of the 2027 Notes outstanding as of December 31, 2024, and the approximately 5.9 million warrants related to the 2027 Notes, outstanding as of the same date, changes in our stock price would affect (i) the number of shares issuable upon conversion of the 2027 Notes, (ii) the number of shares issuable upon exercise of the warrants subject to the 2027 Warrant Transactions, (iii) the number of additional shares deemed outstanding with respect to the 2027 Notes, after applying the if-converted method, for purposes of calculating diluted earnings per share ("Total If-Converted Method Incremental Shares"), (iv) the number of shares of our common stock deliverable to us upon settlement of the 2027 Note Hedge Transactions and (v) the number of shares issuable upon concurrent conversion of the 2027 Notes, exercise of the warrants subject to the 2027 Warrant Transactions, and settlement of the 2027 Note Hedge Transactions (in thousands): 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 (a) $106 1,612 — 1,612 (1,612) — $120 2,119 691 2,810 (2,119) 691 $130 2,414 1,095 3,509 (2,414) 1,095 $140 2,666 1,442 4,108 (2,666) 1,442 $150 2,885 1,743 4,628 (2,885) 1,743 $160 3,077 2,006 5,083 (3,077) 2,006 $170 3,246 2,238 5,484 (3,246) 2,238 $180 3,397 2,444 5,841 (3,397) 2,444 $190 3,531 2,629 6,160 (3,531) 2,629 $200 3,652 2,795 6,447 (3,652) 2,795 $210 3,762 2,946 6,708 (3,762) 2,946 $220 3,861 3,082 6,943 (3,861) 3,082 $230 3,952 3,207 7,159 (3,952) 3,207 $240 4,035 3,321 7,356 (4,035) 3,321 $250 4,112 3,427 7,539 (4,112) 3,427 (a) Represents incremental shares issuable upon concurrent conversion of convertible notes, exercise of warrants and settlement of the hedge agreements. 41 Table of Contents Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2024 (in thousands): Payments Due by Period Total Less Than 1 year 1-3 Years 3-5 Years Thereafter 2027 Notes (a) $ 460,000 $ — $ 460,000 $ — $ — Contractual interest payments on the 2027 Notes (a) 38,953 16,100 22,853 — — Purchase obligations (b) 23,078 23,078 — — — Operating lease obligations 22,628 4,559 8,542 7,037 2,490 Defined benefit plan obligations (c) 4,457 369 356 710 3,022 Total contractual obligations $ 549,116 $ 44,106 $ 491,751 $ 7,747 $ 5,512 (a) The table above represents the payment made on the maturity date of the 2027 Notes.
Our video technology portfolio combines patents and applications that InterDigital obtained through the acquisitions of the patent licensing business and research and innovation unit of visual technology industry leader Technicolor SA and patents and applications created by internal development.
Our video technology portfolio combines patents and applications that InterDigital obtained through the acquisitions of the research and innovation unit and patent licensing business of visual technology industry leader Technicolor SA and patents and applications created by internal development.
Based on our past performance and current expectations, we believe our available sources of funds, including cash, cash equivalents and short-term investments and cash generated from our operations, will be sufficient to finance our operations, capital requirements, debt obligations, existing stock repurchase program, dividend program, and other contractual obligations discussed below in both the short-term over the next twelve months, and the long-term beyond twelve months.
Based on our past performance and current expectations, we believe our available sources of funds, including cash, cash equivalents, short-term investments, and cash generated from our operations, will be sufficient to finance our operations, capital requirements, debt obligations, existing stock repurchase program, dividend program, and other contractual obligations discussed below in both the short-term over the next twelve months, and the long-term beyond twelve months.
As discussed above we believe our available sources of funds, including cash, cash equivalents and short-term investments and cash generated from our operations, will be sufficient to finance these contractual obligations discussed below in both the short-term over the next twelve month, and the long-term beyond twelve months.
As discussed above 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 these contractual obligations discussed below in both the short-term over the next twelve month, and the long-term beyond twelve months.
As described in Note 10, " Obligations " within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K, the Convertible Notes are convertible into cash up to the aggregate principal amount of the Convertible Notes to be converted and any remaining obligation may be in cash, shares of the Company’s common stock or a combination thereof ("net share settlement").
As described in Note 10, " Obligations " within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K, the 2027 Notes are convertible into cash up to the aggregate principal amount of the 2027 Notes to be converted and any remaining obligation may be in cash, shares of the Company’s common stock or a combination thereof ("net share settlement").
In accordance with US GAAP, we use a five-step model to achieve the core underlying principle that an entity should recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.
In accordance with GAAP, we use a five-step model to achieve the core underlying principle that an entity should recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.
From the period January 1, 2024 through March 31, 2024, 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.
From the period January 1, 2024 through March 31, 2025, 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.
(b) Other cash receipts are primarily comprised of cash receipts related to our variable patent royalty revenue and catch-up revenues. 33 Table of Contents 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.
(b) Other cash receipts are primarily comprised of cash receipts related to our variable patent royalty revenue and catch-up revenues. 32 Table of Contents 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.
A discussion regarding our financial condition and results of operations for December 31, 2022 compared to our fiscal year ended December 31, 2021 can be found in Part II, Item 7 of our Annual Report on Form 10-K for fiscal year 2022, filed with the Securities and Exchange Commission (the “SEC”) on February 15, 2023.
A discussion regarding our financial condition and results of operations for December 31, 2023 compared to our fiscal year ended December 31, 2022 can be found in Part II, Item 7 of our Annual Report on Form 10-K for fiscal year 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 15, 2024.
For static fixed-fee license agreements, we typically classify the associated revenue as catch-up revenues. 30 Table of Contents Business InterDigital, Inc. ("InterDigital") is a global research and development company focused primarily on wireless, video, artificial intelligence ("AI"), and related technologies.
For static fixed-fee license agreements, we typically classify the associated revenue as catch-up revenues. 29 Table of Contents Business InterDigital, Inc. ("InterDigital") is a global research and development company focused primarily on wireless, video, artificial intelligence ("AI"), and related technologies.
(b) Refer to Note 11, " Commitments ," within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for details of our defined benefit plan obligations. Estimated future benefit payments included above are through 2030.
(c) Refer to Note 11, " Commitments ," within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for details of our defined benefit plan obligations. Estimated future benefit payments included above are through 2030.
The process for determining the value of the standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements requires the exercise of significant judgment when evaluating the valuation methods and assumptions, including the assumed royalty rates, projected sales volumes, discount rate, identification of comparable market transactions which are not directly observable and other relevant factors.
The process for determining the value of the standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements requires the exercise of significant judgment when evaluating the valuation methods and assumptions, including the assumed royalties, projected sales volumes, discount rate, identification of comparable market transactions which are not directly observable and other relevant factors.
