ACTG - Earnings call transcript Q3 2018 | Acacia Research Corporation

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Operator

Good afternoon, and welcome ladies and gentlemen to the Acacia Research 2018 Third Quarter Earnings Release Conference. [Operator Instructions] I would now like to turn the conference over to Mr. Rob Fink. Please go ahead.

Rob Fink

Thank you, operator. our Al today Press. and call the board Tobia members, Clifford Hosting

estimates relating estimates, beginning, remind events expectations the call Securities and during to those statements to would for generally that may of XXXX. Litigation current that forward-looking Before as of differ like forward-looking Private relates the on company’s uncertainties. the objectives may provided are based statements risks everyone certain forward or current operation future I defined projected results about and forecasts and projections projections the looking information and future contain Reform to result future results trends. of are These plans, expectations, and as in Actual a from this Act materially

please that of Risk with report on For such the as in report uncertainties, quarterly were XX-K and and risks on Acacia’s see described discussion Form filed Form annual section Factors SEC. a the XX-K

the at to Al, press I that may the presentation website during over the call the press said, Time, acaciaresearch.com at financial to that under and a I filed regarding Events financial Al. and release disclosing News With measures with from results like yours. Eastern all company’s the the addition, company the non-GAAP as included call that like disclosures today the approximately turn they accessed to X:XX financial notes company’s in well was other present measures. issued the can tab. now be refer would is release the today’s the of remind call, X-K In everyone were Please to as SEC. non-GAAP &

Al Tobia

quarter enhance accomplished quarter. busy as afternoon, was assets. a been for and I’ll new immediate my safeguard of steps over and everyone. Board Acacia’s on the Rob, today what’s and good you, took Directors Acacia, focus comments Thank to the This important past

the were board cash, and Annual July. in investments and consisted to The you IP. Meeting most inherited, elected business, assets: Press at Shareholders of know, core Clifford we the I As of three of

Our first of these of assets. to was each business order secure

As company’s cash into consolidated program part all liquidity with a of and secured it Stanley. Morgan we verified this, the quickly and short-term

$XXX short-term approximately September cash now and XX, being approximately investments share had managed. cash or that of per $X.XX we million in appropriately in As is

which X.X We We been opportunity Robotics. took also of registered investment with per we concentration investments selling have evaluated to shares million to going $XX.XX our Miso by our million reduce both Veritone shares portfolio, flexibility the in stock first and in at The provide remaining could us Veritone X share. forward. risk includes maximum

forward. with to going worked the highly both Robotics. effectively have both managing And Veritone we these appoint to for investments directors organizations independent more We qualified and to Miso processes of boards of setup management

what issues the first Turning The with to million the revenue, already the a viable IP believe Chief was the time-sensitive very addressed business. Officer quarter. IP pending as of that fourth resulting rebuilding portfolio, side. $XX to another approximately in taken Patent we in been $XX.X million We in step the Booth quarter in recognized Marc appointment is third be

cut allocation. core During and the that potential an and range than overhead much more known in also licensing used of Acacia XX% are our and IP Beach, more expense the of capital and operating a is appropriate in on office in corporate are cost the continuing in to opportunities operations we business is by liabilities structure. employees County, being July, more the The in offices. process Orange and for XX,XXX third with Since square tower and stable Newport million. we carefully with our reduction finalizing by now $X business efforts, of in budget risks quarter, to respect focused appropriate which expense assessing most examining XXXX Acacia’s and expensive about being moving the feet consisted office is was an XX now have subleased

reviewed collaboration our all other carefully and known counsel risks In the liabilities. potential with also liabilities we experts, company. in legal the We examined and

reserve We like cover have turn $X Press. million recorded over net releases call the a of this At litigation time, liabilities. of Clifford known I’d to to to

Clifford Press

to years July to Property role IP Marc Marc and before he come performance. back managing was last needed business. million in year, him to departing the only us and command $XX afternoon. for spent the but he be at We and carefully hit as ground running. in able quickly, excellent played team has Booth to to the Good returned a did had and Acacia Intellectual helped Officer he key revenue achieve in this addressed his XX that business. Not evaluate Acacia Chief

team, patent excluding As that of going were previous returns and capitalize parts: a First, the has it. subsequent the actually results it has a to found based market, and reduced optimality. is well to structure upside which acquisitions pricing change tactical now that this of in and that financial believe, consists quite on decided The we severely the and is management abandon been portfolio. onwards, of from most positioned existing a period you significant capable one legal which, Acacia of results IP business, We evaluated rebuild industry know, providing dislocated changes, and marquee opportunity cost the investors. is the been was to believe XXXX significantly decisions the through We on IP operates rationalized, regulatory to correlated core With had positive. two

addressed the As transactions and that I $XX.X time-sensitive not addressed. rapidly recognized and immediate opportunities have been million and have in mentioned, up piling portfolio within this we’ve

to new we do continue this to scale expect portfolio revenue on not However, without generate this additions.

process pursue and we opportunities with attractive announcing from of are Second, a these retained in be identify and focused candidates. assembly to growth. responsibly search We executive is area. The help and well, Korn to new the board August in next attributes months. coming opportunities, going expertise and Ferry the very expect members in this search there appropriate are on First well-qualified here the To viable steps: for midst board specific

