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Adeia Announces Second Quarter 2024 Financial Results

 Repriced term loan for annual interest expense savings of approximately $3 million
Generated over $90 million in cash from operations in the first half of 2024

SAN JOSE, Calif., Aug. 06, 2024 (GLOBE NEWSWIRE) -- Adeia Inc. (Nasdaq: ADEA) (the “Company” or “Adeia”) today announced financial results for the second quarter ended June 30, 2024.

“We delivered revenue of $87.4 million in the second quarter, in line with our expectations, and generated over $90 million in cash from operations in the first two quarters of 2024” said Paul E. Davis, chief executive officer of Adeia. “We signed 5 deals, demonstrating success across diverse end markets in social media, consumer electronics, semiconductor and Pay-TV, including a multi-year license renewal with X Corp. (formerly Twitter) that resolved all outstanding litigation between the two companies. Our deal momentum in the quarter further validates the strength and value of our IP portfolios across multiple verticals, fueled by our continued dedication to innovation. We are pleased with the progress we have made on key strategic initiatives and we are on-track to achieve our objectives and goals for 2024.”

Second Quarter Financial Highlights

  • Revenue was $87.4 million as compared to $83.4 million in the first quarter of 2024
  • GAAP diluted earnings per share (EPS) was $0.07 and non-GAAP diluted EPS was $0.28
  • GAAP net income was $8.4 million and adjusted EBITDA was $52.8 million
  • Cash flows from operations was $23.5 million
  • Repriced term-loan which lowered our interest rate by 61 basis points and increased our financial flexibility

Business Highlights

  • Signed 5 agreements across diverse end-markets including social media, consumer electronics, semiconductor and Pay-TV
  • X Corp., formerly known as Twitter, signed a multi-year renewal for access to our media portfolio that resolved all outstanding litigation between the two companies
  • Panasonic, a global provider of connected TVs, signed a multi-year renewal for access to our media portfolio
  • Hamamatsu, a pioneer in optical sensors, light sources and systems, signed a new license for access to our die-to-wafer hybrid bonding technology
  • Signed multi-year renewals with two regional U.S. Pay-TV providers for access to our media portfolio
  • Following the close of the quarter, signed a multi-year renewal with Liberty Global, a European Pay-TV provider, for access to our media portfolio

Capital Allocation

During the quarter, the Company made $12.0 million in principal payments towards its term loan, bringing the outstanding balance to $549.1 million as of June 30, 2024.

On June 18, 2024, the Company distributed $5.4 million to stockholders of record on May 28, 2024, for a quarterly cash dividend of $0.05 per share of common stock.

On July 24, 2024, the Board of Directors declared a dividend of $0.05 per share of common stock, payable on September 17, 2024, to stockholders of record on August 27, 2024.

Financial Outlook

The Company is reiterating its prior full-year 2024 revenue outlook, and updating certain other items of its financial outlook to reflect lower operating expenses and lower interest expense for the year:

     
Category
(in millions, except for tax rate)
 2024
GAAP Outlook
 2024
Non-GAAP Outlook
  Updated Prior Updated Prior
Revenue $380.0 − 420.0 $380.0 − 420.0 $380.0 − 420.0 $380.0 − 420.0
Operating expenses(1) $249.0 − 263.0 $254.0 − 268.0 $145.0 − 155.0 $150.0 − 160.0
Interest expense $52.0 − 55.0 $54.0 − 57.0 $52.0 − 55.0 $54.0 − 57.0
Other income $5.0 − 6.0 $5.0 − 6.0 $5.0 − 6.0 $5.0 − 6.0
Tax rate 15% − 30% 15% − 30% 23% 23%
Net income(2) $71.4 − 75.6 $65.4 − 70.7 $144.8 − 166.3 $139.4 − 160.9
Adjusted EBITDA(2) N/A N/A $237.5 − 267.5 $232.5 − 262.5
Diluted shares outstanding 113.0 − 114.0 114.0 − 115.0 113.0 − 114.0 114.0 − 115.0


(1)See tables for reconciliation of GAAP to non-GAAP operating expenses
(2)See tables for reconciliation of GAAP net income to (i) non-GAAP net income and (ii) adjusted earnings before interest expense, income taxes, depreciation and amortization (adjusted EBITDA)
  

Conference Call Information

The Company will hold its second quarter 2024 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Tuesday, August 6, 2024. To access the call in the U.S., please dial +1 (888) 660-6411, and for international callers, dial +1 (929) 203-0849. All participants should dial in 15 minutes prior to the start of the conference call. The Company also suggests utilizing the webcast link to access the live call and the replay at Q2 2024 Earnings Call Webcast.

