Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
|
26-2990113
(I.R.S. Employer
Identification No.)
|
|
|
|
Title of Each Class
|
|
Name of Each Exchange on Which Registered
|
Common Stock, $0.0001 Par Value
|
|
The NASDAQ Stock Market LLC
|
Large accelerated filer
|
|
x
|
|
Accelerated filer
|
|
¨
|
|
|
|
|
|
|
|
Non-accelerated filer
|
|
¨
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
¨
|
|
|
|
|
|
Page
|
|
||
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
||
|
|
|
Item 5.
|
||
Item 6.
|
||
Item 7.
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
Item 9B.
|
||
|
|
|
|
||
|
|
|
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
|
||
|
|
|
|
||
|
|
|
Item 15.
|
||
|
||
|
Item 1.
|
Business.
|
•
|
Reduced Risk of Patent Litigation
– Clients reduce their exposure to patent litigation because we continuously assess patent assets available for sale or license and acquire many that are being or may be asserted against our clients or potential clients. Our clients have no litigation risk related to the patents that we own.
|
•
|
Cost-Effective Licenses
– Our annual subscription fee is generally based on a client’s historical financial results. Accordingly, our subscription fee is predictable for our clients. We believe our approach to pricing is different than the pricing strategies of traditional patent licensing businesses, which generally negotiate license fees based on the perceived relevance of their various patent portfolios to each licensee. We believe our approach to pricing also provides clients with non-exclusive license rights to our large and growing portfolio of patent assets at a lower cost than they would have paid if these patent assets were owned by other entities.
|
•
|
Reduced Patent Risk Management Costs
– Clients can reduce their ongoing patent risk management costs by supplementing their internal resources with our database of information and extensive transaction experience relating to the patent market. We actively monitor the patent market to understand the availability of patent assets for sale or license, the identity of the owners and licensors of these assets, the terms by which they may be available and the technologies to which these assets apply. We also track relevant litigation activity and identify key participants and trends in the patent
|
•
|
Patents Provide a Limited Monopoly
– In exchange for public disclosure of an invention, a patent owner is granted a monopoly over the use of a patented invention for a specified period, typically 20 years from the filing of the patent application.
|
•
|
Patents Confer Negative Rights
– Patent rights are negative rights, meaning that they generally enable a patent owner to exclude others from commercial exploitation of a patented invention, regardless of whether the patent owner has the resources to manufacture or commercialize the invention. As the owner of a negative right, a patent owner has recourse through litigation to prevent others from using, making, offering for sale or selling the patented invention. Even when the patented invention is only a component of a broader product or service, the negative right can be enforced against any product or service that incorporates the component.
|
•
|
Patents May Be Licensed and are Infinitely Divisible
– A patent owner can authorize the use of the patented invention by one or more parties, typically in exchange for licensing fees. There is no legal limit to the amount of licenses a patent owner can provide to market participants.
|
•
|
Patents Are Assets That Can Be Transferred
– A patent can be sold, in which case the negative right and monopoly associated with the patented invention are transferred to the buyer. When a patent is sold, the buyer’s negative rights may be constrained by licenses granted by previous owners.
|
•
|
Improved Search Capabilities
– The entire database of United States patents is searchable on the Internet, enabling patent investors to quickly identify patents and their owners. The Internet also makes it much easier for patent owners to identify and research products and services that may relate to their patents.
|
•
|
Increasing Rate of Issuance of Technology Patents
– Patents issued with class code identifiers that we classify as technology-related patents have nearly doubled in the past 10 years.
|
•
|
Overlap of Technology Patents
– Because inventors can patent incremental improvements to existing inventions, multiple patents can apply to individual components of a product or service. Consequently, multiple patent owners may seek to extract license fees related to a single product or service. One example of this overlap of patents is semiconductor technology known as DRAM. Today, there are several thousand issued United States patents with “DRAM” specifically listed as a claim element. These DRAM patents span design, fabrication, testing and component technology including dies, capacitors, memory cells, transistors, integrated circuits, substrates and packaging. Each of those aspects may be covered by multiple patents that could be infringed by a DRAM semiconductor device or downstream product. Potential infringement of these patents could occur by anyone who designs, makes, uses or sells a product using this technology.
|
•
|
Technology Convergence
– Modern products and services incorporate numerous technology components, such as the evolution of mobile devices. This growth can be attributed to the expanded set of features and functionality incorporated in
|
•
|
More Companies Employing Patented Technologies
– A growing number of companies, including non-technology companies, make, use and sell products or services that utilize patented inventions. For example, consumer banks now offer online and mobile banking and bill pay as a standard feature, which rely on numerous complex technologies that may be subject to many patents.
|
•
|
Specialized Appellate Court for Patent Cases
– The United States Court of Appeals for the Federal Circuit was created in 1982 to serve as the central appellate venue for patent-related cases. We believe this centralization of patent-related appeals has resulted in a more uniform application of patent law. In addition, various federal district courts have adopted patent-specific rules of procedure to facilitate patent litigation. These factors have created a more attractive environment for patent assertions.
|
•
|
Reduced Risk of Patent Litigation
– Clients reduce their exposure to patent litigation because we continuously assess patent assets available for sale or license and acquire many that are being or may be asserted against our clients or potential clients. Our clients have no litigation risk related to the patents that we own.
|
•
|
Cost-Effective Licenses
– Our annual subscription fee is typically based on a client’s historical financial results, which provides predictability for us and our clients. We believe our approach is different than the pricing strategies of traditional patent licensing businesses, which generally negotiate license fees based on the perceived relevance of their various patent portfolios to each licensee.
We believe our approach to pricing also provides clients with non-exclusive license rights to our large and growing portfolio of patent assets at a lower cost than they would have paid if these patent assets were owned by other entities.
|
•
|
Reduced Patent Risk Management Costs
– Clients can reduce their ongoing patent risk management costs by supplementing their internal resources with our database of information and extensive transaction experience relating to the patent market. We actively monitor the patent market to understand the availability of patent assets for sale or license, the identity of the owners and licensors of these assets, the terms by which they may be available and the technologies to which these assets apply. We also track relevant litigation activity and identify key participants and trends in the patent market. As part of their subscription, our clients have access to this information through our proprietary web portal and through discussions with our client relations team.
|
•
|
Growing Our Client Network
– We intend to grow our client network by continuing to develop relationships with companies that have experienced NPE-initiated patent litigation and continuing to demonstrate the value of our patent risk management solution.
|
•
|
Acquiring Additional Patent Assets
– We intend to continue to acquire patent assets that are being or may be asserted against current and prospective clients and to increase our role and expertise in the patent market. We believe our disciplined approach to valuing and acquiring patent assets will allow us to continue to deploy our capital in an efficient and effective manner to maximize the patent risk management benefits to our clients.
|
•
|
Focusing on Client Relations
– We intend to continue to deliver the highest levels of service and support to our clients, in order to assist in our efforts to build and maintain trusting relationships and retain clients.
|
•
|
Developing Proprietary Technology Solutions for Our Clients
– We intend to continue to enhance our proprietary web portal to provide our clients with the most current intelligence and data on patent acquisition opportunities, relevant litigation activity and key market participants and trends that affect their patent risk exposure.
|
•
|
Syndicated Transactions
– On certain occasions, clients ask us to acquire patent assets that we would not otherwise purchase using our capital (due to the size or limited applicability of the portfolio). In these instances, we facilitate syndicated transactions that include contributions from participating clients in addition to their annual subscription fees. Similar to other acquisitions, these syndicated deals are designed to efficiently share resources and collectively reduce litigation risk. Transaction participants typically pay a fee to RPX for structuring, negotiating and executing the transactions.
|
•
|
Offering NPE Insurance
– We offer insurance policies for clients interested in additional management of their exposure to patent infringement claims brought by NPEs.
|
•
|
Providing Complementary Solutions
– We believe we can offer complementary solutions that further mitigate patent risks and expenses for operating companies, including the facilitation of challenges to patent validity, coordinating prior art searches, and other services intended to improve patent quality and reduce expenses for our clients.
|
•
|
Enhancing Our Capabilities Through Acquisitions
– We occasionally evaluate the potential acquisition of businesses and technologies that can enhance our capabilities and our patent risk management solution.
|
•
|
our alignment of interest and strong relationships with our clients resulting from our pricing structure and guarantee never to assert our patent assets against our clients;
|
•
|
our ability to reduce the costs associated with patent market transactions by engaging in more transparent discussions based on the economic value of patent assets rather than discussions involving litigation or the threat of litigation;
|
•
|
our ability to increase efficiency and expand our role in the patent market as our client network and capital available for patent asset acquisitions grows;
|
•
|
our access to data regarding our analysis of the patent market and patent litigation; and
|
•
|
our extensive patent market expertise, relationships and transaction experience.
|
•
|
Alignment of Interests With Our Clients
– Our business model aligns our interests with those of our clients. We have not asserted and will not assert our patents. We generate subscription fee revenue based on our published rate card rather than the value of the patent assets we acquire or the potential costs associated with defending against assertions related to our patent assets. As a result, we have relationships with our clients that are based on trust, enabling them to communicate with us without concern that the information shared will be used against them.
|
•
|
Network Effect
– As we add new clients, we generate new subscription fees that can be used to fund additional acquisitions of patent assets. These acquisitions enable us to further add new clients and to deliver greater value to our existing clients.
