[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents unaudited condensed consolidated financial statements and management's analysis of financial condition and operations [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) Presents unaudited condensed consolidated financial statements for periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position (assets, liabilities, equity) as of June 30, 2025 and December 31, 2024 | Asset/Liability Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------- | :----------------------------- | :------------------------------- | | **Assets** | | | | Cash and cash equivalents | $14,624 | $257,068 | | Marketable securities | $646,428 | $484,930 | | Total current assets | $673,030 | $754,210 | | Total assets | $701,445 | $754,797 | | **Liabilities** | | | | Total current liabilities | $30,381 | $21,368 | | Total liabilities | $31,087 | $21,420 | | **Stockholders' Equity**| | | | Accumulated deficit | $(293,859) | $(217,981) | | Total stockholders' equity | $670,358 | $733,377 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Details revenues, expenses, and net loss for the three and six months ended June 30, 2025 and 2024 | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :---------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | License and collaboration revenue | $0 | $111 | $52 | $640 | | Research and development expenses | $31,331 | $18,470 | $58,799 | $35,680 | | General and administrative expenses | $17,410 | $7,494 | $32,198 | $13,282 | | Total operating expenses | $48,741 | $25,964 | $90,997 | $48,962 | | Loss from operations | $(48,741) | $(25,853) | $(90,945) | $(48,322) | | Interest income, net | $7,319 | $6,943 | $15,066 | $12,487 | | Net loss and comprehensive loss | $(41,426) | $(18,902) | $(75,878) | $(35,836) | | Net loss per share, basic and diluted | $(0.54) | $(0.28) | $(1.00) | $(0.63) | [Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity%20%28Deficit%29) Outlines changes in redeemable convertible preferred stock and stockholders' equity for the periods presented - The company's redeemable convertible preferred stock converted into common stock concurrently with its IPO in January 2024[17](index=17&type=chunk)[25](index=25&type=chunk) As of June 30, 2025, and December 31, 2024, there was **no redeemable convertible preferred stock outstanding**[17](index=17&type=chunk) | Equity Item | December 31, 2024 (in thousands) | March 31, 2025 (in thousands) | June 30, 2025 (in thousands) | | :-------------------------- | :------------------------------- | :---------------------------- | :--------------------------- | | Common Stock | $8 | $8 | $8 | | Additional Paid-in Capital | $951,350 | $957,183 | $964,209 | | Accumulated Deficit | $(217,981) | $(252,433) | $(293,859) | | Total Stockholders' Equity | $733,377 | $704,758 | $670,358 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash flows from operating, investing, and financing activities for the periods presented | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(57,236) | $(42,132) | | Net cash used in investing activities | $(185,362) | $(343,674) | | Net cash provided by financing activities | $154 | $402,698 | | Net (decrease) increase in cash and cash equivalents | $(242,444) | $16,892 | | Cash and cash equivalents at end of period | $14,624 | $25,158 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of accounting policies, financial line items, and significant events [1. Description of Business and Basis of Presentation](index=7&type=section&id=1.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Describes the company's business, clinical stage, recent financing activities, and current financial position - CG Oncology, Inc. is a late-stage clinical biopharmaceutical company focused on developing and commercializing cretostimogene grenadenorepvec for bladder cancer[23](index=23&type=chunk) The company is at a clinical stage and does not expect significant revenues until FDA approval and commercialization[23](index=23&type=chunk) - The company completed its IPO on January 29, 2024, raising **$399.6 million** net proceeds, and a follow-on offering in December 2024, raising **$223.1 million** net proceeds[25](index=25&type=chunk) All redeemable convertible preferred stock converted to common stock with the IPO[25](index=25&type=chunk) - In February 2025, the company's subsidiary established a **$26.0 million** convertible promissory note receivable with SP Healthcare SPV I, LLC, which invested in Biovire, Inc. to acquire a contract manufacturing organization for cretostimogene[26](index=26&type=chunk) - As of June 30, 2025, the company had **$661.1 million** in cash, cash equivalents, and marketable securities, and a working capital of **$642.6 million**[31](index=31&type=chunk) It has an accumulated deficit of **$293.9 million** and incurred net losses of **$41.4 million** and **$75.9 million** for the three and six months ended June 30, 2025, respectively[31](index=31&type=chunk) - On March 28, 2025, the company entered into an Open Market Sale Agreement with Jefferies LLC to sell up to **$250.0 million** in common stock, with no sales made as of June 30, 2025[32](index=32&type=chunk) [2. Summary of Significant Accounting Policies](index=8&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines key accounting policies, deferred offering costs, and evaluation of new accounting standards - The company capitalizes direct and incremental legal, professional, accounting, and other third-party fees incurred in connection with equity offerings as deferred offering costs[34](index=34&type=chunk) As of June 30, 2025, deferred offering costs were **$0.4 million**, related to a Form S-3 registration statement filed in March 2025[34](index=34&type=chunk) - The FASB issued ASU 2023-09 (Income Taxes) in December 2023, effective for annual periods beginning after December 15, 2025, requiring enhanced income tax disclosures[36](index=36&type=chunk) The company is evaluating its impact[36](index=36&type=chunk) - The FASB issued ASU No. 2024-03 (Comprehensive Income - Expense Disaggregation Disclosures) in November 2024, effective for fiscal years beginning after December 15, 2026, to improve expense disclosures[38](index=38&type=chunk) The company is evaluating its impact[38](index=38&type=chunk) [3. Fair Value Measurements](index=9&type=section&id=3.%20Fair%20Value%20Measurements) Details fair value measurements for cash equivalents and marketable securities, including their classification | Asset Category | Fair Value at June 30, 2025 (in thousands) | Fair Value at December 31, 2024 (in thousands) | | :--------------- | :--------------------------------------- | :--------------------------------------------- | | Cash equivalents | $14,291 | $256,204 | | Marketable securities | $646,428 | $484,930 | - Cash equivalents are classified as **Level 1** fair value measurements (short-term U.S. Treasury money market fund)[39](index=39&type=chunk) Marketable securities (fixed income U.S. Treasury bills) are classified as **Level 2** fair value measurements[39](index=39&type=chunk) [4. Note Receivable](index=9&type=section&id=4.%20Note%20Receivable) Describes the convertible promissory note receivable held by the company's subsidiary - The company's subsidiary, SafeGuard Healthcare, LLC, holds a **$26.0 million** convertible promissory note receivable from SPV, established in February 2025, with an **8% interest rate** and due February 3, 2029[41](index=41&type=chunk) No payments have been made as of June 30, 2025[41](index=41&type=chunk) [5. Accrued Expenses and Other Current Liabilities](index=10&type=section&id=5.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Presents a breakdown of accrued expenses and other current liabilities as of the reporting dates | Component | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | External research and development expenses | $16,000 | $7,181 | | Personnel-related expenses | $4,561 | $5,793 | | Professional fees | $2,166 | $1,255 | | Other | $241 | $436 | | Total accrued expenses and other current liabilities | $22,968 | $14,665 | [6. Commitments and Contingencies](index=10&type=section&id=6.%20Commitments%20and%20Contingencies) Details operating lease obligations and provides an update on significant legal proceedings - As of June 30, 2025, the company had **three operating leases** for office space, with terms expiring between 2026 and 2030[45](index=45&type=chunk)[46](index=46&type=chunk) Total lease cost for the three and six months ended June 30, 2025, was **$86 thousand** and **$152 thousand**, respectively[45](index=45&type=chunk)[46](index=46&type=chunk) | Year | Lease Liabilities (in thousands) | | :--- | :------------------------------- | | 2025 | $172 | | 2026 | $324 | | 2027 | $274 | | 2028 | $227 | | 2029 | $124 | | Thereafter | $10 | | Total future minimum lease obligations | $994 | - On July 16, 2025, the Superior Court granted the company's motion for summary judgment regarding ANI Pharmaceuticals, Inc.'s royalty claim on cretostimogene sales[49](index=49&type=chunk) On July 29, 2025, a jury rejected ANI's unjust enrichment claim, meaning the company will **not owe ANI a 5% royalty or damages**[49](index=49&type=chunk) [7. License and Collaboration Agreements](index=11&type=section&id=7.%20License%20and%20Collaboration%20Agreements) Summarizes key terms and revenue recognition from the Lepu and Kissei license agreements - Under the Lepu License Agreement (March 2019), the company granted an exclusive license to Lepu Biotech Co., Ltd. for cretostimogene in mainland China, Hong Kong, and Macau[51](index=51&type=chunk) Lepu paid a **$4.5 million upfront fee** and is obligated for up to **$2.5 million** in regulatory milestones and **$57.5 million** in commercial milestones, plus high single-digit royalties on net sales[52](index=52&type=chunk)[53](index=53&type=chunk) - Under the Kissei License Agreement (March 2020, amended September 2022), the company granted an exclusive license to Kissei Pharmaceutical Co., Ltd. for cretostimogene in various Asian territories[58](index=58&type=chunk) Kissei paid a **$10.0 million upfront fee** and purchased **$30.0 million** in Series D preferred stock[59](index=59&type=chunk) Kissei is obligated for up to **$33.0 million** in development/regulatory milestones and **$67.0 million** in commercial milestones[59](index=59&type=chunk) The company is entitled to mid-twenties percentage royalties on Kissei Territory sales and pays Kissei a low-single digit royalty on sales outside the Kissei/Lepu Territories[59](index=59&type=chunk) | Revenue Source | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Lepu License Agreement | $0 | $0 | $0 | $500 | | Kissei License Agreement | $0 | $100 | <$100 | $100 | | Total License and Collaboration Revenue | $0 | $111 | $52 | $640 | [8. Segment Disclosures](index=15&type=section&id=8.%20Segment%20Disclosures) Confirms the company operates as a single operating segment for financial reporting purposes - The company operates as a **single operating segment**, with its chief executive officer reviewing financial information on a consolidated basis to assess performance and allocate resources[68](index=68&type=chunk) [9. Common Stock](index=15&type=section&id=9.%20Common%20Stock) Provides information on common stock (authorized, issued, outstanding) and shares reserved for equity plans - As of June 30, 2025, the company had **76,231,859 shares** of common stock issued and outstanding, out of **700,000,000 authorized shares**[70](index=70&type=chunk) | Reserved Shares Category | June 30, 2025 | | :----------------------- | :------------ | | Stock options outstanding | 8,963,925 | | Reserved for future stock option issuances | 3,788,588 | | Reserved for future ESPP issuances | 751,077 | | Total | 13,503,590 | [10. Stock-Based Compensation](index=16&type=section&id=10.%20Stock-Based%20Compensation) Details the company's equity incentive plans and the stock-based compensation expense recognized - The company has three equity incentive plans: the 2015 Plan, 2022 Plan, and 2024 Equity Incentive Plan[75](index=75&type=chunk) The 2024 Plan replaced the 2022 Plan, with **8,246,565 shares** initially available, plus shares from prior plans that become available[76](index=76&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 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock-based compensation expense (R&D) | $2,303 thousand | $779 thousand | $3,955 thousand | $1,322 thousand | | Stock-based compensation expense (G&A) | $4,704 thousand | $1,467 thousand | $8,203 thousand | $2,441 thousand | | Total stock-based compensation expense | $7,007 thousand | $2,246 thousand | $12,158 thousand | $3,763 thousand | - As of June 30, 2025, the company had **$79.8 million** of gross unrecognized stock-based compensation expense related to unvested options, to be recognized over a weighted average period of **3.2 years**[81](index=81&type=chunk) [11. Employee Stock Purchase Plan](index=18&type=section&id=11.%20Employee%20Stock%20Purchase%20Plan) Describes the ESPP, shares available, and related stock-based compensation expense - The 2024 Employee Stock Purchase Plan (ESPP) became effective January 11, 2024, with **812,242 shares** initially available[83](index=83&type=chunk) It allows eligible employees to purchase common stock at **85% of fair market value**[83](index=83&type=chunk) As of June 30, 2025, **751,077 shares** were available for issuance[83](index=83&type=chunk) - Stock-based compensation expense under the ESPP was approximately **$0.6 million** for the three months ended June 30, 2025, and **$1.4 million** for the six months ended June 30, 2025[84](index=84&type=chunk) [12. Debt](index=19&type=section&id=12.%20Debt) Provides an update on the company's debt obligations, including repayment of prior loans - In May 2023, the company repaid all outstanding principal and interest on its loan agreement with Silicon Valley Bank (SVB)[86](index=86&type=chunk) In March 2024, the company paid a **$0.4 million** Success Fee to SVB in connection with its IPO[87](index=87&type=chunk) As of June 30, 2025, the company has **no further debt obligations**[88](index=88&type=chunk) [13. Net Loss Per Share Attributable to Common Stockholders](index=19&type=section&id=13.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) Presents the calculation of basic and diluted net loss per share for common stockholders | 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 loss and comprehensive loss (in thousands) | $(41,426) | $(18,902) | $(75,878) | $(35,836) | | Weighted-average common stock outstanding (basic and diluted) | 76,226,829 | 66,649,443 | 76,207,333 | 56,857,104 | | Net loss per share (basic and diluted) | $(0.54) | $(0.28) | $(1.00) | $(0.63) | - Potentially dilutive securities, including redeemable convertible preferred stock and stock options, were excluded from diluted net loss per share calculations as their effect would be **anti-dilutive**[89](index=89&type=chunk) [14. Subsequent Events](index=20&type=section&id=14.%20Subsequent%20Events) Reports significant events after the balance sheet date, including a change in control of an SPV - Subsequent to June 30, 2025, on July 20, 2025, the company obtained **control of SP Healthcare SPV I, LLC (SPV)** following the conversion of a convertible note[92](index=92&type=chunk)[93](index=93&type=chunk) The company will now consolidate SPV in its financial statements[92](index=92&type=chunk)[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operational results, liquidity, and capital resources [Overview](index=21&type=section&id=Overview) Summarizes the company's business, product development, financial performance, and funding outlook - CG Oncology is a late-stage clinical biopharmaceutical company developing cretostimogene grenadenorepvec for bladder cancer, aiming to be an alternative to Bacillus Calmette-Guérin (BCG) for high-risk Non-Muscle Invasive Bladder Cancer (NMIBC) unresponsive to BCG[99](index=99&type=chunk) - The company is building commercial operations in anticipation of potential U.S. FDA approval for cretostimogene, with a Biologics License Application (BLA) submission expected in **Q4 2025** based on the BOND-003 Cohort C Phase 3 trial data[100](index=100&type=chunk) - The company has incurred significant operating losses and negative cash flows since inception, with net losses of **$75.9 million** for the six months ended June 30, 2025, and an accumulated deficit of **$293.9 million**[103](index=103&type=chunk) - Existing cash, cash equivalents, and marketable securities of **$661.1 million** as of June 30, 2025, are estimated to fund operations into the **first half of 2028**[104](index=104&type=chunk)[105](index=105&type=chunk) [License and Collaboration Agreements](index=24&type=section&id=License%20and%20Collaboration%20Agreements) Discusses the revenue recognition and key terms of the Lepu and Kissei license agreements - The Lepu License Agreement (March 2019) grants Lepu Biotech Co., Ltd. exclusive rights for cretostimogene in mainland China, Hong Kong, and Macau[109](index=109&type=chunk) **No revenue** was recognized from this agreement for the three and six months ended June 30, 2025[109](index=109&type=chunk) - The Kissei License Agreement (March 2020, amended September 2022) grants Kissei Pharmaceutical Co., Ltd. exclusive rights for cretostimogene in various Asian territories[110](index=110&type=chunk) **Less than $0.1 million** in revenue was recognized for the six months ended June 30, 2025, and **zero** for the three months ended June 30, 2025[110](index=110&type=chunk) [Components of Our Results of Operations](index=24&type=section&id=Components%20of%20Our%20Results%20of%20Operations) Explains primary components of revenue, operating expenses, and other income (expense) impacting financial results - The company has recognized **$26.2 million** in license and collaboration revenue since inception through June 30, 2025, but has not generated product sales revenue and does not expect to in the foreseeable future[111](index=111&type=chunk) - Operating expenses consist of research and development (R&D) expenses and general and administrative (G&A) expenses[112](index=112&type=chunk) R&D expenses are primarily external costs for clinical trials and internal personnel-related expenses, all related to cretostimogene[113](index=113&type=chunk)[114](index=114&type=chunk)[117](index=117&type=chunk) - G&A expenses include personnel-related costs for executive, legal, finance, HR, and other administrative functions, as well as professional fees and allocated facilities costs[119](index=119&type=chunk) - Other income (expense), net, includes interest income from invested cash and marketable securities, and miscellaneous items like success fees[121](index=121&type=chunk)[122](index=122&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance by comparing key metrics across different reporting periods [Comparison of the Three Months Ended June 30, 2025 and 2024](index=27&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Compares the company's financial performance for the three-month periods ended June 30, 2025 and 2024 | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------- | | License and collaboration revenue | $0 | $111 | $(111) | | Research and development | $31,331 | $18,470 | $12,861 | | General and administrative | $17,410 | $7,494 | $9,916 | | Total operating expenses | $48,741 | $25,964 | $22,777 | | Loss from operations | $(48,741) | $(25,853) | $(22,888) | | Interest income, net | $7,319 | $6,943 | $376 | | Net loss and comprehensive loss | $(41,426) | $(18,902) | $(22,524) | - R&D expenses increased by **$12.9 million**, primarily due to a **$7.9 million** increase in external clinical trial expenses (higher CRO fees) and a **$3.9 million** increase in personnel-related costs (including **$1.5 million** in stock-based compensation)[125](index=125&type=chunk) - G&A expenses increased by **$9.9 million**, driven by a **$5.4 million** increase in personnel-related costs (including **$3.2 million** in stock-based compensation) and a **$3.3 million** increase in professional and consultant fees (including **$3.0 million** in legal fees)[126](index=126&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=29&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Compares the company's financial performance for the six-month periods ended June 30, 2025 and 2024 | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | | License and collaboration revenue | $52 | $640 | $(588) | | Research and development | $58,799 | $35,680 | $23,119 | | General and administrative | $32,198 | $13,282 | $18,916 | | Total operating expenses | $90,997 | $48,962 | $42,035 | | Loss from operations | $(90,945) | $(48,322) | $(42,623) | | Interest income, net | $15,066 | $12,487 | $2,579 | | Net loss and comprehensive loss | $(75,878) | $(35,836) | $(40,042) | - R&D expenses increased by **$23.1 million**, primarily due to a **$13.4 million** increase in external clinical trial expenses and a **$7.4 million** increase in personnel-related costs (including **$2.6 million** in stock-based