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FNJN: Finjan Receives $65 Million Symantec Payment to Start Its Record Year

04/10/2018
By Lisa Thompson

NASDAQ:FNJN

Finjan (NASDAQ:FNJN) reported its first quarter of 2018 revenues consisted of booking $65 million-- all from its settlement with Symantec. This compares with $24.7 million booked in the Q1 2017 quarter. Finjan received the $65 million payment due from Symantec on March 19, 2018. Subsequently, the company retired the remaining balance of its Series A-1 Preferred Stock from its 2017 $15.3 million Series A-1 Preferred Stock. After having paid the lawyers on the Symantec and Blue Coat cases, the company now has $66 million in cash, no debt and no preferred. It believes that gives it a runway of two to three years of cash on hand to support current operations not including any additional revenues. This first quarter payment resulted in operating income of $42.9 million versus $16.3 million a year ago.

Yesterday Finjan announced it had settled its lawsuit against Carbon Black that was filed on March 21, 2018 in the U.S. Northern District of California. Finjan alleged that Carbon Black’s products and services infringe at least four U.S. Finjan patents: 6,804,780; 6,154,844; 8,677,494; and 8,141,154. Finjan sought, among other things, a jury trial, a judgment of infringement by Carbon Black, a preliminary and permanent injunction for infringement the ‘154 Patent, past damages not less than a reasonable royalty, enhanced damages for willful infringement, and reasonable attorneys' fees and costs for infringement of each of the asserted patents. In return for a license for its products, Carbon Black agreed to pay Finjan $3.9 million in three installments of $1.3 million to be received in Finjan Q2, Q3, and Q4 quarters. In addition, upon acquisition of Carbon Black or acquisitions by Carbon Black, additional one-time license fees will be due to Finjan equal to eight percent of the gross revenues of certain qualifying products and services for the four concluded quarters immediately preceding the acquisition.

Updating Forecasts

For 2018 we are conservatively expecting the company to book $17 million in licenses from various companies, which includes the already negotiated $3.9 million to be received from Carbon Black. During the earnings call management told investors to expect it would spend less that previously thought in 2018. It reduced its operating expense level estimate to $5-$6 million per quarter due to the reduced level of litigation required since the settlement with Symantec and Blue Coat. Based on that, we are raising our EPS estimate for 2018 to $1.52 per share.

In 2019 we are assuming that SYMC will buy a company that will trigger the $45 million to Finjan. In addition it will be due $2.5 million from Sophos and we estimate it could garner another $20 million in various license fees, settlements or judgments. This could result in the company earning $1.17 per share.

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