Liberty Energy Inc.: Form 10-Q for the period ended Jun 30, 2025

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs, and expected performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties, including those described in “Cautionary Note Regarding Forward-Looking Statements,” the Annual Report under the heading “Item 1A. Risk Factors,” and in “Part II – Other Information, Item 1A. Risk Factors” included herein. We assume no obligation to update any of these forward-looking statements.

Overview

The Company, together with its subsidiaries, is a leading integrated energy services and technology company focused on providing innovative hydraulic fracturing services and related technologies to onshore oil and natural gas E&P companies. We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, field gas processing and treating, CNG delivery, data analytics, related goods (including our sand mine operations), and technologies to facilitate lower emission completions, thereby helping our customers reduce their emissions profile. We have grown from one active hydraulic fracturing fleet in December 2011 to approximately 40 active fleets as of June 30, 2025. We provide our services primarily in the major oil and gas shale basins in North America and in the Northern Territory of Australia.

In early 2023, the Company launched Liberty Power Innovations LLC (“LPI”), an integrated alternative fuel and power solutions provider for remote applications. LPI provides CNG supply, field gas processing and treating, and well site fueling and logistics. LPI was formed to support the Company’s transition towards our next generation digiFleets℠ and dual fuel fleets, as CNG fueling services can be limited in the market, yet critical to maintaining highly efficient well site operations. Through the first half of 2025, LPI was primarily focused on supporting an industry transition to natural gas fueled technologies, serving as a key enabler of the next step of cost and emissions reductions in the oilfield. In January 2025, we announced LPI’s expansion into the distributed power business, where we expect to leverage our experience in providing electric power for our digiFrac℠ pumps into other areas inside and outside of the oilfield.

Business Developments

On March 3, 2025, we completed the acquisition of IMG Energy Solutions, a leading developer of distributed power systems, for cash consideration of approximately $19.6 million, subject to normal closing adjustments and net of cash received. The IMG Acquisition brings integrated capabilities across engineering design and development, construction management, enhanced software and monitoring systems, operations and marketing. We believe the IMG Acquisition will strengthen LPI by incorporating IMG Energy Solutions’s advanced engineering designs, software control systems, utility interconnection experience and power marketing expertise.

Business Strategy and Technical Innovation

We believe technical innovation and strong relationships with our customer and supplier bases distinguish us from our competitors and are the foundations of our business. We expect that E&P companies will continue to focus on technological innovation as completion complexity and fracture intensity of horizontal wells increases, particularly as customers are increasingly focused on reducing emissions from their completions operations. We remain proactive in developing innovative solutions to industry challenges, including developing: (i) our databases of U.S. unconventional wells to which we apply our proprietary multi-variable statistical analysis technologies to provide differential insight into fracture design optimization; (ii) our Liberty Quiet Fleet® design which significantly reduces noise levels compared to conventional hydraulic fracturing fleets; (iii) hydraulic fracturing fluid systems tailored to the specific reservoir properties in the basins in which we operate; (iv) our dual fuel dynamic gas blending (“DGB”) fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs; (v) our digiFleets℠, comprising of digiFrac℠ and digiPrime℠ pumps and other complementary equipment, including power generation units (together “digiTechnologies℠”), our innovative, purpose-built electric and hybrid frac pumps that have approximately 25% lower CO2e emission profile than the Tier IV DGB; (vi) our wet sand handling technology which eliminates the need to dry sand, enabling the deployment of mobile mines nearer to wellsites; and (vii) the launch of LPI to support the transition to our digiFleets as well as the transition to lower costs and emissions in the oilfield. In addition, our integrated supply chain includes proppant, chemicals, equipment, natural gas fueling services, logistics and integrated software which we believe promotes wellsite efficiency and leads to more pumping hours and higher productivity throughout the year to better service our customers. In order to achieve our technological objectives, we carefully manage our liquidity and debt position to promote operational flexibility and invest in the business throughout the full commodity cycle in the regions we operate.

