Finjan Holdings, Inc. (NASDAQ:FNJN) Q3 2016 Earnings Conference Call November 15, 2016 4:30 PM ET
Vanessa Winter - IR
Phil Hartstein - President and CEO
Michael Noonan - CFO
Andrew D'Silva - B. Riley & Co.
Jim McIlree - Chardan Capital
Lisa Thomson - Zacks Investment Research
Mike Crawford - B. Riley and Company
Thank you for standing by. This is the conference operator. Welcome to the Finjan Holdings Shareholder Update Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]
I would now like to turn the conference over to Vanessa Winter, Investor Relations. Please go ahead.
Hello, every1, and thank you for joining us this afternoon for a review of our third quarter 2016 results. Joining me on today’s call is Phil Hartstein, Finjan’s President and CEO; and Michael Noonan, CFO. As a reminder, this call is being webcast and a replay of the webcast will be available on our website. Before I begin, I would like to quickly make note of our Safe Harbor. During the course of this call, we may make statements related to our overall business outlook, future financial operating results, timing of redemption of shares of Series A preferred stock, outcomes of our pending and future litigation, accounting matters and future prospects for our operating subsidiary. These are forward-looking statements based on certain assumptions and are subject to a number of risks and uncertainties that could cause future results to differ materially from our expectations.
You can learn more about these risks in our most recently filed Form 10-K with the SEC on March 25, 2016 as well as our subsequent filings. These documents are available on the Investor Relations page of our website at www.finjan.com. We assume no obligation to update any forward-looking statements. I’d also like to mention, Finjan management will be attending a number of upcoming conferences, so we hope to get the opportunity to touch face with many of you in person. We will presenting at the Drexel Hamilton Emerging Growth Conference on December 1 in New York City; the LD Micro Conference on December 7 in Los Angeles; and the 13th Annual Noble Financial Conference, January 30 and 31 in Boca Raton. As additional details are available, we will make a more formal announcement. Please contact me email@example.com to schedule a meeting.
With that I'd like to turn that call over to Phil Hartstein, Finjan's President and CEO. Phil?
Thank you, Vanessa andthank you all for joining today's update call. I'd like to begin by briefly discussing what I'm hearing on my travels to conferences and private meetings on the current patent landscape, update you on pending administrative challenges [indiscernible] Patent and Trademark Office or USPTO and the Patent Trial and Appeal Board or PTAB. And finally provide an update on our licensing and litigation efforts. I will then turn the call over to Michael to cover the financial and operational sides of our business and to discuss our development efforts through our subsidiaries CybeRisk and Finjan Mobile.
Turning to my first topic, the current patent landscape, I’ve spent a great deal of my time recently at industry events. I participated in a Licensing Executive Society or LES panel on what's new in patent m1tization in New York, attended their annual meeting in Vancouver and we continue our work on establishing standards in the industry around licensing best practices. I also attended the Annual American Intellectual Property Law Association or AIPLA; annual meeting in DC and separately participated in a panel discussion at the London IP Summit. Later this week I'm participating in the IP Dealmakers Forum in New York where I will speak on a panel focused on getting deals d1 in today's market. While I'm encouraged by the trajectory of discussions at these various events, the patent environment continues to have its challenges.
1 of the major sources of uncertainty in our business which we have discussed with you in the past include these administrative challenges to our patents or inner parties reviews, IPRs. By the numbers, the PTAB has now instituted proceedings on more than 70% of the 5,000 plus AIA petition filed. And while institution rates have improved a little bit from 86% in 2013 to 66% year-to-date, it still represents a significant issue when considering these patent challenges are being adjudicated by the same hands that issued them in the first place. We’ve spoken about Finjan’s inverse success rate with these administrative challenges, with a positive kill rate of over 75%. N1theless, over the past 24 months we have spent precious time and real dollars defending our patents in more than 50 administrative challenges. Today, only 4 IPRs on Finjan patents have been instituted for further review at the PTAB.
