RPX Corporation is a patent risk management company that acquires patents to protect its subscription-based clients from litigation. It has acquired over $890 million in patents and doubled its portfolio through a recent $1.8 billion deal. RPX's recurring subscription revenues and high cash flows from operations allow it to fund further patent acquisitions without external capital. Its growing patent portfolio attracts more clients, driving continued revenue growth.
In Bessemer’s State of the Cloud 2020 Report, we distill twenty years of data on the private and public cloud market trends, dive into the time tested tenets that early-stage cloud founders need to prioritize for growth, and of course, share our predictions that explain the emerging categories we’re eyeing to spot promising new companies.
Since the early 2000s, the industry has seen exponential growth, both in private and public spheres. Many companies have cloud strategies in place, but they are amidst their digital transformations. We believe the future of technology is forged in the cloud, and after two decades of growth it’s just the beginning.
In a time when founders and investors are faced with unprecedented market volatility, it is especially timely to step back and look at the long arc of technology, and the cloud computing revolution in particular.
Source: bvp.com/cloud
Bessemer Venture Partners (Byron Deeter, Elliott Robinson, Hansae Catlett, Mary D'Onofrio)
Tracxn - Top Business Models - UK & Ireland Tech- Sep 2021Tracxn
Here's a detailed analysis of top #BusinessModels in rebrand.ly/3hgf7x0
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Tracxn - Top Business Models - Technology Tech - Mar 2022Tracxn
Tracxn's proprietary #taxonomy brings to you top #BusinessModels in Technology rebrand.ly/se5dbjg
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Tracxn - Geo Monthly Report - UK & Ireland Tech - Dec 2021Tracxn
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The document provides an overview of the legal tech sector, including key statistics and trends. It summarizes that the sector has received $2.7B in funding, with 17 mega companies. The top subsectors are discussed, such as legal practice management, intellectual property management, and eDiscovery. Notable companies, recent investments, and acquisitions are also highlighted.
Idaho National Labs - Overview & Electric Vehicle ActivitiesForth
The Idaho National Laboratory is a government-owned, contractor-operated institution that has been involved in nuclear energy research and development since the 1940s. It is the U.S. Department of Energy's lead laboratory for nuclear energy and conducts important work in electric vehicles and infrastructure testing. The laboratory maintains extensive facilities on its 890 square mile site and has tested over 11,600 electric vehicles and infrastructure components, accumulating over 122 million test miles. It works with partners to study grid integration and provides independent analysis to support further electric vehicle adoption.
LUMA Digital Brief 020 - Market Report Q2 2018LUMA Partners
The document provides an overview of mergers and acquisitions (M&A) activity in the digital media sector in Q2 2018. Key points include:
- M&A activity slowed due to GDPR privacy regulations but picked up towards the end of the quarter.
- Notable deals included AT&T's acquisition of AppNexus and Adobe's acquisition of Magento.
- The stock performance of major ad tech and martech companies was strong, with many hitting all-time highs.
- Several digital media startups raised large funding rounds to fuel further growth.
ROI Acquistion Corp. II SPAC Acquiring A Highly Attractive Asset In An Explos...Lester Goh
ROI Acquistion Corp. II (ROIQ) is a SPAC that plans to acquire Ascend Telecom, a telecom infrastructure company in India. Ascend operates in a growing industry with favorable regulations and possesses competitive advantages like strategic tower locations. While Ascend has strong growth potential, ROIQ currently trades at a significant discount to peers due to its SPAC structure and lack of research coverage. The acquisition of Ascend represents an opportunity for substantial upside if the valuation gap with peers closes to reflect Ascend's fundamentals and industry tailwinds.
In Bessemer’s State of the Cloud 2020 Report, we distill twenty years of data on the private and public cloud market trends, dive into the time tested tenets that early-stage cloud founders need to prioritize for growth, and of course, share our predictions that explain the emerging categories we’re eyeing to spot promising new companies.
Since the early 2000s, the industry has seen exponential growth, both in private and public spheres. Many companies have cloud strategies in place, but they are amidst their digital transformations. We believe the future of technology is forged in the cloud, and after two decades of growth it’s just the beginning.
In a time when founders and investors are faced with unprecedented market volatility, it is especially timely to step back and look at the long arc of technology, and the cloud computing revolution in particular.
Source: bvp.com/cloud
Bessemer Venture Partners (Byron Deeter, Elliott Robinson, Hansae Catlett, Mary D'Onofrio)
Tracxn - Top Business Models - UK & Ireland Tech- Sep 2021Tracxn
Here's a detailed analysis of top #BusinessModels in rebrand.ly/3hgf7x0
Get these reports of any geography delivered to your mailbox for free! Subscribe
Tracxn - Top Business Models - Technology Tech - Mar 2022Tracxn
Tracxn's proprietary #taxonomy brings to you top #BusinessModels in Technology rebrand.ly/se5dbjg
Get our free reports on #PracticeArea or #sector of your interest to your mailbox regularly https://rb.gy/cx2upn
Tracxn - Geo Monthly Report - UK & Ireland Tech - Dec 2021Tracxn
We are back with our latest report on top #BusinessModels in based on #Tracxn's #proprietary #taxonomy rebrand.ly/t1q4ym7
Get our free reports on geo of your interest to your mailbox regularly
The document provides an overview of the legal tech sector, including key statistics and trends. It summarizes that the sector has received $2.7B in funding, with 17 mega companies. The top subsectors are discussed, such as legal practice management, intellectual property management, and eDiscovery. Notable companies, recent investments, and acquisitions are also highlighted.
