ACTG - Earnings call transcript Q2 2018 | Acacia Research Corporation

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Operator

Good afternoon, ladies and gentlemen. And welcome to the Acacia Research Corporation's Second Quarter 2018 Earnings Release Conference Call.

As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Clayton Haynes, Chief Financial Officer.

You may begin.

Clayton Haynes

operator. you, Thank you conference thank today's quarter second Welcome for shareholder call. XXXX and joining release this The on was that earnings disseminated Relations of the afternoon section our website. Investor available is terms contains of certain release financial will today's we discussing measures as earnings The non-GAAP various financial reconciliations as definitions of in call. be well provide of of of the will financial condition our current our XXXX and quarter outlook. XXXX I Today, recap second a summary a remaining expense update results and

and may involve our our the Harbor with Safe our Today's call disclaimer. today's licensing, statements. subsidiaries. and exhibit patent Research to its First, subsidiaries. All to call, of enforcement forward-looking by considers refer the majority and operating owned wholly an operating refer In forward-looking on earnings terms the what be us, Corporation our as statement. SEC filed and majority-owned rights, X-K we, are wholly and Acacia our, to statement SEC certain Please today release conducted activities Corporation's solely Research to Acacia

today, quarter in compared revenues decreased $XX.X revenues year to second XXXX to of million comparable $X.X million prior quarter. the reported As

recognized. For for XX% revenues quarter individually licensees accounted the XX% of of second and XXXX, two

XX% For XXXX, licensee the of one second revenues accounted quarter for recognized. of

year million of $X.XX $XX.X quarter. a On loss the per million as or to $X.XX of for a $XX.X $X.XX stock per $X.XX administrative comparable For reported share million XXXX, million net charges, quarter. we of the second of share general we and GAAP share prior quarter compared and or non-GAAP and per amortization second net income or the or of year net impairment non-GAAP non-GAAP GAAP share non-cash quarter XXXX $X.X reported net a $X.X prior comparable compensation loss patent loss per basis, versus excluding for a

or XXXX in we loss of reported prior the second of investment a fair of the for the our as quarter for share $X.XX the diluted compared per or Excluding value per equity net $X.X diluted non-GAAP of comparable share change $X.XX million $X.X quarter. impact million in Veritone, year to

in results for costs charges did portfolios when incur on when $XX.X GAAP prior Accepted second our we investment market acquisition did in unrealized reduction in its During patent totaling $XX.X included any for patents portfolio. estimated realized gain cash related due not partial XXXX cost of impairment second Accounting to acquired investment The to the initially pursuant which are each not were of Generally not million. incurred XXXX, charges as expected value the the certain of that approximately period we carrying our impairment flows June to over The recorded impairment Principle. quarter reflected impacted estimated million impairment non-GAAP future value acquired of US our period. The XXXX. consisted charges the fair balance Veritone a acquisition to sheet initially charges the of XX, period. certain requirement charges in for asset to only that to The The patents net an mark impact quarter impairment excess Acacia

with of earnings XXXX release Please other quarter investment. disclosures X-K refer $X.X the Veritone to investment to related and Second our the regarding net in today's totaling included notes SEC. unrealized results million loss presentation our financial a and non-GAAP filed measures

million $X.X prior to revenues the quarter to as the million expense due $X.X quarter in year compared decrease quarter-to-quarter. totaled royalties Second inventor XXXX in comparable primarily

the decrease of year to as Average $X the compared XX% legal expense contingent second also in compared margins in quarter-to-quarter. due XXXX fees in prior quarter primarily to $X.X quarter, totaled XXXX for Second comparable million comparable prior quarter the XX% the million as year quarter. to revenues were

to XX% litigation $X.X consulting Second the enforcement quarter decreased and a associated support XXXX decrease prior in to expenses to quarter third-party million licensing $X.X overall continued decrease and ongoing due net related million activities. comparable portfolio with in primarily in compared and programs litigation enforcement a technical year and expenses licensing

