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Adeia (ADEA)
NASDAQ:ADEA
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Adeia
(NASDAQ:ADEA)
72Outperform
Positive Factors
Debt Management
ADEA continues to delever its balance sheet with a steady source of free cash flow.
Financial Performance
Strong results and cash flow are reported for Adeia Inc., indicating a solid performance.
Licensing Agreements
ADEA signed 32 IP licensing deals in 2024, including with notable companies like Roku, Sharp, and Amazon.
Negative Factors
Delayed Licensing Agreements
A month after Adeia announced a licensing agreement with Amazon.com there has been no further developments as to the other licensing agreement management had previously expressed was close to signing.
Litigation Expenses
Litigation expenses are expected to increase in 2025 as ADEA's lawsuits against Disney progress.
Revenue Decline
Full year results for 2024 showed a decline in revenue by 3.3% and adjusted EBITDA by 10.6% year-over-year.
Adeia (ADEA) vs. S&P 500 (SPY)
Market Cap
$1.51B
Dividend Yield1.43%
Average Volume (3M)846.52K
Price to Earnings (P/E)24.5
Beta (1Y)1.04
Revenue Growth-3.28%
EPS Growth-6.40%
CountryUS
Employees150
SectorTechnology
Sector Strength50
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.57
Shares Outstanding108,444,910
10 Day Avg. Volume821,582
30 Day Avg. Volume846,522
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.90
Price to Cash Flow (P/CF)3.40
P/FCF Ratio3.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$18.33Price Target Upside38.34% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Adeia Business Overview & Revenue Model
Company DescriptionAdeia Inc., together with its subsidiaries, operates as a consumer and entertainment product/solutions licensing company worldwide. It licenses its innovations to companies in the entertainment industry under the Adeia brand. The company licenses its patent portfolios across various markets, including multichannel video programming distributors comprising cable, satellite, and telecommunications television providers that aggregate and distribute linear content over networks, as well as television providers that aggregate and stream linear content over broadband networks; over-the-top video service providers, social media, and other new media companies, such as subscription video-on-demand service providers and social media companies; consumer electronics manufacturers, which includes smart televisions, streaming media devices, video game consoles, mobile devices, DVRs, and other connected media devices; and semiconductors, including sensors, radio frequency components, memory, and logic devices. The company was incorporated in 2019 and is headquartered in San Jose, California.
How the Company Makes MoneyAdeia makes money through a robust licensing model, primarily by developing and holding a broad portfolio of intellectual property and technology patents. The company generates revenue by licensing these patents to other tech companies and manufacturers, allowing them to incorporate Adeia's proprietary technologies into their products and services. This model not only provides a steady stream of licensing fees but also incentivizes innovation and the development of new technologies. Key revenue streams include long-term licensing agreements, royalties, and strategic partnerships with leading technology firms, which help expand its reach and ensure continued income from its intellectual property assets.
Adeia Financial Statement Overview
Summary
Adeia demonstrates strong cash flow and improved financial leverage, although the declining revenue trend poses a risk. The stable profitability margins and stronger equity position provide a stable financial footing.Income Statement
Adeia's income statement shows a declining revenue trend over recent years, with a significant decrease from 2020 to 2021. The gross profit margin remains strong at 100% due to the nature of the business, but net profit margin has fluctuated, with a recent positive turn in 2024. However, revenue growth is negative in the latest year, which is a concern.62
Positive
Balance Sheet
The balance sheet indicates a reduced debt-to-equity ratio over the years, showing improved financial leverage. Stockholders' equity has increased, indicating a stronger equity base. The equity ratio improved, reflecting better asset management and financial stability.68
Positive
Cash Flow
Adeia's cash flow statement reveals robust free cash flow and operating cash flow generation. The free cash flow growth rate is positive, and the operating cash flow to net income ratio is high, indicating strong cash generation relative to earnings.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 376.02M | 388.79M | 438.93M | 877.70M | 892.02M | Gross Profit |
| 376.02M | 388.79M | 324.71M | 750.94M | 813.66M | EBIT |
| 128.61M | 136.23M | 153.06M | 28.09M | 177.63M | EBITDA |
| 128.61M | 237.82M | 269.33M | 235.64M | 348.53M | Net Income Common Stockholders |
| 64.62M | 67.37M | 138.39M | -58.91M | 146.76M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.82M | 83.57M | 114.56M | 261.65M | 257.13M | Total Assets |
| 1.10B | 1.11B | 1.21B | 2.47B | 2.70B | Total Debt |
| 30.50M | 595.93M | 734.19M | 820.14M | 905.59M | Net Debt |
| 25.68M | 541.37M | 619.63M | 619.02M | 735.40M | Total Liabilities |
| 701.39M | 748.93M | 909.11M | 1.13B | 1.25B | Stockholders Equity |
| 396.57M | 356.62M | 301.41M | 1.35B | 1.46B |
| Cash Flow | Free Cash Flow | |||
| 210.64M | 146.41M | 170.16M | 220.65M | 369.29M | Operating Cash Flow |
| 212.46M | 152.75M | 183.02M | 234.79M | 427.60M | Investing Cash Flow |
| -24.02M | -34.49M | -2.91M | -6.21M | 17.84M | Financing Cash Flow |
| -164.17M | -178.26M | -263.26M | -196.25M | -351.14M |
Adeia Technical Analysis
Negative
13.25
Price Trends
13.99
Negative
13.49
Negative
12.50
Positive
Market Momentum
-0.19
Positive
38.17
Neutral
33.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADEA, the sentiment is Negative. The current price of 13.25 is below the 20-day moving average (MA) of 14.14, below the 50-day MA of 13.99, and above the 200-day MA of 12.50, indicating a neutral trend. The MACD of -0.19 indicates Positive momentum. The RSI at 38.17 is Neutral, neither overbought nor oversold. The STOCH value of 33.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ADEA.
