Innventure, Inc. (INV)

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context otherwise requires, references in this section to “we”, “us” and “our” refer to the business and operations of Innventure, Inc. and its consolidated subsidiaries.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 included in Item 1 of this Form 10-Q and our and our predecessor’s, as applicable, audited consolidated financial statements and related notes as of and for the years ended December 31, 2025 and 2024 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“Form 10-K”). This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below in this section and those discussed in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward–Looking Statements” included elsewhere in this Form 10-Q and in the Form 10-K. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

Innventure is an industrial growth conglomerate that founds, funds, and operates companies with a focus on commercializing transformative, sustainable technology solutions acquired or licensed from technology innovators, which are typically multinational corporations (“MNCs”) with the intent to maximize value for stockholders and other stakeholders through positive cash flow generated through long term ownership and operation of AeroFlexx, LLC (“AeroFlexx”), Accelsius Holdings LLC (“Accelsius”) and Refinity Olefins, LLC (“Refinity” and, together with AeroFlexx, Accelsius, and those subsidiary companies that Innventure may found, fund, and operate going forward, the “Innventure Companies”). Refer to Item 1. “Business” of the Form 10-K for a detailed discussion of our business activities.

Segments

Based on the allocation of resources and assessment of financial performance by our Chief Executive Officer (who has been determined to be our Chief Operating Decision Maker), we have identified one reportable segment: Technology. The Company’s remaining operations are not reportable segments and are classified as “Other.” “Other” primarily includes the Company’s remaining operations consisting of Innventure’s original platform business, service activities, Refinity and other equity method investment activities.

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Results of Operations for the three and six months ended June 30, 2026 and 2025

Comparison of the three months ended June 30, 2026 and June 30, 2025:

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*not meaningful

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Revenue

Revenue was $1.0 million and $0.5 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $0.5 million or 100.2%. The increase was driven by an increase of product sales and service revenue in the Technology segment.

Cost of sales

Cost of sales was $5.1 million and $2.9 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $2.2 million or 77.3%. The increase related to an increase in revenue in the Technology segment resulting in an increase in costs related to supplies and materials, amortization of intangible assets, and employee costs.

General and administrative

General and administrative expense was $14.5 million and $18.6 million for the three months ended June 30, 2026 and 2025, respectively, a decrease of $4.1 million, or 21.9%. The decrease was due to a decrease in stock-based compensation costs and a decrease in professional and legal fees.

Goodwill impairment

Goodwill impairment expense was $113.3 million for the three months ended June 30, 2025. The prior-year charge was due to sustained decreases in the Company’s publicly quoted share price and market capitalization, which were sensitive to the general downward volatility experienced in the stock market during 2025. There was no goodwill impairment expense during the three months ended June 30, 2026.

Sales and marketing

Sales and marketing expense was $3.1 million and $2.2 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $0.9 million, or 39.9%. The increase was due to increased marketing-related events and expenses primarily associated with the commercialization of the Technology segment, and employee expenses, partially offset by a decrease in marketing related professional fees.

Research and development

Research and development expense was $9.8 million and $6.1 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $3.7 million, or 61.2%. The increase was due to increased expenses in the development of new technologies related to Refinity.

Interest expense, net

Interest expense, net was $0.5 million and $2.6 million for the three months ended June 30, 2026 and 2025, respectively, a decrease of $2.1 million, or 79.9%. The decrease was due to a decrease in interest expense on related party notes and interest related to the amortization of issuance costs for the convertible debentures issued pursuant to that certain securities purchase agreement entered into with Yorkville on March 25, 2025 (the “Existing Convertible Debentures”) and the convertible debentures issued pursuant to that certain securities purchase agreement entered into with Yorkville on September 15, 2025 (the “New Convertible Debentures” and, together with the Existing Convertible Debentures, the “Convertible Debentures”), which were either converted to equity or paid off.

Change in fair value of financial liabilities

The change in fair value of financial liabilities was a net loss of $2.2 million for the three months ended June 30, 2026, as compared to a gain of $7.2 million for the three months ended June 30, 2025. Changes in the fair value are due to changes in the fair value of the earnout and warrant liabilities.

Equity method investment (loss) income

Equity method investment activity for the three months ended June 30, 2026 and 2025 were net losses of $1.5 million and $1.9 million, respectively, from the Company’s equity method investment in AeroFlexx.

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Loss on extinguishment of debt

Loss on extinguishment of debt was $3.5 million for the three months ended June 30, 2025. The prior-year loss was due to the modification of the term loan facility with WTI Fund X, Inc. and WTI Fund XI, Inc. in the aggregate principal amount of up to $50.0 million (the “WTI Facility”) in connection with the issuance of the first tranche of the Existing Convertible Debentures. There was no loss on extinguishment of debt for the three months ended June 30, 2026.

Comparison of the six months ended June 30, 2026 and 2025:

*not meaningful

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Revenue

Revenue was $2.4 million and $0.7 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $1.7 million. The increase was driven by an increase of product sales and service revenue in the Technology segment.

Cost of sales

Cost of sales was $10.3 million and $3.0 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $7.3 million. The increase relates to the generation of revenue in the Technology segment resulting in an increase in costs related to supplies and materials, amortization of intangible assets, and employee costs.

