Exhibit 99.1
[IXIA LOGO]
FOR IMMEDIATE RELEASE
For more information, contact:
Tom Miller The Blueshirt Group
Chief Financial Officer Chris Danne, Rakesh Mehta
(818) 444-2325 (415) 217-7722
tmiller@ixiacom.com chris or rakesh@blueshirtgroup.com
IXIA ANNOUNCES RECORD REVENUES FOR THE THIRD QUARTER
NET REVENUES INCREASE 39% YEAR-OVER-YEAR AND 12% SEQUENTIALLY
CALABASAS, CA -- October 21, 2004--Ixia (Nasdaq: XXIA) today reported financial
results for the third quarter ended September 30, 2004.
Net revenues for the third quarter of 2004 increased 39% on a year-over-year
basis and 12% sequentially, to $30.1 million, the highest total in the Company's
history. Net income on a GAAP basis for the third quarter of 2004 was $4.7
million, or $0.07 per diluted share, a 96% increase when compared to $2.4
million or $0.04 per diluted share, for the third quarter of 2003.
Ixia's third quarter of 2004 GAAP results included $1.2 million of non-cash
charges related to the amortization of acquired intangible assets and
stock-based compensation, and associated income tax benefit of $503,000.
Excluding the effects of these items, non-GAAP net income was $5.5 million, or
$0.09 per diluted share, compared to $3.1 million, or $0.05 per diluted share,
for the same period last year after excluding the effects of similar items.
"Our record top-line performance reflects strong momentum for our product lines,
as bookings were the highest in the Company's history," commented Errol
Ginsberg,
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President and Chief Executive Officer of Ixia. "While the market for IT spending
remains challenging, this growth reflects the success of our R&D efforts, our
strategic acquisitions and the rapid expansion of our core Ethernet business.
During the quarter, we grew sales of our 1 Gig TXS load modules by 30%
sequentially, as the market demand continues to grow for these advanced Ethernet
test solutions capable of running complex applications. Solid demand for 10 Gig
products was another key factor in our record quarterly performance in a
normally seasonally softer period."
"Ixia is also succeeding in diversifying its products and customer base thus
expanding our addressable market opportunity. Software continues to help drive
sales of our TXS cards, accounting for approximately $4 million in sales, up 45%
from last year. The third quarter was also highlighted by encouraging results in
the government market. Our new dedicated sales team is performing well and we
were pleased with a number of wins in this area."
During the third quarter ended September 30, 2004, Ixia increased cash, cash
equivalents and investments by $2.3 million to approximately $128.1 million.
Ixia will host a conference call today for analysts and investors to discuss its
quarterly results at 5:00 p.m. Eastern Time. Open to the public, a live Web cast
of the conference call will be accessible from the "Investors" section of Ixia's
Web site (www.ixiacom.com). Following the live Web cast, an archived version
will be available in the "Investors" section on the Ixia Web site for 90 days.
NON-GAAP INFORMATION
Certain non-GAAP financial measures are included in this press release. These
non-GAAP financial measures are provided to enhance the user's overall
understanding of our financial performance. Specifically, we believe that
certain non-cash charges, as well as the related tax effects, are not indicative
of our core operating results. By excluding these items, our non-GAAP results
provide information to both management and investors that is useful in assessing
Ixia's core operating performance and in evaluating and comparing our results of
operations on a consistent basis from period to period. These non-GAAP financial
measures are used by management to evaluate financial results and to plan and
forecast future periods. The presentation of this additional information is not
meant to be
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considered a substitute for the corresponding financial measures prepared in
accordance with generally accepted accounting principles. Investors are
encouraged to review the reconciliations of GAAP to non-GAAP financial measures
which are included below.
ABOUT IXIA
Ixia is a leading, global provider of high performance IP network testing
solutions. Its highly scalable solutions generate, capture, characterize, and
emulate network and application traffic, establishing definitive performance and
conformance metrics of network devices or systems under test. Ixia's testing
solutions are used by network equipment manufacturers, semiconductor
manufacturers, service providers, and large enterprises to validate the
functionality and reliability of complex IP networks, devices, and applications.