Idaho National Labs - Overview & Electric Vehicle ActivitiesForth
The Idaho National Laboratory is a government-owned, contractor-operated institution that has been involved in nuclear energy research and development since the 1940s. It is the U.S. Department of Energy's lead laboratory for nuclear energy and conducts important work in electric vehicles and infrastructure testing. The laboratory maintains extensive facilities on its 890 square mile site and has tested over 11,600 electric vehicles and infrastructure components, accumulating over 122 million test miles. It works with partners to study grid integration and provides independent analysis to support further electric vehicle adoption.
LUMA Digital Brief 020 - Market Report Q2 2018LUMA Partners
The document provides an overview of mergers and acquisitions (M&A) activity in the digital media sector in Q2 2018. Key points include:
- M&A activity slowed due to GDPR privacy regulations but picked up towards the end of the quarter.
- Notable deals included AT&T's acquisition of AppNexus and Adobe's acquisition of Magento.
- The stock performance of major ad tech and martech companies was strong, with many hitting all-time highs.
- Several digital media startups raised large funding rounds to fuel further growth.
ROI Acquistion Corp. II SPAC Acquiring A Highly Attractive Asset In An Explos...Lester Goh
ROI Acquistion Corp. II (ROIQ) is a SPAC that plans to acquire Ascend Telecom, a telecom infrastructure company in India. Ascend operates in a growing industry with favorable regulations and possesses competitive advantages like strategic tower locations. While Ascend has strong growth potential, ROIQ currently trades at a significant discount to peers due to its SPAC structure and lack of research coverage. The acquisition of Ascend represents an opportunity for substantial upside if the valuation gap with peers closes to reflect Ascend's fundamentals and industry tailwinds.
What's next for the investment management industry?SimCorp
“It's difficult to predict. Especially about the future."
It may be debatable who the source of the above quote is: Mark Twain, Storm P., Niels Bohr or Yogi Berra. But the truth of it struck us as particularly relevant as we looked back at the tumultuous events of the past twelve months in preparation for writing this outlook on the year ahead.
This document provides information on potential investment and acquisition opportunities. It lists various business engagements across different industries that could be of interest to investors. It includes contact information for the managing director and client operations manager at STS Capital to discuss any of the engagement opportunities.
- Many startups and unicorns do not develop extensive patent portfolios, despite the importance of intellectual property protection. Failure to align IP strategy with long-term business objectives can cost companies millions in litigation and licensing fees later on.
- While some unicorns have grown their patent portfolios as they approach exits like IPOs or expand into new markets, many unicorns still own few or no patents. This leaves them vulnerable to litigation from assertive patent owners.
- Experts recommend that startups focus on obtaining baseline patent protection of core technologies early on. However, companies often overlook opportunities to further strengthen their portfolios through activities like patent monitoring and freedom-to-operate analyses that provide competitive advantages.
Vertical software companies are increasingly moving to cloud platforms, allowing them to deliver software that is more usable, cheaper, easier to maintain, and accessible from any device. This document outlines several "plays" or strategies that industry cloud companies can employ to drive growth, such as replacing outdated incumbent software, helping customers find new ways to grow their revenue, attacking the small and medium business market, tapping into large data sources, and building platforms to lock in customers. It also discusses characteristics these companies look for in potential investments, such as total addressable markets over $500 million in annual recurring revenue.
MDK GLOBAL ADVISORS COMMENTS ON SAP AGREEING TO ACQUIRE QUALTRICS FOR $8BN IN...MDK Global Advisors
According to analysts at MDK Global Advisors, SAP, the global technology giant, announced today that it has agreed to buy Qualtrics, the survey and research software company, for USD 8 billion in Cash, shortly before it was scheduled to go public. The deal is set to be finalised in the first half of 2019.
Blockchain Land is a multichain metaverse with a unique purpose and opportunities. Read our Business Valley deck presentation to gain more knowledge about a platform that can give you a ride of the world with virtual reality.
The document summarizes key metrics and trends in the cloud computing industry:
1) The cloud computing market has grown exponentially in recent years, with total cloud revenue increasing over 10x from $5.6 billion in 2008 to $56.6 billion in 2014.
2) Cloud revenue is projected to continue growing rapidly, reaching an estimated $127.5 billion by 2018. Major cloud companies have seen their market capitalizations soar, with the top 10 public cloud companies now worth over $140 billion more than in 2008.
3) Key metrics that public and private investors use to value cloud companies include annual recurring revenue (ARR), ARR growth rates, retention/upsell rates, customer acquisition costs and
CxO Roadmap: Designing a Fintech Strategy Around Your Legacy Core IT SupplierKelli Wilkinson
Senior Execs struggle with how to pick the best alternative fintech suppliers while simultaneously de-handcuffing from one-sided legacy core relationships. With so many choices appearing in the market CEOs want to know which neo-cores are ready? What fintech suppliers are mature enough to partner? How does the bank structure a greenfield deal with a new market entrant and manage the associated business risk?
CEOs need strategic insights on how to set the vision and direct their franchise to take advantage of the fintech opportunity without creating too much disruption with clients, staff and the bottom line. Information is pouring in from all directions on fintech and it has become difficult to adopt the right strategy in a fragmented evolving marketplace providing many options.
This session will provide an unbiased, no BS summary for non-technical CEOs ready to lead their franchise in the new fintech era while minimizing the long term hold that legacy core IT suppliers have on them.
