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Adeia Inc. (ADEA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $87.7M with non-GAAP diluted EPS of $0.26; revenue was slightly below consensus while EPS was modestly above consensus. Management reiterated full-year 2025 guidance and flagged potential Q2 timing risk if deals slip to H2 . EPS and revenue estimates from S&P Global: Q1 2025 EPS $0.252*, revenue $88.964M* vs actual $0.26 and $87.7M, respectively.
  • Adjusted EBITDA was $47.3M (54% margin). Strong cash generation ($57.1M CFO) supported further deleveraging (term loan down to $470.0M) and capital returns ($10.0M buyback; $0.05 dividend declared for June 17) .
  • Commercial momentum continued: 10 deals signed including 4 new customers across social media, OTT, semiconductors, and a major U.S. sports league streaming agreement; recurring revenue in non-pay TV markets rose 25% YoY per management commentary .
  • Key watch items: ongoing Disney OTT litigation elevating Q2 litigation expense, and one large semiconductor agreement still pending; management remains confident with >80% of FY25 revenue outlook backed by contracted revenue .

What Went Well and What Went Wrong

What Went Well

  • Signed 10 licensing agreements with 4 new customers across growth verticals (social media, OTT, semiconductors) including a major U.S. professional sports league for streaming, expanding OTT footprint .
  • Strong cash generation and disciplined capital allocation: $57.1M cash from operations; $17.1M debt reduction (term loan $470.0M); $10.0M buyback; dividend declared for June 17 .
  • Non-pay TV recurring revenue up 25% YoY, demonstrating growth offsetting pay TV declines; portfolio expanded to >12,750 patent assets (+4% QoQ), bolstering IP leverage in AI, imaging, microLED, and hybrid bonding .

What Went Wrong

  • Revenue modestly below Q1 2025 consensus ($87.7M vs $88.964M*), and down sequentially from Q4’s seasonal strength; management cautioned Q2 could be similar to Q1 if deals slip to H2 . EPS and revenue estimates from S&P Global: Q1 2025 EPS $0.252*, revenue $88.964M*.
  • Litigation expense increased to $5.9M (+$2.0M QoQ) with further increase anticipated in Q2 due to Disney and Canadian pay TV matters, pressuring near-term OpEx .
  • The “large” semiconductor deal referenced in prior quarters remains unsigned; management reiterated engagement but timing uncertainty persists .

Financial Results

Results vs Prior Periods (actuals)

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$83.405 $86.101 $119.168 $87.670
GAAP Diluted EPS ($)$0.01 $0.17 $0.32 $0.10
Non-GAAP Diluted EPS ($)$0.25 $0.27 $0.47 $0.26
Adjusted EBITDA ($USD Millions)$50.010 $51.279 $80.266 $47.312
Adjusted EBITDA Margin (%)—60% 67% 54%
Cash from Operations ($USD Millions)$67.229 $14.3 $107.5 $57.139

Q1 2025 vs S&P Global Consensus

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)$88.964*$87.670
Primary EPS ($)$0.252*$0.26
# of Estimates (Revenue)3*—
# of Estimates (EPS)3*—
Values retrieved from S&P Global.

KPIs and Operating Metrics

KPIQ3 2024Q4 2024Q1 2025
Deals signed (new)7 (—) 10 (4 new) 10 (4 new)
Term loan balance ($USD Millions)$537.1 $487.1 $470.0
Share repurchases ($USD Millions)—$20.0 $10.0
Dividend declared ($/share)$0.05 (Dec 18, 2024) $0.05 (Mar 31, 2025) $0.05 (Jun 17, 2025)
Patent assets (total)>11,750 >12,000 >12,750

Note: Segment revenue breakdown was not disclosed; mix commentary highlighted OTT, semiconductor, social media, pay TV and consumer electronics .

Guidance Changes

MetricPeriodPrevious Guidance (as of Q4 2024)Current Guidance (Q1 2025)Change
Revenue ($USD Millions)FY 2025$390–$430 $390–$430 Maintained
Non-GAAP Operating Expenses ($USD Millions)FY 2025$166–$174 $166–$174 Maintained
Interest Expense ($USD Millions)FY 2025$41–$43 $41–$43 Maintained
Other Income ($USD Millions)FY 2025$4.0–$4.5 $4.0–$4.5 Maintained
Non-GAAP Tax Rate (%)FY 2025~23% 23% Maintained
Adjusted EBITDA ($USD Millions)FY 2025$226.3–$258.3 $226.3–$258.3 Maintained
Diluted Shares (Millions)FY 2025113–114 113–114 Maintained
Capital Expenditures ($USD Millions)FY 2025~$1 ~$1 Maintained
Q2 Revenue commentaryQ2 2025—“Could be similar to Q1 if deals shift to H2” New color
Litigation expenseQ2 2025“~double” vs run-rate in FY25 outlook Increase anticipated in Q2 Increased timing commentary
DividendQ2 2025$0.05 payable Mar 31 $0.05 payable Jun 17 (record May 27) Maintained program

