Core Insights - The article discusses the investment potential of ACTG shares, highlighting a beneficial long position held by the analyst [1]. Group 1 - The analyst expresses a personal opinion on ACTG shares, indicating a positive outlook based on their own analysis [1]. - There is no compensation received for the article, suggesting an independent viewpoint [1]. - The article does not provide specific investment recommendations or advice, maintaining a neutral stance on suitability for investors [2].

Financial Data and Key Metrics - Consolidated revenue for Q2 2024 was $25.8 million, up 227% YoY and 121% compared to the first six months of 2023, driven by the acquisition of operated producing wells in the Western Anadarko Basin [8] - Intellectual property operations revenue increased by $4.9 million YoY due to more license agreements executed during the quarter [8] - Energy operations delivered $14.2 million in Q2 revenue, while industrial operations revenue decreased by $1.2 million due to lower printer sales [8] - Adjusted EBITDA for the intellectual property business was $8.5 million, Printronix generated $2.3 million, and Benchmark generated $8.4 million in the first six months of 2024 [9] - Book value per share was $5.95 as of June 30, 2024, compared to $5.90 at the end of 2023 [10] Business Line Performance - Intellectual property business generated $5.3 million in licensing revenue, up over 200% YoY due to increased license agreements and higher average fees [20] - Printronix (industrial operations) generated $6.3 million in revenue, down from $7.5 million YoY due to lower printer sales, but operating losses decreased due to cost improvements [17][21] - Benchmark (energy operations) delivered $14.2 million in revenue, with $7 million in adjusted EBITDA for Q2, reflecting partial results from the April acquisition [14][21] Market and Strategic Focus - Acacia focuses on acquiring businesses with stable cash flow generation and scalability, particularly in Technology, Energy, and Industrials [6][7] - The company’s energy strategy involves acquiring mature, long-lived assets and optimizing production through field enhancements and low capital intensity [13] - Acacia’s intellectual property business continues to evaluate new patent portfolios for acquisition, with the Wi-Fi 6 portfolio representing a lucrative opportunity [15][16] Management Commentary on Environment and Outlook - Management remains cautious about market volatility but believes the impact on underlying businesses will be negligible [18] - The M&A environment remains constructive, with a strong pipeline of opportunities, particularly in oil and gas, industrials, and technology [18][19] - Acacia’s strategic relationship with Starboard enhances its sourcing and operating network, providing access to industry expertise and acquisition opportunities [26] Other Important Information - Acacia’s cash, cash equivalents, and equity securities totaled $405.2 million as of June 30, 2024, with no parent company debt and $82 million in non-recourse debt at Benchmark [24][25] - The company’s hedge book covers approximately 70% of net oil and gas production over the next three years, with significant realized and unrealized derivative gains and losses [14] Q&A Session Summary Question: Share buyback plans - Acacia is evaluating the timing of executing its authorized share buyback program [28] Question: Benchmark revenue expectations for Q3 - Management suggested interpolating revenue estimates for Q3 based on data provided in the investor deck [30] Question: Benchmark’s operating income ratio - Management highlighted that EBITDA is a better metric for evaluating profitability, with the business performing as expected [32] Question: Drivers of Benchmark’s revenue growth - Revenue growth will be driven by operational improvements to existing wells, cost optimization, and potential partnerships for undeveloped acreage [34][35][36] Question: G&A expenses related to Benchmark - Acacia consolidates 73.5% of Benchmark’s G&A expenses, with adjustments for minority interest [38] Question: Printronix turnaround progress - Management is pleased with Printronix’s progress in transitioning to higher-margin consumables and reducing operating costs [41] Question: Operating cash flow for H1 2024 - The $71 million operating cash flow was driven by patent settlements recorded as revenue in Q4 2023, with cash received in H1 2024 [45]