Red Cat Holdings, through its three wholly owned subsidiaries, Fat Shark, Red Cat Propware, and Rotor Riot provides products, services, and solutions to the drone industry. Fat Shark makes First Person View (FPV) video goggles for the drone industry and has the largest market share for drone video goggles. Red Cat Propware is developing software that
performs flight data analytics, flight data storage, diagnostics, and problem prevention. Rotor Riot is a drone media, education, and ecommerce store. Rotor Riot’s premium brand and large influence on the drone industry
supports and promotes Fat Shark, Red Cat Propware, and future acquisitions while providing direct retail distribution.
2003 closes out as planned rays of sunshine for it market in 2004ARC Advisory Group
The document provides predictions for IT trends in manufacturing and supply chains for the years 2003 and 2004 from ARC Insights. For 2003, it summarizes that 7 of ARC's 10 predictions were accurate, with the remaining 3 being mixed. For 2004, it outlines 10 new predictions, including that IT spending will accelerate, consolidation will continue, acceptance of application service providers will grow and split into two models, and supply chain execution suppliers will lead in supporting manufacturers' RFID compliance efforts. It provides analysis and context for each prediction.
This document summarizes an agenda for an insurance industry roundtable discussing blockchain applications. The roundtable included presentations from various blockchain insurance startups on current solutions and future opportunities. It also involved breaking attendees into groups to collaboratively build potential business cases for using blockchain within the insurance industry. The document outlines common pain points within insurance such as inefficient processes, lack of shared data and trust. It presents blockchain as a solution to create a shared ledger and smart contracts to improve efficiencies. It discusses opportunities around areas like claims, underwriting and capital markets. The business case exercise was aimed at identifying specific use cases where blockchain could provide value to participants.
Investor deck may 2018 needham et presentation and website versionsynacor2016ir
Synacor has experienced double-digit revenue growth in recent years and expects this growth to continue. In Q1 2018, revenue grew 24% year-over-year to $32.9 million. Synacor has two growing sources of revenue - search and advertising (60% of revenue) and recurring software and fees (40% of revenue). The company sees opportunities to expand in both areas through initiatives like growing its advertising business and portal customer base as well as innovating its software offerings. Synacor has a large customer reach including hundreds of publishers, 200 million unique users, and operator and enterprise customers.
Just how much device makers are on the hook for in patent licensing payouts is one of the most debated questions in the IP community. While a complete answer may remain elusive, an analytical approach can help manufacturers assess their risk.
The document discusses the challenges facing communications service providers (CSPs) as their traditional business models are disrupted by digital technologies. It argues that CSPs must transform their core businesses, operating models, and technology stacks to unlock new sources of growth. Specifically, the document recommends that CSPs: 1) optimize costs in their core businesses to free up investment for growth; 2) look for new growth opportunities in business-to-consumer and business-to-business markets; and 3) adopt user-centric, data-driven approaches and move to software-defined networks to capitalize on emerging trends like 5G and the internet of things.
If you’re an investor who’d like to find out more about Hive, get in touch with the founder directly via john.ryder@hive.hr, or alternatively drop me an email at alex@mountsideventures.com
NCR Corporation provides technology solutions and services globally. It operates through four segments: Financial Services, Retail Solutions, Hospitality and Emerging Industries. Recent financial performance has declined as customers shift to cloud-based solutions. Shareholder pressure is mounting for strategic changes as the company transitions from hardware to software and services. A potential takeover of NCR has been discussed as one alternative for the company to address these challenges.
The document discusses how insurance companies are using data analytics to improve their business performance and competitiveness. It notes that insurance companies generate large amounts of data but have traditionally only used it for rearview analysis of past performance. However, some companies are now using insights from data to predict future outcomes and positions. The document provides examples of how different insurance companies have leveraged analytics to improve areas like claims management, fraud detection, and policy renewal rates. It promotes Wipro's solutions for integrated performance management and predictive analytics that can help insurance companies control costs, improve efficiency, and enhance customer satisfaction through more timely claims settlements and better risk selection.
Mapping the cloud maturity curve is an interactive research programme, sponsored by IBM, exploring the strategic fundamentals of cloud maturity and how companies seize growth opportunities opened up by the cloud. Discover the fundamental five to find out what businesses must have in place to extract the maximum value from the cloud.
The document provides details on multiple subscale deals (under $25 million) in the cloud accounting, finance and accounting outsourcing, and professional services industries between 2005-2019. It summarizes acquisition multiples paid for different companies, ranging from 0.38x to 4.6x revenue. The majority of deals were priced between 80-100% of annual revenues, with outsourcing deals commanding a premium. It also includes a table analyzing typical enterprise value to sales multiples across related industries like accounting, bookkeeping, consulting, and tax, ranging from 0.54x to 2.34x.
What's next for the investment management industry?SimCorp
“It's difficult to predict. Especially about the future."
It may be debatable who the source of the above quote is: Mark Twain, Storm P., Niels Bohr or Yogi Berra. But the truth of it struck us as particularly relevant as we looked back at the tumultuous events of the past twelve months in preparation for writing this outlook on the year ahead.
This document provides information on potential investment and acquisition opportunities. It lists various business engagements across different industries that could be of interest to investors. It includes contact information for the managing director and client operations manager at STS Capital to discuss any of the engagement opportunities.
- Many startups and unicorns do not develop extensive patent portfolios, despite the importance of intellectual property protection. Failure to align IP strategy with long-term business objectives can cost companies millions in litigation and licensing fees later on.
- While some unicorns have grown their patent portfolios as they approach exits like IPOs or expand into new markets, many unicorns still own few or no patents. This leaves them vulnerable to litigation from assertive patent owners.
- Experts recommend that startups focus on obtaining baseline patent protection of core technologies early on. However, companies often overlook opportunities to further strengthen their portfolios through activities like patent monitoring and freedom-to-operate analyses that provide competitive advantages.
