Company Closes First Patent Investments since
2016
Completes Reconstitution of Board with Highly
Credentialed and Relevant Directors
Acacia Research Corporation(1) ("Acacia" or "the Company")
(Nasdaq: ACTG) today reported results for the three months ended
March 31, 2019.
Statements from Alfred V. Tobia Jr. and Clifford
Press
“Acacia continued to execute a disciplined approach to
developing its intellectual property business,” commented Clifford
Press, Director. “A crucial initial step was completing the
reconstitution of our Board with four highly experienced directors
with significant expertise in a wide-range of intellectual property
and investing disciplines. Acacia is prudently developing a
pipeline of opportunities to capitalize on investments that meet
our criteria and are capable of producing substantial returns.
During the first quarter, the Company closed the acquisition of two
patent portfolios. We have eight legacy portfolios currently active
and are methodically evaluating additional opportunities to grow
the overall IP portfolio.”
Al Tobia, Director, added, “With a streamlined cost structure, a
strengthened board and an active licensing team in place, we are
systematically advancing our IP business. As our activity to
identify new investments and deploy capital has increased, so has
the scale, scope and quality of our deal flow. We are evaluating an
increasing number of potential investments while advancing new
partnership opportunities with patent owners that we have
optioned.”
Business Outlook
Mr. Tobia added, “The existing portfolio of Acacia has a limited
number of remaining licenses to be negotiated. As expected, we did
not generate significant revenues in the first quarter of 2019. For
the full year 2019, we continue to expect gross revenues of
approximately $25 million, all from the existing portfolio.”
First Quarter Financial Summary:
- Gross revenues were $3.4 million during
the quarter.
- After deducting inventor royalties and
contingent legal fees, net revenues were $1.9 million, or 55% of
gross revenues.
- Operating loss was $6.9 million.
- GAAP net loss was $4.4 million or $0.09
per diluted share.
- Non-GAAP net loss was $5.1 million or
$0.10 per diluted share. See below for information regarding
non-GAAP financial measures.
- Cash used in operating activities for
the 3 months ended March 31, 2019 was $2.0 million.
Balance Sheet
- Cash and short-term investments totaled
$167.9 million as of March 31, 2019, as compared to $165.5 million
as of December 31, 2018.
Investor Conference Call:
The Company will host an investor conference call and live
webcast to provide a business update on Friday, May 10, 2019, to
begin at 11:00 AM (EDT) / 8:00 AM (PDT). To access the live call,
please dial (800) 289-0438 (U.S. and Canada) or (323) 794-2423
(international) and reference conference ID 2573190.
The conference call will also be webcasted on the Company’s
website at http://acaciaresearch.com/events/. Following the
conclusion of the live call, a replay of the webcast will be
available on the Company's website for at least 30 days.
INFORMATION ABOUT NON-GAAP FINANCIAL MEASURES
As used herein, “GAAP” refers to accounting principles generally
accepted in the United States of America. This earnings release
includes financial measures, including (1) non-GAAP net income and
(2) non-GAAP Earnings Per Share (“EPS”), that are considered
non-GAAP financial measures as defined in Rule 101 of Regulation G
promulgated by the Securities and Exchange Commission. Generally, a
non-GAAP financial measure is a numerical measure of a company’s
historical or future performance, financial position, or cash flows
that either excludes or includes amounts that are not normally
excluded or included in the most directly comparable measure
calculated and presented in accordance with GAAP. The presentation
of this non-GAAP financial information is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP.
Non-GAAP Net income and EPS. We define non-GAAP net income
as net income calculated in accordance with GAAP, plus unrealized
change in fair value of investments, loss on investment, non-cash
stock compensation charges and non-cash patent amortization
charges. Non-GAAP EPS is defined as non-GAAP net income divided by
the weighted average outstanding shares, on a fully-diluted basis,
calculated in accordance with GAAP, for the respective reporting
period. Additional information regarding these non-GAAP measures is
available in previously disclosed SEC filings.
Non-GAAP net income does not reflect realized losses and
unrealized changes to the fair value of our investment in Veritone,
Inc. We had previously included unrealized changes to the fair
value of our investment in Veritone, Inc. in Non-GAAP net income in
our previously reported earnings releases. However, given the
volatility of Veritone’s market price, we believe excluding our
Veritone investment from Non-GAAP net income more accurately
reflects our financial performance.
These non-GAAP measures are presented because they are important
metrics used by management as a means to assess financial
performance.