Recent Trends and Outlook

While oil markets continue to evolve in response to dynamic global economic and geopolitical developments, North American production has remained relatively stable during 2025. Recent events, ranging from shifting tariff policies to rising regional hostilities and mixed economic signals affecting global oil demand, have not yet driven a meaningful North American production response. Larger, well-capitalized producers with strong balance sheets and highly efficient operations enjoy healthy well economics, enabling them to weather commodity price volatility. Intra-quarter price fluctuations created hedging opportunities, further tempering supply side reactions.

Producers are targeting a relatively flat production profile, sustaining a baseline of frac activity to offset the natural decline of producing wells. Completions activity is anticipated to gradually slow during the second half of 2025, reflecting disciplined capital deployment and contributing to market pricing pressure on services. This slowdown in activity is expected to accelerate equipment cannibalization and attrition, which fundamentally improves the supply and demand dynamics within the services industry over the cycle.

Amidst market pressures and near-term reductions in customer activity, the Company is planning to modestly reduce its deployed fleet count during the remainder of 2025 and reposition this horsepower to support expanded simul-frac offerings for its customers

During the second quarter of 2025, the posted WTI price traded at an average of $64.57 per barrel (“Bbl”), as compared to the second quarter of 2024 average of $81.81 per Bbl, and the first quarter of 2025 average of $71.78 per Bbl. Subsequent to June 30, 2025, the WTI price traded at an average of $68.59 per Bbl through July 14, 2025. In addition, during the the second quarter of 2025, the Henry Hub price traded at an average of $3.19 per one million British thermal units (“MMBtu”), as compared to the first quarter of 2025 average of $4.14 per MMBtu, and the second quarter of 2024 average of $2.06 per MMBtu. Subsequent to June 30, 2025, the Henry Hub traded at an average of $3.17 per MMBtu through July 14, 2025. The average domestic onshore rig count for the United States and Canada was 686 rigs reported in the second quarter of 2025, down from the average in the second quarter of 2024 of 716, and the average in the first quarter of 2025 of 788, according to a report from Baker Hughes.

Results of Operations

Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024

(in thousands)

Revenue

Our revenue decreased $117.4 million, or 10%, to $1.0 billion for the three months ended June 30, 2025 compared to $1.2 billion for the three months ended June 30, 2024. The decrease in revenue was primarily attributable to a decrease in service and materials pricing, along with moderately reduced activity levels.

Cost of Services

Cost of services (exclusive of depreciation, depletion, and amortization) decreased $23.7 million, or 3%, to $812.1 million for the three months ended June 30, 2025 compared to $835.8 million for the three months ended June 30, 2024. The decrease in expense was primarily related to decreases in materials costs, partially offset by increased personnel costs.

General and Administrative

General and administrative expenses were consistent between periods, increasing $0.6 million, or 1%, to $58.3 million for the three months ended June 30, 2025 compared to $57.7 million for the three months ended June 30, 2024.

Depreciation, Depletion, and Amortization

Depreciation, depletion, and amortization expense increased $6.1 million, or 5%, to $129.4 million for the three months ended June 30, 2025 compared to $123.3 million for the three months ended June 30, 2024. The increase during the three months ended June 30, 2025 was primarily due to additional finance leases entered into since the prior period for heavy equipment.

Loss on Disposal of Assets, net

The Company recorded a loss on disposal of assets, net of $5.6 million for the three months ended June 30, 2025 compared to $1.2 million for the three months ended June 30, 2024, as the Company disposed of used equipment that is no longer in use as part of of normal course fleet and equipment management.

Other (Income) Expense, net

The Company recognized other income, net of $58.1 million for the three months ended June 30, 2025 compared to $0.9 million expense, net for the three months ended June 30, 2024. Other (income) expense, net is comprised of gain on investments, net of $68.2 million related to investments in equity securities measured at fair value for the three months ended June 30, 2025, compared to $7.2 million during the three months ended June 30, 2024. Additionally, interest expense, net increased $2.1 million primarily as a result of the addition of finance lease liabilities, refer to “Liquidity and Capital Resources” below for further discussion of the Company’s finance leases.