Safe Harbor Statement

This press release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on information available to the Company as of the date hereof, as well as the Company’s current expectations, assumptions, estimates and projections that involve risks and uncertainties. In this context, forward-looking statements often address expected future business, financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “see,” “will,” “may,” “would,” “might,” “potentially,” “estimate,” “continue,” “target,” similar expressions or the negatives of these words or other comparable terminology that convey uncertainty of future events or outcomes. All forward-looking statements by their nature address matters that involve risks and uncertainties, many of which are beyond the Company’s control, and are not guarantees of future results. Forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to: the Company’s ability to implement its business strategy; the Company’s ability to enter into new and renewal license agreements with customers on favorable terms; the Company’s ability to retain and hire key personnel; uncertainty as to the long-term value of the Company’s common stock; legislative, regulatory and economic developments affecting the Company’s business; general economic and market developments and conditions; the Company’s ability to grow and expand its patent portfolios; changes in technology and development of new technology in the industries in which in which the Company operates; the evolving legal, regulatory and tax regimes under which the Company operates; unforeseen liabilities and expenses; risks associated with the Company’s indebtedness; the Company’s ability to achieve the intended benefits of, and its ability to recognize the anticipated tax treatment of, the spin-off of its product business; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, natural disasters and future outbreaks or pandemics, each of which may have an adverse impact on the Company’s business, results of operations, and financial condition. These risks, as well as other risks associated with the Company’s business, are more fully discussed in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”), including the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. While the list of factors presented here is, and the list of factors presented in the Company’s filings with the SEC are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.

Causes of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the Company’s consolidated financial condition, results of operations, liquidity or trading price of common stock. The Company does not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

About Adeia Inc.

Adeia is a leading R&D and intellectual property (IP) licensing company that accelerates the adoption of innovative technologies in the media and semiconductor industries. Adeia’s fundamental innovations underpin technology solutions that are shaping and elevating the future of digital entertainment and electronics. Adeia’s IP portfolios power the connected devices that touch the lives of millions of people around the world every day as they live, work and play. For more, please visit www.adeia.com.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP), the Company’s earnings release contains non-GAAP financial measures adjusted, where applicable, for either one-time or ongoing non-cash acquired intangibles amortization charges, costs related to actual or planned business combinations including transaction fees, integration costs, severance, facility closures, and retention bonuses, separation costs, all forms of stock-based compensation, loss on debt extinguishment, expensed debt refinancing costs, impairment of intangible assets, impact of certain foreign currency adjustments, discontinued operations and related tax effects. In addition, adjusted EBITDA adjusts for recurring charges of interest expense, income taxes, depreciation and amortization. Management believes that the non-GAAP measures used in this release provide investors with important perspectives on the Company’s ongoing business and financial performance and are helpful to provide investors with an understanding of our core operating results reflecting our normal business operations. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. Our use of non-GAAP financial measures has certain limitations in that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as adjusted EBITDA, non-GAAP operating expenses, non-GAAP net income and non-GAAP diluted earnings per share (EPS) do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached hereto. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. All financial data is presented on a GAAP basis except where the Company indicates its presentation is on a non-GAAP basis.

Set forth below are reconciliations of the Company’s reported and forecasted GAAP to non-GAAP financial metrics.

Investor Contact:

Chris Chaney
Vice President, Investor Relations
IR@adeia.com

SOURCE: ADEIA INC.
ADEA

 
ADEIA INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
 Three Months Ended  Six Months Ended 
 June 30,
2024
  June 30,
2023
  June 30,
2024
  June 30,
2023
 
Revenue$87,350  $83,217  $170,755  $200,524 
Operating expenses:           
Research and development 14,799   13,116   28,724   26,127 
Selling, general and administrative 24,617   26,394   48,646   49,256 
Amortization expense 20,030   23,650   43,187   47,339 
Litigation expense 4,262   2,334   7,192   4,956 
Total operating expenses 63,708   65,494   127,749   127,678 
Operating income 23,642   17,723   43,006   72,846 
Interest expense (13,296)  (15,540)  (27,471)  (31,478)
Other income and expense, net 1,428   1,617   2,828   3,237 
Loss on debt extinguishment (453)     (453)   
Income before income taxes 11,321   3,800   17,910   44,605 
Provision for income taxes 2,939   2,381   8,629   14,165 
Net income$8,382  $1,419  $9,281  $30,440 
Net income per share:           
Basic$0.08  $0.01  $0.09  $0.29 
Diluted$0.07  $0.01  $0.08  $0.27 
Weighted average number of shares used in per share calculations:           
Basic 108,667   106,464   108,216   106,027 
Diluted 112,536   112,775   112,757   113,105 
                