excluding in general related Second cost. million $X.X to primarily million, stock compensation prior which comparable XXXX in offset $X.X and totaling a XXXX non-cash general quarter administrative partially increased XX% the proxy and corporate, year increase was by $X expenses an employee-related million to administrative severance to quarter to due contest reduction the compared costs in to

million. million in The ended XX, million the June XX, related as change operations our December $XXX.X February totaling to $XXX.X million as XXXX. primarily six to and cash cash during of Robotics $X inflows million short-term short capital of June was June XX, of on term investment XXXX in from as of as $X.X XXXX, comprised investments XX, financial Miso investments and XX, additional Working of condition December our June XXXX XXXX. XXXX and cash outflows million XX, of of Moving cash as XXXX months versus $XXX.X $XXX.X totaled totaled versus

quarter $X.X earlier Second stock average shares year. activities with the stock at XXXX million ACTG X.X buyback million of an February XXXX this $XX an million price repurchase of pursuant plan repurchase financing the were outflows The cash aggregate included repurchases to $X.XX. of from announced made cost of

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

$X.X G&A remainder expense the fixed the termination announced including estimated costs includes severance the Turning to charges, for we million fiscal and $X.X reflects for This the of related impact G&A and approximately such earlier variable now variable and to separation expect consulting million. of non-recurring approximately expense corporate certain $XXX,XXX and fiscal expense XXXX charges agreements estimated XXXX, costs. variable of non-cash as of excluding today six our months be our remaining of outlook to legal variable lease

restructuring in the normalized estimated million run-rate million of G&A six these $X.X Further, Excluding charges, be is and to fixed efforts, to expected administrative ongoing months going general our for one-time remaining expense and approximately $X.X XXXX. expected per be the with forward variable are approximately year. expenses connection

the the to of $X.X to XXXX range for litigation in million be remainder expect and million. $X licensing We of expenses

expense We non-cash patent $XX.X expect amortization remainder be for to approximately the million. of scheduled XXXX

We with $XXX,XXX. expect of will guidance of stock on based stock expense This for estimate Veritone’s to remainder remainder and revenue compensation our be fluctuate which during the in future stock timing uncertainty expense the not of amounts revenues. the related price provide practice, we to excludes past XXXX interest, Consistent approximately for compensation do non-cash Veritone XXXX. associated due the profits movements with

assets. monetize quarter reporting the to continues of looks concludes patent our be historical However, forward summary engaged our The actively to company future efforts Acacia in results. on of in a second XXXX results This efforts our the periods. to existing basis

I Before wanted enjoyed Acacia my I XX time last the years the I've in over at address Alfred call to briefly departure my wish to release. well earnings the ahead. turn over announcement years company and the Tobia, in the

a call level be shareholders last serving company's me years. my Financial agreed over With to While have of for a as call I to the privilege XX for consultant to high transition. Al? and Officer the I business as Al past the this Tobia with opportunity turn will CFO, to providing that, the help thank Chief update. Acacia for Board Member, serve a as earnings the I the will want with

Alfred Tobia

everyone. good And afternoon, Thank you, Clayton.

As Treska Board say of transitioning to Clayton the to Clayton been And at respective consultants I'd like it's wish Both with their process all are And on ease Ed the we we the Directors, agreed best in transition. out thank recently. in as them Ed pleasure of have working their behalf Clayton both disclosed and the and endeavors. Ed the and a help future them of release, Haynes on roles earnings company. in today's stay and of to

stabilizing I'd we I are to XXXX priorities costs, business made like and schedule ahead to Now, Meeting, governance, of we and independent prudent including stockholder directors. on pleased highly announce initiatives. outlined the cutting many of executing of our Press the Clifford updates are am Annual progress Board corporate on Acacia. strategic recent with I ahead credentialed reconstituting the plans business, and plan protecting capital, that implementing and discuss have tangible these for and Acacia's

