Cronos Group(CRON) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements. Presents Cronos Group Inc.'s unaudited condensed consolidated financial statements and detailed notes for Q2 2025 and FY2024 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets | Metric | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :---------------------------------- | :----------------------------------- | :-------------------- | | Total Assets | $1,175,227 | $1,166,312 | $8,915 | | Total Liabilities | $45,021 | $55,330 | $(10,309) | | Total Shareholders' Equity | $1,130,206 | $1,110,982 | $19,224 | Condensed Consolidated Statements of Net Loss and Comprehensive Income (Loss) Condensed Consolidated Statements of Net Loss and Comprehensive Income (Loss) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Revenue | $33,455 | $27,762 | $5,693 | 20.5% | | Gross Profit | $14,504 | $6,297 | $8,207 | 130.3% | | Operating Loss | $(5,324) | $(15,561) | $10,237 | -65.8% | | Net Loss | $(38,482) | $(8,759) | $(29,723) | 339.3% | | Net Loss Attributable to Cronos Group | $(39,711) | $(8,757) | $(30,954) | 353.5% | | Basic Net Loss Per Share | $(0.10) | $(0.02) | $(0.08) | 400.0% | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Revenue | $65,717 | $53,050 | $12,667 | 23.9% | | Gross Profit | $28,238 | $10,780 | $17,458 | 161.9% | | Operating Loss | $(9,396) | $(31,509) | $22,113 | -70.2% | | Net Loss | $(30,759) | $(11,243) | $(19,516) | 173.6% | | Net Loss Attributable to Cronos Group | $(33,589) | $(10,998) | $(22,591) | 205.4% | | Basic Net Loss Per Share | $(0.09) | $(0.03) | $(0.06) | 200.0% | Condensed Consolidated Statements of Changes in Equity Condensed Consolidated Statements of Changes in Equity | Metric | As of Dec 31, 2024 (in thousands) | As of Jun 30, 2025 (in thousands) | Change (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------- | | Total Shareholders' Equity | $1,110,982 | $1,130,206 | $19,224 | | Net Loss | N/A | $(39,711) | N/A | | Foreign Exchange Gain on Translation | N/A | $58,045 | N/A | | Share Repurchases | N/A | $(3,612) | N/A | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Net cash provided by (used in) operating activities | $722 | $(460) | $1,182 | | Net cash provided by (used in) investing activities | $(56,339) | $180,999 | $(237,338) | | Net cash used in financing activities | $(10,616) | $(905) | $(9,711) | | Net change in cash and cash equivalents | $(64,389) | $178,898 | $(243,287) | | Cash and cash equivalents, end of period | $794,416 | $848,189 | $(53,773) | Notes to Condensed Consolidated Financial Statements 1. Background, Basis of Presentation, and Summary of Significant Accounting Policies - Cronos Group is an innovative global cannabinoid company focused on building disruptive intellectual property through cannabis research, technology, and product development, with brands like Spinach®, PEACE NATURALS®, and Lord Jones®[18] - The company operates as a single reportable segment, encompassing operations in Canada and Israel, involved in cultivation, manufacture, and marketing of cannabis and cannabis-derived products[22] Product Category Revenue | Product Category | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :--------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Cannabis flower | $25,025 | $20,661 | $4,364 | 21.1% | | Cannabis extracts | $8,360 | $7,064 | $1,296 | 18.3% | | Other | $70 | $37 | $33 | 89.2% | | Net revenue | $33,455 | $27,762 | $5,693 | 20.5% | Geographic Region Revenue | Geographic Region | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Canada | $19,150 | $19,844 | $(694) | -3.5% | | Israel | $9,376 | $6,889 | $2,487 | 36.1% | | Other countries | $4,929 | $1,029 | $3,900 | 379.0% | | Net revenue | $33,455 | $27,762 | $5,693 | 20.5% | 2. Business Combination - Cronos Group obtained majority control of Cronos GrowCo in Q3 2024, leading to its consolidation and effective settlement of pre-existing financial relationships[33][34] - The business combination resulted in recording $65,269 thousand in goodwill, primarily attributed to expected synergies and enhanced supply capabilities[35][37] Acquired Assets and Liabilities | Acquired Asset/Liability | Fair Value at Transaction Date (in thousands) | | :----------------------- | :------------------------------------------ | | Cash | $5,993 | | Accounts receivable | $2,437 | | Inventory | $15,754 | | Intangible assets | $8,008 | | Goodwill | $65,269 | | Property, plant and equipment | $87,630 | | Total Purchase Price | $178,879 | 3. Inventory, net Inventory by Category | Inventory Category | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------- | :--------------------------------- | :----------------------------------- | :-------------------- | :--------- | | Raw materials | $5,831 | $5,400 | $431 | 8.0% | | Work-in-progress | $23,707 | $14,350 | $9,357 | 65.2% | | Finished