RPX Announces Third Quarter 2012 Financial Results

RPX Announces Third Quarter 2012 Financial Results

SAN FRANCISCO, Oct. 30, 2012 (GLOBE NEWSWIRE) -- RPX Corporation
(Nasdaq:RPXC), a leading provider of patent risk management solutions, today
announced its financial results for the third quarter ended September 30,
2012.

Financial Highlights

  *Revenue for the third quarter of fiscal 2012 totaled $47.0 million, up 23%
    from the prior year period
  *GAAP net income for the third quarter of fiscal 2012 was $7.6 million or
    $0.14 per pro forma diluted share^[1]
  *Non-GAAP net income for the third quarter of fiscal 2012 was $9.4 million
    or $0.18 per pro forma diluted share^[1]

"RPX made solid progress on all fronts in the third quarter," said John
Amster, CEO of RPX Corporation. "We grew our client network to 128 members,
completed eight acquisitions of patent assets, and continued to deliver value
to our clients, both by reducing their patent litigation costs and by
providing them with unique strategic market intelligence. We also continued to
expand our suite of patent risk solutions with the launch of our insurance
service and the signing of our first two insurance clients."

Summary Results


Revenue for the third quarter increased 23% to $47.0 million, compared to
$38.4 million in the third quarter of 2011. 

Net acquisition spend during the quarter totaled $26.4 million, and included
eight 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 quarter was $7.6 million or $0.14 per diluted share,
compared to $7.9 million or $0.15 per diluted share in the third quarter of
2011. Net income was $0.14 per pro forma diluted share^[1] in the third
quarter, compared to $0.15 per pro forma diluted share^[1] in the third
quarter of 2011. 

Non-GAAP net income for the quarter, which excludes stock-based compensation
and the amortization of acquired intangibles (in each case, net of tax), was
$9.4 million or $0.18 per pro forma diluted share^[1], compared to $9.0
million or $0.17 per pro forma diluted share^[1] in the third quarter of 2011.

As of September 30, 2012, RPX had cash, cash equivalents and short-term
investments of $208.6 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 fourth quarter and full year 2012:


                                    Fourth Quarter 2012 Full Year 2012
Revenue                              $48.7 – $49.2       $194.8 – $195.3
                                     Million             Million
Non-GAAP Cost of Revenue as a        ----                42% – 43%
Percentage of Revenue
Non-GAAP SG&A                        ----                $42.2 – $43.1 Million
Non-GAAP Net Income                  $9.8 -- $10.4       $44.6 – $45.2 Million
                                     Million
Non-GAAP Effective Tax Rate          36%                 36%
Diluted Shares Outstanding (Pro      53.0 Million        52.7 Million
Forma Weighted Average)
Net Acquisition Spend                ----                $110 -- $120 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 and the
conversion of the Company's redeemable convertible preferred stock into common
stock using the as-if converted method as though the conversion had occurred
as of January 1, 2011 or the original issuance, if later.

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 October 30, 2012. Parties in the
United States and Canada can access the call by dialing 1-877-941-2068, using
conference code 4567518.International parties can access the call by dialing
1-480-629-9712, using conference code 4567518.

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
www.rpxcorp.com. The webcast will be archived there for a period of 30
days.An audio replay of the conference call will also be available 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 4567518. International parties should call 1-303-590-3030 and
enter conference code 4567518.

About RPX Corporation

RPX Corporation(Nasdaq:RPXC)is a leading provider of patent risk solutions,
offering defensive buying, acquisition syndication, patent intelligence 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, RPX helps to mitigate and manage patent
risk for its growing client network.

Use of Non-GAAP Financial Information

This news release dated October 30, 2012 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) and the amortization of
acquired intangible assets.Management uses these non-GAAP measures to
evaluate the Company's financial results, and believes investors wish to
exclude the effects of such items in 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 impact of the current economic climate on the Company's business,
the Company's ability to effectively manage its growth, 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," "will," "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 Nine Months Ended
                                       September 30,       September 30,
                                      2012     2011     2012     2011
Revenue                                $ 47,044  $ 38,394  $ 146,131 $ 111,634
Cost of revenue                        21,980   16,459   60,508   44,652
Selling, general and administrative    13,147   9,069    39,903   28,465
expenses
(Gain) on sale of patent assets, net   --       --       (177)    --
Operating income                       11,917   12,866   45,897   38,517
Other income (expense), net            65       (79)     92       (645)
Income before provision for income     11,982   12,787   45,989   37,872
taxes
Provision for income taxes             4,392    4,935    17,130   15,659
Net income                             $ 7,590   $ 7,852   $ 28,859  $ 22,213
Net income available to common                                    
stockholders:
Basic                                  $ 7,556  $ 7,381  $28,378 $ 12,858
Diluted                                $ 7,557  $ 7,421  $28,399  $ 13,518
Net income per common share:                                      
Basic                                  $ 0.15    $ 0.17    $ 0.57    $ 0.48
Diluted                                $ 0.14   $ 0.15    $ 0.55    $ 0.43
Weighted-average shares used in                                   
computing net income per common share:
Basic                                  50,457   44,473   49,410   27,015
Diluted                                52,127   48,914   51,711   31,125
                                                                 



