Richard Brezski
Thanks Liren. As we noted in Q4, we delivered an outstanding finish to the year total revenue of $253 million increased 140% year over year and was above our outlook of $239 to $249 million driven primarily by new agreements that closed. After the prior guidance, our '24 revenue included catch up revenue of $136 million related to our fourth quarter license agreements with Oppo, Lenovo and ZTE.
Our adjusted EBITA for the quarter of $198 million exceeded the top end of the outlook of $180 to $190 million. as the vast majority of the revenue upside flowed through and resulted in an adjusted EBITA margin of 78%. GAAP EPS for the quarter of $4.09 cents beat our guidance Non-GAAP EPS for the quarter of $5.15 cents came in below our guidance due to greater dilution from the converts on account of our higher share price and lower than expected Non-GAAP adjustments for Q4.
However, for the full year, both GAAP EPS of $12.07 cents and Non-GAAP EPS of $14.97 cents came in at or above the high end of the range. Meanwhile, cash generation for the quarter was exceptionally strong with cash flow operations of $192 million and free cash flow of $169 million. Building on Liren's comments, I'll highlight a few noteworthy metrics from our full year, 2024 results. And provide the additional perspective of how each item has improved over the last four years.
All together these metrics demonstrate our success in progressing towards our objective of delivering $1 billion plus in annual recurring revenue and $600 million plus of adjusted EBITA by 2030. Total revenue accelerated to $869 million an increase of 58% year over year, resulting in a compound annual growth rate of 25% over the past four years.
Our 2024 revenue included $269 million of CEIOT revenue more than triple prior year levels. This result which includes our milestone agreement with Samsung TV. Demonstrates our ability to grow revenue by capitalizing on the value of our found. The foundational technologies bring to markets beyond smartphones adjusted EBITA. Even our margin was very strong again 2024 coming in at 63% a 20 point improvement over the past four years, over that same time frame adjusted EBITA has grown more than 3.5 times.
We ended the year with almost $1 billion in cash including net cash of over $500 million which is up more than $100 million from last year. Full year cash flow continued to be robust with $272 million of cash from operations and $213 million of free cash flow for the year.
In fact, over the last four years, we have generated nearly three quarters of a billion in free cash flow. These strong cash flows allowed us to return $110 million to shareholders through buybacks and dividends and $126 million to holders of our '24 notes upon their maturity last spring.
Over the last four years, we have returned the vast majority of our free cash flow to shareholders through share buybacks and dividends totalling $678 million. In that time, we have reduced our outstanding share count by 5.1 million shares or 17% to 25.7 million shares at the end of 2024.
Turning to our outlook, we have guided to another very strong year in 2025 with total revenue in the range of $660 to $760 million adjusted EBITA of $400 to $495 million. And non-GAAP diluted earnings per share of $9.69 cents to $12.92 cents.
In addition, we expect to improve upon the strong free cash flow. We delivered in 2024 as we anticipate the resolution of an outstanding arbitration and continued success from our licensing efforts will drive double digit growth in free cash flow for 2025. With that as a backdrop, our board of directors approved a 33% increase in our dividend from $0.45 cents to $0.60 cents per share.
As a reminder, we begin the year with $230 million remaining on our buyback authorization between the increased dividend and our commitment to continued share buybacks. We expect to have another strong year of returning capital to shareholders in 2025.
You will see in our financial metrics that we have also begun to present annualized recurring revenue. This metric simply analyzes the recurring revenue for a given quarter. For example, in Q4, We had $117 million of recurring revenue. So, multiply that by four and you get $468 million of ARR, which is by far a record level over the last four years, we have increased our ARR at a double-digit growth rate from $314 million at the start of 2021. to $468 million at the end of 2024.
As we begin 2025, we do have a small step down due to 2024-year end expirations. But we expect to drive renewals and agreements this year to close 2025 with double digit growth in ARR from the $468 million level at which we concluded 2024.
Before I turn it back to Raiford, I want to reiterate that our quarterly guidance for Q1'25 does not include the impact of any new agreements or arbitration results we may sign or receive over the balance of the first quarter.