There are a number of limitations related to the use of non-GAAP
net income and EPS versus net income and EPS calculated in
accordance with GAAP. These non-GAAP measures should not be
considered alternatives to financial metrics derived in accordance
with GAAP. Management compensates for these limitations by
providing specific information regarding the GAAP amounts excluded
from non-GAAP net income and EPS and evaluating non-GAAP net income
and EPS in conjunction with net income and EPS calculated in
accordance with GAAP.
The table below titled “Reconciliation of GAAP Net Income (Loss)
and EPS to Non-GAAP Net Income (Loss) and EPS (In thousands, except
share and per share data)” provides a reconciliation of the
non-GAAP financial measures presented to the most directly
comparable financial measures prepared in accordance with GAAP.
Due to uncertainties related to our ability to utilize certain
deferred tax assets in future periods, we have recorded a full
valuation allowance against our net deferred tax assets for the
periods presented herein. Tax expense for the periods presented
reflects foreign taxes withheld on revenue agreements with
licensees in foreign jurisdictions and other state taxes, and the
impact of the full valuation allowance recorded for net operating
loss and foreign tax credit related tax assets generated during the
periods. As such, no tax benefit was recognized for net operating
loss and foreign tax credit related tax benefits generated during
the applicable periods presented. Accordingly, there are no income
tax effects related to our adjustments to arrive at our non-GAAP
measures included herein.
______________________________________________
ABOUT ACACIA RESEARCH CORPORATION
Founded in 1993, Acacia Research Corporation (ACTG) invests in
Intellectual Property Assets and partners with inventors and patent
owners to realize the financial value in their patented inventions.
Acacia bridges the gap between invention and application,
facilitating efficiency and delivering monetary rewards to the
patent owner.
Information about Acacia Research Corporation and its
subsidiaries is available at www.acaciaresearch.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
This news release contains forward-looking statements within the
meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based upon our
current expectations and speak only as of the date hereof. Our
actual results may differ materially and adversely from those
expressed in any forward-looking statements as a result of various
factors and uncertainties, including the ability to successfully
implement our strategic plan, the ability to successfully build out
a new leadership team within a certain timeframe, the ability to
streamline financial reporting, the ability to successfully develop
licensing programs and attract new business, changes in demand for
current and future intellectual property rights, legislative,
regulatory and competitive developments addressing licensing and
enforcement of patents and/or intellectual property in general,
general economic conditions and the success of our investments. Our
Annual Report on Form 10-K, recent and forthcoming Quarterly
Reports on Form 10-Q, recent Current Reports on Form 8-K, and any
amendments to the forgoing, and other SEC filings discuss some of
the important risk factors that may affect our business, results of
operations and financial condition. We undertake no obligation to
revise or update publicly any forward-looking statements for any
reason.
The results achieved in the most recent quarter are not
necessarily indicative of the results to be achieved by us in any
subsequent quarters, as it is currently anticipated that Acacia
Research Corporation’s financial results will vary, and may vary
significantly, from quarter to quarter. This variance is expected
to result from a number of factors, including risk factors
affecting our results of operations and financial condition
referenced above, and the particular structure of our licensing
transactions, which may impact the amount of inventor royalties and
contingent legal fees expenses we incur period to period.