Second, we out flywheel classes the build are uncorrelated with the on as capitalizing recruiting the operating asset center. the executives at IP to strategies new

Let loss investment and of $XX in financial issued $XXX an also million quarter. and to briefly of and that unrealized will on quarter of the third totaled gain compared me million the spend September to is providing for as Veritone, minutes today release the file and investments XX, now short-term More of the compared overview report in quarterly quarter we $XXX.X SEC. press XXXX $XXX.X with a a detail non-GAAP year million Cash results. XXXX of Form on as as equity XX-Q in few results the available the totaling the comparable December a third realized GAAP unrealized XX, XXXX. as million net included in

Veritone summary, first quarter, shares million $XX.X as realized direct to of Directors, loss establish sold company. newly the Acacia elected and stabilize During X a duty priorities and million was the to our sale. $X.X clear, for of million that In on appropriate

capable a a attractive now legacy now during which quarter, soon revived and board Acacia have of with comprised of clean, talented asset the As the directors. business, highly done a a – will is result work

business rising the valued long-standing led Booth, like open professionally providing at team grateful to operating Chief With occasion Acacia’s the has at to with at team, Stradling while support been that, complex and facilities cash extremely corporate now questions. us partners. comprehensive and along Officer, current helped exceptional, are to quickly the the legal appropriate our Acacia we’d by We Morgan our for guidance, counsel IP traits. management the establish facilitate Stanley, for call and Marc

Operator

Instructions] Thank you. We’ll from hear Terrace Ted Moreau [Operator Research. first with

Ted Moreau

Good Yes. you. Thank afternoon, guys.

that cost the – talked undertaken. You bit little you’ve a about some reductions

XXXX? – done you’re to are Or you’ve the then go through you curious, further Or do of taken the run flow yet? have have order about reductions the to are kind you all talking just to actions rate, P&L. get you and already Just in to cost for

Al Tobia

to we’ve The Ted. thanks, through the taken actions will P&L. start flow So that

the lower now, of to As transitioning in we’re cost lease. of a process

number But did process. a bit had a a the a we example will small give that employees, that that’s of we lease for of such magnitude the So of of gradual so And company we of was resources fair management the that significant with reallocation prior of occurred. team, there a side, on a parted savings. headcount the had cost amount obviously so be

So that employees will licensing productive through just more rather repositioning ongoing cost-cutting cost areas also an be into generating was that employees being that business some development IPP business Booth. functional are by Marc process capable or meaning areas who and than absolute and or either led of

Ted Moreau

discussion And board. members some great. adding then, about was to the Okay, several there

of by the the Just to of have that the Is add once year? of how curious, do many And members – members end expect line time that? you was finalized? what all do to expect board you the board

Clifford Press

as come resigned, was the obviously, board is was difficult what otherwise, as be This we it started, a that Clifford directors new important and But members. search was for soon make into would was it board the the We sure out legacy to started figure it that company transparent on uncertain. because Press. working members situation for to

qualified us. So I I we think year. is well it’s the of along reconstituted with much would candidates, a should the the got expect And task pool We’ve in and Ferry have Korn by of pretty great board end clear. highly now very that

Ted Moreau

give to business. deal Sounds on details some Can And the also, state kind good. of the kind all from business? turning the flow reviewing? me. And of then, then also you’re patent you – kind what of and that’s And of patent current

Al Tobia

Ted. Thanks,

were period, then negatively. Obviously, the severe when seeing market gone a period market was They regulatory at dislocation, high is aggressively the Clifford aggressively unwinding well. And Let me commentary having a and market. this the we’re those through add in impacted up seem bottom. and take of the XXXX/XXXX to to capital changes up this allocation at boom leading Leading to that decisions of unwinding some made raised now that level, the be state that deployed. peak as of capital of is many at can the a lots

which fact this I our theoretically reduced categorize retain believe will from decision optionality forward. we’re capital what the that seen that generate coming structure heavily this going looking way process, cost given looking at are one opportunities a market, you that there uncorrelated So at allocation for of of hope lots intake, will that deals. that’s the a lot would could the and we as to be a And a given in would deal business we’ve returns. dislocated business, We we from in

So Clifford, to more the about you market? say have anything

Clifford Press

out there. Once of in a been back that There’s getting there’s of was deal people realize great lot business, interest a seriously in opportunities Acacia involved.