We must calculate the number of shares of our common stock issuable under the terms of the Convertible Notes based on the average market price of our common stock during the applicable reporting period and include that number in the total diluted shares figure for the period.
We must 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 total diluted shares figure for the period.
There is no liability associated with the revenue-share agreement at December 31, 2023, as there are no minimum or maximum payments under the revenue-sharing arrangement, and, except in certain circumstances, the arrangement continues through December 31, 2038.
There is no liability associated with the revenue-share agreement at December 31, 2024, as there are no minimum or maximum payments under the revenue-sharing arrangement, and, except in certain circumstances, the arrangement continues through December 31, 2038.
Achievement rates can vary by performance cycle and from period to period, resulting in variability in our compensation expense. 38 Table of Contents We account for compensation costs associated with share-based compensation based on the fair value of the instruments issued. The estimated value of stock options includes assumptions around expected life, stock volatility and dividends.
Achievement rates can vary by performance cycle and from period to period, resulting in variability in our compensation expense. We account for compensation costs associated with share-based compensation based on the fair value of the instruments issued. The estimated value of stock options includes assumptions around expected life, stock volatility and dividends.
As a result, in periods where the average market price of our common stock is above the conversion price or strike price, as applicable, under the if-converted method, we calculate 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 include that number in the total diluted shares outstanding for the period. 42 Table of Contents Under the if-converted method, changes in the price per share of our common stock can have a significant impact on the number of shares that we must include in the fully diluted earnings per share calculation.
As a result, in periods where the average market price of our common stock is above the conversion price or strike price, as applicable, under the if-converted method, we calculate the number of shares issuable under the terms of the 2027 Notes and the warrants based on the average market price of the stock during the period, and include that number in the total diluted shares outstanding for the period. 40 Table of Contents Under the if-converted method, changes in the price per share of our common stock can have a significant impact on the number of shares that we must include in the fully diluted earnings per share calculation.
Intellectual Property Rights Enforcement If we believe a party is required to license our patents in order to manufacture, use and/or sell certain products or services and such party refuses to do so, we typically offer such party to have royalty rates, or other terms, set by third party adjudicators (such as arbitrators).
Intellectual Property Rights Enforcement If we believe a party is required to license our patents in order to manufacture, use and/or sell certain products or services and such party refuses to do so, we typically offer such party to have royalties, or other terms, set by third party adjudicators (such as arbitrators).
At the time we issued the Convertible Notes, we entered into the 2027 Call Spread Transactions and 2024 Call Spread Transactions that together were designed to have the economic effect of reducing the net number of shares that will be issued in the event of conversion of the Convertible Notes by, in effect, increasing the conversion price of the Convertible Notes from our economic standpoint.
At the time we issued the 2027 Notes, we entered into the 2027 Call Spread Transactions that together were designed to have the economic effect of reducing the net number of shares that will be issued in the event of conversion of the 2027 Notes by, in effect, increasing the conversion price of the 2027 Notes from our economic standpoint.
We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law. 48 Table of Contents
We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law. 46 Table of Contents
However, under GAAP, since the impact of the 2027 Note Hedge Transactions and 2024 Note Hedge Transactions (together, the "Note Hedge Transactions") is anti-dilutive, we exclude from the calculation of fully diluted shares the number of shares of our common stock that we would receive from the counterparties to these agreements upon settlement.
However, under GAAP, since the impact of the 2027 Note Hedge Transactions is anti-dilutive, we exclude from the calculation of fully diluted shares the number of shares of our common stock that we would receive from the counterparties to these agreements upon settlement.
Subsequently our Board of Directors authorized five $100 million increases to the program, an additional $333 million in December 2022, and an additional $235 million in December 2023, bringing the total amount of the Share Repurchase Program to nearly $1.4 billion. Since 2014, we have repurchased $1.1 billion of shares at an average price of $58.36, adjusted for dividends.
Subsequently our Board of Directors authorized five $100 million increases to the program, an additional $333 million in December 2022, and an additional $235 million in December 2023, bringing the total amount of the Share Repurchase Program to nearly $1.4 billion. Since 2014, we have repurchased $1.1 billion of shares at an average price of $63.27, adjusted for dividends.
The development of a number of these inputs and assumptions requires a significant amount of management judgment and is based upon a number of factors, including identification of comparable market transactions, assumed royalty rates, projected sales volumes, economic lives of the patents and other relevant factors.
The development of a number of these inputs and assumptions requires a significant amount of management judgment and is based upon a number of factors, including identification of comparable market transactions, assumed royalties, projected sales volumes, economic lives of the patents and other relevant factors.
The following section generally discusses our financial condition and results of operations for our fiscal year ended December 31, 2023 compared to our fiscal year ended December 31, 2022.
The following section generally discusses our financial condition and results of operations for our fiscal year ended December 31, 2024 compared to our fiscal year ended December 31, 2023.
As of December 31, 2023, InterDigital's wholly owned subsidiaries held a portfolio of more than 30,000 patents and patent applications related to wireless communications, video coding, display technology, and other areas relevant to communications and entertainment products and services.
As of December 31, 2024, InterDigital's wholly owned subsidiaries held a portfolio of more than 33,000 patents and patent applications related to wireless communications, video coding, display technology, and other areas relevant to communications and entertainment products and services.
If the matter had been resolved as of December 31, 2023, we would have recognized a loss up to $13.8 million based on exchange rates and prior competent authority resolutions.
If the matter had been resolved as of December 31, 2024, we would have recognized a loss up to $22.8 million based on exchange rates and prior competent authority resolutions.
The following table reconciles the timing differences between cash receipts and recognized revenue on a quarterly basis for each of the last three years, including the resulting operating cash flow (in thousands): 2023 Cash vs.
The following table reconciles the timing differences between cash receipts and recognized revenue on a quarterly basis for each of the last two years, including the resulting operating cash flow (in thousands): 2024 Cash vs.
Based on current license agreements, we expect the amortization of dynamic fixed-fee royalty payments to reduce the December 31, 2023 deferred revenue balance by $153.6 million over the next twelve months. 41 Table of Contents Convertible Notes Refer to Note 10, " Obligations " within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for definitions of capitalized terms used below.
Based on current license agreements, we expect the amortization of dynamic fixed-fee royalty payments to reduce the December 31, 2024 deferred revenue balance by $178.0 million over the next twelve months. 39 Table of Contents Convertible Notes Refer to Note 10, " Obligations " within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for definitions of capitalized terms used below.
This amount includes the $199.9 million, excluding fees, expenses and excise tax, repurchased as part of the modified “Dutch auction” tender offer in 2023. As of December 31, 2023, there was $296.3 million remaining under the Share Repurchase Program authorization.
This amount includes the $199.9 million, excluding fees, expenses and excise tax, repurchased as part of the modified “Dutch auction” tender offer in 2023. As of December 31, 2024, there was $229.5 million remaining under the Share Repurchase Program authorization.