compensation)[131](index=131&type=chunk) - G&A expenses increased by **$18.9 million**, mainly due to a **$10.7 million** increase in personnel-related costs (including **$5.8 million** in stock-based compensation) and a **$4.8 million** increase in professional and consultant fees[133](index=133&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet financial obligations and fund future operations through available capital - The company has primarily funded operations through public offerings of common stock and redeemable convertible preferred stock, raising **$982.9 million** in gross proceeds since inception through June 30, 2025[135](index=135&type=chunk) - As of June 30, 2025, cash, cash equivalents, and marketable securities totaled **$661.1 million**, estimated to fund operations into the **first half of 2028**[135](index=135&type=chunk)[139](index=139&type=chunk) - On March 28, 2025, the company entered into an At-the-Market (ATM) offering agreement with Jefferies LLC to sell up to **$250 million** of common stock, with no sales made as of June 30, 2025[136](index=136&type=chunk) - Future funding requirements are expected to increase substantially due to ongoing R&D, regulatory approval processes, potential commercialization of cretostimogene, and costs associated with being a public company[137](index=137&type=chunk) - The company expects to finance future operations through equity offerings, debt financings, or collaborations, acknowledging potential dilution or restrictive covenants[140](index=140&type=chunk) [Cash Flows](index=33&type=section&id=Cash%20Flows) Analyzes the sources and uses of cash from operating, investing, and financing activities | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(57,236) | $(42,132) | | Net cash used in investing activities | $(185,362) | $(343,674) | | Net cash provided by financing activities | $154 | $402,698 | - Operating activities used **$57.2 million** in cash for the six months ended June 30, 2025, primarily due to a net loss of **$75.9 million**, partially offset by non-cash stock-based compensation and changes in operating assets and liabilities[144](index=144&type=chunk) - Investing activities used **$185.4 million** in cash for the six months ended June 30, 2025, mainly from purchases of marketable securities and the issuance of a **$26.0 million** note receivable[146](index=146&type=chunk) - Financing activities provided **$0.2 million** in cash for the six months ended June 30, 2025, primarily from stock option exercises, offset by deferred offering costs[148](index=148&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) Highlights accounting policies requiring significant management judgment and estimation, including R&D expenses - The preparation of financial statements requires management to make estimates and judgments, particularly for R&D expenses, which involve estimating costs for services performed by vendors when invoices are not yet received[150](index=150&type=chunk)[152](index=152&type=chunk) - There have been **no material changes** to the critical accounting policies and estimates from those described in the 2024 Annual Report[151](index=151&type=chunk) [Off-Balance Sheet Arrangements](index=35&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms the absence of any off-balance sheet arrangements during the reported periods - The company did not have any **off-balance sheet arrangements** during the periods presented[155](index=155&type=chunk) [Recently Issued Accounting Standards](index=35&type=section&id=Recently%20Issued%20Accounting%20Standards) Refers to disclosures regarding new accounting standards and their potential impact on the company - A description of recently issued accounting standards that may impact the company's financial position, results of operations, and cash flows is included in **Note 2** to the condensed consolidated financial statements[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses the company's exposure to market risks, focusing on interest rate sensitivity and inflation impact - The company's market risk exposure is primarily limited to **interest rate sensitivity**, with **$661.1 million** in cash, cash equivalents, and marketable securities (money market funds and U.S. Treasury bills) as of June 30, 2025[157](index=157&type=chunk) - Due to the short-term duration and low-risk profile of its investment portfolio, the company believes its exposure to interest rate risk is **not significant**[158](index=158&type=chunk) - Inflation has **not had a material effect** on the company's business, financial condition, or results of operations for the periods covered[159](index=159&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Details disclosure controls and procedures, including management's evaluation of effectiveness and internal control changes - Management, including the principal executive officer and principal financial officer, concluded that the company's disclosure controls and procedures were **effective at a reasonable assurance level** as of June 30, 2025[161](index=161&type=chunk) - There have been **no material changes** in the company's internal control over financial reporting during the three months ended June 30, 2025[162](index=162&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) Presents additional information including legal proceedings, risk factors, equity sales, and other disclosures [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) Provides an update on significant legal proceedings, specifically the lawsuit filed by ANI Pharmaceuticals - On July 16, 2025, the Superior Court granted the company's motion for summary judgment regarding ANI Pharmaceuticals, Inc.'s royalty claim on cretostimogene sales[165](index=165&type=chunk) On July 29, 2025, a jury unanimously rejected ANI's unjust enrichment claim[165](index=165&type=chunk) - As a result, the company will **not owe ANI a future royalty of 5%** on commercial sales of cretostimogene, and **no damages** were awarded to ANI[165](index=165&type=chunk) - The company expects ANI to pursue post-trial motions and appeals and will continue to vigorously defend against these claims[165](index=165&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) Supplements previously disclosed risk factors, focusing on litigation, trade policies, and healthcare reform - The company's business could be affected by litigation, government investigations, and enforcement actions, which can be expensive, time-consuming, and cause reputational damage, as exemplified by the ANI Pharmaceuticals lawsuit[168](index=168&type=chunk)[169](index=169&type=chunk) - International trade policies, including tariffs, sanctions, and trade barriers, may adversely affect the business by increasing R&D expenses, disrupting supply chains (especially for non-U.S. suppliers of raw materials and equipment), and potentially delaying development timelines[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - Current and future healthcare reform legislation, such as the 'One Big Beautiful Bill Act' (OBBBA) and the Inflation Reduction Act of 2022 (IRA), may increase the difficulty and cost of obtaining coverage and commercializing products, potentially reducing reimbursement and affecting pricing[175](index=175&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) - Changes in tax law, including recent U.S. federal tax reforms and potential future legislation, could materially adversely affect the company's financial condition, results of operations, and cash flows[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports on unregistered sales of equity securities and details the use of IPO proceeds - There were **no recent unregistered sales** of equity securities[184](index=184&type=chunk) - The company received net proceeds of approximately **$399.6 million** from its IPO on January 29, 2024[185](index=185&type=chunk) As of June 30, 2025, approximately **$204.7 million** of these proceeds have been used for general corporate purposes, including R&D and pre-commercial activities for cretostimogene[185](index=185&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item states that there are no defaults upon senior securities - Not applicable[186](index=186&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item states that there are no mine safety disclosures - Not applicable[187](index=187&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) Provides information on Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by officers and directors - During the six months ended June 30, 2025, Director James J. Mulé adopted a **Rule 10b5-1 trading arrangement** on June 6, 2025, to sell **99,032 shares**, expiring June 30, 2026[188](index=188&type=chunk)[189](index=189&type=chunk) No other officers or directors adopted, modified, or terminated such arrangements[188](index=188&type=chunk)[189](index=189&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) Lists exhibits filed as part of the Form 10-Q, including organizational documents, certifications, and XBRL | Exhibit Number | Exhibit Description | Filed Herewith | | :------------- | :------------------------------------------------------------------------------------------------------ | :------------- | | 3.1 | Amended and Restated Certificate of Incorporation | | | 3.2 | Amended and Restated Bylaws | | | 31.1 | Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) | X | | 31.2 | Certification of Principal Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) | X | | 32.1* | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | | 32.2* | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | | 101.INS | Inline XBRL Instance Document | X | | 101.SCH | Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Document | X | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | | [Signatures](index=44&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q report - The report was signed on **August 8, 2025**, by Arthur Kuan, Chairman and Chief Executive Officer, and Robert Lapetina, Vice President, Financial Planning & Analysis[196](index=196&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________ FORM 10-K ☑ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended June 30, 2025 OR ☐ 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: 1-07151 THE CLOROX COMPANY (Exact name of registrant as specified in its charter) Delaware 31 ...

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) Skechers reported strong top-line growth in the second quarter of 2025, with sales increasing 13.1% year-over-year to $2.44 billion, while profitability was impacted by higher operating expenses Q2 2025 Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Sales | $2,440.0M | $2,157.6M | 13.1% | | Gross Profit | $1,301.3M | $1,184.4M | 9.9% | | Gross Margin | 53.3% | 54.9% | (160) bps | | Earnings from Operations | $173.1M | $206.5M | (16.2)% | | Operating Margin | 7.1% | 9.6% | (250) bps | | Net Earnings | $170.5M | $140.3M | 21.5% | | Diluted EPS | $1.13 | $0.91 | 24.2% | - Sales growth was positively impacted by foreign currency exchange rates, which contributed **$33.9 million**[6](index=6&type=chunk) - On a constant currency basis, sales grew **11.5%**[6](index=6&type=chunk) - Growth was observed across both major sales channels: **Wholesale Sales** grew **15.0%**, and **Direct-to-Consumer Sales** grew **11.0%**[6](index=6&type=chunk) [First Half 2025 Financial Results](index=1&type=section&id=Six%20Months%202025%20Financial%20Results) For the first six months of 2025, Skechers achieved sales of $4.85 billion, a 10.0% increase, but experienced margin contraction similar to the quarterly results H1 2025 Financial Highlights (vs. H1 2024) | Metric | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Sales | $4,851.6M | $4,409.2M | 10.0% | | Gross Profit | $2,555.7M | $2,366.1M | 8.0% | | Gross Margin | 52.7% | 53.7% | (100) bps | | Earnings from Operations | $438.2M | $505.3M | (13.3)% | | Operating Margin | 9.0% | 11.5% | (240) bps | | Net Earnings | $372.9M | $346.9M | 7.5% | | Diluted EPS | $2.46 | $2.24 | 9.8% | [Segment and Geographic Performance](index=5&type=section&id=Segment%20and%20Geographic%20Performance) [Performance by Sales Channel](index=5&type=section&id=Performance%20by%20Sales%20Channel) In Q2 2025, both sales channels demonstrated growth, with Wholesale sales increasing by 15.0% and Direct-to-Consumer (DTC) sales growing 11.0%, though Wholesale gross margin compressed Q2 2025 Sales Channel Performance (vs. Q2 2024) | Channel | Sales | Growth (%) | Gross Margin | Margin Change (bps) | | :--- | :--- | :--- | :--- | :--- | | Wholesale | $1,301.4M | 15.0% | 41.4% | (250) bps | | Direct-to-Consumer | $1,138.6M | 11.0% | 67.0% | 0 bps | H1 2025 Sales Channel Performance (vs. H1 2024) | Channel | Sales | Growth (%) | Gross Margin | Margin Change (bps) | | :--- | :--- | :--- | :--- | :--- | | Wholesale | $2,833.6M | 11.0% | 42.8% | (150) bps | | Direct-to-Consumer | $2,018.0M | 8.8% | 66.5% | 0 bps | [Performance by Geography](index=6&type=section&id=Performance%20by%20Geography) International markets, particularly EMEA, drove Q2 2025 growth with a 22.0% surge, while domestic sales were nearly flat and China experienced a downturn Q2 2025 Geographic Sales (vs. Q2 2024) | Geography | Sales | Growth (%) | | :--- | :--- | :--- | | **Domestic** | **$862.1M** | **(0.2)%** | | Wholesale | $413.3M | (7.5)% | | Direct-to-Consumer | $448.8M | 7.6% | | **International** | **$1,577.9M** | **22.0%** | | Wholesale | $888.1M | 29.6% | | Direct-to-Consumer | $689.8M | 13.3% | Q2 2025 Regional Sales (vs. Q2 2024) | Region | Sales | Growth (%) | | :--- | :--- | :--- | | Americas (AMER) | $1,113.0M | 1.1% | | EMEA | $731.5M | 48.5% | | Asia Pacific (APAC) | $595.5M | 5.5% | | **China (included in APAC)** | **$287.2M** | **(8.2)%** | [Financial Statements](index=3&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Skechers reported a healthy balance sheet with total assets of $9.28 billion, increased cash, and slightly decreased inventory Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | **$4,851,711** | **$4,449,423** | | Cash and cash equivalents | $1,377,152 | $1,116,516 | | Inventory | $1,871,805 | $1,919,386 | | **Total Assets** | **$9,278,116** | **$8,455,758** | | **Total Current Liabilities** | **$2,315,937** | **$2,256,484** | | **Total Liabilities** | **$3,902,607** | **$3,635,494** | | **Total Stockholders' Equity** | **$5,273,135** | **$4,730,165** | [Condensed Consolidated Statements of Earnings](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) The Q2 2025 income statement shows total sales of $2.44 billion, with increased operating expenses leading to lower earnings from operations, partially offset by significant other income Q2 2025 Statement of Earnings (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Sales | $2,440,024 | $2,157,643 | | Gross Profit | $1,301,303 | $1,184,437 | | Total Operating Expenses | $1,128,221 | $977,906 | | Earnings from Operations | $173,082 | $206,531 | | Other Income (Expense) | $45,517 | $(1,652) | | Net Earnings | $182,705 | $164,524 | | Net Earnings Attributable to Skechers | $170,498 | $140,302 | [Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of GAAP to Constant Currency Measures](index=7&type=section&id=Reconciliation%20of%20GAAP%20to%20Constant%20Currency%20Measures) Skechers provides non-GAAP constant currency measures to exclude foreign exchange rate volatility, revealing an 11.5% sales growth and an 8.8% diluted EPS decline year-over-year in Q2 2025 on this basis - The company presents constant currency results to facilitate period-to-period comparisons of its business performance, excluding the volatility of foreign currency exchange rates[17](index=17&type=chunk) Q2 2025 GAAP vs. Constant Currency (Non-GAAP) | Metric | Reported GAAP | Constant Currency Adj. | Non-GAAP Measure | YoY Change (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Sales | $2,440.0M | $(33.9)M | $2,406.1M | 11.5% | | Net Earnings | $170.5M | $(44.2)M | $126.3M | (10.0)% | | Diluted EPS | $1.13 | $(0.30) | $0.83 | (8.8)% | [Company Information and Forward-Looking Statements](index=2&type=section&id=Company%20Information%20and%20Forward-Looking%20Statements) [About Skechers U.S.A., Inc.](index=2&type=section&id=About%20Skechers%20U.S.A.,%20Inc.) Skechers U.S.A., Inc. is a global leader in footwear, apparel, and accessories, distributing products in approximately 180 countries through wholesale partners and a direct-to-consumer network - Skechers is a global footwear leader specializing in lifestyle and performance products for men, women, and children[7](index=7&type=chunk) - The company operates a global distribution network, selling products in approximately **180 countries** through wholesale channels and approximately **5,300 Skechers-owned retail stores**[7](index=7&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section provides a standard safe harbor warning that the report contains forward-looking statements subject to various risks and uncertainties, including supply chain disruptions and international instability - The report includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[8](index=8&type=chunk) - Key risks that could cause actual results to differ materially include: supply chain disruptions, international economic and political conditions (inflation, tariffs, conflicts), intense competition, and uncertainties related to a proposed merger[8](index=8&type=chunk)

PART I — FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=6&type=section&id=ITEM%201.%20Financial%20Statements%20%28Unaudited%29) TeraWulf reported increased revenue but a significantly widened net loss for H1 2025, primarily due to higher costs, while total assets grew and cash decreased [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $869.4 million as of June 30, 2025, while cash decreased and total liabilities rose Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $89,993 | $274,065 | | Property, plant and equipment, net | $604,760 | $411,869 | | Goodwill | $55,457 | $0 | | **Total Assets** | **$869,408** | **$787,511** | | **Liabilities** | | | | Total current liabilities | $151,304 | $51,845 | | Convertible notes | $488,716 | $487,502 | | Deferred rent liability | $90,000 | $0 | | **Total Liabilities** | **$695,076** | **$543,066** | | **Total stockholders' equity** | **$174,332** | **$244,445** | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue increased for H1 2025, but net loss significantly widened, primarily due to higher cost of revenue and increased SG&A expenses Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $47,636 | $35,574 | $82,041 | $78,007 | | Cost of revenue | $22,094 | $13,918 | $46,647 | $28,326 | | Selling, general and administrative expenses | $9,996 | $9,113 | $56,569 | $21,402 | | Operating loss | $(15,590) | $(6,765) | $(75,218) | $(9,081) | | Net loss | $(18,370) | $(10,876) | $(79,788) | $(20,489) | | Loss per common share (Basic and diluted) | $(0.05) | $(0.03) | $(0.21) | $(0.07) | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased for H1 2025, primarily due to net loss and treasury stock repurchases - Key activities impacting stockholders' equity in the first six months of 2025 include a **$79.8 million net loss**, **$33.3 million in treasury stock repurchases**, **$19.6 million in common stock issued** for a business acquisition, and **$40.0 million in stock-based compensation**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by $182.6 million for H1 2025, driven by lower operating cash flow and increased investing activities Condensed Consolidated Statements of Cash Flows Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,677 | $39,227 | | Net cash used in investing activities | $(132,096) | $(93,579) | | Net cash (used in) provided by financing activities | $(52,228) | $104,022 | | **Net change in cash and cash equivalents** | **$(182,647)** | **$49,670** | - A major change in cash flow presentation occurred: proceeds from the sale of digital currency (**$82.4 million**) are now classified as an investing activity in 2025, whereas they were an operating activity (**$97.6 million**) in 2024. This is because the company no longer immediately converts bitcoin to cash following a debt repayment in July 2024[20](index=20&type=chunk)[54](index=54&type=chunk)[219](index=219&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business, Beowulf E&D acquisition, digital currency fair value accounting, debt, and new HPC leases - On May 21, 2025, the Company acquired 100% of Beowulf E&D for total consideration of approximately **$54.6 million**, which included cash, common stock, and contingent payments. The acquisition resulted in the recognition of **$55.5 million** in goodwill[28](index=28&type=chunk)[71](index=71&type=chunk)[79](index=79&type=chunk) - The company elected to early adopt ASU 2023-08 effective January 1, 2024, which requires digital currency to be measured at fair value with changes recognized in net income[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - In October 2024, the company sold its 25% equity interest in the Nautilus joint venture for total consideration of **$102.1 