ADEA 10-K & 10-Q changes, risk factors and insider trading

If we fail to protectadequately protect, maintain and enforce our IP rights, contract rights, and our confidential information, our business willcould suffer.be adversely affected.

Our variable interest rate indebtedness may exposeexposes us to the risk of rising interest rate risk,rates, which couldwould cause our debt costs to increase significantly.

NewChanges governmentalin laws, regulations, newor interpretations of existing laws, includingrelating legislative initiatives, or judicial or regulatory decisions regardingto IP rights or the internet could causecreate uncertainties and resultadversely in harm toaffect our business.

We derive our revenue from the licensing of our patents and other intellectual property, including patent licenses and technology transfer agreements. The success of our business depends on our ability to continue to develop, acquire, maintain, defend and enforce patents that address the evolving needs of the industries in which our current or future customers operate. We devote significant resources to developingdevelop and acquiringacquire such patents and we must continue to do so in the future to remain competitive. Competition for acquiring such patents is intense and there is no assurance that we can continue to acquire such patents on favorable terms or develop such patents in a timely or economical fashion. Furthermore, our patents will expire in the future, the timing of which varies from jurisdiction to jurisdiction. Our current U.S. issued patents expire at various times through the next two decades. Consequently, to maintain and grow our licensable portfolio of IP rights 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 significantlywould 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. If we are unable to replace the revenue from an expiring license, either through a renewal of such license or with licenses from other customers, our results of operations couldwould be adversely impacted as compared to periods prior to such expiration.

In addition, we may not be able to continue entering into licenses on terms that are favorable to us, which couldwould harm our results of operations. While we have expanded our licensable technology portfolio through internal development and third-party acquisitions, there is no guarantee that these measures will lead to continued revenue. If we fail to continue to do business with our current customers, our business would be materially adversely affected.

If we fail to protectadequately protect, maintain and enforce our IP rights, contract rights, and our confidential information, our business will suffer.could be adversely affected.

OthersOthers, including our customers, may also develop new technologies that are similar or superior to our technologies, duplicate our technologies or design around our technologies. The growth of our business depends in large part on our ability to anticipate technological developments, secure relevant IP rights in a timely manner, our ability to convince third parties of the applicability of our IP rights to their products and services, and ourmaintain ability toand enforce our IP rights.

We attempt to obtain patent protection for our innovations, and our license agreements typically include both issued patents and pending patent applications. If we fail to file for patents in a timely manner or if the patents issued to us do not cover all of the inventions disclosed in our patent applications, others could use portions of our technology and IP without a license or without the payment of license fees. For example, our business may suffer if we are unable to obtain patent protection in a timely manner from the US Patent and Trademark Office.

Further, theThe laws and enforcement regimes of certain countries may not protect our technology and IP to the same extent as do the laws and enforcement regimes of the U.S. In certain jurisdictions we may be unable to protect our technology and IP adequately against unauthorized use, which could adversely affect our business.

At times, we are engaged in disputes regarding the licensing of our IP rights, including matters related to our license fees and other terms of our licensing arrangements. These types of disputes can be asserted by our customers, prospective customers, or by other third parties as part of negotiations with us or in private actions seeking monetary damages or injunctive relief, or in regulatory actions. Any such disputes, regardless of their merit, could be difficult and costly to defend or settle and could adversely impact our revenue.revenue and harm our reputation. Damages and requests for injunctive relief asserted in disputes like these could be significant and could be disruptive to our business.business, require significant management time and resources, and could limit or delay our ability to offer certain technologies or enter into or maintain certain license arrangements.

While some companies seek licenses before they commence manufacturing and/or selling products, services or solutions that use our patented inventions, most do not. Consequently, we proactively approach companies and seek to establish license agreements for using our inventions. We expend significant time and effort identifying users and potential users of our inventions and negotiating license agreements with companies, including those that may be reluctant to pay for licenses to our IP. However, if we believe that a third party is required to take a license to our patents in order to manufacture, sell, offer for sale, import or use products and services, we have in the past commenced, and may in the future, commence legal or administrative action against the third party if they refuse to enter into a license agreement with us. 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. 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. Litigation adversaries have also filed against us, and other third parties may in the future file,file validity challenges such as Inter Partes Review proceedings in the USPTO, which can lead to delays of our patent infringement actions as well as potential findings of invalidity. 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.

Some of our license agreements contain “most favored nation” clauses, which typically provide that if we enter into an agreement with another customer on more favorable terms, we must offer some of those terms to our existing customers.customers with the “most favored nation” clauses. We have entered into a number of license agreements with terms that differ in some respects from those contained in other agreements. These agreements may obligate us to provide different, more favorable, terms to those customers, which could, if applied, result in lower revenue or otherwise adversely affect our business, financial condition, and results of operations. While we believe that we have appropriately complied with the most favored nation terms included in our license agreements, these contracts are complex and other parties could reach a different conclusion that, if enforced, could have an adverse effect on our financial condition or results of operations. Disputes over such terms may be costly, difficult and time-consuming to resolve, and could divert our management’s attention and resources.

