Wi-LAN’s new focus is improving revenue and margin consistency, says Cantor Fitzgerald

Wi-LAN CEO Jim Skippen. A better than expected quarter has led Cantor Fitzgerald Canada analyst Blair Abernethy to raise his revenue and earnings expectations for Wi-LAN (TSX:WIN), this year and next.

Yesterday, Wi-LAN reported Q2, 2015 results. The company posted adjusted earnings of $16.6-million, or 14 cents a share, on revenue of $25.7-million.

CEO Jim Skippen commented on the achievement.

“In the second quarter, we made significant progress in our ongoing efforts to increase the profitability and diversification of our business,” he said. “Strong revenues, driven in part by signed licence agreements with Nokia Networks and Sony, and the control of litigation expenses, contributed to the third straight quarter of positive GAAP earnings and adjusted earnings exceeding 55 per cent of revenue.”

Abernethy says the quarter exceeded his revenue expectations and the company’s own guidance, which were at $22.1-million and $19.4-million, respectively. He believes Wi-LAN’s shift towards a focus on greater license volume and fixed-price legals is improving the company’s margin consistency and income statement.

Yesterday’s results have led Abernethy to up his revenue and earnings expectations for Wi-LAN’s fiscal 2014 and 2015. He now believes the company will post EBITDA of $61.9-million on revenue of $98.2-million this year, up from $58.3-million and $92.4-million, respectively. For 2015, the analyst expects the company’s EBITDA will come in at $63.9-million on revenue of $99.6-million, up from $62.0-million and $94.1-million.

In a research update to clients this morning, Abernethy maintained his “Buy” recommendation and one-year target price of $4.50 on Wi-LAN, implying a return of 40% at the time of publication.