Table of Contents ☐ 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: 001-41929 ARRIVENT BIOPHARMA, INC. (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR (State of Other Jurisdiction of inc ...

Exhibit 99.1 ArriVent BioPharma Reports Second Quarter 2025 Financial Results NEWTOWN SQUARE, PA, August 11, 2025 (GLOBE NEWSWIRE) -- ArriVent BioPharma, Inc. (Company or ArriVent) (Nasdaq: AVBP), a clinical-stage company dedicated to accelerating the global development of innovative biopharmaceutical therapeutics, today reported financial results for the second quarter ended June 30, 2025, and highlighted recent Company progress. "Firmonertinib continues to advance with strong momentum toward registration, ...

[Executive Summary & Fiscal First Quarter 2026 Performance](index=1&type=section&id=Executive%20Summary%20%26%20Fiscal%20First%20Quarter%202026%20Performance) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) Motorcar Parts of America reported record sales and gross profit for its fiscal 2026 first quarter, alongside a significant improvement in operating income and a return to net income. The company also generated solid cash flow from operations and reduced net bank debt | Metric | Q1 FY2026 (June 30, 2025) | Q1 FY2025 (June 30, 2024) | Change (%) | | :-------------------------------- | :------------------------ | :------------------------ | :--------- | | Net Sales | $188.4 million | $169.9 million | 10.9% | | Gross Profit | $33.9 million | $29.2 million | 16.3% | | Gross Margin | 18.0% | 17.2% | 0.8 pp | | Operating Income (Loss) | $20.1 million | $(6.5) million | N/A | | Net Income (Loss) | $3.0 million | $(18.1) million | N/A | | Diluted EPS | $0.15 | $(0.92) | N/A | | Cash from Operating Activities | $10.0 million | $(20.8) million | N/A | | Net Bank Debt | $74.4 million | $81.4 million | (8.6%) | - Operating income, excluding non-cash foreign exchange impact, increased **153.6%** to **$11.7 million** from **$4.6 million** in the prior year[6](index=6&type=chunk) - Interest expense decreased by **$1.6 million** to **$12.8 million**, driven by lower average outstanding balances and reduced interest rates[8](index=8&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) CEO Selwyn Joffe expressed satisfaction with the record first-quarter results, emphasizing the company's focus on supply chain and operating efficiencies. He highlighted favorable industry dynamics, including an increasing number of vehicles and an aging car parc, and noted proactive efforts to reduce reliance on Chinese suppliers - The company is focused on enhancing its supply chain and operating efficiencies to capitalize on its prominent position in the non-discretionary automotive aftermarket business[10](index=10&type=chunk)[12](index=12&type=chunk) - Favorable industry dynamics, such as an increasing number of vehicles on the road and an aging car parc (currently **12.8 years** in the U.S.), continue to drive the automotive aftermarket[11](index=11&type=chunk) - Reliance on Chinese suppliers has been significantly reduced to less than **25%** of parts and components, with optimism for a successful resolution of current global economic events related to tariffs[12](index=12&type=chunk) [Share Repurchase Activity](index=2&type=section&id=Share%20Repurchase%20Activity) During the fiscal 2026 first quarter, the company repurchased shares under its current authorization program, supported by strong cash generation | Metric | Q1 FY2026 | | :-------------------- | :---------- | | Shares Repurchased | 197,796 | | Total Value | $2.0 million | | Average Price per Share | $9.94 | - The company anticipates further opportunities to build shareholder value through enhanced profitability and strong cash generation[14](index=14&type=chunk) [Fiscal 2026 Guidance Update](index=3&type=section&id=Fiscal%202026%20Guidance%20Update) Motorcar Parts of America has increased its fiscal 2026 sales guidance, reflecting a strong start to the fiscal year and the impact of tariff passthroughs. Operating income guidance remains reaffirmed, incorporating tariff passthroughs and cost mitigation | Metric | Updated Fiscal 2026 Guidance | | :-------------------- | :--------------------------- | | Net Sales | $800 million to $820 million | | YoY Sales Growth | 5.6% to 8.3% | | Operating Income | $86 million to $91 million | | YoY Operating Income Growth | 4.3% to 10.4% | | Depreciation & Amortization | Approximately $11 million | - The sales guidance increase incorporates the impact of tariff passthroughs[15](index=15&type=chunk) - Operating income guidance reflects a combination of tariff passthroughs and cost mitigation measures[15](index=15&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) [About Motorcar Parts of America, Inc.](index=4&type=section&id=About%20Motorcar%20Parts%20of%20America%2C%20Inc.) Motorcar Parts of America is a remanufacturer, manufacturer, and distributor of automotive aftermarket parts for various vehicle types, serving retail and professional repair markets across North America. The company also has an electrical vehicle subsidiary focused on testing solutions for the electrification of automotive and aerospace industries - The company's core business involves remanufacturing, manufacturing, and distributing automotive aftermarket parts such as alternators, starters, brake components, and turbochargers[18](index=18&type=chunk) - Products are sold to automotive retail outlets and the professional repair market in the United States, Canada, and Mexico[18](index=18&type=chunk) - An electrical vehicle subsidiary designs and manufactures testing solutions for performance, endurance, and production of multiple components in the electric power train, including EV charging systems[18](index=18&type=chunk) [Safe Harbor Statement](index=4&type=section&id=Safe%20Harbor%20Statement) The Private Securities Litigation Reform Act of 1995 provides a 'safe harbor' for forward-looking statements made in this press release. These statements are based on current expectations and involve significant risks and uncertainties, as detailed in the company's SEC filings - Forward-looking statements are subject to significant risks and uncertainties, some beyond the company's control, and are subject to change[19](index=19&type=chunk) - Investors are referred to the Risk Factors in the company's Form 10-K and 10-Q filings with the SEC for additional information on risks and uncertainties[19](index=19&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20%28Unaudited%29) The consolidated statements of operations show a strong performance for Q1 FY2026, with significant increases in net sales and gross profit, and a shift from an operating loss to a substantial operating income, leading to positive net income | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $188,364,000 | $169,887,000 | | Cost of goods sold | $154,447,000 | $140,713,000 | | Gross profit | $33,917,000 | $29,174,000 | | Total operating expenses | $13,848,000 | $35,630,000 | | Operating income (loss) | $20,069,000 | $(6,456,000) | | Interest expense, net | $12,812,000 | $14,387,000 | | Income (loss) before income tax expense (benefit) | $5,467,000 | $(18,263,000) | | Net income (loss) | $3,042,000 | $(18,085,000) | | Diluted net income (loss) per share | $0.15 | $(0.92) | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2025, shows an increase in total assets and shareholders' equity compared to March 31, 2025, reflecting improved financial health. Cash and cash equivalents also increased | Metric | June 30, 2025 (Unaudited) | March 31, 2025 | | :-------------------------------- | :-------------------------- | :------------- | | **ASSETS** | | | | Cash and cash equivalents | $12,479,000 | $9,429,000 | | Total current assets | $519,382,000 | $511,471,000 | | TOTAL ASSETS | $973,350,000 | $957,636,000 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Total current liabilities | $360,616,000 | $351,025,000 | | Revolving loan | $86,856,000 | $90,787,000 | | Total liabilities | $713,237,000 | $699,937,000 | | Total shareholders' equity | $260,113,000 | $257,699,000 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $973,350,000 | $957,636,000 | - Cash and cash equivalents increased by **$3.05 million** from March 31, 2025, to June 30, 2025[24](index=24&type=chunk) - The revolving loan balance decreased by **$3.931 million** from March 31, 2025, to June 30, 2025[24](index=24&type=chunk) [Non-GAAP Financial Measures and Additional Information](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Additional%20Information) [Use of Non-GAAP Measures Explanation](index=3&type=section&id=Use%20of%20Non-GAAP%20Measures%20Explanation) The company uses non-GAAP measures, such as EBITDA, to provide investors and management with additional insights into financial and business trends. These measures are supplementary to GAAP and should not be considered substitutes, as they have limitations and may not be comparable to other companies' metrics - EBITDA is defined as earnings before interest, taxes, depreciation, and amortization[16](index=16&type=chunk)[27](index=27&type=chunk) - Non-GAAP measures do not reflect all costs and items associated with business operations in accordance with GAAP and may differ from similar measures used by other companies[16](index=16&type=chunk)[26](index=26&type=chunk) [Items Impacting Net Income (Exhibit 1)](index=8&type=section&id=Items%20Impacting%20Net%20Income%20%28Exhibit%201%29) Exhibit 1 provides a reconciliation of GAAP net income (loss) to adjusted net income by detailing non-cash and cash items impacting net income for the three months ended June 30, 2025 and 2024 | Item | Q1 FY2026 ($) | Q1 FY2026 (Per Diluted Share) | Q1 FY2025 ($) | Q1 FY2025 (Per Diluted Share) | | :---------------------------------------------------------- | :------------ | :---------------------------- | :------------ | :---------------------------- | | GAAP net income (loss) | $3,042,000 | $0.15 | $(18,085,000) | $(0.92) | | **Total non-cash items impacting net income** | $(1,304,000) | $(0.07) | $9,465,000 | $0.48 | | *Foreign exchange impact of lease liabilities and forward contracts* | $(8,348,000) | $(0.42) | $11,078,000 | $0.56 | | **Total cash items impacting net income** | $1,069,000 | $0.05 | $2,205,000 | $0.11 | | *Net tariff costs paid for products sold before price increases were effective* | $1,426,000 | $0.07 | - | - | [Items Impacting Gross Profit (Exhibit 2)](index=9&type=section&id=Items%20Impacting%20Gross%20Profit%20%28Exhibit%202%29) Exhibit 2 details the non-cash and cash items that impacted gross profit and gross margin for the three months ended June 30, 2025 and 2024 | Item | Q1 FY2026 ($) | Q1 FY2026 (Gross Margin %) | Q1 FY2025 ($) | Q1 FY2025 (Gross Margin %) | | :---------------------------------------------------------- | :------------ | :------------------------- | :------------ | :------------------------- | | GAAP gross profit | $33,917,000 | 18.0% | $29,174,000 | 17.2% | | **Total non-cash items impacting gross profit** | $3,873,000 | 2.1% | $3,122,000 | 1.8% | | *Core and finished goods premium amortization* | $2,847,000 | 1.5% | $2,728,000 | 1.6% | | **Total cash items impacting gross profit** | $1,426,000 | 0.8% | - | 0.0% | | *Net tariff costs paid for products sold before price increases were effective* | $1,426,000 | 0.8% | - | - | [Items Impacting EBITDA (Exhibit 3)](index=10&type=section&id=Items%20Impacting%20EBITDA%20%28Exhibit%203%29) Exhibit 3 provides a reconciliation of GAAP net income (loss) to EBITDA, along with the non-cash and cash items impacting EBITDA for the three months ended June 30, 2025 and 2024 | Item | Q1 FY2026 ($) | Q1 FY2025 ($) | | :---------------------------------------------------------- | :------------ | :------------ | | GAAP net income (loss) | $3,042,000 | $(18,085,000) | | Interest expense, net | $12,812,000 | $14,387,000 | | Income tax expense (benefit) | $2,425,000 | $(178,000) | | Depreciation and amortization | $2,449,000 | $2,729,000 | | **EBITDA** | $20,728,000 | $(1,147,000) | | **Total non-cash items impacting EBITDA** | $(1,739,000) | $12,620,000 | | *Foreign exchange impact of lease liabilities and forward contracts* | $(8,348,000) | $11,078,000 | | **Total cash items impacting EBITDA** | $1,426,000 | $2,940,000 | [Earnings Conference Call and Webcast](index=3&type=section&id=Earnings%20Conference%20Call%20and%20Webcast) Motorcar Parts of America hosted an investor conference call and webcast to discuss its financial results and operations, with replay options available - The conference call was held on August 11, 2025, at **10:00 a.m. Pacific time**[17](index=17&type=chunk) - Access was available via live audio webcast at www.motorcarparts.com or by phone[17](index=17&type=chunk) - A telephone playback of the conference call was available until August 18, 2025[17](index=17&type=chunk)

Exhibit 10.2 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "Agreement") is dated as of August 11, 2025, between ALT5 Sigma Corporation, a Nevada corporation (the "Company"), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a "Purchaser" and collectively, the "Purchasers"). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the "Secu ...