A portion of our revenue is dependent on sales by our customers that are outside our control and that could be negatively affected by a variety of factors, including global, regional and/or country-specific economic conditions and/or public health concerns, outbreaks or pandemics, country-specific natural disasters, hostilities, or armed conflicts impacting licensee manufacturing and sales, demand and buying patterns of end users, which are often driven by increasingly rapid replacement and innovation cycles, the service life of products incorporating our technologies, competition for our customers’ products, trade regulations and the imposition of tariffs, supply chain disruptions, and any decline in the sale prices our customers receive for their covered products and services. The foregoing factors are difficult to forecast and could adversely affect both our quarterly and annual operating results and financial condition.

Due to the exclusionary nature of patent rights, we do not compete, in a traditional sense, with other patent holders for patent licensing relationships. Other patent holders do not have the same rights to the inventions and technologies encompassed by our patent portfolio. However, our future success depends on our ability to establish and maintain licensing relationships with companies in the industries that we currently serve and may enter in the future, including Pay-TV service providers, consumer electronicsCE manufacturers, semiconductor and equipment manufacturers, and the entertainment and electronics businesses.

We may not realize the anticipated benefits of the other acquisitions or other strategic transactions we may complete in the future, and we may not be able to incorporate any acquired IP or technologies with our existing operations, or integrate personnel, systems, processes and operations from the acquired businesses, in which case our business could be harmed.

Financing for future acquisitions or other strategic transactions may not be available on favorable terms, or at all. If we use our equity securities to fund the acquisition, it may result in significant dilution to our existing stockholders. If we identify an appropriate acquisition candidate for any of our businesses, we may not be able to negotiate the terms of the acquisition successfully, finance the acquisition or integrate the acquired technologies or employees into our existing business and operations. Future acquisitions and divestitures may not be well-received by the investment community, which may cause the value of our stock to fall. We cannot ensure that we will be able to successfully complete any acquisition or divestiture in the future. Further, the terms of our indebtedness constrain our ability to make and finance additional acquisitions or divestitures.

political and economic instabilityinstability, trade conflict, and trade conflictwars;

economic sanctions, import and export restrictionsrestrictions, and other trade barriers;

Any one or more of the above factors could adversely affect our international operations and could significantly affect our results of operations, financial conditioncondition, cash flows, and cash flows.reputation. The results of our operations will beare dependent to a large extent upon the global economy. Geopolitical factors such as terrorist activities, armed conflict, global health conditions, outbreaks or pandemics that adversely affect the global economy may adversely affect our operating results and financial condition.

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. The occurrence of any of these or similar events could damage our business, hurt our ability to license IP and collect revenue, threaten the proprietary or confidential nature of our technology, harm our reputation, increase the costs of our ongoing cybersecurity monitoring, protections and enhancements, require us to incur significant expenses to evaluate, address, remediate or resolve such issues and expose us to litigation and other liabilities. Because some of our technologies are intended to inhibit use of or restrict access to our customers’ IP, we may become the target of hackers or other persons whose use of, or access to, our customers’ IP is affected by our technologies. Also, hackers may, for financial gain or other motives, seek to infiltrate or damage our systems, or obtain sensitive business information or customer information from our systems. Further, the use of artificial intelligenceAI by cybercriminals may increase the frequency and severity of cybersecurity attacks against us or our third-party vendors and clients. We also may be exposed to customer claims, or other liability, in connection with any security breach or inadvertent disclosure. We may be required to expend significant capital or other resources to protect against the threat of security breaches, hacker attacks or system malfunctions or to alleviate and remediate problems caused by such breaches, attacks or failures.

Our success also depends on our ability to attract, train and retain highly skilled managerial, sales, marketing, research and development, legal and finance personnel and on the abilities of new personnel to function effectively, both individually and as a group. Competition for qualified personnel is intense, particularly in the technology industry in which we operate, and we may not be successful in attracting and retaining such personnel. If we fail to attract and retain qualified employees, including internationally, our ability to grow our business could be harmed. In order to attract and retain personnel in a competitive marketplace, we believe that we must provide a competitive compensation package, including cash and equity-based compensation. Some of the companies with which we compete for experienced personnel may be able to offer more attractive terms of employment to potential candidates. Volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees.

As of December 31, 2024,2025, we had $487.1$426.7 million of total debt outstanding under our 2024 Term Loan B. 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.

Our variable interest rate indebtedness may exposeexposes us to the risk of rising interest rate risk,rates, which couldwould cause our debt costs to increase significantly.

As of December 31, 2024,2025, we had $487.1$426.7 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. At December 31, 2024,2025, 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$4.2 million. Any significant increase in our interest expense couldwould negatively impact our results of operations and cash flows and also our ability to pay dividends in the future. If the U.S. Federal Reserve raises its benchmark interest rate through one or more rate hikes, the increases would likely impact the borrowing rate on our outstanding indebtedness and increase our interest expense.

If our cash flows and capital resources are insufficient to timely fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital, or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of cash flows and capital resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our credit agreement restricts our ability to dispose of assets, use the proceeds from any disposition of assets and refinance our indebtedness. 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.

Our subsidiaries own a significant portion of our assets and conduct substantially all of our operations. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Additionally, distributions from our non-U.S. subsidiaries may be subject to foreign withholding taxes and would be subject to U.S. federal and state income tax which could reduce the net cash available for principal and interest payments.

