SOURCE: Ixia

Ixia

April 19, 2012 16:03 ET

Ixia Announces Record First Quarter 2012 Revenue

CALABASAS, CA--(Marketwire - Apr 19, 2012) - Ixia (NASDAQ: XXIA) today reported its financial results for the first quarter ended March 31, 2012.

Total revenue for the 2012 first quarter was $85.6 million, compared with $78.5 million reported for the 2011 first quarter and $83.7 million reported for the 2011 fourth quarter.

On a GAAP basis, the company recorded net income for the 2012 first quarter of $4.4 million, or $0.06 per diluted share, compared with net income of $7.1 million, or $0.10 per diluted share, for the 2011 first quarter.

Non-GAAP net income for the 2012 first quarter was $11.4 million, or $0.15 per diluted share, compared with non-GAAP net income of $12.2 million, or $0.16 per diluted share, for the 2011 first quarter.

Additional non-GAAP information and a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures for the 2012 and 2011 first quarters may be found in the attached financial tables.

"In the first quarter, we achieved record revenue primarily driven by a robust quarter in Japan as well as the strong sales of our LTE solutions worldwide," commented Victor Alston, Ixia's chief operating officer. "We are encouraged by the strong start to the year and the opportunities for growth we see in 2012. While we have seen increases in the levels of our operating expenses over the last few quarters, we believe that these investments position us well in the more rapidly growing and promising segments of our market, including virtualization, cloud, mobility and security test solutions for the converged networks of the future. These investments pave the way for Ixia to be a leader in emerging markets for the years to come."

Ixia ended the first quarter with approximately $422 million in cash and investments, compared with $385 million at December 31, 2011.

Conference Call and Webcast Information

Ixia will host a conference call today, at 5:00 p.m., Eastern time, for analysts and investors to discuss its 2012 first quarter results and its business outlook for the 2012 second quarter. Open to the public, investors may access the call by dialing (678) 825-8347. A live webcast of the conference call, along with supplemental financial information, will be accessible from the "Investors" section of Ixia's web site (www.ixiacom.com). Following the live webcast, an archived version will be available in the "Investors" section on the Ixia web site for 90 days.

Non-GAAP Information

To supplement our consolidated financial results prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), we have included certain non-GAAP financial measures in this press release and in the attachments hereto. Specifically, we have provided non-GAAP financial measures (e.g., non-GAAP cost of revenues, non-GAAP operating expenses, non-GAAP operating margin, non-GAAP income tax expense, non-GAAP net income, and non-GAAP diluted earnings per share) that exclude certain non-cash and/or non-recurring income and expense items such as proceeds and expenses from certain legal and contractual settlements, stock-based compensation expenses, acquisition and other related costs, the amortization of acquisition-related intangible assets, and the related income tax effects of these items, as well as the income tax impacts of the valuation allowance recorded against certain deferred tax assets. The aforementioned items represent income and expense items that may be difficult to estimate from period to period and/or that we believe are not directly attributable to the underlying performance of our business operations. These non-GAAP financial measures are provided to enhance the user's overall understanding of our financial performance. We believe that by excluding these items, our non-GAAP measures provide supplemental information to both management and investors that is useful in assessing our core operating performance, in evaluating our ongoing business operations and in comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to plan and forecast future periods and to assist in making operating and strategic decisions. The presentation of this additional information is not prepared in accordance with GAAP. The information therefore may not necessarily be comparable to that of other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Investors are encouraged to review the reconciliations of GAAP to non-GAAP financial measures which are included below in the attached financial tables.

About Ixia

Ixia provides the industry's most comprehensive converged IP services testing solution - from the wireless edge to the Internet core. Network equipment manufacturers, service providers, enterprises and government agencies use Ixia's industry-leading test and simulation platforms to design and validate a broad range of wired, Wi-Fi and 3G/LTE networking equipment and networks. Ixia's solutions create real-world conditions by emulating a full range of high-scaling networking protocols and generating media-rich application traffic to validate performance, conformance and security of cloud, core, data center, wireless and multiplay networks. For more information, visit www.ixiacom.com.

