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

As part of our business strategy, we regularly seek to expand our revenue opportunities both organically and inorganically. In particular, we have expanded our licensing activities beyond device-based licensing revenue to certain video and cloud-based service providers. The market for licensing video and cloud-based services is not as developed as device-based licensing programs. As a result, video and cloud-based service providers do not have a significant volume of comparable agreements against which to compare our offers and may use this as a reason to delay our negotiations with such providers. Additionally, our pricing models may not reflect the value of our technologies in the eyes of our customers. Because we have not yet entered into our first video services license, the revenue we expect to realize from this program is uncertain and inherently subject to risk. And, because thisthe services licensing market is less developed, holdout behavior may be more likely than in device licensing. Service providers may also opt to use alternative technologies for which we have little or no patent coverage. Accordingly, we may not be able to enter into license agreements with these providers on terms that are favorable to us, or at all. Services revenue is a key component of our future growth, and if we are unable to successfully launch and execute a services licensing program,program and monetize our video patents in respect of video services as we currently intend, we will not reach our revenue and other financial targets, and our business, financial condition and prospects could be harmed.

We face challenges in entering into new patent license agreements. Most implementers of our technology do not voluntarily seek to enter into license agreements with us before they commence manufacturing and/or selling devices that use our patented inventions. The process of identifying users of our inventions and negotiating license agreements with reluctant prospective licensees requires significant time, effort and expense. Some infringers may act in bad faith, by attempting to hold out on taking a license altogether or behaving opportunistically in license negotiations. Even good faith negotiations are often very long and complex, involving significant company time and resources. Given these challenges, we cannot ensure that we will be able to enter into patent license agreements either at all or on terms acceptable to us. Additionally, given the large number of implementers using our patented inventions, we may not be able to identify all potential licensees. Once identified, it is not feasible for us to seek licenses from all users of our patented technologies, so we have to make strategic decisions with respect to which companies we should approach for license negotiations. In particular, the CE/IoT market is much more fragmented than our traditional smartphone core. Uncertainty related to entry into new license agreements could impactimpacts our forecasts and ultimately, revenue, cash flow and business.

We also face challenges in renewing our existing license agreements. Although we endeavor to renew license agreements prior to their expiration, due to various factors, including the technology and business needs and competitive positions of our licensees and, at times, reluctance on the part of our licensees to participate in renewal discussions, we may not be able to renegotiate the license agreements on acceptable terms before the expiration of the license agreement, or at all. If there is a delayDelays in renegotiating and renewing a license agreement prior to its expiration, therecause could be a gapgaps in time during which we may be unable to recognize revenue from that licenseelicensee. or weWe may also be forced to renegotiate and renew the license agreement on terms that are more favorable to such licensee. If we fail to renegotiate and renew our license agreements prior to their expiration, at all or on terms that are favorable to us, our forecasts, revenue and cash flow could be materially adversely affected.

Historically, we strive for the terms of our patent license agreements, including royalties, to be reached through arms-length bilateral negotiations with our licensees. We could agree, as we did with Samsung and Lenovo pursuant to binding arbitration agreements, to have royalties and any other disputed terms set by third party adjudicators (such as arbitrators). We have no guarantee that the royalties or other terms set by arbitrators, courts or other third parties will be favorable to us. It is possible that courts or regulators could decide to set or otherwise determine the FRAND consistency of such terms or the manner in which such terms are determined, including by determining a worldwide royalty for our SEPs.portfolio. Changes to or clarifications of our obligations to be prepared to offer licenses to SEPs on FRAND terms and conditions could require such terms, including our royalties, to be determined through third party adjudications. Finally, we and certain of our current and prospective licensees have initiated, and we and others could in the future initiate, legal proceedings or regulatory proceedings requesting third party adjudicators or regulators to set FRAND terms and conditions for a worldwide license to our SEPs,SEPs or our entire portfolio, or to determine the FRAND-consistency of current terms and conditions in our patent license agreements. Chinese courts have affirmed their position that in certain SEP licensing disputes, Chinese courts can set worldwide royalties, and in December 2023, one such court issued such a decision setting a worldwide royalty for Nokia’s cellular patents. We have faced similar proceedings with OPPO in China to determine a worldwide royalty for certain of our SEPs as well as royalty-setting proceedings in the UK initiated by LenovoAmazon and Tesla. If any court or arbitration tribunal decision sets a worldwide royalty rate that is unfavorable to us, our standard essential patent portfolio could be significantly devalued as it relates to the FRAND royalty an implementer should pay, which could in turn negatively impact pricing with other licensees.

To the extent that our patent royalties for our patent license agreements are determined through arbitration or other third party adjudications or regulatory or court proceedings rather than through bilateral negotiations, because such proceedings are inherently unpredictable and uncertain and there are currently few precedents for such determinations, it is possible that royalties may be lower than our accounting estimates and/or comparable licenses. This could also have a negative impact on royalties we are able to obtain from future licensees, which may have an adverse effect on our revenue and cash flow.flow and render us unable to meet our revenue and other financial targets. Prospective customers may delay, and in some cases have delayed, negotiations on the basis of an adverse decision. In addition, to the extent that other terms and conditions for our patent license agreements are determined through such means, such terms and conditions could be less favorable than our historical terms and conditions, which could have an adverse effect on our licensing business more broadly.

Although we always seek to enter into licenses through bi-lateralbilateral negotiations, sometimes licensees are unwilling and litigation is necessary. This may be even more true with respect to video services licensing than device licensinglicensing, sincebecause the licensing effortsmarket inis thisless space are newer.developed. While some companies seek licenses before they commence manufacturing and/or selling devices or services that use our patented inventions, the vast majority do not. Consequently, we approach companies and seek to establish license agreements for using our inventions. We expend significant time and effort identifying users and potential users of our inventions and negotiating license agreements with companies that may be reluctant to take licenses. If a third party implementer is unwilling to take a license on reasonable terms or in a reasonable time frame, or at all, we have in the past commenced, and may in the future commence, legal or administrative actions against such third parties to enforce our intellectual property rights. In turn, we have faced, and expect to continue to face, counterclaims and other legal proceedings that challenge the essential nature of our patents, or that claim that our patents are invalid, unenforceable or not infringed. Litigation adversaries have and may continue to allege that we have not complied with certain commitments to standards-setting organizations and therefore that we are not entitled to the relief that we seek. Parties have also filed, and may in the future file, antitrust claims, unfair competition claims or regulatory complaints on that or other bases, and may seek damages and other relief based on such claims. Litigation adversaries have also filed against us, and other third parties may in the future file, validity challenges such as inter partes proceedings in the USPTO or the China National Intellectual Property Administration, which can lead to delays of our patent infringement actions as well as potential findings of invalidity. Such parties may also seek to obtain a determination that our patents are not infringed, are not essential or are unenforceable.

Potential patent and litigation reform legislation, potential USPTO and international patent rule changes, potential legislation affecting mechanisms for patent enforcement and available remedies, and potential changes to the intellectual property rights (“IPR”) policies of worldwide standards bodies, as well as rulings in legal proceedings, may affect our investments in research and development and our strategies for patent prosecution, licensing and enforcement and could have a material adverse effect on our licensing business as well as our business as a whole.business.

