Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

RPX Announces Fourth Quarter and Fiscal 2015 Financial Results
PR Newswire

SAN FRANCISCO, Feb. 9, 2016 /PRNewswire/ -- RPX Corporation (together with its subsidiaries, "RPX", "the Company") (NASDAQ: RPXC), the leading provider of patent risk management and discovery management solutions, today announced its financial results for the fourth quarter and year ended December 31, 2015.

Highlights

  • Subscription revenue for the fourth quarter of fiscal 2015 was $67.7 million, up 7% compared to $63.5 million in the prior year period
  • Subscription revenue for fiscal 2015 totaled $269.7 million, up 7% compared to $251.4 million for fiscal 2014
  • Revenue for the fourth quarter of fiscal 2015 totaled $72.8 million, up 8% compared to $67.7 million in the prior year period
  • Revenue for fiscal 2015 totaled $291.9 million, up 13% compared to $259.3 million for fiscal 2014
  • There were 255 clients in RPX's network as of December 31, 2015, including 89 insurance policy holders.
  • In December 2015, RPX closed a syndicated transaction securing licensing rights to patents owned by Round Rock Research, LLC for over 20 companies for a total purchase price in excess of $100 million ($33 million net patent spend by RPX.)
  • On January 22, 2016, RPX acquired Inventus Solutions, Inc. for $232 million in cash, net of working capital adjustments.

"RPX ended an important year on a solid quarter, with revenues increasing 8% over the prior year," said John Amster, CEO of RPX. "For the full year, revenues grew 13% with strong cash generation while we increased our subscriber base, expanded our insurance offering and entered the ediscovery management space with the acquisition of Inventus. Our focus in 2016 will be continuing to build the patent clearinghouse, growing our discovery services business, and leveraging the combined expertise of RPX and Inventus to bring efficiencies to new sectors of the legal market."

Summary Results

Revenue for the fourth quarter of fiscal 2015 was $72.8 million, compared to $67.7 million in the prior year period. Revenue for fiscal 2015 was $291.9 million, compared to $259.3 million for fiscal 2014.

Net acquisition spend during the quarter totaled $50.4 million, and included 13 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 $160.7 million.

GAAP net income for the fourth quarter was $5.5 million or $0.10 per diluted share, compared to $9.2 million or $0.17 per diluted share in the fourth quarter of 2014. GAAP net income for fiscal 2015 was $39.4 million or $0.71 per diluted share, compared to $39.3 million or $0.72 per diluted share for fiscal 2014.

Non-GAAP net income for the fourth quarter, which excludes stock-based compensation, the amortization of acquired intangibles, fair value adjustments on deferred payment obligations, gains on extinguishment of deferred payment obligations, other-than-temporary impairments on short-term investments, and realized losses on exchange of short-term investments (in each case, net of tax), was $11.7 million or $0.21 per diluted share, compared to $12.6 million or $0.23 per diluted share in the fourth quarter of 2014. Non-GAAP net income for fiscal 2015 was $54.7 million or $0.99 per diluted share, compared to $52.6 million or $0.96 per diluted share for fiscal 2014.

As of December 31, 2015, RPX had cash, cash equivalents and short-term investments of $326.0 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 2016:

Subscription and Discovery revenue[1]


$76 - $78 million

Fee-related revenue


$1.5 million

Total revenue


$78 - $80 million

Net income (non-GAAP)


$6 - $7 million

Total EBITDA


$53 - $54 million

Effective tax rate (non-GAAP)


37%

Weighted-average diluted shares outstanding


53.1 million

The Company provided the following business outlook for the full year 2016:

Subscription revenue[1]


$265 - $275 million

Discovery revenue


$54 - $57 million

Fee-related revenue


$5 - $15 million

Total revenue


$324 - $347 million

Cost of revenue (non-GAAP)


$188 - $194 million

SG&A (non-GAAP)


$77 - $82 million

Net income (non-GAAP)


$39 - $46 million




RPX EBITDA (non-GAAP)


$202 - $216 million

Discovery EBITDA (non-GAAP)


$18 - $20 million

Total EBITDA (non-GAAP)


$220 - $236 million

Net patent spend


$130 million

EBITDA less net patent spend (non-GAAP)


$90 - $106 million




Effective tax rate (non-GAAP)


37%

Weighted-average diluted shares outstanding


53.3 million

The Company provided the following additional information regarding amortization expense for the full year 2016:

Amortization of patent assets acquired through December 31, 2015


$136.3 million

Amortization of patent assets to be acquired during fiscal 2016


$20.0 - $26.0 million

Total amortization of patent assets


$156.3 - $162.3 million

The above additional information regarding amortization expense does not include expected amortization costs related to the acquired intangibles from Inventus Solutions, Inc., which the Company expects to be between $10.0 and $16.0 million for the year ending December 31, 2016 based on its preliminary purchase price allocation. The Company will exclude the amortization expense from these acquired intangibles from its non-GAAP financial measures.

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, net of ceding commissions, from insurance policies, and management fees related to its insurance business.

