Acacia Research (ACTG) Q2 Revenue Up 98%
GAAP revenue nearly doubled year over year to $51.2 million in Q2 2025, driven by newly acquired manufacturing operations, but missed the $55.0 million GAAP revenue estimate.
Non-GAAP earnings per share came in at $(0.06), short of the $(0.05) non-GAAP consensus estimate; Adjusted EBITDA (non-GAAP) declined to $1.9 million from $4.1 million.
Intellectual Property segment GAAP revenue dropped sharply to $0.3 million, highlighting continued volatility and reliance on one-time settlements.
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Acacia Research (NASDAQ:ACTG), an investment firm known for acquiring undervalued businesses across multiple sectors, released its second quarter results on August 6, 2025. The headline news from the period: GAAP revenue soared 98% from the prior-year quarter, reaching $51.2 million, primarily on the back of the Deflecto acquisition in its manufacturing business. However, The company missed analyst expectations, which had forecasted $55.0 million in GAAP revenue. Non-GAAP earnings per share (EPS) landed at $(0.06), compared with the anticipated $(0.05). Overall, the quarter reflected robust top-line growth from acquisitions.
Metric Q2 2025 Q2 2025 Estimate Q2 2024 Y/Y Change
EPS (Non-GAAP) $(0.06) $(0.05) $(0.01) (500.0%)
EPS (GAAP) $(0.03) $(0.08) N/A
Revenue (GAAP) $51.2 million $55.0 million $25.8 million 98.4%
Total Company Adjusted EBITDA $1.9 million $4.1 million (53.7%)
Free Cash Flow (Non-GAAP) $47.9 million N/A
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Strategic Focus
Acacia Research operates as an investment platform that acquires, manages, and seeks to unlock value in businesses across manufacturing, industrial, energy, and intellectual property. It searches for underappreciated and complex assets, with a specific emphasis on free cash flow potential and operational improvement.
In recent quarters, the company has concentrated on expanding by acquisition, particularly with the addition of Deflecto to create a new manufacturing segment. Key success factors for Acacia Research include selecting the right acquisition targets, integrating them efficiently, and achieving steady cash flow. The company also leverages its partnership with Starboard Value to enhance sourcing and execution of strategic transactions.
Quarter Highlights: Financial and Operational Performance
The most prominent story this period was headline revenue growth, which nearly doubled year over year, with GAAP revenue increasing 98% to $51.2 million from $25.8 million in Q2 2024. This jump was primarily driven by the Manufacturing Operations segment, thanks to the second full quarter of Deflecto's contribution, generating $29.0 million in segment revenue. Energy Operations (Benchmark) delivered $15.3 million in GAAP revenue, up modestly from $14.2 million in Q2 2024, and Industrial Operations (Printronix) posted $6.6 million in GAAP revenue, up slightly from $6.3 million for Q2 2024. However, the IP segment, focused on licensing technology and patent portfolios, was a weak spot. IP revenue (GAAP) fell sharply to $0.3 million from $5.3 million in Q2 2024, reflecting a lack of new settlements or licensing income in the quarter.
This high volatility is typical in IP licensing businesses, which often depend on unpredictable legal settlements. The first half of the year had been boosted by a large one-time intellectual property (IP) settlement, but the second quarter saw minimal activity. In contrast, Energy and industrial divisions showed modest revenue growth, with Energy Operations Adjusted EBITDA slightly declining and Industrial Operations Adjusted EBITDA increasing. The new manufacturing segment is now the largest by revenue, but its margin profile is slim, as shown by $1.3 million in adjusted EBITDA on $29.0 million in revenue, around a 4.4% margin.
Despite strong revenue growth, profitability metrics deteriorated. Total company adjusted EBITDA (non-GAAP) was $1.9 million, a drop from $4.1 million in the prior-year period. Operated segment adjusted EBITDA (non-GAAP, excluding parent-level costs) was $6.8 million, down from $8.8 million for Q2 2024. Notably, Sales and marketing expenses for industrial and manufacturing operations increased to $3.4 million.