Ensuring that we have adequate internal controls and procedures in place to facilitate the production of accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. We are continually indocument, the process of documenting, reviewingreview and, if appropriate, improvingimprove our internal controls and procedures in connection with Section 404 of the Sarbanes-Oxley Act of 2002,2002 which(“SOX”). Section 404 of SOX requires annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accountants on the effectiveness of our internal control over financial reporting. If we identify areas for further attention or improvement, implementing any appropriate changes to our internal controls may require specific compliance training of our directors, officers and employees, entail substantial costs in order to modify our existing accounting systems, and take a significant amount of time to complete. We have in the past identified, and may in the future identify, significant deficiencies in the design and operation of our internal controls, which have been or will in the future need to be remediated.

We are subject to U.S. federal and state income taxes, as well as taxes in various international jurisdictions. As a result, our effective tax rate is derived from a combination of applicable tax rates in the various jurisdictions where we operate. In preparing our financial statements, we estimate the amount of tax to accrue in each tax jurisdiction. Nevertheless, our effective tax rate may be different than what we experienced in the past due to numerous factors, including from the passage of new tax laws, changes in the mix of our profitability from state to state and from country to country, the amount of payments from the Company’s U.S. entities to related foreign entities, the results of examinations and audits of our tax filings, our inability to secure or sustain acceptable agreements with tax authorities and changes in accounting for income taxes. Our future effective tax rates could be unfavorably affected by changes in tax rates, tax laws or the interpretation of tax laws, by changes in the amount of pre-tax income derived from countries with high statutory income tax rates, or by changes in our deferred tax assets and liabilities, including changes in our ability to realize our deferred tax assets. Our effective income tax rate could be unfavorably affected by changes in the amount of sales to customers in countries with high withholding tax rates. Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations and may result in tax obligations in excess of amounts accrued in our financial statements.

At December 31, 2024,2025, we held approximately $78.8$73.1 million in cash and cash equivalents and $31.6$63.6 million in short-termmarketable investments.securities. Short-termMarketable investmentssecurities typically include various financial securities such as corporate bonds and notes, municipal bonds and notes, commercial paper, treasury and agency notes and bills, and money market funds. Although we invest in high quality securities, ongoing financial events have at times adversely impacted the general credit, liquidity, market and interest rates for these and other types of debt securities. Changes in monetary policy by the Federal Reserve, government fiscal policies, and global economic and market conditions may adversely affect the value of our investment portfolio. We may in the future have a need to sell investments before their maturity dates, which could result in losses on the sale of those investments. 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.

NewChanges governmentalin laws, regulations, newor interpretations of existing laws,laws includingrelating legislative initiatives, or judicial or regulatory decisions regardingto IP rights or the internet could causecreate uncertainties and resultadversely in harm toaffect our business.

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. Patent and Trademark Office in the examination of U.S. patent applications, which may decrease the likelihood that we will be able to obtain patents and may increase the likelihood of challenges to patents we obtain or license. ForAs example,such, our patents continue to face challenges in the U.S. from Interex Partesparte Reviewreexaminations proceedingin the United States Patent and Trademark Office and from inter partes review (“IPR”) proceedings before the Patent Trial and Appeal Board. HistoricallyHistorically, these types of proceedingsIPRs have a high rate of invalidation of patents, and patents we have asserted in litigation have been and may continue to be invalidated in sucheither proceedings.IPRs or ex parte reexaminations. Additionally, there have been and may be bills introduced in the U.S. Congress relating to patent law that could adversely impact our business depending on the scope of any bills that may ultimately be enacted into law. Some of these changes or potential changes may not be advantageous for us and may make it more difficult to obtain adequate patent protection, or to enforce our patents against parties using them without a license or payment of royalties. These changes or potential changes could increase the costs and uncertainties surrounding the prosecution of our patent applications and the enforcement of our patent rights. In addition,Other potential changes in the law, such as with respect to patent exhaustion and permissible licensing practices, could have a negative effect on our ability to license our patents and, therefore, on the royalties we can collect. 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.

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.internet and digital technologies more broadly. These laws may relate to many areas that impact our business, including IP rights, privacyprivacy, artificial intelligence and taxation. These types of regulations are likely to differ between countries and other political and geographic divisions. ChangesIt is difficult to anticipate the impact of current or future laws and regulations on our business, and changes to these laws, or the interpretation or enforcement 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.practices, Itwhich iscould difficultmaterially toand anticipateadversely theaffect impactour business, financial condition, and results of current or future laws and regulations on our business.operations. 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.

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. In particular, our business has been impacted due to increased and ongoing trade conflicts and the imposition of tariffs and retaliatory tariffs between the United States and China. Further United States government actions to protect domestic economic and security interests could lead to further restrictions or additional or increased conflicts. 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. Any such conflicts or trends could have a material adverse impact on our revenue. In addition, any failure by us to comply with these complex restrictions, or other restrictions that may be imposed in the future, in the United States or internationally, could subject us to fines and penalties, require changes to our business practices and result in reputational harm.

cyclical fluctuations in semiconductor and consumer electronicsCE markets generally;

This section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons of 2025 against 2024. A discussion regarding 2023 items and year-to-year comparisons of 2024 against 2023. 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. 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.2024. The following discussion of our financial condition and results of operations should be read together with the audited consolidated financial statements and notes to the consolidated financial statements included elsewhere in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed under “Risk Factors” in Part I, Item 1A above.

