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

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Paragraph-level year-over-year comparison of Adeia 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.

+199 added−212 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-23)

Top changes in Adeia Inc.'s 2024 10-K

199 paragraphs added · 212 removed · 165 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur innovative solutions touch practically every aspect of consumers' day-to-day interaction with media, consumer electronics and entertainment, enabling our customers to build customized, next-generation solutions for users around the globe. Our commitment to innovation has resulted in a leading intellectual property (“IP”) licensing platform in these industries, with a diverse portfolio of media and semiconductor IP.
Biggest changeWe have spent decades investing in advanced research and development to create market-leading technologies for the entertainment, media, consumer electronics, and semiconductor industries. Our innovative solutions support practically every aspect of consumers’ day-to-day interaction with media, consumer electronics and entertainment, enabling our customers to build customized, next-generation solutions for users around the globe.
In order to serve an increasingly connected world, we invent, develop, acquire and license fundamental innovations that enhance billions of devices and shape the way millions of people explore and experience entertainment across a variety of platforms. Ideas are at the heart of our business and are embedded in our name, which means “to license” in Greek.
In order to serve an increasingly connected world, we invent, develop, acquire and license fundamental innovations that enhance billions of devices and shape the way millions of people explore and experience entertainment and technology across a variety of platforms. Ideas are at the heart of our business and are embedded in our name, which means “to license” in Greek.
Customers have typically paid us fixed fees for specified periods of time and include several of the leading social media companies. 6 • Semiconductors: includes providers of memory, logic, sensors, and radio frequency (“RF”) devices commonly used in electronic products such as mobile phones, laptops, PCs, game consoles and servers.
Customers have typically paid us fixed fees for specified periods of time and include several of the leading social media companies. • Semiconductors: includes providers of memory, logic, sensors, and radio frequency (“RF”) devices commonly used in electronic products such as mobile phones, laptops, PCs, game consoles and servers.
For further details, refer to “Note 9 – Discontinued Operations ”, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. 4 Our Strategy We have adopted a proactive strategy designed to protect and extend our technology and IP.
For further details, refer to “Note 9 – Discontinued Operations ”, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. Our Strategy We have adopted a proactive strategy designed to protect and extend our technology and IP.
Customers have typically paid us fixed fees for specified periods of time and include some of the leading media companies and services including DAZN, Google (including YouTube), Starz and Peacock. • Consumer Electronics (“CE”) Manufacturers: includes producers of content access points such as smart televisions, streaming media devices, video game consoles, mobile devices, content storage devices and other connected media devices.
Customers have typically paid us fixed fees for specified periods of time and include some of the leading media companies and services including Amazon (including Amazon Prime), DAZN, Google (including YouTube), Starz and Peacock. • Consumer Electronics (“CE”) Manufacturers: includes producers of content access points such as smart televisions, streaming media devices, video game consoles, mobile devices, content storage devices and other connected media devices.
We continue to grow our patent portfolios in size and relevance through ongoing investment in internal innovation, strategic management and targeted acquisitions within our target markets. We conduct our business primarily by licensing our innovations to leading companies in the broader media and semiconductor industries and companies adopting new technologies that will help drive these industries forward.
We continue to grow our patent portfolios in size and relevance through ongoing investment in internal innovation, strategic management and targeted acquisitions within our expanding addressable markets. We conduct our business primarily by licensing our innovations to leading companies in the broader media and semiconductor industries and companies adopting new technologies that will help drive these industries forward.
As of December 31, 2023, we had a talent base consisting of approximately 130 full-time employees, with substantially all of our employees located in the U.S. To enable our talent to actively contribute to, and have a positive impact on, our overall business and culture, we develop and maintain a set of programs and initiatives.
As of December 31, 2024, we had a talent base consisting of approximately 150 full-time employees, with substantially all of our employees located in the U.S. To enable our talent to actively contribute to, and have a positive impact on, our overall business and culture, we develop and maintain a set of programs and initiatives.
We have a long history of innovation across a diverse set of applications and technologies and have grown an IP portfolio of approximately 10,950 media and semiconductor patent assets, which are specifically designed to meet the evolving needs of businesses and consumers.
We have a long history of innovation across a diverse set of applications and technologies and have grown an IP portfolio of approximately 12,250 media and semiconductor patent assets, which are specifically designed to meet the evolving needs of businesses and consumers.
Select customers include Panasonic, Roku, Samsung and TCL. • Social Media Companies: includes social media companies that allow users to stream and upload user-generated content, often leveraging a variety of computer vision technologies.
Select customers include LG, Panasonic, Roku, Samsung, Sharp, TCL, and Vizio. 6 • Social Media Companies: includes social media companies that allow users to stream and upload user-generated content, often leveraging a variety of computer vision technologies.
The last of our currently issued patents are set to expire in 2042. From time to time, we acquire complementary IP portfolios.
The last of our currently issued patents are set to expire in May 2044. From time to time, we acquire complementary IP portfolios.
On October 1, 2022, Xperi Hold Co’s product business was separated from Xperi Hold Co through a tax-efficient spin-off transaction (the “Separation”) and became an independent, publicly-traded company named Xperi Inc. The IP licensing business was retained by Xperi Hold Co, which was renamed Adeia Inc.
On October 1, 2022, Xperi Hold Co’s product business was separated from Xperi Hold Co through a tax-efficient spin-off transaction (the “Separation”) and became an independent, publicly-traded company named Xperi Inc.
Following the Separation, Xperi Inc. became an independent, publicly-traded company, and we retain no ownership interest in Xperi Inc. Xperi Inc.’s historical financial results for periods prior to the Separation are reflected in our consolidated financial statements as discontinued operations for the periods presented.
The IP licensing business was retained by Xperi Hold Co, which was renamed Adeia Inc. 4 Following the Separation, Xperi Inc. became an independent, publicly-traded company, and we retain no ownership interest in Xperi Inc. Xperi Inc.’s historical financial results for periods prior to the Separation are reflected in our consolidated financial statements as discontinued operations for the periods presented.
While we are at a comparatively earlier stage of licensing the key providers in this market, we are confident that the fundamental innovations from our patent portfolios will be similarly relevant to these new and widely-adopted OTT video services. • Accelerate the Semiconductor licensing business: With the rising cost and complexity of developing cutting-edge semiconductor manufacturing processes, the industry is increasingly looking beyond Moore’s Law towards advanced packaging and 3D integration technologies.
Amazon is a top five provider of OTT services and we believe represents a significant proof point that our fundamental innovations from our patent portfolios are similarly relevant to these new and widely-adopted OTT video services. • Accelerate the Semiconductor licensing business: With the rising cost and complexity of developing cutting-edge semiconductor manufacturing processes, the industry is increasingly looking beyond Moore’s Law towards advanced packaging and 3D integration technologies.
We protect our innovations and inventions through a variety of means, including applying for patent protection domestically and internationally. As of December 31, 2023, we held approximately 10,950 patent and patent applications worldwide, including approximately 4,800 United States issued patents and 1,600 patent applications, as well as approximately 3,500 foreign issued patents and 1,050 patent applications.
We protect our innovations and inventions through a variety of means, including applying for patent protection domestically and internationally. As of December 31, 2024, we held approximately 12,250 patent and patent applications worldwide, including approximately 5,400 United States issued patents and 1,870 patent applications, as well as approximately 3,725 foreign issued patents and 1,250 patent applications.
Adeia and the Adeia logo are trademarks or registered trademarks of Adeia Inc. or its affiliated companies in the U.S. All other company, brand and product names may be trademarks or registered trademarks of their respective companies.
Adeia and the Adeia logo are trademarks or registered trademarks of Adeia Inc. or its affiliated companies in the U.S. All other company, brand and product names may be trademarks or registered trademarks of their respective companies. Overview We (the “Company,” “Adeia,” “we,” “our,” and “us”) are a technology company and an innovation incubator.
While these services have significantly lower ARPUs as compared to traditional Pay-TV, the scale of the overall OTT video market continues to grow and presents an increasingly important licensing opportunity for our business.
While these services have significantly lower ARPUs as compared to traditional Pay-TV, the scale of the overall OTT video market continues to grow and presents an increasingly important licensing opportunity for our business. In December of 2024 we announced that Amazon signed a multi-year license agreement for access to our media portfolio.
We believe the continued growth of video consumption, the evolution of how consumers explore and experience video, and the need for content storage and high-performance computing present new opportunities for us to continue to develop patentable innovations, expand the industries we serve and license additional patent rights. 5 Semiconductor Strategy Our semiconductor business invents, develops, and licenses the fundamental technologies that enable the current and next generation devices that we use to watch and enjoy entertainment.
We believe the continued growth of video consumption, the evolution of how consumers explore and experience video, and the need for content storage and high-performance computing present new opportunities for us to continue to develop patentable innovations, expand the industries we serve and license additional patent rights.
Some of these new markets include companies that provide advertising technology, automotive, e-commerce, gaming, and music streaming products and services. • Expansion of MVPD licensing internationally: We continue to license MVPDs internationally and have already successfully licensed several leading providers. Licensing unlicensed international MVPD providers presents a significant opportunity for expanding our business.
We have begun to see traction in these adjacent markets and announced a new e-commerce deal with a leading luxury retailer in November of 2024. • Expansion of MVPD licensing internationally: We continue to license MVPDs internationally and have already successfully licensed several leading providers. Licensing unlicensed international MVPD providers presents a significant opportunity for expanding our business.
Our patented innovations broadly cover all aspects of the entertainment experience, including (i) guidance, (ii) discovery, (iii) search, (iv) recommendations, (v) multi-screen, (vi) personalization, (vii) data analytics, (viii) advertising, (ix) computer vision, (x) content storage and (xi) high-performance computing.
Our patented innovations broadly cover all aspects of the entertainment experience, including (i) guidance, (ii) discovery, (iii) search, (iv) recommendations, (v) multi-screen, (vi) personalization, (vii) data analytics, (viii) advertising, (ix) computer vision, (x) content storage and (xi) high-performance computing. 5 We license our patented media innovations for use with traditional linear television, both in North America and internationally, as well as in connection with OTT and social media services that provide access to entertainment inside and outside the home on a broad array of devices.
Licensing these ideas is how we go to market – by making our ideas broadly available to the media and semiconductor industries. Our innovations address one of the biggest consumer trends in entertainment today – the massive proliferation of entertainment content and the rapidly changing habits of how consumers are finding, watching and enjoying entertainment.
Our innovations address one of the biggest consumer trends in entertainment today – the massive proliferation of entertainment content and the rapidly changing habits of how consumers are finding, engaging with and enjoying entertainment and evolving technology, such as AI.
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Overview We (the “Company,” “Adeia,” “we,” “our,” and “us”) are an innovation incubator and have spent decades investing in advanced research and development to create market-leading technologies for the entertainment, media, consumer electronics, and semiconductor industries.
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Our commitment to and investment in innovation has resulted in a leading intellectual property (“IP”) licensing platform in these industries, with a diverse portfolio of media and semiconductor IP.
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We license our patented media innovations for use with traditional linear television, both in North America and internationally, as well as in connection with OTT and social media services that provide access to entertainment inside and outside the home on a broad array of devices.
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Licensing these ideas is how we go to market – by making our ideas broadly available to the media and semiconductor industries.
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Semiconductor Strategy Our semiconductor business invents, develops, and licenses the fundamental technologies that enable the current and next generation devices that we use to watch and enjoy entertainment.
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Some of these new markets include companies that provide advertising technology, automotive, e-commerce, gaming, and music streaming products and services.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we seek to focus our operations in areas where we see the potential for growth and to divest assets where we see more limited opportunities, dispositions we decide to undertake may involve risks, and the anticipated benefits of such actions may not be realized. • The structure and timing of our IP license agreements may cause fluctuations in our quarterly or annual financial results. • Some of our IP license agreements may convert to fully paid-up licenses at the expiration of their terms, or upon the occurrence of certain events, and in such event, we will not receive fees thereafter. • The long-term success of our business is partially dependent on a royalty-based business model, which is inherently risky. • A portion of our revenue and cash flow is dependent upon our customers’ sales and other factors that are beyond our control or are difficult to forecast. 9 Risks Related to Financial Matters • We have significant indebtedness which could adversely affect our financial position. • Our variable rate indebtedness may expose us to interest rate risk, which could cause our debt costs to increase significantly. • We may not be able to generate sufficient cash to service our debt obligations. • Repayment of debt is dependent on cash flow generated by our subsidiaries. • Changes in, or interpretations of, tax rules and regulations, could adversely affect our effective tax rates and negatively affect our business and financial condition. • Our ability to use net operating losses to offset future taxable income may be subject to limitations.
Biggest changeAlthough we seek to focus our operations in areas where we see the potential for growth and to divest assets where we see more limited opportunities, dispositions we decide to undertake may involve risks, and the anticipated benefits of such actions may not be realized. • The structure and timing of our IP license agreements may cause fluctuations in our quarterly or annual financial results. • Some of our IP license agreements may convert to fully paid-up licenses at the expiration of their terms, or upon the occurrence of certain events, and in such event, we will not receive fees thereafter. • The long-term success of our business is partially dependent on a royalty-based business model, which is inherently risky. • A portion of our revenue and cash flow is dependent upon our customers’ sales and other factors that are beyond our control or are difficult to forecast.
These indemnities may not be sufficient to insure us against the full amount of liabilities for which we will be allocated responsibility, and Xperi Inc. may not be able to satisfy its indemnification obligations in the future.
