Financial Performance - Net income for Q1 fiscal 2026 was $45.8 million, or $0.69 per Common Unit, compared to $19.4 million, or $0.30 per Common Unit in Q1 fiscal 2025[3] - Adjusted EBITDA for Q1 fiscal 2026 improved by $8.1 million, or 10.8%, to $83.4 million compared to the prior year[3] - Total gross margin for Q1 fiscal 2026 was $239.5 million, an increase of $13.4 million, or 5.9%, from the prior year[6] - Net income for the three months ended December 27, 2025, was $45,780, compared to $19,420 for the same period in 2024, representing a year-over-year increase of approximately 135%[20] - EBITDA for the three months ended December 27, 2025, was $82,631, up from $56,694 in the prior year, indicating a growth of about 46%[20] - Adjusted EBITDA increased to $83,405 for the three months ended December 27, 2025, from $75,301 in the same period of 2024, reflecting a rise of approximately 11%[20] Sales and Operations - Retail propane gallons sold increased by 4.2% to 110.2 million gallons in Q1 fiscal 2026, driven by colder temperatures and recent acquisitions[4] - Average propane prices decreased by 14.0% compared to the prior year first quarter[5] - Combined operating and general administrative expenses rose by $5.0 million, or 3.4%, primarily due to higher payroll and variable operating costs[7] Acquisitions and Investments - The Partnership acquired two propane businesses in California for $24.0 million during the quarter[9] Debt and Financing - The refinancing of $350.0 million of senior notes extended weighted average debt maturities by nearly three years[8] - The Consolidated Leverage Ratio for the twelve-month period ended December 27, 2025, was 4.57x, down from 4.99x for the prior year[9] Distributions - A quarterly distribution of $0.325 per Common Unit was declared, equating to an annualized rate of $1.30 per Common Unit[10] Tax and Expenses - The provision for income taxes for the three months ended December 27, 2025, was $231, down from $563 in the prior year, showing a decrease of about 59%[20] - Interest expense, net, was $19,756 for the three months ended December 27, 2025, slightly up from $19,612 in the previous year, indicating a marginal increase of about 1%[20] - Depreciation and amortization expenses were $16,864 for the three months ended December 27, 2025, compared to $17,099 in the same period of 2024, reflecting a decrease of approximately 1%[20] - Loss on debt extinguishment was recorded at $1,183 for the three months ended December 27, 2025, with no comparable figure for the previous year[20] - Equity in losses and impairment charges for investments in unconsolidated affiliates amounted to $521 for the three months ended December 27, 2025, down from $22,241 in the prior year, indicating a significant reduction of approximately 98%[20] - Unrealized non-cash gains on changes in fair value of derivatives were $(930) for the three months ended December 27, 2025, compared to $(3,634) in the same period of 2024, showing an improvement of about 74%[20]

Table of Contents 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 December 31, 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: 1-16027 LANTRONIX, INC. (Exact name of registrant as specified in its charter) (State or other juris ...

Financial Performance - Earnings per diluted share for Q3 Fiscal 2026 were $5.82, up 25% year-over-year on a reported basis, and $6.22, up 29% on an adjusted basis [2]. - Revenue for Q3 Fiscal 2026 increased 12% to $2.4 billion on a reported basis, with a 10% increase in constant currency [5][10]. - Net income for the three months ended December 27, 2025, was $361.6 million, representing a 21.6% increase from $297.4 million in the same period last year [36]. - Basic net income per share for the three months ended December 27, 2025, was $5.91, compared to $4.76 for the same period in 2024, reflecting a 24.1% increase [36]. - Total net revenues for the three months ended December 27, 2025, were $2,358.1 million, a decrease of $47.9 million compared to the same period in 2024 [49]. - Operating income for the three months ended December 27, 2025, was reported at $471.3 million, compared to $389.7 million for the same period in 2024, reflecting an operating margin of 19.6% [50]. - Total operating income for the nine months ended December 27, 2025, was $990.6 million, compared to $777.1 million in the same period of 2024, reflecting a growth of 27.4% [40]. Revenue Growth - Global direct-to-consumer comparable store sales grew high-single-digits, with North America revenue increasing 8% to $1.1 billion [10][17]. - The company expects full-year Fiscal 2026 revenues to increase high-single to low-double digits on a constant currency basis, up from a prior outlook of 5% to 7% [22]. - North America segment net revenues increased by 9.4% to $2,566.9 million for the nine months ended December 27, 2025, compared to $2,345.4 million in 2024 [43]. - Asia segment net revenues grew by 20.5% to $1,539.9 million for the