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Acme Packet Reports Results for Third Quarter of 2012
Acme Packet (Oct 25 2012)
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Acme Packet Reports Results for Third Quarter of 2012
Company Updates Outlook for 2012
BEDFORD, MA - Acme Packet, Inc. (NASDAQ: APKT), the leader in session delivery network solutions, today announced results for the third quarter of 2012 and updated its business outlook for 2012. All earnings per share results are on a fully diluted basis.
Results for the Third Quarter of 2012
Total revenue for the third quarter of 2012 was $65.3 million, compared to $70.6 million in the third quarter of 2011 and $67.6 million in the second quarter of 2012. GAAP net loss for the third quarter of 2012 was $5.5 million, or $(0.08) per share, compared to GAAP net income of $7.9 million, or $0.11 per share, in the third quarter of 2011 and GAAP net loss of $0.1 million, or $(0.00) per share, in the second quarter of 2012. Net income on a non-GAAP1 basis for the third quarter of 2012 was $4.7 million, or $0.07 per share, compared to $14.6 million, or $0.21 per share, in the third quarter of 2011, and $9.5 million, or $0.13 per share, in the second quarter of 2012.Company Updates Business Outlook for 2012
The Company today updated its business outlook for 2012. The Company's outlook is based on the current indications for its business, which may change at any time. A reconciliation of the Company's expected GAAP to non-GAAP business outlook, and a statement as to the use of non-GAAP financial measures, is included at the end of this press release.Business Outlook for Year Ending December 31, 2012 Estimate Issued on July 26, 2012 Issued on October 25, 2012 Total revenue (in millions) $270-$275 No change GAAP Earnings (loss) Per Share $(0.11)-$(0.07) $(0.11)-$(0.08) Non-GAAP1 Earnings Per Share $0.43-$0.47 $0.44-$0.46 Company to Host Live Conference Call and Webcast
The Company's management team plans to host a live conference call and webcast at 4:30 p.m. eastern time today to discuss the financial results as well as management's outlook for the business. The conference call may be accessed in the United States by dialing 1.800.230.1085 and using access code "APKT". The conference call may be accessed outside of the United States by dialing +1.612.234.9960 and using access code "APKT". The conference call will be simultaneously webcast on the Company's investor relations website, which can be accessed at www.ir.acmepacket.com. A replay of the conference call will be available approximately two hours after the call by dialing 1.800.475.6701 or +1.320.365.3844 and using access code 265599 or by accessing the webcast replay on the Company's investor relations website.1A reconciliation of GAAP to non-GAAP results, and a statement on the use of non-GAAP financial measures, is included at the end of this press release.
About Acme Packet
Acme Packet (NASDAQ: APKT), the leader in session delivery network solutions, enables the trusted, first-class delivery of next-generation voice, video, data and unified communications services and applications across IP networks. Our Net-Net product family fulfills demanding security, service assurance and regulatory requirements in service provider, enterprise and contact center networks. Based in Bedford, Massachusetts, Acme Packet designs and manufactures its products primarily in the USA, selling them through over 309 reseller partners worldwide. More than 1,850 customers in 109 countries have deployed over 20,000 Acme Packet systems, including 89 of the top 100 service providers and 48 of the Fortune 100. For more information visit www.acmepacket.com.Acme Packet, Inc. Safe Harbor Statement
Statements contained herein that are not historical fact may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may relate to, among other things, expected financial and operating results, expected growth rates, future stock-based compensation and amortization expenses, future business prospects and market conditions. Such forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated. These include, but are not limited to: the amount of stock-based compensation awarded; the applicable Company stock price used to determine stock-based compensation; the exercise pattern of employee stock options; difficulties expanding the Company's customer base; difficulties leveraging market opportunities; difficulties providing solutions that meet the needs of customers; poor product sales; long sales cycles; difficulties developing new products; difficulties in relationships with vendors and partners; higher risks in international operations; difficulties managing rapid growth; difficulties managing the Company's financial performance; the ability to hire and retain employees and appropriately staff operations; the Company's cash needs; the impact of new accounting pronouncements and increased competition. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in the Company's recent filings with the Securities and Exchange Commission, including those factors discussed under the caption "Risk Factors" in such filings.Acme Packet, Inc. Condensed Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Revenue: Product $ 46,771 $ 53,077 $ 149,791 $ 177,507 Maintenance, support and service 18,550 17,544 53,944 46,814 Total revenue 65,321 70,621 203,735 224,321 Cost of revenue: Product 9,584 8,778 29,347 30,090 Maintenance, support and service 4,261 3,042 11,894 8,573 Total cost of revenue 13,845 11,820 41,241 38,663 Gross profit 51,476 58,801 162,494 185,658 Operating expenses: Sales and marketing 35,090 27,201 98,230 75,640 Research and development 16,898 13,249 48,252 37,262 General and administrative 6,154 5,406 18,441 15,771 Merger related costs 30 120 643 300 Total operating expenses 58,172 45,976 165,566 128,973 (Loss) income from operations (6,696) 12,825 (3,072) 56,685 Other income (expense), net 52 (53) 127 (147) (Loss) income before income taxes (6,644) 12,772 (2,945) 56,538 (Benefit from) provision for income taxes (1,129) 4,846 268 20,895 Net (loss) income $ (5,515) $ 7,926 $ (3,213) $ 35,643 Net (loss) income per share: Basic $ (0.08) $ 0.12 $ (0.05) $ 0.54 Diluted $ (0.08) $ 0.11 $ (0.05) $ 0.50 Weighted average number of common shares used in the calculation of net (loss) income per share: Basic 68,246,091 66,752,669 68,235,987 66,011,761 Diluted 68,246,091 70,908,590 68,235,987 70,887,241 Acme Packet, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited) September 30,
2012December 31,
2011Assets Current assets: Cash and cash equivalents $ 56,167 $ 160,403 Short-term investments 307,294 191,672 Accounts receivable, net 57,155 59,739 Inventory 11,354 10,246 Deferred product costs 814 1,515 Deferred tax asset, net 4,809 4,809 Income taxes receivable 4,599 4,341 Other current assets 5,091 4,385 Total current assets 447,283 437,110 Long-term investments 10,046 20,096 Property and equipment, net 38,030 26,252 Intangible assets, net 20,327 8,569 Goodwill 15,170 3,778 Deferred tax asset, net 18,371 18,371 Other assets 395 230 Total assets $ 549,622 $ 514,406 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 10,544 $ 10,318 Accrued expenses and other current liabilities 14,798 12,715 Deferred revenue 26,385 22,261 Total current liabilities 51,727 45,294 Deferred revenue, net of current portion 2,235 2,049 Deferred rent 9,640 4,533 Deferred tax liability 4,064 - Stockholders' equity: Common stock 75 74 Additional paid-in capital 415,196 363,769 Treasury stock, at cost (66,311) (37,522) Accumulated other comprehensive income 1 1 Retained earnings 132,995 136,208 Total stockholders' equity 481,956 462,530 Total liabilities and stockholders' equity $ 549,622 $ 514,406 Condensed Consolidated Statements of Cash Flow Data (in thousands) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Cash provided by operating activities $ 6,701 $ 16,441 $ 57,020 $ 36,646 Cash provided by (used in) investing activities 16,521 10,516 (143,820) (14,486) Cash (used in) provided by financing activities (28,398) 9,434 (17,436) 43,133 Acme Packet, Inc. Statement on Use of Non-GAAP Financial Measures and Reconciliation of Non-GAAP Net (Loss) Income and Non-GAAP Net (Loss) Income Per Share (in thousands, except share and per share data) (unaudited) Statement on Use of Non-GAAP Financial Measures:
To supplement its condensed consolidated statements of operations presented in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company discloses certain non-GAAP financial measures, including "non-GAAP net (loss) income", "net (loss) income on a non-GAAP basis", "non-GAAP EPS", and "net (loss) income per share on a non-GAAP basis". These non-GAAP financial measures are not presented in accordance with GAAP and are not meant to be a substitute for the most directly comparable GAAP measures of "net (loss) income", "EPS" or "net (loss) income per share". Rather, these non-GAAP financial measures should be evaluated in conjunction with its most directly comparable GAAP financial measure and the Company's financial statements as a whole.
Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in the Company's business, to assess its performance relative to its competitors, and to establish operational goals and forecasts that are used in allocating resources. Management uses these non-GAAP financial measures because they exclude stock-based compensation expense which is a non-cash charge and related payroll taxes, amortization of acquired intangible assets, and merger and related costs associated with the Company's acquisition activities all of which are non-operational costs and expenses. By excluding stock-based compensation expense and related payroll taxes, amortization of acquired intangible assets, and merger and related costs, management can compare the Company's operations to prior periods and to the operations of other companies in its industry who may have materially different unusual, non-operational charges. Management does not consider any of stock-based compensation expense and related payroll taxes, amortization of acquired intangible assets, and merger and related costs to be part of the Company's operating activities or meaningful in evaluating the Company's past financial performance or future prospects. Management believes that excluding these items is useful to investors because it is more representative of ongoing costs and therefore more comparable to historical operations.