goods | $12,432 | $13,248 | $(816) | -6.1% | | Supplies and consumables | $172 | $151 | $21 | 13.9% | | Total | $42,142 | $33,149 | $8,993 | 27.1% | - The $5,605 thousand inventory step-up from the Cronos GrowCo Transaction has been fully recognized in cost of sales by June 30, 2025[38] 4. Investments - The net book value of the PharmaCann Option was nil as of June 30, 2025, and December 31, 2024, following significant impairment charges in 2024[41][42] - The company's ownership in Vitura Health Limited decreased from approximately 10% to 8.3% in Q1 2025 due to additional share issuance[45] Vitura Investment | Investment | As of Dec 31, 2024 (in thousands) | Unrealized Loss (in thousands) | Foreign Exchange Effect (in thousands) | As of Jun 30, 2025 (in thousands) | | :--------- | :-------------------------------- | :----------------------------- | :------------------------------------- | :-------------------------------- | | Vitura | $2,813 | $(700) | $138 | $2,251 | 5. Loans Receivable, net Loans Receivable | Loan Type | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | | :------------------------ | :--------------------------------- | :----------------------------------- | :-------------------- | | Mucci Promissory Note | $11,497 | $13,464 | $(1,967) | | Cannasoul Collaboration Loan | $1,874 | $1,736 | $138 | | Total loans receivable, net | $13,767 | $16,144 | $(2,377) | - The GrowCo Credit Facility loans were remeasured at fair value and effectively settled as a result of the Cronos GrowCo Transaction on July 1, 2024[50] - Mucci made principal repayments of $2,855 thousand and interest payments of $1,003 thousand on the Mucci Promissory Note for Q2 2025[51] 6. Property, Plant and Equipment, net Property, Plant and Equipment | Category | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------- | :--------------------------------- | :----------------------------------- | :-------------------- | | Land | $6,875 | $6,389 | $486 | | Building and leasehold improvements | $239,415 | $192,059 | $47,356 | | Machinery and Equipment | $45,420 | $36,741 | $8,679 | | Construction in progress | $634 | $28,710 | $(28,076) | | Accumulated depreciation | $(35,608) | $(29,798) | $(5,810) | | Accumulated impairment charges | $(109,145) | $(103,599) | $(5,546) | | Property, Plant and Equipment, net | $150,243 | $133,189 | $17,054 | - Depreciation expense for the six months ended June 30, 2025, was $5,611 thousand, significantly higher than $1,308 thousand in the same period of 2024[56] 7. Goodwill and Intangible Assets, net Goodwill and Intangible Assets | Category | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | Change (in thousands) | | :---------------- | :--------------------------------- | :----------------------------------- | :-------------------- | | Goodwill | $66,918 | $63,453 | $3,465 | | Intangible assets, net | $10,565 | $11,257 | $(692) | - Goodwill increased primarily due to the Cronos GrowCo Transaction, which added $65,269 thousand in goodwill, attributable to synergies and enhanced supply capabilities[37][58] - Know-how, valued at $8,008 thousand at acquisition, was a key intangible asset acquired as part of the Cronos GrowCo Transaction, with an amortization period of 10 years[36][59] 8. Restructuring - The company continued its Realignment initiatives in Q1 2025, focusing on IT infrastructure and finance department transformation for cost efficiencies[60] - A loss of $2,501 thousand on held-for-sale assets was recognized in Q2 2025 due to a reassessment of the fair value of Cronos Fermentation assets[62][144] Restructuring Costs | Restructuring Costs | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Total Restructuring Costs | $768 | $547 | $221 | 40.4% | | Restructuring Costs | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Total Restructuring Costs | $1,323 | $630 | $693 | 110.0% | 9. Share-based Compensation Share-based Compensation | Share-based Compensation | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Stock options | $79 | $33 | $46 | 139.4% | | RSUs | $1,302 | $2,203 | $(901) | -40.9% | | Total | $1,381 | $2,236 | $(855) | -38.2% | | Share-based Compensation | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Stock options | $154 | $67 | $87 | 129.9% | | RSUs | $3,315 | $4,184 | $(869) | -20.8% | | Total | $3,469 | $4,251 | $(782) | -18.4% | - For the six months ended June 30, 2025, 2,633,793 RSUs were granted, and 4,844,056 RSUs vested and were issued[69] 10. Share Repurchase Program - The Board authorized a share repurchase program of up to $50,000 thousand, not exceeding 19,270,951 common shares, commencing May 14, 2025[71] - As of June 30, 2025, the company repurchased 1,874,951 common shares for $3,612 thousand, which were retired and cancelled[72][173] 11. Commitments and Contingencies - A proposed agreement-in-principle has been reached to