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Acacia Research Corporation (NASDAQ:ACTG) is a company that specializes in acquiring and managing patent portfolios. It operates in the intellectual property sector, focusing on patent licensing and enforcement. The company competes with other firms in the technology and intellectual property space, such as ACI Worldwide, Inc. (ACIW), AAON, Inc. (AAON), Ameris Bancorp (ABCB), and Agilysys, Inc. (AGYS).In evaluating Acacia Research Corporation's financial performance, the Return on Invested Capital (ROIC) is ...

Revenue Performance - Total revenues for Q3 2025 reached $59.446 million, a significant increase from $23.310 million in Q3 2024, representing a growth of 155.5%[18] - Total revenues for Q3 2025 were $30,815,000, compared to $23,310,000 in Q3 2024, marking an increase of 32%[206] - Total revenues for the nine months ended September 30, 2025, were $235.105 million, compared to $73.468 million for the same period in 2024, representing a significant increase[207] - Revenues from the United States for the nine months ended September 30, 2025, were $186,665,000, up from $78,027,000 in 2024, indicating a 139% growth[209] - Total revenues for Benchmark for the nine months ended September 30, 2025, were $47,799,000, up 50.0% from $31,843,000 in the same period of 2024[70] Segment Performance - Intellectual property operations generated $7.795 million in revenue for Q3 2025, compared to $486 thousand in Q3 2024, marking a substantial increase of 1,505%[18] - Energy operations reported revenues of $14.176 million in Q3 2025, slightly down from $15.817 million in Q3 2024, a decrease of 10.4%[18] - Manufacturing operations contributed $30.815 million in revenue for Q3 2025, with no revenue reported in Q3 2024[18] - The energy operations segment generated $47.799 million in revenue for the nine months ended September 30, 2025, compared to $31.843 million in 2024, reflecting a growth of approximately 50%[207] - Printronix's net revenues for the three months ended September 30, 2025, were $6,660,000, a decrease from $7,007,000 in 2024[60] Financial Position - The net loss attributable to Acacia Research Corporation for Q3 2025 was $2.730 million, an improvement from a net loss of $13.996 million in Q3 2024[18] - Total assets increased to $768.871 million as of September 30, 2025, up from $756.394 million as of December 31, 2024, reflecting a growth of 1.9%[15] - Total liabilities decreased to $192.033 million as of September 30, 2025, down from $203.775 million as of December 31, 2024, a reduction of 5.8%[15] - Stockholders' equity rose to $576.838 million as of September 30, 2025, compared to $552.619 million as of December 31, 2024, an increase of 4.4%[15] - The company reported a net income before income taxes of $25.357 million for the nine months ended September 30, 2025, compared to a loss of $23.348 million in 2024[207] Cash Flow and Investments - Cash flows from operating activities for the nine months ended September 30, 2025, were $62.1 million, compared to $70.4 million in 2024, indicating a decrease of approximately 11.0%[23] - The company reported a net cash used in investing activities of $14.7 million for the nine months ended September 30, 2025, compared to $117.1 million in 2024, reflecting a significant reduction in investment outflows[23] - The company invested $10.0 million to acquire a 50.4% equity interest in Benchmark Energy II, LLC, which is engaged in oil and gas asset acquisition and development[35] - The company completed the acquisition of Deflecto Acquisition, Inc. for an aggregate consideration of $103.7 million, funded by a $48.0 million secured term loan and cash on hand[38] Shareholder Equity and Stock Activity - The company issued 15,385 shares of common stock for unvested restricted stock awards during the three months ended September 30, 2025[19] - The company repurchased 1,537,122 shares of common stock, resulting in a treasury stock balance of $(118,542,000) as of September 30, 2025[21] - The net loss attributable to common stockholders for Q3 2025 was $(2,730,000), compared to a net loss of $(13,996,000) in Q3 2024, showing an improvement of 80%[195] - As of September 30, 2025, there were 12,179,045 shares of common stock available for grant under the 2024 Acacia Research Corporation Stock Incentive Plan[188] Legal and Compliance Matters - The Company is subject to various legal claims, but management believes that any potential liability will not materially affect its financial position[170] - Acacia settled the AIP Matter for a payment of $14.5 million during the year ended December 31, 2024, with an additional non-recurring legal expense of $12.9 million[174] - The Company agreed to appoint at least two independent directors to the Board until May 12, 2026, with current members satisfying this requirement[152] Strategic Partnerships and Future Outlook - Acacia's investment strategy focuses on acquiring businesses with a total enterprise value of $1 billion or less, targeting those with stable cash flow generation and scalability[27] - The company anticipates continued growth in revenues driven by market expansion and new product developments in the upcoming quarters[213] - Acacia's relationship with Starboard Value, LP provides access to industry expertise and operational partners to evaluate acquisition opportunities and enhance value creation[28]

