Company: ACTG
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0000934549-25-000054
Chunk: 169

Company: ACACIA RESEARCH CORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 8
Chunk 169
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 to an increase in average license fees per agreement. Recurring revenue, that provides for quarterly sales-based license fees, decreased $1.0 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, due to the expiration of certain on-going license arrangements.

Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding our revenue arrangements and related concentrations for the periods presented herein.

Refer to “Investments in Patent Portfolios” above for information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues.

Cost of Revenues

Three Months EndedSeptember 30,Nine Months EndedSeptember 30,20252024$ Change% Change20252024$ Change% Change(In thousands, except percentage change values)Inventor royalties$384 $220 $164 75%$17,079 $1,628 $15,451 949%Contingent legal fees1,336 (22)1,358 (6,173%)6,152 2,373 3,779 159%Litigation and licensing expenses1,296 797 499 63%4,322 3,087 1,235 40%Amortization of patents5,285 4,712 573 12%15,218 11,385 3,833 34%Total$8,301 $5,707 $2,594 45%$42,771 $18,473 $24,298 132%

Refer to detailed change explanations above for the three and nine months ended September 30, 2025 and 2024 regarding cost of revenues for our Intellectual Property Operations.

The economic terms of patent portfolio related partnering agreements and contingent legal fee arrangements, if any, including royalty obligations, if any, royalty rates, contingent fee rates and other terms and conditions, vary across the patent portfolios owned or controlled by our operating subsidiaries. In certain instances, we have invested in certain patent portfolios without future patent partner royalty obligations. The costs associated with the forementioned obligations fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios, with varying economic terms and conditions, generating revenues each period.

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Litigation and licensing expenses include patent-related litigation, enforcement and prosecution costs incurred by law firms and external patent attorneys engaged on either an hourly