Adeia closed 2025 with record fourth-quarter revenue of $182.6 million and record full-year revenue, both above the high end of guidance, alongside adjusted EBITDA of $133.9 million (73% margin) and $60 million of operating cash flow. The quarter featured nine deals and four new customers, headlined by a Disney license that resolved roughly a year of litigation and made Adeia a licensor to two of the largest OTT providers, plus a new Major League Baseball agreement and a Vodafone renewal. Operating and litigation expenses rose sequentially on higher variable compensation and active litigation, and management announced a new executive structure and reiterated a long-term goal of $500 million of annual licensing revenue.
Good afternoon, everyone. Thank you for joining us as we share with you details of our quarterly financial results. With me on the call today are Paul Davis, our President and CEO, and Keith Jones, our CFO. Paul will share with you some general observations regarding the quarter, and then Keith will give further details on our financial results and guidance. We will then conclude with a question and answer period. In addition to today's earnings release, there is an earnings presentation which you can access, along with the webcast, in the IR portion of our website. Before turning the call over to Paul, I would like to provide a few reminders. First, today's discussion contains forward-looking statements that are predictions, projections, or other statements about future events, which are based on management's current expectations and beliefs, and therefore are subject to risks, uncertainties, and changes in circumstances.
For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discuss today, please refer to the Risk Factors section in our SEC filings, including our annual report on Form 10-K and our quarterly report on Form 10-Q. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call. To enhance investors' understanding of our ongoing economic performance, we will discuss non-GAAP information during this call. We use non-GAAP financial measures internally to evaluate and manage our operations. We have therefore chosen to provide this information to enable you to perform comparisons of our operating results as we do internally.
We have provided reconciliations of these non-GAAP measures to the most directly comparable GAAP measures in the earnings release, the earnings presentation, and on the Investor Relations section of our website. A recording of this conference call will be made available on the Investor Relations website at adeia.com. Now, I'd like to turn the call over to our CEO, Paul Davis.
Thank you, Chris, and thank you everyone for joining us today. I'm pleased to be here to share our results for the fourth quarter and full year 2025. We delivered an outstanding year, both financially and operationally. Our record annual revenue exceeded the high end of our guidance range, and we delivered excellent operating income and EBITDA, also exceeding the high end of our guidance. Our record revenue for both the quarter and the year was driven by our dedicated focus on key growth areas, including OTT. I'm proud of our team's commitment to maintaining relationships and finding ways to resolve litigation matters efficiently, resulting in outstanding outcomes for our stakeholders. As we mentioned during the prior call, we were pursuing multiple opportunities that would lead to a strong start for 2026.
With this deal momentum, we have already executed several new agreements this year, most notably a multi-year license agreement with Microsoft, a leading technology company. This agreement covers our media portfolio with broad applicability to Microsoft's business, including their consumer electronics and social media products and services. Let me discuss our fourth quarter results in a little more detail. In the fourth quarter, we delivered revenue of $183 million, highlighted by nine deals, including eight in media and one in semiconductors, with four new customers. Our efforts to diversify our revenue base continue to show results, with non-pay TV recurring revenue growing 30% in the quarter year-over-year. We are pleased to have signed Disney, our biggest new customer in the quarter. With Amazon and Disney, we now have licensed two of the largest OTT providers in the world.
After an extended period of engagement with Disney, we took formal steps to protect our intellectual property while continuing constructive dialogue. Through the course of the litigation, which lasted approximately one year, we believe we are able to demonstrate to Disney the applicability of our portfolio to their services, and both parties reached a comprehensive agreement resolving all disputes. Concluding this matter efficiently reinforces the strength and broad applicability of our IP portfolio and provides additional momentum as we pursue further OTT opportunities. Another new customer in the fourth quarter was Major League Baseball, the second major U.S. professional sports league to sign a multi-year agreement for access to our media portfolio. We were also pleased to sign a multi-year renewal with Vodafone, reaffirming our relevance and strength in international pay TV markets.
In addition, during the quarter, we signed a new OTT customer in South Korea, a new consumer electronics customer in Japan. A domestic consumer electronics renewal and two PTV renewals, further demonstrating the breadth of our licensing platform. In semiconductors, we signed a prototype development agreement with an existing customer following an initial license agreement with them last year. The customer recognized early on the value of our hybrid bonding technology for high-performance imaging and detection systems. I'd like to provide a brief review of our accomplishments for the year. Turning to the full year, 2025 was a record year for Adeia. Revenue reached $443 million, exceeding the upper end of our revised guidance, with operating income of $276 million and adjusted EBITDA of $278 million, both above the high end of our guidance.
