PART I – FINANCIAL INFORMATION Presents unaudited consolidated financial statements and management's discussion for Q2 and H1 2025 and 2024 [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements, including balance sheets, income, equity, cash flows, and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and equity | (In thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------------------- | :-------------- | :------------------ | | **Total Assets** | $5,379,317 | $5,571,696 | | **Total Current Liabilities** | $899,077 | $870,280 | | **Long-term debt** | $5,063,792 | $5,048,968 | | **Total Stockholders' Deficit** | $(1,726,249) | $(1,371,780) | - Total Assets decreased by **$192.38 million** from December 31, 2024, to June 30, 2025[9](index=9&type=chunk) - Total Stockholders' Deficit increased by **$354.469 million** from December 31, 2024, to June 30, 2025[9](index=9&type=chunk) [Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) Revenues, operating income, and net loss for Q2 and H1 2025 and 2024 | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Revenue** | $933,653 | $929,092 | $1,740,754 | $1,728,130 | | **Operating income (loss)** | $35,370 | $(909,667) | $9,936 | $(944,375) | | **Net loss attributable to the Company** | $(83,480) | $(981,658) | $(364,704) | $(1,000,166) | | **Basic Net loss per common share** | $(0.54) | $(6.50) | $(2.38) | $(6.65) | - Revenue for the three months ended June 30, 2025, increased by **$4.561 million (0.5%)** compared to the same period in 2024[11](index=11&type=chunk) - Operating income significantly improved from a loss of **$(909.667) million** in Q2 2024 to an income of **$35.370 million** in Q2 2025, primarily due to lower impairment charges[11](index=11&type=chunk) - Net loss attributable to the Company improved by **$898.178 million** for the three months ended June 30, 2025, compared to the same period in 2024[11](index=11&type=chunk) [Consolidated Statements of Changes in Stockholders' Deficit](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Deficit) Outlines changes in the company's equity, including accumulated deficit, for the periods ended June 30, 2025, and December 31, 2024 | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :------------------ | | **Accumulated Deficit** | $(4,704,787) | $(4,340,083) | | **Total Stockholders' Deficit** | $(1,726,249) | $(1,371,780) | - Accumulated deficit increased by **$364.704 million** from December 31, 2024, to June 30, 2025, primarily due to net loss[14](index=14&type=chunk) - Total Stockholders' Deficit increased by **$354.469 million** from December 31, 2024, to June 30, 2025[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Reports cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | **Cash flows from operating activities** | $(54,123) | $(32,548) | | **Cash flows from investing activities** | $(40,648) | $55,871 | | **Cash flows from financing activities** | $70,681 | $(4,816) | | **Net increase (decrease) in cash, cash equivalents and restricted cash** | $(23,648) | $18,362 | | **Cash, cash equivalents and restricted cash at end of period** | $235,932 | $364,744 | - Cash used for operating activities increased to **$54.123 million** in H1 2025 from **$32.548 million** in H1 2024[17](index=17&type=chunk) - Investing activities shifted from providing **$55.871 million** in H1 2024 to using **$40.648 million** in H1 2025, primarily due to the absence of the BMI investment sale[17](index=17&type=chunk) - Financing activities provided **$70.681 million** in H1 2025, a significant increase from using **$4.816 million** in H1 2024, driven by ABL facility borrowings[17](index=17&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed explanations supporting financial statements, covering revenue, leases, debt, and segments [NOTE 1 – BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION) Reporting segments, accounting policies, and current economic environment - The Company operates with three reportable segments: Multiplatform Group, Digital Audio Group, and Audio & Media Services Group[20](index=20&type=chunk)[27](index=27&type=chunk) - Economic conditions, including higher interest rates and inflation, continue to create a challenging macroeconomic environment impacting the Company's revenues and cash flows[21](index=21&type=chunk) Metric | Metric | June 30, 2025 (in thousands) | | :------------------------------------ | :--------------------------- | | Cash and cash equivalents | $235,932 | | ABL Facility outstanding borrowings | $100,000 | | ABL Facility available for borrowing | $290,800 | | Total available liquidity | $526,700 | [NOTE 2 – REVENUE](index=10&type=section&id=NOTE%202%20%E2%80%93%20REVENUE) Revenue disaggregation by stream, trade/barter, and future contract revenue Revenue Stream Performance | Revenue Stream (in thousands) | Q2 2025 | Q2 2024 | YoY Change (%) | H1 2025 | H1 2024 | YoY Change (%) | | :---------------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Broadcast Radio | $395,789 | $425,490 | (7.0)% | $736,525 | $784,828 | (6.2)% | | Networks | $107,813 | $106,591 | 1.1% | $207,276 | $208,642 | (0.7)% | | Sponsorship and Events | $36,485 | $39,121 | (6.7)% | $65,106 | $66,950 | (2.8)% | | Digital, excluding Podcast | $188,407 | $179,918 | 4.7% | $348,527 | $327,077 | 6.5% | | Podcast | $134,296 | $104,521 | 28.5% | $250,332 | $195,145 | 28.3% | | Audio & Media Services | $66,352 | $68,746 | (3.5)% | $124,319 | $136,538 | (8.8)% | | **Consolidated Total Revenue** | **$933,653** | **$929,092** | **0.5%** | **$1,740,754** | **$1,728,130** | **0.7%** | Trade and Barter Revenues and Expenses | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Trade and barter revenues | $75,995 | $69,277 | $125,360 | $110,582 | | Trade and barter expenses | $64,769 | $57,786 | $98,563 | $91,967 | - The Company expects to recognize **$264.7 million** of revenue in future periods from current contracts with customers that have an original expected duration greater than one year, mostly within the next five years[33](index=33&type=chunk) [NOTE 3 – LEASES](index=13&type=section&id=NOTE%203%20%E2%80%93%20LEASES) Lease accounting, ROU asset impairment, and cash flows for lease liabilities - The Company recognized non-cash impairment charges of **$2.6 million** and **$5.4 million** for the three and six months ended June 30, 2025, respectively, related to ROU assets due to changes in sublease assumptions for operating leases[37](index=37&type=chunk) Lease Liabilities Cash Flows | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------------- | :----------------------------- | :----------------------------- | | Cash paid for amounts included in measurement of operating lease liabilities | $72,805 | $75,069 | | Lease liabilities arising from obtaining right-of-use assets | $12,241 | $13,022 | [NOTE 4 – PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL](index=14&type=section&id=NOTE%204%20%E2%80%93%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%2C%20INTANGIBLE%20ASSETS%20AND%20GOODWILL) Balances and amortization for fixed assets, intangibles, and goodwill Asset Balances | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :------------------ | | Property, plant and equipment, net | $451,250 | $489,843 | | Indefinite-lived intangibles - licenses | $809,928 | $809,928 | | Other intangibles, net | $820,145 | $927,582 | | Goodwill | $1,105,507 | $1,105,156 | - Total amortization expense for definite-lived intangible assets was **$53.7 million** for Q2 2025 (down from **$61.2 million** in Q2 2024) and **$107.4 million** for H1 2025 (down from **$123.1 million** in H1 2024)[44](index=44&type=chunk) Estimated Amortization Expense | (In thousands) | Estimated Amortization Expense | | :------------- | :----------------------------- | | 2026 | $201,512 | | 2027 | $176,171 | | 2028 | $160,395 | | 2029 | $121,622 | | 2030 | $16,430 | [NOTE 5 – LONG-TERM DEBT](index=15&type=section&id=NOTE%205%20%E2%80%93%20LONG-TERM%20DEBT) Debt structure, interest rates, market value, and covenant compliance Debt Structure | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :------------------ | | **Total Debt** | $5,137,518 | $5,071,469 | | Less: Current portion | $73,726 | $22,501 | | **Total long-term debt** | $5,063,792 | $5,048,968 | | Weighted average interest rate | 9.2% | 9.4% | | Aggregate market value of debt | ~$3.7 billion | ~$4.1 billion | - The Company borrowed **$100.0 million** under the ABL Facility on May 22, 2025, for short-term liquidity management[47](index=47&type=chunk) - As of June 30, 2025, the Company was in compliance with all covenants related to its debt agreements[47](index=47&type=chunk) [NOTE 6 – COMMITMENTS AND CONTINGENCIES](index=16&type=section&id=NOTE%206%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) Legal proceedings, probable costs, and FCC foreign ownership rules - The Company is involved in various legal proceedings, accruing estimates for probable costs where loss is probable and estimable[49](index=49&type=chunk) - The FCC issued a declaratory ruling on November 5, 2020, permitting the Company to be up to **100% foreign-owned**, subject to certain conditions[51](index=51&type=chunk) [NOTE 7 – INCOME TAXES](index=16&type=section&id=NOTE%207%20%E2%80%93%20INCOME%20TAXES) Income tax benefit/expense and effective tax rates, impacted by valuation allowances Income Tax Benefit (Expense) and Effective Tax Rate | (In thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Income tax benefit (expense) | $(18,253) | $23,959 | $(153,612) | $44,621 | | Effective tax rate | (27.8)% | 2.4% | (72.7)% | 4.3% | - The effective tax rates were primarily impacted by a forecasted increase in valuation allowance against certain deferred tax assets, mainly due to disallowed interest expense carryforwards[52](index=52&type=chunk) - The 2024 effective tax rates were also impacted by impairment charges to non-deductible goodwill[52](index=52&type=chunk) [NOTE 8 – STOCKHOLDERS' DEFICIT](index=16&type=section&id=NOTE%208%20%E2%80%93%20STOCKHOLDERS'%20DEFICIT) Share-based compensation, net loss per share, and unrecognized compensation costs Share-Based Compensation and Net Loss Per Share | (In thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | | Total Share Based Compensation Expense | $7,260 | $7,220 | $16,289 | $15,700 | | Basic Net loss per common share | $(0.54) | $(6.50) | $(2.38) | $(6.65) | | Diluted Net loss per common share | $(0.54) | $(6.50) | $(2.38) | $(6.65) | - As of June 30, 2025, there was **$21.4 million** of unrecognized compensation cost related to share-based compensation, expected to be recognized over approximately **1.8 years**[56](index=56&type=chunk) - No Special Warrants were exercised for Class A or Class B common stock during the three or six months ended June 30, 2025[58](index=58&type=chunk)[59](index=59&type=chunk) [NOTE 9 – SEGMENT DATA](index=18&type=section&id=NOTE%209%20%E2%80%93%20SEGMENT%20DATA) Financial performance for Multiplatform, Digital Audio, and Audio & Media Services segments - Segment Adjusted EBITDA is the primary profitability metric used by the Chief Operating Decision Maker (CEO) for resource allocation and performance assessment[62](index=62&type=chunk)[63](index=63&type=chunk) Q2 2025 Segment Performance | (In thousands) | Multiplatform Group (Q2 2025) | Digital Audio Group (Q2 2025) | Audio & Media Services Group (Q2 2025) | | :---------------------------- | :---------------------------- | :---------------------------- | :------------------------------------- | | Revenue | $544,598 | $323,856 | $67,736 | | Segment Adjusted EBITDA | $96,364 | $107,610 | $23,721 | | Segment Adjusted EBITDA margin | 17.7% | 33.2% | 35.0% | H1 2025 Segment Performance | (In thousands) | Multiplatform Group (H1 2025) | Digital Audio Group (H1 2025) | Audio & Media Services Group (H1 2025) | | :---------------------------- | :---------------------------- | :---------------------------- | :------------------------------------- | | Revenue | $1,017,576 | $601,143 | $127,059 | | Segment Adjusted EBITDA | $166,371 | $194,693 | $39,519 | | Segment Adjusted EBITDA margin | 16.3% | 