Table of Contents SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number: 001-37721 Acacia Research Corporation (Name of registrant as specified in its charter) Delaware 95-4405754 ( ...

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PresentationNuno Vieira Thank you. Thank you very much for being here today. This is a great opportunity to present -- to update you on CTT's transformation journey. And it has been a long way since we last met in a Capital Markets Day in June 2022. And now we want to update you on the journey we've done so far, and we want to present you the new way, the new path that we are going through. We will have a full morning. This will include an initial part of a presentation on strategy and e-commerce solutions ...

Acacia Research (NasdaqGS:ACTG) Q3 2025 Earnings Call November 05, 2025 08:00 AM ET Speaker1Good morning, everyone. Thank you for joining Acacia Research's third quarter 2025 earnings conference call. My name is Kelly, and I will be your conference facilitator for today. All lines are currently muted to prevent any background noise. I would like to remind you that this conference call is being recorded today and also is available through audio webcast on Acacia's website. Following the speaker's remarks, th ...

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 ...

Exhibit 99.1 Acacia Research Corporation Reports Third Quarter 2025 Financial Results Total Revenue of $59.4 million, Up 155% Year Over Year GAAP Net Loss of ($2.7) million and GAAP Diluted EPS of ($0.03) Adjusted Net Loss of ($1.1) million and Adjusted Diluted EPS of $(0.01) 1 1 Total Company Adjusted EBITDA of $8.0 million and Operated Segment Adjusted EBITDA of $12.6 million 1 1 Total Cash, Cash Equivalents, Equity Securities and Loans Receivable of $332.4 million, or $3.45 per share New York, NY, Novemb ...

[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]

Financial Data and Key Metrics Changes - The company generated total revenue of $51.2 million in Q2 2025, compared to $51.2 million in the same quarter last year, reflecting stability in revenue generation [21][22] - Adjusted EBITDA for the company was $1.9 million, with free cash flow of $47.9 million, primarily due to cash collection from a previously announced settlement in the IP business [10][22] - The net loss attributable to Acacia was $3.3 million or $0.03 per share, an improvement from a net loss of $8.4 million or $0.08 per share in the prior year [24][25] - Book value per share at the end of Q2 was $5.99, essentially flat compared to the previous quarter [10] Business Line Data and Key Metrics Changes - Energy operations generated $15.3 million in revenue, up from $14.2 million year-over-year [22] - Manufacturing operations generated $29 million in revenue, while industrial operations generated $6.6 million, compared to $6.3 million in the same quarter last year [22] - Intellectual property operations generated $300,000 in licensing and other revenue, down from $5.3 million in the same quarter last year, reflecting the episodic nature of this business [22][19] Market Data and Key Metrics Changes - The company noted a slight sequential improvement in operated production, having lapped significant weather events from Q1 [10] - The Class 8 truck market has seen new orders at their lowest level since 2010, impacting demand in the transportation safety business [16] Company Strategy and Development Direction - The company announced a partnership with Unchained Capital and Build Asset Management to offer secured lending solutions backed by Bitcoin, committing $20 million to acquire a portfolio of fully recourse loans [6][9] - The company is focused on maintaining a strong balance sheet while pursuing value-oriented strategies and evaluating M&A opportunities [10][12] - The company is strategically building around existing assets, particularly in the Cherokee position acquired as part of the Revolution deal [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the inherent value of the company's assets and its ability to execute long-term value creation strategies despite macroeconomic headwinds [27] - The company is optimistic about the potential for the investment in Bitcoin-backed loans to grow over time as Bitcoin institutionalizes [9] - Management acknowledged the challenges posed by tariffs and global trade uncertainties but remains confident in the long-term value of its businesses [14][17] Other Important Information - The company has hedged over 70% of its operated oil and gas production through 2027, protecting a substantial amount of cash flow from downside pricing risk [11] - The company recorded a GAAP operating loss of $12.4 million, primarily due to a revenue decline in the IP business and increased patent amortization [23] Q&A Session Summary Question: Expected interest rates on Bitcoin commercial loans - Management indicated that loans are expected to yield net returns in excess of 10%, with a conservative loan-to-value ratio of 50% [35][36] Question: Outlook for the Class 8 truck market - Management noted that purchasing patterns have changed due to tariffs, but they remain optimistic about future demand as fleets age [37][40] Question: Risk management for Bitcoin loans - Management assured that the Bitcoin market is mature enough for hedging, and they have measures in place to protect against significant price drops [48][54] Question: Potential for private equity deals - Management observed that opportunities are increasing in the B and C quartile assets, while A quartile assets remain stable [60][61] Question: Valuation of the legacy patent business - Management expressed the difficulty in disclosing detailed information without compromising negotiations but acknowledged the need for market clarity [62]

Financial Performance - As of June 30, 2025, Acacia Research Corporation reported a book value of $577.5 million[8] - The book value per share (BVPS) was $5.99, representing approximately 16% growth since the new management team's constitution[8] - The company's cash and public securities totaled $338.2 million[8] - The market capitalization stood at $345.3 million, calculated based on 96.4 million common shares outstanding and a closing share price of $3.58 on June 30, 2025[8, 10] - Last Twelve Months (LTM) total company revenue was $247.8 million[8] - LTM total company adjusted EBITDA was $59.1 million[8] Debt and Operations - The parent company had no corporate debt, while the consolidated total indebtedness was $104.4 million in non-recourse debt at Benchmark and Deflecto as of June 30, 2025[8, 10] - For the three months ended June 30, 2025, Energy Operations Adjusted EBITDA was $7.0 million, Industrial Operations Adjusted EBITDA was $0.6 million, Manufacturing Operations Adjusted EBITDA was $1.3 million, and Intellectual Property Operations Adjusted EBITDA was negative $2.1 million[71] - For the three months ended March 31, 2025, Energy Operations Adjusted EBITDA was $7.9 million, Industrial Operations Adjusted EBITDA was $1.0 million, Manufacturing Operations Adjusted EBITDA was $2.4 million, and Intellectual Property Operations Adjusted EBITDA was $43.3 million[73]