Sonus Networks Reports 2012 Second Quarter Results
Exceeds SBC Revenue Expectations and Reaffirms Full Year SBC Revenue Outlook
Second Quarter 2012 Highlights
-
Total revenue was
$57.6 million -
SBC total revenue, including maintenance and services, grew 77%
year-over-year, to
$19.1 million , compared to$10.8 million in the second quarter of 2011 and$17.0 million in the first quarter of 2012 -
SBC product revenue grew 75% year-over-year, to
$13.5 million , compared to$7.7 million in the second quarter of 2011 and$13.2 million in the first quarter of 2012 - SBC product revenue comprised 42% of total product revenue, the highest percentage of quarterly product revenue contribution to date
- Sonus won six new customers in the quarter, all of whom purchased SBC products and services
-
Launched first enterprise and channel-focused product, the Sonus SBC
5100, which became Generally Available on
July 31, 2012 - Launched Sonus Partner Assure, the Company's first global channel program to extend coverage of the enterprise market
- Announced intent to acquire Network Equipment Technologies, Inc. Proposed acquisition expands Sonus' coverage of the enterprise SBC market
Revenue for the second quarter of fiscal 2012 was
2012 Third Quarter, Fourth Quarter and Full Year Outlook
The Company's outlook is based on current indications for its business,
which may change during the current quarter. A reconciliation of the
non-GAAP to GAAP outlook and a statement on the use of non-GAAP
financial measures are included at the end of this press release. All
figures exclude the impact of the proposed acquisition of NET, which was
announced on
For the third quarter of 2012, management provides the following outlook on a non-GAAP basis:
-
Total revenue of
$51 million to $53 million -
SBC total revenue, including maintenance and services, of
$17 million to$19 million , up 23% to 37% from the third quarter of 2011-
SBC product revenue of
$14 million to $16 million , up 35% to 54% from the third quarter of 2011
-
SBC product revenue of
- Gross margins between 58% and 59%
-
Operating expenses of
$39 million to $40 million -
Loss per share of
$0.03 - Basic shares of 280 million
-
Cash and investments of approximately
$300 million , assuming the NET acquisition closes in the third quarter
For the fourth quarter of 2012, management provides the following outlook on a non-GAAP basis:
-
Total revenue of
$84 million to $86 million -
SBC total revenue, including maintenance and services, of
$22 million to$25 million -
SBC product revenue of
$19 million to $22 million
-
SBC product revenue of
- Gross margins between 58% and 59%
-
Operating expenses of
$38 million to $39 million -
Diluted earnings per share of
$0.04 - Diluted shares of 282 million
Management reiterates the following outlook on a non-GAAP basis for the
year ending
-
Total SBC revenue, including maintenance and services, between
$75 million and $80 million , up 44% to 54% year over year-
SBC product revenue between
$60 million and $65 million , up 58% to 72% year over year
-
SBC product revenue between
Management provides the following updated outlook on a non-GAAP basis
for the year ending
-
Total revenue of approximately
$257 million to $261 million
- Gross margins of approximately 60%
-
Operating expenses reduced to between
$165 million and $166 million -
Loss per share of
$0.04 - Basic shares of 280 million
-
Cash and investments of approximately
$290 million to $300 million , assuming the NET acquisition has closed
Restructuring
In
Quotes
"Our team is effectively transforming Sonus, as evidenced by our strong
SBC results this quarter, which exceeded our expectations," said
NET Proposed Acquisition
The Company's proposed acquisition of NET, which was announced on
Conference Call Details
Date:
Time:
Dial-in number: 800 734 8592
International Callers: +1 212 231 2900
Replay information:
A telephone playback of the call will be available shortly following the
conference call until
Accounting Period:
As of the beginning of fiscal 2012, the Company began reporting its
first, second and third quarters on a 4-4-5 basis, with the quarter
ending on the Friday closest to the last day of each third month. The
Company's fiscal year-end is
Tags:
About
Sonus helps the world's leading communications service providers and enterprises embrace the next generation of SIP-based solutions including VoIP, video and Unified Communications through secure, reliable and scalable IP networks. With customers around the globe and 15 years of experience transforming networks to IP, Sonus has enabled service providers to capture and retain users and both service providers and enterprises to generate significant ROI. Sonus products include session border controllers, policy/routing servers, subscriber feature servers and media and signaling gateways. Sonus products are supported by a global services team with experience in design, deployment and maintenance of some of the world's largest and most complex IP networks. For more information, visit www.sonus.net or call 1-855-GO-SONUS.
