PROCERA NETWORKS INC FREMONT, Calif., Aug. 6, 2014 /PRNewswire/ -- Procera Networks, Inc. (NASDAQ: PKT), the global Internet intelligence company, today reported financial results for its second quarter 2014 ended on June 30, 2014.
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Second Quarter 2014 Financial & Business Highlights
-- Reports record second quarter revenue of $20.6 million, up 16%
year-over-year; bookings of $23.9 million.
-- Bookings reflect our first important wins following our expansion in
Africa.
-- Added 12 new service provider customers, including three new Tier 1
service providers.
-- Received expansion orders from 10 current Tier 1 customers.
-- Received a follow-on order for ContentLogic from an existing Tier 1 EMEA
Mobile operator customer.
-- Extended performance leadership with the launch of the new 600 Gbps
PL20000 with 100 gigabit interfaces.
-- Announced RAN Perspectives, a new Subscriber Experience solution for
mobile broadband operators that delivers real-time location and RAN QoE
awareness.
Revenue for the second quarter of 2014 was $20.6 million, up 16% from revenue of $17.8 million in the second quarter of 2013. GAAP net loss for the second quarter of 2014 was $1.4 million, or $0.07 per diluted share, compared to GAAP net loss of $3.3 million, or $0.16 per diluted share, for the second quarter of 2013. Non-GAAP net profit for the second quarter of 2014 was $19,000 or $0.00 per diluted share, compared to non-GAAP net loss of $0.3 million, or $0.02 per diluted share, for the second quarter of 2013. Bookings for the second quarter of 2014 were $23.9 million.
A description of the non-GAAP financial measures and reconciliation to comparable GAAP measures is provided in the accompanying table entitled "Use of Non-GAAP Financial Information" below.
"We are pleased with our revenue growth in international markets and our organic innovation," stated James Brear, President and CEO of Procera Networks. "Our market is evolving rapidly and we are maniacal in our focus on the broadband subscriber experience and delivering solutions to service providers that enable them to manage and monetize their networks."
Guidance
Procera is reiterating guidance of annual revenue growth of 15% for 2014. We expect to return to non-GAAP profitability in the second half of 2014.
This guidance is an estimate only and actual performance could differ. Procera's financial results historically have been volatile, and a number of uncertainties and other factors may cause Procera's future results, performance or achievements to be materially different from prior results.
Conference Call Information
Procera Networks, Inc. is hosting a conference call for analysts and investors to discuss its second quarter 2014 results at 1:30 p.m. Pacific time (4:30 p.m. Eastern time) today, August 6, 2014. A live audio webcast of the conference call along with supplemental financial information will also be accessible from the "Investor Relations" section of Procera's website at http://proceranetworks.com/investors. A replay will be available following the call on Procera's Investor Relations website and for one week at the following numbers: 1-877-870-5176 (domestic), 1-858-384-5517 (international) using ID# 13586709.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements related to Procera Networks, Inc., including statements about Procera's expectations for 2014 revenue growth and product solution investments, a return to non-GAAP profitability in the second half of 2014, long-term growth and the market opportunity, the estimated future value of Procera's recently awarded business, potential applications for Procera's products, as well as Procera's general outlook. Statements in this release that are not historical or current facts are forward-looking statements. All forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause Procera's actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, without limitation, risks and uncertainties related to the acceptance and adoption of Procera's products; Procera's ability to service and upgrade its products; lengthy sales cycles and lab and field trial delays by service providers; its ability to obtain any follow-on orders from major customers; its customers canceling orders or awards; its ability to achieve revenue recognition on awarded business; its dependence on a limited product line and key customers; its dependence on key employees; its ability to compete in our industry with companies that are significantly larger and have greater resources than us; its ability to manage costs effectively; its ability to protect its intellectual property rights in a global market; its ability to manufacture product quickly enough to meet potential demand; its ability to continue to integrate Vineyard Networks and realize anticipated benefits from the acquisition; and other risks and uncertainties described more fully in Procera's documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact Procera Networks' business are described in the "Risk Factors" sections of its Form 10-K filed for the year ended December 31, 2013 and its Form 10-Q filed for the quarter ended March 31, 2014, and other reports filed with the SEC, which are available free of charge on the SEC's website at http://www.sec.gov and on Procera's website at http://www.proceranetworks.com. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements in this press release are based on information available to Procera as of the date hereof, and Procera undertakes no obligation to update, amend or clarify any forward-looking statement for any reason.
