Exhibit 99.1
NEWS RELEASE
For more information, contact:
Jon Wilson
Chief Financial Officer
503-615-1685
jon.wilson@radisys.com
RADISYS REPORTS SECOND QUARTER 2015 RESULTS
Consolidated revenue of $47.0 million above guidance range;
Software-Systems revenue grew 36% year-on-year
HILLSBORO, OR - July 28, 2015 - Radisys Corporation (NASDAQ: RSYS), the services acceleration company, today announced financial results for the second quarter ended June 30, 2015.
Second Quarter Consolidated Financial Highlights
| |
| • | Consolidated revenue of $47.0 million; |
| |
| • | Non-GAAP gross margin of 31.2%, an increase of 280 bps year-on-year; |
| |
| • | Non-GAAP earnings per share of $0.03, an increase of $0.10 year-on-year; and |
| |
| • | Cash generation of $2.7 million. |
“In the second quarter, we continued to generate further momentum across our business, specifically within Software-Systems with strong revenue growth both sequentially and year-on-year,” said Brian Bronson, Radisys President and CEO. “Most notably, during the quarter we received an $11 million follow-on order from a large Asian carrier that selected our MediaEngine platform to enable all media processing in its VoLTE rollout. Also strategically significant during the quarter was the acceptance of additional FlowEngine lab units by the large North American carrier we are engaged with representing another tangible proof point for our new products. We continue to expect initial orders from this carrier for commercial deployments later in the second half of 2015. ”
Software-Systems Results
For the second quarter of 2015, Software-Systems revenue was $14.2 million, compared to $9.7 million in the prior quarter and $10.4 million in the second quarter of 2014, representing increases of 46% and 36%, respectively. Revenue growth was primarily driven by accelerating MediaEngine deployments in support of VoLTE rollouts, including partial delivery of the $11M order noted above, and revenue tied to acceptance of FlowEngine lab systems.
Gross margins were 56.1%, compared to 55.0% in the prior quarter and 55.9% in the second quarter of 2014. The sequential improvement in gross margins was the result of higher product shipments during the quarter.
Operating loss for the second quarter was $1.0 million, compared to a loss of $2.9 million in the prior quarter and a loss of $1.8 million in the second quarter of 2014. The improved operating results were attributable to strong revenue growth, partially offset by increased investment in the FlowEngine product line.
Embedded Products Results
For the second quarter of 2015, Embedded Products revenue was $32.9 million, compared to $39.0 million in the prior quarter and $39.6 million in the second quarter of 2014. While revenue was down both sequentially and year-
on-year largely resulting from legacy end-of-life product transitions, Embedded Products revenue came in above expectations due to continued strength from the segment’s core customer base.
Operating income for the second quarter was $2.4 million, compared to $4.0 million in the prior quarter and break even in the second quarter of 2014.
Consolidated Results
For the second quarter of 2015, revenue was $47.0 million, compared to $48.7 million in the prior quarter and $50.0 million in the second quarter of 2014.
On a GAAP basis, gross margin in the second quarter of 2015 was 26.8%, compared to 25.9% in the first quarter of 2015 and 24.0% in the second quarter of 2014. Second quarter 2015 GAAP operating expenses were $14.3 million, compared to $14.2 million in the previous quarter and $17.4 million in the second quarter of 2014. On a non-GAAP basis, second quarter 2015 gross margin was 31.2%, compared to 30.1% in the first quarter of 2015 and 28.4% in the second quarter of 2014. Second quarter 2015 gross margin improved 110 basis points sequentially due primarily to growth in Software-Systems revenue. Second quarter 2015 operating expenses on a non-GAAP basis were $13.3 million, compared to $13.6 million in the previous quarter and $16.1 million in the second quarter of 2014, reflecting the benefit of the Company’s cost-reduction initiatives.
