RPX Announces Fourth Quarter and Fiscal Year 2012 Financial Results

RPX Announces Fourth Quarter and Fiscal Year 2012 Financial Results

SAN FRANCISCO, Feb. 12, 2013 (GLOBE NEWSWIRE) -- RPX Corporation
(Nasdaq:RPXC), a leading provider of patent risk management solutions, today
announced its financial results for the fourth quarter and year ended December
31, 2012.

Financial Highlights

  *Revenue for the fourth quarter of fiscal 2012 totaled $51.6 million, up
    22% from the prior year period
  *Revenue for fiscal 2012 totaled $197.7 million, up 28% from fiscal 2011
  *GAAP net income for the fourth quarter of fiscal 2012 was $10.1 million or
    $0.19 per pro forma diluted share[1]
  *GAAP net income for fiscal 2012 was $39.0 million or $0.74 per pro forma
    diluted share[1]
  *Non-GAAP net income for the fourth quarter of fiscal 2012 was $12.3
    million or $0.24 per pro forma diluted share[1]
  *Non-GAAP net income for fiscal 2012 was $47.1 million or $0.90 per pro
    forma diluted share[1]

"RPX reported a solid 2012, capped by a strong fourth quarter with progress in
client growth, patent acquisition activity, and the roll out of our insurance
service," said Chief Executive Officer John Amster. "These results affirm that
our mission to help companies manage and reduce exposure to patent risk is
being embraced by the market."

Summary Results

Revenue for the fourth quarter increased 22% to $51.6 million, compared to
$42.4 million in the fourth quarter of 2011. For fiscal year 2012, revenue was
$197.7 million, compared to revenue of $154.0 million for fiscal year 2011.

Net acquisition spend during the quarter totaled $23.2 million, and included
seven 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 $10.1 million or $0.19 per diluted share,
compared to $6.9 million or $0.13 per diluted share in the fourth quarter of
2011. Net income was $0.19 per pro forma diluted share^[1] in the fourth
quarter, compared to $0.13 per pro forma diluted share^[1] in the fourth
quarter of 2011. For fiscal 2012, GAAP net income was $39.0 million or $0.74
per diluted share, compared to $29.1 million or $0.57 per diluted share for
fiscal 2011. Net income was $0.74 per pro forma diluted share^[1], compared to
$0.60 per pro forma diluted share^[1] for fiscal 2011.

Non-GAAP net income for the quarter, which excludes stock-based compensation,
the amortization of acquired intangibles and in 2011 it also excludes a
payment in lieu of a contingent obligation (in each case, net of tax), was
$12.3 million or $0.24 per pro forma diluted share^[1], compared to $11.3
million or $0.22 per pro forma diluted share^[1] in the fourth quarter of
2011. For fiscal 2012, Non-GAAP net income was $47.1 million or $0.90 per pro
forma diluted share^[1], compared to $37.1 million or $0.77 per pro forma
diluted share^[1] for fiscal 2011.

As of December 31, 2012, RPX had cash, cash equivalents and short-term
investments of $199.7 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 2013:

                                                     
Subscription revenue^[2]                              $52.8 - $53.3 million
Other revenue                                         $7.2 million
Total revenue                                         $60.0-- $60.5 million
Net income (non-GAAP)                                 $15.0 - $15.5 million
Effective tax rate (non-GAAP)                         37%
Pro forma weighted-average diluted shares outstanding 52.5 million

The Company provided the following business outlook for the full year 2013:

                                                     
Subscription revenue^[2]                              $215 - $225 million
Other revenue                                         $8 - $10 million
Total revenue                                         $223 - $235 million
Cost of revenue (non-GAAP)                            $96 - $101 million
SG&A (non-GAAP)                                       $48-- $52 million
Net income (non-GAAP)                                 $47 - $52 million
Effective tax rate (non-GAAP)                         37%
Pro forma weighted-average diluted shares outstanding 53.3 million
Net acquisition spend                                 $115 - $125 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.

^[2] Subscription revenue is comprised of revenue generated from membership
subscription services and premiums earned from insurance policies.

Change in CFO

Separately RPX announced that its Chief Financial Officer, Adam Spiegel, will
be leaving the Company to explore earlier stage opportunities. He will be
replaced by Ned Segal, an investment banker with Goldman Sachs & Co., and
currently Head of Global Software Investment Banking and COO of Technology
Banking. Mr. Segal will join RPX no later than June 1, 2013 and Mr. Spiegel
will be leaving RPX on or before June 1, 2013.

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 February 12, 2013.Parties in the
United States and Canada can access the call by dialing 1-877-941-9205, using
conference code 4590942.International parties can access the call by dialing
1-480-629-9645, using conference code 4590942.

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 4590942. International parties
should call 1-303-590-3030 and enter conference code 4590942.

