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]

[Second Quarter 2025 Financial Results Overview](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results%20Overview) Acacia Research Corporation reported strong Q2 2025 revenue growth, strategic partnerships, and a robust financial position [Key Financial Highlights](index=1&type=section&id=1.1.%20Key%20Financial%20Highlights) Q2 2025 saw total revenue of $51.2 million, a 98% increase, with a GAAP Net Loss of ($3.3) million and $338.2 million in cash and equivalents Second Quarter 2025 Key Financial Highlights | Metric | Value | | :--------------------------------- | :------------------ | | Total Revenue | $51.2 million | | GAAP Net Loss | ($3.3) million | | GAAP Diluted EPS | ($0.03) | | Adjusted Net Loss | ($5.9) million | | Adjusted Diluted EPS | ($0.06) | | Operated Segment Adjusted EBITDA | $6.8 million | | Total Company Adjusted EBITDA | $1.9 million | | Total Cash, Cash Equivalents, and Equity Securities | $338.2 million | | Per Share Cash, Cash Equivalents, and Equity Securities | $3.51 | - Total revenue for the quarter increased by **98%** compared to the prior-year quarter, primarily driven by **$29.0 million** in revenue from Manufacturing Operations[5](index=5&type=chunk) [CEO Statement and Strategic Focus](index=1&type=section&id=1.2.%20CEO%20Statement%20and%20Strategic%20Focus) CEO highlighted strategic acquisitions, operational efficiency, and a new Bitcoin-backed commercial loan partnership, supported by a strong balance sheet - The company's strategy remains focused on acquiring fundamentally strong businesses where management processes can drive incremental value, with a current emphasis on improving efficiencies, strengthening market positioning, and upgrading operational capabilities[2](index=2&type=chunk) - Acacia announced a new partnership with Unchained Capital and Build Asset Management for a Bitcoin-backed commercial loan strategy[1](index=1&type=chunk)[2](index=2&type=chunk) - The company maintains a strong balance sheet with approximately **$338.2 million** in cash, cash equivalents, and equity securities, providing substantial dry powder for business growth and accretive acquisition opportunities[2](index=2&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed%20Financial%20Performance) Detailed Q2 2025 financial performance covers revenue, EBITDA, net income, and free cash flow across all operating segments [Revenue Breakdown by Segment](index=2&type=section&id=2.1.%20Revenue%20Breakdown%20by%20Segment) Q2 2025 total revenue increased to $51.2 million, primarily from Manufacturing Operations, offsetting a decline in Intellectual Property revenue Total Revenues (in thousands) | Period | 2025 | 2024 | YoY Change (%) | | :----------------------- | :------- | :------- | :------------- | | Three Months Ended June 30 | $51,237 | $25,838 | 98.3% | | Six Months Ended June 30 | $175,659 | $50,158 | 250.2% | Revenue by Segment (Three Months Ended June 30, in thousands) | Segment | 2025 | 2024 | YoY Change (%) | | :----------------------- | :------- | :------- | :------------- | | Energy Operations | $15,317 | $14,170 | 8.1% | | Industrial Operations | $6,590 | $6,335 | 4.0% | | Manufacturing Operations | $29,001 | — | N/A | | Intellectual Property Operations | $329 | $5,333 | -93.8% | [Total Company Adjusted EBITDA](index=2&type=section&id=2.2.%20Total%20Company%20Adjusted%20EBITDA) Total Company Adjusted EBITDA decreased to $1.9 million in Q2 2025 but rose significantly to $52.6 million for the six-month period Total Company Adjusted EBITDA (in thousands) | Period | 2025 | 2024 | YoY Change (%) | | :----------------------- | :------- | :------- | :------------- | | Three Months Ended June 30 | $1,873 | $4,089 | -54.2% | | Six Months Ended June 30 | $52,572 | $10,421 | 404.5% | GAAP Net Income (Loss) (in thousands) | Period | 2025 | 2024 | | :----------------------- | :------- | :------- | | Three Months Ended June 30 | $(3,293) | $(8,446) | | Six Months Ended June 30 | $20,994 | $(8,632) | [Operated Segment Adjusted EBITDA](index=3&type=section&id=2.3.%20Operated%20Segment%20Adjusted%20EBITDA) Operated Segment Adjusted EBITDA (excluding IP) increased to $8.8 million, but total decreased to $6.8 million due to a ($2.1) million IP loss Operated Segment Adjusted EBITDA (Three Months Ended June 30, in thousands) | Segment | 2025 | 2024 | YoY Change (%) | | :--------------------------------------- | :------- | :------- | :------------- | | Energy Operations | $6,951 | $7,039 | -1.3% | | Industrial Operations | $620 | $449 | 38.1% | | Manufacturing Operations | $1,274 | — | N/A | | Intellectual Property Operations | $(2,061) | $1,309 | -257.5% | | Operated Segment Adjusted EBITDA (Total) | $6,784 | $8,797 | -22.9% | Operated Segment Adjusted EBITDA (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | YoY Change (%) | | :--------------------------------------- | :------- | :------- | :------------- | | Energy Operations | $14,887 | $8,417 | 76.9% | | Industrial Operations | $1,641 | $2,346 | -30.1% | | Manufacturing Operations | $3,713 | — | N/A | | Intellectual Property Operations | $41,204 | $8,469 | 386.5% | | Operated Segment Adjusted EBITDA (Total) | $61,445 | $19,232 | 219.5% | [Adjusted Net Income (Loss) and Diluted EPS](index=3&type=section&id=2.4.