Use of Non-GAAP Financial Information
In addition to the financial results presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures. Our management regularly uses these supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods and believes that these non-GAAP financial measures, when taken together with the corresponding GAAP measures, provide incremental insight into the underlying factors and trends affecting both Procera's performance and its cash-generating potential.
Our non-GAAP financial measures include adjustments for stock-based compensation expenses; business development expenses; cost reduction efforts; and acquisition-related intangible asset and deferred compensation amortization and tax effects. We have excluded the effect of stock-based compensation; the cost of outside professional services for negotiating and performing legal, accounting and tax due diligence for potential mergers and acquisitions; expenses connected with cost reduction efforts; and acquisition-related intangible asset and deferred compensation amortization, and tax effects, from our non-GAAP gross profit, operating expenses and net income measures. Stock-based compensation, which represents the estimated fair value of stock options, restricted stock and restricted stock units granted to employees, is excluded since grant activities vary significantly from quarter to quarter in both quantity and fair value. In addition, although stock-based compensation will recur in future periods, excluding this expense allows us to better compare core operating results with those of our competitors who also generally exclude stock-based compensation from their core operating results, and who may have different granting patterns and types of equity awards and who may use different option valuation assumptions than we do. Business development expenses are necessary as part of certain growth strategies, such as through mergers and acquisitions, and will occur when such transactions are pursued. We have excluded these expenses because they can vary materially from period-to-period and transaction-to-transaction and expenses associated with these business development activities are not considered a key measure of Procera's operating performance. Cost reduction efforts occur with shifts in objectives and evolving requirements of the business and can result in fluctuating expenses connected with reducing employment in certain areas. We have excluded these expenses because they can vary significantly from period-to-period and are not considered a key measure of Procera's operating performance. Acquisition-related intangible asset and deferred compensation amortization and tax effects represent non-cash charges and benefits that result from the accounting for acquisitions. We have excluded these items because, in any period, they may not directly correlate to the underlying performance of Procera's business and these items can vary materially from period-to-period and transaction-to-transaction. In addition, we exclude these acquisition-related costs and benefits when evaluating our current operating performance.
Our non-GAAP financial measures may not reflect the full economic impact of Procera's activities. Further, these non-GAAP financial measures may be unique to Procera, as they may be different from non-GAAP financial measures used by other companies, including Procera's competitors. As such, this presentation of non-GAAP financial measures may not enhance the comparability of Procera's results to the results of other companies. Investors are cautioned not to place undue reliance on our non-GAAP financial measures. In addition, investors are cautioned that these non-GAAP financial measures are not intended to be considered in isolation and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.
For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, "GAAP to Non-GAAP Reconciliations."
About Procera Networks Inc.
Procera Networks, Inc. (NASDAQ: PKT) delivers Internet Intelligence solutions to service providers and network equipment manufacturers for analytics and enforcement of broadband traffic worldwide. Procera's solutions provide actionable intelligence and policy enforcement to ensure a high quality experience for any Internet and network connected devices. For more information, visit www.proceranetworks.com or follow Procera on Twitter at @ProceraNetworks.
Investor Relations Contact
Nicole Noutsios
NMN Advisors (for Procera Networks)
procera@nmnadvisors.com
1+510-315-1003
Media Contact
Bob Eastwood
Engage PR (for Procera Networks)
beastwood@engagepr.com
1+ 510-748-8200 x215
Procera Networks, Inc.