[Securities Purchase Agreement Overview](index=1&type=section&id=Securities%20Purchase%20Agreement) This agreement outlines ALT5 Sigma Corporation's private placement offering to raise up to $1.5 billion, including concurrent Registration Rights and Token Purchase Agreements [Agreement Parties and Offering](index=1&type=section&id=Agreement%20Parties%20and%20Offering) The agreement, dated August 11, 2025, details ALT5 Sigma Corporation's private placement to raise up to $1.5 billion, involving specific securities and a concurrent token purchase - The agreement is dated **August 11, 2025**, between ALT5 Sigma Corporation and the purchasers identified on the signature pages[2](index=2&type=chunk) Offering Details | Offering Detail | Value / Description | | :--- | :--- | | **Maximum Gross Proceeds** | Up to **$1.5 billion** | | **Offering Basis** | Commercially reasonable best efforts | | **Securities Act Exemption** | Section 4(a)(2) and Rule 506(b) of Regulation D | - Contemporaneously with this offering, the parties will execute a Registration Rights Agreement and a Token Purchase Agreement, under which the Company will purchase **$WLFI** from the Lead Investor[3](index=3&type=chunk) - The purchase of securities is intended to be treated as a tax-free exchange under **Section 351(a)** of the Internal Revenue Code[4](index=4&type=chunk) [Article I: Definitions](index=1&type=section&id=ARTICLE%20I.%20DEFINITIONS) This article defines key terms, including the $7.50 per share purchase price, the Lead Investor, and the various securities offered [Key Definitions](index=1&type=section&id=1.1%20Definitions) Key terms defined include the $7.50 per share price, World Liberty Financial as Lead Investor, and the various common stock and warrant securities - The "Per Share Purchase Price" for the Common Stock is established at **$7.50**[37](index=37&type=chunk) - The "Lead Investor" is identified as **World Liberty Financial, Inc.**[30](index=30&type=chunk) - The "Securities" being sold include Shares of Common Stock, Pre-Funded Warrants, Lead Investor Warrants, Management Warrants, and the shares issuable upon their exercise[53](index=53&type=chunk) - The agreement defines several stablecoins that can be used for payment: **USD1** (World Liberty Financial USD coin), **USDC** (USD Coin), and **USDT** (Tether)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - The "Placement Agent" for the offering is **A.G.P./Alliance Global Partners**[39](index=39&type=chunk) [Article II: Purchase and Sale](index=7&type=section&id=ARTICLE%20II.%20PURCHASE%20AND%20SALE) This article details the closing terms, including share sales, beneficial ownership limits, payment methods, and required deliverables [Closing](index=7&type=section&id=2.1%20Closing) The closing involves selling up to $750 million in shares, with options for Pre-Funded Warrants and payment in cash or specified stablecoins/tokens Transaction Closing Details | Item | Detail | | :--- | :--- | | **Aggregate Purchase** | Up to **~$750 million** of Shares | | **Beneficial Ownership Limitation** | 4.99% or 9.99% (at Purchaser's election) | | **Payment Methods** | Cash, USD1, USDT, USDC, or $WLFI | | **$WLFI Fixed Exchange Rate** | **$0.20** per **$WLFI** token | - Purchasers may elect to purchase Pre-Funded Warrants in lieu of Shares to manage their beneficial ownership percentage[65](index=65&type=chunk) [Deliveries](index=8&type=section&id=2.2%20Deliveries) This section specifies the Company's provision of executed documents and warrants, and Purchasers' delivery of agreements and subscription amounts - Company's deliverables include the executed Agreement, legal opinions, irrevocable instructions to the Transfer Agent, various Warrants (Pre-Funded, Asset Manager, Lead Investor, Management), and other related agreements[66](index=66&type=chunk) - Purchasers' deliverables include the executed Agreement, the Registration Rights Agreement, the TPA (from Lead Investor), and the Subscription Amount in the specified form (cash or crypto)[66](index=66&type=chunk) [Closing Conditions](index=9&type=section&id=2.3%20Closing%20Conditions) Closing is contingent on accurate representations, covenant fulfillment, and required deliveries, with additional conditions for Purchasers regarding material adverse effects - The Company's obligation to close is subject to the accuracy of Purchasers' representations and their performance of all obligations[67](index=67&type=chunk) - The Purchasers' obligation to close is subject to the accuracy of the Company's representations, its performance of obligations, the absence of a Material Adverse Effect, and that the Company's stock has not been suspended from trading[67](index=67&type=chunk) [Article III: Representations and Warranties](index=10&type=section&id=ARTICLE%20III.%20REPRESENTATIONS%20AND%20WARRANTIES) This article covers the Company's and Purchasers' assurances regarding corporate status, financial compliance, and investment intent [Representations and Warranties of the Company](index=10&type=section&id=3.1%20Representations%20and%20Warranties%20of%20the%20Company) The Company warrants its SEC compliance, non-investment company status, valid securities issuance, and the governance-only utility of $WLFI tokens - The Company represents that its **SEC Reports** are filed on time, comply with regulations, and do not contain any untrue statements of a material fact[77](index=77&type=chunk) - The Company confirms it is not an "investment company" under the **Investment Company Act of 1940** and will conduct its business to avoid becoming one[91](index=91&type=chunk) - The Company represents that, assuming the accuracy of the Purchasers' representations, the offering is a private placement exempt from registration under the **Securities Act**[90](index=90&type=chunk) - The Company acknowledges that the sole utility of the **$WLFI** token is for governance participation in the World Liberty Financial Protocol and that it does not confer economic rights or represent an expectation of profits[116](index=116&type=chunk) [Representations and Warranties of the Purchasers](index=21&type=section&id=3.2%20Representations%20and%20Warranties%20of%20the%20Purchasers) Purchasers confirm their accredited investor status, acquisition for own account, and clear title to any digital assets used for payment - Each Purchaser represents they are an "**accredited investor**" as defined under the Securities Act[125](index=125&type=chunk) - Each Purchaser confirms they are acquiring the Securities for their own account and not as a result of any "general solicitation" or "general advertising"[124](index=124&type=chunk)[127](index=127&type=chunk) - Purchasers paying with digital assets (**USD1**, **USDC**, **USDT**, or **$WLFI**) represent that they have full rights and title to the assets, which are held in a secure digital wallet under their exclusive control[131](index=131&type=chunk) [Article IV: Other Agreements of the Parties](index=23&type=section&id=ARTICLE%20IV.%20OTHER%20AGREEMENTS%20OF%20THE%20PARTIES) This article outlines ongoing covenants, including disclosure, equity sales, Lead Investor board rights, and the $WLFI-centric Treasury Reserve Policy [Covenants and Post-Closing Obligations](index=23&type=section&id=Covenants%20and%20Post-Closing%20Obligations) Key covenants include public disclosure, use of proceeds for $WLFI acquisition, board nomination rights for Lead Investor, and adoption of a $WLFI-focused Treasury Reserve Policy - The Company is required to issue a press release and file a **Form 8-K** to publicly disclose the transaction, after which the Purchasers are released from confidentiality obligations[144](index=144&type=chunk) - Net proceeds from the sale will be used to acquire **$WLFI** and establish the company's cryptocurrency treasury operations, managed by an Asset Manager[147](index=147&type=chunk) - The Company agrees to seek stockholder approval to increase its authorized shares to ensure sufficient reserves for warrant exercises, with a meeting to be held by **September 30, 2025**[151](index=151&type=chunk) - The Lead Investor obtains the right to nominate **two directors** to the Company's board (including the Chairman) and to select the Chief Investment Officer[162](index=162&type=chunk) - The Company will adopt a "**Treasury Reserve Policy**" making **$WLFI** its primary treasury reserve asset, with oversight from a board subcommittee chaired by a Lead Investor director[163](index=163&type=chunk) - The parties agree to treat the transaction as a tax-free exchange under **Section 351(a)** of the IRC, with **$WLFI** valued at **$0.20 per token** for tax purposes[165](index=165&type=chunk)[166](index=166&type=chunk) [Article V: Miscellaneous](index=33&type=section&id=ARTICLE%20V.%20MISCELLANEOUS) This article covers general legal provisions, including termination conditions, expense allocation, governing law, and waiver of jury trial [General Provisions](index=33&type=section&id=General%20Provisions) Standard clauses include termination rights, expense reimbursement, New York governing law, and a mutual waiver of jury trial for disputes - A Purchaser may terminate their obligation if the Closing has not occurred on or before the **seventh Trading Day** following the agreement's date[170](index=170&type=chunk) - The Company agrees to reimburse the Lead Investor for up to **$1,000,000** in costs and expenses related to the transaction[171](index=171&type=chunk) - The agreement shall be governed by the internal laws of the **State of New York**, with legal proceedings to be commenced in New York City courts[178](index=178&type=chunk) - All parties knowingly and irrevocably waive their right to a **trial by jury** in any action, suit, or proceeding related to the agreement[190](index=190&type=chunk) [Exhibits](index=40&type=section&id=Exhibits) This section lists the ancillary documents forming part of the agreement, including the Registration Rights Agreement and various warrant forms [Attached Exhibits](index=40&type=section&id=Attached%20Exhibits) The agreement incorporates key exhibits such as the Registration Rights Agreement, various lock-up agreements, and forms for different warrant types - The agreement references and includes the following key exhibits: * **Exhibit A:** Registration Rights Agreement * **Exhibit B:** Form of Management Lock-Up Agreement * **Exhibit C:** Form of Pre-Funded Warrant * **Exhibit D:** Form of Lead Investor Warrant * **Exhibit E:** Form of Management Warrant * **Exhibit F:** Token Purchase Agreement * **Exhibit G:** Investor Lock-Up Agreement[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides Sphere Entertainment Co.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the periods ended June 30, 2025 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Sphere Entertainment Co.'s unaudited condensed consolidated financial statements and detailed notes for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show decreased total assets and current liabilities, increased total stockholders' equity, and a shift from current to non-current long-term debt | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total assets | $4,199,061 | $4,515,300 | $(316,239) | | Total liabilities | $1,885,374 | $2,313,881 | $(428,507) | | Total stockholders' equity | $2,313,687 | $2,201,419 | $112,268 | | Current portion of long-term debt, net | $58,799 | $829,125 | $(770,326) | | Long-term debt, net | $830,535 | $524,010 | $306,525 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company achieved net income for the three and six months ended June 30, 2025, driven by a debt extinguishment gain, despite mixed revenue performance | Metric (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 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $282,677 | $273,395 | $563,251 | $594,725 | | Operating loss | $(50,159) | $(71,377) | $(128,768) | $(111,770) | | Gain on extinguishment of debt | $346,092 | — | $346,092 | — | | Net income (loss) | $151,816 | $(46,586) | $69,862 | $(93,826) | | Basic income (loss) per common share | $4.18 | $(1.31) | $1.93 | $(2.64) | | Diluted income (loss) per common share | $3.39 | $(1.31) | $1.56 | $(2.64) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Comprehensive income significantly improved for the three and six months ended June 30, 2025, due to net income and positive cumulative translation adjustments | Metric (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 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $151,816 | $(46,586) | $69,862 | $(93,826) | | Other comprehensive income (loss), net of income taxes | $5,489 | $407 | $7,474 | $(253) | | Comprehensive income (loss) | $157,305 | $(46,179) | $77,336 | $(94,079) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company experienced a net decrease in cash for the six months ended June 30, 2025, primarily from debt repayments and operating activities, partially offset by investing activities | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(52,711) | $28,570 | | Net cash provided by (used in) investing activities | $16,441 | $(46,156) | | Net cash used in financing activities | $(111,059) | $(36,242) | | Net decrease in cash, cash equivalents, and restricted cash | $(146,706) | $(54,604) | | Cash, cash equivalents, and restricted cash at end of period | $368,927 | $573,223 | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased from December 31, 2024, to June 30, 2025, due to net income and other comprehensive income | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :------------------------------------ | :------------------ | :-------------- | | Total Equity | $2,201,419 | $2,313,687 | | Net income (loss) for the period | $(81,954) (Q1 2025) / $151,816 (Q2 2025) | N/A | | Share-based compensation | $21,921 (Q1 2025) / $19,070 (Q2 2025) | N/A | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on business operations, accounting policies, financial performance, and subsequent events supporting the consolidated financial statements [Note 1. Description of Business and Basis of Presentation](index=10&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Sphere Entertainment Co. operates two segments: Sphere (live entertainment) and MSG Networks (regional sports media), with financial statements prepared under GAAP - Sphere Entertainment Co. is comprised of two reportable segments: Sphere (next-generation entertainment medium) and MSG Networks (regional sports and entertainment networks, including DTC streaming)[23](index=23&type=chunk) - The first Sphere venue opened in Las Vegas in September 2023, offering immersive productions, concerts, and corporate events, with plans underway for a second Sphere in Abu Dhabi, UAE, announced in October 2024[24](index=24&type=chunk) - MSG Networks serves the New York designated market area, broadcasting live local games for NBA (Knicks) and NHL (Rangers, Islanders, Devils, Sabres), and NFL (Giants, Bills)[24](index=24&type=chunk) [Note 2. Accounting Policies](index=11&type=section&id=Note%202.%20Accounting%20Policies) This note details the company's accounting policies, including consolidation principles, use of estimates, and the impact of new and adopted accounting pronouncements - The company's condensed consolidated financial statements include Sphere Entertainment Co. and its subsidiaries, with all significant intercompany transactions eliminated[31](index=31&type=chunk) - Management uses estimates for items such as credit losses, valuation of investments, goodwill, intangible assets, deferred production content, deferred tax assets, and pension obligations[32](index=32&type=chunk) - Recently issued ASUs include 2024-03 (Disaggregation of Income Statement Expenses, effective Dec 31, 2027), 2024-04 (Induced Conversions of Convertible Debt Instruments, effective Dec 31, 2026), and 2025-05 (Measurement of Credit Losses for Accounts Receivable and Contract Assets, effective Q1 2026)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - Recently adopted ASUs include 2023-07 (Improvements to Reportable Segment Disclosures, effective Dec 31, 2024) and 2023-09 (Improvements to Income Tax Disclosures, effective Dec 31, 2025)[37](index=37&type=chunk)[38](index=38&type=chunk) [Note 3. Revenue Recognition](index=13&type=section&id=Note%203.%20Revenue%20Recognition) This note outlines revenue recognition policies and disaggregates revenue by source and segment, distinguishing between event-related and media-related revenues | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sphere | $175,587 | $151,217 | $333,132 | $321,581 | | MSG Networks | $107,090 | $122,178 | $230,119 | $273,144 | | Total Revenues | $282,677 | $273,395 | $563,251 | $594,725 | | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Ticketing and venue license fee revenues | $124,640 | $104,973 | $237,618 | $215,628 | | Sponsorship, signage, Exosphere advertising, and suite license revenues | $22,624 | $20,356 | $46,798 | $60,867 | | Food, beverage, and merchandise revenues | $27,884 | $25,074 | $47,773 | $43,549 | | Media networks revenues | $107,090 | $122,178 | $230,119 | $273,144 | | Total revenues from contracts with customers | $282,238 | $272,581 | $562,308 | $593,188 | - As of June 30, 2025, remaining performance obligations were **$208,881 thousand**, of which **66%** is expected to be recognized over the next two years and **34%** thereafter, primarily from sponsorship agreements[50](index=50&type=chunk) [Note 4. Restructuring Charges](index=17&type=section&id=Note%204.