million**[29](index=29&type=chunk)[136](index=136&type=chunk) - The company entered into long-term HPC lease agreements and received **$90.0 million** in prepaid rent during the first six months of 2025[41](index=41&type=chunk)[111](index=111&type=chunk)[113](index=113&type=chunk) - In October 2024, the company completed a private offering of **$500.0 million** of 2.75% Convertible Senior Notes due 2030[123](index=123&type=chunk)[124](index=124&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's dual strategy in bitcoin mining and HPC, noting revenue growth offset by increased costs and reduced liquidity [Overview and Business Strategy](index=37&type=section&id=Overview%20and%20Business%20Strategy) TeraWulf's strategy focuses on vertically integrated bitcoin mining and HPC hosting, leveraging its Lake Mariner Facility and recent acquisition - The company's strategy is a dual focus on bitcoin mining and expanding into HPC hosting to capitalize on growing demand for AI and cloud computing[171](index=171&type=chunk)[172](index=172&type=chunk) - A key strategic development is the signing of multi-year data center lease agreements with Core42 for **72.5 MW** of HPC hosting capacity at the Lake Mariner Facility[173](index=173&type=chunk) - The acquisition of Beowulf E&D on May 21, 2025, vertically integrates a team of **94 employees** with expertise in power generation and electrical infrastructure, supporting the company's growth strategy[165](index=165&type=chunk) [Facilities and Operations](index=38&type=section&id=Facilities%20and%20Operations) The Lake Mariner Facility has 245 MW bitcoin mining and 72.5 MW HPC capacity; operational hashrate was 12.2 EH/s Operational Hashrate and Efficiency | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Global hashrate (EH/s) | 843.0 | 566.0 | | TeraWulf operational hashrate (EH/s) | 12.2 | 8.0 | | TeraWulf percentage of global hashrate | 1.4% | 1.4% | | Miner efficiency (j/th) | 17.7 | 23.2 | Cost to Mine One Bitcoin | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Cost to mine one bitcoin | $45,608 | $22,994 | $54,494 | $18,506 | | Value of each bitcoin mined | $98,219 | $65,984 | $95,730 | $58,622 | | Cost per kWh | $0.053 | $0.037 | $0.065 | $0.039 | - The company recorded **$3.1 million** and **$5.9 million** from demand response programs in the three and six months ended June 30, 2025, respectively, which are treated as a reduction in cost of revenue[188](index=188&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) Revenue increased in H1 2025 due to higher bitcoin prices, but cost of revenue and SG&A surged, leading to a wider operating loss - Revenue increased in Q2 and H1 2025 due to higher average bitcoin prices, despite mining fewer bitcoins (**857** in H1 2025 vs. **1,750** in H1 2024) because of the April 2024 halving and increased network difficulty[197](index=197&type=chunk) - Cost of revenue for H1 2025 increased by **$18.3 million** year-over-year, driven by higher power expenses from expanded mining capacity and higher realized power prices[199](index=199&type=chunk) - Selling, general and administrative expenses for H1 2025 increased by **$37.6 million** year-over-year, mainly due to a **$28.2 million** increase in stock-based compensation, **$1.5 million** in acquisition costs, and higher employee-related expenses[202](index=202&type=chunk) - Depreciation expense increased by **$5.2 million** in H1 2025 compared to H1 2024 due to new infrastructure placed in service[204](index=204&type=chunk) [Non-GAAP Measure and Liquidity](index=45&type=section&id=Non-GAAP%20Measure%20and%20Liquidity) The company reported Adjusted EBITDA of $14.5 million for Q2 2025; liquidity tightened, with cash decreasing to $90.0 million due to capital expenditures Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(18,370) | $(10,876) | $(79,788) | $(20,489) | | **Non-GAAP Adjusted EBITDA** | **$14,531** | **$19,526** | **$9,836** | **$51,503** | - Cash and cash equivalents decreased by **$182.6 million** during the first six months of 2025, primarily due to significant investments in plant and equipment (**$213.6 million**) and share repurchases (**$33.3 million**)[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) - As of June 30, 2025, the company had cash of **$90.0 million** and a working capital deficit of **$52.2 million**[222](index=222&type=chunk) [Critical Accounting Estimates](index=47&type=section&id=Critical%20Accounting%20Estimates) Management highlights critical accounting estimates including fair value of digital currency, asset impairment, stock-based compensation, and business combinations - Key estimates include fair value of digital currency, impairment of long-lived assets, stock-based compensation, income taxes, and accounting for business combinations and goodwill[223](index=223&type=chunk)[225](index=225&type=chunk)[227](index=227&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are bitcoin price and power cost, with a 10% change impacting H1 2025 net loss by $8.2 million and $4.7 million respectively - A **10%** change in the price of bitcoin would have impacted H1 2025 net loss by approximately **$8.2 million**[236](index=236&type=chunk) - A **10%** change in power prices would have impacted H1 2025 net loss by approximately **$4.7 million**[236](index=236&type=chunk) [Controls and Procedures](index=50&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 controls - Management concluded that disclosure controls and procedures were effective as of the end of the period[237](index=237&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[238](index=238&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=51&type=section&id=ITEM%201.%20Legal%20Proceedings) The company was not subject to any material pending legal proceedings during the reporting period - As of the reporting date, TeraWulf was not involved in any material legal proceedings[240](index=240&type=chunk) [Risk Factors](index=51&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes to the risk factors from the Annual Report on Form 10-K have been reported - No material changes to the risk factors from the Annual Report on Form 10-K have been reported[242](index=242&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%2E) The company's $200.0 million share repurchase program had no repurchases in Q2 2025, with the full amount available - The company did not repurchase any shares of its common stock during the second quarter of 2025[244](index=244&type=chunk) - As of June 30, 2025, the maximum value of shares that may yet be purchased under the program is **$200.0 million**[243](index=243&type=chunk)[244](index=244&type=chunk) [Defaults Upon Senior Securities](index=51&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities%2E) The company reported no defaults upon senior securities during the period - The company reported no defaults upon senior securities[245](index=245&type=chunk) [Mine Safety Disclosures](index=51&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures%2E) The company reported no mine safety disclosures during the period - The company reported no mine safety disclosures[246](index=246&type=chunk) [Other Information](index=52&type=section&id=ITEM%205.%20Other%20Information%2E) The company reported no other information under this item - The company reported no other information under this item[247](index=247&type=chunk) [Exhibits](index=52&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including agreements and officer certifications

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Surrozen, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Surrozen, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed explanatory notes [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This table provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates | Metric | June 30, 2025 (Unaudited) (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------------------- | :----------------------------------- | | **Assets:** | | | | Cash and cash equivalents | $90,390 | $34,565 | | Total current assets | $94,235 | $38,932 | | Total assets | $102,696 | $48,467 | | **Liabilities and Stockholders' Equity (Deficit):** | | | | Total current liabilities | $5,743 | $7,315 | | Tranche liability | $10,903 | — | | Warrant liabilities | $32,620 | $55,892 | | Total liabilities | $55,582 | $69,847 | | Total stockholders' equity (deficit) | $47,114 | $(21,380) | | Total liabilities and stockholders' equity | $102,696 | $48,467 | [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This table presents the company's financial performance over specific periods, including revenue, expenses, and net income or loss | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :---------------------------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Research service revenue – related party | $983 | $— | $1,966 | $— | | Research and development expenses | $6,042 | $5,335 | $12,600 | $10,582 | | General and administrative expenses | $3,958 | $3,714 | $7,934 | $7,597 | | Loss from operations | $(9,017) | $(9,049) | $(18,568) | $(18,179) | | Interest income | $1,025 | $490 | $1,321 | $875 | | Loss on issuance of common stock, pre-funded warrants and warrants in the 2024 PIPE | $— | $(20,397) | $— | $(20,397) | | Loss on amendment and cancellation of warrants | $— | $— | $(2,073) | $— | | Loss on execution of the 2025 PIPE | $— | $— | $(71,084) | $— | | Gain on change in fair value of tranche liability | $31,520 | $— | $47,860 | $— | | Gain on settlement of tranche liability | $— | $— | $1,117 | $— | | Other income, net | $16,218 | $3,695 | $54,203 | $3,610 | | Net income (loss) | $39,746 | $(25,261) | $12,776 | $(34,091) | | Net income (loss) per share, basic and diluted | $2.55 | $(7.99) | $0.85 | $(13.00) | [Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) This table details changes in the company's equity over time, reflecting common stock, additional paid-in capital, and accumulated deficit | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :--------------------------------------- | :------------------------------- | :----------------------------- | | Common stock (shares) | 3,262 | 8,570 | | Common stock (amount) | $0 | $1 | | Additional paid-in capital | $263,879 | $319,596 | | Accumulated deficit | $(285,259) | $(272,483) | | Total stockholders' equity (deficit) | $(21,380) | $47,114 | - Issuance of common stock in 2025 PIPE: **5,213 shares**, **$53,189** in APIC[19](index=19&type=chunk) - Stock-based compensation expense: **$1,828**[19](index=19&type=chunk) - Net income: **$12,776**[19](index=19&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This table summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods | Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(15,392) | $(14,357) | | Net cash used in investing activities | $(45) | $(7) | | Net cash provided by financing activities | $71,262 | $16,086 | | Net increase in cash, cash equivalents and restricted cash | $55,825 | $1,722 | | Cash, cash equivalents and restricted cash at end of period | $91,078 | $38,453 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1. Organization and Business](index=9&type=section&id=Note%201.%20Organization%20and%20Business) This note describes Surrozen, Inc.'s biotechnology focus on the Wnt pathway, its financial performance, and liquidity outlook - Surrozen, Inc. is a biotechnology company focused on modulating the Wnt pathway for tissue repair, with a current emphasis on ophthalmology[24](index=24&type=chunk) Financial Performance and Liquidity (in millions) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $39.7 | $12.8 | $(34.1) | | Noncash gains (tranche & warrant liabilities) | $47.6 | $104.6 | — | | Cash used in operations | — | $(15.4) | $(14.4) | | Cash and cash equivalents (as of June 30, 2025) | $90.4 | $90.4 | — | | Accumulated deficit (as of June 30, 2025) | $(272.5) | $(272.5) | — | - Management believes existing cash and cash equivalents are sufficient for at least the next 12 months, but additional capital will be needed for future operations and clinical studies[26](index=26&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note details the basis of financial statement presentation, key accounting policies, and evaluation of recent accounting pronouncements - The financial statements are prepared under U.S. GAAP, with estimates for R&D accruals, tranche liability, and warrant fair values[27](index=27&type=chunk)[30](index=30&type=chunk) - Tranche liability from the 2025 PIPE and warrant liabilities are classified as liabilities and remeasured at fair value each reporting period, with changes recognized in the statements of operations[34](index=34&type=chunk)[35](index=35&type=chunk) - Basic and diluted net income (loss) per share are computed using the two-class method, considering pre-funded and certain PIPE warrants as participating securities[37](index=37&type=chunk)[38](index=38&type=chunk) - The company is evaluating the impact of new FASB Accounting Standards Updates 2024-03 (Expense Disaggregation Disclosures) and 2023-09 (Income Tax Disclosures), effective for annual periods beginning after December 15, 2026 and 2024, respectively[39](index=39&type=chunk)[40](index=40&type=chunk) [Note 3. Fair Value Measurement](index=15&type=section&id=Note%203.%20Fair%20Value%20Measurement) This note explains the fair value measurements of financial assets and liabilities, including valuation methodologies for warrants and tranche liability Financial Assets and Liabilities Measured at Fair Value (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :-------------- | :---------------- | | **Assets:** | | | | Money market funds (Level 1) | $80,155 | $25,495 | | **Liabilities:** | | | | Tranche liability (Level 3) | $10,903 | — | | 2021 Public Warrants (Level 1) | $96 | $109 | | 2021 PIPE Warrants (Level 2) | $11 | $17 | | 2024 Pre-Funded Warrants (Level 2) | $358 | $574 | | 2024 PIPE Warrants (Level 3) | $7,856 | $55,192 | | 2025 Pre-Funded Warrants (Level 2) | $11,667 | — | | 2025 PIPE Warrants (Level 3) | $12,632 | — | | Total financial liabilities at fair value | $43,523 | $55,892 | - Level 3 liabilities (tranche liability, 2024 PIPE Warrants, 2025 PIPE Warrants) are valued using the Black-Scholes model with unobservable inputs like expected term, volatility, risk-free rate, dividend yield, and for some, milestone timing/probability[44](index=44&type=chunk)[45](index=45&type=chunk) - The discontinuation of SZN-043 clinical development in Q1 2025 resulted in the fair value of Series C and D 2024 PIPE Warrants becoming zero. Amendments to Series A and B 2024 PIPE Warrants and their cancellation in connection with the 2025 PIPE led to a **$2.1 million loss**[48](index=48&type=chunk) [Note 4. Balance Sheet Components](index=18&type=section&id=Note%204.%20Balance%20Sheet%20Components) This note provides a detailed breakdown of the company's accrued and other liabilities at specific reporting dates Accrued and Other Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Accrued payroll and related expenses | $2,114 | $2,929 | | Accrued research and development expenses | $1,652 | $1,904 | | Accrued professional service fees | $193 | $156 | | Other | $232 | $191 | | **Total Accrued and other liabilities** | **$4,191** | **$5,180** | [Note 5. Collaboration and License Agreements](index=18&type=section&id=Note%205.%20Collaboration%20and%20License%20Agreements) This note details the collaboration and license agreement with Boehringer Ingelheim for Fzd4 bi-specific antibodies, including milestone and royalty terms - The company has a Collaboration and License Agreement (CLA) with Boehringer Ingelheim (BI) for Fzd4 bi-specific antibodies, including SZN-413[51](index=51&type=chunk) - Under the CLA, BI paid a non-refundable upfront payment of **$12.5 million** (received **$10.5 million**) and may pay up to **$587.0 million** in success-based milestones and mid-single to low-double digit royalties on net sales[52](index=52&type=chunk) - Revenue from future milestones is fully constrained due to the inherent uncertainty of success, and sales-based royalties will be recognized when related sales occur[53](index=53&type=chunk) [Note 6. License Agreements](index=18&type=section&id=Note%206.%20License%20Agreements) This note describes the exclusive license agreement with Stanford University for engineered Wnt surrogate molecules, including potential milestone and royalty payments - The company holds an exclusive, sublicensable license from Stanford University for engineered Wnt surrogate molecules, covering patents and technology for treating human and veterinary diseases[54](index=54&type=chunk) - The Stanford Agreement includes potential payments of up to **$0.9 million** for development/regulatory milestones and up to **$5.0 million** for sales milestones, plus very low single-digit royalties on net sales[54](index=54&type=chunk)[55](index=55&type=chunk) - As of June 30, 2025, de minimis R&D expenses were incurred, and no milestones have been achieved under the Stanford Agreement[56](index=56&type=chunk) [Note 7. Commitments and Contingencies](index=20&type=section&id=Note%207.%20Commitments%20and%20Contingencies) This note details the company's operating lease for its office and laboratory space, including lease terms, extension options, and future rental payments - The company has an operating lease for its office and laboratory space in South San Francisco, California, with a term ending in April 2029[57](index=57&type=chunk) - The lease includes an option to extend for four years and a one-time early termination option effective April 30, 2026, with a **$0.4 million** termination fee[57](index=57&type=chunk) Aggregate Future Minimum Rental Payments (in thousands) | Period | Amount | | :------------------------------------ | :----- | | Remaining six months ending Dec 31, 2025 | $1,162 | | Year ending Dec 31, 2026 | $1,797 | | Year ending Dec 31, 2027 | $2,461 | | Year ending Dec 31, 2028 | $2,547 | | Year ending Dec 31, 2029 | $857 | | **Total lease payments** | **$8,824** | | Less: Imputed interest | $(1,310) | | **Operating lease liabilities** | **$7,514** | [Note 8. Stockholders' Equity](index=20&type=section&id=Note%208.%20Stockholders'%20Equity) This note outlines the company's equity transactions, including the 2025 and 2024 Private Placements (PIPEs) and their financial impact - The 2025 PIPE, executed March 24, 2025, aims to raise approximately **$175.0 million** to fund ophthalmology programs. The first tranche closed on March 26, 2025, generating approximately **$71.2 million** in net proceeds[60](index=60&type=chunk)[61](index=61&type=chunk) - The second tranche of the 2025 PIPE, expected to raise **$98.6 million**, is contingent upon FDA clearance of the IND application for SZN-8141 by October 31, 2026[61](index=61&type=chunk)[62](index=62&type=chunk) - The 2024 PIPE, closed in April 2024, generated approximately **$17.5 million** in gross proceeds but resulted in a **$20.4 million loss** on issuance because the fair value of warrants issued exceeded the proceeds received[65](index=65&type=chunk) [Note 9. Related Party Transactions](index=22&type=section&id=Note%209.%20Related%20Party%20Transactions) This note details transactions with related parties, including a research collaboration and a sublease agreement, due to shared affiliations - The company has a strategic research collaboration with TCGFB, Inc. for TGF-β antibody discovery, which is a related party transaction due to shared affiliations with The Column Group[66](index=66&type=chunk)[68](index=68&type=chunk) Research Service Revenue – Related Party (in thousands) | Period | Amount | | :------------------------------- | :----- | | Three Months Ended June 30, 2025 | $1,000 | | Six Months Ended June 30, 2025 | $2,000 | - A sublease agreement with Nura Bio, Inc., also a related party, generated **$0.2 million** and **$0.3 million** in sublease income for the three and six months ended June 30, 2025, respectively, recognized as reductions to operating expenses[72](index=72&type=chunk) [Note 10. Common Stock Warrants](index=25&type=section&id=Note%2010.%20Common%20Stock%20Warrants) This note summarizes the company's outstanding common stock warrants, their terms, and the impact of recent amendments and cancellations Common Stock Warrants Outstanding (in thousands) | Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | 2021 Public Warrants | 5,117 | 5,117 | | 2021 PIPE Warrants | 791 | 790 | | 2024 Pre-Funded Warrants | 40 | 40 | | 2025 Pre-Funded Warrants | 1,305 | — | | 2024 PIPE Warrants – Series A | 1,132 | 1,132 | | 2024 PIPE Warrants – Series B | 1,231 | 1,231 | | 2024 PIPE Warrants – Series C | — | 4,386 | | 2024 PIPE Warrants – Series D | — | 4,386 | | 2025 PIPE Warrants – Series E | 3,293 | — | | **Total** | **12,909** | **17,082** | - The 2025 Pre-Funded Warrants have a nominal exercise price (**$0.0001**) and are immediately exercisable, while Series E common stock warrants have an exercise price of **$11.54** and expire in five years[75](index=75&type=chunk) - Series C and D 2024 PIPE Warrants were cancelled in March 2025 due to the discontinuation of SZN-043 development, and exercise prices for Series A and B 2024 PIPE Warrants were reduced[77](index=77&type=chunk) - All outstanding warrants are classified as liabilities and measured at fair value, with changes recognized in other income, net[82](index=82&type=chunk) [Note 11. Stock-Based Compensation Plans](index=26&type=section&id=Note%2011.