This is because it is harder to predict the timing of new agreements in short windows. In contrast, our full year guidance includes contributions from both new agreements and arbitration results.
As was the case last year, we believe we can achieve the financial results within our full year guided range. Through different combinations of new agreements and arbitration results with that. I'll turn it back to Raiford.
Raiford Garrabrant
Thanks Rich. Before we move to Q&A, I'd like to mention that we'll be attending a number of investor events in Q1, including the Roth Conference in Dana Point, California and the Sidoti conference, which is virtual. Please reach out to your representatives at those firms. If you'd like to schedule a meeting, Michelle, we are now ready to take questions.
Operator
(Operator Instructions)
Our first question is going to come from the line of Scott Searle, ROTH Capital Partners Your line is open. Please go ahead.
Scott Searle
Hey, good morning. Congrats on the quarter guys. Thanks for taking my questions.
We're in maybe just to dive in on the on the Disney front. I'm wondering if you could put some parameters around the timing of when you would expect this to progress and kind of the milestones there. Also, if you could address your engagement with other video streaming vendors and opportunities, as they're ongoing within 2025 like kind of the level of engagement that you're seeing.
Liren Chen
Yeah, Hi, good morning, Scott. Thanks for the question. So, regarding Disney, it's public now in our legal findings, we have engaged Disney for more than 2.5 years in bilateral negotiation. And as you know, we prefer to sign most of our deals through amicable discussions and, but we have concluded after spending, 2.5 years negotiating that enforcement is needed for this particular case.
And as you probably know in our enforcement, when we started filing the case, we are fully committed to leading it through the course of the lawsuits. But as in any other cases, also, we are always open for negotiation during the lawsuit.
So it's, difficult for me to predict precisely how long the lawsuits may last. As you probably know, from our smartphone experience, sometimes it can be, fairly quickly resolved and sometimes it takes multiple years to resolve. So as of this case, as of now, I we do not really know for sure how long this case will take.
So regarding engagement with other licensed with other streaming service providers. As we have discussed before in our Investor day, we have engaged with almost all the major players and we are patient in dimension our value to them and we hope to make progress as always through bilateral negotiation.
Scott Searle
Okay. Thanks. That's very helpful. Maybe, shifting to the annual guidance I know, this is a very difficult one to pin down. But could, you provide some color in terms of the range of outcomes, how you're thinking about it in terms of catch-up sales versus how we would be exiting the year from a recurring revenue standpoint? I know that they're probably multiple different ways to get there. But if you could kind of help us frame it a little bit.
And as part of that, rich is we're looking to the first quarter and that recurring revenue guidance, I think it's 112 to 116. I know there's some expirations this year. I think in the K you talk about seven agreements for a total of $91 or $92 million. How much of that is layering into the first quarter? Recurring guidance?
Liren Chen
Yeah, he's got, let me take on the majority of the open opportunities and then I'll have reached adding on the details for the recuring numbers. So if you look at our 2025 major opportunity here, there's, we have three major programs on the smartphone side with our momentum for signing Oppo and Frankie ZTE and others.
We really only have less than handful major opportunities we need to sign, I am the largest one is we will, as you are aware, then we need to essentially resolve honor and I probably transcend, not necessarily in that order, by the way, we are engaging with all of them in parallel on the consumer electronic IOT side. We have built a lot of momentum as rich has covered in his section, we see tremendous amount of groups in multiple verticals.
But our priority number one is to frankly signing, some of the larger TV makers as well as making progress in, different segments of vertical for our team for the service industry as we already touched on here, we actually do not take back any, material revenue for 2025. That's important for us to engaging the major players and build a multiyear negotiating progress. And obviously we already touched on the enforcement with Disney.
Richard Brezski
Yeah, and Scott, I'll just add to that, that in my comments, I noted that we ended 2024 with $468 million of ARR. And you know, we're looking to through new renewals and new agreements drive double digit growth in that ARR number by the end of 2025.