|
•
|
More Transparent Valuation Discussions
– Most participants in the patent market either assert patents or face patent assertions. Because we do not assert patents and are not likely to have patents asserted against us, we are able to have more open and transparent discussions about the value of patent assets than other market participants whose discussions are directly affected by litigation or the threat of litigation.
|
•
|
Patent Market Expertise
– Since our inception, we have been refining our processes for identifying potentially valuable patent assets, analyzing and evaluating those assets and executing transactions to acquire rights to those assets. We have developed an extensive set of skills, relationships, historical transaction data and methodologies for valuing patent assets.
|
Item 1A.
|
Risk Factors.
|
•
|
increases in the prices we need to pay to acquire patent assets;
|
•
|
increases in operating expenses, including those attributable to additional headcount and the costs of new business initiatives;
|
•
|
our lengthy and unpredictable membership sales cycle, including delays in potential clients’ decisions whether to subscribe to our solution;
|
•
|
lower subscription fees from clients whose annual subscription fees decrease due to declining operating income or revenue of such clients;
|
•
|
losses incurred as a result of claims made on insurance policies underwritten by us;
|
•
|
non-renewals from existing clients for any reason;
|
•
|
loss of clients, including through acquisitions or consolidations;
|
•
|
changes in our subscription fee rates or changes in our own pricing and discounting policies or those of our competitors;
|
•
|
our inability to acquire patent assets that are being asserted or may be asserted against our clients due to lack of availability, unfavorable pricing terms or otherwise;
|
•
|
changes in patent law and regulations and other legislation, as well as United States Patent and Trademark Office procedures or court rulings, that reduce the value of our solution to our existing and potential clients;
|
•
|
changes in the accounting treatment associated with our acquisitions of patent assets, how we amortize those patent assets and how we recognize revenue under subscription agreements;
|
•
|
our acquisition of patent assets with a shorter estimated useful life that increases our near-term patent asset amortization expense and decreases our earnings;
|
•
|
our inability to effectively develop and implement new solutions that meet client requirements in a timely manner;
|
•
|
decreases in our clients’ and prospective clients’ costs of litigating patent infringement claims;
|
•
|
our inability to retain key personnel;
|
•
|
any significant changes in the competitive dynamics of our market, including new competitors or substantial discounting of services that are viewed by our target market as competitive to ours;
|
•
|
gains or losses realized as a result of our sale of patents, including upon the exercise by any of our clients of their limited right to purchase certain of our patent assets for defensive purposes in the event of a patent infringement suit brought against such client by a third party; and
|
•
|
adverse economic conditions in the industries that we serve, particularly as they affect the intellectual property risk management and/or litigation budgets of our existing or potential clients.
|
•
|
uncertainty about our ability to significantly reduce patent litigation costs for a particular company;
|
•
|
reduced assertions from NPEs or decreased patent licensing fees owed to NPEs;
|
•
|
limitations on the ability of NPEs to bring patent claims or limitations on the potential damages recoverable from such claims;
|
•
|
reduced cost to our clients of defending patent assertion claims;
|
•
|
lack of perceived relevance and value in our existing patent asset portfolio by existing or potential clients;
|
•
|
concerns by existing or potential clients about our future ability to obtain rights to patent assets that are being or may be asserted against them;
|
•
|
reduced incentives to renew memberships if clients have vested into perpetual licenses in all patent assets that they believe are materially relevant to their businesses;
|
•
|
lack of sufficient interest by mid- and small-size companies in our patent risk management or insurance offerings;
|
•
|
reduced incentive for companies to become clients because we do not assert our patent assets in litigation;
|
•
|
concerns that we might change our current business model and assert our patent assets in litigation;
|
•
|
budgetary limitations for existing or potential clients; and
|
•
|
the belief that adequate coverage for the risks and expenses we attempt to reduce is available from alternative products or services.
|
•
|
difficulties in integrating operations, technologies, services and personnel;
|
•
|
unanticipated costs or liabilities associated with the acquisition;
|
•
|
incurrence of acquisition-related costs;
|
•
|
diversion of management’s attention from other business concerns;
|
•
|
potential loss of key employees;
|
•
|
additional legal, financial and accounting challenges and complexities in areas such as tax planning, cash management and financial reporting;
|
•
|
use of resources that are needed in other parts of our business; and
|
•
|
use of substantial portions of our available cash to consummate the acquisition.
|
•
|
variations in our financial condition and operating results;
|
•
|
the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
|
•
|
changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our common stock;
|
•
|
addition or loss of significant clients;
|
•
|
adoption or modification of laws, regulations, policies, procedures or programs applicable to our business, including those related to the enforcement of patent claims;
|
•
|
announcements of technological innovations, new products and services, acquisitions, strategic alliances or significant agreements by us or by our competitors;
|
•
|
recruitment or departure of members of our Board of Directors, management team or other key personnel;
|
•
|
market conditions in our industry and the economy as a whole;
|
•
|
price and volume fluctuations in the overall stock market or resulting from inconsistent trading volume levels of our shares;
|
•
|
lawsuits threatened or filed against us;
|
•
|
sales of our common stock by us or our stockholders; and
|
•
|
the opening or closing of our employee trading window.
|
•
|
authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to thwart a takeover attempt;
|
•
|
establish a classified Board of Directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;
|
•
|
require that directors only be removed from office for cause and only upon a majority stockholder vote;
|
•
|
provide that vacancies on our Board of Directors, including newly created directorships, may be filled only by a majority vote of directors then in office;
|
•
|
limit who may call special meetings of stockholders;
|
•
|
prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders;
|
•
|
do not provide stockholders with the ability to cumulate their votes;
|
•
|
require supermajority stockholder voting to effect certain amendments to our amended and restated certificate of incorporation and amended and restated bylaws; and
|
•
|
require advance notification of stockholder nominations and proposals.
|
Item 1B.
|
Unresolved Staff Comments.
|
Item 2.
|
Properties.
|
Item 3.
|
Legal Proceedings.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
|
|
High
|
|
Low
|
||||
For the year ended December 31, 2013:
|
|
|
|
|
||||
First Quarter
|
|
$
|
14.36
|
|
|
$
|
9.64
|
|
Second Quarter
|
|
$
|
16.80
|
|
|
$
|
12.95
|
|
Third Quarter
|
|
$
|
18.97
|
|
|
$
|
15.48
|
|
Fourth Quarter
|
|
$
|
18.29
|
|
|
$
|
15.95
|
|
For the year ended December 31, 2014:
|
|
|
|
|
||||
First Quarter
|
|
$
|
17.37
|
|
|
$
|
15.40
|
|
Second Quarter
|
|
$
|
17.75
|
|
|
$
|
15.76
|
|
Third Quarter
|
|
$
|
18.12
|
|
|
$
|
13.73
|
|
Fourth Quarter
|
|
$
|
15.25
|
|
|
$
|
13.01
|
|
Item 6.
|
Selected Consolidated Financial Data.
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||||||
Revenue
|
|
$
|
259,335
|
|
|
$
|
237,504
|
|
|
$
|
197,688
|
|
|
$
|
154,044
|
|
|
$
|
94,874
|
|
Cost of revenue
|
|
124,435
|
|
|
110,771
|
|
|
82,323
|
|
|
67,371
|
|
|
43,602
|
|
|||||
Selling, general and administrative expenses
|
|
71,679
|
|
|
62,525
|
|
|
53,590
|
|
|
40,593
|
|
|
23,917
|
|
|||||
(Gain) loss on sale of patent assets, net
|
|
(707
|
)
|
|
126
|
|
|
(177
|
)
|
|
—
|
|
|
536
|
|
|||||
Operating income
|
|
63,928
|
|
|
64,082
|
|
|
61,952
|
|
|
46,080
|
|
|
26,819
|
|
|||||
Other income (expense), net
|
|
354
|
|
|
213
|
|
|
117
|
|
|
(723
|
)
|
|
(2,764
|
)
|
|||||
Income before provision for income taxes
|
|
64,282
|
|
|
64,295
|
|
|
62,069
|
|
|
45,357
|
|
|
24,055
|
|
|||||
Provision for income taxes
|
|
24,941
|
|
|
23,512
|
|
|
23,112
|
|
|
16,225
|
|
|
10,184
|
|
|||||
Net income
|
|
$
|
39,341
|
|
|
$
|
40,783
|
|
|
$
|
38,957
|
|
|
$
|
29,132
|
|
|
$
|
13,871
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income available to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
39,341
|
|
|
$
|
40,763
|
|
|
$
|
38,455
|
|
|
$
|
19,697
|
|
|
$
|
1,392
|
|
Diluted
|
|
$
|
39,341
|
|
|
$
|
40,763
|
|
|
$
|
38,474
|
|
|
$
|
20,310
|
|
|
$
|
1,671
|
|
Net income available to common stockholders per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.74
|
|
|
$
|
0.78
|
|
|
$
|
0.77
|
|
|
$
|
0.61
|
|
|
$
|
0.24
|
|
Diluted
|
|
$
|
0.72
|
|
|
$
|
0.76
|
|
|
$
|
0.74
|
|
|
$
|
0.57
|
|
|
$
|
0.23
|
|
Weighted-average shares used in computing net income available to common stockholders per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
53,444
|
|
|
51,956
|
|
|
49,766
|
|
|
32,032
|
|
|
5,747
|
|
|||||
Diluted
|
|
54,818
|
|
|
53,652
|
|
|
51,802
|
|
|
35,920
|
|
|
7,164
|
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Cash, cash equivalents, and short-term investments
|
|
$
|
317,533
|
|
|
$
|
290,722
|
|
|
$
|
199,730
|
|
|
$
|
233,725
|
|
|
$
|
46,656
|
|
Patent assets, net
|
|
236,349
|
|
|
219,954
|
|
|
199,314
|
|
|
163,352
|
|
|
126,508
|
|
|||||
Total assets
|
|
642,064
|
|
|
588,801
|
|
|
493,967
|
|
|
437,994
|
|
|
197,022
|
|
|||||
Deferred revenue, including current portion
|
|
136,209
|
|
|
137,743
|
|
|
104,371
|
|
|
108,275
|
|
|
82,440
|
|
|||||
Notes payable and other deferred payment obligations, including current portion
|
|
—
|
|
|
500
|
|
|
500
|
|
|
5,056
|
|
|
23,583
|
|
|||||
Total liabilities
|
|
157,019
|
|
|
163,878
|
|
|
133,708
|
|
|
138,910
|
|
|
123,522
|
|
|||||
Redeemable convertible preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,793
|
|
|||||
Total stockholders’ equity
|
|
485,045
|
|
|
424,923
|
|
|
360,259
|
|
|
299,084
|
|
|
10,707
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
Persuasive evidence of an arrangement exists.