nine months ended December 27, 2025, compared to $1,277.8 million in the previous year [43]. - Digital commerce sales in North America increased by 12% for the nine months ended December 27, 2025, while brick-and-mortar sales rose by 9% [42]. Margins and Profitability - Adjusted gross margin for Q3 Fiscal 2026 was 69.9%, up 150 basis points from the prior year, driven by high-teens AUR growth [13]. - Gross profit for the three months ended December 27, 2025, was $1,681.7 million, up from $1,466.1 million in the same period last year, resulting in a gross profit margin of 69.9% [49]. - Adjusted operating income for the three months ended December 27, 2025, was $503.1 million, reflecting an adjusted operating margin of 20.9% [50]. Cash and Investments - The company ended Q3 Fiscal 2026 with $2.3 billion in cash and short-term investments, compared to $2.1 billion at the end of Q3 Fiscal 2025 [19]. - Cash and cash equivalents increased to $2,031.9 million as of December 27, 2025, from $1,922.5 million as of March 29, 2025, reflecting a growth of 5.7% [34]. - Approximately $500 million was returned to shareholders through dividends and stock repurchases in Fiscal Year-to-Date [5]. Store Expansion - The company opened 32 new stores in key cities during Q3, including locations in Chengdu, Sydney, and New Delhi [11]. - The total number of directly operated stores increased to 600 globally as of December 27, 2025, compared to 579 in the previous year [47]. Shareholder Returns - The company declared dividends of $0.9125 per share for the three months ended December 27, 2025, compared to $0.825 per share for the same period in 2024, an increase of 10.6% [36]. - The company repurchased common stock totaling $473.4 million during the nine months ended December 27, 2025, compared to $404.6 million in the same period of 2024 [38]. Restructuring and Charges - The company reported a restructuring charge of $31.8 million for the three months ended December 27, 2025, compared to $12.2 million in the same period last year [36]. - The adjustments during the fiscal periods include charges related to the Company's restructuring activities and other non-recurring events, with income tax benefits adjusted accordingly [57]. - The Fiscal 2026 full year and fourth quarter guidance excludes potential restructuring-related and other charges that may occur in future periods [58]. - A full reconciliation of non-U.S. GAAP financial measures to U.S. GAAP cannot be provided due to the uncertain nature of potential future charges [58].

Financial Performance - Net sales for the second quarter increased by 6% to $4.229 billion, with organic net sales rising by 4%[6] - Gross profit reached $3.235 billion, resulting in a gross margin of 76.5%, an increase of 40 basis points from the previous year[8] - Operating income improved significantly to $401 million, with an operating margin of 9.5%, up from a loss of $580 million in the prior-year period[6] - Diluted net earnings per share increased to $0.44, compared to a net loss of $(1.64) in the prior-year period, while adjusted diluted net earnings per share rose by 43% to $0.89[8] - Free cash flow for the six months ended December 31, 2025, was $581 million, a substantial increase from $114 million in the prior-year period[8] - Net earnings for Q2 2025 were $162 million, a significant recovery from a loss of $(590) million in Q2 2024, representing over 100% growth[51] - Adjusted operating income (Non-GAAP) for the six months ended December 31, 2025, was $863 million, a 42% increase from $606 million in 2024[55] - Net cash flows provided by operating activities for the six months ended December 31, 2025, were $785 million, up from $387 million in 2024[68] - Total assets as of December 31, 2025, were $19,634 million, slightly down from $19,760 million in 2024[66] - Total equity increased to $4,031 million as of December 31, 2025, compared to $4,169 million in 2024[66] Sales Performance by Category - Skin Care net sales grew by 6%, driven by strong performances from La Mer and Estée Lauder during key shopping moments[16] - Makeup net sales decreased by 1%, primarily driven by Estée Lauder, while M·A·C net sales increased due to initial shipments for the March 2026 launch[19] - Fragrance net sales increased by 6%, driven by high-single-digit growth from Luxury Brands, with TOM FORD, Le Labo, and KILIAN PARIS leading the growth[19] - Hair Care net sales returned to growth, increasing by 5%, primarily driven by distribution expansion and the success of Multi-Peptide Serum for Hair Density from The Ordinary[25] - Net sales from The Ordinary increased, benefiting from targeted expanded consumer reach and existing distribution growth, with successful activations including the launch of Volufiline 92% + Pal-Isoleucine 1% Targeted Plumping Serum[19] - The Americas region reported a 1% decline in net sales to $2,392 million, while the EUKEM region saw a 7% increase to $2,084 million[58] - Mainland China net sales