%20Adjusted%20Net%20Income%20%28Loss%29%20and%20Diluted%20EPS) Q2 2025 Adjusted Net Loss was ($5.9) million with ($0.06) Adjusted Diluted EPS, while six-month Adjusted Net Income reached $27.1 million Adjusted Net Income (Loss) and Diluted EPS (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | GAAP Net Income (Loss) | $(3,293) | $(8,446) | $20,994 | $(8,632) | | Adjusted Net Income (Loss) | $(5,945) | $(1,371) | $27,135 | $27,088 | | GAAP Diluted EPS | $(0.03) | $(0.08) | $0.22 | $(0.09) | | Adjusted Diluted EPS | $(0.06) | $(0.01) | $0.28 | $0.27 | [Free Cash Flow](index=4&type=section&id=2.5.%20Free%20Cash%20Flow) Consolidated Free Cash Flow for Q2 2025 was $47.9 million, primarily from Intellectual Property, totaling $48.2 million for the six-month period Consolidated Free Cash Flow (in thousands) | Period | 2025 | | :----------------------- | :------- | | Three Months Ended June 30 | $47,907 | | Six Months Ended June 30 | $48,242 | Free Cash Flow by Segment (Three Months Ended June 30, 2025, in thousands) | Segment | FCF | | :----------------------- | :------- | | Energy Operations | $4,051 | | Industrial Operations | $872 | | Manufacturing Operations | $909 | | Intellectual Property Operations | $44,047 | | Parent Costs | $(1,972) | [Financial Position and Capital Structure](index=4&type=section&id=Financial%20Position%20and%20Capital%20Structure) Financial position and capital structure details balance sheet, cash, equity securities, and indebtedness as of June 30, 2025 [Balance Sheet Summary](index=6&type=section&id=3.1.%20Balance%20Sheet%20Summary) As of June 30, 2025, total assets increased to $775.5 million, liabilities decreased, and stockholders' equity rose to $577.5 million Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------ | :---------------- | :------- | | Total Assets | $775,546 | $756,394 | $19,152 | | Total Liabilities | $198,075 | $203,775 | $(5,700) | | Total Stockholders' Equity | $577,471 | $552,619 | $24,852 | [Cash, Equity Securities, and Indebtedness](index=4&type=section&id=3.2.%20Cash%2C%20Equity%20Securities%2C%20and%20Indebtedness) Cash, cash equivalents, and equity securities increased to $338.2 million, driven by operating activities, with consolidated indebtedness at $104.4 million - Cash, cash equivalents, and equity securities totaled **$338.2 million** at June 30, 2025, an increase of **$41.2 million** from **$297.0 million** at December 31, 2024[5](index=5&type=chunk)[18](index=18&type=chunk) - The increase in cash was primarily due to **$58.8 million** generated from operating activities across all Operated Segments, plus **$2.6 million** in net proceeds from the purchase and sale of equity securities[18](index=18&type=chunk) - The Parent company's total indebtedness was **zero** at June 30, 2025. On a consolidated basis, total indebtedness was **$104.4 million**, consisting of **$58.0 million** in non-recourse debt at Benchmark and **$46.4 million** in non-recourse debt at Deflecto[18](index=18&type=chunk) - Book value per share was **$5.99** as of June 30, 2025, with **96.4 million** shares of common stock outstanding[17](index=17&type=chunk) [Supplemental Information on Non-GAAP Measures](index=8&type=section&id=Supplemental%20Information%20on%20Non-GAAP%20Measures) This section defines and reconciles Acacia's non-GAAP financial measures, including Adjusted EBITDA metrics and Free Cash Flow [Non-GAAP Financial Measures Definitions](index=8&type=section&id=4.1.%20Non-GAAP%20Financial%20Measures%20Definitions) This section defines key non-GAAP financial measures including Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Diluted EPS, and Free Cash Flow - Total Company Adjusted EBITDA is defined as net income/(loss) before net income/(loss) attributable to noncontrolling interests, income tax (benefit)/expense, interest expense, interest income, and other expense, net and loss/(gain) on foreign currency exchange, net realized and unrealized (gain)/loss on derivatives, net realized and unrealized loss/(gain) on investments, non-recurring legacy legal expenses, depreciation, depletion and amortization, stock-based compensation, realized hedge gain/(loss), transaction-related costs, and costs related to the legacy items[27](index=27&type=chunk) - Operated Segment Adjusted EBITDA is the aggregate of Energy Operations, Manufacturing Operations, Industrial Operations, and Intellectual Property Operations Adjusted EBITDA[27](index=27&type=chunk) - Adjusted Net Income (Loss) is defined as GAAP Net Income (Loss) excluding costs related to certain legacy matters, stock-based compensation, transaction-related costs, amortization of acquired intangibles, any unrealized (gain)/loss on securities, any unrealized (gain)/loss on hedges, and any (gain)/loss on non-cash derivatives and taking into account the tax effect(s) of those adjustments[35](index=35&type=chunk) - Free Cash Flow (FCF) is defined as net cash provided by (used in) operating activities, less net purchases of property and equipment, oil and gas properties, and patent acquisitions ('Capital Expenditures')[34](index=34&type=chunk) [Segment Adjusted EBITDA Reconciliations](index=9&type=section&id=4.2.