%20Stock-Based%20Compensation%20Plans) This note details the company's stock-based compensation plans, including option and RSU activity, and total compensation expense - As of June 30, 2025, **0.1 million shares** were available under the 2021 Equity Incentive Plan and approximately **0.1 million shares** under the 2021 Employee Stock Purchase Plan (ESPP)[83](index=83&type=chunk) Stock Option Activity (in thousands, except price) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :---------------- | :-------------- | | Options Outstanding (Number) | 536 | 1,220 | | Weighted Average Exercise Price | $19.45 | $14.80 | | Weighted Average Grant-Date Fair Value (6 months) | $7.45 (2024) | $8.97 (2025) | | Aggregate Intrinsic Value (Outstanding) | — | $36 | | Aggregate Intrinsic Value (Exercisable) | — | $13 | Total Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $340 | $350 | $606 | $649 | | General and administrative | $654 | $795 | $1,222 | $1,526 | | **Total** | **$994** | **$1,145** | **$1,828** | **$2,175** | - As of June 30, 2025, approximately **$9.0 million** of stock-based compensation expense remains to be recognized over a weighted-average period of **2.97 years**[87](index=87&type=chunk) [Note 12. Segment Reporting](index=28&type=section&id=Note%2012.%20Segment%20Reporting) This note clarifies that the company operates as a single reportable segment focused on Wnt pathway drug candidate research and development - The company operates in one reportable segment: research and development of drug candidates to modulate the Wnt pathway for tissue repair and regeneration[88](index=88&type=chunk) Segment Profit or Loss Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $983 | $— | $1,966 | $— | | Compensation (excl. stock-based) | $(3,283) | $(3,144) | $(6,613) | $(6,520) | | Development and manufacturing costs | $(1,509) | $(1,305) | $(3,619) | $(2,592) | | Stock-based compensation | $(994) | $(1,145) | $(1,828) | $(2,175) | | Other income (expense), including loss on execution of 2025 PIPE | $48,763 | $(16,214) | $31,344 | $(15,914) | | **Segment and consolidated net income (loss)** | **$39,746** | **$(25,261)** | **$12,776** | **$(34,091)** | - All research service revenue (**$1.0 million** for Q2 2025, **$2.0 million** for H1 2025) and long-lived assets are located in the United States[91](index=91&type=chunk) [Note 13. Subsequent Event](index=30&type=section&id=Note%2013.%20Subsequent%20Event) This note discloses the adoption of the 2025 Equity Inducement Plan by the board of directors for new employee equity awards - On August 7, 2025, the board adopted the 2025 Equity Inducement Plan, reserving **250,000 shares** for new employee equity awards[92](index=92&type=chunk) - No awards have been granted under the Inducement Plan as of the filing date of this Quarterly Report[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and operational results, covering its biotechnology focus, performance, liquidity, capital resources, and regulatory status [Overview](index=31&type=section&id=Overview) This overview introduces Surrozen, Inc.'s biotechnology focus on Wnt pathway modulation, its key product candidates, and recent financial highlights - Surrozen is a biotechnology company focused on discovering and developing drug candidates to selectively modulate the Wnt pathway for tissue repair, with a current focus in ophthalmology[97](index=97&type=chunk)[98](index=98&type=chunk) - Key product candidates include SZN-8141 (Fzd4 agonism + VEGF antagonism for retinal diseases, IND expected in 2026), SZN-8143 (Fzd4 agonism + VEGF antagonism + IL-6 antagonism for retinal diseases), and SZN-113 (Fzd127 target for Fuchs' Endothelial Corneal Dystrophy and Geographic Atrophy)[101](index=101&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - SZN-413, a Fzd4 bi-specific antibody, is being developed under a collaboration with Boehringer Ingelheim, which triggered a **$10.0 million** milestone payment in September 2024[105](index=105&type=chunk) - Development of SZN-043 for severe alcohol associated hepatitis was discontinued in Q1 2025 due to insufficient early clinical benefit[106](index=106&type=chunk) Financial Summary (as of June 30, 2025, in millions) | Metric | Amount | | :-------------------- | :----- | | Accumulated deficit | $272.5 | | Cash and cash equivalents | $90.4 | Net Income (Loss) (in millions) | Period | Net Income (Loss) | | :------------------------------- | :---------------- | | Three Months Ended June 30, 2025 | $39.7 | | Six Months Ended June 30, 2025 | $12.8 | | Three Months Ended June 30, 2024 | $(25.3) | | Six Months Ended June 30, 2024 | $(34.1) | *Note: 2025 net income includes noncash gains of **$47.6 million** (Q2) and **$104.6 million** (H1) on changes in fair value of tranche and warrant liabilities* [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in revenue, operating expenses, and net income or loss for the reported periods Key Financial Changes (Three Months Ended June 30, 2025 vs. 2024, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :---------------------------------------------------------------- | :----- | :----- | :--------- | :--------- | | Research service revenue – related party | $983 | $— | $983 | * | | Research and development expenses | $6,042 | $5,335 | $707 | 13% | | General and administrative expenses | $3,958 | $3,714 | $244 | 7% | | Interest income | $1,025 | $490 | $535 | 109% | | Loss on issuance of common stock, pre-funded warrants and warrants in the 2024 PIPE | $— | $(20,397) | $20,397 | -100% | | Gain on change in fair value of tranche liability | $31,520 | $— | $31,520 | * | | Other income, net | $16,218 | $3,695 | $12,523 | * | | Net income (loss) | $39,746 | $(25,261) | $65,007 | * | *Percentage is not meaningful Key Financial Changes (Six Months Ended June 30, 2025 vs. 2024, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :---------------------------------------------------------------- | :----- | :----- | :--------- | :--------- | | Research service revenue – related party | $1,966 | $— | $1,966 | * | | Research and development expenses | $12,600 | $10,582 | $2,018 | 19% | | General and administrative expenses | $7,934 | $7,597 | $337 | 4% | | Interest income | $1,321 | $875 | $446 | 51% | | Loss on issuance of common stock, pre-funded warrants and warrants in the 2024 PIPE | $— | $(20,397) | $20,397 | -100% | | Loss on amendment and cancellation of warrants | $(2,073) | $— | $(2,073) | * | | Loss on execution of the 2025 PIPE | $(71,084) | $— | $(71,084) | * | | Gain on change in fair value of tranche liability | $47,860 | $— | $47,860 | * | | Gain on settlement of tranche liability | $1,117 | $— | $1,117 | * | | Other income, net | $54,203 | $3,610 | $50,593 | * | | Net income (loss) | $12,776 | $(34,091) | $46,867 | * | *Percentage is not meaningful - Research and development expenses increased by **$0.7 million** (13%) for Q2 2025 and **$2.0 million** (19%) for H1 2025, primarily due to increased manufacturing costs, lab expenses, and consulting fees for ophthalmology programs, partially offset by decreased clinical expenses from the discontinuation of SZN-043[115](index=115&type=chunk)[123](index=123&type=chunk) - Net income for Q2 and H1 2025 was significantly impacted by noncash gains on changes in fair value of tranche liability (**$31.5 million** for Q2, **$47.9 million** for H1) and warrant liabilities (**$11.0 million** for Q2, **$51.7 million** for H1)[119](index=119&type=chunk)[120](index=120&type=chunk)[129](index=129&type=chunk)[131](index=131&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's historical funding, current cash position, future capital needs, and potential financing strategies - The company has incurred significant operating losses and negative cash flows from operations since inception, primarily financing activities through equity sales and collaboration payments[132](index=132&type=chunk) - The first tranche of the 2025 PIPE, closed in March 2025, generated approximately **$71.2 million** in net proceeds[133](index=133&type=chunk) - A second tranche of the 2025 PIPE, expected to provide **$98.6 million**, is contingent upon FDA clearance of the SZN-8141 IND application by October 31, 2026[133](index=133&type=chunk) - As of June 30, 2025, cash and cash equivalents were **$90.4 million**, and management believes this is sufficient to fund operations for at least the next 12 months[136](index=136&type=chunk) - The company will require substantial additional capital for future product candidate development, clinical trials, regulatory approvals, and commercialization, likely through equity offerings, debt financings, or collaborations, which could lead to stockholder dilution[135](index=135&type=chunk)[136](index=136&type=chunk)[138](index=138&type=chunk) Summary of Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Net cash used in operating activities | $(15,392) | $(14,357) | | Net cash used in investing activities | $(45) | $(7) | | Net cash provided by financing activities | $71,262 | $16,086 | | Net increase in cash, cash equivalents and restricted cash | $55,825 | $1,722 | [Emerging Growth Company Status](index=42&type=section&id=Emerging%20Growth%20Company%20Status) This section explains the company's status as an Emerging Growth Company and Smaller Reporting Company, outlining associated regulatory exemptions - The company is an Emerging Growth Company (EGC) and a Smaller Reporting Company (SRC), allowing it to use exemptions from certain disclosure requirements and an extended transition period for new accounting standards[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[124](index=124&type=chunk)[184](index=184&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk)[386](index=386&type=chunk) - The EGC status will be maintained until the earliest of December 31, 2025, or reaching specific revenue or market capitalization thresholds[147](index=147&type=chunk)[384](index=384&type=chunk) [Impact of Inflation](index=44&type=section&id=Impact%20of%20Inflation) This section addresses the impact of inflation on the company's labor, research, and clinical trial costs, and its overall financial condition - Inflation has increased labor costs, research and clinical trial costs, and is expected to continue to do so, potentially adversely affecting the company's financial condition and results of operations[149](index=149&type=chunk) [Impact of Tariffs](index=44&type=section&id=Impact%20of%20Tariffs) This section discusses the company's evaluation of potential tariff impacts, particularly concerning its UK-based contract manufacturing organization - The company is evaluating the potential impact of tariffs on its business, particularly as its contract manufacturing organization is located in the United Kingdom[150](index=150&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Surrozen, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[151](index=151&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[152](index=152&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[153](index=153&type=chunk) - The company acknowledges that disclosure controls and procedures provide reasonable, not absolute, assurance and may not prevent all errors or instances of fraud[154](index=154&type=chunk)[155](index=155&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers other material information, including legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business[157](index=157&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) Investing in Surrozen, Inc. involves significant risks, including a history of losses, substantial funding needs, and uncertainties in product development and commercialization [Summary of Risk Factors](index=47&type=section&id=Summary%20of%20Risk%20Factors) This section provides a concise overview of the material risks associated with investing in Surrozen, Inc., covering financial, operational, and regulatory challenges - The company has a history of losses and expects to incur significant losses for the foreseeable future, with no guarantee of achieving profitability[159](index=159&type=chunk)[161](index=161&type=chunk) - Substantial additional funds are required to advance product candidates, and there is no guarantee of sufficient future funding, which could lead to dilution for existing stockholders[159](index=159&type=chunk)[163](index=163&type=chunk)[187](index=187&type=chunk) - None of the company's product candidates have received regulatory approval, and successful commercialization depends on obtaining such approvals, which is a lengthy, expensive, and uncertain process[159](index=159&type=chunk)[169](index=169&type=chunk)[334](index=334&type=chunk) - The company relies on third parties for preclinical studies, clinical trials, and manufacturing, and their unsatisfactory performance could cause delays or failures[159](index=159&type=chunk)[197](index=197&type=chunk)[217](index=217&type=chunk) - Competition from other pharmaceutical and biotechnology companies, including those with greater resources, poses a significant risk to the company's ability to develop and commercialize product candidates[159](index=159&type=chunk)[225](index=225&type=chunk)[227](index=227&type=chunk) - The company faces risks related to obtaining and protecting intellectual property rights, including challenges to patent validity, enforceability, and scope, as well as potential infringement claims from third parties[159](index=159&type=chunk)[271](index=271&type=chunk)[310](index=310&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=126&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) No unregistered sales of equity securities, use of proceeds, or issuer purchases occurred during the reporting period - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities occurred during the reporting period[393](index=393&type=chunk) [Item 3. Defaults Upon Senior Securities](index=126&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period covered by this report - No defaults upon senior securities occurred during the reporting period[393](index=393&type=chunk) [Item 4. Mine Safety Disclosures](index=126&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[393](index=393&type=chunk) [Item 5. Other Information](index=126&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - No other information is reported under this item[393](index=393&type=chunk) [Item 6. Exhibits](index=127&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents and certifications - The exhibits include corporate governance documents (Certificate of Incorporation, Bylaws), the Warrant Agreement, and certifications required by the Sarbanes-Oxley Act[395](index=395&type=chunk)

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 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 333-258176 __________________________________ FIRSTSUN CAPITAL BANCORP (Exact name of registrant as specified in its charter) _________________ ...

[Part I. Financial Information](index=6&type=section&id=Part%20I.%20Financial%20Information) This section presents the company's unaudited condensed consolidated financial statements, management's analysis, market risk disclosures, and internal controls [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, business combinations, revenue disaggregation, goodwill and intangible assets, debt, stock-based compensation, and recent restructuring activities [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's balance sheet shows a decrease in total assets from $858.9 million at Dec 31, 2024, to $616.2 million at June 30, 2025, primarily driven by a significant reduction in cash and short-term investments Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :-------------- | :---------------- | :--------- | :--------- | | Total Assets | $616,180 | $858,929 | $(242,749) | (28.26)% | | Cash and cash equivalents | $50,712 | $249,645 | $(198,933) | (79.69)% | | Short-term investments | $46,626 | $142,355 | $(95,729) | (67.25)% | | Total Liabilities | $268,633 | $493,722 | $(225,089) | (45.59)% | | Current portion of long-term debt | $1,627 | $231,182 | $(229,555) | (99.29)% | | Total Stockholders' Equity | $347,547 | $365,207 | $(17,660) | (4.84)% | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported increased net losses for both the three and six months ended June 30, 2025, primarily due to a significant goodwill impairment charge of $28.8 million Statements of Operations Highlights (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Total Revenue | $80,721 | $75,902 | $4,819 | 6.35% | $160,134 | $150,625 | $9,509 | 6.31% | | Technology Revenue | $52,876 | $47,635 | $5,241 | 11.00% | $104,358 | $94,601 | $9,757 | 10.31% | | Professional Services Revenue | $27,845 | $28,267 | $(422) | (1.49)% | $55,776 | $56,024 | $(248) | (0.44)% | | Net Loss | $(40,978) | $(13,516) | $(27,462) | 203.18% | $(64,720) | $(34,103) | $(30,617) | 89.78% | | Goodwill Impairment | $28,769 | $0 | $28,769 | N/A | $28,769 | $0 | $28,769 | N/A | [Condensed Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) The company's comprehensive loss significantly increased for both the three and six months ended June 30, 2025, primarily driven by the higher net loss, partially offset by a positive foreign currency translation adjustment in 2025 Comprehensive Loss (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Comprehensive Loss | $(38,886) | $(13,554) | $(25,332) | 186.89% | $(61,653) | $(34,298) | $(27,355) | 79.76% | | Change in foreign currency translation adjustment | $2,096 | $0 | $2,096 | N/A | $3,145 | $(27) | $3,172 | N/A | [Condensed Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from $365.2 million at December 31, 2024, to $347.5 million at June 30, 2025, primarily due to net loss and common stock repurchases Stockholders' Equity Highlights (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :------------------------------------ | :--------- | :--------- | | Balance as of December 31 | $365,207 | $366,919 | | Net loss | $(64,720) | $(34,103) | | Stock-based compensation | $16,406 | $20,236 | | Repurchase of common stock | $(5,000) | $0 | | Issuance of common stock related to acquisition | $31,584 | $2,584 | | Balance as of June 30 | $347,547 | $357,002 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, the company experienced a net decrease in cash and cash equivalents of $198.9 million, a significant shift from a $95.6 million increase in the prior year Cash Flow Summary (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | | :------------------------------------ | :--------- | :--------- | :--------- | | Net cash (used in) provided by operating activities | $(8,717) | $11,878 | $(20,595) | | Net cash provided by investing activities | $44,537 | $82,201 | $(37,664) | | Net cash (used in) provided by financing activities | $(234,811) | $1,561 | $(236,372) | | Net (decrease) increase in cash and cash equivalents | $(198,933) | $95,619 | $(294,552) | - Repayment of debt was a major use of cash in financing activities, totaling **$230,814 thousand** for the six months ended June 30, 2025[36](index=36&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's financial reporting, including its business model, accounting policies, and the impact of recent events [Note 1. Description of Business and Summary of Significant Accounting Policies](index=14&type=section&id=Note%201.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) Health Catalyst provides data and analytics technology and services to healthcare organizations, operating in two segments: technology and professional services - Health Catalyst, Inc. is a leading provider of data and analytics technology and services to healthcare organizations, offering cloud-based data platforms, software analytics applications, and professional services expertise[40](index=40&type=chunk) - The company operates in two reportable segments: technology (data platform, analytics applications, support services) and professional services (analytics, implementation, strategic advisory, outsource, and improvement services)[45](index=45&type=chunk)[209](index=209&type=chunk) - Technology revenue from cloud-based subscriptions is recognized ratably over the contract term (typically 3-5 years), while professional services revenue is generally recognized as the service is provided[49](index=49&type=chunk)[50](index=50&type=chunk)[53](index=53&type=chunk) - A goodwill impairment of **$28.8 million** was recorded during the three months ended June 30, 2025[78](index=78&type=chunk) [Note 2. Business Combinations](index=24&type=section&id=Note%202.