Adeia Inc. (formerly known as Xperi Holding Corporation) (“Adeia”, “we”) is a leading IP licensing platform in the consumer and entertainment space, with aan diverseextensive portfolio of media and semiconductor intellectual property and approximately 12,25013,750 patentsmedia and semiconductor patent applicationsassets worldwide. 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. 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.

Headquartered in Silicon Valley with more than 35 years of operating experience, we have approximately 150 full-time employees, with substantially all of our employees located in the U.S.

Macroeconomic conditions due to inflation, geopolitical instability and global health events hadhave in the past, and may in the future have, an adverse impact on our business. 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.

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, trade regulations and tariffs, market volatility, labor shortages, supply chain disruptions, microchip shortages, changes in demand for semiconductors and market downturns.

Revenue decreasedincreased by $12.6$67.4 million, or 3%,18%, from $388.8$376.0 million in 20232024 to $376.2$443.4 million in 2024.2025.

Non-recurring revenues decreasedincreased by $15.5$57.4 million, or 31%166% from $50.1 million in 2023 to $34.6 million in 2024.2024 to $92.0 million in 2025.

Cash provided by operating activities increaseddecreased by $59.7$54.4 million, or 39.1%,26%, from $152.8 million in 2023 to $212.5 million in 2024.2024 to $158.1 million in 2025.

We repriced our term loan which lowered our interest rate by 61 basis points and made $114.2$60.4 million in principal payments, bringing the outstanding balance to $487.1$426.7 million as of December 31, 2024. We subsequently completed another repricing in January 2025, further reducing our interest rate by 50 basis points.2025.

We derive the majority of our revenue from the licensing of our intellectual property (“IP”) rights to customers. For our revenue recognition policy, including descriptions of revenue-generating activities, refer to “Note 4 – Revenue” of the Notes to Consolidated Financial Statements. The following table presents our historical operating results for the periods indicated as a percentage of revenue:

The decreaseincrease in revenue during the year ended December 31, 2024,2025, as compared to the prior year, was primarily attributable to the execution of twoa new long-term license agreementsagreement with Kioxia and Western DigitalDisney in the firstfourth quarter of 2023, which did not recur in 2024, and declines in royalty revenue from certain Pay-TV customers,2025, partially offset by a multi-year license agreement with Amazon for access to our media portfolio that occurred in the fourth quarter of 2024. A portion of revenue from both license agreements was recognized up-front in the respective period each agreement was executed.

Recurring revenues for the years ended December 31, 20242025 and 20232024 were $341.5$351.3 million and $338.7$341.5 million, respectively. The increase of $2.8$9.8 million was driven primarily by the execution of new customerlicense agreements with new customers in 2024,2024 and the2025, ramp-upand of recurringincreased royalty paymentsrevenue underfrom existingcertain semiconductor agreements,customers, which were partially offset by declines in royalty revenue from certain Pay-TV customers.

Non-recurring revenues for the years ended December 31, 20242025 and 20232024 were $34.6$92.0 million and $50.1$34.6 million, respectively. The decreaseincrease of $15.5$57.4 million was primarily attributable to the execution ofa new 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 SamsungDisney in the thirdfourth quarter of 2023,2025, 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. A portion of revenue from both license agreements was recognized up-front in the respective period each agreement was executed.

Research and development expense (“R&D expense”) consistscosts consist 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 expensecosts isare 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 maintainsecure new customers and improverenew ouragreements competitiveness.with existing customers.

The increase in R&D expensecosts during the year ended December 31, 2024,2025, 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, partiallyand offsetan by a decreaseincrease in professionalpersonnel servicesrelated costs.

Selling, general and administrative (“SG&A”) expenses consist primarily of personnel costs, sales commission, advertising, branding activities, stock-based compensation, professional services, facilities costs, and expenses related to our executiveexecutive, finance, human resource, legal, and information technology organizations.

The increase in SG&A expense during the year ended December 31, 2024,2025, as compared to the prior year, was primarily due to an increaseincreases in personnel related costs asand aadvertising 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,expense, partially offset by decreases in separationoutside 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.services.

The decrease in amortization expense during the year ended December 31, 2024,2025, as compared to the prior year, was primarily due to certain intangible assets becoming fully amortized during 2024. The decrease was partially offset by anthe increaseacquisition inof patent portfolios and the resulting amortization expense as a result of patentsthose acquired in 2024.assets.

The decrease in interest expense during the year ended December 31, 2024,2025, as compared to the prior year, was primarily due to lower debt balance,balances, the reduction of the interest rate margin resulting from the repricing of our Term Loan B during the second quarter of 2024,2024 and the first quarter of 2025, and the effects of the Federal Reserve interest rate cutcuts during the2024 thirdand quarter of 2024.2025.