Our results were driven by the execution of 26 license agreements across a diverse customer base spanning OTT, semiconductors, consumer electronics, pay-TV, and e-commerce verticals. Importantly, we added a record 12 new customers, significantly expanding and diversifying our licensing base. Momentum was strong across both core and growth verticals, including 9 pay-TV deals, 7 in OTT, and 4 semiconductor deals. New customers such as Disney, STMicro, Major League Baseball, and several e-commerce platforms contributed meaningfully to growth. Renewals with customers including Altice USA, Vodafone, and others continue to support the stability and predictability of our recurring revenue stream. Balanced capital allocation remained a priority in 2025. During the year, we reduced debt by $60 million, returned capital through dividends and share repurchases, and acquired 6 tuck-in patent portfolios, all while growing our cash balance. Our semiconductor innovation also received industry recognition.
Our hybrid bonding technology was awarded Best of Show for Most Innovative Technology at the Future of Memory and Storage Conference. In addition, RapidCool received the Global Brands Award for Technology Excellence. As demand for high-performance computing driven by AI continues to grow, we believe effective thermal solutions will be increasingly critical and remain focused on advancing RapidCool with partners and potential customers. Several opportunities we previously discussed have closed or are expected to close early in 2026, supporting our confidence in our annual revenue guidance. The opportunities in our pipeline continue to expand across both media and semiconductors. As we have previously mentioned, we are expecting pay-TV as a percentage of revenue to decline below the historical average of approximately 50%-60%. We are now anticipating pay-TV will represent approximately 35%-40% of our forecasted revenue this year.
We are closely monitoring and taking direct action to challenges within our pay-TV licensing program. Specifically, DirecTV has filed certain litigation which ultimately challenges the need for a new license agreement. We believe this is a clear violation of the agreements we had in place, and we have in turn filed a breach of contract suit against them. As we have demonstrated in recent disputes, including Altice USA and Disney, we are confident we will ultimately be able to successfully resolve this matter. As a reminder, the vast majority of U.S. pay-TV operators are licensed to our media portfolio, several of which agreements extend into the next decade. We continue to diversify our customer base. One of our primary strategic priorities over the last few years has been to grow our revenue in non-pay-TV verticals such as OTT, semiconductors, consumer electronics, social media, and adjacent media markets.
By adding new customers in these verticals, we have made tremendous progress. In 2025, we grew our non-pay-TV recurring revenue by more than 20%, and since 2022, we have grown it by more than 60%. In semiconductors, we see the adoption of hybrid bonding broadening, with new product releases anticipated in 2026. Hybrid bonding enables further advancement of Moore's Law in an environment where there is a growing need for innovations that support rapidly evolving AI ecosystems and related infrastructure. While AMD is already in production with their hybrid bonded products, other logic leaders, such as Intel, Broadcom, and Marvell, have publicly disclosed product roadmaps that will utilize hybrid bonding. Hybrid bonding is also becoming critical in memory, especially in high-bandwidth memory and NAND, which are increasingly needed to process today's large language models and other AI applications.
Micron, Samsung, and SK Hynix are all making significant multi-billion dollar investments in advanced packaging capacity that support their hybrid bonding strategies for HBM and NAND. Semiconductor equipment tool makers involved in the hybrid bonding supply chain have further confirmed the rising adoption within their tool orders, recently accelerating. With AI driving significant transitions in semiconductor architectures and the need for better cooling technologies only increasing, our hybrid bonding and RapidCool technologies position us well to capture meaningful opportunities in the next several years. Our patent portfolio underpins our future licensing activity. In 2025, we grew our portfolio by 13%, marking our third consecutive year of double-digit growth, driven by strategic R&D and targeted M&A. While portfolio expansion remains a priority, we expect growth to moderate over time.
I'm pleased once again, we were recognized by Harrity & Harrity as one of the most prolific inventors in the U.S., with our ranking rising compared to last year and ahead of industry leaders such as AMD, Broadcom, Verizon, and AT&T. Amongst these industry titans, I'm extremely proud that we had the 66 most new U.S. patents issued in 2025, a remarkable achievement for a company of our size and a testament to our commitment to innovation. We achieved a lot in 2025. We strengthened our predictable revenue stream while expanding into key growth markets, positioning Adeia for continued long-term value creation. We also recently enhanced our leadership structure to strengthen execution towards the company's long-term strategy and growth priorities.
Specifically, we welcome back Craig Mitchell to the newly created role of Chief Semiconductor Officer, where he will lead the company's semiconductor technology and R&D organization and will be responsible for shaping Adeia's semiconductor vision. In addition, Dr. Mark Kokes was appointed Chief Revenue Officer. Mark will oversee our global sales and go-to-market strategy across the organization. Finally, Bill Thomas was appointed to Chief Strategy Officer, a newly created position to oversee our long-term planning, market analysis, and growth initiatives. With this new leadership, I am confident we have the right team and structure to execute on our strategy. We are off to a strong start in 2026, supported by recent agreements and a growing pipeline. We remain focused on achieving our long-term goal of $500 million of annual licensing revenue. Now I'll turn the call over to Keith for further details on our financial results.