For the second quarter of 2015, the Company recorded a GAAP net loss of $4.1 million, or $0.11 per share, compared to a GAAP net loss of $7.1 million, or $0.19 per share, in the first quarter of 2015 and GAAP net loss of $8.2 million, or $0.23 per share, in the second quarter of 2014. On a non-GAAP basis, the Company recorded a profit of $1.1 million, or $0.03 per diluted share, compared to a non-GAAP profit of $1.2 million, or $0.03 per diluted share, in the first quarter of 2015 and non-GAAP net loss of $2.5 million, or $0.07 per share, in the second quarter of 2014.
Third Quarter Outlook
| |
| • | Revenue is expected between $43 million and $47 million. |
| |
| • | Non-GAAP gross margin is expected between 35% and 37% and non-GAAP R&D and SG&A expenses are expected to approximate $13.8 million. |
| |
| • | Non-GAAP earnings are expected to range from $0.03 to $0.09 per share. |
| |
| • | Cash is expected to decrease by approximately $1.0 million as the result of extended payment terms with the large Asian carrier deploying MediaEngine product. |
2015 Outlook
| |
| • | Radisys increased its full year revenue outlook to now approximate $180 million, which is at the high end of the Company’s initial expectations of $160 to $180 million. |
| |
| • | Cash generation, net of debt repayments, is now expected to be $7 million, down from prior guidance of $10 million. Given extended payment terms on the $11 million MediaEngine order secured in the second quarter of 2015, over $3 million of customer payments are now expected in the first quarter of 2016. |
| |
| • | All other guidance remains unchanged from the Company’s press release dated February 3, 2015. |
Conference Call and Webcast Information
Radisys will host a conference call on Tuesday, July 28, 2015 at 5:00 p.m. ET to discuss its second quarter 2015 results and financial outlook for the third quarter of 2015.
To participate in the live conference call, dial 888-333-0027 in the U.S. and Canada or 706-634-4990 for all other countries and reference conference ID # 83628311. The live conference call will also be available via webcast on the Radisys investor relations website at http://investor.radisys.com/.
A replay of the conference call will be available two hours after the call is complete until 11:59 p.m. on Tuesday, August 11, 2015. To access the replay, dial 855-859-2056 or 404-537-3406 and reference conference ID# 83628311. A replay of the webcast will be available for an extended period of time on the Radisys investor relations website at http://investor.radisys.com/.
About Radisys
Radisys (NASDAQ: RSYS) helps communications and content providers, and their strategic partners, create new revenue streams and drive cost out of their services delivery infrastructure. Radisys’ service aware traffic distribution platforms, real-time media processing engines and wireless access technologies enable its customers to maximize, virtualize and monetize their networks.
Forward-Looking Statements
This press release contains forward-looking statements, including statements about the Company's business strategy, changes in reporting segments financial outlook and expectations for 2015 and for the third quarter 2015, and statements related to revenue and gross margins from our respective segments and product lines, investments in future growth, expense savings or reductions, increased profitability, product line focus, operational and administrative efficiencies, revenue growth, margin improvement, financial performance and other attributes of the Company. These forward-looking statements are based on the Company's expectations and assumptions, as