The decreaseincrease in other income and expense, net during the year ended December 31, 2024,2025, as compared to the prior year, was primarily due to aan decreaseincrease in interest income from significant financing components from certain revenue contracts.contracts and interest income from our cash, cash equivalents and marketable securities.

During the year ended December 31, 2024, we recognized $0.5 million associated with the repricing of our Term Loan BB. and thereThere were no such costs in 2023.2025. Refer to discussion below for further detail on the repricing of our Term Loan B.

For the year ended December 31, 2024,2025, we recorded an income tax expense of $16.6$29.8 million on a pretax income from continuing operations of $81.2$140.9 million, which resultedresulting in an effective tax rate of 20.4%.21.2%. The income tax expense offor $16.6the millionyear was primarily relatedattributable to tax on current year income, foreign withholding tax and unrealized foreign exchange loss from prior year South Korea refund claimspartially offset by foreign tax credits, the foreign-derived intangible income deduction, and releases of uncertain tax positions, the foreign derived intangible income deduction and foreign tax credits.positions. The increase in income tax expense for the year ended December 31, 2024,2025, as compared to the prior year, was primarily attributable to taxhigher onpretax current year income and unrealized foreign exchange loss from prior year South Korea refund claims offset by releases of uncertain tax positions.income.

For the year ended December 31, 2023,2024, we recorded an income tax expense of $12.6$16.6 million on a pretax income from continuing operations of $80.0$81.2 million, which resultedresulting in an effective tax rate of 15.8%.20.4%. The income tax expense offor $12.6the millionyear was primarily relatedattributable to tax on current year income, foreign withholding taxtaxes, and unrealized foreign exchange losslosses fromrelated to prior year South Korea refund claimsclaims, partially offset by releases of uncertain tax positions.

The need for a valuation allowance requires an assessment of both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. In making such an assessment, significant weight is given to evidence that can be objectively verified. After considering both positive and negative evidence to assess the realizability ofGiven our net deferred tax assets, we determined that the positive evidence outweighed the negative evidence primarily due to cumulative income from our IP Licensing business on a continuing operations basis and the expectationhistory of sustained profitabilityprofitability, in future periods, andwe concluded that it was more-likely-than-not that we would realize our U.S. federal and certain state deferred tax assets. AsWe continue to maintain a result, during the fourth quarter of 2022, we released the valuation allowance on all the federal deferredagainst tax assetsattributes and state deferred tax assets, except forin California and certain other states wherestate tax attributes that can only be utilized against the income of specific legal entities. The release of the valuation allowance resulted in $86.1 million of tax benefit in the fourth quarter of 2022. We will maintain a full valuation allowance on our foreign deferred tax asset as the expectation of future taxable income is uncertain.

Our primary sources of liquidity and capital resources are our operating cash flows and our short-term investments in marketable securities. Cash, cash equivalents and marketable securities were $136.7 million at December 31, 2025, an increase of $26.3 million from $110.4 million at December 31, 2024, an increase of $26.8 million from $83.6 million at December 31, 2023.2024. This increase resulted primarily from $212.5$158.1 million of cash generated from operations and $3.2$2.4 million in proceeds from our employee stock purchase program and exercise of stock options, partially offset by $114.2$60.4 million in repayment of long-term debt, $22.3$8.8 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 wereexecuted pendingduring settlementthe asyear ofended December 31, 2024 were settled in January 2025), and $12.8$22.5 million in repurchases of common stock for tax withholdings on equity awards.

As of December 31, 2024,2025, we had outstanding long-term debt in an aggregate principal amount of $487.1$426.7 million, with a minimum of $28.1$24.4 million payable within the next 12 months. For the year ended December 31, 2023, we were required to make $29.1 million in payments basedBased 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. Based onachieving certain leverage ratios and theas a result of voluntary prepaymentsprepayments, we madewere duringnot required to make excess cash flow payments as pursuant to the yearagreement for either of the years ended December 31, 2024,2024 no excess cash flow payment is required inand 2025.

Prior to the Separation, we and a subsidiary of Xperi Inc. (“Xperi Sub”) entered into an agreement (the “Specified Agreement”) with a third party pursuant to which we guarantee the performance of Xperi Sub under the Specified Agreement, including its payment obligations to such third party. In connection with the Separation, we and Xperi Sub entered into a separate cross business agreement (the “Cross Business Agreement”) effective as of October 1, 2022 under which we agreed to make guarantee payments to Xperi Sub in amounts based on certain of its operating expenses and other minimum performance obligations under the Specified Agreement through 2031. Consequently, on October 1, 2022, we recognized a guarantee liability of $19.7 millionmillion, which represents the fair value of ourAdeia Media’s projected payments of such operating expenses during the term of the Cross Business Agreement. Subsequent changes to the carrying value of the guarantee are recognized as part of our results of operations. As of December 31, 2024,2025, the balance of the guarantee liability is $17.1$16.3 million, including a current portion of $2.5$0.8 million. Operating expense reimbursements are capped at a maximum of $7.5 million per annum. To date, such reimbursements have not been material.

As of December 31, 2024,2025, we had accrued $84.6$7.3 million of unrecognized tax benefits in long-term income taxes payable related to uncertain tax positions, which includesinclude an immaterial amount of accrued interest and penalties. At this time, we are unable to reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or decrease over time. 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.