%20Restructuring%20Charges) The company incurred restructuring charges for employee termination benefits in the Sphere segment, leading to a decrease in the restructuring liability | Period | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Three Months Ended June 30, | $947 | $141 | | Six Months Ended June 30, | $2,788 | $4,808 | | Metric | Amount | | :-------------------------- | :----- | | Balance as of December 31, 2024 | $3,590 | | Restructuring charges | $2,788 | | Payments | $(4,115) | | Balance as of June 30, 2025 | $2,263 | [Note 5. Investments](index=17&type=section&id=Note%205.%20Investments) The company's investments, primarily equity method holdings, increased slightly, with recognized unrealized gains on other equity investments | Investment | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------- | :-------------- | :---------------- | | SACO Technologies Inc. (30% ownership) | $19,151 | $18,095 | | Gotham Advanced Media and Entertainment, LLC (50% ownership) | $9,718 | $10,000 | | Equity investments without readily determinable fair values | $8,721 | $8,721 | | Other equity investments with readily determinable fair values | $3,721 | $3,580 | | Total investments | $41,311 | $40,396 | - The Company recognized unrealized gains on equity investments of **$219 thousand** (three months) and **$240 thousand** (six months) for the period ended June 30, 2025[53](index=53&type=chunk) [Note 6. Property and Equipment, net](index=18&type=section&id=Note%206.%20Property%20and%20Equipment%2C%20net) Net property and equipment decreased due to depreciation and a pre-tax loss from the sale of land in Stratford, London | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Total property and equipment, gross | $3,508,527 | $3,528,414 | | Less accumulated depreciation and amortization | $(656,549) | $(492,684) | | Property and equipment, net | $2,851,978 | $3,035,730 | - The Company completed the sale of its land in Stratford, London, for **$48,757 thousand**, recognizing a pre-tax loss of **$3,741 thousand**[57](index=57&type=chunk) | Period | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Three Months Ended June 30, | $82,251 | $80,885 | | Six Months Ended June 30, | $164,880 | $159,973 | [Note 7. Original Immersive Production Content](index=18&type=section&id=Note%207.%20Original%20Immersive%20Production%20Content) Deferred production content costs for original immersive productions significantly increased, particularly for in-process content, with amortization reported in direct operating expenses | Production Content | June 30, 2025 | December 31, 2024 | | :------------------- | :-------------- | :---------------- | | Released, less amortization | $39,880 | $52,782 | | In-process | $114,979 | $49,837 | | Total production content | $154,859 | $102,619 | | Period | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Three Months Ended June 30, | $5,845 | $7,093 | | Six Months Ended June 30, | $13,089 | $14,882 | [Note 8. Goodwill and Intangible Assets](index=19&type=section&id=Note%208.%20Goodwill%20and%20Intangible%20Assets) Goodwill remained stable after a $61.2 million impairment charge for MSG Networks, while amortizable intangible assets slightly decreased | Segment | June 30, 2025 | December 31, 2024 | | :---------- | :-------------- | :---------------- | | Sphere | $46,864 | $46,864 | | MSG Networks | $363,308 | $363,308 | | Total Goodwill | $410,172 | $410,172 | - A non-cash goodwill impairment charge of **$61.2 million** was recorded for the MSG Networks segment as of December 31, 2024, following an interim impairment test triggered by the expiration of an affiliation agreement with Altice[62](index=62&type=chunk) | Intangible Asset | June 30, 2025 | December 31, 2024 | | :----------------- | :-------------- | :---------------- | | Affiliate relationships | $11,680 | $13,238 | | Technology | $11,889 | $13,440 | | Trade name | $1,560 | $1,705 | | Total | $25,129 | $28,383 | [Note 9. Commitments and Contingencies](index=20&type=section&id=Note%209.%20Commitments%20and%20Contingencies) The company has significant broadcast rights commitments and settled Networks Merger litigations, with an ongoing insurance coverage dispute for one settlement | Segment | 2025 (Remainder) | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :---------------------- | :--------------- | :----- | :----- | :----- | :----- | :--------- | :------ | | Sphere | $23,890 | $20,103 | $15,333 | $— | $— | $— | $59,326 | | MSG Networks | $114,918 | $219,363 | $225,092 | $204,742 | $113,008 | $39,393 | $916,516 | | Total Commitments | $138,808 | $239,466 | $240,425 | $204,742 | $113,008 | $39,393 | $975,842 | - The MSG Entertainment Litigation was settled for approximately **$85 million**, paid to the Company by insurers[69](index=69&type=chunk) - The MSG Networks Litigation settled for approximately **$48.5 million**, with **$28 million** paid by the Company and **$20.5 million** by insurers, with an ongoing dispute over remaining insurance coverage[71](index=71&type=chunk) [Note 10. Credit Facilities and Convertible Notes](index=22&type=section&id=Note%2010.%20Credit%20Facilities%20and%20Convertible%20Notes) This note details the company's debt structure, including the MSG Networks debt restructuring that yielded a $346.092 million gain, and terms for other credit facilities and convertible notes - On June 27, 2025, MSG Networks' prior credit facilities were replaced with a new **$210 million** MSGN Term Loan Facility, maturing December 31, 2029, following a troubled debt restructuring[79](index=79&type=chunk) - The troubled debt restructuring resulted in a gain on extinguishment of debt of **$346.092 million**[93](index=93&type=chunk) - The MSGN Term Loan Facility requires fixed amortization of **$10 million** per quarter starting September 30, 2025, and mandatory prepayments from excess cash sweep[84](index=84&type=chunk) - The LV Sphere Term Loan Facility is a **$275 million** senior secured term loan maturing December 22, 2027, with principal due at maturity and no prior amortization payments[94](index=94&type=chunk)[96](index=96&type=chunk) - The Company has **$258.750 million** in 3.50% Convertible Senior Notes due 2028[101](index=101&type=chunk) | Year | MSGN Term Loan Facility | LV Sphere Term Loan Facility | 3.50% Convertible Senior Notes | Total Debt | | :--------- | :---------------------- | :--------------------------- | :----------------------------- | :--------- | | 2025 (rem) | $20,000 | $— | $— | $20,000 | | 2026 | $40,000 | $— | $— | $40,000 | | 2027 | $40,000 | $275,000 | $— | $315,000 | | 2028 | $40,000 | $— | $258,750 | $298,750 | | 2029 | $70,000 | $— | $— | $70,000 | | Thereafter | $— | $— | $— | $— | | Total debt | $210,000 | $275,000 | $258,750 | $743,750 | | Liability | June 30, 2025 Carrying Value | June 30, 2025 Fair Value | December 31, 2024 Carrying Value | December 31, 2024 Fair Value | | :-------------------------------- | :----------------------------- | :------------------------- | :------------------------------- | :------------------------- | | MSG Networks term loan facility | $363,970 | $168,000 | $829,125 | $335,796 | | LV Sphere Term Loan Facility | $275,000 | $270,875 | $275,000 | $273,625 | | 3.50% Convertible Senior Notes | $253,863 | $363,984 | $253,155 | $353,246 | | Total debt | $892,833 | $802,859 | $1,357,280 | $962,667 | [Note 11. Pension Plans and Other Postretirement Benefit Plan](index=30&type=section&id=Note%2011.%20Pension%20Plans%20and%20Other%20Postretirement%20Benefit%20Plan) The company sponsors various pension and postretirement plans, with net periodic benefit costs for pension plans and increased expenses for defined contribution plans - The Company sponsors both funded and unfunded, qualified and non-qualified pension plans (Networks Plans, Sphere Excess Plan) and a postretirement benefit plan[108](index=108&type=chunk) | 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 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net periodic benefit cost (Pension Plans) | $389 | $475 | $778 | $851 | | Net periodic benefit cost (Postretirement Plan) | $28 | $69 | $56 | $74 | | Period | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Three Months Ended June 30, | $2,417 | $1,420 | | Six Months Ended June 30, | $4,012 | $3,163 | [Note 12. Share-based Compensation](index=33&type=section&id=Note%2012.%20Share-based%20Compensation) Share-based compensation expense increased, with $91.391 million in unrecognized compensation cost for unvested awards to be recognized over 2.1 years | Period | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Three Months Ended June 30, | $19,497 | $13,263 | | Six Months Ended June 30, | $40,918 | $30,427 | - As of June 30, 2025, there was **$91.391 million** of unrecognized compensation cost related to unvested RSUs, PSUs, stock options, and SARs, with a weighted-average recognition period of approximately **2.1 years**[119](index=119&type=chunk) - For the six months ended June 30, 2025, approximately **465 RSUs**, **368 PSUs**, and **1,685 stock options** were granted[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk) [Note 13. Stockholders' Equity](index=34&type=section&id=Note%2013.%20Stockholders%27%20Equity) The company has no outstanding preferred stock, a re-authorized $350 million share repurchase program with no activity, and significantly improved accumulated other comprehensive loss - The Company is authorized to issue **15,000 shares** of preferred stock, but none were outstanding as of June 30, 2025[126](index=126&type=chunk) - A share repurchase program for up to **$350 million** of Class A Common Stock was re-authorized on March 29, 2023, but no shares have been repurchased to date[127](index=127&type=chunk) | Metric | December 31, 2024 | June 30, 2025 | | :------------------------------------ | :------------------ | :-------------- | | Balance of Accumulated Other Comprehensive Loss | $(7,508) | $(34) | | Other comprehensive income (loss), total (Q2 2025) | $5,489 | N/A | | Other comprehensive income (loss), total (YTD 2025) | $7,474 | N/A | [Note 14. Related Party Transactions](index=35&type=section&id=Note%2014.%20Related%20Party%20Transactions) The Dolan Family Group controls the company, with significant related party transactions including amended MSG Networks media rights and issued penny warrants to MSG Sports - The Dolan Family Group beneficially owns **100%** of Class B Common Stock and approximately **6.0%** of Class A Common Stock, representing about **71.8%** of aggregate voting power[133](index=133&type=chunk) - MSG Networks' media rights agreements with New York Knicks, LLC and New York Rangers, LLC were amended on June 27, 2025, to reduce annual rights fees by **28%** and **18%** respectively, eliminate escalators, and shorten terms to expire after the 2028-29 seasons[135](index=135&type=chunk)[188](index=188&type=chunk) - MSG Networks issued penny warrants to MSG Sports, exercisable for **19.9%** of MSG Networks' common stock, with an estimated fair value of **$0** at inception[136](index=136&type=chunk) | 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 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $1,202 | $323 | $2,486 | $1,538 | | Total operating expenses, net | $(44,800) | $(75,619) | $(111,718) | $(154,182) | | - Media fees | $(24,181) | $(42,845) | $(69,124) | $(86,792) | | - Corporate G&A (MSG Ent. Agreement) | $(17,188) | $(27,355) | $(34,522) | $(54,849) | [Note 15. Segment Information](index=37&type=section&id=Note%2015.%20Segment%20Information) The company's two reportable segments, Sphere and MSG Networks, are evaluated by Adjusted Operating Income, with detailed financial results and reconciliation provided - The company's two reportable segments are Sphere and MSG Networks, with performance evaluated using Adjusted Operating Income (AOI)[140](index=140&type=chunk)[141](index=141&type=chunk) | Period | 2025 | 2024 | Change | | :------------------------------------ | :----- | :----- | :----- | | Three Months Ended June 30, | $61,466 | $25,657 | $35,809 | | Six Months Ended June 30, | $97,434 | $87,178 | $10,256 | | Period | 2025 | 2024 | Change | | :------------------------------------ | :----- | :----- | :----- | | Three Months Ended June 30, | $24,949 | $(5,473) | $30,422 | | Six Months Ended June 30, | $38,096 | $7,436 | $30,660 | | Period | 2025 | 2024 | Change | | :------------------------------------ | :----- | :----- | :----- | | Three Months Ended June 30, | $36,517 | $31,130 | $5,387 | | Six Months Ended June 30, | $59,338 | $79,742 | $(20,404) | | Customer | Accounts Receivable (June 30, 2025) | Accounts Receivable (Dec 31, 2024) | Revenues (Q2 2025) | Revenues (Q2 2024) | Revenues (YTD 2025) | Revenues (YTD 2024) | | :--------- | :---------------------------------- | :--------------------------------- | :----------------- | :----------------- | :------------------ | :------------------ | | Customer A | 13% | 14% | N/A | N/A | N/A | N/A | | Customer B | 12% | 14% | N/A | N/A | N/A | N/A | | Customer C | 10% | 10% | N/A | N/A | N/A | N/A | | Customer 1 | N/A | N/A | 11% | 12% | 11% | 11% | | Customer 2 | N/A | N/A | 9% | 12% | 6% | 12% | | Customer 3 | N/A | N/A | 8% | 9% | 8% | 9% | [Note 16. Additional Financial Information](index=43&type=section&id=Note%2016.%20Additional%20Financial%20Information) This note summarizes cash, prepaid expenses, accrued liabilities, and income tax payments, providing additional financial details | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Cash and cash equivalents | $355,661 | $501,954 | | Restricted cash | $13,266 | $13,679 | | Total cash, cash equivalents and restricted cash | $368,927 | $515,633 | | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Accrued payroll and employee related liabilities | $41,058 | $42,892 | | Cash due to promoters | $94,827 | $109,078 | | Capital expenditure accruals | $131,930 | $142,989 | | Accrued legal fees | $25,683 | $22,046 | | Other accrued expenses | $53,427 | $71,365 | | Total Accrued expenses and other current liabilities | $346,925 | $388,370 | - Income tax payments, net of refunds, for the six months ended June 30, 2025, were **$1,939 thousand**, compared to **$(140) thousand** in the prior year[159](index=159&type=chunk) [Note 17. Subsequent Events](index=44&type=section&id=Note%2017.