RPX Corporation
Feb 10, 2015

RPX Announces Fourth Quarter and Fiscal 2014 Financial Results

SAN FRANCISCO, Feb. 10, 2015 /PRNewswire/ -- RPX Corporation (NASDAQ: RPXC), the leading provider of patent risk management solutions, today announced its financial results for the fourth quarter and year ended December 31, 2014.

Highlights

  • Subscription revenue for the fourth quarter of fiscal 2014 was $63.5 million, up 10% compared to $57.9 million in the prior year period
  • Subscription revenue for fiscal 2014 totaled $251.4 million, up 12% compared to $224.7 million for fiscal 2013
  • Revenue for the fourth quarter of fiscal 2014 totaled $67.7 million, up 12% compared to $60.3 million in the prior year period
  • Revenue for fiscal 2014 totaled $259.3 million, up 9% compared to $237.5 million for fiscal 2013
  • Subsequent to the end of the quarter, RPX signed its first automaker client, Ford Motor Company

"We are very pleased to report solid growth and cash generation in our sixth full year of reducing NPE risk for technology companies," said John Amster, Chief Executive Officer of RPX Corporation. "With 204 clients in our network, a growing insurance business, and numerous new initiatives underway, we're excited about the opportunities in front of us."

Share Repurchase Program

Separately RPX announced that its Board of Directors has authorized a share repurchase program under which the Company is authorized to repurchase up to $75 million of its outstanding common stock.

Summary Results

Revenue for the fourth quarter of fiscal 2014 was $67.7 million, compared to $60.3 million in the prior year period. Revenue for fiscal 2014 was $259.3 million, compared to $237.5 million for fiscal 2013.

Net acquisition spend during the quarter totaled $20.8 million, and included 12 new acquisitions of patent assets, in addition to the exercise of previously negotiated options to acquire licenses for new clients. Net acquisition spend during the year totaled $136.5 million.

GAAP net income for the fourth quarter was $9.9 million or $0.18 per diluted share, compared to $7.0 million or $0.13 per diluted share in the fourth quarter of 2013. GAAP net income for fiscal 2014 was $40.0 million or $0.73 per diluted share, compared to $40.8 million or $0.76 per diluted share for fiscal 2013.

Non-GAAP net income for the fourth quarter, which excludes stock-based compensation and the amortization of acquired intangibles (in each case, net of tax), was $13.3 million or $0.24 per pro forma diluted share[1], compared to $9.7 million or $0.18 per pro forma diluted share[1] in the fourth quarter of 2013. Non-GAAP net income for fiscal 2014 was $53.2 million or $0.97 per pro forma diluted share[1], compared to $52.7 million or $0.98 per pro forma diluted share[1] for fiscal 2013.

As of December 31, 2014, RPX had cash, cash equivalents and short-term investments of $317.5 million

Business Outlook

This outlook reflects the Company's current and preliminary view and may be subject to change.  Please see the paragraph regarding "Forward-Looking Statements" at the end of this news release.

The Company provided the following business outlook for the first quarter of fiscal 2015:

 

Subscription revenue[1]


$66.2 - $66.7 million

Fee-related revenue


$16.1 million

Total revenue


$82.3 - $82.8 million

Net income (non-GAAP)


$19.5 - $20.1 million

Effective tax rate (non-GAAP)


37%

Weighted-average diluted shares outstanding


55.3 million

 

The Company provided the following business outlook for the full year 2015:

 

Subscription revenue[1]


$265.0 - $275.0 million

Fee-related revenue


$20.0 - $25.0 million

Total revenue


$285.0 - $300.0 million

Cost of revenue (non-GAAP)


$145.0 - $150.0 million

SG&A (non-GAAP)


$60.0 - $64.0 million

Net income (non-GAAP)


$50.0 - $54.0 million

Effective tax rate (non-GAAP)


37%

Weighted-average diluted shares outstanding


55.9 million

Net acquisition spend


$170.0 million

The above outlook is forward-looking.  Actual results may differ materially.  Please refer to the information under the caption "Use of Non-GAAP Financial Information" below.