All subscription fees are supported by an executed subscription agreement.
|
•
|
Delivery has occurred or services have been rendered.
The subscription agreement calls for us to provide our patent risk management solution over a specific term commencing on the agreement effective date. Because services are not on an individualized basis (i.e., we generally perform our services on behalf of all of our clients as opposed to each client individually), delivery occurs automatically with the passage of time. Consequently, we recognize subscription revenue ratably.
|
•
|
Seller’s price to the buyer is fixed or determinable.
Each client’s annual subscription fee is typically based on a rate card in effect at the time of the client’s initial agreement. A client’s subscription fee is generally determined using its rate card and its normalized operating income, which is defined as the greater of (i) the average of its operating income for the three most recently reported fiscal years and (ii) 5% of its revenue for the most recently reported fiscal year. The fee for the first year of the agreement is typically determined and invoiced at the time of contract execution. The fee for each subsequent year of the agreement is generally calculated and invoiced in advance prior to each anniversary date of the agreement.
|
•
|
Collectability is reasonably assured.
Subscription fees are generally collected on or near the effective date of the agreement and again at or near each anniversary date thereof. We do not recognize revenue in instances where collectability is not reasonably assured. Generally, our subscription agreements state that all fees paid are non-refundable.
|
•
|
the seller of the patent assets is generally viewed as the primary obligor in the arrangement, given that it owns and controls the underlying patent(s) and thus has the absolute authority to grant and deliver any release from past damages and dismissal from litigation, as well the general terms of the license granted;
|
•
|
we have no inventory risk, as the clients generally enter into their contractual obligations with us prior to or contemporaneous to us entering into a contractual obligation with the seller;
|
•
|
we generally have limited pricing latitude as client contributions are based on the sales price set by the seller;
|
•
|
we are not involved in the determination of the product or service specification and have no ability to change the product or perform any part of the service in connection with these transactions, as the seller owns the underlying patent(s); and
|
•
|
we have limited or no credit risk, as each respective client has a contractually binding obligation, such clients are generally of high credit quality and in many instances, we collect the client contribution prior to making a payment to the seller.
|
•
|
List price, which represents the rates listed on our annual rate card. We publish a standard rate card annually. Each client’s subscription fee is typically calculated using the applicable rate card and its normalized operating income, which is defined as the greater of (i) 5% of the client’s most recently reported fiscal year’s revenue, and (ii) the average of the three most recently reported fiscal years’ operating income of the client. Each client’s annual subscription fee is reset annually based on its revenue and operating income for its most recently completed fiscal years.
|
•
|
Actuarially determined factors. Although we sell our insurance product both on a standalone basis and as a component of a multiple-element arrangement, the pricing is not affected by the subscription to our patent risk management solution. We use an actuarial model that calculates an individual client’s insurance premium based on its projected annual frequency (i.e., number of claims during the policy term) and severity (i.e., the amount which it expects to settle a claim).
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
Revenue
|
|
$
|
259,335
|
|
|
$
|
237,504
|
|
|
$
|
197,688
|
|
Cost of revenue
|
|
124,435
|
|
|
110,771
|
|
|
82,323
|
|
|||
Selling, general and administrative expenses
|
|
71,679
|
|
|
62,525
|
|
|
53,590
|
|
|||
(Gain) loss on sale of patent assets, net
|
|
(707
|
)
|
|
126
|
|
|
(177
|
)
|
|||
Operating income
|
|
63,928
|
|
|
64,082
|
|
|
61,952
|
|
|||
Other income, net
|
|
354
|
|
|
213
|
|
|
117
|
|
|||
Income before provision for income taxes
|
|
64,282
|
|
|
64,295
|
|
|
62,069
|
|
|||
Provision for income taxes
|
|
24,941
|
|
|
23,512
|
|
|
23,112
|
|
|||
Net income
|
|
$
|
39,341
|
|
|
$
|
40,783
|
|
|
$
|
38,957
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2014
|
|
2013
|
|
2012
|
|||
Revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
|
48
|
|
|
47
|
|
|
42
|
|
Selling, general and administrative expenses
|
|
28
|
|
|
26
|
|
|
27
|
|
(Gain) loss on sale of patent assets, net
|
|
—
|
|
|
—
|
|
|
—
|
|
Operating income
|
|
24
|
|
|
27
|
|
|
31
|
|
Other income, net
|
|
—
|
|
|
—
|
|
|
—
|
|
Income before provision for income taxes
|
|
24
|
|
|
27
|
|
|
31
|
|
Provision for income taxes
|
|
10
|
|
|
10
|
|
|
12
|
|
Net income
|
|
14
|
%
|
|
17
|
%
|
|
19
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net cash provided by operating activities
|
$
|
191,469
|
|
|
$
|
212,473
|
|
|
$
|
91,377
|
|
Net cash used in investing activities
|
(214,434
|
)
|
|
(194,208
|
)
|
|
(131,630
|
)
|
|||
Net cash provided by financing activities
|
829
|
|
|
8,252
|
|
|
7,142
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
(22,136
|
)
|
|
$
|
26,517
|
|
|
$
|
(33,111
|
)
|
|
|
Less Than
1 Year
|
|
1 to 3
Years
|
|
3 to 5
Years
|
|
More Than
5 Years
|
|
Total
|
||||||||||
Lease commitments
|
|
$
|
4,284
|
|
|
$
|
8,475
|
|
|
$
|
7,886
|
|
|
$
|
—
|
|
|
$
|
20,645
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
Item 8.
|
Consolidated Financial Statements and Supplementary Data.