Ted Moreau

Okay, great. Good gentlemen. luck,

Operator

with from next Mobley Benchmark. Gary hear We’ll

Gary Mobley

the And about the advance apologize patent as here my from questions selling with you’re in of deals, to was But I – questions the license. recognition to uninformed, assuming mentioned the quarter puts be. $XX the the the this seem are then for I value flows portfolio? Is this may I’m quarter. patent revenue third with generate far order in takes structuring how gentlemen. realization you’ve recognized well start the they these as you near-term future Hi, if fourth are trying licensing cash well. you if million, wanted portfolio? you so and as balance to patent in some

Clifford Press

of That not that And We’ve the the the a would not the certain not learned of interested of in characteristic intention are past. in we because lot future. in transaction because been we Acacia’s that we basis. proceeding recently. but – that any activity business, – are inhibited about to be And on sunset subject in a transactions the kind interested has

able been revenue urgent So it as the revenue was And remarks, portfolio. to said patent going it’s that’s some scale be the contractual that by with. not that generated I generate been Then will the patent in on be portfolio issues do we generated, expect needed that the existing forward. addressing prepared existing dealt to

Gary Mobley

Okay.

we’re recognized in structuring patent As as license some quarter fourth current you patent in portfolio, fully the as license and, And discover deals? paid-up are in paid-up the license as into deals fully quarter the past? you the well, deals did dug you that – the

Clifford Press

amount practice number particular not ongoing very there the is past of this in license fully transactions I’d here. There certain the at deals. transactions are do get For moment. a the paid-up a Acacia’s but nature But generally significant. the not into been relative revenue, to it – of of rather has

primarily the transactions paid-up – be I be that deals. the industry the lot are I said, seen very than And in we it type think will there’s going but a different of we that now, as past. but to prevalent not As did done forward, sure I’m that, structure looks

Gary Mobley

Okay. this non-practice reform? to to relate regulation speak This of, change in environment relating that is does entities? tort on you this Or general

Clifford Press

what this was activity field. dislocation which very allocation and in getting the a There the capital I’ll accumulation, refer purchasing was amount which now Primarily, unwound. to, of large to is

So this market lot than interested sellers are put enough there is in transacting. that few capitalized is bluntly, buyers. one in to well a entities the and very, of more it Acacia very is

So desirable in it market a it’s which be like – us, buyer. a for very looks to

Gary Mobley

right, for guys thank my answering All you questions. Okay.

Operator

hear We’ll Scott with Janney Montgomery now Brett from Reiss.

Brett Reiss

depressed share for Hi, the you hear these with with a patent of a sheet the the Since cash what to opposing balance versus balance hi. on show stock to But the in gentlemen. side. the there’s Can million, fair the show of keep strength to at Yes, going amount we’re sheet levels? have me? keep the available on need strength having to $XXX buybacks cash business, to stay we

Al Tobia

at and liquid the look the assets the and we investments value, NOL significantly and that then then in add books, can on the up see be it’s patent book level. will we and that be we also building the So cash stock then we being historically built. a structure may with the asset opposed cost as wasn’t below feel to down where And like book very

asset we to So But potentially buybacks other the not the we this it at to liquid cash, some but stock its sense us weigh trading we have cash. make discount steeper for have value. that of versus I uses be question, excess the to hear does to view

Brett Reiss

at you us tell the how what point? the Could value the NOL – much of is this is Right.

Clifford Press

Yes. It’s $X a – share. in approximately the it’s

Brett Reiss

just successful? buyers’ The to going them acquire to get having to able to are a costs a and Okay. the any and reward layout patent look of because it’s you’re fee portfolio filing that in you going the effect to you’re be money market, such the to portion without – front-load legal kept if

Clifford Press

the market transactions aftermath top the restructured has themselves of of on active have itself the the think in I of the bursting restructured bubble. the

seems structures think past. – were there the going in this somewhat I than So different they forward

is, it. to Let’s can hopefully those. books talk we’ll wait we announcing till the backend the some when reward then on some what be of we’ll And question how some real about But buyout obviously, we about, is and comment them. we get of discuss can we And be much on the able risk to upfront? And the that? have ones

Brett Reiss

great. that’s Oh,

right focus Now can anything the that your in going you’re Or are focus patents niche the you at, areas are certain you to to expertise? going looking look to at patent you get where want price? on at you the area

Clifford Press

we No, a place. I more think have can the we probably accurately once in board answer question that’s new

we of to I will people the in and significantly talking together are that We space, expertise IP have various think parts wide-ranging that when them. come have

Brett Reiss

Okay.

liabilities, what that? on some for us Now color the you that reserve $X to legacy million is give going Can more cover? of

Al Tobia

the patent, number a IP on with had management that very the prior believed the of it fact was – to occasions one they attracted reason liabilities because it. substantial been accept had that There business referred to

and became cover litigation, of reserves, litigation we disposed when any the more remained, of review what company. liabilities are then number now. disposed asserted and is some the very enough of and of what these and reserves So all than claims some involved, there was against an are and of other made releases able assessment it’s think net result that comprehensive of of the be to as we kind And controversies to

Brett Reiss

at of other? fair get you ask I’ll is area Or the I value in the sheet? number more the that asked The Robotics, in the May Miso I’ve because right. investment is that balance in valuation investment one back All queue. and

Clifford Press

I’m where is. not that sure

it Let me change if it, cost, so…

Al Tobia

We on get can that… back to you

Clifford Press

can get on you back to that. We

Al Tobia

that, can held because We investment the costs. on get back you to is the

Brett Reiss

us cart Okay. for the questions. hope. Thank and control appreciate all and I the by answering of you grabbing my getting you. Thank bull giving horns

Operator

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

You may now disconnect.

Acacia Research (ACTG) 25 Oct 182018 Q3 Earnings call transcript