Adeia Inc. Q3 FY2025 earnings call

• Paul Davis mentioned third quarter revenue was in line with expectations. • Announced filing litigation against AMD for patent infringement, with 10 patents including 7 hybrid bonding patents, and 8 patents expiring mid-2030 or later. • Progress in other litigations: Disney case moving forward with court rulings, Shaw case ruling in favor, Videotron case with positive ruling, Bell case expected to rule in 2026. • Closed 2 long-term license agreements: renewal with Altice and new e-commerce customer. • IP portfolio grew from ~9,500 to over 13,000 patent assets since separation. • Cash-generative business model with $17.8 million cash from operations in Q3, $312 million debt paid down since separation, and paid $0.05 per share dividend in Q3.

Third quarter revenue was $87.3 million. Non-Pay TV recurring revenue was up 31% year-over-year for the third quarter and 81% since separation. Revenue guidance for 2025 has been revised to a range of $360 million to $380 million, reflecting the unlikelihood of closing a license agreement with AMD in 2025 as previously expected.

• 2025 revenue guidance revised to $360M-$380M. • Operating expenses expected to be in range of $160M-$164M. • Interest expense expected in range of $40M-$41M. • Other income expected in range of $5.5M-$6.5M. • Adjusted EBITDA margin expected to be approximately 56%. • Capital expenditures expected to be ~$2M for full year.

• Litigation uncertainties with AMD and other cases, including potential trial delays due to factors like government shutdowns. • Timing risks related to deal executions affecting revenue recognition in the short term.

Q: Clarification on onetime catch-up fees in Q3 and details on pipeline, recurring revenue, and 2026 recurring media revenue growth.

A: Recurring revenue in Q3 was ~$1 million from one new license agreement and one renewal. Pipeline has significant deals in media and semiconductor, with potential uplift in recurring revenue.

Q: Reconciliation of prior quarter commentary and guidance adjustment.

A: Annual guidance provided, AMD litigation led to guidance adjustment as anticipated license agreement with AMD didn't close in 2025.

Q: Implications of AMD litigation on other semiconductor deals.

A: Litigation filed in Western District of Texas, cases anticipated to go to trial in 2027, 7 patents related to hybrid bonding, and 8 patents expiring mid-2030 or later.

Q: Implications of AMD litigation on other semiconductor deals and operating expenses in 2026.

A: Excited about hybrid bonding adoption, pipeline has potential deals, operating expenses will be managed with tight lid on spending while growing portfolio.