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
|
2014
|
|
2013
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
78,019
|
|
|
$
|
100,155
|
|
Short-term investments
|
|
239,514
|
|
|
190,567
|
|
||
Restricted cash
|
|
584
|
|
|
364
|
|
||
Accounts receivable
|
|
24,793
|
|
|
38,477
|
|
||
Prepaid expenses and other current assets
|
|
3,466
|
|
|
10,546
|
|
||
Deferred tax assets
|
|
4,400
|
|
|
3,817
|
|
||
Total current assets
|
|
350,776
|
|
|
343,926
|
|
||
Patent assets, net
|
|
236,349
|
|
|
219,954
|
|
||
Property and equipment, net
|
|
4,151
|
|
|
4,667
|
|
||
Intangible assets, net
|
|
3,526
|
|
|
1,718
|
|
||
Goodwill
|
|
19,978
|
|
|
16,460
|
|
||
Restricted cash, less current portion
|
|
1,091
|
|
|
1,454
|
|
||
Other assets
|
|
26,100
|
|
|
622
|
|
||
Deferred tax assets, less current portion
|
|
93
|
|
|
—
|
|
||
Total assets
|
|
$
|
642,064
|
|
|
$
|
588,801
|
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
235
|
|
|
$
|
332
|
|
Accrued liabilities
|
|
14,257
|
|
|
8,784
|
|
||
Deferred revenue
|
|
133,316
|
|
|
131,808
|
|
||
Deferred payment obligations
|
|
—
|
|
|
500
|
|
||
Other current liabilities
|
|
640
|
|
|
1,638
|
|
||
Total current liabilities
|
|
148,448
|
|
|
143,062
|
|
||
Deferred revenue, less current portion
|
|
2,893
|
|
|
5,935
|
|
||
Deferred tax liabilities
|
|
—
|
|
|
11,654
|
|
||
Other liabilities
|
|
5,678
|
|
|
3,227
|
|
||
Total liabilities
|
|
157,019
|
|
|
163,878
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Common stock, $0.0001 par value — 200,000 shares authorized; 54,062 and 52,692 issued and outstanding as of December 31, 2014 and 2013, respectively
|
|
5
|
|
|
5
|
|
||
Additional paid-in capital
|
|
326,280
|
|
|
305,343
|
|
||
Retained earnings
|
|
158,868
|
|
|
119,527
|
|
||
Accumulated other comprehensive income (loss)
|
|
(108
|
)
|
|
48
|
|
||
Total stockholders’ equity
|
|
485,045
|
|
|
424,923
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
642,064
|
|
|
$
|
588,801
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
Revenue
|
|
$
|
259,335
|
|
|
$
|
237,504
|
|
|
$
|
197,688
|
|
Cost of revenue
|
|
124,435
|
|
|
110,771
|
|
|
82,323
|
|
|||
Selling, general and administrative expenses
|
|
71,679
|
|
|
62,525
|
|
|
53,590
|
|
|||
(Gain) loss on sale of patent assets, net
|
|
(707
|
)
|
|
126
|
|
|
(177
|
)
|
|||
Operating income
|
|
63,928
|
|
|
64,082
|
|
|
61,952
|
|
|||
Other income, net
|
|
354
|
|
|
213
|
|
|
117
|
|
|||
Income before provision for income taxes
|
|
64,282
|
|
|
64,295
|
|
|
62,069
|
|
|||
Provision for income taxes
|
|
24,941
|
|
|
23,512
|
|
|
23,112
|
|
|||
Net income
|
|
$
|
39,341
|
|
|
$
|
40,783
|
|
|
$
|
38,957
|
|
|
|
|
|
|
|
|
||||||
Net income available to common stockholders:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
39,341
|
|
|
$
|
40,763
|
|
|
$
|
38,455
|
|
Diluted
|
|
$
|
39,341
|
|
|
$
|
40,763
|
|
|
$
|
38,474
|
|
Net income available to common stockholders per common share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.74
|
|
|
$
|
0.78
|
|
|
$
|
0.77
|
|
Diluted
|
|
$
|
0.72
|
|
|
$
|
0.76
|
|
|
$
|
0.74
|
|
Weighted-average shares used in computing net income available to common stockholders per common share:
|
|
|
|
|
|
|
||||||
Basic
|
|
53,444
|
|
|
51,956
|
|
|
49,766
|
|
|||
Diluted
|
|
54,818
|
|
|
53,652
|
|
|
51,802
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net income
|
$
|
39,341
|
|
|
$
|
40,783
|
|
|
$
|
38,957
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
||||||
Unrealized gains (losses) on available-for-sale securities:
|
|
|
|
|
|
||||||
Unrealized holding gains (losses) arising during the period
|
(156
|
)
|
|
67
|
|
|
15
|
|
|||
Less: reclassification adjustment for (gains) losses included in net income
|
—
|
|
|
1
|
|
|
(12
|
)
|
|||
Net unrealized gains (losses) on available-for-sale securities, net of tax
|
(156
|
)
|
|
68
|
|
|
3
|
|
|||
Comprehensive income
|
$
|
39,185
|
|
|
$
|
40,851
|
|
|
$
|
38,960
|
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total
Stockholders’
Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 31, 2011
|
|
49,145
|
|
|
$
|
5
|
|
|
$
|
259,315
|
|
|
$
|
39,787
|
|
|
$
|
(23
|
)
|
|
$
|
299,084
|
|
Components of comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,957
|
|
|
—
|
|
|
38,957
|
|
|||||
Unrealized gain on available-for-sale securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|||||
Issuance of common stock upon exercise of stock options, vesting of restricted stock units and other common stock issuances
|
|
1,869
|
|
|
—
|
|
|
3,154
|
|
|
—
|
|
|
—
|
|
|
3,154
|
|
|||||
Issuance of restricted stock upon early exercise of options
|
|
70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Vesting of options early exercised
|
|
—
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|
105
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
10,644
|
|
|
—
|
|
|
—
|
|
|
10,644
|
|
|||||
Tax benefit of equity award deductions
|
|
—
|
|
|
—
|
|
|
8,317
|
|
|
—
|
|
|
—
|
|
|
8,317
|
|
|||||
Other
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||
Balance at December 31, 2012
|
|
51,084
|
|
|
5
|
|
|
281,530
|
|
|
78,744
|
|
|
(20
|
)
|
|
360,259
|
|
|||||
Components of comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,783
|
|
|
—
|
|
|
40,783
|
|
|||||
Unrealized gain on available-for-sale securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|
68
|
|
|||||
Issuance of common stock upon exercise of stock options, vesting of restricted stock units and other common stock issuances
|
|
1,618
|
|
|
—
|
|
|
5,223
|
|
|
—
|
|
|
—
|
|
|
5,223
|
|
|||||
Repurchase of common stock
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Vesting of options early exercised
|
|
—
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
16,192
|
|
|
—
|
|
|
—
|
|
|
16,192
|
|
|||||
Tax benefit of equity award deductions
|
|
—
|
|
|
—
|
|
|
3,088
|
|
|
—
|
|
|
—
|
|
|
3,088
|
|
|||||
Tax withholdings related to net share settlements of restricted stock units
|
|
—
|
|
|
—
|
|
|
(756
|
)
|
|
—
|
|
|
—
|
|
|
(756
|
)
|
|||||
Balance at December 31, 2013
|
|
52,692
|
|
|
5
|
|
|
305,343
|
|
|
119,527
|
|
|
48
|
|
|
424,923
|
|
|||||
Components of comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,341
|
|
|
—
|
|
|
39,341
|
|
|||||
Unrealized loss on available-for-sale securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(156
|
)
|
|
(156
|
)
|
|||||
Issuance of common stock upon exercise of stock options, vesting of restricted stock units and other common stock issuances
|
|
1,188
|
|
|
—
|
|
|
3,163
|
|
|
—
|
|
|
—
|
|
|
3,163
|
|
|||||
Issuance of common stock related to business acquisition
|
|
182
|
|
|
—
|
|
|
3,156
|
|
|
—
|
|
|
—
|
|
|
3,156
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
17,747
|
|
|
—
|
|
|
—
|
|
|
17,747
|
|
|||||
Tax benefit of equity award deductions
|
|
—
|
|
|
—
|
|
|
1,799
|
|
|
—
|
|
|
—
|
|
|
1,799
|
|
|||||
Tax withholdings related to net share settlements of restricted stock units
|
|
—
|
|
|
—
|
|
|
(4,928
|
)
|
|
—
|
|
|
—
|
|
|
(4,928
|
)
|
|||||
Balance at December 31, 2014
|
|
54,062
|
|
|
$
|
5
|
|
|
$
|
326,280
|
|
|
$
|
158,868
|
|
|
$
|
(108
|
)
|
|
$
|
485,045
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
39,341
|
|
|
$
|
40,783
|
|
|
$
|
38,957
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
123,138
|
|
|
108,629
|
|
|
83,137
|
|
|||
Stock-based compensation
|
17,656
|
|
|
16,115
|
|
|
10,334
|
|
|||
Excess tax benefit from stock-based compensation
|
(2,598
|
)
|
|
(3,857
|
)
|
|
(8,574
|
)
|
|||
Imputed interest on deferred payment obligations
|
—
|
|
|
—
|
|
|
94
|
|
|||
(Gain) loss on sale of patent assets, net
|
(707
|
)
|
|
126
|
|
|
(177
|
)
|
|||
Amortization of premium on investments
|
6,585
|
|
|
6,013
|
|
|
5,131
|
|
|||
Deferred taxes
|
(14,216
|
)
|
|
(3,302
|
)
|
|
1,477
|
|
|||
Other
|
(500
|
)
|
|
116
|
|
|
12
|
|
|||
Changes in assets and liabilities, net of business acquired:
|
|
|
|
|
|
||||||
Accounts receivable
|
14,006
|
|
|
(13,333
|
)
|
|
(8,984
|
)
|
|||
Other receivables
|
—
|
|
|
33,775
|
|
|
(33,775
|
)
|
|||
Prepaid expenses and other assets
|
3,565
|
|
|
(9,376
|
)
|
|
8,667
|
|
|||
Accounts payable
|
(97
|
)
|
|
(236
|
)
|
|
(253
|
)
|
|||
Accrued and other liabilities
|
6,930
|
|
|
3,648
|
|
|
(711
|
)
|
|||
Deferred revenue
|
(1,634
|
)
|
|
33,372
|
|
|
(3,958
|
)
|
|||
Net cash provided by operating activities
|
191,469
|
|
|
212,473
|
|
|
91,377
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Purchases of investments classified as available-for-sale
|
(224,548
|
)
|
|
(210,660
|
)
|
|
(185,582
|
)
|
|||
Maturities of investments classified as available-for-sale
|
174,650
|
|
|
147,052
|
|
|
188,026
|
|
|||
Sales of investments classified as available-for-sale
|
—
|
|
|
1,099
|
|
|
—
|
|
|||
Business acquisition, net of cash acquired
|
(2,286
|
)
|
|
—
|
|
|
(45,765
|
)
|
|||
(Increase) decrease in restricted cash
|
143
|
|
|
(1,818
|
)
|
|
647
|
|
|||
Purchases of intangible assets
|
—
|
|
|
—
|
|
|
(64
|
)
|
|||
Purchases of property and equipment
|
(1,511
|
)
|
|
(2,880
|
)
|
|
(1,726
|
)
|
|||
Acquisitions of patent assets
|
(136,968
|
)
|
|
(127,101
|
)
|
|
(87,366
|
)
|
|||
Deposit for acquisition of patent assets
|
(25,000
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of patent assets
|
1,086
|
|
|
100
|
|
|
200
|
|
|||
Net cash used in investing activities
|
(214,434
|
)
|
|
(194,208
|
)
|
|
(131,630
|
)
|
|||
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
|
3,159
|
|
|
5,151
|
|
|
3,218
|
|
|||
Taxes paid related to net-share settlements of restricted stock units
|
(4,928
|
)
|
|
(756
|
)
|
|
—
|
|
|||
Excess tax benefit from stock-based compensation
|
2,598
|
|
|
3,857
|
|
|
8,574
|
|
|||
Net cash provided by financing activities
|
829
|
|
|
8,252
|
|
|
7,142
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(22,136
|
)
|
|
26,517
|
|
|
(33,111
|
)
|
|||
Cash and cash equivalents at beginning of period
|
100,155
|
|
|
73,638
|
|
|
106,749
|
|
|||
Cash and cash equivalents at end of period
|
$
|
78,019
|
|
|
$
|
100,155
|
|
|
$
|
73,638
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
94
|
|
Cash paid for income taxes
|
15,066
|
|
|
17,849
|
|
|
4,672
|
|
|||
|
|
|
|
|
|
||||||
Non-cash investing and financing activities
|
|
|
|
|
|
||||||
Change in patent assets purchased and accrued but not paid
|
$
|
(500
|
)
|
|
$
|
(600
|
)
|
|
$
|
1,100
|
|
Change in fixed assets purchased and accrued but not paid
|
(166
|
)
|
|
166
|
|
|
—
|
|
|||
Change in other assets purchased and accrued but not paid
|
(63
|
)
|
|
63
|
|
|
(250
|
)
|
|||
Patent assets and intangible assets received in barter transactions
|
—
|
|
|
—
|
|
|
54
|
|
|||
Issuance of common stock related to business acquisition
|
3,156
|
|
|
—
|
|
|
—
|
|
|||
Unpaid cash consideration for business acquisition
|
425
|
|
|
—
|
|
|
—
|
|
1.
