ACACIA RESEARCH Q1 2020 Earnings Presentation May 11, 2020 SAFE - PowerPoint PPT Presentation

ACACIA RESEARCH Q1 2020 Earnings Presentation May 11, 2020

SAFE HARBOR T h i s p r e s e n t a t i o n m a y c o n t a i n f o r w a r d - l o o k i n g s t a t e m e n t s w i t h i n t h e m e a n i n g o f t h e “ s a f e h a r b o r ” p r o v i s i o n s o f t h e P r i v a t e S e c u r i t i e s L i t i g a t i o n R e f o r m A c t o f 1 9 9 5 . S u c h s t a t e m e n t s a r e b a s e d u p o n o u r c u r r e n t ex p e c t a t i o n s a n d s p e a k o n l y a s o f t h e d a t e h e r e o f. O u r a c t u a l r e s u l t s m a y d i f f e r m a t e r i a l l y a n d a d v e r s e l y f r o m t h o s e ex p r e s s e d h e r e i n i n a n y f o r w a r d - l o o k i n g s t a t e m e n t s a s a r e s u l t o f v a r i o u s f a c t o r s a n d u n c e r t a i n t i e s , i n c l u d i n g r e c e n t e c o n o m i c f a c t o r s i m p a c t i n g o u r p r o d u c t s a n d i n v e s t m e n t s ; c h a n g e s i n g l o b a l m a r ke t s ; r e c e n t h e a l t h i s s u e s i m p a c t i n g e v e r y a s p e c t o f g l o b a l b u s i n e s s ; r a p i d t e c h n o l o g i c a l c h a n g e ; c h a n g e s i n d e m a n d f o r o u r f u t u r e p r o d u c t s ; l e g i s l a t i v e , r e g u l a t o r y a n d c o m p e t i t i v e d e v e l o p m e n t s i n o u r a r e a o f b u s i n e s s ; a n d g e n e r a l e c o n o m i c c o n d i t i o n s . O u r A n n u a l R e p o r t o n F o r m 1 0 - K , r e c e n t a n d f o r t h c o m i n g Q u a r t e r l y R e p o r t s o n F o r m 1 0 - Q , r e c e n t C u r r e n t R e p o r t s o n F o r m s 8 - K a n d 8 - K /A , a n d o t h e r S E C f i l i n g s d i s c u s s s o m e o f t h e i m p o r t a n t r i s k f a c t o r s t h a t m a y a f f e c t o u r b u s i n e s s , r e s u l t s o f o p e r a t i o n s a n d f i n a n c i a l c o n d i t i o n . We u n d e r t a ke n o o b l i g a t i o n t o r e v i s e o r u p d a t e p u b l i c l y a n y f o r w a r d - l o o k i n g s t a t e m e n t s f o r a n y r e a s o n . 2 2

Q1 SUMMARY A dvancing A bsol ute Re turn Strate g y • Focus on growing book value and leveraging our substantial NOLs and capital partnership with Starboard . • Actively evaluating corporate development opportunities with Starboard • Strategic Committee of the board is meeting regularly • Recent market volatility has opened many opportunities that are being evaluated • Restarted IP Assertion Engine Enhance d IP P ortfol io with Two A cquisitions • Acquired assets offer an attractive blend of licensing and litigation opportunities to pursue • Additions expected to begin generating licensing revenues in Q2 with significant contribution beginning in 2021 3 3

A COMMON FRAMEWORK FOR UNIQUE INVESTMENT OPPORTUNITIES V a l u a b l e A s s e t s + C o m p l e x E x t r a n e o u s I s s u e s = V a l u e D i s l o c a t i o n s Acacia Skill Sets Governance Investing Capital Valuation Markets Trading & Engine M&A Capital Allocation 4 Absolute Return Investment Platform

IP INVESTMENT APPROACH & BUSINESS UPDATE 5

IP INVESTING SUMMARY • Current IP team’s leadership has track record for generating positive returns in all environments • Environment now healthier – less capital, litigation backdrop improving • Leveraging IP brand equity to be an effective patent licensor • Strategy incorporates soft licensing opportunities (more predictable, faster return of capital) with incremental exposure to higher return litigation opportunities • Leverage revitalized efforts to drive increased awareness among patent owners 6