General and administrative

General and administrative expense was $27.2 million and $38.2 million for the six months ended June 30, 2026 and 2025, respectively, a decrease of $11.0 million or 28.8%. The decrease in expenditures was due

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context otherwise requires, references in this section to “we”, “us” and “our” refer to the business and operations of Innventure LLC and its consolidated subsidiaries prior to the Business Combination, which became the business of the Company and its subsidiaries following the consummation of the Business Combination. Unless otherwise indicated, all dollar amounts (“$”) are expressed in thousands.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our and our predecessor’s, as applicable, consolidated financial statements and related notes and other information included elsewhere in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below in this section and those discussed in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward–Looking Statements” included elsewhere in this Form 10-K. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

Innventure is an industrial growth conglomerate that founds, funds, and operates companies with a focus on commercializing transformative, sustainable technology solutions acquired or licensed from MNCs or other technology innovators with the intent to maximize values for investors and other stakeholders through positive cash flow generated through holding long term positions in our Innventure Companies. Refer to Item 1. “Business” of this Form 10-K for a detailed discussion of our business activities.

Segments

Based on the allocation of resources and assessment of financial performance by our Chief Executive Officer (who has been determined to be our Chief Operating Decision Maker), we have identified one reportable segment: Technology. The Company’s remaining operations are not reportable segments and are classified as “Other”. “Other” primarily includes the Company’s remaining operations consisting of Innventure’s original platform business, service activities, Refinity and equity method investment activities.

The Business Combination

On October 24, 2023, Learn CW and Innventure LLC entered into a Business Combination Agreement with Holdco, LCW Merger Sub and Innventure Merger Sub. On September 30, 2024, the stockholders of Learn CW approved the Business Combination, and the Business Combination closed on the Closing Date. The Business Combination has been accounted for using the acquisition method of accounting. The Company determined the accounting acquirer to be Holdco. Accordingly, the Company recorded assets acquired, liabilities assumed and non-controlling interest at their acquisition date fair values and recognized goodwill.

As a consequence of the Business Combination, Innventure, Inc. is the successor to an SEC-registered and Nasdaq listed company which will require Innventure to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. Innventure expects to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.

Innventure’s future results of consolidated operations and financial position may not be comparable to historical results as a result of the Business Combination.

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Financial Summary

Highlights

The year ended December 31, 2025 includes the following highlights:

•Innventure’s Technology segment began generating revenue related to its cooling systems for data centers.

•Total operational expenses of approximately $466.8 million, primarily made up of a goodwill impairment charge and increased costs associated with generating revenue for the Technology Segment, professional and legal fees, and sales and advertising costs for the year ended December 31, 2025.

•Cash inflows from equity and net debt raises were approximately $139.3 million for the year ended December 31, 2025. These cash inflows from equity and net debt raises are compared to net cash outflows related to operating and investing activities of $84.8 million for the year ended December 31, 2025.

Results of Operations for the Years Ended December 31, 2025 and 2024

To reflect the application of different bases of accounting as a result of the Business Combination, the tables provided below separate the Company’s results via a black line into two distinct periods as follows: (1) up to and including the Closing Date (labeled “Predecessor”) and (2) the period after that date (labeled “Successor”). The periods after October 1, 2024 are the “Successor” period while the periods before October 2, 2024 are the “Predecessor” periods.

Management believes reviewing our operating results for the twelve-months ended December 31, 2024 by combining the results of the Predecessor and Successor periods (“S/P Combined”) is more useful in discussing our overall operating performance when compared to the same period in the prior year. The combined results of operations included in our discussion below are not considered to be prepared in accordance with U.S. GAAP and have not been prepared as pro forma results under applicable regulations, may not reflect the actual results we would have achieved had the Business Combination occurred at the beginning of fiscal 2024 and should not be viewed as a substitute for the results of operations of the Predecessor and Successor periods presented in accordance with GAAP. Accordingly, in addition to presenting our results of operations as reported in our consolidated financial statements in accordance with GAAP, the tables below present the non-GAAP combined results for the year.

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*not meaningful

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Revenue

Revenue was $2.1 million and $1.2 million for the years ended December 31, 2025 and 2024 an increase of $0.8 million, or 68.5%. The increase was driven by an increase in product sales in the Technology segment, offset by a decrease in management fee income.

Cost of sales

Cost of sales was $18.8 million and $4.5 million for the year ended December 31, 2025 and 2024, respectively, an increase of $14.3 million. The increase relates to the generation of revenue at the Technology segment resulting in an increase in costs related to supplies and materials, an increase in amortization of intangible assets and, an increase in employee costs.

General and administrative

General and administrative expense was $66.7 million and $56.3 million for the year ended December 31, 2025 and 2024, respectively, an increase of 10.4 million, or 18.6%. The increase in expenditure was attributed to increased stock-based compensation costs, increased intangible asset amortization, and increased professional and legal fees.

Goodwill impairment

Goodwill impairment expense was $346.6 million for the December 31, 2025 The impairment was due to sustained decreases in the Company’s publicly quoted share price and market capitalization, which were sensitive to the general downward volatility experienced in the stock market during late February 2025 through April 2025.

Sales and marketing

Sales and marketing expense was $9.6 million and $6.2 million for the year ended December 31, 2025 and 2024, respectively, an increase of $3.4 million, or 55.7%. The increase was due to increased employee costs and an increase in advertising and marketing-related events and expenses primarily associated with the commercialization phase of the Technology segment.

Research and development

Research and development expense was $25.0 million and $11.3 million for the year ended December 31, 2025 and 2024, respectively, an increase of $13.7 million or 121.1%. The increase was due to an increase in amortization of intangible assets, an increase in employee costs, and an increase in development fees at Refinity.

Interest expense, net

Interest expense, net was $9.7 million and $2.4 million for the year ended December 31, 2025 and 2024, respectively, an increase of $7.3 million. The increase was due to int

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