|
Nature of Business
|
•
|
the estimated economic useful lives of patent assets;
|
•
|
the determination of a best estimated selling price of a subscription to the Company’s patent risk management solution and its insurance offering;
|
•
|
the fair value of assets acquired and liabilities assumed for business combinations;
|
•
|
recognition and measurement of current and deferred income taxes and uncertain tax positions;
|
•
|
the fair value of stock awards issued; and
|
•
|
the estimated reserves for known and incurred but not reported claims.
|
•
|
Persuasive evidence of an arrangement exists.
All subscription fees are supported by an executed subscription agreement.
|
•
|
Delivery has occurred or services have been rendered.
The subscription agreement calls for the Company to provide its patent risk management solution over a specific term commencing on the agreement effective date. Because services are not on an individualized basis (
i.e.
, the Company generally performs its services on behalf of all of its clients as opposed to
|
•
|
Seller’s price to the buyer is fixed or determinable.
Each client’s annual subscription fee is typically based on the Company’s rate card in effect at the time of the client’s initial agreement. A client’s subscription fee is generally determined using the applicable rate card and its normalized operating income, which is defined as the greater of (i) the average of its operating income for the three most recently reported fiscal years and (ii)
5%
of its revenue for the most recently reported fiscal year. The fee for the first year of the agreement is typically determined and invoiced at the time of contract execution. The fee for each subsequent year of the agreement is generally calculated and invoiced in advance prior to each anniversary date of the agreement.
|
•
|
Collectability is reasonably assured.
Subscription fees are generally collected on or near the effective date of the agreement and again at or near each anniversary date thereof. The Company does not recognize revenue in instances where collectability is not reasonably assured. Generally, the Company’s subscription agreements state that all fees paid are non-refundable.
|
•
|
the seller of the patent assets is generally viewed as the primary obligor in the arrangement, given that it owns and controls the underlying patent(s) and thus has the absolute authority to grant and deliver any release from past damages and dismissal from litigation, as well the general terms of the license granted;
|
•
|
the Company has no inventory risk, as the clients generally enter into their contractual obligations with the Company prior to or contemporaneous to the Company entering into a contractual obligation with the seller;
|
•
|
the Company generally has limited pricing latitude as client contributions are based on the sales price set by the seller;
|
•
|
the Company is not involved in the determination of the product or service specification and has no ability to change the product or perform any part of the service in connection with these transactions, as the seller owns the underlying patent(s); and
|
•
|
the Company has limited or no credit risk, as each respective client has a contractually binding obligation, such clients are generally of high credit quality and in many instances, the Company collects the client contribution prior to making a payment to the seller.
|
•
|
List price, which represents the rates listed on its annual rate card. The Company publishes a standard rate card annually. Each client’s subscription fee is typically calculated using its applicable rate card and its normalized operating income, which is defined as the greater of (i)
5%
of the client’s most recently reported fiscal year’s revenue, and (ii) the average of the three most recently reported fiscal years’ operating income of the client. Each client’s annual subscription fee is reset annually based on its revenue and operating income for its most recently completed fiscal years.
|
•
|
Actuarially determined factors. Although the Company sells its insurance product both on a standalone basis and as a component of a multiple-element arrangement, the pricing is not affected by the subscription to our patent risk management solution. The Company uses an actuarial model that calculates an individual client’s insurance premium based on its projected annual frequency (i.e., number of claims during the policy term) and severity (i.e., the amount which it expects to settle a claim).
|
3.
|
Net Income Available to Common Stockholders
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net income available to common stockholders:
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Basic:
|
|
|
|
|
|
||||||
Net income
|
$
|
39,341
|
|
|
$
|
40,783
|
|
|
$
|
38,957
|
|
Allocation of net income to participating stockholders
|
—
|
|
|
(20
|
)
|
|
(502
|
)
|
|||
Net income available to common stockholders – basic
|
$
|
39,341
|
|
|
$
|
40,763
|
|
|
$
|
38,455
|
|
Diluted:
|
|
|
|
|
|
||||||
Net income available to common stockholders – basic
|
$
|
39,341
|
|
|
$
|
40,763
|
|
|
$
|
38,455
|
|
Undistributed earnings re-allocated to common stockholders
|
—
|
|
|
—
|
|
|
19
|
|
|||
Net income available to common stockholders – diluted
|
$
|
39,341
|
|
|
$
|
40,763
|
|
|
$
|
38,474
|
|
Denominator:
|
|
|
|
|
|
||||||
Basic shares:
|
|
|
|
|
|
||||||
Weighted-average shares used in computing basic net income available to common stockholders
|
53,444
|
|
|
51,956
|
|
|
49,766
|
|
|||
Diluted shares:
|
|
|
|
|
|
||||||
Weighted-average shares used in computing basic net income available to common stockholders
|
53,444
|
|
|
51,956
|
|
|
49,766
|
|
|||
Dilutive effect of stock options and restricted stock units using treasury-stock method
|
1,374
|
|
|
1,696
|
|
|
2,036
|
|
|||
Weighted-average shares used in computing diluted net income available to common stockholders
|
54,818
|
|
|
53,652
|
|
|
51,802
|
|
|||
Net income per common share available to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.74
|
|
|
$
|
0.78
|
|
|
$
|
0.77
|
|
Diluted
|
$
|
0.72
|
|
|
$
|
0.76
|
|
|
$
|
0.74
|
|
|
Year Ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Weighted-average:
|
|
|
|
|
|
|||
Stock options outstanding
|
767
|
|
|
1,215
|
|
|
2,672
|
|
Restricted stock units outstanding
|
100
|
|
|
127
|
|
|
395
|
|
Shares of common stock subject to repurchase
|
—
|
|
|
25
|
|
|
649
|
|
4.
|
Fair Value Measurements
|
|
December 31, 2014
|
||||||||||
|
Fair Value
|
|
Level 1
|
|
Level 2
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Commercial paper
|
$
|
5,749
|
|
|
$
|
—
|
|
|
$
|
5,749
|
|
U.S. government and agency securities
|
2,000
|
|
|
—
|
|
|
2,000
|
|
|||
Money market funds
|
451
|
|
|
451
|
|
|
—
|
|
|||
Municipal bonds
|
1,409
|
|
|
—
|
|
|
1,409
|
|
|||
|
$
|
9,609
|
|
|
$
|
451
|
|
|
$
|
9,158
|
|
|
|
|
|
|
|
||||||
Short-term investments:
|
|
|
|
|
|
||||||
Municipal bonds
|
$
|
120,282
|
|
|
$
|
—
|
|
|
$
|
120,282
|
|
Commercial paper
|
2,498
|
|
|
—
|
|
|
2,498
|
|
|||
Corporate bonds
|
68,672
|
|
|
—
|
|
|
68,672
|
|
|||
U.S. government and agency securities
|
48,062
|
|
|
—
|
|
|
48,062
|
|
|||
|
$
|
239,514
|
|
|
$
|
—
|
|
|
$
|
239,514
|
|
|
December 31, 2013
|
||||||||||
|
Fair Value
|
|
Level 1
|
|
Level 2
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Commercial paper
|
$
|
34,498
|
|
|
$
|
—
|
|
|
$
|
34,498
|
|
Money market funds
|
37
|
|
|
37
|
|
|
—
|
|
|||
U.S. government and agency securities
|
3,801
|
|
|
—
|
|
|
3,801
|
|
|||
|
$
|
38,336
|
|
|
$
|
37
|
|
|
$
|
38,299
|
|
|
|
|
|
|
|
||||||
Short-term investments:
|
|
|
|
|
|
||||||
Municipal bonds
|
$
|
146,100
|
|
|
$
|
—
|
|
|
$
|
146,100
|
|
Commercial paper
|
31,597
|
|
|
—
|
|
|
31,597
|
|
|||
Corporate bonds
|
7,875
|
|
|
—
|
|
|
7,875
|
|
|||
U.S. government and agency securities
|
4,995
|
|
|
—
|
|
|
4,995
|
|
|||
|
$
|
190,567
|
|
|
$
|
—
|
|
|
$
|
190,567
|
|
5.