These indemnities may not be sufficient to insure us against the full amount of liabilities for which we will be allocated responsibility, and Xperi Inc. may not be able to satisfy its indemnification obligations in the future.
Factors that could cause our operating results to fluctuate during any period or that could adversely affect our ability to achieve our strategic objectives include those listed in this “Risk Factors” section of this report and the following: • the consequences of the separation transaction; • the timing of, and compliance with the terms and conditions for, payment by third parties to us of fees (including royalties) under IP license agreements; • fluctuations in our royalties caused by the pricing terms of certain of our IP license agreements; • the amount of our revenue; • changes in the level of our operating expenses; • the substantial research and development expenses that we have incurred and will continue to incur in connection with the development of new IP, as well as the uncertainty that such new technologies will generate material revenue for the Company; • our ability to protect or enforce our IP rights or the terms of our agreements; • legal proceedings affecting our patents, patent applications or IP license agreements; • the timing of the introduction of new technologies that replace technologies covered by our IP; • the timing of establishing new IP license agreements and expiration of existing IP license agreements; • changes in generally accepted accounting principles including new accounting standards which may materially affect our revenue recognition and the comparability between revenue recognition and cash flow from customer royalties; • cyclical fluctuations in semiconductor and consumer electronics markets generally; • supply chain constraints, and attendant effects, including but not limited to increased costs or shipping delays that may impact our customers; 22 • adverse labor market conditions, and any impacts on our ability to attract and retain qualified personnel; • inflation and/or changes in central bank interest rate policies; • expenses related to and the financial impact of possible acquisitions of other businesses and the integration of such businesses; • expenses related to and the financial impact of the disposition of assets, including post-closing indemnification obligations; and • adverse changes in the level of economic activity in the U.S. or other major economies in which we do business as a result of the threat of terrorism, military actions taken by the U.S. or its allies, civil unrest, hostilities, global health concerns, outbreaks, pandemics, natural disasters or generally weak and uncertain economic and industry conditions.
Factors that could cause our operating results to fluctuate during any period or that could adversely affect our ability to achieve our strategic objectives include those listed in this “Risk Factors” section of this report and the following: • the consequences of the separation transaction; • the timing of, and compliance with the terms and conditions for, payment by third parties to us of fees (including royalties) under IP license agreements; • fluctuations in our royalties caused by the pricing terms of certain of our IP license agreements; • the amount of our revenue; • changes in the level of our operating expenses; • the substantial research and development expenses that we have incurred and will continue to incur in connection with the development of new IP, as well as the uncertainty that such new technologies will generate material revenue for the Company; • our ability to protect or enforce our IP rights or the terms of our agreements; • legal proceedings affecting our patents, patent applications or IP license agreements; • the timing of the introduction of new technologies that replace technologies covered by our IP; • the timing of establishing new IP license agreements and expiration of existing IP license agreements; • changes in generally accepted accounting principles including new accounting standards which may materially affect our revenue recognition and the comparability between revenue recognition and cash flow from customer royalties; • cyclical fluctuations in semiconductor and consumer electronics markets generally; • supply chain constraints, and attendant effects, including but not limited to increased costs or shipping delays that may impact our customers; • adverse labor market conditions, and any impacts on our ability to attract and retain qualified personnel; • inflation and/or changes in central bank interest rate policies; • expenses related to and the financial impact of possible acquisitions of other businesses and the integration of such businesses; • expenses related to and the financial impact of the disposition of assets, including post-closing indemnification obligations; and • adverse changes in the level of economic activity in the U.S. or other major economies in which we do business as a result of the threat of terrorism, military actions taken by the U.S. or its allies, civil unrest, hostilities, global health concerns, outbreaks, pandemics, natural disasters or generally weak and uncertain economic and industry conditions.
Therefore, we face exposure to risks of operating in many foreign countries, including: • difficulties and costs associated with complying with a wide variety of complex laws, treaties, regulations and compliance requirements; • unexpected changes in political or regulatory environments; • earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs; 16 • exchange controls or other restrictions; • political and economic instability and trade conflict; • import and export restrictions and other trade barriers; • difficulties in maintaining overseas subsidiaries; • difficulties in obtaining approval for significant transactions; and • fluctuations in foreign currency exchange rates.
Therefore, we face exposure to risks of operating in many foreign countries, including: • difficulties and costs associated with complying with a wide variety of complex laws, treaties, regulations and compliance requirements; • unexpected changes in political or regulatory environments; • earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs; • exchange controls or other restrictions; • political and economic instability and trade conflict; • import and export restrictions and other trade barriers; • difficulties in maintaining overseas subsidiaries; • difficulties in obtaining approval for significant transactions; and • fluctuations in foreign currency exchange rates.
In addition, under Sections 382 and 383 of the Internal Revenue Code (the “Code”) and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than fifty-percent (50%) change, by value, in its equity ownership over a three (3)-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
In addition, under Sections 382 and 383 of the Internal Revenue Code (the “Code”) and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than fifty-percent (50%) change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
We undertook the Separation to achieve certain intended benefits including: • eliminating competing priorities for capital allocation between the product and IP licensing businesses; • enabling the respective management teams to better focus on strengthening their core businesses and operations; • enhancing operational flexibility for both businesses, particularly in dealing with suppliers and customers; • streamlining the investment profiles of both businesses and enhancing their marketability; and • improving access to talent by allowing each company to capitalize on their distinct cultures and recruitment strategies.
We undertook the Separation to achieve certain intended benefits including: • eliminating competing priorities for capital allocation between the product and IP licensing businesses; • enabling the respective management teams to better focus on strengthening their core businesses and operations; 19 • enhancing operational flexibility for both businesses, particularly in dealing with suppliers and customers; • streamlining the investment profiles of both businesses and enhancing their marketability; and • improving access to talent by allowing each company to capitalize on their distinct cultures and recruitment strategies.
We face risks inherent in a license-based business model, many of which are outside of our control, such as the following: • the number of subscribers our Pay-TV customers have; • the rate of adoption and incorporation of our technology by semiconductor manufacturers, assemblers, foundries, and manufacturers of consumer and communication electronics; • the demand for products that incorporate our licensed technology; • the cyclicality of supply and demand for products using our licensed technology; • the impact of economic downturns; and • the impact of poor financial performance of our customers.
We face risks inherent in a license-based business model, many of which are outside of our control, such as the following: • the number of subscribers our Pay-TV customers have; • the rate of adoption and incorporation of our technology by semiconductor manufacturers, assemblers, foundries, and manufacturers of consumer and communication electronics; 12 • the demand for products that incorporate our licensed technology; • the cyclicality of supply and demand for products using our licensed technology; • the impact of economic downturns; and • the impact of poor financial performance of our customers.
This also may cause our revenue and cash flows to fluctuate on a quarter-to-quarter or year-over-year basis. 14 Some of our IP license agreements may convert to fully paid-up licenses at the expiration of their terms, or upon the occurrence of certain events, and in such event we will not receive fees thereafter.
This also may cause our revenue and cash flows to fluctuate on a quarter-to-quarter or year-over-year basis. Some of our IP license agreements may convert to fully paid-up licenses at the expiration of their terms, or upon the occurrence of certain events, and in such event we will not receive fees thereafter.
Any of these provisions could have the effect of delaying, deferring or preventing a change in control, including without limitation, discouraging a proxy contest or making more difficult the acquisition of a substantial block of our common stock. 23 Decreased effectiveness of stock-based compensation could adversely affect our ability to attract and retain employees.
Any of these provisions could have the effect of delaying, deferring or preventing a change in control, including without limitation, discouraging a proxy contest or making more difficult the acquisition of a substantial block of our common stock. Decreased effectiveness of stock-based compensation could adversely affect our ability to attract and retain employees.
Our ability to meet our debt service obligations will depend on our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control. 18 Our variable rate indebtedness may expose us to interest rate risk, which could cause our debt costs to increase significantly.
Our ability to meet our debt service obligations will depend on our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control. Our variable rate indebtedness may expose us to interest rate risk, which could cause our debt costs to increase significantly.
This could result in an adverse reaction in the financial markets due to investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements. 19 Changes in, or interpretations of, tax rules and regulations, could adversely affect our effective tax rates and negatively affect our business and financial condition.
This could result in an adverse reaction in the financial markets due to investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements. Changes in, or interpretations of, tax rules and regulations, could adversely affect our effective tax rates and negatively affect our business and financial condition.
Damages and requests for injunctive relief asserted in disputes like these could be significant and could be disruptive to our business. 13 Due to the nature of our business, we could continue to be involved in a number of costly litigation, arbitration and administrative proceedings to enforce or defend our IP rights and to defend our licensing practices.
Damages and requests for injunctive relief asserted in disputes like these could be significant and could be disruptive to our business. Due to the nature of our business, we could continue to be involved in a number of costly litigation, arbitration and administrative proceedings to enforce or defend our IP rights and to defend our licensing practices.
This could make the collection process complex, difficult and costly, which could adversely impact our business, financial condition, results of operations and cash flows. 15 It is difficult for us to verify royalty amounts owed to us under our IP license agreements, and this may cause us to lose revenue.
This could make the collection process complex, difficult and costly, which could adversely impact our business, financial condition, results of operations and cash flows. It is difficult for us to verify royalty amounts owed to us under our IP license agreements, and this may cause us to lose revenue.
We may not be able to consummate those dispositions or to maximize the proceeds that we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due. Repayment of debt is dependent on cash flow generated by our subsidiaries.
We may not be able to consummate those dispositions or to maximize the proceeds that we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due. 16 Repayment of debt is dependent on cash flow generated by our subsidiaries.
Inability to use our common stock in acquisitions may hinder our ability to actively make future acquisitions and recruit talent through acquisitions and restricts the flexibility in which we can make acquisition bids. Stock transfer restrictions in our certificate of incorporation may act as an anti-takeover device.
Inability to use our common stock in acquisitions may hinder our ability to actively make future acquisitions and recruit talent through acquisitions and restricts the flexibility in which we can make acquisition bids. 23 Stock transfer restrictions in our certificate of incorporation may act as an anti-takeover device.
By engaging in business activities in these states and foreign jurisdictions, we become subject to their various laws and regulations, including the payment of income taxes on revenue generated from activities in those states and foreign jurisdictions. 20 The laws and regulations governing the payment of income taxes are numerous, complex, and vary among states and foreign jurisdictions.
By engaging in business activities in these states and foreign jurisdictions, we become subject to their various laws and regulations, including the payment of income taxes on revenue generated from activities in those states and foreign jurisdictions. The laws and regulations governing the payment of income taxes are numerous, complex, and vary among states and foreign jurisdictions.
Use of our common stock for future acquisitions may be limited. Our ability to use common stock for future acquisitions without triggering an ownership change for the purposes of Sections 382 and 383 of the Code will likely be limited for three (3) years following the Mergers.
Use of our common stock for future acquisitions may be limited. Our ability to use common stock for future acquisitions without triggering an ownership change for the purposes of Sections 382 and 383 of the Code will likely be limited for three-years following the Mergers.
The increased trade conflicts between the United States and its major trading partners in recent years, evidenced by trade restrictions such as tariffs, taxes, export controls, economic sanctions, and enhanced policies designed to protect national security, have had and may continue to have adverse impact on our revenue if such policies continue.
The increased trade conflicts between the United States and its major trading partners in recent years, evidenced by trade restrictions such as tariffs, taxes, export controls, economic sanctions, foreign investment controls and enhanced policies designed to protect national security, have had and may continue to have adverse impact on our revenue if such policies continue.
Moreover, growing trade conflicts and uncertainties may lead to decreased use of foreign-owned technologies in China and other countries, due to efforts by foreign governments and enterprises to find alternative sources of supply, the development of proprietary domestic technologies, and the reduction of reliance on foreign technology sources.
Moreover, growing trade conflicts and uncertainties and foreign investment controls may lead to decreased use of foreign-owned technologies in China and other countries, due to efforts by foreign governments and enterprises to find alternative sources of supply, the development of proprietary domestic technologies, and the reduction of reliance on foreign technology sources.
As of December 31, 2023, we had $601.3 million of outstanding indebtedness that is subject to floating interest rates. Changes in economic conditions outside of our control could result in higher interest rates, thereby increasing our interest expense and reducing the funds available for capital investment, operations or other purposes.
As of December 31, 2024, we had $487.1 million of outstanding indebtedness that is subject to floating interest rates. Changes in economic conditions outside of our control could result in higher interest rates, thereby increasing our interest expense and reducing the funds available for capital investment, operations or other purposes.
Our future success will depend, in part, upon the ability of our management team to manage any growth effectively, requiring our management to: • recruit, hire, and train additional personnel; • implement and improve our operational and financial systems, procedures, and controls; • maintain our cost structure at an appropriate level based on the revenue and cash we forecast and generate; • manage multiple concurrent IP development projects; and • manage operations in multiple time zones with different cultures and languages.
Acquisitions involve challenges in terms of successful integration of IP, technologies, and employees. 13 Our future success will depend, in part, upon the ability of our management team to manage any growth effectively, requiring our management to: • recruit, hire, and train additional personnel; • implement and improve our operational and financial systems, procedures, and controls; • maintain our cost structure at an appropriate level based on the revenue and cash we forecast and generate; • manage multiple concurrent IP development projects; and • manage operations in multiple time zones with different cultures and languages.