In 20242025 and 2023,2024, we paid quarterly dividends of $0.05 per share in each of the March, June, September and December quarterly periods. Our capacity to pay dividends in the future depends on many factors, including our financial condition, results of operations, capital requirements, capital structure, industry practice and other business conditions that the Board of Directors considers relevant. We anticipate that allany quarterly dividends if and when paid, will be paid out of cash, cash equivalents and short-term investments in marketable securities.

On June 12, 2020, our Board of Directors terminated a prior stock repurchase program and approved a new stock repurchase plan (the “Plan”), which provides for the repurchase of up to $150.0 million of our common stock dependent on market conditions, share price and other factors. 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. In October 2024, our Board of Directors approved an increase ofto 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. SinceDuring the inceptionyear of the Plan, and throughended December 31, 2024,2025, we have repurchased ana aggregatetotal of approximately 11.41.5 million shares of common stock at a total cost of $192.2 millionstock, at an average price of $16.83.$13.55 per share for a total cost of $20.0 million. During the year ended December 31, 2024, we repurchased a total of approximately 1.4 million shares of common stock, at an average price of $13.95 per share for a total cost of $20.0 million. As of December 31, 2024,2025, the total remaining amount available for repurchase under thethis Planplan was $180.0$160.0 million.

We may continue to execute authorized repurchases from time to time under theour Plan.existing stock repurchase plan. The amount and timing of any repurchases under the Planstock repurchase plan depend on a number of factors, including, but not limited to, the trading price, volume and availability of our common shares. There is no guarantee that such repurchases under the Planstock repurchase plan will enhance the value of our common stock.

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 each of the years ended December 31, 20242025 and 2023,2024, 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.expenditures. Our capital expenditures for intangible assets consists primarily of acquired patents. During the years ended December 31, 20242025 and 2023,2024, we spent $20.5$7.0 million and $2.5$20.5 million on purchases of intangible assets, respectively. 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.

On May 20,20 2024, we entered into Amendment No. 3 (“Amendment No. 3”) to the 2020 Credit Agreement, which provided for, among other things, (i)for a repricing of the 2020 Term Loan B Facility through a refinancing of the entire amount of the 2021 Refinanced Term Loan B with a new tranche of term loans (the “2024 Term Loan B”) in anoutstanding aggregate principal amount of $561.1 million,million. Amendment No. 3 also reduced interest margins (ii50 basis points) from SOFR plus a reductionmargin of the interest rate margin applicable3.50% to such loans to (x) in the case of SOFR loans, SOFR plus a margin of 3.00% per annum and (y) in the case ofor base rate loans,plus a margin of 2.00% per annum,annum. (iii)In aaddition, reductionAmendment inNo. 3 lowered the excess cash flow mandatory payment thresholds and (iv)credit aspread prepaymentadjustment premium of 1.00% in connection with any repricing transaction with respect to the 2024 Term Loan B within six months of the closing date of Amendment No. 3. The 2024 Term Loan B will mature on June 8, 2028, the same date upon which the 2021 Refinanced Term Loan B matured prior to giving effect to Amendment No. 3.provision.

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. Interest is payable monthly. Under the existing loan agreement, we have future minimum principal payments for $28.1our debt of $24.4 million each year from 20252026 through 2027, with the remaining principal balance of $402.9$378.0 million will be due inJune 8, 2028. After the Separation, we own the debt under the term loan B facility. 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. The 2020 Credit Agreement, as amended, also requires that we continue to make cash payments on an annual basis based on certain leverage ratios and excess cash flow generated for the immediately preceding fiscal year. The cash payments are applied to the remaining principal balance due at final maturity. Based on certain leverage ratios and the voluntary prepayments wethe Company made during the year ended December 31, 2024, no excess cash flow paymentpayments iswere required infor 2025.the years ended December 31, 2025 and 2024. The term loan B facility contains customary covenants, and as of December 31, 2024,2025, we were in full compliance with such covenants.

We derive the majority of our revenue from the licensing of our intellectual property (“IP”) rights to customers. Generally, revenueRevenue is recognized upon transfer ofwhen control of the IP rights is transferred to customersa customer in an amount that reflects the consideration that we expect to be entitled to in exchange for thosethe IPlicensing rights.of our IP. The primary judgments include identifying the performance obligations in the contract, determining standalone selling price used to allocate consideration in a contract with multiple performance obligations, estimating the fair value of noncash consideration, estimating variable consideration relating to potential future price adjustments as a result of legal contract disputes, and estimating quarterly royalties prior to receiving the royalty reports from the licensee, determining standalone selling price and allocating consideration in a contract with multiple performance obligations.licensee.

Adeia Inc. (formerly known as Xperi Holding Corporation) (“Adeia”, “we”) is a technology company and an innovation incubator. We have spent decades investing in advanced research and development to create market-leading technologies for the entertainment, media, consumer electronics, e-commerce 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. We believe our commitment to and investment in innovation has resulted in a leading IP licensing platform in these industries, with an extensive portfolio of media and semiconductor IP and approximatelyover 13,75014,250 media and semiconductor patent assets worldwide. 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.