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Core Insights - The presentation aims to update stakeholders on CTT's transformation journey since the last Capital Markets Day in June 2022 [1] Group 1: Strategy and E-commerce Solutions - The presentation will include a segment on strategy and e-commerce solutions led by the CEO, Mr. João Bento [1] Group 2: Mail Services - The Chief Commercial Officer, Mr. Joao Sousa, will present on mail services [1] Group 3: Banking Operations - The CEO of the bank, Mr. Francisco Barbeira, will discuss banking operations [1] Group 4: Financial Ambitions - The CFO, Mr. Guy Pacheco, will outline the financial ambitions for 2028 [1] Group 5: Q&A Session - A Q&A session will follow the presentations to address any questions from stakeholders [1]

Financial Data and Key Metrics Changes - Acacia reported total revenue of $59.4 million, up 16% sequentially and up 155% year-over-year, primarily driven by the third full quarter of Deflecto [5][17] - Adjusted EBITDA for the company was $8 million, with segment-adjusted EBITDA at $12.6 million [5][17] - Free cash flow for the quarter was $7.7 million, with a GAAP loss of $0.03 per share [5][22] - Book value per share at the end of Q3 was $5.98, essentially flat from the last quarter [5] Business Line Data and Key Metrics Changes - Energy operations generated $14.2 million in revenue, down from $15.8 million year-over-year due to a softer oil price environment [17] - Manufacturing operations, including Deflecto, generated $30.8 million, marking a third consecutive sequential increase [17] - Industrial operations reported $6.7 million in revenue, down from $7 million in the same quarter last year [17] - Intellectual property operations generated $7.8 million in revenue, a significant increase from $0.5 million in the prior year [17] Market Data and Key Metrics Changes - The Class 8 truck market faced demand headwinds, with September net orders being the weakest since 2019 [13] - Despite tariff pressures, Deflecto's essential non-discretionary products position the business well for future growth [14] - Benchmark's hedging strategy protects a significant amount of cash flow from downside price risk, with over 70% of operated oil and gas production hedged [11] Company Strategy and Development Direction - Acacia is focused on identifying and acquiring under-loved, under-managed, and under-valued businesses to drive long-term growth [6] - The company is implementing pricing strategies, cost savings initiatives, and operational efficiencies to mitigate tariff pressures [4] - There is a strong emphasis on pursuing accretive, organic, and inorganic growth opportunities, with a cash position of approximately $332 million [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged persistent macroeconomic and geopolitical headwinds but emphasized strong execution against their operationally focused strategy [4] - The company remains focused on driving revenue, EBITDA, and free cash flow growth while expanding its M&A pipeline [8] - Management expressed confidence in the inherent value of their assets and the ability to build momentum through year-end and into next year [25] Other Important Information - Total consolidated G&A expenses were $16 million, up from $11.2 million year-over-year, primarily due to the addition of Deflecto [18] - The company recorded a GAAP operating loss of $6.4 million, an improvement from a loss of $10.3 million in the prior year [19] - Acacia's total indebtedness was $94 million as of September 30, 2025, with zero debt at the parent company level [23][24] Q&A Session Summary Question: Focus on Deflecto's performance - Management noted that Deflecto performed better than expected in a challenging environment and discussed future free cash flow allocation towards debt repayment [26][27] Question: Update on Benchmark and Cherokee properties - Management confirmed that Benchmark's production is performing well and discussed ongoing strategic acquisitions in the Cherokee area [30] Question: Interest in AMO Pharma - Management stated that while AMO Pharma has made positive advancements, they have not changed their estimated valuation [44] Question: Impact of geopolitical tensions on patent portfolio - Management indicated that the U.S. appears to be more IP-friendly under the new administration, which is a positive for their patent portfolio [32] Question: Outreach to investors and analysts - Management acknowledged the need for increased investor outreach and discussed ongoing efforts to raise Acacia's profile among potential investors [39][41]

Disclosures Q3 2025 Earnings Presentation As of September 30, 2025 | NASDAQ: ACTG Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon the current expectations of Acacia Research Corporation ("Acacia" or the "Company") and speak only as of the date hereof. All statements other than statements of historical fact are forward-looking statements ...