increased by 11% to $1,460 million, contributing to overall growth in the Asia/Pacific region[58] Strategic Initiatives - The Company announced a strategic partnership with Shopify to modernize its digital infrastructure and improve consumer experiences[11] - A minority investment in the Mexican luxury fragrance brand XINÚ was made, emphasizing the Company's commitment to local entrepreneurship[11] - New product innovations included the launch of Re-Nutriv Ultimate Lift Rejuvenating Oil and La Mer's New Lip Treatment, enhancing the product portfolio[10] Outlook and Projections - The Company raised its fiscal 2026 full-year outlook, tightening the range on net sales and raising its outlook for adjusted diluted net earnings per common share and adjusted operating margin[36] - The Company expects tariff-related headwinds to impact fiscal 2026 profitability by approximately $100 million, mostly in the second half[39] - Organic net sales growth for fiscal 2026 is anticipated to be between 1% and 3%, with mid-single-digit growth expected in Mainland China, while The Americas is projected to remain flat[43] - Adjusted Non-GAAP EPS is expected to range from $2.05 to $2.25, reflecting a growth of 36% to 49% compared to $1.51 in 2025[43] - Forecasted GAAP EPS for fiscal 2026 is projected to be between $0.98 and $1.22, a significant recovery from a loss of $(3.15) in 2025, indicating over 100% growth[43] - Adjusted operating margin is forecasted to be between 9.8% and 10.2%, with a contraction of about 50 basis points expected in Q3 due to consumer-facing investments and tariff headwinds[43] - Capital expenditures are expected to be approximately 4% of projected sales, reflecting a more efficient level of expenditures[43] Restructuring and Charges - The restructuring program component of the PRGP is expected to yield annual gross benefits of between $0.8 billion and $1.0 billion, before taxes[32] - The Company has recognized total cumulative charges under the restructuring component of the PRGP of $904 million through December 31, 2025[34] - The company expects to continue incurring charges similar to those presented, which may impact future results[60] - The company recorded a $159 million charge in Q1 fiscal 2025 related to talcum litigation settlement agreements[54] - In Q2 fiscal 2025, TOM FORD brand and Too Faced reporting unit experienced lower-than-expected growth, leading to $773 million and $75 million impairment charges for TOM FORD and Too Faced trademarks, respectively[53] - For the six months ended December 31, 2024, total charges related to goodwill and other intangible asset impairments amounted to $861 million, impacting earnings by $1.87 per common share[54] Tax and Financial Metrics - Effective tax rate for the three months ended December 31, 2025, was 51.4%, compared to 9.2% in 2024[64] - Operating margin for the three months ended December 31, 2025, was 9.5%, a significant improvement from (14.5)% in 2024[64]

Financial Performance - In Q4 2025, net sales decreased 1% year over year to $2.0 billion, while gross profit increased 9% to $478.4 million, resulting in a gross margin expansion of 220 basis points to 23.4%[1][4]. - For the full year 2025, net sales decreased 5% year over year to $8.2 billion, with gross profit remaining flat at $1.8 billion and gross margin expanding 110 basis points to 21.4%[2][12]. - Consolidated net earnings for Q4 2025 were $52.0 million, up 40% year over year, while full year consolidated net earnings were $157.3 million, down 37% compared to 2024[1][2]. - Adjusted earnings from operations for Q4 2025 increased 13% year over year to $146.2 million, representing 7.1% of net sales[1][4]. - Diluted earnings per share for Q4 2025 was $1.67, up 69% year over year, while for the full year it was $4.86, down 26% year over year[1][2]. - Total net sales for Q4 2025 were $2,048,297, a decrease of 1% compared to Q4 2024's $2,072,665[25]. - Net earnings for the full year 2025 were $157,347, down 37% from $249,691 in 2024[25]. - Diluted earnings per share for Q4 2025 increased by 69% to $1.67, compared to $0.99 in Q4 2024[25]. - Gross profit for Q4 2025 was $478,428, representing a 9% increase from $439,638 in Q4 2024[25]. - Gross profit for the twelve months ended December 31, 2025, was $1,761,427, slightly down from $1,766,016 in 2024, reflecting a stable performance[35]. - Net earnings for the twelve months ended December 31, 2025, were $157,347, down from $249,691 in 2024, indicating a decline of 37%[35]. - Adjusted non-GAAP consolidated net earnings for 2025 were $315,104 thousand, slightly down from $338,181 thousand in 2024, reflecting a decrease of 6.8%[41]. - GAAP consolidated earnings from operations (EFO) for 2025 were $334,923 thousand, down from $388,584 thousand in 2024, a decline of 13.8%[41]. - Adjusted non-GAAP consolidated EFO for the twelve months ended December 31, 2025, was $503,988 million, compared to $502,372 million in 2024, showing a slight increase[50]. Cash