%20Subsequent%20Events) Post-period, Sphere Entertainment Group finalized agreements with DCT Abu Dhabi for Sphere Abu Dhabi, securing franchise rights, technology licenses, and future royalties - On July 25, 2025, Sphere Entertainment Group and DCT Abu Dhabi finalized agreements for Sphere Abu Dhabi, granting DCT Abu Dhabi exclusive rights to build and operate the venue and additional Spheres in the MENA region[160](index=160&type=chunk)[161](index=161&type=chunk) - Sphere Entertainment Group will receive a franchise initiation fee (partially paid, with installments tied to milestones) and royalties based on Sphere Abu Dhabi's total revenues and ticket sales for licensed content, plus fees for pre-construction and construction services[163](index=163&type=chunk)[164](index=164&type=chunk) - The Franchise Agreement has an initial term of **25 years** from opening, with two **10-year** renewal options[163](index=163&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Sphere Entertainment Co.'s financial condition and results for the three and six months ended June 30, 2025, covering business, recent developments, performance, liquidity, and accounting estimates [Introduction](index=47&type=section&id=Introduction) This MD&A introduction supplements financial statements, discusses forward-looking statements and risks, and outlines the company's primary business activities - The MD&A contains forward-looking statements regarding future operating and financial performance, including the success of Sphere, development of immersive productions, plans for Sphere Abu Dhabi, debt financing, and MSG Networks subscriber trends[165](index=165&type=chunk) - Investors are cautioned that forward-looking statements are not guarantees of future performance and involve risks and uncertainties, which are detailed in the 'Risk Factors' section[165](index=165&type=chunk)[167](index=167&type=chunk) [Business Overview](index=47&type=section&id=Business%20Overview) Sphere Entertainment Co. operates two segments: Sphere, a next-generation entertainment medium, and MSG Networks, a regional sports and entertainment network - Sphere segment focuses on multi-sensory experiences at its Las Vegas venue, hosting immersive productions, concerts, and corporate events, supported by Sphere Studios, with a second Sphere planned for Abu Dhabi[171](index=171&type=chunk) - MSG Networks segment includes MSG Network and MSG Sportsnet, providing exclusive live local games and programming for major New York-area sports teams (Knicks, Rangers, Islanders, Devils, Sabres, Giants, Bills), along with the MSG+ streaming service[172](index=172&type=chunk)[175](index=175&type=chunk) [Factors Affecting Operating Results](index=49&type=section&id=Factors%20Affecting%20Operating%20Results) Operating results are influenced by Sphere's audience and event attraction, MSG Networks' subscriber trends and media rights, and broader economic conditions - Sphere segment's operating results are dependent on attracting audiences to The Sphere Experience, advertisers, marketing partners, and guests/artists for events[178](index=178&type=chunk) - MSG Networks' operating results are influenced by affiliation agreements with distributors, subscriber numbers, media rights agreements, debt service payments, the success of MSG+ streaming, and advertising rates[178](index=178&type=chunk) - General economic conditions, especially in Las Vegas and New York City, can impact tourism, demand for entertainment, advertising, sponsorship, and concession sales, potentially affecting the number of events and immersive productions[179](index=179&type=chunk) [Recent Developments](index=49&type=section&id=Recent%20Developments) Recent developments include MSG Networks' debt restructuring with reduced media rights fees and finalized agreements for Sphere Abu Dhabi, securing franchise fees and royalties [MSG Networks Debt Restructuring](index=49&type=section&id=MSG%20Networks%20Debt%20Restructuring) MSG Networks completed a debt restructuring on June 27, 2025, establishing a new $210 million term loan, involving a capital contribution, cash payment, and amended media rights agreements - MSG Networks' debt was restructured on June 27, 2025, replacing prior facilities with a **$210 million** MSGN Term Loan Facility maturing December 31, 2029[182](index=182&type=chunk) - The Company made a **$15 million** capital contribution to MSG Networks, and MSGN L.P. made an **$80 million** cash payment to lenders[183](index=183&type=chunk) - Media rights agreements with the New York Knicks and New York Rangers were amended, reducing annual rights fees by **28%** and **18%** respectively, eliminating escalators, and setting new expiration dates after the 2028-29 seasons[185](index=185&type=chunk)[188](index=188&type=chunk) - MSG Networks issued penny warrants to MSG Sports, exercisable for **19.9%** of MSG Networks' common stock[186](index=186&type=chunk) [Sphere Abu Dhabi](index=51&type=section&id=Sphere%20Abu%20Dhabi) Sphere Entertainment Group finalized agreements with DCT Abu Dhabi for Sphere Abu Dhabi, granting exclusive rights for development and operation in exchange for franchise fees and royalties - On July 25, 2025, Sphere Entertainment Group and DCT Abu Dhabi finalized agreements for Sphere Abu Dhabi, granting DCT Abu Dhabi exclusive rights to build and operate the venue and additional Spheres in the MENA region[187](index=187&type=chunk)[189](index=189&type=chunk) - Sphere Entertainment Group will receive a franchise initiation fee (partially paid, with installments tied to milestones) and annual royalties based on Sphere Abu Dhabi's total revenues and ticket sales for licensed content, plus fees for pre-construction and construction services[191](index=191&type=chunk)[192](index=192&type=chunk) - The Franchise Agreement has an initial term of **25 years** from opening, with two **10-year** renewal options[191](index=191&type=chunk) [Other Matters](index=52&type=section&id=Other%20Matters) The "One Big Beautiful Bill Act" was signed into law on July 4, 2025, and the company is evaluating its impact on financial statements - The 'One Big Beautiful Bill Act' (OBBBA) was signed into law on July 4, 2025, introducing tax reform provisions[193](index=193&type=chunk) - The Company is currently evaluating the impact of OBBBA's tax reform provisions on its consolidated financial statements[193](index=193&type=chunk) [Condensed Consolidated Results of Operations](index=53&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations) The company reported net income for the three and six months ended June 30, 2025, driven by a $346.092 million debt extinguishment gain, despite mixed revenue and operating loss trends | 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 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $282,677 | $273,395 | $563,251 | $594,725 | | Direct operating expenses | $(131,318) | $(149,519) | $(289,641) | $(303,559) | | Selling, general, and administrative expenses | $(113,023) | $(107,040) | $(227,292) | $(230,189) | | Operating loss | $(50,159) | $(71,377) | $(128,768) | $(111,770) | | Gain on extinguishment of debt | $346,092 | — | $346,092 | — | | Net income (loss) | $151,816 | $(46,586) | $69,862 | $(93,826) | | Adjusted operating income | $61,466 | $25,657 | $97,434 | $87,178 | - The **$346.092 million** gain on extinguishment of debt for the three and six months ended June 30, 2025, was a primary driver of the net income turnaround[201](index=201&type=chunk) - Interest income decreased by **$3,645 thousand** (Q2) and **$7,421 thousand** (YTD) due to lower average cash balances, while interest expense decreased by **$1,059 thousand** (Q2) and **$1,972 thousand** (YTD) due to a reduction in the average outstanding principal balance of the MSGN Term Loan Facility[202](index=202&type=chunk)[203](index=203&type=chunk) - Income tax expense for the six months ended June 30, 2025, was **$101,616 thousand** (**59%** effective rate), significantly impacted by cancellation of debt income (CODI) excluded from taxable income under insolvency provisions[206](index=206&type=chunk)[207](index=207&type=chunk) [Business Segment Results](index=58&type=section&id=Business%20Segment%20Results) This section analyzes Sphere and MSG Networks segment performance, highlighting Sphere's revenue growth and improved operating income, and MSG Networks' revenue declines despite reduced media rights expenses [Sphere Segment](index=58&type=section&id=Sphere%20Segment) Sphere segment revenues increased due to more concerts and corporate events, improving operating loss and adjusted operating income, despite lower Sphere Experience revenues | 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 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $175,587 | $151,217 | $333,132 | $321,581 | | Direct operating expenses | $(76,351) | $(67,870) | $(146,887) | $(130,164) | | Selling, general, and administrative expenses | $(96,389) | $(102,109) | $(192,793) | $(211,085) | | Operating loss | $(83,448) | $(104,530) | $(177,210) | $(188,028) | | Adjusted operating income (loss) | $24,949 | $(5,473) | $38,096 | $7,436 | - Event-related revenues increased due to **9** (Q2) and **19** (YTD) additional concert residency shows and higher corporate events at Sphere in Las Vegas[217](index=217&type=chunk) - Revenues for The Sphere Experience decreased due to lower average per-show revenues (**$315k/performance** Q2 2025 vs **$358k/performance** Q2 2024) and fewer overall performances for the six-month period[220](index=220&type=chunk)[221](index=221&type=chunk) - Direct operating expenses increased due to higher event-related expenses and the impact of consolidating Holoplot after its acquisition in April 2024[222](index=222&type=chunk)[224](index=224&type=chunk) - Selling, general, and administrative expenses decreased due to lower employee compensation and professional fees[228](index=228&type=chunk)[229](index=229&type=chunk) [MSG Networks Segment](index=62&type=section&id=MSG%20Networks%20Segment) MSG Networks segment revenues decreased due to subscriber losses and the Altice non-carriage period, despite significant reductions in media rights fees, while SG&A expenses increased | 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 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $107,090 | $122,178 | $230,119 | $273,144 | | Direct operating expenses | $(54,967) | $(81,649) | $(142,754) | $(173,395) | | Selling, general, and administrative expenses | $(16,634) | $(4,931) | $(34,499) | $(19,104) | | Operating income | $33,289 | $33,153 | $48,442 | $76,258 | | Adjusted operating income | $36,517 | $31,130 | $59,338 | $79,742 | - Distribution revenue decreased primarily due to a **13.0%** (Q2) and **12.5%** (YTD) decrease in total subscribers (excluding Altice non-carriage period) and the absence of Altice revenues during its non-carriage period (Jan 1 - Feb 21, 2025)[241](index=241&type=chunk) - Advertising revenue decreased due to a lower number of live regular season and postseason professional sports telecasts[242](index=242&type=chunk) - Direct operating expenses decreased significantly due to reductions in media rights fees for certain professional sports teams, including retroactive adjustments, following the June 27, 2025, credit facilities restructuring[243](index=243&type=chunk) - Selling, general, and administrative expenses increased due to higher advertising and marketing costs and increased professional fees, partly due to the absence of litigation-related insurance recoveries in the prior year[244](index=244&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity relies on cash and operating cash flows, used for working capital, capital spending, and debt service, with future liquidity dependent on Sphere's cash flow generation - Primary liquidity sources are cash and cash equivalents and cash flows from operations, with uses including working capital, capital spending (e.g., Sphere content), and debt service[249](index=249&type=chunk) - As of June 30, 2025, unrestricted cash and cash equivalents were **$355.661 million**, down from **$501.954 million** at December 31, 2024[250](index=250&type=chunk)[157](index=157&type=chunk) - Cash usage for the period included **$105 million** in principal payments and **$52.711 million** net cash used in operating activities[250](index=250&type=chunk) - The company's liquidity is highly dependent on Sphere generating significant positive cash flow, which is uncertain given the novel nature of its immersive productions[251](index=251&type=chunk)[320](index=320&type=chunk) - The company has a **$350 million** share repurchase program authorized, but no shares have been repurchased to date[253](index=253&type=chunk) - Sphere Entertainment Group finalized agreements for Sphere Abu Dhabi on July 25, 2025, which will provide franchise initiation fees and future royalties[255](index=255&type=chunk) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(52,711) | $28,570 | | Net cash provided by (used in) investing activities | $16,441 | $(46,156) | | Net cash used in financing activities | $(111,059) | $(36,242) | | Net decrease in cash, cash equivalents, and restricted cash | $(146,706) | $(54,604) | [Seasonality of Our Business](index=71&type=section&id=Seasonality%20of%20Our%20Business) MSG Networks' annual revenues are typically higher in the first and fourth quarters, driven by advertising from live NBA and NHL programming - MSG Networks segment's annual revenues are higher in the first and fourth quarters, driven by advertising revenue from live NBA and NHL programming[283](index=283&type=chunk) [Recently Issued Accounting Pronouncements and Critical Accounting Estimates](index=71&type=section&id=Recently%20Issued%20Accounting%20Pronouncements%20and%20Critical%20Accounting%20Estimates) No material changes occurred in critical accounting policies, but an interim goodwill impairment test for MSG Networks resulted in a $61.2 million non-cash charge - No material changes to critical accounting policies were reported[285](index=285&type=chunk) - The company performed an annual goodwill impairment test as of August 31, 2024, and an interim quantitative impairment test for the MSG Networks reporting unit as of December 31, 2024[285](index=285&type=chunk)[288](index=288&type=chunk) - The interim impairment test for MSG Networks resulted in a non-cash goodwill impairment charge of **$61.2 million**, triggered by changes in the programming industry and the expiration of an affiliation agreement with Altice[288](index=288&type=chunk)[291](index=291&type=chunk) | Reporting Unit | June 30, 2025 | | :------------- | :-------------- | | Sphere | $46,864 | | MSG Networks | $363,308 | | Total Goodwill | $410,172 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's market risk exposure, including interest rate risk on floating-rate debt and foreign currency exchange rate risk from international operations - The Company is exposed to interest rate risk from floating-rate borrowings under its credit facilities; a hypothetical **200 basis point** increase in floating interest rates would increase interest payments by **$12.779 million** annually[293](index=293&type=chunk) - Foreign currency exchange rate exposure primarily relates to activities in the United Kingdom (British pound sterling) and Germany (Euro); a hypothetical **10%** fluctuation in GBP/USD would change net asset value by approximately **$100 thousand**, and for EUR/USD by approximately **$140 thousand**[294](index=294&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) - The Company may use foreign currency forward exchange contracts to reduce translation risk but does not plan to use derivative financial instruments for speculative purposes[297](index=297&type=chunk) [Item 4. Controls and Procedures](index=74&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 over financial reporting - Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[298](index=298&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025[299](index=299&type=chunk) [PART II. OTHER INFORMATION](index=75&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information, including legal proceedings, risk factors, equity security sales, exhibits, and the report's signature [Item 1. Legal Proceedings](index=75&type=section&id=Item%201.%20Legal%20Proceedings) This section details Networks Merger legal proceedings, including the MSG Entertainment Litigation settled by insurers and the MSG Networks Litigation with an ongoing insurance coverage dispute - The MSG Entertainment Litigation, alleging fiduciary breaches in the Networks Merger, was settled for approximately **$85 million**, fully funded by the other defendants' insurers[305](index=305&type=chunk) - The MSG Networks Litigation, also alleging fiduciary breaches, was settled for approximately **$48.5 million**; the Company paid **$28 million**, and insurers paid **$20.5 million**, with an ongoing dispute regarding further insurance coverage[307](index=307&type=chunk) - As of June 30, 2025, approximately **$18 million** has been accrued in Accrued expenses and other current liabilities related to the MSG Networks Litigation settlement[307](index=307&type=chunk) [Item 1A. Risk Factors](index=76&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks, including MSG Networks' debt repayment challenges, reliance on media rights, and the company's high leverage and dependence on Sphere's uncertain cash flow - MSG Networks faces risks including the inability to generate sufficient operating cash flows to repay its **$210 million** term loan facility (MSGN Term Loan Facility) maturing December 31, 2029, which could lead to acceleration of debt and foreclosure by lenders[310](index=310&type=chunk)[311](index=311&type=chunk) - The MSG Networks business is highly dependent on media rights agreements with professional sports teams (Knicks, Rangers), which were amended on June 27, 2025, to reduce rights fees and shorten terms to the 2028-29 seasons; failure to renew these or generate sufficient revenue could materially negatively affect the business[312](index=312&type=chunk)[314](index=314&type=chunk) - Sphere Entertainment Co. is highly leveraged with approximately **$889.3 million** in consolidated debt as of June 30, 2025; its ability to fund operations and service debt depends on Sphere generating significant positive cash flow, which is uncertain given the novel nature of its immersive productions[317](index=317&type=chunk)[320](index=320&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=79&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a re-authorized $350 million share repurchase program for Class A Common Stock, with no shares repurchased to date - The Company's Board of Directors authorized a share repurchase program for up to **$350 million** of Class A Common Stock, re-authorized on March 29, 2023[327](index=327&type=chunk) - As of June 30, 2025, no shares have been repurchased under the share repurchase program[327](index=327&type=chunk) [Item 6. Exhibits](index=80&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, agreements, certifications, and XBRL data [SIGNATURE](index=82&type=section&id=SIGNATURE) The report is signed by Robert Langer, Executive Vice President, Chief Financial Officer and Treasurer, on August 11, 2025 - The report was signed by Robert Langer, Executive Vice President, Chief Financial Officer and Treasurer, on August 11, 2025[334](index=334&type=chunk)[335](index=335&type=chunk)

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 Commission file number 001-14157 TELEPHONE AND DATA SYSTEMS, INC. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECU ...