Potential changes to certain U.S. and international patent laws, rules and regulations may occur in the future, some or all of which may affect our research and development investments, patent prosecution or maintenance costs, the scope of future patent coverage we secure, the number of forums in which we can seek to enforce our patents, the remedies that we may be entitled to in patent litigation, and attorneys’ fees or other remedies that could be sought against us, and may require us to reevaluate and modify our research and development activities and patent prosecution, licensing and enforcement strategies. For example, the State Administration for Market Regulation in China regularly reviews its policies related to intellectual property and antitrust laws, and any such review could result in ambiguous standards and/or create a worse position for patent holders like us. Additionally, there is uncertainty surrounding future EU IP policy. In 2023, the European Commission (“EC”) has initiatedintroduced a reviewproposal for SEP regulation that would have increased regulation of and requirements on SEP holders. Following discussion and debate inside of the EU’sEuropean IPParliament policies(“EP”) and the EC, the EC withdrew the proposed policy in 2025, but discussions between the EP and EC continue as they relate to the future of SEPs and FRAND.FRAND Thispolicy review is currently being discussed and debated insidein the EuropeanEU. Parliament and the European Council and anyAny change to the legal or regulatory landscape as a result of this review could impact our ability to negotiate license agreements on favorable terms or at all, while also limiting our potential legal remedies and materially impacting our business. Further, legislation designed to reduce the value of SEPs and alter the U.S. patent system, including legislation designed to reduce the jurisdiction and remedial authority of the USITC, has periodically been introduced in Congress.

Rulings in our legal proceedings, as well as those of third parties, may affect our strategies for patent prosecution, licensing and royalty setting and enforcement. For example, in the past, the USITC and U.S. courts, including the U.S. Supreme Court, have taken actions that have been viewed as unfavorable to patentees, including us. Decisions that occur in the U.S. or in international forums may change the law applicable to various patent law issues, such as, for example, patentability, validity, claim construction, patent exhaustion, patent misuse, permissible licensing practices, available forums, and remedies such as damages and injunctive relief, in ways that are detrimental to the ability of patentees to enforce patents and obtain suitable relief. There are regularly discussions within the EC regarding potential regulations and policy changes that could determine how and whether a patent is essential to a standard. The risk of having our patents determined essential based on a single methodology or specific criteria and conditions associated with patent enforcement and licensing as imposed by the EC would affect our strategies as well. Ongoing uncertainty related to the feasibility and criteria used for this evaluation as well as the cost associated with such essentiality determination could impact the assessment of our SEP portfolio.

Our ability to license device manufacturersbusiness and service providers in Chinaoperations may be adversely affected by a deterioration in United States-China relations or broader trade and geopolitical relations, our customers facing economic uncertainty there or our failure to establish a positive reputation in China.conditions.

China is a key market for us, and any of thesethe above-mentioned factors could harm our ability to execute our business plansplans. thereThe andultimate impact of ongoing trade tensions is uncertain, but if tensions continue or escalate, we could insuffer turnmaterial causeharm to our long-term business, financial condition and operating results to be materially adversely affected.results.

We invest significant resources in the development of advanced technology and related solutions. However, certain of our inventions that we believe will be employed in current and future products, including 4G, 5G, HEVC, VVC and others, are the subject of patent applications where no patent has been issued to us yet by the relevant patent issuing authorities. There is no assurance that these applications will issue as patents, either at all or with claims that would be required by products in the market currently or in the future. Our investments may not be recoverable or may not result in meaningful revenue if a sufficient number of our technologies are not patented and/or adopted by the relevant standards or if products based on the technologies in which we invest are not widely deployed. Competing technologies could reduce the opportunities for the adoption or deployment of technologies we develop. In addition, it is possible that in certain technology areas, such as in the IoT space, the adoption of proprietary systems could compete with or replace standards-based technology. It is also possible in certain technology areas, such as video coding and the IoT, that open source and/or purportedly royalty-free solutions such as AV1, VP-9 and OCF could compete with or replace proprietary standards-based technology. If the technologies in which we invest do not become patented, are not adopted by the relevant standards, or are not adopted by and deployed in the mainstream markets, at all or at the rate or within time periods that we expect, our business, financial condition and operating results could be adversely affected.

Some third parties have challenged, and we expect will continue to challenge, the infringement, validity and enforceability of certain of our patents. In some instances, certain of our patent claims could be substantially narrowed or declared invalid, unenforceable, not essential or not infringed. For example, in limited cases, certain of our patents have been held invalid by courts in proceedings initiated by counterparties to our litigation proceedings. We cannot ensure that the validity and enforceability of our patents will be maintained or that our patents will be determined to be applicable to any particular product or standard. Moreover, third parties could and do attempt to circumvent certain of our patents through design changes. Any significant adverse findings as to the validity, infringement, enforceability or scope of our patents and/or any successful design-around of our patents could result in the loss of patent licensing revenue from existing licensees, through termination or modification of agreements or otherwise, and could substantially impair our ability to secure new patent licensing arrangements, either at all or on beneficial terms.

Domestic and foreign antitrust authorities regularly review their policies with respect to the use of SEPs, including the enforcement of such patents against competitors and others. Such scrutiny has in the past resulted in enforcement actions against Qualcomm and other licensing companies, and could lead to additional investigations of, or enforcement actions against, us. Additionally, potential licensees may initiate antitrust complaints against us, such as the complaint that Disney recently filed against us. Such inquiries and/or enforcement actions could impact the availability of injunctive and monetary relief, which may adversely affect our strategies for patent prosecution, licensing and enforcement and increase our costs of operation. Such inquiries and/or enforcement actions could also result in monetary fines, penalties or other remedies or sanctions that could adversely affect our business and financial condition.

We earn a significant amount of our revenuesrevenue from a limited number of licensees or customers, and we expect that a significant portion of our revenuesrevenue will continue to come from a limited number of licensees or customers for the foreseeable future. For example, in 2024,2025, Samsung, Lenovo, Apple, and OPPOvivo each comprised 10% or more of our consolidated revenues.revenue. Further, because of the limited number of licensees and potential licensees, any opportunistic behavior during license negotiations by a company or companies using our technology could create large exposure for us. In the event that we are unable to renew one or more of such license agreements at all or on terms that are favorable to us, our future revenue and cash flow could be materially adversely affected. In the event that one or more of our significant licensees or customers fail to meet their payment or reporting obligations (for example, due to a credit issue or in connection with a legal dispute or similar proceeding) under their respective license agreements, our future revenue and cash flow could be materially adversely affected. In addition, in the event that there is a material decrease in shipments of licensed products by one of our per-unit licensees, our revenuesrevenue from such licensee could significantly decline and our future revenue and cash flow could be adversely affected.

Additionally, there is significant concentration in the wireless communications industry in general, and these trends may continue. For example, in 2024,2025, Samsung, Apple, and Xiaomi collectively accounted for over 50% of worldwide smartphone shipments, and we anticipate a similar level of concentration in worldwide shipments for future years. Any further concentration or sale within the wireless industry among handset providers may reduce the number of licensing opportunities or, in some instances, result in the reduction, loss or elimination of existing royalty obligations. Further, if wireless carriers consolidate with companies that utilize technologies that are competitive with our technologies or that are not covered by our patents, we could lose market opportunities, which could negatively impact our revenuesrevenue and financial condition.