Financial Performance - Total revenue for Q3 2025 was $59.4 million, representing a 155% increase year-over-year from $23.3 million[6] - GAAP net loss for the quarter was ($2.7) million, equating to a GAAP diluted EPS of ($0.03)[6] - Adjusted net loss for Q3 2025 was ($1.1) million, with an adjusted diluted EPS of ($0.01)[6] - Total Company adjusted EBITDA was $8.0 million, while operated segment adjusted EBITDA reached $12.6 million for the quarter[6] - Adjusted net income for the nine months ended September 30, 2025, was $26.1 million, with an adjusted diluted EPS of $0.27[14] - Adjusted EBITDA for the total company was $7.968 million for Q3 2025, compared to an operating loss of $6.426 million[40] - Net loss attributable to Acacia Research Corporation was $2.730 million in Q3 2025, an improvement from a net loss of $13.996 million in Q3 2024[27] - The comprehensive loss attributable to Acacia Research Corporation was $2.844 million in Q3 2025, compared to a loss of $13.996 million in Q3 2024[27] - For the nine months ended September 30, 2025, the consolidated GAAP Operating Income was $19,494,000, compared to a loss of $17,644,000 in the previous year[41] - Adjusted EBITDA for the nine months ended September 30, 2025, reached $60,540,000, up from $44,208,000 in the prior year[41] Revenue Breakdown - Revenue from Manufacturing Operations contributed $30.8 million in Q3 2025, marking the third full quarter of operations in this segment[6] - Energy Operations generated $14.2 million in revenue, while Intellectual Property Operations brought in $7.8 million for the quarter[8] - Intellectual property operations generated revenues of $7.795 million in Q3 2025, compared to $486 thousand in Q3 2024, marking a growth of 1511%[27] - Energy operations revenues were $14.176 million in Q3 2025, slightly down from $15.817 million in Q3 2024, a decrease of 10.4%[27] - Manufacturing operations reported revenues of $30.815 million in Q3 2025, with no revenues reported in Q3 2024[27] Cash and Assets - Cash, cash equivalents, equity securities, and loans receivable totaled approximately $332.4 million, or $3.45 per share, at the end of Q3 2025[3] - Cash and cash equivalents increased to $332.4 million at September 30, 2025, up from $297.0 million at December 31, 2024, reflecting a $35.4 million increase[20] - Total assets as of September 30, 2025, were $768.9 million, compared to $756.4 million at December 31, 2024[26] - Total liabilities decreased to $192.0 million as of September 30, 2025, from $203.8 million at December 31, 2024[26] - The Parent company's total indebtedness was zero, while consolidated total indebtedness was $94.0 million as of September 30, 2025[20] - Acacia's total stockholders' equity increased to $576.8 million as of September 30, 2025, compared to $552.6 million at December 31, 2024[26] - Acacia's equity securities measured at fair value totaled $27.2 million as of September 30, 2025, up from $23.1 million at December 31, 2024[26] Operational Efficiency - The company implemented targeted pricing strategies and cost-saving measures to mitigate tariff pressures and streamline operations[2] - Looking ahead, the company aims to leverage its strong cash position to pursue both organic and inorganic growth opportunities[3] - The company generated $70.3 million from operating activities during the nine months ended September 30, 2025[20] Costs and Expenses - Total costs and expenses increased to $65.872 million in Q3 2025 from $33.582 million in Q3 2024, reflecting a rise of 96%[27] - Stock-Based Compensation for the nine months ended September 30, 2025, was $3,751,000, an increase from $3,239,000 in the prior year[41] - The company incurred transaction-related costs of $320,000 for the three months ended September 30, 2024[41] - For the nine months ended September 30, 2024, the company reported legacy matter costs of $2,777,000[41]

[Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) - Forward-looking statements are identified by words such as "anticipate," "believe," "estimate," "expect," "may," "plan," and "will," covering areas including business strategies, acquisitions, financial results, litigation, and regulatory matters[7](index=7&type=chunk) - Substantial risks and uncertainties could cause future results to differ materially, including inability to acquire or integrate businesses, challenges in retaining employees, adverse developments in operating businesses, and various operational, market, and regulatory risks across its segments[7](index=7&type=chunk)[11](index=11&type=chunk) [Part I. Financial Information](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Details the company's consolidated financial statements and notes for periods ending June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets Highlights (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Total Assets | $775,546 | $756,394 | | Cash and cash equivalents | $316,721 | $273,880 | | Total Liabilities | $198,075 | $203,775 | | Total Stockholders' Equity | $577,471 | $552,619 | - Total assets increased by **$19.2 million**, primarily driven by a **$42.8 million** increase in cash and cash equivalents[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (In thousands, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenues | $51,237 | $25,838 | $175,659 | $50,158 | | Operating Income (Loss) | $(12,385) | $(4,758) | $25,920 | $(6,845) | | Net Income (Loss) attributable to Acacia Research Corporation | $(3,293) | $(8,446) | $20,994 | $(8,632) | | Basic Net Income (Loss) per Common Share | $(0.03) | $(0.08) | $0.22 | $(0.09) | - Total revenues for the six months ended June 30, 2025, increased by **250% year-over-year to $175.7 million**, leading to a net income of **$21.0 million**, a significant improvement from a net loss of **$8.6 million** in the prior year[17](index=17&type=chunk)[56](index=56&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Changes in Stockholders' Equity (In thousands) | Metric | Balance at Dec 31, 2024 | Net Income (6M 