Safe Harbor Under the Private Securities Litigation Reform Act of 1995:
Certain statements made in this press release are forward-looking statements, including, without limitation, statements regarding growth, profitability, financial performance and future business. In some cases, such forward-looking statements can be identified by terms such as may, will, should, expect, plan, believe, estimate, predict or the like. Such statements reflect our current intent, belief and expectations and are subject to risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that may cause future results to differ materially from our current expectations include changes in the global economy, competition, consistency of orders from significant customers, our success in developing and producing new products, market acceptance of our products and war, terrorism, political unrest, natural disasters and other circumstances that could, among other consequences, reduce the demand for our products, disrupt our supply chain or impact the delivery of our products. Such factors also include those identified in our Annual Report on Form 10-K for the year ended December 31, 2011, and in our other filings with the U.S. Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, December 31,
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 49,414 $ 42,729
Short-term investments in marketable securities 169,751 156,684
Accounts receivable, net 63,357 65,357
Inventories 26,796 27,239
Prepaid expenses and other current assets 13,330 12,700
Total current assets 322,648 304,709
Investments in marketable securities 202,381 185,608
Property and equipment, net 25,817 25,060
Intangible assets, net 42,189 46,028
Goodwill 66,429 66,429
Other assets 6,750 6,633
Total assets $ 666,214 $ 634,467
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 9,948 $ 5,005
Accrued expenses 31,685 27,301
Deferred revenues 46,731 40,963
Income taxes payable 900 895
Total current liabilities 89,264 74,164
Deferred revenues 10,220 10,092
Other liabilities 6,494 5,849
Convertible senior notes 200,000 200,000
Total liabilities 305,978 290,105
Shareholders' equity:
Common stock, without par value; 200,000 shares authorized at March 31, 2012 and December 31, 2011; 71,179 and 70,240 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively 138,277 132,330
Additional paid-in capital 150,598 145,840
Retained earnings 68,344 63,962
Accumulated other comprehensive income 3,017 2,230
Total shareholders' equity 360,236 344,362
Total liabilities and shareholders' equity $ 666,214 $ 634,467
IXIA
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended
March 31,
2012 2011
Revenues:
Products $ 69,043 $ 64,927
Services 16,600 13,534
Total revenues 85,643 78,461
Costs and operating expenses:(1)
Cost of revenues - products 14,782 14,021
Cost of revenues - services 2,130 1,478
Research and development 20,851 18,519
Sales and marketing 24,607 22,918
General and administrative 11,516 8,398
Amortization of intangible assets 4,045 3,690
Acquisition and other related 425 --
Total costs and operating expenses 78,356 69,024
Income from operations 7,287 9,437
Interest income and other, net 110 538
Interest expense (1,800 ) (1,800 )
Income before income taxes 5,597 8,175
Income tax expense 1,215 1,066
Net income $ 4,382 $ 7,109
Earnings per share:
Basic $ 0.06 $ 0.10
Diluted $ 0.06 $ 0.10
Weighted average number of common and common equivalent shares outstanding:
Basic 70,580 68,121
Diluted 72,954 71,433
(1) Stock-based compensation included in:
Cost of revenues - products $ 96 $ 136
Cost of revenues - services 37 51
Research and development 1,279 1,374
Sales and marketing 1,023 1,041
General and administrative 1,666 1,259
IXIA
Non-GAAP Information and Reconciliation to Comparable GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)
Three months ended March 31,
2012 2011
Amount ($) % Total
Revenues
Amount ($) % Total
Revenues
Total revenues $ 85,643 100 % $ 78,461 100 %
Total cost of revenues - GAAP $ 16,912 19.7 % $ 15,499 19.8 %
Stock-based compensation(a) (133 ) -0.1 % (187 ) -0.3 %
Total cost of revenues - Non-GAAP $ 16,779 19.6 % $ 15,312 19.5 %
Operating expenses - GAAP $ 61,444 71.7 % $ 53,525 68.2 %
Amortization of intangible assets(b) (4,045 ) -4.7 % (3,690 ) -4.7 %