%20Business%20Combinations) Health Catalyst completed several acquisitions in 2024 and 2025 to expand its offerings, including Upfront Healthcare Services for $80.0 million in January 2025 - On January 22, 2025, Health Catalyst acquired Upfront Healthcare Services for **$80.0 million**, comprising cash, common stock, and contingent consideration, with **$52.9 million** in goodwill allocated to the technology reporting unit[105](index=105&type=chunk)[107](index=107&type=chunk) - In 2024, the company acquired Intraprise Health, LLC (**$44.9 million** consideration, **$29.6 million** goodwill), Lumeon Ltd. (**$39.8 million** consideration, **$24.4 million** goodwill), and Carevive Systems, Inc. (**$22.1 million** consideration, **$15.6 million** goodwill)[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) Unaudited Pro Forma Net Loss (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :--------- | :--------- | | Six Months Ended June 30 | $(69,014) | $(40,759) | [Note 3. Revenue](index=29&type=section&id=Note%203.%20Revenue) Total revenue for the three months ended June 30, 2025, was $80.7 million (6% increase YoY), with technology revenue growing 11% and professional services revenue slightly decreasing Revenue Disaggregation (in thousands) | Revenue Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Recurring technology | $52,876 | $47,635 | $5,241 | 11.00% | $104,358 | $94,601 | $9,757 | 10.31% | | Professional services | $27,845 | $28,267 | $(422) | (1.49)% | $55,776 | $56,024 | $(248) | (0.44)% | | Total revenue | $80,721 | $75,902 | $4,819 | 6.35% | $160,134 | $150,625 | $9,509 | 6.31% | - Revenue from clients in the United States accounted for **96.4%** and **96.2%** of total revenue for the three and six months ended June 30, 2025, respectively[123](index=123&type=chunk) [Note 4. Goodwill and Intangible Assets](index=29&type=section&id=Note%204.%20Goodwill%20and%20Intangible%20Assets) The company recorded a non-cash goodwill impairment charge of $28.8 million for the three and six months ended June 30, 2025, due to declines in stock price and market capitalization - A non-cash goodwill impairment charge of **$28.8 million** was recorded for the three and six months ended June 30, 2025, triggered by declines in stock price, market capitalization, and a downward revision of future revenue forecasts[124](index=124&type=chunk)[126](index=126&type=chunk) Goodwill Carrying Amount by Reporting Unit (in thousands) | Reporting Unit | December 31, 2024 | June 30, 2025 | | :--------------- | :---------------- | :-------------- | | Technology | $253,090 | $286,095 | | Professional Services | $6,669 | $0 | | Total | $259,759 | $286,095 | Intangible Assets, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Total intangible assets, net | $98,346 | $86,052 | - Amortization expense of acquired intangible assets was **$9.0 million** and **$17.8 million** for the three and six months ended June 30, 2025, respectively, up from $7.5 million and $14.8 million in the prior year periods[128](index=128&type=chunk) [Note 5. Property and Equipment](index=30&type=section&id=Note%205.%20Property%20and%20Equipment) Net property and equipment increased to $33.4 million at June 30, 2025, from $29.4 million at December 31, 2024, primarily due to increased capitalized internal-use software costs Property and Equipment, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Property and equipment, net | $33,399 | $29,394 | | Capitalized internal-use software costs | $56,867 | $46,143 | Depreciation Expense (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :--------- | :--------- | | 3 Months Ended June 30 | $3,600 | $3,100 | | 6 Months Ended June 30 | $7,200 | $6,400 | - Capitalized internal-use software costs for the six months ended June 30, 2025, were **$10.7 million**, up from $6.4 million in the prior year[132](index=132&type=chunk) [Note 6. Short-term Investments](index=31&type=section&id=Note%206.%20Short-term%20Investments) Short-term investments decreased significantly from $142.4 million at December 31, 2024, to $46.6 million at June 30, 2025, primarily consisting of U.S. treasury notes and commercial paper Short-term Investments (Fair Value, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :---------------- | | Short-term investments | $46,626 | $142,355 | - As of June 30, 2025, short-term investments primarily consisted of **U.S. treasury notes ($34.6 million)** and **commercial paper ($12.1 million)**, all due within one year[134](index=134&type=chunk) - The company did not have any material realized gains or losses on investments during the three and six months ended June 30, 2025 and 2024[133](index=133&type=chunk) [Note 7. Fair Value of Financial Instruments](index=32&type=section&id=Note%207.%20Fair%20Value%20of%20Financial%20Instruments) As of June 30, 2025, financial instruments measured at fair value totaled $90.3 million, primarily Level 1 money market funds and U.S. Treasury notes, with convertible senior notes fully settled Fair Value of Financial Instruments (June 30, 2025, in thousands) | Instrument | Level 1 | Level 2 | Level 3 | Total | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | | Money market funds | $44,371 | — | — | $44,371 | | U.S. Treasury notes | $34,554 | — | — | $34,554 | | Commercial paper | — | $13,557 | — | $13,557 | | Contingent consideration liabilities | — | — | $(2,145) | $(2,145) | | Total | $78,925 | $13,557 | $(2,145) | $90,337 | - Contingent consideration liabilities, categorized as Level 3, decreased by **$5.2 million** due to a change in fair value, resulting in a balance of **$2.1 million** as of June 30, 2025[143](index=143&type=chunk) - The **2.50% convertible senior notes due 2025** were fully settled in cash on April 14, 2025[138](index=138&type=chunk) [Note 8. Accrued Liabilities](index=34&type=section&id=Note%208.%20Accrued%20Liabilities) Accrued liabilities decreased from $26.3 million at December 31, 2024, to $17.4 million at June 30, 2025, primarily due to reductions in accrued compensation and interest payable Accrued Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Accrued compensation and benefit expenses | $5,916 | $11,655 | | Interest payable | $3,474 | $4,803 | | Restructuring liabilities | $70 | — | | Other accrued liabilities | $7,907 | $9,882 | | Total accrued liabilities | $17,367 | $26,340 | [Note 9. Leases](index=34&type=section&id=Note%209.%20Leases) The company's operating lease expense was $787 thousand (Q2 2025) and $1.6 million (H1 2025), partially offset by sublease income, with no impairment charges in H1 2025 Lease Expense (Income) (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease expense | $787 | $666 | $1,556 | $1,294 | | Sublease income | $(519) | $(339) | $(1,019) | $(654) | | Total | $432 | $358 | $856 | $704 | - No impairment charges related to leases were recognized during the six months ended June 30, 2025, compared to **$2.2 million** in the prior year period[147](index=147&type=chunk) [Note 10. Debt](index=35&type=section&id=Note%2010.%20Debt) Total debt principal outstanding decreased significantly from $392.4 million at December 31, 2024, to $161.6 million at June 30, 2025, primarily due to the full repayment of $230.0 million in convertible senior notes Debt Composition (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Variable interest rate term loan maturing 2029 | $161,574 | $162,388 | | 2.50% convertible senior notes due 2025 | — | $230,000 | | Total Principal Outstanding | $161,574 | $392,388 | - The **$230.0 million** aggregate principal amount of **2.50% Convertible Senior Notes due 2025** was fully repaid in cash on April 14, 2025[161](index=161&type=chunk) Interest Expense (in thousands) | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Interest Expense | $5,787 | $1,833 | $13,103 | $3,662 | - The variable interest rate term loan bears interest at **SOFR plus 6.5% per year** and has a final maturity date of July 16, 2029[154](index=154&type=chunk) [Note 11. Stockholders' Equity](index=37&type=section&id=Note%2011.%20Stockholders'%20Equity) As of June 30, 2025, the company had 70.4 million common shares outstanding, with $5.0 million in share repurchases during the first half of 2025 Common Stock Outstanding | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Shares outstanding | 70,373,625 | 64,043,799 | - During the six months ended June 30, 2025, the company repurchased and retired **1,103,601 shares** of common stock for **$5.0 million** under its Share Repurchase Plan, leaving **$24.8 million** of authorization remaining[164](index=164&type=chunk) - No dividends have been declared or paid on common stock through June 30, 2025[163](index=163&type=chunk) [Note 12. Net Loss Per Share](index=38&type=section&id=Note%2012.%20Net%20Loss%20Per%20Share) Basic and diluted net loss per share for the three months ended June 30, 2025, was $(0.59), reflecting the increased net loss, with potentially dilutive securities excluded Net Loss Per Share (Basic and Diluted) | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss per share | $(0.59) | $(0.23) | $(0.94) | $(0.58) | - Stock options, restricted stock units, performance-based restricted stock units, convertible senior notes, employee stock purchase plan, and restricted shares were excluded from diluted net loss per share calculation as their effect was anti-dilutive due to net losses[166](index=166&type=chunk) [Note 13. Stock-Based Compensation](index=39&type=section&id=Note%2013.%20Stock-Based%20Compensation) Total stock-based compensation expense decreased to $8.3 million (Q2 2025) and $15.9 million (H1 2025), primarily driven by lower RSU and restricted shares expense Total Stock-Based Compensation Expense (in thousands) | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total stock-based compensation | $8,323 | $8,966 | $15,866 | $19,804 | - During the six months ended June 30, 2025, **3,396,364 RSUs** and **2,407,823 PRSUs** were granted[173](index=173&type=chunk)[182](index=182&type=chunk) - As of June 30, 2025, unrecognized stock-based compensation expense was **$33.4 million** for RSUs (weighted-average period of **2.2 years**) and **$7.7 million** for PRSUs (weighted-average period of **1.1 years**)[174](index=174&type=chunk)[183](index=183&type=chunk) [Note 14. Income Taxes](index=44&type=section&id=Note%2014.%20Income%20Taxes) The company reported an income tax provision of $81 thousand (Q2 2025) and $296 thousand (H1 2025), with an estimated effective tax rate of (0.2)% and (0.5)% respectively Income Tax Provision (in thousands) | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income tax provision | $81 | $70 | $296 | $183 | - The estimated effective tax rate for the six months ended June 30, 2025 and 2024, was **(0.2)%** and **(0.5)%**, respectively, primarily due to a full valuation allowance on net deferred tax assets[194](index=194&type=chunk)[195](index=195&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, is anticipated to partially defer income tax payments in future years but not materially impact the effective tax rate[197](index=197&type=chunk) [Note 15. Commitments and Contingencies](index=44&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) The company is involved in routine legal proceedings not expected to have a material adverse effect, and no charges were recorded for loss contingencies - The company is involved in routine legal proceedings that are not expected to have a material adverse effect on its business, financial condition, results of operations, or liquidity[199](index=199&type=chunk) - No charges were recorded for loss contingencies during the three and six months ended June 30, 2025 and 2024[199](index=199&type=chunk) [Note 16. Contract Balances and Performance Obligations](index=45&type=section&id=Note%2016.%20Contract%20Balances%20and%20Performance%20Obligations) Unbilled accounts receivable decreased to $8.7 million at June 30, 2025, while total deferred revenue increased to $67.3 million, with $252.3 million of revenue expected from unsatisfied obligations Contract Balances (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Unbilled accounts receivable | $8,700 | $11,800 | | Total deferred revenue | $67,300 | $53,500 | - The company expects to recognize **$252.3 million** of revenue on unsatisfied performance obligations as of June 30, 2025, with approximately **70%** recognized over the next 24 months[202](index=202&type=chunk) [Note 17. Related Parties](index=45&type=section&id=Note%2017.%20Related%20Parties) The company recognized $4.5 million (Q2 2025) and $8.9 million (H1 2025) in revenue from Carle Health, a client with a board member on the company's board Revenue from Related Party (Carle Health, in thousands) | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $4,500 | $4,100 | $8,900 | $8,200 | - As of June 30, 2025, receivables from Carle Health were **$0.1 million** and deferred revenue was **$1.0 million**[203](index=203&type=chunk) [Note 18. Segments](index=46&type=section&id=Note%2018.%20Segments) The company operates in two segments: Technology and Professional Services, with Technology Adjusted Gross Profit increasing and Professional Services Adjusted Gross Profit decreasing Adjusted Gross Profit by Segment (in thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Technology | $34,852 | $32,063 | $2,789 | 8.70% | $69,463 | $64,223 | $5,240 | 8.16% | | Professional Services | $5,112 | $5,740 | $(628) | (10.94)% | $9,549 | $11,899 | $(2,350) | (19.75)% | | Total | $39,964 | $37,803 | $2,161 | 5.72% | $79,012 | $76,122 | $2,890 | 3.79% | [Note 19. Restructuring Costs](index=47&type=section&id=Note%2019.%20Restructuring%20Costs) The January 2025 Restructuring Plan involved a global workforce reduction, incurring $3.9 million in severance costs, primarily allocated to R&D and professional services - The January 2025 Restructuring Plan involved a global workforce reduction to optimize cost structure and focus investments in key priority areas[212](index=212&type=chunk) January 2025 Restructuring Plan Costs (Six Months Ended June 30, 2025, in thousands) | Financial Statement Line Item | Total Severance and Other Team Member Costs | | :------------------------------------ | :------------------------------------------ | | Technology | $401 | | Professional services | $1,142 | | Sales and marketing | $352 | | Research and development | $1,908 | | General and administrative | $136 | | Total | $3,939 | - Restructuring liabilities related to the January 2025 plan were **$70 thousand** as of June 30, 2025, with the plan substantially complete[214](index=214&type=chunk)[215](index=215&type=chunk) [Note 20. Subsequent Events](index=49&type=section&id=Note%2020.%20Subsequent%20Events) The August 2025 Restructuring Plan will reduce the global workforce by approximately 9% in Q3 2025, with expected charges of at least $4.5 million, and the OBBBA was signed into law - The August 2025 Restructuring Plan, authorized on August 5, 2025, will reduce the global workforce by approximately **9%** in Q3 2025, primarily in R&D and sales and marketing, with expected charges of at least **$4.5 million**[221](index=221&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, including tax reform and significant Medicaid funding reductions, with its impact on future financial results currently under evaluation[223](index=223&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, covering business overview, macroeconomic impact, key metrics, and operating results [Overview](index=50&type=section&id=Overview) Health Catalyst provides data and analytics technology and services to healthcare organizations, with total revenue increasing by 6% but net losses widening due to a $28.8 million goodwill impairment - Health Catalyst is a leading provider of data and analytics technology and services to healthcare organizations, focused on enabling data-informed healthcare decisions[225](index=225&type=chunk) Financial Highlights (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenue | $80,721 | $75,902 | $160,134 | $150,625 | | Net Loss | $(40,978) | $(13,516) | $(64,720) | $(34,103) | | Adjusted EBITDA | $9,344 | $7,522 | $15,623 | $10,899 | - The increased net losses in 2025 were largely driven by a **$28.8 million** goodwill impairment charge[229](index=229&type=chunk) [Macroeconomic Environment and Strategic Operating Plan](index=50&type=section&id=Macroeconomic%20Environment%20and%20Strategic%20Operating%20Plan) Ongoing macroeconomic challenges continue to strain the healthcare market, leading to elongated sales cycles and lower new Platform Client bookings, prompting a strategic operating plan focused on high ROI offerings - Macroeconomic challenges (high inflation, interest rates, Medicaid/research funding cuts, OBBBA) continue to adversely affect the healthcare market, leading to elongated sales cycles and lower new Platform Client bookings[227](index=227&type=chunk)[230](index=230&type=chunk) - An increasing number of clients are opting for price reductions during migration to Health Catalyst Ignite, resulting in lower overall spend[233](index=233&type=chunk) - The strategic operating plan emphasizes offerings with competitive differentiation and measurable ROI, driving cross-selling within the existing client base, and continued R&D investment in Health Catalyst Ignite[231](index=231&type=chunk)[234](index=234&type=chunk) - Over **90%** of the company's revenue is recurring, with high predictability in technology revenue, especially from Platform Clients with contractual escalators[232](index=232&type=chunk) [Key Financial Metrics](index=52&type=section&id=Key%20Financial%20Metrics) The company monitors GAAP measures like total revenue, gross profit, and net loss, alongside non-GAAP measures such as Adjusted Gross Profit and Adjusted EBITDA, to evaluate performance Key Financial Metrics (in thousands, except percentages) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | **GAAP Financial Measures:** | | | | | | Total revenue | $80,721 | $75,902 | $160,134 | $150,625 | | Gross profit | $30,333 | $28,806 | $58,992 | $58,127 | | Gross margin | 38 % | 38 % | 37 % | 39 % | | Net loss | $(40,978) | $(13,516) | $(64,720) | $(34,103) | | **Non-GAAP Financial Measures:** | | | | | | Adjusted Gross Profit | $39,964 | $37,803 | $79,012 | $76,122 | | Adjusted Gross Margin | 50 % | 50 % | 49 % | 51 % | | Adjusted EBITDA | $9,344 | $7,522 | $15,623 | $10,899 | [Reconciliation of Non-GAAP Financial Measures (Adjusted Gross Profit and Adjusted Gross Margin)](index=52&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures%20(Adjusted%20Gross%20Profit%20and%20Adjusted%20Gross%20Margin)) Adjusted Gross Profit and Adjusted Gross Margin are non-GAAP measures used to evaluate operating performance by excluding non-cash expenses and certain non-recurring costs Adjusted Gross Profit by Segment (3 Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | :--------- | | Technology | $34,852 | $32,063 | $2,789 | 8.70% | | Professional Services | $5,112 | $5,740 | $(628) | (10.94)% | | Total | $39,964 | $37,803 | $2,161 | 5.72% | Adjusted Gross Margin by Segment (3 Months Ended June 30) | Segment | 2025 | 2024 | Change (pp) | | :-------------------- | :--- | :--- | :---------- | | Technology | 66 % | 67 % | (1) | | Professional Services | 18 % | 20 % | (2) | | Total | 50 % | 50 % | 0 | Adjusted Gross Profit by Segment (6 Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | :--------- | | Technology | $69,463 | $64,223 | $5,240 | 8.16% | | Professional Services | $9,549 | $11,899 | $(2,350) | (19.75)% | | Total | $79,012 | $76,122 | $2,890 | 3.79% | Adjusted Gross Margin by Segment (6 Months Ended June 30) | Segment | 2025 | 2024 | Change (pp) | | :-------------------- | :--- | :--- | :---------- | | Technology | 67 % | 68 % | (1) | | Professional Services | 17 % | 21 % | (4) | | Total | 49 % | 51 % | (2) | - Adjusted Technology Gross Margin decreased due to costs associated with transitioning clients to Azure-hosted environments, migrating to Health Catalyst Ignite, and Ninja Universe deployment costs[244](index=244&type=chunk)[253](index=253&type=chunk) - Adjusted Professional Services Gross Margin decreased due to lower utilization rates, timing of certain one-time revenue items, and increased costs related to pilot ambulatory operations TEMS[246](index=246&type=chunk)[255](index=255&type=chunk) [Adjusted EBITDA](index=56&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA improved year-over-year, reaching $9.3 million for Q2 2025 and $15.6 million for H1 2025, attributed to revenue growth and cost reduction initiatives Adjusted EBITDA (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | :--------- | | 3 Months Ended June 30 | $9,344 | $7,522 | $1,822 | 24.22% | | 6 Months Ended June 30 | $15,623 | $10,899 | $4,724 | 43.34% | - Adjusted EBITDA improved year-over-year as a result of revenue growth and cost reduction initiatives, as well as the timing of some non-headcount expenses[258](index=258&type=chunk) - Reconciliation adjustments for Adjusted EBITDA include interest and other (income) expense, income tax provision, depreciation and amortization, stock-based compensation, acquisition-related costs, restructuring costs, goodwill impairment, and non-recurring lease-related charges[260](index=260&type=chunk) [Key Factors Affecting Our Performance](index=58&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) Key factors influencing performance include the challenging