Ixia's IxVoice products address the growing need for IP telephony test solutions
for developing VoIP networks. Ixia's Real World Traffic Suite addresses the
growing need to test applications and networks prior to deployment under
realistic load conditions. Ixia's analysis solutions utilize a wide range of
industry-standard interfaces, including Ethernet, SONET, and ATM, and are
distinguished by their performance, accuracy, reliability, and adaptability to
the industry's constant evolution.
For more information, contact Ixia at 26601 West Agoura Road, Calabasas, CA
91302; (818) 871-1800, Fax: (818) 871-1805; Email: info@ixiacom.com or visit our
Web Site at http://www.ixiacom.com.
Ixia and the Ixia logo are registered trademarks of Ixia. IxVoice and Real World
Traffic are trademarks of Ixia. Other trademarks used in this release are the
trademarks or registered trademarks of their respective owners.
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 possible future revenues,
growth and profitability and future business and market share. In some cases,
such forward-looking statements can be identified by terms such as "may,"
"will," "expect," "plan," "believe," "estimate," "predict" or the like. Such
statements reflect the Company's current intent, belief and expectations and are
subject to risks and uncertainties that could cause the
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Company's 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 the Company's current expectations include, among other things:
consistency of orders from significant customers, our ability to effectively
integrate G3 NOVA and market, develop and sell its technology, our success in
developing and producing new products and market acceptance of our products.
These and other risk factors that may affect Ixia's financial results in the
future are discussed in Ixia's periodic SEC filings, including its Annual Report
on Form 10-K for the year ended December 31, 2003. Ixia undertakes no obligation
to update any forward-looking statements, whether as a result of new
information, future events or otherwise.
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IXIA
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
2004 2003
------------- -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 58,444 $ 41,708
Short-term investments in marketable securities 23,434 22,143
Accounts receivable, net 23,740 17,121
Inventories 6,539 5,585
Income taxes receivable 939 2,011
Prepaid expenses and other current assets 6,876 6,927
--------- ---------
Total current assets 119,972 95,495
Investments in marketable securities 46,191 58,072
Property and equipment, net 10,519 6,907
Goodwill 9,252 1,592
Other intangible assets, net 21,729 19,960
Other assets 3,137 2,992
--------- ---------
Total assets $ 210,800 $ 185,018
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,267 $ 806
Accrued expenses 9,519 8,825
Deferred revenues 6,021 5,436
Income taxes payable 4,073 2,897
--------- ---------
Total current liabilities 21,880 17,964
Deferred income taxes 2,166 --
--------- ---------
Total liabilities 24,046 17,964
--------- ---------
Shareholders' equity:
Common stock, without par value; 200,000 shares authorized,
60,766 and 59,642 shares issued and outstanding as of
September 30, 2004 and December 31, 2003, respectively 91,004 84,048
Additional paid-in capital 49,787 48,769
Deferred stock-based compensation -- (419)
Retained earnings 45,963 34,656
--------- ---------
Total shareholders' equity 186,754 167,054
--------- ---------
Total liabilities and shareholders' equity $ 210,800 $ 185,018
========= =========
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IXIA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Net revenues $ 30,092 $ 21,635 $ 81,816 $ 60,484
Cost of revenues(1) 5,382 4,153 14,644 11,235
Amortization of purchased technology 836 588 2,207 588
--------- --------- --------- ---------
Gross profit 23,874 16,894 64,965 48,661
--------- --------- --------- ---------
Operating expenses:
Research and development 6,544 5,169 17,726 15,291
Sales and marketing 7,895 6,234 23,247 18,288
General and administrative 3,035 2,312 8,360 6,583
Amortization of intangible assets 373 305 1,161 770
Stock-based compensation(2) 14 364 389 1,420
--------- --------- --------- ---------