Our activities are subject to a number of cybersecurity and stability risks: • our own or licensed encryption and authentication technology, or access or security procedures, may be compromised, breached or otherwise be insufficient to ensure the security of confidential or proprietary information or data, including customer information; • we could experience damage from unauthorized access, computer viruses, ransomware, system interference or destruction, “denial of service” attacks and other disruptive problems, whether intentional or accidental, that may inhibit or prevent access to our websites and infrastructure, or cause confidential or proprietary information to be disclosed to a perpetrator, others or the general public; • hackers could circumvent our integrated risk management processes and security measures and misappropriate our information, or our customers’ proprietary information or content, interrupt operations, or jeopardize our licensing arrangements, many of which are contingent on our sustaining appropriate security protections; or • we could inadvertently disclose confidential or proprietary information. 17 Each of the foregoing risks also applies to the computer systems of third parties that we rely upon in our operations, including providers of cloud storage and services.
Our activities are subject to a number of cybersecurity and stability risks: • our own or licensed encryption and authentication technology, or access or security procedures, may be compromised, breached or otherwise be insufficient to ensure the security of confidential or proprietary information or data, including customer information; • we could experience damage from unauthorized access, computer viruses, ransomware, system interference or destruction, “denial of service” attacks and other disruptive problems, whether intentional or accidental, that may inhibit or prevent access to our websites and infrastructure, or cause confidential or proprietary information to be disclosed to a perpetrator, others or the general public; • hackers could circumvent our integrated risk management processes and security measures and misappropriate our information, or our customers’ proprietary information or content, interrupt operations, or jeopardize our licensing arrangements, many of which are contingent on our sustaining appropriate security protections; or • we could inadvertently disclose confidential or proprietary information.
The investment of our cash, cash equivalents and investments in marketable debt and equity securities is subject to risks which may cause losses and affect the liquidity of these investments. At December 31, 2023, we held approximately $54.6 million in cash and cash equivalents and $29.0 million in short-term investments.
The investment of our cash, cash equivalents and investments in marketable debt and equity securities is subject to risks which may cause losses and affect the liquidity of these investments. At December 31, 2024, we held approximately $78.8 million in cash and cash equivalents and $31.6 million in short-term investments.
At December 31, 2023, a 1% increase in the effective interest rate on our outstanding debt throughout a one-year period would result in an annual increase in our interest expense of approximately $5.7 million.
At December 31, 2024, a 1% increase in the effective interest rate on our outstanding debt throughout a one-year period would result in an annual increase in our interest expense of approximately $4.8 million.
Volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees. Risks Related to Financial Matters We have significant indebtedness which could adversely affect our financial position. As of December 31, 2023, we had $601.3 million of total debt outstanding under our Refinanced Term B Loans.
Volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees. Risks Related to Financial Matters We have significant indebtedness which could adversely affect our financial position. As of December 31, 2024, we had $487.1 million of total debt outstanding under our 2024 Term Loan B.
Our Refinanced Term B Loans are guaranteed by us and our wholly-owned material domestic subsidiaries and are secured by substantially all of our and the subsidiary guarantors’ assets.
Our 2024 Term Loan B is guaranteed by us and our wholly-owned material domestic subsidiaries and are secured by substantially all of our and the subsidiary guarantors’ assets.
In June 2020, our Board of Directors authorized a stock repurchase program to repurchase up to $150.0 million of our outstanding shares of common stock dependent on market conditions, share price, and other factors. In April 2021 our Board of Directors authorized an additional $100.0 million of stock repurchases under this program.
In June 2020, our Board of Directors authorized a stock repurchase program to repurchase up to $150.0 million of our outstanding shares of common stock dependent on market conditions, share price, and other factors.
We may have significant expenses associated with staying apprised of and in compliance with local, state, federal, and international legislation and regulation of our business and in presenting the Company’s positions on proposed laws and regulations.
It is difficult to anticipate the impact of current or future laws and regulations on our business. We may have significant expenses associated with staying apprised of and in compliance with local, state, federal, and international legislation and regulation of our business and in presenting the Company’s positions on proposed laws and regulations.
Our failure to do so could significantly harm our business, financial position, results of operations, and cash flows. 12 We enter into IP license agreements that have fixed expiration dates and if, upon expiration or termination, we are unable to renew or replace such license agreements on terms favorable to us, our results of operations could be harmed.
We enter into IP license agreements that have fixed expiration dates and if, upon expiration or termination, we are unable to renew or replace such license agreements on terms favorable to us, our results of operations could be harmed. We enter into IP license agreements that have fixed expiration dates.
Consumer demand for our technologies can shift quickly as many of the markets in which we serve are rapidly evolving. As a result, these customers may lose subscribers, which would reduce our revenue.
Agreements with some of these customers do not require any minimum license fees. Consumer demand for our technologies can shift quickly as many of the markets in which we serve are rapidly evolving. As a result, these customers may lose subscribers, which would reduce our revenue.
Net operating losses that expire unused will be unavailable to offset future income tax liabilities. Under the Tax Cuts and Jobs Act, federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal net operating losses is limited.
Under the Tax Cuts and Jobs Act, federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal net operating losses is limited.
Any suspension or discontinuation could cause the market price of our stock to decline. The timing of repurchases pursuant to our stock repurchase program could affect our stock price and increase its volatility.
The timing of repurchases is at our discretion and the program may be suspended or discontinued at any time. Any suspension or discontinuation could cause the market price of our stock to decline. The timing of repurchases pursuant to our stock repurchase program could affect our stock price and increase its volatility.
Notwithstanding the Tax Opinion and the IRS Ruling, the IRS could determine that the distribution or a related transaction should nevertheless be treated as a taxable transaction to us if it determines that any of the facts, assumptions, representations or undertakings provided by us are not correct or that the distribution should be taxable for other reasons, including if the IRS were to disagree with the conclusions in the Tax Opinion that are not covered by the IRS Ruling. 11 Under the tax matters agreement that we entered into with Xperi Inc. on October 1, 2022 (the “Tax Matters Agreement”), Xperi Inc. is generally obligated to indemnify us against taxes imposed on us that result from the failure of the distribution to qualify for non-recognition treatment for U.S. federal income tax purposes (including any taxes imposed on us due to the application of Section 355(e) to the distribution), to the extent such failure is attributable to actions, events or transactions relating to Xperi Inc. or its affiliates’ stock, assets or business, or any breach of Xperi Inc.’s representations, covenants or obligations under the Tax Matters Agreement (or certain other agreements it entered into in connection with the separation and distribution) or any breach by Xperi Inc. or its affiliates of representations made in any representation letter provided in connection with the Tax Opinion.
Under the tax matters agreement that we entered into with Xperi Inc. on October 1, 2022 (the “Tax Matters Agreement”), Xperi Inc. is generally obligated to indemnify us against taxes imposed on us that result from the failure of the distribution to qualify for non-recognition treatment for U.S. federal income tax purposes (including any taxes imposed on us due to the application of Section 355(e) to the distribution), to the extent such failure is attributable to actions, events or transactions relating to Xperi Inc. or its affiliates’ stock, assets or business, or any breach of Xperi Inc.’s representations, covenants or obligations under the Tax Matters Agreement (or certain other agreements it entered into in connection with the separation and distribution) or any breach by Xperi Inc. or its affiliates of representations made in any representation letter provided in connection with the Tax Opinion.
Furthermore, we may be more susceptible to market fluctuations and other adverse events. If the distribution, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then we could be subject to significant tax liability.
If the distribution, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then we could be subject to significant tax liability.
Our stock repurchase program could increase the volatility of the price of our common stock, and the program may be suspended or terminated at any time, which may cause the trading price of our common stock to decline.
Any decrease in the amount of the dividend, or suspension or discontinuance of payment of a dividend, could cause our stock price to decline. 22 Our stock repurchase program could increase the volatility of the price of our common stock, and the program may be suspended or terminated at any time, which may cause the trading price of our common stock to decline.
Additionally, as a result of the Separation and distribution, we may become more susceptible to market fluctuations and other adverse events than if Xperi Inc. had remained part of our organizational structure. 10 If the Separation does not continue to provide the benefits we intend, there could be a disruption of our operations, loss of, or inability to recruit, key personnel needed to operate and grow our business and impairment of our key customer relationships.
If the Separation does not continue to provide the benefits we intend, there could be a disruption of our operations, loss of, or inability to recruit, key personnel needed to operate and grow our business and impairment of our key customer relationships. Furthermore, we may be more susceptible to market fluctuations and other adverse events.
Even if the distribution otherwise constitutes a tax-free transaction to stockholders under Section 355 of the Code, we may be required to recognize corporate level tax on the distribution and certain related transactions under Section 355(e) of the Code if, as a result of the all-stock merger of equals transaction consummated on June 1, 2020 between TiVo Corporation and Xperi Corporation and their respective consolidated subsidiaries (the “Mergers”) or other transactions considered part of a plan with the distribution, there is a 50 percent or greater change of ownership in us or Xperi Inc.
Even if the distribution otherwise constitutes a tax-free transaction to stockholders under Section 355 of the Code, we may be required to recognize corporate level tax on the distribution and certain related transactions under Section 355(e) of the Code if, as a result of the all-stock merger of equals transaction consummated on June 1, 2020 between TiVo Corporation and Xperi Corporation and their respective consolidated subsidiaries (the “Mergers”) or other transactions considered part of a plan with the distribution, there is a 50 percent or greater change of ownership in us or Xperi Inc. 20 Following the Mergers, and in anticipation of the distribution, we sought and received the IRS Ruling, which included a ruling from the IRS regarding the proper manner and methodology for measuring the common ownership of our stock and the stock of TiVo Corporation and Xperi Corporation for purposes of determining whether there has been a 50 percent or greater change of ownership under Section 355(e) of the Code.
Because our operating results are difficult to predict, one should not rely on quarterly or annual comparisons of our results of operations as an indication of our future performance.
Our quarterly operating results have fluctuated in the past and are likely to do so in the future. Because our operating results are difficult to predict, one should not rely on quarterly or annual comparisons of our results of operations as an indication of our future performance.
The standards that courts use to interpret patents are not always applied predictably or uniformly and may evolve, particularly as new technologies develop. For example, the Supreme Court of the United States has modified some legal standards applied by the U.S.
Our business relies in part on the uniform and historically consistent application of U.S. patent laws, rules, and regulations. The standards that courts use to interpret patents are not always applied predictably or uniformly and may evolve, particularly as new technologies develop. For example, the Supreme Court of the United States has modified some legal standards applied by the U.S.
Our current U.S. issued patents expire at various times through the next two decades. Consequently, we need to develop or acquire successful innovations and obtain patents on those innovations, or acquire new patents from third parties, before our current patents expire.
Our current U.S. issued patents expire at various times through the next two decades. Consequently, we need to develop or acquire successful innovations and obtain patents on those innovations, or acquire new patents from third parties, before our current patents expire. Our failure to do so could significantly harm our business, financial position, results of operations, and cash flows.
We enter into IP license agreements that have fixed expiration dates. Upon expiration of such agreements, we need to renew or replace these agreements in order to maintain our revenue base.
Upon expiration of such agreements, we need to renew or replace these agreements in order to maintain our revenue base.
In turn, we have faced, and could continue to face, counterclaims and other legal proceedings that claim that our patents are invalid, unenforceable or not infringed.
In addition, in connection with such legal or administrative actions to defend our IP rights and our licensing practices, we have faced, and could continue to face, counterclaims and other legal proceedings that claim that our patents are invalid, unenforceable or not infringed.
Our success also depends on our ability to attract, train and retain highly skilled managerial, sales, marketing, legal and finance personnel and on the abilities of new personnel to function effectively, both individually and as a group.
Our future success will depend to a significant extent on the ability of these executives to effectively drive execution of our business strategy, and on the ability of our management team to work together effectively. 15 Our success also depends on our ability to attract, train and retain highly skilled managerial, sales, marketing, legal and finance personnel and on the abilities of new personnel to function effectively, both individually and as a group.
If we fail to continue to do business with our current customers, our business would be materially adversely affected. Furthermore, a small number of our customers represent a significant percentage of our revenue. For the year ended December 31, 2023, four customers represented 45.4% of aggregate revenue. Agreements with some of these customers do not require any minimum license fees.
If we fail to continue to do business with our current customers, our business would be materially adversely affected. 10 Furthermore, a small number of our customers represent a significant percentage of our revenue. For the year ended December 31, 2024, five customers represented 49.6% of aggregate revenue.
If we or our intermediaries fail to comply with the requirements of the FCPA or similar laws, governmental authorities could commence an investigation or seek to impose civil and criminal fines and penalties which could have a material adverse effect on our business, results of operations and financial condition.
If we or our intermediaries fail to comply with the requirements of the FCPA or similar laws, governmental authorities could commence an investigation or seek to impose civil and criminal fines and penalties which could have a material adverse effect on our business, results of operations and financial condition. 14 Our systems, networks and business activities and those of third parties that we utilize in our operations are subject to cybersecurity and stability risks, including information technology system failures, and security breaches.
Even if we ultimately succeed in recovering from Xperi Inc. any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, financial condition, results of operations and cash flows.
Even if we ultimately succeed in recovering from Xperi Inc. any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves.
Changes to these laws, or the interpretation thereof, could increase our costs, expose us to increased litigation risk, substantial defense costs and other liabilities or require us or our customers to change business practices. It is difficult to anticipate the impact of current or future laws and regulations on our business.