|
Short-term Investments
|
|
December 31, 2014
|
||||||||||||||
|
|
|
Unrealized
|
|
|
||||||||||
|
Amortized Cost
|
|
Gains
|
|
Losses
|
|
Estimated Fair Value
|
||||||||
Municipal bonds
|
$
|
120,270
|
|
|
$
|
24
|
|
|
$
|
(12
|
)
|
|
$
|
120,282
|
|
Commercial paper
|
2,498
|
|
|
—
|
|
|
—
|
|
|
2,498
|
|
||||
Corporate bonds
|
68,758
|
|
|
1
|
|
|
(87
|
)
|
|
68,672
|
|
||||
U.S. government and agency securities
|
48,095
|
|
|
—
|
|
|
(33
|
)
|
|
48,062
|
|
||||
|
$
|
239,621
|
|
|
$
|
25
|
|
|
$
|
(132
|
)
|
|
$
|
239,514
|
|
|
December 31, 2013
|
||||||||||||||
|
|
|
Unrealized
|
|
|
||||||||||
|
Amortized Cost
|
|
Gains
|
|
Losses
|
|
Estimated Fair Value
|
||||||||
Municipal bonds
|
$
|
146,047
|
|
|
$
|
56
|
|
|
$
|
(3
|
)
|
|
$
|
146,100
|
|
Commercial paper
|
31,597
|
|
|
—
|
|
|
—
|
|
|
31,597
|
|
||||
Corporate bonds
|
7,873
|
|
|
2
|
|
|
—
|
|
|
7,875
|
|
||||
U.S. government and agency securities
|
5,002
|
|
|
—
|
|
|
(7
|
)
|
|
4,995
|
|
||||
|
$
|
190,519
|
|
|
$
|
58
|
|
|
$
|
(10
|
)
|
|
$
|
190,567
|
|
6.
|
Patent Assets, Net
|
|
December 31, 2013
|
|
Additions
|
|
Sales
|
|
December 31, 2014
|
||||||||
Patent assets
|
$
|
529,526
|
|
|
$
|
136,468
|
|
|
$
|
(704
|
)
|
|
$
|
665,290
|
|
Accumulated amortization
|
(309,572
|
)
|
|
(119,694
|
)
|
|
325
|
|
|
(428,941
|
)
|
||||
Patent assets, net
|
$
|
219,954
|
|
|
|
|
|
|
$
|
236,349
|
|
|
December 31, 2012
|
|
Additions
|
|
Sales
|
|
December 31, 2013
|
||||||||
Patent assets
|
$
|
403,875
|
|
|
$
|
126,501
|
|
|
$
|
(850
|
)
|
|
$
|
529,526
|
|
Accumulated amortization
|
(204,561
|
)
|
|
(105,533
|
)
|
|
522
|
|
|
(309,572
|
)
|
||||
Patent assets, net
|
$
|
199,314
|
|
|
|
|
|
|
$
|
219,954
|
|
2015
|
$
|
111,415
|
|
2016
|
80,576
|
|
|
2017
|
36,241
|
|
|
2018
|
7,166
|
|
|
2019
|
951
|
|
|
Total estimated future amortization expense
|
$
|
236,349
|
|
7.
|
Property and Equipment, Net
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Internal-use software
|
$
|
5,358
|
|
|
$
|
4,198
|
|
Leasehold improvements
|
1,799
|
|
|
1,700
|
|
||
Computer, equipment and software
|
1,221
|
|
|
1,096
|
|
||
Furniture and fixtures
|
818
|
|
|
813
|
|
||
Construction-in-progress
|
167
|
|
|
119
|
|
||
Total property and equipment, gross
|
9,363
|
|
|
7,926
|
|
||
Less: Accumulated depreciation and amortization
|
(5,212
|
)
|
|
(3,259
|
)
|
||
Total property and equipment, net
|
$
|
4,151
|
|
|
$
|
4,667
|
|
8.
|
Business Combinations
|
9.
|
Goodwill
|
|
|
2014
|
|
2013
|
||||
Balance as of January 1,
|
|
$
|
16,460
|
|
|
$
|
16,460
|
|
Goodwill from business acquisition
|
|
3,518
|
|
|
—
|
|
||
Balance as of December 31,
|
|
$
|
19,978
|
|
|
$
|
16,460
|
|
10.
|
Intangible Assets, Net
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
|
Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Proprietary data and models
|
$
|
2,100
|
|
|
$
|
(1,119
|
)
|
|
$
|
981
|
|
|
$
|
1,500
|
|
|
$
|
(637
|
)
|
|
$
|
863
|
|
Trademarks
|
1,890
|
|
|
(1,565
|
)
|
|
325
|
|
|
1,890
|
|
|
(1,184
|
)
|
|
706
|
|
||||||
Developed technology
|
433
|
|
|
(433
|
)
|
|
—
|
|
|
728
|
|
|
(625
|
)
|
|
103
|
|
||||||
Customer relationships
|
1,050
|
|
|
(392
|
)
|
|
658
|
|
|
250
|
|
|
(215
|
)
|
|
35
|
|
||||||
Covenant not to compete
|
1,920
|
|
|
(358
|
)
|
|
1,562
|
|
|
480
|
|
|
(469
|
)
|
|
11
|
|
||||||
|
$
|
7,393
|
|
|
$
|
(3,867
|
)
|
|
$
|
3,526
|
|
|
$
|
4,848
|
|
|
$
|
(3,130
|
)
|
|
$
|
1,718
|
|
2015
|
$
|
1,725
|
|
2016
|
1,288
|
|
|
2017
|
513
|
|
|
Total estimated future amortization expense
|
$
|
3,526
|
|
11.
|
Accrued and Other Current Liabilities
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Accrued payroll-related expenses
|
$
|
9,270
|
|
|
$
|
6,791
|
|
Accrued expenses
|
4,987
|
|
|
1,993
|
|
||
Total accrued liabilities
|
$
|
14,257
|
|
|
$
|
8,784
|
|
|
|
|
|
||||
Patent and other assets purchased but not paid
|
$
|
—
|
|
|
$
|
563
|
|
Other current liabilities
|
640
|
|
|
1,075
|
|
||
Total other current liabilities
|
$
|
640
|
|
|
$
|
1,638
|
|
12.
|
Commitments and Contingencies
|
2015
|
$
|
4,284
|
|
2016
|
4,269
|
|
|
2017
|
4,206
|
|
|
2018
|
4,273
|
|
|
2019
|
3,613
|
|
|
Future non-cancelable minimum operating lease payments
|
20,645
|
|
|
Less: minimum payments to be received from non-cancelable subleases
|
(1,499
|
)
|
|
Total future non-cancelable minimum operating lease payments, net
|
$
|
19,146
|
|
13.
|
Stockholder’ Equity
|
|
|
|
Options Outstanding
|
||||||||||||
|
Shares Available for Grant
|
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life in Years
|
|
Aggregate Intrinsic Value
|
||||||
Balance - December 31, 2013
|
2,451
|
|
|
4,089
|
|
|
$
|
9.91
|
|
|
|
|
|
||
Shares authorized
|
1,000
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Options exercised
|
—
|
|
|
(623
|
)
|
|
5.08
|
|
|
|
|
|
|||
Options forfeited
|
202
|
|
|
(202
|
)
|
|
17.25
|
|
|
|
|
|
|||
Restricted stock units granted
|
(1,550
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Restricted stock units forfeited
|
257
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Restricted stock units withheld related to net share settlement of restricted stock units
|
325
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Balance - December 31, 2014
|
2,685
|
|
|
3,264
|
|
|
10.38
|
|
|
6.2
|
|
$
|
14,475
|
|
|
Vested and exercisable - December 31, 2014
|
|
|
2,467
|
|
|
10.51
|
|
|
6.1
|
|
11,094
|
|
|||
Vested and expected to vest - December 31, 2014
|
|
|
3,176
|
|
|
10.40
|
|
|
6.2
|
|
14,078
|
|
|
Number of Shares
|
|
Weighted-Average Grant Date Fair Value
|
|
Aggregate Intrinsic Value
|
|||||
Non-vested units - December 31, 2013
|
2,057
|
|
|
$
|
12.38
|
|
|
|
||
Granted
|
1,550
|
|
|
14.54
|
|
|
|
|||
Vested
|
(890
|
)
|
|
13.60
|
|
|
|
|||
Forfeited
|
(257
|
)
|
|
13.85
|
|
|
|
|||
Non-vested units - December 31, 2014
|
2,460
|
|
|
13.15
|
|
|
$
|
33,896
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2013
|
|
2012
|
||||
Dividend yield
|
|
—
|
%
|
|
—
|
%
|
||
Risk-free rate
|
|
0.93
|
%
|
|
1.11
|
%
|
||
Expected volatility
|
|
61
|
%
|
|
61
|
%
|
||
Expected term (in years)
|
|
6.1
|
|
|
6.0
|
|
||
Grant date fair value
|
|
$
|
7.39
|
|
|
$
|
9.02
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2014
|
|
2013
|
||||
Dividend yield
|
|
—
|
|
|
—
|
|
||
Risk free rate
|
|
1.11
|
%
|
|
0.59
|
%
|
||
Expected volatility
|
|
48
|
%
|
|
53
|
%
|
||
Grant date fair value
|
|
$
|
7.47
|
|
|
$
|
6.39
|
|
14.
