Richard Lloyd

WiLAN announced its results for the fourth quarter yesterday and it’s fair to say that the Canadian NPE had a very strong end to 2016. Revenues for the last three months of the year were $30.2 million, up just over $4 million year-on-year, while EBITDA stood at $17.5 million.

Among other highlights the business also added new portfolios from Eastman Kodak and Global Foundries in yet another sign of its ability to replenish its patent pipeline. WiLAN’s portfolio now stands at around 11,000 after a significant growth spurt in the last couple of years. That makes it one of the biggest NPEs in the market — possibly only eclipsed by Intellectual Ventures — although on a call with analysts yesterday to discuss the latest numbers management admitted that it would most likely drop some patents.

The expense of maintaining the assets it owns has hit $10 million, compared to $7.7 million in 2015. That makes sense given the significant growth in WiLAN’s arsenal, but it’s still a heavy cost burden to bear. “For this year 2017 we will continue to work to cull the portfolio of certain non-core patents in order to optimize this expense,” CEO Jim Skippen said on the call.  

The Kodak and Global Foundries deals come at the end of a year which saw deals involving Panasonic, SRI International and Funai, as well as new partnerships with two Canadian universities and a litigation strategy which saw WiLAN file its first lawsuit in China, against Sony. In the fourth quarter it also signed licensing deals with Asian-based manufacturers Funai and Tongfang, which helped drive the impressive revenue growth in the last quarter. That said, overall revenue for 2016 was down year-on-year to $92.9 million compared with $102.9 million in 2015.

This news took some of the gloss off WiLAN’s numbers, but as Skippen made clear on the call, being a public IP company (PIPCO) tends to mean very lumpy revenues as one or two large licensing deals can skew the numbers. Despite that, it’s hard not to see the last couple of years as transformational for the NPE. Just a few years ago it was undergoing a strategic review to evaluate its future and considering massively reducing its portfolio.

WiLAN’s performance also stands out at a time when others have been struggling. Inventergy and Form Holdings (previously Vringo) are both effectively out of the IP licensing business. Spherix is still monetising assets, in large part through its relationship with Equitable IP, but is also actively looking at other ways of applying its patent expertise.  

Of the larger NPEs, Acacia’s share price had a strong 2016, but it has not replenished its patent pipeline in some time which raises the suspicion that it is looking to get out of the licensing business. If that turmoil continues and WiLAN can keep churning out deals (admittedly that is a big if) then the prospects for Skippen and his team look much better than for most. What the last few years have shown is that there are still operating companies prepared to offload assets either in straight sales or through privateering deals. For the few PIPCOs that stay in the business, that should provide some hope.