These types of regulations are likely to differ between countries and other political and geographic divisions. Changes to these laws, or the interpretation thereof, could increase our costs, expose us to increased litigation risk, substantial defense costs and other liabilities or require us or our customers to change business practices.
Our customers may also merge with or may shift the manufacture of licensed products to companies that are not currently customers of our technology.
Such lawsuits can require us to devote significant time and resources to enforce our rights. Our customers may also merge with or may shift the manufacture of licensed products to companies that are not currently customers of our technology.
Our ability to use net operating losses to offset future taxable income may be subject to limitations. As of December 31, 2023, we had U.S. federal and state net operating losses of approximately $2.6 million and $884.7 million, respectively. A portion of the state net operating loss carryforwards will begin to expire, if not utilized, in 2024.
As of December 31, 2024, we had U.S. federal and state net operating losses of approximately $2.3 million and $861.2 million, respectively, on a tax return basis. A portion of the state net operating loss carryforwards will begin to expire, if not utilized, in 2025. Net operating losses that expire unused will be unavailable to offset future income tax liabilities.
Further, in certain jurisdictions where we may pursue protections of our IP rights, if we are unsuccessful in litigation, we may be liable for the costs of defendants that receive favorable rulings. Given the nature of our business, such proceedings could have a material adverse effect on our business, financial condition, and results of operations.
Further, in certain jurisdictions where we may pursue protections of our IP rights, if we are unsuccessful in litigation, we may be liable for the costs of defendants that receive favorable rulings.
We may be required to reevaluate and modify our licensing practices and strategies in response to such changes and, given the nature of our business, any resulting modifications could have a material adverse effect on our business and financial condition. 21 Many laws and regulations are pending and may be adopted by the U.S. federal government, individual states and local jurisdictions and other countries with respect to the internet.
We may be required to reevaluate and modify our licensing practices and strategies in response to such changes and, given the nature of our business, any resulting modifications could have a material adverse effect on our business and financial condition.
Some of our IP license agreements contain “most favored nations” clauses, which may restrict our ability to offer more competitive terms to other customers in the future.
Given the nature of our business, such proceedings could have a material adverse effect on our business, financial condition, and results of operations. 11 Some of our IP license agreements contain “most favored nations” clauses, which may restrict our ability to offer more competitive terms to other customers in the future.
Although Congress is considering legislation that would repeal or defer this capitalization and amortization requirement, it is not certain that this provision will be repealed or otherwise modified. The new requirement adversely impacts our cash tax liability for 2023, although the negative cash impact is expected to decline annually over the amortization period.
Although Congress is considering legislation that would repeal or defer this capitalization and amortization requirement, it is not certain that this provision will be repealed or otherwise modified.
Risks Related to Regulatory and Legal Matters New governmental regulations, new interpretations of existing laws, including legislative initiatives, or judicial or regulatory decisions regarding IP rights or the internet could cause uncertainties and result in harm to our business. Our business relies in part on the uniform and historically consistent application of U.S. patent laws, rules, and regulations.
The financial market and monetary risks associated with our investment portfolio have had and may in the future have a material adverse effect on our financial condition, results of operations or cash flows. 18 Risks Related to Regulatory and Legal Matters New governmental regulations, new interpretations of existing laws, including legislative initiatives, or judicial or regulatory decisions regarding IP rights or the internet could cause uncertainties and result in harm to our business.
Risks Related to Regulatory and Legal Matters • New governmental regulations, new interpretations of existing laws, including legislative initiatives, or judicial or regulatory decisions regarding IP rights or the internet could cause uncertainties and result in harm to our business. • Further deterioration of trade relations between the United States and China, other trade conflicts and barriers, economic sanctions, and national security protection policies could limit or prevent existing or potential customers from doing business with us.
Risks Related to Financial Matters • We have significant indebtedness which could adversely affect our financial position. • Our variable rate indebtedness may expose us to interest rate risk, which could cause our debt costs to increase significantly. • We may not be able to generate sufficient cash to service our debt obligations. • Repayment of debt is dependent on cash flow generated by our subsidiaries. • Changes in, or interpretations of, tax rules and regulations, could adversely affect our effective tax rates and negatively affect our business and financial condition. • Our ability to use net operating losses to offset future taxable income may be subject to limitations. 9 Risks Related to Regulatory and Legal Matters • New governmental regulations, new interpretations of existing laws, including legislative initiatives, or judicial or regulatory decisions regarding IP rights or the internet could cause uncertainties and result in harm to our business. • Further deterioration of trade relations between the United States and China, other trade conflicts and barriers, economic sanctions, and national security protection policies could limit or prevent existing or potential customers from doing business with us.
Risks Relating to Ownership of our Common Stock Our financial and operating results may vary, which may cause the price of our common stock to decline. Our quarterly operating results have fluctuated in the past and are likely to do so in the future.
Each of these risks could negatively affect our business, financial condition, results of operations and cash flows. 21 Risks Relating to Ownership of our Common Stock Our financial and operating results may vary, which may cause the price of our common stock to decline.
Since July 2020, the Board has declared quarterly cash dividends of $0.05 per share. Any decrease in the amount of the dividend, or suspension or discontinuance of payment of a dividend, could cause our stock price to decline.
Since July 2020, the Board has declared quarterly cash dividends of $0.05 per share.
These laws may relate to many areas that impact our business, including IP rights, privacy and taxation. These types of regulations are likely to differ between countries and other political and geographic divisions.
Many laws and regulations are pending and may be adopted by the U.S. federal government, individual states and local jurisdictions and other countries with respect to the internet. These laws may relate to many areas that impact our business, including IP rights, privacy and taxation.
(together “Shaw”) in the United States District Court for the Southern District of New York, respectively, each alleging breach of contract for failure to pay royalties under license agreements. Such lawsuits can require us to devote significant time and resources to enforce our rights.
For example, in October of 2023, our affiliates filed a complaint against Shaw Cablesystems G.P. and Shaw Satellite G.P. (together “Shaw”) in the United States District Court for the Southern District of New York, alleging breach of contract for failure to pay royalties under a license agreement.
As of December 31, 2023, the total amount available for repurchase under the plan was $77.8 million. The amount of repurchases under our stock repurchase program will vary depending on various factors. The timing of repurchases is at our discretion and the program may be suspended or discontinued at any time.
In October 2024, our Board of Directors approved an increase of the existing share repurchase authorization up to a total of $200.0 million. As of December 31, 2024, the total amount available for repurchase under the plan was $180.0 million. The amount of repurchases under our stock repurchase program will vary depending on various factors.
Removed
Following the Mergers, and in anticipation of the distribution, we sought and received the IRS Ruling, which included a ruling from the IRS regarding the proper manner and methodology for measuring the common ownership of our stock and the stock of TiVo Corporation and Xperi Corporation for purposes of determining whether there has been a 50 percent or greater change of ownership under Section 355(e) of the Code.
Added
For example, in November 2024, our affiliates filed complaints against The Walt Disney Company and certain of its affiliates in the United States District Court for the District of Delaware as well as in courts in Germany, The Netherlands and Brazil alleging infringement of our patents. This and other legal or administrative actions may prove costly.
Removed
For example, in August and October of 2023, our affiliates filed complaints against X Corporation in the California Superior Court for Santa Clara County and against Shaw Cablesystems G.P. and Shaw Satellite G.P.
Added
Each of the foregoing risks also applies to the computer systems of third parties that we rely upon in our operations, including providers of cloud storage and services.
Removed
Acquisitions involve challenges in terms of successful integration of IP, technologies, and employees.
Added
The new requirement adversely impacts our cash tax liability for 2024, although the negative cash impact is expected to decline annually over the amortization period. 17 Our ability to use net operating losses to offset future taxable income may be subject to limitations.
Removed
Our systems, networks and business activities and those of third parties that we utilize in our operations are subject to cybersecurity and stability risks, including information technology system failures, and security breaches.
Added
Additionally, as a result of the Separation and distribution, we may become more susceptible to market fluctuations and other adverse events than if Xperi Inc. had remained part of our organizational structure.
Removed
Our future success will depend to a significant extent on the ability of these executives to effectively drive execution of our business strategy, and on the ability of our management team to work together effectively.
Added
Notwithstanding the Tax Opinion and the IRS Ruling, the IRS could determine that the distribution or a related transaction should nevertheless be treated as a taxable transaction to us if it determines that any of the facts, assumptions, representations or undertakings provided by us are not correct or that the distribution should be taxable for other reasons, including if the IRS were to disagree with the conclusions in the Tax Opinion that are not covered by the IRS Ruling.
Removed
The financial market and monetary risks associated with our investment portfolio have had and may in the future have a material adverse effect on our financial condition, results of operations or cash flows.
Added
In April 2021 our Board of Directors authorized an additional $100.0 million of stock repurchases under this program, under which $172.2 million was utilized for stock repurchases, leaving the total authorized amount available for repurchase under the program at $77.8 million.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed14 unchanged
Biggest changeWe also employ various defensive and continuous monitoring techniques using recognized industry frameworks and cybersecurity standards. 25 Our VP of IT meets with the audit committee quarterly to review our information technology systems and discuss key cybersecurity risks.
Biggest changeWe also employ various defensive and continuous monitoring techniques using recognized industry frameworks and cybersecurity standards. 25 Our VP of IT meets with the audit committee quarterly to review our information technology systems and discuss key cybersecurity risks, and these matters are also presented to the board of directors annually.
Our cybersecurity risk management extends to risks associated with our use of third-party service providers. We routinely conduct risk and compliance assessments of third-party service providers that request access to our information assets. We re-asses our third-party vendors in an ongoing basis. Our cybersecurity risk management is integrated into our comprehensive business continuity program and enterprise risk management.
Our cybersecurity risk management extends to risks associated with our use of third-party service providers. We routinely conduct risk and compliance assessments of third-party service providers that request access to our information assets. We re-assess our third-party vendors in an ongoing basis. Our cybersecurity risk management is integrated into our comprehensive business continuity program and enterprise risk management.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

7 edited+7 added−6 removed19 unchanged
Biggest change(together “Shaw”) in the United States District Court for the Southern District of New York, alleging breach of contract by Shaw for failure to pay royalties owed to Adeia Media under the license agreement between the parties.
Biggest change(together “Shaw”) in the United States District Court for the Southern District of New York, alleging breach of contract by Shaw for failure to pay royalties owed to Adeia Media under the license agreement between the parties. On October 8, 2024, Shaw filed a motion to dismiss the complaint. The Court has yet to rule on Shaw’s motion to dismiss.
On May 21, 2021, Adeia Media filed a patent infringement complaint against Videotron in Toronto, Canada, alleging infringement of four patents (“Videotron 2”). On July 21, 2021, the Federal Court of Canada held a case management conference in Videotron 2, shortly before which Videotron filed a motion to strike various portions of the statement of claim.
On May 21, 2021, Adeia Media filed a separate patent infringement complaint against Videotron in Toronto, Canada, alleging infringement of four patents (“Videotron 2”). On July 21, 2021, the Federal Court of Canada held a case management conference in Videotron 2, shortly before which Videotron filed a motion to strike various portions of the statement of claim.
On February 15, 2023, the Court issued an order granting the motion for bifurcation in which the Court bifurcated the liability and injunction phase from the damages quantification phase of the case. Discovery in the case began in November 2022. The trial is scheduled to start on April 28, 2025.
On February 15, 2023, the Court issued an order granting the motion for bifurcation in which the Court bifurcated the liability and injunction phase from the damages quantification phase of the case. The trial is scheduled to start on April 28, 2025.
On June 30, 2022, the Court of Appeal issued its decision in Videotron’s appeal in which it ruled in Adeia Media’s favor and dismissed Videotron’s appeal. Discovery in the case began in August 2022.
On June 30, 2022, the Court of Appeal issued its decision in Videotron’s appeal in which it ruled in Adeia Media’s favor and dismissed Videotron’s appeal.
The trial is scheduled to start on January 13, 2025. 26 Bell and Telus Patent Infringement Litigation On January 19, 2018, Adeia Media filed a patent infringement complaint against Bell Canada (and four of its affiliates) (collectively, “Bell”) in Toronto, Canada, alleging infringement of six patents (“Bell 1”).
The trial commenced on February 3, 2025. 26 Bell and Telus Patent Infringement Litigation On January 19, 2018, Adeia Media filed a patent infringement complaint against Bell Canada (and four of its affiliates) (collectively, “Bell”) in Toronto, Canada, alleging infringement of six patents (“Bell 1”).
On November 28, 2023, the Federal Court of Appeal of Canada held a hearing on the appeal and took the matter under reserve. There is no set date for the Federal Court of Appeal of Canada to issue its decision.
On November 28, 2023, the Federal Court of Appeal of Canada held a hearing on the appeal and took the matter under reserve. On August 6, 2024, the Federal Court of Appeal of Canada issued a judgment in the appeal in which it dismissed the appeal.
On November 29, 2023, the Federal Court of Appeal of Canada held a hearing on the appeal and took the matter under reserve. There is no set date for the Federal Court of Appeal to issue its decision.
On November 29, 2023, the Federal Court of Appeal of Canada held a hearing on the appeal and took the matter under reserve. On August 6, 2024, the Federal Court of Appeal of Canada issued a judgment in the appeal in which it dismissed the appeal.
Removed
On January 16, 2024, Shaw submitted a pre-motion letter to the Court requesting leave of the Court to file a motion to dismiss the complaint. On January 19, 2024, Adeia Media submitted a letter to the Court in response to Shaw’s pre-motion letter. The Court has yet to rule on Shaw’s pre-motion letter. The trial date has not been set.