Total operating expenses 17,861 14,384 50,883 42,352
--------- --------- --------- ---------
Income from operations 6,013 2,510 14,082 6,309
Interest and other, net 597 716 1,930 2,329
--------- --------- --------- ---------
Income before income taxes 6,610 3,226 16,012 8,638
Income tax expense 1,871 813 4,705 2,247
--------- --------- --------- ---------
Net income $ 4,739 $ 2,413 $ 11,307 $ 6,391
========= ========= ========= =========
Earnings per share:
Basic $ 0.08 $ 0.04 $ 0.19 $ 0.11
Diluted $ 0.07 $ 0.04 $ 0.18 $ 0.10
Weighted average number of common and common
equivalent shares outstanding:
Basic 60,711 58,436 60,351 58,028
Diluted 63,856 62,455 64,311 61,674
- -----------------------
(1)Stock-based compensation included in:
Cost of revenues $ 1 $ 33 $ 30 $ 125
========= ========= ========= =========
(2)Stock-based compensation related to:
Research and development $ 8 $ 209 $ 271 $ 1,094
Sales and marketing 5 99 80 96
General and administrative 1 56 38 230
--------- --------- --------- ---------
$ 14 $ 364 $ 389 $ 1,420
========= ========= ========= =========
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IXIA
IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA)
(unaudited)
THREE MONTHS ENDED SEPTEMBER 30, 2004
--------------------------------------
GAAP Adjustments Non-GAAP
--------- ----------- ---------
Net revenues $ 30,092 $ -- $ 30,092
Cost of revenues 5,382 (1) (1) 5,381
Amortization of purchased technology 836 (836) (2) --
--------- --------- ---------
Gross profit 23,874 837 24,711
--------- --------- ---------
79.3% 82.1%
Operating expenses:
Research and development 6,544 -- 6,544
Sales and marketing 7,895 -- 7,895
General and administrative 3,035 -- 3,035
Amortization of intangible assets 373 (373) (2) --
Stock-based compensation 14 (14) (1) --
--------- --------- ---------
Total operating expenses 17,861 (387) 17,474
--------- --------- ---------
59.4% 58.1%
Income from operations 6,013 1,224 7,237
Interest and other, net 597 -- 597
--------- --------- ---------
Income before income taxes 6,610 1,224 7,834
Income tax expense 1,871 503 (3) 2,374
--------- --------- ---------
Net income $ 4,739 $ 721 $ 5,460
========= ========= =========
Earnings per share:
Basic $ 0.08 $ 0.09
Diluted $ 0.07 $ 0.09
Weighted average number of common and
common equivalent shares outstanding:
Basic 60,711 60,711
Diluted 63,856 63,856
(1) The adjustment represents the amortization of certain stock-based
compensation related to stock options granted prior to our IPO in October
2000.
(2) The adjustment represents the amortization of intangible assets related to
the acquisition of the ANVL product line from Empirix, Inc., the
acquisition of certain rights associated with the Chariot product line
from NetIQ Corporation, and the acquisition of G3 Nova Technologies, Inc.
(3) The adjustment represents the income tax effect of footnotes (1) and (2).
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IXIA
IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA)
(unaudited)
THREE MONTHS ENDED SEPTEMBER 30, 2003
--------------------------------------
GAAP Adjustments Non-GAAP
--------- ----------- ---------
Net revenues $ 21,635 $ -- $ 21,635
Cost of revenues 4,153 (33) (1) 4,120
Amortization of purchased technology 588 (588) (2) --
--------- --------- ---------
Gross profit 16,894 621 17,515
--------- --------- ---------
78.1% 81.0%
Operating expenses:
Research and development 5,169 -- 5,169
Sales and marketing 6,234 -- 6,234
General and administrative 2,312 -- 2,312
Amortization of intangible assets 305 (305) (2) --
Stock-based compensation 364 (364) (1) --
--------- --------- ---------
Total operating expenses 14,384 (669) 13,715
--------- --------- ---------
66.5% 63.4%
Income from operations 2,510 1,290 3,800
Interest and other, net 716 -- 716
--------- --------- ---------
Income before income taxes 3,226 1,290 4,516
Income tax expense 813 582 (3) 1,395
--------- --------- ---------
Net income $ 2,413 $ 708 $ 3,121
========= ========= =========
Earnings per share:
Basic $ 0.04 $ 0.05
Diluted $ 0.04 $ 0.05
Weighted average number of common and
common equivalent shares outstanding:
Basic 58,436 58,436
Diluted 62,455 62,455
(1) The adjustment represents the amortization of certain stock-based
compensation related to stock options granted prior to our IPO in October
2000.
