[Management View]
Adeia reported $87.3 million in revenue for Q3 2025, aligning with expectations. Non-pay TV recurring revenue increased 31% YoY, and 81% since separation. The patent portfolio grew by over 35% to 13,000 assets, driven by internal R&D. Litigation against AMD and Disney is progressing, with multiple favorable rulings.

[Outlook]
Revenue guidance for FY2025 was revised to $360-$380 million due to AMD litigation. Operating expenses are projected at $160-$164 million, with interest expenses at $40-$41 million. Adjusted EBITDA margin guidance is approximately 56%. Major licensing opportunities could drive substantial revenue growth in 2026.

[Financial Performance]
Revenue for Q3 2025 was $87.3 million, consistent with expectations. Non-GAAP operating expenses decreased by 9% QoQ to $37.1 million. Litigation expenses were $5.2 million, down 28% QoQ. Adjusted EBITDA was $50.7 million with a 58% margin. Cash and equivalents were $115.1 million, with $17.8 million generated from operations.

[Q&A Highlights]
Question 1: Keith, I'm not sure if I heard any of one-time catch-up fees in the quarter. I'm wondering if you could clarify that, and I assume it would all be related to media. And as we're looking out to the fourth quarter, a wide range of outcomes there depending on when deals get signed. Wonder if you could provide a little bit more color in terms of the size, types of deals in the pipeline. I think you talked a lot about e-commerce comprising that. But in particular, I'd like to know what you guys are thinking about recurring revenue, how that moves sequentially from the third quarter to the fourth quarter? And maybe an early shot at 2026 of how you see recurring media revenue growing in 2026%?

Answer: The recurring revenue was very modest, about $1 million, from both new license agreements and renewals. This stability gives us a recurring revenue number in the mid-eighties. We expect it to cross approximately $90 million in Q4. The pipeline remains strong, with agreements in media and semiconductor sectors providing a solid foundation for growth. We see strength in recurring revenue going forward, with significant growth potential in 2026.

Question 2: Could you just lay out the timelines and the milestones that we could expect in terms of how this litigation would progress? And as part of that then how is that impacting or not impacting the dialogue with other semi vendors out there particularly as it relates to the logic opportunity with chiplet opportunities?

Answer: We filed two cases against AMD in the Western District of Texas, expected to go to trial in 2027. The government shutdown may impact jurisdiction availability. The 10 patents filed are substantial, with eight expiring mid-2030 or beyond, covering virtually all of AMD's products. The litigation does not impact our dialogue with other semiconductor vendors, as hybrid bonding adoption is increasing, especially in logic and memory markets.

Question 3: Could you reconcile some of the commentary you've made last quarter and this quarter? Last quarter, you said there was so much opportunity that you wouldn't need AMD and could still hit the upper end of the guidance. But this quarter, you're reducing guidance because you don't have AMD. And then right now, you're saying that you met the guidance your expectations for Q2 for Q3 will that was the case, why didn't you provide guidance? Because the street was at $100 million.

Answer: We provide annual guidance only, not quarterly. The statements last quarter remain true; we have a robust pipeline with opportunities to hit above the revised guidance range. Given the time of year and narrowed paths due to AMD litigation, we took a prudent approach to adjust the guidance. Opportunities remain for significant growth in both media and semiconductor businesses.

Question 4: What's there in the pipeline that gives you confidence that you could see revenue lift by about $20 million in the quarter that hasn't happened at all throughout this year?

Answer: We do very large deals that can take time and are complicated to negotiate. We have good discussions with multiple parties in both media and semiconductor sectors. Opportunities include litigation against AMD and Disney, Canadian operators, large OTT opportunities, and additional semiconductor pursuits. The timing of these deals impacts revenue guidance.

Question 5: Are there any implications for other possible deals or renewals in the semiconductor pipeline given the litigation announcement with AMD?

Answer: The adoption cycle of hybrid bonding is increasing, especially in logic and memory markets. AMD was ahead in hybrid bonding adoption, with other companies launching products in 2026 and beyond. The breadth of our portfolio and relevance to advanced semiconductors are exciting, with significant patents covering AMD's products.

Question 6: Do you expect operating expenses to follow the revenue trend line in 2026, or will you keep a tight lid on spending?

Answer: We will continue to invest in the business at a modest rate. The increase in revenue would not be consumed by significantly higher spending. We expect EBITDA margins to remain in the sixtieth percentile, with strong cash generation from operations. Our investment in R&D strengthens our portfolio and supports new deals and litigation.

Question 7: What is the timeline for licensing RapidCool, and how is it different from Microsoft's microfluidics cooling technique?

Answer: RapidCool is a mid- to long-term revenue opportunity, with early-stage engagements ongoing. Our solution involves directly bonding a cold plate to the chip, which we believe is more plug-and-play compared to Microsoft's etching technique. We see RapidCool as a significant opportunity for efficient semiconductor cooling.

[Sentiment Analysis]
Analysts expressed cautious optimism, seeking clarification on revenue guidance and pipeline opportunities. Management maintained a confident tone, emphasizing strong pipeline and strategic growth potential despite litigation challenges.

[Quarterly Comparison]
| Metric | Q3 2025 | Q2 2025 | Change (%) |
|-------------------------------|---------------|---------------|----------------|
| Revenue | $87.3 million | $87.3 million | 0% |
| Non-GAAP Operating Expenses | $37.1 million | $40.6 million | -9% |
| Litigation Expenses | $5.2 million | $7.2 million | -28% |
| Adjusted EBITDA | $50.7 million | $50.7 million | 0% |
| Cash and Equivalents | $115.1 million| $97.3 million | 18.3% |
| Debt Reduction | $11.1 million | $11.1 million | 0% |

[Risks and Concerns]
The company faces increased litigation expenses due to new legal actions against AMD and ongoing litigation with Disney. The likelihood of closing a license agreement with AMD is low, impacting revenue guidance. The government shutdown may affect litigation timelines.

[Final Takeaway]
Adeia's Q3 2025 performance was stable, with revenue aligning with expectations and significant growth in non-pay TV recurring revenue. The company revised its FY2025 revenue guidance due to AMD litigation but remains confident in its strong pipeline and strategic growth opportunities. Management emphasized the potential for substantial revenue growth in 2026, driven by ongoing engagements and new licensing deals. Despite litigation challenges, Adeia continues to focus on expanding its patent portfolio and maintaining capital discipline.