Flow and Expenses - Cash flows from operating activities were $153.8 million for Q4 2025 and $303.8 million for the full year[4]. - Cash flows from operating activities provided $303,827 thousand in 2025, a significant decrease of 52.1% from $632,845 thousand in 2024[39]. - Selling and administrative expenses for the three months ended December 31, 2025, were $361,412, a slight increase from $358,487 in 2024[35]. - Severance and restructuring expenses for Q4 2025 increased by 33% to $21,310 compared to $15,967 in Q4 2024[25]. - Severance and restructuring expenses increased to $37,131 million in 2025 from $31,605 million in 2024[50]. - Transformation costs decreased to $13,083 million in 2025 from $18,355 million in 2024[50]. Market Segments and Regional Performance - In Q4 2025, services net sales increased 11% year over year, while product net sales decreased 4%[8]. - North America net sales decreased 3% year over year to $1.6 billion in Q4 2025, while EMEA and APAC saw increases of 8% and 15%, respectively[8]. - The company is focusing on expanding its services segment, which has shown growth potential, particularly in the APAC region[35]. - GAAP EFO from North America segment for Q4 2025 was $79.129 million, up from $52.396 million in Q4 2024, representing a growth of 50.9%[43]. - GAAP EFO from APAC segment for Q4 2025 was $5.776 million, an increase from $4.922 million in Q4 2024, reflecting a growth of 17.4%[45]. - Adjusted non-GAAP EFO from EMEA segment for Q4 2025 was $20.720 million, compared to $14.626 million in Q4 2024, an increase of 41.7%[45]. Future Outlook - For 2026, the company expects Adjusted diluted earnings per share to be between $10.10 and $10.60, representing a 5% growth at the midpoint compared to 2025[14]. - The company anticipates gross profit growth in the low single digits and expects gross margin to be approximately 21% for 2026[14]. - The company experienced a net cash used in investing activities of $309,803 thousand in 2025, slightly higher than $303,278 thousand in 2024[39]. - The company anticipates continued challenges due to inflation and higher interest rates affecting future financial performance[29]. Balance Sheet and Capital Structure - Total current assets increased to $6,362,387 thousand in 2025 from $4,844,622 thousand in 2024, representing a growth of 31.3%[37]. - The company reported an increase in accounts payable to $4,263,796 thousand in 2025, up from $3,059,667 thousand in 2024, indicating a rise of 39.3%[37]. - Long-term debt rose to $1,361,327 thousand in 2025, compared to $531,233 thousand in 2024, marking an increase of 156.0%[37]. - The cash, cash equivalents, and restricted cash at the end of the period increased to $360,776 thousand in 2025 from $261,467 thousand in 2024, a growth of 37.9%[39]. - Average stockholders' equity decreased to $1,639,329 million in 2025 from $1,775,136 million in 2024[50]. - Average debt increased significantly to $1,180,854 million in 2025 from $953,619 million in 2024[50]. - Average cash position worsened, with a negative average cash of $(359,051) million in 2025 compared to $(296,166) million in 2024[50]. - Total invested capital increased to $2,461,132 million in 2025 from $2,432,589 million in 2024[50]. - Income tax expense for the twelve months ended December 31, 2025, was $131,037 million, slightly up from $130,617 million in 2024[50].

Financial Performance - Net income for Q4 2025 was $282 million, a significant increase from $11 million in Q4 2024, with net income attributable to TPG Inc. at $77 million compared to $13 million in the same period [22]. - Total revenues for FY 2025 reached $4.67 billion, up from $3.50 billion in FY 2024, reflecting a growth of approximately 33.4% [21]. - The operating profit margin improved to 18.9% in Q4 2025, compared to 1.0% in Q4 2024 [23]. - Total expenses for FY 2025 were $4.09 billion, an increase from $3.58 billion in FY 2024 [21]. - Compensation and benefits expenses rose to $3.14 billion in FY 2025, compared to $2.77 billion in FY 2024 [21]. - Distributable earnings for Q4'25 were $336.2 million, contributing to a total of $1.04 billion for FY'25, showcasing strong cash generation capabilities [134]. - The company experienced a net loss from investment activities of $2.8 million for FY'25, indicating challenges in investment performance despite strong operational results [131]. Capital Management - TPG raised over $51 billion and deployed $52 billion in 2025, driving total assets under management (AUM) to more than $300 billion [5]. - The company has $72 billion in dry powder, positioning it well for future growth and market navigation [5]. - Available Capital at the end of 4Q'25 was $72.4 billion, reflecting a strong liquidity position [25]. - Approximately $51.9 billion was invested over the last twelve months, with $72.4 billion of capital available for deployment at the end of Q4 2025 [89]. - The company intends to pay at least 85% of its Distributable Earnings as