Expressed disappointment with Deflecto's numbers given reported tailwinds in Class A trucking, asking why it hasn't been reflected yet.

Management views trucking tailwinds as a leading indicator for Deflecto. They believe current strong trucking firm numbers reflect sales of existing, not newly manufactured, OEM inventory. Deflecto expects to benefit from incremental volumes as this inventory works through the system. “I think a lot of the sales are sales of existing, not newly manufactured OEM inventory. And so as that works through the system, we think that Deflecto will be a beneficiary of those incremental volumes.”

Asked if higher-for-longer interest rates and maturing private equity/credit investments are creating more attractive, closer-to-the-finish-line deal opportunities.

Management confirmed deal flow has never been stronger, with opportunities arising from private credit lenders wanting out and private equity funds with maturing assets. They focus on "acute situations" and bilateral discussions, avoiding broad auction processes, which is leading to higher quality deal flow. “Our deal flow has never been stronger actually. And we have been talking to folks that are in the position where they have on the -- to address your point on the private credit side, have private credit lenders that want out of those businesses... So we're actually pretty encouraged by the deal flow.”

Asked if the $10.9 million IP EBITDA was a rough net after paying lawyers/investors, and if the cash from the IP settlement was included in Q2 cash.

Management clarified that IP EBITDA is not the best proxy for net cash from the TP-Link settlement due to higher contingency fees (case went almost all the way through court) and $3.7 million in nonrecurring legal expenses. The cash for the settlement was received in Q3, not included in Q2 cash, but was booked as accounts receivable at the end of Q2. “The settlement that came in was TP-Link... the cost of the contingency fee grows as the case goes farther and farther through the court system and TP-Link went almost all the way through the court system. So it's a higher contingency rate than what we typically see.”

ACTG

Acacia Research (ACTG) Q2 FY26 earnings call: the analyst Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 5, 2026

Source: earnings call transcript

Executive summary

Acacia Research Corporation Q2 FY26 — Strong Operating Performance and IP Licensing

Acacia Research delivered a strong second quarter, driven by robust performance across its operating businesses and significant licensing revenue from its Intellectual Property platform. The company continues to prioritize long-term intrinsic value creation through disciplined capital allocation and active ownership, leveraging its strong balance sheet to pursue attractive acquisition opportunities amidst market dislocation. While facing some segment-specific headwinds and a legacy investment write-down, management remains focused on operational efficiency and strategic growth.

Highlights

Total revenue reached $114.6 million, significantly up from $51.2 million in the prior year.
Operated segment adjusted EBITDA was $22.8 million, demonstrating strong underlying business performance.
Intellectual Property segment generated $60.6 million in licensing revenue, driven by a significant Wi-Fi 6 settlement.
Ended the quarter with $334.6 million in cash, securities, and loans receivable, maintaining no parent company debt.
Public securities portfolio contributed $9.4 million in gains, demonstrating effective capital deployment.

Concerns

Consolidated G&A expense totaled $19.6 million, including $3.7 million of nonrecurring legacy litigation expense in the IP segment.
Deflecto's adjusted EBITDA was $1.1 million, reflecting softer end markets despite operational improvements.
Full write-down of the MalinJ1 investment due to liquidity issues at Mycovia Pharmaceuticals, impacting book value.
GAAP net income attributable to Acacia Research Corporation was only $47,000 or $0.00 per diluted share.

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Benchmark (Energy Operations) Delivered another record revenue quarter with operating performance and cash flow exceeding expectations. Production from the Cherokee development performed in line with expectations. Free cash flow: $6.5 million	$20.5 million	—	—	Adjusted EBITDA: $9.8 million
Deflecto (Manufacturing Operations) Continued progress with manufacturing optimization, organizational streamlining, cost management, and pricing initiatives. Well positioned for meaningful operating leverage as demand improves.	$27.1 million	—	—	Adjusted EBITDA: $1.1 million
Printronix (Industrial Operations) Generated consistent cash flow and improved profitability through disciplined operational execution, leveraging installed base and global distribution network for higher-margin consumables. Free cash flow: $900,000	$6 million	—	—	Adjusted EBITDA: $1 million
Intellectual Property Produced strong results driven primarily by a significant licensing settlement within the Wi-Fi 6 portfolio. Cost structure significantly rationalized.	$60.6 million	—	—	Adjusted EBITDA: $10.9 million

Deals & partnerships

Mycovia Pharmaceuticals Potential financing alternative and direct ownership interest

Acacia is actively working with Mycovia to evaluate potential financing alternatives that would allow it to fund operations through upcoming FDA milestones. One potential transaction would give Acacia a direct ownership interest in Mycovia, rather than an indirect economic interest through milestone and royalty rights.