[Executive Summary & Q1 FY2026 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q1%20FY2026%20Highlights) Powerfleet reported a strong start to FY2026, with significant sequential growth in services revenue, robust year-over-year total revenue growth, and substantial expansion in Adjusted EBITDA and gross margins, leading to raised full-year revenue guidance [Key Financial & Operational Achievements](index=1&type=section&id=Key%20Financial%20%26%20Operational%20Achievements) Powerfleet reported a strong start to FY2026, with significant sequential growth in services revenue, robust year-over-year total revenue growth, and substantial expansion in Adjusted EBITDA and gross margins. The company also raised its full-year revenue guidance | Metric | Q1 FY2026 | Q4 FY2025 | Sequential Change | YoY Change | | :-------------------------------- | :---------- | :---------- | :---------------- | :--------- | | Services Revenue (Millions USD) | $86.5 | $81.8 | +6% | +53% | | Total Revenue (Millions USD) | $104.1 | - | - | +38% | | Services Revenue as % of Total | 83% | 79% | +4 pp | +8 pp | | Adjusted EBITDA (Millions USD) | $21.6 | - | - | +58% | | Adjusted EBITDA Margin | 21% | - | +260 bps | - | | Adjusted EBITDA Gross Margins | 67% | - | +3% | - | - The EBITDA expansion program delivered **$11 million in annual savings**, achieving **60% of the full-year target of $18 million**[2](index=2&type=chunk) | Metric | New FY2026 Guidance (Millions USD) | Prior FY2026 Guidance (Millions USD) | | :-------------------- | :------------------ | :-------------------- | | Total Revenue | $430-$440 | $420-$440 | [Management Commentary](index=1&type=section&id=MANAGEMENT%20COMMENTARY) CEO Steve Towe highlighted the strong Q1 performance, attributing it to accelerating adoption of Unity's AI-driven SaaS solutions and a successful transition to a recurring, high-margin business model. He emphasized robust market demand, particularly through indirect channels, and efficient scaling across verticals - The company's performance underscores accelerating adoption of Unity's AI-driven SaaS solutions and validates the long-term value creation through a transition to a recurring, high-margin business model[5](index=5&type=chunk) | Metric | Q1 FY2026 | | :-------------------- | :---------- | | AI Video ARR Bookings | +52% QoQ | | New Logo Wins | +14% Sequential | | Six-figure ARR Deals | Across 11 diverse industry sectors | - Services revenue represented a record **83% of total revenue**, highlighting a successful shift to higher-quality SaaS revenue while navigating tariff headwinds and accelerating supply chain efficiencies[5](index=5&type=chunk) [Detailed Q1 FY2026 Performance](index=2&type=section&id=FIRST%20QUARTER%20FY2026%20OPERATIONAL%20AND%20FINANCIAL%20HIGHLIGHTS) This section provides an in-depth review of Powerfleet's operational achievements and financial results for Q1 FY2026, highlighting growth drivers and efficiency gains [Operational Momentum](index=2&type=section&id=Operational%20Momentum) Powerfleet demonstrated strong operational momentum in Q1 FY2026, marked by significant ARR wins across diverse sectors, robust indirect channel performance, and strategic partnerships. The company also received industry recognition for its innovation and launched a new AI-powered risk application [Go-To-Market Momentum](index=2&type=section&id=Go-To-Market%20Momentum_sub) The company achieved over $100k ARR wins across 11 diverse sectors and saw strong indirect channel partner momentum, with AI video bookings surging 52% quarter-over-quarter. A major strategic sales channel partnership was signed with MTN Group - **11 diverse sectors** contributed to ARR wins over **$100k**[12](index=12&type=chunk) | Metric | Q1 FY2026 | | :-------------------- | :---------- | | AI Video Bookings | +52% QoQ | | Indirect Channel Partner Momentum | Strong, contributing significantly to ARR | - A major new strategic sales channel partnership was signed with MTN Group, one of the world's largest network providers, to white label Powerfleet's portfolio of solutions to enterprise customers[12](index=12&type=chunk) [Technology and Innovation](index=2&type=section&id=Technology%20and%20Innovation) Powerfleet was recognized by ABI Research as one of the 7 most innovative global tech companies and launched a new AI-powered automated risk application. The company also announced an upcoming Investor Innovation Session - Powerfleet was ranked by ABI Research as one of the **7 most innovative global tech companies**[12](index=12&type=chunk) - Launched new AI-powered automated risk application to drive top-tier quantifiable enterprise safety benefits[12](index=12&type=chunk) - Powerfleet will host an Investor Innovation Session showcasing Unity AIoT product and technology in November 2025[12](index=12&type=chunk) [Financial Performance](index=2&type=section&id=First%20Quarter%20Financial%20Highlights) The first quarter saw significant financial improvements, including substantial revenue growth driven by services, expanded gross margins, and a notable increase in Adjusted EBITDA. The company also improved its net loss per share and reduced its net debt leverage ratio [Revenue and Gross Profit](index=2&type=section&id=Revenue%20and%20Gross%20Profit) Total revenue increased by 38% year-over-year to $104.1 million, primarily due to the Fleet Complete acquisition and organic growth in recurring services. Services revenue surged 53% YoY and 6% sequentially, now comprising a record 83% of total revenue, contributing to a 300 basis point expansion in adjusted EBITDA gross margin to 67% | Metric | Q1 FY2026 (Millions USD) | Q1 FY2025 (Millions USD) | YoY Change | | :-------------------- | :---------- | :---------- | :--------- | | Total Revenue | $104.1 | $75.43 | +38% | | Services Revenue | $86.5 | $56.69 | +53% | | Services Revenue as % of Total | 83% | 75% | +8 pp | | Adjusted EBITDA Gross Margin | 67% | 64% | +300 bps | [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Total operating expenses were $58.5 million, with adjusted operating expenses at $54.3 million after excluding one-time transaction and restructuring costs. General and administrative expenses improved by 400 basis points as a percentage of revenue, while sales and marketing expenses increased due to planned growth reinvestments | Metric | Q1 FY2026 (Millions USD) | Q1 FY2025 (Millions USD) | Change (Millions USD) | | :------------------------------------------ | :---------- | :---------- | :-------------------- | | Total Operating Expenses | $58.5 | $57.88 | +$0.64 | | Adjusted Operating Expenses | $54.3 | $37.49 | +$16.78 | | G&A Expense as % of Revenue (Adjusted EBITDA) | 26% | 30% | -400 bps | | Sales & Marketing Expense as % of Revenue | 17% | 12% | +500 bps | | R&D Expense as % of Total Revenue | 5% | 4% | +100 bps | [Adjusted EBITDA and Net Loss](index=3&type=section&id=Adjusted%20EBITDA%20and%20Net%20Loss) Adjusted EBITDA increased 58% to $21.6 million, driven by the Fleet Complete acquisition, organic growth, margin expansion, and cost synergies. Net loss attributable to common stockholders improved to $0.08 per share from $0.21 per share in the prior year, with adjusted net income per share reaching $0.01 | Metric | Q1 FY2026 (Millions USD) | Q1 FY2025 (Millions USD) | YoY Change | | :------------------------------------------ | :---------- | :---------- | :--------- | | Adjusted EBITDA | $21.6 | $13.7 | +58% | | Net Loss Attributable to Common Stockholders per Share (USD) | $(0.08) | $(0.21) | Improved | | Adjusted Net Income per Share (USD) | $0.01 | $0.00 | Improved | [Debt and Leverage](index=3&type=section&id=Debt%20and%20Leverage) The adjusted net debt to adjusted EBITDA ratio improved to 2.97x from 3.22x at the end of fiscal year 2025. Net debt at quarter end stood at $234.8 million, comprising $35.6 million in cash and $270.4 million in total debt | Metric | Q1 FY2026 | FY2025 End | | :-------------------------------- | :---------- | :--------- | | Adjusted Net Debt to Adjusted EBITDA | 2.97x | 3.22x | | Net Debt at Quarter End (Millions USD) | $234.8 | - | | Cash and Cash Equivalents (Millions USD) | $35.6 | - | | Total Debt (Millions USD) | $270.4 | - | [Financial Outlook & Investor Information](index=3&type=section&id=FULL-YEAR%202026%20FINANCIAL%20OUTLOOK) This section outlines Powerfleet's updated full-year 2026 financial guidance, details for the investor conference call, and explanations of non-GAAP financial measures [Full-Year 2026 Financial Outlook](index=3&type=section&id=FULL-YEAR%202026%20FINANCIAL%20OUTLOOK_sub) Powerfleet increased its full-year 2026 revenue guidance to $430-$440 million, while maintaining its guidance for annual adjusted EBITDA growth of 45% to 55% and an improved adjusted net debt to adjusted EBITDA leverage ratio below 2.25x by March 31, 2026 | Metric | New FY2026 Guidance (Millions USD) | Prior FY2026 Guidance (Millions USD) | | :-------------------- | :------------------ | :-------------------- | | Total Revenue | $430-$440 | $420-$440 | | Metric | FY2026 Guidance | | :------------------------------------------ | :-------------- | | Annual Adjusted EBITDA Growth | 45% to 55% | | Adjusted Net Debt to Adjusted EBITDA Leverage Ratio | Below 2.25x by March 31, 2026 (from 3.2x as of March 31, 2025) | [Investor Conference Call Details](index=3&type=section&id=INVESTOR%20CONFERENCE%20CALL%20AND%20BUSINESS%20UPDATE) Powerfleet announced an investor conference call on Monday, August 11, 2025, at 8:30 a.m. Eastern time to discuss Q1 FY2026 results and provide a business update, with access details provided for participants and webcast replay - A conference call to discuss Q1 FY2026 results and provide a business update will be held on Monday, August 11, 2025, at **8:30 a.m. Eastern time**[16](index=16&type=chunk) - Access details for the conference call include toll-free (888-506-0062), international (973-528-0011), and participant access code (321752) A webcast and accompanying slide presentation will be available via ir.powerfleet.com[16](index=16&type=chunk) [Non-GAAP Financial Measures Explanation](index=3&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) Powerfleet provides several non-GAAP financial measures, such as adjusted EBITDA and adjusted net income per share, to supplement GAAP financial statements. These measures are intended to enhance investors' understanding of core operating results by excluding certain non-recurring or non-operational items - Powerfleet provides non-GAAP measures including adjusted EBITDA, adjusted EBITDA gross margin, adjusted EBITDA gross profit, adjusted EBITDA service margin, adjusted product margin, adjusted EBITDA operating expenses, adjusted net income per share, and net debt[17](index=17&type=chunk) - These non-GAAP measures are provided to enhance investors' overall understanding of Powerfleet's current financial performance by excluding certain expenses, gains, losses, and currency fluctuations that may not be indicative of core operating results[17](index=17&type=chunk) [Company Information & Disclosures](index=4&type=section&id=ABOUT%20POWERFLEET) This section presents an overview of Powerfleet's business, cautionary statements regarding forward-looking information, and contact details for investor and media relations [About Powerfleet](index=4&type=section&id=ABOUT%20POWERFLEET_sub) Powerfleet is a global leader in the Artificial Intelligence of Things (AIoT) software-as-a-service (SaaS) mobile asset industry, with over 30 years of experience. The company unifies business operations through data ingestion and integration, delivering actionable insights to help clients save lives, time, and money - Powerfleet is a global leader in the artificial intelligence of things (AIoT) software-as-a-service (SaaS) mobile asset industry, unifying business operations and delivering actionable insights[19](index=19&type=chunk) - The company is headquartered in New Jersey, United States, with offices globally, and is listed on The Nasdaq Global Market (AIOT) and the Johannesburg Stock Exchange (JSE: PWR)[19](index=19&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section advises readers that the press release contains forward-looking statements, which are subject to various known and unknown risks and uncertainties. Actual results may differ materially from expectations, and readers should not place undue reliance on these statements - The press release contains forward-looking statements, which are predictions of future events and are subject to significant known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[20](index=20&type=chunk)[21](index=21&type=chunk) - Key risks include challenges related to business combinations (MiX Telematics, Fleet Complete), global economic conditions, supply chain disruptions, technological changes, cybersecurity, intellectual property protection, competitive pressures, international political and economic landscapes, and changes in laws and regulations[21](index=21&type=chunk) [Investor & Media Contacts](index=5&type=section&id=Powerfleet%20Investor%20Contacts) Contact information is provided for investor relations and media inquiries for Powerfleet - Investor contacts are Carolyn Capaccio and Jody Burfening at Alliance Advisors IR (AIOTIRTeam@allianceadvisors.com)[23](index=23&type=chunk) - Media contact is Jonathan Bates (jonathan.bates@powerfleet.com, +44 121 717-5360)[23](index=23&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=POWERFLEET%2C%20INC.