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 February 12, 2013 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, and for 2011 it is also excluding a payment in
lieu of a contingent obligation related to the acquisition of patent
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 changes in its
executive team, 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  Year Ended
                                     December 31,        December 31,
                                    2012      2011      2012       2011
Revenue                              $51,557 $42,410 $197,688 $154,044
Cost of revenue                      21,815    22,719    82,323     67,371
Selling, general and administrative  13,687    12,128    53,590     40,593
expenses
(Gain) on sale of patent assets, net —         —         (177)      —
Operating income                     16,055    7,563     61,952     46,080
Other income (expense), net          25        (78)      117        (723)
Income before provision for income   16,080    7,485     62,069     45,357
taxes
Provision for income taxes           5,982     566       23,112     16,225
Net income                           $10,098 $6,919  $38,957  $29,132
Net income available to common                                   
stockholders:
Basic                                $10,080 $6,615  $38,455  $19,697
Diluted                              $10,080 $6,633  $38,474  $20,310
Net income per common share:                                     
Basic                                $0.20   $0.14   $0.77    $0.61
Diluted                              $0.19   $0.13   $0.74    $0.57
Weighted-average shares used in
computing net income per common                                  
share:
Basic                                50,824    46,920    49,766     32,032
Diluted                              52,017    50,055    51,802     35,920


RPX Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                                    
                                          December 31,
                                          2012       2011
Assets                                               
Current assets:                                      
Cash and cash equivalents                  $73,638  $106,749
Short-term investments                     126,092    126,976
Restricted cash                            —          500
Accounts receivable                        25,144     16,160
Other receivables                          33,775     —
Prepaid expenses and other current assets  5,237      12,124
Deferred tax assets                        7,658      5,192
Total current assets                       271,544    267,701
Patent assets, net                         199,314    163,352
Property and equipment, net                3,144      2,317
Intangible assets, net                     3,226      1,837
Goodwill                                   16,460     1,675
Restricted cash, less current portion      —          147
Deferred tax assets, less current portion  —          300
Other assets                               279        665
Total assets                               $493,967 $437,994
Liabilities and stockholders' equity                 
Current liabilities:                                 
Accounts payable                           $568     $821
Accrued liabilities                        7,206      7,762
Deferred revenue                           101,249    96,513
Deferred payment obligations               500        5,056
Other current liabilities                  1,813      2,182
Total current liabilities                  111,336    112,334
Deferredrevenue, less current portion     3,122      11,762
Deferred tax liabilities                   18,108     14,695
Other liabilities                          1,142      119
Total liabilities                          133,708    138,910
Common stock                               5          5
Additional paid-in capital                 281,530    259,315
Retained earnings                          78,744     39,787
Accumulated other comprehensive loss       (20)       (23)
Total stockholders' equity                 360,259    299,084
Total liabilities and stockholders' equity $493,967 $437,994


RPX Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                                 
                                                      Year Ended December 31,
                                                      2012        2011
Cash flows from operating activities                              
Net income                                             $38,957   $29,132
Adjustments to reconcile net income to net cash                   
provided by operating activities:
Depreciation and amortization                          83,137      63,446
Stock-based compensation                               10,334      6,996
Excess tax benefit from stock-based compensation       (8,574)     (2,302)
Imputed interest on deferred payment obligations       94          727
Gain on sale of patent assets                          (177)       —
Amortization of premium on investments                 5,131       1,086
Deferred taxes                                         1,477       5,624
Other                                                  12          8
Changes in assets and liabilities:                                
Accounts receivable                                    (8,984)     (3,528)
Other receivables                                      (33,775)    —
Prepaid expenses and other assets                      8,667       (12,085)
Accounts payable                                       (253)       332
Accrued and other liabilities                          (711)       5,198
Deferred revenue                                       (3,958)     25,714
Net cash provided by operating activities              91,377      120,348
Cash flows from investing activities                              
Purchases of investments classified as                 (185,582)   (202,430)
available-for-sale
Maturities and sale of investments classified as       188,026     78,246
available-for-sale
Business acquisition                                   (45,765)    (3,345)
Decrease in restricted cash                            647         73
Purchases of intangible assets                         (64)        (112)
Purchases of property and equipment                    (1,726)     (1,971)
Acquisitions of patent assets                          (87,366)    (101,170)
Proceeds from sale of patent assets                    200         80
Net cash used in investing activities                  (131,630)   (230,629)
Cash flows from financing activities                              
Repayments of principal on deferred payment            (5,150)     (19,254)
obligations
Proceeds from other obligations                        500         —
Proceeds from issuance of common stock in initial      —           157,478
public offering, net of issuance costs
Proceeds from issuance of common stock in follow-on    —           26,855
offering, net of issuance costs
Proceeds from exercise of stock options and other      3,218       2,993
common stock issuances
Excess tax benefit from stock-based compensation       8,574       2,302
Net cash provided by financing activities              7,142       170,374
Net increase (decrease) in cash and cash equivalents   (33,111)    60,093
Cash and cash equivalents at beginning of period       106,749     46,656
Cash and cash equivalents at end of period             $73,638   $106,749


RPX Corporation
Reconciliation of Pro Forma Net Income Per Share
(in thousands, except per share data)
(unaudited)
                                                                 