We operate and report in one segment: IP Licensing. 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 considerationaccordance with the authoritative guidance on segment reporting.

In evaluating our financial condition and operating performance, we primarily focus on revenue and cash flows from operations. For the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025:

We made $28.1$6.1 million in principal payments towards our term loan, bringing the outstanding balance to $398.6$392.6 million as of MarchJune 31,30, 2026.

We repurchased $10.0 million of our common stock induring the three months ended June 30, 2026.

The following table sets forth our revenue for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands, except for percentages):

The increase in revenue during the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, was primarily attributable to the execution of two new multi-year license agreements with AMD and Microsoft in 2026; partially offset by declines in royalty revenue from certain Pay-TV customers.

Recurring revenue for the three months ended MarchJune 31,30, 2026 and 2025 were $66.3$73.5 million and $84.4$85.1 million, respectively. The decrease of $18.1$11.6 million was driven primarily by declines in royalty revenue from certain Pay-TV customers; partially offset by the execution of license agreements with new customers fromafter Aprilthe 1,second 2025quarter toof March 31, 2026.2025.

Non-recurring revenues for the three months ended MarchJune 31,30, 2026 and 2025 were $38.5$22.6 million and $3.3$0.6 million, respectively. The increase of $35.2$22.0 million was primarily attributabledriven toby thetwo execution of three newmulti-year license agreements inexecuted during the firstsecond quarter of 2026, includingeach AMDof andwhich anotherincluded new customerconsideration for accessthe torelease of past infringement of our semiconductorIP, IPwhich portfolio,was andrecognized Microsoftin forthe accessrespective to our media portfolio.quarter.

Research and development (“R&D”) costs consist 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 costs are 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.

The increase in R&D costs during the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, was primarily due to an increase in patent portfolio expenses and an increase in personnel related costs as a result of increased headcount.

The increasedecrease in SG&A expense during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, was primarily due to a decrease in advertising expense, partially offset by an increase in personnel related costs as a result of increased headcountheadcount. andSG&A anexpense increaseduring the six months ended June 30, 2026, as compared to the same period in advertising2025, expense,was partiallyrelatively offset by lower outside services.consistent.

The increase in amortization expense during the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, was primarily due to patents acquired in 2025,2025 and 2026, partially offset by certain intangible assets becoming fully amortized during 2025.

OurThe decrease in litigation expense for the three and six months ended MarchJune 31,30, 2026, wasas relativelycompared consistent withto the same periodperiods in 2025.2025, Higherwas expensesprimarily drivendue byto increaseddecreased activityexpense inassociated with certain matters that have settledsettled, werepartially offset by expenses associated with new litigation matters. See Part II, Item 1 – Legal Proceedings for additional information regarding these matters.

The decrease in interest expense during the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, was primarily due to lower debt balance and lower variable interest rates.

Other income and expense, net during the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, was relatively consistent.

Our income tax provision for interim periods is based on the estimated annual effective tax rate adjusted for discrete items during the period. For the three months ended MarchJune 31,30, 2026, we recorded income tax expense of $5.2$1.6 million on pretax income of $28.0$19.0 million, and for the six months ended June 30, 2026, we recorded income tax expense of $6.8 million on pretax income of $47.0 million, which resulted in an effective tax raterates of 18.6%.8.6% and 14.6%, respectively, for the three and six months ended June 30, 2026. The effective tax rate varies from the 21% U.S. federal tax rate primarily due to excess tax benefits related to stock-based compensation.

For the three months ended MarchJune 31,30, 2025, we recorded an income tax expensebenefit of $2.1$9.1 million on pretax income of $13.9$7.6 million, and for the six months ended June 30, 2025, we recorded an income tax benefit of $7.0 million on pretax income of $21.5 million, which resulted in an effective tax raterates of 15.0%.(119.4)% and (32.6)%, respectively, for the three and six months ended June 30, 2025.

The increase in income tax expense for the three and six months ended MarchJune 31,30, 2026, as compared to the same period in the prior year was primarily due to an increase to pretax income.

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 threesix months ended MarchJune 31,30, 2026 and 2025:

Our primary sources of liquidity and capital resources are our operating cash flows and our short-term investments in marketable securities. Cash, cash equivalents and marketable securities were $115.8$137.1 million at March 31, 2026, a decrease of $21.0 million fromand $136.7 million at June 30, 2026 and December 31, 2025.2025, Thisrespectively. decreaseThe primarilychange resultedin fromcash, $58.5cash equivalents and marketable securities in the six months ended June 30, 2026 included $113.1 million of cash generated from operations, partially offset by $28.1$34.2 million in repayment of our long-term debt, $29.8$32.9 million in repurchases of common stock associated with tax withholdings on equity awards, $10.0$20.0 million in repurchases of common stock, $5.5$11.0 million in dividends paid, and $5.5$15.0 million in purchases of intangible assets.

The primary objectives of our investment activities are to preserve principal and to maintain liquidity, while at the same time capturing a market rate of return. To achieve these objectives, we maintain a diversified portfolio of securities including money market funds and debt securities such as corporate bonds and notes, municipal bonds and notes, commercial paper, treasury and agency notes and bills and certificates of deposit. 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 For information about our material cash requirements, see “Liquidity and Capital Resources” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. Other than the principal payments of $28.1$34.2 million made by us under the existing Term Loan B during the threesix months ended MarchJune 31,30, 2026, our cash requirements have not materially changed since December 31, 2025. We expect to continue to make additional payments on our existing debt from cash generated from operations.