Income Tax Expense

The Company recognized income tax expense of $24.1 million for the three months ended June 30, 2025, an effective rate of 25%, compared to $32.6 million for the three months ended June 30, 2024, an effective rate of 23%. The decrease in income tax expense was primarily attributable to the decrease in net income before income taxes, as discussed above.

Six Months Ended June 30, 2025, Compared to Six Months Ended June 30, 2024

(in thousands)

Revenue

Our revenue decreased $213.0 million, or 10%, to $2.0 billion for the six months ended June 30, 2025 compared to $2.2 billion for the six months ended June 30, 2024. The decrease in revenue was primarily attributable to a decrease in service and materials pricing, along with moderately reduced activity levels.

Cost of Services

Cost of services (exclusive of depreciation, depletion, and amortization) decreased $44.8 million, or 3%, to $1.6 billion for the six months ended June 30, 2025 compared to $1.6 billion for the six months ended June 30, 2024. The decrease in expense was primarily related to decreases in materials costs, partially offset by increased personnel costs.

General and Administrative

General and administrative expenses increased $13.4 million, or 12%, to $124.1 million for the six months ended June 30, 2025 compared to $110.7 million for the six months ended June 30, 2024. The increase was primarily attributable to increased stock-based compensation expense recognized during the first quarter of 2025 in connection with the resignation of Christopher A. Wright, the Company’s previous Chief Executive Officer and Chairman of the Board, from the Company upon his confirmation to the Secretary of Energy of the United States.

Transaction and Other Costs

Transaction and other costs were $0.8 million for the six months ended June 30, 2025, with no such costs recorded for the six months ended June 30, 2024, for costs related to the IMG Acquisition. See Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for further details.

Depreciation, Depletion, and Amortization

Depreciation, depletion, and amortization expense increased $10.6 million, or 4%, to $257.1 million for the six months ended June 30, 2025 compared to $246.5 million for the six months ended June 30, 2024. The increase in 2025 was due to additional finance leases entered into since the prior period for heavy equipment.

Loss on disposal of assets, net

The Company recognized a loss on disposal of assets, net of $9.0 million for the six months ended June 30, 2025 compared to $0.1 million for the six months ended June 30, 2024, as the Company disposed of used equipment that is no longer in use as part of of normal course fleet and equipment management.

Other (Income) Expense, net

The Company recognized other income, net of $67.8 million for the six months ended June 30, 2025 compared to $7.9 million expense, net for the six months ended June 30, 2024. Other (income) expense, net is comprised of gain on investments, net of $87.5 million related to investments in equity securities measured at fair value for the six months ended June 30, 2025, compared to a $7.2 million gain on investments during the six months ended June 30, 2024. Interest expense, net increased $4.1 million primarily as a result of the addition of finance lease liabilities, refer to “Liquidity and Capital Resources” below for further discussion of the Company’s finance leases. Additionally, interest income—related party decreased $0.5 million related to a note receivable agreement executed in December 2022, amended in August 2023, and fully collected in March 2024.

Income Tax Expense

The Company recognized income tax expense of $31.9 million for the six months ended June 30, 2025, an effective rate of 26%, compared to $59.0 million for the six months ended June 30, 2024, an effective rate of 24%. The decrease in income tax expense was primarily attributable to the decrease in net income before income taxes, as discussed above.

Comparison of Non-GAAP Financial Measures

We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income before interest, income taxes, and depreciation, depletion, and amortization. We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock-based compensation, new fleet or new basin start-up costs, fleet lay-down costs, gain or loss on the disposal of assets, net, bad debt reserves, transaction and other costs, the gain or loss on remeasurement of liability under our tax receivable agreements, the gain or loss on investments, net, and other non-recurring expenses that management does not consider in assessing ongoing performance.

