Executive Summary

Q2 delivered double‑digit top-line growth: Portfolio Receipts rose 20% to $727M and Royalty Receipts grew 11% to $672M, driven by Voranigo, Trelegy, Evrysdi, and Tremfya .
Guidance raised: FY25 Portfolio Receipts to $3.05B–$3.15B (from $2.975B–$3.125B) and operating/professional costs trimmed to ~9%–9.5% of Portfolio Receipts (from ~10%) as internalization savings begin to flow .
Capital deployment and pipeline catalysts: $595M deployed (incl. $250M upfront to Revolution Medicines) and a $200M Adstiladrin milestone; RPRX repurchased $277M in shares in Q2 and $1.0B YTD 1H25 under a $3B authorization .
Mixed vs consensus: GAAP revenue missed but EPS beat; company emphasizes non‑GAAP liquidity metrics (Adjusted EBITDA, Portfolio Cash Flow) and Portfolio Receipts, with Portfolio Cash Flow margin ~88% in Q2, underscoring strong cash conversion . Results vs estimates from S&P Global noted below.*

What Went Well and What Went Wrong

What Went Well
- Strong top-line cash generation: Portfolio Receipts +20% to $727M; Royalty Receipts +11% to $672M; Adjusted EBITDA +13% to $633M and Portfolio Cash Flow +12% to $641M .
- Guidance raised and cost discipline: FY25 Portfolio Receipts raised; operating/professional costs eased to 9%–9.5% for FY25 as internalization eliminated the management fee; CFO expects 5%–6% in 2H25 and a path to 4%–5% longer term .
- Strategic progress: Closed internalization of external manager; “groundbreaking” $2B funding partnership with Revolution Medicines anchored by up to $1.25B synthetic royalty on daraxonrasib; CEO: “prospects… have never been stronger” .
What Went Wrong
- GAAP revenue miss vs consensus; EBITDA (SPGI definition) missed as well; note RPRX manages to cash metrics where performance was solid.*
- CF dispute headwind: RPRX did not receive the full Alyftrek royalty (received 4% vs claimed 8%); dispute resolution initiated; management doesn’t expect interim updates and resolution could extend into 2026 .
- Operating/professional costs temporarily elevated: Q2 included ~$35M in one‑time internalization costs (12.9% of Portfolio Receipts); underlying ratio would be just over 8% excluding one‑time items .

Financial Results

Headline cash metrics and trend (company-reported)

Metric ($M)	Q4 2024	Q1 2025	Q2 2025
Portfolio Receipts	742	839	727
Royalty Receipts	729	788	672
Adjusted EBITDA (non‑GAAP)	669	738	633
Portfolio Cash Flow (non‑GAAP)	678	611	641

GAAP revenue and EPS vs prior periods and S&P Global consensus

Metric	Q2 2024 Actual	Q1 2025 Actual	Q2 2025 Actual	Q2 2025 Consensus*	Surprise*
Total income and other revenues ($)	537M	568M	579M	693.74M*	-114.07M (miss)*
Primary EPS	—	—	1.1406*	1.0324*	+0.1082 (beat)*

Margins (note definitions differ: SPGI “EBITDA Margin %” vs RPRX Portfolio Cash Flow margin)

Margin	Q1 2025	Q2 2025	Commentary
EBITDA Margin % (SPGI)	—	38.97%*	Based on SPGI EBITDA vs GAAP revenue; differs from company’s liquidity metrics.*
Portfolio Cash Flow Margin (company)	—	~88%	CFO: Portfolio Cash Flow $641M in Q2 equates to ~88% margin .

Product-level Royalty Receipts (Q2)

Product	2Q25 ($M)	2Q24 ($M)	Y/Y
Cystic fibrosis franchise	194	195	0%
Trelegy	57	48	+17%
Tysabri	56	64	-13%
Imbruvica	44	49	-11%
Xtandi	42	39	+8%
Tremfya	37	30	+24%
Evrysdi	33	25	+32%
Promacta	33	30	+7%
Voranigo	26	—	n/a
Cabo/Cometriq	20	17	+22%
Spinraza	12	10	+25%
Erleada	10	9	+10%
Trodelvy	10	10	-4%
Other	98	79	+25%
Royalty Receipts total	672	605	+11%

KPIs and cash deployment

KPI	Q2 2025	Q2 2024	Notes
Net cash from operating activities	$364M	$658M	One‑timers; see non‑GAAP reconciliation .
Capital Deployment	$595M	$951M	Q2’25 included $250M to Revolution Medicines; $200M Adstiladrin milestone .
Share repurchases	$277M	$84M	8M shares in Q2; $1.0B in 1H25 .
Cash & equivalents (end of period)	$632M	—	As of Jun 30, 2025 .
Total debt (principal)	$8.2B	—	As of Jun 30, 2025 .
Weighted avg diluted shares	562M	597M	Reflects buyback .
Dividend per share	$0.22	—	Q3 2025 dividend; declared July 18, 2025 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Portfolio Receipts	FY 2025	$2,975B–$3,125B (05/08)	$3,050B–$3,150B (08/06)	Raised
Payments for operating & professional costs	FY 2025	~10% of Portfolio Receipts	~9%–9.5% of Portfolio Receipts	Lowered
Interest paid	FY 2025	~$260M	~$275M; ~$126M in Q3, ~$8M in Q4	Increased
Dividend	Q3 2025	—	$0.22 per Class A share	Maintained sequentially vs Q2’s $0.22