%20Segment%20Adjusted%20EBITDA%20Reconciliations) Detailed reconciliations of GAAP Operating Income (Loss) to Adjusted EBITDA are provided for each operating segment and Parent Costs - Detailed reconciliation tables are provided for each segment (Energy, Industrial, Manufacturing, Intellectual Property) and Parent Costs, showing adjustments from GAAP Operating Income (Loss) to Adjusted EBITDA for items such as depreciation, depletion & amortization, stock-based compensation, realized hedge gain (loss), transaction-related costs, legacy matter costs, and severance costs[38](index=38&type=chunk)[39](index=39&type=chunk) [Corporate Information](index=5&type=section&id=Corporate%20Information) Corporate information includes investor conference call details, company overview, safe harbor statement, and investor contact [Investor Conference Call](index=5&type=section&id=5.1.%20Investor%20Conference%20Call) Acacia Research Corporation will host a conference call on August 6, 2025, at 8:00 a.m. ET to discuss financial results - A conference call to discuss financial results will be held on **August 6, 2025**, at **8:00 a.m. Eastern Time**[19](index=19&type=chunk) - Access to the live call is available by dialing **877-545-0523** (U.S. and Canada) or **973-528-0016** (international) with access code '**395103**'. A webcast will also be available on the company's website[19](index=19&type=chunk) [About the Company](index=5&type=section&id=5.2.%20About%20the%20Company) Acacia (Nasdaq: ACTG) acquires and operates businesses in technology, energy, and industrial sectors, leveraging expertise and capital to drive value - Acacia (Nasdaq: **ACTG**) acquires and operates businesses across the mature technology, energy, and industrial/manufacturing sectors[20](index=20&type=chunk) - The company leverages its expertise, significant capital base, and deep industry relationships to drive value, evaluating opportunities based on the attractiveness of underlying cash flows[20](index=20&type=chunk) - Acacia operates its businesses based on three key principles: people, process, and performance[20](index=20&type=chunk) [Safe Harbor Statement](index=5&type=section&id=5.3.%20Safe%20Harbor%20Statement) This section contains forward-looking statements subject to risks and uncertainties, with actual results potentially differing due to various factors - The news release contains forward-looking statements based on current expectations, subject to risks and uncertainties as defined by the Private Securities Litigation Reform Act of 1995[21](index=21&type=chunk) - Factors that could cause actual results to differ materially include the ability to successfully identify, diligence, complete, and integrate strategic acquisitions, performance of businesses, market conditions (e.g., oil and gas, inflation), supply chain disruptions, regulatory changes, and security threats[21](index=21&type=chunk) - The company undertakes no obligation to revise or update publicly any forward-looking statements, except as required by applicable law[21](index=21&type=chunk) [Investor Contact](index=5&type=section&id=5.4.%20Investor%20Contact) Contact information for investor inquiries is provided - Investor contact: Gagnier Communications, **ir@acaciares.com**[22](index=22&type=chunk)

Core Viewpoint - Acacia Research (NASDAQ: ACTG) shares have shown significant recovery following a positive quarterly earnings report released in May [1] Summary by Relevant Sections - **Company Performance** - The company experienced a notable rebound in its stock price due to favorable market reactions to its quarterly earnings release [1]