                                      Three Months Ended  Year Ended
                                       December 31,        December 31,
                                      2012      2011      2012      2011
Net income                             $10,098 $6,919  $38,957 $29,132
Pro forma net income per share:                                   
Basic                                  $0.20   $0.14   $0.77   $0.66
Diluted                                $0.19   $0.13   $0.74   $0.60
Shares used in computing pro forma net                            
income per share:
Basic:                                                            
Basic weighted-average common shares   50,824    46,920    49,766    32,032
Less: Conversion of redeemable         —         —         —         (16,960)
convertible preferred shares
Add: Assumed conversion of redeemable  —         —         —         26,230
convertible preferred shares
Add: Restricted stock                  91        2,158     649       3,114
Shares used in computing pro forma     50,915    49,078    50,415    44,416
basic net income per share
Diluted:                                                          
Diluted weighted-average common shares 52,017    50,055    51,802    35,920
Less: Conversion of redeemable         —         —         —         (16,960)
convertible preferred shares
Add: Assumed conversion of redeemable  —         —         —         26,230
convertible preferred shares
Add: Restricted stock                  91        2,158     649       3,114
Shares used in computing pro forma     52,108    52,213    52,451    48,304
diluted net income per share
                                                                 
RPX Corporation
Reconciliation of GAAP to Pro Forma Non-GAAP Net Income Per Share
(in thousands, except per share data)
(unaudited)
                                                                 
                                      Three Months Ended  Year Ended
                                       December 31,        December 31,
                                      2012      2011      2012      2011
Net income                             $10,098 $6,919  $38,957 $29,132
Stock-based compensation^[1]           2,873     2,166     10,683    7,015
Amortization of acquired intangible    360       146       1,192     292
assets^[2]
Payment in lieu of contingent          —         4,000     —         4,000
obligation^[3]
Income tax adjustments^[4]             (1,061)   (1,944)   (3,750)   (3,356)
Non-GAAP net income                    $12,270 $11,287 $47,082 $37,083
Pro forma non-GAAP net income per                                 
share:
Basic                                  $0.24   $0.23   $0.93   $0.83
Diluted                                $0.24   $0.22   $0.90   $0.77
Pro forma weighted-average shares:                                
Basic                                  50,915    49,078    50,415    44,416
Diluted                                52,108    52,213    52,451    48,304


RPX Corporation
Reconciliation of GAAP to Non-GAAP Cost of Revenue
(in thousands)
(unaudited)
                                                       
                      Three Months Ended      Year Ended
                       December 31,            December 31,
                      2012        2011        2012        2011
Cost of revenue        $21,815   $22,719   $82,323   $67,371
Payment in lieu of
contingent             —           (4,000)     —           (4,000)
obligation^[3]
Amortization of
acquired intangible    (55)        (51)        (223)       (104)
assets^[2]
Non-GAAP cost of       $21,760   $18,668   $82,100   $63,267
revenue
                                                       
RPX Corporation
Reconciliation of GAAP to Non-GAAP Selling, General and Administrative
Expenses
(in thousands)
(unaudited)
                                                       
                      Three Months Ended      Year Ended
                       December 31,            December 31,
                      2012        2011        2012        2011
Selling, general and
administrative         $13,687   $12,128   $53,590   $40,593
expenses
Stock-based            (2,873)     (2,166)     (10,683)    (7,015)
compensation^[1]
Amortization of
acquired intangible    (305)       (95)        (969)       (188)
assets^[2]
Non-GAAP selling,
general and            $10,509   $9,867    $41,938   $33,390
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] In 2008, RPX entered into an agreement to purchase patent assets
with an unaffiliated third party which stipulated that RPX make a
one-time payment of $5.0 million in the event RPX earned $170.0
million of subscription revenue in any calendar year. In 2011, RPX
agreed to pay $4.0 million in lieu of the $5.0 million contingent
payment.
^[4] 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 December 31,
Operating Metrics                      2012                2011
Number of clients                      140                 112
Net additions                          12                  9
Trailing four quarters                 28                  40
Gross acquisition spend                $104,360          $28,730
Trailing four quarters                 $251,800          $103,796
Net acquisition spend                  $23,160           $28,730
Trailing four quarters                 $116,370          $99,171
Full time equivalent headcount         125                 110
                                      As of and for the Year Ended
                                       December 31,
Financial Metrics                      2012                2011
Subscription revenue^[1]               $185,609          $150,721
Advisory fees                          2,000               —
Other revenue                          10,079              3,323
Revenue                                $197,688          $154,044
Cash, cash equivalents and short-term  $199,730          $233,725
investments
Deferred revenue, current and          $104,371          $108,275
noncurrent
                                                         
^[1] Subscription revenue is comprised of revenue generated from membership
subscription services and premiums earned from insurance policies.

CONTACT: Investor Relations
         JoAnn Horne
         Market Street Partners
         +1-415-445-3233
         ir@rpxcorp.com
        
         Media Relations
         Kaustuva Das
         RPX Corporation
         +1-415-529-3105
         media@rpxcorp.com

company logo
 
Press spacebar to pause and continue. Press esc to stop.