Vertical software companies are increasingly moving to cloud platforms, allowing them to deliver software that is more usable, cheaper, easier to maintain, and accessible from any device. This document outlines several "plays" or strategies that industry cloud companies can employ to drive growth, such as replacing outdated incumbent software, helping customers find new ways to grow their revenue, attacking the small and medium business market, tapping into large data sources, and building platforms to lock in customers. It also discusses characteristics these companies look for in potential investments, such as total addressable markets over $500 million in annual recurring revenue.
MDK GLOBAL ADVISORS COMMENTS ON SAP AGREEING TO ACQUIRE QUALTRICS FOR $8BN IN...MDK Global Advisors
According to analysts at MDK Global Advisors, SAP, the global technology giant, announced today that it has agreed to buy Qualtrics, the survey and research software company, for USD 8 billion in Cash, shortly before it was scheduled to go public. The deal is set to be finalised in the first half of 2019.
Blockchain Land is a multichain metaverse with a unique purpose and opportunities. Read our Business Valley deck presentation to gain more knowledge about a platform that can give you a ride of the world with virtual reality.
The document summarizes key metrics and trends in the cloud computing industry:
1) The cloud computing market has grown exponentially in recent years, with total cloud revenue increasing over 10x from $5.6 billion in 2008 to $56.6 billion in 2014.
2) Cloud revenue is projected to continue growing rapidly, reaching an estimated $127.5 billion by 2018. Major cloud companies have seen their market capitalizations soar, with the top 10 public cloud companies now worth over $140 billion more than in 2008.
3) Key metrics that public and private investors use to value cloud companies include annual recurring revenue (ARR), ARR growth rates, retention/upsell rates, customer acquisition costs and
CxO Roadmap: Designing a Fintech Strategy Around Your Legacy Core IT SupplierKelli Wilkinson
Senior Execs struggle with how to pick the best alternative fintech suppliers while simultaneously de-handcuffing from one-sided legacy core relationships. With so many choices appearing in the market CEOs want to know which neo-cores are ready? What fintech suppliers are mature enough to partner? How does the bank structure a greenfield deal with a new market entrant and manage the associated business risk?
CEOs need strategic insights on how to set the vision and direct their franchise to take advantage of the fintech opportunity without creating too much disruption with clients, staff and the bottom line. Information is pouring in from all directions on fintech and it has become difficult to adopt the right strategy in a fragmented evolving marketplace providing many options.
This session will provide an unbiased, no BS summary for non-technical CEOs ready to lead their franchise in the new fintech era while minimizing the long term hold that legacy core IT suppliers have on them.
Red Cat Holdings, through its three wholly owned subsidiaries, Fat Shark, Red Cat Propware, and Rotor Riot provides products, services, and solutions to the drone industry. Fat Shark makes First Person View (FPV) video goggles for the drone industry and has the largest market share for drone video goggles. Red Cat Propware is developing software that
performs flight data analytics, flight data storage, diagnostics, and problem prevention. Rotor Riot is a drone media, education, and ecommerce store. Rotor Riot’s premium brand and large influence on the drone industry
supports and promotes Fat Shark, Red Cat Propware, and future acquisitions while providing direct retail distribution.
2003 closes out as planned rays of sunshine for it market in 2004ARC Advisory Group
The document provides predictions for IT trends in manufacturing and supply chains for the years 2003 and 2004 from ARC Insights. For 2003, it summarizes that 7 of ARC's 10 predictions were accurate, with the remaining 3 being mixed. For 2004, it outlines 10 new predictions, including that IT spending will accelerate, consolidation will continue, acceptance of application service providers will grow and split into two models, and supply chain execution suppliers will lead in supporting manufacturers' RFID compliance efforts. It provides analysis and context for each prediction.
This document summarizes an agenda for an insurance industry roundtable discussing blockchain applications. The roundtable included presentations from various blockchain insurance startups on current solutions and future opportunities. It also involved breaking attendees into groups to collaboratively build potential business cases for using blockchain within the insurance industry. The document outlines common pain points within insurance such as inefficient processes, lack of shared data and trust. It presents blockchain as a solution to create a shared ledger and smart contracts to improve efficiencies. It discusses opportunities around areas like claims, underwriting and capital markets. The business case exercise was aimed at identifying specific use cases where blockchain could provide value to participants.
Investor deck may 2018 needham et presentation and website versionsynacor2016ir
Synacor has experienced double-digit revenue growth in recent years and expects this growth to continue. In Q1 2018, revenue grew 24% year-over-year to $32.9 million. Synacor has two growing sources of revenue - search and advertising (60% of revenue) and recurring software and fees (40% of revenue). The company sees opportunities to expand in both areas through initiatives like growing its advertising business and portal customer base as well as innovating its software offerings. Synacor has a large customer reach including hundreds of publishers, 200 million unique users, and operator and enterprise customers.
Just how much device makers are on the hook for in patent licensing payouts is one of the most debated questions in the IP community. While a complete answer may remain elusive, an analytical approach can help manufacturers assess their risk.
The document discusses the challenges facing communications service providers (CSPs) as their traditional business models are disrupted by digital technologies. It argues that CSPs must transform their core businesses, operating models, and technology stacks to unlock new sources of growth. Specifically, the document recommends that CSPs: 1) optimize costs in their core businesses to free up investment for growth; 2) look for new growth opportunities in business-to-consumer and business-to-business markets; and 3) adopt user-centric, data-driven approaches and move to software-defined networks to capitalize on emerging trends like 5G and the internet of things.