Acquisition and other related(c) (425 ) -0.5 % -- -- %
Stock-based compensation(a) (3,968 ) -4.6 % (3,674 ) -4.7 %
Legal, contract settlements and other(d) (1,682 ) -2.0 % (900 ) -1.1 %
Operating expenses - Non-GAAP $ 51,324 59.9 % $ 45,261 57.7 %
Operating margin - GAAP $ 7,287 8.5 % $ 9,437 12.0 %
Amortization of intangible assets(b) 4,045 4.7 % 3,690 4.7 %
Acquisition and other related(c) 425 0.5 % -- -- %
Stock-based compensation(a) 4,101 4.8 % 3,861 5.0 %
Legal, contract settlements and other (d) 1,682 2.0 % 900 1.1 %
Operating margin - Non-GAAP $ 17,540 20.5 % $ 17,888 22.8 %
Income tax expense - GAAP $ 1,215 1.4 % $ 1,066 1.4 %
Effect of reconciling items(e) 3,211 3.8 % 3,391 4.3 %
Income tax expense - Non-GAAP $ 4,426 5.2 % $ 4,457 5.7 %
Net income - GAAP $ 4,382 5.1 % $ 7,109 9.1 %
Effect of reconciling items(f) 7,042 8.2 % 5,060 6.4 %
Net income - Non-GAAP $ 11,424 13.3 % $ 12,169 15.5 %
Diluted earnings per share - GAAP $ 0.06 $ 0.10
Effect of reconciling items(g)(h) 0.09 0.06
Diluted earnings per share - Non-GAAP $ 0.15 $ 0.16
(a) This reconciling item represents stock-based compensation expenses. As stock-based compensation represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding stock-based compensation, we provide our investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance. While we expect to continue to recognize stock-based compensation expense in the future, management also excludes this expense when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions.
(b) This reconciling item represents the amortization of intangible assets related to the acquisitions of various businesses and technologies such as the acquisitions of Catapult Communications Corporation, Agilent Technologies' N2X Data Network Testing Product line and VeriWave, Inc. As the amortization expense represents a non-cash charge that is not directly attributable to the underlying performance of our business operations, we believe that by excluding the amortization of acquisition-related intangible assets, we provide investors with supplemental information that is useful in evaluating our ongoing operations and performance. While the amortization of acquisition-related intangible assets is expected to continue in the future, management also excludes this expense when evaluating current performance, forecasting future results, measuring core operating results, and making operating and strategic decisions.
(c) This reconciling item represents costs associated with acquisition-related activities. These acquisition and other related costs consist primarily of professional fees for legal, accounting and tax services, and other related costs. We believe that by excluding acquisition and other related costs, we provide investors with supplemental information that is useful in comparing our ongoing operating results from period to period and in evaluating our core operations and performance.
(d) This reconciling item represents a one-time charge of $900,000 incurred in the first quarter of 2011 to terminate and settle a development contract and a one-time transition charge of $1.7 million incurred in the first quarter of 2012 in connection with the previously announced departure of our CEO. We believe that by excluding these charges, we provide our investors with supplemental information that is useful in comparing our operating results from period to period and in evaluating our core operations and performance.
(e) This adjustment represents the income tax effects of the reconciling items noted in footnotes (a), (b), (c) and (d) as well as changes in the valuation allowance relating to the company's deferred tax assets.
(f) This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d) and (e).
(g) This adjustment represents the effects of the reconciling items noted in footnotes (a), (b), (c), (d) and (e), on a diluted per share basis.
(h) This reconciling item for the non-GAAP diluted earnings per share calculation includes the impact of our convertible senior notes as these were anti-dilutive for the equivalent GAAP earnings per share calculations.

Contact Information

  • Financial Contact:
    The Blueshirt Group
    Investor Relations
    Maria Riley
    415-217-7722
    or
    Tom Miller
    Chief Financial Officer
    Dir: 818-444-2325
    Email Contact