dividends, subject to board discretion and business needs [143]. Asset Management - Total Assets Under Management (AUM) reached $303 billion, a 23% increase year-over-year [25]. - Fee-Earning AUM increased 20% from 4Q'24 to $170.1 billion, primarily due to fee-earning capital raised of $22.1 billion [64]. - Performance Eligible AUM totaled $254.3 billion, or 84% of total AUM, at the end of 4Q'25 [81]. - Performance Generating AUM totaled $208.8 billion, or 69% of total AUM, at the end of 4Q'25 [81]. - The potential fee-related revenue opportunity associated with AUM Not Yet Earning Fees and FAUM Subject to Step-Up is estimated at approximately $250 million annually [75]. Revenue Streams - Fee-Related Revenues for FY'25 are anticipated to be $2,109,255, rising from $461,410 in 4Q'24 to $628,476 in 4Q'25 [139]. - Fee-Related Earnings (FRE) rose 72% from $190 million in 4Q'24 to $326 million in 4Q'25, with a FRE margin increase from 41% to 52% [29]. - 4Q'25 Fee-Related Revenues (FRR) increased by 36% to $628 million compared to $461 million in 4Q'24 [25]. - Non-GAAP total revenue for Q4'25 was $1,280 million, compared to $1,193 million in Q3'25, indicating an increase of about 7.3% [98]. Dividends and Shareholder Returns - TPG declared a quarterly dividend of $0.61 per share of Class A common stock, payable on March 5, 2026 [6]. - The declared dividend for Q4'25 was $0.61 per share, with total dividends declared for FY'25 amounting to $2.06 per share [104]. - Total participating shares outstanding decreased from 400,086,112 on September 30, 2025, to 399,575,212 by December 31, 2025 [100]. Investment Performance - The company reported a total of $632.4 million in GAAP performance allocations for the three months ended December 31, 2025, with a realized amount of $238.0 million [95]. - Realizations for the full year 2025 totaled $23.4 billion, compared to $22.9 billion in FY'24, indicating a slight increase in capital returned to investors [91]. - The company reported an operating profit margin defined as U.S. GAAP net income divided by U.S. GAAP total revenue [173]. Corporate Developments - The acquisition of TPG Peppertree, effective July 1, 2025, is expected to enhance the company's market position and expand its asset management capabilities [86]. - The company’s reorganization included a corporate conversion of TPG Partners, LLC to a Delaware corporation named TPG Inc., in conjunction with the IPO [173]. - The reorganization will take effect on November 1, 2023, impacting future profit distributions [174].

Financial Performance - Fourth quarter net sales increased 9% to $924 million compared to $846 million in Q4 2024; full year net sales increased 6% to $4.0 billion[4] - Operating income for Q4 increased 45% to $57 million, with an operating margin of 6.2%; full year operating income increased 7% to $276 million, with an operating margin of 7.0%[4] - Net income for Q4 doubled to $29 million, while full year net income was $135 million compared to $138 million in 2024; adjusted net income for Q4 increased 63% to $30 million[4] - Diluted earnings per share (EPS) for Q4 was $0.83, a 98% increase; full year diluted EPS was $3.90 compared to $4.11 in 2024[8] - Adjusted EBITDA for Q4 grew 17% to $105 million, with an adjusted EBITDA margin of 11.4%; full year adjusted EBITDA increased 4% to $468 million[4] - Gross profit for the year ended December 31, 2025, was $912,860,000, up from $835,890,000 in 2024, reflecting a growth of 9.2%[19] - Operating income for the year increased to $275,989,000, compared to $258,040,000 in 2024, marking a rise of 7%[19] - Net income for Q4 2025 was $29,079,000, a significant increase of 99.5% from $14,558,000 in Q4 2024[19] - Basic earnings per share for the year ended December 31, 2025, was $4.16, down from $4.25 in 2024, reflecting a decrease of 2.1%[19] - Adjusted EBITDA for the year ended December 31, 2025, was $468,045,000, representing an increase of 3.5% from $451,658,000 in 2024[30] - Adjusted net income for the year ended December 31, 2025, was $153,915,000, up from $146,242,000 in 2024, showing an increase of approximately 5.7%[32] Cash Flow and Liquidity - Free cash flow in 2025 was $246 million, down from $251 million in 2024; $87 million was returned to shareholders through dividends and share repurchases[9] - Total net liquidity at the end of Q4 was $818 million, with a total net leverage ratio of 2.6x, down from 2.8x in Q3 2025[10] - Cash and cash equivalents at the end of 2025 were $26,432,000, down from $33,561,000 at the end of 2024[24] - Net cash provided by operating activities for the year was $329,414,000, slightly up from $326,841,000 in 2024[24] - Cash flows from operating activities for the year ended December 31, 2025, were $329,414,000, compared to $326,841,000 for 2024, reflecting a slight increase[31] - Free cash flow for the year ended December 31, 2025, was $246,493,000, down from $251,159,000 in 2024, indicating a decrease of approximately 1.3%[31] Acquisitions