2025) | Other Comprehensive Income (6M 2025) | Share-based Awards (Net) | Balance at Jun 30, 2025 | | :----------------------------------- | :---------------------- | :--------------------- | :---------------------------------- | :----------------------- | :---------------------- | | Total Stockholders' Equity | $552,619 | $22,091 | $1,525 | $1,236 | $577,471 | - Total stockholders' equity increased by **$24.8 million** from December 31, 2024, to June 30, 2025, primarily due to net income and other comprehensive income[14](index=14&type=chunk)[20](index=20&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (In thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :------------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Net cash provided by operating activities | $52,545 | $70,977 | $(18,432) | | Net cash used in investing activities | $(451) | $(109,833) | +$109,382 | | Net cash (used in) provided by financing activities | $(10,340) | $85,880 | $(96,220) | | Increase in cash and cash equivalents | $42,841 | $46,897 | $(4,056) | - Net cash provided by operating activities decreased by **$18.4 million**, while net cash used in investing activities significantly decreased by **$109.4 million** due to the absence of large asset acquisitions in 2025[21](index=21&type=chunk)[297](index=297&type=chunk)[302](index=302&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Description of Business](index=11&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS) - Acacia is a value-oriented acquirer and operator of businesses in industrial, energy, and technology sectors, focusing on strong free cash flow generation and scalability[22](index=22&type=chunk)[25](index=25&type=chunk) - The company's strategic relationship with Starboard Value, LP provides access to industry expertise and operating partners for acquisition sourcing and evaluation[26](index=26&type=chunk) - Acacia operates in four segments: Intellectual Property (patent licensing), Industrial (Printronix printers), Energy (Benchmark oil and gas, **73.5% interest**), and Manufacturing (Deflecto specialty products, acquired Oct 2024)[27](index=27&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[36](index=36&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=13&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The consolidated financial statements include Acacia and its wholly and majority-owned subsidiaries, with noncontrolling interests presented separately[39](index=39&type=chunk)[40](index=40&type=chunk) - Revenue recognition varies by segment: IP (granting rights), Industrial (product shipment/service over time), Energy (product control transfer), and Manufacturing (product control transfer)[44](index=44&type=chunk)[55](index=55&type=chunk)[62](index=62&type=chunk)[72](index=72&type=chunk) - The company follows the successful efforts method for oil and natural gas producing activities and evaluates goodwill for impairment annually or on an interim basis[86](index=86&type=chunk)[88](index=88&type=chunk) - New accounting pronouncements (ASU 2023-09 and ASU 2024-03) are expected to enhance disclosures but will not materially impact the company's financial statements[106](index=106&type=chunk)[107](index=107&type=chunk) [Note 3. Acquisitions](index=23&type=section&id=3.%20ACQUISITIONS) - In April 2024, Benchmark acquired upstream assets for **$145 million**, increasing Acacia's interest to **73.5%**[109](index=109&type=chunk) - In October 2024, Acacia acquired Deflecto for **$103.7 million**, funded by a **$48.0 million** secured term loan and cash on hand[112](index=112&type=chunk)[113](index=113&type=chunk) - The Deflecto acquisition resulted in **$16.8 million** in goodwill, which was subsequently decreased by **$3.8 million** due to measurement period adjustments in Q1 2025[114](index=114&type=chunk)[116](index=116&type=chunk) [Note 4. Equity Securities](index=25&type=section&id=4.%20EQUITY%20SECURITIES) Equity Securities Fair Value (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Equity securities - other common stock | $21,467 | $23,135 | - The company fully exited its Arix Bioscience PLC position in January 2024, selling shares for **$57.1 million**[122](index=122&type=chunk) - For the six months ended June 30, 2025, the company reported a net realized and unrealized gain of **$0.95 million** from equity securities, a significant improvement from a **$2.6 million** net loss in the prior year[17](index=17&type=chunk)[278](index=278&type=chunk) [Note 5. Inventories](index=26&type=section&id=5.%20INVENTORIES) Inventories (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Raw materials | $6,737 | $8,575 | | Subassemblies and work in process | $1,171 | $1,481 | | Finished goods | $17,816 | $17,429 | | **Total inventories** | **$25,724** | **$27,485** | - Total inventories decreased by **$1.8 million** from December 31, 2024, to June 30, 2025, primarily due to reductions in raw materials and subassemblies/work in process[124](index=124&type=chunk) [Note 6. Property, Plant and Equipment, Net](index=27&type=section&id=6.%20PROPERTY,%20PLANT%20AND%20EQUIPMENT,%20NET) Property, Plant and Equipment, Net (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Total Property, Plant and Equipment | $29,572 | $28,791 | | Accumulated depreciation and amortization | $(6,821) | $(4,926) | | **Property, plant and equipment, net** | **$22,751** | **$23,865** | - Total depreciation and amortization expense for property, plant and equipment increased from **$0.6 million** for the six months ended June 30, 2024, to **$2.5 million** for the same period in 2025, with Manufacturing Operations contributing **$2.1 million**[125](index=125&type=chunk) [Note 7. Oil and Natural Gas Properties, Net](index=27&type=section&id=7.