Because management uses them, management believes that the disclosure of these non-GAAP financial measures to investors provides greater transparency and useful information to help the investor better understand the Company's operating performance and to evaluate the methodology used by management to evaluate and measure such performance. Notwithstanding their utility to investors in understanding operational trends, these non-GAAP measures should not be considered measures of the Company's liquidity. In addition, the Company cautions that its definition of "non-GAAP net (loss) income", "net (loss) income on a non-GAAP basis", "non-GAAP EPS" and "net (loss) income per share on a non-GAAP basis" may differ from similar measures used by other companies and may differ from period to period. Also, in future periods, management may make other adjustments for expenses and gains that it does not consider reflective of core operating performance in a particular period thereby modifying its definition of "non-GAAP net (loss) income", "non-GAAP EPS" and "non-GAAP net (loss) income per share" by excluding these other or additional expenses and gains.
Reconciliation of GAAP to Non-GAAP Financial Measures for the Three Months Ended September 30, 2012, June 30, 2012 and September 30, 2011 and for the Nine Months Ended September 30, 2012 and September 30, 2011:
Acme Packet, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended September 30, 2012 (in thousands, except per share data) (unaudited) GAAP Stock-based compensation expense and related payroll taxes Amortization of acquired intangible assets Merger
related
costsNon-GAAP1 Cost of revenue: Product $ 9,584 $ (438) $ (658) $ - $ 8,488 Maintenance, support and service 4,261 (702) - - 3,559 Operating expenses: Sales and marketing 35,090 (6,794) (261) - 28,035 Research and development 16,898 (4,181) (51) - 12,666 General and administrative 6,154 (1,336) - - 4,818 Merger related costs 30 - - (30) - (Benefit from) provision for income taxes (1,129) 3,844 359 - 3,074 Net (loss) income (5,515) 9,607 611 30 4,733 Net (loss) income per share: Basic $ (0.08) $ 0.14 $ 0.01 $ 0.00 $ 0.07 Diluted $ (0.08) $ 0.14 $ 0.01 $ 0.00 $ 0.07 Weighted average number of shares used in the calculation of net (loss) income per share: Basic 68,246,091 68,246,091 68,246,091 68,246,091 68,246,091 Diluted 68,246,091 70,102,125 70,102,125 70,102,125 70,102,125 Acme Packet, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended June 30, 2012 (in thousands, except per share data) (unaudited) GAAP Stock-based compensation expense and related payroll taxes Amortization of acquired intangible assets Merger
related
costsNon-GAAP1 Cost of revenue: Product $ 9,785 $ (442) $ (583) $ - $ 8,760 Maintenance, support and service 3,675 (717) - - 2,958 Operating expenses: Sales and marketing 32,138 (6,570) (238) - 25,330 Research and development 16,257 (4,354 ) (34 ) - 11,869 General and administrative 5,849 (1,502) - - 4,347 Merger related costs 576 - - (576) - (Benefit from) provision for income taxes (588) 5,072 319 - 4,803 Net (loss) income (127) 8,513 536 576 9,498 Net (loss) income per share: Basic $ (0.00) $ 0.12 $ 0.01 $ 0.01 $ 0.14 Diluted $ (0.00) $ 0.12 $ 0.01 $ 0.01 $ 0.13 Weighted average number of shares used in the calculation of net (loss) income per share: Basic 68,507,111 68,507,111 68,507,111 68,507,111 68,507,111 Diluted 68,507,111 70,927,009 70,927,009 70,927,009 70,927,009 Acme Packet, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended September 30, 2011 (in thousands, except per share data) (unaudited)