macroeconomic environment, the ability to add new clients and expand existing relationships, and the impact of acquisitions and revenue mix - Macroeconomic challenges (high inflation, interest rates, tariffs, cuts in Medicaid and research funding, tight labor market) continue to adversely affect client decisions and business results[265](index=265&type=chunk) - Future growth depends on the ability to attract new clients, expand relationships with existing clients through new product offerings (e.g., PowerCosting, PowerLabor), and successfully migrate clients to Health Catalyst Ignite[265](index=265&type=chunk)[266](index=266&type=chunk) - Recent acquisitions (Medicity, Able Health, Healthfinch, Vitalware, Twistle, KPI Ninja, ARMUS, ERS, Carevive, Lumeon, Intraprise, Upfront) impact overall growth rates and operating costs due to integration and varying revenue profiles[265](index=265&type=chunk) - Changes in the revenue mix between higher-margin technology offerings and lower-margin professional services significantly impact future gross margin and Adjusted Gross Margin[266](index=266&type=chunk) [Recent Acquisitions](index=59&type=section&id=Recent%20Acquisitions) Health Catalyst recently acquired Upfront Healthcare Services for $80.0 million, Intraprise Health for $44.9 million, Lumeon Ltd. for $39.8 million, and Carevive Systems, Inc. for $22.1 million - Acquired Upfront Healthcare Services on January 22, 2025, for **$80.0 million** (cash, common stock, contingent consideration) to enhance patient engagement[267](index=267&type=chunk) - Acquired Intraprise Health, LLC on November 8, 2024, for **$44.9 million** (cash, common stock) for data and analytics technology and security services[268](index=268&type=chunk) - Acquired Lumeon Ltd. on August 1, 2024, for **$39.8 million** (cash, common stock, contingent consideration) for automated care orchestration[269](index=269&type=chunk) - Acquired Carevive Systems, Inc. on May 24, 2024, for **$22.1 million** (cash, common stock, contingent consideration) for oncology-focused health technology[270](index=270&type=chunk) [Components of Our Results of Operations](index=60&type=section&id=Components%20of%20Our%20Results%20of%20Operations) Revenue is primarily from technology subscriptions (65% of total H1 2025) and professional services, with operating expenses influenced by growth investments, restructuring, and acquisition-related costs - For the six months ended June 30, 2025, technology revenue represented **65%** of total revenue, and professional services revenue represented **35%**[271](index=271&type=chunk) - Near-term technology revenue growth is expected to be negatively impacted by policy developments around Medicaid and research funding reductions[271](index=271&type=chunk) - Cost of technology revenue is expected to fluctuate and potentially increase in the near term due to additional costs associated with transitioning clients to Microsoft Azure and migrating to Health Catalyst Ignite[276](index=276&type=chunk) - Operating expenses (Sales and marketing, Research and development, General and administrative) are influenced by investments in growth, restructuring activities (2023 and January 2025 plans), and acquisition-related costs[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk) - A goodwill impairment charge of **$28.8 million** was recognized during the three months ended June 30, 2025[282](index=282&type=chunk) - A full valuation allowance is provided for net deferred tax assets, and the One Big Beautiful Bill Act (OBBBA) is anticipated to partially defer income tax payments in future years[284](index=284&type=chunk)[286](index=286&type=chunk) [Discussion of the Three Months Ended June 30, 2025 and 2024](index=65&type=section&id=Discussion%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Total revenue increased 6% to $80.7 million, driven by 11% growth in technology revenue, but a $28.8 million goodwill impairment led to a significant operating loss Revenue Performance (3 Months Ended June 30, in thousands) | Revenue Type | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | :--------- | | Technology | $52,876 | $47,635 | $5,241 | 11 % | | Professional services | $27,845 | $28,267 | $(422) | (1)% | | Total revenue | $80,721 | $75,902 | $4,819 | 6 % | - Cost of technology revenue, excluding depreciation and amortization, increased by **$2.3 million (14%)** to **$18.4 million**, primarily due to increased cloud computing and hosting costs[297](index=297&type=chunk) - General and administrative expenses decreased by **$6.1 million (42%)** to **$8.3 million**, mainly due to a **$5.2 million** decrease in the fair value of contingent consideration liabilities[303](index=303&type=chunk) - A non-cash goodwill impairment charge of **$28.8 million** was recorded[306](index=306&type=chunk) - Interest and other (expense) income, net, decreased by **$6.2 million (261%)** to **$(3.8) million**, driven by increased interest expense from the credit agreement and decreased interest income[307](index=307&type=chunk) [Discussion of the Six Months Ended June 30, 2025 and 2024](index=68&type=section&id=Discussion%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Total revenue increased 6% to $160.1 million, with technology revenue up 10%, while operating expenses decreased due to restructuring and lower contingent consideration fair value, despite a $28.8 million goodwill impairment Revenue Performance (6 Months Ended June 30, in thousands) | Revenue Type | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | :--------- | | Technology | $104,358 | $94,601 | $9,757 | 10 % | | Professional services | $55,776 | $56,024 | $(248) | — % | | Total revenue | $160,134 | $150,625 | $9,509 | 6 % | - Cost of technology revenue, excluding depreciation and amortization, increased by **$4.5 million (14%)** to **$35.9 million**, primarily due to increased cloud computing and hosting costs[312](index=312&type=chunk) - General and administrative expenses decreased by **$6.5 million (22%)** to **$22.4 million**, mainly due to a **$5.2 million** decrease in the fair value of contingent consideration liabilities and a **$2.2 million** decrease in lease-related impairment charges[318](index=318&type=chunk) - A non-cash goodwill impairment charge of **$28.8 million** was recorded[321](index=321&type=chunk) - Interest and other (expense) income, net, decreased by **$11.9 million (252%)** to **$(7.2) million**, due to increased interest expense from the credit agreement and decreased interest income[322](index=322&type=chunk) [Liquidity and Capital Resources](index=72&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had $97.3 million in cash, cash equivalents, and short-term investments, with the $230.0 million convertible senior notes fully repaid using proceeds from a new term loan facility - As of June 30, 2025, cash, cash equivalents, and short-term investments totaled **$97.3 million**[324](index=324&type=chunk) - The **$230.0 million** convertible senior notes were fully repaid in cash on April 14, 2025[333](index=333&type=chunk) - A new **$225.0 million** term loan facility (Credit Agreement) was entered into on July 16, 2024, with **$161.6 million** outstanding as of June 30, 2025[327](index=327&type=chunk)[328](index=328&type=chunk)[149](index=149&type=chunk) - The Share Repurchase Plan has **$24.8 million** remaining authorization as of June 30, 2025, after repurchasing **$5.0 million** in H1 2025[331](index=331&type=chunk)[332](index=332&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :------------------------------------ | :--------- | :--------- | | Net cash (used in) provided by operating activities | $(8,717) | $11,878 | | Net cash (used in) provided by financing activities | $(234,811) | $1,561 | [Off-Balance Sheet Arrangements](index=74&type=section&id=Off-Balance%20Sheet%20Arrangements) As of June 30, 2025, the company had no relationships with unconsolidated organizations or financial partnerships for off-balance sheet arrangements - The company did not have any off-balance sheet arrangements as of June 30, 2025[341](index=341&type=chunk) [Critical Accounting Policies and Estimates](index=74&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's financial statements rely on estimates and assumptions, particularly for revenue recognition, impairment assessments, and deferred taxes, with a $28.8 million goodwill impairment recorded in Q2 2025 - Critical accounting policies and estimates include revenue recognition, expected credit losses, useful lives of property and equipment, impairment assessments of goodwill and intangible assets, fair value of financial instruments, deferred tax assets, and stock-based compensation[44](index=44&type=chunk)[342](index=342&type=chunk) - A **$28.8 million** non-cash goodwill impairment charge was recorded during the three months ended June 30, 2025, due to declines in market capitalization and a downward revision of future revenue forecasts[346](index=346&type=chunk)[348](index=348&type=chunk) - The company actively monitors the impact of inflationary pressures, market volatility, and the challenging macroeconomic environment on its estimates[343](index=343&type=chunk) [Contractual Obligations and Commitments](index=75&type=section&id=Contractual%20Obligations%20and%20Commitments) There have been no material changes to the contractual obligations as disclosed in the Annual Report on Form 10-K filed on February 26, 2025 - No material changes to contractual obligations since the Annual Report on Form 10-K filed on February 26, 2025[349](index=349&type=chunk) [Recent Accounting Pronouncements](index=75&type=section&id=Recent%20Accounting%20Pronouncements) Information regarding recently issued accounting pronouncements is provided in Note 1 to the condensed consolidated financial statements - Information regarding recently issued accounting pronouncements is provided in Note 1 to the condensed consolidated financial statements[350](index=350&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=76&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks primarily from interest rate fluctuations, with potential future exposure to foreign currency exchange and inflation, and does not engage in speculative investments - The primary market risk exposure is from fluctuations in interest rates, with potential future exposure to foreign currency exchange and inflation[351](index=351&type=chunk) - The company does not make investments for trading or speculative purposes[352](index=352&type=chunk)[353](index=353&type=chunk) [Interest rate risk](index=76&type=section&id=Interest%20rate%20risk) The company holds $97.3 million in cash, cash equivalents, and short-term investments, which are subject to interest rate risk, but a hypothetical 100 basis point change would not materially impact their value - As of June 30, 2025, cash, cash equivalents, and short-term investments totaled **$97.3 million**[352](index=352&type=chunk) - A hypothetical **100 basis point** change in interest rates would not have a material impact on the value of the company's cash equivalents, investment portfolio, or the fair value of its outstanding debt[354](index=354&type=chunk)[357](index=357&type=chunk) - The term loans under the Credit Agreement bear interest at a floating rate equal to **SOFR plus 6.5% per year**[355](index=355&type=chunk) [Foreign currency exchange risk](index=77&type=section&id=Foreign%20currency%20exchange%20risk) The company's international operations are relatively small, limiting foreign currency exposure primarily to the British Pound, Indian Rupee, and Singapore Dollar, with no hedging program currently in place - Foreign currency exposure is limited due to the relatively small size of international operations, primarily involving the British Pound, Indian Rupee, and Singapore Dollar[359](index=359&type=chunk) - International sales contracts are generally denominated in U.S. dollars, while international operating expenses are often in local currencies[360](index=360&type=chunk) - The company has not instituted a hedging program but is considering the costs and benefits of initiating one as international operations expand[359](index=359&type=chunk) [Inflation risk](index=77&type=section&id=Inflation%20risk) High inflation has adversely affected the healthcare industry, increasing labor and supply costs for clients, and future inflation could negatively impact the company's ability to offset higher costs - The recent high inflationary environment has adversely affected the healthcare industry, leading to increased labor and supply costs for health systems without commensurate revenue increases, causing significant margin pressure[361](index=361&type=chunk)[362](index=362&type=chunk) - Future inflation could negatively impact clients and the company's ability to fully offset higher costs by increasing fees for its Solution, which could harm its business, results of operations, or financial condition[362](index=362&type=chunk) [Item 4. Controls and Procedures](index=77&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025, with no material changes in internal control - Management, with the participation of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they were effective at the reasonable assurance level[364](index=364&type=chunk) - There was no change in internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or is reasonably likely to materially affect, internal control over financial reporting[365](index=365&type=chunk) [Evaluation of disclosure controls and procedures](index=77&type=section&id=Evaluation%20of%20disclosure%20controls%20and%20procedures) The CEO and CFO evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they were effective at the reasonable assurance level - The registrant's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[364](index=364&type=chunk) [Changes in internal control over financial reporting](index=77&type=section&id=Changes%20in%20internal%20control%20over%20financial%20reporting) No material changes in internal control over financial reporting occurred during the period covered by this report - No material changes in internal control over financial reporting occurred during the period covered by this Quarterly Report on Form 10-Q[365](index=365&type=chunk) [Inherent limitations on effectiveness of controls](index=78&type=section&id=Inherent%20limitations%20on%20effectiveness%20of%20controls) Management acknowledges that control systems provide reasonable, not absolute, assurance and have inherent limitations, such as faulty judgment, human error, and circumvention - Disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable, not absolute, assurance[366](index=366&type=chunk) - Inherent limitations include faulty judgment, human error, circumvention by individual acts or collusion, and management override[366](index=366&type=chunk) [Part II. Other Information](index=79&type=section&id=Part%20II.%20Other%20Information) This section details legal proceedings, comprehensive risk factors, equity sales, other disclosures, and official report exhibits and signatures [Item 1. Legal Proceedings](index=79&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings that are not considered significant and are not expected to have a material adverse effect on its business, financial condition, results of operations, or liquidity - The company is party to routine legal proceedings that are not significant and are not expected to have a material adverse effect on its business, financial condition, results of operations, or liquidity[368](index=368&type=chunk) [Item 1A. Risk Factors](index=79&type=section&id=Item%201A.%20Risk%20Factors) The company faces a wide array of risks, including intense competition, macroeconomic challenges, difficulties in executing growth and restructuring initiatives, and critical data and intellectual property risks - The company operates in a highly competitive healthcare industry, facing large, well-financed competitors and requiring continuous innovation[370](index=370&type=chunk)[371](index=371&type=chunk) - Macroeconomic challenges (high inflation, interest rates, tariffs, Medicaid/research funding cuts) significantly impact client spending, lengthen sales cycles, and pose risks to financial condition[376](index=376&type=chunk)[378](index=378&type=chunk) - Risks include the inability to successfully execute growth initiatives, manage organizational changes, realize benefits from restructuring plans, and maintain client satisfaction and effective professional services[379](index=379&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk)[395](index=395&type=chunk) - Data and intellectual property risks involve reliance on third-party data, vulnerability to cyberattacks, compliance with open-source software licenses, and potential infringement claims[442](index=442&type=chunk)[444](index=444&type=chunk)[449](index=449&type=chunk)[466](index=466&type=chunk)[474](index=474&type=chunk) - Increasing reliance on AI and machine learning technologies exposes the company to development challenges, regulatory uncertainties, potential for false outputs, and third-party claims[409](index=409&type=chunk)[410](index=410&type=chunk)[414](index=414&type=chunk) - Significant indebtedness from the Term Loan Facility creates interest rate risks and restrictive covenants, potentially limiting financial flexibility and increasing default risk[511](index=511&type=chunk)[514](index=514&type=chunk)[515](index=515&type=chunk) - The company has a history of net losses, expects future losses, and its stock price is subject to high volatility, making investment risky[518](index=518&type=chunk)[520](index=520&type=chunk) [Risks Related to Our Business and Industry](index=79&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) The company faces intense competition, changes in the healthcare industry, macroeconomic challenges, and risks in executing growth and restructuring initiatives, all impacting its business and financial condition - The market for healthcare solutions is intensely competitive, with competition from industry-agnostic analytics companies, EHR companies (e.g., Epic Systems, Oracle Health), point solution vendors, and internal healthcare analytics, often with greater resources[370](index=370&type=chunk)[371](index=371&type=chunk) - Changes in the healthcare industry, such as reduced governmental funding, cuts to government research funding, and client/vendor consolidation, could reduce demand for the Solution and negatively impact contract negotiations[374](index=374&type=chunk)[375](index=375&type=chunk) - Macroeconomic challenges (high inflation, high interest rates, Medicaid/research funding cuts, tight labor market) continue to adversely affect client spending, lengthen sales cycles, and harm business, results of operations, and financial condition[376](index=376&type=chunk)[378](index=378&type=chunk) - Risks in executing growth initiatives, business strategies, and cost reduction/restructuring initiatives (e.g., migration to Health Catalyst Ignite, 2023/January 2025/August 2025 Restructuring Plans) include disruptions, higher costs, and unintended attrition[379](index=379&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk) - Failure to provide effective professional services and high-quality client support, long and unpredictable sales cycles, and potential software defects could damage reputation, lead to claims, and harm business operations[383](index=383&type=chunk)[384](index=384&type=chunk)[386](index=386&type=chunk)[390](index=390&type=chunk) - Maintaining and enhancing brand recognition and continuously innovating to provide useful services are critical for competitiveness; failure to do so could lead to loss of clients and revenue[391](index=391&type=chunk)[393](index=393&type=chunk) - Operating results have fluctuated and may continue to fluctuate significantly due to factors like market acceptance, new application introductions, sales cycles, revenue mix, client financial condition, and macroeconomic challenges, making future performance unpredictable[399](index=399&type=chunk)[400](index=400&type=chunk) [Risks Related to Data and Intellectual Property](index=94&type=section&id=Risks%20Related%20to%20Data%20and%20Intellectual%20Property) The company faces risks from client data permissions, IT system failures, cyberattacks, reliance on third-party data and infrastructure, open-source software compliance, and intellectual property protection and infringement claims - Failure by clients to obtain proper permissions and waivers for data use could result in claims against the company or limit its ability to use data, harming its business[442](index=442&type=chunk)[443](index=443&type=chunk) - Information technology system failures, cyberattacks, or deficiencies in cybersecurity could lead to loss or inappropriate use of information, litigation, reputational damage, and regulatory fines[444](index=444&type=chunk)[446](index=446&type=chunk)[447](index=447&type=chunk) - The Solution's dependence on sourcing data from third parties and reliance on third-party computing infrastructure (e.g., Microsoft Azure) exposes the company to risks of