%20OIL%20AND%20NATURAL%20GAS%20PROPERTIES,%20NET) Oil and Natural Gas Properties, Net (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Proved oil and gas properties | $202,838 | $199,559 | | Unproved oil and gas properties | $4,786 | $4,786 | | Accumulated depletion and depreciation | $(20,529) | $(12,665) | | **Oil and natural gas properties, net** | **$187,095** | **$191,680** | - Total depletion and depreciation expense for oil and natural gas properties increased from **$3.9 million** for the six months ended June 30, 2024, to **$7.9 million** for the same period in 2025, reflecting the full impact of the Revolution Transaction assets[126](index=126&type=chunk) [Note 8. Goodwill and Other Intangible Assets, Net](index=28&type=section&id=8.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS,%20NET) Goodwill (In thousands) | Segment | Beginning Balance (Dec 31, 2024) | Effect of FX Translation | Measurement Period Adjustments | Ending Balance (Jun 30, 2025) | | :----------------------- | :------------------------------- | :----------------------- | :----------------------------- | :----------------------------- | | Industrial Operations | $7,541 | — | — | $7,541 | | Energy Operations | $1,449 | — | — | $1,449 | | Manufacturing Operations | $20,349 | $272 | $(3,829) | $16,792 | | **Total** | **$29,339** | **$272** | **$(3,829)** | **$25,782** | Other Intangible Assets, Net (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Patents | $25,845 | $21,024 | | Customer relationships | $23,885 | $22,785 | | Trade name and trademarks | $10,659 | $10,248 | | Developed technology | $930 | $980 | | Favorable leases | $324 | $392 | | **Total other intangible assets, net** | **$61,643** | **$55,429** | - Total other intangible asset amortization expense increased from **$7.5 million** for the six months ended June 30, 2024, to **$11.7 million** for the same period in 2025[130](index=130&type=chunk) - During the six months ended June 30, 2025, Intellectual Property Operations capitalized **$15.0 million** in patent and patent rights costs by exercising an exclusive option[132](index=132&type=chunk) [Note 9. Accrued Expenses and Other Current Liabilities](index=30&type=section&id=9.%20ACCURRED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued Expenses and Other Current Liabilities (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Accrued consulting and other professional fees | $1,367 | $2,602 | | Income taxes payable | $6,069 | $3,832 | | Sales and tax and fees payable | $5,217 | $4,818 | | Interest accrual | $1,585 | $1,162 | | Short-term lease liability | $4,081 | $3,563 | | **Total** | **$22,677** | **$20,575** | - Accrued expenses and other current liabilities increased by **$2.1 million**, primarily due to increases in income taxes payable, sales and tax and fees payable, interest accrual, and short-term lease liability[133](index=133&type=chunk) [Note 10. Asset Retirement Obligations](index=30&type=section&id=10.%20ASSET%20RETIREMENT%20OBLIGATIONS) Asset Retirement Obligations (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | | Beginning balance | $32,616 | $294 | | Liabilities acquired | — | $28,713 | | Accretion of discounts | $867 | $254 | | **Ending balance** | **$33,399** | **$29,261** | - Asset retirement obligations increased by **$4.1 million** year-over-year, primarily due to liabilities acquired in 2024 and accretion of discounts[134](index=134&type=chunk) [Note 11. Revolving Credit Facility and Term Loan](index=30&type=section&id=11.%20REVOLVING%20CREDIT%20FACILITY%20AND%20TERM%20LOAN) - Benchmark's Revolving Credit Facility balance decreased to **$58.0 million** at June 30, 2025, from **$66.5 million** at December 31, 2024, following **$8.5 million** in paydowns[135](index=135&type=chunk) - The Deflecto Term Loan balance decreased to **$46.4 million** at June 30, 2025, from **$47.5 million** at December 31, 2024, with **$1.2 million** in paydowns[143](index=143&type=chunk) - Both Benchmark and Deflecto were in compliance with their respective loan covenants as of June 30, 2025[137](index=137&type=chunk)[142](index=142&type=chunk) [Note 12. Starboard Investment](index=32&type=section&id=12.%20STARBOARD%20INVESTMENT) - The Recapitalization Agreement in October 2022 simplified the capital structure, resulting in Starboard owning approximately **61.2%** of common stock as of July 13, 2023[146](index=146&type=chunk) - The Services Agreement with Starboard provides trade execution, research, and due diligence on an expense reimbursement basis, with no reimbursements made during the six months ended June 30, 2025[151](index=151&type=chunk) [Note 13. Fair Value Measurements](index=33&type=section&id=13.%20FAIR%20VALUE%20MEASUREMENTS) - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (significant observable inputs), and Level 3 (unobservable inputs)[155](index=155&type=chunk) Financial Assets Measured at Fair Value (In thousands) | Asset Type | Level 1 (Jun 30, 2025) | Level 2 (Jun 30, 2025) | Level 3 (Jun 30, 2025) | Total (Jun 30, 2025) | | :-------------------------- | :----------------------- | :----------------------- | :----------------------- | :--------------------- | | Equity securities | $21,467 | — | — | $21,467 | | Commodity derivative instruments | — | $2,902 | — | $2,902 | - Benchmark's commodity derivative activities resulted in a realized gain of **$0.83 million** and an unrealized gain of **$0.79 million** for the six months ended June 30, 2025[157](index=157&type=chunk) [Note 14. Related Party Transactions](index=35&type=section&id=14.%20RELATED%20PARTY%20TRANSACTIONS) - The company has a Loan Facility with a related private portfolio company, with a balance of **$4.3 million** (including interest receivable) at June 30, 2025, bearing an interest rate of **9.5%** per annum[160](index=160&type=chunk) - Interest income from this related party loan was **$0.19 million** for the six months ended June 30, 2025[160](index=160&type=chunk) [Note 15. Commitments and Contingencies](index=35&type=section&id=15.