The impact that a five-percent change in the estimated aggregate value of the patents acquired would have had on 2023 revenue, patent amortization and pre-tax income is summarized in the following table (in thousands): Change in estimate Estimated value of patents acquired in connection with PLAs +5% -5% Revenue $ 730 $ (730) Less: Patent amortization 841 (841) Pre-tax income $ (111) $ 111 Compensation Programs We use a variety of compensation programs to attract, retain and motivate our employees, and to align employee compensation more closely with company performance.
The impact that a five-percent change in the estimated aggregate value of the patents acquired would have had on 2024 revenue, patent amortization and pre-tax income is summarized in the following table (in thousands): Change in estimate Estimated value of patents acquired in connection with PLAs +5% -5% Revenue $ 732 $ (732) Less: Patent amortization 614 (614) Pre-tax income $ 118 $ (118) Compensation Programs We use a variety of compensation programs to attract, retain and motivate our employees, and to align employee compensation more closely with company performance.
Tax windfalls and shortfalls related to share-based compensation was windfalls of $3.1 million and $0.8 million for the years ended 2023 and 2021, respectively, and shortfalls for the year ended 2022 of $0.4 million.
Tax windfalls and shortfalls related to share-based compensation was windfalls of $4.9 million and $3.1 million for the years ended 2024 and 2023, respectively, and shortfalls for the year ended 2022 of $0.4 million.
During periods in which the average market price of our common stock is above the applicable conversion price of the Convertible Notes ($77.49 per share for the 2027 Notes and $81.29 per share for the 2024 Notes as of December 31, 2023) or above the weighted average strike price of the warrants ($106.35 per share for the 2027 Warrant Transactions and $109.43 per share for the 2024 Warrant Transactions as of December 31, 2023), the impact of conversion or exercise, as applicable, would be dilutive and such dilutive effect is reflected in diluted earnings per share.
During periods in which the average market price of our common stock is above the applicable conversion price of the Convertible Notes ($77.49 per share for the 2027 Notes as of December 31, 2024) or above the weighted average strike price of the warrants ($106.22 per share for the 2027 Warrant Transactions s as of December 31, 2024), the impact of conversion or exercise, as applicable, would be dilutive and such dilutive effect is reflected in diluted earnings per share.
In 2023, 2022, and 2021, we recognized $141.2 million, $53.9 million and $73.7 million, respectively, of catch-up revenues as more fully discussed below. In 2023, fixed-fee royalties accounted for 89% of our recurring revenues. These fixed-fee revenues are not affected by the related licensees’ success in the market or the general economic climate.
In 2024 and 2023, we recognized $460.1 million and $141.2 million, respectively, of catch-up revenues as more fully discussed below. In 2024, fixed-fee royalties accounted for 89% of our recurring revenues. These fixed-fee revenues are not affected by the related licensees’ success in the market or the general economic climate.
As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today's most advanced Wi-Fi technologies.
As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today's most advanced Wi-Fi technologies. We are also a leader in video processing and video encoding/decoding technology used in video-enabled products and services.
Business” and “Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” and other information regarding our current beliefs, plans and expectations, including, without limitation, the matters set forth below.
Such statements include certain information in “Part I, Item 1. Business” and “Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” and other information regarding our current beliefs, plans and expectations, including, without limitation, the matters set forth below.
Income Taxes In 2023, based on the statutory federal tax rate net of discrete federal and state taxes, our effective tax rate is 10.0%, as compared to an effective tax of 21.7% in 2022.
Income Taxes In 2024, based on the statutory federal tax rate net of discrete federal and state taxes, our effective tax rate is 16.5%, as compared to an effective tax of 10.0% in 2023.
Our patented inventions have been implemented in a wide variety of products, including smartphones, other wireless communication devices and infrastructure equipment, such as tablets, and base stations, consumer electronics and Internet of Things ("IoT") products, such as televisions, laptops, gaming consoles, set-top boxes, streaming devices and connected automobiles.
Our patented inventions have been implemented in a wide variety of products, including smartphones, tablets, base stations, televisions, laptops, gaming consoles, set-top boxes, streaming devices, connected automobiles, and other consumer electronics and IoT products.
Refer to the sections below for further discussion of these items. 40 Table of Contents Cash flows from operations We generated the following cash flows from our operating activities in 2023 and 2022 (in thousands): For the Year Ended December 31, 2023 2022 Increase / (Decrease) Cash flows provided by operating activities $ 213,733 $ 286,039 $ (72,306) 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.
Refer to the sections below for further discussion of these items. 38 Table of Contents Cash flows from operations We generated the following cash flows from our operating activities in 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 Increase / (Decrease) Cash flows provided by operating activities $ 271,528 $ 213,733 $ 57,795 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.
As of December 31, 2023, we have recorded long-term debt of $29.0 million related to the Technicolor Patent Acquisition. Additionally, we are subject to a revenue-sharing arrangement with Technicolor resulting from the Technicolor Acquisitions.
As of December 31, 2024, we have a debt obligation of $17.0 million related to the Technicolor Patent Acquisition. Additionally, we are subject to a revenue-sharing arrangement with Technicolor resulting from the Technicolor Acquisitions.
Our wireless portfolio has largely been built through internal development, supplemented by joint development projects with other companies, and select acquisitions of patents and companies.
Our wireless portfolio has largely been built through internal investment in a world-class research team, supplemented by joint development projects with other companies, and select acquisitions of patents and companies.
Changes in any of a number of these assumptions could have had a substantial impact on the relative fair value assigned to each performance obligation for accounting purposes.
Changes in any of a number of these assumptions could have had a substantial impact on the relative fair value assigned to each performance obligation for accounting purposes. These inputs and assumptions represent management's best estimates at the time of the transaction.
Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from these estimates and any such differences may be material to the financial statements.
Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from these estimates and any such differences may be material to the financial statements.
Cash and Short-Term Investments As of December 31, 2023, we had $1.0 billion of cash, restricted cash, and short-term investments and an additional $1.2 billion of cash payments due under contracted fixed price agreements, which includes our conservative estimates of the minimum cash receipts that we expect to receive under the wireless patent license agreement with Samsung. 32 Table of Contents 89% of our recurring revenue comes from fixed-fee royalties.
Cash and Short-Term Investments As of December 31, 2024, we had $982.4 million of cash, restricted cash, and short-term investments and an additional $1.4 billion of cash payments due under contracted fixed price agreements, which includes our conservative estimates of the minimum cash receipts that we expect to receive under the Samsung and Lenovo arbitrations. 89% of our recurring revenue comes from fixed-fee royalties.
Intellectual property enforcement costs will vary depending upon activity levels, and it is likely they will continue to be a significant expense for us in the future.
These costs represented 33% of our total licensing costs of $169.2 million in 2024. Intellectual property enforcement costs will vary depending upon activity levels, and it is likely they will continue to be a significant expense for us in the future.