and Strategic Initiatives - The company completed five acquisitions in 2025, including two in Q4, with total capital deployed for acquisitions amounting to $122 million[4] - The company remains focused on strategic priorities including acquisitions, organic growth, and enhancing customer partnerships as it enters 2026[11] Assets and Liabilities - Total assets as of December 31, 2025, were $3,076,174,000, an increase from $3,020,954,000 in 2024[22] - Total liabilities decreased slightly to $1,891,877,000 in 2025 from $1,892,588,000 in 2024[22] Margins - The operating margin for the fourth quarter ended December 31, 2025, improved to 6.2%, up from 4.7% in the same quarter of 2024[31] - Adjusted operating margin for the year ended December 31, 2025, was 7.0%, slightly down from 7.2% in 2024[31]

Clinical Trials and Product Development - AXPAXLI is currently in Phase 3 trials for wet AMD and diabetic retinal disease, with plans to submit an NDA based on Week 52 data from the SOL-1 trial[706][711] - The SOL-1 trial has maintained an exceptional subject retention rate, with no safety signals identified to date[707] - The SOL-R trial achieved its randomization target of 631 subjects, with topline data expected in Q1 2027, ahead of previous guidance[709] - The company plans to initiate the SOL-X trial in Q2 2026 to evaluate long-term safety for subjects from the SOL-1 and SOL-R trials[710] - The company expects to continue incurring losses as it advances clinical trials for product candidates, including SOL-1, SOL-R, and HELIOS-3, and supports the commercialization of DEXTENZA[768] Financial Performance - DEXTENZA net product revenue for 2025 was $51.8 million, a decrease of $11.6 million or 18.3% compared to 2024, primarily due to Medicare reimbursement caps and rebates[716] - Product revenue decreased to $51.8 million in 2025 from $63.5 million in 2024, a decline of $11.6 million year-over-year[739] - Total revenue for 2025 was $51.9 million, down from $63.7 million in 2024, reflecting a decrease of $11.8 million[738] - Collaboration revenue was minimal at $0.1 million in 2025, down from $0.3 million in 2024, with no expected revenue for 2026[742] - The net loss for the year ended December 31, 2025, was $265.9 million, compared to $193.5 million in 2024 and $80.7 million in 2023, indicating a significant increase in losses[767] Expenses and Cost Management - Research and development expenses are expected to increase as the company continues to support the development of its product candidates[728] - Research and development expenses increased to $197.1 million in 2025 from $127.6 million in 2024, an increase of $69.5 million year-over-year[743] - Selling and marketing expenses rose to $53.9 million in 2025, up from $41.6 million in 2024, reflecting an increase of $12.3 million[748] - General and administrative expenses increased to $64.4 million in 2025 from $60.7 million in 2024, an increase of $3.7 million[751] - Operating expenses for 2025 totaled $322.0 million, primarily for research and development, selling and marketing, and general and administrative activities[778] Cash Flow and Financing - Cash and cash equivalents as of December 31, 2025, were $737.1 million, with outstanding notes payable of $82.5 million under the Barings Credit Facility[762] - The company raised approximately $561.7 million from financing activities in 2025, compared to $332.1 million in 2024 and $169.8 million in 2023[778] - In February 2024, the company raised approximately $316.4 million from the sale of 32,413,560 shares of common stock and pre-funded warrants[764] - Net cash used in operating activities was $70.2 million for the year ended December 31, 2023, primarily due to a net loss of $80.7 million and unfavorable changes in operating assets and liabilities of $7.4 million[782] - Net cash provided by financing activities for the year ended December 31, 2023 was $169.8 million, including proceeds from public offerings of $117.3 million and drawings under the Barings Credit Facility of $82.5 million[786] Debt and Obligations - The Barings Credit Facility has an outstanding principal of $82.5 million as of December 31, 2025[734] - Total contractual obligations and commitments amounted to $88.7 million as of December 31, 2025, with $82.5 million related to the Barings Credit Agreement[787] - The company has a secured term loan facility with a principal amount of $82.5 million under the Barings Credit Agreement[814] Revenue Recognition and Accounting Policies - Revenue from product sales is recognized when the customer obtains control of the product, which occurs upon delivery[800] - The company estimates variable consideration for product sales, including trade discounts and allowances, which are recorded as reductions of revenue[801] - The company has received minimal product returns to date and expects returns of DEXTENZA to remain minimal[804] - Chargebacks for government healthcare providers are established in the same period