of the date such statements are made, regarding the Company's future operating performance and financial condition, customer requirements, outcome of product trials, the economy and other future events or circumstances. Actual results could differ materially from the outlook guidance and expectations in these forward-looking statements as a result of a number of risk factors, including, among others, (a) customer implementation of traffic management solutions, (b) the outcome of product trials, (c) the market success of customers' products and solutions, (d) the development and transition of new products and solutions, (e) the enhancement of existing products and solutions to meet customer needs and respond to emerging technological trends, (f) the Company's dependence on certain customers and high degree of customer concentration, (g) the Company's use of one contract manufacturer for a significant portion of the production of its products, including the success of transitioning contract manufacturing partners, (h) the anticipated amount and timing of revenues from design wins due to the Company's customers' product development time, cancellations or delays, (i) matters affecting the software and embedded product industry, including changes in industry standards, changes in customer requirements and new product introductions, (j) actions by regulatory authorities or other third parties, (k) cash generation, (l) changes in tariff and trade policies and other risks associated with foreign operations, (m) fluctuations in currency exchange rates, (n) the ability of the Company to successfully complete any restructuring, acquisition or divestiture activities, (o) risks relating to fluctuations in the Company's operating results, the uncertainty of revenues and profitability and the potential need to raise additional funding and (p) other factors listed in the Company's reports filed with the Securities and Exchange Commission (SEC), including those listed under “Risk Factors” in Radisys' Annual Report on Form 10-K for the year ended December 31, 2014, copies of which may be obtained by contacting the Company at 503-615-1100, from the Company's investor relations web site at http://investor.radisys.com/, or at the SEC's website at http://www.sec.gov. Although forward-looking statements help provide additional information about Radisys, investors should keep in mind that forward-looking statements are inherently less reliable than historical information. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. The Company believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. All information in this press release is as of July 28, 2015. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
Non-GAAP Financial Measures
To supplement its consolidated financial statements in accordance with generally accepted accounting principles (GAAP), the Company's earnings release contains non-GAAP financial measures that exclude certain expenses, gains and losses, such as the effects of (a) amortization of acquired intangible assets, (b) stock-based compensation expense, (c) restructuring and other charges (reversals), net, (d) non-cash income tax expense, (e) gain on life insurance asset and (f) gain on sale of land held for sale. The Company believes that the use of non-GAAP financial measures provides useful information to investors to gain an overall understanding of its current financial performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that the Company believes are not indicative of its core operating results. In addition, non-GAAP financial measures are used by management for budgeting and forecasting as well as subsequently measuring the Company's performance, and the Company believes that it is providing investors with financial measures that most closely align to its internal measurement processes. These non-GAAP measures are considered to be reflective of the Company's core operating results as they more closely reflect the essential revenue-generating activities of the