Important Information Regarding Forward-Looking Statements
The information in this release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to a number of risks and uncertainties. All statements other than statements of historical facts contained in this report are forward-looking statements. Without limiting the foregoing, the words "anticipates", "believes", "could", "estimates", "expects", "intends", "may", "plans", "seeks", "projects" and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, objectives, outlook, goals, strategies, future events or performance, trends, investments, customer growth, operational performance and costs, liquidity and financial positions, competition, estimated expenditures and investments, impacts of laws, rules and regulations, revenues and earnings, performance and other statements that are other than statements of historical facts. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. They are neither statements of historical fact nor guarantees or assurances of future performance. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the timing of our recognition of revenues; our ability to recruit and retain key personnel; difficulties supporting our new strategic focus on channel sales; difficulties retaining and expanding our customer base; difficulties leveraging market opportunities; restructuring activities; our ability to realize benefits from acquisitions (including with respect to the proposed acquisition of Network Equipment Technologies, Inc.); litigation; actions taken by significant stockholders; difficulties providing solutions that meet the needs of customers; market acceptance of our products and services; rapid technological and market change; our ability to protect our intellectual property rights; our ability to maintain partner, reseller, distribution and vendor support and supply relationships; higher risks in international operations and markets; the impact of increased competition; currency fluctuations; changes in the market price of our common stock; and/or failure or circumvention of our controls and procedures. Important factors that could cause actual results to differ materially from those in these forward-looking statements are discussed in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations", Part I, Item 3 "Quantitative and Qualitative Disclosures About Market Risk" and Part II, Item 1A "Risk Factors" in the Company's most recent Quarterly Report on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. We therefore caution you against relying on any of these forward-looking statements, which speak only as of the date made.
Sonus is a registered trademark of
Discussion of Non-GAAP Financial Measures
Sonus management uses a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. Our annual financial plan is prepared both on a GAAP and non-GAAP basis, and the non-GAAP annual financial plan is approved by our board of directors. Continuous budgeting and forecasting for revenue and expenses are conducted on a consistent non-GAAP basis (in addition to GAAP) and actual results on a non-GAAP basis are assessed against the annual financial plan. We consider the use of non-GAAP financial measures helpful in assessing the core performance of our continuing operations and liquidity, and when planning and forecasting future periods. By continuing operations we mean the ongoing results of the business excluding certain costs, including, but not limited to: stock-based compensation, amortization of intangible assets, acquisition-related costs and restructuring. We also consider the use of non-GAAP earnings per share helpful in assessing the organic performance of the continuing operations of our business. By organic performance we mean performance as if we had owned an acquired business in the same period a year ago. While our management uses these non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, GAAP measures. In addition, our presentations of these measures may not be comparable to similarly titled measures used by other companies. These non-GAAP financial measures should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP.
Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to Sonus' financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future.
Stock-based compensation is different from other forms of compensation, as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally unrelated to the amount of cash ultimately received by the employee, and the cost to us is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time. We believe that excluding non-cash stock-based compensation expense from our operating results facilitates the ability of readers of our financial statements to compare our operating results to our historical results and to other companies in our industry.
We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that intangible assets contribute to revenue generation. We believe that excluding the non-cash amortization of intangible assets facilitates the comparison of our financial results to our historical operating results and to other companies in our industry as if the acquired intangible assets had been developed internally rather than acquired, and provides meaningful information regarding our liquidity.