If you’re an investor who’d like to find out more about Hive, get in touch with the founder directly via john.ryder@hive.hr, or alternatively drop me an email at alex@mountsideventures.com
NCR Corporation provides technology solutions and services globally. It operates through four segments: Financial Services, Retail Solutions, Hospitality and Emerging Industries. Recent financial performance has declined as customers shift to cloud-based solutions. Shareholder pressure is mounting for strategic changes as the company transitions from hardware to software and services. A potential takeover of NCR has been discussed as one alternative for the company to address these challenges.
The document discusses how insurance companies are using data analytics to improve their business performance and competitiveness. It notes that insurance companies generate large amounts of data but have traditionally only used it for rearview analysis of past performance. However, some companies are now using insights from data to predict future outcomes and positions. The document provides examples of how different insurance companies have leveraged analytics to improve areas like claims management, fraud detection, and policy renewal rates. It promotes Wipro's solutions for integrated performance management and predictive analytics that can help insurance companies control costs, improve efficiency, and enhance customer satisfaction through more timely claims settlements and better risk selection.
Mapping the cloud maturity curve is an interactive research programme, sponsored by IBM, exploring the strategic fundamentals of cloud maturity and how companies seize growth opportunities opened up by the cloud. Discover the fundamental five to find out what businesses must have in place to extract the maximum value from the cloud.
The document provides details on multiple subscale deals (under $25 million) in the cloud accounting, finance and accounting outsourcing, and professional services industries between 2005-2019. It summarizes acquisition multiples paid for different companies, ranging from 0.38x to 4.6x revenue. The majority of deals were priced between 80-100% of annual revenues, with outsourcing deals commanding a premium. It also includes a table analyzing typical enterprise value to sales multiples across related industries like accounting, bookkeeping, consulting, and tax, ranging from 0.54x to 2.34x.
1. InvestmentThesis
Company Overview
- RPXC cannot function unless it has control of a huge number of patents. The
company has acquired these patents through cash flow from operations since
2009, and shows no signs having to alter this pattern. With a Base Case of
cash flows from operations as 65% of revenues, RPXC can fund its acquisi-
tions and has positive growth cash balances through 2019—implying the com-
pany will be able to fund its core competency without raising capital in the near
future.
- Until September 30, 2014, RPX has spent a combined $890 Million to ac-
quire over 4900 patents. A deal with Rockstar was finalized in February 2015
and RPXC effectively doubled its patent assets—worth $1.8B. So long as RPX
increases the number of patents they own, they can increase the number of
companies they attract to subscribe to their services, which gives investors
what they seek: growth.
-Over 96% of RPXC’s revenues are subscription based, and over 90% of
those revenues are renewed each year. These two things allow management
to focus energy on growth through patent acquisitions, and also leads to ex-
tremely high cash flow from operations. Because of this the current price to
cash flow multiple is much lower than is justifiable indicating a deep value to
investors.
-The patent market is growing like weeds, annual litigation costs have tripled
since 2008. RPX brings efficiency and a good name to a broken and badly
branded market. Their network effect allows them to generate more than 2x
revenue per dollar of assets than competitors.
RPX Corporation
Company Snapshot
RPXC *ACTG
Share Price 15.27 10.85
52 Week Range 11.94-
18.16
9.71-
19.93
Target Price $20.68 -
Difference % +35% -
Market Cap 828.83M 335.42M
Key Statistics (as of year end 2014)
EBITDA Margin 72% -47.9%
Operating Margin 54.4% -40.62%
Profit Margin 15.2% -50.45%
P/Operating CF 4.36x 79.0x
TEV/Revenue 1.9x 2.7x
Market Cap/ 3.5x 2.0x
Patent Assets 236.35 286.64
Competitors
*Acacia Research (ACTG)
Marathon Patent Group, Inc. (MARA)
Pendrell Corporation (PCO)
SOURCE: Yahoo! Finance 4/3/15
NASDAQ: RPXC
May 2015
Target: $20.68
BUY
RPX Corporation is a NPE (patent troll) litigation protection service that spe-
cializes in patent risk management solutions within the Tech World. The com-
pany’s objective is to minimize NPE costs and financial risks. It achieves this
through its subscription based business model. Companies buy a subscription
from RPX Corporation for multiple services including: defensive patent acquisi-
tions, litigation insurance, market intelligence, RPX OPEN (a transparent envi-
ronment for sellers and buyers of patents), and RPX R&D (search services to
improve general patent research). RPX Corporation has a very unique busi-
ness model: it is the biggest buyer of patents in the open market and also
helps their clients with ongoing patent litigation cases. Along with tech compa-
nies, RPX Corporation also has clients like Barnes & Noble, Starbucks, Wells
Fargo, and the new addition of Ford Motors. RPX Corporation has first mover
advantage within its market and has huge potential to increase its client base.
