XOMA Royalty 2025 Q2 Earnings Declining Net Income Amid Revenue Growth

XOMA Royalty reported its fiscal 2025 Q2 earnings on Aug 13th, 2025, showing a mix of performance highlights. While revenue increased, net income and EPS saw significant declines. The company remains optimistic about its portfolio expansion and upcoming clinical trial data.

XOMA Royalty’s fiscal 2025 Q2 earnings report showed a strong revenue increase of 18.4% year-over-year, but net income and EPS both declined, signaling mixed performance. The company has not provided formal guidance for future quarters, leaving investors to assess the outlook based on current trends and strategic initiatives.

Revenue

XOMA Royalty's total revenue for Q2 2025 rose to $13.13 million, representing an 18.4% year-over-year increase. The growth was driven by robust performance in several revenue streams, including income from purchased receivables and revenue from customer contracts. Specifically, income from purchased receivables accounted for $7.75 million, with $6.01 million under the EIR method and $1.74 million under the cost recovery method. Additionally, revenue from contracts with customers totaled $5.03 million, and revenue recognized under the units-of-revenue method added $354,000 to the total. The diversified revenue base reflects the company’s strategic approach to capturing income across multiple financial instruments.

Earnings/Net Income

Net income for XOMA Royalty in Q2 2025 declined to $9.19 million, down 42.5% compared to $15.98 million in the same period in 2024. Similarly, the company’s earnings per share (EPS) dropped by 47.7% to $0.46, compared to $0.88 in Q2 2024. This decline in profitability, despite an increase in total revenue, highlights potential operational or cost-related challenges that the company is facing.

Price Action

The stock of XOMA Royalty has experienced positive price momentum in recent weeks. Over the latest trading day, the stock gained 3.00%, while over the past full trading week, it surged by 16.92%. Month-to-date, the stock has climbed 11.28%, reflecting strong investor sentiment following the earnings release.

Post Earnings Price Action Review

Historically, a strategy of purchasing XOMA shares 30 days after the earnings release date following a quarter-over-quarter revenue increase over the past three years has yielded moderate returns. This approach generated a compound annual growth rate (CAGR) of 21.60% and an excess return of 3.58% compared to the benchmark. However, the investment also faced considerable volatility, with a maximum drawdown of 58.09%. Despite this, the Sharpe ratio of 0.37 suggests the risk-adjusted return is acceptable given the market exposure.

CEO Commentary

Owen Hughes, Chief Executive Officer of XOMA Royalty, emphasized the company’s ongoing commitment to expanding its portfolio of early- and late-stage assets through disciplined capital deployment and innovative financial structures. He highlighted that recently approved drugs are addressing key unmet patient needs, which is driving increased royalty receipts. The CEO also expressed anticipation for data from several key Phase 3 assets in the coming quarters, reflecting a positive outlook for future growth and shareholder value creation.

Additional News

Recent developments in Nigeria include the Nigerian Communications Commission (NCC) and National Security Adviser (NSA) calling for public cooperation to protect telecommunications infrastructure. The Federal Government has also announced a seven-year ban on the establishment of new federal universities, polytechnics, and colleges of education. Additionally, Bitcoin hit a record high of over $124,000 driven by favorable U.S. legislation and market conditions.