GAAPStock-based compensation expense and related payroll taxes Amortization of acquired intangible assets Merger related costs Non-GAAP1 Cost of revenue: Product $ 8,778 $ (327) $ (385) $ - $ 8,066 Maintenance, support and service 3,042 (568) - - 2,474 Operating expenses: Sales and marketing 27,201 (4,784) (101) - 22,316 Research and development 13,249 (2,929) (11) - 10,309 General and administrative 5,406 (1,615) - - 3,791 Merger related costs 120 - - (120) - Provision for income taxes 4,846 3,896 179 43 8,964 Net income 7,926 6,327 318 77 14,648 Net income per share: Basic $ 0.12 $ 0.09 $ 0.01 $ 0.00 $ 0.22 Diluted $ 0.11 $ 0.09 $ 0.01 $ 0.00 $ 0.21 Weighted average number of common shares used in the calculation of net income per share: Basic 66,752,669 66,752,669 66,752,669 66,752,669 66,752,669 Diluted 70,908,590 70,908,590 70,908,590 70,908,590 70,908,590 Acme Packet, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures Nine Months Ended September 30, 2012 (in thousands, except per share data) (unaudited) GAAP Stock-based compensation expense and related payroll taxes
Amortization of acquired intangible assetsMerger
related
costsNon-GAAP1 Cost of revenue: Product $ 29,347 $ (1,308) $ (1,675) $ - $ 26,364 Maintenance, support and service 11,894 (2,121) - - 9,773 Operating expenses: Sales and marketing 98,230 (19,778) (556) - 77,896 Research and development 48,252 (12,830) (85) - 35,337 General and administrative 18,441 (4,915) - - 13,526 Merger related costs 643 - - (643) - Provision for income taxes 268 13,389 866 - 14,523 Net (loss) income (3,213) 27,563 1,450 643 26,443 Net (loss) income per share: Basic $ (0.05) $ 0.40 $ 0.02 $ 0.01 $ 0.39 Diluted $ (0.05) $ 0.39 $ 0.02 $ 0.01 $ 0.37 Weighted average number of common shares used in the calculation of net income per share: Basic 68,235,987 68,235,987 68,235,987 68,235,987 68,235,987 Diluted 68,235,987 70,698,124 70,698,124 70,698,124 70,698,124 Acme Packet, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures Nine Months Ended September 30, 2011 (in thousands, except per share data) (unaudited) GAAP Stock-based compensation expense and related payroll taxes Amortization of acquired intangible assets Merger
related
costsNon-GAAP1 Cost of revenue: Product $ 30,090 $ (916) $ (1,292) $ - $ 27,882 Maintenance, support and service 8,573 (1,518) - - 7,055 Operating expenses: Sales and marketing 75,640 (12,804) (287) - 62,549 Research and development 37,262 (7,823) (34) - 29,405 General and administrative 15,771 (3,898) - - 11,873 Merger related costs 300 - - (300) - Provision for income taxes 20,895 9,874 581 43 31,393 Net income 35,643 17,085 1,032 257 54,017 Net income per share: Basic $ 0.54 $ 0.26 $ 0.02 $ 0.00 $ 0.82 Diluted $ 0.50 $ 0.24 $ 0.02 $ 0.00 $ 0.76 Weighted average number of common shares used in the calculation of net income per share: Basic 66,011,761 66,011,761 66,011,761 66,011,761 66,011,761 Diluted 70,887,241 70,887,241 70,887,241 70,887,241 70,887,241 Reconciliation of Expected Non-GAAP Net Income and Non-GAAP Net Income Per Share for the Year Ending December 31, 2012 (unaudited):
Twelve Months Ending
December 31, 2012
(unaudited)
(in thousands, except per share data)Low High Revenue $ 270,000 $ 275,000 Reconciliation of non-GAAP net income: GAAP net loss $ (7,243) $ (5,243) Adjustments: Stock-based compensation expense and related payroll taxes, net of taxes 35,500 35,500 Amortization of acquired intangible assets, net of taxes 2,100 2,100 Merger related costs 643 643 Non-GAAP net income $ 31,000 $ 33,000 Reconciliation of diluted non-GAAP net income per share: GAAP net loss per share $ (0.11) $ (0.08) Adjustments: Stock-based compensation expense and related payroll taxes, net of taxes 0.50 0.50 Amortization of acquired intangible assets, net of taxes 0.03 0.03 Merger related costs 0.01 0.01 Non-GAAP net income per share $ 0.44 $ 0.46 Acme Packet, Inc. Other Operational Data (unaudited) Three Months Ended September 30,
2012June 30,
2012September 30,
2011Other operational data: Depreciation and amortization (in thousands) $ 3,991 $ 3,591 $ 2,835 Capital expenditures (in thousands) 5,151 6,576 5,570 Days sales outstanding 79 66 65 Total headcount 863 831 741 Quarterly inventory turnover - annualized 3.28 3.40 3.27
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