Acacia Research (ACTG) FY Conference Summary Company Overview - Acacia Research has transitioned from an intellectual property business to a value-based acquirer of companies, focusing on creating a diversified portfolio of assets [2][3] - The company has a book value of approximately $577 million, translating to about $6 per share, with $340 million in cash and public securities [4] Financial Performance - Acacia generated $222 million in revenue and $61 million in EBITDA, with $40 million of EBITDA related to its former intellectual property business [5] - The company operates with no debt, emphasizing a strong financial position [5] Investment Strategy - The management team, led by the CEO with a private equity background, focuses on acquiring undervalued businesses, particularly in contrarian sectors [6][8] - Acacia aims to improve the operational efficiency and profitability of acquired businesses, emphasizing hands-on management rather than passive ownership [10][11] - The company has seen a significant number of acquisition opportunities, evaluating 350 businesses last year and 280 so far this year, but remains selective [9][50] Recent Acquisitions - Acacia has made strategic acquisitions, including Benchmark Energy and Deflecto, to build a scaled oil and gas platform and diversify its portfolio [15][22] - The acquisition of Benchmark was based on identifying dislocation in the oil and gas market, focusing on cash flow generation rather than traditional valuation metrics [17][19] - Deflecto was acquired as a collection of three unrelated businesses, with plans to streamline operations and enhance value through cost-cutting and management alignment [22][24] Operational Focus - The company emphasizes operational improvements and continuous enhancement of acquired businesses, aiming to generate cash flow and increase margins [11][20] - Acacia's approach includes leveraging existing management expertise and operational partners to drive performance in acquired companies [8][26] Market Position and Future Outlook - Acacia is exploring opportunities in specialty lending and insurance, indicating a strategic focus on markets with limited capital flow [51][52] - The company is cautious about entering new markets, preferring to build around existing positions and leverage its team's expertise [54] - Acacia aims to unlock trapped value in its portfolio, with a long-term vision of growing into a formidable public holding company with multiple large businesses [42][43] Conclusion - Acacia Research is positioned as a value-oriented acquirer with a strong financial foundation and a clear strategy for operational improvement and growth through selective acquisitions [34][55]

Core Viewpoint - Acacia Research (NASDAQ: ACTG) has seen volatile share price movements since the last analysis in January, indicating potential fluctuations in investor sentiment and market conditions [1]. Company Summary - The company has maintained a long position in its shares, suggesting confidence in its future performance despite recent price turbulence [1].

Financial Performance - Total revenues for Q1 2025 reached $124.4 million, a significant increase of 412% compared to $24.3 million in Q1 2024[16] - Operating income for Q1 2025 was $38.3 million, compared to an operating loss of $2.1 million in Q1 2024[16] - Net income attributable to Acacia Research Corporation for Q1 2025 was $24.3 million, a turnaround from a net loss of $0.2 million in Q1 2024[16] - The company reported a basic net income per common share of $0.25 for Q1 2025, compared to no earnings per share in Q1 2024[16] - For the three months ended March 31, 2025, Acacia Research Corporation reported a net income of $23,528,000, a significant increase from a net loss of $189,000 in the same period of 2024[19] - Acacia's net income attributable to common stockholders for the three months ended March 31, 2025, was $24.287 million, compared to a loss of $186,000 in the same period of 2024[186] Cash and Assets - Cash and cash equivalents as of March 31, 2025, were $272.0 million, slightly down from $273.9 million at the end of 2024[14] - Total assets increased to $801.6 million as of March 31, 2025, up from $756.4 million at the end of 2024[14] - The company’s total stockholders' equity increased to $577.3 million as of March 31, 2025, from $552.6 million at the end of 2024[14] - Acacia's cash and cash equivalents decreased to $271,964,000 at the end of Q1 2025, down from $438,762,000 at the end of Q1 2024, reflecting a decline of 38%[19] Liabilities and Equity - Total liabilities rose to $224.3 million as of March 31, 2025, compared to $203.8 million at the end of 2024[14] - The company recorded total unrecognized tax benefits of approximately $935,000 as of March 31, 2025[103] - The effective tax rate for the company was slightly lower than the U.S. federal statutory rate due to non-controlling partnership earnings allocated to minority shareholders[102] Revenue Sources - The company is focusing on expanding its intellectual property operations, which generated $69.9 million in revenue for Q1 2025, compared to $13.6 million in Q1 2024[16] - Acacia's total license revenue for the three months ended March 31, 2025, was $69,905,000, a significant increase from $13,623,000 in the same period of 2024, representing a growth of approximately 413%[49] - Paid-up license revenue agreements contributed $69,490,000 to total revenue in Q1 2025, compared to $12,365,000 in Q1 2024, indicating a growth of about 463%[49] Acquisitions and Investments - Acacia invested $10 million to acquire a 50.4% equity interest in Benchmark Energy II, LLC, which operates in the oil and gas sector[31] - The