Acacia(ACTG) - 2022 Q1 - Quarterly Report

Financial Performance - Total revenues for the three months ended March 31, 2022, were $13.5 million, a significant increase from $5.8 million in the same period of 2021, representing a growth of 132%[14] - The operating loss for the first quarter of 2022 was $8.5 million, compared to a loss of $5.7 million in the first quarter of 2021, indicating a deterioration in operational performance[14] - The company reported a net loss attributable to Acacia Research Corporation of $73.3 million for Q1 2022, compared to a net loss of $164.5 million in Q1 2021, showing an improvement in net loss[15] - The net loss for the three months ended March 31, 2022, was $73.27 million, compared to a net loss of $163.57 million for the same period in 2021, representing a 55% improvement[25] - The basic and diluted net loss per common share for Q1 2022 was $(1.61), an improvement from $(2.81) in Q1 2021[15] Cash and Assets - The cash and cash equivalents as of March 31, 2022, were $289.4 million, down from $308.9 million as of December 31, 2021[10] - Total assets decreased to $661.4 million as of March 31, 2022, from $798.9 million at the end of 2021, reflecting a reduction of approximately 17%[10] - Total liabilities decreased to $300.1 million as of March 31, 2022, from $353.6 million at the end of 2021, indicating a reduction of about 15%[10] - Cash and cash equivalents at the end of March 31, 2022, were $289.37 million, compared to $180.23 million at the end of March 31, 2021, indicating a year-over-year increase of 60%[25] - The total stockholders' equity as of March 31, 2022, was $345.47 million, a decrease from $288.32 million as of December 31, 2020[21] Revenue Sources - The company incurred a total cost of revenues of $4.6 million for intellectual property operations, compared to $5.3 million in the previous year, reflecting a decrease of 14%[14] - Paid-up license revenue agreements generated $2.193 million, down from $5.410 million in the prior year, reflecting a decline of 59.5%[51] - Recurring License Revenue Agreements increased to $422,000 from $393,000, marking a growth of 7.4% year-over-year[51] - Printronix's net revenues for the three months ended March 31, 2022, totaled $10.892 million, with $9.638 million from printers, consumables, and parts, and $1.254 million from services[58] Acquisitions and Investments - Acacia acquired Printronix for approximately $37.0 million, including an initial cash payment of $33.0 million and a $4.0 million working capital adjustment[35] - The company has a focus on acquiring businesses with market values in the sub-$2 billion range, particularly those valued at $1 billion or less[28] - Acacia Research Corporation has monetized a portion of its Life Sciences Portfolio while retaining interests in several operating businesses[29] Operational Insights - The company continues to monitor the impact of the COVID-19 pandemic, which has not materially affected operations to date, but potential risks remain[36] - The company engages in patent licensing and enforcement, generating revenues from granting IP rights for patented technologies[30] - Acacia's revenue recognition for Intellectual Property Operations is based on the transfer of control of IP Rights, with revenue recognized upon execution of contracts[44] - Printronix recognizes revenue upon shipment for products and over time for services, with maintenance service agreements recognized on a straight-line basis[56][57] Stock and Equity - The company repurchased common stock amounting to $10.99 million during the three months ended March 31, 2022[25] - Acacia's Board of Directors approved a stock repurchase program of up to $15.0 million, completing it in February 2022 with total purchases of 3,125,819 shares[197] - A new stock repurchase program for up to $40.0 million was approved effective March 31, 2022, with 1,392,467 shares repurchased at an average price of $4.60 as of May 9, 2022[197] Liabilities and Debt - The effective tax rates for the three months ended March 31, 2022, and 2021 were 17% and zero, respectively, with a tax benefit primarily due to a decrease in deferred tax liabilities[108] - The Company issued $115.0 million in Senior Secured Notes on June 4, 2020, as part of a Securities Purchase Agreement with Starboard[160] - The New Notes bear an interest rate of 6.00% per annum, with a total principal amount outstanding of $165.0 million as of March 31, 2022, down from $180.0 million as of December 31, 2021[164] Miscellaneous - The company has implemented robust disaster recovery and business continuity policies in response to the ongoing pandemic[36] - The company evaluates goodwill for impairment at least annually, using methods such as discounted projected future net earnings or cash flows[90] - The company recognizes a lease liability for all leases with terms greater than twelve months, along with a corresponding right-of-use asset[92]