Subsequent to these four decisions to institute, we have seen 19 joinders or me-too petitioned. Despite these [indiscernible] our licensing efforts, time and time Finjan’s patents have proven to be resilient and durable. Now I'd like to transition over to our licensing enforcement efforts. First to our licensing program, and while you may not have seen any deals announced in the quarter, we continue negotiations with 25 perspective licensees with 4 deals nearing the final stages. From where we sit today, we expect at least 1 of those to close in the 4th quarter. As Michael will discuss in more detail after a comprehensive evaluation of our licensing program, we have identified a number of ways to drive efficiency and reduce cost into that program. The changes have already been implemented as of the start of the 4th quarter and we expect to benefit from more than $1 million in cost saving and reduction of other topline expenses in the coming year. In fact, we believe these changes will lead to shorten timelines and even more completed licenses over time.
In litigation, during the quarter, we had a victory against Sophos in a Northern California District Court, where the jury awarded Finjan $15 million in damages. A short time ago we received an affirmative judgment on that award from the court. This is our second District Court victory in thirteen months, where 2 separate Northern District of California juries have awarded Finjan nearly $60 million in damages. In the most recent Sophos decision, the 5 patents in that case were found to be valid and directly infringed. Once again proving that Finjan’s patents are durable and forcible and valuable in relation to state of the art cyber security technologies in the marketplace. With respect to our initial dispute with Blue Coat Systems, the $39.5 million judgment from the District Court is now final. In addition, the District Court granted Finjan pre and post judgment interest on the jury's award and Blue Coat has already put up a bond with the court for the $39.5 million and an incremental accounting for pretrial interest. Blue Coat has appealed the district court's final judgment to the Federal Circuit; we are monitoring this process and expected to run approximately 1 year before a decision around the 4th quarter of 2017.
In our second separate suit against Blue Coat, again before the same judges in Blue Coat 1, there are ten patents asserted against Blue Coat and a trial date has been set for October 30, 2017. As you can tell there are a number of pending matters against Blue Coat that require some additional commentary, we filed a third case against Blue Coat this time in Germany on October 15 pursuing their infringement in the international market. The trial for this Germany case is not yet docketed but it is expected for the 4th quarter of 2017. On a related note, Symantec’s recent acquisition of Blue Coat for more than $4.5 billion was completed in early August, right around the time the stay was lifted in our litigation with Symantec. That litigation with Symantec includes separate accusations of infringement of 8 Finjan patents with a different judge and on its own timeline. We are expecting a trial date for this case to be set for the first half of 2017. All this aside, we remain committed to finding a mutually beneficial resolution with Blue Coat through a licensing and settlement agreement to resolve all outstanding liabilities.
Turning to our recent lawsuit with ESET, Finjan filed a lawsuit in the Northern District of California seeking among other things a jury trial and damages of not less than $44 million. ESET filed a contemporaneous declaratory relief action or DJ action of non-infringement of Finjan’s asserted patents in the Southern District of California. That DJ action was unsuccessful and was dismissed on September 26. On the same day, we filed our case in the Northern District of California, there was a separate filing in Germany where the Case Management Conference or CMC was held and a trial date is set for July 6, 2017. I’d like to remind our shareholders that we currently have other pending cases before the Northern District of California court including both FireEye and Palo Alto Ne2rks.
Before I turn the call back over to Michael, I'd like to give you some insights into the direction of our operating subsidiaries both CybeRisk and Finjan Mobile. First to CybeRisk, as you may have seen, we recently announced that Eyal Harari has been promoted to CEO as of Monday. Yoram Golandsky is departing for an in-house role elsewhere. Eyal has been with for CybeRisk from the beginning and we look forward to his leadership and continuing to build out the advisory services offerings of CybeRisk for the financial and legal services sectors. Moving onto Finjan Mobile, 3 weeks ago we launched our Gen3 VitalSecurity Browser into consumer marketplaces. This represented a complete redesign over our earlier products. While we had modest expectations of consumer interest, we are well beyond our projections at this early stage in the product rollout. I attribute the positive reception to a few notable factors focused on simple design and user interface, a secure ph1 web browsing experience, our commitment to not capture personal data or usage information, and finally the fact that what was once enterprise grade, Finjan technology is now available in the palm of your hand.