company completed the acquisition of Deflecto Acquisition, Inc. for $103.7 million, funded by a combination of a $48 million secured term loan and cash[34] - The identifiable net assets acquired in the Deflecto transaction were valued at $80.965 million, resulting in goodwill of $16.798 million[111] Operational Highlights - The company aims to acquire businesses with total enterprise values of $1 billion or less, focusing on those with stable cash flow generation and scalability[23] - The company operates in four reportable segments: Intellectual Property Operations, Industrial Operations, Energy Operations, and Manufacturing Operations[187] - The Manufacturing Operations segment was established following the acquisition of Deflecto in October 2024, focusing on specialty plastics[193] Segment Performance - The segment gross profit for intellectual property operations was $41,993,000, while the total segment operating income was $43,082,000 for the three months ended March 31, 2025[197] - Benchmark's total revenue for the three months ended March 31, 2025, was $18,306,000, a substantial increase from $1,856,000 in Q1 2024, marking a growth of approximately 884%[67] Debt and Financing - The Benchmark Revolving Credit Facility has a maximum credit amount of $150 million, with an outstanding balance of $61.5 million as of March 31, 2025, down from $66.5 million at the end of 2024[132] - The interest rate on the Deflecto Term Loan was 8% as of March 31, 2025, with an outstanding balance of $46.9 million[140] Stock and Compensation - The total compensation expense for share-based awards recognized in general and administrative expenses for the three months ended March 31, 2025, was $922,000, an increase from $858,000 in 2024[184] - As of March 31, 2025, there were 15,999,789 shares of common stock reserved for issuance under the Plans[179] Strategic Initiatives - Acacia's relationship with Starboard Value, LP enhances its access to industry expertise and acquisition opportunities, contributing to its strategic growth initiatives[24] - The company emphasizes a disciplined approach to identifying acquisition opportunities, avoiding traditional sale processes to secure attractive pricing[209] - The company’s approach to transactions is as business owners rather than purely financial investors, aiming for long-term value creation for shareholders[205]

Financial Data and Key Metrics Changes - Acacia recorded total revenue of $124.4 million during the first quarter, a significant increase compared to the previous year [21] - The company reported first quarter GAAP operating income of $38.3 million, compared to a GAAP operating loss of $2.1 million in the same quarter last year [24] - GAAP net income attributable to Acacia was $24.3 million or $0.25 per share, compared to a net loss of $200,000 or $0 per share in the prior year period [25] Business Line Data and Key Metrics Changes - Energy operations generated $18.3 million in revenue for the quarter, compared to $1.9 million in the same quarter last year [21] - Manufacturing operations generated $28.5 million in revenue, while industrial operations generated $7.7 million, a slight decrease from $8.8 million in the same quarter last year [22] - Intellectual property operations generated $69.9 million in licensing and other revenue, compared to $13.6 million in the same quarter last year, primarily due to a large settlement [23] Market Data and Key Metrics Changes - The company has hedged over 70% of its production through the end of 2027, providing price protection and greater cash flow predictability [11] - Approximately 51% of Benchmark's last twelve months revenue and 78% of production was driven by gas and natural gas liquids, which have remained resilient despite recent market volatility [11] Company Strategy and Development Direction - Acacia's strategy focuses on acquiring and building businesses with stable long-term cash flow generation and scalability [6] - The company is actively exploring strategic acquisitions and organic growth initiatives across its verticals, particularly in energy and industrial sectors [28] - Management is evaluating opportunities in the mature technology sector, aiming to enhance the value of its intellectual property portfolio [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Acacia's resilience amid macroeconomic uncertainties and believes the current environment presents compelling opportunities [28] - The company is optimistic about the long-term growth potential of its Deflecto business and is implementing initiatives to optimize operations [15] - Management highlighted the importance of disciplined cost management and operational excellence in navigating volatile market conditions [16] Other Important Information - Total consolidated G&A expense was $17.3 million during the first quarter, an increase from $12.5 million in the same quarter last year, primarily due to the addition of