Adeia Risk Analysis
Adeia disclosed 41 risk factors in its most recent earnings report. Adeia reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Adeia Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $175.18B | 17.12 | 41.96% | 2.12% | 12.13% | 36.17% | |
75 Outperform | $842.92B | 90.80 | 14.85% | 1.21% | 40.30% | -22.79% | |
72 Outperform | $1.51B | 24.51 | 17.16% | 1.43% | -3.28% | -6.40% | |
71 Outperform | $103.63B | 67.14 | 4.43% | 1.75% | -19.28% | -44.00% | |
68 Neutral | $27.32B | 91.99 | 4.71% | 3.48% | -44.31% | -86.74% | |
65 Neutral | $164.48B | 35.51 | 28.25% | 2.88% | -10.72% | -26.60% | |
58 Neutral | $21.15B | 10.32 | -17.43% | 2.43% | 4.55% | -24.50% |
* Technology Sector Average
Performance Comparison
ADEA
Adeia
13.25
2.62
24.65%
ADI
Analog Devices
201.56
8.15
4.21%
AVGO
Broadcom
169.12
35.72
26.78%
MCHP
Microchip
48.70
-38.86
-44.38%
QCOM
Qualcomm
152.72
-15.63
-9.28%
TXN
Texas Instruments
176.33
7.87
4.67%
Adeia Earnings Call Summary
Earnings Call Date: Feb 18, 2025 | % Change Since: -1.27% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance and strategic progress with new deals and debt reduction. However, increased operating expenses and legal challenges, particularly with Disney, were notable concerns. Despite these challenges, the overall future outlook remains positive, driven by strategic deals and recurring revenue growth.Highlights
Record Financial Performance
Fourth quarter revenue of $119.2 million and operating cash flow of $107.5 million set post-separation records. Adjusted EBITDA was $80.3 million with an operating margin of 67%.
Significant New Deals
Successfully signed 10 license agreements in Q4, including major deals with Amazon and Canon, contributing to a 65% year-over-year increase in new media revenue.
Debt Reduction Success
Reduced debt by $50 million in Q4, bringing the total debt balance down to $487 million. Paid down $114.2 million in debt over the year, totaling $272.3 million since separation.
Stock Buyback Program
Initiated a $20 million stock buyback program in Q4 and repurchased an additional $10 million worth of shares in Q1 2025.
Strong Recurring Revenue Growth
Achieved an 18% year-over-year increase in recurring revenue outside of Pay-TV verticals.
Recognition and Awards
Ranked in the top 75 in the world for U.S. patents issued in 2024, with 597 patents granted. Won the Best Paper Award at the Electronic Components and Technology Conference.
Lowlights
Increased Operating Expenses
Operating expenses in Q4 were $39.4 million, a 12% increase from the prior quarter, primarily due to higher R&D and legal costs.
Litigation Challenges
Initiated litigation against Disney for patent infringement, which could extend over several years, and faced ongoing litigation with Canadian Pay-TV operators.
Semiconductor Deal Delays
Noted delays in closing a significant semiconductor deal, initially planned for 2024, now pushed to 2025.
Company Guidance
During Adeia's Fourth Quarter 2024 Earnings Conference Call, the company provided detailed guidance and metrics for the year ahead. The fourth quarter revenue was reported at $119.2 million, with an operating cash flow of $107.5 million and adjusted EBITDA of $80.3 million, reflecting an operating margin of 67%. The company signed 10 license agreements, including a significant multiyear deal with Amazon, contributing to a 65% year-over-year increase in new media revenue. Adeia also made accelerated debt payments of $50 million, reducing the debt balance to $487 million, and initiated a $20 million stock buyback program. For fiscal year 2025, Adeia anticipates revenue between $390 million and $430 million, driven by a robust pipeline and key agreements. Operating expenses are projected to range from $166 million to $174 million, with an expected adjusted EBITDA margin of approximately 59%. The company has also repriced its term loan, reducing the interest rate, and plans to maintain a non-GAAP tax rate of around 23%. This guidance emphasizes Adeia's focus on expanding its media and semiconductor portfolios, while managing debt and capital allocation effectively.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.