32.4% | 31.1% | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on financial condition, operations, segment results, and market risks [Format of Presentation](index=21&type=section&id=Format%20of%20Presentation) Segment reporting structure and key profitability metrics used by the CEO - The Company reports based on three segments: Multiplatform Group, Digital Audio Group, and Audio & Media Services Group[68](index=68&type=chunk)[76](index=76&type=chunk) - Segment Adjusted EBITDA is the key profitability metric used by the Chief Operating Decision Maker (CEO) for resource allocation and performance assessment[69](index=69&type=chunk) [Description of our Business](index=21&type=section&id=Description%20of%20our%20Business) Overview of business segments, their revenue sources, and primary expenses [Multiplatform Group](index=21&type=section&id=Multiplatform%20Group) Revenue from radio advertising and events, with related variable expenses - Primary revenue source is selling local and national advertising time on radio stations, with contracts typically less than one year[72](index=72&type=chunk) - Revenue is also generated from network syndication, nationally recognized events, and other miscellaneous transactions[72](index=72&type=chunk) - Variable expenses primarily relate to programming and sales departments, including profit sharing fees and commissions[78](index=78&type=chunk) [Digital Audio Group](index=22&type=section&id=Digital%20Audio%20Group) Revenue from podcast and digital advertising, highlighting market position and content costs - Primary revenue source is selling advertising on the podcast network, iHeartRadio mobile application, website, and station websites[79](index=79&type=chunk) - iHeartMedia is the **number one podcast publisher** in America, with reach across over 500 platforms[81](index=81&type=chunk) - Variable expenses primarily relate to content costs, including podcast profit sharing, third-party digital costs, and sales commissions[82](index=82&type=chunk) [Audio & Media Services Group](index=22&type=section&id=Audio%20%26%20Media%20Services%20Group) Revenue generation through media representation and broadcast software services - Revenue is generated by services to broadcast industry participants through Katz Media (media representation commissions) and RCS (broadcast software, media streaming, research services)[83](index=83&type=chunk) [Economic Conditions](index=22&type=section&id=Economic%20Conditions) Impact of macroeconomic factors and recent tax legislation on financial performance - Higher interest rates and inflation continue to create a challenging macroeconomic environment, impacting advertising revenue, cash flows, and cost of capital[84](index=84&type=chunk) - The U.S. government enacted the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, introducing significant changes to federal income tax, effective 2025, including restoration of **100% bonus depreciation** and immediate expensing of R&D costs[85](index=85&type=chunk) - The Company expects significant reductions in cash taxes paid due to the OBBBA, but the full financial effect is still being assessed[86](index=86&type=chunk) [Modernization Initiatives](index=23&type=section&id=Modernization%20Initiatives) Anticipated operating expense savings from strategic initiatives implemented in 2024 - Operating expense savings initiatives implemented in 2024, including headcount reductions, are anticipated to result in approximately **$150 million** of net savings for full year 2025[87](index=87&type=chunk) [Executive Summary](index=24&type=section&id=Executive%20Summary) Consolidated revenues for Q2 2025 increased slightly due to continued demand for digital advertising, partially offset by lower radio advertising spending. Operating income and net loss significantly improved compared to the prior year, primarily due to substantially lower non-cash impairment charges. Cash flows from operating activities decreased, while Adjusted EBITDA increased. Q2 2025 Financial Highlights | (In thousands) | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------- | :------ | :------ | :--------- | | Consolidated Revenue | $933,653 | $929,092 | +0.5% | | Operating income (loss) | $35,370 | $(909,667) | +$945.0M | | Net loss | $(83,988) | $(981,989) | +$898.0M | | Cash provided by operating activities | $6,821 | $26,729 | -$19.9M | | Adjusted EBITDA | $156,127 | $150,207 | +$5.9M | | Free cash flow | $(13,176) | $5,557 | -$18.7M | - Digital Audio Group Revenue increased by **$38.2 million (13.4%)** and Segment Adjusted EBITDA increased by **$15.7 million (17.1%)** in Q2 2025[91](index=91&type=chunk) - Multiplatform Group Revenue decreased by **$31.3 million (5.4%)** and Segment Adjusted EBITDA decreased by **$7.9 million (7.6%)** in Q2 2025[91](index=91&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Consolidated revenue saw a modest increase, driven by strong growth in Digital Audio (especially podcasting), which offset declines in Multiplatform Group (broadcast radio) and Audio & Media Services. Operating expenses increased due to higher variable content costs, while SG&A decreased due to modernization initiatives. Significant improvement in operating income and net loss was primarily due to substantially lower impairment charges in 2025 compared to 2024. [Revenue](index=26&type=section&id=Revenue) Consolidated and segment-specific revenue trends, highlighting growth drivers and declines Consolidated and Segment Revenue | Revenue Stream (in thousands) | Q2 2025 | Q2 2024 | YoY Change (%) | H1 2025 | H1 2024 | YoY Change (%) | | :---------------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Multiplatform Group | $544,598 | $575,907 | (5.4)% | $1,017,576 | $1,069,370 | (4.8)% | | Digital Audio Group | $323,856 | $285,614 | 13.4% | $601,143 | $524,582 | 14.6% | | Audio & Media Services | $67,736 | $70,082 | (3.3)% | $127,059 | $139,250 | (8.8)% | | **Consolidated Total Revenue** | **$933,653** | **$929,092** | **0.5%** | **$1,740,754** | **$1,728,130** | **0.7%** | - Digital Audio Group revenue growth was primarily driven by podcast advertising, which increased by **28.5%** in Q2 2025 and **28.3%** in H1 2025[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - Audio & Media Services revenue decreased due to lower political revenues (2024 was a presidential election year) and nonrecurring contract termination fees in 2024[93](index=93&type=chunk)[94](index=94&type=chunk) [Direct Operating Expenses](index=26&type=section&id=Direct%20Operating%20Expenses) Changes in direct operating expenses, driven by variable content costs and employee compensation Consolidated Direct Operating Expenses | (In thousands) | Q2 2025 | Q2 2024 | YoY Change (%) | H1 2025 | H1 2024 | YoY Change (%) | | :---------------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Consolidated Direct Operating Expenses | $391,194 | $382,049 | 2.4% | $747,520 | $723,409 | 3.3% | - The increase was primarily driven by higher variable content costs, including podcast profit share and third-party digital costs, partially offset by decreased employee compensation due to modernization initiatives[95](index=95&type=chunk) [Selling, General and Administrative Expenses](index=26&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) Decrease in SG&A expenses due to cost savings and lower sales commissions Consolidated SG&A Expenses | (In thousands) | Q2 2025 | Q2 2024 | YoY Change (%) | H1 2025 | H1 2024 | YoY Change (%) | | :------------------------------------ | :------ | :------ | :------------- | :------ | :------ | :------------- | | Consolidated SG&A Expenses | $413,082 | $431,614 | (4.3)% | $793,876 | $816,758 | (2.8)% | - The decrease was primarily due to lower costs from cost savings initiatives, including reduced employee compensation from modernization and lower sales commissions, partially offset by increased non-cash trade and barter expense and employee benefit expense[96](index=96&type=chunk) [Depreciation and Amortization](index=26&type=section&id=Depreciation%20and%20Amortization) Decrease in D&A, primarily due to a lower fixed asset base Depreciation and Amortization | (In thousands) | Q2 2025 | Q2 2024 | YoY Change (%) | H1 2025 | H1 2024 | YoY Change (%) | | :-------------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Depreciation and Amortization | $90,369 | $104,356 | (13.5)% | $182,270 | $209,518 | (13.0)% | - The decrease was primarily a result of a lower fixed asset base due to reduced capital expenditures[97](index=97&type=chunk) [Impairment Charges](index=26&type=section&id=Impairment%20Charges) Significant reduction in impairment charges in 2025 compared to the prior year Impairment Charges | (In thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------- | :------ | :------ | :------ | :------ | | Impairment Charges | $2,552 | $920,224 | $5,407 | $921,732 | - Impairment charges in 2025 were primarily related to changes in sublease assumptions for operating leases[98](index=98&type=chunk) - Impairment charges in 2024 were primarily to reduce the carrying values of indefinite-lived FCC licenses and goodwill[99](index=99&type=chunk) [Interest Expense, net](index=26&type=section&id=Interest%20Expense%2C%20net) Increase in net interest expense due to higher contractual interest rates from debt exchange Interest Expense, net | (In thousands) | Q2 2025 | Q2 2024 | YoY Change (%) | H1 2025 | H1 2024 | YoY Change (%) | | :-------------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Interest Expense, net | $100,894 | $95,577 | 5.6% | $201,280 | $191,092 | 5.3% | - The increase was primarily due to higher contractual interest rates resulting from the debt exchange transaction in Q4 2024[100](index=100&type=chunk) [Gain (Loss) On Investments, Net](index=27&type=section&id=Gain%20(Loss)%20On%20Investments%2C%20Net) Impact of investment gains and losses, including prior year's BMI sale Gain (Loss) on Investments, Net | (In thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Gain (Loss) on investments, net | $(901) | $(412) | $(19,495) | $91,582 | - H1 2024 included a **$101.4 million** gain from the sale of the investment in Broadcast Music, Inc. (BMI)[102](index=102&type=chunk) [Income Tax Benefit (Expense)](index=27&type=section&id=Income%20Tax%20Benefit%20(Expense)) Income tax benefit/expense and effective tax rates, influenced by valuation allowances Income Tax Benefit (Expense) and Effective Tax Rate | (In thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Income tax benefit (expense) | $(18,253) | $23,959 | $(153,612) | $44,621 | | Effective tax rate | (27.8)% | 2.4% | (72.7)% | 4.3% | - Effective tax rates were primarily impacted by a forecasted increase in valuation allowance against deferred tax assets, related to disallowed interest expense carryforwards[103](index=103&type=chunk) [Net Loss Attributable to the Company](index=27&type=section&id=Net%20Loss%20Attributable%20to%20the%20Company) Significant improvement in net loss, primarily due to lower impairment charges Net Loss Attributable to the Company | (In thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | | Net loss attributable to the Company | $(83,480) | $(981,658) | $(364,704) | $(1,000,166) | - Net loss improved by **$898.2 million** in Q2 2025 and **$635.5 million** in H1 2025, primarily due to significantly lower non-cash impairment charges in 2025 compared to 2024[104](index=104&type=chunk)[105](index=105&type=chunk) - The H1 2025 improvement was partially offset by the **$101.4 million** gain from the BMI sale in H1 2024[105](index=105&type=chunk) [Multiplatform Group Results](index=27&type=section&id=Multiplatform%20Group%20Results) Revenue, operating expenses, and Adjusted EBITDA for the Multiplatform Group Multiplatform Group Performance | (In thousands) | Q2 2025 | Q2 2024 | YoY Change (%) | H1 2025 | H1 2024 | YoY Change (%) | | :-------------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Revenue | $544,598 | $575,907 | (5.4)% | $1,017,576 | $1,069,370 | (4.8)% | | Operating expenses | $448,234 | $471,644 | (5.0)% | $851,205 | $887,925 | (4.1)% | | Segment Adjusted EBITDA | $96,364 | $104,263 | (7.6)% | $166,371 | $181,445 | (8.3)% | | Segment Adjusted EBITDA margin | 17.7% | 18.1% | | 16.3% | 17.0% | | - Revenue decreased primarily due to lower broadcast advertising, influenced by uncertain market conditions and lower political revenues in H1 2025[108](index=108&type=chunk)[110](index=110&type=chunk) - Operating expenses decreased due to reduced employee compensation from modernization initiatives and lower sales commissions[109](index=109&type=chunk)[111](index=111&type=chunk) [Digital Audio Group Results](index=28&type=section&id=Digital%20Audio%20Group%20Results) Revenue, operating expenses, and Adjusted EBITDA for the Digital Audio Group Digital Audio Group Performance | (In thousands) | Q2 2025 | Q2 2024 | YoY Change (%) | H1 2025 | H1 2024 | YoY Change (%) | | :-------------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Revenue | $323,856 | $285,614 | 13.4% | $601,143 | $524,582 | 14.6% | | Operating expenses | $216,246 | $193,744 | 11.6% | $406,450 | $364,585 | 11.5% | | Segment Adjusted EBITDA | $107,610 | $91,870 | 17.1% | $194,693 | $159,997 | 21.7% | | Segment Adjusted EBITDA margin | 33.2% | 32.2% | | 32.4% | 30.5% | | - Revenue growth was driven by a **28.5%** increase in Podcast revenue in Q2 2025 and a **28.3%** increase in H1 2025, reflecting continued advertiser demand[113](index=113&type=chunk)[115](index=115&type=chunk) - Operating expenses increased primarily due to higher variable content costs, including podcast profit share and third-party digital costs, linked to increased revenues[114](index=114&type=chunk)[116](index=116&type=chunk) [Audio & Media Services Group Results](index=28&type=section&id=Audio%20%26%20Media%20Services%20Group%20Results) Revenue, operating expenses, and Adjusted EBITDA for the Audio & Media Services Group Audio & Media Services Group Performance | (In thousands) | Q2 2025 | Q2 2024 | YoY Change (%) | H1 2025 | H1 2024 | YoY Change (%) | | :-------------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Revenue | $67,736 | $70,082 | (3.3)% | $127,059 | $139,250 | (8.8)% | | Operating expenses | $44,015 | $46,233 | (4.8)% | $87,540 | $91,706 | (4.5)% | | Segment Adjusted EBITDA | $23,721 | $23,849 | (0.5)% | $39,519 | $47,544 | (16.9)% | | Segment Adjusted EBITDA margin | 35.0% | 34.0% | | 31.1% | 34.1% | | - Revenue decreased due to lower broadcast advertising, reduced political revenues (2024 was a presidential election year), and nonrecurring contract termination fees in H1 2024, partially offset by increased digital advertising demand[118](index=118&type=chunk)[119](index=119&type=chunk) - Operating expenses decreased primarily due to reduced employee compensation costs from modernization initiatives[118](index=118&type=chunk)[120](index=120&type=chunk) [Reconciliation of Operating income (loss) to EBITDA and Adjusted EBITDA](index=29&type=section&id=Reconciliation%20of%20Operating%20income%20(loss)%20to%20EBITDA%20and%20Adjusted%20EBITDA) Provides a reconciliation of operating income (loss) to EBITDA and Adjusted EBITDA, detailing adjustments Operating Income (Loss) to Adjusted EBITDA Reconciliation | (In thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | | Operating income (loss) | $35,370 | $(909,667) | $9,936 | $(944,375) | | Depreciation and amortization | $90,369 | $104,356 | $182,270 | $209,518 | | Impairment charges | $2,552 | $920,224 | $5,407 | $921,732 | | Restructuring expenses | $19,490 | $27,558 | $45,068 | $51,161 | | Share-based compensation expense | $7,260 | $7,220 | $16,289 | $15,700 | | **Adjusted EBITDA** | **$156,127** | **$150,207** | **$260,715** | **$254,824** | [Reconciliation of Net loss to EBITDA and Adjusted EBITDA](index=30&type=section&id=Reconciliation%20of%20Net%20loss%20to%20EBITDA%20and%20Adjusted%20EBITDA) Presents a reconciliation of net loss to EBITDA and Adjusted EBITDA, including various non-GAAP adjustments Net Loss to Adjusted EBITDA Reconciliation | (In thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | | Net loss | $(83,988) | $(981,989) | $(364,871) | $(1,000,097) | | Income tax (benefit) expense | $18,253 | $(23,959) | $153,612 | $(44,621) | | Interest expense, net | $100,894 | $95,577 | $201,280 | $191,092 | | Depreciation and amortization | $90,369 | $104,356 | $182,270 | $209,518 | | **EBITDA** | **$125,528** | **$(806,015)** | **$172,291** | **$(644,108)** | | Impairment charges | $2,552 | $920,224 | $5,407 | $921,732 | | Restructuring expenses | $19,490 | $27,558 | $45,068 | $51,161 | | Share-based compensation expense | $7,260 | $7,220 | $16,289 | $15,700 | | **Adjusted EBITDA** | **$156,127** | **$150,207** | **$260,715** | **$254,824** | - Adjusted EBITDA is defined as consolidated Operating income (loss) adjusted for restructuring expenses, share-based compensation, depreciation and amortization, impairment charges, and other operating expense[122](index=122&type=chunk) [Reconciliation of Cash provided by (used for) operating activities to Free Cash Flow](index=31&type=section&id=Reconciliation%20of%20Cash%20provided%20by%20(used%20for)%20operating%20activities%20to%20Free%20Cash%20Flow) Reconciles cash flows from operating activities to Free Cash Flow, accounting for capital expenditures Cash Flow to Free Cash Flow Reconciliation | (In thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | | Cash provided by (used for) operating activities | $6,821 | $26,729 | $(54,123) | $(32,548) | | Purchases of property, plant and equipment | $(19,997) | $(21,172) | $(39,727) | $(42,754) | | **Free cash flow** | **$(13,176)** | **$5,557** | **$(93,850)** | **$(75,302)** | - Free Cash Flow is defined as Cash provided by (used for) operating activities less capital expenditures[123](index=123&type=chunk) [Share-Based Compensation Expense](index=31&type=section&id=Share-Based%20Compensation%20Expense) Share-based compensation expenses and unrecognized compensation costs for future periods Share-Based Compensation Expenses | (In thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | | Share-based compensation expenses | $7,260 | $7,220 | $16,289 | $15,700 | - As of June 30, 2025, **$21.4 million** of unrecognized compensation cost related to share-based arrangements is expected to be recognized over a weighted average period of approximately **1.8 years**[126](index=126&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=32&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity is supported by cash on hand and available ABL facility borrowings, totaling $526.7 million as of June 30, 2025. Cash used for operating activities increased, while investing activities shifted from providing to using cash, primarily due to the absence of a major asset sale seen in the prior year. Financing activities provided cash due to ABL facility borrowings. The company expects sufficient liquidity for the next twelve months despite market uncertainties and increased debt service payments. [Cash Flows](index=32&type=section&id=Cash%20Flows) Summarizes cash flows from operating, investing, and financing activities for the six-month periods Cash Flow Summary | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Cash provided by (used for) Operating activities | $(54,123) | $(32,548) | | Cash provided by (used for) Investing activities | $(40,648) | $55,871 | | Cash provided by (used for) Financing activities | $70,681 | $(4,816) | | Free Cash Flow | $(93,850) | $(75,302) | [Operating Activities](index=32&type=section&id=Operating%20Activities) Changes in cash used for operating activities, driven by timing of collections and payments - Cash used for operating activities increased to **$54.1 million** in H1 2025 from **$32.5 million** in H1 2024, primarily due to timing of receivable collections and payable payments, partially offset by interest payment timing[128](index=128&type=chunk) [Investing Activities](index=32&type=section&id=Investing%20Activities) Cash flows from investing activities, including capital expenditures and asset sales - Cash used for investing activities was **$40.6 million** in H1 2025, primarily for **$39.7 million** in capital expenditures across segments (Multiplatform: **$16.6 million**, Digital Audio: **$10.3 million**, Audio & Media Services: **$8.4 million**, Corporate: **$4.4 million**)[129](index=129&type=chunk) - Cash provided by investing activities was **$55.9 million** in H1 2024, reflecting **$101.4 million** from the sale of BMI, partially offset by **$42.8 million** in capital expenditures[130](index=130&type=chunk) [Financing Activities](index=32&type=section&id=Financing%20Activities) Cash flows from financing activities, primarily from ABL facility borrowings and debt payments - Cash provided by financing activities totaled **$70.7 million** in H1 2025, primarily due to **$100.0 million** borrowed under the ABL Facility, partially offset by term loan amortization and debt premium payments[131](index=131&type=chunk) - Cash used for financing activities totaled **$4.8 million** in H1 2024, primarily due to distributions to noncontrolling interest holders[132](index=132&type=chunk) [Sources of Liquidity and Anticipated Cash Requirements](index=33&type=section&id=Sources%20of%20Liquidity%20and%20Anticipated%20Cash%20Requirements) Available liquidity, anticipated debt service, and management's outlook on funding needs Available Liquidity | Metric | June 30, 2025 (in millions) | | :------------------------------------ | :--------------------------- | | Cash and cash equivalents | $235.9 | | ABL Facility available for borrowing | $290.8 | | Total available liquidity | $526.7 | - The Company anticipates cash payments of approximately **$238.4 million** for debt service in the remainder of 2025, including interest, term loan amortization, and debt premium payments[135](index=135&type=chunk) - Management believes current liquidity is sufficient to fund operations, capital expenditures, and debt payments for at least the next twelve months[133](index=133&type=chunk)[136](index=136&type=chunk) [Summary Debt Capital Structure](index=34&type=section&id=Summary%20Debt%20Capital%20Structure) Presents the company's total and net debt, along with compliance with debt covenants Debt Capital Structure | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :------------------ | | Total Debt | $5,137,518 | $5,071,469 | | Net Debt | $4,635,284 | $4,522,137 | - The ABL Facility contains a springing fixed charge coverage ratio, which was not effective as of June 30, 2025, as no triggering event occurred[138](index=138&type=chunk) - As of June 30, 2025, the Company was in compliance with all covenants related to its debt agreements[138](index=138&type=chunk) [Supplemental Financial Information under Debt Agreements](index=35&type=section&id=Supplemental%20Financial%20Information%20under%20Debt%20Agreements) No material differences in financial information relevant to debt agreements - There are no material differences between iHeartMedia's consolidated financial information and that of Capital I and its consolidated restricted subsidiaries for the three and six months ended June 30, 2025[140](index=140&type=chunk) [Commitments, Contingencies and Guarantees](index=35&type=section&id=Commitments%2C%20Contingencies%20and%20Guarantees) Legal proceedings, accrued costs, and future cash obligations from contracts - The Company is involved in various legal proceedings and accrues estimates for probable costs, acknowledging the inherent uncertainty of litigation[141](index=141&type=chunk) - Future cash obligations include long-term debt, non-cancelable operating lease agreements, employment and talent contracts, and music license fees[143](index=143&type=chunk) [SEASONALITY](index=35&type=section&id=SEASONALITY) Seasonal patterns of business and impact of election years on revenues - The Company's businesses typically experience their lowest financial performance in the first quarter of the calendar year[144](index=144&type=chunk) - Revenues are generally higher in congressional election years, especially presidential election years, impacting comparability between years[144](index=144&type=chunk) [MARKET