Company and direct operating expenses (resulting in cash expenditures) needed to perform these revenue-generating activities. The Company also believes, based on feedback provided to the Company during its earnings calls' Q&A sessions and discussions with the investment community, that the non-GAAP financial measures it provides are necessary to allow the investment community to construct their valuation models to better align its results and projections with its competitors and market sector, as there is significant variability and unpredictability across companies with respect to certain expenses, gains and losses.
The non-GAAP financial information is presented using a consistent methodology from quarter-to-quarter and year-to-year. These measures should be considered in addition to results prepared in accordance with GAAP. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP financial measures.
A reconciliation of non-GAAP information to GAAP information is included in the tables below. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP, and reconciliations between GAAP and non-GAAP financial measures included in this earnings release should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Radisys® and Trillium® are registered trademarks of Radisys
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| Revenues | $ | 47,049 |
| | $ | 49,964 |
| | $ | 95,736 |
| | $ | 93,763 |
|
| Cost of sales: | | | | | | | |
| Cost of sales | 32,468 |
| | 35,902 |
| | 66,535 |
| | 66,499 |
|
| Amortization of purchased technology | 1,980 |
| | 2,055 |
| | 3,974 |
| | 4,109 |
|
| Gross margin | 12,601 |
| | 12,007 |
| | 25,227 |
| | 23,155 |
|
| Operating expenses: | | | | | | | |
| Research and development | 6,840 |
| | 8,408 |
| | 13,564 |
| | 16,827 |
|
| Selling, general and administrative | 7,475 |
| | 8,953 |
| | 14,975 |
| | 18,549 |
|
| Intangible assets amortization | 1,260 |
| | 1,260 |
| | 2,520 |
| | 2,557 |
|
| Restructuring and other charges, net | 559 |
| | 815 |
| | 4,694 |
| | 2,115 |
|
| Loss from operations | (3,533 | ) | | (7,429 | ) | | (10,526 | ) | | (16,893 | ) |
| Interest expense | (103 | ) | | (345 | ) | | (320 | ) | | (632 | ) |
| Other income, net | 161 |
| | 157 |
| | 558 |
| | 336 |
|
| Loss before income tax expense | (3,475 | ) | | (7,617 | ) | | (10,288 | ) | | (17,189 | ) |
| Income tax expense | 644 |
| | 594 |
| | 884 |
| | 1,456 |
|
| Net loss | $ | (4,119 | ) | | $ | (8,211 | ) | | $ | (11,172 | ) | | $ | (18,645 | ) |
| | | | | | | | |
| Net loss per share: | | | | | | | |
| Basic | $ | (0.11 | ) | | $ | (0.23 | ) | | $ | (0.30 | ) | | $ | (0.57 | ) |
| Diluted | $ | (0.11 | ) | | $ | (0.23 | ) | | $ | (0.30 | ) | | $ | (0.57 | ) |
| Weighted average shares outstanding | | | | | | | |
| Basic | 36,741 |
| | 36,096 |
| | 36,695 |
| | 32,980 |
|
| Diluted | 36,741 |
| | 36,096 |
| | 36,695 |
| | 32,980 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
|
| | | | | | | |
| | June 30,
2015 | | December 31,
2014 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 18,549 |
| | $ | 31,242 |
|
| Accounts receivable, net | 38,951 |
| | 43,845 |
|
| Inventories and inventory deposit, net | 14,815 |
| | 18,475 |
|
| Other current assets | 6,715 |
| | 9,822 |
|
| Total current assets | 79,030 |