ADEIA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 June 30,  December 31, 
 2024  2023 
ASSETS     
Current assets:     
Cash and cash equivalents$66,454  $54,560 
Marketable securities 27,997   29,012 
Accounts receivable, net 25,735   39,651 
Unbilled contracts receivable 89,187   74,919 
Other current assets 10,010   7,700 
Total current assets 219,383   205,842 
Long-term unbilled contracts receivable 63,943   73,843 
Property and equipment, net 6,704   6,971 
Operating lease right-of-use assets 9,121   9,484 
Intangible assets, net 310,961   347,172 
Goodwill 313,660   313,660 
Long-term income tax receivable 113,816   120,338 
Other long-term assets 31,086   28,246 
Total assets$1,068,674  $1,105,556 
LIABILITIES AND EQUITY     
Current liabilities:     
Accounts payable$4,788  $9,623 
Accrued liabilities 16,751   19,138 
Current portion of long-term debt, net 24,753   66,145 
Deferred revenue 26,931   7,132 
Total current liabilities 73,223   102,038 
Deferred revenue, less current portion 15,113   17,672 
Long-term debt, net 510,857   519,550 
Noncurrent operating lease liabilities 9,412   9,730 
Long-term income tax payable 81,846   81,834 
Other long-term liabilities 19,087   18,110 
Total liabilities 709,538   748,934 
Commitments and contingencies     
Stockholders’ equity:     
Preferred stock     
Common stock 123   121 
Additional paid-in capital 637,752   635,331 
Treasury stock at cost (231,599)  (222,497)
Accumulated other comprehensive loss (96)  (8)
Accumulated deficit (47,044)  (56,325)
Total stockholders’ equity 359,136   356,622 
Total liabilities and equity$1,068,674  $1,105,556 
        


ADEIA INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 Six Months Ended 
 June 30,
2024
  June 30,
2023
 
Cash flows from operating activities:     
Net income$9,281  $30,440 
Adjustments to reconcile net income to net cash from operating activities:     
Depreciation of property and equipment 1,010   769 
Amortization of intangible assets 43,187   47,339 
Stock-based compensation expense 11,737   8,196 
Deferred income tax (3,596)  1,501 
Loss on debt extinguishment 453    
Amortization of debt issuance costs 1,601   2,239 
Other (1,272)  493 
Changes in operating assets and liabilities:     
Accounts receivable 14,666   27,708 
Unbilled contracts receivable (4,368)  (25,467)
Other assets 5,331   6,868 
Accounts payable (2,864)  6,987 
Accrued and other liabilities (1,716)  (16,447)
Deferred revenue 17,240   1,442 
Net cash from operating activities 90,690   92,068 
Cash flows from investing activities:     
Purchases of property and equipment (1,214)  (1,545)
Purchases of intangible assets (8,476)  (95)
Purchases of short-term investments (18,701)  (23,766)
Proceeds from maturities of investments 20,150    
Net cash from investing activities (8,241)  (25,406)
Cash flows from financing activities:     
Dividends paid (10,853)  (10,636)
Repayment of debt (52,139)  (103,750)
Proceeds from employee stock purchase program and exercise of stock options 1,539   1,130 
Repurchases of common stock for tax withholdings on equity awards (9,102)  (7,491)
Net cash from financing activities (70,555)  (120,747)
Net increase (decrease) in cash and cash equivalents 11,894   (54,085)
Cash and cash equivalents at beginning of period 54,560   114,555 
Cash and cash equivalents at end of period$66,454  $60,470 
        


ADEIA INC.
GAAP TO NON-GAAP RECONCILIATIONS
(in thousands, except per share amounts)
(unaudited)
 
Net income           
 Three Months Ended  Six Months Ended 
 June 30,
2024
  June 30,
2023
  June 30,
2024
  June 30,
2023
 
GAAP net income$8,382  $1,419  $9,281  $30,440 
            
Adjustments to GAAP net income:           
Stock-based compensation expense:           
Research and development 1,093   736   1,902   1,330 
Selling, general and administrative 5,499   3,820   9,835   6,866 
Amortization expense 20,030   23,650   43,187   47,339 
Transaction costs recorded in selling, general and administrative 1,255      1,255    
Separation and other related costs recorded in selling, general and administrative (1) 767   5,306   2,591   8,308 
Severance and retention costs recorded in selling, general and administrative    78      78 
Total operating expenses adjustments 28,644   33,590   58,770   63,921 
Other income and expense, net          (302)
Loss on debt extinguishment 453      453    
Non-GAAP tax adjustment (2) (6,357)  (6,218)  (9,111)  (10,726)
Non-GAAP net income$31,122  $28,791  $59,393  $83,333 
            
Diluted income per share           
 Three Months Ended  Six Months Ended 
 June 30,
2024
  June 30,
2023
  June 30,
2024
  June 30,
2023
 
