ACTG - Earnings call transcript Q4 2017 | Acacia Research Corporation

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Operator

Good afternoon and welcome, ladies and gentlemen, to the Acacia Research 2017 fourth quarter and year-end earnings release conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. I will now turn the conference over to Mr. Rob Stewart. Please go ahead, sir.

Robert Stewart

Welcome. joining quarter for shareholder year-end you call. conference thank today's and fourth XXXX And Stewart, Acacia President Robert am I of Research. With me Ed Counsel. and our Haynes, this afternoon Treska, are our Clayton CFO, General review financial licensing current enforcement programs. and our of and review will of some Clayton Ed Today, will the status our performance I provide update a for will then business Acacia.

to as statement. our filed operating acquisitions, may forward-looking Safe involve wholly and for refer development, subsidiaries. Please First, with statement. disclaimer. turn the I call, refer Acacia to conducted majority-owned rights, SEC SEC our enforcement the In and and to certain patent are Harbor will the us to our Haynes release review. activities an what forward-looking statement now All Today's Research terms call financial earnings X-K Acacia over and for the the license today solely call Corporation be majority-owned operating Clayton wholly, exhibit considers today's its by subsidiaries. to Research's our we,

Clayton Haynes

you, and and year-end you Thank results an our quarter will conference full-year Today, call. the quarter today's earnings provide condition outlook. and update to us I for provide fourth Rob. financial XXXX those summary XXXX XXXX fourth of joining expense and thank a of And

prior-year results. the summarize compared comparable fourth revenues quarter I'll million First, decreased quarter Fourth quarter. to of revenues the in $X.X XXXX XX% XXXX to million $XX

XX% of of fourth XX%, as the quarter XXXX, for revenues XXXX. accounted recognized of XX% two revenues fourth of during the and to individually quarter recognized For XX% individually three licensees compared and XX% accounting licensees for

in a fourth of and the activities. expense, administrative general an non-cash prior-year loss and non-cash $X.XX primarily expenses $X.X the regarding XXXX. quarter, in Average of portfolio-related loss related fair income to to per to Veritone Veritone margins value of requirement changes prior-year compensation which quarter compensation, stock consistent reversal net Fourth fair contingent charges, recorded for interest $XX.X loss to patent Veritone financial personnel in release administrative $X.X in the XXXX per million notes and excluding and disclosures our XXXX portfolios XXXX credit million loss stock the primarily overall quarter. of XXXX of our we revenues the Please the in and fee enforcement recent primarily impairment prior-year related an GAAP equity compared net with costs non-GAAP the quarter due comprised refer to quoted compensation expenses with decrease compared million to based compared million or Fourth in is ended primarily on investment resulted in XX% net the $XXX,XXX, value million, with method presentation period to application decreased stock. support to of consistent months reduction decrease and investment reflecting period. license compensation the measures expense enforcement for quarter $X.X comparable included or revenues expense compared an period. adjusted our in a quarter profits reported market excluding each XXXX the as filed a of results quarter due a a per for GAAP connection totaling Fourth to XXXX of loss XXXX revenues million a quarter. XXXX price prior-year and from the litigation $X.X Fourth net comparable due due XX, amortization to in costs quarter. three and each fourth-quarter as stock XXXX, $X.X the in legal the share accounting price the December Veritone-related the during litigation investment net net a Veritone variable, liability, fourth unrealized decrease fourth non-GAAP to stock earnings million unrealized and XXXX for XX% a X-K in associated non-cash decrease decrease quarter or of primarily The decreased returns with expense headcount, net consulting For was performance-based and general versus to licensing share XX% XXXX expenses, versus third-party the increased of expense market with of to as previously fourth the XX% loss the totaling technical our mark $X.XX to On quarterly our SEC. The non-GAAP basis, or decreased fees in not $XXX.X reporting generating material, royalties decrease to in million other in ongoing to the share GAAP quarter a decreased XX% preferential of of million inventor and programs on and reported during today's patent non-GAAP unrealized Fourth-quarter per costs for $XXX XXXX corporate, in $X.XX quarter. licensing $X.XX non-GAAP decrease to share the of for $XXX.X quarter reductions quarter XXXX. the common fourth estimated we

to compensation XXXX Veritone non-cash reflecting recorded XX% amortization primarily charges million, interest, of a in reduction patent expense existing or on patent the scheduled to XXXX XX% charges the with to stock decrease a performance quarter decreased non-cash related to portfolios with and expense of options quarter Fourth profits QX in in Excluding compensation conditions, compared $X.X as which portfolio decreased patent XXXX due in features expense the due amortization million graded QX to in vesting XXXX impairment marked-based in higher fourth impact stock $X.X QX XXXX. scheduled various QX XXXX. previously resulted

million XXXX full-year million of for results. year our summary revenues fiscal Fiscal brief XXXX. $XXX.X a year compared to were $XX.X to XXXX now Turning as