Risks & headwinds

Episodic nature of licensing activity Ongoing

Licensing revenue of $60.6 million in Q2 FY26, but quarterly results can vary significantly.

Mitigation:Aggressively managing the platform from a cost perspective; significantly reduced operating expenses; amortization of legacy intangible assets declining.

Legacy litigation expense Q2 FY26

$3.7 million nonrecurring expense in Q2 FY26

Mitigation:Believed to be substantially complete and not representative of ongoing cost structure; optimistic about potential recovery exceeding associated cost.

Liquidity issues and contraindication for VIVJOA Ongoing

Full write-down of MalinJ1 investment in Q2 FY26

Mitigation:Actively working with Mycovia to evaluate potential financing alternatives; exploring direct ownership interest to participate in value creation.

Biotechnology investment inherent risk Ongoing

No assurance that a transaction will be completed or that Mycovia will achieve its regulatory objectives.

Mitigation:Acacia is not a traditional biotech investor but uniquely positioned to execute in such situations; managing actively and with discipline.

Softer end markets for Deflecto Current

Adjusted EBITDA of $1.1 million in Q2 FY26

Mitigation:Manufacturing optimization, organizational streamlining, disciplined cost management, and pricing initiatives; well positioned for operating leverage as demand improves.

What to watch in Q3 FY26

Deflecto operating leverage

Next quarter / future quarters

Current Adjusted EBITDA of $1.1 million in Q2 FY26

Target Meaningful operating leverage as demand improves

Why it matters

Indicates whether Deflecto's restructuring efforts are translating into improved profitability as market conditions normalize.

As demand improves, we believe Deflecto is well positioned to benefit from meaningful operating leverage going forward.

Find out whether ACTG delivers this. Inve re-checks your case every morning.

Q&A highlights

Inquired if Q2 Benchmark FCF and EBITDA included a full quarter from the wholly-owned well, and about plans for additional wells and their expected performance.

Management confirmed the Q2 results included a full quarter from the Cherokee well, which started producing early in Q2. They have several units identified for drilling, aiming for one producing well and one PUD per unit. Future wells are underwritten to perform similarly to the Cherokee well.

“we're underwriting to type curves in future wells that look similar to the performance of the Cherokee well that we drilled in Q1.”

asked by Brett Reiss · answered by Martin McNulty

2 min read 6 chapters

Detailed narrative

Strategic Approach and Capital Allocation

Acacia emphasizes compounding long-term intrinsic value per share through disciplined capital allocation, acquiring businesses at attractive valuations, improving operations, and deploying capital for attractive long-term returns. The company remains patient and disciplined in pursuing acquisition opportunities, focusing on situations where operational expertise can create value beyond the purchase price, particularly in acute situations outside broad auction processes.

Intellectual Property Platform Performance

The IP platform generated significant licensing revenue of $60.6 million, primarily from a Wi-Fi 6 portfolio settlement. Management views this as a differentiated, noncorrelated asset class. The platform's cost structure has been significantly rationalized, and amortization of legacy intangible assets is declining. The company incurred $3.7 million in nonrecurring legal expenses for a legacy litigation matter, which is not expected to be an ongoing cost.

Life Sciences Portfolio Developments

AMO Pharma, in which Acacia is the second-largest shareholder, received constructive regulatory advice from the FDA, MHRA, and Health Canada for its AM02 therapeutic candidate, supporting the design of a planned registrational clinical study. Separately, Acacia recorded a full write-down of its MalinJ1 investment due to liquidity issues at Mycovia Pharmaceuticals, which holds the FDA-approved antifungal drug VIVJOA.

Acacia is actively exploring financing alternatives for Mycovia, potentially converting its indirect interest into a direct ownership stake.

Public Securities Investment Strategy

Acacia actively invests in small-cap public markets, seeking compelling opportunities where market prices diverge from underlying value. This strategy can involve establishing toehold positions for potential broader strategic transactions or monetizing investments when risk-reward becomes compelling. The company successfully exited one such investment during the quarter, realizing an attractive return.

Benchmark Operating Business

Benchmark delivered record revenue of $20.5 million, adjusted EBITDA of $9.8 million, and free cash flow of $6.5 million. The company's recently developed drilling inventory continues to show attractive economics, and management is evaluating additional drilling opportunities using a disciplined underwriting framework. Commodity hedging is used to reduce earnings volatility and protect downside risk, not to speculate on prices.

Deflecto and Printronix Operations

Deflecto generated $27.1 million in revenue and $1.1 million in adjusted EBITDA, continuing manufacturing optimization and restructuring initiatives to position for profitable growth and operating leverage as demand improves. Printronix generated $6 million in revenue, $1 million in adjusted EBITDA, and $900,000 in free cash flow, demonstrating resiliency through strong cash generation, improved product mix, and disciplined cost management in a mature market.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.