As a result of recognizing revenues in the period in which the licensees’ sales occur using estimates, adjustments to revenues are required in subsequent periods to reflect changes in estimates as new information becomes available, primarily resulting from actual amounts reported by our licensees.
As a result of recognizing revenues in the period in which the licensees’ sales occur using estimates, adjustments to revenues are required in subsequent periods to reflect changes in estimates as new information becomes available, primarily resulting from actual amounts reported by our licensees. 35 Table of Contents Agreements with Multiple Performance Obligations During 2024, we signed new fixed-fee agreements that had multiple performance obligations.
We caution readers that actual results and outcomes could differ materially from those expressed in or anticipated by such forward-looking statements due to a variety of factors, including those set forth below: • unanticipated delays, difficulties or accelerations in the execution of patent license agreements; • the resolution of current legal proceedings, including any awards or judgments relating to such proceedings, additional or related legal proceedings, including appeals, changes in the schedules or costs associated with such proceedings or adverse rulings; • our ability to leverage our strategic relationships and secure new patent license agreements on acceptable terms; • our ability to enter into sales and/or licensing partnering arrangements for certain of our patent assets; • our ability to expand our revenue opportunities by entering into licensing arrangements with video streaming and other cloud-based service providers; • our ability to enter into partnerships with leading inventors and research organizations and identify and acquire technology and patent portfolios that align with our roadmap; • our ability to commercialize our technologies and enter into customer agreements; • the failure of the markets for our current or new technologies to materialize to the extent or at the rate that we expect; • our continued ability to develop new technologies and secure new patents, including the risk of unexpected delays or difficulties related to the development of our technologies; • risks associated with our capital allocation strategies, including risks associated with our planned dividend payments and share repurchases; • changes in our interpretations of, and assumptions and calculations with respect to the impact on us of, the 2017 Tax Cuts and Jobs Act, as well as further guidance that may be issued regarding such act; • risks related to the potential impact of new accounting standards on our financial position, results of operations or cash flows; • failure to accurately forecast the impact of our restructuring activities on our financial statements and our business; • the timing and impact of potential administrative and legislative matters; • changes or inaccuracies in market projections; • our ability to obtain liquidity through debt and equity financings; • the potential effects that macroeconomic uncertainty could have on our financial position, results of operations and cash flows; • impacts from acts of terrorism, war or political or civil unrest, or any responses thereto, in the United States or elsewhere; • changes in our business strategy; • changes or inaccuracies in our expectations with respect to royalty payments by our customers; and • risks related to our assumptions and application of relevant accounting standards, including with respect to revenue recognition.
We caution readers that actual results and outcomes could differ materially from those expressed in or anticipated by such forward-looking statements due to a variety of factors, including those set forth below: • unanticipated delays, difficulties or accelerations 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 video streaming and other cloud-based service providers; • the resolution of legal proceedings, including any awards or judgments relating to such proceedings, and changes in the schedules or costs associated therewith; • our ability to identify and acquire technology and patent portfolios that align with our roadmap; • our ability to commercialize our technologies; • the failure of the markets for our current or new technologies to materialize to the extent or at the rate that we expect; • our continued ability to develop new technologies and secure new patents, including the risk of unexpected delays or difficulties related to the development of our technologies; • our continued leadership within standards and industry groups and our ability to ensure our inventions become standardized; • risks associated with our capital allocation strategies, including risks associated with our planned dividend payments and share repurchases; • changes in our interpretations of, and assumptions and calculations with respect to the impact on us of, 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; • U.S./China trade and/or national security tensions; • changes or inaccuracies in market projections; • our ability to retain and hire key personnel; • our ability to enter into sales and/or licensing partnering arrangements for certain of our patent assets; • the potential effects that macroeconomic uncertainty could have on our financial position, results of operations and cash flows; • operational risks, including cybersecurity events, external hazards, human failures or other difficulties with our information technology systems that could disrupt our business or result in the loss of critical and confidential information and/or increased costs; • impacts from acts of terrorism, war or political or civil unrest, or any responses thereto, in the United States or elsewhere; • changes in our business strategy; and • risks related to any new accounting standards or our assumptions and application of relevant accounting standards, including with respect to revenue recognition.
The matters are more fully discussed in Note 12, “ Litigation and Legal Proceedings ,” to the Notes to Consolidated Financial Statements included below in Part II, Item 8 of this Form 10-K.
These matters are more fully discussed in Note 12, “ Litigation and Legal Proceedings ,” to the Notes to Consolidated Financial Statements included below in Part II, Item 8 of this Form 10-K. In 2024, our intellectual property enforcement costs increased to $56.2 million, from $48.8 million in 2023.
Since January 2014, we have paid $394.4 million in dividends, bringing our total return of capital over the last ten years to nearly $1.5 billion.
Since January 2014, we have paid $437.5 million in dividends, bringing our total return of capital over this period to nearly $1.6 billion.
The below table summarizes our supplemental compensation expense for 2023, 2022 and 2021, in thousands: 2023 2022 2021 Short-term incentive compensation $ 19,780 $ 24,341 $ 18,820 Time-based awards (a) 26,426 15,422 12,490 Performance-based awards (a) 10,035 8,155 17,933 Total supplemental compensation expense $ 56,241 $ 47,918 $ 49,243 (a) For 2023, 2022 and 2021, approximately 3%, 8%, and 7%, respectively, of the aggregate expense associated with time-based and performance-based awards related to cash awards.
The below table summarizes our supplemental compensation expense for 2024, 2023 and 2022, in thousands: Year Ended December 31, 2024 2023 2022 Short-term incentive compensation $ 27,589 $ 19,780 $ 24,341 Time-based awards (a) 25,499 26,426 15,422 Performance-based awards (a) 20,756 10,035 8,155 Total supplemental compensation expense $ 73,844 $ 56,241 $ 47,918 (a) For 2024, 2023 and 2022, approximately 1%, 3%, and 8%, respectively, of the aggregate expense associated with time-based and performance-based awards related to cash awards.
We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services. We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles and providers of cloud-based services such as video streaming.
We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, internet of things ("IoT") devices, cars and other motor vehicles and providers of cloud-based services such as video streaming.
Non-Operating Income (Expense), Net • In 2023, we recognized $10.4 million of gains resulting from observable price changes of our long-term strategic investments, which was included within “ Other income (expense), net ” in the consolidated statement of income. • In 2023, we recognized a $4.0 million reduction to interest expense due to a change in estimate of our Technicolor Patent Acquisition Long-Term Debt, which was included within “ Interest expense ” in the consolidated statement of income.
Non-Operating Income (Expense), Net • In 2024, we recognized $2.0 million of net gains resulting from observable price changes of our long-term strategic investments, which was included within “ Other income (expense), net ” in the consolidated statement of income.
