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FNJN: Finjan Licenses its Patents to Trend Micro for $13.4 Million on the Last Day of the Quarter

07/02/2018
By Lisa Thompson

NASDAQ:FNJN

READ THE FULL FNJN RESEARCH REPORT

On June 29, 2018 Trend Micro agreed to pay Finjan (NASDAQ:FNJN) a $13.4 million license fee, which was paid and booked as revenue that day. The agreement further stipulated that upon acquisition by the Trend Micro of certain entities, Trend Micro will pay additional license fees to Finjan, unless otherwise mutually agreed. Further, the agreement has additional provisions relating to certain unlicensed products of any company that acquires a Trend Micro Party, in which case additional license fees may apply. The parties also entered into related agreements with respect to their respective patents, including the transfer of select security-related patent assets from the Trend Micro to Finjan.

Updating Forecasts

In Q2 Finjan booked $14.7 million in revenues according to filings, we are adjusting estimates accordingly. This should result in EPS of $0.19 per share using gross margins of 90%, expenses of $5.5 million, a 28% tax rate and fully diluted shares of 30.3 million.

For Q3 we have $1.3 million being received from Carbon Black, and are assuming another $3 million in licensing fees generated before the end of the quarter giving us a total of $4.3 million in revenues for the quarter. This could result in an EPS loss of $0.04 per share.

For the full year of 2018 we are now at $93.5 million in revenues, of which $82.4 million have already been paid or are due to paid by year-end. EPS for the year is raised to $1.16 per share from a previous estimate of $0.93 per share.

The company’s has a market cap of $94 million and we estimate it has a current enterprise value of approximately $23 million. Estimating revenues of $93.5 million in 2018 and an industry multiple of 2.0 times sales, the company could be worth as much as $187 million in enterprise value or $257 million market cap. This equates to $8.55 per share.

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