Greetings and welcome to Acacia Research First Quarter Financial Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the conference over to your host Mr. Rob Fink with FNK IR. Thank you. You may begin.

Thank you, operator. Hosting the call today are Clifford Press, Chief Executive Officer, and Al Tobia, Chief Investment Officer. Before beginning, I would like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts, and projections about future events that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company's plans, objectives, and expectations for future operations and are based on current estimates and projections, future results, or trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, please see the risk factors described in Acacia's annual report on Form 10-K and quarterly reports on 10-Q that are filed with the SEC. I would like to remind everyone that a press release disclosing the company's financial results was issued this morning before the market opened. This release may be accessed on the company's website at acaciaresearch.com under the News tab. In addition, the company has prepared an investor presentation for this call that can also be downloaded on Acacia's website under the Events & Presentations tab. With all that said, I would now like to turn the call over to Clifford Press. Clifford, the call is yours.

Thank you, Rob, and good morning. Our recently announced relationship with Starboard Value, combined with the volatile equity market, has kept us very busy. We are executing against a broad mandate and are reviewing a wide range of investment opportunities. Our strategic committee has been meeting frequently. Unlike other structures that may face redemptions and liquidity or approval constraints, we have permanent capital that has positioned us well to evaluate an increasing number of compelling opportunities. We have built the new Acacia to be remarkably flexible. We are not tied to investments in intellectual property, and we can pursue investments in multiple revenue streams. We can do public or private corporate acquisitions or acquire assets directly. We believe that together with Starboard, we are well-positioned to pursue corporate development opportunities of greater scale and flexibility. With regard to specific IP business, we announced the acquisition of two patent portfolios during the quarter. I will describe these purchases later. At this point, I think it is important to review a brief history of Acacia's involvement in the IP industry and how we view our ongoing operations. We generally support the consensus that the patent business peaked in 2012. While multiple empirical data points are hard to come by, we referenced price per patent by year. The regulatory environment turned sharply negative with the implementation of the AIA in 2012 and the Alis decision in 2014, among other changes. By the time Mark Goods rejoined Acacia in the second half of 2018, conditions were starting to improve. Mark and his team were tasked with monetizing Acacia's legacy patent portfolios. From the fourth quarter of 2018 to the first quarter of 2020, they recovered approximately $64 million in gross revenues through a combination of various licensing agreements and litigation settlements. The IP group has worked with management to present our board with a comprehensive study of our patent organization. With a fresh set of eyes, we reviewed patents purchased from 2012 through 2016 in Acacia’s core markets. A detailed analysis showed favorable returns during the sharply negative macro environment. With that in mind, we have started to commit capital in a measured way, where we see an attractive risk-adjusted return. We should note that Acacia's history as an aggressive litigator is a leverageable asset as we increase our focus on licensing. We see IP assertion as a segment of our overall absolute return investment strategy. We have strategically built the IP portfolio with outcome diversification in mind, using licensing revenue as a base with the upside potential of litigation outcomes as well. Adding these assets to our existing portfolio creates an attractive blend of licensing and litigation opportunities to pursue. We expect these additions to begin generating licensing revenues this quarter with significant contributions beginning in 2021.

Thank you, Clifford. For the first quarter, cash and short-term investments totaled $158.1 million at March 31, 2020, compared to $168.3 million at December 31, 2019. Revenues for the first quarter of 2020 were $3.8 million. More details on these results have been made available in the press release issued this morning and also in the upcoming quarterly report on Form 10-Q, which we will file with the SEC later today. We will strategically remain focused on growing Acacia's book value. As we evaluate larger and more diverse corporate development opportunities, we will be working to continue to preserve shareholder value. Our stock is trading at a steep discount to its intrinsic value which is $3.42 per share as represented by cash plus invested assets as of March 31. Based on our current operating plan, we would expect to use no more than 5% of our beginning 2020 cash balance on operating expenses and investment due diligence by the completion of an approved investment or the commencement of our first redemption test period in August 2021 as outlined in the proxy. We would note that we recently completed a $4 million stock buyback, repurchasing approximately 1.7 million shares at an average price of $2.35 per share. As Clifford reviewed our patent assertion business earlier, as part of this we have acquired Excalibur IP, a portfolio of more than 2,500 patents that were spun out of Yahoo prior to its sale to Verizon. These patents cover technologies including internet search, cloud computing, e-commerce, location-based services, mobile apps, media management, and social networking. These patents have applicability to a variety of industries, including enterprise software, web search and analytics, online shopping and advertising, and audio and video streaming services. In addition, we acquired a significant portfolio of nearly 150 patents from L3 Harris. These patents cover commercial applications of Wi-Fi and IoT technologies. These patents have applicability to a wide variety of products and markets, including consumer electronics, home and office wireless networking, home automation, smart metering, industrial wireless control systems, and remote access systems. Finally, as we disclosed on our last quarterly call, we acquired a portfolio of over 70 patents originating from Fusion-io. These patents cover flash memory management and control technology and are applicable to flash memory systems such as solid-state drives and controllers. In summary, we have the processes, cost structure, and resources necessary to create and sustain value for our stockholders. We continue to make progress on reinvigorating our patent assertion business, focusing our business development efforts on the void that exists between litigation, finance, and loan-to-own lenders. Our partnership with Starboard is active, and we are exploring a wide range of opportunities. With that, I'd now like to open the call for questions.