Added
Disney Patent Infringement Litigation On November 7, 2024, Adeia Technologies, Inc., Adeia Guides Inc., and Adeia Media Holdings LLC filed a complaint against The Walt Disney Company, Disney Media and Entertainment Distribution LLC, Disney DTC LLC, Disney Streaming Services LLC, Disney Entertainment & Sports LLC, Disney Platform Distribution, Inc., BAMTech, LLC, Hulu, LLC, and ESPN, Inc. (collectively, “Disney U.S.
Removed
X Corp. (f.k.a. Twitter) Litigation On August 7, 2023, Adeia Media LLC (“Adeia Media”) filed a complaint against X Corporation (“X Corp.”) in California Superior Court for Santa Clara County alleging breach of contract by X Corp. for failure to pay royalties owed to Adeia Media under the patent license agreement between the parties.
Added
Defendants”) in the United States District Court for the District of Delaware, alleging infringement of six patents. On January 16, 2025, Disney U.S. Defendants filed a motion to dismiss two of the six asserted patents as invalid under 35 U.S.C. §101. Adeia’s opposition to the motion to dismiss was filed on February 13, 2025.
Removed
On October 2, 2023, X Corp. filed its answer to the complaint, asserting a general denial of the allegations and causes of action in the complaint and asserting affirmative defenses. The trial date has not been set.
Added
On November 7, 2024, Adeia Solutions LLC filed a complaint against The Walt Disney Company Benelux (BV), Disney Interactive Studios, Inc., and The Walt Disney Company Limited (collectively, “Disney Europe Defendants”) in the Regional Court of Munich, Germany, alleging infringement of one patent. Disney Europe Defendants’ answer to the complaint is due June 30, 2025.
Removed
On November 28, 2023, X Corp. filed a complaint for declaratory judgment of patent noninfringement (“DJ Complaint”) in the United States District Court for the Northern District of California against Adeia Inc., Adeia Media LLC and Adeia Guides Inc.
Added
On November 7, 2024, Adeia Guides Inc. (“Adeia Guides”) filed a complaint against the Disney Europe Defendants in the Unified Patent Court (“UPC”) Munich Local Division, Germany, alleging infringement of one patent. Disney Europe Defendants’ answer to the complaint is due March 11, 2025.
Removed
(collectively, “Adeia Media”) alleging that it had terminated the patent license agreement between the companies and seeking a finding that it does not infringe four Adeia Media patents. On January 16, 2024, Adeia Media filed a motion to dismiss the DJ Complaint for lack of subject matter jurisdiction.
Added
On November 7, 2024, Adeia Guides filed a complaint against the Disney Europe Defendants in the UPC The Hague Local Division, The Netherlands, alleging infringement of one patent.
Removed
The hearing on the motion to dismiss is scheduled for April 9, 2024. Item 4. Mine Saf ety Disclosures Not applicable. 27 PART II
Added
Disney Europe Defendants’ answer to the complaint is due March 5, 2025. 27 On November 11, 2024, Adeia Guides filed a complaint against The Walt Disney Company (Brasil) LTDA in Rio de Janeiro State Court, Brazil, alleging infringement of four patents (“Brazilian Asserted Patents”). Disney’s answer to the complaint was filed on January 27, 2025.
Added
On January 27, 2025, The Walt Disney Company (Brasil) LTDA filed a patent invalidity lawsuit against Adeia Inc., Adeia Guides Inc. and the Brazilian Patent and Trademark Office in Rio de Janeiro Federal Court, Brazil, alleging the Brazilian Asserted Patents are invalid. Item 4. Mine Saf ety Disclosures Not applicable. 28 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+2 added−0 removed4 unchanged
Biggest changeWe anticipate that all quarterly dividends and stock repurchases will be paid out of cash, cash equivalents and short-term investments. Stock Repurchases On June 12, 2020, our Board of Directors approved a new stock repurchase plan (the “Plan”) providing for the repurchase of up to $150.0 million of our common stock dependent on market conditions, share price and other factors.
Biggest changeStock Repurchases The following table summarizes repurchases of our common stock during the three months ended December 31, 2024: Total number of shares purchased Average price paid per share Total number of shares purchased as part of our share repurchase program (1) Approximate dollar value of shares that may yet be purchased under our share repurchase program (1) (in thousands, except share price) October 1, 2024 – October 31, 2024 — — — — November 1, 2024 – November 30, 2024 — — — — December 1, 2024 – December 31, 2024 1,435 13.95 1,435 179,979 Total 1,435 $ 13.95 1,435 $ 179,979 (1) On June 12, 2020, our Board of Directors approved a new stock repurchase plan (the “Plan”) providing for the repurchase of up to $150.0 million of our common stock dependent on market conditions, share price and other factors.
Following the separation of Xperi Holding Corporation’s product business, and effective at the open of business on October 3, 2022, Adeia Inc.’s shares of common stock began trading on Nasdaq under the new ticker symbol “ADEA”. As of February 7, 2024, there were 107,424,894 outstanding shares of common stock held by 355 stockholders of record.
Following the separation of Xperi Holding Corporation’s product business, and effective at the open of business on October 3, 2022, Adeia Inc.’s shares of common stock began trading on Nasdaq under the new ticker symbol “ADEA”. As of February 7, 2025, there were 107,508,991 outstanding shares of common stock held by 333 stockholders of record.
As of December 31, 2023, the total remaining amount available for repurchase under the Plan was $77.8 million. 28 Stock Performance Graph The following graph shows a comparison of total stockholder return for holders of our common stock, the Nasdaq Composite Index, the Russell 2000 Index and the S&P 500 from June 2, 2020 through December 31, 2023.
As of December 31, 2024, the total remaining amount available for repurchase under the Plan was $180.0 million. 29 Stock Performance Graph The following graph shows a comparison of total stockholder return for holders of our common stock, the Nasdaq Composite Index, the Russell 2000 Index and the S&P 500 from June 2, 2020 through December 31, 2024.
There is no guarantee that such repurchases under the program will enhance the value of our stock. There were no repurchases during the year ended December 31, 2023.
There is no guarantee that such repurchases under the program will enhance the value of our stock.
This graphic comparison is presented pursuant to Item 201 of Regulation S-K. 6/2/2020 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/30/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Adeia Inc. $100.00 $109.25 $85.05 $154.70 $161.14 $164.62 $139.45 $139.97 $128.20 $106.81 $104.66 $121.72 $113.76 $141.36 $137.12 $159.08 Nasdaq Composite $100.00 $104.69 $116.23 $134.14 $137.87 $150.95 $150.37 $162.83 $148.00 $114.78 $110.07 $108.93 $127.20 $143.50 $137.58 $156.23 Russell 2000 Index $100.00 $101.63 $106.31 $139.25 $156.57 $162.92 $155.43 $158.32 $145.97 $120.43 $117.38 $124.19 $127.10 $133.18 $125.87 $142.93 S&P 500 $100.00 $100.63 $109.16 $121.92 $128.96 $139.49 $139.82 $154.70 $147.05 $122.87 $116.39 $124.63 $133.38 $144.45 $139.19 $154.82 This section is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (“Exchange Act”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
This graphic comparison is presented pursuant to Item 201 of Regulation S-K. 6/2/2020 12/31/2020 12/31/2021 12/30/2022 12/31/2023 12/31/2024 Adeia Inc. $100.00 $154.70 $139.97 $121.72 $159.08 $179.50 Nasdaq Composite $100.00 $134.14 $162.83 $108.93 $156.23 $200.98 Russell 2000 Index $100.00 $139.25 $158.32 $124.19 $142.93 $157.25 S&P 500 $100.00 $121.92 $154.70 $124.63 $154.82 $190.91 This section is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (“Exchange Act”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
No expiration has been specified for this Plan. On April 22, 2021, our Board of Directors authorized an additional $100.0 million of purchases under the Plan. The stock repurchases may be made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions, or pursuant to a Rule 10b5-1 plan.
In October 2024, our Board of Directors approved an increase of the existing share repurchase authorization up to a total of $200.0 million. The stock repurchases may be made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions, or pursuant to a Rule 10b5-1 plan.
Added
We anticipate that all quarterly dividends and stock repurchases will be paid out of cash, cash equivalents and short-term investments.
Added
No expiration has been specified for this Plan. On April 22, 2021, our Board of Directors authorized an additional $100.0 million of purchases under the Plan, under which $172.2 million was utilized for stock repurchases, leaving the total authorized amount available for repurchase under the Plan at $77.8 million.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. (Reserved) 29 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42 Item 8. Financial Statements and Supplementary Data 42 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 43
Biggest changeItem 6. (Reserved) 30 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41 Item 8. Financial Statements and Supplementary Data 41 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 41

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe following table presents our historical operating results for the periods indicated as a percentage of revenue: Years ended December 31, 2023 2022 2021 Revenue 100 % 100 % 100 % Operating expenses: Research and development 14 10 10 Selling, general and administrative 25 31 33 Amortization expense 24 22 25 Litigation expense 2 2 1 Total operating expenses 65 65 69 Operating income from continuing operations 35 35 31 Interest expense (16 ) (10 ) (10 ) Other income and expense, net 1 — — Loss on debt extinguishment — — (2 ) Income from continuing operations before income taxes 20 25 19 Provision for (benefit from) income taxes 3 (7 ) 1 Net income from continuing operations 17 % 32 % 18 % The following table sets forth our revenue by year (in thousands, except for percentages): Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Decrease % Change Increase % Change Revenue $388,788 $438,933 $391,212 $(50,145) (11)% $47,721 12% 2023 compared to 2022 The decrease in revenue during the year ended December 31, 2023, as compared to the prior year, was primarily attributable to the execution of a new, multi-year license agreement with Micron Technology in the first quarter of 2022 and the execution of a long-term license agreement with a leading consumer electronics and OTT service provider in the second quarter of 2022, for which a meaningful portion of the total revenue was recognized in the respective quarters, and in part due to a decline in royalty revenue from certain Pay-TV customers.
Biggest changeThe following table presents our historical operating results for the periods indicated as a percentage of revenue: Years ended December 31, 2024 2023 Revenue 100 % 100 % Operating expenses: Research and development 16 14 Selling, general and administrative 27 25 Amortization expense 19 24 Litigation expense 4 2 Total operating expenses 66 65 Operating income from continuing operations 34 35 Interest expense (14 ) (16 ) Other income and expense, net 1 1 Loss on debt extinguishment — — Income from continuing operations before income taxes 21 20 Provision for income taxes 4 3 Net income from continuing operations 17 % 17 % The following table sets forth our revenue by year (in thousands, except for percentages): Years Ended December 31, 2024 vs. 2023 2024 2023 Decrease % Change Revenue $ 376,024 $ 388,788 $ (12,764 ) (3 )% The decrease in revenue during the year ended December 31, 2024, as compared to the prior year, was primarily attributable to the execution of two long-term license agreements with Kioxia and Western Digital in the first quarter of 2023, which did not recur in 2024, and declines in royalty revenue from certain Pay-TV customers, partially offset by a multi-year license agreement with Amazon for access to our media portfolio that occurred in the fourth quarter of 2024.
The 2020 Credit Agreement initially provided for a five-year senior secured term B loan facility in an aggregate principal amount of $1,050 million (the “2020 Term B Loan Facility”).
The 2020 Credit Agreement initially provided for a five-year senior secured term loan B facility in an aggregate principal amount of $1,050 million (the “2020 Term Loan B Facility”).
Cash Flows from Financing Activities Net cash used in financing activities was $178.3 million for the year ended December 31, 2023 principally due to $148.0 million in repayment of indebtedness, $21.3 million in dividends paid, and $11.3 million in repurchases of common stock for tax withholdings on equity awards, partially offset by $2.4 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans.
Net cash used in financing activities was $178.3 million for the year ended December 31, 2023 principally due to $148.0 million in repayment of indebtedness, $21.3 million in dividends paid, and $11.3 million in repurchases of common stock for tax withholdings on equity awards, partially offset by $2.4 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans.
Estimating variable consideration related to potential future price adjustments requires significant management judgment in evaluating the possible outcomes. 40 We generally recognize royalty revenue from per-unit or per-subscriber licenses based on units shipped or manufactured or number of subscribers. Revenue is recognized in the period in which the customer’s sales or usage are estimated to have occurred.
Estimating variable consideration related to potential future price adjustments requires significant management judgment in evaluating the possible outcomes. We generally recognize royalty revenue from per-unit or per-subscriber licenses based on units shipped or manufactured or number of subscribers. Revenue is recognized in the period in which the customer’s sales or usage are estimated to have occurred.
See “Note 2 – Summary of Significant Accounting Policies ” and “Note 4 – Revenue ” of the Notes to Consolidated Financial Statements for a full description of our accounting policies. Revenue recognition We derive the majority of our revenue from the licensing of our intellectual property (“IP”) rights to customers.
See “Note 2 – Summary of Significant Accounting Policies ” and “Note 4 – Revenue ” of the Notes to Consolidated Financial Statements for a full description of our accounting policies. 39 Revenue recognition We derive the majority of our revenue from the licensing of our intellectual property (“IP”) rights to customers.