Thank you, Paul. I'm pleased to be speaking with you today to share details of our fourth quarter 2025 financial results. During the fourth quarter, we delivered strong financial results with revenue, operating income, and adjusted EBITDA, all exceeding the high end of our guidance. Record revenue of $182.6 million was driven by the execution of nine deals across a diverse mix of customers, including OTT, pay-TV, consumer electronics, and semiconductor. During the quarter, we signed four new license agreements. This includes signing a significant license agreement with Disney, which greatly adds to our presence in the OTT market. Now, I would like to discuss our operating expenses, for which I will be referring to non-GAAP numbers only.
During the fourth quarter, operating expenses were $49.2 million, an increase of $12.1 million, or 33% from the prior quarter. The increase is primarily due to increased variable compensation as a result of exceeding certain performance targets. Research and development expenses increased $3.1 million, or 21% from the prior quarter. The increase is primarily due to increased variable compensation, as well as increased portfolio development costs. Selling general administrative expenses increased $7.7 million, or 44% from the prior quarter, reflecting increased variable compensation costs. Litigation expense was $6.5 million, an increase of $1.3 million, or 25%, compared to the prior quarter, primarily due to higher spending on AMD and Canadian litigation matters.
Interest expense during the fourth quarter was $9.4 million, a decrease of $614,000, primarily attributable to our continued debt payments and due to lower variable interest rates during the period. Our current effective interest rate, which includes amortization of debt issuance costs, was 7.5%. Other income was $1.7 million and was primarily related to interest earned on our cash and investment portfolio and due to interest income earned on our revenue agreements with long-term billing structures under ASC 606. Our adjusted EBITDA for the fourth quarter was $133.9 million, reflecting an adjusted EBITDA margin of 73%. Depreciation expense for the fourth quarter was $484,000. Our non-GAAP income tax rate remained at 23% for the quarter.
Our income tax expense consists primarily of federal and state domestic taxes, as well as Korean withholding taxes. Now for a few details on the balance sheet. We ended the fourth quarter with $136.7 million in cash, cash equivalents, and marketable securities, and we generated $60 million in cash from operations. As demonstrated by our results, the fourth quarter has historically been a very strong cash generation period for us. This strong financial performance allowed us to execute on all four pillars of our balanced capital allocation approach while growing our cash balance. This includes paying down our debt, repurchasing shares, paying our dividend, and making 2 tuck-in acquisitions.
We made $21.1 million in principal payments on our debt in the fourth quarter and ended the quarter with a term loan balance of $426.7 million. In the fourth quarter, we repurchased approximately 718,000 shares for $10 million, bringing the remaining amount available for future repurchases to $160 million under our current stock repurchase program. We paid a cash dividend of $0.05 per share of common stock. Our board also approved a payment of another $0.05 per share dividend to be paid on March 30th to shareholders of record as of March 16th. Now I'll go over our guidance for the full year 2026. Our 2026 revenue guidance range is $395 million to $435 million.
As we mentioned in our previous call, our sales pipeline was, and continues to be, very strong. This has manifested not only a strong close to 2025, but serves as a springboard to early success in 2026, which we see propelling us through the remainder of the year with future wins. Overall, we see the first half of the year and the second half of the year being relatively equal in terms of revenue contribution. Operating expenses are expected to be in the range of $184 million to $192 million. We anticipate modest single-digit growth for both R&D as well as SG&A expenses as we continue to prioritize investing in our technology and infrastructure in both our media and semiconductor businesses. We anticipate that our litigation expense will increase year-over-year.
Even with recent settlements, our litigation docket remains active as we pursue additional large licensing opportunities. We expect interest expense to be in the range of $34 millio to -$36 million. We expect other income to be in a range of $5.5 million to $6.5 million. We expect a resulting adjusted EBITDA margin of approximately 55%. We expect the non-GAAP tax rate to be 21% for the full year. We also expect capital expenditures to be approximately $2 million for the full year. I could not be more pleased with our performance in 2025. Our operating results reflect significant records for Adeia, for revenue as well as earnings. Our deal momentum and execution have led to a record number of new customers, which are a key catalyst for our future growth as we look to expand our business.
We have shown that we have a relevant and sustainable licensing program, which is bolstered by our commitment to investing in our portfolio development. With the momentum that we have generated, I'm excited and encouraged about our prospects in 2026 and beyond. I'm incredibly proud of our dedicated employees who have worked tirelessly to accomplish our goals, and thankful for their continued belief in our mission. I'd like to turn the call back to Paul for a few additional remarks. Paul?