Condensed Consolidated Statements of Operations
Unaudited
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
Sales:
Product sales $15,124 $13,617 $24,628 $24,028
Support sales 5,484 4,222 10,521 7,982
Total sales 20,608 17,839 35,149 32,010
Cost of sales:
Product cost
of sales 7,780 6,283 12,871 12,370
Support cost
of sales 1,085 831 2,151 1,546
Total cost of sales 8,865 7,114 15,022 13,916
----- ----- ------ ------
Gross profit 11,743 10,725 20,127 18,094
------ ------ ------ ------
57.0% 60.1% 57.3% 56.5%
Operating expenses:
Research and
development 3,716 4,186 8,264 8,587
Sales and
marketing 7,051 7,349 13,928 13,970
General and
administrative 2,442 3,352 5,552 6,989
Total operating expenses 13,209 14,887 27,744 29,546
------ ------ ------ ------
Loss from operations (1,466) (4,162) (7,617) (11,452)
------ ------ ------ -------
Interest and other income (expense), net 83 20 111 (30)
--- --- --- ---
Loss before
income taxes (1,383) (4,142) (7,506) (11,482)
Income tax provision (benefit) 25 (860) (122) (1,483)
--- ---- ---- ------
Net loss $(1,408) $(3,282) $(7,384) $(9,999)
Net loss per share - basic and diluted $(0.07) $(0.16) $(0.36) $(0.50)
====== ====== ====== ======
Shares used in computing net loss per
share:
Basic and
diluted 20,356 19,997 20,342 19,971
Procera Networks, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2014 2013
---- ----
ASSETS
Current Assets:
Cash and cash
equivalents $25,278 $90,774
Short-term
investments 81,859 15,789
Accounts
receivable,
net of
allowance 18,311 25,008
Inventories,
net 16,543 18,836
Prepaid
expenses and
other 2,696 2,128
Total current assets 144,687 152,535
Property and
equipment, net 7,604 7,121
Intangible
assets, net 5,471 6,270
Goodwill 12,286 12,326
Deferred tax
asset 1,429 1,101
Other non-
current assets 114 83
Total assets $171,591 $179,436
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts
payable $4,233 $7,305
Deferred
revenue 11,957 11,633
Accrued
liabilities 6,379 6,721
Total current liabilities 22,569 25,659
Non-current liabilities:
Deferred
revenue 3,605 3,273
Deferred tax
liability 1,623 1,690
Deferred rent 127 143
Total liabilities 27,924 30,765
Commitments and contingencies - -
Stockholders' equity:
Common stock 21 21
Additional
paid-in
capital 222,285 219,763
Accumulated
other
comprehensive
loss (2,039) (1,897)
Accumulated
deficit (76,600) (69,216)
Total stockholders' equity 143,667 148,671
------- -------
Total liabilities and stockholders'
equity $171,591 $179,436
======== ========
Procera Networks, Inc.
GAAP to Non-GAAP Reconciliation; and Supplemental Financial Information
Unaudited
(in thousands, except per share data)
Three Months Ended Six Months Ended
------------------ ----------------
June 2014 March 2014 June 2013 June 2014 June 2013
--------- ---------- --------- --------- ---------
Sales:
Product sales $15,124 $9,504 $13,617 $24,628 $24,028
Support sales 5,484 5,037 4,222 10,521 7,982
Total sales 20,608 14,541 17,839 35,149 32,010
Cost of sales:
Product cost of sales,
GAAP 7,780 5,091 6,283 12,871 12,370
Non-GAAP
adjustments:
Stock-based compensation (1) (7) (15) (20) (22) (39)
Amortization of intangibles (2) (267) (262) (284) (529) (544)
Cost reduction efforts (3) - (237) - (237) -
--- ---- --- ---- ---
Product cost of
sales, non-GAAP 7,506 4,577 5,979 12,083 11,787
Support cost of sales,
GAAP 1,085 1,066 831 2,151 1,546
Non-GAAP
adjustments:
Stock-based compensation (1) (86) (82) (48) (168) (141)
--- --- --- ---- ----
Support cost of
sales, non-GAAP 999 984 783 1,983 1,405
--- --- --- ----- -----
Total cost of
sales, non-GAAP 8,505 5,561 6,762 14,066 13,192
----- ----- ----- ------ ------
Gross profit, non-
GAAP 12,103 8,980 11,077 21,083 18,818
------ ----- ------ ------ ------
58.7% 61.8% 62.1% 60.0% 58.8%
Operating expenses:
Research and
development 3,716 4,548 4,186 8,264 8,587
Non-GAAP
adjustments:
Stock-based compensation (1) (296) (388) (216) (684) (716)
Cost reduction efforts (3) - (206) - (206) -