Financial Performance - Total revenues for the quarter ended June 30, 2024, were $25.8 million, a significant increase from $7.9 million in the same quarter of 2023, representing a 227% year-over-year growth[25]. - The net loss attributable to Acacia Research Corporation for the quarter was $8.4 million, an improvement from a net loss of $18.8 million in the same quarter of 2023[22]. - Basic net loss per common share was $0.08, compared to $0.36 in the prior year, indicating a reduction in loss per share[23]. - Total costs and expenses for the quarter were $30.6 million, up from $20.4 million in the same quarter of 2023, reflecting increased operational activities[25]. - Operating loss for the quarter was $4.8 million, a decrease from $12.5 million in the same quarter of the previous year[25]. - The net loss for the six months ended June 30, 2024, was $9.018 million, slightly improved from a net loss of $9.332 million in the same period of 2023[39]. - Operating activities generated net cash of $70.955 million, a significant recovery from a cash outflow of $19.122 million in the prior year[39]. Revenue Sources - Intellectual property operations generated revenues of $5.3 million, compared to $0.4 million in the prior year, marking a 1,233% increase[25]. - Energy operations contributed $14.2 million in revenues for the quarter, with no prior year comparison as this segment was newly established[25]. - For the three months ended June 30, 2024, paid-up license revenue agreements generated $4,888,000, a significant increase from $75,000 in the same period of 2023[65]. - Recurring License Revenue Agreements for the same period totaled $445,000, up from $319,000 in 2023[65]. - Total license revenues for the three months ended June 30, 2024, reached $5,333,000, compared to $394,000 in 2023, marking a substantial growth[65]. - Printronix's net revenues for the three months ended June 30, 2024, were $6,335,000, down from $7,510,000 in 2023[72]. - For the six months ended June 30, 2024, Printronix reported total revenues of $15,176,000, a decrease from $18,137,000 in the same period of 2023[72]. - Benchmark's total revenue for the three months ended June 30, 2024, was $14,170,000, compared to $16,026,000 in 2023[78]. Assets and Liabilities - Acacia Research Corporation's total liabilities and stockholders' equity stood at $753.6 million as of June 30, 2024, compared to $633.5 million in the previous year[19]. - As of June 30, 2024, cash and cash equivalents increased to $386.988 million from $340.091 million at the beginning of the period, reflecting an increase of $46.897 million[39]. - Total stockholders' equity increased to $335.433 million as of June 30, 2024, up from $269.322 million at the end of 2022[34]. - The company reported a change in fair value of equity securities amounting to $31.445 million, compared to a loss of $9.960 million in the previous year[39]. - The company’s oil and natural gas properties had a net value of $192.6 million as of June 30, 2024, significantly up from $25.1 million as of December 31, 2023[128]. Investments and Acquisitions - The company invested $10 million to acquire a 50.4% equity interest in Benchmark Energy II, LLC, which includes over 13,000 net acres and interests in over 125 wells[50]. - On April 17, 2024, Benchmark completed a transaction to acquire upstream assets in Texas and Oklahoma for $145 million, with the company's contribution being $59.9 million[52]. - The company recognized an asset retirement obligation of $28.8 million as part of the acquisition of oil and gas producing properties[117]. Stock and Shareholder Information - The weighted average number of shares outstanding increased to 100,079,803 from 58,408,711 in the prior year, affecting per share calculations[23]. - Starboard Value, LP holds approximately 60.9% of the common stock, providing access to industry expertise for evaluating acquisition opportunities[45]. - The Board approved a stock repurchase program for up to $20.0 million, with a cap of 5,800,000 shares of common stock[196]. - No stock repurchases occurred under this program for the three and six months ended June 30, 2024[196]. - The 2024 Acacia Research Corporation Stock Incentive Plan reserves 11,168,000 shares for issuance, plus 1,421,848 shares transferred from the 2016 Plan[204]. Expenses and Costs - The company recorded a compensation expense for share-based awards of $1.749 million for the six months ended June 30, 2024, compared to $1.351 million in the same period of 2023[39]. - The total amortization expense for other intangible assets for the six months ended June 30, 2024, was $7.5 million, compared to $6.1 million for the same period in 2023, indicating a year-over-year increase of approximately 22.95%[136]. - The company’s asset retirement obligation as of June 30, 2024, was $29,261,000, with a current portion of $1,543,000[139]. Tax and Legal Matters - The company's effective tax rates were (44)% and (8)% for the three months ended June 30, 2024 and 2023, respectively, and (48)% and 10% for the six months ended June 30, 2024 and 2023, respectively[108]. - As of June 30, 2024, the company had total unrecognized tax benefits of approximately $757,000, which would impact the effective tax rate if recognized[110]. - An accrual of $14.5 million was recorded as of June 30, 2024, related to a dispute involving former executives' profit interests, which will result in a payment in Q3 2024[192]. Miscellaneous - The company has not obtained control of any new patent portfolios during the six months ended June 30, 2024[48]. - The company has made no material payments related to guarantees and indemnities, estimating the fair value of its obligations to be immaterial[193]. - The lease for the New York office was amended to extend the term for Unit 601 for 40 months commencing on April 1, 2024, with annual rent increases[181].

