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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 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

    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...

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