| | 103,384 |
|
| Property and equipment, net | 7,625 |
| | 9,786 |
|
| Intangible assets, net | 36,730 |
| | 43,224 |
|
| Other assets, net | 3,788 |
| | 4,326 |
|
| Total assets | $ | 127,173 |
| | $ | 160,720 |
|
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 25,991 |
| | $ | 33,679 |
|
| Deferred revenue | 6,570 |
| | 6,204 |
|
| Other accrued liabilities | 13,370 |
| | 12,261 |
|
| Line of credit | 10,000 |
| | 10,000 |
|
| Convertible senior notes | ��� |
| | 18,000 |
|
| Total current liabilities | 55,931 |
| | 80,144 |
|
| Other long-term liabilities | 3,035 |
| | 2,800 |
|
| Total liabilities | 58,966 |
| | 82,944 |
|
| Shareholders' equity: | | | |
| Common stock | 335,893 |
| | 334,024 |
|
| Accumulated deficit | (267,843 | ) | | (256,671 | ) |
| Accumulated other comprehensive income | 157 |
| | 423 |
|
| Total shareholders’ equity | 68,207 |
| | 77,776 |
|
| Total liabilities and shareholders’ equity | $ | 127,173 |
| | $ | 160,720 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| Cash flows from operating activities: | | | | | | | |
| Net loss | $ | (4,119 | ) | | $ | (8,211 | ) | | $ | (11,172 | ) | | $ | (18,645 | ) |
| Adjustments to reconcile net loss to net cash | | | | | | | |
| provided by (used in) operating activities: | | | | | | | |
| Depreciation and amortization | 4,696 |
| | 5,091 |
| | 9,474 |
| | 10,336 |
|
| Stock-based compensation expense | 1,140 |
| | 1,460 |
| | 1,799 |
| | 2,581 |
|
| Other | 346 |
| | 796 |
| | 730 |
| | 3,570 |
|
| Changes in operating assets and liabilities: | | | | | | | |
| Accounts receivable | 2,843 |
| | (4,466 | ) | | 4,907 |
| | (565 | ) |
| Inventories | 607 |
| | 3,953 |
| | 3,376 |
| | 4,338 |
|
| Other receivables | (1,376 | ) | | (5,389 | ) | | 2,507 |
| | (7,096 | ) |
| Accounts payable | 594 |
| | 2,393 |
| | (7,589 | ) | | (320 | ) |
| Deferred revenue | (885 | ) | | 1,545 |
| | 366 |
| | 4,336 |
|
| Other operating assets and liabilities | (860 | ) | | 710 |
| | 2,216 |
| | (3,857 | ) |
| Net cash provided by (used in) operating activities | 2,986 |
| | (2,118 | ) | | 6,614 |
| | (5,322 | ) |
| Cash flows from investing activities: | | | | | | | |
| Capital expenditures | (406 | ) | | (599 | ) | | (1,046 | ) | | (1,277 | ) |
| Net cash used in investing activities | (406 | ) | | (599 | ) | | (1,046 | ) | | (1,277 | ) |
| Cash flows from financing activities: | | | | | | | |
| Borrowings on line of credit | 1,500 |
| | — |
| | 8,500 |
| | — |
|
Payments on line of credit
| (1,500 | ) | | (5,000 | ) | | (8,500 | ) | | (5,000 | ) |
| Repayment of convertible senior notes | — |
| | — |
| | (18,000 | ) | | — |
|
| Proceeds from issuance of common stock | 73 |
| | 140 |
| | 167 |
| | 21,020 |
|
| Other financing activities, net | (11 | ) | | (66 | ) | | (97 | ) | | (301 | ) |
| Net cash provided by (used in) financing activities | 62 |
| | (4,926 | ) | | (17,930 | ) | | 15,719 |
|
| Effect of exchange rate changes on cash and cash equivalents | 61 |
| | (15 | ) | | (331 | ) | | 4 |
|
| Net increase (decrease) in cash and cash equivalents | 2,703 |
| | (7,658 | ) | | (12,693 | ) | | 9,124 |
|
| Cash and cash equivalents, beginning of period | 15,846 |
| | 42,264 |
| | 31,242 |
| | 25,482 |
|
| Cash and cash equivalents, end of period | $ | 18,549 |
| | $ | 34,606 |
| | $ | 18,549 |
| | $ | 34,606 |
|
REVENUES, GROSS MARGIN AND INCOME (LOSS) FROM OPERATIONS BY OPERATING SEGMENT
(In thousands, unaudited)
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | 2015 | | 2014 | | 2015 | | 2014 |
| Revenue | | | | | | | | |
| Software-Systems | | $ | 14,170 |
| | $ | 10,400 |
| | $ | 23,859 |
| | $ | 18,241 |
