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FNJN: New License Agreement with F5 Booked in Q4 2016

By Lisa Thompson


Finjan (NASDAQ:FNJN) booked one of the four license deals it promised would close in Q4 on December 30, 2016. While it had seemed the company had missed the quarter, today a press release revealed that on December 28th it had struck a deal with F5 for a $4 million license and had subsequently received the full amount on December 30, 2016. This was one of the four potential deals to close in Q4. At least two of the other three are expected to be closer to the $7-10 million range. We had previously added in only $2.5 million to our Q4 estimate for this new license and now we are changing that to the actual $4 million received. In addition the company got an early payment from Proofpoint of $3.3 million that had been due in Q1 2017 and have shifted the revenue accordingly. The only revenue unknown now for the quarter is whatever revenues CybeRisk brings in. Our Q4 revenue estimate has now been raised to $7.5 million and the EPS estimate is now a positive $0.13 per share. This makes full year revenues $17.5 million and EPS loss of $0.32.

The language in this agreement does not grant F5 any right to transfer, sublicense or grant any rights to a third party except as specifically provided under the agreement. This license also has certain provisions relating to certain unlicensed products of any company that acquires F5, or is acquired by F5 or its affiliates, in which case additional royalties of 8%, or license fees, respectively, may apply. Given all the mergers and acquisition in this industry, and a recent acquisition offer on F5, certainly such provisions in the agreement are prudent.


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