As to Q1, you noted correctly that the end of over the course of '25. And, and I'll say typically agreements are calendar year based, not always, but typically, that we have $91 million of expirations in '25 again, typically at the end of the year.
So that's really not an impact in the couple million dollar difference between recurring revenue and Q4 stepping down to Q1, that's really driven by 24 expirations. I think we noted we had 524 expirations totalling $17 million which that math kind of shows you that's the majority of that step down.
Scott Searle
Great, very helpful. And lastly, if I could just on the capital structure and the convert. Rich, could you take us through what you're factoring in, for the first quarter and how that will progress in terms of interest expense, the fully diluted share impact and, also how you're thinking about the capital structure in general, I think, when you first initiated a convert years ago, it was to be able to have a robust balance sheet to be able to litigate against potential customers like Disney.
Now, given that you've got $500 million of net cash, is, is that a mechanism and an instrument that you guys need to have in the future going forward? Thanks.
Richard Brezski
Sure. So let me take the first part of that question and I'll get to the kind of structure as we see it going forward in the first quarter. When we, we're, in any quarter, factoring in interest, income and interest expense. And we're not really looking at that much differently than, we have in recent quarters.
We also, as you allude to need to factor in any potential dilution from the convert or the related hedge there that becomes a function of the stock price. Typically, we're, looking at what the stock price is around the time that we post that guidance. And, and I know you're aware of this but for everybody's benefit in our 10-K as in our Ques in the footnotes to our financial statements, we have a sensitivity table that shows how that dilution is impacted at different prices.
Again, there's greater dilution the convert itself which we reduce through the hedge and on the far right column, you'll see the net dilution from the, warrants that we issue as for the cap structure in general. Yeah, we've for, more than 10 years have been us utilizing converts to help both through the balance sheet that enables us to you know, go to with larger customers when necessary.
If they, if we need to enforce our rights while being able to you know, buy back stock and return capital to shareholders. Because we're just in a much different position than, than even when we did the last convert in the spring of 22. I think we have more options available to us going forward. Not to say we you know, may make any predictions on what we'll do there. I'm just saying that we enjoy having more optionality in how we look at our cap structure.
Scott Searle
Great. Thanks so much. I'll get back in queue.
Operator
(Operator Instructions)
Thank you. And one moment, as we move on to our next question, comes from the line of Arjun Bhatia with William Blair & Company. Your line is open. Please go ahead.
Arjun Bhatia
Perfect. Thank you, guys. I appreciate you taking the question here. Maybe I want to start first on the streaming opportunity. It's good to see that, there is a kind of litigation and we're, somewhat far down the monetization path of your video technology.
Liren one question I have on this is, for smartphones, I think we all kind of understand how the economics work, right? You know, it's, largely based on kind of units of smartphones sold with the, with the royalty rate. When we're looking at the streaming opportunity, how should we think about kind of the underlying metric that we should get grounded in for, some sort of a royalty rate with Disney.
For example, right? You mentioned $25 billion in streaming revenue, and I think 250 million subscribers, is it more on the per minute stream? Is it the number of subscribers? Is it a revenue rate? How are you thinking you might monetize this this opportunity here.
Liren Chen
Hey Arjun, good morning. Thank you for your question. So, on the streaming side here, we are actually flexible in negotiating with our customers based on, what is the right matrix to use? If you look at fundamentally, we bring a set of very important technology that we believe underpin their services. That's both in driving the revenue forward as well as saving cost on the operating side, internal storage power, as well as cooling and internet services here.
So, and by the way, various different streaming services may have different business model. Some of them are subscription based, some of them may be advertisement sponsor based. So, when we do approach them fundamentally, we try to charge for a very small but fair price for what we bring to the table that enable their services.
So, that can be subscription based where you know, we will get a small percentage of the, monthly subscription fee times the amount of subscribers, all that can be a fairly small percentage of the overall revenue. We are actually open for both arrangement regarding the overall cyber market. And as we have discussed in our investor day and we project based on third party data that by 2027 the streaming industry overall will be the same size of the smartphone industry.