Cash, cash equivalents, and equity securities totaled $338.2 million at period-end, up from $297.0 million at December 31, 2024, providing flexibility for future acquisitions or shareholder programs. Free cash flow (non-GAAP) was $47.9 million, aided mostly by IP settlement receipts booked earlier in the year. Total consolidated debt was $104.4 million as of June 30, 2025, with all borrowings at the operating subsidiary level and none at the parent company. Book value per share stood at $5.99, with 96.4 million shares outstanding.
Segment and Product Updates, One-Time Items, and Dividend
The company's diverse portfolio includes manufacturing products (Deflecto makes plastic-based goods for air distribution, transportation, and office use), industrial equipment (Printronix specializes in printing solutions), energy assets (Benchmark manages oil, gas, and natural gas liquids), and intellectual property (Acacia Research Group pursues patent-related revenue). Energy operations had an Adjusted EBITDA of $6.95 million on $15.32 million in revenue. -- while IP's contribution has proven highly variable and manufacturing's headline revenue has not yet delivered expected profit scales.
Looking deeper at trends, the energy business posted stable results, reporting flat adjusted EBITDA (non-GAAP) on a modest increase in revenue. Industrial operations maintained small but positive margins. The manufacturing unit is in its initial integration phase, with management focusing on cost controls, footprint optimization, and streamlined product offerings. Despite capturing the most revenue, Deflecto's margins were slim due to ramp-up costs and higher G&A.
though investors should note that first quarter results included a sizeable legal settlement in the Intellectual Property segment, distorting free cash flow and headline earnings for the current year. The company also announced a new partnership with Unchained Capital and Build Asset Management to pursue a Bitcoin-backed commercial lending product. This represents a move outside its traditional domains, and the company did not specify the scale or risk profile of the initiative in its filing.
Acacia Research does not currently pay a dividend.
Outlook and What to Watch Ahead
Management did not provide explicit financial guidance for the remainder of fiscal 2025 or for its key segments. The leadership team reaffirmed its acquisition-driven growth strategy and noted that its strong cash position enables continued pursuit of new investments, but stopped short of giving concrete forecasts.
For observers, several issues warrant attention in coming quarters. Key areas include the sustainability of revenue mix, integration of newly acquired businesses (especially Deflecto), margin recovery efforts, and the ability to generate recurring cash flow beyond large, infrequent IP settlements. Volatility in the IP segment and the still-maturing manufacturing business will likely be central drivers of earnings variability for the foreseeable future.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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Article content Docebo is revising financial guidance for the fiscal year ended December 31, 2025 as follows: Article content Subscription revenue growth of 10.75% to 11.75% Total revenue growth between 10.0% to 11.0% Adjusted EBITDA as a percentage of total revenue of between 17.0% to 18.0% Article content The information in this section is forward-looking. Please see the sections entitled 'Non-IFRS Measures and Reconciliation of Non-IFRS Measures' and 'Key Performance Indicators' in this press release for how we define 'Adjusted EBITDA' and the section entitled 'Forward-Looking Information.' A reconciliation of forward-looking 'Adjusted EBITDA' to the most directly comparable IFRS measure is not available without unreasonable effort, as certain items cannot be reasonably predicted because of their high variability, complexity and low visibility. Docebo believes that this type of guidance provides useful insight into the anticipated performance of its business. 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Article content Forward-Looking Information Article content This press release contains 'forward-looking information' and 'forward-looking statements' (collectively, 'forward-looking information') within the meaning of applicable securities laws. Article content In some cases, forward-looking information can be identified by the use of forward-looking terminology such as 'plans', 'targets', 'expects', 'is expected', 'an opportunity exists', 'budget', 'scheduled', 'estimates', 'outlook', 'forecasts', 'projection', 'prospects', 'strategy', 'intends', 'anticipates', 'believes', or variations of such words and phrases or statements that certain actions, events or results 'may', 'could', 'would', 'might' or, 'will', 'occur' or 'be achieved', and similar words or the negative of these terms and similar terminology. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. Article content This forward-looking information in this press release includes, but is not limited to, statements regarding the Company's business; the guidance for the three months ended September 30, 2025 in respect of total revenue, Adjusted EBITDA as a percentage of total revenue and subscription revenue and fiscal year ended December 31, 2025 in respect of total revenue growth, and Adjusted EBITDA as a percentage of total revenue discussed under 'Financial Outlook' in this press release; the impact of AI on our business; future financial position and business strategy; the learning management industry; our growth rates and growth strategies; addressable markets for our solutions; the achievement of advances in and expansion of our platform; expectations regarding our revenue and the revenue generation potential of our platform and other products; our business plans and strategies; expectations regarding continued AWS' use of Docebo products and services after December 31, 2025; and our competitive position in our industry. This forward-looking information is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Certain assumptions include: our ability to build our market share and enter new markets and industry verticals; our ability to attract and retain key personnel; our ability to maintain and expand geographic scope; our ability to execute on our expansion plans; our ability to continue investing in infrastructure to support our growth; our ability to obtain and maintain existing financing on acceptable terms; our ability to execute on profitability initiatives; AWS' ability to transition from our platform; currency exchange and interest rates; the impact of inflation and global macroeconomic conditions; the impact of competition; our ability to respond to the changes and trends in our industry or the global economy; and the changes in laws, rules, regulations, and global standards are material factors made in preparing forward-looking information and management's expectations. Article content Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that, while considered by the Company to be appropriate and reasonable as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to: Article content the Company's ability to execute its growth strategies; the impact of changing conditions in the global corporate e-learning market; increasing competition in the global corporate e-learning market in which the Company operates; fluctuations in currency exchange rates and volatility in financial markets; changes in the attitudes, financial condition and demand of our target market; the Company's ability to operate its business and effectively manage its growth under evolving macroeconomic conditions, such as high inflation and recessionary environments; developments and changes in applicable laws and regulations; fluctuations in the length and complexity of the sales cycle for our platform, especially for sales to larger enterprises; issues in the use of AI in our platform and potential resulting reputational harm or liability; and such other factors discussed in greater detail under the 'Risk Factors' section of our Annual Information Form dated February 27, 2025 ('AIF'), which is available under our profile on SEDAR+ at Our guidance for the three months ended September 30, 2025 in respect of total revenue, Adjusted EBITDA as a percentage of total revenue and subscription revenue and for the fiscal year ended December 31, 2025 in respect of total revenue, and Adjusted EBITDA as a percentage of total revenue, is in each case subject to certain assumptions and associated risks as stated above under this 'Forward-Looking Information,' section and in particular the following: Article content currency assumptions, in particular that the US dollar will remain strong against other major currencies; there will be continued macro-economic headwinds that will specifically affect our small and medium sized business and lower mid-market customers; there will be a seven-figure negative impact on our Annual Recurring Revenue base resulting from a large enterprise customer terminating its agreement with us following its acquisition of an organization that has an in-house LMS; our ability to win business from new customers and expand business from existing customers; the timing of new customer wins and expansion decisions by our existing customers; maintaining our customer retention levels, and specifically, that customers will renew contractual commitments on a periodic basis as those commitments come up for renewal, at rates not materially inconsistent with our historical experience; and with respect to Adjusted EBITDA as a percentage of revenue, our ability to contain expense levels while expanding our business. Article content If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The