In MarchJune 2026 and 2025, we paid a quarterly dividend of $0.05 per share. In AprilJuly 2026, our Board authorized payment of a quarterly cash dividend of $0.05 per share, to be paid in JuneSeptember 2026.

In October 2024, our Board of Directors approved an increase to 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. During the three months ended MarchJune 31,30, 2026, we repurchased a total of approximately 0.4 million shares of common stock, at an average price of $22.45$28.36 per share for a total cost of $10.0 million. During the threesix months ended MarchJune 31,30, 2026, we repurchased a total of approximately 0.8 million shares of common stock, at an average price of $25.06 per share for a total cost of $20.0 million. During the six months ended June 30, 2025, we repurchased a total of approximately 0.8 million shares of common stock, at an average price of $13.19 per share for a total cost of $10.0 million. These purchases occurred during the three months ended March 31, 2025 and no repurchases were made during the three months ended June 30, 2025. As of MarchJune 31,30, 2026, the total remaining amount available for repurchase under this plan was $150.0$140.0 million.

Cash flows provided by operations were $58.5$113.1 million for the threesix months ended MarchJune 31,30, 2026, primarily due to our net income of $22.8$40.1 million being adjusted for non-cashnoncash items of amortization of intangible assets of $15.9$32.0 million, stock-based compensation expense of $8.8$19.2 million, and $11.8$21.9 million in changes in operating assets and liabilities including payment during the period of employee bonuses earned in 2025.

Cash flows provided by operations were $57.1$80.3 million for the threesix months ended MarchJune 31,30, 2025, primarily due to our net income of $11.8$28.5 million being adjusted for non-cashnoncash items of amortization of intangible assets of $14.1$28.3 million, stock-based compensation expense of $8.2$16.9 million, and $25.8$9.0 million in changes in operating assets and liabilities including payment during the period of employee bonuses earned in 2024.

Net cash used in investing activities was $4.9$16.8 million for the threesix months ended MarchJune 31,30, 2026, primarily due to purchases of short-term investments in marketable securities of $9.0$19.3 million, purchases of intangible assets of $5.5$15.0 million, and proceeds from maturities of marketable securities of $10.1$18.4 million.

Net cash used in investing activities was $6.2 million for the threesix months ended MarchJune 31,30, 2025, primarily due to purchases of short-term investments in marketable securities of $7.2$13.0 million, purchases of intangible assets of $5.4 million, and proceeds from maturities of marketable securities of $6.6$12.6 million.

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 threesix months ended MarchJune 31,30, 2026 and 2025, we spent $0.4$1.0 million and $0.2$0.4 million on capital expenditures, respectively. Our capital expenditures for intangible assets consists primarily of acquired patents. During the threesix months ended MarchJune 31,30, 2026 and 2025, we spent $5.5$15.0 million and $5.4 million on purchases of intangible assets, respectively. 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.

Net cash used in financing activities was $73.4$96.6 million for the threesix months ended MarchJune 31,30, 2026, primarily due to $28.1$34.2 million in repayment of indebtedness, $5.5$11.0 million in dividends paid, $29.8$32.9 million in repurchases of common stock for tax withholdings on equity awards, and $10.0$20.0 million in repurchases of common stock.

Net cash used in financing activities was $45.6$68.7 million for the threesix months ended MarchJune 31,30, 2025, primarily due to $17.1$28.2 million in repayment of indebtedness, $5.4$10.9 million in dividends paid, $12.0$19.7 million in repurchases of common stock for tax withholdings on equity awards, and $10.0$11.3 million in repurchases of common stock.

As of MarchJune 31,30, 2026, $398.6$392.6 million was outstanding under the term loan B facility. In addition, we had $7.4$6.5 million of unamortized debt discount and issuance costs recorded as a reduction from the carrying amount of the debt. The interest rate on the Term Loan B, including the amortization of debt discount and issuance costs, was 7.3%7.1% and interest is payable monthly.

Under the existing loan agreement, we have future minimum principal payments for our debt of $18.3$12.2 million in the remainder of 2026, $24.4 million in 2027, with the remaining principal balance of $356.0 million due June 8, 2028. The 2020 Credit Agreement, as amended, also requires that we continue to make cash payments on an annual basis based on certain leverage ratios and excess cash flow generated for the immediately preceding fiscal year. The cash payments are applied to the remaining principal balance due at final maturity. Based on certain leverage ratios and the voluntary prepayments we made during the year ended December 31, 2025, no excess cash flow payment is required in 2026. The term loan B facility contains customary covenants, and as of MarchJune 31,30, 2026, we were in full compliance with such covenants.

During the threesix months ended MarchJune 31,30, 2026, there were no significant changes in our critical accounting policies and estimates. See “Note 2 – Summary of Significant Accounting Policies” of Notes to Condensed Consolidated Financial Statements for additional detail. For a discussion of our critical accounting policies and estimates, see Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K.