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Why RPX Corp.'s Shares Dropped 18% Today

By Travis Hoium - Feb 10, 2016 at 4:11PM

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Revenue was up, but a weak bottom line had investors concerned today.

What: Shares of patent risk management company RPX Corp. (RPXC) plunged 18% on Wednesday after the company reported earnings.

So what: Revenue for the fourth quarter rose 8% to $72.8 million on the back of a 7% increase in subscription revenue. But net income dropped from $9.2 million a year ago to $5.5 million, or $0.10 per share. For the full year, net income was up only slightly to $39.4 million, while earnings per share dropped a penny to $0.71.  

Now what: What investors are keying in on today is the anticipated decline in financials in 2016. Management gives non-GAAP earnings guidance and said it expects to earn $39 million to $46 million this year, which is down from the $54.7 million earned in 2015. The earnings decline is a bad sign after the recent $232 million acquisition of Inventus Solutions, and until we see some bottom line growth, this isn't a stock I'll jump into.

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