IIoT acquisitions boost Ottawa-based Quarterhill’s Q2 revenues past patent slump

IIoT
For illustrative purposes only.

Quarterhill’s revenues continued to climb a week after the Ottawa-based firm got some good news about a big patent win.

Quarterhill (TSX:QTRH)(NASDAQ:QTRH) recorded revenues of $20.4 million for the three-month period ending June 30, an increase of 10 per cent year over year. Revenues are similarly up 24 per cent over the first half of 2018.

These figures seem like steady annual growth, but the Quarterhill story has always been more complicated than that.

For starters, last year’s figures did not include revenue from two acquisitions made in the second quarter of 2017, International Road Dynamics and Viziya. These came after the firm announced it would pivot into the industrial internet of things space earlier that year.

The other source of well-documented “lumpiness” in Quarterhill’s earnings is WiLAN, the patent licensing division that the company was founded on. Revenue from this segment is dependent on litigation wins across the firm’s large patent portfolio. These results can vary wildly – this past quarter saw revenues of roughly $4 million compared with $12 million a year ago – and so management often suggests taking a longer-term view of WiLAN’s performance.

Of course, that’s also true of its jackpot wins. Just last week, for instance, the firm won a $145.5-million patent case against Apple. Quarterhill’s share price spiked after the sizeable payday was announced but has fallen off slightly since.

The discrepancy in WiLAN’s year-over-year performance is being blamed for a net loss of $7.9 million this past quarter compared with a profit of $3.6 million a year ago.

On the IIoT side, Quarterhill president and CEO Doug Parker said he was pleased with the performance of the acquired firms. Though both IRD and Viziya got off to slow starts under the Quarterhill banner, he said in a release that their past quarter revenues are “indicative of what we believe the businesses are capable of delivering on a more regular basis.”

Shares of the firm were priced at $1.71, a increase of roughly five per cent, in early morning trading on the Toronto Stock Exchange.