t618h047@ku.edu
jacob.vonfeldt@ku.edu
SamCarter@ku.edu
eric.dinkel@ku.edu
Grant.helm@ku.edu
Taylor Herron
Jacob Von Feldt
Samantha Carter
Eric Dinkel
Grant Helm
Group 2
2. Page 2
May 2015 $20.68 BUY Group 2
Competitive Advantage through CAPEX
While RPXC’s business model and revenue growth de-
pends on new subscriptions and renewals, those sub-
scriptions will only keep rolling in if RPXC continues to
acquire new patents to expand its portfolio. More patents
equate to a larger client base, which is key to RPXC’s
subscription growth, stability, and more reoccurring reve-
nue. The industry of tech patent protection has high
growth potential—in 2013 there were approximately 2,500
tech companies sued by patent trolls1
. PPXC has high
probability to grab onto and take control of this market
given that it is the biggest buyer of patents in the open
market, and because the company also helps resolve pa-
tent troll litigation cases. RPXC is a one of a kind business
1 Investor Presentation 2014 3 RPX Corporation Website
2 Email from Boone
model, therefore the only company operating with this sort
of capacity2
. RPXC has first mover advantage in market
that houses over $12.2 billion in NPE litigation costs3
,
which grants a huge competitive advantage and an ex-
tremely wide moat. This moat is sustained because RPXC
holds an enormous amount of data, given the tech nature
of its business, which it uses to meet its clients’ needs—
many of which are big names. These names include Cis-
co, Toshiba, LinkedIn, and many more1
. More than 550
unique companies have been named in patent troll suits
just in Q1 of 2015; 500 of which are not yet clients of
RPXC and half of those experienced their first patent troll
suit. 75 of those 550 companies were sued more than
once, only half of which are current clients of RPXC2
.
In order to attract all of this client potential, RPXC has to
continue to acquire patents. With exception of its first
Base Case: 65% of Revenue
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Cash & Cash Equivilents 28.9 46.7 106.7 73.6 100.2 78.0 132.5 193.2 260.0 334.7 417.2
Cash from Operations 17.6 120.1 120.3 91.4 212.5 191.5 208.4 231.4 254.5 277.4 299.6
CapEx Requirement 38.5 72.1 101.2 87.4 127.1 137.0 147.7 164.5 179.8 194.9 209.5
Bear Case: 35% of Revenue
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Cash & Cash Equivilents 28.9 46.7 106.7 73.6 100.2 78.0 132.5 97.0 57.0 14.3 (31.2)
Cash from Operations 17.6 120.1 120.3 91.4 212.5 191.5 112.2 124.6 137.0 149.4 161.3
CapEx Requirement 38.5 72.1 101.2 87.4 127.1 137.0 147.7 164.5 179.8 194.9 209.5
Bull Case: 90% of Revenue
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Cash & Cash Equivilents 28.9 46.7 106.7 73.6 100.2 78.0 132.5 273.4 429.2 601.7 790.9
Cash from Operations 17.6 120.1 120.3 91.4 212.5 191.5 288.6 320.3 352.4 384.1 414.8
CapEx Requirement 38.5 72.1 101.2 87.4 127.1 137.0 147.7 164.5 179.8 194.9 209.5
year, RPXC has been able to fund its patent acquisitions
from its cash from operations. Historically, cash from oper-
ations as a percent of total revenues has been a fairly sig-
nificant, ranging anywhere from 46-127%, but more con-
sistently around 70% (see table 1). In a Base Case of
65% (table 2) and a Bull Case of 90% (table 4) of reve-
nues, cash from operations will be more than enough to
fund CAPEX needs for a conservatively growing client
base. In both of these cases, through 2019 the cash and
cash equivalent balance is still well within positive
growth—25% in the Base and 31% in in the Bull. In a very
unlikely Bear Case of a historically low (by more than
10%) 35% of revenues (table 3), cash alone will not be
able to fund RPXC’s CAPEX requirements for its growing
client base and the growth will become negative by 2016.
Depreciation and Amortization projections are the basis
of CAPEX projections. Historically, the two line up within
about $10 million of each other, CAPEX being on the
higher end. This is because depreciation and amortization
costs are associated with the acquisition of patents, which
is essentially how RPXC measures CAPEX. This means
that RPXC will likely not have to raise any capital in the
near future in order to fund the company’s business mod-
el. If the company does choose to raise capital, it can do it
through both equity and debt. It’s current debt level is 0%,
and has been since just slightly after it became public.
PRXC has enormous amount of leverage to work with if it
chooses to do so, or if cash from operations as a percent
of revenue fall more in line with the Bear Case.
Historic Operating Cash Flow as % of Revenue
2009 2010 2011 2012 2013 2014
Revenue 32.8 94.9 154.0 197.7 237.5 259.3
Cash Flow from Operating Activities 17.6 120.1 120.3 91.4 212.5 191.5
As % of Rev 54% 127% 78% 46% 89% 74%
Table 1
Table 2
Table 3
Table 4
3. Page 3
May 2015 $20.68 BUY Group 2
Cash Flows & Reoccurring RevenueRockstar Patents Purchase
On Tuesday December 23, 2014, RPX Corp announced
it would buy patents from the likes of Apple and other
Smartphone Tech firms. The sale is supposedly designed
to reduce the number of lawsuits over smartphone tech-
nology. The sale consists of over 4000 patents that are
owned by Rockstar Consortium and according to the man-
agement team at RPX, is the largest structured transac-
tion the company has ever been a part of. The deal, which
includes nearly over 35 other companies, is worth approxi-
mately $900 million.
Rockstar Consortium, was formed from the $4.5 Billion
purchase of about 6000 Nortel Network Corp Patents in
2011 following its bankruptcy. Rockstar also includes oth-
er Silicon Valley giants like Microsoft, Sony Erricson and
Blackberry. This is one of the first purchases of
Smartphone technology patents for RPX and the company
is hailing the deal as a “prototype” and that it hopes to fur-
ther promote innovation through their unique patent sys-
tem. John Amster, Chief Executive Officer of RPX Corp.
said that “Peace is breaking out,” after the deal was an-
nounced. “I Think people have started to realize that li-
censing, not litigation, is the best way to make use of pa-
tents, and this deal I a significant acknowledgement of that
reality.”
