Recent

% | \$
 Quotes you view appear here for quick access.

Digimarc Corporation Message Board

• dtmccune3 dtmccune3 Feb 12, 2013 12:45 PM Flag

IV deal back of napkin math...

In my opinion the way to look at the IV deal is as follows...

IV revs from dmrc licensing tech - costs incurred (including lic revs paid to dmrc, lic costs to other cos, and % of revs available to dmrc bc IV has formed different baskets of patents so its not just dmrc patents being licensed there are other companies tech involved as well)

If x is the upfront license fee in each year and y is the trailing license fee per year...
We know year 1 ( or first 15 mo) is \$27m + 23m over 5-7 years or \$3.2m/yr
Year 2 which we will find out in march I am assuming (due to all the companies we have mentioned on this board) will be similar to year 1 ( this could be conservative) = \$25m + 20m over 5-7 years or \$2.8m/yr
Year 3 I also think will be similar if not bigger, but just to be conservative I will assume \$15m upfront + 10m over 5-7 yrs or \$1.4m/yr
Year 4 let's just use \$8m and 4m over 5-7 years to be conservative
This gives you the revenue picture for these baskets of patents...

Yr 1: \$27m + 0
Yr 2: \$25m + 3.2m
Yr 3: \$15m + 3.2m + 2.8m
Yr 4: \$8m + 3.2m + 2.8m + 1.4m
Yr 5: \$yr5X + 3.2 + 2.8m +1.4m + .5m
Yr 6: \$yr6X + 3.2 + 2.8m +1.4m + .5m + yr5Y
Etc etc etc

This gives you the revenue number...now if you take out the costs such as IV lic costs and portfolio costs and the % of the patents that are dmrc's you can get the total cost. Then you get the net revs attributable to dmrc and multiply that by 20% = dmrc revs from IV which most likely 95% + gross margin

I am using 60% of the IV revs as dmrc's portion of the IV patent baskets and including whatever costs IV incurs in that number...also I agree with the \$41m number for iv's licensing costs to dmrc although through 2012 this number is probably more around \$32m

So...
Yr 1: \$27m =27m.
Yr 2: \$28.2m. =55.2m. *.6= 33.12m -32m=1.1m *.2= \$200k for dmrc
Yr3: \$21m. =76.2m. *6= 45.72m -41m= 4.7m *.2= 900k for dmrc
Yr4: 15.4m. =89.6m. *6= 53.76m -41m= 12.76m *.2= \$2.5m for dmrc
Etc etc etc

This is the way I understand the deal...obviously the big variables are each years upfront license payments, the perpetual license payments, the costs of IV, and the % of the revs that are due to dmrc

I think the numbers I used were realistic if not conservative...

I also agree that 1st wave is making the 2nd wave more valuable...

SortNewest  |  Oldest  |  Most Replied Expand all replies

Top Stories

33.65+1.02(+3.13%)Oct 24 4:00 PMEDT