Additionally, acquisitions or other strategic transactions may increase our costs, including but not limited to accounting and legal fees, and may not generate financial returns or result in increased adoption or continued use of our technologies or of any technologies we may acquire. The integration of acquired companies or businesses may result in significant challenges, including, among others: successfully monetizing any acquired technology, in particular outside of our core licensing programs; integrating new employees, technology and/or products; consolidating research and development operations; minimizing the diversion of management’s attention from ongoing business matters; and consolidating corporate and administrative infrastructures. As a result, we may be unable to accomplish the integration smoothly or successfully. In addition, we cannot be certain that the integration of acquired companies, businesses, technology and/or intellectual property with our business will result in the realization of the full benefits that we anticipate will be realized from such acquisitions. For example, in October 2025, we acquired AI startup Deep Render, and we may not realize the benefits of the acquisition to the extent anticipated. Our plans to integrate and/or expand upon research and development programs and technologies obtained through acquisitions may result in products or technologies that are not adopted by the market, or the market may adopt solutions competitive to our technologies.

We own an evolving portfolio of issued and pending patents related to 3G, 4G and 5G cellular technologies and non-cellular technologies including video coding technologies, and our patent portfolio licensing program for future-generation wireless standards or video coding standards may not be as successful in generating licensing income as our current licensing programs. Although we continue to participate in worldwide standards bodies and contribute our intellectual property to future-generation wireless and video coding standards, including standards that will define 5G and beyond, our technologies might not be adopted by the relevant standards. In addition, we may not be as successful in the licensing of future-generation products as we have been in licensing products deploying existing wireless and video coding standards, or we may not achieve a level of royalty revenues on such products that is comparable to that which we have historically received on products deploying existing wireless and video coding standards. Furthermore, ifIf there is a delay in the standardization and/or deployment of 5G or future video coding standards, our business and revenue could be negatively impacted.

Attempts by others to gain unauthorized access to information technology systems are becoming more sophisticated. These attempts, which in some cases could be related to industrial or other espionage, include covertly introducing malware to computers and networks and impersonating authorized users, among others. Advancements in technology, including artificial intelligence (“AI”) and machine learning, may continue to change the way bad actors seek to gain unauthorized access and disrupt systems, thereby increasing the risks of security breaches. Material security events could also require public disclosure, which could further harm our business or reputation. We seek to detect and investigate all security incidents and to prevent their recurrence, but, in some cases, we might be unaware of an incident or its magnitude and effects. The increasing use of AI tools also exposes us to additional risks of security breach and information loss. While we have not identified any material incidents of unauthorized access to date, the theft, unauthorized use or publication of our intellectual property and/or confidential business or personal information (whether through a breach of our own systems or the breach of a system of a third party that provides services to us) could harm our competitive or negotiating positions, reduce the value of our investment in research and development and other strategic initiatives, compromise our patent enforcement strategies or outlook, damage our reputation or otherwise adversely affect our business. In addition, to the extent that any future security breach results in inappropriate disclosure of our employees’, licensees’, or customers’ confidential and /or personal information, we may incur liability or additional costs to remedy any damages caused by such breach.

A significant portion of our licensees, potential licensees and customers are international, and our licensees, potential licensees and customers sell their products to markets throughout the world. Accordingly, a significant portion of our revenue are derived from operations outside of the United States. In addition, in recent years, we have expanded, and we may continue to expand, our international operations, opening offices in China, France and Finland. Accordingly, we are subject to the risks and uncertainties of operating internationally. Our international operations could exacerbate the other risk factors we have identified, and we could be affected by a variety of uncontrollable and changing factors, including, but not limited to: difficulty in protecting our intellectual property in foreign jurisdictions; enforcing contractual commitments in foreign jurisdictions or against foreign corporations; government regulations, tariffs and other applicable trade barriers; biased enforcement of foreign laws and regulations to promote industrial or economic policies at our expense; retaliatory practices by foreign actors; currency control regulations; export license requirements and restrictions on the use of technology; social, economic and political instability; costly, time consuming and changing regulatory regimes; natural disasters, acts of terrorism, widespread illness and war; potentially adverse tax consequences; general delays in remittance of and difficulties collecting non-U.S. payments; foreign labor regulations; anti-corruption laws; public health issues; and difficulty in staffing and managing operations remotely. Managing operations and complying with relevant laws and regulations in China may be particularly complex, costly and time-consuming. We also are subject to risks specific to the individual countries in which we and our licensees, potential licensees and customers do business.

•If the effective price of products sold by our licensees were to increase as a result of fluctuations in the exchange rate of the relevant currencies, demand for the products could fall, which in turn would reduce our royalty revenues.revenue.

There is significant focus from investors, customers and employees as well as other stakeholders concerning sustainability and governance matters. Current and prospective investors are utilizing this data to inform their decisions including investment and voting using a multitude of evolving score and rating frameworks. AdditionallyAdditionally, public interest and legislative pressure related to public companies' sustainability, governance and related practices continue to grow and evolve. We actively manage these issues and have established and publicly announced certain goals, commitments, and targets which we may refine or expand further in the future. These goals, commitments, and targets reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.

Our success depends, in part, on our ability to define and keep pace with changes in industry standards, technological developments and varying customer requirements. Changes in industry standards and needs could adversely affect the development of, and demand for, our technology, rendering our technology currently under development obsolete and unmarketable. The rapid adoption of AI, including its use in video codecs and related technologies, and widespread use of AI tools and could accelerate these changes. The patents and applications comprising our portfolio have fixed terms, and, if we fail to anticipate or respond adequately to these changes through the development or acquisition of new patentable inventions, patents or other technology, we could miss a critical market opportunity, reducing or eliminating our ability to capitalize on our patents, technology solutions or both.

We are a U.S. headquartered multinational company subject to complex and changing tax laws in the United States and foreign jurisdictions where we do business. Significant judgementjudgment is required in determining our worldwide provision of income taxes. As a U.S. multinational company, we are subject to examination by the Internal Revenue Service (“IRS”) and other tax authorities, and we have ongoing tax audits in various jurisdictions. Any of these examinations could result in challenges to various positions we assert in our filings and could impact our tax liability, both for future and past tax years. Although we believe that our tax estimates are reasonable, the final determination of tax audits and any related legal proceedings could materially differ from amounts reflected in our income tax provisions and accruals. InDue suchto case,governmental and regulatory delays, the timing of the resolution of certain of our open audits has been extended, creating additional uncertainty. If the final determination of any of our open audits materially differs from our estimates and accruals, our income tax provision, results of operations and cash flows in the period or periods in which that determination is made could be negatively affected. And, the timing of the resolution of these audits could impact our cash position.

Our tax rate could be adversely affected by several factors beyond our control, including changes in tax laws, regulations, interpretations, tax rates, assessments and any related tax, interest or penalties. If we are deemed to owe additional taxes, it could negatively impact our business, financial condition, and results of operations. For example, most of our income is taxable in the United States with a significant portion qualifying for preferential treatment as foreign-derived intangible income ("FDII"). Beginning in 2026, the effective tax rate for FDII increaseswill increase from 13% to 16%.14%. Further,Any ifreduction U.S.or taxelimination rates increase and/orof the FDII deduction iswould eliminatednegatively or reduced,impact our provision for income taxes, results of operations and cash flows would be adversely affected.business. In France, where we have substantial operations, we benefit from research tax credits applicable to French technology companies, including the Crédit Impôt Recherche (CIR). While we have historically benefited from the CIR, the French government has recently challenged our eligibility for portions of the CIR that they previously accepted. We believe our estimates are reasonable and consistent with the regulation, but if this challenge is successful and our eligibility for the CIR is reduced, it could adversely impact our results of operations and cash flows. The French government could also eliminate or reduce the CIR entirely, in which could harmcase our business.provision for income taxes, results of operations and cash flows would be adversely affected.