RISK](index=35&type=section&id=MARKET%20RISK) Exposure to market risks, including interest rate fluctuations and inflation - The Company is exposed to market risks from changes in interest rates, foreign currency exchange rates, and inflation[145](index=145&type=chunk) [Interest Rate Risk](index=35&type=section&id=Interest%20Rate%20Risk) Impact of floating interest rates on debt and potential changes in interest expense - Approximately **46%** of the Company's aggregate principal amount of long-term debt bore interest at floating rates as of June 30, 2025[146](index=146&type=chunk) - A **100 basis point change** in floating interest rates would change interest expense by an estimated **$11.3 million** for the six months ended June 30, 2025[146](index=146&type=chunk) [Inflation](index=36&type=section&id=Inflation) Effects of inflation on costs and the company's mitigation strategies - Inflation has affected costs for employee compensation, equipment, and third-party services, but the Company believes its impact will remain immaterial due to mitigation actions[148](index=148&type=chunk) [Critical Accounting Estimates](index=36&type=section&id=Critical%20Accounting%20Estimates) No significant changes to critical accounting policies and estimates - There have been no significant changes to critical accounting policies and estimates from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[149](index=149&type=chunk) [CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS](index=36&type=section&id=CAUTIONARY%20STATEMENT%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) Warnings about forward-looking statements, inherent risks, and factors causing actual results to differ - The report contains forward-looking statements regarding future operating and financial performance, macroeconomic trends, anticipated tax benefits, modernization initiatives, and other strategic matters[150](index=150&type=chunk) - These statements involve risks and uncertainties, and actual future events and performance may differ materially from expectations[150](index=150&type=chunk) - Key risk factors include weak economic conditions, advertising revenue fluctuations, intense competition, dependence on talent, technological changes, substantial indebtedness, and regulatory requirements[151](index=151&type=chunk)[152](index=152&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Refers to the 'Market Risk' section in Item 2 for disclosures on interest rate, foreign currency, and inflation risks - Required information on quantitative and qualitative disclosures about market risk is presented under the 'Market Risk' section within Item 2 of Part I[153](index=153&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective; no material changes in internal control over financial reporting [Disclosure Controls and Procedures](index=37&type=section&id=Disclosure%20Controls%20and%20Procedures) Acknowledges inherent limitations of disclosure controls, providing reasonable assurance - Management acknowledges that controls and procedures provide only reasonable assurance due to inherent limitations and resource constraints[154](index=154&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=37&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Effectiveness of disclosure controls and procedures at reasonable assurance level as of June 30, 2025 - The CEO and CFO concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[155](index=155&type=chunk) [Changes in Internal Control over Financial Reporting](index=37&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting during the quarter - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect internal control over financial reporting[156](index=156&type=chunk) PART II – OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=38&type=section&id=Item%201.%20Legal%20Proceedings) Various legal proceedings in the ordinary course of business, with accrued estimates for probable costs - The Company is involved in a variety of legal proceedings in the ordinary course of business, including commercial/contract disputes, defamation, employment, intellectual property, real estate, governmental investigations, and tax disputes[159](index=159&type=chunk) - Estimates of probable costs for claims where loss is probable and estimable have been accrued, but future results could be materially affected by changes in assumptions or strategies[159](index=159&type=chunk) [ITEM 1A. RISK FACTORS](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the Annual Report on Form 10-K for December 31, 2024 - There have been no material changes in the Company's risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024[160](index=160&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales; repurchased shares for employee tax withholding - The Company did not issue or sell any shares of its common stock or any other equity securities pursuant to unregistered transactions during the three months ended June 30, 2025[161](index=161&type=chunk) Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----------------------- | :------------------------------- | :--------------------------- | | April 1 through April 30 | 12,536 | $1.26 | | May 1 through May 31 | 461,142 | $1.25 | | June 1 through June 30 | 757 | $1.50 | | **Total** | **474,435** | **$1.25** | - The repurchased shares were Class A common stock tendered by employees to satisfy tax withholding obligations related to restricted stock vesting[162](index=162&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period - This item is not applicable[163](index=163&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period - This item is not applicable[164](index=164&type=chunk) [ITEM 5. OTHER INFORMATION](index=39&type=section&id=Item%205.%20Other%20Information) No other material information; no director or officer trading arrangement changes - No director or officer of the Company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[167](index=167&type=chunk) [ITEM 6. EXHIBITS](index=39&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including certificates and SOX certifications - The exhibits include the Fifth Amended and Restated Certificate of Incorporation, certifications pursuant to the Sarbanes-Oxley Act, and Inline XBRL documents[165](index=165&type=chunk) [Signatures](index=40&type=section&id=Signatures) The report is signed by Michael B. McGuinness, Executive Vice President – Finance, Deputy Chief Financial Officer and Head of Investor Relations, as the Principal Accounting Officer and Authorized Officer - The report is signed by Michael B. McGuinness, Executive Vice President – Finance, Deputy Chief Financial Officer and Head of Investor Relations, as the Principal Accounting Officer and Authorized Officer[170](index=170&type=chunk)

[Q1 2025 Shareholder Letter](index=1&type=section&id=Q1%202025%20Shareholder%20Letter) [Operational and Financial Highlights](index=2&type=section&id=Operational%20and%20Financial%20Highlights) Archer reports significant progress in Q2 2025 across key areas: ramping up Midnight aircraft manufacturing, securing a partnership for the LA 2028 Olympics supported by a White House executive order, launching its first international program in the UAE, accelerating its defense division with strategic acquisitions, and strengthening its financial position to over $1.7 billion in cash - Six Midnight aircraft are in production, with three in final assembly, as the company progresses towards its production certificate with the FAA[3](index=3&type=chunk) - Selected as the Official Air Taxi Provider for the LA 2028 Olympic Games, with a White House Executive Order promoting U.S. leadership in eVTOL technology[4](index=4&type=chunk) - Activated its first international Launch Edition program in the UAE, delivering the first Midnight aircraft and commencing the flight test program in Abu Dhabi[5](index=5&type=chunk) - Accelerated the Archer Defense program through two strategic acquisitions: a patent portfolio and talent from Overair, and defense composite manufacturing assets from Mission Critical Composites[6](index=6&type=chunk) - Achieved a sector-leading cash position surpassing **$1.7 billion** following a Q2'25 capital raise of **$850 million**[7](index=7&type=chunk) [Manufacturing Capabilities and Production Certificate Progress](index=3&type=section&id=Manufacturing%20Capabilities%20and%20Production%20Certificate%20Progress) The company is focused on ramping up manufacturing to a rate of 50 aircraft per year. Currently, six Midnight aircraft are in production across its Silicon Valley "golden line" and high-volume Georgia facility. The FAA is actively conducting reviews for the production certificate. The company is also scaling up its proprietary electric engine and battery pack production lines - The near-term focus is to ramp up production capabilities to achieve a rate of **50 aircraft per year**[10](index=10&type=chunk) - Six Midnight aircraft are in various stages of production, with three in final assembly. The FAA is concurrently conducting inspections for the production certificate[11](index=11&type=chunk) - A "golden manufacturing line" in Silicon Valley is used for early Midnight builds to inform the ramp-up of high-volume manufacturing in Covington, Georgia[12](index=12&type=chunk)[13](index=13&type=chunk) - The company is ramping production of its proprietary electric engines and its "automotive style" battery packs at its Silicon Valley facilities[20](index=20&type=chunk)[22](index=22&type=chunk) [U.S. Commercialization and Government Support](index=7&type=section&id=U.S.%20Commercialization%20and%20Government%20Support) Archer's U.S. launch is significantly advanced by its role as the Official Air Taxi Provider for the LA 2028 Olympics and a supportive White House Executive Order. The FAA's Innovate28 plan aims for scaled eVTOL operations by 2028. The executive order establishes an eVTOL Integration Pilot Program to fast-track real-world deployment, with discussions for flights as early as next year - Selected as the Official Air Taxi Provider for the LA 2028 Olympic Games, aligning federal and local stakeholders[4](index=4&type=chunk)[23](index=23&type=chunk) - The Trump Administration has committed support for the FAA's Innovate28 plan, which targets meaningful eVTOL operations by 2028, and established a White House task force for the Olympics[24](index=24&type=chunk) - A June 2025 White House Executive Order, "Unleashing American Drone Dominance," created the eVTOL Integration Pilot Program to accelerate commercialization and integration into U.S. airspace[30](index=30&type=chunk)[31](index=31&type=chunk) - Discussions are underway with the DOT and FAA for potential early deployments of Midnight aircraft as soon as next year under the new pilot program[31](index=31&type=chunk) [International Expansion: UAE Launch](index=9&type=section&id=International%20Expansion%3A%20UAE%20Launch) Archer has activated its first international "Launch Edition" program in the UAE. The company signed definitive agreements with Abu Dhabi Aviation and the Abu Dhabi Investment Office, delivered its first Midnight aircraft to the region, and has commenced its flight test program in Abu Dhabi. Initial commercial payments are expected later this year - Signed definitive agreements with Abu Dhabi Aviation and the Abu Dhabi Investment Office to activate the first Launch Edition program[36](index=36&type=chunk) - The first Midnight aircraft was delivered to the UAE, and the flight test program has commenced in Abu Dhabi[36](index=36&type=chunk) - The airline operations team is working with Etihad Aviation Training to build operational readiness for pilot training, maintenance, and security[36](index=36&type=chunk) [Archer Defense Program](index=10&type=section&id=Archer%20Defense%20Program) The Archer Defense division is experiencing strong demand from major allied defense programs. To accelerate its path to market, the company made two strategic acquisitions during the quarter: a patent portfolio and key talent from Overair, and specialized composite manufacturing assets and a facility from Mission Critical Composites - Acquired a patent portfolio and critical employees from Overair, a spin-off of Karem Aircraft, which specialized in high-efficiency tiltrotors[39](index=39&type=chunk) - Acquired key composite manufacturing assets and a ~60,000 sq ft facility from Mission Critical Composites to bring core composite fabrication in-house for rapid prototyping[40](index=40&type=chunk) [Q2 2025 Financial Review](index=12&type=section&id=Q2%202025%20Financial%20Review) Archer ended Q2 2025 with a record cash balance of $1.724 billion, bolstered by an $850 million capital raise. Total GAAP operating expenses were $176.1 million, with a net loss of $206.0 million. The company projects an Adjusted EBITDA loss of $110 million to $130 million for Q3 2025 [Summary Financials and Liquidity](index=12&type=section&id=Summary%20Financials%20and%20Liquidity) The company's cash and cash equivalents reached a record high of $1.724 billion at the end of Q2 2025, a significant increase from $1.030 billion in Q1 2025, primarily due to an $850 million registered direct offering. Cash used in operating and investing activities for the quarter was $127.5 million Summary Financials and Liquidity (in millions) | | JUN 30, 2025 | MAR 31, 2025 | JUN 30, 2024 | | :--- | :--- | :--- | :--- | | **TOTAL OPERATING EXPENSES** | $176.1 million | $144.0 million | $121.2 million | | **NET LOSS** | ($206.0 million) | ($93.4 million) | ($106.9 million) | | **NON-GAAP TOTAL OPERATING EXPENSES** | $123.5 million | $113.1 million | $96.4 million | | **ADJUSTED EBITDA** | ($118.7 million) | ($109.0 million) | ($93.8 million) | | **CASH, CASH EQUIVALENTS** | $1,724.0 million | $1,030.4 million | $360.4 million | - Ended Q2 2025 with a record **$1,724.0 million** in cash and cash equivalents, an increase of **$693.6 million** from Q1 2025, mainly due to an **$850.0 million** gross proceeds from a direct offering[50](index=50&type=chunk) [Operating Performance and Outlook](index=13&type=section&id=Operating%20Performance%20and%20Outlook) In Q2 2025, total GAAP operating expenses rose to $176.1 million, and non-GAAP operating expenses were $123.5 million, reflecting increased investment in development and operations. The net loss was $206.0 million, and the Adjusted EBITDA loss was $118.7 million. For Q3 2025, the company forecasts an Adjusted EBITDA loss between $110 million and $130 million - Q2 2025 total GAAP operating expenses were **$176.1 million**, up **$32.1 million** from Q1 2025. Non-GAAP operating expenses were **$123.5 million**, up **$10.4 million** from Q1 2025[54](index=54&type=chunk)[55](index=55&type=chunk) - Q2 2025 net loss was **$206.0 million**, an increase of **$112.6 million** from Q1 2025, primarily due to an **$82.0 million** non-cash change in fair value of warrant liability[56](index=56&type=chunk) - Q2 2025 Adjusted EBITDA was a loss of **$118.7 million**, an increase of **$9.7 million** from Q1 2025[58](index=58&type=chunk) - The company anticipates an Adjusted EBITDA loss of **$110 million to $130 million** for Q3 2025[59](index=59&type=chunk) [Consolidated Financial Statements](index=14&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail Archer's financial position as of June 30, 2025. The balance sheet shows total assets of $1.94 billion. The statement of operations reports a Q2 2025 net loss of $206.0 million. The cash flow statement indicates a net cash increase of $889.2 million for the first six months of 2025, driven by financing activities Consolidated Balance Sheets (in millions) | | JUN 30, 2025 | DEC 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,757.0 | $858.4 | | **Total assets** | **$1,938.3** | **$1,001.2** | | **Total current liabilities** | $78.8 | $71.1 | | **Total liabilities** | **$257.4** | **$248.6** | | **Total stockholders' equity** | $1,680.9 | $752.6 | | **Total liabilities and stockholders' equity** | **$1,938.3** | **$1,001.2** | Consolidated Statements of Operations (in millions, for Three Months Ended June 30) | | 2025 | 2024 | | :--- | :--- | :--- | | Total operating expenses | $176.1 | $121.2 | | Loss from operations | ($176.1) | ($121.2) | | Other income (expense), net | ($40.0) | $9.3 | | Interest income, net | $10.2 | $5.1 | | **Net loss** | **($206.0)** | **($106.9)** | | Net loss per share, basic and diluted | ($0.36) | ($0.32) | Consolidated Condensed Statements of Cash Flows (in millions, for Six Months Ended June 30) | | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($198.0) | ($167.0) | | Net cash used in investing activities | ($34.1) | ($38.2) | | Net cash provided by financing activities | $1,121.3 | $100.8 | | **Net increase (decrease) in cash** | **$889.2** | **($104.4)** | | Cash, end of period | $1,730.5 | $367.1 | [GAAP to Non-GAAP Reconciliation](index=17&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) This section provides detailed reconciliations of GAAP to non-GAAP financial measures. For Q2 2025, total operating expenses of $176.1 million are reconciled to non-GAAP total operating expenses of $123.5 million. Net loss of $206.0 million is reconciled to an Adjusted EBITDA loss of $118.7 million by excluding items such as stock-based compensation and changes in warrant liability value Reconciliation of Operating Expenses (in millions) | | JUN 30, 2025 | MAR 31, 2025 | JUN 30, 2024 | | :--- | :--- | :--- | :--- | | **TOTAL OPERATING EXPENSES (GAAP)** | **$176.1** | **$144.0** | **$121.2** | | Stellantis warrant expense | (0.8) | (0.8) | (2.0) | | Stock-based compensation | (51.8) | (30.1) | (22.8) | | **NON-GAAP TOTAL OPERATING EXPENSES** | **$123.5** | **$113.1** | **$96.4** | Reconciliation of Adjusted EBITDA (in millions) | | JUN 30, 2025 | MAR 31, 2025 | JUN 30, 2024 | | :--- | :--- | :--- | :--- | | **NET LOSS (GAAP)** | **($206.0)** | **($93.4)** | **($106.9)** | | Other (income) expense, net | 40.0 | (42.0) | (9.3) | | Interest income, net | (10.2) | (8.7) | (5.1) | | Income tax expense | 0.1 | 0.1 | 0.1 | | Depreciation and amortization | 4.8 | 4.1 | 2.6 | | Stellantis warrant expense | 0.8 | 0.8 | 2.0 | | Stock-based compensation | 51.8 | 30.1 | 22.8 | | **ADJUSTED EBITDA** | **($118.7)** | **($109.0)** | **($93.8)** | [Upcoming Events](index=11&type=section&id=Upcoming%20Events) Archer has outlined its participation in several upcoming investor and industry conferences throughout August and September, including events hosted by Canaccord, JP Morgan, Needham, Deutsche Bank, H.C. Wainwright, and the Global Aerospace Summit. The company also provided details for its Q2 2025 earnings webcast and conference call Upcoming Events Schedule | Date | Event | Location | | :--- | :--- | :--- | | AUG 12 | Canaccord 45th Annual Growth Conference | Boston | | AUG 13 | JP Morgan Autos Conference | New York | | AUG 18 | 14th Annual Needham Industrial, Tech & Cleantech Conference | Virtual | | SEP 3 | Needham Transportation Conference | New York | | SEP 4 | Deutsche Bank 15th Annual Aviation Forum | New York | | SEP 8 | H.C. Wainwright 27th Annual Global Investment Conference | New York | | SEP 9-11 | Global Aerospace Summit | Washington D.C. | - Details for the earnings webcast and conference call were provided, accessible via the investor relations website and a dedicated conference call line[44](index=44&type=chunk) [Forward-Looking Statements & Disclaimers](index=20&type=section&id=Forward-Looking%20Statements%20%26%20Disclaimers) This section contains standard legal disclaimers regarding forward-looking statements made within the shareholder letter. It cautions that statements about future performance, timelines for certification and manufacturing, and business plans are subject to numerous risks and uncertainties. Readers are advised that actual results could differ materially and that they should not place undue reliance on these projections - The letter includes forward-looking statements regarding future performance, financial results, business strategy, aircraft development, and commercialization timelines, which are subject to risks and uncertainties[83](index=83&type=chunk) - Actual results could differ materially due to a variety of factors, including the early-stage nature of the business, manufacturing challenges, regulatory hurdles, supplier dependencies, and market adoption risks[84](index=84&type=chunk) - The company directs readers to its SEC filings, including its Form 10-K and Form 8-K, for a more detailed discussion of risks and uncertainties[87](index=87&type=chunk)

[Executive Summary & Recent Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Recent%20Highlights) This section provides an overview of Maravai LifeSciences' Q2 2025 performance, strategic initiatives, and recent leadership appointments [Overview of Q2 2025 Performance](index=1&type=section&id=1.1.%20Overview%20of%20Q2%202025%20Performance) Maravai LifeSciences reported a 5% year-over-year growth in base business revenue for Q2 2025, excluding high-volume CleanCap sales. However, total revenue decreased significantly, leading to a net loss and negative Adjusted EBITDA, partly due to a goodwill impairment - Quarterly base business revenue, excluding high-volume CleanCap for commercialized vaccine programs, grew **5% year-over-year**[1](index=1&type=chunk)[3](index=3&type=chunk) Q2 2025 Key Financial Highlights | Metric | Amount (Millions USD) | | :-------------------- | :-------------------- | | Quarterly Revenue | $47.4 | | Net Loss | $(69.8) | | Adjusted EBITDA | $(10.4) | | Goodwill Impairment | $30.4 | [Strategic Initiatives and Leadership Changes](index=1&type=section&id=1.2.%20Strategic%20Initiatives%20and%20Leadership%20Changes) The company announced an organizational restructuring and operating cost reduction initiatives targeting over $50 million in annualized cost savings. This comes alongside new executive leadership appointments and strategic expansions in CDMO enablement and mRNA synthesis - Organizational restructuring and operating cost reduction initiatives are targeting more than **$50 million in annualized cost savings**, comprising labor, facilities, capex, and productivity initiatives[1](index=1&type=chunk)[4](index=4&type=chunk) - Bernd Brust was appointed as the new Chief Executive Officer (CEO) and Raj Asarpota as Chief Financial Officer (CFO) to accelerate innovation, execution, and financial performance[5](index=5&type=chunk) - Expanded CDMO enablement strategy with a new license and supply agreement for CleanCap with Thermo Fisher Scientific[5](index=5&type=chunk) - Launched an mRNA synthesis kit leveraging TriLink BioTechnologies' high-performing products to simplify the in vitro transcription (IVT) workflow[5](index=5&type=chunk) [Financial Results](index=2&type=section&id=Financial%20Results) This section details Maravai's consolidated revenue performance, net loss, Adjusted EBITDA, and the withdrawal of full-year 2025 guidance [Consolidated Revenue Performance](index=2&type=section&id=2.1.%20Consolidated%20Revenue%20Performance) Maravai's total revenue for Q2 2025 and the six months ended June 30, 2025, saw significant year-over-year decreases, primarily driven by a lack of high-volume CleanCap orders in Nucleic Acid Production, partially offset by growth in Biologics Safety Testing Total Revenue Performance | Period | 2025 (000's USD) | 2024 (000's USD) | YoY % Change | | :----- | :--------------- | :--------------- | :----------- | | Q2 | $47,397 | $69,423 | (31.7)% | | 6 Months | $94,247 | $133,602 | (29.5)% | [Second Quarter 2025 Revenue](index=2&type=section&id=2.1.1.%20Second%20Quarter%202025%20Revenue) Second quarter revenue decreased by 31.7% year-over-year. Nucleic Acid Production revenue declined sharply due to reduced high-volume CleanCap orders, while Biologics Safety Testing revenue showed strong growth driven by HCP kits and MockV viral clearance kits Q2 2025 Revenue by Segment | Segment | 2025 (000's USD) | 2024 (000's USD) | YoY % Change | | :---------------------- | :--------------- | :--------------- | :----------- | | Nucleic Acid Production | $31,085 | $54,586 | (43.1)% | | Biologics Safety Testing| $16,312 | $14,837 | 9.9 % | - Nucleic Acid Production revenue decrease was primarily driven by a lack of high-volume CleanCap orders for commercial phase vaccine programs. Excluding high-volume CleanCap, revenue was up **3.0% YoY**, driven by growth in GMP products[9](index=9&type=chunk) - Biologics Safety Testing revenue increase was primarily driven by strength in Host Cell Protein (HCP) kits and associated HCP qualification services and increased demand for MockV viral clearance kits[9](index=9&type=chunk) [Six Months Ended June 30, 2025 Revenue](index=2&type=section&id=2.1.2.