RPX Corporation Q Earnings Call

Transcription

1 RPX Corporation Earnings Call February 10, 2015 John Amster, Chief Executive Officer and Co-founder Robert Heath, Chief Financial Officer RPX CORPORATION DO NOT COPY, DISTRIBUTE, BROADCAST OR INCORPORATE THESE MATERIALS WITHOUT THE EXPRESS WRITTEN CONSENT OF RPX CORPORATION

2 Safe Harbor The following presentation contains forward-looking statements, including statements regarding our future financial performance and business strategy, our plans and objectives for future operations, and our expectations regarding the future growth of a market for patents. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Many of the factors that could cause or contribute to such differences are described in the Risk Factors section of our most recent annual report on Form 10-K, its quarterly reports on Form 10-Q, and the Company s other filings with the SEC, including: - we may experience significant quarterly fluctuations in our operating results, - new legislation, regulations or court rulings related to enforcing patents could reduce the value of our service to clients or potential clients, and - we may not be able to compete effectively against others to attract new clients or acquire patent assets. In light of these risks and uncertainties, the forward-looking statements contained in this presentation may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We do not intend, and undertake no duty, to update any forward-looking statements to reflect future events or circumstances. 2

3 and FY Financial Summary Total revenue of $67.7 million, up 12% year over year Subscription revenue of $63.5 million, up 10% year over year Fee-related revenue of $4.2 million FY total revenue of $259.3 million, up 9% over prior year Subscription revenue of $251.4 million, up 12% over prior year Fee-related revenue of $8.0 million 9 net client adds Total 204 clients 48 active insurance clients Renewal rate above 90% Cash, cash equivalents and short-term investments of $317.5 million [1] Subsequent to the end of the quarter, signed first automaker client, Ford Motor Company (NYSE:F) Subsequent to the end of the quarter, announced $75 million share repurchase program [1] As of December 31, 3

4 Guidance (in millions) Q FY 2015 Subscription revenue $ $66.7 $ $275.0 Fee-related revenue $16.1 $ $25.0 Total revenue $ $82.8 $ $300.0 Cost of revenue [1] -- $ $150.0 SG&A [1] -- $ $64.0 Net income [1] $ $20.1 $ $54.0 Effective tax rate [1] 37% 37% Pro forma WA diluted shares Net acquisition spend -- $170.0 [1] Cost of Revenue, SG&A, Net Income and Effective Tax Rate are non-gaap metrics 4

5 and FY Consolidated P&L (in millions, except per share data) 2013 FY FY 2013 Total Revenue $67.7 $60.3 $259.3 $237.5 Subscription Revenue $63.5 $57.9 $251.4 $224.7 Cost of Revenue [1] $33.5 $32.6 $124.2 $110.5 SG&A [1] $13.3 $12.3 $52.4 $44.7 Effective Tax Rate [1] 37% 37% 37% 36% Net Income [1] $12.6 $9.7 $52.6 $52.7 Pro Forma Diluted EPS $0.23 $0.18 $0.96 $0.98 Pro Forma WA Diluted Shares [1] Cost of Revenue, SG&A, Effective Tax Rate and Net Income are non-gaap metrics 5

6 Key Performance Metrics ($ in millions) $60.3 $61.9 Total Revenue $64.3 $65.4 $67.7 Subscription Revenue $60.8 $57.9 $64.3 $62.7 $63.5 Cost of Revenue [1] $32.6 $28.9 $31.5 $30.4 $ Q1 Q2 Q Q1 Q2 Q Q1 Q2 Q3 SG&A [1] Operating Margin [1] Net Income [1] $12.3 $13.1 $13.2 $12.8 $ % 32% 32% 34% 31% $9.7 $12.7 $12.9 $14.3 $ Q1 Q2 Q Q1 Q2 Q Q1 Q2 Q3 [1] Cost of Revenue, SG&A, Operating Margin and Net Income are non-gaap performance metrics 6

7 Revenue Annual Quarterly ($ in millions) ($ in millions) $94.9 $94.1 $259.3 $237.5 $251.4 $197.7 $224.7 $154.0 $185.6 $150.7 Revenue $67.7 $64.3 $65.4 $61.2 $61.9 $58.6 $60.3 $64.3 $55.2 $57.5 $62.7 $63.5 $60.8 $51.6 $57.8 $57.9 $47.0 $54.0 $55.0 $42.4 $43.8 $48.9 $38.9 $45.8 $47.0 $38.4 $43.8 $34.4 $42.4 $38.4 $34.4 $ Q1'11 Q2'11 Q3'11 '11 Q1'12 Q2'12 Q3'12 '12 Q1'13 Q2'13 Q3'13 '13 Q1'14 Q2'14 Q3'14 '14 Net Clients Added Net Clients Added Subscription revenue Fee-related revenue 7