Additionally, any increase in tax rates or new tax legislation, or any new guidance or interpretations of the same, could expose us to additional tax liabilities. For example, the OECD Model Rules under Pillar Two introduced a minimum corporate tax rate of 15% on multinational enterprises with annual consolidated revenue exceeding €750 million in at least two of the prior four years.years, Althoughand beginning in 2026, we are subject to this minimum taxtax, which has been adopted by various jurisdictions where we do business, including France and the UK,UK. weThis areand notany yet subject toof the minimumother taxfactors baseddescribed above could have an adverse impact on our revenues.provision Iffor weincome becometaxes, subjectcash to the Pillar Two minimum tax, our business,flows, results of operations and cash flows would be adversely affected.business.

From time to time, we make strategic decisions about our patent portfolio, whether through a formal portfolio review or opportunistic dispositions. Cost savings expectations of any portfolio review are inherently uncertain and, therefore, we cannot provide assurance that we will achieve any expected, or any actual cost savings from any such action. Our portfolio review activities may place substantial demands on our management, which could lead to the diversion of management’s attention from other business priorities. We havemay divesteddivest aor numberabandon of assets, includingassets as part of aefforts recentto strategicoptimize portfoliospending rationalizationon review.our patent portfolio. Any assets that we divest could turn out to be more valuable than we had anticipated and we may not realize the anticipated benefits of any strategic decision about our patent portfolio. Due to cost constraints, we also regularly undertake strategic decisions in respect of where and how we file for patents. These decisions could later prove to be incorrect, which could ultimately harm our licensing potential or enforcement options, which could in turn harm our financial results and business prospects.

We may be affected by existing and proposed laws and regulations, as well as government policies and practices related to cybersecurity, privacy and data protection. For example, the European General Data Protection Regulation ("GDPR"), the United Kingdom’s GDPR, the California Consumer Privacy Act of 2018 and the California Privacy Rights Act of 2020 impose obligations on companies such as ours regarding the handlingcollection, use, retention, protection and processing of personal data. Additionally, in 2021, China adopted the Personal Information Protection Law (“PIPL”), which, together China’s existing cyber and data securities regulations, have required and will continue to require significant investment and resources to ensure compliance. Complying with the these and other privacy and cybersecurity regulations could cause us to incur substantial costs or require us to change our business practices. If we cannot implement an effective compliance mechanism for cross-border privacy and security matters, we may face increased exposure to regulatory actions, substantial fines and other penalties.penalties and damage to our reputation, any of which could have a material adverse effect on our business. Further, these areas are quickly changing, becoming increasingly stringent, and creating regulatory uncertainty. Our commercial and cybersecurity insurance policies may be insufficient to insure us against these risks, and future escalations in premiums and deductibles under these policies may render them cost-prohibitive.

Our operating results may fluctuate from quarter to quarter as a result of a number of factors, many of which are outside of our control and may be difficult to predict. In particular, the timing of revenue recognition may cause our revenuesrevenue and earnings to fluctuate, and there is significant judgment in the application of our revenue recognition principles. For example, accounting principles sometimes require us to recognize revenue before the actual amount is certain, which could add to uncertainty in our revenue guidance. The variability and unpredictability of our results of operations or other operating metrics could result in our failure to meet our expectations or those of industry or financial analysts. If we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could fall substantially.

In connection with the 2027 Notes issuance, we entered into convertible note hedge transactions with certain financial institutions (the “option counterparties”) and sold warrants to the respective option counterparties. These transactions will be accounted for as an adjustment to our shareholders’ equity. The convertible note hedge transactions are expected to reduce the potential equity dilution upon any conversion of the notes. The warrants will have a dilutive effect on our earnings per share to the extent that the market price of our common stock exceeds the applicable strike price of the warrants on any expiration date of the warrants. Given the trading price of our stock in recent months, dilution related to these instruments will be substantial, and the market could react negatively. In addition, the respective option counterparties (and/or their affiliates) may modify their respective hedge positions from time to time (including during any observation period related to a conversion of the notes) by entering into or unwinding various derivative transactions with respect to our common stock and/or by purchasing or selling our common stock in open market transactions and/or privately negotiated transactions. The potential effect, if any, of any of these transactions and activities on the market price of our common stock will depend in part on investor expectations and market conditions and cannot be ascertained at this time, but any of these activities could adversely affect the market price of our common stock.

Throughout the following discussion and elsewhere in this Form 10-K, we refer to “recurring revenues” and “catch-up revenues.revenue.” For variable and dynamic fixed-fee license agreements, “catch-up revenuesrevenue” primarily represents revenue associated with reporting periods prior to the execution of the license agreement, while “recurring revenue” represents revenue associated with reporting periods beginning with the execution of the license agreement. For static fixed-fee license agreements, we typically classify the associated revenue as catch-up revenues.

InterDigital is one of the largest pure research and development and licensing companies in the world, with one of the most significant patent portfolios of fundamental wireless and video technologies. As of December 31, 2024,2025, InterDigital's wholly owned subsidiaries held a portfolio of more than 33,00038,000 patents and patent applications related to wireless communications, video coding, display technology, and other areas relevant to communications and entertainment products and services. Our portfolio includes numerous patents and patent applications that we believe are or may be essential to existing standards, or may become essential to future standards, established by many Standards Development Organizations ("SDOs"). We have contributed technology to wireless standards including the 3G, 4G, 5G, and 5Gthe development of 6G cellular standards and the IEEE 802802.11 suite of standards. We have contributed technology to video standards including standards established by ISO/IEC Moving Picture Expert Group (MPEG), the ITU-T Video Coding Expert Group (VCEG), the Joint Collaborative Team on Video Coding (JCT-VC) and the Joint Video Expert Team (JVET), among others. We also develop technologies and associated patents enabling high dynamic range (HDR) production, distribution and display solutions.

Our wireless portfolio has largely been built through internal investment in a world-class research team, supplemented by joint development projects with other companies, and select acquisitions of patents and companies. Our video technology portfolio combines patents and applications that InterDigital obtained through the acquisitions of the research and innovation unit and patent licensing business of visual technology industry leader Technicolor SA (the "Technicolor Patent Acquisition") and patents and applications created by internal development. Our patented inventions have been implemented in a wide variety of products, including smartphones, tablets, base stations, televisions, laptops, gaming consoles, set-top boxes, streaming devices, connected automobiles, and other consumer electronics and IoT products. Our patented inventions have also been implemented in a wide variety of services, such as video streaming, user generated content sharing, video conferencing, video gaming, and other cloud-based services. We believe our patented innovations are also used in the training of video based generative AI models as well as in the distribution and storage of the content generated by such models.

In 20242025 and 2023,2024, our total revenuesrevenue werewas $868.5$834.0 million and $549.6$868.5 million, respectively.respectively, Ourwhich recurringincludes revenues were $408.4 million in both 2024 and 2023. In 2024 and 2023, we recognized $460.1$277.4 million and $141.2$460.1 million, respectively, of catch-up revenuesrevenue as more fully discussed below. In 2024,2025, fixed-fee royaltiesagreements accounted for 89%93% of our recurring revenues.revenue. These fixed-fee revenuesrevenue are not affected by the related licensees’ success in the market or the general economic climate. The majority of the remaining portion of our recurring revenue was variable in nature due to the per-unit structure of the related license agreements.

