RPX Corporation
Apr 28, 2015

RPX Announces First Quarter 2015 Financial Results

SAN FRANCISCO, April 28, 2015 /PRNewswire/ -- RPX Corporation (NASDAQ: RPXC), the leading provider of patent risk management solutions, today announced its financial results for the first quarter ended March 31, 2015.

Financial Highlights

  • Subscription revenue for the first quarter of fiscal 2015 was $66.2 million, up 9% compared to $60.8 million in the prior year period
  • Revenue for the first quarter of fiscal 2015 totaled $83.3 million, up 35% compared to $61.9 million in the prior year period
  • Client count for the first quarter of fiscal 2015 increased by 20 net clients bringing our total client network to 224 as of March 31, 2015

"We saw good results across all of our metrics in the first quarter, including the size of our network, number of insurance policy holders, fee revenue and cash generation," said John A. Amster, Chief Executive and Co-founder of RPX Corporation. "We are off to a solid start to 2015 and are pleased by our continued success in reducing patent risk for technology companies."

Summary Results

Revenue for the first quarter was $83.3 million, compared to $61.9 million in the first quarter of 2014.

Net acquisition spend during the quarter totaled $53.6 million, and included 24 new acquisitions of patent assets, in addition to the exercise of previously negotiated options to acquire licenses for new clients.

GAAP net income for the first quarter was $18.0 million or $0.33 per diluted share, compared to $9.9 million or $0.18 per diluted share in the first quarter of 2014.

Non-GAAP net income for the first quarter, which excludes stock-based compensation and the amortization of acquired intangibles (in each case, net of tax), was $21.2 million or $0.38 per diluted share, compared to $12.7 million or $0.23 per diluted share in the first quarter of 2014.

As of March 31, 2015, RPX had cash, cash equivalents and short-term investments of $370.6 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 second quarter of fiscal 2015:

Subscription revenue[1]


$67.0 - $67.5 million

Fee-related revenue


$0.0 million

Total revenue


$67.0 - $67.5 million

Net income (non-GAAP)


$9.1 - $9.6 million

Effective tax rate (non-GAAP)


37%

Weighted-average diluted shares outstanding


55.6 million

 

The Company provided the following unchanged 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. PDT/5:00 p.m. EDT on April 28, 2015. Parties in the United States and Canada can access the call by dialing 1-888-466-4462, using conference code 1229965. International parties can access the call by dialing 1-719-325-2463, using conference code 1229965.

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 1229965. International parties should call 1-719-457-0820 and enter conference code 1229965.

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 April 28, 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 the Company's 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 should not 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 the future financial performance of RPX as well as any statements regarding the Company's strategic and operational plans. The Company's actual results may differ materially from those predicted or implied 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 insurance business and other 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 included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's most recent annual report on Form 10-K and its quarterly reports on Form 10-Q on file and available at the SEC's website at www.sec.gov. 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 March 31,





2015


2014

Revenue




$

83,287


$

61,888

Cost of revenue


34,759


28,920

Selling, general and administrative expenses


19,459


17,255

Operating income


29,069


15,713

Other income, net


121


99

Income before provision for income taxes


29,190


15,812

Provision for income taxes


11,159


5,952

Net income


$

18,031


$

9,860




Net income per common share:



Basic


$

0.33


$

0.19

Diluted


$

0.33


$

0.18

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



Basic


54,175


52,803

Diluted


55,197


54,443

 



RPX Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)






March 31,
 2015


December 31,
 2014

Assets





Current assets:




Cash and cash equivalents

$

118,858


$

78,019

Short-term investments

251,725


239,514

Restricted cash

785


584

Accounts receivable

15,351


24,793

Prepaid expenses and other current assets

8,353


3,466

Deferred tax assets

4,400


4,400

Total current assets

399,472


350,776

Patent assets, net

256,898


236,349

Property and equipment, net

4,230


4,151

Intangible assets, net

3,095


3,526

Long-term investments

4,355


Goodwill

19,978


19,978

Restricted cash, less current portion

1,091


1,091

Other assets

1,128


26,100

Deferred tax assets, less current portion

720


93

Total assets

$

690,967


$

642,064

Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

1,583


$

235

Accrued liabilities

7,190


14,257

Deferred revenue

152,602


133,316

Deferred payment obligations

5,935


Other current liabilities

857


640

Total current liabilities

168,167


148,448

Deferred revenue, less current portion

5,809


2,893

Deferred payment obligations, less current portion

4,355


Other liabilities

5,770


5,678

Total liabilities

184,101


157,019

Stockholders' equity:




Common stock

5


5

Additional paid-in capital

330,274


326,280

Retained earnings

176,611


158,868

Accumulated other comprehensive income

(24


(108

Total stockholders' equity

506,866


485,045

Total liabilities and stockholders' equity

$

690,967


$

642,064

 



RPX Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)




Three Months Ended March 31,




2015


2014

Operating activities




Net income

$

18,031


$

9,860

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



Depreciation and amortization

34,011


28,418

Stock-based compensation

3,881


3,802

Excess tax benefit from stock-based compensation

(316


(694

Amortization of premium on investments

1,435


1,608

Deferred taxes

(738


(893

Other


(500

Changes in assets and liabilities:



Accounts receivable

9,442


25,406

Prepaid expenses and other assets

(5,323


463

Accounts payable

1,348


467

Accrued and other liabilities

(6,802


(2,601

Deferred revenue

22,102


2,791

Net cash provided by operating activities

77,071


68,127

Investing activities



Purchases of investments

(57,663


(51,125

Maturities of investments

44,559


59,945

Increase in restricted cash

(201


Purchases of property and equipment

(547


(426

Acquisitions of patent assets

(28,636


(56,153

Net cash used in investing activities

(42,488


(47,759

Financing activities



Proceeds from deferred payment obligations

6,270


Proceeds from exercise of stock options and other common stock issuances

671


582

Tax withholdings related to net share settlements of restricted stock units

(857


(901

Excess tax benefit from stock-based compensation

316


694

Repurchase of common stock

(144


Net cash provided by financing activities

6,256


375

Net increase in cash and cash equivalents

40,839


20,743

Cash and cash equivalents at beginning of period

78,019


100,155

Cash and cash equivalents at end of period

$

118,858


$

120,898

 


RPX Corporation


Reconciliation of GAAP to Non-GAAP Net Income Per Share


(in thousands, except per share data)


(unaudited)








Three Months Ended March 31,




2015



2014


Net income


$

18,031



$

9,860


Stock-based compensation[1]


3,992



3,919


Amortization of acquired intangible assets[2]


431



305


Income tax adjustments[3]


(1,290)



(1,369)


Non-GAAP net income


$

21,164



$

12,715


Non-GAAP net income per share:







Basic


$

0.39



$

0.24


Diluted


$

0.38



$

0.23


Shares used in computing non-GAAP net income per share:







Basic


54,175



52,803


Diluted


55,197



54,443


 


RPX Corporation


Reconciliation of GAAP to Non-GAAP Cost of Revenue


(in thousands)


(unaudited)








Three Months Ended March 31,




2015



2014


Cost of revenue


$

34,759



$

28,920


Amortization of acquired intangible assets[2]


(50)



(56)


Non-GAAP cost of revenue


$

34,709



$

28,864


 


RPX Corporation


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


(in thousands)


(unaudited)








Three Months Ended March 31,




2015



2014


Selling, general and administrative expenses


$

19,459



$

17,255


Stock-based compensation[1]


(3,992)



(3,919)


Amortization of acquired intangible assets[2]


(381)



(249)


Non-GAAP selling, general and administrative expenses


$

15,086



$

13,087


 


RPX Corporation


Additional Metrics


(in thousands, except client and headcount data)


(unaudited)








As of and for the Three
Months Ended March 31,


Operating Metrics


2015



2014


Number of clients


224



178


Net additions


20



10


Trailing four quarters


46



32


Gross acquisition spend


$

924,718



$

58,653


Trailing four quarters


$

1,025,233



$

161,467


Net acquisition spend


$

53,636



$

55,653


Trailing four quarters


$

134,451



$

152,717


Full time equivalent headcount


151



133




As of and for the Three
Months Ended March 31,


Financial Metrics


2015



2014


Subscription revenue[4]


$

66,244



$

60,788


Fee-related revenue


17,043



1,100


Total revenue


$

83,287



$

61,888


Cash, cash equivalents and short-term investments


$

370,583



$

302,714


Deferred revenue, current and noncurrent


$

158,411



$

140,534


 



[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.

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SOURCE RPX Corporation

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