Effective cost controls and higher revenue helped Ottawa-based WiLAN’s 2015 first-quarter earnings exceed guidance by 112 per cent, its president and CEO said Wednesday.
“The first quarter was a quarter of steady progress,” Jim Skippen said in a statement, adding the company signed eight new licences and two wireless licence renewals.
Adjusted earnings for the three months ending March 31 were $6.8 million, or six cents per share. This is down from $16.8 million, or 14 cents per share, the company earned in the first quarter of 2014. The company said increased litigation expenses are primarily to blame for the decline.
WiLAN’s GAAP earnings amounted to a loss of $4.8 million, or four cents per share, compared with earnings of $4.0 million, or three cents per share, in the same quarter last year.
First-quarter revenue of $20.4 million was down about $5.5 million from the same quarter last year but still exceeded guidance by 17 per cent. The company said the decline was due primarily to the timing and amount of fixed payments.
Operating expenses for the quarter came in at $19.5 million, about $5 million more than the first quarter of 2014. The company said the increase was mostly because of litigation, patent amortization and contingent partner payments and contingent legal fees.
Litigation expenses were $6.2 million for the quarter, an increase of $1.7 million from the same period last year. The company said litigation expenses vary from period to period due to the “variability of litigation activities.”
As of March 31, WiLAN (TSX:WIN, NASDAQ:WILN) had $118.5 million in cash, cash equivalents or short-term investments, a decrease of $9.1 million from three months ago. The company said this is due mostly to the $5.5 million given back to shareholders in dividend and share buyback payments, as well as payments for patents acquired in the current and past fiscal year.
Looking ahead, WiLAN expects second-quarter revenues of at least $18.3 million, operating expenses between $11.7 million and $12.9 million, and adjusted earnings between $5.5 million and $6.7 million.
The company has consistently exceeded guidance over the last three years, often by substantial amounts, because it does not include running royalty payments expected but not yet received or amounts from new licences signed after guidance is given. With the company now announcing quarterly results earlier, it feels the guidance numbers are “not particularly helpful” to investors. In the future, the company will no longer provide revenue or earnings guidance but will continue to announce quarterly expense guidance.