HISTORICAL PERSPECTIVE: 2000 – 2012 A CLASSIC ASSET BUBBLE CREATED…. Excess Capital Entered the Market $6Bn+ in capital raised by IP investment management entities during 2000-2012 Patent Portfolio Deal Sizes Rose (price / patent) Patent sales between 2000 - 2010 were generally @ ~$150-200K/patent 7

HISTORICAL PERSPECTIVE: 2012 – 2013 … BUT THEN IT BURST Ch Chang nges s in t n the regulatory latory and nd legal al env nvironm nment nt led to sharp rp reduct uction ions in pa patent nt va valuation uations • 2011 -- AIA passed • 2012 -- Inter-Partes Review (IPR) process introduced (a new level of post grant review) • 2014 -- -- Alice v. CLS Bank Supreme Court decision constrained patented subject matter • 2015 5 – Leadership changes at the USPTO 8

PATENT PRICES HAVE BOTTOMED, BUT STILL WELL BELOW PEAK P r i c e s f e l l f r o m $ 3 5 0 K / p a t e n t i n 2 0 1 2 t o $ 1 5 0 K / p a t e n t i n 2 0 1 7 9

R E G U L A T O R Y / L E G A L E N V I O R N M E N T H A S I M P R O V E D F e w e r p a t e n t s a r e r e v i e w e d a t I P R f o r i n v a l i d a t i o n - o f t h o s e r e v i e w e d , a s m a l l e r p e r c e n t a g e a r e i n v a l i d a t e d O f t h o s e i n v a l i d a t i o n c l a i m s h a v e F e w e r p a t e n t s r e v i e w e d a t I P R f o r d e c l i n e d i n v a l i d a t i o n Institution Rates Determinations of Claims in Final Written Decisions (FY13 to FY20: Oct. 1, 2012 to Feb. 29, 2020 Not unpatentable Unpatentable Instituted Denied 1,600 100% 12,000 30% 87% 1,400 26% 75% 10,000 80% 24% 23% 1,200 68% 67% 63% 63% 60% 8,000 1,000 55% 60% 17% 800 6,000 10% 12% 40% 600 4,000 400 20% 2,000 200 0 0% 0 -10% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 2014 2015 2016 2017 2018 Institution rate for each fiscal year is calculated by dividing petitions instituted by decisions on institution (i.e. petitions instituted plus petitions denied). The outcomes of decisions on institution responsive to requests for rehearing are excluded 1 0

ACACIA's IP Asset base • Core IP Team • Highly skilled and experienced • Very efficient and able to leverage for scale • IP expertise can be leveraged to diligence other corporate opportunities • Well recognized as an aggressive assertion entity • Company is well capitalized • Can move quickly on market opportunities • Committed to remaining a well-capitalized counterparty 1 1

2020 PORTFOLIO ACQUISTIONS TO DATE • 3 Portfolios Acquired – Fusion IO, L3Harris, Excalibur • Diversified balance of soft licensing, litigation-driven revenue • Soft licensing expected to deliver attractive near-term returns over 6-18 months • Litigation provides incremental and outsized returns over long-term 1 2

FINANCIAL SUMMARY & UPDATE 1 3

ACCESS TO CAPITAL A S O F M A R C H 3 1 , 2 0 2 0 ( I N $ M I L L I O N S ) U N R E S T R I C T E D C A S H , L I Q U I D S E C U R I T I E S 1 5 8 R E S T R I C T E D C A S H ( S T A R B O A R D P R E F E R R E D ) 3 5 N O T E S T O B E I S S U E D T O S T A R T B O A R D 3 6 5 ( u p t o ) N O T E S T O B E I S S U E D T O A C T G S H A R E H O L D E R S 1 0 0 ( u p t o ) T O T A L A V A I L A B L E C A P I T A L $ 6 5 8 1 4