|
Income Taxes
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
Domestic
|
|
$
|
64,238
|
|
|
$
|
64,281
|
|
|
$
|
61,983
|
|
International
|
|
44
|
|
|
14
|
|
|
86
|
|
|||
Total income before income tax provision
|
|
$
|
64,282
|
|
|
$
|
64,295
|
|
|
$
|
62,069
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
(26,517
|
)
|
|
$
|
(17,145
|
)
|
|
$
|
(17,525
|
)
|
State
|
|
(3,031
|
)
|
|
(1,188
|
)
|
|
(643
|
)
|
|||
Foreign
|
|
(9,611
|
)
|
|
(8,220
|
)
|
|
(3,737
|
)
|
|||
Total current provision for income taxes
|
|
(39,159
|
)
|
|
(26,553
|
)
|
|
(21,905
|
)
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
13,668
|
|
|
2,920
|
|
|
(450
|
)
|
|||
State
|
|
550
|
|
|
121
|
|
|
(757
|
)
|
|||
Total deferred provision for income taxes
|
|
14,218
|
|
|
3,041
|
|
|
(1,207
|
)
|
|||
Total provision for income taxes
|
|
$
|
(24,941
|
)
|
|
$
|
(23,512
|
)
|
|
$
|
(23,112
|
)
|
|
|
December 31,
|
||||||
|
|
2014
|
|
2013
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Deferred revenue
|
|
$
|
2,779
|
|
|
$
|
1,850
|
|
Reserves and other
|
|
2,319
|
|
|
2,073
|
|
||
Stock-based compensation
|
|
5,963
|
|
|
5,200
|
|
||
Total deferred tax assets
|
|
11,061
|
|
|
9,123
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
(6,568
|
)
|
|
(16,960
|
)
|
||
Net deferred tax assets (liabilities)
|
|
$
|
4,493
|
|
|
$
|
(7,837
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
Tax at statutory federal rate
|
|
$
|
(22,498
|
)
|
|
$
|
(22,503
|
)
|
|
$
|
(21,721
|
)
|
State tax – net of federal benefit
|
|
(1,678
|
)
|
|
(655
|
)
|
|
(928
|
)
|
|||
Permanent differences
|
|
(879
|
)
|
|
(569
|
)
|
|
(644
|
)
|
|||
Foreign tax
|
|
(9,576
|
)
|
|
(8,214
|
)
|
|
(3,737
|
)
|
|||
Foreign tax credits
|
|
9,576
|
|
|
8,216
|
|
|
3,652
|
|
|||
Foreign income not taxed at federal rate
|
|
(3
|
)
|
|
1
|
|
|
30
|
|
|||
Other
|
|
117
|
|
|
212
|
|
|
236
|
|
|||
Total provision for income taxes
|
|
$
|
(24,941
|
)
|
|
$
|
(23,512
|
)
|
|
$
|
(23,112
|
)
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Balance as of January 1,
|
|
$
|
2,036
|
|
|
$
|
1,136
|
|
|
$
|
369
|
|
Gross increase related to current period tax positions
|
|
1,672
|
|
|
1,043
|
|
|
767
|
|
|||
Gross decrease related to prior period tax positions
|
|
(1
|
)
|
|
(143
|
)
|
|
—
|
|
|||
Balance as of December 31,
|
|
$
|
3,707
|
|
|
$
|
2,036
|
|
|
$
|
1,136
|
|
15.
|
Related-Party Transactions
|
16.
|
Employee Savings Plan
|
17.
|
Segment Reporting
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||
United States
|
$
|
166,593
|
|
|
64
|
%
|
|
$
|
145,310
|
|
|
61
|
%
|
|
$
|
111,419
|
|
|
56
|
%
|
Japan
|
36,849
|
|
|
14
|
|
|
39,465
|
|
|
17
|
|
|
40,484
|
|
|
20
|
|
|||
Other
|
55,893
|
|
|
22
|
|
|
52,729
|
|
|
22
|
|
|
45,785
|
|
|
24
|
|
|||
Total revenue
|
$
|
259,335
|
|
|
100
|
%
|
|
$
|
237,504
|
|
|
100
|
%
|
|
$
|
197,688
|
|
|
100
|
%
|
|
Year Ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
United States
|
$
|
4,137
|
|
|
$
|
4,646
|
|
Japan
|
14
|
|
|
21
|
|
||
Total long-lived assets
|
$
|
4,151
|
|
|
$
|
4,667
|
|
18.
|
Subsequent Events
|
19.
|
Selected Quarterly Financial Information (Unaudited)
|
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31,
2014 |
|
June 30,
2014 |
|
September 30,
2014 |
|
December 31,
2014 |
||||||||
Revenue
|
|
$
|
61,888
|
|
|
$
|
64,293
|
|
|
$
|
65,407
|
|
|
$
|
67,747
|
|
Cost of revenue
|
|
28,920
|
|
|
31,542
|
|
|
30,444
|
|
|
33,529
|
|
||||
Selling, general and administrative expenses
|
|
17,255
|
|
|
18,579
|
|
|
17,786
|
|
|
18,059
|
|
||||
Loss on sale of patent assets
|
|
—
|
|
|
(699
|
)
|
|
(8
|
)
|
|
—
|
|
||||
Operating income
|
|
15,713
|
|
|
14,871
|
|
|
17,185
|
|
|
16,159
|
|
||||
Other income, net
|
|
99
|
|
|
94
|
|
|
73
|
|
|
88
|
|
||||
Income before provision for income taxes
|
|
15,812
|
|
|
14,965
|
|
|
17,258
|
|
|
16,247
|
|
||||
Provision for income taxes
|
|
5,952
|
|
|
5,566
|
|
|
6,425
|
|
|
6,998
|
|
||||
Net income
|
|
$
|
9,860
|
|
|
$
|
9,399
|
|
|
$
|
10,833
|
|
|
$
|
9,249
|
|
Net income available to common stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
9,860
|
|
|
$
|
9,399
|
|
|
$
|
10,833
|
|
|
$
|
9,249
|
|
Diluted
|
|
$
|
9,860
|
|
|
$
|
9,399
|
|
|
$
|
10,833
|
|
|
$
|
9,249
|
|
Net income available to common stockholders per common share
(1)
:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.19
|
|
|
$
|
0.18
|
|
|
$
|
0.20
|
|
|
$
|
0.17
|
|
Diluted
|
|
$
|
0.18
|
|
|
$
|
0.17
|
|
|
$
|
0.20
|
|
|
$
|
0.17
|
|
Other Data:
|
|
|
|
|
|
|
|
|
||||||||
Deferred revenue, including current portion
|
|
$
|
140,534
|
|
|
$
|
131,207
|
|
|
$
|
112,820
|
|
|
$
|
136,209
|
|
Stock-based compensation expense
|
|
$
|
3,803
|
|
|
$
|
5,065
|
|
|
$
|
4,486
|
|
|
$
|
4,302
|
|
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31,
2013 |
|
June 30,
2013 |
|
September 30,
2013 |
|
December 31,
2013 |
||||||||
Revenue
|
|
$
|
61,194
|
|
|
$
|
57,481
|
|
|
$
|
58,554
|
|
|
$
|
60,275
|
|
Cost of revenue
|
|
23,670
|
|
|
24,694
|
|
|
29,766
|
|
|
32,641
|
|
||||
Selling, general and administrative expenses
|
|
14,473
|
|
|
15,736
|
|
|
15,584
|
|
|
16,732
|
|
||||
(Gain) on sale of patent assets
|
|
—
|
|
|
126
|
|
|
—
|
|
|
—
|
|
||||
Operating income
|
|
23,051
|
|
|
16,925
|
|
|
13,204
|
|
|
10,902
|
|
||||
Other income (expense), net
|
|
51
|
|
|
63
|
|
|
56
|
|
|
43
|
|
||||
Income before provision for income taxes
|
|
23,102
|
|
|
16,988
|
|
|
13,260
|
|
|
10,945
|
|
||||
Provision for income taxes
|
|
8,407
|
|
|
6,291
|
|
|
4,863
|
|
|
3,951
|
|
||||
Net income
|
|
$
|
14,695
|
|
|
$
|
10,697
|
|
|
$
|
8,397
|
|
|
$
|
6,994
|
|
Net income available to common stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
14,678
|
|
|
$
|
10,691
|
|
|
$
|
8,395
|
|
|
$
|
6,994
|
|
Diluted
|
|
$
|
14,678
|
|
|
$
|
10,691
|
|
|
$
|
8,395
|
|
|
$
|
6,994
|
|
Net income available to common stockholders per common share
(1)
:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.29
|
|
|
$
|
0.21
|
|
|
$
|
0.16
|
|
|
$
|
0.13
|
|
Diluted
|
|
$
|
0.28
|
|
|
$
|
0.20
|
|
|
$
|
0.16
|
|
|
$
|
0.13
|
|
Other Data:
|
|
|
|
|
|
|
|
|
||||||||
Deferred revenue, including current portion
|
|
$
|
118,177
|
|
|
$
|
117,573
|
|
|
$
|
105,230
|
|
|
$
|
137,743
|
|
Stock-based compensation expense
|
|
$
|
3,708
|
|
|
$
|
4,478
|
|
|
$
|
3,895
|
|
|
$
|
4,033
|
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accounting Fees and Services.