expenses, expense $XX $X.X rate We million. run million approximately from operating decreasing G&A have Acacia's annual reduced to significantly

going to continue for optimize to opportunities will We reduction our cost forward business. identify

a We having five will Allen Bradley goal and add new extensive on operational highly Board. the our total qualified independent of of directors financial, and part Board. expertise as leadership deep of experience to the legal directors brings

a Board, know to and join be forward. will moving asset he We are to great Acacia the have thrilled him

sensible capital order company's of have allocation establish We current the operations completed process shareholder optimize Until Board the to will and a company also allocation decisions potential directly restructuring, the the working at capital improve capital. for oversee we investments. both are and decision utilization of to

we Intellectual deeply that as we as in previous rehired year. Additionally, Property management announce are Acacia he for patent its familiar terminated with have XX last business portfolio and Acacia's Marc to years worked Booth has Officer. previously was and patent by is the happy Marc Chief

and assets vital our patent decisions interest analyze Marc a we measured the confident their that future to opportunities that weigh Acacia's profitability business valuable in of in to and will other are are business, asset against We patents. of prudent our of regard assessment the making we potential the are investment ensure best managing shareholders. With conducting prove a are part a and our to patent

We our plan. stated of ahead are

However, we have a to lot do. work of

capital excited that reduce for begin mindful our very basis the I'll of can business, you. call Thank turn business question-and-answer the are regard believe next to and continue With the about if our company. We this call. portion of cost patent we the we Acacia's to prepared remarks. be could concludes decisions, to allocation to This operator profitable very over be the now the And chapter.

Operator

[Operator Terrace Ted We'll first our Moreau Instructions]. you. take with question Research. from Thank

Ted Moreau

Yes. my Thank afternoon, gentlemen. you questions. for taking Good

fallen the Anderson's mentioned from that William in question you why apart? letter resigning Can explain a has that sell had transaction First potential through. he -- Board,

Alfred Tobia

in I an say began of a not rejected was to we unraveling at making We best riddled and company that with idea one conflicts in. felt had offer the eminent and problems credit that potential Thanks, Ted. involved valued The a software high a the to with was gave you the It no speculative vote. also desperate merger I'll bad of have a for take and an response the premium not offer involved ditch startup transaction greenmail the discount the stockholders. NOL. engaging it the interest would proposed Acacia would XX% that the cash. market. loss how greenmail out reverse was a of of transaction. valuation us worth Acacia’s transaction to was, combination its It at the was the to shareholder the that. deal and And proposal to It give its last very that a --

Ted Moreau

then you going the And bit portfolio. patent a Okay. little how portfolio? fix remarks of you your about a little prepared patent bit elaborate the Can in you're were talking kind on to

Alfred Tobia

to present, in, I at taken portfolio down. everything of We’ve cost the think going Booth for about present, sort At saying. said the to that's put we what we're in and of we’ve the Marc a sort steady hand now. And we're say business

Ted Moreau

I see.

kind you're Okay. directors several elaborate a incumbent going recently there on the you that what's going can that of or -- into a of go bit kind then your indignant little strategy were And of is that that you there? on why occurred and an all after resigned. detail Can

Alfred Tobia

all between for the he there wasn't the removed Board by connections if materials associates of was of legacy them the look close person. overwhelmingly stay. kind mean proxy reason friends And really much one at you once I we've Well. where or from to shareholders drawn directors of the sort

the with reconstituting our directors. independent qualified highly I As now. anticipated Board we of plan We're new ahead said,

So the anything to the Allen experience our shareholder rapidly he fact viewed has Board, will added that good the be representative. should news execution excellent voice And not deep strategy. who independent resignations is than and other expertise, having occurred for and as an be strong Bradley a

are. pleased So we where we're very actually

Ted Moreau

CEO? for when joined looking you expect any priority go your or the to a you team? Okay a can there do And was new management great. are a of there? this And particular so into characteristics then Board new you in kind when you're thought appoint And process