I would like to now turn the call over to Michael to discuss our third quarter financial results and operational highlights. Michael?
Well thanks Phil and I’d like to begin with an update on our third quarter results. Please note that unless otherwise stated, all comparisons on a year over year basis. We had that $1.1 million in revenue, primarily due to the loss payment from a confidential license entered in December of 2015 as well as modest revenues from our CybeRisk business. This compares to no revenue a year ago. Revenue for the nine month period was $10 million as compared to only $700,000 dollars in the same period a year ago. Please note we've already doubled revenue this year and we also expect additional revenue in the fourth quarter of this year.
Operating expenses which primarily consist of SG&A decreased 7% to $4.2 million compared to $4.5 million a year ago. Having had the Sophos this quarter and the Blue Coat trial in the same period a year ago, you can see that we continue to drive our costs down. Expenses for our emerging CybeRisk and Finjan Mobile businesses increased 26% to $259,000 compared to $206,000 in the same period a year ago. Net loss excluding the accretion of our Series A preferred financing was $3.3 million or $0.14 a share compared to a net loss of $4.7 million or $0.21 a share a year ago. Net loss for the nine-month period, excluding Series A accretion was $0.16 compared to a net loss of $0.51 in the same period a year ago.
We ended the quarter with $11.6 million in cash and cash equivalents with $7.3 million of working capital. Importantly, we have contracted revenue of $7.6 million through the first quarter of 2018 for outstanding license agreements as well we have to $55 million from our two favorable judgment orders from the Blue Coat and Sophos trials, which we expect to collect in 2017 and 2018 respectively. As Phil mentioned, we recently restructured our licensing business to create even greater efficiency. Over the next month or two, we would expect to cut approximately $1 million in expenses, while still maintaining our aggressive pipeline.
Further, as we've mentioned in the past, our agreement with our outside council has given us the opportunity to carefully manage our cash to prepayments, so in periods of trial as you saw during this quarter we are not left with a one-time massive payment. Now I’d to turn to our emerging businesses. In Finjan Mobile, we launched the third version of our mobile secure browser VitalSecurity just three weeks ago. As Phil mentioned, [indiscernible] Finjan’s patented technology and we are very excited with the initial response. As of today, we have more than 20,000 downloads of the app across the Android and iOS platforms. This performance speaks well to both the interest and future prospects of the app as we are aggressively working towards including more premium features such as embedding a VTN in the browser.
These 20,000 downloads are a result of a modest marketing campaign that began on November 2, less than two weeks ago. We have reached nearly 3 million highly targeted users and I found that over 400,000 users have viewed our mobile app video. Our Gen4 offering which will offer additional features will be a subscription offering and we expect it to be launched over the next couple of months. That will be the start of revenue generation through Finjan Mobile. Further, we are actively exploring technical and corporate partnerships to help us bring this premium offering to the market in a meaningful way.
Turning to CybeRisk, we recognized approximately $150,000 in this business and are currently working through a number of contracts. We remain active in our marketing and social media efforts in order to build the CybeRisk brand as we work to build momentum in this business over time. Now I’d like to turn to our investment in the cyber security of the future through Jerusalem venture partners or JVP. We made $600,000 contribution for the fund during the nine months ended September 30, 2016 and we have a $2.7 million outstanding capital commitment to the venture capital fund. Please note we have already received approximately $2 million in proceeds from successful exits from the fund, so we essentially have a free carry on our investment. Finally, we redeemed and retired approximately $2.6 million or a little over 17,000 shares of the Series A preferred stock will quarter. We believe we are on track to redeem and retire all of the remaining shares before the end of 2017.
Now with that I’d like to turn the call back over to Vanessa to coordinate Q&A period.
We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Andrew D'Silva with B. Riley & Co. Please go ahead.
Just a few here. First off can you recap where you are on the post judgment filings as it relates to Sophos, have you filed your final motions and when is the deadline there?