%20COMMITMENTS%20AND%20CONTINGENCIES) - The company is subject to inventor royalties and contingent legal fees based on future net revenues from patent licensing and enforcement activities[162](index=162&type=chunk)[163](index=163&type=chunk) - The AIP Matter, a dispute involving former executives' profit interests, was settled on August 2, 2024, resulting in a **$14.5 million** payment by Acacia during 2024[167](index=167&type=chunk) - The company is involved in ongoing patent enforcement litigation, which consumes significant financial and management resources, with potential for monetary sanctions or attorney's fees[165](index=165&type=chunk)[324](index=324&type=chunk) [Note 16. Stockholders' Equity](index=36&type=section&id=16.%20STOCKHOLDERS'%20EQUITY) - The **$20.0 million** stock repurchase program, approved in November 2023, was completed in 2024 with the purchase of **4,358,361 shares**, and no further repurchases occurred under this program during the six months ended June 30, 2025[171](index=171&type=chunk) [Note 17. Equity-Based Incentive Plans](index=36&type=section&id=17.%20EQUITY-BASED%20INCENTIVE%20PLANS) - The 2024 Acacia Research Corporation Stock Incentive Plan is the exclusive plan for granting stock options, restricted stock units (RSUs), and performance-based stock awards (PSUs)[173](index=173&type=chunk) Stock Option Activity Summary | Metric | Outstanding at Dec 31, 2024 | Exercised (6M 2025) | Outstanding at Jun 30, 2025 | | :--------------------------------- | :-------------------------- | :-------------------- | :-------------------------- | | Options | 1,001,520 | (8,333) | 993,187 | | Weighted Average Exercise Price | $4.16 | $3.58 | $4.16 | Compensation Expense for Share-Based Awards (In thousands) | Award Type | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--------------------------------- | :---------------------------- | :---------------------------- | | Options | $149 | $252 | | RSAs | $194 | $242 | | RSUs | $1,093 | $1,255 | | PSUs | $440 | — | | **Total** | **$1,876** | **$1,749** | [Note 18. Income (Loss) Per Share](index=39&type=section&id=18.%20INCOME%20(LOSS)%20PER%20SHARE) Income (Loss) Per Share (Except share data) | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :------------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Basic net income (loss) per common share | $(0.03) | $(0.08) | $0.22 | $(0.09) | | Diluted net income (loss) per common share | $(0.03) | $(0.08) | $0.22 | $(0.09) | - Basic and diluted net income per common share for the six months ended June 30, 2025, was **$0.22**, a significant improvement from a loss of **$0.09** per share in the prior year[188](index=188&type=chunk) [Note 19. Segment Reporting](index=40&type=section&id=19.%20SEGMENT%20REPORTING) - The company operates in four reportable segments: Intellectual Property Operations, Industrial Operations, Energy Operations, and Manufacturing Operations[189](index=189&type=chunk) Segment Revenues (In thousands) | Segment | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :-------------------------- | :---------------------------- | :---------------------------- | | Intellectual Property | $70,234 | $18,956 | | Industrial | $14,266 | $15,176 | | Energy | $33,623 | $16,026 | | Manufacturing | $57,536 | — | | **Total Revenues** | **$175,659** | **$50,158** | Segment Operating Income (Loss) (In thousands) | Segment | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :-------------------------- | :---------------------------- | :---------------------------- | | Intellectual Property | $30,895 | $1,029 | | Industrial | $376 | $978 | | Energy | $6,094 | $3,405 | | Manufacturing | $(355) | — | [Note 20. Subsequent Events](index=47&type=section&id=20.%20SUBSEQUENT%20EVENTS) - On July 4, 2025, the "One Big Beautiful Bill Act" (H.R. 1) was enacted, introducing significant amendments to the U.S. tax code with multiple effective dates[208](index=208&type=chunk)[289](index=289&type=chunk) - The company is currently evaluating the impact of this new tax legislation on its consolidated financial statements[208](index=208&type=chunk)[289](index=289&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, results of operations, business strategy, and segment performance [General Business Overview](index=48&type=section&id=General) - Acacia's core strategy is to acquire and operate businesses with strong free cash flow generation and scalability, focusing on unique and complex situations[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) - The company defines value through free cash flow generation, book value appreciation, and stock price growth[211](index=211&type=chunk) - Key differentiators include an experienced management team, a disciplined focus on advantageous acquisitions, a deep operating executive network, and flexibility in transaction structuring and long-term commitment[215](index=215&type=chunk)[217](index=217&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) [Business Segments Overview](index=49&type=section&id=Business%20Segments%20Overview) - Intellectual Property Operations invests in and licenses patented technologies, with over **1,600 license agreements** and **$1.9 billion** in gross licensing revenue as of June 30, 2025[218](index=218&type=chunk)[223](index=223&type=chunk) - Industrial Operations (Printronix) manufactures and distributes industrial impact printers and consumables, aiming to transition to higher-margin consumable sales[226](index=226&type=chunk)[227](index=227&type=chunk) - Energy Operations (Benchmark), **73.5%** owned by Acacia, acquires and develops oil and gas assets in Texas and Oklahoma, expanding significantly with the **$145 million** Revolution Transaction in April 2024[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - Manufacturing Operations (Deflecto), acquired in October 2024 for **$103.7 million**, is a specialty manufacturer for commercial transportation, HVAC, and office markets[233](index=233&type=chunk) [Recent Business Developments and Trends](index=51&type=section&id=Recent%20Business%20Developments%20and%20Trends) - The company's growth strategy involves acquiring additional operating businesses, energy assets, and intellectual property assets, acknowledging potential costs and