We consider certain transition, integration and other acquisition-related costs to be unpredictable and dependent on a significant number of factors that may be outside of our control. We do not consider these acquisition-related costs to be related to the organic continuing operations of the acquired businesses and accordingly, they are generally not relevant in assessing or estimating the long-term performance of the acquired assets. In addition, the size, complexity and/or volume of an acquisition, which often drives the magnitude of acquisition-related costs, may not be indicative of such future costs. By excluding acquisition-related costs from our non-GAAP measures, management is better able to evaluate our ability to utilize our existing assets and estimate the long-term value that acquired assets will generate for the Company.
We expect to record approximately
We believe that providing non-GAAP information to investors, in addition to the GAAP presentation, will allow investors to view the financial results in the way management views the operating results. We further believe that providing this information allows investors to better understand our financial performance and evaluate the efficacy of the methodology and information used by our management to evaluate and measure such performance.
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Condensed Consolidated Statements of Operations | |||||||||||
(in thousands, except percentages and per share amounts) | |||||||||||
(unaudited) | |||||||||||
Three months ended | |||||||||||
|
|
June 30, | |||||||||
2012 | 2012 | 2011 | |||||||||
Revenue: | |||||||||||
Product | $ | 32,586 | $ | 41,411 | $ | 29,446 | |||||
Service | 25,024 | 22,928 | 22,326 | ||||||||
Total revenue | 57,610 | 64,339 | 51,772 | ||||||||
Cost of revenue: | |||||||||||
Product | 11,027 | 9,193 | 9,618 | ||||||||
Service | 13,788 | 13,392 | 12,218 | ||||||||
Total cost of revenue | 24,815 | 22,585 | 21,836 | ||||||||
Gross profit | 32,795 | 41,754 | 29,936 | ||||||||
Gross margin: | |||||||||||
Product | 66.2 | % | 77.8 | % | 67.3 | % | |||||
Service | 44.9 | % | 41.6 | % | 45.3 | % | |||||
Total gross margin | 56.9 | % | 64.9 | % | 57.8 | % | |||||
Operating expenses: | |||||||||||
Research and development | 17,095 | 18,387 | 15,187 | ||||||||
Sales and marketing | 18,141 | 20,585 | 13,298 | ||||||||
General and administrative | 9,351 | 8,979 | 8,197 | ||||||||
Total operating expenses | 44,587 | 47,951 | 36,682 | ||||||||
Loss from operations | (11,792 | ) | (6,197 | ) | (6,746 | ) | |||||
Interest income, net | 222 | 215 | 332 | ||||||||
Loss before income taxes | (11,570 | ) | (5,982 | ) | (6,414 | ) | |||||
Income tax (provision) benefit | (155 | ) | (456 | ) | 480 | ||||||
Net loss | $ | (11,725 | ) | $ | (6,438 | ) | $ | (5,934 | ) | ||
Loss per share: | |||||||||||
Basic | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||
Diluted | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||
Shares used to compute loss per share: | |||||||||||
Basic | 279,926 | 279,487 | 278,400 | ||||||||
Diluted | 279,926 | 279,487 | 278,400 |
|
|||||||
Condensed Consolidated Statements of Operations | |||||||
(in thousands, except percentages and per share amounts) | |||||||
(unaudited) | |||||||
Six months ended | |||||||
|
June 30, | ||||||
2012 | 2011 | ||||||
Revenue: | |||||||
Product | $ | 73,997 | $ | 65,399 | |||
Service | 47,952 | 53,672 | |||||
Total revenue | 121,949 | 119,071 | |||||
Cost of revenue: | |||||||
Product | 20,220 | 32,779 | |||||
Service | 27,180 | 29,731 | |||||