|
| Embedded Products and Hardware Services | | 32,879 |
| | 39,564 |
| | 71,877 |
| | 75,522 |
|
| Total revenues | | $ | 47,049 |
| | $ | 49,964 |
| | $ | 95,736 |
| | $ | 93,763 |
|
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | 2015 | | 2014 | | 2015 | | 2014 |
| Gross margin | | | | | | | | |
| Software-Systems | | $ | 7,945 |
| | $ | 5,816 |
| | $ | 13,273 |
| | $ | 11,014 |
|
| Embedded Products and Hardware Services | | 6,725 |
| | 8,397 |
| | 16,069 |
| | 16,532 |
|
| Corporate and other | | (2,069 | ) | | (2,206 | ) | | (4,115 | ) | | (4,391 | ) |
| Total gross margin | | $ | 12,601 |
| | $ | 12,007 |
| | $ | 25,227 |
| | $ | 23,155 |
|
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | 2015 | | 2014 | | 2015 | | 2014 |
| Income (loss) from operations | | | | | | | | |
| Software-Systems | | $ | (967 | ) | | $ | (1,848 | ) | | $ | (3,869 | ) | | $ | (4,712 | ) |
| Embedded Products and Hardware Services | | 2,373 |
| | 9 |
| | 6,330 |
| | (819 | ) |
| Corporate and other | | (4,939 | ) | | (5,590 | ) | | (12,987 | ) | | (11,362 | ) |
| Total loss from operations | | $ | (3,533 | ) | | $ | (7,429 | ) | | $ | (10,526 | ) | | $ | (16,893 | ) |
REVENUES BY GEOGRAPHY
(In thousands, unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| North America | $ | 18,714 |
| 39.7 | % | | $ | 19,604 |
| 39.3 | % | | $ | 39,931 |
| 41.7 | % | | $ | 36,434 |
| 38.9 | % |
| Asia Pacific | 21,625 |
| 46.0 |
| | 15,600 |
| 31.2 |
| | 38,810 |
| 40.5 |
| | 33,095 |
| 35.3 |
|
| Europe, the Middle East and Africa | 6,710 |
| 14.3 |
| | 14,760 |
| 29.5 |
| | 16,995 |
| 17.8 |
| | 24,234 |
| 25.8 |
|
| Total | $ | 47,049 |
| 100.0 | % | | $ | 49,964 |
| 100.0 | % | | $ | 95,736 |
| 100.0 | % | | $ | 93,763 |
| 100.0 | % |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES AND AS A PERCENT OF REVENUES
(In thousands, except per share amounts, unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| GROSS MARGIN: | | | | | | | | | | | |
| GAAP gross margin | $ | 12,601 |
| 26.8 | % | | $ | 12,007 |
| 24.0 | % | | $ | 25,227 |
| 26.4 | % | | $ | 23,155 |
| 24.7 | % |
| (a) Amortization of acquired intangible assets | 1,980 |
| | | 2,055 |
| | | 3,973 |
| | | 4,109 |
| |
| (b) Stock-based compensation | 89 |
| | | 151 |
| | | 142 |
| | | 282 |
| |
| Non-GAAP gross margin | $ | 14,670 |
| 31.2 | % | | $ | 14,213 |
| 28.4 | % | | $ | 29,342 |
| 30.6 | % | | $ | 27,546 |
| 29.4 | % |
| | | | | | | | | | | | |
| RESEARCH AND DEVELOPMENT: | | | | | | | | | | | |
| GAAP research and development | $ | 6,840 |
| 14.5 | % | | $ | 8,408 |
| 16.8 | % | | $ | 13,564 |
| 14.2 | % | | $ | 16,827 |
| 17.9 | % |
| (b) Stock-based compensation | 257 |
| | | 324 |
| | | 389 |
| | | 553 |
| |
| Non-GAAP research and development | $ | 6,583 |
| 14.0 | % | | $ | 8,084 |
| 16.2 | % | | $ | 13,175 |
| 13.8 | % | | $ | 16,274 |
| 17.4 | % |
| | | | | | | | | | | | |
| SELLING, GENERAL AND ADMINISTRATIVE: | | | | | | | | | | | |
| GAAP selling, general and administrative | $ | 7,475 |
| 15.9 | % | | $ | 8,953 |
| 17.9 | % | | $ | 14,975 |
| 15.6 | % | | $ | 18,549 |
| 19.8 | % |
| (b) Stock-based compensation | 794 |
| | | 985 |
| | | 1,268 |
| | | 1,746 |
| |
| Non-GAAP selling, general and administrative | $ | 6,681 |
| 14.2 | % | | $ | 7,968 |
| 15.9 | % | | $ | 13,707 |
| 14.3 | % | | $ | 16,803 |
| 17.9 | % |
| | | | | | | | | | | | |
| INCOME (LOSS) FROM OPERATIONS: | | | | | | | | | | | |
| GAAP loss from operations | $ | (3,533 | ) | (7.5 | )% | | $ | (7,429 | ) | (14.9 | )% | | $ | (10,526 | ) | (11.0 | )% | | $ | (16,893 | ) | (18.0 | )% |
| (a) Amortization of acquired intangible assets | 3,240 |