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 9, 2016. Parties in the United States and Canada can access the call by dialing 1-888-438-5525, using conference code 5854608.  International parties can access the call by dialing 1-719-325-2452, using conference code 5854608.

The conference call will be webcast and investors will be able to access the webcast and slide presentation from the "Investor Relations" section of the company's website at www.rpxcorp.com. A replay of the webcast will be available online at the aforementioned website following the conclusion of the conference call.

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 9, 2016 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 EBITDA, non-GAAP other income, net, non-GAAP net income, and non-GAAP net income per share.

To supplement the Company's 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 (1) stock-based compensation expenses (inclusive of related employer payroll taxes), (2) the amortization of acquired intangible assets (other than patents), (3) fair value adjustments on deferred payment obligations, (4) gains on extinguishment of deferred payment obligations, (5) other-than-temporary impairments on short-term investments, (6) realized losses on exchange of short-term investments, and (7) their related tax effects. EBITDA is a non-GAAP measure defined as GAAP earnings before other income or expenses, net, taxes, depreciation, amortization, and stock-based compensation expenses (inclusive of related employer payroll taxes). 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 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, the Company's ability to integrate and manage the acquisition of Inventus Solutions, Inc., 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

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)



Three Months Ended December 31,


Year Ended December 31,


2015


2014


2015


2014

Revenue

$

72,831



$

67,747



$

291,881



$

259,335


Cost of revenue

39,475



33,529



148,858



124,435


Selling, general and administrative expenses

20,199



18,059



77,428



71,679


Gain on sale of patent assets, net





(592)



(707)


Operating income

13,157



16,159



66,187



63,928


Other income (expense), net

(2,619)



88



(688)



354


Income before provision for income taxes

10,538



16,247



65,499



64,282


Provision for income taxes

5,011



6,998



26,077



24,941


Net income

$

5,527



$

9,249



$

39,422



$

39,341










Net income per share:








Basic

$

0.10



$

0.17



$

0.72



$

0.74


Diluted

$

0.10



$

0.17



$

0.71



$

0.72


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








Basic

54,260



53,980



54,432



53,444


Diluted

55,002



54,995



55,410



54,818


 

RPX Corporation

Consolidated Balance Sheets

(in thousands)

(unaudited)



December 31,


2015


2014

Assets




Current assets:




Cash and cash equivalents

$

94,983



$

78,019


Short-term investments

231,015



239,514


Restricted cash

701



584


Accounts receivable

13,905



24,793


Prepaid expenses and other current assets

12,643



3,466


Deferred tax assets



4,400


Total current assets

353,247



350,776


Patent assets, net

254,560



236,349


Property and equipment, net

4,733



4,151


Intangible assets, net

1,801



3,526


Goodwill

19,978



19,978


Restricted cash, less current portion

727



1,091


Deferred tax assets, less current portion

16,619



93


Other assets

6,896



26,100


Total assets

$

658,561



$

642,064


Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

959



$

235


Accrued liabilities

14,842



14,257


Deferred revenue

110,921



133,316


Deferred payment obligations

2,383




Other current liabilities

467



640


Total current liabilities

129,572



148,448


Deferred revenue, less current portion

4,731



2,893


Other liabilities

7,779



5,678


Total liabilities

142,082



157,019


Stockholders' equity:




Common stock

5



5


Additional paid-in capital

344,610



326,280


Retained earnings

172,115



158,868


Accumulated other comprehensive loss

(251)



(108)


Total stockholders' equity

516,479



485,045


Total liabilities and stockholders' equity

$

658,561



$

642,064


 

RPX Corporation

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)



Year Ended December 31,


2015


2014

Operating activities




Net income

$

39,422



$

39,341


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




Depreciation and amortization

145,835



123,138


Stock-based compensation

17,594



17,656


Excess tax benefit from stock-based compensation

(1,593)



(2,598)


Gain on sale of patent assets

(592)



(707)


Amortization of premium on investments

6,666



6,585


Deferred taxes

(13,010)



(14,216)


Fair value adjustments on deferred payment obligations

(3,887)




Gain on extinguishment of deferred payment obligation

(3,000)




Other-than-temporary impairment of short-term investments

5,096




Realized loss on exchange of short-term investments

3,444




Other

(60)



(500)


Changes in assets and liabilities, net of business acquired:




Accounts receivable

10,888



14,006


Prepaid expenses and other assets

(17,651)



3,565


Accounts payable

724



(97)


Accrued and other current liabilities

4,631



6,930


Deferred revenue

(21,284)



(1,634)


Net cash provided by operating activities

173,223



191,469


Investing activities




Purchases of investments

(273,853)



(224,548)


Maturities of investments

254,360



174,650


Sales of investments

21,650




Business acquisition, net of cash acquired

(425)



(2,286)


Decrease in restricted cash

247



143


Purchases of property and equipment

(2,163)



(1,511)


Acquisitions of patent assets

(132,834)



(136,968)


Deposit for acquisition of patent assets



(25,000)


Proceeds from sale of patent assets

650



1,086


Acquisition of other assets

(2,500)




Net cash used in investing activities

(134,868)