Deflecto [23] - Cash, cash equivalents, and equity securities at fair value totaled $290 million as of March 31, 2025, compared to $297 million at December 31, 2024 [26] Q&A Session Summary Question: Can you detail the total winnings from the WiFi portfolio? - Management indicated that since Q1 2023, approximately $178 million has been generated from the WiFi assets, with more value expected in the portfolio [33] Question: Are you seeing prices coming down in M&A? - Management confirmed they are looking at opportunities in energy, industrials, and mature technology, with a focus on assets that can be improved through operational efficiencies [35][36] Question: What is the calculus on protecting tax attributes versus share buybacks? - Management completed a $20 million buyback and is monitoring tax attributes to determine the optimal time for further buybacks [41] Question: Will the recent settlement pressure the defendant in the $37 million judgment case to settle sooner? - Management expressed hope that the recent settlement would encourage a quicker resolution, but could not provide a definitive answer [50]

Financial Data and Key Metrics Changes - Acacia recorded total revenue of $124.4 million during the first quarter, a significant increase compared to the same quarter last year [21] - The company reported first quarter GAAP operating income of $38.3 million, compared to a GAAP operating loss of $2.1 million in the same quarter last year [23] - GAAP net income attributable to Acacia was $24.3 million or $0.25 per share, compared to a net loss of $0.2 million or $0 per share in the prior year period [24] - Adjusted net income attributable to Acacia was $33.1 million or $0.34 per share [24] - Cash, cash equivalents, and equity securities at fair value totaled $290 million as of March 31, 2025, compared to $297 million at December 31, 2024 [25] Business Line Data and Key Metrics Changes - Energy operations generated $18.3 million in revenue for the quarter, compared to $1.9 million in the same quarter of last year [21] - Manufacturing operations generated $28.5 million in revenue [21] - Industrial operations generated $7.7 million in revenue during the quarter, a slight decrease from $8.8 million in the same quarter last year [21] - Intellectual property operations generated $69.9 million in licensing and other revenue during the quarter, compared to $13.6 million in the same quarter last year [22] Market Data and Key Metrics Changes - Benchmark's energy segment has hedged over 70% of its production through the end of 2027, providing price protection and cash flow predictability [11] - Approximately 51% of Benchmark's last twelve months (LTM) revenue and 78% of LTM production was driven by gas and natural gas liquids, which have remained resilient [11] Company Strategy and Development Direction - The company focuses on acquiring and building businesses with stable long-term cash flow generation and scalability [6] - Acacia is actively evaluating strategic acquisitions and organic growth initiatives across its verticals [27] - The company is exploring avenues to monetize its Cherokee position and is monitoring attractive M&A targets due to recent oil price softness [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Acacia's resilience amid macroeconomic uncertainties and believes the current environment presents compelling opportunities [27] - The company is focused on disciplined cost management and operational excellence to navigate volatile periods [16] - Management highlighted the strong performance driven by realized gains from the intellectual property business and the integration of Revolution assets [7][14] Other Important Information - Total consolidated G&A expense was $17.3 million during the first quarter, an increase from $12.5 million in the same quarter last year, primarily due to the addition of Deflecto [22] - The company has zero capital commitments from a drilling perspective, allowing it to remain cash flow positive even in challenging price environments [11] Q&A Session Summary Question: Can you detail the total winnings from the WiFi portfolio? - Management indicated that since Q1 2023, approximately $178 million has been generated from the WiFi assets, with ongoing cases potentially adding more value [31] Question: Are you seeing prices coming down in M&A? - Management noted they are looking at three verticals: energy, industrials, and mature technology, with ongoing evaluations of acquisition opportunities [33][34] Question: What is the calculus on protecting tax attributes versus share buybacks? - Management confirmed they completed a $20 million buyback while monitoring tax attributes to determine the optimal time for further buybacks [40] Question: Does the recent settlement put pressure on the defendant in the $37 million judgment case? - Management expressed uncertainty but hoped that the recent settlement would encourage a quicker resolution [49]