And as you are aware on the smartphone side, which as you commented on, we have demonstrated a lot of progress. And frankly, we have shown a lot of solid results in that industry. We are projecting getting about $500 million in recurrent revenue from the smartphone.
But for the streaming services, even though we believe our technology is just as important to them because it might be new because we believe we have to demonstrate our patients. And so therefore, we are in my opinion, concert setting, the target to be about $300 million by 2030 for that market to mature for us over time.
Arjun Bhatia
Okay. I'm so very helpful. Thanks Liren. I wonder if I can follow up just on the recurring revenue outlook for 2025. It sounds like you're baking in some incremental Upsell and maybe arbitration agreements with some of these agreements in particular, do you have kind of a sense of the range of uplift that you're expecting from, Samsung, which I think should be coming relatively soon? Like how should we benchmark the potential uplift that you could see there? You know if that's announced in Q1 or Q2 here?
Liren Chen
Yeah. Hey, Arjun, this is Liren. So, I'll cover it first if there's anything else which might be able to chime in. So, on the recurring revenue side, which commented, we will target to grow our recurring revenue in 2025 by at least double digit growth.
But that's also not based on any single deal or any single outcome. So, we have a number of opportunity we are pursuing. And by the way, a number of those opportunity carry both recurring revenues as well as cash up payment. So, we really look at all the opportunity holistically and we frankly estimate an outcome for per case as well as the likelihood that they will be done this year. So, this is the same process we took last year. So that's why we frankly add them up into a range of outcomes here.
Regarding the Samsung arbitration outcome. As I commented on earlier, we have spent substantial amount of effort to go through the process already as a match. The last hearing happened last October already. And at that time, the arbitrator told us they will take time to essentially make their decision, writing their conclusion and due to the holiday season in between.
So, basically, they told us that it will be after New Year. So, we are waiting for the outcome and as I commented earlier here, that can be soon, but we don't really know precisely what time regarding the outcome of the range. We comment before in our prior calls, we believe strongly that the value of portfolio has gone up substantially due to the last contract.
And if you look at the most closest you know, comparable, we believe we should realize the uplifting of the value. But this is for the arbitrator to decide, and we are currently just waiting for the result.
Arjun Bhatia
All right, wonderful. Thank you.
Operator
Thank you. And one moment as we move on to our next question, our next question is going to come from the line of Taliani with Bank of America. Your line is open. Please go ahead.
Tell your line might be on mute.
Tal Liani
Can you hear me?
Operator
We can now, sir?
Tal Liani
Oh, perfect. Thanks. Once again, you're bidding the numbers by significant amount. And I don't think you ever reported a number that is even remotely close to your guidance. It's, so hard to predict the numbers. So, I want to focus on the recurring part and I have two questions on the recurring. You said that ARR should grow double digits is, are the trends in revenues different than ARR? Meaning is there any deviation between revenue growth and AR R growth? And what could be the reasons for that?
And the second question is you noted $70 million that are that expired in 2024 and, $91 million are expected to expire in 2025. What is, what is, what happens with these expirations? Are they renewed before renewed after? How does it go with these expirations of recurring revenues? Thanks.
Richard Brezski
Okay. Hey, thanks, Tal Liani. This is Rich. Let, let me start with the first question, I think maybe Liren will have a comment for the second question, and I may have an additional point to make there. So, yeah, when we, I guess the first point to emphasize when we issue quarterly guidance and I mentioned this in my prepared remarks again today.
It's difficult for us over a short window to determine what the time period when exactly a new agreement will cross the line. Our customers are already using our technology. So, it's not like we know that they need to make a decision to so they can, produce their product and, and ship it on a certain deadline, they're already using it. And it's really then a function of when can we reach an agreement to them on the fair amount that they should pay us.
So, as a consequence on our quarterly guidance, typically are not including the potential for new agreements. And they are for you typically on a quarterly basis if we sign a new agreement will come in higher for the full year guidance. We did initiate for the first time, full year guidance last year in 2024.