Cisco and Google are two of the companies who were
facing litigation from Rockstar so it’s easy to see why Cis-
co’s general counsel was pleased after the deal an-
nouncement; “With RPX acting as a clearing house and
deal manager, a global consortium of unprecedented
scale came together and reached a fair value for licensing
rights in a negotiated business transaction instead of a
courtroom. This is an approach and transaction that is
conducive for the entire industry.”
RPX received a transaction fee for its work, worth ap-
proximately $35 million and has been recognized on Q4
and Q1 revenues. As of September 30, 3024, RPX had
invested $890 Million to acquire approximately 4900 pa-
tent assets and rights, so completion of the deal with
Rockstar (which was finalized on February 3, 2015), effec-
tively doubled the patent assets that RPX has ownership
of, thereby doubling the amount of patents it can give out
to companies in return for subscription revenues. The ac-
quisition of these assets allows Rockstar to break into cell
technology patent industry, one of the busiest in terms of
litigation.
This will allow them to grow their client base substan-
tially. As large portion of RPX’s value is in their patent
“library”, this acquisition will make it increasingly more
valuable to subscribe to RPX patent litigation protection.
Not only will it attract new customers, but it will increase
the amount RPX can charge in each contract.
Due to the subscription business model of RPXC, much
of the company’s revenue is reoccurring in nature. For the
most recent fiscal year, subscription revenue consisted of
$251.4 Million of the total revenue of $259.3 Million. This
means that over the last year over 96% of RPXC Corpora-
tion’s revenue is subscrip-
tion based and therefore
reoccurring. In addition,
90% of the company’s rev-
enue is renewed every
year. It should also be not-
ed that the company gets
most of its revenue in a
single payment, and defers
the revenue evenly over
twelve months to comply
with GAAP. This makes
comparison from a quarter
to quarter perspective
much harder because if
they lost a client it would
not be apparent until the
following year.
The extremely high per-
cent of recurring revenue is im-
portant for any business, but es-
pecially a business like RPX. The
company’s success depends on them being able to go
acquire as many useful patents in order to gain new cli-
ents. One of the benefits of subscription revenue is that
you have the ability to focus on growth rather than focus-
ing on finding enough new or repeat business in order to
hit the same revenue numbers as last year. For example,
if RPX had $100 million in sales last year, they could know
with almost certainty that they could bring in $90 million
the next year, because of the 90% renewal rate. This
leaves management with the task of finding only $10 mil-
lion the next year in new sales, with everything over that
$10 million being growth on the previous revenues. The
reoccurring revenue model is key to RPX’s business be-
cause management can focus on what really matters to
their investors: growth.
Additionally, the reoccurring revenue model is essential
for great cash flows. As previously mentioned, cash flows
from operations (the core business) has since inception of
the company always been over 45%, and averaged over
65% of the total revenue. These cash flows are what we
as investors should be concerned with. Although cash
from operations are not quite the same as free cash flow
to the firm, it is still a good metric to look at. We as inves-
tors should understand that with a company like this, cash
*Chart from Investor Presentation
4. Page 4
May 2015 $20.68 BUY Group 2
Value as Defense Aggregator
flows should be a point of emphasis over earnings num-
bers. Currently RPX trades at over 20 times previous
earnings. This number is very misleading because of
RPX’s high amount of depreciation, currently around 40%
of revenues. This is expected with a patent company, but
because the earnings are being effected by the high
amount of non-cash depreciation, the earnings are being
artificially skewed. The actual cash earnings are much
higher. Right now, the company generates $3.53 per
share in cash flow from operations. They trade at 9.69 of
next years estimated free cash flows, and trade at only
4.36 times of the operating cash flows of last year’s earn-
ings. To get a sense of this high value, cash generating
giant Microsoft generates $3.94 per share in cash flow
from operations and trades at over 12.35 times the operat-
ing cash flow. Although this is a bit of an apples to orang-
es comparison, it still helps to show the great value this
company could be, especially in today’s high-priced mar-
ket.
Over the last 15 years, and more prolifically in the last 7,
the patent industry has shifted its approach from treating
intellectual property (IP) as a complicated legal entity to
treating patents as assets. This shifted has not only al-
tered this niche market, it has greatly affected the legal
and business practices of pretty much all companies doing
business in the United States. The change has created
four main types of patent companies. The most common
and influential companies are called non-practicing entities
(NPEs) and are more commonly referred to as “patent
trolls”. A subset of this category is offensive aggregators.
These companies buy or develop patents and then force
other companies who may possibly infringe on the IP to
buy a license to the patent. If the victim refuses, costly
litigation ensues. Some transactions jump straight to the
litigation face. There are also IP management companies,
who essentially consult with patent owners and how to
maximize revenues generated from their IP, which usually
ends in litigation.
The lack of an efficient market has created a hostile and
legally complex field which has a less than stellar reputa-
tion. The growing bad image of patent trolls has created a
huge market opportunity for RPXC. RPXC is considered a
defense aggregator, and they are the leader in this subcat-
egory. The company’s main services are patent defense
and RPX OPEN. RPXC buys patents on the open market,
then all of their subscribing customers collectively own
rights (with some exceptions) to the patent and can avoid
any infringement litigation. In 2013, 2500 companies faced
litigation. With only 204 customers in 2014, RPXC has a
high ceiling to grow into. Additionally, RPXC offers an
online market place for the buying and selling of patents in
an organized matter. Essentially the EBAY of patents, this
market creates a more efficient and friendly environment
for companies and patent owners to facilitate these trans-
actions. While the current trend is for transactions to occur
through litigation, RPXC hopes to shift trends and move
away from the bad name the industry has developed.