Total cost of revenue | 47,400 | 62,510 | |||||
Gross profit | 74,549 | 56,561 | |||||
Gross margin: | |||||||
Product | 72.7 | % | 49.9 | % | |||
Service | 43.3 | % | 44.6 | % | |||
Total gross margin | 61.1 | % | 47.5 | % | |||
Operating expenses: | |||||||
Research and development | 35,482 | 30,795 | |||||
Sales and marketing | 38,726 | 27,595 | |||||
General and administrative | 18,330 | 16,393 | |||||
Total operating expenses | 92,538 | 74,783 | |||||
Loss from operations | (17,989 | ) | (18,222 | ) | |||
Interest income, net | 437 | 767 | |||||
Loss before income taxes | (17,552 | ) | (17,455 | ) | |||
Income tax provision | (611 | ) | (887 | ) | |||
Net loss | $ | (18,163 | ) | $ | (18,342 | ) | |
Loss per share: | |||||||
Basic | $ | (0.06 | ) | $ | (0.07 | ) | |
Diluted | $ | (0.06 | ) | $ | (0.07 | ) | |
Shares used to compute loss per share: | |||||||
Basic | 279,708 | 278,080 | |||||
Diluted | 279,708 | 278,080 |
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Condensed Consolidated Balance Sheets | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
|
December 31, | ||||||
2012 | 2011 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 106,112 | $ | 105,451 | |||
Marketable securities | 234,740 | 224,090 | |||||
Accounts receivable, net | 41,300 | 53,126 | |||||
Inventory | 18,262 | 15,434 | |||||
Deferred income taxes | 475 | 486 | |||||
Other current assets | 18,281 | 12,246 | |||||
Total current assets | 419,170 | 410,833 | |||||
Property and equipment, net | 21,939 | 22,084 | |||||
Intangible assets, net | 1,000 | 1,200 | |||||
Goodwill | 5,062 | 5,062 | |||||
Investments | 22,890 | 55,427 | |||||
Deferred income taxes | 1,099 | 1,137 | |||||
Other assets | 14,267 | 8,972 | |||||
$ | 485,427 | $ | 504,715 | ||||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 12,066 | $ | 12,754 | |||
Accrued expenses | 20,013 | 21,620 | |||||
Current portion of deferred revenue | 36,479 | 38,565 | |||||
Current portion of long-term liabilities | 1,099 | 1,275 | |||||
Total current liabilities | 69,657 | 74,214 | |||||
Deferred revenue | 10,673 | 11,601 | |||||
Long-term liabilities | 3,229 | 3,599 | |||||
Total liabilities | 83,559 | 89,414 | |||||
Commitments and contingencies | |||||||
Stockholders equity: | |||||||
Common stock | 280 | 279 | |||||
Additional paid-in capital | 1,314,946 | 1,309,919 | |||||
Accumulated deficit | (920,367 | ) | (902,204 | ) | |||
Accumulated other comprehensive income | 7,009 | 7,307 | |||||
Total stockholders' equity | 401,868 | 415,301 | |||||
$ | 485,427 | $ | 504,715 |
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Condensed Consolidated Statements of Cash Flows | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
Six months ended | |||||||
|
June 30, | ||||||
2012 | 2011 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (18,163 | ) | $ | (18,342 | ) | |
Adjustments to reconcile net loss to cash flows used in operating activities: | |||||||
Depreciation and amortization of property and equipment | 5,778 | 5,644 | |||||
Amortization of intangible assets | 200 | 200 | |||||
Stock-based compensation | 4,140 | 4,241 | |||||
Loss on disposal of property and equipment | - | 6 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 11,739 | 17,243 | |||||
Inventory | (3,390 | ) | 12,799 | ||||
Other operating assets | (8,222 | ) | 6,565 | ||||
Accounts payable | (2,011 | ) | (1,926 | ) | |||
Accrued expenses and other long-term liabilities | (1,967 | ) | (12,375 | ) | |||
Deferred revenue | (3,010 | ) | (25,336 | ) | |||