ACACIA RESEARCH CORPORATION
SUMMARY FINANCIAL INFORMATION
(In thousands, except share and per
share information)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
Three Months EndedMarch 31,
2019 2018 Revenues $ 3,387
$ 62,093 Portfolio operations: Inventor royalties
1,353 21,744 Contingent legal fees 177 15,759 Patent acquisition
expenses — 4,000 Litigation and licensing expenses - patents 3,801
2,989 Amortization of patents 656 5,330 Other portfolio expenses
650 — Total portfolio operations 6,637 49,822
Net portfolio income (loss)
(3,250 ) 12,271 General and administrative expenses 3,695
3,301 Operating income (loss) (6,945 ) 8,970 Other income
(expense): Change in fair value of investment, net 6,908 (41,097 )
Loss on sale of investment
(5,590 ) — Interest income and other 1,543 207 Total
other income (expense) 2,861 (40,890 ) Loss before provision
for income taxes (4,084 ) (31,920 ) Provision for income taxes (314
) (191 ) Net loss including noncontrolling interests in
subsidiaries (4,398 ) (32,111 ) Net loss attributable to
noncontrolling interests in subsidiaries 14 73 Net
loss attributable to Acacia Research Corporation $ (4,384 ) $
(32,038 )
Net loss attributable to common
stockholders - basic and diluted
$ (4,384 ) $ (32,038 ) Basic and diluted loss per common share $
(0.09 ) $ (0.63 )
Weighted average number of shares
outstanding - basic and diluted
49,655,881 50,632,958
Reconciliation of GAAP Net Loss and EPS
to Non-GAAP Net Income (Loss) and EPS
(In thousands, except share and per
share data)
Three Months EndedMarch 31,
2019 2018 GAAP net loss $ (4,384 ) $
(32,038 ) Add back: Change in fair value of investment, net (6,908
) 41,097 Loss on sale of investment 5,590 — Non-cash stock
compensation expense (8 ) (1,024 ) Non-cash patent amortization 656
5,330 Pro forma non-GAAP net income (loss) $ (5,054 )
$ 13,365 Pro forma non-GAAP net income (loss) per common
share - diluted $ (0.10 ) $ 0.26 GAAP weighted-average
shares — diluted 49,655,881 50,713,645
ACACIA RESEARCH CORPORATION
SUMMARY FINANCIAL INFORMATION,
(CONTINUED)
(In thousands)
(Unaudited)
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2019
December 31, 2018 ASSETS Current assets: Cash
and cash equivalents $ 73,285 $ 128,809 Trading securities - debt
93,756 33,642 Trading securities - equity 831 3,012 Accounts
receivable 23,964 32,884 Prepaid expenses and other current assets
3,686 3,125 Total current assets 195,522 201,472 Investment
at fair value 5,483 7,459 Investment - other 8,195 8,195 Patents,
net of accumulated amortization 9,681 6,587
Other non-current assets
216 236 $ 219,097 $ 223,949
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and
accrued expenses $ 11,448 $ 8,347 Accrued patent investment costs
3,750 — Royalties and contingent legal fees payable 16,149
22,688 Total current liabilities 31,347 31,035 Other
liabilities 916 1,674 Total liabilities 32,263 32,709 Total
stockholders’ equity 186,834 191,240 $ 219,097 $
223,949
ACACIA RESEARCH CORPORATION
SUMMARY FINANCIAL INFORMATION,
(CONTINUED)
(In thousands)
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Three Months EndedMarch 31,
2019 2018 Cash flows from operating
activities: Net loss including noncontrolling interests in
subsidiaries $ (4,398 ) $ (32,111 ) Adjustments to reconcile net
loss including noncontrolling interests in subsidiaries to net cash
provided by operating activities: Change in fair value of
investment, net (6,908 ) 41,097
Loss on sale of investment
5,590 — Depreciation and amortization 660 5,344 Non-cash stock
compensation (8 ) (1,024 ) Income from trading securities (1,077 )
— Other — (87 ) Changes in assets and liabilities: Accounts
receivable 8,920 (59 ) Prepaid expenses and other assets (541 )
(863 ) Accounts payable and accrued expenses 2,343 1,065 Royalties
and contingent legal fees payable (6,539 ) 36,608 Net
cash provided by (used in) operating activities (1,958 ) 49,970
Cash flows from investing activities: Sale of
investment 3,294 — Investments in Investees — (7,000 ) Purchase of
available-for-sale investments (60,193 ) (33,309 ) Maturities and
sales of available-for-sale investments 3,339 4,000 Purchases of
property and equipment (6 ) — Net cash used in
investing activities (53,566 ) (36,309 ) Cash flows from
financing activities: Repurchased restricted common stock — (7 )
Proceeds from exercises of stock options — 31
Net cash provided by financing activities — 24
Increase (decrease) in cash and cash equivalents (55,524 ) 13,685
Cash and cash equivalents, beginning 128,809 136,604
Cash and cash equivalents, ending $ 73,285 $
150,289
Footnotes:
(1) As used herein, “Acacia Research Corporation,”
“we,” “us,” and “our” refer to Acacia Research Corporation and/or
its wholly and majority-owned operating subsidiaries. All
intellectual property investment, development, licensing and
enforcement activities are conducted solely by certain of Acacia
Research Corporation’s wholly and majority-owned operating
subsidiaries.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190509005915/en/
Investors:Hayden IRRob Fink,
646-415-8972actg@haydenir.comMedia:Sloane & CompanyJoe
Germani / Kristen Duarte, 212-486-9500jgermani@sloanepr.com /
kduarte@sloanepr.com
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