data access blockage, increased fees, and service disruptions[449](index=449&type=chunk)[452](index=452&type=chunk)[454](index=454&type=chunk) - Use of open-source software and third-party licensed software carries risks of compliance breaches, potential public release of proprietary code, and functionality limitations or increased costs if licenses cannot be maintained[466](index=466&type=chunk)[468](index=468&type=chunk) - Failure to protect intellectual property rights (patents, trademarks, trade secrets) could impair the ability to protect proprietary technology and brand, while litigation to enforce or defend these rights is costly and distracting[469](index=469&type=chunk)[472](index=472&type=chunk)[477](index=477&type=chunk) - The company may be sued by third parties for alleged infringement of their proprietary rights or misappropriation of intellectual property, potentially leading to substantial damages, royalty payments, or operational restrictions[474](index=474&type=chunk)[477](index=477&type=chunk) [Risks Related to Governmental Regulation](index=101&type=section&id=Risks%20Related%20to%20Governmental%20Regulation) The company faces extensive and evolving healthcare and data privacy regulations, including HIPAA and GDPR, new AI technology regulations, and potential FDA oversight of medical software - Actual or perceived failures to comply with health information privacy and security laws (e.g., HIPAA) and state data protection laws (e.g., CCPA) could adversely affect business, results of operations, and financial condition through penalties and reputational damage[478](index=478&type=chunk)[479](index=479&type=chunk)[481](index=481&type=chunk) - Compliance with international data privacy protection laws (e.g., GDPR, UK GDPR) imposes increased obligations and risks, including potential fines and scrutiny of data transfers[481](index=481&type=chunk)[482](index=482&type=chunk)[483](index=483&type=chunk) - The rapidly evolving regulatory framework for AI Technologies, including new federal, state, and foreign laws, could limit the company's ability to use AI, increase operating expenses, and harm its business[484](index=484&type=chunk)[485](index=485&type=chunk)[486](index=486&type=chunk) - Arrangements with clinicians and other healthcare professionals may be found to constitute improper rendering of professional medical services or fee splitting under state laws, adversely impacting business[494](index=494&type=chunk)[495](index=495&type=chunk) - The FDA may modify its enforcement policies, potentially subjecting the company's medical software products to extensive regulatory requirements, increasing costs and harming business[496](index=496&type=chunk)[497](index=497&type=chunk)[498](index=498&type=chunk) - The company may be subject to additional government regulations, including antitrust laws, the Foreign Corrupt Practices Act (FCPA), and economic sanctions, with non-compliance leading to fines or restrictions[501](index=501&type=chunk)[504](index=504&type=chunk) [Risks Related to Tax Regulation](index=108&type=section&id=Risks%20Related%20to%20Tax%20Regulation) The company faces risks from potential assertions by taxing authorities regarding sales and use taxes, unanticipated changes in effective tax rates, and limitations on the use of net operating losses - Taxing authorities may successfully assert that the company should have collected sales and use, value-added, or similar transactional taxes, leading to tax assessments, penalties, and interest[502](index=502&type=chunk) - Unanticipated changes in the effective tax rate and additional tax liabilities can arise from changes in the mix of earnings/losses in different jurisdictions, new tax rules (e.g., Tax Act, CARES Act), and differing interpretations by taxing authorities[503](index=503&type=chunk)[505](index=505&type=chunk) - The ability to use net operating losses (NOLs) to offset future taxable income may be subject to limitations due to ownership changes (Section 382 of the Code) or regulatory changes, potentially increasing future tax liability[506](index=506&type=chunk)[507](index=507&type=chunk)[508](index=508&type=chunk) - Comprehensive tax reform legislation, such as the Tax Cuts and Jobs Act of 2017, has significantly changed corporate taxation, including limitations on NOL deductions and required capitalization of R&D expenditures, which could adversely affect the business[509](index=509&type=chunk)[510](index=510&type=chunk) [Risks Related to Our Indebtedness](index=110&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) The company's $225 million Term Loan Facility exposes it to interest rate risks and restrictive covenants, potentially hindering operational and financial flexibility and increasing default risk - The company's indebtedness, including the Term Loan Facility (up to **$225 million**, with **$161.6 million** outstanding as of June 30, 2025), could make it vulnerable to adverse economic conditions and prevent it from fulfilling debt obligations[511](index=511&type=chunk)[149](index=149&type=chunk) - Failure to generate sufficient cash flow to satisfy debt obligations could lead to default, acceleration of amounts owed, and foreclosure on collateral, materially adversely affecting the business[513](index=513&type=chunk) - The Credit Agreement contains restrictive covenants that limit the company's ability to incur debt, grant liens, make investments, and pay dividends, which may restrict operational and financial flexibility[514](index=514&type=chunk) - The Term Loan Facility's floating interest rate (**SOFR plus 6.5% per year**) exposes the company to interest rate risks, impacting cash flows and results of operations[515](index=515&type=chunk) [Risks Related to Ownership of Our Common Stock](index=111&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) The company has a limited operating history, expects future losses, and its common stock is subject to high volatility, with future equity issuances diluting existing stockholders - The company's limited operating history, particularly with recent acquisitions, makes it difficult to effectively assess or forecast future prospects and increases investment risk[516](index=516&type=chunk)[517](index=517&type=chunk) - The company has experienced significant net losses since inception (**$69.5 million** in 2024, **$118.1 million** in 2023) and expects to incur losses in the future, potentially requiring additional capital[518](index=518&type=chunk)[519](index=519&type=chunk) - The market price of common stock may be volatile and decline regardless of operating performance, influenced by factors such as financial fluctuations, economic conditions, and analyst expectations[520](index=520&type=chunk) - The Share Repurchase Plan, with **$24.8 million** remaining authorization as of June 30, 2025, may not be fully consummated or enhance stockholder value, and repurchases could affect stock price[523](index=523&type=chunk)[524](index=524&type=chunk) - Future issuances of additional capital stock in connection with financings, acquisitions, or stock incentive plans will dilute all other stockholders and may cause the per-share value of common stock to decline[527](index=527&type=chunk)[528](index=528&type=chunk) - The requirements of being a public company strain resources, divert management's attention, increase legal/accounting compliance costs, and raise the risk of litigation[529](index=529&type=chunk)[532](index=532&type=chunk) - The company does not intend to pay dividends on its common stock, meaning the ability of common stockholders to achieve a return on investment will depend solely on appreciation in the stock price[534](index=534&type=chunk) [Risks Related to Our Charter and Bylaws](index=115&type=section&id=Risks%20Related%20to%20Our%20Charter%20and%20Bylaws) Provisions in the company's charter documents and Delaware law could make an acquisition more difficult and limit stockholders' ability to change the board or management, including exclusive forum provisions - Provisions in the amended and restated certificate of incorporation and bylaws, such as a classified board, super-majority voting for amendments, and restrictions on stockholder actions, could delay or prevent a change of control or changes in management[539](index=539&type=chunk) - Section 203 of the Delaware General Corporation Law may discourage, delay, or prevent a change in control by imposing restrictions on mergers and business combinations with holders of **15%** or more of common stock[537](index=537&type=chunk) - Exclusive forum provisions in the bylaws designate Delaware state or federal courts for certain litigation and federal district courts for Securities Act claims, which could limit stockholders' ability to obtain a favorable judicial forum[538](index=538&type=chunk)[540](index=540&type=chunk) [General Risks](index=117&type=section&id=General%20Risks) Changes in GAAP can cause financial fluctuations and impact reporting. Economic downturns can disproportionately affect demand for the company's Solution and negatively impact results. Increasing investor focus on environmental, social, and gover

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q _____________________________ (Mark One) x 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 o 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 001-40936 _____________________________ Informatica Inc. ____________________________ ...

[Report Overview & Highlights](index=1&type=section&id=Report%20Overview%20%26%20Highlights) [Q2 2025 Highlights](index=1&type=section&id=Q2%202025%20Highlights) Global Self Storage achieved strong growth in Q2 2025 with increased total and net income, significant growth in same-store revenue, NOI, and occupancy, reaching an industry-leading 94.7% same-store occupancy, while FFO and AFFO saw double-digit growth, maintaining a quarterly dividend of $0.0725 per share and possessing ample capital resources of approximately $25.2 million Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :--------- | :--------- | :------- | | Total Revenue | $3.2 Million | - | 2.7% | | Net Income | $664,000 | $592,000 | 12.16% | | Diluted Net Income Per Share | $0.06 | $0.05 | 20.0% | | Same-Store Revenue | $3.2 Million | - | 2.7% | | Same-Store Operating Costs | $1.2 Million | - | 0.7% | | Same-Store Net Operating Income (NOI) | $2.0 Million | - | 4.0% | | FFO | $1.1 Million | $0.9 Million | 18.9% | | Diluted FFO Per Share | $0.10 | $0.08 | 25.0% | | AFFO | $1.2 Million | $1.0 Million | 17.5% | | Diluted AFFO Per Share | $0.10 | $0.09 | 11.11% | | Quarterly Dividend | $0.0725/share | $0.0725/share | 0.0% | | Capital Resources (as of June 30) | $25.2 Million | - | - | - Same-store occupancy reached **94.7%** as of June 30, 2025, an increase of **170 basis points** from 93.0% on June 30, 2024, representing an industry-leading level[4](index=4&type=chunk) - Same-store average tenant tenure reached a record **3.4 years** as of June 30, 2025, up from 3.3 years on June 30, 2024[4](index=4&type=chunk) [First Half 2025 Highlights](index=1&type=section&id=First%20Half%202025%20Highlights) In the first half of 2025, Global Self Storage saw growth in total and net income, strong same-store revenue and NOI performance, significant FFO and AFFO increases, and maintained a semi-annual dividend of $0.145 per share First Half 2025 Key Financial Metrics | Metric | H1 2025 | H1 2024 | Change (%) | | :-------------------------------- | :------------- | :------------- | :------- | | Total Revenue | $6.3 Million | - | 2.9% | | Net Income | $1.2 Million | $858,000 | 39.86% | | Diluted Net Income Per Share | $0.11 | $0.08 | 37.5% | | Same-Store Revenue | $6.3 Million | - | 2.9% | | Same-Store Operating Costs | $2.4 Million | - | -0.6% | | Same-Store Net Operating Income (NOI) | $3.9 Million | - | 5.1% | | FFO | $2.1 Million | - | 17.1% | | Diluted FFO Per Share | $0.18 | - | - | | AFFO | $2.2 Million | - | 17.1% | | Diluted AFFO Per Share | $0.20 | - | - | | Semi-Annual Dividend | $0.145/share | - | - | [Company Profile & Strategy](index=3&type=section&id=Company%20Profile%20%26%20Strategy) [Company Objective](index=3&type=section&id=Company%20Objective) Global Self Storage aims to increase long-term shareholder value by executing its strategic business plan, including acquisitions and property expansions, with the board regularly reviewing capital formation, debt-to-equity ratios, dividend policy, FFO, AFFO, and cash levels - The company aims to increase long-term shareholder value through acquisitions and expansion projects[6](index=6&type=chunk) - The strategic business plan encompasses capital formation, debt-to-equity ratios, dividend policy, capital and debt utilization, FFO and AFFO performance, and optimal cash levels[6](index=6&type=chunk) - Management believes the company's sustained operating performance and capital resources position it well to execute its strategic business plan[7](index=7&type=chunk) [About Global Self Storage](index=7&type=section&id=About%20Global%20Self%20Storage) Global Self Storage is a self-managed and self-operated REIT focused on owning, operating, managing, acquiring, and redeveloping self-storage properties, with 13 properties across eight US states providing affordable, accessible, and secure storage - Global Self Storage is a self-managed and self-operated REIT focused on owning, operating, managing, acquiring, and redeveloping self-storage properties[35](index=35&type=chunk) - The company owns and/or manages **13 self-storage properties** across **eight US states** through its wholly-owned subsidiaries, offering affordable, accessible, and secure storage space[35](index=35&type=chunk) [Management Insights](index=3&type=section&id=Management%20Insights) [CEO Commentary](index=3&type=section&id=CEO%20Commentary) CEO Mark C. Winmill highlighted that exceptional Q2 operational performance drove industry-leading growth in same-store revenue, occupancy, NOI, and FFO, attributed to targeted marketing and enhanced brand recognition, achieving high conversion rates and record tenant tenure through customer satisfaction and service excellence, with a robust balance sheet supporting growth strategies in differentiated geographic markets - Q2 operational excellence drove industry-leading growth in same-store revenue, occupancy, NOI, and FFO, attributed to targeted marketing initiatives and enhanced brand recognition[8](index=8&type=chunk)[10](index=10&type=chunk) - The company achieved high customer inquiry conversion rates and a record **3.4-year average tenant tenure** through high customer satisfaction (average rating over **4.9/5 stars**) and exceptional service[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk) - The company possesses strong capital resources of approximately **$25.2 million**, supporting its strategic business plan for growth through acquisitions, joint ventures, and expansion in US and non-US markets with limited supply growth and less competition[14](index=14&type=chunk) - Markets where the company operates exhibit stable demand and limited new supply pressure, with a differentiated geographic strategy, disciplined acquisition approach, and commitment to superior customer experience continuing to create shareholder value[15](index=15&type=chunk) [Financial Performance Analysis](index=4&type=section&id=Financial%20Performance%20Analysis) [Q2 2025 Financial Summary](index=4&type=section&id=Q2%202025%20Financial%20Summary) In Q2 2025, total revenue grew 2.7% to $3.2 million, driven by increased occupancy and revenue rate management, while total operating expenses decreased 4.4% due to reduced general and administrative costs, leading to a 30.4% increase in operating income to $829,000 and net income rising to $664,000 or $0.06 per share, with capital resources totaling approximately $25.2 million as of June 30 Q2 2025 Financial Summary | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------- | :--------- | :--------- | :------- | | Total Revenue | $3.2 Million | $3.1 Million | 2.7% | | Total Operating Expenses | $2.4 Million | $2.5 Million | -4.4% | | Operating Income | $829,000 | $636,000 | 30.4% | | Net Income | $664,000 | $592,000 | 12.16% | | Diluted Net Income Per Share | $0.06 | $0.05 | 20.0% | | Capital Resources (as of June 30) | $25.2 Million | - | - | [Q2 2025 Same-Store Results](index=4&type=section&id=Q2%202025%20Same-Store%20Results) As of June 30, 2025, the company had 12 same-store properties, with Q2 same-store revenue growing 2.7% to $3.2 million, same-store operating costs slightly increasing 0.7% to $1.18 million, and same-store Net Operating Income (NOI) rising 4.0% to $2.0 million, primarily due to revenue growth, while same-store occupancy improved by 170 basis points to 94.7% and average tenant tenure increased to 3.4 years Q2 2025 Same-Store Key Metrics | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------------------- | :--------- | :--------- | :------- | | Same-Store Revenue | $3.2 Million | - | 2.7% | | Same-Store Operating Costs | $1.18 Million | $1.17 Million | 0.7% | | Same-Store Net Operating Income (NOI) | $2.0 Million | $1.9 Million | 4.0% | | Same-Store Occupancy (as of June 30) | 94.7% | 93.0% | +170 bps | | Same-Store Average Tenant Tenure (as of June 30) | 3.4 Years | 3.3 Years | +0.1 Years | | Number of Same-Store Properties (as of June 30) | 12 | - | - | [Q2 2025 Operating Results](index=5&type=section&id=Q2%202025%20Operating%20Results) Net income for Q2 2025 was $664,000, or $0.06 per diluted share, with property operating expenses slightly increasing to $1.18 million, general and administrative expenses decreasing to $779,000, and business development costs at zero, while interest expense rose to $214,000 primarily due to unused revolving credit facility fees, and FFO grew 18.9% to $1.1 million ($0.10 per diluted share) and AFFO increased 17.5% to $1.2 million ($0.10 per diluted share) Q2 2025 Operating Results | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------- | :--------- | :--------- | :------- | | Net Income | $664,000 | $592,000 | 12.16% | | Diluted Net Income Per Share | $0.06 | $0.05 | 20.0% | | Property Operating Expenses | $1.18 Million | $1.17 Million | 0.85% | | General and Administrative Expenses | $779,000 | $893,000 | -12.77% | | Business Development Costs | $0 | $0 | 0.0% | | Interest Expense | $214,000 | $211,000 | 1.42% | | FFO | $1.1 Million | $0.9 Million | 18.9% | | Diluted FFO Per Share | $0.10 | $0.08 | 25.0% | | AFFO | $1.2 Million | $1.0 Million | 17.5% | | Diluted AFFO Per Share | $0.10 | $0.09 | 11.11% | [First Half 2025 Financial Summary](index=5&type=section&id=First%20Half%202025%20Financial%20Summary) In the first half of 2025, total revenue increased 2.9% to $6.3 million, driven by higher occupancy and existing tenant rate management, while total operating expenses decreased 3.0% to $4.8 million due to reduced store-level and general and administrative costs, resulting in a 26.5% increase in operating income to $1.6 million and net income rising to $1.2 million or $0.11 per diluted share First Half 2025 Financial Summary | Metric | H1 2025 | H1 2024 | Change (%) | | :-------------------- | :------------- | :------------- | :------- | | Total Revenue | $6.3 Million | $6.1 Million | 2.9% | | Total Operating Expenses | $4.8 Million | $4.9 Million | -3.0% | | Operating Income | $1.6 Million | $1.2 Million | 26.5% | | Net Income | $1.2 Million | $0.9 Million | 33.33% | | Diluted Net Income Per Share | $0.11 | $0.08 | 37.5% | [First Half 2025 Same-Store Results](index=5&type=section&id=First%20Half%202025%20Same-Store%20Results) In the first half of 2025, same-store revenue grew 2.9% to $6.3 million, primarily due to increased occupancy and existing tenant rate management, while same-store operating costs decreased 0.6% to $2.39 million, mainly due to reduced employment costs and real estate taxes, leading to a 5.1% increase in same-store Net Operating Income (NOI) to $3.9 million, driven by revenue growth First Half 2025 Same-Store Key Metrics | Metric | H1 2025 | H1 2024 | Change (%) | | :----------------------------------- | :------------- | :------------- | :------- | | Same-Store Revenue | $6.3 Million | $6.1 Million | 2.9% | | Same-Store Operating Costs | $2.39 Million | $2.40 Million | -0.6% | | Same-Store Net Operating Income (NOI) | $3.9 Million | $3.7 Million | 5.1% | [First Half 2025 Operating Results](index=6&type=section&id=First%20Half%202025%20Operating%20Results) Net income for the first half of 2025 was $1.2 million, or $0.11 per diluted share, with property operating expenses decreasing to $2.39 million, general and administrative expenses decreasing to $1.6 million, and business development costs falling to zero, while interest expense rose to $438,000 primarily due to unused revolving credit facility fees, and FFO grew 17.1% to $2.1 million ($0.18 per diluted share) and AFFO increased 17.1% to $2.2 million ($0.20 per diluted share) First Half 2025 Operating Results | Metric | H1 2025 | H1 2024 | Change (%) | | :-------------------- | :------------- | :------------- | :------- | | Net Income | $1.2 Million | $0.9 Million | 33.33% | | Diluted Net Income