SOURCE: Acme Packet

Acme Packet

July 26, 2012 16:05 ET

Acme Packet Reports Results for Second Quarter of 2012

BEDFORD, MA--(Marketwire - Jul 26, 2012) - Acme Packet, Inc. (NASDAQ: APKT), the leader in session delivery network solutions, today announced results for the second quarter of 2012 and updated its business outlook for 2012. All earnings per share results are on a fully diluted basis.

Results for the Second Quarter of 2012
Total revenue for the second quarter of 2012 was $67.6 million, compared to $79.7 million in the second quarter of 2011 and $70.8 million in the first quarter of 2012. GAAP net loss for the second quarter of 2012 was $0.1 million, or ($0.00) per share, compared to GAAP net income of $14.0 million, or $0.20 per share, in the second quarter of 2011 and GAAP net income of $2.4 million, or $0.03 per share, in the first quarter of 2012. Net income on a non-GAAP1 basis for the second quarter of 2012 was $9.5 million, or $0.13 per share, compared to $20.4 million, or $0.29 per share, in the second quarter of 2011, and $12.2 million, or $0.17 per share, in the first quarter of 2012.

Updated 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.

     
     

Estimate
  Business Outlook for Year
Ending December 31, 2012
Total revenue (in millions)   $270-$275
GAAP EPS   ($0.11)-($0.07)
Non-GAAP1 EPS   $0.43-$0.47
     
     

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 1.800.230.1059 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 253634 or by accessing the webcast replay on the Company's investor relations website.

1 A 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 in the USA, selling them through over 250 reseller partners worldwide. More than 1,775 customers in 109 countries have deployed over 19,000 Acme Packet systems, including 89 of the top 100 service providers and 45 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     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012   2011  
Revenue:                              
  Product   $ 49,556     $ 64,688     $ 103,020   $ 124,430  
  Maintenance, support and service     18,028       15,045       35,394     29,270  
    Total revenue     67,584       79,733       138,414     153,700  
                               
Cost of revenue:                              
  Product     9,785       11,367       19,763     21,312  
  Maintenance, support and service     3,675       2,525       7,633     5,531  
    Total cost of revenue     13,460       13,892       27,396     26,843  
                               
Gross profit     54,124       65,841       111,018     126,857  
                               
Operating expenses:                              
  Sales and marketing     32,138       24,736       63,140     48,439  
  Research and development     16,257       12,719       31,354     24,013  
  General and administrative     5,849       5,788       12,287     10,365  
  Merger and related costs     576       -       613     180  
  Total operating expenses     54,820       43,243       107,394     82,997  
                               
(Loss) income from operations     (696 )     22,598       3,624     43,860  
                               
Other (expense) income, net     (19 )     (196 )     75     (94 )
                               
(Loss) income before (benefit from) provision for income taxes    
 (715
)    
 22,402
     
3,699
   
 43,766
 
                               
(Benefit from) provision for income taxes     (588 )     8,394       1,397     16,049  
                               
Net (loss) income   $ (127 )   $ 14,008     $ 2,302   $ 27,717  
                               
Net (loss) income per share:                              
  Basic   $ (0.00 )   $ 0.21     $ 0.03   $ 0.42  
  Diluted   $ (0.00 )   $ 0.20     $ 0.03   $ 0.39  
                               
Weighted average number of common shares used in the calculation of net (loss) income per share:                              
  Basic     68,507,111       66,141,163       68,230,330     65,623,359  
  Diluted     68,507,111       71,033,614       70,923,757     70,839,456  
                               
                               
                               
Acme Packet, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands)  
(unaudited)  
   
       
    June 30,
2012
    December 31,
2011
 
Assets                
Current assets:                
  Cash and cash equivalents   $ 61,343     $ 160,403  
  Short-term investments     305,366       191,672  
  Accounts receivable, net     49,792       59,739  
  Inventory     12,004       10,246  
  Deferred product costs     786       1,515  
  Deferred tax asset, net     4,809       4,809  
  Income taxes receivable     4,599       4,341  
  Other current assets     5,575       4,385  
    Total current assets     444,274       437,110  
Long-term investments     34,547       20,096  
Property and equipment, net     31,469       26,252  
Intangible assets, net     21,575       8,569  
Goodwill     15,262       3,778  
Deferred tax asset, net     18,371       18,371  
Other assets     241       230  
  Total assets   $ 565,739     $ 514,406  
                 
Liabilities and Stockholders' Equity                
Current liabilities:                
  Accounts payable   $ 8,956     $ 10,318  
  Accrued expenses and other current liabilities     10,548       12,715  
  Deferred revenue     29,636       22,261  
    Total current liabilities     49,140       45,294  
                 
Deferred revenue, net of current portion     2,283       2,049  
Deferred rent     6,597       4,533  
Deferred tax liability     4,733       -  
                 
Stockholders' equity:                
  Common stock     75       74  
  Additional paid-in capital     401,931       363,769  
  Treasury stock, at cost     (37,522 )     (37,522 )
  Accumulated other comprehensive income     (8 )     1  
  Retained earnings     138,510       136,208  
    Total stockholders' equity     502,986       462,530  
  Total liabilities and stockholders' equity   $ 565,739     $ 514,406  
                   
                   
                   
Condensed Consolidated Statements of Cash Flow Data  
(in thousands)  
(unaudited)  
   
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
Cash provided by operating activities   $ 23,624     $ 8,664     $ 50,319     $ 20,205  
Cash used in investing activities     (94,869 )     (20,729 )     (160,341 )     (25,002 )
Cash provided by financing activities     4,437       13,712       10,962       33,699  
                                 
                                 
                                 