|
Item 15.
|
Exhibits and Consolidated Financial Statement Schedules.
|
1.
|
Consolidated Financial Statements
|
2.
|
Consolidated Financial Statement Schedules
|
3.
|
Exhibits
|
|
|
|
|
|
|
|
RPX CORPORATION
|
||
|
|
(Registrant)
|
||
|
|
|
||
March 2, 2015
|
|
By:
|
|
/s/ JOHN A. AMSTER
|
|
|
|
|
John A. Amster
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ JOHN A. AMSTER
|
|
Chief Executive Officer; Director (Principal Executive Officer)
|
|
March 2, 2015
|
John A. Amster
|
|
|
|
|
|
|
|
||
/s/ ROBERT HEATH
|
|
Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
March 2, 2015
|
Robert Heath
|
|
|
|
|
|
|
|
||
/s/ GEOFFREY T. BARKER
|
|
Executive Director
|
|
March 2, 2015
|
Geoffrey T. Barker
|
|
|
|
|
|
|
|
||
/s/ SHELBY W. BONNIE
|
|
Director
|
|
March 2, 2015
|
Shelby W. Bonnie
|
|
|
|
|
|
|
|
|
|
/s/ FRANK E. DANGEARD
|
|
Director
|
|
March 2, 2015
|
Frank E. Dangeard
|
|
|
|
|
|
|
|
||
/s/ STEVEN L. FINGERHOOD
|
|
Director
|
|
March 2, 2015
|
Steven L. Fingerhood
|
|
|
|
|
|
|
|
||
/s/ RANDY KOMISAR
|
|
Director
|
|
March 2, 2015
|
Randy Komisar
|
|
|
|
|
|
|
|
||
/s/ THOMAS O. RYDER
|
|
Director
|
|
March 2, 2015
|
Thomas O. Ryder
|
|
|
|
|
|
|
|
||
/s/ SANFORD R. ROBERTSON
|
|
Director
|
|
March 2, 2015
|
Sanford R. Robertson
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit
Number |
|
Exhibit Title
|
|
Form
|
|
File No.
|
|
Exhibit
No. |
|
Filing
Date |
|
Provided
Herewith |
|
|
|
|
|
|
|
||||||
3.1
|
|
Amended and Restated Certificate of Incorporation of RPX Corporation
|
|
S-1
|
|
333-171817
|
|
3.2
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
||||||
3.2
|
|
Amended and Restated Bylaws of RPX Corporation
|
|
S-1/A
|
|
333-171817
|
|
3.4
|
|
4/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Reference is made to Exhibits 3.1 and 3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
Form of Common Stock Certificate evidencing shares of common stock of the Registrant
|
|
S-1/A
|
|
333-171817
|
|
4.2
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
Amended and Restated Investors’ Rights Agreement by and among the Registrant, John Amster, Geoffrey T. Barker, Eran Zur and the Investors (as defined therein), dated as of July 15, 2009
|
|
S-1
|
|
333-171817
|
|
4.3
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
Waiver and Amendment No. 1 to the Amended and Restated Investors’ Rights Agreement, the Amended and Restated Voting Agreement and the Amended and Restated First Refusal and Co-Sale Agreement, dated as of November 12, 2010
|
|
S-1
|
|
333-171817
|
|
4.4
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
Form of Indemnification Agreement between the Registrant and each officer and director
|
|
S-1
|
|
333-171817
|
|
10.1
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
Employment Offer Letter by and between the Registrant and John Amster, dated as of August 9, 2008
|
|
S-1
|
|
333-171817
|
|
10.2
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
Employment Offer Letter by and between the Registrant and Geoffrey Barker, dated as of August 10, 2008
|
|
S-1
|
|
333-171817
|
|
10.3
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
Employment Offer Letter by and between the Registrant and Henri Linde, dated as of October 8, 2008
|
|
S-1
|
|
333-171817
|
|
10.5
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
Revised Employment Offer Letter by and between the Registrant and Adam Spiegel, dated as of February 10, 2010
|
|
S-1
|
|
333-171817
|
|
10.6
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
Employment Offer Letter by and between the Registrant and Mallun Yen, dated as of October 25, 2010
|
|
S-1
|
|
333-171817
|
|
10.7
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
Director Offer Letter by and between the Registrant and Shelby Bonnie, dated as of January 29, 2011
|
|
S-1/A
|
|
333-171817
|
|
10.26
|
|
3/7/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
Director Offer Letter by and between the Registrant and Sanford R. Robertson, dated as of March 2, 2011
|
|
S-1/A
|
|
333-171817
|
|
10.28
|
|
4/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
2008 Stock Plan, as amended
|
|
S-1
|
|
333-171817
|
|
10.8
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
Form of Notice of Stock Option Grant (Early Exercise) and Stock Option Agreement under 2008 Stock Plan
|
|
S-1
|
|
333-171817
|
|
10.9
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
Form of Notice of Stock Option Grant and Stock Option Agreement under 2008 Stock Plan
|
|
S-1
|
|
333-171817
|
|
10.1
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
Form of Notice of Stock Option Exercise (Early Exercise) under 2008 Stock Plan
|
|
S-1
|
|
333-171817
|
|
10.11
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
Form of Notice of Stock Option Exercise under 2008 Stock Plan
|
|
S-1
|
|
333-171817
|
|
10.12
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14
|
|
2011 Equity Incentive Plan
|
|
S-1/A
|
|
333-171817
|
|
10.25
|
|
3/7/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
Form of Notice of Stock Option Grant and Stock Option Agreement under 2011 Equity Incentive Plan
|
|
S-1/A
|
|
333-171817
|
|
10.32
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
Form of Notice of Stock Option Grant (Non-Employee Directors) and Stock Option Agreement (Non-Employee Directors) under 2011 Equity Incentive Plan
|
|
S-1/A
|
|
333-171817
|
|
10.33
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17
|
|
Form of Notice of Stock Unit Award and Stock Unit Agreement under 2011 Equity Incentive Plan
|
|
S-1/A
|
|
333-171817
|
|
10.34
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18
|
|
Amended and Restated Compensation Program for Non-Employee Directors
|
|
10-Q
|
|
001-35146
|
|
10.3
|
|
3/7/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19
|
|
Reference is made to Exhibit 4.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20
|
|
Reference is made to Exhibit 4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21
|
|
Common Stock Purchase Agreement by and among the Registrant and the Investors (as defined therein), dated as of April 7, 2011
|
|
S-1/A
|
|
333-171817
|
|
10.29
|
|
4/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22
|
|
Form of Lock-Up Agreement, entered into by MHV Partners LLC and Sanford Robertson
|
|
S-1/A
|
|
333-171817
|
|
10.30
|
|
4/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.23
|
|
Sublease by and between Registrant and Sedgwick, Detert, Moran & Arnold LLP, dated as of September 29, 2009
|
|
S-1
|
|
333-171817
|
|
10.23
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24
|
|
Office Lease Agreement between Registrant and PPF Paramount One Market Plaza Owner, L.P., dated as of July 28, 2010
|
|
S-1
|
|
333-171817
|
|
10.24
|
|
1/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25
|
|
Office Lease Agreement between Registrant and PPF Paramount One Market Plaza Owner, L.P., dated as of March 9, 2012
|
|
10-K
|
|
001-35146
|
|
10.31
|
|
3/26/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26
|
|
Employment Offer Letter by and between the Registrant and Ned Segal, dated as of February 7, 2013
|
|
8-K
|
|
001-35146
|
|
10.1
|
|
2/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27
|
|
Separation Agreement between RPX Corporation and Adam Spiegel dated March 7, 2013
|
|
8-K
|
|
001-35146
|
|
10.1
|
|
3/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28
†
|
|
Asset Purchase Agreement (Redacted), dated December 22, 2014, by and among
Rockstar Consortium US LP, Rockstar Consortium LLC, Bockstar Technologies LLC, Constellation Technologies LLC, MobileStar Technologies LLC, NetStar Technologies LLC, RPX Clearinghouse LLC, and the Registrant
|
|
8-K
|
|
001-35146
|
|
10.1
|
|
2/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29
|
|
Employment Offer Letter by and between the Registrant and Robert Heath, dated as of March 15, 2011
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
List of subsidiaries of the Registrant
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1
|
|
Power of Attorney (Included in Signature Page)
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
||||||
31.2
|
|
Certification of Chief Financial Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
||||||
32.1
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
||||||
32.2
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
1.
|
I have reviewed this Annual Report on Form 10-K of RPX Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
March 2, 2015
|
|
|
|
/s/ JOHN A. AMSTER
|
|
|
John A. Amster
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of RPX Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
March 2, 2015
|
|
|
|
/s/
ROBERT HEATH
|
|
|
Robert Heath
|
|
|
Chief Financial Officer and Senior Vice
President, Finance
|
|
|
(Principal Financial Officer)
|
Date:
|
March 2, 2015
|
|
|
|
/s/ JOHN A. AMSTER
|
|
|
John A. Amster
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
March 2, 2015
|
|
|
|
/s/ ROBERT HEATH
|
|
|
Robert Heath
|
|
|
Chief Financial Officer and Senior Vice
President, Finance
|
|
|
(Principal Financial Officer)
|