settle the U.S. class action complaint related to the restatement of 2019 interim financial statements[75] - The Israel Ministry of Justice sustained the Minister of Finance's veto of a proposed 165% anti-dumping duty on Canadian medical cannabis imports[85][86][121] - The company expects litigation and regulatory proceedings related to the marketing, distribution, import, and sale of its products to increase[87] 12. Segment Information - The company operates as a single reportable segment, with the CEO reviewing Adjusted EBITDA to evaluate performance and allocate resources[88] Adjusted EBITDA | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Adjusted EBITDA | $1,688 | $(11,051) | $12,739 | N/M | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Adjusted EBITDA | $3,977 | $(21,720) | $25,697 | N/M | - The improvement in Adjusted EBITDA was primarily driven by higher revenue, lower cost of sales due to Cronos GrowCo consolidation, and reduced general and administrative costs[155] 13. Loss per Share Loss per Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Basic Net Loss Per Share Attributable to Cronos Group | $(0.10) | $(0.02) | $(0.08) | | Diluted Net Loss Per Share Attributable to Cronos Group | $(0.10) | $(0.02) | $(0.08) | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Basic Net Loss Per Share Attributable to Cronos Group | $(0.09) | $(0.03) | $(0.06) | | Diluted Net Loss Per Share Attributable to Cronos Group | $(0.09) | $(0.03) | $(0.06) | - Incremental common shares were not considered in the computation of diluted loss per share due to the net loss reported, as their inclusion would be anti-dilutive[96] 14. Fair Value Measurements - Fair value measurements are categorized into Level 1 (quoted prices), Level 2 (observable data), and Level 3 (unobservable data)[97] Fair Value Measurements | Asset/Liability | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :-------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Cash and cash equivalents | $0 | $794,416 | $0 | $794,416 | | Other investments | $0 | $2,251 | $0 | $2,251 | | Derivative liabilities | $0 | $0 | $3 | $3 | 15. Related Party Transactions - Cronos GrowCo, previously an equity method investment, is now an intercompany relationship due to Cronos obtaining majority control, with all intercompany activity eliminated upon consolidation[99] Related Party Transactions | Related Party Transaction | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Related party – purchases of products and services | $173 | $260 | $362 | $936 | - Cronos GrowCo paid a dividend of $3,858 thousand to its non-controlling shareholders on June 30, 2025, funded from excess operating cash flows[104] 16. Subsequent Events - Cronos Group entered into a C$30,000 thousand junior secured convertible debt agreement with High Tide Inc. on July 16, 2025, with a 4% annual interest rate and conversion option at C$4.20 per common share[105][122] - The agreement with High Tide Inc. also includes a common share purchase warrant exercisable into up to 3,836,317 common shares at C$3.91 per share[105][122] - Lloyd Wilson was appointed as the company's Principal Accounting Officer, effective immediately after the 10-Q filing[106] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management's discussion and analysis of financial condition and results of operations for Q2 2025, including non-GAAP measures Forward-Looking Statements - Forward-looking statements are based on current expectations, estimates, projections, assumptions, and beliefs, covering topics like the Anti-Dumping Investigation in Israel and Realignment initiatives[109][110] - Key assumptions include navigating regulatory developments, managing the Middle East Conflict's impact, realizing cost-savings from Realignment, and achieving benefits from business combinations[113] - Readers are cautioned that forward-looking statements are subject to inherent risks and uncertainties, including regulatory changes, market conditions, and operational challenges[113][114] Foreign currency exchange rates - All currency amounts in the Quarterly Report are stated in U.S. dollars, the company's reporting currency[115] Canadian Dollar Exchange Rates | Currency | Exchange Rate (C$ per $) | As of June 30, 2025 | As of June 30, 2024 | As of December 31, 2024 | | :------- | :----------------------- | :------------------ | :------------------ | :---------------------- | | Canadian Dollar | Spot rate | 1.3608 | 1.3674 | 1.4351 | | Canadian Dollar | Average rate | 1.4094 | 1.3581 | N/A | Israeli Shekel Exchange Rates | Currency | Exchange Rate (ILS per $) | As of June 30, 2025 | As of June 30, 2024 | As of December 31, 2023 | | :------- | :----------------------- | :------------------ | :------------------ | :---------------------- | | Israeli Shekel | Spot rate | 3.3683 | 3.7742 | 3.6526 | | Israeli Shekel | Average