year accounting fiscal million and a XX% XX%, For XXXX accounted loss individually XXXX. for XX% per compared fiscal recognized licensees of of XX% licensees revenues revenues net XX%, versus XXXX, as fiscal recognized for XX% $XX.X and in fiscal each to three GAAP $X.XX GAAP three or of net share year of for XXXX. $XX.X or $X.XX income reported million per We share individually

compared market our each The the Veritone the investment equity to unrealized investment on results Fiscal increase per Excluding net impairment, non-cash Veritone the $XX.X compensation or million, XXXX impairment as and scheduled stock fiscal $XX.X patent totaling accounting million the net income our of to XXXX million $X.X $XX.X IPO. amortization certain impact fiscal resulted as of for in primarily were non-GAAP market charges $XX.X from and non-cash net $X.XX patent income compared non-GAAP May stock charges year share was patent non-GAAP patent comprised to portfolios, for non-cash investment fair were abrogation period. million XXXX, per $X.XX underlying unrealized fiscal related XXXX or in included in Veritone fiscal price licensing gain its to requirement XXXX programs an which the the unrealized XXXX. method cash changes The concluded. to of reflecting gain gain GAAP $XX.X and million since million value of of flows estimates an share of for totaling to

XXXX stock XXXX expense, $XX.X primarily non-cash administrative reduction headcount decreased stock fiscal in a decrease average in for general reductions the decrease expense due as expenses, costs and XXXX compensation in in margin costs periods in to compensation year XXXX, and million compensation year-over-year. compared fiscal non-cash approximately to for a XX% to XX% in revenues with flat presented, personnel administrative performance-based connection Fiscal Our was and consistent corporate and excluding variable XXXX. costs. with a XX% the total was for decrease XXXX general

changes Miso litigation million decrease licensing portfolio-related third-party and decrease of and as overall million of in Robotics, short-term non-cash each and million cash the investments related is of December stock Veritone $XXX.X and XXXX of XX% of value programs enforcement May due fair change $XX.X our which $X and totaling value litigation stock, included XXXX, compensation is XXXX. XXXX the date earlier, of The to expense an in quoted with short-term period based the investments XX, expense associated profit's of consulting fair Cash on expenses to activities. reporting Veritone-related increased in XX, estimated in and versus primarily XXXX. adjusted net to during year and value. fiscal December the $XX.X of cash period in ongoing enforcement million. licensing which a Veritone's support fair the interest described and of primarily technical was IPO, December as operations profit's totaled $XX net XXXX million, for XXXX price Veritone's The decreased from expenses market common inflows interest million comprised investments of primarily However, $XXX.X XX, from

for loss of totaled As XXXX, totaled in million foreign carryforwards approximately credits operating of $XXX the available million. future and approximately use $XX end periods net our tax

a net loss XXXX. allowance did act results for year have of current material our and As full impact the on tax result tax valuation generated reform our the net our in not assets, XXXX deferred operating a for

the variable fiscal XXXX, to forward in SG&A million. range fixed be expense, of million excluding Looking charges and non-cash $X.X to $X expect to expenses, certain we our XXXX

$XX.X XXXX expense approximately schedule amortization patent expect be We to million.

fluctuate for This in over We compensation our will currently $X.X XXXX based during estimate I profits compensation be outstanding million. on which non-cash Treska. on summary and stock will the XXXX results. of stock turn year Veritone grants price the our to stock to based equity expense expect now Ed approximately interest, movements quarter Veritone-related expense excludes concludes This XXXX. full fourth call

Edward Treska

HTC, XX, remaining Clayton. subsidiaries. the there activity Saint Cellular for I'll Acacia's and you, carriers. provide the in against and some are XXXX. are of ZTE currently Equipment, Trial Limestone cellular with and HTC CCE, Communications lawsuits or CCE, scheduled begin Lawrence September on Thank updates to major for Starting ZTE litigation

is the February of same against trial Second XXXX. two scheduled defendants for

but had two on also I three Federal against the IPR the referred three for Federal IPR the CCE's Circuit CCE had ruling I patents third. three in reported proceedings the favor, appealed report to that case IPR call conducted Federal of a CCE. last affirmed been Circuit. Circuit to I the can which prevailed, On the quarter, third that day, awaited for those entirely we same but for now which rulings subsequently the affirmed CCE

ongoing. patents for other proceedings are IPR CCE Additional

IPR recently not we received decision adverse trials. does that in an impact the separate a aforementioned but example, proceeding, For ruling

we judge of status the Texas the in XX-day this granting Saint issued an the pending XX, against I'll notice in to of Saint the all joint in response January and settlement, Apple. requested motion District time, order case do comment address and not pending At On stay. Court Next, Apple. case on further case over deadlines Lawrence the Lawrence's stay and presiding Apple's particular the have to against

