Q2 2019 Earnings Call

Good day, and welcome ladies and gentlemen to the Acacia research. Once you 19 second quarter earnings 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 Fink. Please go ahead Sir.

Thank you hosting the call today are more board members out to be a equipment from.

Before beginning I would like to remind you that the information provided during this call may contain forward looking statements relating to current expectations estimates forecasts and projections about future events that are forward looking on defined in the private Securities Litigation Reform Act of 1995.

These forward looking statements generally relate to the company's plans objectives and expectations for future operations are based on the current estimates and projections of future results or trends.

Actual results may differ materially from those projected as a result of certain risks and uncertainties.

For a discussion of such risks and uncertainties. Please see the risk factors described in occasions annual report on Form 10-K quarterly reports on Form 10-Q .

Following filed with the SEC.

In addition, during the call the company will present non-GAAP financial measures. Please refer to disclosures regarding the presentation of non-GAAP financial measures and other notes that were included in yesterday's earnings release as well as the 8-K filed with the SEC.

I would like to remind everyone that a press release disclosing the company's financial results was issued yesterday. After the market closed. This release may be accessed on the company's website at Acacia research Dot com under the news and events tab with all that said I'd like to turn the call over to al outlook call as yours.

Thank you, Rob and good morning, everyone.

During the second quarter Acacia is board implemented a comprehensive set of governance reforms to complete the transformation that began at last year's annual shareholder meeting.

In preparing this initiative, we met with nearly all of our large shareholders soliciting input on the company, which shaped Acacia strategy and drove the actions of the past year.

Our shareholders expressed the view that the IP business is deeply dislocated offering attractive potential returns for a well capitalized company with a prudent asset allocation strategy.

In response, our new board of directors made the strategic decision to invest indications IP business rationalizing our cost structure and directing wasteful corporate spending to productive licensing assets.

With solid capitalization significant net operating loss carry forwards and a highly relevant board that includes investors and professionals. We are uniquely positioned to pursue investments that are capable of producing absolute returns over the long term.

We are also evaluating a number of opportunities where we have identified value in the public markets and can capitalize on them Opportunistically.

With the money in skills now represented indication.

We have initiated a 5.1% physician in immersion Corporation.

On August Onest, we filed the form 13D.

In this filing we stated that we purchased this position because we believed immersion to be trading at a discount to intrinsic value only to missteps in areas of strategy can be corrected to realize the value of immersions assets.

This investment is consistent with our absolute return strategy and provides us with significant optionality, we will keep our shareholders apprised of future actions here.

Turning to the balance sheet.

Specifically the other investments line accounting rules require us to write off the investment in me So robotics, given the Companys financial position and current cash burn they are currently pursuing strategic partnerships.

I'd like to now turn the call over to Clifford for a review of our Q2 results and a discussion of our progress on our go forward strategy.

Thanks Al Good morning, everyone I will provide an overview of the second quarter financial results with more detail is available in the press release issued last night and also in the upcoming pushing forward.

On Form 10-Q , which we will file with the SEC.

As a reminder.

Our focus is on getting the cases book value over time.

Cash and short term investments totaled 164.9 million at June 29 team as compared to $65.5 million as of December 31st last year revenues for the second quarter were $5.5 million.

Well the fit of oldest occasions board of directors approved a buyback.

Up to $10 million in Acacia common stock over the next 12 months, which could be used among other purposes to offset dilution from equity based incentive grants.

For the full year, we expect revenues of approximately 25 million and net cash from operations of around $5 million before investing at budgeted 20 million in new IP.

Now lets open the call for questions.

Operator.

Okay.

Thank you she'd like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again press star one to ask a question, we'll take our first question from Mr., Brett Reiss from Janney. Please go ahead.

Oh, Hi, Al High Clifford.

Hey, Brent.

Could you update US did we are in take any patent portfolios this quarter and how does the pipeline look.

The next couple of quarters.

Oh pipeline looks good this quarter, we actually closed on around 600000 of new intake.

But we do expect that Jim.

We'll get to approximately 20 million by the end of the there's a fair amount of.

Material that's currently in interviews.

Okay.

When we're selecting a patent portfolios for intake Oh are we trying to find portfolios.

That.

The revenue flow, we'll we'll start a quicker time line then you know the typical.

Patent portfolios in the past.

Well, but I'm not sure what you're considering the typical pattern portfolio in the past, but Jim.

We've made a decision not to buy anything simply because it fills a short term revenue.

Oh.

Opportunity are we looking at these portfolios strictly on the basis of the return available over the complete monetization of the of the assets.

And in general it takes at least the.

Two years until you start to see licensing coming in.

As a as a rule, but it's all I do the math.

Okay.

Any movement on the pharma royalty business that you're you're looking to develop.

Well from a royalties are up an IP opportunity that actually do represent current revenue and income just by the nature of them and we are looking at those opportunities as well.

With respect to.

The 5% plus position in immersion.

You know if you could wave a magic wand and get your you know maximum best wishes on that but but what would you like to see happen there and just.

It some more color what what attracts you to the immersion situation.

The bid were a little bit constrained because none of their public the form 13D filing.

It will be difficult. So it's good to go beyond what was stated in the filing that we made it clear that we felt was a good asset it's trading at a discount and represents an attractive value for us to buy at this stage and we also said that.

There are probably some actions that the board of the company could take to correct. The undervaluation. So I didn't know if that's what you're thinking of in terms of the magic wand that we would like to see them address that.

Great one last one what's our remaining position in Veritone, both with the stock and the warrants.

The the warrant position remains the same as it was that's unchanged and the stock position were public on the 13D filings so.

You know that's all that's all disclosed publicly right now where there's no there's no.

News there.

Okay. Thank you for taking my questions I'll drop back in queue.

Thank you for Sunday question I'm sorry.

Please remove yourself from the queue by pressing star too.

Once again, if youd like to ask a question. Please press star one we're taking our next question from William Gibson from Roth Capital Partners. Please go ahead.

Thank you I'd like to follow up a little bit on bretts Probeam at and just in regard to the type of IP you're looking for.

With investment in a public company it implies that your.

Thinking the return and are practicing entity could be better than non practicing out what's sort of your sense of.

You know going for the IP and because some of the NPS been hard to monetize.

Oh, Yeah, I didn't think I understand the question I don't think that necessarily looking at it as an NPV NPV versus a non NP situation. We actually think that issue is probably fading a little bit now it's been it's been dealt with and in this case its business.

The company that Youre, referring to imagine.

He has got some very solid assets, they well tested they'd been litigated.

The question there is how the asset is being monetized its no different than when we take in essence of the same nature and how we go about monetizing them.

And just to add here.

Yes, just went to that remember, we we havent 200 plus million dollars Oh well.

So when you look at when you look at.

Adding productive assets to the company we are weird, if we have an efficient cost structure and we haven't in a while.

Good point thank you.

[noise].

It appears that there are no further questions at this moment.

Please get old trying to conference back to the management for any closing or <unk> remarks.

Thank you all for joining us today.

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