Net cash used in operating activities | (14,906 | ) | (11,281 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (4,380 | ) | (7,319 | ) | |||
Purchases of marketable securities | (128,931 | ) | (101,584 | ) | |||
Sale/maturities of marketable securities | 148,045 | 130,194 | |||||
Net cash provided by investing activities | 14,734 | 21,291 | |||||
Cash flows from financing activities: | |||||||
Proceeds from sale of common stock in connection with employee stock purchase plan | 993 | 754 | |||||
Proceeds from exercise of stock options | 68 | 777 | |||||
Payment of tax withholding obligations related to net share settlements of restricted stock awards | (134 | ) | (902 | ) | |||
Principal payments of capital lease obligations | (51 | ) | (48 | ) | |||
Net cash provided by financing activities | 876 | 581 | |||||
Effect of exchange rate changes on cash and cash equivalents | (43 | ) | 309 | ||||
Net increase in cash and cash equivalents | 661 | 10,900 | |||||
Cash and cash equivalents, beginning of year | 105,451 | 62,501 | |||||
Cash and cash equivalents, end of period | $ | 106,112 | $ | 73,401 |
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Supplemental Information | ||||||||
(In thousands) | ||||||||
(unaudited) | ||||||||
The following tables provide the details of stock-based
compensation and amortization of intangible assets included in |
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Three months ended | ||||||||
|
|
June 30, | ||||||
2012 | 2012 | 2011 | ||||||
Stock-based compensation | ||||||||
Cost of revenue - product | $ | 36 | $ | 53 | $ | 109 | ||
Cost of revenue - service | 209 | 175 | 389 | |||||
Cost of revenue | 245 | 228 | 498 | |||||
Research and development expense | 633 | 616 | 527 | |||||
Sales and marketing expense | 491 | 467 | 563 | |||||
General and administrative expense | 654 | 806 | 627 | |||||
Operating expense | 1,778 | 1,889 | 1,717 | |||||
Total stock-based compensation | $ | 2,023 | $ | 2,117 | $ | 2,215 | ||
Amortization of intangible assets | ||||||||
Research and development | $ | 100 | $ | 100 | $ | 100 | ||
Acquisition-related costs | ||||||||
General and administrative | $ | 967 | $ | - | $ | - | ||
Six months ended | ||||||||
|
June 30, | |||||||
2012 | 2011 | |||||||
Stock-based compensation | ||||||||
Cost of revenue - product | $ | 89 | $ | 217 | ||||
Cost of revenue - service | 384 | 774 | ||||||
Cost of revenue | 473 | 991 | ||||||
Research and development expense | 1,249 | 1,060 | ||||||
Sales and marketing expense | 958 | 1,060 | ||||||
General and administrative expense | 1,460 | 1,130 | ||||||
Operating expense | 3,667 | 3,250 | ||||||
Total stock-based compensation | $ | 4,140 | $ | 4,241 | ||||
Amortization of intangible assets | ||||||||
Research and development | $ | 200 | $ | 200 | ||||
Acquisition-related costs | ||||||||
General and administrative | $ | 967 | $ | - |
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||
Statement on the Use of Non-GAAP Financial Measures and | ||
Reconciliation of Non-GAAP to GAAP Financial Measures | ||
(unaudited) | ||
To supplement its condensed consolidated financial statements
presented in accordance with accounting principles generally
accepted in |
||