that related revenue is recognized, impacting product revenue and trade receivables[805] - The company estimates future claims for rebates and records a liability for these rebates, impacting product revenue[806] Intellectual Property and Royalties - The company has in-licensed a significant portion of its intellectual property from Incept, with obligations to pay royalties based on net sales of licensed products[792] - The Royalty Fee Derivative Liability was valued at $13.9 million as of December 31, 2025[815] - The Royalty Fee Derivative Liability is measured using a Monte Carlo simulation, considering expected future revenue and estimated volatility[810] - Changes in the fair value of the Royalty Fee Derivative Liability have no impact on anticipated cash outflows[815] Future Outlook - The company anticipates continued increases in research and development expenses for 2026 and beyond as it progresses with multiple clinical trials[746] - The company anticipates additional funding will be required to support the commercialization of AXPAXLI if approved by the FDA[772] - The company plans to scale up manufacturing processes and capabilities to support sales and clinical trials of its product candidates[771]

Financial Performance - Fourth quarter revenue was $2.19 billion, flat year-over-year, while full-year 2025 revenue totaled $8.56 billion, a 2% decline from 2024[2][5] - Net income for the fourth quarter was $99 million, down from $287 million in the prior year, while full-year net income was $805 million compared to a net loss of $2,075 million in 2024[2][5] - Adjusted EBITDA for the fourth quarter was $691 million, slightly up from $688 million in the same period last year, with a full-year adjusted EBITDA of $2.67 billion, reflecting a 2% decline from 2024[3][5] - SiriusXM total revenue for Q4 2025 was $1,611 million, a decrease of 1% compared to Q4 2024, with a total revenue for the year of $6,417 million, down 2% from $6,553 million in 2024[28] - SiriusXM subscriber revenue decreased by 2% year-over-year for the twelve months, totaling $5,960 million in 2025 compared to $6,076 million in 2024[28] - Adjusted EBITDA for Q4 2025 was $691 million, remaining stable compared to $688 million in Q4 2024, with a total for the year of $2,665 million, down 2% from $2,732 million[28] Cash Flow and Investments - Free cash flow for 2025 was $1.26 billion, up 24% from $1.02 billion in 2024, driven by lower capital expenditures and operating discipline[17][5] - Cash used in investing activities was $747 million in 2025, down from $970 million in 2024, a decrease of approximately 23%[25] - Free cash flow increased by $25 million (5%) to $541 million for the three months ended December 31, 2025, compared to $516 million in 2024[36] Subscriber Metrics - SiriusXM ended 2025 with approximately 33 million total subscribers, with self-pay net subscribers increasing by approximately 110 thousand in Q4[11][5] - Total subscribers for SiriusXM as of December 31, 2025, were 32,927 thousand, a decline of 1% from 33,226 thousand in 2024[31] - The weighted average number of SiriusXM subscribers decreased by 333 thousand (1%) to 32,785 thousand for the three months ended December 31, 2025, compared to 33,118 thousand in 2024[35] - Self-pay subscribers decreased by 301 thousand (26%) to 110 thousand for the three months ended December 31, 2025, compared to 149 thousand in 2024[35] - Paid promotional subscribers increased by 2 thousand (110%) for the three months ended December 31, 2025, compared to a decrease of 79 thousand in 2024[35] Profitability and Expenses - SiriusXM's gross profit for 2025 was $3.82 billion, down 2% from $3.91 billion in 2024, resulting in a gross margin of 59%[13][5] - Total operating expenses for Q4 2025 increased by 17% to $1,967 million, compared to $1,682 million in Q4 2024[28] - SiriusXM's gross profit margin for Q4 2025 was 59%, down from 60% in Q4 2024, indicating a slight decline in profitability[28] Shareholder Returns - The company returned $501 million to shareholders in 2025 through dividends and share repurchases[18][5] - Common stock repurchased and retired amounted to $136 million in 2025, compared to $6 million in 2024, indicating a significant increase in share buybacks[25] - Dividends paid increased to $365 million in 2025 from $143 million in 2024, reflecting a rise of approximately 155%[25] Future Outlook - The company expects total revenue of approximately $8.5 billion, adjusted EBITDA of approximately $2.6 billion, and free cash flow of approximately $1.35 billion for 2026[19][5] Advertising and Podcasting - Podcasting revenue grew by 41% in 2025, building on a 12% growth in 2024[5][5] - Pandora's advertising revenue increased by 4% in Q4 2025, reaching $450 million, while total revenue for Pandora and Off-platform grew by 2% to $582 million[28] Asset and Liability Management - Total assets decreased to $27,237 million in 2025 from $27,521 million in 2024, a decline of approximately 