Our Board, management, investors, and lenders use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation, depletion, and amortization) and other items that impact the comparability of financial results from period to period. We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP.

Note Regarding Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial performance and results of operations. Net income is the GAAP financial measure most directly comparable to EBITDA and Adjusted EBITDA. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as an analytical tool due to exclusion of some but not all items that affect the most directly comparable GAAP financial measures. You should not consider EBITDA or Adjusted EBITDA in isolation or as substitutes for an analysis of our results as reported under GAAP. Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

The following tables present a reconciliation of EBITDA and Adjusted EBITDA to our net income, which is the most directly comparable GAAP financial measure for the periods presented:

Three and Six Months Ended June 30, 2025, Compared to Three and Six Months Ended June 30, 2024: EBITDA and Adjusted EBITDA

(in thousands)

EBITDA was $234.7 million for the three months ended June 30, 2025 compared to $272.3 million for the three months ended June 30, 2024. Adjusted EBITDA was $180.8 million for the three months ended June 30, 2025 compared to $273.3 million for the three months ended June 30, 2024. The decreases in EBITDA and Adjusted EBITDA primarily resulted from lower pricing and were partially offset by changes in activity levels in 2025 as described above under the captions Revenue, Cost of Services, and General and Administrative for the Three Months Ended June 30, 2025, Compared to the Three Months Ended June 30, 2024.

EBITDA was $399.9 million for the six months ended June 30, 2025 compared to $511.0 million for the six months ended June 30, 2024. Adjusted EBITDA was $348.9 million for the six months ended June 30, 2025 compared to $518.0 million for the six months ended June 30, 2024. The decreases in EBITDA and Adjusted EBITDA primarily resulted from lower pricing and partially offset by changes in activity levels in 2025 as described above under the captions Revenue, Cost of Services, and General and Administrative for the Six Months Ended June 30, 2025, Compared to the Six Months Ended June 30, 2024.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity consist of cash flows from operations and borrowings under our ABL Facility. While we believe that we can fund operations and current organic growth plans with these sources, we monitor the availability and cost of capital resources such as equity, debt, and lease financings that could be leveraged for current or future financial obligations including those related to acquisitions, capital expenditures, working capital, and other liquidity requirements. We may incur additional indebtedness or issue equity in order to meet our capital expenditure activities and liquidity requirements, as well as to fund organic and other growth opportunities that we pursue, including our expansion into the distributed power business and potential acquisitions. Our primary uses of capital have been capital expenditures to support growth, both organic and through acquisitions, and funding ongoing operations, including maintenance and fleet upgrades, as well as the repurchases of, and dividends on, shares of our Class A Common Stock.

Cash and cash equivalents decreased by $0.4 million to $19.6 million as of June 30, 2025 compared to $20.0 million as of December 31, 2024, while working capital excluding cash and current liabilities under debt and lease arrangements decreased $39.7 million.

As of June 30, 2025, the Company was party to one credit agreement, which provides for a revolving line of credit up to $525.0 million. The ABL Facility is subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory available to finance working capital needs. As of June 30, 2025, the borrowing base was calculated to be $430.4 million, and the Company had $160.0 million outstanding, in addition to letters of credit in the amount of $14.0 million, with $256.4 million of remaining availability.

The ABL Facility contains covenants that restrict our ability to take certain actions. As of June 30, 2025, we were in compliance with all debt covenants.

See Note 7—Debt to the accompanying unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for further details.

Effective July 24, 2025, (i) the outstanding debt under the ABL Facility was repaid in full, (ii) the outstanding liabilities with respect to obligations under the ABL Facility were released and discharged, (iii) all liens, security interests and guaranties under the ABL Facility were released and terminated and (iv) all letters of credit issued and outstanding under the ABL Facility were continued as letters of credit issued and outstanding under the Revolving Credit Facility. Furthermore, also effective July 24, 2025, the Borrowers, the Company, JPMorgan Chase Bank, N.A. and other lender parties thereto entered into the Credit Agreement, which provides for, among other things, a Revolving Credit Facility with initial revolving commitments of $750.0 million, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory. See “Part II – Other Information, Item 5. Other Information” for additional information about the Credit Agreement and the Revolving Credit Facility.

