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ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
ACACIA
RESEARCH
GROUP LLC
UNLOCKING patent POTENTIAL
NASDAQ: ACTG A Subsidiary of Acacia Research Corporation
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Forward Looking Statements
This presentation contains forward looking statements within the meaning of
the “safe” harbor provisions of the Private Securities Litigation Reform Act of
1995. These statements address future events and conditions concerning the
company’s business plans. Such statements are based on management’s
current expectations and are subject to a number of factors and uncertainties,
such as future economic conditions, changes in consumer demand, legislative,
regulatory and competitive developments, and other circumstances affecting
anticipated revenues and costs, which may cause actual results to differ
materially. The company expressly disclaims any future obligation or
undertaking to update or revise any forward looking statement contained
herein.
CONFIDENTIAL AND PROPRIETARY 2
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
ACACIA
is at the
TRANSACTIONAL
CENTER of
INNOVATION.
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ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Unlocking
Patent Potential
Acacia is the No. 1 outsourced partner for monetizing patented technologies
CONFIDENTIAL AND PROPRIETARY 4
*as of 4/22/2015
Key Financial Information
NASDAQ Listing ACTG
Stock Price* $9.83
Market Capitalization $546M
2014 Revenue $131M
Cash and Investments (No Debt) $166M
Dividend Yield 4.7%
• Intermediates transactions between patent owners & patent infringers by partnering with patent owners
• Facilitates efficiency and delivers
monetary rewards to the patent owner • Approximately $691M returned to patent
partners
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Investment Highlights
Empowering Inventors and Patent Owners
• Leading outsourced patent licensing company an emerging patent
clearinghouse
• Strategic focus on more consistent, predictable and profitable business model
• Robust portfolio of diverse licensing programs across multiple industries
• Accelerating trial calendar—2015 and 2016 more than 20 trials
• Strong operating leverage with highly scalable business model
• Deep legal and technology expertise
• Deep industry knowledge
• Presently proposed patent reform legislation is good for Acacia
CONFIDENTIAL AND PROPRIETARY 5
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Rewarding the Idea Makers
and the World Changers
Acacia is a leading player in the secondary patent market
• Most patents are owned by entities that do not make products covered by their patents
• Acacia partners with patent owners to bridge the gap between invention and production, helping patent owners get paid by licensing their patents to the companies that use them
• Outsourced IP licensing transactions help promote a secondary market for these patents
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Patent Owners
Products & Services
ACACIA
(Clearinghouse)
CONFIDENTIAL AND PROPRIETARY
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
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Demand: Needs Driving Patent Holders To Outsource Monetization
or Why Do Patent Owners Partner With Acacia?
• Complexity of current environment
• Interdisciplinary experience (Licensing, Business, Engineering)
• History and track record of success
Licensing
Expertise
• High cost for internal licensing programs
• Longer time to revenue
• Scale: Serial vs. Parallel Licensing
Risk Mitigation
• Transforming patents into cash
• Short term cash flow
• Long term royalty stream
Liquidity
CONFIDENTIAL AND PROPRIETARY
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Financial Models
CONFIDENTIAL AND PROPRIETARY 8
Hybrid Partnership Acquisition Model
Acacia 70-100%
Legal 0-30%
Acacia buys 100% of the patents for 100% of the profits
Typical partners:
• Distressed Corporations
• Failed Corporations Controlled by VCs
Higher margins with increased upside potential
How it works:
• Up-front capital infusion as an advance on future licensing
• Acacia receives 100% of return until capital infusion is returned
Objectives:
• Recover capital infusion in 18-24 months
• Upon return of capital infusion, net profit revenue split with patent partner begins
• 3x return of capital in 5 years
Purpose:
• Increases Acacia’s total addressable market
• Strong Balance Sheet yields competitive advantage
Typical partners for Acacia:
• Major corporations
• Research labs and universities
• Individual inventors
Protects patent owner from countersuits
High margins with upside leverage
Partnership
40% Patent Owner
40% Acacia
20% Law Firm
Patent Diligence
License patents to corporate
users
Pay legal costs
Split net profit 50/50 with patent
owner
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Creating Opportunity Marquee Portfolios + New Industry Verticals
CONFIDENTIAL AND PROPRIETARY 9
Smart Phones, Tablets, PCs and TVs • Palmsource mobile computing • Adaptix 4/4.5G wireless air interface • Nokia Siemens Networks 2G/3G wireless air interface • Rambus backlighting units • Silicon Image high speed chip interconnects • Silicon Image high speed display interfaces • VoiceAge high definition voice • ST Micro shared memory architectures for application processors • Renesas semiconductors