%20Six%20Months%20Ended%20June%2030%2C%202025%20Revenue) Revenue for the first six months of 2025 decreased by 29.5% year-over-year. Nucleic Acid Production experienced a significant decline due to CleanCap and lower demand for research products, while Biologics Safety Testing continued to grow, supported by HCP qualification services and MockV kits Six Months Ended June 30, 2025 Revenue by Segment | Segment | 2025 (000's USD) | 2024 (000's USD) | YoY % Change | | :---------------------- | :--------------- | :--------------- | :----------- | | Nucleic Acid Production | $59,835 | $100,602 | (40.5)% | | Biologics Safety Testing| $34,412 | $33,000 | 4.3 % | - Nucleic Acid Production revenue decrease was primarily driven by a lack of high-volume CleanCap orders for commercial phase vaccine programs and lower demand for research and discovery products. Excluding high-volume CleanCap, revenue was down **11.0% YoY**[10](index=10&type=chunk) - Biologics Safety Testing revenue growth was driven by strength in HCP qualification services and increased demand for MockV viral clearance kits[10](index=10&type=chunk) [Net Loss and Adjusted EBITDA](index=2&type=section&id=2.2.%20Net%20Loss%20and%20Adjusted%20EBITDA) Both net loss and Adjusted EBITDA significantly worsened for both the second quarter and the six months ended June 30, 2025, compared to the prior year, reflecting the overall revenue decline and increased operating expenses including goodwill impairment Net Loss and Adjusted EBITDA Performance | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 6 Months 2025 (Millions USD) | 6 Months 2024 (Millions USD) | | :-------------- | :--------------------- | :--------------------- | :--------------------------- | :--------------------------- | | Net Loss | $(69.8) | $(18.4) | $(122.7) | $(41.1) | | Adjusted EBITDA | $(10.4) | $13.0 | $(21.0) | $20.8 | [Second Quarter 2025 Net Loss and Adjusted EBITDA](index=2&type=section&id=2.2.1.%20Second%20Quarter%202025%20Net%20Loss%20and%20Adjusted%20EBITDA) For the second quarter of 2025, the company reported a net loss of $(69.8) million and Adjusted EBITDA of $(10.4) million, a substantial decline from the prior year's net loss of $(18.4) million and positive Adjusted EBITDA of $13.0 million Q2 2025 Net Loss and Adjusted EBITDA | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | | :-------------- | :--------------------- | :--------------------- | | Net Loss | $(69.8) | $(18.4) | | Adjusted EBITDA | $(10.4) | $13.0 | [Six Months Ended June 30, 2025 Net Loss and Adjusted EBITDA](index=4&type=section&id=2.2.2.%20Six%20Months%20Ended%20June%2030%2C%202025%20Net%20Loss%20and%20Adjusted%20EBITDA) For the six months ended June 30, 2025, the net loss was $(122.7) million and Adjusted EBITDA was $(21.0) million, compared to a net loss of $(41.1) million and positive Adjusted EBITDA of $20.8 million in the prior year period Six Months Ended June 30, 2025 Net Loss and Adjusted EBITDA | Metric | 6 Months 2025 (Millions USD) | 6 Months 2024 (Millions USD) | | :-------------- | :--------------------------- | :--------------------------- | | Net Loss | $(122.7) | $(41.1) | | Adjusted EBITDA | $(21.0) | $20.8 | [Full Year 2025 Guidance](index=4&type=section&id=2.3.%20Full%20Year%202025%20Guidance) Maravai is withdrawing and suspending its revenue guidance for the full year 2025 due to the recent Chief Executive Officer and Chief Financial Officer transition and an ongoing comprehensive business review - Maravai is withdrawing and suspending revenue guidance for 2025 due to the CEO and CFO transition and an ongoing comprehensive business review and forecasting process[12](index=12&type=chunk) [Corporate Realignment and Cost Reductions](index=4&type=section&id=Corporate%20Realignment%20and%20Cost%20Reductions) Maravai is implementing a corporate realignment and cost reduction plan, targeting over $50 million in annualized savings. The company expects to incur $8.0 million to $9.0 million in restructuring charges, primarily for employee severance and benefits, mostly in the second half of 2025 - The company estimates incurring restructuring charges of approximately **$8.0 million to $9.0 million**, primarily for employee severance, benefits, and related costs[13](index=13&type=chunk) - The majority of restructuring charges are expected to be incurred in the second half of 2025[13](index=13&type=chunk) - These initiatives are expected to realize north of **$50 million in annualized cost savings**[4](index=4&type=chunk) [Consolidated Financial Statements (GAAP)](index=5&type=section&id=Consolidated%20Financial%20Statements%20(GAAP)) This section presents Maravai's consolidated statements of operations, highlighting key revenue, expense, and profitability metrics under GAAP for the reported periods [Consolidated Statements of Operations](index=5&type=section&id=4.1.%20Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show a significant increase in net loss and loss from operations for both the three and six months ended June 30, 2025, compared to the prior year, largely due to decreased revenue and a substantial goodwill impairment charge Consolidated Statements of Operations (Selected Items, in thousands) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------------- | :----------- | :----------- | :------------ | :------------ | | Revenue | $47,397 | $69,423 | $94,247 | $133,602 | | Cost of revenue | $39,629 | $38,582 | $78,754 | $76,917 | | Selling, general and administrative | $38,575 | $40,556 | $78,139 | $81,441 | | Research and development | $4,882 | $4,924 | $9,770 | $9,956 | | Goodwill impairment | $30,449 | — | $42,884 | — | | Total operating expenses | $113,675 | $82,863 | $209,687 | $165,903 | | Loss from operations | $(66,278) | $(13,440) | $(115,440) | $(32,301) | | Net loss | $(69,837) | $(18,420) | $(122,690) | $(41,100) | | Net loss per Class A common share, basic and diluted | $(0.27) | $(0.07) | $(0.48) | $(0.16) | [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations from GAAP net loss to non-GAAP Adjusted EBITDA and Adjusted Net Loss, along with explanatory notes and definitions of these supplemental financial measures [Reconciliation of Net Loss to Adjusted EBITDA](index=6&type=section&id=5.1.%20Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) The reconciliation from GAAP Net Loss to non-GAAP Adjusted EBITDA shows significant adjustments for non-cash items and other non-recurring costs, including goodwill impairment, leading to a negative Adjusted EBITDA for both periods in 2025 Net Loss to Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------------- | :----------- | :----------- | :------------ | :------------ | | Net loss | $(69,837) | $(18,420) | $(122,690) | $(41,100) | | Add: Amortization | $7,200 | $6,869 | $14,230 | $13,738 | | Add: Depreciation | $5,957 | $5,556 | $11,650 | $10,342 | | Add: Interest expense | $6,815 | $11,939 | $13,593 | $22,803 | | Less: Interest income | $(3,030) | $(7,086) | $(6,255) | $(14,296) | | Less: Income tax benefit | $(4,288) | $(2,435) | $(4,126) | $(2,164) | | EBITDA | $(57,183) | $(3,577) | $(93,598) | $(10,677) | | Add: Goodwill impairment | $30,449 | — | $42,884 | — | | Add: Stock-based compensation | $6,789 | $13,763 | $17,192 | $25,820 | | Adjusted EBITDA (non-GAAP) | $(10,410) | $12,989 | $(20,959) | $20,784 | [Reconciliation of Net Loss to Adjusted Net Loss and Adjusted Fully Diluted Loss Per Share](index=7&type=section&id=5.2.%20Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20Net%20Loss%20and%20Adjusted%20Fully%20Diluted%20Loss%20Per%20Share) The reconciliation for Adjusted Net Loss and Adjusted Fully Diluted Loss Per Share highlights the impact of various non-GAAP adjustments, including goodwill impairment and stock-based compensation, on the company's profitability metrics Adjusted Net Loss and Adjusted Fully Diluted Loss Per Share Reconciliation (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :------------------------------------------ | :----------- | :----------- | :------------ | :------------ | | Net loss attributable to Maravai LifeSciences Holdings, Inc. | $(39,591) | $(9,789) | $(69,536) | $(21,867) | | Tax-effected net loss | $(62,633) | $(16,367) | $(110,030) | $(36,517) | | Goodwill impairment | $30,449 | — | $42,884 | — | | Stock-based compensation | $6,789 | $13,763 | $17,192 | $25,820 | | Adjusted net loss (non-GAAP) | $(20,837) | $(3,053) | $(41,273) | $(8,421) | | Adjusted fully diluted loss per share (non-GAAP) | $(0.08) | $(0.01) | $(0.16) | $(0.03) | [Explanatory Notes and Non-GAAP Definitions](index=7&type=section&id=5.3.%20Explanatory%20Notes%20and%20Non-GAAP%20Definitions) This section provides detailed explanations for the adjustments made in the non-GAAP reconciliations, such as acquisition contingent consideration, integration costs, stock-based compensation, and impairment charges. It also defines Adjusted EBITDA, Adjusted Net Loss, and Adjusted fully diluted EPS, clarifying their purpose as supplemental measures and their limitations compared to GAAP - Adjustments include acquisition contingent consideration, acquisition integration costs (including retention payments for MyChem and Alphazyme), non-cash stock-based compensation, merger and acquisition related expenses, acquisition related tax adjustments, executive leadership transition costs, goodwill impairment, property and equipment impairment, restructuring costs, and other non-recurring costs[19](index=19&type=chunk)[20](index=20&type=chunk) - Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization, certain non-cash items, and other adjustments not considered representative of ongoing operating performance[22](index=22&type=chunk) - Adjusted Net Loss is defined as tax-effected earnings before the specified adjustments and their tax effects. Adjusted fully diluted EPS is Adjusted Net Loss divided by diluted weighted average shares, assuming proforma exchange of Class B common stock[22](index=22&type=chunk) - These non-GAAP measures are supplemental, not GAAP alternatives, used by management to understand core operating performance and trends, but have limitations and should not be considered in isolation[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) [Company Information](index=10&type=section&id=Company%20Information) This section provides an overview of Maravai LifeSciences, its forward-looking statements, key risk factors, and investor contact information [About Maravai](index=10&type=section&id=6.1.%20About%20Maravai) Maravai LifeSciences is a leading life sciences company that provides critical products and services for drug therapies, diagnostics, novel vaccines, and human disease research, specializing in nucleic acid synthesis and biologics safety testing - Maravai is a leading life sciences company providing critical products to enable the development of drug therapies, diagnostics, and novel vaccines and to support research on human diseases[26](index=26&type=chunk) - Maravai's companies are leaders in providing products and services in nucleic acid synthesis and biologics safety testing to biopharmaceutical, vaccine, diagnostics, and cell and gene therapy companies[26](index=26&type=chunk) [Forward-Looking Statements & Risk Factors](index=11&type=section&id=6.2.%20Forward-Looking%20Statements%20%26%20Risk%20Factors) This section includes a cautionary statement regarding forward-looking statements, emphasizing that actual results may differ materially due to inherent uncertainties and risks. It outlines numerous factors that could impact Maravai's financial condition and operations, ranging from customer demand and operational efficiency to competition, regulatory changes, intellectual property, and financial obligations - Forward-looking statements are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of management's control[29](index=29&type=chunk) - Key risk factors include customer spending and demand, realization of operational benefits from organizational changes, revenue fluctuation, dependency on CleanCap sales, impact of trade policy, ability to attract and retain skilled workforce, risks related to product use in new therapies, competition, product performance and quality, market acceptance, acquisition management, geopolitical instability, product liability, customer/supplier reliance, regulatory scrutiny, intellectual property protection, cybersecurity, indebtedness, tax agreements, and corporate governance[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Contact Information](index=16&type=section&id=6.3.%20Contact%20Information) Contact details for investor relations are provided for inquiries regarding Maravai LifeSciences - Contact for investor relations: Deb Hart, **+1 858-988-5917**, ir@maravai.com[33](index=33&type=chunk)