Per Share | $0.11 | $0.08 | 37.5% | | Property Operating Expenses | $2.39 Million | $2.40 Million | -0.42% | | General and Administrative Expenses | $1.6 Million | $1.7 Million | -5.88% | | Business Development Costs | $0 | $2,275 | -100.0% | | Interest Expense | $438,000 | $416,000 | 5.29% | | FFO | $2.1 Million | $1.8 Million | 17.1% | | Diluted FFO Per Share | $0.18 | $0.16 | 12.5% | | AFFO | $2.2 Million | $1.9 Million | 17.1% | | Diluted AFFO Per Share | $0.20 | $0.17 | 17.65% | [FFO and AFFO Performance](index=7&type=section&id=FFO%20and%20AFFO%20Performance) In Q2 2025, FFO attributable to common shareholders was $1.1 million ($0.10 per diluted share) and AFFO was $1.17 million ($0.10 per diluted share), while for the first half of 2025, FFO was $2.07 million ($0.18 per diluted share) and AFFO was $2.24 million ($0.20 per diluted share) FFO and AFFO Performance (Unaudited) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :--------- | :--------- | :------------- | :------------- | | Net Income | $664,216 | $591,530 | $1,219,368 | $857,680 | | FFO Attributable to Common Shareholders | $1,095,380 | $921,136 | $2,070,723 | $1,769,092 | | AFFO Attributable to Common Shareholders | $1,167,598 | $994,061 | $2,243,677 | $1,915,296 | | Diluted FFO Per Share | $0.10 | $0.08 | $0.18 | $0.16 | | Diluted AFFO Per Share | $0.10 | $0.09 | $0.20 | $0.17 | | Diluted Weighted Average Shares Outstanding | 11,250,678 | 11,134,894 | 11,212,867 | 11,121,296 | [Consolidated Financial Statements](index=10&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $64.996 million, slightly down from $65.515 million on December 31, 2024, with a decrease in net real estate assets but an increase in cash and restricted cash, while total liabilities were $17.807 million and total stockholders' equity was $47.189 million Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :--------------- | | **Assets** | | | | Real Estate Assets, Net | $53,217,941 | $53,925,409 | | Cash and Cash Equivalents | $7,511,571 | $7,180,857 | | Restricted Cash | $67,773 | $29,204 | | Investment Securities | $2,572,195 | $2,608,987 | | Total Assets | $64,996,100 | $65,515,024 | | **Liabilities and Equity** | | | | Notes Payable, Net | $16,074,555 | $16,356,582 | | Accounts Payable and Accrued Expenses | $1,732,281 | $1,720,765 | | Total Liabilities | $17,806,836 | $18,077,347 | | Common Stock | $113,382 | $112,927 | | Additional Paid-in Capital | $49,732,485 | $49,559,986 | | Accumulated Deficit | ($2,656,603) | ($2,235,236) | | Total Stockholders' Equity | $47,189,264 | $47,437,677 | | Total Liabilities and Stockholders' Equity | $64,996,100 | $65,515,024 | [Consolidated Statements of Operations and Comprehensive Income](index=11&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) In Q2 2025, total revenue was $3.194 million, operating income was $829,000, and net income was $664,000, while for the first half of 2025, total revenue was $6.321 million, operating income was $1.553 million, and net income was $1.219 million, showing improvements across various income and operating metrics compared to the prior year Consolidated Statements of Operations and Comprehensive Income (Unaudited) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :--------- | :--------- | :------------- | :------------- | | Rental Income | $3,062,588 | $2,983,039 | $6,062,640 | $5,896,500 | | Other Property Related Income | $113,008 | $108,489 | $220,878 | $212,339 | | Management Fees and Other Income | $18,782 | $17,510 | $37,164 | $34,239 | | **Total Revenue** | **$3,194,378** | **$3,109,038** | **$6,320,682** | **$6,143,078** | | Property Operating Expenses | $1,179,041 | $1,171,169 | $2,387,940 | $2,402,285 | | General and Administrative Expenses | $778,695 | $892,822 | $1,565,587 | $1,695,550 | | Depreciation and Amortization | $407,717 | $409,136 | $814,563 | $816,064 | | Business Development | $0 | $0 | $0 | $2,275 | | **Total Expenses** | **$2,365,453** | **$2,473,127** | **$4,768,090** | **$4,916,174** | | **Operating Income** | **$828,925** | **$635,911** | **$1,552,592** | **$1,226,904** | | Dividend and Interest Income | $73,130 | $87,450 | $141,729 | $142,327 | | Unrealized (Loss) Gain on Marketable Equity Securities | ($23,447) | $79,530 | ($36,792) | ($95,348) | | Interest Expense | ($214,392) | ($211,361) | ($438,161) | ($416,203) | | **Net Income and Comprehensive Income** | **$664,216** | **$591,530** | **$1,219,368** | **$857,680** | | Diluted Earnings Per Share | $0.06 | $0.05 | $0.11 | $0.08 | [Reconciliation of GAAP Net Income to Same-Store Net Operating Income](index=12&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Same-Store%20Net%20Operating%20Income) This reconciliation adjusts GAAP net income to same-store Net Operating Income (NOI) by adding back management fees, general and administrative expenses, depreciation and amortization, business development costs, and interest expense, while subtracting dividend and interest income and adjusting for unrealized gains/losses on marketable equity securities, resulting in same-store NOI of $1.997 million for Q2 2025 and $3.896 million for the first half Reconciliation of GAAP Net Income to Same-Store Net Operating Income (Unaudited) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :--------- | :--------- | :------------- | :------------- | | Net Income | $664,216 | $591,530 | $1,219,368 | $857,680 | | **Adjustments:** | | | | | | Management Fees and Other Income | ($18,782) | ($17,510) | ($37,164) | ($34,239) | | General and Administrative Expenses | $778,695 | $892,822 | $1,565,587 | $1,695,550 | | Depreciation and Amortization | $407,717 | $409,136 | $814,563 | $816,064 | | Business Development | $0 | $0 | $0 | $2,275 | | Dividend and Interest | ($73,130) | ($87,450) | ($141,729) | ($142,327) | | Unrealized Loss (Gain) on Marketable Equity Securities | $23,447 | ($79,530) | $36,792 | $95,348 | | Interest Expense | $214,392 | $211,361 | $438,161 | $416,203 | | **Total Same-Store Net Operating Income** | **$1,996,555** | **$1,920,359** | **$3,895,578** | **$3,706,554** | | Same-Store Revenue | $3,175,596 | $3,091,528 | $6,283,518 | $6,108,839 | | Same-Store Operating Costs | $1,179,041 | $1,171,169 | $2,387,940 | $2,402,285 | | **Total Same-Store Net Operating Income** | **$1,996,555** | **$1,920,359** | **$3,895,578** | **$3,706,554** | [Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) [Funds from Operations (FFO)](index=7&type=section&id=Funds%20from%20Operations%20(FFO)) FFO, a non-GAAP metric defined by NAREIT, is considered useful by REITs and analysts for measuring REIT performance, calculated by adding back real estate depreciation and amortization to net income and excluding gains/losses from property sales and unrealized gains/losses on marketable equity securities, but it is not a substitute for net income, EPS, liquidity, or dividend-paying ability, and may vary among REITs - FFO, a non-GAAP metric defined by NAREIT, is calculated by adding back real estate depreciation and amortization to net income and excluding gains/losses from property sales and unrealized gains/losses on marketable equity securities[37](index=37&type=chunk) - FFO is considered a useful metric by REITs and analysts for measuring REIT performance, but it is not a substitute for net income, EPS, liquidity, or the ability to pay dividends[37](index=37&type=chunk) [Adjusted FFO (AFFO)](index=8&type=section&id=Adjusted%20FFO%20(AFFO)) AFFO is a non-GAAP adjustment to FFO that excludes equity-based compensation, business development, financing and acquisition-related costs, and non-recurring items, which are considered not representative of the company's ongoing operating results, and it is not a substitute for net income, EPS, liquidity, or dividend-paying ability, and may vary among REITs - AFFO is a non-GAAP adjustment to FFO, excluding equity-based compensation, business development, financing and acquisition-related costs, and non-recurring items[39](index=39&type=chunk) - The company believes AFFO aids in understanding operating results by excluding items not representative of ongoing operations, and it is considered by the analyst community in evaluating the company[39](index=39&type=chunk) [Net Operating Income (NOI)](index=8&type=section&id=Net%20Operating%20Income%20(NOI)) NOI is a key metric for operating performance, defined as net store-level income before general and administrative expenses, interest, taxes, depreciation, and amortization, used by the company for capital allocation, store valuation, performance assessment, and period/market comparisons, but it is not a substitute for net income, net cash flow from operations, or other GAAP financial measures - NOI is defined as net store-level income before general and administrative expenses, interest, taxes, depreciation, and amortization[40](index=40&type=chunk) - The company uses NOI for capital allocation, store valuation, performance assessment, and period and market comparisons, and the investment community also uses it to evaluate operating performance and real estate value[40](index=40&type=chunk) [Same-Store Self Storage Operations Definition](index=8&type=section&id=Same-Store%20Self%20Storage%20Operations%20Definition) The same-store portfolio includes properties consistently owned and operated throughout the reporting period, considered stabilized with market-representative occupancy for at least one year and free from significant damage or redevelopment, with same-store results aiding investors in evaluating store-level operational performance by excluding the impact of acquisitions, dispositions, or new developments, but not serving as an indicator of future performance - The same-store portfolio includes properties consistently owned and operated throughout the reporting period, considered stabilized with market-representative occupancy for at least one year and free from significant damage or redevelopment[42](index=42&type=chunk) - Same-store results help investors evaluate store-level operational performance by excluding the impact of acquisitions, dispositions, or new developments, but they are not indicative of future same-store or overall company performance[42](index=42&type=chunk) [Legal & Contact Information](index=7&type=section&id=Legal%20%26%20Contact%20Information) [Additional Information](index=7&type=section&id=Additional%20Information) Further details on the company's Q2 2025 performance, including financial statements and related notes, are available in its Form 10-Q filing with the SEC and on the company's investor relations website - Detailed information on the company's Q2 2025 performance is available in its Form 10-Q filing and on the company's investor relations website[34](index=34&type=chunk) [Cautionary Note Regarding Forward Looking Statements](index=8&type=section&id=Cautionary%20Note%20Regarding%20Forward%20Looking%20Statements) This press release contains forward-looking statements as defined by federal securities laws, concerning company plans, objectives, future events, and performance, which are not historical facts and involve known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from expectations, with no obligation to publicly update or revise such statements, and dividend amounts, nature, and frequency are subject to change - This press release contains forward-looking statements, including non-historical information regarding company plans, objectives, future events, and performance[44](index=44&type=chunk) - Forward-looking statements involve known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from expectations[44](index=44&type=chunk) - The company undertakes no obligation to publicly update or revise forward-looking statements, and dividend amounts, nature, and frequency are subject to change at any time[44](index=44&type=chunk) [Company Contact](index=9&type=section&id=Company%20Contact) Contact information is provided for Global Self Storage CFO Thomas O'Malley and Investor Relations contact Ron Both, including phone numbers and email - Company contacts include CFO Thomas O'Malley at (212) 785-0900, ext. 267, and Investor Relations contact Ron Both (Encore Investor Relations) at (949) 432-7557[45](index=45&type=chunk)

[Overview of Q2 2025 Performance](index=1&type=section&id=Overview%20of%20Q2%202025%20Performance) Westwood Holdings Group achieved a significant profit turnaround and operational milestones in Q2 2025, including AUM growth and strategic index inclusion [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Westwood Holdings Group achieved a significant year-over-year net income turnaround in Q2 2025, with stable revenues, increased AUM, and a strong debt-free balance sheet Key Financial Metrics | Financial Metric | Q2 2025 (USD) | Q1 2025 (USD) | Q2 2024 (USD) | | :--- | :--- | :--- | :--- | | Total Revenues | $23.1M | $23.3M | $22.7M | | Net Income (Loss) | $1.0M | $0.5M | ($2.2M) | | Diluted EPS | $0.12/share | $0.05/share | ($0.27)/share | | Economic Earnings | $2.8M | $2.5M | ($0.5M) | | AUM & AUA | $18.3B | - | $16.8B | | Dividend per Share | $0.15/share | - | - | - The company's financial position is strong, with **$33.1 million** in cash and liquid investments as of June 30, 2025, an increase of **$6.0 million** from the first quarter, and no debt[4](index=4&type=chunk) [Operational & Strategic Highlights](index=1&type=section&id=Operational%20%26%20Strategic%20Highlights) Key operational achievements include Russell 2000 Index inclusion, significant ETF asset growth, strong intermediary sales, and outperformance across multiple investment strategies - WHG was added to the Russell 2000 Index in its 24th year as a public company[1](index=1&type=chunk)[2](index=2&type=chunk) - The Enhanced Midstream Energy ETF (MDST) exceeded **$100 million** in assets and maintains a **10.2% p.a. distribution rate**[1](index=1&type=chunk)[2](index=2&type=chunk) - Several investment strategies, including SmallCap Value, AllCap Value, and MidCap Value, beat their primary benchmarks, with MidCap Value, Credit Opportunities, and Enhanced Midstream Income achieving top quartile rankings among peers[4](index=4&type=chunk) - In partnership with WHG, WEBs Investments launched 11 sector funds, expanding its Defined Volatility℠ ETF suite[1](index=1&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents the detailed consolidated financial statements, including operations, balance sheets, and cash flows, for the reporting periods [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section provides a detailed breakdown of the company's financial performance, including revenues, expenses, and net income for both the three-month and six-month periods ending June 30, 2025, with comparisons to the prior year [Quarterly Performance (Three Months Ended June 30, 2025)](index=4&type=section&id=Quarterly%20Performance%20%28Three%20Months%20Ended%20June%2030%2C%202025%29) Q2 2025 saw total revenues of **$23.1 million** and net income of **$1.0 million**, a significant improvement year-over-year due to the absence of contingent consideration loss Quarterly Consolidated Statements of Operations (USD thousands) | Item | Q2 2025 (USD thousands) | Q1 2025 (USD thousands) | Q2 2024 (USD thousands) | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$23,120** | **$23,252** | **$22,688** | | Asset-based fees | $17,955 | $17,731 | $17,139 | | Trust fees | $5,069 | $5,429 | $5,227 | | **Total Expenses** | **$22,252** | **$23,320** | **$26,866** | | Employee compensation | $13,472 | $14,501 | $13,638 | | Loss on contingent consideration | $0 | $0 | $4,807 | | **Net Income (Loss) to WHG** | **$1,019** | **$478** | **($2,243)** | [Year-to-Date Performance (Six Months Ended June 30, 2025)](index=5&type=section&id=Year-to-Date%20Performance%20%28Six%20Months%20Ended%20June%2030%2C%202025%29) Year-to-date total revenues increased to **$46.4 million**, with net income reaching **$1.5 million**, a substantial turnaround from the prior year driven by higher asset-based fees Year-to-Date Consolidated Statements of Operations (USD thousands) | Item | Six Months Ended June 30, 2025 (USD thousands) | Six Months Ended June 30, 2024 (USD thousands) | | :--- | :--- | :--- | | **Total Revenues** | **$46,372** | **$45,420** | | Asset-based fees | $35,686 | $33,956 | | **Total Expenses** | **$45,572** | **$46,657** | | Employee compensation | $27,973 | $28,349 | | **Net Income to WHG** | **$1,497** | **$53** | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2025, reflects total assets of **$146.3 million**, total liabilities of **$23.9 million**, and **$120.3 million** in stockholders' equity, with contingent consideration settled Consolidated Balance Sheets (USD thousands) | Item | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | | :--- | :--- | :--- | | **Total Assets** | **$146,279** | **$149,989** | | Cash and cash equivalents | $15,403 | $18,847 | | Investments, at fair value | $19,768 | $27,694 | | Goodwill | $39,501 | $39,501 | | **Total Liabilities** | **$23,921** | **$27,657** | | Contingent consideration | $0 | $4,657 | | **Total Stockholders' Equity** | **$120,306** | **$120,291** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly decreased to **$2.4 million** for the six months ended June 30, 2025, resulting in a **$3.4 million** net decrease in cash and equivalents Consolidated Statements of Cash Flows (USD thousands) | Item | Six Months Ended June 30, 2025 (USD thousands) | Six Months Ended June 30, 2024 (USD thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,403 | $11,685 | | Net cash used in investing activities | ($1,455) | ($1,524) | | Net cash used in financing activities | ($4,392) | ($6,813) | | **Net change in cash** | **($3,444)** | **$3,348** | | **Cash at end of period** | **$15,403** | **$23,770** | [Non-GAAP Financial Measures](index=8&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles GAAP net income to Economic Earnings, providing an adjusted view of the company's core operating performance [Reconciliation to Economic Earnings](index=8&type=section&id=Reconciliation%20to%20Economic%20Earnings) Economic Earnings, a non-GAAP measure, significantly improved to **$2.8 million** in Q2 2025 and more than doubled year-to-date, providing a clearer view of underlying operating performance - Economic Earnings are defined as GAAP net income adjusted for non-cash equity-based compensation, amortization of intangible assets, and deferred taxes related to goodwill[17](index=17&type=chunk) Economic Earnings Reconciliation - Quarterly (USD thousands, except per share) | Item | Q2 2025 (USD thousands) | Q1 2025 (USD thousands) | Q2 2024 (USD thousands) | | :--- | :--- | :--- | :--- | | GAAP Net Income (Loss) | $1,019 | $478 | ($2,243) | | Stock-based compensation | $1,295 | $1,327 | $1,397 | | Intangible amortization | $1,037 | $1,045 | $1,032 | | **Economic Earnings (Loss)** | **$2,792** | **$2,514** | **($508)** | | **Economic EPS** | **$0.32/share** | **$0.29/share** | **($0.06)/share** | Economic Earnings Reconciliation - Year-to-Date (USD thousands, except per share) | Item | Six Months 2025 (USD thousands) | Six Months 2024 (USD thousands) | | :--- | :--- | :--- | | GAAP Net Income | $1,497 | $53 | | **Economic Earnings** | **$5,306** | **$2,504** | | **Economic EPS** | **$0.60/share** | **$0.30/share** | [Company Information and Forward-Looking Statements](index=2&type=section&id=Company%20Information%20and%20Forward-Looking%20Statements) This section provides an overview of Westwood Holdings Group, details conference call information, and includes standard forward-looking statement disclaimers [About Westwood Holdings Group](index=2&type=section&id=About%20Westwood%20Holdings%20Group) Westwood Holdings Group is a boutique asset management firm offering diverse actively-managed investment strategies and wealth services, committed to client-first values and adaptability - WHG is a boutique asset management firm offering actively-managed and outcome-oriented investment strategies, along with trust and wealth services[7](index=7&type=chunk) - The firm, originally woman-founded, emphasizes its commitment to incorporating diverse insights and operates based on core values of integrity, reliability, and teamwork[8](index=8&type=chunk) [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) The company scheduled a conference call and webcast to discuss its second quarter 2025 results on August 8, 2025, at 4:30 p.m. Eastern time - A conference call to discuss Q2 2025 results is scheduled for 4:30 p.m. Eastern time on the day of the release[6](index=6&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward%20Looking%20Statements) This section serves as a standard legal disclaimer, cautioning investors that statements in the press release that are not historical facts are subject to risks and uncertainties - The press release contains forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934[9](index=9&type=chunk) - Investors are warned not to place undue reliance on these statements, as actual results may vary due to numerous factors including market conditions, competitive pressures, and other risks detailed in SEC filings[9](index=9&type=chunk)[10](index=10&type=chunk)