Adeia Inc. Q2 FY2026 earnings call

Overall Financial and Operational Performance

• Q2 2026 delivered total revenue of $96.1 million in line with management expectations, with an adjusted EBITDA margin of 59%
• Generated $54.6 million in cash from operations, ending the quarter with $137.1 million in cash, cash equivalents, and marketable securities
• Closed 6 new license agreements and added a record 12 new total customers in the quarter, with a customer renewal rate above 90%
• Executed on all four pillars of capital allocation: paid down $6.1 million in debt principal, repurchased 353,000 common shares for $10 million, paid a 5-cent per share cash dividend, and completed 6 tuck-in IP portfolio acquisitions
• Grew total patent portfolio to over 14,250 assets, a 4% increase from Q1 2026, with almost 5,000 assets added since separation from Xperia four years prior

Key Customer and Deal Milestones

• Secured a multi-year pay TV/media portfolio license renewal with long-time customer Google (YouTube TV), adding one of the largest and fastest-growing virtual MVPD platforms to the customer base alongside Disney's Hulu Plus Live TV
• Closed a landmark multi-year e-commerce license agreement with RPX, covering 10 participating member companies across the digital commerce ecosystem for approximately 10,900 of Audia's patent assets
• Additional Q2 deals included new multi-year licenses with L'Oreal and a streaming documentary provider, plus renewals with a leading European pay TV provider and a Japanese consumer electronics manufacturer

Strategic Growth Updates

• Non-pay TV recurring revenue growth of 54% YoY confirms the success of Audia's diversification strategy away from the declining secular pay TV market
• Raised the company's long-term annual revenue target to $600 million, up from the prior target of $500 million: the media segment long-term target remains unchanged at $400 million, while the semiconductor segment target was increased to $200 million from $100 million driven by faster broader adoption of hybrid bonding technology
• AI-fueled demand for advanced semiconductors has created a hybrid bonding super cycle, with leading foundries, memory firms, and OSATs planning $125 billion in near-term CapEx for advanced packaging including hybrid bonding; major semiconductor players including Apple, Intel, Broadcom, AMD, Sandisk, and Kyoksha already have hybrid bonding products in production, with NVIDIA planning to adopt the technology by 2028
• Completed six tuck-in IP acquisitions for $9.5 million in Q2, focused on high-growth media verticals including e-commerce, OTT, and imaging
• Filed patent infringement litigation against Fubo after failing to reach a mutually acceptable license agreement; management notes the litigation is independent of Audia's existing Disney license agreement
• The board's CEO search process is progressing well, with a successor expected to be named by Q4 2026; operations continue as usual with unchanged strategy and leadership during the search

For Q2 2026, Audia reported total revenue of $96.1 million. The semiconductor segment generated $14.8 million in Q2 revenue, representing approximately 15.4% of total Q2 revenue. Year-to-date semiconductor revenue through Q2 was $48 million, equal to 24% of the long-term $200 million annual semiconductor target and more than 2025's full-year semiconductor revenue of $26 million. The remaining ~84.6% of Q2 total revenue came from the media segment, which includes pay TV, OTT, e-commerce, consumer electronics, and social media IP licensing. Non-pay TV recurring revenue within the media segment grew 54% year-over-year in Q2 2026, and is now nearly double the size of pay TV recurring revenue.

• Management reiterated its full-year 2026 revenue guidance range of $395 to $435 million, maintaining the prior outlook
• Full-year 2026 operating expenses are projected to be between $184 and $192 million, interest expense between $34 and $36 million, and other income between $5.5 and $6.5 million
• Full-year 2026 adjusted EBITDA margin is expected to be approximately 55%, with a non-GAAP tax rate of 21% and capital expenditures of approximately $2 million
• Management reaffirmed the long-term annual revenue target of $600 million (revised up from $500 million), with the semiconductor segment contributing $200 million and the media segment contributing $400 million, expected to be achieved within a five-year timeframe from Q2 2026

• The resolution timing of ongoing patent litigation (including the recently filed Fubo case and prior pay TV disputes) is uncertain, and could negatively impact short-term financial results if resolutions are delayed
• As a small-volume, high-average-deal-size business, Audia's full-year results are highly dependent on the timing of large license agreement signings; any delayed deals that push into 2027 would create a near-term revenue miss for 2026, though delayed deals would provide a foundation for 2027 performance
• Pay TV continues to face secular industry headwinds that negatively impact the segment's performance

Q: What is the current revenue split between the media and semiconductor segments, and what is the current state of the semiconductor deal pipeline? / A: Semiconductor segment revenue for Q2 2026 was $14.8 million, with year-to-date semiconductor revenue reaching $48 million, 24% of the new $200 million annual long-term target. This represents strong growth over 2025's full-year semiconductor revenue of $26 million. Hybrid bonding adoption is accelerating across all major semiconductor categories: major logic players including AMD, Apple, Broadcom, and Intel already have products in production, with NVIDIA planning to adopt the technology by 2028. Industry planned CapEx of $125 billion for advanced packaging confirms widespread adoption, justifying the upward revision to the semiconductor long-term target.

Q: Is the new $200 million annual semiconductor long-term target expected to be achieved in the same original timeframe as the prior $100 million target? And is Audia's RapidCool thermal technology available for licensing? / A: The $200 million target is expected to be achieved within the same five-year long-term planning timeframe that the original $100 million target was tied to. The upward revision is driven by faster-than-expected adoption of hybrid bonding across both logic and memory (NAND and HBM) segments, supported by massive industry CapEx buildout. RapidCool is ready for licensing, integrated into Audia's existing portfolio licensing model. It solves critical industry thermal management challenges for high-density chips, is compatible with existing manufacturing equipment and data center infrastructure, and is an important value-add for customer licensing discussions.

Q: With Audia currently running at the low end of 2026 guidance, how likely is the business to reach the high end of the range, and how dependent is that outcome on large individual deals? / A: Year-to-date 2026 revenue is already at the midpoint of the guidance range, which is a better position than the company was in at this point last year. Audia's business has always been somewhat back-end loaded for deal closing, and that trend continues this year, but the company is in a better position than in prior years. The pipeline has multiple paths to hit any point within the guidance range, with strong momentum across e-commerce, OTT, and semiconductors. Internal forecasting aligns with consensus analyst models.

Q: What should we expect for cash flow through the rest of 2026, and can the RPX e-commerce deal structure be replicated with other groups going forward? / A: The end-of-Q2 cash balance is consistent with the end-of-2025 balance, with the strong Q2 cash build planned to offset expected weaker Q3 operating cash generation, which is typical for Audia's seasonal pattern. Full-year 2026 cash from operations is still expected to be ~$150 million, with cash ending the year near the company's $100 million target after capital allocation activity (debt paydown, dividends, acquisitions, share repurchases). The RPX deal, which brought 10 e-commerce companies under license in one agreement, reduced licensing friction for fragmented customer segments, and Audia expects to replicate this deal structure for future e-commerce and other growth vertical licensing efforts.