The Convertible Notes are convertible into cash up to the aggregate principal amount of the Convertible Notes to be converted and any remaining obligation may be settled in cash, shares of the Company’s common stock or a combination thereof.
Under the if-converted method, we must 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 remaining obligation may be settled in cash, shares of the Company’s common stock or a combination thereof.
These inputs and assumptions represent management's best estimates at the time of the transaction. 37 Table of Contents The impact that a five percent change in the aggregate amount allocated to past patent royalties under these agreements would have had on 2023 revenue is summarized in the following table (in thousands): Change in amount allocated Allocation to past patent royalties +5% -%5 Change in Revenue $ 3,887 $ (3,887) Revenue from Non-financial Sources During 2023, 2022 and 2021, approximately 3%, 4% and 5%, respectively, of our total revenue was based on the estimated fair value of patents.
The impact that a five percent change in the aggregate amount allocated to catch-up revenues under these agreements would have had on 2024 revenue is summarized in the following table (in thousands): Change in amount allocated Allocation to catch-up revenues +5% -%5 Change in revenue $ 8,733 $ (8,733) Revenue from Non-financial Sources During 2024, 2023, and 2022, approximately 2%, 3% and 4%, respectively, of our total revenue was based on the estimated fair value of non-financial consideration received, principally patents.
The following table shows the projected amortization of our current and long term deferred revenue as of December 31, 2023 (in thousands): Deferred Revenue 2024 $ 153,597 2025 129,022 2026 78,777 2027 12,450 2028 1,141 Thereafter 2,476 Total $ 377,463 Return of Capital In June 2014, our Board of Directors authorized a $300 million share repurchase program (the “Share Repurchase Program”).
The following table shows the projected amortization of our current and long term deferred revenue as of December 31, 2024 (in thousands): Deferred Revenue 2025 $ 178,009 2026 139,017 2027 39,486 2028 1,141 2029 1,206 Thereafter 1,269 Total $ 360,128 Return of Capital In June 2014, our Board of Directors authorized a $300 million share repurchase program (the “Share Repurchase Program”).
Under our patent license agreements, we typically receive one or a combination of the following forms of payment as consideration for permitting our licensees to use our patented inventions in their applications and products. 36 Table of Contents Consideration for Past Patent Royalties Consideration related to a licensee’s product sales from prior periods may result from a negotiated agreement with a licensee that utilized our patented inventions prior to signing a patent license agreement with us or from the resolution of a disagreement or arbitration with a licensee over the specific terms of an existing license agreement.
Consideration for Past Patent Royalties Consideration related to a licensee’s product sales from prior periods may result from a negotiated agreement with a licensee that utilized our patented inventions prior to signing a patent license agreement with us or from the resolution of a disagreement or arbitration with a licensee over the specific terms of an existing license agreement.
Contract assets due more than twelve months after the balance sheet date are included within other non-current assets. For certain patent license agreements or other contractual arrangements, the amount of consideration that we will receive is uncertain. In such cases, we estimate and recognize licensing revenues only when we have a contract, as defined in the revenue recognition guidance.
Contract assets due more than twelve months after the balance sheet date are included within other non-current assets. 34 Table of Contents For certain patent license agreements or other contractual arrangements, the amount of consideration that we will receive is uncertain.
We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies. InterDigital is one of the largest pure research and development and licensing companies in the world, with one of the most significant patent portfolios of fundamental wireless and video technologies.
Our AI research effort is focused on the intersection of AI with both wireless and video technologies. InterDigital is one of the largest pure research and development and licensing companies in the world, with one of the most significant patent portfolios of fundamental wireless and video technologies.
The table below sets forth the total number of shares repurchased and the dollar value of shares repurchased under the Share Repurchase Program, cash dividends on outstanding common stock declared, and the total capital returned to our shareholders (in thousands): Share Repurchase Program Cash Dividends Declared Total Capital Returned to Shareholders # of Shares Value Per Share Value 2023 4,411 $ 339,704 $ 1.50 $ 39,296 $ 379,000 2022 1,224 74,445 1.40 41,949 116,394 2021 458 30,000 1.40 43,041 73,041 2020 6 349 1.40 43,111 43,460 2019 2,962 196,269 1.40 43,718 239,987 2018 1,478 110,505 1.40 47,922 158,427 2017 107 7,693 1.30 45,122 52,815 2016 1,304 64,685 1.00 34,359 99,044 2015 1,836 96,410 0.80 28,726 125,136 2014 3,554 152,625 0.70 27,153 179,778 Total 17,340 $ 1,072,685 $ 12.30 $ 394,397 $ 1,467,082 Restructuring Activities On June 10, 2021, we announced that, as a result of a strategic review of our research and innovation priorities, we commenced the process of a collective economic layoff in which we proposed a reduction in force of our research and innovation unit.
The table below sets forth the total number of shares repurchased and the dollar value of shares repurchased under the Share Repurchase Program, cash dividends on outstanding common stock declared, and the total capital returned to our shareholders (in thousands): Share Repurchase Program Cash Dividends Declared Total Capital Returned to Shareholders # of Shares Value Per Share Value 2024 644 $ 66,726 $ 1.70 $ 43,130 $ 109,856 2023 4,411 339,704 1.50 39,296 379,000 2022 1,224 74,445 1.40 41,949 116,394 2021 458 30,000 1.40 43,041 73,041 2020 6 349 1.40 43,111 43,460 2019 2,962 196,269 1.40 43,718 239,987 2018 1,478 110,505 1.40 47,922 158,427 2017 107 7,693 1.30 45,122 52,815 2016 1,304 64,685 1.00 34,359 99,044 2015 1,836 96,410 0.80 28,726 125,136 2014 3,554 152,625 0.70 27,153 179,778 Total 17,984 $ 1,139,411 $ 14.00 $ 437,527 $ 1,576,938 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 inflation, supply chain issues, high interest rates, labor shortages, and the potential for a recession.
The agreement licenses Samsung’s digital TVs and computer display monitors under InterDigital's joint licensing program with Sony and includes licenses to key technologies including ATSC 3.0, as well as licenses under InterDigital’s patents including HEVC, VVC and Wi-Fi. No revenues or revenue share costs associated with this patent license agreement were recognized in 2023.
The agreement licenses Samsung’s digital TVs and computer display monitors under InterDigital's joint licensing program with Sony and includes licenses to key technologies including ATSC 3.0, as well as licenses under InterDigital’s patents including HEVC, VVC and Wi-Fi. In June 2024, we signed a new device license agreement with Google.
(b) Income taxes paid include foreign withholding taxes. Cash provided by or used in investing and financing activities Net cash used in investing activities in 2023 was $85.2 million, a $229.5 million change from $314.7 million in 2022.
Amount includes revenue share costs of $81.3 million and $3.3 million in 2024 and 2023, respectively. (b) Income taxes paid include foreign withholding taxes. Cash provided by or used in investing and financing activities Net cash provided by investing activities in 2024 was $109.5 million, a $194.6 million change from $85.2 million net cash used in investing activities in 2023.