(214,434)


Financing activities




Repayments of principal on deferred payment obligations

(2,935)




Proceeds from deferred payment obligations

6,270




Proceeds from exercise of stock options

4,953



3,159


Tax withholdings related to net share settlements of restricted stock units

(5,097)



(4,928)


Excess tax benefit from stock-based compensation

1,593



2,598


Repurchase of common stock

(26,175)




Net cash provided by (used in) financing activities

(21,391)



829


Net increase (decrease) in cash and cash equivalents

16,964



(22,136)


Cash and cash equivalents at beginning of period

78,019



100,155


Cash and cash equivalents at end of period

$

94,983



$

78,019


 

RPX Corporation

Reconciliation to Non-GAAP Net Income Per Share

(in thousands, except per share data)

(unaudited)



Three Months Ended December 31,


Year Ended December 31,


2015


2014


2015


2014

Revenue

$

72,831



$

67,747



$

291,881



$

259,335










Cost of revenue

39,475



33,529



148,858



124,435


Amortization of acquired intangible assets[2]

(50)



(55)



(200)



(225)


Non-GAAP cost of revenue

39,425



33,474



148,658



124,210










Selling, general and administrative expenses

20,199



18,059



77,428



71,679


Stock-based compensation[1]

(4,533)



(4,355)



(18,015)



(18,049)


Amortization of acquired intangible assets[2]

(381)



(381)



(1,525)



(1,251)


Non-GAAP selling, general and administrative expenses

15,285



13,323



57,888



52,379










Gain on sale of patent assets, net





(592)



(707)


Non-GAAP operating income

18,121



20,950



85,927



83,453










Other income (expense), net

(2,619)



88



(688)



354


Fair value adjustment on deferred payment obligations[3]

(655)





(3,887)




Gain on extinguishment of deferred payment obligations[4]

(3,000)





(3,000)




Other-than-temporary impairment on short-term investments[4]

3,181





5,096




Realized loss on exchange of short-term investments[4]

3,336





3,336




Non-GAAP other income, net

243



88



857



354










Provision for income taxes

5,011



6,998



26,077



24,941


Income tax adjustments[5]

1,649



1,410



6,037



6,300


Non-GAAP provision for income taxes

6,660



8,408



32,114



31,241










Non-GAAP net income

$

11,704



$

12,630



$

54,670



$

52,566










Non-GAAP net income per share:








Basic

$

0.22



$

0.23



$

1.00



$

0.98


Diluted

$

0.21



$

0.23



$

0.99



$

0.96


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








Basic

54,260



53,980



54,432



53,444


Diluted

55,002



54,995



55,410



54,818


 

RPX Corporation

Reconciliation of Net Income to Non-GAAP EBITDA Less Net Patent Spend

(in thousands)

(unaudited)



Three Months Ended December 31,


Year Ended December 31,


2015


2014


2015


2014

Net income

$

5,527



$

9,249



$

39,422



$

39,341


Provision for income taxes

5,011



6,998



26,077



24,941


Other (income) expense, net

2,619



(88)



688



(354)


Stock-based compensation[1]

4,533



4,355



18,015



18,049


Depreciation and amortization

38,809



33,438



145,835



123,138


Non-GAAP EBITDA[6]

56,499



53,952



230,037



205,115


Net patent spend

(50,353)



(20,810)



(160,665)



(136,468)


Non-GAAP EBITDA less net patent spend

$

6,146



$

33,142



$

69,372



$

68,647


 

RPX Corporation

Additional Metrics

(in thousands, except client and headcount data)

(unaudited)




As of and for the Three Months Ended December 31,

Operating Metrics


2015


2014

Number of clients


255



204


Net additions


10



9


Trailing four quarters


51



36


Gross patent spend


$

137,673



$

21,760


Trailing four quarters


$

1,119,354



$

159,168


Net patent spend


$

50,353



$

20,810


Trailing four quarters


$

160,665



$

136,468


Full time equivalent headcount


161



152











As of and for the Three Months Ended December 31,

Financial Metrics


2015


2014

Subscription revenue[7]


$

67,701



$

63,546


Fee-related revenue


5,130



4,201


Total revenue


$

72,831



$

67,747


Cash, cash equivalents and short-term investments


$

325,998



$

317,533


Deferred revenue, current and non-current


$

115,652



$

136,209




[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]

RPX excludes fair value adjustments related to its deferred payment obligations from its non-GAAP financial measures.

[4]

RPX excludes gains on extinguishment of deferred payment obligations, other-than-temporary impairments to its short-term investments, and realized losses on exchanges of short-term investments from its non-GAAP financial measures.

[5]

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

[6]

RPX calculates non-GAAP EBITDA as GAAP earnings before other income or expenses, net, taxes, depreciation, amortization, and stock-based compensation expenses (inclusive of related employer payroll taxes).

[7]

Subscription revenue is comprised of revenue generated from membership subscription services, premiums earned, net of ceding commissions, from insurance policies, and management fees related to its insurance business.

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-2015-financial-results-300217589.html

SOURCE RPX Corporation

 Top of page