Notes: Management also guided to 2H25 operating/professional costs of 5%–6% of Portfolio Receipts as full internalization benefits come through .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Internalization of manager	Announced Jan ’25; closing expected Q2; savings >$100M in 2026 .	Closed May ’25; costs coming down; 2H25 opex 5%–6% target; path to 4%–5% LT .	Positive, sustained cost leverage.
Capital allocation	New $3B program; intent to repurchase $2B in 2025 .	$1.0B repurchases in 1H25; $277M in Q2 .	Ongoing buyback balanced with pipeline deals.
Revolution Medicines deal (daraxonrasib)	—	Up to $2B structure; IRR in “teens,” peak royalties >$170M potential; tranche triggers tied to Ph3/approvals/sales .	Expanding synthetic royalty toolkit.
Product performance	Evrysdi, CF, Trelegy, Tremfya strong drivers .	Adds Voranigo ramp as key driver .	Broad-based growth; new launch traction.
Regulatory/legal	—	Vertex Alyftrek royalty dispute (paid 4% vs claimed 8%); process underway; limited updates expected .	Overhang until resolution (potentially 2026).
Policy & macro (Medicare Part D redesign, MFN/PBM)	Introduced FY25 guide with Part D in view .	Management scenario-analyzing; focus on high‑impact meds; flexible model .	Monitored; manageable via portfolio mix.

Management Commentary

CEO: “We delivered excellent second quarter 2025 results… raised our full year guidance… [and] closed the acquisition of our external manager… [and] announced a groundbreaking funding agreement with Revolution Medicines… The prospects for the royalty market and our business have never been stronger” .
CFO: “Portfolio Cash Flow… amounted to $641 million in the quarter, equivalent to a margin of around 88%… underscores the efficiency of our business model” .
Head of R&I (Revolution Medicines): “We will provide up to $2.0 billion… expect first Phase 3 readout in second line metastatic pancreatic cancer in 2026… peak potential annual royalties in excess of $170 million” .
CFO (costs/interest): “Operating & professional costs… 5%–6% of portfolio receipts in 2H25… Interest paid in 2025… around $275M… $126M in Q3 and $8M in Q4” .

Q&A Highlights

Capacity for more “end-to-end” synthetic royalty/loan structures: Management sees the Revolution Medicines construct as a blueprint; has capacity and active dialogues to do more at scale .
Vertex CF royalty dispute: Currently receiving 4% on Alyftrek vs claimed 8%; dispute process underway with resolution potentially in 2026; consensus appears to reflect the lower rate .
Operating cost trajectory and buybacks: Internalization benefits drive opex to 5%–6% in 2H25, trending to 4%–5% longer term; buybacks remain dynamic vs pipeline opportunities .
Competition in royalty space: RPRX highlights structural cost-of-capital advantages (WAAC ~7% and low debt cost), scale, and relationships; able to win multi‑billion transactions .
Policy risk (MFN/PBM): Maintaining scenario-based underwriting; focus on high‑impact medicines and flexible deployment to mitigate policy outcomes .

Estimates Context

Q2 2025 vs S&P Global consensus: GAAP revenue $579M vs $693.7M consensus (miss); Primary EPS 1.1406 vs 1.0324 consensus (beat); EBITDA $225.5M vs $606.6M consensus (miss). Company emphasizes Portfolio Receipts/Portfolio Cash Flow, which were strong .*
Target price consensus and recs: Target price consensus $45.98.* Management’s raised FY25 outlook and cost trajectory could drive upward revisions to Portfolio Receipts and non‑GAAP cash metrics; GAAP “revenue/EBITDA” optics may remain noisy due to non‑cash provisions and milestone timing .*

Table — Q2 2025 actuals vs S&P Global consensus

Metric	Q2 2025 Actual	Q2 2025 Consensus*	Surprise*
Revenue ($)	578.67M	693.74M*	-115.07M (miss)*
Primary EPS	1.1406*	1.0324*	+0.1082 (beat)*
EBITDA ($)	225.49M*	606.56M*	-381.07M (miss)*

*Values retrieved from S&P Global.

Key Takeaways for Investors

Cash engine remains robust: Portfolio Receipts, Adjusted EBITDA, and Portfolio Cash Flow grew double digits; PFCF margin ~88% showcases strong cash conversion and supports continued capital deployment and buybacks .
Guidance momentum: Portfolio Receipts raised to $3.05B–$3.15B and opex reduced; expect 2H25 operating/professional costs at 5%–6%, with a credible path to 4%–5% longer term .
Synthetic royalty scale-up: Revolution Medicines structure expands RPRX’s playbook; potential teens IRR and >$170M peak royalty from daraxonrasib; watch 2026 Ph3 pancreatic readout as a medium‑term catalyst .
CF dispute is an overhang but bounded: Current 4% Alyftrek pay rate vs claimed 8% introduces uncertainty; potential resolution around 2026; consensus appears to bake in the lower rate .
Mix tailwinds and headwinds: Growth drivers (Voranigo, Trelegy, Evrysdi, Tremfya) offsetting headwinds (Promacta generics, policy changes, CF dispute), with diversified exposure across >35 commercial products .
Capital returns sustained: $1.0B buybacks in 1H25; dividend held at $0.22; balance with an active deployment pipeline should support TSR while compounding the portfolio .
Near-term trading setup: Raised guidance and cost leverage are positives; GAAP revenue/EBITDA optics may remain volatile vs consensus, but the cash metrics and Investor Day (Sept 11) can be catalysts for sentiment and estimate revisions .

Notes on metrics:
- Company emphasizes Portfolio Receipts, Adjusted EBITDA, and Portfolio Cash Flow as key liquidity metrics; these differ from GAAP revenue/EBITDA used in consensus frameworks **[1802768_0001193125-25-173988_d90343dex991.htm:9]** **[1802768_5d4eeb26b1be453baf0082ac9cc6d35b_11]**.
- All consensus/estimate values marked with * are retrieved from S&P Global.

Royalty Pharma plc (RPRX)·Q2 2025 Earnings Summary