We use a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. We consider the use of these non-GAAP financial measures helpful in assessing the core performance of our continuing operations and liquidity, and when planning and forecasting future periods. We define continuing operations as the ongoing revenues and expenses of the business, excluding certain items. These excluded items for the periods presented are stock-based compensation expense and amortization of intangible assets. We do not include any income tax effect of non-GAAP adjustments as we were unable to recognize a tax benefit on domestic losses incurred in any of the periods presented; accordingly, no adjustment to income taxes for non-GAAP items is required. | ||
Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to the Company's GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in the Company's financial results for the foreseeable future. | ||
Stock-Based Compensation | ||
Stock-based compensation is different from other forms of compensation, as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally unrelated to the amount of cash ultimately received by the employee, and the cost to us is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time. We believe that excluding non-cash stock-based compensation expense from our operating results facilitates the ability of readers of our financial statements to compare our operating results to our historical results and to other companies in our industry. | ||
Amortization of Intangible Assets | ||
On |
||
Acquisition-Related Costs | ||
On |
||
Restructuring | ||
We expect to record approximately |
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Reconciliation of Non-GAAP and GAAP Financial Measures - Outlook | |||||||||||||||
(in millions, except percentages and per share amounts) | |||||||||||||||
(unaudited) | |||||||||||||||
Three months ended | Three months ended | ||||||||||||||
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Range | Range | ||||||||||||||
Revenue | $ | 51 | $ | 53 | $ | 84 | $ | 86 | |||||||
Gross margin | |||||||||||||||
GAAP outlook | 57.6 | % | 58.6 | % | 57.8 | % | 58.8 | % | |||||||
Stock-based compensation | 0.4 | % | 0.4 | % | 0.2 | % | 0.2 | % | |||||||
Non-GAAP outlook | 58.0 | % | 59.0 | % | 58.0 | % | 59.0 | % | |||||||
Operating expenses | |||||||||||||||
GAAP outlook | $ | 45.4 | $ | 46.4 | $ | 42.0 | $ | 43.0 | |||||||
Stock-based compensation | (2.5 | ) | (2.5 | ) | (3.9 | ) | (3.9 | ) | |||||||
Amortization of intangible assets | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.1 | ) | |||||||
Acquisition-related costs (A) | (1.5 | ) | (1.5 | ) | - | - | |||||||||
Restructuring | (2.3 | ) | (2.3 | ) | - | - | |||||||||
Non-GAAP outlook | $ | 39.0 | $ | 40.0 | $ | 38.0 | $ | 39.0 | |||||||
(Loss) earnings per share | |||||||||||||||
GAAP outlook | $ | (0.05 | ) | $ | (0.05 | ) | $ | 0.03 | $ | 0.03 | |||||
Stock-based compensation expense | 0.01 | 0.01 | 0.01 | 0.01 | |||||||||||
Amortization of intangible assets * | - | - | - | - | |||||||||||
Acquisition-related costs * | - | - | - | - | |||||||||||
Restructuring | 0.01 | 0.01 | - | - | |||||||||||
Non-GAAP outlook | $ | (0.03 | ) | $ | (0.03 | ) | $ | 0.04 | $ | 0.04 | |||||
Year ended | |||||||||||||||
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Range | |||||||||||||||
Revenue | $ | 257 | $ | 261 | |||||||||||
Gross margin | |||||||||||||||
GAAP outlook | 59.6 | % | 59.7 | % | |||||||||||
Stock-based compensation | 0.4 | % | 0.3 | % | |||||||||||
Non-GAAP outlook | 60.0 | % | 60.0 | % | |||||||||||
Operating expenses | |||||||||||||||
GAAP outlook | $ | 180.3 | $ | 181.3 | |||||||||||
Stock-based compensation | (10.1 | ) | (10.1 | ) | |||||||||||
Amortization of intangible assets | (0.4 | ) | (0.4 | ) | |||||||||||
Acquisition-related costs (A) | (2.5 | ) | (2.5 | ) | |||||||||||