PART I. CONSOLIDATED FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Presents PennantPark's unaudited consolidated financial statements for Q2 2025, covering key financial statements and investment schedules, with auditor review [Consolidated Statements of Assets and Liabilities](index=4&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Total assets and liabilities decreased as of June 30, 2025, leading to a decline in total net assets to **$480.6 million** and NAV per share to **$7.36** Consolidated Balance Sheet Highlights (in thousands, except per share data) | Metric | June 30, 2025 (unaudited) | September 30, 2024 | | :--- | :--- | :--- | | Total Investments at Fair Value | $1,171,624 | $1,328,050 | | Total Assets | $1,252,888 | $1,389,086 | | Total Liabilities | $772,303 | $895,178 | | **Total Net Assets** | **$480,585** | **$493,908** | | **Net Asset Value per Share** | **$7.36** | **$7.56** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net investment income for Q2 2025 decreased to **$11.8 million** ($0.18/share), while net assets from operations increased to **$8.2 million** due to lower losses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Investment Income | $29,555 | $37,004 | $94,423 | $107,318 | | Net Expenses | $17,757 | $21,258 | $58,204 | $61,661 | | **Net Investment Income** | **$11,798** | **$15,746** | **$36,219** | **$45,657** | | Net Realized & Unrealized Loss | $(3,648) | $(12,000) | $(2,529) | $(15,173) | | **Net Increase in Net Assets** | **$8,150** | **$3,746** | **$33,690** | **$30,484** | | Net Investment Income per Share | $0.18 | $0.24 | $0.55 | $0.70 | | Net Increase in Net Assets per Share | $0.12 | $0.06 | $0.52 | $0.47 | [Consolidated Statements of Changes in Net Assets](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) Net assets decreased by **$13.3 million** for the nine months ended June 30, 2025, primarily due to stockholder distributions exceeding operational increases - Net assets decreased from **$493.9 million** to **$480.6 million** for the nine months ended June 30, 2025[16](index=16&type=chunk) - Distributions to stockholders of **$47.0 million** were the primary driver for the net asset decrease, surpassing the **$33.7 million** net increase from operations[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$212.6 million** for the nine months ended June 30, 2025, leading to a **$20.7 million** increase in cash and equivalents Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $212,562 | $(167,739) | | Net Cash from Financing Activities | $(192,014) | $188,116 | | **Net Increase in Cash** | **$20,548** | **$20,377** | | Cash and Cash Equivalents, End of Period | $70,546 | $59,152 | [Consolidated Schedules of Investments](index=8&type=section&id=Consolidated%20Schedules%20of%20Investments) The investment portfolio totaled **$1.17 billion** as of June 30, 2025, diversified across debt and equity, with first lien secured debt as a primary component Portfolio Composition by Investment Type (June 30, 2025) | Investment Type | Fair Value ($ thousands) | % of Net Assets | | :--- | :--- | :--- | | First Lien Secured Debt | $476,461 | 84.3% | | Second Lien Secured Debt | $18,011 | 3.7% | | Subordinate Debt/Corporate Notes | $53,884 | 6.4% | | Preferred Equity/Partnership Interests | $284,954 | 3.9% | | Common Equity/Partnership Interests/Warrants | $132,039 | 27.5% | | U.S. Government Securities | $124,697 | 25.9% | | **Total Investments** | **$1,171,624** | **243.8%** | - The portfolio is categorized into non-controlled non-affiliated (**$729.8 million**), non-controlled affiliated (**$7.5 million**), and controlled affiliated (**$434.4 million**) investments[12](index=12&type=chunk)[43](index=43&type=chunk)[46](index=46&type=chunk) [Notes to Consolidated Financial Statements (unaudited)](index=28&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) Provides detailed explanations of the company's organization, accounting policies, related party transactions, investment valuation, and debt structure - **Organization:** PennantPark is a BDC investing primarily in U.S. middle-market companies through debt and equity, externally managed by PennantPark Investment Advisers, LLC[85](index=85&type=chunk) - **Accounting Policies:** Financial statements adhere to GAAP (ASC 946), with illiquid investments valued by the board; four portfolio companies were on non-accrual status as of June 30, 2025[93](index=93&type=chunk)[96](index=96&type=chunk)[100](index=100&type=chunk) - **Related Party Transactions:** The Investment Adviser receives a base management fee (1.50% on average adjusted gross assets, reduced to 1.00% on assets exceeding 200% of net assets) and a two-part incentive fee[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - **Debt:** The company maintains a **$500 million** Truist Credit Facility and **$315 million** in unsecured notes, with an asset coverage ratio of **176%** as of June 30, 2025[198](index=198&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operational results, noting decreased investment income due to a smaller portfolio and lower yields, covering portfolio, operations, and liquidity [Portfolio and Investment Activity](index=52&type=section&id=Portfolio%20and%20Investment%20Activity) The portfolio value decreased to **$1.17 billion** as of June 30, 2025, with a lower weighted average yield and significant investment activity Portfolio Summary | Metric | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Portfolio Value | $1,171.6M | $1,328.1M | | Number of Portfolio Companies | 158 | 152 | | Weighted Avg. Yield on Debt | 11.5% | 12.3% | | Non-Accrual (Cost Basis) | 2.8% | 4.1% | | Non-Accrual (Fair Value) | 0.7% | 2.3% | - For the nine months ended June 30, 2025, investment activity included **$560.2 million** in new and existing investments and **$749.0 million** in sales and repayments, with **$462.8 million** sold to the PSLF joint venture[236](index=236&type=chunk) [Results of Operations](index=56&type=section&id=Results%20of%20Operations) Investment income and net investment income decreased for Q2 2025, while the net increase in net assets from operations improved due to lower losses - Investment income for the nine months ended June 30, 2025, decreased to **$94.4 million** from **$107.3 million**, driven by a smaller portfolio and lower weighted average yield[272](index=272&type=chunk) - Expenses for the nine months ended June 30, 2025, decreased to **$58.2 million** from **$61.7 million**, primarily due to lower interest expenses and incentive fees[273](index=273&type=chunk) - Net investment income for the nine months ended June 30, 2025, was **$36.2 million** (**$0.55** per share), a decrease from **$45.7 million** (**$0.70** per share) in 2024[274](index=274&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by operations and debt financings, with **$70.5 million** in cash and a **176%** asset coverage ratio as of June 30, 2025 - As of June 30, 2025, the company held **$70.5 million** in cash and equivalents and **$183.5 million** in unused borrowing capacity under its Truist Credit Facility[282](index=282&type=chunk)[291](index=291&type=chunk) - The asset coverage ratio stood at **176%** as of June 30, 2025, exceeding the **150%** regulatory minimum[281](index=281&type=chunk) - Cash from operations for the nine months ended June 30, 2025, was **$212.6 million**, a significant improvement from **$167.7 million** used in the prior year, driven by higher investment sales proceeds[292](index=292&type=chunk)[293](index=293&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risk primarily from interest rate changes, with **90%** of its debt portfolio in variable-rate investments, impacting net investment income - As of June 30, 2025, **90%** of the company's debt portfolio consists of variable-rate investments, making its income sensitive to interest rate fluctuations[324](index=324&type=chunk) Annualized Impact of Hypothetical Interest Rate Changes | Change in Interest Rates | Change in Net Interest Income (in thousands) | Change in Net Interest Income Per Share | | :--- | :--- | :--- | | Down 1% | $(3,044) | $(0.05) | | Up 1% | $3,044 | $0.05 | | Up 2% | $6,088 | $0.09 | | Up 3% | $9,132 | $0.14 | [Item 4. Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control - The CEO and CFO affirmed the effectiveness of the company's disclosure controls and procedures as of June 30, 2025[329](index=329&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[330](index=330&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings) No material legal proceedings are currently pending against the company, its Investment Adviser, or Administrator - No material legal proceedings are currently against the company, its Investment Adviser, or Administrator[331](index=331&type=chunk) [Item 1A. Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) Key risks include potential negative impacts from changes in U.S. trade policies and significant cybersecurity threats to systems and data - Changes to U.S. trade policies and tariffs could adversely affect portfolio companies' performance by increasing costs or reducing demand[333](index=333&type=chunk) - Significant cybersecurity risks, including data breaches and system failures, could impact operations and financial results despite mitigation efforts[334](index=334&type=chunk)[335](index=335&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - None[337](index=337&type=chunk) [Item 3. Defaults Upon Senior Securities](index=68&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - None[337](index=337&type=chunk) [Item 5. Other Information](index=68&type=section&id=Item%205.%20Other%20Information) No other information is reported for the period - None[339](index=339&type=chunk) [Item 6. Exhibits](index=69&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL data files - Exhibits filed include CEO and CFO certifications (Rule 13a-14 and Section 906) and Inline XBRL documents[341](index=341&type=chunk)

Second quarter 2025 Financial Highlights (all comparisons are with the second quarter of 2024) Exhibit 99.1 August 11, 2025 COMPANY CONTACT FutureFuel Corp. Roeland Polet (314) 854-8352 www.futurefuelcorporation.com FutureFuel Releases Second Quarter 2025 Results Reports Net Loss of $10.4 Million or $0.24 per Diluted Share, and Adjusted EBITDA of ($9.8) Million CLAYTON, Mo. (August 11, 2025) – FutureFuel Corp. (NYSE: FF) ("FutureFuel"), a manufacturer of custom and performance chemicals and biofuels, today ...

SOUTH SAN FRANCISCO, Calif. – August 11, 2025 – Septerna, Inc. (Nasdaq: SEPN), a biotechnology company pioneering a new era of G protein-coupled receptor (GPCR) drug discovery, today highlighted key business updates and upcoming milestones and reported financial results for the second quarter ended June 30, 2025. "We are executing effectively across our portfolio, with each program nearing important milestones," said Jeffrey Finer, M.D., Ph.D., chief executive officer and co-founder of Septerna. "Our next-g ...