TheSmartphone, CompanyCE, considers SmartphoneIoT/Auto, and CE,Video Auto/IoTServices as the groupings that best reflectare the Company's core licensing programs. The Smartphone revenue grouping consists primarily of smartphones and also includes other wireless communication devices and infrastructure equipment, such as tablets, and base stations. The CE, IoT/Auto revenue grouping consists of consumer electronics and IoT products, such as televisions, laptops, gaming consoles, set-top boxes, streaming devices, and connected automobiles. We do not yet have revenue from Video Services but a Video Services grouping would consist of SVOD, AVOD, global pay-TV, video conferencing, cloud gaming, and other cloud-based services.

During 2024,2025, we entered into fourteeneight patent license agreements as discussed below.

In JuneApril 2024,2025, we signed a new devicemulti-year license agreement with Google.HP Inc. The agreement licenses aHP rangepersonal of devices including Pixel smartphones, Fitbit wearables, and other consumer electronics devicescomputers to InterDigital’s cellular wireless, Wi-Fi,Wi-Fi and HEVC video patenteddecoding technologies.

Additionally, we entered into device licenses covering our technologies with Arcelik,a Blu,significant Ericsson,social Kyocera,media Panasonic,company, Teltronic,along TPV,with Eaton, Seiko Solutions Inc., Sharp, and ZTE.Teltronic.

OurFive revenue-generating patent license agreements with five licensees that expired betweenduring January 1, 20242025 and December 31, 2024 have not yet been renewed.renewed, including the Samsung TV agreement. These patent license agreements contributed $17.2$31.7 million of recurring revenuesrevenue in 2024.2025.

SevenFourteen of our revenue generatingrevenue-generating patent license agreements are scheduled to expire atby the end of 2025,2026. including the Samsung TV agreement and the agreement with Xiaomi. Collectively, these expiringThese agreements notcontributed yet$15.0 renewed accounted for $91.8 million, or approximately 22%,million of recurring revenuesrevenue in 2024.2025.

We are actively working to renew these agreements on terms consistent with theeach licensees' respectivelicensee’s market positionsposition and utilizationuse of our technology.

During 2024,2025, the 2027 Notes had a dilutive impact of 2.24.1 million shares, which are offset from an economic standpoint by the 2027 Note Hedge Transactions and would result in no incremental shares being issued upon conversion. However, under GAAP,Generally Accepted Accounting Principles in the United States ("GAAP"), we are required to exclude the impact of the shares received from the 2027 Note Hedge Transactions counterparties from the calculation of weighted averageweighted-average diluted shares outstanding.

As of December 31, 2024,2025, 5.96.0 million warrants remain outstanding related to the 2027 Warrant Transactions at a weighted averageweighted-average strike price of $106.22$105.67 per share, subject to adjustment, which mature on a net-share basis beginning September 2027 through April 2028. Assuming a share price of $175, we would issue 2.3 million of common shares related to the 2027 Warrant Transactions. Refer to "Financial Position, Liquidity, and Capital Resources — Convertible Notes" for further information regarding how changes in our stock price would affect the number of shares issuable related to the 2027 Warrant Transactions. For example, if the share price was $350, we would issue 4.2 million of common shares related to the 2027 Warrant Transactions.

We initiated litigation against Lenovo and OPPO to enforce our intellectual patent rights in 2019 and 2021, respectively. Through these patent infringement actions, we successfully negotiated resolutions that resulted in patent license agreements being reached with OPPO in 2024 and Lenovo, with respect to our HEVC patents only, in 2023. Additionally, in 2024 we entered into an arbitration agreement with Lenovo to determine the terms of a new patent license for our cellular and other technologies. As part of these agreements, we and both third parties agreed to dismiss all pending litigations between us, and accordingly all litigations with Lenovo and OPPO have been dismissed as of fourth quarter 2024. Currently, our open enforcement actions include proceedings with Transsion, Disney, and Amazon, and the arbitration proceedings with Lenovo and Samsung.Lenovo. The SamsungCompany proceedinganticipates resulted fromthat the arbitration agreementhearing reachedwill withoccur Samsungbefore Electronics,year in which we agreed to binding arbitration to establish the royalties to be paid by Samsung for a worldwide license to certain of our patents. We expect a decision in early 2025. The Lenovo arbitration is in its early stages, and no schedule has been set yet.end.

In 2024,2025, our intellectual property enforcement costs increaseddecreased to $56.2$48.9 million, from $48.8$56.2 million in 2023.2024. These costs represented 33%52% of our total licensing costs of $169.2$93.6 million in 2024.2025. Intellectual property enforcement costs will vary depending upon activity levels, and it is likely they will continue to be a significant expense for us in the future.

As of December 31, 2024,2025, we had $982.4$1.3 millionbillion of cash, restricted cash, and short-term investments and anapproximately additional $1.4$1.5 billion of cash payments due under contracted fixed price agreements, which includes our conservative estimates of the minimum cash receipts that we expect to receive under the Samsung and Lenovo arbitrations.arbitration.

89%93% of our recurring2025 revenue comes from fixed-fee royalties.agreements. Such agreements often have prescribed payment schedules that are uneven and sometimes front-loaded, resulting in timing differences between when we collect the cash payments and recognize the related revenue.

(a) Fixed fee cash receipts are comprised of cash receipts from Dynamic Fixed-Fee Agreement royalties, including the associated catch-up revenues.revenue.

(b) Other cash receipts are primarily comprised of cash receipts related to our variable patent royalty revenue and catch-up revenues.revenue.

In June 2014, our Board of Directors authorized a $300 million share repurchase program (the “Share Repurchase Program”). Subsequently our Board of Directors authorized five $100 millionadditional increases to the program, anmost additional $333 million in December 2022, and an additional $235 millionrecently in December 2023, bringing the total amountauthorization of the Share Repurchase Program to nearly $1.4 billion. Since 2014, we have repurchased $1.1$1.2 billion of shares at an average price of $63.27,$62.50, adjusted for dividends. This amount includes the $199.9 million, excluding fees, expenses and excise tax, repurchased as part of the modified “Dutch auction” tender offer in 2023. As of December 31, 2024,2025, there was $229.5$127.2 million remaining under the Share Repurchase Program authorization.

We have been actively monitoring the impact of the current macroeconomic environment in the U.S. and globally characterized by market volatility, inflation, supply chain issues, high interest rates, labortariffs shortages,and other potential trade-related sanctions, and the potential for a recession. These market factors, as well as the impacts of the Ukraine-Russia andUkraine-Russia, Middle East and other global conflicts, have not had a material impact on our business to date. However, if these conditions continue or worsen, they could have an adverse effect on our operating results and our financial condition.

•Our 20242025 revenue includes $460.1$277.4 million of catch-up revenuesrevenue primarily resultingrelated to the Samsung arbitration decision and from the Samsungvivo, TVHP, and OPPOHonor patent license agreements entered into in 2024, as well as revenue recognized on the Lenovo cellular license resulting from the UK proceedings and arbitration agreement.2025.

•In 2024,2025, we incurred $68.8$7.4 million of nonrecurring revenuecosts, sharewhich includes severance costs from executive and non-executive departures, litigation fee reimbursement, and costs associated with the catch-upacquisition revenuesof recognizedDeep in the period.Render.

