Company: IDCC
Filing Date: 2025-02-06
Form Type: 10-K
Source: 0001405495-25-000011
Chunk: 97

Company: InterDigital, Inc.
Filing Date: 2025-02-06
Form: 10-K
Item: Item 7
Chunk 97
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 for these agreements and recognize revenues during the contract term when the underlying sale or usage occurs.  Our licensees under variable agreements provide us with quarterly royalty reports that summarize their sales of covered products and their related royalty obligations to us. We typically receive these royalty reports subsequent to the period in which our licensees’ underlying sales occurred. As a result, we are required to estimate revenues and recognize sales-based royalties on such licensed products in the period in which the associated sales occur, considering all relevant information (historical, current and forecasted) that is reasonably available to us. Estimating licensees’ quarterly royalties prior to receiving the royalty reports requires us to make assumptions and judgments related to forecasted trends and growth rates used to estimate our licensees’ sales, which could have an impact on the amount of revenue we report on a quarterly basis. As a result of recognizing revenues in the period in which the licensees’ sales occur using estimates, adjustments to revenues are required in subsequent periods to reflect changes in estimates as new information becomes available, primarily resulting from actual amounts reported by our licensees.

35

Agreements with Multiple Performance Obligations

During 2024, we signed new fixed-fee agreements that had multiple performance obligations.  Consistent with the revenue recognition policies disclosed above, we (1) identified the contract with the customer, (2) identified the performance obligations, (3) determined the transaction price, (4) allocated the transaction price to the performance obligations, and (5) recognized revenue as we satisfy the performance obligations.  We allocated the transaction price to each performance obligation for accounting purposes using our best estimate of the term and value.  The process for determining the value of the standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements requires the exercise of significant judgment when evaluating the valuation methods and assumptions, including the assumed royalties, projected sales volumes, discount rate, identification of comparable market transactions which are not directly observable and other relevant factors. Changes in any of a number of these assumptions could have had a substantial impact on the relative fair value assigned to each performance obligation for accounting purposes.  These inputs and assumptions represent management's best estimates at the time of the transaction. 

The impact that a five percent change in the aggregate amount allocated to catch-up revenues under these agreements would have had on 2024 revenue is summarized in the following table (in thousands):

Change in amount allocatedAllocation to catch-up revenues+5%-%5Change in revenue$8,733 $(8,733)

Revenue