rate | 3.5954 | 3.6950 | N/A | Business Overview - Cronos Group is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology, and product development[117] - The company's core strategic priorities include growing iconic brands, developing a diversified global sales and distribution network, and creating disruptive intellectual property[119] - Cronos operates as one consolidated segment with operations in Canada (Peace Naturals, Cronos GrowCo) and Israel, holding relevant certifications for medical cannabis[118] Recent Developments - The Cronos GrowCo Phase 2 Expansion Area is complete, with sales expected in Fall 2025, anticipated to fuel international and domestic Canadian market growth[120] - The Israel Ministry of Justice validated the Minister of Finance's veto of a proposed 165% anti-dumping duty on Canadian medical cannabis imports[121] - Cronos Group entered a C$30,000 thousand junior secured convertible debt agreement with High Tide Inc. on July 16, 2025, including a common share purchase warrant[122] Consolidated Results of Operations Consolidated Results of Operations | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Revenue | $33,455 | $27,762 | $5,693 | 20.5% | | Gross Profit | $14,504 | $6,297 | $8,207 | 130.3% | | Operating Loss | $(5,324) | $(15,561) | $10,237 | -65.8% | | Net Loss | $(38,482) | $(8,759) | $(29,723) | 339.3% | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Revenue | $65,717 | $53,050 | $12,667 | 23.9% | | Gross Profit | $28,238 | $10,780 | $17,458 | 161.9% | | Operating Loss | $(9,396) | $(31,509) | $22,113 | -70.2% | | Net Loss | $(30,759) | $(11,243) | $(19,516) | 173.6% | - Net revenue increase was primarily due to higher cannabis flower sales in Israel and other countries, consolidation of Cronos GrowCo, and higher cannabis extract sales in Canada[126] - Gross profit increased due to Cronos GrowCo consolidation, higher average sales prices from a mix shift to Israel and other countries, increased sales volumes, and production efficiencies[129] - The higher net loss was primarily driven by an unrealized foreign exchange loss due to the Canadian dollar strengthening against the U.S. dollar[147] Non-GAAP Measures - Adjusted EBITDA is defined as net income (loss) before interest, tax, depreciation, and amortization, adjusted for various non-cash and non-recurring items[149] - Adjusted Gross Profit and Adjusted Gross Margin exclude inventory-related purchase accounting adjustments from the Cronos GrowCo Transaction for clearer insight into business trends[156][157] Non-GAAP Financial Metrics | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Adjusted EBITDA | $1,688 | $(11,051) | $12,739 | N/M | | Adjusted Gross Profit | $14,504 | $6,297 | $8,207 | 130.3% | | Adjusted Gross Margin | 43% | 23% | 20 pp | N/A | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Adjusted EBITDA | $3,977 | $(21,720) | $25,697 | N/M | | Adjusted Gross Profit | $28,755 | $10,780 | $17,975 | 166.7% | | Adjusted Gross Margin | 44% | 20% | 24 pp | N/A | Constant Currency - Constant currency measures are used to assess underlying operational performance by converting foreign currency results using prior period exchange rates[159] Constant Currency Financial Metrics | Metric (Constant Currency) | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net revenue | $33,334 | $27,762 | $5,572 | 20% | | Gross profit | $14,421 | $6,297 | $8,124 | 129% | | Net loss | $(39,798) | $(8,759) | $(31,039) | 354% | | Adjusted EBITDA | $1,587 | $(11,051) | $12,638 | N/M | | Metric (Constant Currency) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net revenue | $66,956 | $53,050 | $13,906 | 26% | | Gross profit | $28,645 | $10,780 | $17,865 | 166% | | Net loss | $(32,477) | $(11,243) | $(21,234) | 189% | | Adjusted EBITDA | $3,920 | $(21,720) | $25,640 | N/M | - The increased net loss on a constant currency basis was primarily due to an unrealized foreign exchange loss on U.S. dollar-denominated cash and investments held in Canada[166] Liquidity and Capital Resources - As of June 30, 2025, the company held $794 million in cash and cash equivalents and $40 million in short-term investments, deemed sufficient to fund operations for the next twelve months[169] Cash Flow Summary | Cash Flow Activity | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Net cash provided by (used in) operating activities | $722 | $(460) | $1,182 | | Net cash provided by (used in) investing activities | $(56,339) | $180,999 | $(237,338) | | Net cash used in financing activities | $(10,616) | $(905) | $(9,711) | | Net change in cash | $(64,389) | $178,898 | $(243,287) | - The change in investing activities was driven by the purchase of $40 million in short-term investments and higher capital expenditures in 2025[171] - Financing activities used more cash due to dividends paid to non-controlling interests, common