Quarterhill Inc. (QTRH) Misses Q2 EPS by 5c, Revenues Miss

Quarterhill Inc. (NASDAQ: QTRH) reported Q2 EPS of ($0.07), $0.05 worse than the analyst estimate of ($0.02). Revenue for the quarter came in at $20.4 million versus the consensus estimate of $24.26 million.

• Revenue of $20.4 million
• Recurring revenues of $6.8 million, representing 34% of total revenue
• Adjusted EBITDA* of ($4.0) million
• Net loss of ($7.9) million, or ($0.07) per common share
• Cash and equivalents were $73.1 million at June 30, 2018
• Announced Mr. James (Jim) Skippen will retire from his positions as Executive Chairman of Quarterhill and interim CEO of WiLAN in August 2018; Mr. Skippen will continue as an outside director and Chair of the Quarterhill Board
• Appointed Mr. Keaton Parekh as President and Chief Executive Officer of Wi-LAN
• Subsequent to quarter-end, on August 1, 2018, a jury awarded WiLAN $145.1 million in damages in its patent suit against Apple Inc.

"We are very pleased with the financial and operational performance in Q2 from IRD and VIZIYA," said Doug Parker, President and CEO of Quarterhill. "Both portfolio companies generated strong total revenue, recurring revenue and Adjusted EBITDA, which is indicative of what we believe the businesses are capable of delivering on a more regular basis. With WiLAN, we continue to experience the variability in performance inherent in the patent license industry as reflected in both the Q2 numbers, but as well, in our announcement on August 1, 2018, that a jury awarded WiLAN $145.1 million in damages in its patent suit against Apple Inc. WiLAN has more than 40 litigations ongoing in multiple jurisdictions and we continue to add patent portfolios via our partner program to build our pipeline for future license activity. As we've said in the past, WiLAN's track record suggests that it can deliver significant cash flows and its performance needs to be measured over a longer period due to the underlying dynamics that exist in the patent license industry.

Our M&A pipeline continues to build behind the efforts of our experienced deal team and our revised target focus on verticalized software companies. These efforts have led to ongoing late-stage discussions with certain targets, but we will remain patient in negotiation and disciplined in our investment criteria to ensure that we are acquiring businesses with the right characteristics at the right valuations. While it can be challenging to wait for the next transaction to occur, it is important to note that as our pipeline grows, a strategy such as ours gains momentum over time and the periods in-between transactions tend to shrink over the long term."

For earnings history and earnings-related data on Quarterhill Inc. (QTRH) click here.

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