In accordance with GAAP, we use a five-step model to achieve the core underlying principle that an entity should recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. These steps include (1) identifying the contract with the customer, (2) identifying the performance obligations, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing revenue as the entity satisfies the performance obligation(s). Additionally, we have elected to utilize certain practical expedients in the application of ASC 606.606, Revenue From Contracts with Customers. In evaluating the presence of a significant financing component in our agreements, we utilize the practical expedient to exclude any contracts wherein the gap between payment by our customers and the delivery of our performance obligation is less than one year. We have also elected to utilize the practical expedient related to costs of obtaining a contract where an entity may recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less. Timing of revenue recognition may differ significantly from the timing of invoicing to customers. Contract assets are included in accounts receivable and represent unbilled amounts expected to be received from customers in future periods, where the revenue recognized to date exceeds the amount billed, and right to payment is subject to the underlying contractual terms. Contract assets are classified as long-term assets if the payments are expected to be received more than one year from the reporting date. Contract assets due within less than twelve months of the balance sheet date are included within accounts receivable in our consolidated balance sheets. Contract assets due more than twelve months after the balance sheet date are includedclassified as long-term assets within other non-current assets.assets if the payments are expected to be received more than one year from the reporting date.

For certain patent license agreements or other contractual arrangements, the amount of consideration that we will receive is uncertain. In such cases, we estimate and recognize licensing revenuesrevenue only when we have a contract, as defined in the revenue recognition guidance. Such estimates are only recognized to the extent it is probable that a significant reversal of cumulative revenuesrevenue recognized will not occur. We analyze the risk of a significant revenue reversal considering both the likelihood and magnitude of the reversal and, if necessary, constrain the amount of estimated revenuesrevenue in order to mitigate this risk, which may result in recognizing revenuesrevenue less than amounts we expect we are most likely to receive. These aforementioned estimates may require significant judgment.

Dynamic fixed-fee license agreements contain a single performance obligation that represents ongoing access to a portfolio of technology over the license term, since our promise to transfer to the licensee access to the portfolio as it exists at inception of the license, along with promises to provide any technology updates to the portfolio during the term, are not separately identifiable. Upon entering a new agreement, we allocate the transaction price to the performance obligations delivered at signing (e.g. our existing patent portfolio) and future performance obligations (e.g. the technology updates). We use a time-based input method of progress to determine the timing of revenue recognition, and as such we recognize the future deliverables on a straight-line basis over the term of the agreement. We utilize the straight-line method as we believe that it best depicts efforts expended to develop and transfer updates to the customer evenly throughout the term of the agreement.

Upon entering a new variable patent license agreement, the licensee typically agrees to pay royalties or license fees on licensed products sold during the term of the agreement. We utilize the sales- or usage- based royalty exception for these agreements and recognize revenuesrevenue during the contract term when the underlying sale or usage occurs. Our licensees under variable agreements typically provide us with quarterly royalty reports that summarize their sales of covered products and their related royalty obligations to us. We typically receive these royalty reports subsequent to the period in which our licensees’ underlying sales occurred. As a result, we are required to estimate revenuesrevenue and recognize sales-based royalties on such licensed products in the period in which the associated sales occur, considering all relevant information (historical, current and forecasted) that is reasonably available to us. Estimating licensees’ quarterly royalties prior to receiving the royalty reports requires us to make assumptions and judgments related to forecasted trends and growth rates used to estimate our licensees’ sales, which could have an impact on the amount of revenue we report on a quarterly basis. As a result of recognizing revenuesrevenue in the period in which the licensees’ sales occur using estimates, adjustments to revenuesrevenue are required in subsequent periods to reflect changes in estimates as new information becomes available, primarilyincluding resultingmarket frominformation, actualroyalty amountsreports reportedprovided by our licensees.licensees, audit results, among others.

During 2024,2025, we signed new fixed-fee agreements that had multiple performance obligations. Consistent with the revenue recognition policies disclosed above, we (1) identified the contract with the customer, (2) identified the performance obligations, (3) determined the transaction price, (4) allocated the transaction price to the performance obligations, and (5) recognized revenue as we satisfy the performance obligations. We allocated the transaction price to each performance obligation for accounting purposes using our best estimate of the term and value. The process for determining the value of the standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements requires the exercise of significant judgment when evaluating the valuation methods and assumptions, including the assumed royalties, projected sales volumes, discount rate, identification of comparable market transactions which are not directly observable and other relevant factors. Changes in any of a number of these assumptions could have had a substantial impact on the relative fair value assigned to each performance obligation for accounting purposes. These inputs and assumptions represent management's best estimates at the time of the transaction.

The impact that a five percent change in the aggregate amount allocated to catch-up revenuesrevenue under these agreements would have had on 20242025 revenue is summarized in the following table (in thousands):

During 2025, 2024, and 2023, less than 1%, 2% and 2022, approximately 2%, 3% and 4%,3%, respectively, of our total revenue was based on the estimated fair value of non-financial consideration received, principally patents. The process for determining the value of revenue from non-financial sources requires estimating the fair value of patents received. We estimated the fair value of the patents in the above transactions using one of, or a combination of, an analysis of comparable market transactions (the market approach), a discounted cash flow analysis (the income approach) and/or by quantifying the amount of money required to replace the future service capability of the assets (the cost approach). For the market approach, judgment was applied as to which market transactions were most comparable to the transaction. For the income approach, the inputs and assumptions used to develop these estimates were based on a market participant perspective and included estimates of projected royalties, discount rates, economic lives and income tax rates, among others. For the cost approach, we utilized the historical cost of assets of similar technologies to determine the estimated replacement cost, including research, development, testing and patent application fees. The development of a number of these inputs and assumptions requires a significant amount of management judgment and is based upon a number of factors, including identification of comparable market transactions, assumed royalties, projected sales volumes, economic lives of the patents and other relevant factors. Changes in any of a number of these assumptions could have had a substantial impact on the fair value assigned to the patents for accounting purposes. These inputs and assumptions represent management's best estimates at the time of the transaction.

The aggregate amount of performance compensation expense we record in a period, under both short-term and long-term incentive compensation programs, requires the input of subjective assumptions and is a function of our estimated progress toward performance goals at both the beginning and the end of the period. Our estimated progress toward goals under performance equity grants is based on meeting a minimum confidence level of achievement in accordance with accounting rules for share-based compensation. Due to the binaryuncertain nature of patent license agreements, performance awards with milestone goals are typically not expensed until the goal has been achieved. Achievement rates can vary by performance cycle and from period to period, resulting in variability in our compensation expense.

In the event of canceled awards, we adjust compensation expense recognized to date as they occur. Tax windfalls and shortfalls related to the tax effects of employee share-based compensation are included in our tax provision. On the consolidated statements of cash flows, tax windfalls and shortfalls related to employee share-based compensation awards are included within operating activities and cash paid to tax authorities for shares withheld are included within financing activities. The inclusion of windfalls and shortfalls in the tax provision could increase our earnings volatility between periods. Tax windfalls and shortfalls related to share-based compensation was windfalls of $7.4 million, $4.9 millionmillion, and $3.1 million for the years ended 20242025, 2024, and 2023, respectively, and shortfalls for the year ended 2022 of $0.4 million.respectively.

The net decreaseincrease in cash, cash equivalents, restricted cash, and short-term investments was attributable to cash provided by operating activities of $544.5 million partially offset by cash used in financing activities of $272.4$201.4 million and cash used in investing activities of $47.2$79.7 million, excluding sales and purchases of short-term investments, partially offset by cash provided by operating activities of $271.5 million.investments. Refer to the sections below for further discussion of these items.