Cash Flows from Operating Activities Cash flows provided by operations were $152.8 million for the year ended December 31, 2023, primarily due to our net income of $67.4 million being adjusted for non-cash items of depreciation of $1.5 million, amortization of intangible assets of $93.7 million, stock-based compensation expense of $18.1 million, deferred income tax of $11.4 million, amortization of debt issuance costs of $4.3 million and $(43.4) million net change in operating assets and liabilities.
Cash flows provided by operations were $152.8 million for the year ended December 31, 2023, primarily due to our net income of $67.4 million being adjusted for non-cash items of depreciation of $1.5 million, amortization of intangible assets of $93.7 million, stock-based compensation expense of $18.1 million, deferred income tax of $11.4 million, amortization of debt issuance costs of $4.3 million and $(43.4) million net change in operating assets and liabilities.
There is no guarantee that such repurchases under the Plan will enhance the value of our common stock. 38 We believe that based on current levels of operations and anticipated growth, our cash from operations, together with cash and cash equivalents currently available, will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months and thereafter for the foreseeable future.
There is no guarantee that such repurchases under the Plan will enhance the value of our common stock. 37 We believe that based on current levels of operations and anticipated growth, our cash from operations, together with cash and cash equivalents currently available, will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months and thereafter for the foreseeable future.
Cash Flows from Investing Activities Net cash used in investing activities was $34.5 million for the year ended December 31, 2023, primarily related to purchases of short-term investments in marketable securities of $42.8 million, and purchases of long-lived assets of $6.3 million, partially offset by maturities of marketable securities of $14.7 million.
Net cash used in investing activities was $34.5 million for the year ended December 31, 2023, primarily related to purchases of short-term investments in marketable securities of $42.8 million, and purchases of long-lived assets of $6.3 million, partially offset by maturities of marketable securities of $14.7 million.
In determining the standalone selling price of each performance obligation, we consider such factors as the number of past and projected future subscribers, units shipped, and units manufactured, as well as the per-subscriber or per-unit licensing rates we generally receive from licensees of comparable sizes in comparable markets and geographies.
In determining the standalone selling price of each performance obligation, we consider such factors as the customer’s revenues, the number of past and projected future subscribers, units shipped, and units manufactured, as well as the per-subscriber or per-unit licensing rates we generally receive from licensees of comparable sizes in comparable markets and geographies.
The Amendment provided for, among other things, (i) a new tranche of term loans (the “Refinanced Term B Loans”) in an aggregate principal amount of $810.0 million, (ii) a reduction of the interest rate margin applicable to such loans to (x) in the case of base rate loans, 2.50% per annum and (y) in the case of Eurodollar loans, LIBOR plus a margin of 3.50% per annum, (iii) a prepayment premium of 1.00% in connection with any repricing transaction with respect to the Refinanced Term B Loans within six months of the closing date of the Amendment, (iv) an extension of the maturity to June 8, 2028, and (v) certain additional amendments, including amendments to provide us with additional flexibility under the covenant governing restricted payments.
Amendment No. 1 provided for, among other things, (i) a new tranche of term loans (the “2021 Refinanced Term Loan B”) in an aggregate principal amount of $810.0 million, (ii) a reduction of the interest rate margin applicable to such loans to (x) in the case of base rate loans, 2.50% per annum and (y) in the case of Eurodollar loans, LIBOR plus a margin of 3.50% per annum, (iii) a prepayment premium of 1.00% in connection with any repricing transaction with respect to the 2021 Refinanced Term Loan B within six months of the closing date of Amendment No. 1, (iv) an extension of the maturity to June 8, 2028, and (v) certain additional amendments, including amendments to provide us with additional flexibility under the covenant governing restricted payments.
We believe that this structure reflects our current operational and financial management following the completion of the Separation and provides the best structure for us to focus on growth opportunities. Our Chief Executive Officer has been determined to be the Chief Operating Decision Maker (“CODM”) in consideration with the authoritative guidance on segment reporting.
We believe that this structure reflects our current operational and financial management and provides the best structure for us to focus on growth opportunities. Our Chief Executive Officer has been determined to be the Chief Operating Decision Maker (“CODM”) in consideration with the authoritative guidance on segment reporting.
For the years ended December 31, 2023 and 2022, respectively, we did not recognize any significant interest or penalties. See “Note 15 – Income Taxes ” of the Notes to Consolidated Financial Statements for additional detail. 41
For the years ended December 31, 2024 and 2023, respectively, we did not recognize any significant interest or penalties. See “Note 15 – Income Taxes ” of the Notes to Consolidated Financial Statements for additional detail. 40
If we are successful in receiving our South Korean withholding tax refunds of $120.3 million, including interest and foreign exchange gain, then $64.6 million of unrecognized tax benefit would be payable to the U.S. tax authorities.
If we are successful in receiving our South Korean withholding tax refunds of $112.4 million, including interest and foreign exchange, then $64.6 million of unrecognized tax benefit would be payable to the U.S. tax authorities.
Capital Expenditures Our capital expenditures for property and equipment consist primarily of leasehold improvements, purchases of computer hardware and software, information systems, and production and test equipment. During the years ended December 31, 2023 and 2022, we spent $3.8 million and $12.6 million on capital expenditures, respectively, and we expect capital expenditures in 2024 to be approximately $2.5 million.
Capital Expenditures Our capital expenditures for property and equipment consist primarily of leasehold improvements, purchases of computer hardware and software, information systems, and production and test equipment. During the years ended December 31, 2024 and 2023, we spent $1.8 million and $3.8 million on capital expenditures, respectively. We expect capital expenditures in 2025 to be approximately $2.0 million.
In addition to the cash requirements outlined above, we have returned cash to stockholders through both quarterly dividend payments and repurchases of our common stock under our stock repurchase plan. Quarterly Dividends In 2023, 2022 and 2021, we paid quarterly dividends of $0.05 per share in each of the March, June, September and December quarterly periods.
In addition to the cash requirements outlined above, we have returned cash to stockholders through both quarterly dividend payments and repurchases of our common stock under our stock repurchase plan, as further described below: Quarterly Dividends In 2024 and 2023, we paid quarterly dividends of $0.05 per share in each of the March, June, September and December quarterly periods.
We intend to make a continued investment in our R&D efforts because we believe they are essential to grow our patent portfolios to maintain and improve our competitiveness.
All R&D expense is expensed as incurred. We intend to make a continued investment in our R&D efforts because we believe they are essential to grow our patent portfolios to maintain and improve our competitiveness.
As a result of the filed and planned refund claims, we recorded a total of $120.3 million and $113.7 million as a noncurrent income tax receivable at December 31, 2023 and 2022, respectively, $64.6 million and $63.6 million as a noncurrent income tax payable at December 31, 2023 and 2022, respectively, and $49.1 million and $42.2 million as a reduction in deferred tax assets at December 31, 2023 and 2022, respectively.
As a result of the filed and planned refund claims, we recorded a total of $112.4 million and $120.3 million as a noncurrent income tax receivable at December 31, 2024 and 2023, respectively, $64.6 million and $64.6 million as a noncurrent income tax payable at December 31, 2024 and 2023, respectively, and $56.7 million and $49.1 million as a reduction in deferred tax assets at December 31, 2024 and 2023, respectively.
Additionally, we are required to make $29.1 million in payments based on the consolidated excess cash flow clause within the debt agreement. The excess cash flow payment has been classified as current portion of long-term debt in the Consolidated Balance Sheet as of December 31, 2023.
For the year ended December 31, 2023, we were required to make $29.1 million in payments based on the consolidated excess cash flow clause within the debt agreement. The excess cash flow payment was classified as current portion of long-term debt in the Consolidated Balance Sheet as of December 31, 2023.
Business Overview On October 1, 2022, Adeia Inc. (formerly known as Xperi Holding Corporation) (“Adeia”, “we”) completed the previously announced separation (“the Separation”) of its product business into an independent, publicly-traded company, Xperi Inc. (“Xperi Inc.”).
On October 1, 2022, we completed the previously announced separation (“the Separation”) of its product business into an independent, publicly-traded company, Xperi Inc. (“Xperi Inc.”).
Since the inception of the Plan, and through December 31, 2023, we have repurchased an aggregate of approximately 10.0 million shares of common stock at a total cost of $172.2 million at an average price of $17.24. As of December 31, 2023, the total remaining amount available for repurchase under the Plan was $77.8 million.
Since the inception of the Plan, and through December 31, 2024, we have repurchased an aggregate of approximately 11.4 million shares of common stock at a total cost of $192.2 million at an average price of $16.83. As of December 31, 2024, the total remaining amount available for repurchase under the Plan was $180.0 million.
For the year ended December 31, 2022, we recorded an income tax benefit of $28.6 million on a pretax income from continuing operations of $109.8 million, which resulted in an effective tax rate of (26.1)%.
For the year ended December 31, 2023, we recorded an income tax expense of $12.6 million on a pretax income from continuing operations of $80.0 million, which resulted in an effective tax rate of 15.8%.
We expect that litigation expense will continue to be a significant portion of our operating expenses, as it is used to enforce and protect our IP and contract rights.
See Part I, Item 3. – Legal Proceedings for additional information regarding these matters. We expect that litigation expense will continue to be a significant portion of our operating expenses, as it is used to enforce and protect our IP and contract rights.
These expenditures are expected to be financed with cash from operations, existing cash and cash equivalents and short-term investments. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs.
There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs.
In order to serve an increasingly connected world, we invent, develop, and license fundamental innovations that enhance billions of devices and shape the way millions of people explore and experience entertainment.
In order to serve an increasingly connected world, we invent, develop, and license fundamental innovations that enhance billions of devices and shape the way millions of people explore and experience entertainment. Our inventions are key enabling technologies that drive how consumers interact with entertainment and devices at home and on the go around the world.
We expect to continue to make additional payments on our existing debt from cash generated from operations. Our material cash requirements include the following contractual and other obligations. Debt As of December 31, 2023, we had outstanding long-term debt in an aggregate principal amount of $601.3 million, with a minimum of $40.5 million payable within 12 months.
Our material cash requirements include the following contractual and other obligations: Debt As of December 31, 2024, we had outstanding long-term debt in an aggregate principal amount of $487.1 million, with a minimum of $28.1 million payable within 12 months.
Our marketable debt securities are classified as available-for-sale (“AFS”) with credit losses recognized as a credit loss expense and non-credit related unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income or loss. We did not hold any such investments as of December 31, 2022.
Our marketable debt securities are classified as available-for-sale (“AFS”) with credit losses recognized as a credit loss expense and non-credit related unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income or loss. We expect to continue to make additional payments on our existing debt from cash generated from operations.
This section of this Form 10-K generally discusses 2023, 2022 and 2021 items and year-to-year comparisons of 2023 against 2022 and of 2022 against 2021. Except otherwise indicated, the year-to-year comparisons and results of operations discussed herein present the results of Adeia Inc. after giving effect to the Separation described herein.
Except as otherwise indicated, the year-to-year comparisons and results of operations discussed herein present the results of Adeia Inc. after giving effect to the Separation described herein.
On April 22, 2021, our Board of Directors authorized an additional $100.0 million of purchases under the Plan. The stock repurchases may be made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions, or pursuant to a Rule 10b5-1 plan.
In October 2024, our Board of Directors approved an increase of the existing share repurchase authorization up to a total of $200.0 million. The stock repurchases may be made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions, or pursuant to a Rule 10b5-1 plan.
Refer to “Note 8 – Leases ” of the Notes to Consolidated Financial Statements for additional information on lease obligations and maturities. 37 Guarantee Prior to the Separation, we and a subsidiary of Xperi Inc.
As of December 31, 2024, fixed lease payment obligations amounted to $10.0 million, with $0.3 million payable within 12 months. Refer to “Note 8 – Leases ” of the Notes to Consolidated Financial Statements for additional information on lease obligations and maturities. 36 Guarantee Prior to the Separation, we and a subsidiary of Xperi Inc.
Under the existing loan agreements, we have future minimum principal payments for our debt of $40.5 million in each year from 2024 through 2027, with the remaining principal balance of $439.3 million due in 2028. After the Separation, we own the debt under the Refinanced B Term Loans.
Interest is payable monthly. Under the existing loan agreement, we have future minimum principal payments for $28.1 million each year from 2025 through 2027, with the remaining principal balance of $402.9 million due in 2028. After the Separation, we own the debt under the term loan B facility.
Additionally, we are obligated to pay $29.1 million by April 2024, based on certain leverage ratios and our excess cash flow generated for the year ended December 31, 2023. We are obligated to continue to pay a portion of excess cash flows on an annual basis.
Additionally, we paid $29.1 million during the year ended December 31, 2024, based on certain leverage ratios and our excess cash flow generated for the year ended December 31, 2023.
Income Tax Payable As of December 31, 2023, we had accrued $81.8 million of unrecognized tax benefits in long-term income taxes payable related to uncertain tax positions, which includes an immaterial amount of accrued interest and penalties.
Refer to “Note 16 – Commitments and Contingencies ” of the Notes to Consolidated Financial Statements for additional detail. Income Tax Payable As of December 31, 2024, we had accrued $84.6 million of unrecognized tax benefits in long-term income taxes payable related to uncertain tax positions, which includes an immaterial amount of accrued interest and penalties.
Provision for (benefit from) Income Taxes Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Increase % Change Decrease % Change Provision for (benefit from) income taxes $12,604 $(28,620) $4,828 $41,224 (144)% $(33,448) (693)% For the year ended December 31, 2023, we recorded an income tax expense of $12.6 million on a pretax income from continuing operations of $80.0 million, which resulted in an effective tax rate of 15.8%.