We have no material off balance sheet arrangements as of June 30, 2025, except for purchase commitments under supply agreements as disclosed above under Note 14—Commitments & Contingencies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. As such, we are not materially exposed to any other financing, liquidity, market, or credit risk that could arise if we had engaged in such financing arrangements.

Share Repurchase Program

Under our share repurchase program, the Company is authorized to repurchase up to $750.0 million of outstanding Class A Common Stock through and including July 31, 2026. Shares may be repurchased from time to time for cash in open market transactions, through block trades, in privately negotiated transactions, through derivative transactions, or by other means in accordance with applicable federal securities laws. The timing and the amount of repurchases will be determined by the Company at its discretion based on an evaluation of market conditions, capital allocation alternatives and other factors. The share repurchase program does not require us to purchase any dollar amount or number of shares of our Class A Common Stock and may be modified, suspended, extended, or terminated at any time without prior notice. The Company expects to fund any repurchases by using cash on hand, borrowings under the ABL Facility, and expected free cash flow to be generated through the duration of the share repurchase program. The Company did not repurchase or retire any shares of Class A Common Stock under the share repurchase program during the three months ended June 30, 2025. During the six months ended June 30, 2025, Company repurchased and retired shares of Class A Common Stock for $24.0 million under the share repurchase program.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

(in thousands)

Analysis of Cash Flow Changes Between the Six Months Ended June 30, 2025 and 2024

Operating Activities. Net cash provided by operating activities was $362.7 million for the six months ended June 30, 2025, compared to $407.6 million for the six months ended June 30, 2024. The $44.9 million decrease in cash from operating activities is attributable to a $213.0 million decrease in revenues, net of a $68.8 million decrease in cash operating expenses, interest expense, net, and income tax expense. The decrease in cash flows provided by operating activities was partially offset by a $61.7 million increase in cash from changes in working capital for the six months ended June 30, 2025, compared to a $37.6 million decrease in cash from changes in working capital for the six months ended June 30, 2024.

Investing Activities. Net cash used in investing activities was $189.3 million for the six months ended June 30, 2025, compared to $292.1 million for the six months ended June 30, 2024. Cash used in investing activities was lower during the six months ended June 30, 2025, compared to the six months ended June 30, 2024 primarily due to proceeds of $80.8 million from the sale of common shares on the active market of Oklo and higher proceeds from the sale of assets, offset by a nominal increase in capital expenditures, including acquisitions. During the six months ended June 30, 2025, the Company acquired IMG Energy Solutions for total cash consideration of approximately $15.2 million, net of cash received, after closing adjustments. Refer to Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to the IMG Acquisition. Investments in equipment, including the new digiTechnologies™ suite and capitalized maintenance of existing equipment decreased $9.5 million, from $281.0 million for the six months ended June 30, 2024 to $271.4 million for the six months ended June 30, 2025.

Financing Activities. Net cash used in financing activities was $174.1 million for the six months ended June 30, 2025, compared to net cash used in financing activities of $122.0 million for the six months ended June 30, 2024. The $52.1 million increase in cash used in financing activities was primarily due to $37.5 million decrease in net borrowings, $35.6 million increase in cash paid under the TRA liability, a $13.7 million increase in cash paid for finance leases, and $3.1 million increase in dividends paid. These increases were partially offset by a $34.9 million decrease in share repurchases and $2.9 million decrease in cash paid for tax withholding on RSU vestings, during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Cash Requirements