We thought that we came out with a, a very strong number for 2024 in full year guidance. But frankly, we just had, as we discussed on the call here, an outstanding year and we're able to, you know, raise it, and then beat that. So we're thrilled about the performance we delivered in '24 and we're, very happy to, to feel confident we can come out with strong numbers again for '25.
So, hopefully that helps as far as recurring revenue versus total. Looking back, I mentioned on my call over the last four years, we've had a double digit CAGR in total revenue, because we have been signing new agreements and been getting catch up sales along with it. Importantly, we've also had a double digit CAGR over that time period in ARR and, I like ARR where we added it to our metrics.
One problem with recurring, we signed OVO in the fourth quarter of 2024 and it contribute one quarter of recurring revenue even though there's catch up sales associated with it. So, I think if you look at 2024 recurring revenue, it's not factoring that in if you look at the ARR where we close, 2024 at $468 million. That's kind of a better measure in my mind of kind of the, you know what we're earning on a recurring basis. So, I'll let me start with a response to the second comment.
Liren Chen
Yeah. Hey Tal, Good morning. Thank you for joining us here. So, on the recurring versus, sometimes we have expiration for contract here. I mean, number one, it's absolutely normal to have certain amount of contract expires each year. And frankly, because we have signed so many agreement, right. We have signed 14 agreement this year.
Our average contract length is, roughly around five years, sometimes it's longer, sometimes it will be shorter. So, on any given year, we will have a few contracts expire. So, for last year to this year, we have $17 million expiration. That's 17. So, it's actually a relatively small number from last year to this year. So, we, our goal H1stly is always try to get them renewed before they expire.
And sometimes, those expiration can frankly for end of the year, which happened to be a holiday time, that's difficult for various different reasons to get them done in time. So, it can be frankly pulled over to the next year for this year, for 2025 at the end of this year. I want to make sure, you guys are aware, we do disclosing our, I think 10-K filing, we have about [$7] & $91 million expiration primary driven by our Xiaomi contract that's out for renewal at end of this year.
So, I won't be able to comment on specific negotiations because they are covered by, NDA's. But what we typically do, TAO is for major agreement, we start roughly, six months to a year ahead of time. We demonstrate the value of our technology, show them the goods for the portfolio as well as demonstrate them how they have benefited more. You know, this time compared to the time of the last contract.
And then when it's appropriate, which we have demonstrated through multiple contracts here, we'll try to get a higher value in the renewal if they have benefited more. So, that's the general practice to and, and we have demonstrated in the last, four or five years, we had a good track record of renewing a large contract, including, the largest contract for Apple before the expires. And that's what we always target to do.
Tal Liani
So when you give the guidance for the year this year, do you assume that the $17 million that expired last year would be renewed this year? Do you, assume renewal of the, of the expired ones or is it excluded also from the numbers?
Liren Chen
So part, the way we do new year forecast is we actually look at all the open opportunities including online customers as well as renewals. By the way, we are not trying to, target for replacing dollar for dollars. We are trying to renew the customer one by one when they come up to.
And as you are aware how some of the customer getting market share over the years, some of them may lose market share. Some of them may have a high, mix of Five G devices, they may have gone up in terms of, every selling prices, we factor in all those parameters. So, therefore, we are not trying to replace every dollar from every customer, but we are trying to renew them.
And frankly, when they benefit more, we try to get a higher valuation out of that new contract. That's normally how it works. So, for this year, when we give the guidance talk, as I mentioned earlier, we try to look at all the opening opportunities and try to obviously drive them to closure as much as we can. But we also know some of those agreement takes longer to renew than others.
And some of the first-time customers, frankly try to solve their past sales can be a difficult and complex negotiation. So, internally we assign a certain amount of probability and certain amount of range of outcome for each of the cases. And then in total, we give ourselves what we call internally multipass to get to the result by targeting a range.