opinions, estimates or assumptions referred to above and described in greater detail in the 'Summary of Factors Affecting our Performance' section of our MD&A for the three and six months ended June 30, 2025 and in the 'Risk Factors' section of our AIF, should be considered carefully by prospective investors. Article content Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents our expectations as of the date specified herein, and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws. Article content All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements. Article content Additional information relating to Docebo, including our AIF, can be found on SEDAR+ at Article content Docebo is redefining the way enterprises leverage technology to create and manage content, deliver training, and measure the business impact of their learning programs. With Docebo's end-to-end learning platform, organizations worldwide are equipped to deliver scaled, personalized learning across all their audiences and use cases, driving growth and powering their business. Article content Three months ended June 30, Six months ended June 30, (In thousands of US dollars, except per share data) 2025 2024 2025 2024 $ $ $ $ Revenue 60,732 53,054 118,028 104,457 Cost of revenue 11,584 10,257 22,979 20,183 Gross profit 49,148 42,797 95,049 84,274 Operating expenses General and administrative 8,394 8,176 17,119 16,331 Sales and marketing 20,393 16,895 40,748 33,328 Research and development 12,699 10,766 26,102 21,178 Share-based compensation 1,733 1,923 2,522 3,855 Foreign exchange loss (gain) 942 (310 ) 1,065 (810 ) Depreciation and amortization 847 824 1,645 1,642 45,008 38,274 89,201 75,524 Operating income 4,140 4,523 5,848 8,750 Finance income, net (542 ) (671 ) (1,190 ) (1,216 ) Other (income) loss (1 ) (14 ) (2 ) (15 ) Income before income taxes 4,683 5,208 7,040 9,981 Income tax expense 1,607 510 2,490 114 Net income 3,076 4,698 4,550 9,867 Other comprehensive (income) loss Item that may be reclassified subsequently to income: Exchange (gain) loss on translation of foreign operations (1,171 ) 447 (1,163 ) 1,344 Comprehensive income 4,247 4,251 5,713 8,523 Earnings per share – basic 0.10 0.15 0.15 0.33 Earnings per share – diluted 0.10 0.15 0.15 0.32 Weighted average number of common shares outstanding – basic 29,559,316 30,350,110 29,909,311 30,334,858 Weighted average number of common shares outstanding – diluted 30,227,581 31,059,307 30,559,452 31,051,667 Article content Key Statement of Financial Position Information Article content Non-IFRS Measures and Reconciliation of Non-IFRS Measures Article content This press release makes reference to certain non-IFRS measures including key performance indicators used by management and typically used by our competitors in the software-as-a-service ('SaaS') industry. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore not necessarily comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures are used to provide investors with alternative measures of our operating performance and liquidity and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures, including SaaS industry metrics, in the evaluation of companies in the SaaS industry. Management also uses non-IFRS measures to facilitate operating performance comparisons from period to period, the preparation of annual operating budgets and forecasts and to determine components of executive compensation. The non-IFRS measures referred to in this press release include 'Annual Recurring Revenue', 'Average Contract Value', 'Adjusted EBITDA', 'Adjusted Net Income', 'Adjusted Earnings per Share – Basic and Diluted', 'Working Capital' and 'Free Cash Flow'. Article content Key Performance Indicators Article content We recognize subscription revenues ratably over the term of the subscription period under the provisions of our agreements with customers. The terms of our agreements, combined with high customer retention rates, provides us with a significant degree of visibility into our near-term revenues. 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Subscription agreements may be subject to price increases upon renewal reflecting both inflationary increases and the additional value provided by our solutions. In addition to the expected increase in subscription revenue from price increases over time, existing customers may subscribe for additional features, learners or services during the term. We believe that this measure provides a fair real-time measure of performance in a subscription-based environment. Annual Recurring Revenue provides us with visibility for consistent and predictable growth to our cash flows. Our strong total revenue growth coupled with increasing Annual Recurring Revenue indicates the continued strength in the expansion of our business and will continue to be our focus on a go-forward basis. Average Contract Value: Average Contract Value is calculated as total Annual Recurring Revenue divided by the number of active customers. Article content Annual Recurring Revenue and Average Contract Value as at June 30, 2025 and 2024 were as follows: Article content Adjusted EBITDA Article content Adjusted EBITDA is defined as net income excluding net finance income, depreciation and amortization, income taxes, share-based compensation and related payroll taxes, other income, foreign exchange gains and losses, acquisition related compensation, transaction related expenses and restructuring costs, if any. Article content The IFRS measure most directly comparable to Adjusted EBITDA presented in our financial statements is net income. 