Thank you. At this time, we'll be conducting a question-and-answer session. Our first question is from the line of Brett Reiss with Janney Montgomery Scott. Please proceed with your question.

Good morning, Clifford. Good morning, Al.

Hi, Brett.

The 2,500 patent portfolio, that's a lot of patents. Do you have any plans to segment them and sell off some of them to start-up?

Clifford, do you want to take that? Or do you want me to take the question?

Go ahead. You've been dealing with it.

So Brett, there are details we can do offline, but this is a big portfolio that had already entered into an agreement with RPX. So there's a great deal of the companies that are under option to RPX. This is a very big and broad portfolio, so it's going to take a lot of effort to segment it as you can imagine, that many patents and craft licensing campaigns that address the most productive and most profitable opportunities. So we can take those details offline. If you want, we can have you connect with Mark Booth, but I think you take a look at the RPX deal; there are many under license with RPX.

Okay. Will there be disclosures like next quarter in the queue what you paid for all of these patents? Or are you at liberty to disclose that now?

I can answer that, Brett. We've taken a policy of not disclosing individual acquisition prices or revenues, and we'll continue on that basis going forward. But on a quarterly basis, we will provide consolidated information.

Okay. And one last one and I'll drop back in queue. I appreciate being able to ask questions because you're really taking in more patent portfolios. Do you anticipate needing additional staff to cover the patent intake?

We have a licensing group in place now that is well capable of handling what we have purchased today.

Our next question comes from the line of Sam Rebotsky with SER Asset Management. Please proceed with your question.

Yes. Good morning, gentlemen. Do you file in 8-K on the cost of the licensing dollar amount or how does that get reflected because presumably in the queue at some point you have to list the dollar amount that you're paying or licensing for this?

Sam, the CapEx is disclosed in the queue, but the individual patent acquisitions are not significant enough to require an 8-K.

Okay. Now I see, RPX Corp announces licensing transaction with Excalibur. This press release was February 26 and they talked about 2,000 patents and these are the same patents that RPX that they put the press release out and Excalibur is a subsidiary of Altapa, is that a private company or?

With Altapa, it's a spin-out; it’s in liquidation from Yahoo. It held a number of assets, the principal one of which was Yahoo's investment in Alibaba. That ended up with Excalibur, which was a one-time very large patent and highly valued patent portfolio. In the process of liquidation, they did multiple transactions, RPX and Acacia with two of the parties with which they dealt.

Of course, in the press release they say, December 31, 2019, RPX invested $2.7 billion to acquire rights to more than 48,000 U.S. and international patents. So this is just a piece of that?

Sam, it's probably not a good idea for us to comment on other company’s press releases. We'll let them speak for themselves.

Okay. Thank you very much.

You're welcome.

Our next question comes from the line of Wayne Cadwallader with Elkhorn Partners. Please proceed with the question.

Hi there. Quick question on the patents that you've acquired. What percentage of those might have been gone through a challenge in the patent office to an IPR process? Any sense of that?

Those details relate to potential litigation strategies, and I don't think it's appropriate for us to get into that in a public forum.

Okay. So some of them might be in litigation at this time?

Well, as I said, the specifics of the assertion campaign, we have a strong policy of not commenting on whilst it's underway.

Okay then. Thank you.

Welcome.

There are no further questions in the queue. I would like to turn the call back over to Mr. Al Tobia for the closing remarks.

Thank you very much, and Clifford and I will be available for questions if anyone needs to ask questions offline. You can also call Rob Fink as well.

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.