RPXC’s position as a defense aggregator, and more
importantly the largest defense aggregator, gives them a
number of huge competitive advantages. RPXC promises
to never use their patent ownership as a way to generate
litigation revenue. They have aligned their interests with
customers, making them a much better partner than the
alternative. This gives them superior likability and increas-
es the likelihood of subscription. Working as one entity in
the name of their collective customers, RPXC can reduce
inefficiencies. The company can provide one legal team
representing several of their customers in the event of liti-
gation, otherwise each company pays legal expenses and
the costs pile up. The biggest competitive advantage
RPXC has developed is via a network effect. Each cus-
Editors note: Disregards Rockstar Paten Acquisition due to time considerations
5. Page 5
May 2015 $20.68 BUY Group 2
tion is consistent as a percent of revenue, and because
CAPEX usually falls about $10M above Depreciation and
Amortization, CAPEX predications became more reliable.
Cash taxes are usually about $10M under reported in-
come tax expense and change in NWC is around -$25M,
which also increases accuracy of projections (see Appen-
dix B). With all these facts considered, the intrinsic per
share valuation price of RPXC is $20 (see Appendix B).
Because of the nature of predicting future numbers and
the lack of confidence in multiples, this method receives
70% weight in valuation (see Appendix E).
From a relative valuation standpoint, RPXC forces
some creativity. Huge Deprecation and Amortization
amount throw a wrench in EBITDA multiples and in an
industry where the focus needs to be elsewhere than
earning, earnings multiples are also funky. The metrics
developed for this report were MarketCap/PatentAssets
and TEV/Revenue.
RPXC is leading the world in patent acquisitions, which
is a key to the company’s ability to perform for its clients—
which makes a patent asset multiple important. It currently
trades at 3.5x, which is far above its competitors (.4x-2x).
Due to its size and influence within its market, RPXC right-
fully deserves higher multiples than its competition, but to
keep valuation conservative, the current market multiple
was used to deliver a share price of $17.39 (see Appendix
D), which is still a +14% premium when compared to the
current market price. This multiple is very indicative of a
company’s performance within this industry, so a 20%
weight was used in target price triangulation (see Appen-
dix E).
TEV/Revenue was used because it is more representa-
tive of the industry over all due to the fact that the focus is
on cash flows instead of the bottom line earnings to fund
operations. This was a straight forwards analysis, the in-
dustry ranged from 1.9x (RPXC) to 4.6x. Because of the
Rockstar acquisition and other revenue growth potential,
RPXC deserves a higher multiple than where it is currently
trading. 3.6x (see Appendix C) was used because it was
the industry average, so it delivers what we consider to be
conservative comparison given the completive edge
RPXC houses over its peers. This method gave a high
value of $29.12, which is far too inflated, thus only receiv-
ing 10% weight in target price triangulation (see Appendix
E).
When taking all three forms of valuation into considera-
tion, RPXC comes in at a buy recommendation with a
price of $20.68 a share—a 35% market premium. RPXC is
so undervalued because the market fails to see the im-
portance of continual patent acquisition—and RPXC’s ad-
vantage in this arena—and that the focus of valuation
needs to be placed on cash flows from operations rather
than earnings.
tomer gets access to a huge “library” of patents (over
10,000). Each new patent acquired benefits 204 custom-
ers, not just the owner of the patent. Each new subscriber
provides more capital for patent acquisitions. More patent
acquisitions make the “library” more valuable and encour-
ages more subscriptions. This builds rapidly, proliferating
their first mover and size advantages. While it makes
sense theoretically, it shows up in the financial statements
as well. For every dollar of patent assets on their books,
RPXC generates more than twice as much revenue than
their “patent troll” competitors. This financial advantage
will give them a huge advantage in patent acquisition.
More efficient sales generation allows them to buy more
patents adding to their network effect. These competitive
advantages, and RPXC’s alternative business model, give
them a huge leg up on their competitors. These justify
higher multiples in all relative valuation scenarios. The
company should be rewarded for its novel approach and
more importantly for its efficient use of the driving asset of
the industry.
Valuation & Recommendation
With company like RPXC, who’s business model is so
unique, intrinsic value is the bulk of valuation. Followed by
a Market Cap/Patent Assets ratio, and finally TEV/
Revenue. This metrics were chosen because traditional
metrics do not translate well for RPXC. EBITDA Margins
are huge because most of COGS is depreciation and
amortization expense, thereby throwing off EBITDA multi-
ples. P/E is also a poor multiple for RPXC cash flows are
emphasized over earnings.
In forecasting revenues, a revenue per company/client
was used as well as conservative growth estimate in the
total number of companies/clients (see Appendix A2). His-
torically this number for revenue/client has been con-
sistent around $1.40M, which was maintained for projec-
tions. RPXC has been adding clients in the range of 30-40
a year. Projected clients were kept at a conservative 25 for
2015-2018 and 24 in 2019. Not only do all of these projec-
tions fall under historical numbers, the Rockstar acquisi-
tion was also not factored into estimates—leading to over-
all conservative valuation, yet still landing with a buy rec-
ommendation.
RPXC came out as a strong buy because of a stellar Q1
2015, revenues were up by $11M from the previous quar-
ter because of the Rockstar acquisition. In the past, RPXC
has maintained very even quarters because of their dif-
fered revenue structure, and there is no reason to believe
that this will change going forward. However, Q2-Q4 reve-
nues are below the Q1 mark in order to project conserva-
tive numbers forward. Another key in delivering an accu-
rate DCF is CAPEX. Because Depreciation and Amortiza-