Our cash flows provided by operating activities are principally derived from cash receipts from patent license agreements, offset by cash operating expenses and income tax payments. The $57.8$272.9 million change in net cash provided by operating activities was driven by higher cash receipts resulting from new agreements and due to timing of cash receipts underon existing agreements.agreements Thisand increasenew agreements, and was partially offset by anhigher increaseforeign inwithholding tax payments on those cash receipts. Additionally, cash operating expenses were lower primarily due to increasedlower revenue share costsand fromlitigation new patent license agreements.costs. The table below sets forth the significant items comprising our cash flows provided by operating activities during the years ended December 31, 20242025 and 20232024 (in thousands):

Reference is made to Part I, Item 1A, “Risk Factors” included in our 2025 Form 10-K for information concerning risk factors, which should be read in conjunction with the factors set forth in the Statement Pursuant to the Private Securities Litigation Reform Act of 1995 -- Forward-Looking Statements in Part I, Item 2 of this Quarterly Report on Form 10-Q. Except as set forth below, thereThere have been no material changes with respect to the risk factors disclosed in our 2025 Form 10-K. You should carefully consider such factors, which could materially affect our business, financial condition or future results. The risks described in the 2025 Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

TheAdditionally, we signed a new IoT patent license agreement with Sonya fintech company in the payments space. The agreement covers allthe oflicensee’s Sony’s end userpoint-of-sale devices under InterDigital'sInterDigital’s global patent portfolio,portfolio includingrelated InterDigital'sto standardthe essentialcellular cellular, Wi-Fi,3G and video4G patents.standards, and the Wi-Fi 5 and Wi-Fi 6 standards.

InjunctionDisney AwardsUPC Injunctions

During firstsecond quarter 2026, the 2027 Notes had a dilutive impact of 4.43.7 million shares, which areis offset from an economic standpoint by the 2027 Note Hedge Transactions and would result in no incremental outstanding shares after conversion. However, under Generally Accepted Accounting Principles in the United States ("GAAP"),GAAP, we are required to exclude the impact of the shares received from the 2027 Note Hedge Transactions counterparties from the calculation of weighted-average diluted shares outstanding.

DuringFrom the period from January 1, 2024 through JuneSeptember 30, 2026, the holders of the 2027 Notes have the right, but not the obligation, to convert any portion of the principal amount of the 2027 Notes. InAs Decemberof 2025,June 30, 2026, $380.0 million in principal of the 2027 Notes remains outstanding, of which holders had elected to convert $80.0$80.3 million principal amount of the 2027 Notes,amount, which waswill settledsettle in the firstthird quarter of 2026. We paid the $80.0 million principal amount in cash and issued 0.8 million shares to settle the conversion spread. These shares issued were offset by 0.8 million shares received upon partial settlement of the 2027 Note Hedge Transactions, resulting in noNo incremental outstanding shares resultingwill result from thesuch conversion.conversions.

As of MarchJune 31,30, 2026, 6.0 million warrants remain outstanding related to the 2027 Warrant Transactions at a weighted-average strike price of $105.55$105.43 per share, subject to adjustment, which mature on a net-share basis beginning September 2027 through April 2028. Refer to "Financial Position, Liquidity, and Capital Resources — Convertible Notes" for further information regarding how changes in our stock price would affect the number of shares issuable related to the 2027 Warrant Transactions. For example, if the share price wereaveraged $350,$275 between September 2027 and April 2028, we would issue 4.23.7 million shares of common stock related to the 2027 Warrant Transactions.

In MarchJune 2026, we announced a regular quarterly cash dividend of $0.70 per share, which is a 17% increase compared to the dividend declared in firstsecond quarter 2025. During firstsecond quarter 2026, we returned $26.3$41.0 million to shareholders, including $23.0 million through the repurchase of shares of common stock and $18.1 million, or $0.70 per share, of cash dividends declared and $8.2 million through the repurchase of shares of common stock. We also reduced our debt by $88.0 million, including the $80.0 million principle payment on the conversion of the 2027 Notes.declared.

As of AprilJune 30, 2026, there was $108.0$96.1 million remaining under the share repurchase authorization, which we plan to utilize to periodically repurchase additional common shares. See Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds—Issuer Purchases of Equity Securities of this Quarterly Report on Form 10-Q.

Cash &and Short-term Investments

As of MarchJune 31,30, 2026, we had $1.1 billion of cash, restricted cash, and short-term investments and approximately $1.7$1.9 billion of cash payments due under contracted fixed price agreements, which includes our conservative estimates of the minimum cash receipts that we expect to receive under the Lenovo arbitration.and Amazon arbitrations.

94%93% of our firstsecond quarter 2026 revenue came from fixed-fee agreements. Such agreements often have prescribed payment schedules that are uneven and sometimes front-loaded, resulting in timing differences between when we collect the cash payments and recognize the related revenue.

The following table reconciles the timing differences between cash receipts and recognized revenue during the three and six months ended MarchJune 31,30, 2026 and 2025, including the resulting operating cash flow (in thousands):

(a) Fixed feeFixed-fee cash receipts are comprised of cash receipts from Dynamic Fixed-Fee Agreement royalties, including the associated catch-up revenue.

When we collect payments on a front-loaded basis, we recognize a deferred revenue liability equal to the cash received and accounts receivable recorded which relate to revenue expected to be recognized in future periods. That liability is then reduced as we recognize revenue over the balance of the agreement. The following table shows the projected amortization of our current and long-term deferred revenue as of MarchJune 31,30, 2026 (in thousands):

FirstSecond quarter 2026 revenue of $205.4$260.2 million includes $63.6$103.7 million of catch-up revenue, while firstsecond quarter 2025 revenue of $210.5$300.6 million includes $84.8$162.3 million of catch-up revenue. The $5.1$40.4 million decrease in total revenue was driven by lower catch-up revenue, partially offset by recurring revenue recognized from thirteen patent license agreements signed since firstsecond quarter 2025. In firstsecond quarter 2026, revenue (in descending order) from LG,Amazon, Apple, and Samsung each comprised 10% or more of our consolidated revenue. Refer to "Results of Operations — FirstSecond Quarter 2026 Compared to FirstSecond Quarter 2025" for further discussion of our 2026 revenue.

When comparing firstsecond quarter 2026 financial results against other periods, the following items should be taken into consideration:

•Our firstsecond quarter 2026 revenue includes $63.6$103.7 million of catch-up revenue primarily related to the newAmazon patent license agreements with LG and Sonyagreement signed in firstsecond quarter 2026.

•During firstsecond quarter 2026, we incurred $26.3$13.7 million of nonrecurring revenueshare-based sharecompensation costs associateddriven withby thebusiness catch-up revenue recognized in the period.successes.

As of MarchJune 31,30, 2026 and December 31, 2025, we had the following amounts of cash and cash equivalents, restricted cash, and short-term investments (in thousands):

Cash flows provided by (used in) operating activities

Cash flows provided by (used in) operating activities in the first quarterhalf 2026 and 2025 (in thousands) were as follows:

Our cash flows provided by (used in) operating activities are principally derived from cash receipts from patent license agreements, offset by cash operating expenses and income tax payments. The $36.1$13.5 million change in cash provided by (used in) operating activities was primarily driven by higher cash receipts due to the timing of receipts under new and existing agreements and was partially offset by higher cash operating expenses, including increased revenue share and intellectual property enforcement costs. The table below sets forth the significant items comprising our cash flows provided by (used in) operating activities during the threesix months ended MarchJune 31,30, 2026 and 2025 (in thousands):

(a) Cash operating expenses include operating expenses less depreciation and disposals of fixed assets, amortization of patents, and non-cash compensation. Amount includes revenue share costs of $27.5$28.4 million and $2.6$5.2 million in first quarterhalf 2026 and 2025, respectively.