Non-cash revenue: Q1 Q2 Q3 Q4 Total Fixed fee cash receipts (a) $ 24,669 $ 9,406 $ 368,608 $ 30,185 $ 432,868 Other cash receipts (b) 19,972 11,160 3,684 18,649 53,465 Decrease (increase) in deferred revenue 42,766 38,641 (77,474) 45,243 49,176 Increase (decrease) in receivables 90,856 92,756 (167,222) 47,720 64,110 Other 24,110 (50,372) 12,510 (36,279) (50,031) Total Revenue $ 202,373 $ 101,591 $ 140,106 $ 105,518 $ 549,588 Net cash (used in) provided by operating activities $ (27,852) $ (45,440) $ 310,610 $ (23,585) $ 213,733 2022 Cash vs.
Non-cash revenue: Q1 Q2 Q3 Q4 Total Fixed fee cash receipts (a) $ 26,953 $ 9,406 $ 368,608 $ 30,185 $ 435,152 Other cash receipts (b) 22,017 11,087 3,956 19,792 56,852 Decrease (increase) in deferred revenue 42,766 38,641 (77,474) 45,243 49,176 Increase (decrease) in receivables 90,856 92,756 (167,222) 47,720 64,110 Other 19,781 (50,299) 12,238 (37,422) (55,702) Total Revenue $ 202,373 $ 101,591 $ 140,106 $ 105,518 $ 549,588 Net cash (used in) provided by operating activities $ (27,852) $ (45,440) $ 310,610 $ (23,585) $ 213,733 (a) Fixed fee cash receipts are comprised of cash receipts from Dynamic Fixed-Fee Agreement royalties, including the associated catch-up revenues.
The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with the taxing authorities.
Our consolidated balance sheet as of December 31, 2024 includes a $13.8 million non-current liability for uncertain tax positions. The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with the taxing authorities.
In addition, our patented inventions have been implemented in a wide variety of services, such as video streaming and other cloud-based services. Revenue In 2023, 2022, and 2021, our total revenues were $549.6 million, $457.8 million, and $425.4 million, respectively. Our recurring revenues in 2023, 2022 and 2021 were $408.4 million, $403.9 million, and $351.7 million, respectively.
Our patented inventions have also been implemented in a wide variety of services, such as video streaming, user generated content sharing, video conferencing, video gaming, and other cloud-based services. Revenue In 2024 and 2023, our total revenues were $868.5 million and $549.6 million, respectively. Our recurring revenues were $408.4 million in both 2024 and 2023.
During 2023, we purchased $38.7 million of short-term marketable securities, net of sales, and capitalized $44.6 million of patent costs and property and equipment purchases. During 2022, we purchased $272.0 million of short-term marketable securities, net of sales, and capitalized $42.8 million of patent costs and property and equipment purchases.
During 2023, we purchased $38.7 million of short-term marketable securities, net of sales, and capitalized $44.6 million of patent costs and property and equipment purchases. Net cash used in financing activities for 2024 was $272.4 million, a $116.4 million change from net cash used in financing activities of $388.8 million in 2023.
This change was primarily attributable to a $265.3 million increase in share repurchases in 2023 compared to 2022, of which $203.4 million was related to the Company's modified "Dutch auction" tender offer in 2023. The change was also due to net proceeds of $138.9 million from the debt refinancing in 2022.
This change was primarily attributable to a $273.0 million decrease in share repurchases in 2024 compared to 2023, of which $203.4 million was related to the Company's modified "Dutch auction" tender offer in 2023.
Such estimates are only recognized to the extent it is probable that a significant reversal of cumulative revenues recognized will not occur.
In such cases, we estimate and recognize licensing revenues only when we have a contract, as defined in the revenue recognition guidance. Such estimates are only recognized to the extent it is probable that a significant reversal of cumulative revenues recognized will not occur.
Refer to Note 10, “Obligations,” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for details of our 2024 Notes and 2027 Notes.
Refer to Note 10, “ Obligations ,” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for details of our 2027 Notes. (b) Purchase obligations consist of agreements to purchase goods and services that are legally binding on us, as well as accounts payable.
Licensing expense: The $8.0 million increase in licensing expense primarily resulted from the above-noted litigation fee reimbursement, increases in share-based compensation, and fair value changes of our deferred compensation liability, partially offset by the decrease in intellectual property enforcement costs.
Licensing expense: The $89.8 million increase in licensing expense primarily resulted from the above-noted increases in revenue share, intellectual property enforcement, and performance-based compensation costs, partially offset by the net litigation fee reimbursement activity. General and administrative expense: The $9.6 million increase in general and administrative expense was primarily driven by the above-noted increase in performance-based compensation.
Cash, cash equivalents, restricted cash, and short-term investments As of December 31, 2023 and December 31, 2022, we had the following amounts of cash, cash equivalents, restricted cash, and short-term investments (in thousands): December 31, 2023 December 31, 2022 Increase / (Decrease) Cash and cash equivalents $ 437,076 $ 693,479 $ (256,403) Restricted cash included within prepaid and other current assets 5,885 9,682 (3,797) Short-term investments 569,280 508,298 60,982 Total cash, cash equivalents, restricted cash, and short-term investments $ 1,012,241 $ 1,211,459 $ (199,218) The net decrease in cash, cash equivalents, restricted cash, and short-term investments was attributable to cash used in financing activities of $388.8 million and cash used in investing activities of $46.5 million, excluding sales and purchases of short-term investments, partially offset by cash provided by operating activities of $213.7 million.
Cash, cash equivalents, restricted cash, and short-term investments As of December 31, 2024 and 2023, we had the following amounts of cash, cash equivalents, restricted cash, and short-term investments (in thousands): December 31, 2024 December 31, 2023 Increase / (Decrease) Cash and cash equivalents $ 527,360 $ 437,076 $ 90,284 Restricted cash included within prepaid and other current assets 24,187 5,885 18,302 Short-term investments 430,848 569,280 (138,432) Total cash, cash equivalents, restricted cash, and short-term investments $ 982,395 $ 1,012,241 $ (29,846) The net decrease in cash, cash equivalents, restricted cash, and short-term investments was attributable to cash used in financing activities of $272.4 million and cash used in investing activities of $47.2 million, excluding sales and purchases of short-term investments, partially offset by cash provided by operating activities of $271.5 million.