| | | 3,315 |
| | | 6,494 |
| | | 6,666 |
| |
| (b) Stock-based compensation | 1,140 |
| | | 1,460 |
| | | 1,799 |
| | | 2,581 |
| |
| (c) Restructuring and acquisition-related charges, net | 559 |
| | | 815 |
| | | 4,694 |
| | | 2,115 |
| |
| Non-GAAP income (loss) from operations | $ | 1,406 |
| 3.0 | % | | $ | (1,839 | ) | (3.7 | )% | | $ | 2,461 |
| 2.6 | % | | $ | (5,531 | ) | (5.9 | )% |
| | | | | | | | | | | | |
| NET INCOME (LOSS): | | | | | | | | | | | |
| GAAP net loss | $ | (4,119 | ) | (8.8 | )% | | $ | (8,211 | ) | (16.4 | )% | | $ | (11,172 | ) | (11.7 | )% | | $ | (18,645 | ) | (19.9 | )% |
| (a) Amortization of acquired intangible assets | 3,240 |
| | | 3,315 |
| | | 6,494 |
| | | 6,666 |
| |
| (b) Stock-based compensation | 1,140 |
| | | 1,460 |
| | | 1,799 |
| | | 2,581 |
| |
| (c) Restructuring and acquisition-related charges, net | 559 |
| | | 815 |
| | | 4,694 |
| | | 2,115 |
| |
| (d) Income taxes | 314 |
| | | 119 |
| | | 498 |
| | | 596 |
| |
| Non-GAAP net income (loss) | $ | 1,134 |
| 2.4 | % | | $ | (2,502 | ) | (5.0 | )% | | $ | 2,313 |
| 2.4 | % | | $ | (6,687 | ) | (7.1 | )% |
| | | | | | | | | | | | |
| GAAP weighted average diluted shares | 36,741 |
| | | 36,096 |
| | | 36,695 |
| | | 32,980 |
| |
| Dilutive equity awards included in | | | | | | | | | | | |
| non-GAAP earnings per share | 193 |
| | | — |
| | | 151 |
| | | — |
| |
| Non-GAAP weighted average diluted shares | 36,934 |
| | | 36,096 |
| | | 36,846 |
| | | 32,980 |
| |
| GAAP net loss per share (diluted) | $ | (0.11 | ) | | | $ | (0.23 | ) | | | $ | (0.30 | ) | | | $ | (0.57 | ) | |
| Non-GAAP adjustments detailed above | 0.14 |
| | | 0.16 |
| | | 0.36 |
| | | 0.37 |
| |
| Non-GAAP net income (loss) per share (diluted) | $ | 0.03 |
| | | $ | (0.07 | ) | | | $ | 0.06 |
| | | $ | (0.20 | ) | |
RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE
NET INCOME (LOSS) PER SHARE
(In millions, except per share amounts, unaudited)
|
| | | | | | | | |
| | | Three Months Ended |
| | | September 30, 2015 |
| | | Low End | | High End |
| GAAP net loss | | (4.0 | ) | | (1.8 | ) |
| (a) Amortization of acquired intangible assets | | 3.3 |
| | 3.3 |
|
| (b) Stock-based compensation | | 1.1 |
| | 1.1 |
|
| (c) Restructuring and acquisition-related charges, net | | 0.5 |
| | 0.4 |
|
| (d) Income taxes | | 0.3 |
| | 0.2 |
|
| Total adjustments | | 5.2 |
| | 5.0 |
|
| Non-GAAP net income | | $ | 1.2 |
| | $ | 3.2 |
|
| | | | | |
| GAAP weighted average shares | | 37,000 |
| | 37,000 |
|
| Non-GAAP adjustments | | 200 |
| | 200 |
|
| Non-GAAP weighted average shares (diluted) | | 37,200 |
| | 37,200 |
|
| | | | | |
| GAAP net loss per share | | (0.11 | ) | | (0.05 | ) |
| Non-GAAP adjustments detailed above | | 0.14 |
| | 0.12 |
|
| Non-GAAP net income per share (diluted) | | $ | 0.03 |
| | $ | 0.09 |
|
RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE
GROSS MARGIN
(unaudited)
|
| | |
| | Estimates at the midpoint of the guidance range |
| | Three Months Ended |
| | September 30, 2015 |
| GAAP | 31.4 | % |
| (a) Amortization of acquired intangible assets | 4.4 |
|
| (b) Stock-based compensation | 0.2 |
|
| Non-GAAP | 36.0 | % |
RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE
RESEARCH AND DEVELOPMENT EXPENSE AND
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
(In millions, unaudited)
|
| | | |
| | Estimates at the midpoint of the guidance range |
| | Three Months Ended |
| | September 30, 2015 |
| GAAP | $ | 14.8 |
|
| (b) Stock-based compensation | 1.0 |
|
| Non-GAAP | $ | 13.8 |
|
Non-GAAP financial measures includes the performance of Software-Systems and Embedded Products and Hardware Services.
