WiLAN sees revenue cut in half during second quarter

Ottawa-based WiLAN saw its revenue drop by more than more half during its second quarter of 2016 compared with the same period the year before.

The patent-licensing firm reported revenue of US$16 million during the three-month period that ended on June 30. That’s down from US$35 million during the same period last year.

The company attributed that to a larger number of fixed-fee license agreements that were signed last year, particularly a multimillion-dollar deal with Samsung.

"There’s no question that our business performance can be lumpy and we experienced that dynamic this quarter," Jim Skippen, WiLAN’s CEO, told investors on a conference call Thursday morning. "Revenues were lower this quarter, but as we’ve said before, this lumpiness is just business as usual for us. It reflects the fact that timing and license agreements can vary from quarter to quarter."

WiLAN reported a GAAP net loss of US$3.2 million during the quarter, down from a net income of US$11 million during the same period last year.

The lower income was credited to the drop in revenue, offset partially by lower costs.

WiLAN reported EBITDA of US$7.1 million during the quarter, down from US$25.2 million during the same period last year.

"Even with revenues being down, we still generated a healthy EBITDA margin and grew the cash on our balance sheet," Mr. Skippen said.

Litigation costs for the company, which frequently uses the courts to enforce its patent rights, were US$600,000, down from US$3.1 million during the same quarter last year.

The company said that decline was due to a focus on settling lawsuits and developing contingent-fee arrangements with legal counsel. WiLAN currently has more than 60 ongoing litigations, according to Mr. Skippen.

Increasingly, he said, WiLAN is pursuing litigation outside of the United States in Germany, China and Canada.

"The environment for patent litigation in the U.S. is not as favourable I don’t think as it was a decade ago," he said. "We still think it’s a good jurisdiction, but we think it’s worth looking at other jurisdictions."

Despite the losses, WiLAN declared a dividend of CDN$0.0125 per common share. The company said it returned $2 million to shareholders during its second quarter through share buybacks and dividend payments.

During the call, Mr. Skippen highlighted several new patent acquisitions and licensing partnerships, including a patent portfolio for the technology used to develop Siri, the voice-activated personal assistant software.

"Apple has already licensed this portfolio, but many other players in this market are not licensed for similar products, which creates what we believe is a significant market opportunity," he said.

WiLAN also signed partnerships with the University of Waterloo and the University of Saskatchewan.

"That two of Canada’s top universities have sought our assistance to help license and promote their technologies speaks to our high stature in the licensing world and also speaks to our potential to develop new and exciting markets in the future," Mr. Skippen said.