In 2023 and 2022, the following licensees or customers accounted for 10% or more of our total revenues: For the Year Ended December 31, 2023 2022 Customer A 27% —% Customer B 24% 30% Customer C 14% 17% Customer D 11% 13% 45 Operating Expenses The following table summarizes the change in operating expenses by category (in thousands): For the Year Ended December 31, 2023 2022 Increase/(Decrease) Research and portfolio development $ 195,285 $ 185,202 $ 10,083 5 % Licensing 79,397 71,419 7,978 11 % General and administrative 53,291 47,377 5,914 12 % Restructuring activities — 3,280 (3,280) (100) % Total operating expenses $ 327,973 $ 307,278 $ 20,695 7 % Operating expenses increased 7% to $328.0 million in 2023 from $307.3 million in 2022.
In 2024 and 2023, the following licensees or customers accounted for 10% or more of our total revenues: Year Ended December 31, 2024 2023 Customer A 30% 14% Customer B 20% 27% Customer C 15% 24% Customer D 14% —% Customer E 11% 43 Table of Contents Operating Expenses The following table summarizes the change in operating expenses by category (in thousands): Year Ended December 31, 2024 2023 Increase/(Decrease) Research and portfolio development $ 196,903 $ 195,285 $ 1,618 1 % Licensing 169,239 79,397 89,842 113 % General and administrative 62,862 53,291 9,571 18 % Total operating expenses $ 429,004 $ 327,973 $ 101,031 31 % Operating expenses increased 31% to $429.0 million in 2024 from $328.0 million in 2023.
Due to the uncertainty regarding the timing and amount of future payments related to these items, the amounts are excluded from the contractual obligations table above. 44 Table of Contents RESULTS OF OPERATIONS 2023 Compared with 2022 Revenues The following table compares 2023 revenues to 2022 revenues (in thousands): For the Year Ended December 31, 2023 2022 Total Increase/(Decrease) Recurring revenues: Smartphone $ 347,124 $ 351,064 $ (3,940) (1) % CE, IoT/Auto 59,858 51,717 8,141 16 % Other 1,410 1,107 303 27 % Total recurring revenues 408,392 403,888 4,504 1 % Catch-up revenues a 141,196 53,906 87,290 162 % Total revenues $ 549,588 $ 457,794 $ 91,794 20 % (a) Catch-up revenues are comprised of past patent royalties and revenues from static fixed-fee agreements.
Due to the uncertainty regarding the timing and amount of future payments related to these items, the amounts are excluded from the contractual obligations table above. 42 Table of Contents RESULTS OF OPERATIONS 2024 Compared with 2023 Revenues The following table compares 2024 revenues to 2023 revenues (in thousands): Year Ended December 31, 2024 2023 Increase/(Decrease) Recurring revenues: Smartphone $ 316,899 $ 347,124 $ (30,225) (9) % CE, IoT/Auto 89,252 59,858 29,394 49 % Other 2,296 1,410 886 63 % Total recurring revenues 408,447 408,392 55 — % Catch-up revenues (a) 460,069 141,196 318,873 226 % Total revenues $ 868,516 $ 549,588 $ 318,928 58 % (a) Catch-up revenues are comprised of past patent royalties and revenues from static fixed-fee agreements.
Such legal actions ultimately may be decided by the presiding court, third party adjudicator, or a negotiated resolution between the parties. In 2019, we were engaged in litigation with ZTE, Huawei, and Lenovo. During 2020, we filed patent infringement actions against Xiaomi.
Such legal actions ultimately may be decided by the presiding court, third party adjudicator, or a negotiated resolution between the parties. 31 Table of Contents We initiated litigation against Lenovo and OPPO to enforce our intellectual patent rights in 2019 and 2021, respectively.
Our long-term incentives, including equity awards, typically include annual equity or cash award grants with three to five year vesting periods; as a result, in any one year, we are typically accounting for at least three active cycles.
Our long-term incentives, including equity awards, typically include annual equity or cash award grants with three to five year vesting periods; as a result, in any one year, we are typically accounting for at least three active cycles. 36 Table of Contents The aggregate amount of performance compensation expense we record in a period, under both short-term and long-term incentive compensation programs, requires the input of subjective assumptions and is a function of our estimated progress toward performance goals at both the beginning and the end of the period.
The table below sets forth the significant items comprising our cash flows provided by operating activities during the years ended December 31, 2023 and 2022 (in thousands): For the Year Ended December 31, 2023 2022 Increase / (Decrease) Total Cash Receipts $ 486,333 $ 509,825 $ (23,492) Cash Outflows: Cash operating expenses (a) (211,525) (204,153) (7,372) Income taxes paid (b) (59,202) (6,805) (52,397) Total cash outflows (270,727) (210,958) (59,769) Other working capital adjustments (1,873) (12,828) 10,955 Cash flows provided by operating activities $ 213,733 $ 286,039 $ (72,306) (a) Cash operating expenses include operating expenses less depreciation of fixed assets, amortization of patents, and non-cash compensation.
The table below sets forth the significant items comprising our cash flows provided by operating activities during the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 Increase / (Decrease) Total Cash Receipts $ 673,910 $ 492,004 $ 181,906 Cash Outflows: Cash operating expenses (a) (313,125) (211,525) (101,600) Income taxes paid (b) (67,541) (59,202) (8,339) Total cash outflows (380,666) (270,727) (109,939) Other working capital adjustments (21,716) (7,544) (14,172) Cash flows provided by operating activities $ 271,528 $ 213,733 $ 57,795 (a) Cash operating expenses include operating expenses less depreciation of fixed assets, amortization of patents, and non-cash compensation.
Seven of our revenue generating patent license agreements were scheduled to expire during 2024, of which two agreements were renewed during 2023. Collectively, the five expiring agreements not yet renewed accounted for $17.6 million, or approximately 4%, of recurring revenues in 2023.
Seven of our revenue generating patent license agreements are scheduled to expire at the end of 2025, including the Samsung TV agreement and the agreement with Xiaomi. Collectively, these expiring agreements not yet renewed accounted for $91.8 million, or approximately 22%, of recurring revenues in 2024.
These market factors, as well as the impacts of the COVID-19 pandemic and the Ukraine-Russia and Israel-Hamas 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.
These market factors, as well as the impacts of the Ukraine-Russia and Middle East conflicts, have not had a material impact on our business to date.
The $72.3 million change in net cash provided by operating activities was driven by higher cash outflows related to tax payments made in 2023 and an increase in cash operating expenses. Cash receipts decreased largely due to timing of cash receipts under existing agreements.
The $57.8 million change in net cash provided by operating activities was driven by higher cash receipts from new agreements and due to timing of cash receipts under existing agreements. This increase was partially offset by an increase in cash operating expenses primarily due to increased revenue share costs from new patent license agreements.
In the event that the IRS or another taxing jurisdiction levies an assessment in the future, it is possible the assessment could have a material adverse effect on our consolidated financial condition or results of operations. 39 Table of Contents Between 2014 and 2023, we paid approximately $138.1 million in foreign taxes to foreign governments that have tax treaties with the U.S., for which we have claimed foreign tax credits against our U.S. tax obligations, and for which the tax treaty procedures are still open.