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
OTT expansionFiled Disney litigation; pipeline strengthening; e-commerce Neiman Marcus win New OTT deal with Amazon; multiple renewals (Roku, Sharp) New OTT customer (international media), sports league streaming; Disney litigation ongoing; Q2 timing risk Broadening OTT footprint; legal action ongoing
Semiconductor hybrid bondingEngineering support deals; adoption gaining in HBM/NAND/logic Tech transfer agreement signed; rate repricing benefits New analog/mixed-signal semiconductor customer; “large” semi deal still pending Steady adoption; one large deal outstanding
Social media licensingHigh major TV brands under license; pipeline expansion Canon win validates imaging IP relevance ~90% social media market licensed; added another new customer High penetration; incremental renewals/new logos
Capital allocation & deleveragingIncreased buyback authorization to $200M; accelerated debt repayment $50M debt paydown; $20M buyback; cash up $17.1M debt paydown; $10M buyback; $0.05 dividend; term loan $470M Continued deleveraging and returns
AI/imaging/microLED IPOTT, broadband connectivity acquisitions Strategic IP acquisitions for OTT/broadband MicroLED and imaging portfolios acquired; AI relevance cited Portfolio expanding in AI-adjacent areas
Macro & guidance postureNarrowed FY24 range; disciplined deal economics FY25 guide set; 80% contracted revenue FY25 guide reiterated; >80% contracted revenue; macro caution Stable outlook; mindful of timing/macro

Management Commentary

  • “We generated $88 million in revenue and $57 million in cash from operations… Our full year 2025 outlook remains unchanged… Over 80% of our full year revenue outlook is supported by contracted revenue.” – Paul Davis, CEO .
  • “We signed 10 license agreements… highlighted by 4 agreements with new customers… recurring revenue is up an impressive 25% year-over-year in non-pay TV parts of our business.” – Paul Davis, CEO .
  • “Adjusted EBITDA for the first quarter was $47.3 million… We ended the quarter with $116.5 million in cash… made $17.1 million in principal payments… term loan balance of $470 million.” – Keith Jones, CFO .
  • “We are reiterating our prior guidance for the full year 2025… revenue $390M–$430M… adjusted EBITDA margin ~59%… capex approximately $1M… Q2 revenue could be similar to Q1 if deals shift to H2.” – Keith Jones, CFO .

Q&A Highlights

  • OTT/sports streaming: Management views the U.S. sports league win as an inroad to additional leagues; categorizes this within OTT and is pursuing adjacent sports gambling opportunities longer-term .
  • MicroLED and imaging portfolios: Acquired without existing licenses; strategic fit expected to open mid- to long-term customer opportunities, including AI-linked semiconductor technologies like silicon photonics .
  • Semiconductor “big deal”: Not yet signed; still targeted for this year though timing pushed from last year; ongoing engagement with customer .
  • OTT opportunity set: Larger revenue opportunities predominantly domestic; Disney litigation ongoing; additional large OTT opportunity remains unlicensed .
  • Social media penetration: Approximately 90% of social media market licensed; growth via renewals and expanding use cases in video/imaging .

Estimates Context

  • Q1 2025: EPS $0.252* vs actual $0.26; Revenue $88.964M* vs actual $87.670M. # of estimates: 3 for both EPS and revenue*. Values retrieved from S&P Global.
  • Prior quarters context: Q4 2024 EPS $0.426* vs actual $0.47; Revenue $114.218M* vs actual $119.168M. Q3 2024 EPS $0.399* vs actual $0.27; Revenue $111.128M* vs actual $86.101M. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Modest “beat/miss” mix: EPS modestly above, revenue modestly below Q1 consensus; FY25 guidance reaffirmed, with >80% revenue tied to contracted agreements, supporting outlook resilience . EPS and revenue estimates from S&P Global: Q1 EPS $0.252*, revenue $88.964M*.
  • Near-term timing risk: Management cautioned Q2 revenue could resemble Q1 if deals slide to H2; litigation expense expected to increase in Q2 (Disney, Canadian pay TV) .
  • Structural growth drivers intact: Non-pay TV recurring revenue up 25% YoY; new OTT, social media, sports, and semiconductor logos underscore diversification and pipeline depth .
  • Continued deleveraging and returns: Term loan reduced to $470M; $10M buyback executed; $0.05 dividend declared for June 17 – supports total return profile and balance sheet improvement .
  • Watch the “large” semiconductor agreement: Still pending; its eventual signing could be a catalyst and impact intra-year phasing and sentiment .
  • Portfolio strengthening in AI/imaging/microLED: IP acquisitions and organic R&D deepen exposure to emerging tech that aligns with OTT and semiconductor demand trends .
  • Actionable: Position for timing/margin dynamics (litigation OpEx in Q2) but recognize robust contracted revenue base and multi-vertical growth optionality; monitor Disney litigation developments and any updates on the large semi deal for potential stock catalysts .