It’ a good question. This is Phil Hartstein. In this case to be quite honest with you and in comparison to Blue Coat it took much longer in Blue Coat to go through the final motions process. The final briefings and motions in the Sophos case are actually completed. The court’s judgment in that case came just very shortly after the jury verdict. So at this point, the timeline really sits on Sophos as to whether or not they intend to file a notice of intent to appeal with the Federal Circuit or whether internally they're having a discussion about trying to reach some negotiated settlement with us but that's on their end. So, I guess my summarized answer would be that the timeline now sits on Sophos not on Finjan [indiscernible].
And so you're still waiting though to hear on the pre-imposed trial interest and expenses that could be awarded as well.
Yeah, now that's correct. Now those are more sort of administrative processes, but that's right those papers have not been filed and certainly there's no conclusion from the court on that yet.
Then related to Symantec, has the briefing schedule for the additional claim construction hearing been established. And if you could recap what this markman hearing is about, I believe it's different, it's related to definitions established at PTAB, is that correct?
Yeah, it’s a really good question and it's a technical one that I think other callers might benefit from a little bit of background. So in our case against Symantec, we had actually completed the claim construction hearing more than a year ago. And then as most know the case was stayed for some time pending the outcome of some of these administrative challenges. Upon the listing of those challenges and in reference to other constructions on the Finjan patents, most notably some constructions that were used in the case was proof point as well as in some of the IPRs, Symantec filed a motion with the court to be able to provide the court with supplemental claim construction briefing. So the court has accepted that motion and what that means is that beyond the ten terms that were currently construed, the court is now considering how many additional terms to push through the markman process. That briefing is underway, the motion on or the court's order on accepting or granting the motion to hear supplemental claim construction briefing was just I believe a week or so ago. So we're in the midst of responding to that.
And then just shifting from the litigation to the licensing side of the business, you noted that the pipeline stands at 25, and four active with one assumed to hopefully settle this quarter. But barring any unforeseen event, is it safe to assume the rate at which license agreements are established should accelerate as we go into ‘17 and ’18 if you are just think about it and generalize your thoughts there.
Certainly and I guess I can give you my view on that. A couple of points I think to generally respond to that. The first is that many of these negotiations have been ongoing for quite some time. These are not conversations that take 30 days or 90 days, in fact these conversations were started some time ago and many of those are longer than a year in process. So, I guess partly we benefit from the fact that many of those discussions were initiated earlier. The second thing is that we've made what we believe internally to be some really significant and positive changes to the way in which we manage the pipeline internally. So aside from just reducing costs, we also believe that we're going to be able to recapture some of the timeline, the extended timelines that has been occurring before in our negotiations, in other words we're going to see shortened timelines going forward. So there is that those would be two general backgrounds. I would also say that we're hopeful that there is some inflection point in all of these successes that we're having with our patents in particular in district court actions, in defending at the PTAB and with other licensing activity that's ongoing. So, it's a long way of saying that I do hope that licensing accelerates it's just incredibly difficult to predict or forecast.
And then just final question as it relates to operating business, CybeRisk. What are your thoughts as far as customer fallout or headwinds related to the CEO transition in the division?
Yeah, this is Mike, I don't think there's any issue there at all. The business is a tough area. However, we're making traction and Eyal is a good leader, has been with the company since the beginning. So, we will [indiscernible] business under his leadership as customer demand [indiscernible].
The next question comes from Jim McIlree with Chardan Capital. Please go ahead.
Yeah, thanks. Good afternoon. The $1 million [ph] in cost savings, is that on an annual basis or on a quarterly basis?
Well I would say, it's going to be the initial basis. It’s certainly not quarterly, I stretched that out over a few quarters, but the idea being is this is that we're going to move a lot of our fixed expenses that we were on the SG&A line and move them up to cost of goods sold. That doesn't mean we're going to a full contingency model. I don't think we're there yet, but we are going to move into more of a performance based licensing system. So again think about -- again moving SG&A costs up to cost of goods sold. So that’s where the cost savings will go back up to that line.