Between 2014 and 2024, we paid approximately $141.9 million in foreign taxes to foreign governments that have tax treaties with the U.S., for which we have claimed foreign tax credits against our U.S. tax obligations, and for which the tax treaty procedures are still open.
The financial statement recognition of the benefit for an uncertain tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable tax authority.
In the event that the IRS or another taxing jurisdiction levies an assessment in the future, it is possible the assessment could have a material adverse effect on our consolidated financial condition or results of operations. 37 Table of Contents The financial statement recognition of the benefit for an uncertain tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable tax authority.
In 2023 and 2022, 76% and 60% of our total revenues were attributable to companies that individually accounted for 10% or more of our total revenues, respectively.
Recurring revenues were relatively flat compared to 2023 with increased CE, IoT/Auto revenue mostly offsetting the 2023 expiration of Huawei and other smartphone agreements. In 2024 and 2023, 79% and 76% of our total revenues were attributable to companies that individually accounted for 10% or more of our total revenues, respectively.
Income Tax Provision • In 2023, we recognized a $11.7 million tax benefit resulting from the release of a valuation allowance from certain foreign jurisdictions and interest due on a federal refund. 35 Table of Contents Critical Accounting Policies and Estimates Our consolidated financial statements are based on the selection and application of GAAP, which require us to make estimates and assumptions that affect the amounts reported in both our consolidated financial statements and the accompanying notes.
Critical Accounting Policies and Estimates Our consolidated financial statements are based on the selection and application of GAAP, which require us to make estimates and assumptions that affect the amounts reported in both our consolidated financial statements and the accompanying notes. Future events and their effects cannot be determined with absolute certainty.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn connection with the offerings of the 2024 and 2027 Notes, we entered into convertible note hedge transactions with option counterparties. We also sold warrants to the option counterparties. These transactions have been accounted for as an adjustment to our shareholders' equity.
Biggest changeIn connection with the offering of the 2027 Notes, we entered into convertible note hedge transactions with option counterparties. We also sold warrants to the option counterparties. These transactions have been accounted for as an adjustment to our shareholders' equity. The convertible note hedge transactions are expected to reduce the potential equity dilution upon conversion of the 2027 Notes.
The following table provides information about our interest-bearing securities that are sensitive to changes in interest rates as of December 31, 2023. The table presents principal cash flows, weighted-average yield at cost and contractual maturity dates. Additionally, we have assumed that these securities are similar enough within the specified categories to aggregate these securities for presentation purposes.
The following table provides information about our interest-bearing securities that are sensitive to changes in interest rates as of December 31, 2024. The table presents principal cash flows, weighted-average yield at cost and contractual maturity dates. Additionally, we have assumed that these securities are similar enough within the specified categories to aggregate these securities for presentation purposes.
The warrants along with any shares issuable upon conversion of the 2024 and 2027 Notes will have a dilutive effect on our earnings per share to the extent that the average market price of our common stock for a given reporting period exceeds the applicable strike price or conversion price of the warrants or convertible 2024 and 2027 Notes. 50 Table of Contents
The warrants along with any shares issuable upon conversion of the 2027 Notes will have a dilutive effect on our earnings per share to the extent that the average market price of our common stock for a given reporting period exceeds the applicable strike price or conversion price of the warrants or convertible 2027 Notes. 48 Table of Contents
If the matter had been resolved as of December 31, 2023, we would have recognized a loss up to $13.8 million based on exchange rates and prior competent authority resolutions. 49 Table of Contents Investment Risk — We are exposed to market risk as it relates to changes in the market value of our short-term and long-term investments in addition to the liquidity and creditworthiness of the underlying issuers of our investments.
If the matter had been resolved as of December 31, 2024, we would have recognized a loss up to $22.8 million based on exchange rates and prior competent authority resolutions. 47 Table of Contents Investment Risk — We are exposed to market risk as it relates to changes in the market value of our short-term and long-term investments in addition to the liquidity and creditworthiness of the underlying issuers of our investments.
Our marketable securities, consisting of government obligations, corporate bonds and commercial paper, are primarily classified as available-for-sale with a fair value of $581.5 million as of December 31, 2023. Equity Risk — We are exposed to changes in the market-traded price of our common stock as it influences the calculation of earnings per share.
Our marketable securities, consisting of government obligations, corporate bonds and commercial paper, are primarily classified as available-for-sale with a fair value of $446.7 million as of December 31, 2024. Equity Risk — We are exposed to changes in the market-traded price of our common stock as it influences the calculation of earnings per share.
Bank Liquidity Risk — As of December 31, 2023, we had approximately $430.7 million in operating accounts that are held with domestic and international financial institutions. The majority of these balances are held with domestic financial institutions.
Bank Liquidity Risk — As of December 31, 2024, we had approximately $535.7 million in operating accounts that are held with domestic and international financial institutions. The majority of these balances are held with domestic financial institutions.
Between 2014 and 2023, we paid approximately $138.1 million in foreign taxes to foreign governments that have tax treaties with the U.S., for which we have claimed foreign tax credits against our U.S. tax obligations, and for which the tax treaty procedures are still open.
Between 2014 and 2024, we paid approximately $141.9 million in foreign taxes to foreign governments that have tax treaties with the U.S., for which we have claimed foreign tax credits against our U.S. tax obligations, and for which the tax treaty procedures are still open.
Interest Rate Risk — We invest our cash in a number of diversified high quality investment-grade fixed and floating rate securities with a fair value of $1.0 billion as of December 31, 2023. Our exposure to interest rate risks is not significant due to the short average maturity, quality and diversification of our holdings.
Interest Rate Risk — We invest our cash in a number of diversified high quality investment-grade fixed and floating rate securities with a fair value of $982.4 million as of December 31, 2024. Our exposure to interest rate risks is not significant due to the short average maturity, quality and diversification of our holdings.
Interest Rate Sensitivity Principal Amount by Expected Maturity Average Interest Rates (in thousands) 2024 2025 2026 2027 2028 Thereafter Total Money market and demand accounts $430,707 — — — — — $430,707 Short-term investments $489,752 $39,133 $52,649 — — — $581,535 Average interest rate 5.1 % 4.7 % 4.6 % — % — % — % 5.0 % Cash and cash equivalents and available-for-sale securities are recorded at fair value.
Interest Rate Sensitivity Principal Amount by Expected Maturity Average Interest Rates (in thousands) 2025 2026 2027 2028 2029 Thereafter Total Money market and demand accounts $535,745 — — — — — $535,745 Short-term investments $323,784 $86,499 $36,367 — — — $446,650 Average interest rate 4.3 % 4.5 % 4.4 % — % — % — % 4.4 % Cash and cash equivalents and available-for-sale securities are recorded at fair value.
Removed
The convertible note hedge transactions are expected to reduce the potential equity dilution upon conversion of the 2024 and 2027 Notes.

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