Acacia(ACTG) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results Overview Acacia Research Corporation reported strong Q2 2025 revenue growth, strategic partnerships, and a robust financial position Key Financial Highlights 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] CEO Statement and Strategic Focus 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] - Acacia announced a new partnership with Unchained Capital and Build Asset Management for a Bitcoin-backed commercial loan strategy[1][2] - 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] Detailed Financial Performance Detailed Q2 2025 financial performance covers revenue, EBITDA, net income, and free cash flow across all operating segments Revenue Breakdown by Segment 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 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 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 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 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 Financial position and capital structure details balance sheet, cash, equity securities, and indebtedness as of June 30, 2025 Balance Sheet Summary 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 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][18] - 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] - 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] - Book value per share was $5.99 as of June 30, 2025, with 96.4 million shares of common stock outstanding[17] Supplemental Information on Non-GAAP Measures This section defines and reconciles Acacia's non-GAAP financial measures, including Adjusted EBITDA metrics and Free Cash Flow Non-GAAP Financial Measures Definitions 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] - Operated Segment Adjusted EBITDA is the aggregate of Energy Operations, Manufacturing Operations, Industrial Operations, and Intellectual Property Operations Adjusted EBITDA[27] - 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] - 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] Segment Adjusted EBITDA Reconciliations 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][39] Corporate Information Corporate information includes investor conference call details, company overview, safe harbor statement, and investor contact Investor Conference Call 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] - 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] About the Company 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] - 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] - Acacia operates its businesses based on three key principles: people, process, and performance[20] Safe Harbor Statement 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] - 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] - The company undertakes no obligation to revise or update publicly any forward-looking statements, except as required by applicable law[21] Investor Contact Contact information for investor inquiries is provided - Investor contact: Gagnier Communications, ir@acaciares.com[22]