RPX Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                                        
                                                        
                                          September 30, December 31,
                                          2012          2011
Assets                                                   
Current assets:                                          
Cash and cash equivalents                  $ 83,440      $ 106,749
Short-term investments                     125,197       126,976
Restricted cash                            --            500
Accounts receivable                        12,997        16,160
Prepaid expenses and other current assets  6,364         12,124
Deposit                                    10,000        --
Deferred tax assets                        6,048         5,192
Total current assets                       244,046       267,701
Patent assets, net                         197,321       163,352
Property and equipment, net                3,434         2,317
Intangible assets, net                     3,594         1,837
Goodwill                                   16,460        1,675
Restricted cash, less current portion      --            147
Deferred tax assets, less current portion  8,279         300
Other assets                               1,112         665
Total assets                               $ 474,246     $ 437,994
                                                        
Liabilities and stockholders' equity                     
Current liabilities:                                     
Accounts payable                           $ 1,046       $ 821
Accrued liabilities                        5,841         7,762
Deferred revenue                           93,722        96,513
Deferred payment obligations               500           5,056
Other current liabilities                  2,124         2,182
Total current liabilities                  103,233       112,334
Deferredrevenue, less current portion     4,965         11,762
Deferred tax liabilities                   21,766        14,695
Other liabilities                          20            119
Total liabilities                          129,984       138,910
                                                        
Common stock                               5             5
Additional paid-in capital                 275,612       259,315
Retained earnings                          68,646        39,787
Accumulated other comprehensive loss       (1)           (23)
Total stockholders' equity                 344,262       299,084
Total liabilities and stockholders' equity $ 474,246     $ 437,994




RPX Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                             
                                             Nine Months Ended September 30,
                                             2012            2011
Cash flows from operating activities                          
Net income                                    $ 28,859        $ 22,213
Adjustments to reconcile net income to net                    
cash provided byoperating activities:
Depreciation and amortization                 61,208          44,651
Stock-based compensation                      7,493           4,849
Excess tax benefit from stock-based           (5,796)         (4,118)
compensation
Imputed interest on deferred payment          94              584
obligations
Gain on sale of patent assets                 (177)           --
Amortization of premium on investments        3,773           404
Deferred taxes                                (1,534)         99
Other                                         (19)            1
Changes in assets and liabilities:                            
Accounts receivable                           3,163           10,586
Prepaid expenses and other assets             5,874           (4,777)
Deposit                                       (10,000)        --
Accounts payable                              225             256
Accrued and other liabilities                 (2,856)         7,543
Deferred revenue                              (9,642)         14,974
Net cash provided by operating activities     80,665          97,265
                                                             
Cash flows from investing activities                          
Purchases of investments classified as        (150,227)       (142,825)
available-for-sale
Maturities and sale of investments classified 153,920         15,100
as available-for-sale
Business acquisition                          (45,765)        (3,345)
Decrease in restricted cash                   647             73
Purchases of intangible assets                (52)            (95)
Purchases of property and equipment           (1,626)         (913)
Acquisitions of patent assets                 (65,056)        (63,815)
Proceeds from sale of patent assets           200             80
Net cash used in investing activities         (107,959)       (195,740)
                                                             
Cash flows from financing activities                          
Repayments of principal on deferred payment   (5,150)         (18,104)
obligations
Proceeds from other obligations               500             --
Proceeds from issuance of common stock in
initial public offering, net of issuance      --             157,478
costs
Proceeds from issuance of common stock in     --             27,379
follow-on offering, net of issuance costs
Proceeds from exercise of stock options and   2,839           2,632
other common stock issuances
Excess tax benefit from stock-based           5,796           4,118
compensation
Net cash provided by financing activities     3,985           173,503
Net increase (decrease) in cash and cash      (23,309)        75,028
equivalents
Cash and cash equivalents at beginning of     106,749         46,656
period
Cash and cash equivalents at end of period    $ 83,440        $ 121,684




RPX Corporation
Reconciliation of Pro Forma Net Income Per Share
(in thousands, except per share data)
(unaudited)
                                                                 
                                       Three Months Ended Nine Months Ended
                                        September 30,     September 30, 
                                       2012     2011    2012     2011
Net income                              $ 7,590  $ 7,852 $ 28,859 $ 22,213
                                                                 