Great. Okay. And then Phil, you talked about the licenses and one of them consummating this quarter. Can you size again on these 25 kind of the average that you think would be reasonable to expect for a different average life?
Yeah. I think I can give you a range and I think this should provide you some color. We generally think of prospective licensees in kind of three tiers. You've got smaller companies, those licenses may be something that's more like a structured royalty over time or maybe we're willing to take equity or some nominal amount of say $1 million just given the small size. There are companies really in the tier 2, which are in the sweet spot of exactly the technology that Finjan developed and that our patents covered. These are kind of companies that have a dedicated security offering, it’s something that largely resembles what Finjan had in its product line. These types of companies are -- typically have licensing payment in the, I don't know, maybe $2.5 million to $6.5 million, $7 million range.
And then of course, there is the large big diversified company to happen to have a security division, right. These are much longer licensing discussions. So really where our focus right now is in that middle category, right, that the ones that are most relevant to Finjan and I think that you'll see our, of these four and also moving into next year, a greater focus in kind of that tier 2, kind of the spot on users of Finjan’s patented technologies with a healthy smattering of those smaller companies as well and the reason for that is those larger players just takes a lot longer. I mean, we all understand the cost of capital that a large company can outlay and just spending or delaying as opposed to just paying a large dollar sum for a license. So unfortunately today, you see the vast majority of those in our litigation pipeline.
Got it. And so of those 25, is it fair to say that 80% to 90% are in the tier 1 and tier 2 and we just have a few, let's call them whales [ph] in that tier 3 category.
In terms of numbers, yes. In terms of dollars, so I think the whales generally carry the day when thinking about it mathematically.
Right, right. I was just thinking numbers. Okay. That’s helpful. And one more if I may, it sounds like the Blue Coat decision has kind of pushed from Q3 to Q4. Am I just wrong on my initial assumption, are we kind of on track there or have things pushed to the right?
You are completely accurate and I can give you the very detailed reason for that. Given that Symantec acquired Blue Coat and Blue Coat hired new counsel to basically go through the oral argument process at the Federal Circuit, they petitioned the federal circuit for an extension, which was granted. We tried to not stipulate to that, but they were given an extra 60 days to make their opening brief filing at the CAFC. So that was not by any doing of our own and it's just one of those things that happens to find its way into your timeline that you couldn't plan for. However, we do fully expect that we're still on track for a fourth quarter decision from the Federal Circuit.
And does that change anything with the cash needs or the preferred payoff, maybe you get a different payoff level by moving it into Q4?
Hey, Jim. This is Mike Noonan. No. There's no change at all. The two year anniversary which will be the tipping point if you like to go for to the next level is in the second quarter of ’18. So we have a lot of runway there. And in terms of cash on hand with our contracted revenue coming in and other activities, we have adequate cash to get it well beyond the time period. Sorry. And just to think about it this way, we've got -- when you look at the outstanding judgments plus the contracted cash that we have out there, that equates to about $2.75 per share. So I know we've all been looking at our stock price getting kind of beat up, but we're not getting any credit for that.
The next question comes from Lisa Thomson with Zacks Investment Research. Please go ahead.
Hi, Mike and Phil and Vanessa. One question. Did I miss this or did you discuss anything about the Blue Coat injunction, what’s going on with that?
Happy to address that. So for the benefit of everyone on the call, we have a number of cases against Blue Coat, the first one now moving into the federal circuit with the second cases we're approaching trial. In July, we filed a motion in front of the court, seeking a preliminary injunction. That is to say asking the court to impose an injunction against Blue Coat and selling its web host product. That motion was heard on November 10th. So we were in court last week on that. It wasn't just that motion. So on Thursday, there was the preliminary injunction motion. There was a challenge under 101 brought by Blue Coat against one of our patents. And there was a number of other issues related to seeking declaratory action or summary judgment on certain motions. We don't have an outcome from the court, but we certainly have gone through that motion hearing. I just don't have any guidance until we hear the order from the court.
