FNJN: No Surprises in Q1 2017 Results

By Lisa Thompson

NASDAQ:FNJN

Finjan (FNJN) reported revenues of $24.7 million versus $2.3 million a year ago, in accordance with its preannouncement as well as the sum of all the announced licensing agreements and settlements announced along the way. Expenses were slightly ahead of our estimates and for the first time the company paid some taxes in form of the federal minimum alternative tax of $324,000. The company reported fully diluted EPS of $0.69, two cents ahead of our estimate primarily because we were off in our estimate of fully diluted shares.

This quarter revenues were comprised of $15 million from Sophos, $7.745 million from Avast and $2 million from Veracode. Sophos is expected to pay Finjan another $2.5 million; one payment is expected on 3/31/2018 and the second on 3/31/2019.

The company has a full pipeline of deals and we expect it to continue to license additional cybersecurity companies throughout the course of the year that are not included in our estimates as they are difficult to forecast.

After Q1 2017 Ended:

In Q2 2107, Finjan redeemed all of its remaining $6.6 million or 39,733 shares of the Series A Preferred stock. Since the company ended March with $26.4 million, that cash level has subsequently been reduced to $19.8 million.

On April 21, 2017, Finjan announced a license with Avira for a total of $4.9 million cash. $2.3 million of that was already paid in Q2 2017 on April 26, 2017. The rest is to be paid in two payments: $1.3 million on or before January 31, 2018, and another $1.3 million on or before January 31, 2019. At the same time, Finjan also struck a deal with Avira, to distribute and sell the Avira VPN Platform as part of Finjan’s Vital SecurityTM suite of product offerings. Avira will also grant Finjan Mobile certain license rights and Finjan Mobile shall pay Avira $3.9 million in license fees payable in 12 quarterly installments of $325,000 over the next 3 years. Finjan Mobile then cross-licensed it patents with Avira. Finjan plans to launch a product offering of its secure browser bundled with Avira’s VPN in Q3 2017. Finjan’s current browser, VitalSecurity Gen3.5, has been downloaded more than 165,000 times to date for Avira through the Android Google Play Store. It is also available in the iTunes store. This month Finjan is updating the browser to include tracker and ad blocking.

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