Pro forma net income per share:                                   
Basic                                   $ 0.15   $ 0.17  $ 0.57   $ 0.52
Diluted                                 $ 0.14   $ 0.15  $ 0.55   $ 0.47
                                                                 
Shares used in computing pro forma net                            
income per share:
Basic:                                                            
Basic weighted-average common shares    50,457   44,473  49,410   27,015
Less: Conversion of redeemable          --       --      --       (13,836)
convertible preferred shares
Add: Assumed conversion of redeemable   --       --      --       26,230
convertible preferred shares
Add: Restricted stock                   227      2,837   838      3,437
Shares used in computing pro forma      50,684   47,310  50,248   42,846
basic net income per share
                                                                 
Diluted:                                                          
Diluted weighted-average common shares  52,127   48,914  51,711   31,125
Less: Conversion of redeemable          --       --      --       (13,836)
convertible preferred shares
Add: Assumed conversion of redeemable   --       --      --       26,230
convertible preferred shares
Add: Restricted stock                   227      2,837   838      3,437
Shares used in computing pro forma      52,354   51,751  52,549   46,956
diluted net income per share




RPX Corporation
Reconciliation of GAAP to Non-GAAP Net Income Per Share
(in thousands)
(unaudited)
                                                       
                       Three Months Ended     Nine Months
                        September 30,           EndedSeptember 30,
                       2012       2011       2012      2011
Net income              $ 7,590    $ 7,852   $ 28,859 $ 22,213
Stock-based             2,529      1,913      7,810     4,849
compensation^[1]
Amortization of
acquired intangible     361        146        832       146
assets^[2]
Income tax              (1,054)    (930)      (2,689)   (1,412)
adjustments^[3]
Non-GAAP net income     $ 9,426   $ 8,981   $ 34,812 $ 25,796
                                                       
Pro forma non-GAAP net                                  
income per share:
Basic                   $ 0.19    $ 0.19    $ 0.69   $ 0.60
Diluted                 $ 0.18    $ 0.17    $ 0.66   $ 0.55
                                                       
Pro forma
weighted-average                                        
shares:
Basic                   50,684     47,310     50,248    42,846
Diluted                 52,354     51,751     52,549    46,956
                                                       
                                                       
RPX Corporation
Reconciliation of GAAP to Non-GAAP Cost of Revenue
(in thousands)
(unaudited)
                                                       
                       Three Months Ended      Nine Months
                        September 30,          EndedSeptember 30,
                       2012      2011       2012     2011
Cost of revenue         $ 21,980  $ 16,459  $ 60,508 $ 44,652
Amortization of
acquired intangible     (56)       (53)       (168)     (53)
assets^[2]
Non-GAAP cost of        $ 21,924  $ 16,406  $ 60,340 $ 44,599
revenue
                                                       
RPX Corporation
Reconciliation of GAAP to Non-GAAP Selling, General and Administrative
Expenses
(in thousands)
(unaudited)
                                                       
                       Three Months Ended      Nine Months
                        September 30,          EndedSeptember 30,
                       2012      2011       2012     2011
Selling, general and    $ 13,147  $ 9,069   $ 39,903 $ 28,465
administrative expenses
Stock-based             (2,529)    (1,913)    (7,810)   (4,849)
compensation^[1]
Amortization of
acquired intangible     (305)      (93)       (664)     (93)
assets^[2]
Non-GAAP selling,
general and             $ 10,313  $ 7,063   $ 31,429 $ 23,523
administrative expenses
                                                                         
^[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.




RPX Corporation
Additional Metrics
($ in thousands)
(unaudited)

                                        As of and for the Three Months Ended
                                         September 30,
Operating Metrics                        2012              2011
Number of clients                        128               103
Net additions                            8                 7
Trailing four quarters                   25                38
                                                          
Gross acquisition spend                  $ 26,376          $ 33,915
Trailing four quarters                   $ 176,170         $ 96,826
                                                          
Net acquisition spend                    $ 26,376          $ 29,290
Trailing four quarters                   $ 121,940         $ 80,823
                                                          
Full time equivalent headcount           126               99
                                                          
Financial Metrics                                          
Subscription revenue                     $ 47,011          $ 38,380
Other revenue                            33                14
Revenue                                  $ 47,044          $ 38,394
                                                          
Cash, cash equivalents and short-term    $ 208,637         $ 250,008
investments
Deferred revenue, current and noncurrent $ 98,687          $ 97,535

CONTACT: Investor Relations
         Cynthia Hiponia
         The Blueshirt Group
         +1-415-418-2563
         ir@rpxcorp.com
        
        
         Media Relations
         Kaustuva Das
         RPX Corporation
         +1-415-529-3105
         media@rpxcorp.com

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