The Company excludes the following corporate and other expenses, reversals, gains and losses from its non-GAAP financial measures, when applicable:
(a) Amortization of acquired intangible assets: Amortization of acquisition-related intangible assets primarily relate to core and existing technologies, trade name and customer relationships that were acquired with the acquisitions of Continuous Computing and Pactolus. The Company excludes the amortization of acquisition-related intangible assets because it does not reflect the Company's ongoing business and it does not have a direct correlation to the operation of the Company's business. In addition, in accordance with GAAP, the Company generally recognizes expenses for internally-developed intangible assets as they are incurred, notwithstanding the potential future benefit such assets may provide. Unlike internally-developed intangible assets, however, and also in accordance with GAAP, the Company generally capitalizes the cost of acquired intangible assets and recognizes that cost as an expense over the useful lives of the assets acquired. As a result of their GAAP treatment, there is an inherent lack of comparability between the financial performance of internally-developed intangible assets and acquired intangible assets. Accordingly, the Company believes it is useful to provide, as a supplement to its GAAP operating results, non-GAAP financial measures that exclude the amortization of acquired intangibles in order to enhance the period-over-period comparison of its operating results, as there is significant variability and unpredictability across companies with respect to this expense.
(b) Stock-based compensation: Stock-based compensation consists of expenses recorded under GAAP, in connection with stock awards such as stock options, restricted stock awards and restricted stock units granted under the Company's equity incentive plans and shares issued pursuant to the Company's employee stock purchase plan. The Company excludes stock-based compensation from non-GAAP financial measures because it is a non-cash measurement that does not reflect the Company's ongoing business and because the Company believes that investors want to understand the impact on the Company of the adoption of the applicable GAAP surrounding share based payments; the Company believes that the provision of non-GAAP information that excludes stock-based compensation improves the ability of investors to compare its period-over-period operating results, as there is significant variability and unpredictability across companies with respect to this expense.
(c) Restructuring and other charges, net: Restructuring and other charges, net relates to costs associated with non-recurring events. These include costs incurred for employee severance, acquisition or divestiture activities, excess facility costs, certain legal costs, asset related charges and other expenses associated with business restructuring activities. Restructuring and other charges are excluded from non-GAAP financial measures because they are not considered core operating activities. Although the Company has engaged in various restructuring activities over the past several years, each has been a discrete event based on a unique set of business objectives. The Company does not engage in restructuring activities in the ordinary course of business. As such, the Company believes it is appropriate to exclude restructuring charges from its non-GAAP financial measures because it enhances the ability of investors to compare the Company's period-over-period operating results.
(d) Income taxes: Non-GAAP income tax expense is equal to the Company's projected cash tax expense. Adjustments to GAAP income tax expense are required to eliminate the recognition of tax expense from profitable entities where we utilize deferred tax assets to offset current period tax liabilities. We believe that providing this non-GAAP figure is useful to our investors as it more closely represents the true economic impact of our tax positions.