Tal Liani
Yeah. Okay, one last question, Geopolitics, a lot of your customers are coming from China, all the situation, all the geopolitical tension between China and the US, do you expect it to have an impact on your contract elongate them or, any other type of impact.
Liren Chen
Yeah. Hey, Tal, that's a great question. So, as we all know, geopolitics is always, in the macro environment we consider but there's several things to keep in mind. Number one, our technology is global, our technology is built in the open standard that is frankly developed by, industry associations.
So, that technology itself is open, it's not subject to any expert license control and frankly, no, not a single government including US or Chinese government really own that standard. So that's always open. That's a starting point. The second one is really most of the open opportunity we are trying to pursue are from large customers who have international business, right? Their sales are driven by many different things.
And frankly, if you look at smartphone industry in particular, those large customers always value domestic industry as well as you know, foreign market and they want it to be big and good. So, that's a healthy dynamic for us. The third one, which is really important for me is I spend some substantial amount of time in frankly DC and Brussels and other capital including Beijing and other places here informing policymakers why our business model is poor competition.
Why our business model is good for them? It's good for their country. It's good for the consumers. It's good for the vendors who are benefiting tremendously from our fundamental innovation. That's what enabled this vendor to come in play, leveraging what we have developed a and becoming global competitor radically fast. So, and frankly, we have done a good job explaining our business model. And I'll tell you tell that our, support cross, different countries actually quite strong.
Tal Liani
Great. Thank you.
Operator
(Operator Instructions)
Thank you. Our next question comes from the line of Anja Soderstrom with Sidoti, your line is open. Please go ahead.
Anja Soderstrom
Hi and thank you for taking my questions. Actually, most of them have been directed already. And congrats on the great performance here. When we went into 2024 you gave the guidance or 2000. Yeah, you gave the guidance for the year and then it seemed like you gave a guidance that was a little bit modest to, going into the year, which is makes sense. But are you doing the same approach this year? You think or?
Liren Chen
So I know, let me take the broader question here. I'll ask Rich to time in if need to be. So, as I explained earlier, right? So, we try to take a whole view of all the open opportunities and each opportunity we essentially associate the likelihood of, completion in the year. As well as a range of possible evaluations.
And if it's a renewal, we sign obviously certain amount, recurring revenue, if it's brand new signed customers here, we also have to estimate how much catch-up payment we can get from that deal. And frankly the timing and the dollar amount are hard to pin down with a long lead time. Right. But but we obviously wanted to give enough into it.
So, our process generally is beginning of the year we do the best we can to come up the range and then, but larger deals happen throughout the year as we have demonstrated last year. And if we have done, more or better or faster, we'll provide guidance accordingly to, either update it or I'll give you the latest information. That's a general approach we take. And so, I don't know if there's anything we just wanted to add.
Richard Brezski
No, I think that covers it. .
Anja Soderstrom
Okay. Thank you. And then just to follow up on the geopolitical environment here with the new administration, do you feel like the sentiment has changed in any way with your counterparts or?
Liren Chen
Yeah, that's a great question. And you, so if you look at the new administration for US, traditionally, as I think many of you guys are aware, Republicans are stronger in IP protection in general. And I, again, I'm not specifically commenting on, any specific person or anything.
So, which we believe it's a generally good thing for, for IP licensing and, but we are still at the beginning of the new administration and by the way, be historic as a close working relationship with, both administrations in the last, decades or more. So we continue to build this relationship, we demonstrate to them, why our business is good for us, why our technology leadership is important to us, technology leadership as well as you know, in the future of our country.
So, those are pretty well received and I expect strong support going forward.
Anja Soderstrom
Okay. Thank you. That was all for me.
Operator
Thank you. And I would now like to hand the conference back over to Liren for any further remarks.
Liren Chen
Yeah. Hey, thank you operator. Before we close, I'd like to thank our employees for their dedication and contribution in the digital as well as many partners and licenses for a record year in 2024. I also thank you everyone who joined us today and we look forward to updating you on our progress next quarter.
Operator
This concludes today's conference call. Thank you for participating and you may now disconnect everyone. Have a great day.