stock repurchases, and increased withholding taxes on share-based awards[172] Critical Accounting Policies and Estimates - Critical accounting policies and estimates remain consistent with those discussed in the Annual Report on Form 10-K for the year ended December 31, 2024[175] Item 3. Quantitative and Qualitative Disclosures About Market Risk. The company is exposed to market risks, primarily foreign currency exchange rate fluctuations and interest rate changes Foreign currency risk - The company is exposed to foreign currency risk from net assets, liabilities, and revenue denominated in Canadian dollars and Israeli new shekels[177] - A 10% change in the Canadian dollar exchange rate would affect the carrying amount of net assets by approximately $39.0 million as of June 30, 2025[178] - The company does not historically engage in, nor currently contemplate, hedging transactions to mitigate foreign exchange risks[178] Foreign Currency Gain (Loss) on Translation | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Foreign currency gain (loss) on translation | $60,228 | $(10,160) | $57,146 | $(32,521) | Interest rate risk - Fluctuations in interest rates can impact the income and expense recorded on cash equivalents and short-term investments[180] Interest Income, Net | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Interest income, net | $9,000 | $13,500 | $18,700 | $27,700 | - A 10% decrease in the interest rate would reduce interest income, net, by $0.9 million for the three months and $1.9 million for the six months ended June 30, 2025[180] Item 4. Controls and Procedures. Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control Evaluation of Disclosure Controls and Procedures - Management, with the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[181] - These controls provide reasonable assurance that information required for SEC reports is recorded, processed, summarized, and reported within specified time periods[181] Changes in Internal Control over Financial Reporting - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[182] PART II OTHER INFORMATION Item 1. Legal Proceedings. Legal proceedings, including class action complaints and regulatory inquiries, are incorporated by reference from Note 11(b) - Information on legal proceedings is incorporated by reference from Note 11(b), "Contingencies," in the condensed consolidated interim financial statements[185] Item 1A. Risk Factors. Investment in the company involves various risks detailed in the Annual Report, potentially affecting business and financial condition - A detailed discussion of the company's risk factors is available in Part I, Item 1A, "Risk Factors" of the Annual Report[186] - Any identified or unidentified risks could materially and adversely affect the company's business, results of operations, financial condition, and the price of its securities[186] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. Company repurchased 1.87 million common shares for $3.6 million under its $50 million share repurchase program Share Repurchase Program Activity | Period | Number of shares purchased | Weighted average price per share | Purchased as part of publicly announced repurchase plan (in thousands) | Approximate dollar value of shares that may yet be purchased on repurchase plan (in thousands) | | :------------------------- | :------------------------- | :------------------------------- | :------------------------------------------------------------------- | :------------------------------------------------------------------------------------------- | | June 1, 2025 to June 30, 2025 | 1,874,951 | $1.92 | $3,612 | $46,388 | - The share repurchase program, authorized for up to $50,000 thousand, commenced on May 14, 2025, and is expected to terminate on May 13, 2026[187] Item 3. Defaults upon Senior Securities. The company reported no defaults upon senior securities - There were no defaults upon senior securities[188] Item 4. Mine Safety Disclosures. This item is not applicable to the company - Mine Safety Disclosures are not applicable[189] Item 5. Other Information. No directors or executive officers entered into, modified, or terminated Rule 10b5-1 trading plans during Q2 2025 - No directors or executive officers entered into, modified, or terminated Rule 10b5-1 trading plans during the three months ended June 30, 2025[190] - Officers and directors may elect to have shares withheld for taxes or option exercise, potentially under Rule 10b5-1 conditions[191] Item 6. Exhibits. Lists exhibits filed as part of the Quarterly Report, including certifications, XBRL documents, and other agreements - The exhibits listed in the Exhibit Index are filed as part of this Quarterly Report[193] - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer, as well as XBRL Instance, Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[194]