Deferred compensation (4) - (65) (752) (65) (1,440)
--- --- ---- --- ------
Research and
development, non-
GAAP 3,420 3,889 3,218 7,309 6,431
Sales and marketing 7,051 6,877 7,349 13,928 13,970
Non-GAAP
adjustments:
Stock-based compensation (1) (398) (408) (376) (806) (963)
Amortization of intangibles (2) (115) (113) (124) (228) (236)
Cost reduction efforts (3) (114) (74) - (188) -
Deferred compensation (4) - - (716) - (1,370)
--- --- ---- --- ------
Sales and
marketing, non-
GAAP 6,424 6,282 6,133 12,706 11,401
General and
administrative 2,442 3,110 3,352 5,552 6,989
Non-GAAP
adjustments:
Stock-based compensation (1) (351) (420) (487) (771) (886)
Cost reduction efforts (3) - (27) - (27) -
Business development expenses (5) - - (614) - (1,616)
General and
administrative,
non-GAAP 2,091 2,663 2,251 4,754 4,487
----- ----- ----- ----- -----
Total operating
expenses, non-
GAAP 11,935 12,834 11,602 24,769 22,319
------ ------ ------ ------ ------
Income (loss) from operations, non-GAAP 168 (3,854) (525) (3,686) (3,501)
--- ------ ---- ------ ------
Interest and other income (expense), net 83 28 20 111 (30)
--- --- --- --- ---
Income (loss) before
income taxes, non-
GAAP 251 (3,826) (505) (3,575) (3,531)
Income tax provision (benefit) 25 (147) (860) (122) (1,483)
Non-GAAP
adjustments (6) 207 179 688 386 1,414
--- --- --- --- -----
Income tax provision
(benefit), non-GAAP 232 32 (172) 264 (69)
Net income (loss),
non-GAAP $19 $(3,858) $(333) $(3,839) $(3,462)
Net income (loss) per share - diluted, non-GAAP $0.00 $(0.19) $(0.02) $(0.19) $(0.17)
===== ====== ====== ====== ======
Shares used in computing diluted net income (loss) per share 20,356 20,329 19,997 20,342 19,971
Reconciliation of Net Income (Loss):
U.S. GAAP as reported $(1,408) $(5,976) $(3,282) $(7,384) $(9,999)
Non-GAAP
adjustments:
Stock-based compensation (1) 1,138 1,313 1,147 2,451 2,745
Amortization of intangibles (2) 382 375 408 757 780
Cost reduction efforts (3) 114 544 - 658 -
Deferred compensation (4) - 65 1,468 65 2,810
Business development expenses (5) - - 614 - 1,616
Income tax adjustment (6) (207) (179) (688) (386) (1,414)
As Adjusted $19 $(3,858) $(333) $(3,839) $(3,462)
-
Reconciliation of Diluted Net Income (Loss) Per Share:
U.S. GAAP as reported $(0.07) $(0.29) $(0.16) $(0.36) $(0.50)
Non-GAAP
adjustments:
Stock-based compensation (1) 0.05 0.06 0.05 0.12 0.14
Amortization of intangibles (2) 0.02 0.02 0.02 0.04 0.04
Cost reduction efforts (3) 0.01 0.03 - 0.03 -
Deferred compensation (4) - 0.00 0.07 0.00 0.14
Business development expenses (5) - - 0.03 - 0.08
Income tax adjustment (6) (0.01) (0.01) (0.03) (0.02) (0.07)
----- ----- ----- ----- -----
As Adjusted $0.00 $(0.19) $(0.02) $(0.19) $(0.17)
Shares used in computing diluted net income (loss) per share 20,356 20,329 19,997 20,342 19,971
(1) Stock-based compensation expense is
calculated in accordance with the fair
value recognition provisions of ASC 718.
(2) Amortization expense associated with
intangible assets acquired in the
Vineyard Networks acquisition.
(3) Severance and other employee-related
costs in connection with the Company's
cost-reduction efforts.
(4) Deferred compensation includes
amortization of amounts paid under
retention agreements with Vineyard's
three founders; these were paid during Q1
2014, after one year of continuous
employment with the Company.
(5) Business development expenses include the
cost of outside professional services for
negotiating and performing legal,
accounting and tax due diligence for
potential mergers, acquisitions and other
significant partnership arrangements.
(6) Income tax benefit associated with the
following Vineyard acquisition related
items:
- reversal of Vineyard's pre-existing
income tax valuation allowance upon
acquisition; and
-amortization of acquired intangible
assets and book/tax differences on
deferred revenue.
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SOURCE Procera Networks, Inc.