(2) The adjustment represents the amortization of intangible assets related to
the acquisition of Caimis, Inc., the acquisition of the ANVL product line
from Empirix, Inc. and the acquisition of certain rights associated with
the Chariot product line from NetIQ Corporation.
(3) The adjustment represents the income tax effect of footnotes (1) and (2).
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IXIA
IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA)
(unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 2004
--------------------------------------
GAAP Adjustments Non-GAAP
--------- ----------- ---------
Net revenues $ 81,816 $ -- $ 81,816
Cost of revenues 14,644 (30) (1) 14,614
Amortization of purchased technology 2,207 (2,207) (2) --
--------- --------- ---------
Gross profit 64,965 2,237 67,202
--------- --------- ---------
79.4% 82.1%
Operating expenses:
Research and development 17,726 -- 17,726
Sales and marketing 23,247 -- 23,247
General and administrative 8,360 -- 8,360
Amortization of intangible assets 1,161 (1,161) (2) --
Stock-based compensation 389 (389) (1) --
--------- --------- ---------
Total operating expenses 50,883 (1,550) 49,333
--------- --------- ---------
62.2% 60.3%
Income from operations 14,082 3,787 17,869
Interest and other, net 1,930 -- 1,930
--------- --------- ---------
Income before income taxes 16,012 3,787 19,799
Income tax expense 4,705 1,657 (3) 6,362
--------- --------- ---------
Net income $ 11,307 $ 2,130 $ 13,437
========= ========= =========
Earnings per share:
Basic $ 0.19 $ 0.22
Diluted $ 0.18 $ 0.21
Weighted average number of common and
common equivalent shares outstanding:
Basic 60,351 60,351
Diluted 64,311 64,311
(1) The adjustment represents the amortization of certain stock-based
compensation related to stock options, granted prior to our IPO in October
2000.
(2) The adjustment represents the amortization of intangible assets related to
the acquisition of the ANVL product line from Empirix, Inc., the
acquisition of certain rights associated with the Chariot product line
from NetIQ Corporation, and the acquisition of G3 Nova Technologies, Inc.
(3) The adjustment represents the income tax effect of footnotes (1) and (2).
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IXIA
IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA)
(unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 2003
--------------------------------------
GAAP Adjustments Non-GAAP
--------- ----------- ---------
Net revenues $ 60,484 $ -- $ 60,484
Cost of revenues 11,235 (125) (1) 11,110
Amortization of purchased technology 588 (588) (2) --
--------- --------- ---------
Gross profit 48,661 713 49,374
--------- --------- ---------
80.5% 81.6%
Operating expenses:
Research and development 15,291 -- 15,291
Sales and marketing 18,288 -- 18,288
General and administrative 6,583 -- 6,583
Amortization of intangible assets 770 (770) (2) --
Stock-based compensation 1,420 (1,420) (1) --
--------- --------- ---------
Total operating expenses 42,352 (2,190) 40,162
--------- --------- ---------
70.0% 66.4%
Income from operations 6,309 2,903 9,212
Interest and other, net 2,329 -- 2,329
--------- --------- ---------
Income before income taxes 8,638 2,903 11,541
Income tax expense 2,247 1,040 (3) 3,287
--------- --------- ---------
Net income $ 6,391 $ 1,863 $ 8,254
========= ========= =========
Earnings per share:
Basic $ 0.11 $ 0.14
Diluted $ 0.10 $ 0.13
Weighted average number of common and
common equivalent shares outstanding:
Basic 58,028 58,028
Diluted 61,674 61,674
(1) The adjustment represents the amortization of certain stock-based
compensation related to stock options, warrants and restricted stock
granted prior to our IPO in October 2000.
(2) The adjustment represents the amortization of intangible assets related to
the acquisition of Caimis, Inc., the acquisition of the ANVL product line
from Empirix, Inc. and the acquisition of certain rights associated with
the Chariot product line from NetIQ Corporation.
(3) The adjustment represents the income tax effect of footnotes (1) and (2).
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