Restructuring | (2.3 | ) | (2.3 | ) | |||||||||||
Non-GAAP outlook | $ | 165.0 | $ | 166.0 | |||||||||||
Loss per share | |||||||||||||||
GAAP outlook | $ | (0.10 | ) | $ | (0.10 | ) | |||||||||
Stock-based compensation expense | 0.04 | 0.04 | |||||||||||||
Amortization of intangible assets * | - | - | |||||||||||||
Acquisition-related costs | 0.01 | 0.01 | |||||||||||||
Restructuring | 0.01 | 0.01 | |||||||||||||
Non-GAAP outlook | $ | (0.04 | ) | $ | (0.04 | ) |
(A) | Acquisition-related costs reflect expenses incurred by Sonus in anticipation of the proposed acquisition of NET. These amounts exclude any costs that would be incurred post-acquisition related to NET, including payments under NET change-in-control agreements, severance for NET employees, integration costs, etc. |
* Less than |
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Reconciliation of Non-GAAP and GAAP Financial Measures - Historical | |||||||||||
(in thousands, except percentages and per share amounts) | |||||||||||
(unaudited) | |||||||||||
Three months ended | |||||||||||
|
|
June 30, | |||||||||
2012 | 2012 | 2011 | |||||||||
GAAP gross margin - product | 66.2 | % | 77.8 | % | 67.3 | % | |||||
Stock-based compensation expense | 0.1 | % | 0.1 | % | 0.4 | % | |||||
Non-GAAP gross margin - product | 66.3 | % | 77.9 | % | 67.7 | % | |||||
GAAP gross margin - service | 44.9 | % | 41.6 | % | 45.3 | % | |||||
Stock-based compensation expense | 0.8 | % | 0.8 | % | 1.7 | % | |||||
Non-GAAP gross margin - service | 45.7 | % | 42.4 | % | 47.0 | % | |||||
GAAP total gross profit | $ | 32,795 | $ | 41,754 | $ | 29,936 | |||||
Stock-based compensation expense | 245 | 228 | 498 | ||||||||
Non-GAAP total gross profit | $ | 33,040 | $ | 41,982 | $ | 30,434 | |||||
GAAP total gross margin | 56.9 | % | 64.9 | % | 57.8 | % | |||||
Stock-based compensation expense % of revenue | 0.5 | % | 0.4 | % | 1.0 | % | |||||
Non-GAAP total gross margin | 57.4 | % | 65.3 | % | 58.8 | % | |||||
GAAP research and development expense | $ | 17,095 | $ | 18,387 | $ | 15,187 | |||||
Stock-based compensation expense | (633 | ) | (616 | ) | (527 | ) | |||||
Amortization of intangible assets | (100 | ) | (100 | ) | (100 | ) | |||||
Non-GAAP research and development expense | $ | 16,362 | $ | 17,671 | $ | 14,560 | |||||
GAAP sales and marketing expense | $ | 18,141 | $ | 20,585 | $ | 13,298 | |||||
Stock-based compensation expense | (491 | ) | (467 | ) | (563 | ) | |||||
Non-GAAP sales and marketing expense | $ | 17,650 | $ | 20,118 | $ | 12,735 | |||||
GAAP general and administrative expense | $ | 9,351 | $ | 8,979 | $ | 8,197 | |||||
Stock-based compensation expense | (654 | ) | (806 | ) | (627 | ) | |||||
Acquisition-related costs | (967 | ) | - | - | |||||||
Non-GAAP general and administrative expense | $ | 7,730 | $ | 8,173 | $ | 7,570 | |||||
GAAP operating expenses | $ | 44,587 | $ | 47,951 | $ | 36,682 | |||||
Stock-based compensation expense | (1,778 | ) | (1,889 | ) | (1,717 | ) | |||||
Amortization of intangible asses | (100 | ) | (100 | ) | (100 | ) | |||||
Acquisition-related costs | (967 | ) | - | - | |||||||
Non-GAAP operating expenses | $ | 41,742 | $ | 45,962 | $ | 34,865 | |||||
GAAP loss from operations | $ | (11,792 | ) | $ | (6,197 | ) | $ | (6,746 | ) | ||
Stock-based compensation expense | 2,023 | 2,117 | 2,215 | ||||||||
Amortization of intangible assets | 100 | 100 | 100 | ||||||||
Acquisition-related costs | 967 | - | - | ||||||||
Non-GAAP loss from operations | $ | (8,702 | ) | $ | (3,980 | ) | $ | (4,431 | ) | ||