Okay. And then getting back to the licenses expected in the fourth quarter, what is the range on these, dollar wise, like what's the minimum probably the biggest one?
It’s a good question. I mentioned kind of the tier 1 smaller to tier 2 mediums in our sweet spot. Three of those four are really in that sweet spot of companies where you could look at their product offerings and look at Finjan’s patented technologies and say okay, I get it. So they're in that mid-tier range. I think on the lower end, you're in the sub $5 million range and on the higher end, you're maybe approaching the maybe $10 million range. It’s not to say that all of them are going to close and we're going to have a $30 million, but there’s value there and the reason why we don't get more specific than that is if they slip in to quarter one or even in to quarter two, or even in to litigation, they kind of come off that licensing forecast to move into a different category on like spreadsheet. But, yes, three of the four are in that middle-tier, the fourth is in a tier 1, it’s a smaller company that is finding early value and a license.
Okay. So the concept is the four will probably not go away entirely, just move in to Q1 and Q2?
Yeah. I think as we’ve suggested, you’ll see at least one of those have the value materialized in terms of the license in the fourth quarter. The others may move into Q1. Unfortunately though what we do see sometimes is that these make a full transition into litigation. It’s not something that we try to get ourselves into, but in certain instances, it becomes really the only way to continue pursuing our rights. So I'd prefer to see all of these come in as licenses but I think you're right. You’re likely to see at least one of those extend into the first quarter.
Okay. And is there anything new going on in Germany, at least with the new tactic of yours to bring over there?
I guess again for the benefit of everyone on the call, it wasn't until 2016 that Finjan actually began enforcing its rights around the world. One of the things that's happened in the United States just given all of the persistent reform initiatives and unpredictable Federal Circuit decisions and the Supreme Court now weighing in is that value extraction from licensing has been reduced to monetary damages. In other words, the value of the injunction is largely gone in the United States. However in Germany, for example, it's really the primary mechanism for finding fault with a party.
So we're in Germany now really to magnify and/or otherwise amplify our seriousness about pursuing infringement. So we're using patents that we have had issued in Europe against defendants who sell products in Europe or are based in Europe and the goal there really is a little bit less on the damages, Lisa, but more towards finding value in the injunction. We should of course find in our favor there. So this is not just Finjan, there are other companies that are pursuing other jurisdictions around the country, France, the UK, Germany, some have even gone so far as to go to more nascent places, but I think for right now, we're going to stick to Europe aside from the United States.
[Operator Instructions] The next question comes from Mike Crawford with B. Riley & Co. Please go ahead.
Thanks. Maybe, I’ll take another stab at these conversations you're having with 25 companies, four of which you are in the final stages. How does that menu look compared with three months ago and maybe at the beginning of the year, in terms of numbers and in terms of specific companies that you're talking to?
So I’ll take the numbers of companies we're talking to first thing, that’s the easiest one. To have a pipeline of licenses, you raise a good point. You don't just wake up one day and put five or six more companies on the list, right, there's a lot of work that goes into that. You've got review products, you've got to compare those to patents, you've got to assess the financial liability at least on an estimated basis that at each of the companies you're about to use of using your patents and seeking a license from them. So there's work that goes into that. I'm happy to say that that list has probably grown in the last 3 or 4 months from maybe 20 to 25. And what I'm trying to indicate there is that, we've had a healthy pipeline of discussions ongoing for some time.
With regard to value, there is a couple of ways to think about where you are in the discussion and I say this half-jokingly, but it doesn't matter what you think where you are in a licensing negotiation, you really have to look at factors that are observable that are being communicated from the other side and let me be very specific. When we say advanced stages, what we mean is that there is a counter offer from the other party that's not to say, hey, we told you what we want and you haven't talked to us in six months and we think this is advancing, that's not advancement.
So we're at a point where we are largely past technical and legal arguments and are purely down to working with parties to make business decisions about the need to take a license and the value that that should be paid for that license. So I would tell you, I think, it's a healthy pipeline for the size of team and resources we have on it. I think that it's sufficiently advanced in time and I think of that with the reprioritization and the focus on those middle tier companies that not only will you see more licenses like the ones we have done previously, but of similar or greater size moving into the future.