Our material uses of cash consist primarily of obligations under long-term debt on the ABL Facility, TRAs, finance and operating leases for property and equipment, cash used to pay for repurchases of, and dividends on, shares of our Class A Common Stock, and purchase obligations as part of normal operations and our expansion into the distributed power business. Certain amounts included in our contractual obligations as of June 30, 2025 are based on our estimates and assumptions about these obligations, including pricing, volumes, and duration. We have no material off balance sheet arrangements as of June 30, 2025, except for purchase commitments under supply agreements of $29.4 million payable within 2025, and $0.5 million payable thereafter. See Note 14—Commitments & Contingencies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for information regarding scheduled contractual obligations. During the three and six months ended June 30, 2025, the Company expanded its equipment lease facilities resulting in the addition of $23.0 million and $50.6 million in new finance lease obligations, respectively. The terms on these new leases range from three to five years.

There have been no other material changes to cash requirements since the year ended December 31, 2024.

Income Taxes

The Company is a corporation and is subject to U.S. federal, state, and local income tax. The Company is also subject to Canada and Australia federal and provincial income tax on its foreign operations.

The effective global income tax rate applicable to the Company for the six months ended June 30, 2025 was 26.0% compared to 23.7%, for the period ended June 30, 2024. The Company’s effective tax rate is greater than the statutory federal income tax rate of 21.0% due to state income taxes in the states the Company operates, as well as nondeductible executive compensation, partially offset by U.S. federal income tax credits. The Company recognized an income tax expense of $24.1 million and $31.9 million during the three and six months ended June 30, 2025, respectively, and $32.6 million and $59.0 million for the three and six months ended June 30, 2024, respectively.

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities, and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. As of June 30, 2025 and December 31, 2024, the Company’s net deferred tax liabilities were $137.7 million.

Refer to Note 11— Income Taxes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to income tax expense.

Tax Receivable Agreements

Refer to Note 11— Income Taxes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to tax receivable agreements.

Critical Accounting Estimates

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates and assumptions (see Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report and Note 2—Significant Accounting Policies and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Annual Report). A critical accounting estimate is one that requires our most difficult, subjective or complex estimates and assessments and is fundamental to our results of operations. We base our estimates on historical experience and on various other assumptions we believe to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

There have been no material changes in our evaluation of our critical accounting policies and estimates since our Annual Report.

Our unaudited condensed consolidated financial statements are expressed in U.S. dollars, but, effective January 1, 2021, a portion of our operations is conducted in a currency other than U.S. dollars. The Canadian dollar is the functional currency of the Company’s foreign subsidiary as it is the primary currency within the economic environment in which the subsidiary operates. Additionally, during the six months ended June 30, 2024, the Company formed an entity in Australia, in which the Australian dollar as the functional currency of the Company’s foreign subsidiary.

Changes in the exchange rates of the above foreign currencies can affect our revenues, earnings, and the carrying value of our assets and liabilities in our unaudited condensed consolidated balance sheets, either positively or negatively. Adjustments resulting from the translation of the subsidiary’s financial statements are reported in other comprehensive income. For the three and six months ended June 30, 2025, the Company recorded a foreign currency translation gain of $6.0 million and $6.1 million, respectively, to comprehensive income. For the three and six months ended June 30, 2024, the Company recorded foreign currency translation loss of $1.7 million and $5.4 million, respectively, to comprehensive income.

Other exposures to market risk have not changed materially since December 31, 2024. For quantitative and qualitative disclosures about market risk, in addition to foreign currency translation, see Part II, Item 7(a), “Quantitative and Qualitative Disclosures About Market Risk,” in the Annual Report.

In accordance with Rules 13a-15 and 15d-15 of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2025 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

During the three months ended June 30, 2025, we integrated the accounting functions of the entity acquired in the IMG Acquisition on March 3, 2025. In connection with the integration, we updated documentation of our internal controls over financial reporting, as necessary, to reflect modifications to business processes and accounting procedures impacted.

There were no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in the Annual Report and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our businesses, financial condition or future results.

No other risk factors were identified in addition to the risk factors set forth in the Annual Report. There have been no material changes to the risk factors in the Annual Report.