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FNJN: Great Q4, Full Year 2016, and Current Q1 2017 For Finjan

03/29/2017

By Lisa Thompson

NASDAQ:FNJN

Finjan (NASDAQ:FNJN) closed out a successful 2016 with a strong Q4 and an early prepayment from Proofpoint and Websense. Progress in Q1 was even more heartening as it unexpectedly closed one $2 million license with Veracode and then settled a case with Avast resulting in payments of $9.745 million already booked and paid this quarter. This is larger than the $8.4 million booked in Q4 2016. The company is on a roll and actions and discussions started months and years ago are now in many cases reaching conclusion. We expect licensing and litigation success to accelerate in coming months leading up to the conclusion of Blue Coat 1 in Q4  2017.

Earnings for Full Year 2016

For the full year 2016, Finjan reported revenues of $18.4 million and an EPS loss of $0.28 versus $4.7 million and an EPS loss of $0.56. Expenses in 2017 were $15.0 million versus $17.8 million due to a reduction in SG&A because of lower litigation expense as the company changed the methodology of when the litigators are paid. Finjan had an operating income of $350,000 and losses due to common shareholders were reduced to a $6.4 million loss versus a $12.6 million loss in 2015. The large loss to common shareholders in 2016 was due to talking on preferred stock in order to finance operations until the anticipated payment of the win against Blue Coat and future licensing deals.

Q4 2016

For Q4 2016, Finjan reported revenues of $8.4 million and fully diluted EPS of $0.16 versus $4.0 million and an EPS loss of $0.05. Expenses in Q1 2016 were $3.7 million versus $4.3 million due to a reduction in SG&A because of reduced litigation expense. Finjan had an operating income and net income due to common shareholders of $3.9 million. This compared with a $1.1 million loss in 2016. There was no expense for accretion from preferred stock in the quarter. Fully diluted EPS per share for the quarter was $0.16 versus a loss of $0.05 on primary shares outstanding.

Raising 2017 Forecasts

Due to the recent license agreement paid by Avast already in March we are raising full year 2017 and Q1 2017 estimates. For Q1 2017 we are now looking for $9.845 million in revenues, all of which have already been announced and paid except for the estimated $100,000 in revenue we are estimating for the CybeRisk division. There are of course a few days left in the quarter and new licenses could surely sneak in. With expenses of $4.1 million, this would yield a fully diluted EPS of $0.23 per share versus $2.3 million in sales and a loss of $0.05 per share in 2016.

For the year we are raising revenues to $61.1 million and $1.08 versus $18.4 million and a loss of $0.28 EPS in 2016. The bulk of the revenues come from collecting on the win against Blue Coat of $45 million expected in Q4 2017.

Clearly the company was able to reach operating break even at an annual revenue level of $18 million, which were generated by licensing deals. If the company can keep this annual revenue rate, we are hopeful that the company will not need any outside financing for the foreseeable future if at all and we look forward to the common shareholders reaping the entirety of the company’s success in 2018.

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