1.03%[23] - Total current liabilities increased to $3,653 million in 2025 from $2,731 million in 2024, an increase of approximately 34%[23] - Long-term debt decreased to $8,648 million in 2025 from $10,314 million in 2024, a reduction of approximately 16%[23] - Total stockholders' equity increased to $11,563 million in 2025 from $11,074 million in 2024, an increase of about 4.4%[23] User Engagement - The number of monthly active users for Pandora and Off-platform services decreased by 5% to 41,112 thousand in 2025 from 43,344 thousand in 2024[31] - The total number of ad-supported listener hours decreased by 0.07 billion (3%) to 2.33 billion for the three months ended December 31, 2025, compared to 2.39 billion in 2024[35] - The company reached a combined monthly audience of approximately 170 million listeners across its audio businesses[38]

Financial Performance - Fourth quarter revenues were $8.5 billion, with GAAP Net Income of $593 million, representing 6.9% of sales[5] - Full-year 2025 revenues totaled $33.7 billion, with GAAP Net Income of $2.8 billion, or 8.4% of sales[5] - Fourth quarter EBITDA was $1.2 billion, or 13.5% of sales, compared to $1.0 billion, or 12.1% of sales in the same quarter of 2024[8] - Full-year 2025 EBITDA was $5.4 billion, or 16.0% of sales, down from $6.3 billion, or 18.6% of sales in 2024[10] - Q4 2025 consolidated net income attributable to Cummins Inc. was $593 million, compared to $418 million in Q4 2024, reflecting a significant increase of 42%[27] - Full year 2025 consolidated net income attributable to Cummins Inc. was $2,843 million, down 28.1% from $3,946 million in 2024[28] - Q4 2025 operating income rose to $813 million, compared to $732 million in Q4 2024, marking an increase of 11.06%[27] - The EBITDA for the year ended December 31, 2025, was $5,385 million, compared to $6,326 million in 2024, indicating a decrease of 14.89%[39] Revenue Breakdown - Total sales for the year ended December 31, 2025, included $10,875 million from the Engine segment, $10,149 million from the Components segment, and $12,405 million from the Distribution segment[39] - Engine segment total sales for 2025 reached $10,875 million, with Q4 sales at $2,600 million, a decrease from $2,720 million in Q4 2024[57] - Components segment total sales for 2025 reached $10,149 million, a decrease from $11,679 million in 2024, representing a decline of approximately 13.1%[58] - Distribution segment total sales for 2025 were $12,405 million, compared to $11,384 million in 2024, indicating an increase of about 8.9%[59] - Power Systems segment total sales for 2025 amounted to $7,463 million, up from $6,408 million in 2024, reflecting a growth of approximately 16.4%[60] Market Performance - Sales in North America decreased by 2% in Q4 2025, while international revenues increased by 5%[6] - Unit shipments for heavy-duty engines in 2025 totaled 101,900, down from 132,900 in 2024, while medium-duty units were 280,500, slightly lower than 310,300 in 2024[57] Shareholder Returns - The company returned a total of $1,055 million to shareholders through dividends in 2025, marking the 16th consecutive year of dividend increases[13] Assets and Liabilities - Cash and cash equivalents at the end of Q4 2025 were $2,845 million, up from $1,671 million at the end of Q4 2024, indicating a strong liquidity position[33] - Total assets increased to $33,992 million in 2025, compared to $31,540 million in 2024, reflecting a growth of 7.77%[31] - Total liabilities rose to $20,584 million in 2025, compared to $20,232 million in 2024, an increase of 1.74%[31] Operating Activities - The company reported net cash provided by operating activities of $3,621 million for the full year 2025, significantly up from $1,487 million in 2024[35] - Capital expenditures for 2025 were $1,235 million, slightly higher than $1,208 million in 2024, indicating continued investment in growth[35] Special Charges and Impairments - The company recorded charges of $218 million related to the electrolyzer business in Q4 2025, impacting diluted EPS by $1.54[5] - The Accelera segment recorded a $210 million impairment charge for goodwill due to deteriorating conditions in the electrolyzer markets, with a $30 million write-down for excess and obsolete inventory[42] - The company incurred $458 million in charges related to Accelera actions during the year ended December 31, 2025[39] - Total charges related to strategic actions in Q4 2025 amounted to $218 million, equating to $1.54 per diluted share, including $13 million in severance and $34 million in contract termination costs[43] Tax Information - The effective tax rate for 2026 is expected to be approximately 24.0%, with the effective tax rates for Q4 2025 and the full year 2025 at 21.6% and 25.4%, respectively[48] Research and Development - Research, development, and engineering expenses for the year ended December 31, 2025, totaled $1,396 million, up from $1,463 million in 2024, indicating a decrease of 4.58%[39]