%20AND%20SUBSIDIARIES%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section contains the official GAAP financial statements, including statements of operations, balance sheets, and cash flows for the reported periods [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section presents the condensed consolidated statements of operations for the three months ended June 30, 2025, and 2024, detailing revenues, cost of revenues, gross profit, operating expenses, and net loss attributable to common stockholders | | Three Months Ended June 30, 2024 (Thousands USD) | Three Months Ended June 30, 2025 (Thousands USD) | | :------------------------------------------ | :------------------------------- | :------------------------------- | | **Revenues:** | | | | Products | $18,738 | $17,657 | | Services | 56,692 | 86,464 | | **Total revenues** | **75,430** | **104,121** | | **Cost of revenues:** | | | | Cost of products | 12,751 | 13,228 | | Cost of services | 23,031 | 34,412 | | **Total cost of revenues** | **35,782** | **47,640** | | **Gross profit** | **39,648** | **56,481** | | **Operating expenses:** | | | | Selling, general and administrative expenses | 54,782 | 53,663 | | Research and development expenses | 3,101 | 4,857 | | **Total operating expenses** | **57,883** | **58,520** | | **Loss from operations** | **(18,235)** | **(2,039)** | | Interest income | 304 | 196 | | Interest expense, net | (2,691) | (6,786) | | Other expense, net | (624) | (1,243) | | **Net loss before income taxes** | **(21,246)** | **(9,872)** | | Income tax expense | (1,053) | (362) | | **Net loss before non-controlling interest** | **(22,299)** | **(10,234)** | | Non-controlling interest | (13) | — | | **Net loss** | **(22,312)** | **(10,234)** | | Preferred stock dividend | (25) | — | | **Net loss attributable to common stockholders** | **$(22,337)** | **$(10,234)** | | Net loss per share attributable to common stockholders - basic and diluted (USD) | $(0.21) | $(0.08) | | Weighted average common shares outstanding - basic and diluted | 107,136 | 133,313 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section provides the condensed consolidated balance sheets as of June 30, 2025, and March 31, 2025, detailing the company's assets, liabilities, and stockholders' equity | | March 31, 2025 (Thousands USD) | June 30, 2025 (Thousands USD) | | :------------------------------------------ | :------------- | :------------ | | **ASSETS** | | | | Current assets: | | | | Cash and cash equivalents | $44,392 | $31,196 | | Restricted cash | 4,396 | 4,447 | | Accounts receivables, net | 78,623 | 81,482 | | Inventory, net | 18,350 | 23,892 | | Prepaid expenses and other current assets | 23,319 | 26,762 | | **Total current assets** | **169,080** | **167,779** | | Fixed assets, net | 58,011 | 62,712 | | Goodwill | 383,146 | 394,668 | | Intangible assets, net | 258,582 | 263,745 | | Right-of-use asset | 12,339 | 11,935 | | Severance payable fund | 3,796 | 4,097 | | Deferred tax asset | 3,934 | 3,926 | | Other assets | 21,183 | 21,920 | | **Total assets** | **$910,071** | **$930,782** | | **LIABILITIES** | | | | Current liabilities: | | | | Short-term bank debt and current maturities of long-term debt | $41,632 | $37,426 | | Accounts payable | 41,599 | 48,341 | | Accrued expenses and other current liabilities | 45,327 | 48,755 | | Deferred revenue - current | 17,375 | 17,116 | | Lease liability - current | 5,076 | 4,965 | | **Total current liabilities** | **151,009** | **156,603** | | Long-term debt - less current maturities | 232,160 | 232,954 | | Deferred revenue - less current portion | 5,197 | 5,133 | | Lease liability - less current portion | 8,191 | 7,994 | | Accrued severance payable | 6,039 | 6,754 | | Deferred tax liability | 57,712 | 57,387 | | Other long-term liabilities | 3,021 | 3,077 | | **Total liabilities** | **463,329** | **469,902** | | **STOCKHOLDERS' EQUITY** | | | | Preferred stock | — | — | | Common stock | 1,343 | 1,343 | | Additional paid-in capital | 671,400 | 673,253 | | Accumulated deficit | (205,783) | (216,017) | | Accumulated other comprehensive loss | (8,850) | 13,669 | | Treasury stock | (11,518) | (11,518) | | **Total stockholders' equity** | **446,592** | **460,730** | | Non-controlling interest | 150 | 150 | | **Total equity** | **446,742** | **460,880** | | **Total liabilities and stockholders' equity** | **$910,071** | **$930,782** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section presents the condensed consolidated statements of cash flows for the three months ended June 30, 2025, and 2024, outlining cash flows from operating, investing, and financing activities, as well as the effect of foreign exchange rate changes on cash | | Three Months Ended June 30, 2024 (Thousands USD) | Three Months Ended June 30, 2025 (Thousands USD) | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | | **Cash flows from operating activities** | | | | Net loss | $(22,312) | $(10,234) | | Adjustments to reconcile net loss to cash (used in) provided by operating activities: | | | | Non-controlling interest | 13 | — | | Inventory reserve | 257 | 193 | | Stock based compensation expense | 5,929 | 1,853 | | Depreciation and amortization | 10,335 | 16,031 | | Right-of-use assets, non-cash lease expense | 760 | 974 | | Derivative mark-to-market adjustment | — | 104 | | Bad debts expense | 1,993 | 1,856 | | Deferred income taxes | 1,021 | (3,157) | | Shares issued for transaction bonuses | 889 | — | | Lease termination and modification losses | — | 59 | | Other non-cash items | 482 | (513) | | Changes in operating assets and liabilities: | | | | Accounts receivables | (6,973) | (2,391) | | Inventories | (624) | (4,733) | | Prepaid expenses and other current assets | (1,518) | (1,284) | | Deferred costs | (1,789) | (2,730) | | Deferred revenue | (142) | (420) | | Accounts payable, accrued expenses and other current liabilities | 4,993 | 9,637 | | Lease liabilities | (927) | (881) | | Accrued severance payable, net | (2) | 357 | | **Net cash (used in) provided by operating activities** | **(7,615)** | **4,721** | | **Cash flows from investing activities:** | | | | Acquisition, net of cash assumed | 27,531 | — | | Proceeds from sale of fixed assets | — | 16 | | Capitalized software development costs | (2,308) | (3,724) | | Capital expenditures | (5,586) | (8,114) | | **Net cash provided by (used in) investing activities** | **19,637** | **(11,822)** | | **Cash flows from financing activities:** | | | | Repayment of long-term debt | (493) | (1,341) | | Short-term bank debt, net | 4,161 | (5,428) | | Purchase of treasury stock upon vesting of restricted stock | (2,836) | — | | Payment of preferred stock dividend and redemption of preferred stock | (90,298) | — | | Cash paid on dividends to affiliates | (4) | — | | **Net cash used in financing activities** | **(89,470)** | **(6,769)** | | Effect of foreign exchange rate changes on cash and cash equivalents | (823) | 725 | | **Net decrease in cash and cash equivalents, and restricted cash** | **(78,271)** | **(13,145)** | | Cash and cash equivalents, and restricted cash at beginning of the period | 109,664 | 48,788 | | **Cash and cash equivalents, and restricted cash at end of the period** | **$31,393** | **$35,643** | | **Reconciliation of cash, cash equivalents, and restricted cash, end of the period** | | | | Cash and cash equivalents | 30,242 | 31,196 | | Restricted cash | 1,151 | 4,447 | | **Cash, cash equivalents, and restricted cash, end of the period** | **$31,393** | **$35,643** | | **Supplemental disclosure of cash flow information:** | | | | Cash paid (received) for: | | | | Taxes | $41 | $873 | | Interest | $3,057 | $5,994 | | **Noncash investing and financing activities:** | | | | Common stock issued for transaction bonus | $9 | $— | | Shares issued in connection with MiX Combination | $362,005 | $— | [Reconciliation of Non-GAAP Financial Measures](index=10&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20ADJUSTED%20EBITDA%20FINANCIAL%20MEASURES) This section provides detailed reconciliations of GAAP figures to non-GAAP measures like Adjusted EBITDA, non-GAAP net income, and adjusted gross profit margins [Reconciliation of GAAP to Adjusted EBITDA](index=10&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20ADJUSTED%20EBITDA%20FINANCIAL%20MEASURES_sub) This section provides a reconciliation of Net Loss Attributable to Common Stockholders (GAAP) to Adjusted EBITDA (Non-GAAP) for the three months ended June 30, 2025, and 2024, detailing various adjustments | | Three Months Ended June 30, 2024 (Thousands USD) | Three Months Ended June 30, 2025 (Thousands USD) | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net loss attributable to common stockholders | $(22,337) | $(10,234) | | Non-controlling interest | 13 | — | | Preferred stock dividend | 25 | — | | Interest expense, net | 2,916 | 6,590 | | Other expense, net | — | 23 | | Income tax expense | 1,053 | 362 | | Depreciation and amortization | 10,335 | 16,031 | | Stock-based compensation | 5,929 | 1,853 | | Foreign currency losses | 109 | 1,161 | | Restructuring-related expenses | 1,198 | 2,442 | | Derivative mark-to-market adjustment | — | 104 | | Recognition of pre-October 1, 2024 contract assets (Fleet Complete) | — | 1,503 | | Acquisition-related expenses | 14,494 | 1,130 | | Integration-related expenses | — | 675 | | **Adjusted EBITDA** | **$13,735** | **$21,640** | [Reconciliation of GAAP to Non-GAAP Net Income](index=11&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20NON-GAAP%20NET%20INCOME%20FINANCIAL%20MEASURES) This section reconciles Net Loss (GAAP) to Non-GAAP Net Income for the three months ended June 30, 2025, and 2024, by adjusting for items such as intangible asset amortization, stock-based compensation, foreign currency impacts, and acquisition-related expenses | | Three Months Ended June 30, 2024 (Thousands USD) | Three Months Ended June 30, 2025 (Thousands USD) | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | | Net loss | $(22,312) | $(10,234) | | Incremental intangible assets amortization expense as a result of business combinations | 2,995 | 5,830 | | Stock-based compensation (non-recurring/accelerated cost) | 4,693 | — | | Foreign currency losses | 109 | 1,161 | | Income tax effect of net foreign exchange losses | (747) | (496) | | Restructuring-related expenses | 1,198 | 2,442 | | Income tax effect of restructuring costs | (103) | (66) | | Derivative mark-to-market adjustment | — | 104 | | Acquisition-related expenses | 14,494 | 1,130 | | Integration-related expenses | — | 675 | | Inventory rationalization and other | — | 415 | | **Non-GAAP net income** | **$327** | **$961** | | Weighted average shares outstanding | 107,136 | 133,313 | | **Non-GAAP net income per share - basic (USD)** | **$0.00** | **$0.01** | [Adjusted Gross Profit Margins](index=12&type=section&id=ADJUSTED%20GROSS%20PROFIT%20MARGINS) This section details the adjusted gross profit and gross profit margins for products, services, and total operations for the three months ended June 30, 2025, and 2024, including adjustments for depreciation and amortization | | Three Months Ended June 30, 2024 (Thousands USD) | Three Months Ended June 30, 2025 (Thousands USD) | | :------------------------------------------ | :------------------------------- | :------------------------------- | | **Products:** | | | | Product revenues | $18,738 | $17,657 | | Cost of products | 12,751 | 13,228 | | Products gross profit | $5,987 | $4,429 | | Products gross profit margin | 32.0% | 25.1% | | Depreciation and amortization | $— | $— | | Adjusted products gross profit | $5,987 | $4,429 | | Adjusted products gross profit margin | 32.0% | 25.1% | | **Services:** | | | | Services revenues | $56,692 | $86,464 | | Cost of services | 23,031 | 34,412 | | Services gross profit | $33,661 | $52,052 | | Services gross profit margin | 59.4% | 60.2% | | Depreciation and amortization | $8,729 | $13,241 | | Adjusted services gross profit | $42,390 | $65,293 | | Adjusted services gross profit margin | 74.8% | 75.5% | | **Total:** | | | | Total revenues | $75,430 | $104,121 | | Total cost of revenues | 35,782 | 47,640 | | Total gross profit | $39,648 | $56,481 | | Total gross profit margin | 52.6% | 54.2% | | Depreciation and amortization | $8,729 | $13,241 | | Adjusted total gross profit | $48,377 | $69,722 | | Adjusted total gross profit margin | 64.1% | 67.0% | [Non-GAAP Expense Ratios](index=13&type=section&id=NON-GAAP%20EXPENSE%20RATIOS) This section presents non-GAAP selling, general and administrative expenses and research and development expenses, both in absolute terms and as a percentage of total revenues, for the three months ended June 30, 2025, and 2024 | | Three Months Ended June 30, 2024 (Thousands USD) | Three Months Ended June 30, 2025 (Thousands USD) | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | | Total revenues | $75,430 | $104,121 | | **Selling, general and administrative expenses** | | | | Selling, general and administrative expenses | 54,782 | 53,663 | | Restructuring-related expenses | (1,198) | (2,442) | | Acquisition-related expenses | (14,494) | (1,130) | | Integration-related costs | — | (675) | | Depreciation and amortization | (1,606) | (2,790) | | Stock-based compensation | (5,929) | (1,853) | | Non-GAAP selling, general and administrative expenses | 31,555 | 44,773 | | Non-GAAP sales and marketing expenses | 9,052 | 17,958 | | Non-GAAP general and administrative expenses | 22,503 | 26,815 | | Non-GAAP selling, general and administrative expenses | $31,555 | $44,773 | | Non-GAAP sales and marketing expenses as a percentage of total revenue | 12.0% | 17.2% | | Non-GAAP general and administrative expenses as a percentage of total revenue | 29.8% | 25.8% | | **Research and development expenses** | | | | Research and development incurred | $5,213 | $8,559 | | Research and development capitalized | (2,112) | (3,702) | | Research and development expenses | $3,101 | $4,857 | | Research and development incurred as a percentage of total revenues | 6.9% | 8.2% | | Research and development expenses as a percentage of total revenues | 4.1% | 4.7% | [Adjusted Operating Expenses](index=14&type=section&id=ADJUSTED%20OPERATING%20EXPENSES) This section reconciles total operating expenses to adjusted operating expenses for the three months ended June 30, 2025, and 2024, by excluding one-off costs such as acquisition-related expenses, integration costs, stock-based compensation, and restructuring-related expenses | | Three Months Ended June 30, 2024 (Thousands USD) | Three Months Ended June 30, 2025 (Thousands USD) | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Total operating expenses | $57,883 | $58,520 | | Adjusted for once-off costs | | | | Acquisition-related expenses | 14,494 | 1,130 | | Integration-related costs | — | 675 | | Stock-based compensation (non-recurring/accelerated cost) | 4,693 | — | | Restructuring-related expenses | 1,198 | 2,442 | | Total adjustments | 20,385 | 4,247 | | **Adjusted operating expenses** | **$37,498** | **$54,273** |

Exhibit 99.1 Powerfleet Drives SaaS Flywheel in Q1 FY2026: 6% Sequential Services Growth, Margin Expansion, and Strong Progress Towards Achieving its EBITDA Expansion Targets Quarterly services revenue jumped by 6% sequentially to $86.5 million, increasing from $81.8 million in Q4'25. Total revenue grew by 38% year-over-year to $104.1million driven by strength in services revenue, which increased to a record high of 83% of total revenue. Adjusted EBITDA increased by 58% to $21.6 million, with adjusted EBITD ...