GAAP net loss | $ | (11,725 | ) | $ | (6,438 | ) | $ | (5,934 | ) | ||
Stock-based compensation expense | 2,023 | 2,117 | 2,215 | ||||||||
Amortization of intangible assets | 100 | 100 | 100 | ||||||||
Acquisition-related costs | 967 | - | - | ||||||||
Non-GAAP net loss | $ | (8,635 | ) | $ | (4,221 | ) | $ | (3,619 | ) | ||
Loss per share | |||||||||||
GAAP | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||
Non-GAAP | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||
Shares used to compute loss per share | |||||||||||
GAAP shares used to compute loss per share | 279,926 | 279,487 | 278,400 | ||||||||
Non-GAAP shares used to compute loss per share | 279,926 | 279,487 | 278,400 |
|
|||||||
Reconciliation of Non-GAAP and GAAP Financial Measures - Historical | |||||||
(in thousands, except percentages and per share amounts) | |||||||
(unaudited) | |||||||
Six months ended | |||||||
|
June 30, | ||||||
2012 | 2011 | ||||||
GAAP gross margin - product | 72.7 | % | 49.9 | % | |||
Stock-based compensation expense | 0.1 | % | 0.3 | % | |||
Non-GAAP gross margin - product | 72.8 | % | 50.2 | % | |||
GAAP gross margin - service | 43.3 | % | 44.6 | % | |||
Stock-based compensation expense | 0.8 | % | 1.4 | % | |||
Non-GAAP gross margin - service | 44.1 | % | 46.0 | % | |||
GAAP total gross profit | $ | 74,549 | $ | 56,561 | |||
Stock-based compensation expense | 473 | 991 | |||||
Non-GAAP total gross profit | $ | 75,022 | $ | 57,552 | |||
GAAP total gross margin | 61.1 | % | 47.5 | % | |||
Stock-based compensation expense % of revenue | 0.4 | % | 0.8 | % | |||
Non-GAAP total gross margin | 61.5 | % | 48.3 | % | |||
GAAP research and development expense | $ | 35,482 | $ | 30,795 | |||
Stock-based compensation expense | (1,249 | ) | (1,060 | ) | |||
Amortization of intangible assets | (200 | ) | (200 | ) | |||
Non-GAAP research and development expense | $ | 34,033 | $ | 29,535 | |||
GAAP sales and marketing expense | $ | 38,726 | $ | 27,595 | |||
Stock-based compensation expense | (958 | ) | (1,060 | ) | |||
Non-GAAP sales and marketing expense | $ | 37,768 | $ | 26,535 | |||
GAAP general and administrative expense | $ | 18,330 | $ | 16,393 | |||
Stock-based compensation expense | (1,460 | ) | (1,130 | ) | |||
Acquisition-related costs | (967 | ) | - | ||||
Non-GAAP general and administrative expense | $ | 15,903 | $ | 15,263 | |||
GAAP operating expenses | $ | 92,538 | $ | 74,783 | |||
Stock-based compensation expense | (3,667 | ) | (3,250 | ) | |||
Amortization of intangible asses | (200 | ) | (200 | ) | |||
Acquisition-related costs | (967 | ) | - | ||||
Non-GAAP operating expenses | $ | 87,704 | $ | 71,333 | |||
GAAP loss from operations | $ | (17,989 | ) | $ | (18,222 | ) | |
Stock-based compensation expense | 4,140 | 4,241 | |||||
Amortization of intangible assets | 200 | 200 | |||||
Acquisition-related costs | 967 | - | |||||
Non-GAAP loss from operations | $ | (12,682 | ) | $ | (13,781 | ) | |
GAAP net loss | $ | (18,163 | ) | $ | (18,342 | ) | |
Stock-based compensation expense | 4,140 | 4,241 | |||||
Amortization of intangible assets | 200 | 200 | |||||
Acquisition-related costs | 967 | - | |||||
Non-GAAP net loss | $ | (12,856 | ) | $ | (13,901 | ) | |
Loss per share | |||||||
GAAP | $ | (0.06 | ) | $ | (0.07 | ) | |
Non-GAAP | $ | (0.05 | ) | $ | (0.05 | ) | |
Shares used to compute loss per share | |||||||
GAAP shares used to compute loss per share | 279,708 | 278,080 | |||||
Non-GAAP shares used to compute loss per share | 279,708 | 278,080 |
pleahy@sonusnet.com
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