And Mike is actually pointing to me here, one example that’s kind of important to note. I mentioned earlier that we would always prefer to pursue licenses. Is that the prime example of a company where we tried for a long period of time to have a licensing discussion with them? In fact, part of the detail of this litigation is the fact that the reason both parties filed, I believe it was on July 1, was because that was the expiration of the three or four times amended NDA and standstill agreement that we had with them and it became a race to the courthouse. So, in some of these instances, licensing discussions and negotiations take on a sort of a will of their own. You need that pressure before you actually see advancement in finding value, but sometimes that pressure results in litigation.
Right. Okay. Thank you. Switching gears, given the success you've demonstrated and best practices you’ve advocated in pursuit of pursuing intellectual property rights, have you considered teaming with any other company that may have a lot of intellectual property and might want to combine with you in some form to help ride right along with what you're doing in that regard?
I’m sitting here with a smile on my face. I guess one of the first things I would say is that we have received more phone calls in the last six months about ideas like that than I would say than we had in the first three years of the business. There are some undeniable attributes of Finjan as a company and Finjan as a licensing company more specifically. This is our 20th year. We did develop the technology that’s in the patents. We now are in our 11th year of licensing those patents. We, as of last year, have returned to technology development. We continue making investments in the space, but moving specifically to the patent assets, you can’t dismiss the fact that we're having good success in a very hard district in our litigation that we're doing very well, in fact, are outside the norm of what’s expected in the administrative challenges.
And from a revenue perspective, we're actually increasing our licensing business. So I think that if I had to summarize the rationale for receiving more calls is that it's challenging out there and if you were sitting on patents that were in a similar technology space, sure. I don't think it's uncommon to reach out to someone in a similar industry who's having success to see if there are opportunities to sort of co-mingle portfolios or companies. So yes, we have seen some of those opportunities present themselves.
Okay. Thank you. And then last question is if you are expecting any capital call on your Jerusalem Venture Fund commitment and or if there's been any recent developments there, similar to what we saw with early liquidity event with CyActive when PayPal acquired that company a while back?
I can answer the first part and then I might redirect to Mike on capital call expectations. The first part is what is it that JVP is investing in and the way I like to characterize that is they're really focused on the next generation of cyber security technology. So whereas when Finjan entered the market, what existed was a sort of a responsive, if you will, security. You had to know all about the virus and you would respond basically as it knocked on the door, you’d say, look to the people. No, I don’t want to let you into my network or my file system. So what Finjan did is it built proactive, right, which was I'm going to keep people away from my front door.
What JVP is tending to invest in is next generation stuff and specifically what I mean is predictive, right. How do I think about what threats are next? How can I use big data and large computational systems to try and get ahead of these risks? So we have previously reported that JVP had made six portfolio investments out of cyber strategic partners which we’re an LP in. And now they have made their 7th portfolio investment. So they continue to see a healthy pipeline, they continue to make investments. Unfortunately, one of the things I've learned about being an LP and a venture fund is that, that's their confidential information, so I can't really spend a lot of time explaining the types of companies beyond CyActive, which is the one that was sold and that everyone knows that we were the beneficiary of the return on invested capital on that deal.
And Mike I don't know if you can answer.
Yeah, Mike, this is Mike Noonan. So JVP can call the balance of our commitment at any time, but what we understand is they just don't want to sit on a lot of cash unless they can deploy it. They've been selling off some of their exited company shares and in fact we heard rumblings that they were going to actually do a spread of cash to the LPs. They may, what they term, recycle that, which means that what they give us, they're going to take back, which goes to credit our investment in any event. As it’s right now, I think we're in a pretty comfortable position. We don't see anything major coming down the -- coming down the road from them.
This concludes the question-and-answer session. I would like to turn the conference back over to Vanessa Winter for any closing remarks.
I just like to thank you all for joining today. We appreciate you taking the time to hear our update and we look forward to seeing you at future events coming up. Thanks.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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