Marathon Digital Holdings Inc (MARA)

[postyle]

Marathon Patent Group Reports 2016 Financial Results

http://ir.marathonpg.com/press-releases/detail/1150

March 30, 2017

LOS ANGELES, CA -- (Marketwired) -- 03/30/17 -- Marathon Patent Group, Inc. (NASDAQ: MARA) ("Marathon" or the "Company"), an IP licensing and commercialization company, announced today its 2016 year-end financial results. Highlights included:

2016 revenue up 93% to $36.6 million
Non-GAAP earnings of $8 million or $0.53 per weighted average basic share
Approximately $5 million in cash as of December 31, 2016
Reduced outstanding debt by $4.8 million since December 31, 2015
19 portfolios totaling 12,000 plus patents covering distinct technology areas; five portfolios in active licensing campaigns
14 portfolios have generated revenue to date
Ten portfolios have generated a net positive cash flow in excess of their cost to acquire and enforce the portfolio

Commenting on the Company's 2016 financial results, Doug Croxall, Founder & Chief Executive Officer of Marathon, stated, "Marathon saw annual revenues almost double in 2016 compared to 2015 as a result of our continuing focus and discipline regarding appropriate license agreements versus the need to meet quarterly expectations."

"We remain optimistic with regard to the fundamental opportunity ahead of us. Currently, we manage a collective pool of quality assets that far surpasses any other time in our history, consisting of over 12,000 assets compared to just 330 this time last year," Croxall concluded.

2016 Year-End Results

Revenue increased approximately 93%, to $36.6 million for the year ended December 31, 2016 ("FY 2016"), compared to $19.0 million of revenue for the year ended December 31, 2015 ("FY 2015"). The increase in revenue in 2016 resulted primarily from licenses issued by our Dynamic Advances and Orthophoenix subsidiaries, with the Dynamic Advances settlement occurring shortly before commencement of the scheduled trial.

Revenues from the five largest licenses in 2016 accounted for approximately 97% of the Company's revenue for the year ended December 31, 2016 and revenues from the five largest licenses in 2015 accounted for approximately 62% of the Company's revenue for the year ended December 31, 2015.

Direct costs of revenues for the years ended December 31, 2016 and December 31, 2015 were approximately $19.1 million and $16.6 million, respectively. For the year ended December 31, 2016, this represented an increase of approximately $2.5 million, or 15%. Direct costs of revenue include contingent payments related to patent enforcement legal costs, patent enforcement advisors and inventors. Direct costs of revenue also includes various non-contingent costs associated with enforcing the Company's patent rights and otherwise in developing and entering into settlement and licensing agreements that generate the Company's revenue. Such costs include other legal fees and expenses, consulting fees, data management costs and other costs. Direct costs of revenues for 2016 were higher than in 2015 due to higher revenues in 2016. Direct costs of revenues in 2015 were a higher percentage of revenue than in 2016 based on a fixed fee engagement agreement with a law firm that represented one of the Company's subsidiaries in two United States trials during the year, an increase in enforcement activity in Germany and to a lesser extent France and preparation for a significant number of trials in both the United States and Germany in 2015 in the Company's Dynamic Advances, Signal IP and TLI subsidiaries.

Other operating expenses increased 18% to approximately $33.1 million in FY 2016 as compared to approximately $28.1 million in FY 2015. This increase in other operating expenses in 2016 compared to 2015 resulted from an increase in patent impairment expenses in the amount of approximately $6.2 million in 2016 compared to 2015 and goodwill impairment expenses in 2016 of approximately $4.3 million compared to no goodwill impairment expenses in 2015. These increases were partially offset by a decrease in patent amortization expenses of $3.3 million, a decrease of consulting and professional fees of $1.8 million and a decline of $0.3 million in other general and administrative expenses.

Operating expenses for the years ended December 31, 2016 and December 31, 2015 include non-cash operating expenses totaling approximately $25.8 million and $20.8 million, respectively. The results for the year ended December 31, 2016 represent an increase in non-cash operating expenses in the amount of approximately $5.0 million or 24%, compared to the non-cash operating expenses for the year ended December 31, 2015. When the Company acquires patents and patent rights, the Company capitalizes those assets and amortizes the costs over the remaining useful lives of the assets. All patent amortization expenses are non-cash expenses.

For the year ended December 31, 2016, net income on a Non-GAAP basis was $0.53 per basic common share compared to net loss per basic common share on a Non-GAAP basis of $(0.48) for the year ended December 31, 2015. On a diluted common share basis, net income on a Non-GAAP basis for the year ended December 31, 2016 was $0.49 per diluted common share compared to a net loss on a Non-GAAP basis of $(0.48) per diluted common share for the year ended December 31, 2015.

Investor Conference Call

Marathon will host a corresponding conference call to discuss the results with Chief Executive Officer Doug Croxall and Chief Financial Officer Frank Knuettel II on Thursday, March 30, 2017 at 4:30 PM ET/1:30 PM PT. To participate in the conference call, investors from the U.S. and Canada should dial [phone] ten minutes prior to the scheduled start time. International calls should dial [phone].

In addition, the call will be broadcast live over the Internet and can be accessed through the Investor Relations section of the Company's website at www.marathonpg.com. The broadcast will be archived online upon completion of the conference call. A telephonic replay of the conference call will also be available until 11:59 p.m. ET on Thursday, April 13, 2017 by dialing [phone] in the U.S. and Canada and [phone] internationally and entering the pin number: 13658360.