RPX Announces Fourth Quarter and Fiscal 2013 Financial Results - WBOC-TV 16, Delmarvas News Leader, FOX 21 -

RPX Announces Fourth Quarter and Fiscal 2013 Financial Results

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SOURCE RPX Corporation

SAN FRANCISCO, Feb. 11, 2014 /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, 2013.

(Logo: http://photos.prnewswire.com/prnh/20130730/SF55756LOGO)

Financial Highlights

  • Subscription revenue for the fourth quarter of fiscal 2013 was $57.9 million, up 18% compared to $48.9 million in the prior year period
  • Subscription revenue for fiscal 2013 totaled $224.7 million, up 21% compared to $185.6 million for fiscal 2012
  • Revenue for the fourth quarter of fiscal 2013 totaled $60.3 million, up 17% compared to $51.6 million in the prior year period
  • Revenue for fiscal 2013 totaled $237.5 million, up 20% compared to $197.7 million for fiscal 2012

"We are very pleased to report solid growth and cash generation in our fifth full year of reducing NPE risk for technology companies," said John Amster, Chief Executive Officer of RPX Corporation. "With 168 clients in our network, a growing insurance business, and numerous new initiatives underway, we're excited about the opportunities in front of us."

Summary Results

Revenue for the fourth quarter of fiscal 2013 was $60.3 million, compared to $51.6 million in the prior year period. Revenue for fiscal 2013 was $237.5 million, compared to $197.7 million for fiscal 2012.

Net acquisition spend during the quarter totaled $40.4 million, and included 19 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 $126.5 million.

GAAP net income for the fourth quarter was $7.0 million or $0.13 per diluted share, compared to $10.1 million or $0.19 per diluted share in the fourth quarter of 2012. GAAP net income for fiscal 2013 was $40.8 million or $0.76 per diluted share, compared to $39.0 million or $0.74 per diluted share for fiscal 2012.

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 $9.7 million or $0.18 per pro forma diluted share[1], compared to $12.3 million or $0.24 per pro forma diluted share[1] in the fourth quarter of 2012. Non-GAAP net income for fiscal 2013 was $52.7 million or $0.98 per pro forma diluted share[1], compared to $47.1 million or $0.90 per pro forma diluted share[1] for fiscal 2012.

As of December 31, 2013, RPX had cash, cash equivalents and short-term investments of $290.7 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 2014:

Subscription revenue[2]


$60.8 - $61.3 million

Fee-related revenue


$1.1 million

Total revenue


$61.9 - $62.4 million

Net income (non-GAAP)


$11.8 - $12.4 million

Effective tax rate (non-GAAP)


36%

Pro forma weighted-average diluted shares outstanding


54.3 million

The Company provided the following business outlook for the full year 2014:

Subscription revenue[2]


$246 - $258 million

Fee-related revenue


$8 - $10 million

Total revenue


$254 - $268 million

Cost of revenue (non-GAAP)


$120 - $124 million

SG&A (non-GAAP)


$51 - $55 million

Net income (non-GAAP)


$53 - $57 million

Effective tax rate (non-GAAP)


36%

Pro forma weighted-average diluted shares outstanding


54.6 million

Net acquisition spend


$135 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]

Pro forma diluted shares computed to give effect to the shares of restricted stock outstanding as of the original date of issuance.

[2]

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

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 11, 2014.  Parties in the United States and Canada can access the call by dialing 1-866-225-8754, using conference code 4663749.  International parties can access the call by dialing 1-480-629-9818, using conference code 4663749.

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 1-800-406-7325 and enter conference code 4663749.  International parties should call 1-303-590-3030 and enter conference code 4663749.

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 11, 2014 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.

 

RPX Corporation

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)



Three Months Ended December 31,


Year Ended December 31,


2013


2012


2013


2012

Revenue

$

60,275



$

51,557



$

237,504



$

197,688


Cost of revenue

32,641



21,815



110,771



82,323


Selling, general and administrative expenses

16,732



13,687



62,525



53,590


(Gain) loss on sale of patent assets, net

-



-



126



(177)


Operating income

10,902



16,055



64,082



61,952


Other income, net

43



25



213



117


Income before provision for income taxes

10,945



16,080



64,295



62,069


Provision for income taxes

3,951



5,982



23,512



23,112


Net income

$

6,994



$

10,098



$

40,783



$

38,957


Net income available to common stockholders:








Basic

$

6,994



$

10,080



$

40,763



$

38,455


Diluted

$

6,994



$

10,080



$

40,763



$

38,474


Net income available to common stockholders per common share:








Basic

$

0.13



$

0.20



$

0.78



$

0.77


Diluted

$

0.13



$

0.19



$

0.76



$

0.74


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








Basic

52,562



50,824



51,956



49,766


Diluted

54,296



52,017



53,652



51,802


              

RPX Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)



December 31,


2013


2012

Assets




Current assets:




Cash and cash equivalents

$

100,155



$

73,638


Short-term investments

190,567



126,092


Restricted cash

364



-


Accounts receivable

38,477



25,144


Other receivables

-



33,775


Prepaid expenses and other current assets

10,546



5,237


Deferred tax assets

8,177



7,658


Total current assets

348,286



271,544


Patent assets, net

219,954



199,314


Property and equipment, net

4,667



3,144


Intangible assets, net

1,718



3,226


Goodwill

16,460



16,460


Restricted cash, less current portion

1,454



-


Other assets

622



279


Total assets

$

593,161



$

493,967


Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

332



$

568


Accrued liabilities

8,784



7,206


Deferred revenue

131,808



101,249


Deferred payment obligations

500



500


Other current liabilities

1,638



1,813


Total current liabilities

143,062



111,336


Deferred revenue, less current portion

5,935



3,122


Deferred tax liabilities

16,014



18,108


Other liabilities

3,227



1,142


Total liabilities

168,238



133,708


Stockholders' equity:




Common stock

5



5


Additional paid-in capital

305,343



281,530


Retained earnings

119,527



78,744


Accumulated other comprehensive income (loss)

48



(20)


Total stockholders' equity

424,923



360,259


Total liabilities and stockholders' equity

$

593,161



$

493,967


              

RPX Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)



Year Ended December 31,


2013


2012

Cash flows from operating activities




Net income

$

40,783



$

38,957


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




Depreciation and amortization

108,629



83,137


Stock-based compensation

16,115



10,334


Excess tax benefit from stock-based compensation

(3,857)



(8,574)


Imputed interest on deferred payment obligations

-



94


(Gain) loss on sale of patent assets

126



(177)


Amortization of premium on investments

6,013



5,131


Deferred taxes

(3,302)



1,477


Other

116



12


Changes in assets and liabilities:




Accounts receivable

(13,333)



(8,984)


Other receivables

33,775



(33,775)


Prepaid expenses and other assets

(9,376)



8,667


Accounts payable

(236)



(253)


Accrued and other liabilities

3,648



(711)


Deferred revenue

33,372



(3,958)


Net cash provided by operating activities

212,473



91,377


Cash flows from investing activities




Purchases of investments classified as available-for-sale

(210,660)



(185,582)


Maturities of investments classified as available-for-sale

147,052



188,026


Sales of investments classified as available-for-sale

1,099



-


Business acquisition

-



(45,765)


(Increase) decrease in restricted cash

(1,818)



647


Purchases of intangible assets

-



(64)


Purchases of property and equipment

(2,880)



(1,726)


Acquisitions of patent assets

(127,101)



(87,366)


Proceeds from sale of patent assets

100



200


Net cash used in investing activities

(194,208)



(131,630)


Cash flows from financing activities




Repayments of principal on deferred payment obligations

-



(5,150)


Proceeds from other obligations

-



500


Proceeds from exercise of stock options and other common stock issuances

5,151



3,218


Tax withholdings related to net share settlements of restricted stock units

(756)



-


Excess tax benefit from stock-based compensation

3,857



8,574


Net cash provided by financing activities

8,252



7,142


Net increase (decrease) in cash and cash equivalents

26,517



(33,111)


Cash and cash equivalents at beginning of period

73,638



106,749


Cash and cash equivalents at end of period

$

100,155



$

73,638


              

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,


2013


2012


2013


2012

Net income

$

6,994



$

10,098



$

40,783



$

38,957


Pro forma net income per share:








Basic

$

0.13



$

0.20



$

0.78



$

0.77


Diluted

$

0.13



$

0.19



$

0.76



$

0.74


Shares used in computing pro forma net income per share:








Basic:








Basic weighted-average common shares

52,562



50,824



51,956



49,766


Add: Restricted stock

3



91



25



649


Shares used in computing pro forma basic net income per share

52,565



50,915



51,981



50,415


Diluted:








Diluted weighted-average common shares

54,296



52,017



53,652



51,802


Add: Restricted stock

3



91



25



649


Shares used in computing pro forma diluted net income per share

54,299



52,108



53,677



52,451


              

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,


2013


2012


2013


2012

Net income

$

6,994



$

10,098



$

40,783



$

38,957


Stock-based compensation[1]

4,136



2,873



16,589



10,683


Amortization of acquired intangible assets[2]

349



360



1,418



1,192


Income tax adjustments[3]

(1,737)



(1,061)



(6,094)



(3,750)


Non-GAAP net income

$

9,742



$

12,270



$

52,696



$

47,082


Pro forma non-GAAP net income per share:








Basic

$

0.19



$

0.24



$

1.01



$

0.93


Diluted

$

0.18



$

0.24



$

0.98



$

0.90


Shares used in computing pro forma net income per share:








Basic

52,565



50,915



51,981



50,415


Diluted

54,299



52,108



53,677



52,451


              

RPX Corporation

Reconciliation of GAAP to Non-GAAP Cost of Revenue

(in thousands)

(unaudited)



Three Months Ended December 31,


Year Ended December 31,


2013


2012


2013


2012

Cost of revenue

$

32,641



$

21,815



$

110,771



$

82,323


Amortization of acquired intangible assets[2]

(55)



(55)



(223)



(223)


Non-GAAP cost of revenue

$

32,586



$

21,760



$

110,548



$

82,100


              

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,


2013


2012


2013


2012

Selling, general and administrative expenses

$

16,732



$

13,687



$

62,525



$

53,590


Stock-based compensation[1]

(4,136)



(2,873)



(16,589)



(10,683)


Amortization of acquired intangible assets[2]

(294)



(305)



(1,195)



(969)


Non-GAAP selling, general and administrative expenses

$

12,302



$

10,509



$

44,741



$

41,938


              

RPX Corporation

Additional Metrics

(in thousands, except client and headcount data)

(unaudited)




As of and for the Three Months Ended December 31,

Operating Metrics


2013


2012

Number of clients


168


140

Net additions


8


12

Trailing four quarters


28


28

Gross acquisition spend


$

41,100


$

104,360

Trailing four quarters


$

132,251


$

251,800

Net acquisition spend


$

40,350


$

23,160

Trailing four quarters


$

126,501


$

116,370

Full time equivalent headcount


137


125








As of and for the Three Months Ended December 31,

Financial Metrics


2013


2012

Subscription revenue[4]


$

57,912


$

48,935

Fee-related revenue


2,363


2,622

Total revenue


$

60,275


$

51,557

Cash, cash equivalents and short-term investments


$

290,722


$

199,730

Deferred revenue, current and noncurrent


$

137,743


$

104,371

 

[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 and premiums earned from insurance policies.

 

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