Alfred Tobia

Marc currently as the are operations going oversee will place get We're are right and they we The Investment business right back he the in that brought to and that the team the aligned appoint oversee directly business Chief appropriate CEO and right when our candidates develop for Board hands with we allocation Officer having feel and strategy. and carefully. it's methodically capable currently will we an identify patent in will proceeding now. So capital Booth,

Ted Moreau

that’s Okay file? then you outlined -- How that me. proxy been in plan great. last implementing from And or strategic the you one outlined are the

Alfred Tobia

plan, laid a be people we will contest. thoughts the about obviously look we capital analysis, out Sure, the the we’ve the the of laid Board, governance and a these And have mindful shareholders the will at with much we'll hire fact forward be that's significantly through improving process shareholders. strategic of and spoke taking business. decision in measured reduced the But reconstituting strategic when given a we in so quickly. basically lot of patent things Acacia’s a basis interest out And that strategy that proxy best allocation our measured lot and the right we’ll moving look cost the at pretty during careful that we've happened

Operator

with Westerly. take Galvin our from next Chris We'll question

Chris Galvin

it’s the entities investments smaller Miso? for question I Al. What's expectation or investments Thanks. like follow-on new a guess for in

Alfred Tobia

the shareholders that and thought of to that Miso That investment have not necessarily order a of right investments and of appropriately. we made, interest Bitzumi best are they then together we interest in we now investments we wanted with with allocate team the are shareholders' could would is things but have. your and that one interest capital operate the being So align and good the investments get operations. get Veritone that

and right will not case for interest right appropriate of report Veritone of then of it now, to -- the right about other those in we large much the as and people we go look too so, And But Miso, allocations. place in is believe get we the to will which diligence maybe us. the than in shareholders. size make best

Operator

Reiss Janney. Brett We'll take from our question with next

Brett Reiss

Yes. Hi, Al.

Alfred Tobia

Brett. Hi,

Brett Reiss

you Marc at outstanding have come look litigation that You it to that there you will that to Booth period? made. stages, maybe and Is be and that have in Mr. in guide various in his decisions settlements offers Treska on transition

Alfred Tobia

Yes.

look Ed services having Booth our a would about I having now our very at who to company. as patent business also of right the and knowledgeable portfolio So is benefit added Marc patent as the consultant

added So very IP and a net, qualified in really we've our system. one one executive

wouldn't the didn't We G&A people any we disruption reduce I significantly, as being that patent actually there. the did burn in view significantly. reduce We've added business So the but one.

Brett Reiss

take of how there? Right, time long business, think right. to it any assessment patent do How on your you -- estimate will long table the ballpark

Alfred Tobia

I Obviously Marc time I'm that. here for at basically. been do don't prepared this think minutes has to

So back to he will quickly as get Board. up the speed to as report possible and

But at And process. Ed. so, having we’ll an it be benefit the be -- obviously be will and he'll work, got of iterative hard he's

exact So but put be speed to time to it. up table wouldn't quickly I he'll fairly an want on

Brett Reiss

on more with Booth in situation was I've color me my the been prior? some to he And you his background? Could there. company if five he And six Mr. little or tell a bit Right. was years, the long him, apologies how just about

Alfred Tobia

years. with was -- company the with the been company has Marc So for XX

Brett Reiss

he's lawyer? Okay. And a

Alfred Tobia

IT I also would he's a an say He's professional. but engineer. graduate-level Yes,

Operator

there time. questions for like Al further closing this I’d no additional remarks. the Tobia appears to to turn conference are it back at any And or

Alfred Tobia

to for portfolio like attending. And on next will and have I'd more then. for everyone we details call be Okay. back patent our to we'll earnings the show thank

Operator

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

Acacia Research (ACTG) 8 Aug 182018 Q2 Earnings call transcript