Management Discussion and Analysis of Financial Condition and Results of Operations [Executive Overview](index=3&type=section&id=Executive%20Overview) The company, now Array, is undergoing a strategic transformation by divesting wireless operations to focus on its Towers business - Company Name Change: United States Cellular Corporation changed its name to **Array Digital Infrastructure, Inc.** on August 1, 2025[8](index=8&type=chunk) - Strategic Divestitures: - Wireless operations and select spectrum assets sold to T-Mobile on August 1, 2025, for **$2,629 million** cash proceeds[14](index=14&type=chunk)[15](index=15&type=chunk) - Pending sale of AWS, Cellular, and PCS wireless spectrum licenses to Verizon for **$1,000 million**, expected to close Q3 2026[16](index=16&type=chunk) - Pending sale of 3.45 GHz and 700 MHz wireless spectrum licenses to AT&T for **$1,018 million**, expected to close in 2025[20](index=20&type=chunk) - Future Business Focus: Grow Towers operations, manage noncontrolling interests in wireless operating companies, and opportunistically monetize remaining wireless spectrum[12](index=12&type=chunk)[13](index=13&type=chunk)[17](index=17&type=chunk) - Subsequent Events (Post June 30, 2025): - Acquisition of King Street Wireless, Inc and Sunshine Spectrum, Inc for **$17 million**, expecting a **$50 million** income tax benefit - Termination of receivables securitization agreement on July 31, 2025 - T-Mobile transaction closed on August 1, 2025, resulting in **$2,629 million** cash proceeds and an expected **$250-$300 million** cash income tax liability - Debt exchange offer concluded, exchanging **$1,680 million** of long-term debt - Master License Agreement (MLA) with T-Mobile for 15-year leases on a minimum of **2,015** Array-owned towers - Special dividend of **$23.00 per share** declared on August 1, 2025 - Repayment of **$863 million** in term loans and export credit financing on August 4, 2025[19](index=19&type=chunk)[20](index=20&type=chunk) [Terms Used by Array](index=7&type=section&id=Terms%20Used%20by%20Array) This section defines key industry-specific and non-GAAP financial terms to ensure clarity and consistent understanding - Definitions provided for industry terms like 5G, Account, Churn Rate, Colocations, Connected Devices, Postpaid ARPA, Postpaid ARPU, Retail Connections, Tower Tenancy Rate, and Universal Service Fund (USF)[21](index=21&type=chunk) - Definitions provided for non-GAAP financial measures: EBITDA, Adjusted EBITDA, Adjusted OIBDA, and Free Cash Flow[21](index=21&type=chunk) [Financial Overview – Array](index=8&type=section&id=Financial%20Overview%20%E2%80%93%20Array) Array's recent financial performance shows decreased revenue and operating income but significantly higher net income due to tax benefits Consolidated Financial Performance (YoY Change) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Total operating revenues | (1)% | (4)% | | Operating income | (4)% | (13)% | | Income before income taxes | 13% | (9)% | | Income tax expense | (73)% | (42)% | | Net income | 77% | 24% | | Net income attributable to Array shareholders | 80% | 41% | | Adjusted OIBDA (Non-GAAP) | (9)% | (7)% | | Adjusted EBITDA (Non-GAAP) | (6)% | (7)% | | Capital expenditures | (52)% | (55)% | - Equity in earnings of unconsolidated entities increased by **8% for Q2 2025** and decreased by **3% for YTD 2025**, with the LA Partnership contributing **$20 million** and **$35 million** for the respective periods[23](index=23&type=chunk)[24](index=24&type=chunk) - Interest expense decreased for the three and six months ended June 30, 2025, due primarily to a decrease in the average principal balance outstanding on the term loan and receivables securitization agreements[25](index=25&type=chunk) - Income tax expense decreased for the three and six months ended June 30, 2025, due primarily to excess stock compensation deductions for awards vesting in the current period[26](index=26&type=chunk) - Enactment of H.R.1 – the One big beautiful bill Act (OBBBA) is expected to result in favorable deferral of cash taxes in future periods[27](index=27&type=chunk) [Wireless Operations](index=10&type=section&id=Wireless%20Operations) Prior to divestiture, wireless operations showed declining retail connections and revenues, with increased postpaid net losses from higher churn Retail Connections – End of Period | Metric | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Postpaid | 3,904,000 | 4,027,000 | (3.05)% | | Prepaid | 429,000 | 439,000 | (2.28)% | | Total | 4,333,000 | 4,466,000 | (3.00)% | Postpaid Activity and Churn (YoY Change) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Total Gross Additions | (7)% | (4)% | | Total Net Additions (Losses) | (75)% | (21)% | | Churn (Handsets) | 1.12% (vs 0.97%) | 1.08% (vs 1.00%) | | Churn (Connected Devices) | 2.36% (vs 2.47%) | 2.38% (vs 2.50%) | | Total Churn | 1.29% (vs 1.16%) | 1.25% (vs 1.19%) | - Total postpaid handset net losses increased for the three and six months ended June 30, 2025, due to **higher defections** as a result of elevated churn and aggressive industry-wide competition[29](index=29&type=chunk) - Total postpaid connected device net additions decreased for the three and six months ended June 30, 2025, due to **lower gross additions** for home internet and connected watches[30](index=30&type=chunk) Postpaid Revenue Metrics (YoY Change) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Postpaid ARPU | 1% | 1% | | Postpaid ARPA | 1% | 1% | Wireless Financial Performance (YoY Change) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Retail service revenues | (2)% | (2)% | | Equipment sales | (2)% | (13)% | | Total operating revenues | (1)% | (4)% | | Operating income | (21)% | (27)% | | Adjusted OIBDA (Non-GAAP) | (11)% | (9)% | | Adjusted EBITDA (Non-GAAP) | (11)% | (9)% | | Capital expenditures | (52)% | (55)% | - Retail service revenues decreased due to a **decline in average postpaid and prepaid connections**, partially offset by an increase in Postpaid ARPU[38](index=38&type=chunk) - Equipment sales revenues decreased for the six months ended June 30, 2025, primarily driven by a **lower volume of upgrades**[38](index=38&type=chunk) - System operations expenses increased for Q2 2025 due to higher maintenance and utilities, but decreased for YTD 2025 due to the **shutdown of the 3G CDMA network**[40](index=40&type=chunk)[41](index=41&type=chunk) - Cost of equipment sold decreased for the six months ended June 30, 2025, due to a **decline in smartphone devices sold**[43](index=43&type=chunk) - (Gain) loss on license sales and exchanges increased due to the **write-off of the liability** associated with the Put/Call Agreement with T-Mobile in 2025[44](index=44&type=chunk) [Towers Operations](index=15&type=section&id=Towers%20Operations) Towers operations demonstrated growth in key metrics and revenues, though future performance will be impacted by the wireless divestiture Towers Operational Metrics (as of June 30) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Owned towers | 4,418 | 4,388 | 1% | | Number of colocations | 2,527 | 2,392 | 6% | | Tower tenancy rate | 1.57 | 1.55 | 2% | Towers Financial Performance (YoY Change) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Third-party revenues | 12% | 9% | | Intra-company revenues | 3% | 3% | | Total tower revenues | 7% | 6% | | Operating income | 11% | 2% | | Adjusted OIBDA (Non-GAAP) | 9% | 4% | | Adjusted EBITDA (Non-GAAP) | 9% | 4% | | Capital expenditures | (51)% | (47)% | - Third-party revenues increased primarily as a result of **new colocations** and escalators on renewed leases[48](index=48&type=chunk) - Intra-company revenues increased primarily as a result of **rent escalations** and an increase in the number of owned towers[48](index=48&type=chunk) - Post-divestiture, Array expects an increase in Third-party revenues from the T-Mobile MLA, but **Intra-company revenues have ceased**, which will significantly lower future tower rental revenues[49](index=49&type=chunk) - Total operating expenses increased due to higher cell site rent and maintenance expenses[50](index=50&type=chunk) - Following the T-Mobile transaction, Array expects to incur costs related to **decommissioning certain towers** and executing strategic alternatives for its remaining spectrum[51](index=51&type=chunk) [Liquidity and Capital Resources](index=17&type=section&id=Liquidity%20and%20Capital%20Resources) Array maintains sufficient liquidity through cash, financing agreements, and asset sales, with significant undrawn borrowing capacity - Array believes existing cash, investments, financing agreements, and asset dispositions will provide **sufficient liquidity** for operating needs and debt service[53](index=53&type=chunk) Available Undrawn Borrowing Capacity (as of June 30, 2025) | Facility | Amount (Millions) | | :--- | :--- | | Revolving Credit Agreement | $300 | | Term Loan Agreements | $800 | | Receivables Securitization Agreement | $450 | | **Total** | **$1,550** | - Revolving Credit Agreement: Amended in April 2025 to **extend maturity to July 2027** and allow for permitted dispositions[60](index=60&type=chunk) - Term Loan Agreements: **$713 million** outstanding at June 30, 2025, was fully repaid on August 4, 2025, with an additional **$800 million** of borrowing capacity secured[61](index=61&type=chunk)[62](index=62&type=chunk) - Export Credit Financing Agreement: **$150 million** outstanding at June 30, 2025, was fully repaid on August 4, 2025[63](index=63&type=chunk) - Receivables Securitization Agreement: **Terminated on July 31, 2025**[64](index=64&type=chunk) - Debt Covenants: Array was in compliance as of June 30, 2025, with key leverage and interest coverage ratios[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - Credit Ratings: On August 1, 2025, Standard & Poor's updated the Array issuer credit rating from BB to **BBB- with a stable outlook**[69](index=69&type=chunk) - Capital expenditures **decreased by 55% to $132 million** for the six months ended June 30, 2025, in line with expectations for 5G deployment[70](index=70&type=chunk)[72](index=72&type=chunk) - Common Share Repurchase Program: During the six months ended June 30, 2025, Array repurchased **328,835 Common Shares for $21 million**[75](index=75&type=chunk) - Dividends: On August 1, 2025, the Array Board of Directors declared a **special dividend of $23.00 per share**[76](index=76&type=chunk) [Consolidated Cash Flow Analysis](index=20&type=section&id=Consolidated%20Cash%20Flow%20Analysis) Array's cash position significantly increased due to strong operating cash flows and reduced investing and financing activities - Net increase in cash, cash equivalents and restricted cash: **$242 million** for YTD 2025 vs **$36 million** for YTD 2024[79](index=79&type=chunk)[81](index=81&type=chunk) - Net cash provided by operating activities: **$485 million** for YTD 2025, driven by net income adjusted for non-cash items and distributions from unconsolidated entities[79](index=79&type=chunk)[81](index=81&type=chunk) - Cash flows used for investing activities: **$150 million** for YTD 2025, primarily for payments for property, plant and equipment[80](index=80&type=chunk)[82](index=82&type=chunk) - Cash flows used for financing activities: **$93 million** for YTD 2025, primarily for tax withholdings, share repurchases, and software license agreements[80](index=80&type=chunk)[82](index=82&type=chunk) [Consolidated Balance Sheet Analysis](index=21&type=section&id=Consolidated%20Balance%20Sheet%20Analysis) The balance sheet reflects a decrease in net inventory from sales and a reduction in accrued compensation following bonus payments - Inventory, net **decreased $53 million** due primarily to the sell through of inventory on hand and seasonality[84](index=84&type=chunk) - Accrued compensation **decreased $39 million** due primarily to associate bonus payments in March 2025[85](index=85&type=chunk) [Supplemental Information Relating to Non-GAAP Financial Measures](index=22&type=section&id=Supplemental%20Information%20Relating%20to%20Non-GAAP%20Financial%20Measures) This section reconciles non-GAAP measures like EBITDA and Free Cash Flow, which management uses to evaluate business performance - Non-GAAP financial measures used in the MD&A and business segment information include EBITDA, Adjusted EBITDA, Adjusted OIBDA, and Free cash flow[90](index=90&type=chunk) Array Consolidated Non-GAAP Reconciliation (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (GAAP) | $32 | $18 | $52 | $42 | | EBITDA (Non-GAAP) | $244 | $242 | $485 | $503 | | Adjusted EBITDA (Non-GAAP) | $254 | $268 | $506 | $542 | | Adjusted OIBDA (Non-GAAP) | $208 | $227 | $422 | $456 | | Operating income (GAAP) | $35 | $36 | $76 | $88 | Array Wireless Non-GAAP Reconciliation (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | EBITDA (Non-GAAP) | $165 | $171 | $336 | $355 | | Adjusted EBITDA and Adjusted OIBDA (Non-GAAP) | $174 | $196 | $355 | $392 | | Operating income (GAAP) | $14 | $17 | $34 | $47 | Array Towers Non-GAAP Reconciliation (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | EBITDA (Non-GAAP) | $33 | $30 | $65 | $62 | | Adjusted EBITDA and Adjusted OIBDA (Non-GAAP) | $34 | $31 | $67 | $64 | | Operating income (GAAP) | $21 | $19 | $42 | $41 | Free Cash Flow (Non-GAAP) (YoY Change) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Cash flows from operating activities (GAAP) | $485 | $516 | | Cash paid for additions to property, plant and equipment | $(147) | $(270) | | Cash paid for software license agreements | $(20) | $(20) | | Free cash flow (Non-GAAP) | $318 | $226 | [Application of Critical Accounting Policies and Estimates](index=25&type=section&id=Application%20of%20Critical%20Accounting%20Policies%20and%20Estimates) Array's financial statements adhere to GAAP, with critical accounting policies consistent with its 2024 Form 10-K - Array prepares its consolidated financial statements in accordance with GAAP[95](index=95&type=chunk) - Array's application of critical accounting policies and estimates is discussed in detail in its Form 10-K for the year ended December 31, 2024[95](index=95&type=chunk) [Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement](index=26&type=section&id=Private%20Securities%20Litigation%20Reform%20Act%20of%201995%20Safe%20Harbor%20Cautionary%20Statement) This section cautions that forward-looking statements involve risks and uncertainties, and actual results may differ materially - This Form 10-Q contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995[97](index=97&type=chunk) - Such forward-looking statements involve known and unknown risks that may cause actual results to be significantly different[97](index=97&type=chunk) - Readers should carefully consider the factors and other information contained in this Form 10-Q to understand the material risks relating to Array's business[97](index=97&type=chunk) [Risk Factors](index=28&type=section&id=Risk%20Factors) Key risks include uncertainties in pending spectrum sales, reliance on T-Mobile, and competition in the tower industry - Closing of the T-Mobile transaction will require **significant changes** to Array's remaining business, which is of a substantially smaller scale[106](index=106&type=chunk) - Uncertainty regarding the consummation of the **Verizon and AT&T spectrum sales** could impact the availability of funds[109](index=109&type=chunk)[111](index=111&type=chunk) - Array's business is **substantially dependent upon T-Mobile** due to the Master License Agreement (MLA) for tower leases[108](index=108&type=chunk) - An **inability to monetize the remaining spectrum assets**, coupled with ongoing costs, could adversely affect Array's operations[115](index=115&type=chunk)[116](index=116&type=chunk) - **Increasing competition** in the tower industry from larger, better-resourced competitors could adversely affect Array's revenues and future growth[117](index=117&type=chunk) - A substantial portion of Array's revenues are derived from a **small number of tenants** concentrated in the wireless industry[118](index=118&type=chunk)[119](index=119&type=chunk) - Uncertainty in Array's future cash flow and liquidity, its level of indebtedness, and inability to access capital could impact business operations[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Array's assets and revenue are **concentrated in the U.S. wireless telecommunications industry**, representing increased risk[131](index=131&type=chunk) - Potential **conflicts of interest** exist between TDS (controlling shareholder) and Array[138](index=138&type=chunk)[140](index=140&type=chunk) - **Cyber-attacks** or other breaches of information technology security are expected to occur regularly and could have an adverse effect on Array's business[145](index=145&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Array's primary market risk is interest rate fluctuation on its debt, which is a mix of fixed and variable rates - As of June 30, 2025, approximately **70%** of Array's long-term debt was in fixed-rate senior notes and approximately **30%** in variable-rate debt[147](index=147&type=chunk) Scheduled Principal Payments on Long-Term Debt (as of June 30, 2025) | Period | Long-Term Debt Obligations (Millions) | Weighted-Avg. Interest Rates | | :--- | :--- | :--- | | Remainder of 2025 | $10 | 6.1% | | 2026 | $36 | 6.1% | | 2027 | $351 | 5.9% | | 2028 | $286 | 6.4% | | 2029 | $5 | 6.9% | | Thereafter | $2,222 | 6.1% | | **Total** | **$2,910** | **6.1%** | - The debt exchange offer with T-Mobile concluded on August 1, 2025, resulting in the exchange of **$1,680 million** of long-term debt, and Array subsequently repaid **$863 million** of other borrowings[149](index=149&type=chunk) Financial Statements (Unaudited) [Consolidated Statement of Operations](index=36&type=section&id=Consolidated%20Statement%20of%20Operations) Array's operating revenues slightly decreased, but net income attributable to shareholders increased due to lower income tax expense Consolidated Statement of Operations (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $916 | $927 | $1,807 | $1,877 | | Operating income | $35 | $36 | $76 | $88 | | Income before income taxes | $36 | $32 | $76 | $83 | | Income tax expense | $4 | $14 | $24 | $41 | | Net income | $32 | $18 | $52 | $42 | | Net income attributable to Array shareholders | $31 | $17 | $50 | $35 | | Basic earnings per share | $0.37 | $0.20 | $0.58 | $0.41 | | Diluted earnings per share | $0.36 | $0.20 | $0.57 | $0.40 | - (Gain) loss on license sales and exchanges, net: **$4 million gain** for Q2 2025 (vs $8 million loss for Q2 2024) and **$5 million