risks[235](index=235&type=chunk) - Recent acquisitions include a **50.4%** equity interest in Benchmark Energy II in November 2023, Benchmark's **$145 million** Revolution Transaction in April 2024 (increasing Acacia's interest to **73.5%**), and the **$103.7 million** acquisition of Deflecto in October 2024[236](index=236&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) - The Life Sciences Portfolio, acquired in June 2020 for **$282.0 million**, has generated **$564.1 million** in proceeds through June 30, 2025, with the Arix Bioscience PLC position fully exited in January 2024 for **$57.1 million**[239](index=239&type=chunk) - Inflation has not historically had a significant impact, but Manufacturing and Industrial Operations may adjust prices, and Energy Operations could face pressures from rising oil/gas prices and supply chain disruptions[240](index=240&type=chunk) - Intellectual Property Operations' revenues fluctuate based on licensing agreements and litigation outcomes; the segment acquired one new patent portfolio (Wi-Fi 7) in Q1 2025 and has three pending patent infringement cases with scheduled trial dates[241](index=241&type=chunk)[242](index=242&type=chunk)[247](index=247&type=chunk) [Operating Activities](index=54&type=section&id=Operating%20Activities) - Intellectual Property Operations revenues historically fluctuate quarterly based on the dollar amount and terms of agreements, litigation outcomes, and external factors, with potential revenues sometimes shifting to subsequent periods[251](index=251&type=chunk)[255](index=255&type=chunk) [Results of Operations](index=55&type=section&id=Results%20of%20Operations) Summary of Results of Operations (In thousands, except percentage change) | Metric | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | $ Change | % Change | | :------------------------------------------ | :--------------------------- | :--------------------------- | :------- | :------- | | Total revenues | $175,659 | $50,158 | $125,501 | 250% | | Total costs and expenses | $149,739 | $57,003 | $92,736 | 163% | | Operating income (loss) | $25,920 | $(6,845) | $32,765 | (479%) | | Income (loss) before income taxes | $28,719 | $(17,188) | $45,907 | (267%) | | Net income (loss) attributable to Acacia Research Corporation | $20,994 | $(8,632) | $29,626 | (343%) | - For the three months ended June 30, 2025, total revenues increased by **98% to $51.2 million**, and loss before income taxes improved from **$15.9 million** to **$0.9 million**, driven by new acquisitions and the absence of non-recurring legal expenses[55](index=55&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) - For the six months ended June 30, 2025, total revenues surged by **250% to $175.7 million**, and income before income taxes dramatically improved from a **$17.2 million** loss to a **$28.7 million** income, primarily due to growth in Intellectual Property, Energy, and new Manufacturing Operations[260](index=260&type=chunk)[261](index=261&type=chunk) - Intellectual Property Operations revenues for the six months ended June 30, 2025, increased by **271% to $70.2 million**, while Energy Operations revenues increased by **110% to $33.6 million**, reflecting the full impact of the Revolution Transaction[260](index=260&type=chunk)[262](index=262&type=chunk)[270](index=270&type=chunk) - Manufacturing Operations, acquired in October 2024, contributed **$57.5 million** in revenues for the six months ended June 30, 2025[260](index=260&type=chunk)[273](index=273&type=chunk) - Total operating expenses increased by **55% to $39.6 million** for the six months ended June 30, 2025, largely due to the inclusion of Manufacturing Operations expenses and increased Energy Operations G&A[275](index=275&type=chunk) - Total other income for the six months ended June 30, 2025, was **$2.8 million**, a significant improvement from a **$10.3 million** expense in the prior year, driven by reduced unrealized losses on equity securities and derivative gains[261](index=261&type=chunk)[264](index=264&type=chunk)[278](index=278&type=chunk) - The company recorded an income tax expense of **$6.6 million** for the six months ended June 30, 2025, compared to a benefit of **$8.2 million** in the prior year, primarily due to year-to-date earnings and foreign withholding taxes[282](index=282&type=chunk)[283](index=283&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary liquidity sources are cash and cash equivalents and cash generated from operating activities; future acquisitions are expected to be financed through cash on hand or equity/debt financing[293](index=293&type=chunk) - Consolidated cash, cash equivalents, and equity securities increased to **$338.2 million** at June 30, 2025, from **$297.0 million** at December 31, 2024[295](index=295&type=chunk) Net Cash Flows Summary (In thousands) | Activity | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | | Operating activities | $52,545 | $70,977 | | Investing activities | $(451) | $(109,833) | | Financing activities | $(10,340) | $85,880 | | **Increase in cash and cash equivalents** | **$42,841** | **$46,897** | - Net cash provided by operating activities decreased to **$52.5 million**, while net cash used in investing activities significantly decreased to **$0.5 million** due to the absence of large asset acquisitions in 2025[297](index=297&type=chunk)[302](index=302&type=chunk) - Net cash used in financing activities was **$10.3 million**, a shift from an **$85.9 million** inflow in the prior year, primarily due to debt paydowns on the Benchmark Revolving Credit Facility and Deflecto Term Loan[297](index=297&type=chunk)[304](index=304&type=chunk) - Critical accounting estimates include revenue recognition, oil and gas reserves, valuation of long-lived assets, goodwill and other intangibles, and income taxes, with no material changes from the 2024 Annual Report[306](index=306&type=chunk)[308](index=308&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=67&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Discusses market risks from equity investments and foreign currency, highlighting potential impacts of volatility and currency fluctuations - The company is exposed to investment risks from changes in the financial condition of its equity investments and market price volatility[310](index=310&type=chunk) - As of June 30, 2025, the carrying value of equity investments in public and private companies was **$58.2 million**; a hypothetical **10%** adverse change in public equity investments would decrease their value by approximately **$2.1 million**[311](index=311&type=chunk)[312](index=312&type=chunk) - The company is exposed to foreign currency exchange rate fluctuations, primarily between the U.S. dollar and the British Pound, Canadian Dollar, Chinese Yuan, and Euro, related to foreign cash accounts[313](index=313&type=chunk) [Item 4. Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of June 30, 2025, due to a material weakness, with remediation efforts ongoing - Disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness and control deficiencies reported in the 2024 Annual Report[315](index=315&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025, other than planned remediation efforts[316](index=316&type=chunk) - Management acknowledges that control systems provide only reasonable, not absolute, assurance against error or fraud due to inherent limitations and the possibility of controls becoming inadequate over time[318](index=318&type=chunk) [Part II. Other Information](index=69&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) Intellectual Property Operations routinely engages in patent enforcement litigation, which is resource-intensive and carries risks of monetary sanctions or adverse effects - Intellectual Property Operations is often required to engage in litigation to enforce its patents and patent rights[322](index=322&type=chunk) - Litigation matters consume significant financial and management resources, often against large, well-financed companies, and may result in monetary sanctions or attorney's fees[324](index=324&type=chunk) [Item 1A. Risk Factors](index=69&type=section&id=Item%201A.%20Risk%20Factors) Investors should consider all risks in this report and prior filings, as no material changes to reported risk factors have occurred - Investors should carefully review all disclosures, including risk factors in this 10-Q, the 2024 Annual Report, and prior 10-Q filings[325](index=325&type=chunk) - No material changes to the risk factors previously reported have occurred[325](index=325&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds occurred[326](index=326&type=chunk) [Item 3. Defaults Upon Senior Securities](index=69&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report during the period - No defaults upon senior securities occurred[327](index=327&type=chunk) [Item 4. Mine Safety Disclosures](index=70&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the registrant[328](index=328&type=chunk) [Item 5. Other Information](index=70&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in Q2 2025 - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[329](index=329&type=chunk) [Item 6. Exhibits](index=70&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Quarterly Report, including corporate documents, an employment agreement, officer certifications, and iXBRL financial statements - Exhibits include the Fourth Amended and Restated Certificate of Incorporation, Employment Agreement, officer certifications (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350), and iXBRL formatted financial statements[330](index=330&type=chunk)

Core Insights - Acacia Research reported a significant 98% year-over-year increase in GAAP revenue, reaching $51.2 million, primarily driven by the acquisition of Deflecto in its manufacturing segment [1][5][10] - Despite strong revenue growth, the company missed analyst expectations for revenue and reported a non-GAAP EPS of $(0.06), worse than the anticipated $(0.05) [1][2][5] Financial Performance - GAAP revenue for Q2 2025 was $51.2 million, compared to $25.8 million in Q2 2024, reflecting a 98.4% increase [2][5] - Non-GAAP EPS was $(0.06), a decline of 500% from $(0.01) in Q2 2024 [2][5] - Total company adjusted EBITDA was $1.9 million, down from $4.1 million in the prior-year period, indicating a 53.7% decrease [2][7] - Free cash flow was reported at $47.9 million, bolstered by earlier IP settlement receipts [2][8] Business Overview and Strategy - Acacia Research focuses on acquiring and managing undervalued businesses across various sectors, including manufacturing, industrial, energy, and intellectual property [3][4] - The company aims to unlock value through operational improvements and emphasizes free cash flow potential [3][4] Segment Performance - The manufacturing segment, bolstered by Deflecto, generated $29.0 million in revenue, making it the largest segment by revenue [5][10] - Energy Operations reported $15.3 million in GAAP revenue, showing modest growth from $14.2 million in Q2 2024 [5][10] - The IP segment experienced a significant decline in revenue, falling to $0.3 million from $5.3 million in Q2 2024 due to a lack of new settlements [5][6] Operational Highlights - The manufacturing unit is in the integration phase, focusing on cost controls and optimizing product offerings [11] - Sales and marketing expenses for industrial and manufacturing operations increased to $3.4 million [7] Cash Position and Debt - Cash, cash equivalents, and equity securities totaled $338.2 million at the end of the period, up from $297.0 million at the end of 2024 [8] - Total consolidated debt was $104.4 million, with no borrowings at the parent company level [8] Future Outlook - Management reaffirmed its acquisition-driven growth strategy but did not provide explicit financial guidance for the remainder of fiscal 2025 [14] - Key areas to watch include revenue sustainability, integration of acquired businesses, margin recovery, and cash flow generation beyond infrequent IP settlements [15]