Provision for Income Taxes Years Ended December 31, 2024 vs. 2023 2024 2023 Increase % Change Provision for income taxes $ 16,564 $ 12,604 $ 3,960 31 % For the year ended December 31, 2024, we recorded an income tax expense of $16.6 million on a pretax income from continuing operations of $81.2 million, which resulted in an effective tax rate of 20.4%.
Amortization Expense Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Decrease % Change Decrease % Change Amortization expense $93,735 $97,077 $98,090 $(3,342) (3)% $(1,013) (1)% 2023 compared to 2022 The decrease in amortization expense during the year ended December 31, 2023, as compared to the prior year, was primarily due to certain intangible assets acquired in prior years, which became fully amortized during 2022.
Amortization Expense Years Ended December 31, 2024 vs. 2023 2024 2023 Decrease % Change Amortization expense $ 70,721 $ 93,735 $ (23,014 ) (25 )% The decrease in amortization expense during the year ended December 31, 2024, as compared to the prior year, was primarily due to certain intangible assets becoming fully amortized during 2024.
We commenced repaying quarterly installments under the Refinanced Term B Loans in the third quarter of 2021. On May 30, 2023, we amended the 2020 Credit Agreement to replace the reference to LIBOR as the base rate with the reference to the Secured Overnight Financing Rate “SOFR” as administered by the Federal Reserve Bank of New York.
On May 30, 2023, we entered into Amendment No. 2 (“Amendment No. 2”) to the 2020 Credit Agreement to replace the reference to LIBOR as the base rate with the reference to the Secured Overnight Financing Rate “SOFR” as administered by the Federal Reserve Bank of New York.
This decrease resulted primarily from $148.0 million in repayment of long-term debt, $11.3 million in repurchases of common stock for tax withholdings on equity awards, $21.3 million in dividends paid, and $6.3 million in purchases of long-lived assets, partially offset by $152.8 million of cash generated from operations and $2.4 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans.
This increase resulted primarily from $212.5 million of cash generated from operations and $3.2 million in proceeds from our employee stock purchase program and exercise of stock options, partially offset by $114.2 million in repayment of long-term debt, $22.3 million in purchases of long-lived assets, $21.8 million in dividends paid, $20.0 million in repurchases of common stock ($1.3 million in repurchases of common stock were pending settlement as of December 31, 2024), and $12.8 million in repurchases of common stock for tax withholdings on equity awards.
The decrease in income tax expense for the year ended December 31, 2022, as compared to the prior year, was attributable to the release of valuation allowance. During the fourth quarter of 2019, we filed a refund claim for foreign taxes previously withheld from licensees in South Korea based on court rulings in South Korea and other business factors.
During the fourth quarter of 2024, we filed a refund claim for foreign taxes previously withheld from licensees in South Korea based on court rulings in South Korea and other business factors. These previously withheld foreign taxes were claimed as a foreign tax credit in the U.S.
Cash, cash equivalents and marketable securities were $83.6 million at December 31, 2023, a decrease of $31.0 million from $114.6 million at December 31, 2022.
Cash, cash equivalents and marketable securities were $110.4 million at December 31, 2024, an increase of $26.8 million from $83.6 million at December 31, 2023.
Net cash used in investing activities, including discontinued operations, was $2.9 million for the year ended December 31, 2022, primarily related to purchases of short-term investments of $4.5 million, and capital expenditures of $12.6 million, partially offset by maturities and sales of securities of $64.8 million.
Cash Flows from Investing Activities Net cash used in investing activities was $24.0 million for the year ended December 31, 2024, primarily related to purchases of short-term investments in marketable securities of $33.2 million, and purchases of long-lived assets of $22.3 million, partially offset by maturities of marketable securities of $31.5 million.
Other Purchase Obligations Our other purchase obligations primarily consist of non-cancelable obligations related to advertising, engineering services and internet and telecommunications services. As of December 31, 2023, we had purchase obligations of $3.4 million, including $1.8 million due in 2024, $1.4 million due in 2025, and $0.2 million due thereafter.
As of December 31, 2024, the balance of the guarantee liability is $17.1 million, including a current portion of $2.5 million. Other Purchase Obligations Our other purchase obligations primarily consist of non-cancelable obligations related to advertising, engineering services and internet and telecommunications services.
Refer to “Note 11 – Debt ” of the Notes to Consolidated Financial Statements for additional information on debt obligations and maturities. Leases We have lease arrangements for office and research facilities, data centers and office equipment. As of December 31, 2023, fixed lease payment obligations amounted to $9.7 million, with $0.5 million payable within 12 months.
The interest payments may vary with changes in interest rates, as well as due to reductions of the principal amount. Refer to “Note 11 – Debt ” of the Notes to Consolidated Financial Statements for additional information on debt obligations and maturities. Leases We have lease arrangements for office and research facilities, data centers and office equipment.
Following the Separation, we are a leading IP licensing platform in the consumer and entertainment space, with a diverse portfolio of media and semiconductor intellectual property and approximately 10,950 patents and patent applications worldwide.
Business Overview Adeia Inc. (formerly known as Xperi Holding Corporation) (“Adeia”, “we”) is a leading IP licensing platform in the consumer and entertainment space, with a diverse portfolio of media and semiconductor intellectual property and approximately 12,250 patents and patent applications worldwide.
Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Increase % Change Increase % Change Research and development $54,264 $44,579 $39,608 $9,685 22% $4,971 13% 2023 compared to 2022 The increase in R&D expense during the year ended December 31, 2023, as compared to the prior year, was primarily due to an increase in patent prosecution costs associated with an increase in patent filings to grow our patent portfolio, professional services costs and personnel costs as a result of increased headcount. 2022 compared to 2021 The increase in R&D expense during the year ended December 31, 2022, as compared to the prior year, was primarily driven by higher employee-related costs due to increased headcount.
Years Ended December 31, 2024 vs. 2023 2024 2023 Increase % Change Research and development $ 59,598 $ 54,264 $ 5,334 10 % The increase in R&D expense during the year ended December 31, 2024, as compared to the prior year, was primarily due to an increase in personnel costs as a result of increased headcount and an increase in patent portfolio expenses, patent technical sales support expenses, partially offset by a decrease in professional services costs.
Other Income and Expense, Net Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Increase % Change Increase % Change Other income and expense, net $6,320 $2,047 $768 $4,273 209% $1,279 167% 2023 compared to 2022 The increase in other income and expense, net during the year ended December 31, 2023, as compared to the prior year, was primarily due to an increase in interest income from significant financing components from certain revenue contracts and an increase in realized gain on our investment in marketable securities. 2022 compared to 2021 The increase in other income and expense, net during the year ended December 31, 2022, as compared to the prior year, was primarily due to an increase in interest income from significant financing components from certain revenue contracts executed during the year, partially offset by a decrease in realized loss on marketable investments.
Other Income and Expense, Net Years Ended December 31, 2024 vs. 2023 2024 2023 Decrease % Change Other income and expense, net $ 5,570 $ 6,320 $ (750 ) (12 )% The decrease in other income and expense, net during the year ended December 31, 2024, as compared to the prior year, was primarily due to a decrease in interest income from significant financing components from certain revenue contracts.
Litigation expense may fluctuate between periods because of planned or ongoing litigation, as described in Part I, Item 3 – Legal Proceedings. 34 Interest Expense Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Increase % Change Increase % Change Interest expense $62,574 $45,335 $38,973 $17,239 38% $6,362 16% 2023 compared to 2022 The increase in interest expense during the year ended December 31, 2023, as compared to the prior year, was primarily due to increased interest rates on our variable interest rate debt due to the rising interest rate environment, partially offset by a lower debt balance. 2022 compared to 2021 The increase in interest expense during the year ended December 31, 2022, as compared to the prior year, was primarily due to increased interest rates on our variable interest rate debt due to the rising interest rate environment.
Litigation expense may fluctuate between periods because of planned or ongoing litigation, as described in Part I, Item 3 – Legal Proceedings. 34 Interest Expense Years Ended December 31, 2024 vs. 2023 2024 2023 Decrease % Change Interest expense $ 52,539 $ 62,574 $ (10,035 ) (16 )% The decrease in interest expense during the year ended December 31, 2024, as compared to the prior year, was primarily due to lower debt balance, the reduction of the interest rate margin resulting from the repricing of our Term Loan B during the second quarter of 2024, and the Federal Reserve interest rate cut during the third quarter of 2024.
Moreover, United States federal, state and foreign government policies have contributed to a rise of inflation that has increased, and may continue to increase, the cost of our operations and have had, and may continue to have, an adverse effect on demand for our customers’ products and services and in turn our licensing revenues, which has had and may continue to have an adverse effect on our financial performance. 30 Although a significant portion of our revenue is derived from fixed-fee and minimum-guarantee arrangements from large, well-capitalized customers, our per-unit and variable-fee based revenue will continue to be susceptible to global health concerns, outbreaks, pandemics, armed conflict, market volatility, labor shortages, supply chain disruptions, microchip shortages and market downturns.
Although a significant portion of our revenue is derived from fixed-fee and minimum-guarantee arrangements from large, well-capitalized customers, our per-unit and variable-fee based revenue will continue to be susceptible to global health concerns, outbreaks, pandemics, armed conflict, geopolitical factors, tariffs, market volatility, labor shortages, supply chain disruptions, microchip shortages, changes in demand for semiconductors and market downturns. 31 Reportable Segments We operate and report in one segment: IP Licensing.
The income tax benefit of $28.6 million was primarily related to the release of certain valuation allowances of $78.7 million, partially offset by tax on current year income, foreign withholding taxes and, unrealized foreign exchange loss from prior year South Korea refund claims. The negative tax rate is the result of a tax benefit recorded against pre-tax income.
The income tax expense of $16.6 million was primarily related to tax on current year income, foreign withholding tax and unrealized foreign exchange loss from prior year South Korea refund claims offset by releases of uncertain tax positions, the foreign derived intangible income deduction and foreign tax credits.
The Refinanced Term B Loans contain customary covenants, and as of December 31, 2023, we were in full compliance with such covenants. Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements.
Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements.
We will maintain a full valuation allowance on our foreign deferred tax asset as the expectation of future taxable income is uncertain. 36 Liquidity and Capital Resources The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents as of and for the years ended December 31, 2023, 2022 and 2021.
We will maintain a full valuation allowance on our foreign deferred tax asset as the expectation of future taxable income is uncertain. 35 Liquidity and Capital Resources The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents as of and for the years ended December 31, 2024 and 2023: December 31, (in thousands) 2024 2023 Cash and cash equivalents $ 78,825 $ 54,560 Marketable securities 31,567 29,012 Total cash, cash equivalents and marketable securities $ 110,392 $ 83,572 Years Ended December 31, 2024 2023 Net cash from operating activities $ 212,461 $ 152,755 Net cash used in investing activities $ (24,022 ) $ (34,488 ) Net cash used in financing activities $ (164,174 ) $ (178,262 ) Our primary sources of liquidity and capital resources are our operating cash flows and our short-term investments in marketable securities.
Cash flows provided by operations, including discontinued operations, were $183.0 million for the year ended December 31, 2022, primarily due to our net loss of $298.6 million being adjusted for non-cash items of depreciation of $17.1 million, amortization of intangible assets of $143.2 million, stock-based compensation expense of $52.6 million, and an impairment charge of $354.0 million recognized in the third quarter of 2022 and included as part of discontinued operations for the year ended December 31, 2022.
Cash Flows from Operating Activities Cash flows provided by operations were $212.5 million for the year ended December 31, 2024, primarily due to our net income of $64.6 million being adjusted for non-cash items of amortization of intangible assets of $70.7 million, stock-based compensation expense of $26.6 million, amortization of debt issuance costs of $3.5 million, depreciation of $2.1 million, partially offset by the change in deferred income tax of $(7.1) million, and $53.2 million net change in operating assets and liabilities.
The decrease was partially offset by an increase in amortization expense as a result of patents acquired during the year. 2022 compared to 2021 The decrease in amortization expense during the year ended December 31, 2022, as compared to the prior year, was primarily due to certain intangible assets acquired in prior years, which became fully amortized during the year.
The decrease was partially offset by an increase in amortization expense as a result of patents acquired in 2024.
Key Metrics In evaluating our financial condition and operating performance, we primarily focus on revenue and cash flows from operations. For the year ended December 31, 2023, as compared to the same period in 2022: • Revenue decreased by $50.1 million, or 11.4%, from $438.9 million in 2022 to $388.8 million in 2023.
Key Metrics In evaluating our financial condition and operating performance, we primarily focus on revenue and cash flows from operations.
Research and Development Research and development expense (“R&D expense”) consists primarily of personnel costs, stock-based compensation, outside engineering consulting expenses associated with new IP development, as well as costs related to patent applications and examinations, reverse engineering, materials, supplies and an allocation of facilities costs. All R&D expense is expensed as incurred.
The decrease of $15.5 million was primarily attributable to the execution of long-term license agreements with Kioxia and Western Digital in the first quarter of 2023 and the execution of the long-term renewal of a license agreement with Samsung in the third quarter of 2023, partially offset by a settlement agreement and multi-year renewal with X Corp. for access to our media portfolio that occurred in the second quarter of 2024 and the execution of the multi-year license agreement with Amazon in the fourth quarter of 2024. 33 Research and Development Research and development expense (“R&D expense”) consists primarily of personnel costs, stock-based compensation, outside engineering consulting expenses associated with new IP development, as well as costs related to patent applications and examinations, reverse engineering, materials, supplies and an allocation of facilities costs.