Net cash providedused byin investing activities for first quarterhalf 2026 was $16.4$17.2 million, a $43.1$5.0 million change from $59.5$22.2 million in first quarterhalf 2025. During first quarterhalf 2026, we sold $29.8$12.1 million of short-term marketable securities, net of purchases, and capitalized $15.1$31.0 million of patent costs and propertycapital and equipment purchases.expenditures. During first quarterhalf 2025, we sold $86.2$18.0 million of short-term marketable securities, net of purchases, and capitalized $26.7$40.2 million of patent costs and propertycapital and equipment purchases.expenditures.

Net cash used in financing activities for first quarterhalf 2026 was $169.2$211.3 million, a change of $126.2$125.6 million from $43.0$85.6 million in first quarterhalf 2025. This change was primarily attributable to an $80.0 million payment related to the partial conversion of the 2027 Notes in first quarterhalf 2026. The change also reflects higher cash outflows in 2026, including a $22.8$22.6 million increase in taxes withheld on restricted stock unit vestings due to a higher share price at vesting and a $6.4$9.0 million increase in dividends paid following the increases in the declared dividend from $0.45$0.60 to $0.70. In addition, during first quarterhalf 2025, we received $7.3 million due to the exercise of stock options.

Our combined short-term and long-term deferred revenue balance as of MarchJune 31,30, 2026 was approximately $420.5$442.2 million, a net increase of $90.9$112.6 million from December 31, 2025. This increase in deferred revenue was primarily due to cash receipts on new and existing patent license agreements, partially offset by amortization of deferred revenue recognized in the period.

Based on current license agreements, we expect the amortization of dynamic fixed-fee royalty payments to reduce the MarchJune 31,30, 2026 deferred revenue balance of $420.5$442.2 million by $261.1$325.7 million over the next twelve months.

From January 1, 2024 through JuneSeptember 30, 2026, the holders of the 2027 Notes have the right, but not the obligation, to convert any portion of the principal amount of the 2027 Notes.

Our 2027 Notes are included in the diluted earnings per share ("diluted EPS") calculation using the if-converted method in accordance with GAAP. Under the if-converted method, we assume that conversion of convertible securities occurs at the beginning of the reporting period. The 2027 Notes are convertible into cash up to the aggregate principal amount of the 2027 Notes to be converted and any value in excess of the principal amount ("the "conversion spread") may be settled in cash, shares of the Company’s common stock, or a combination thereof. As the principal amount is required to be paid in cash and only the conversion spread may result in shares being issued, we only include the net number of incremental shares that would be issued upon conversion. We calculate the number of shares of our common stock issuable under the terms of the 2027 Notes based on the average market price of our common stock during the applicable reporting period and include that number in the weighted‑average diluted shares outstanding for the period.

At the time we issued the 2027 Notes, we entered into the 2027 Note Hedge Transactions and 2027 Warrant Transactions (collectively, the "2027 Call Spread Transactions") that together were designed to have the economic effect of reducing potential dilution upon conversion of the 2027 Notes by, in effect, increasing the conversion price of the 2027 Notes on an economic basis. However, under GAAP, since the impact of the 2027 Note Hedge Transactions is anti-dilutive, we exclude from the calculation of diluted EPS the shares of our common stock that we would receive from the counterparties upon settlement of the 2027 Note Hedge Transactions.

During periods in which the average market price of our common stock is above the applicable conversion price of the 2027 Notes (initial conversion price of approximately $77.49$76.72 per shareshare, subject to adjustment), or above the strike price of the warrants (weighted average strike price of $105.55$105.43 per shareshare, subject to adjustment), the impact of conversion of the 2027 Notes or exercise of the warrants, as applicable, would be dilutive and such dilutive effect is reflected in diluted earnings per share. In those periods, we calculate the incremental shares associated with the 2027 Notes (under the if‑converted method) or the warrants based on the average market price of our common stock during the period and include those incremental shares in weighted‑average diluted shares outstanding.

Under the if-converted method, changes in the price per share of our common stock can have a significant impact on the number of shares that we must include in the diluted EPS calculation. As described in Note 5, "Obligations" in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, the 2027 Notes are convertible into cash up to the aggregate principal amount of 2027 Notes to be converted and any remaining obligations may be settled in cash, shares of the Company’s common stock or a combination thereof ("net share settlement"). Assuming net share settlement upon conversion, the following table illustrates how changes in our stock price would affect the shares issuable under the 2027 Notes and related warrant transactions, the incremental shares included in diluted EPS under the if‑converted method (“Total Incremental Shares”), the shares deliverable to us under the 2027 Note Hedge Transactions, and the resulting net incremental shares, based on $380.0 million aggregate principal amount outstanding and approximately 6.0 million related warrants as of MarchJune 31,30, 2026 (in thousands):

FirstSecond Quarter 2026 Compared to FirstSecond Quarter 2025

The following table compares firstsecond quarter 2026 revenue to firstsecond quarter 2025 revenue (in thousands):

Total revenue of $205.4$260.2 million was relatively flatdecreased compared to firstsecond quarter 2025, decreasing slightly primarily due to lower catch-up revenue recognized from the LG TV and Sony agreements in first quarter 2026, as compared to catch-up revenue from vivothe MobileSamsung arbitration and HP agreement recognized in firstsecond quarter 2025, andpartially offset by catch-up revenue from the expirationAmazon ofagreement therecognized Samsungin TVsecond agreement.quarter 2026. This decrease was partially offset by new revenue from the Samsung arbitration decision and from thirteen new patent license agreements signed in the last twelve months.months, including the Amazon agreement and the previously announced Xiaomi, Honor, and LG TV agreements.

In firstsecond quarter 2026 and 2025, 61%68% and 71%,78%, respectively, of our total revenue was attributable to licensees that individually accounted for 10% or more of our total revenue. In firstsecond quarter 2026 and 2025, the following licensees accounted for 10% or more of our total revenue:

The following table summarizes the changes in operating expenses between firstsecond quarter 2026 and firstsecond quarter 2025 by category (in thousands):

Operating expenses increased to $123.2$120.9 million in firstsecond quarter 2026 compared to $78.7$95.2 million in firstsecond quarter 2025. The $44.5$25.8 million increase in total operating expenses was primarily due to changes in the following items (in thousands):

Research and portfolio development expense: Research and portfolio development expense increased slightly compared to firstsecond quarter 2025 primarily due to the aboveabove-noted notedshare-based increasecompensation incosts personnel-relatedand costs.depreciation.

Licensing expense: Licensing expense increased compared to firstsecond quarter 2025 primarily due to the aboveabove-noted noted changeschange in revenue share and intellectual property enforcement costs.

General and administrative expense: General and administrative expense increased compared to firstsecond quarter 2025 primarily due to the above notedabove-noted increase in personnel-relatedshare-based compensation costs.

Non-Operating Income (expense),Income, net

The following table compares firstsecond quarter 2026 non-operating expense,income, net to firstsecond quarter 2025 non-operating income, net (in thousands):

The change in non-operating (expense) income, net was primarily due to a foreign currency translation net loss arising from translation of our foreign subsidiaries of $2.9$1.5 million in firstsecond quarter 2026, compared to a $2.2$3.6 million net gain in firstsecond quarter 2025.

In firstsecond quarter 2026 and 2025, based on the statutory federal tax rate net of discrete federal and state taxes, we had an effective tax rate of 5.6%18.8% and 12.6%,14.4%, respectively. The change in effective tax rate wasis primarily due to an increase in the amount of taxnon-deductible benefits related to share-basedofficer’s compensation.