8 Non-GAAP Net Income Annual Quarterly ($ in millions) ($ in millions) $17.5 $37.1 $47.1 $52.7 $52.6 $7.7 $9.1 $9.0 $11.3 $10.0 $15.4 $9.4 $12.3 $14.0 $14.3 $12.7 $12.9 $12.6 $11.4 $9.7 $ Q1'11Q2'11Q3'11'11Q1'12Q2'12Q3'12'12Q1'13Q2'13Q3'13'13Q1'14Q2'14Q3'14'14 8

9 Patent Acquisition Spend Annual Quarterly ($ in millions) ($ in millions) $107.7 $104.4 $251.8 $146.4 $103.8 $88.6 $99.2 $132.3 $159.2 $116.4 $126.5 $136.5 $19.4 $21.7 $33.9 $28.7 $13.4 $19.4 $21.7 $29.3 $28.7 $13.4 $58.7 $60.0 $41.1 $41.1 $29.4 $26.4 $53.5 $20.6 $55.7 $18.8 $39.1 $40.4 $26.4 $29.4 $23.2 $17.6 $17.8 $21.8 $42.2 $ Q1'11Q2'11Q3'11'11Q1'12Q2'12Q3'12'12Q1'13Q2'13Q3'13'13Q1'14Q2'14Q3'14'14 Net Gross 9

10 Free Cash Flow Annual Quarterly ($ in millions) ($ in millions) Reflects collection of $33.8 receivable in Q1 13 from 12 $82.5 $80.3 $47.5 $17.2 $28.0 $20.0 $21.3 $12.6 $18.8 $10.8 $11.5 $14.0 $15.1 ($25.6) ($8.8) ($15.3) ($10.5) ($11.7) ($16.0) ($27.5) ($12.7) Q1'11Q2'11Q3'11'11Q1'12Q2'12Q3'12'12Q1'13Q2'13Q3'13'13Q1'14Q2'14Q3'14'14 Free cash flow is defined as operating cash flow minus capital expenditures (i.e. purchases of intangible assets, property and equipment, patent assets and patent assets acquired in a business combination). Q and FY 2012 take into account $27.9 million of patent assets acquired in the Digitude transaction. and FY take into account $25 million deposit for acquisition of Rockstar patent assets. 10

11 Deferred Revenue ($ in millions) $137.7 $140.5 $131.2 $136.2 $92.8 $80.0 $87.6 $85.1 $118.2 $117.6 $105.2 $128.7 $130.6 $130.2 $125.3 $108.3 $112.8 $105.8 $106.0 $98.7 $104.4 $119.7 $97.5 $109.7 $111.4 $96.6 $99.8 $104.4 $104.7 $106.8 $103.7 $90.1 Q1'11 Q2'11 Q3'11 '11 Q1'12 Q2'12 Q3'12 '12 Q1'13 Q2'13 Q3'13 '13 Q1'14 Q2'14 Q3'14 '14 Trailing 12 month average 11

12 GAAP to Non-GAAP Reconciliation ($M) 2013 Net Income $9.2 $7.0 Stock-based compensation $4.4 $4.1 Amortization of acquired intangible assets $0.4 $0.3 Income tax adjustments ($1.4) ($1.7) Non-GAAP net income $12.6 $9.7 Pro forma non-gaap net income per share Basic $0.23 $0.19 Diluted $0.23 $0.18 Pro forma weighted-average shares Basic Diluted ($M) 2013 Cost of Revenue $33.5 $32.6 Amortization of acquired intangible assets ($0.1) ($0.1) Non-GAAP cost of revenue $33.5 $32.6 ($M) 2013 Selling, general and administrative expenses $18.1 $16.7 Stock-based compensation ($4.4) ($4.1) Amortization of acquired intangible assets Non-GAAP selling, general and administrative expenses ($0.4) ($0.3) $13.3 $

13 FY GAAP to Non-GAAP Reconciliation ($M) FY FY 2013 Net Income $39.3 $40.8 Stock-based compensation $18.0 $16.6 Amortization of acquired intangible assets $1.5 $1.4 Income tax adjustments ($6.3) ($6.1) Non-GAAP net income $52.6 $52.7 Pro forma non-gaap net income per share Basic $0.98 $1.01 Diluted $0.96 $0.98 Pro forma weighted-average shares Basic Diluted ($M) FY FY 2013 Cost of Revenue $124.4 $110.8 Amortization of acquired intangible assets ($0.2) ($0.2) Non-GAAP cost of revenue $124.2 $110.5 ($M) FY FY 2013 Selling, general and administrative expenses $71.7 $62.5 Stock-based compensation ($18.0) ($16.6) Amortization of acquired intangible assets Non-GAAP selling, general and administrative expenses ($1.3) ($1.2) $52.4 $

14 Thank You