GAAP diluted income per share$0.07  $0.01  $0.08  $0.27 
            
Adjustments to GAAP diluted income per share:           
Stock-based compensation expense:           
Research and development 0.01   0.01   0.02   0.01 
Selling, general and administrative 0.05   0.03   0.09   0.06 
Amortization expense 0.18   0.21   0.38   0.42 
Transaction costs recorded in selling, general and administrative 0.01      0.01    
Separation and other related costs recorded in selling, general and administrative (1) 0.01   0.05   0.02   0.07 
Total operating expenses adjustments 0.26   0.30   0.52   0.56 
Other income and expense, net           
Loss on debt extinguishment           
Non-GAAP tax adjustment (2) (0.05)  (0.05)  (0.07)  (0.09)
Non-GAAP diluted income per share$0.28  $0.26  $0.53  $0.74 


(1)Represents separation and related costs that were incurred subsequent to the separation on October 1, 2022, including fees for financial advisory and other professional services, and expenses incurred on a transitional basis under a contract shared with Xperi Inc.
(2)The provision for income taxes is adjusted to reflect the net income tax effects of the various non-GAAP pretax adjustments.
  


ADEIA INC.
GAAP NET INCOME TO
ADJUSTED EBITDA RECONCILIATION
(in thousands)
(unaudited)
 
 Three Months Ended  Six Months Ended 
 June 30,
2024
  June 30,
2023
  June 30,
2024
  June 30,
2023
 
GAAP net income$8,382  $1,419  $9,281  $30,440 
            
Adjustments to GAAP net income:           
Stock-based compensation expense:           
Research and development 1,093   736   1,902   1,330 
Selling, general and administrative 5,499   3,820   9,835   6,866 
Transaction costs recorded in selling, general and administrative 1,255      1,255    
Separation and other related costs recorded in selling, general and administrative (1) 767   5,306   2,591   8,308 
Severance and retention costs recorded in selling, general and administrative    78      78 
Amortization expense 20,030   23,650   43,187   47,339 
Depreciation expense 490   385   1,010   769 
Interest expense 13,296   15,540   27,471   31,478 
Other income and expense, net (1,428)  (1,617)  (2,828)  (3,237)
Loss on debt extinguishment 453      453    
Provision for income taxes 2,939   2,381   8,629   14,165 
Adjusted EBITDA$52,776  $51,698  $102,786  $137,536 


(1)Represents separation and related costs that were incurred subsequent to the separation on October 1, 2022, including expenses incurred on a transitional basis under a contract shared with Xperi Inc.
  


ADEIA INC.
RECONCILIATION FOR GUIDANCE
ON OPERATING EXPENSES
(in millions)
(unaudited)
 
 Year Ended 
 December 31, 2024 
 Low  High 
GAAP operating expenses$249.0  $263.0 
Amortization expense 72.0   72.0 
Stock-based compensation expense 24.0   26.0 
Separation and related costs (1) 8.0   10.0 
Total of non-GAAP adjustments 104.0   108.0 
Non-GAAP operating expenses$145.0  $155.0 


(1)Represents separation and related costs that were incurred subsequent to the separation on October 1, 2022, including expenses incurred on a transitional basis under a contract shared with Xperi Inc.
  


ADEIA INC.
RECONCILIATION FOR GUIDANCE
ON NET INCOME
(in millions)
(unaudited)
 
 Year Ended 
 December 31, 2024 
 Low  High 
GAAP net income$71.4  $75.6 
Amortization expense 72.0   72.0 
Stock-based compensation expense 24.0   26.0 
Separation and related costs (1) 8.0   10.0 
Total of non-GAAP operating expenses 104.0   108.0 
Non-GAAP tax adjustment (2) (30.6)  (17.3)
Non-GAAP net income$144.8  $166.3 


(1)Represents separation and related costs that were incurred subsequent to the separation on October 1, 2022, including expenses incurred on a transitional basis under a contract shared with Xperi Inc.
(2)The provision for income taxes is adjusted to reflect the net income tax effects of the various non-GAAP pretax adjustments.
  


ADEIA INC.
RECONCILIATION FOR GUIDANCE ON
ADJUSTED EBITDA
(in millions)
(unaudited)
 
 Year Ended 
 December 31, 2024 
 Low  High 
GAAP net income$71.4  $75.6 
Stock-based compensation expense 24.0   26.0 
Separation and related costs (1) 8.0   10.0 
Amortization expense 72.0   72.0 
Depreciation expense 2.5   2.5 
Interest expense 52.0   55.0 
Other income (5.0)  (6.0)
Income tax expense 12.6   32.4 
Total of non-GAAP adjustments 166.1   191.9 
Adjusted EBITDA$237.5  $267.5 


(1)Represents separation and related costs that were incurred subsequent to the separation on October 1, 2022, including expenses incurred on a transitional basis under a contract shared with Xperi Inc.
  

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