Acme Packet, Inc.
Statement on Use of Non-GAAP Financial Measures and
Reconciliation of Non-GAAP Net Income and Non-GAAP Net 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 June 30, 2012, June 30, 2011 and March 31, 2012 and for the Six Months Ended June 30, 2012 and June 30, 2011:

 
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
and related
costs
   

Non-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 and 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 June 30, 2011
(in thousands, except per share data)
(unaudited)
 
   


GAAP
  Stock-based compensation expense and
related payroll
taxes
    Amortization of acquired
intangible
assets
   

Non-GAAP1
Cost of revenue:                            
    Product   $ 11,367   $ (327 )   $ (536 )   $ 10,504
    Maintenance, support and service     2,525     (499 )     -       2,026
                             
Operating expenses:                            
    Sales and marketing     24,736     (4,441 )     (140 )     20,155
    Research and development     12,719     (2,652 )     (11 )     10,056
    General and administrative     5,788     (1,303 )     -       4,485
                             
Provision for income taxes     8,394     3,241       246       11,881
                             
Net income     14,008     5,981       441       20,430
                             
Net income per share:                            
  Basic   $ 0.21   $ 0.09     $ 0.01     $ 0.31
  Diluted   $ 0.20   $ 0.08     $ 0.01     $ 0.29
                               
                               
                               
Acme Packet, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended March 31, 2012
(in thousands, except per share data)
(unaudited)
 
   
GAAP
  Stock-based compensation expense and
related payroll
taxes
    Amortization of acquired
intangible
assets
   
Merger
and related
costs
   
Non-GAAP1
Cost of revenue:                                    
    Product   $ 9,978   $ (428 )   $ (434 )   $ -     $ 9,116
    Maintenance, support and service     3,958     (702 )     -       -       3,256
                                     
Operating expenses:                                    
    Sales and marketing     31,002     (6,414 )     (57 )     -       24,531
    Research and development     15,097     (4,295 )     -       -       10,802
    General and administrative     6,438     (2,077 )     -       -       4,361
    Merger and related costs     37     -       -       (37 )     -
                                     
Provision for income taxes     1,985     4,473       188       -       6,646
                                     
Net income     2,429     9,443       303       37       12,212
                                     
Net income per share:                                    
  Basic   $ 0.04   $ 0.14     $ 0.00     $ 0.00     $ 0.18
  Diluted   $ 0.03   $ 0.13     $ 0.00     $ 0.00     $ 0.17
                                       
                                       
                                       
Acme Packet, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
Six 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
and related
costs
   

Non-GAAP1
Cost of revenue:                                    
    Product   $ 19,763   $ (870 )   $ (1,017 )   $ -     $ 17,876
    Maintenance, support and service     7,633     (1,419 )     -       -       6,214
                                     
Operating expenses:                                    
    Sales and marketing     63,140     (12,984 )     (295 )     -       49,861
    Research and development     31,354     (8,649 )     (34 )     -       22,671
    General and administrative     12,287     (3,579 )     -       -       8,708
    Merger and related costs     613     -       -       (613 )     -
                                     
Provision for income taxes     1,397     9,545       507       -       11,449
                                     
Net income     2,302     17,956       839       613       21,710
                                     
Net income per share:                                    
  Basic   $ 0.03   $ 0.26     $ 0.01     $ 0.01     $ 0.32
  Diluted   $ 0.03   $ 0.25     $ 0.01     $ 0.01     $ 0.31
                                       
                                       
                                       
Acme Packet, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
Six Months Ended June 30, 2011
(in thousands, except per share data)
(unaudited)
 
   
GAAP
  Stock-based compensation expense and
related payroll
taxes
    Amortization of acquired
intangible
assets
    Merger
and related
costs
   


Non-GAAP1
Cost of revenue:                                    
    Product   $ 21,312   $ (589 )   $ (907 )   $ -     $ 19,816
    Maintenance, support and service     5,531     (950 )     -       -       4,581
                                     
Operating expenses:                                    
    Sales and marketing     48,439     (8,020 )     (186 )     -       40,233
    Research and development     24,013     (4,894 )     (23 )     -       19,096
    General and administrative     10,365     (2,283 )     -       -       8,082
    Merger and related costs     180     -       -       (180 )     -
                                     
Provision for income taxes     16,049     5,978       402       -       22,429
                                     
Net income     27,717     10,758       714       180       39,369
                                     
Net income per share:                                    
  Basic   $ 0.42   $ 0.16     $ 0.01     $ 0.00     $ 0.60
  Diluted   $ 0.39   $ 0.15     $ 0.01     $ 0.00     $ 0.56
                                     
                                     
                                     

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   $ (8,013 )   $ (4,713 )
Adjustments:                
  Stock-based compensation expense and related payroll taxes, net of taxes     35,600       35,600  
  Amortization of acquired intangible assets, net of taxes     2,300       2,300  
  Merger and related costs     613       613  
Non-GAAP net income   $ 30,500     $ 33,800  
                 
Reconciliation of diluted non-GAAP net income per share:                
GAAP net loss per share   $ (0.11 )   $ (0.07 )
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 and related costs     0.01       0.01  
Non-GAAP net income per share   $ 0.43     $ 0.47  
                 
                 
                 
Acme Packet, Inc.
Other Operational Data
(unaudited)
 
    Three Months Ended
    June 30,
2012
  March 31,
2012
  June 30,
2011
Other operational data:                  
Depreciation and amortization (in thousands)   $ 3,591   $ 2,958   $ 1,894
Capital expenditures (in thousands)     6,576     3,745     2,598
Days sales outstanding     66     77     60
Total headcount     831     764     710
Quarterly inventory turnover - annualized     3.40     3.76     5.42