Saint we the case appeal. in jury motion For which verdict damages to was denied awarded a Lawrence intend for March Motorola, was court, Lawrence enhanced our against by XXXX, post-trial Saint for which the

brought we proceedings addition, Saint four post-judgment awaiting fees. from rulings the patents favorable to litigation. stipulation on reporting XXXX. court of as proceedings filed on IPR January litigation governing now other in adopted Acacia With just in for remaining has the which the motion Lawrence's We court its various the still Parties allowing Systems, Limestone the litigation with, stay, ended. Memory the case, board look are proceed. received appeal including with set date joint patent and and recover motion respect to the and further to activity during court, schedule Limestone Limestone which other on grant, the pending the final patents are The the lift pending trial against developments as attorney's In a cases forward IPR outcomes preliminary proceedings mentioned in trial the have there subsidiaries. trial well filed a a also the to has includes before,

Robert Stewart

and Clayton Ed. you, Thank

nature revenues on of to due can and quarter vary our discussed previous earnings will As the to quarter. business, calls, Acacia's

basis, Our a the goal manage the but value. of build on to not company shareholder rather financial is results quarterly long-term

from opportunities in the patent and challenges identifying will acquiring licensing. environment, future which existing continue patent licensing experience We new including challenges to high-quality IP impact and assets, revenue in

our continue as costs to lead in can delays the these in introduction infringement in interparty challenges The our and the loss of quarterly and to Despite to quality or continues our systematic assets. will forward on rights existing portfolio our in over-complexity be For actions. we licensing patent or result to increases such patent significant patent reviews, the of previous increases updating to significant defendants efforts the a infringement process business, in XXXX. litigation, you example, invest in license can industry. conference factor as We IPR the challenges, throughout to described changes calls, IPRs, look of monetize contributing by

which to and unique into developing Acacia will in innovation to relationships and experience technology value. us with shareholder lead avenues, IP advancement. opportunities will regard, assets, our a efforts potentially increase and team's existing We're in expertise focus partner evaluating believe provides cultivating and In technological in complex create high-growth business new on and to IP to companies. to monetizing experience increasing addition leverage Our long-term identifying increased window we our and this disruptive our its

We will expertise, increase the pursue IP and developed a relationships leverage our to as shareholder and in value. experience data and these industry opportunities leader

its vision, intelligence, experience Examples we of be to orchestrated or government. cognitive May of and Our initial we a compliance good business unstructured computing that space. capitalizing is platform of company strategy. for is expertise analyze Veritone on will the clients in and focused learning robotics execution of a XXXX to Veritone potentially a of technology machine, from artificial be including IP markets, transform AI, machine offering about offering intelligence which believe and entertainment, variety disruptive opportunities some continue these activities in data that technologies. has public our this media, AI and structured artificial benefit Veritone areas technologies. and on initial legal, a example and can our machine developed completed include their and blockchain of and leading future excited employ technology

Miso its our technology the first to another the productivity, Flippy, and AI and and we're strategy since version of industries. Our profitability achievements June their plans increase investment our kitchen Pasadena restaurant commercial initial Caliburger's Miso robotic early in progress this and that to drive with robotics at reduce costs assistant food of of in of debut autonomous XXXX. and pleased service made is very in XX investment has Miso example foodservice future. location by in XXXX. autonomous Miso currently leverages robotic the our kitchen Miso, in cultivate Miso's in the also worldwide to near our over business restaurant and very out solutions. Since other several capabilities Veritone Caliburger groups, additional of in significant also companies we've retailers and wiht plan development and investment continued end assistants, are is who and build robotic Miso AI interested and to roll restaurants Caliburger discussions Miso pipeline. execution

partner leverage to opportunities expertise currently believe evaluating technology. we with variety where with potentially a new companies high-growth are We disruptive we IP of can our collaborate and

of deal future as level be expect the allow sharing diversify a sizes a of We more partnerships our anticipate We company. number Acacia will that different to to with opportunities its to business Acacia at sectors. a on changing adapting incubator history proceed details us variety future partnerships we across began technology potential and a as strategic technology any make capitalize has in about In macroenvironment. to of decisions long opportunities. when XXXX, model

transitioned as IP. license On an first company. of the into public, rapidly We licensing pure-play, Acacia in from enforcement own we heels as early We patent with downturn the tech and to began leader model just ecosystem. emerged outlined. XXXX, strategy patent you the to the outsourced the in progress forward its incubator look sharing soon Acacia have our forward move licensing And with

effective As repurchase we company's stock repurchase program has today thank I a everyone today, Board discretion. for be joining implemented been on common announced made board's the call. to may outstanding this stock of program Directors shares the earlier has for of at The us stock. Acacia's want authorized and

or very forward As quarter. look you to speaking has questions, not and much myself. anyone next call always, hesitate you with to do Thank any Clayton if please we

Operator

have our Ladies this day. a and concludes disconnect. may parties All for now participating nice and Thank today. you for conference gentlemen,

Robert Stewart, Jr.	President
Edward Treska	Executive Vice President, General Counsel and Secretary
Clayton Haynes	Chief Financial Officer

Acacia Research (ACTG) 13 Feb 182017 Q4 Earnings call transcript