PART I. CONSOLIDATED FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Financial statements detail the company's position, operations, and cash flows, showing asset growth, increased income, and a lower NAV per share [Consolidated Statements of Assets and Liabilities](index=4&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Total assets increased to $2.52 billion, but Net Asset Value per share decreased to $10.96 from $11.31 Consolidated Statements of Assets and Liabilities Highlights (in thousands, except per share data) | Metric | June 30, 2025 (unaudited) | September 30, 2024 | | :--- | :--- | :--- | | Total Investments at Fair Value | $2,403,515 | $1,983,504 | | Total Assets | $2,521,602 | $2,108,845 | | Total Liabilities | $1,434,089 | $1,231,551 | | Total Net Assets | $1,087,513 | $877,294 | | Net Asset Value per share | $10.96 | $11.31 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Investment income increased for both three and nine-month periods, but net unrealized losses led to lower net asset growth Key Operational Results (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Investment Income | $63,502 | $48,505 | $192,449 | $130,831 | | Total Expenses | $38,877 | $27,295 | $112,827 | $71,085 | | Net Investment Income | $24,625 | $21,210 | $79,622 | $59,746 | | Net Increase in Net Assets | $19,298 | $16,920 | $48,852 | $70,499 | | Net Investment Income per Share | $0.25 | $0.31 | $0.88 | $0.95 | | Net Increase in Net Assets per Share | $0.19 | $0.25 | $0.54 | $1.12 | [Consolidated Statements of Changes in Net Assets](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) Net assets increased by $210.2 million to $1.09 billion, primarily from operations and capital transactions, offset by distributions - Net assets grew from **$877.3 million** at the beginning of the period to **$1,087.5 million** at the end[16](index=16&type=chunk) Changes in Net Assets for the Nine Months Ended June 30, 2025 (in thousands) | Description | Amount | | :--- | :--- | | Net Increase from Operations | $48,852 | | Distributions to Stockholders | $(83,389) | | Net Increase from Capital Transactions | $244,756 | | **Net Increase in Net Assets** | **$210,219** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating activities used $386.1 million cash, largely offset by $376.7 million from financing, leading to a $9.3 million net cash decrease Cash Flow Summary for the Nine Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(386,052) | $(509,641) | | Net Cash Provided by Financing Activities | $376,732 | $493,675 | | **Net (Decrease) in Cash** | **$(9,320)** | **$(15,966)** | [Consolidated Schedules of Investments](index=8&type=section&id=Consolidated%20Schedules%20of%20Investments) The investment portfolio expanded to $2.40 billion, predominantly in first lien secured debt, with significant PSSL holdings Investment Portfolio Composition (in thousands) | Investment Classification | Fair Value at June 30, 2025 | Fair Value at Sept 30, 2024 | | :--- | :--- | :--- | | **Non-Controlled, Non-Affiliated** | | | | First Lien Secured Debt | $1,912,951 | $1,472,064 | | Subordinate Debt | $12,506 | $2,693 | | Preferred Equity | $18,801 | $18,305 | | Common Equity/Warrants | $168,318 | $139,207 | | **Subtotal** | **$2,112,576** | **$1,632,269** | | **Controlled, Affiliated (PSSL)** | | | | First Lien Secured Debt | $237,650 | $274,634 | | Equity Interests | $53,289 | $76,601 | | **Subtotal** | **$290,939** | **$351,235** | | **Total Investments** | **$2,403,515** | **$1,983,504** | - As of June 30, 2025, two portfolio companies were on non-accrual status, representing **1.0%** of the portfolio at cost and **0.5%** at fair value[88](index=88&type=chunk) [Notes to Consolidated Financial Statements](index=27&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's BDC structure, investment strategy, fee arrangements, debt facilities, and PSSL joint venture - The company's investment objective is to generate current income and capital appreciation by investing primarily in floating rate loans to U.S. middle-market private companies[61](index=61&type=chunk) - In February 2025, the company completed a new **$474.6 million** term debt securitization (2037 Debt Securitization), retaining **$113.6 million** of the subordinated and Class D notes[72](index=72&type=chunk) - The company's asset coverage ratio was **177%** as of June 30, 2025, above the regulatory minimum of **150%**[185](index=185&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, portfolio growth to $2.4 billion, 10.4% yield, and financing, confirming sufficient liquidity Portfolio Summary as of June 30, 2025 | Metric | Value | | :--- | :--- | | Total Portfolio Value | $2,403.5 million | | Number of Portfolio Companies | 155 | | Average Investment Size | $15.5 million | | Weighted Average Yield on Debt | 10.4% | | % First Lien Secured Debt | 89% | | % Subordinated Debt | <1% | | % Preferred & Common Equity | 10% | - For the nine months ended June 30, 2025, the company invested **$1.1 billion** in 18 new and 112 existing portfolio companies, with sales and repayments totaling **$669.5 million**[242](index=242&type=chunk) - The company established a new **$500 million** at-the-market (ATM) offering program in July 2024, raising **$244.8 million** in net proceeds by issuing **21.6 million shares** through its ATM programs during the nine months ended June 30, 2025[78](index=78&type=chunk)[79](index=79&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk, with 99% variable-rate debt; a 1% rate increase boosts net interest income by $9.5 million Annualized Impact of Hypothetical Interest Rate Changes | Change in Interest Rates | Change in Net Interest Income (in thousands) | Change in Net Interest Income Per Share | | :--- | :--- | :--- | | Down 1% | $(9,453) | $(0.10) | | Up 1% | $9,453 | $0.10 | | Up 2% | $18,905 | $0.19 | | Up 3% | $28,358 | $0.29 | [Item 4. Controls and Procedures](index=71&type=section&id=Item%204.%20Controls%20and%20Procedures) CEO and CFO confirmed effective disclosure controls as of June 30, 2025, with no material internal control changes - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[346](index=346&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[347](index=347&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=71&type=section&id=Item%201.%20Legal%20Proceedings) The company, its Investment Adviser, and Administrator are not subject to any material legal proceedings - The company is not currently subject to any material legal proceedings[348](index=348&type=chunk) [Item 1A. Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) Key risks include U.S. trade policy changes affecting portfolio companies and significant cybersecurity vulnerabilities - Changes in U.S. trade policies and tariffs could increase costs or reduce demand for portfolio companies' products, adversely affecting their operations[350](index=350&type=chunk) - The company is subject to significant cybersecurity risks, including data breaches and system failures, which could lead to financial losses, regulatory intervention, and reputational damage[351](index=351&type=chunk)[352](index=352&type=chunk)[353](index=353&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - None[355](index=355&type=chunk) [Item 3. Defaults Upon Senior Securities](index=72&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - None[356](index=356&type=chunk) [Item 4. Mine Safety Disclosures](index=72&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure item is not applicable to the company's operations - Not applicable[357](index=357&type=chunk) [Item 5. Other Information](index=72&type=section&id=Item%205.%20Other%20Information) This item is not applicable, and no Rule 10b5-1 trading arrangements were adopted or terminated - Not applicable[358](index=358&type=chunk) [Item 6. Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including credit agreement amendments and certifications

[PART I: FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion for the period ended June 30, 2025 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents VirTra, Inc.'s unaudited condensed consolidated financial statements for the period ended June 30, 2025, including balance sheets, statements of operations, cash flows, and accompanying notes [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Balance Sheet Highlights (as of June 30, 2025) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $20,697,354 | $18,040,827 | | Total current assets | $44,149,274 | $44,473,235 | | Total assets | $67,369,972 | $65,453,086 | | **Liabilities & Equity** | | | | Total current liabilities | $10,028,833 | $9,646,555 | | Total liabilities | $20,026,886 | $19,762,198 | | Total stockholders' equity | $47,343,086 | $45,690,888 | - Total assets increased to **$67.4 million** from **$65.5 million** at year-end 2024, primarily driven by an increase in cash and intangible assets[8](index=8&type=chunk) - Stockholders' equity grew to **$47.3 million** from **$45.7 million**, mainly due to retained earnings from net income[8](index=8&type=chunk) [Condensed Statements of Operations](index=6&type=section&id=Condensed%20Statements%20of%20Operations) Details the company's revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024 Statements of Operations Highlights | 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 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $6,978,938 | $6,075,040 | $14,139,185 | $13,421,461 | | Gross Profit | $4,812,477 | $5,524,616 | $10,009,357 | $10,238,779 | | Income from Operations | $914,366 | $1,131,421 | $2,282,169 | $1,781,782 | | Net Income | $175,314 | $1,200,727 | $1,439,375 | $1,668,923 | | Diluted EPS | $0.02 | $0.11 | $0.13 | $0.15 | - For Q2 2025, revenue increased **15%** year-over-year, but net income decreased significantly by **85%** from **$1.2 million** to **$175,314**, primarily due to a substantial increase in cost of sales and a swing to 'Other expense'[11](index=11&type=chunk) [Condensed Statements of Cash Flows](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,047,430 | $1,268,224 | | Net cash used in investing activities | ($3,261,941) | ($1,608,798) | | Net cash used in financing activities | ($128,962) | ($97,634) | | **Net increase (decrease) in cash** | **$2,656,527** | **($438,208)** | - Cash from operations increased significantly to **$6.0 million** for the first six months of 2025, compared to **$1.3 million** in the prior year period, mainly due to higher net income and improved accounts receivable collections[16](index=16&type=chunk) - Investing activities included **$2.3 million** for internal intangible assets and nearly **$1.0 million** for property and equipment purchases[16](index=16&type=chunk) [Notes to the Unaudited Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Financial%20Statements) Provides detailed explanations of accounting policies, significant transactions, and financial statement line items - A restatement of 2024 revenue was noted, where **$747,977** was incorrectly recorded in Q1 2024 instead of 2023 due to an accounting software implementation issue[27](index=27&type=chunk) - For the six months ended June 30, 2025, government customers comprised **75%** of total net sales, while international customers grew to **23%** of sales, up from **9%** in the same period of 2024[33](index=33&type=chunk) - The company identified six business segments, with 'Simulators and Accessories' being the largest revenue contributor, followed by 'Extended Service-type warranties' and the 'STEP' subscription program[38](index=38&type=chunk)[39](index=39&type=chunk) - As of June 30, 2025, the company had significant customer concentration, with two customers accounting for **31%** and **13%** of total accounts receivable[51](index=51&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting revenue growth, profitability decline, liquidity, and backlog, noting future booking uncertainties [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Analyzes key financial metrics including net sales, gross profit, operating income, and net income for the recent periods Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $6,978,938 | $6,075,040 | $903,898 | 15% | | Gross Profit | $4,812,477 | $5,524,616 | ($712,139) | -13% | | Gross Margin | 69% | 91% | -22 p.p. | N/A | | Operating Income | $914,366 | $1,131,421 | ($217,055) | -19% | | Net Income | $175,314 | $1,200,727 | ($1,025,413) | -85% | - The **294%** increase in Q2 cost of sales was attributed to a reclassification of COGS labor in 2024 that was an outlier, making the 2025 expense appear disproportionately high in comparison[90](index=90&type=chunk) - Net operating expenses decreased by **11%** in Q2 2025 due to company efforts to lower overhead and operating costs[93](index=93&type=chunk) - A significant swing in 'Other income (expense)' from a **$157K** gain in Q2 2024 to a **$748K** loss in Q2 2025, primarily from foreign exchange fluctuations, heavily impacted net income[95](index=95&type=chunk) [Liquidity, Capital Resources, Bookings, and Backlog](index=26&type=section&id=Liquidity,%20Capital%20Resources,%20Bookings,%20and%20Backlog) Assesses the company's cash position, working capital, new bookings, and total backlog, including future outlook - The company maintained a strong liquidity position with **$20.7 million** in cash and cash equivalents and **$34.1 million** in working capital as of June 30, 2025[100](index=100&type=chunk) - Bookings totaled **$4.6 million** for Q2 2025 and **$11 million** for the first six months of the year[104](index=104&type=chunk) - Total backlog stood at **$18.8 million** as of June 30, 2025, composed of **$7.1 million** in Capital, **$5.7 million** in Service, and **$6 million** in STEP agreements[105](index=105&type=chunk) - Management expressed uncertainty about future bookings due to potential budget cuts and funding freezes from the new federal administration[108](index=108&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that this disclosure is not required as it qualifies as a smaller reporting company - Disclosure is not required for smaller reporting companies[113](index=113&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were ineffective due to identified material weaknesses, with ongoing remediation efforts - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025[114](index=114&type=chunk) - The ineffectiveness was due to previously identified material weaknesses: (i) lack of multiple levels of management review on complex issues and (ii) failure to implement adequate system and manual controls[114](index=114&type=chunk) - The company is in the process of implementing more formal review processes and increasing ERP training for staff to address these weaknesses[115](index=115&type=chunk) [PART II: OTHER INFORMATION](index=29&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers other required disclosures, including legal proceedings, equity sales, and senior securities, noting non-applicability for smaller reporting companies [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that there are no material pending legal proceedings, other than ordinary routine litigation incidental to its business - There are no material pending legal proceedings to which the company is a party[117](index=117&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company states that this disclosure is not required as it qualifies as a smaller reporting company - Disclosure is not required for smaller reporting companies[118](index=118&type=chunk) [Other Items (2, 3, 4, 5, 6)](index=29&type=section&id=Other%20Items%20(2,%203,%204,%205,%206)) The company reports no unregistered equity sales, no defaults on senior securities, and confirms mine safety disclosures are not applicable - The company reported no unregistered sales of equity securities, defaults upon senior securities, or other material information during the period[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) [Signatures](index=30&type=section&id=Signatures) The report is duly signed by the Chief Executive Officer, John F. Givens II, and the Chief Financial Officer, Alanna Boudreau, on August 11, 2025

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2025 ☐ 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: 001-42659 ProCap Acquisition Corp (Exact Name of Registrant as Specified in Its Charter) Cayman Islands N/A (State or other jurisdiction of inco ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2025 ☐ 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: 001-42659 ProCap Acquisition Corp (Exact Name of Registrant as Specified in Its Charter) Cayman Islands N/A (State or other jurisdiction of inco ...