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(2) Depreciation and amortization expense is primarily related to depreciation expense on right-of-use assets ('ROU assets'), property and equipment and acquired intangible assets. (3) These expenses represent non-cash expenditures recognized in connection with the issuance of share-based compensation to our employees and directors and cash payroll taxes paid on gains earned by option holders when stock options are exercised. (4) Other income, net is primarily comprised of rental income from subleasing office space. (5) These non-cash gains and losses relate to foreign exchange translation. (6) These costs represent the earn-out portion of the consideration paid to the vendors of previously acquired businesses that is associated with the achievement of certain acquisition related performance and other obligations. (7) These expenses relate to professional, legal, consulting, accounting and other fees related to acquisition activities that would otherwise have not been incurred and are not considered an expense indicative of continuing operations. (8) There was a reduction in workforce during the first half of 2025 that resulted in severance payments to employees. Article content Adjusted Net Income and Adjusted Earnings per Share – Basic and Diluted Article content Adjusted Net Income is defined as net income excluding amortization of intangible assets, share-based compensation and related payroll taxes, acquisition related compensation, transaction related expenses, restructuring costs, foreign exchange gains and losses, and income taxes. Article content Adjusted Earnings per share – basic and diluted is defined as Adjusted Net Income divided by the weighted average number of common shares (basic and diluted). Article content Three months ended June 30, Six months ended June 30, (In thousands of US dollars) 2025 2024 2025 2024 $ $ $ $ Net income for the period 3,076 4,698 4,550 9,867 Amortization of intangible assets 178 172 349 345 Share-based compensation 1,733 1,923 2,522 3,855 Acquisition related compensation 1,002 994 2,059 1,984 Transaction related expenses 93 — 464 — Restructuring 468 — 4,543 — Foreign exchange loss (gain) 942 (310 ) 1,065 (810 ) Deferred income tax expense (recovery) 1,422 452 1,857 (38 ) Adjusted net income 8,914 7,929 17,409 15,203 Weighted average number of common shares – basic 29,559,316 30,350,110 29,909,311 30,334,858 Weighted average number of common shares – diluted 30,227,581 31,059,307 30,559,452 31,051,667 Adjusted earnings per share – basic 0.30 0.26 0.58 0.50 Adjusted earnings per share – diluted 0.29 0.26 0.57 0.49 Article content Working Capital Article content Working Capital as at June 30, 2025 and 2024 was $(5.1) million and $8.5 million, respectively. Working Capital is defined as current assets, excluding the current portion of the net investment in finance lease and contract costs, minus current liabilities, excluding borrowings, if any, and the current portion of contingent consideration and lease obligations. The decrease in working capital from June 30, 2024 to June 30, 2025 is driven by the use of cash and cash equivalents to purchase shares under the NCIB, as well as the recognition of the ASPP liability. Working Capital is not a recognized measure under IFRS. Article content The following table represents the Company's working capital position as at June 30, 2025 and 2024: Article content Free Cash Flow Article content Free Cash Flow is defined as cash flows from operating activities less cash used for purchases of property and equipment and capitalized internal-use software costs, plus non-recurring expenditures such as the payment of acquisition-related compensation, the payment of transaction-related costs, and the payment of restructuring costs. Free Cash Flow is not a recognized measure under IFRS. The IFRS measure most directly comparable to Free Cash Flow presented in our financial statements is cash flow from operating activities. Article content Article content Article content Article content Article content Contacts Article content For further information, please contact: Article content Article content Mike McCarthy Article content Article content Article content Article content