gain** for YTD 2025 (vs $7 million loss for YTD 2024)[152](index=152&type=chunk) [Consolidated Statement of Cash Flows](index=37&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Array's cash position significantly increased due to strong operating cash flows and reduced investing and financing activities Consolidated Statement of Cash Flows (YTD Change) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $485 | $516 | | Net cash used in investing activities | $(150) | $(284) | | Net cash used in financing activities | $(93) | $(196) | | Net increase in cash, cash equivalents and restricted cash | $242 | $36 | | Cash, cash equivalents and restricted cash, end of period | $401 | $215 | - Distributions from unconsolidated entities: **$88 million** for YTD 2025 (vs $80 million for YTD 2024)[154](index=154&type=chunk) - Cash paid for additions to property, plant and equipment: **$(147) million** for YTD 2025 (vs $(270) million for YTD 2024)[154](index=154&type=chunk) - Repayment of long-term debt: **$(12) million** for YTD 2025 (vs $(198) million for YTD 2024)[154](index=154&type=chunk) - Repurchase of Common Shares: **$(21) million** for YTD 2025 (vs $0 for YTD 2024)[154](index=154&type=chunk) [Consolidated Balance Sheet](index=38&type=section&id=Consolidated%20Balance%20Sheet) Total assets and liabilities decreased slightly, while cash and cash equivalents saw a significant increase Consolidated Balance Sheet (as of) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $386 | $144 | $242 | | Total current assets | $1,509 | $1,345 | $164 | | Licenses | $4,583 | $4,579 | $4 | | Property, plant and equipment, net | $2,313 | $2,502 | $(189) | | Total assets | $10,377 | $10,449 | $(72) | | Total current liabilities | $808 | $884 | $(76) | | Long-term debt, net | $2,819 | $2,837 | $(18) | | Total liabilities and equity | $10,377 | $10,449 | $(72) | | Total Array shareholders' equity | $4,600 | $4,577 | $23 | - Equipment installment plan receivables, net: **$957 million** at June 30, 2025 (vs $1,028 million at December 31, 2024)[195](index=195&type=chunk) - Consolidated VIEs assets: **$1,871 million** at June 30, 2025 (vs $1,982 million at December 31, 2024)[160](index=160&type=chunk)[222](index=222&type=chunk) - Consolidated VIEs liabilities: **$109 million** at June 30, 2025 (vs $110 million at December 31, 2024)[160](index=160&type=chunk)[222](index=222&type=chunk) [Consolidated Statement of Changes in Equity](index=40&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Total shareholders' equity increased slightly, driven by net income partially offset by share repurchases Total Array Shareholders' Equity | Date | Amount (Millions) | | :--- | :--- | | December 31, 2024 | $4,577 | | June 30, 2025 | $4,600 | - Net income attributable to Array shareholders: **$50 million** for the six months ended June 30, 2025[168](index=168&type=chunk) - Repurchase of Common Shares: **$(21) million** for the six months ended June 30, 2025[168](index=168&type=chunk) Notes to Consolidated Financial Statements [Note 1 Basis of Presentation](index=44&type=section&id=Note%201%20Basis%20of%20Presentation) The financial statements are prepared under GAAP for Array Digital Infrastructure, Inc, an 82.5%-owned subsidiary of TDS - United States Cellular Corporation changed its name to **Array Digital Infrastructure, Inc (Array)** on August 1, 2025[174](index=174&type=chunk) - As of June 30, 2025, Array is an **82.5%-owned subsidiary** of Telephone and Data Systems, Inc (TDS)[174](index=174&type=chunk) - Array's business segments are **Wireless and Towers**, operating only in the United States[176](index=176&type=chunk) - Array has not changed its significant accounting and reporting policies from those disclosed in its Form 10-K for the year ended December 31, 2024[178](index=178&type=chunk) Reconciliation of Cash, cash equivalents and restricted cash | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $386 | $144 | | Restricted cash included in Other current assets | $15 | $15 | | Cash, cash equivalents and restricted cash in the statement of cash flows | $401 | $159 | [Note 2 Revenue Recognition](index=45&type=section&id=Note%202%20Revenue%20Recognition) Revenue is disaggregated by service type and timing, with service revenues recognized over time and equipment sales at a point in time Disaggregated Revenue (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Retail service | $652 | $666 | $1,312 | $1,344 | | Other service | $56 | $52 | $109 | $102 | | Service revenues from contracts with customers | $708 | $718 | $1,421 | $1,446 | | Equipment sales | $180 | $184 | $330 | $380 | | Total revenues from contracts with customers | $888 | $902 | $1,751 | $1,826 | | Operating lease income (Towers) | $28 | $25 | $56 | $51 | | Total operating revenues | $916 | $927 | $1,807 | $1,877 | Contract Balances (as of) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contract assets | $4 | $4 | | Contract liabilities | $320 | $334 | - Revenue recognized related to contract liabilities existing at January 1, 2025, was **$154 million** for the six months ended June 30, 2025[184](index=184&type=chunk) Transaction Price Allocated to Remaining Performance Obligations (Service Revenues) | Period | Amount (Millions) | | :--- | :--- | | Remainder of 2025 | $171 | | 2026 | $114 | | Thereafter | $73 | | **Total** | **$358** | - The contract cost asset balance related to commission fees and other costs was **$129 million** at June 30, 2025[187](index=187&type=chunk) [Note 3 Fair Value Measurements](index=46&type=section&id=Note%203%20Fair%20Value%20Measurements) Array had no material assets or liabilities recorded at fair value, and the fair value of long-term debt is estimated using market prices - As of June 30, 2025 and December 31, 2024, Array did not have any material financial or nonfinancial assets or liabilities required to be recorded at fair value[188](index=188&type=chunk) Fair Value of Long-term Debt (as of) | Metric | June 30, 2025 (Book Value) | June 30, 2025 (Fair Value) | December 31, 2024 (Book Value) | December 31, 2024 (Fair Value) | | :--- | :--- | :--- | :--- | :--- | | Long-term debt | $2,873 | $2,702 | $2,890 | $2,785 | - The fair values of Cash and cash equivalents and restricted cash approximate their book values due to the short-term nature of these financial instruments[192](index=192&type=chunk) [Note 4 Equipment Installment Plans](index=46&type=section&id=Note%204%20Equipment%20Installment%20Plans) Array sells devices via equipment installment plans, with the allowance for credit losses decreasing in the first half of 2025 Equipment Installment Plan Receivables, Net (as of) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Equipment installment plan receivables, gross | $1,032 | $1,110 | | Allowance for credit losses | $(75) | $(82) | | Equipment installment plan receivables, net | $957 | $1,028 | Allowance for Credit Losses Activity (YTD) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Allowance for credit losses, beginning of period | $82 | $90 | | Bad debts expense | $30 | $33 | | Write-offs, net of recoveries | $(37) | $(38) | | Allowance for credit losses, end of period | $75 | $85 | [Note 5 Earnings Per Share](index=47&type=section&id=Note%205%20Earnings%20Per%20Share) Basic and diluted earnings per share are calculated based on net income attributable to Array shareholders and weighted average shares Earnings Per Share (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to Array shareholders | $31 | $17 | $50 | $35 | | Basic earnings per share | $0.37 | $0.20 | $0.58 | $0.41 | | Diluted earnings per share | $0.36 | $0.20 | $0.57 | $0.40 | - Weighted average basic shares outstanding: **86 million** for both the three and six months ended June 30, 2025[198](index=198&type=chunk) [Note 6 Divestitures](index=48&type=section&id=Note%206%20Divestitures) Array is pursuing strategic alternatives, including the closed sale of wireless operations to T-Mobile and pending spectrum sales to Verizon and AT&T - Strategic alternatives process initiated on **August 4, 2023**[199](index=199&type=chunk) - Wireless operations and select spectrum assets sold to T-Mobile (**closed August 1, 2025**)[199](index=199&type=chunk) - Pending sale of AWS, Cellular, and PCS wireless spectrum licenses to Verizon for total proceeds of **$1,000 million**, expected to close in Q3 2026[200](index=200&type=chunk) - Pending sale of 3.45 GHz and 700 MHz wireless spectrum licenses to AT&T for total proceeds of **$1,018 million**, expected to close in 2025[201](index=201&type=chunk) - Third-party expenses related to announced transactions and strategic alternatives review: **$12 million** for Q2 2025 and **$22 million** for YTD 2025[203](index=203&type=chunk) - Put/Call Agreement with T-Mobile for **$106 million** spectrum assets; the entire fair value of the net written call option was written off as of June 30, 2025[204](index=204&type=chunk) [Note 7 Investments in Unconsolidated Entities](index=49&type=section&id=Note%207%20Investments%20in%20Unconsolidated%20Entities) Array holds noncontrolling interests in various entities, which contributed significantly to its equity in earnings Total Investments in Unconsolidated Entities (as of) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Equity method investments | $431 | $440 | | Measurement alternative method investments | $5 | $5 | | Investments recorded using the net asset value practical expedient | $8 | $9 | | **Total** | **$444** | **$454** | Combined Results of Operations of Equity Method Investments (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,933 | $1,821 | $3,841 | $3,663 | | Operating expenses | $1,511 | $1,413 | $3,028 | $2,828 | | Operating income | $422 | $408 | $813 | $835 | | Net income | $419 | $416 | $798 | $834 | [Note 8 Debt](index=50&type=section&id=Note%208%20Debt) Array manages various debt instruments, with significant repayments and amendments to credit facilities occurring post-quarter end - Revolving Credit Agreement: **$300 million** maximum borrowing capacity, amended in April 2025 to extend maturity to July 2027[209](index=209&type=chunk) - Term Loan Agreements: **$713 million** outstanding at June 30, 2025, with an additional **$800 million** borrowing capacity secured in June 2025[210](index=210&type=chunk)[211](index=211&type=chunk) - Export Credit Financing Agreement: **$150 million** outstanding at June 30, 2025[212](index=212&type=chunk) - Receivables Securitization Agreement: No outstanding borrowings at June 30, 2025, and **terminated on July 31, 2025**[213](index=213&type=chunk) - Debt Covenants: Array was in compliance as of June 30, 2025, with key leverage and interest coverage ratios[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) [Note 9 Variable Interest Entities](index=50&type=section&id=Note%209%20Variable%20Interest%20Entities) Array consolidates certain Variable Interest Entities (VIEs) where it holds a controlling financial interest - Array consolidates VIEs in which it has a controlling financial interest, including special purpose entities for securitized borrowings and designated entities for wireless spectrum licenses[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[223](index=223&type=chunk) Consolidated VIEs' Assets and Liabilities (as of) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $1,871 | $1,982 | | Total liabilities | $109 | $110 | - Array manages but does not consolidate certain other limited partnerships where it is not the primary beneficiary[224](index=224&type=chunk)[225](index=225&type=chunk) - Array made contributions, loans or advances to its VIEs totaling **$6 million** during the six months ended June 30, 2025[226](index=226&type=chunk) [Note 10 Business Segment Information](index=54&type=section&id=Note%2010%20Business%20Segment%20Information) Array operates in two reportable segments, Wireless and Towers, with Adjusted EBITDA as the key performance measure - Array has two reportable segments: **Wireless and Towers**[227](index=227&type=chunk) - **Adjusted EBITDA** is the segment measure of profit or loss reported to the chief operating decision maker[228](index=228&type=chunk) Wireless Segment Financials (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues from external customers | $888 | $902 | $1,751 | $1,826 | | Segment Adjusted EBITDA (Non-GAAP) | $174 | $196 | $355 | $392 | | Capital expenditures | $77 | $160 | $127 | $286 | Towers Segment Financials (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues from external customers | $28 | $25 | $56 | $51 | | Intersegment revenues | $34 | $33 | $67 | $65 | | Segment Adjusted EBITDA (Non-GAAP) | $34 | $31 | $67 | $64 | | Capital expenditures | $3 | $5 | $5 | $9 | [Note 11 Subsequent Events](index=58&type=section&id=Note%2011%20Subsequent%20Events) Significant events after June 30, 2025 include acquisitions, the T-Mobile sale closing, debt restructuring, and a special dividend - On July 14, 2025, Array completed the acquisition of King Street Wireless, Inc and Sunshine Spectrum, Inc for **$17 million**, expecting a **$50 million** tax benefit[239](index=239&type=chunk) - On July 31, 2025, Array **terminated the receivables securitization agreement**[239](index=239&type=chunk) - On August 1, 2025, the sale of the wireless operations to T-Mobile closed, and Array received cash proceeds of **$2,629 million**[239](index=239&type=chunk) - The debt exchange offering concluded on August 1, 2025, resulting in the exchange of **$1,680 million** of long-term debt[239](index=239&type=chunk) - On August 1, 2025, Array and T-Mobile entered into a **Master License Agreement (MLA)** for T-Mobile to license space on a minimum of 2,015 towers[239](index=239&type=chunk) - On August 1, 2025, the Array Board of Directors declared a **special dividend of $23.00 per share**[239](index=239&type=chunk) - On August 4, 2025, Array repaid **$863 million** in outstanding borrowings under its term loan and export credit financing agreements[239](index=239&type=chunk) Controls and Procedures [Evaluation of Disclosure Controls and Procedures](index=59&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - Array's principal executive officer and principal financial officer concluded that Array's disclosure controls and procedures were **effective** as of June 30, 2025, at the reasonable assurance level[242](index=242&type=chunk) [Changes in Internal Control Over Financial Reporting](index=59&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes occurred in Array's internal control over financial reporting during the second quarter of 2025 - There have been **no changes** in internal controls over financial reporting that have occurred during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, Array's internal control over financial reporting[243](index=243&type=chunk) Legal Proceedings [Legal Proceedings](index=60&type=section&id=Legal%20Proceedings) Array is involved in several legal proceedings, including a False Claims Act inquiry and multiple stockholder lawsuits - Federal False Claims Act Inquiry: DOJ inquiries regarding Array's participation in FCC wireless spectrum license auctions, with one matter dismissed and another pending[244](index=244&type=chunk) - Stockholder Class Action: A settlement in principle was reached on February 28, 2025, with a final approval hearing set for September 2025[245](index=245&type=chunk) - Stockholder Derivative Lawsuits: Multiple lawsuits filed alleging breach of fiduciary duty, with some cases dismissed and others pending[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - Array is unable at this time to determine whether the outcome of these actions would have a material impact on its financial condition or results of operations[249](index=249&type=chunk) Unregistered Sales of Equity Securities and Use of Proceeds [Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Array has an authorized share repurchase program with remaining capacity, but no purchases were made during the second quarter of 2025 - Array's Board of Directors authorized the repurchase of up to **1,300,000** additional Common Shares on an annual basis beginning in 2009[250](index=250&type=chunk) - The maximum number of shares that may yet be purchased under this program was **658,107** as of June 30, 2025[251](index=251&type=chunk) - There were **no purchases** made by or on behalf of Array of Array Common Shares during the quarter covered by this Form 10-Q[251](index=251&type=chunk) Other Information [Rule 10b5-1 Trading Arrangements](index=62&type=section&id=Rule%2010b5-1%20Trading%20Arrangements) No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the second quarter of 2025 - During the three months ended June 30, 2025, **none of Array's directors or officers** adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5–1 trading arrangement[253](index=253&type=chunk) Exhibits [Exhibits](index=63&type=section&id=Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate amendments, debt agreements, and the T-Mobile MLA - Exhibit 3.1: Certificate of Amendment No 1 to the Restated Certificate of Incorporation of United States Cellular Corporation, dated as of August 1, 2025[254](index=254&type=chunk) - Exhibit 3.2: Amended and Restated Bylaws of Array Digital Infrastructure, Inc, as adopted on August 1, 2025[254](index=254&type=chunk) - Exhibits 4.1-4.4: Twelfth through Fifteenth Supplemental Indentures related to the Registrant's Senior Notes[254](index=254&type=chunk) - Exhibit 4.5: Fourth Amended and Restated Credit Agreement among the Registrant, CoBank, ACB, as Administrative Agent, and the other lenders party thereto, dated June 25, 2025[254](index=254&type=chunk) - Exhibit 10.3: Master License Agreement, dated as of August 1, 2025, between ADI Leasing Company, LLC and T-Mobile USA, Inc[254](index=254&type=chunk) Form 10-Q Cross Reference Index [Form 10-Q Cross Reference Index](index=64&type=section&id=Form%2010-Q%20Cross%20Reference%20Index) This section provides a cross-reference index to the various items and page numbers within the Form 10-Q - The index lists items such as Financial Statements, MD&A, Risk Factors, and Exhibits with their corresponding page numbers[256](index=256&type=chunk) Signatures [Signatures](index=65&type=section&id=Signatures) The report is duly signed by Array's President and CEO, and its Executive Vice President and CFO, on August 11, 2025 - The report is signed by **Douglas W Chambers**, President and Chief Executive Officer, and **Vicki L Villacrez**, Executive Vice President, Chief Financial Officer and Treasurer[259](index=259&type=chunk) - The signing date is **August 11, 2025**[259](index=259&type=chunk)