Medical Devices and Technology (Launched 2011) • Bonutti Skeletal Innovations • Boston Scientific stent grafts Automotive (Launched 2013) • Automotive Technologies International safety, diagnostics and navigation • Telematics • Smartphones portfolios, as set out above, (Adaptix, 4/4.5G, Palmsource Mobile
Computing etc.) Energy (Launched 2013) • Austin Geo 3D subsurface visualization • Covertech reflective insulation
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Smart Phone Coverage
CONFIDENTIAL AND PROPRIETARY 10
Rambus 69 Patents LED back lighting
Access 125 Patents Sync, Apps, User Interface
VoiceAge 274 Patents High Fidelity Voice Codecs
Adaptix 205 Patents 4G/4.5G OFDM, Cooperative Diversity
Silicon Image 1 138 Patents High Speed Chip Interconnect
NSN 74 Patents 2G/3G Power Control, Handover, Coding
Silicon Image 2 10 Patents High Speed Display Interfaces
ST Micro 13 patents Shared memory architectures for application processors
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Stent Graft and Vena Cava Filter Patent Coverage
• 1800+ Patents
• Single largest collection of US patents covering stent graft technology
• Comprehensive worldwide coverage
• Portfolios come from leading researchers and corporations
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Orthopedics and Sports Medicine
• Over 150 Patents and applications
• Technologies covered include: Spine, hip, knee, shoulder, biologics and tissue repair
CONFIDENTIAL AND PROPRIETARY
Emerging Opportunities
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Driver-Assistance
Vehicle Sensing American Vehicular Sciences • 230 patents covering automotive safety, navigation and diagnostics
technologies • Ranked 1st in research intensity and as 32nd overall innovator in
The Patent Board TM January 2012 Automotive & Transportation Industry Scorecard
Rambus Automotive Illumination
• Covering illumination applications including, headlights, taillights, instrumentation, internal & external lighting
Rambus Backlighting Units
• 69 Patents covering LED back lighting for navigation and infotainment displays
Palmsource • 125 patents covering sync, apps, user interface
Adaptix
• 205 Patents covering 4G/4.5G OFDM, cooperative diversity
NSN
• 74 Patents covering 2G/3G power control, handover, coding
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Emerging Opportunities
Automotive & Transportation Industry
CONFIDENTIAL AND PROPRIETARY
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Mobile Phones & Tablets*
Digital Home* Laptops & PCs* Automobiles*
Patented Technology*
Semiconductors
Wireless Air Interfaces
Software
Displays
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Patents: Apply To A Wide Variety Of Products
Constant infusion of new technology creates licensing opportunities
*Representative sampling only
CONFIDENTIAL AND PROPRIETARY
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
2015 Opportunities – Strong Trial Date Calendar
• Opportunities continue ramping up throughout 2015
• Multiple Adaptix trials – EDTex and NDCal (Q1-Q2)
• Adaptix hearings – Japan (Ongoing Q1-4)
• Multiple St. Lawrence (VoiceAge) trials – Germany (Q1-2)
• PUMA (STMicro) trials – EDTex (Q4)
• Lifescreen (Boston Sci) trials – DDel (Q4)
• IDT (Rambus) trials – EDTex (Q1)
CONFIDENTIAL AND PROPRIETARY 14
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
2016 and Beyond – Trial Dates Set and Continue to Populate
• 2016 promises to continue the momentum from 2015
• CCE (NSN) trials set for 2016 • Lifeport (Boston Sci) trials set for 2016 • Additional Adaptix trials in 2016 • Data Engine (Borland) trials in 2016 • Patent portfolios continue to grow
• Over 90 new litigations filed in Q1-Q3 2014 without Markman or Trial dates yet • Trials likely to be set for 2016 and 2017
• Trials, Markmans, IPR decisions etc. all present value setting points
• While dates may change, the revenue opportunities still exist
CONFIDENTIAL AND PROPRIETARY 15
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Financial Performance
The Power of Innovation
CONFIDENTIAL AND PROPRIETARY 17
2009 (000’s)
2010 (000’s)
2011 (000’s)
2012 (000’s)
2013 (000’s)
2014 (000’s)
Q1 2015* (000’s)
Revenues $67,340 $131,829 $184,707 $250,727 $130,556 $130,876 $34,210
Non-GAAP Operating Margin
.6% 37.5% 24.4% 54.8% (1.1%) 7.1% 9.2%
Non-GAAP Net Income
$409 $49,405 $45,013 $137,339 ($1,424) $9,328 $3,155
Pro-forma Non-GAAP EPS
$.01 $1.46 $1.12 $2.80 ($0.04) $0.18 $0.06
*Q1 2015 financials (Jan 1, 2015 – Mar 31, 2015)
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC
Cumulative Licensing Revenue
by Size of Licensee
95% of Licensing Revenue from Companies Generating > $100 Million Annually
Large Licensees Drive Acacia’s Business
CONFIDENTIAL AND PROPRIETARY 18
Licensee Revenue
Size
Less than $100M
$101M - $1B > $1Billion
Percent Of Acacia Business
5% 15% 80%
ACACIA RESEARCH GROUP, LLC
ACACIA RESEARCH GROUP, LLC ACACIA RESEARCH GROUP, LLC
returns to PATENT OWNERS
CONFIDENTIAL AND PROPRIETARY 19
Our partnership with patent owners is the cornerstone of Acacia’s corporate strategy.
691,000,000