A view of the stakes of patent litigation. Image: RPX.

Innovative companies often find a lucrative niche in the economy, and RPX (RPXC) hopes that helping to fight back against the increase in patent litigation will be a profitable venture. Yet coming into Tuesday's fourth-quarter earnings report, RPX investors were prepared for declines in earnings and sales, and it wasn't entirely clear whether the company had developed a business model that would produce sustainable growth. RPX gave shareholders good news in its backward-looking results, but a tepid set of projections for 2016 leaves the question of the company's future in question. Let's take a closer look at RPX and whether it can overcome some of the obstacles it's facing in 2016.

How RPX finished 2015
RPX's fourth-quarter results actually showed some signs of life in light of the troubling trends that we've seen for several quarters now. Revenue rose 7.5% to $72.8 million, which more than tripled the growth rate that investors expected and represented a strong acceleration from last quarter's sales gains. However, adjusted net income fell about 7% to $11.7 million, and adjusted earnings of $0.21 per share were down from year-ago levels, even though the figure exceeded the bottom-line consensus forecast for just $0.14 per share.

A look at RPX's operational numbers added to evidence of favorable performance. RPX added another 10 clients during the quarter, bringing its total to 255. That's up by exactly 25% from where RPX finished 2014, and RPX also accelerated its spending on patents to add to its intellectual property portfolio. Net spending on patents more than doubled to top the $50 million mark, and RPX brought in 13 new patent-asset acquisitions with that money.

CEO John Amster again seemed satisfied with the pace of RPX's efforts. "We increased our client base," Amster said, "expanded our insurance offering, and entered the e-discovery management space with the acquisition of Inventus." RPX sees even more opportunities ahead, especially after closing on its deal with Round Rock Research on patent licensing rights in December.

Can RPX avoid a day of reckoning?
Still, RPX's guidance was somewhat mixed. On the revenue front, RPX's figures were optimistic. First-quarter projections for $78 million to $80 million in sales are well above the $75 million that investors were expecting, and full-year 2016 projections for $324 million to $347 million in revenue would easily top the $305 million consensus forecast.

The problem is that RPX doesn't expect that business to be as profitable as investors had expected. In the first quarter, adjusted net income of $6 million to $7 million works out to between $0.11 and $0.13 per share, which is a big hit from the current expectation for $0.21 per share. Similarly, full-year adjusted net income of $39 million to $46 million is just $0.73 to $0.86 per share, and that compares unfavorably to the $0.89 per share that investors expect.

Nevertheless, RPX has high hopes for the coming year. As Amster sees it, "Our focus in 2016 will be continuing to build the patent clearinghouse, growing our discovery services business, and leveraging the combined expertise of RPX and Inventus to bring efficiencies to new sectors of the legal market."

RPX's stock didn't move immediately after the announcement, but the patent-litigation protection company is truly at a crossroads right now. If it can find new ways to grow, then RPX can keep its stock climbing over time. If it stagnates, however, then RPX's future prospects could be much more limited for investors.