These purchase obligations represent commitments under enforceable and legally binding agreements and do not represent the entire anticipated purchases in the future. Refer to “Note 16 – Commitments and Contingencies ” of the Notes to Consolidated Financial Statements for additional detail.
As of December 31, 2024, we had purchase obligations of $5.1 million, including $2.9 million due in 2025, $1.1 million due in 2026, and $1.1 million due thereafter. These purchase obligations represent commitments under enforceable and legally binding agreements and do not represent the entire anticipated purchases in the future.
Recurring revenues for the years ended December 31, 2023 and 2022 were $338.7 million and $363.6 million, respectively. The decrease of $24.9 million was primarily due to a decline in royalty revenue from certain Pay-TV customers in Canada. 32 Non-recurring revenues for the years ended December 31, 2023 and 2022 were $50.1 and $75.3 million, respectively.
Recurring revenues for the years ended December 31, 2024 and 2023 were $341.5 million and $338.7 million, respectively. The increase of $2.8 million was driven primarily by the execution of new customer agreements in 2024, and the ramp-up of recurring royalty payments under existing semiconductor agreements, partially offset by declines in royalty revenue from certain Pay-TV customers.
At December 31, 2023, $601.3 million was outstanding under the Refinanced Term B Loans with an interest rate, including unamortized debt discount and issuance costs of $15.6 million. Interest is payable monthly.
The 2025 Term Loan B will mature on June 8, 2028, the same date upon which the 2024 Term Loan B matured prior to giving effect to Amendment No. 4. At December 31, 2024, $487.1 million was outstanding under the term loan B facility with an interest rate, including unamortized debt discount and issuance costs of $11.6 million.
The current macroeconomic environment has also caused challenges and delays in acquiring new customers and executing license renewals. These factors have negatively impacted our financial condition and results of operations, which may result in an impairment of our long-lived assets, including goodwill, and increased credit losses.
For example, such conditions may cause volatility in the markets we serve, particularly the broad consumer electronics market. Impacts from adverse macroeconomic conditions may negatively impact our financial condition and results of operations, which could result in an impairment of our long-lived assets, including goodwill, and increased credit losses.
Net cash used in financing activities, including discontinued operations, was $263.3 million for the year ended December 31, 2022 principally due to $40.5 million in repayment of indebtedness, $20.9 million in dividends paid, $33.2 million in repurchases of common stock, and $183.0 net cash impact of the Separation, partially offset by $14.3 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans. 39 Long-term Debt On June 8, 2021, we amended (the “Amendment”) that certain Credit Agreement dated June 1, 2020 by and among us, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “2020 Credit Agreement”).
Cash Flows from Financing Activities Net cash used in financing activities was $164.2 million for the year ended December 31, 2024 principally due to $114.2 million in repayment of indebtedness, $21.8 million in dividends paid, $20.0 million in repurchases of common stock ($1.3 million in repurchases of common stock were pending settlement as of December 31, 2024), and $12.8 million in repurchases of common stock for tax withholdings on equity awards, partially offset by $3.2 million in proceeds from our employee stock purchase program and exercise of stock options.
Through providing the IP that helps to power smart devices, entertainment experiences and more, we have created a unified ecosystem that reaches highly-engaged consumers and uncovered new business opportunities. Headquartered in Silicon Valley with more than 35 years of operating experience, we have approximately 130 employees, with substantially all of our employees located in the U.S.
Headquartered in Silicon Valley with more than 35 years of operating experience, we have approximately 150 employees, with substantially all of our employees located in the U.S. Macroeconomic Conditions Macroeconomic conditions due to inflation, geopolitical instability and global health events had in the past, and may in the future have, an adverse impact on our business.
The increase in income tax expense for the year ended December 31, 2023, as compared to the prior year, was attributable to the impact of the release of certain valuation allowances of $78.7 million for the year ended December 31, 2022.
The increase in income tax expense for the year ended December 31, 2024, as compared to the prior year, was attributable to tax on current year income and unrealized foreign exchange loss from prior year South Korea refund claims offset by releases of uncertain tax positions.
The decrease was partially offset by an increase in marketing and advertising expense, professional services costs and personnel costs as a result of increased headcount. 2022 compared to 2021 The increase in SG&A expense during the year ended December 31, 2022, as compared to the prior year, was primarily due to increased stock-based compensation associated with the accelerated vesting of outstanding restricted stock awards upon the separation of a former executive in the first quarter of 2022, an increase in variable compensation, and the incurrence of certain separation related costs upon the consummation of the Separation in the fourth quarter of 2022.
Years Ended December 31, 2024 vs. 2023 2024 2023 Increase % Change Selling, general and administrative $ 103,443 $ 95,226 $ 8,217 9 % The increase in SG&A expense during the year ended December 31, 2024, as compared to the prior year, was primarily due to an increase in personnel related costs as a result of increased headcount as we scaled our business in 2024, an increase in professional services costs, an increase in certain administrative costs associated with the repricing of our credit facility in the second quarter of 2024, partially offset by decreases in separation costs that were incurred in 2023 but did not recur in 2024 since they were one-time costs, lower insurance costs and recovery of certain bad debt expenses.
Litigation Expense Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Increase % Change Increase % Change Litigation expense $9,333 $8,587 $5,272 $746 9% $3,315 63% 2023 compared to 2022 The increase in litigation expense during the year ended December 31, 2023, as compared to the prior year, was primarily due to increased legal fees during 2023 as a result of increased case activity, partially offset by a $2.5 million expense related to the Videotron matter and $2.6 million expense related to the Bell and Tellus matter that were each recorded in the second half of 2022.
Litigation Expense Years Ended December 31, 2024 vs. 2023 2024 2023 Increase % Change Litigation expense $ 13,653 $ 9,333 $ 4,320 46 % The increase in litigation expense during the year ended December 31, 2024, as compared to the prior year, was primarily due to increased activity in current litigation matters.
Through our IP licensing business, we help enable extraordinary experiences at home and on the go for millions of consumers around the world, with IP that helps elevate content and improves how audiences connect with it in a way that is more intelligent, immersive and personal.
Our foundational technologies help elevate content and improve how audiences connect with it in a way that is more intelligent, immersive and personal. Our innovative solutions help power smart devices, entertainment experiences and more, and have created a unified ecosystem that reaches highly-engaged consumers and uncovered new business opportunities.
Removed
Macroeconomic Conditions The current macroeconomic environment, which has arisen in part from the effects of the COVID-19 pandemic, has had, and may continue to have, an adverse impact on our business. The impact to date has included periods of significant volatility in the markets we serve, in particular the broad consumer electronics market.
Added
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons of 2024 against 2023.
Removed
Further, our operations and those of our customers have also been negatively impacted by certain trends arising out of the COVID-19 pandemic and macroeconomic conditions including labor market constraints, shortages of semiconductor components, decreased manufacturing capacities and delays in shipments, product development and product launches.
Added
A discussion regarding 2022 items and year-to-year comparisons of 2023 against 2022 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Removed
Key Developments The accounting requirements for reporting the Separation of Xperi Inc. as a discontinued operation were met when the Separation was completed on October 1, 2022. Accordingly, the financial results of Xperi Inc. for the years ended December 31, 2022 and 2021 are presented as net loss from discontinued operations, net of tax on the Consolidated Statements of Operations.
Added
For the year ended December 31, 2024, as compared to the same period in 2023: • Revenue decreased by $12.6 million, or 3%, from $388.8 million in 2023 to $376.2 million in 2024. • Recurring revenues increased by $2.8 million, or 0.8% from $338.7 million in 2023 to $341.5 million in 2024. • Non-recurring revenues decreased by $15.5 million, or 31% from $50.1 million in 2023 to $34.6 million in 2024. • Cash provided by operating activities increased by $59.7 million, or 39.1%, from $152.8 million in 2023 to $212.5 million in 2024. • We repriced our term loan which lowered our interest rate by 61 basis points and made $114.2 million in principal payments, bringing the outstanding balance to $487.1 million as of December 31, 2024.
Removed
Unless noted otherwise, the discussion of our results of operations pertain to continuing operations. Additionally, the operating results from continuing operations for all periods presented and those prior to the Separation, include certain general corporate overhead costs that do not meet the requirements to be presented in discontinued operations, although such costs are not reflective of our on-going operations.
Added
We subsequently completed another repricing in January 2025, further reducing our interest rate by 50 basis points. • We repurchased $20.0 million of our common stock in December 2024 following the decision of our Board of Directors to increase the total share repurchase authorization to $200.0 million in October of 2024. 32 Results of Operations Revenue We derive the majority of our revenue from the licensing of our intellectual property (“IP”) rights to customers.
Removed
Such general corporate overhead costs include labor and non-labor costs related to our corporate support functions (e.g., administration, human resources, finance, accounting, tax, information technology, corporate development and legal, among others) that historically provided support to Xperi Inc. prior to the Separation.
Added
Non-recurring revenues for the years ended December 31, 2024 and 2023 were $34.6 million and $50.1 million, respectively.
Removed
In addition, discontinued operations excludes the historical intercompany balances and transactions between Adeia and Xperi Inc. that were eliminated in consolidation. In connection with the Separation, we incurred separation costs of $45.0 million from January 1, 2020 to December 31, 2023.
Added
Loss on Debt Extinguishment During the year ended December 31, 2024, we recognized $0.5 million associated with the repricing of our Term Loan B and there were no such costs in 2023. Refer to discussion below for further detail on the repricing of our Term Loan B.
Removed
Separation costs primarily consist of third-party advisory, consulting, legal and professional service, IT and employee bonus costs directly related to the Separation, as well as other items that are incremental and one-time in nature. Out of these costs, $28.6 million were incurred prior to the Separation and are included in net loss from discontinued operations, net of tax.
Added
Based on certain leverage ratios and the voluntary prepayments we made during the year ended December 31, 2024, no excess cash flow payment is required in 2025. Future interest payments associated with the debt, based on current interest rates, total $117.2 million, with $36.7 million payable within 12 months.
Removed
The remaining separation costs of $16.4 million were incurred after the Separation and are reflected in continuing operations within operating expenses in our Consolidated Statements of Operations. Reportable Segments Upon completion of the Separation, in the fourth quarter of 2022, we changed our organizational structure to operate and report in one segment: IP Licensing.
Added
On April 22, 2021, our Board of Directors authorized an additional $100.0 million of purchases under the Plan, under which $172.2 million was utilized for stock repurchases, leaving the total authorized amount available for repurchase under the Plan at $77.8 million.
Removed
The decrease was due to the execution of a new, multi-year license agreement with Micron Technology in the first quarter of 2022 and the execution of a long-term license agreement with a leading consumer electronics and OTT service provider in the second quarter of 2022, for which a meaningful portion of the total revenue was recognized in the respective quarters, and in part due to a decline in royalty revenue from certain Pay-TV customers.

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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 changeWe did not hold investments classified as marketable securities as of December 31, 2022. Unrealized losses, net of tax, on these investments were not material as of December 31, 2023. We did not hold any derivatives, derivative commodity instruments or other similar financial instruments in our portfolio as of December 31, 2023.
Biggest changeUnrealized losses, net of tax, on these investments were not material as of December 31, 2024. We did not hold any derivatives, derivative commodity instruments or other similar financial instruments in our portfolio as of December 31, 2024.
During 2023, the impact of foreign exchange rate fluctuations related to translation of our foreign subsidiaries’ financial statements was immaterial to our Consolidated Financial Statements.
During 2024, the impact of foreign exchange rate fluctuations related to translation of our foreign subsidiaries’ financial statements was immaterial to our Consolidated Financial Statements.
Our marketable debt securities, consisting primarily of municipal bonds and notes, corporate bonds and notes, commercial paper, treasury and agency notes and bills and certificates of deposit, are classified as available-for-sale securities. As of December 31, 2023, the fair value of our investments classified as marketable securities was $29.0 million.
Our marketable debt securities, consisting primarily of municipal bonds and notes, corporate bonds and notes, commercial paper, treasury and agency notes and bills and certificates of deposit, are classified as available-for-sale securities. As of December 31, 2024, the fair value of our investments classified as marketable securities was $31.6 million.
To achieve these objectives, we maintain our portfolio of cash, cash equivalents and investments in a variety of securities, which are subject to risks including: Interest Rate Risk As of December 31, 2023, we had $601.3 million of outstanding indebtedness that was subject to floating interest rates.
To achieve these objectives, we maintain our portfolio of cash, cash equivalents and investments in a variety of securities, which are subject to risks including: Interest Rate Risk As of December 31, 2024, we had $487.1 million of outstanding indebtedness that was subject to floating interest rates.
Bank Liquidity Risk As of December 31, 2023, we have approximately $48.8 million of cash in operating accounts that are held with both domestic and international financial institutions, the majority of which is held with high quality domestic financial institutions.
Bank Liquidity Risk As of December 31, 2024, we have approximately $74.0 million of cash in operating accounts that are held with both domestic and international financial institutions, the majority of which is held with high quality domestic financial institutions.
At December 31, 2023, a 1% increase in the effective interest rate on our outstanding debt throughout a one-year period would result in an annual increase in our interest expense of approximately $5.7 million.
At December 31, 2024, a 1% increase in the effective interest rate on our outstanding debt throughout a one-year period would result in an annual increase in our interest expense of approximately $4.8 million.

Other ADEA 10-K year-over-year comparisons