Revenue Growth - Consolidated revenue for Q2 2024 was $25.8 million, representing a 227% increase compared to $7.9 million in Q2 2023[4] - Total revenues for the first six months of 2024 reached $50.2 million, up 121% from $22.7 million in the same period of 2023[3] - Total revenues for Q2 2024 reached $25,838,000, a significant increase from $7,904,000 in Q2 2023, representing a growth of 227% year-over-year[20] - Intellectual property operations generated revenues of $5,333,000 in Q2 2024, compared to $394,000 in Q2 2023, marking a growth of 1,253%[20] - Energy operations contributed $14,170,000 in revenues for Q2 2024, with no revenues reported in Q2 2023[20] - Benchmark generated approximately $14.2 million in revenue during Q2 2024, contributing significantly to the overall revenue growth[5] Financial Performance - Acacia recorded a GAAP net loss of $8.4 million, or $0.08 diluted net loss per share, for Q2 2024, an improvement from a net loss of $18.8 million, or $0.36 per share, in Q2 2023[7] - The company reported a net loss attributable to Acacia Research Corporation of $8,446,000 for Q2 2024, an improvement from a net loss of $18,779,000 in Q2 2023[25] - Adjusted EBITDA for Q2 2024 was $4.1 million, with a total of $10.4 million for the first half of 2024[4] - Adjusted EBITDA for Q2 2024 was $4,091,000, compared to $6,332,000 in Q1 2024, indicating a decrease in operational performance[28] - Excluding the impact of a $12.9 million accrual related to the AIP Matter, the diluted net loss per share for Q2 2024 would have been $0.02[8] Assets and Liabilities - Cash, cash equivalents, and equity investments measured at fair value totaled $405.2 million at June 30, 2024, compared to $403.2 million at December 31, 2023[10] - Total current assets decreased to $493,934,000 as of June 30, 2024, down from $554,512,000 at the end of 2023[18] - The company’s total liabilities increased significantly to $156,848,000 as of June 30, 2024, compared to $43,936,000 at the end of 2023[18] - Cash and cash equivalents rose to $386,988,000 as of June 30, 2024, up from $340,091,000 at the end of 2023[18] Costs and Expenses - The company incurred total costs and expenses of $30,596,000 in Q2 2024, compared to $20,433,000 in Q2 2023, reflecting a 50% increase[21] Shareholder Information - The company's book value per share increased to $5.95 as of June 30, 2024, compared to $5.90 at December 31, 2023[4] - The weighted average number of shares outstanding increased to 100,079,803 in Q2 2024, compared to 58,408,711 in Q2 2023, indicating a dilution effect on earnings per share[26] Acquisitions - The acquisition of upstream assets in Texas and Oklahoma added approximately 470 operated producing wells and expanded Benchmark's portfolio by about 140,000 net acres[5]

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Acacia Research Corporation (NASDAQ:ACTG) Q1 2024 Earnings Conference Call May 9, 2024 4:30 PM ET Company Participants Rob Fink - FNK, IR MJ McNulty - CEO Kirsten Hoover - Interim CFO Conference Call Participants Brett Reiss - Janney Montgomery Scott Adam Eagleston - Formidable Asset Management Operator Good day and welcome to the Acacia Research First Quarter 2024 Financial Results Conference Call. At this time all participants are in a listen-only mode. After managements prepared remarks there will be a q ...

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 March 31, 2024 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 (Stat ...