————————

[1]

Subscription revenue is comprised of revenue generated from membership subscription services, premiums earned from insurance policies, and management fees.

Conference Call

RPX management will host a conference call and live webcast for analysts and investors at 2:00 p.m. PST/5:00 p.m. EST on February 10, 2015.  Parties in the United States and Canada can access the call by dialing 1-800-768-6490, using conference code 2611297.  International parties can access the call by dialing 1-785-830-7987, using conference code 2611297.

RPX will offer a live webcast of the conference call which can be accessed from the "Investor Relations" section of the Company's website at http://ir.rpxcorp.com. An audio replay of the conference call will also be available approximately two hours after the call and will be available for 30 days. To hear the replay, parties in the United States and Canada should call 1-888-203-1112 and enter conference code 2611297.  International parties should call 1-719-457-0820 and enter conference code 2611297.

About RPX Corporation

RPX Corporation (NASDAQ: RPXC) is the leading provider of patent risk solutions, offering defensive buying, acquisition syndication, patent intelligence, insurance services and advisory services.  Since its founding in 2008, RPX has introduced efficiency to the patent market by providing a rational alternative to litigation. The San Francisco-based company's pioneering approach combines principal capital, deep patent expertise, and client contributions to generate enhanced patent buying power. By acquiring patents and patent rights, RPX helps to mitigate and manage patent risk for its growing client network.

Use of Non-GAAP Financial Information

This news release dated February 10, 2015 contains non-GAAP financial measures.  Tables are provided in this news release that reconcile the non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include non-GAAP cost of revenue, non-GAAP selling, general and administrative expenses, non-GAAP net income, and non-GAAP net income per share.

To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, management believes that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. Management is excluding from its non-GAAP operating results stock-based compensation expenses (inclusive of related employer payroll taxes), the amortization of acquired intangible assets (other than patents) and related tax effects. Management uses these non-GAAP measures to evaluate the Company's financial results, and believes these non-GAAP measures may prove useful to investors who wish to consider the impact of certain items when comparing our financial performance with that of other companies. The adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results, trends and performance. The presentation of additional information is not meant to be considered in isolation or as a substitute for or superior to financial results determined in accordance with GAAP.

Forward-Looking Statements

This news release and its attachments contain forward-looking statements within the meaning of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements include statements regarding RPX's future financial performance as well as any statements regarding the Company's strategic and operational plans.  The Company's actual results may differ materially from those anticipated in these forward-looking statements.  Factors that may contribute to such differences include, among others, the Company's ability to maintain an adequate rate of growth, the success of the Company's new initiatives, and the Company's ability to attract new clients and retain existing clients.  Forward-looking statements are often identified by the use of words such as, but not limited to, "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "project," "seek," "should," "target," "will," "would," and similar expressions or variations intended to identify forward-looking statements.  More information about potential factors that could affect the Company's business and financial results is contained in the Company's most recent annual report on Form 10-K, its quarterly reports on Form 10-Q, and the Company's other filings with the SEC.  The Company does not intend, and undertakes no duty, to update any forward-looking statements to reflect future events or circumstances.

Contacts




Investor Relations

Media Relations 

JoAnn Horne

Allan W. Whitescarver 

Market Street Partners

RPX Corporation 

+1-415-445-3233

+1-415-852-3171

ir@rpxcorp.com

media@rpxcorp.com

 

RPX Corporation

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


Three Months Ended December 31,


Year Ended December 31,


2014


2013


2014


2013

Revenue

$

67,747



$

60,275



$

259,335



$

237,504


Cost of revenue

33,529



32,641



124,435



110,771


Selling, general and administrative expenses

18,059



16,732



71,679



62,525


(Gain) loss on sale of patent assets, net





(707)



126


Operating income

16,159



10,902



63,928



64,082


Other income, net

88



43



354



213


Income before provision for income taxes

16,247



10,945



64,282



64,295


Provision for income taxes

6,372



3,951



24,315



23,512


Net income

$

9,875



$

6,994



$

39,967



$

40,783


Net income available to common stockholders:












Basic

$

9,875



$

6,994



$

39,967



$

40,763


Diluted

$

9,875



$

6,994



$

39,967



$

40,763


Net income available to common stockholders per common share:












Basic

$

0.18



$

0.13



$

0.75



$

0.78


Diluted

$

0.18



$

0.13



$

0.73



$

0.76


Weighted-average shares used in computing net income available to common stockholders per common share:












Basic

53,980



52,562



53,444



51,956


Diluted

54,995



54,296



54,818



53,652


 


RPX Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


December 31,


2014


2013

Assets






Current assets:






Cash and cash equivalents

$

78,019



$

100,155


Short-term investments

239,514



190,567


Restricted cash

584



364


Accounts receivable

24,793



38,477


Prepaid expenses and other current assets

3,466



10,546


Deferred tax assets

4,400



3,817


Total current assets

350,776



343,926


Patent assets, net

236,349



219,954


Property and equipment, net

4,151



4,667


Intangible assets, net

3,526



1,718


Goodwill

19,978



16,460


Restricted cash, less current portion

1,091



1,454


Deferred tax assets, less current portion

93




Other assets

26,100



622


Total assets

$

642,064



$

588,801


Liabilities and stockholders' equity






Current liabilities:






Accounts payable

$

235



$

332


Accrued liabilities

14,432



8,784


Deferred revenue

133,316



131,808


Deferred payment obligations



500


Other current liabilities

640



1,638


Total current liabilities

148,623



143,062


Deferred revenue, less current portion

2,893



5,935


Deferred tax liabilities



11,654


Other liabilities

4,877



3,227


Total liabilities

156,393



163,878


Stockholders' equity:






Common stock

5



5


Additional paid-in capital

326,280



305,343


Retained earnings

159,494



119,527


Accumulated other comprehensive income (loss)

(108)



48


Total stockholders' equity

485,671



424,923


Total liabilities and stockholders' equity

$

642,064



$

588,801


 


RPX Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


Year Ended December 31,


2014


2013

Operating activities






Net income

$

39,967



$

40,783


Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation and amortization

123,138



108,629


Stock-based compensation

17,656



16,115


Excess tax benefit from stock-based compensation

(2,598)



(3,857)


(Gain) loss on sale of patent assets

(707)



126


Amortization of premium on investments

6,585



6,013


Deferred taxes

(14,216)



(3,302)


Other

(500)



116


Changes in assets and liabilities, net of business acquired:






Accounts receivable

14,006



(13,333)


Other receivables



33,775


Prepaid expenses and other assets

3,565



(9,376)


Accounts payable

(97)



(236)


Accrued and other liabilities

6,304



3,648


Deferred revenue

(1,634)



33,372


Net cash provided by operating activities

191,469



212,473


Investing activities






Purchases of investments classified as available-for-sale

(224,548)



(210,660)


Maturities of investments classified as available-for-sale

174,650



147,052


Sales of investments classified as available-for-sale



1,099


Business acquisition

(2,286)




(Increase) decrease in restricted cash

143



(1,818)


Purchases of property and equipment

(1,511)



(2,880)


Acquisitions of patent assets

(136,968)



(127,101)


Deposit for acquisition of patent assets

(25,000)




Proceeds from sale of patent assets

1,086



100


Net cash used in investing activities

(214,434)



(194,208)


Financing activities






Proceeds from exercise of stock options and other common stock issuances

3,159



5,151


Tax withholdings related to net share settlements of restricted stock units

(4,928)



(756)


Excess tax benefit from stock-based compensation

2,598



3,857


Net cash provided by financing activities

829



8,252


Net increase (decrease) in cash and cash equivalents

(22,136)



26,517


Cash and cash equivalents at beginning of period

100,155



73,638


Cash and cash equivalents at end of period

$

78,019



$

100,155


 


RPX Corporation

Reconciliation of Pro Forma Net Income Per Share

(in thousands, except per share data)

(unaudited)


Three Months Ended December 31,


Year Ended December 31,


2014


2013


2014


2013

Net income

$

9,875



$

6,994



$

39,967



$

40,783


Pro forma net income per share:












Basic

$

0.18



$

0.13



$

0.75



$

0.78


Diluted

$

0.18



$

0.13



$

0.73



$

0.76


Shares used in computing pro forma net income per share:












Basic:












Basic weighted-average common shares

53,980



52,562



53,444



51,956


Add: Restricted stock



3





25


Shares used in computing pro forma basic net income per share

53,980



52,565



53,444



51,981


Diluted:












Diluted weighted-average common shares

54,995



54,296



54,818



53,652


Add: Restricted stock



3





25


Shares used in computing pro forma diluted net income per share

54,995



54,299



54,818



53,677


 


RPX Corporation

Reconciliation of GAAP to Pro Forma Non-GAAP Net Income Per Share

(in thousands, except per share data)

(unaudited)


Three Months Ended December 31,


Year Ended December 31,


2014


2013


2014


2013

Net income

$

9,875



$

6,994



$

39,967



$

40,783


Stock-based compensation[1]

4,355



4,136



18,049



16,589


Amortization of acquired intangible assets[2]

436



349



1,476



1,418


Income tax adjustments[3]

(1,410)



(1,737)



(6,300)



(6,094)


Non-GAAP net income

$

13,256



$

9,742



$

53,192



$

52,696


Pro forma non-GAAP net income per share:












  Basic

$

0.25



$

0.19



$

1.00



$

1.01


  Diluted

$

0.24



$

0.18



$

0.97



$

0.98


Shares used in computing pro forma net income per share:












  Basic

53,980



52,565



53,444



51,981


  Diluted

54,995



54,299



54,818



53,677


 


RPX Corporation

Reconciliation of GAAP to Non-GAAP Cost of Revenue

(in thousands)

(unaudited)


Three Months Ended December 31,


Year Ended December 31,


2014


2013


2014


2013

Cost of revenue

$

33,529



$

32,641



$

124,435



$

110,771


Amortization of acquired intangible assets[2]

(55)



(55)



(225)



(223)


Non-GAAP cost of revenue

$

33,474



$

32,586



$

124,210



$

110,548


 


RPX Corporation

Reconciliation of GAAP to Non-GAAP Selling, General and Administrative Expenses

(in thousands)

(unaudited)


Three Months Ended December 31,


Year Ended December 31,


2014


2013


2014


2013

Selling, general and administrative expenses

$

18,059



$

16,732



$

71,679



$

62,525


Stock-based compensation[1]

(4,355)



(4,136)



(18,049)



(16,589)


Amortization of acquired intangible assets[2]

(381)



(294)



(1,251)



(1,195)


Non-GAAP selling, general and administrative expenses

$

13,323



$

12,302



$

52,379



$

44,741


 


RPX Corporation

Additional Metrics

(in thousands, except client and headcount data)

(unaudited)



As of and for the Three Months Ended December 31,

Operating Metrics


2014


2013

Number of clients


204



168


Net additions


9



8


Trailing four quarters


36



28


Gross acquisition spend


$

21,760



$

41,100


Trailing four quarters


$

159,168



$

132,251


Net acquisition spend


$

20,810



$

40,350


Trailing four quarters


$

136,468



$

126,501


Full time equivalent headcount


152



137




As of and for the Three Months Ended December 31,

Financial Metrics


2014


2013

Subscription revenue[4]


$

63,546



$

57,912


Fee-related revenue


4,201



2,363


Total revenue


$

67,747



$

60,275


Cash, cash equivalents and short-term investments


$

317,533



$

290,722


Deferred revenue, current and non-current


$

136,209



$

137,743


 

[1]

RPX excludes stock-based compensation and related employer payroll taxes from its non-GAAP financial measures.

[2]

RPX excludes amortization expense related to intangible assets (other than patents) acquired in conjunction with the acquisition of businesses from its non-GAAP financial measures.

[3]

Amount reflects income taxes associated with the above noted non-GAAP exclusions.

[4]

Subscription revenue is comprised of revenue generated from membership subscription services, premiums earned from insurance policies, and management fees.

Logo - http://photos.prnewswire.com/prnh/20130730/SF55756LOGO

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/rpx-announces-fourth-quarter-and-fiscal-2014-financial-results-300034080.html

SOURCE RPX Corporation

News Provided by Acquire Media