Acme Packet (ticker: APKT, exchange: NASDAQ Global Market (.O))
News Release -
7-Feb-2008
Acme Packet Reports Record Results for Fourth Quarter of Fiscal Year 2007 Company Posts Record Revenues and Pre-Tax Earnings; Issues Business Outlook for 2008
BURLINGTON, Mass.--(BUSINESS WIRE)--Feb. 7, 2008--Acme Packet,
Inc. (NASDAQ:APKT), the leader in session border control solutions,
today announced results for the fourth quarter and fiscal year ended
December 31, 2007. The Company also issued its business outlook for
the fiscal year ending December 31, 2008. Summary financial results
are as follows:
Fiscal Year 2007 Q4:
- Record Quarterly Revenues of $31.4 million, up 32%
year-over-year;
- Record Quarterly Earnings Before Income Taxes of $8.7 million,
up 29% year-over-year;
Fiscal Year 2007:
- Record Annual Revenues of $113.1 million, up 34%
year-over-year;
- Record Annual Earnings Before Income Taxes of $30.9 million,
up 22% year-over-year;
Results for the Fourth Quarter of Fiscal Year 2007
Total revenues for the fourth quarter of fiscal year 2007 grew to
a record $31.4 million, an increase of 32% compared to $23.7 million
in the same period last year. Earnings before taxes for the fourth
quarter of fiscal year 2007 grew to a record $8.7 million, an increase
of 29% compared to $6.7 million in the same period last year. The
Company's results in the fourth quarter of fiscal year 2007 reflect a
fully effective GAAP tax rate of approximately 40% compared to a tax
benefit in the same period last year when the Company was able to
utilize net operating loss carryforwards and tax credits to offset
taxable income. Net income for the fourth quarter of fiscal year 2007
was $5.2 million, or $0.08 per share on a diluted basis, compared to
$10.8 million, or $0.18 per share on a diluted basis, in the same
period last year. Net income on a non-GAAP(1) basis for the fourth
quarter of 2007 was $6.5 million, or $0.10 per share on a diluted
basis compared to $6.5 million, or $0.11 per share on a diluted basis
in the same period last year. Non-GAAP net income(1) differs from GAAP
net income in the fourth quarter of 2007 as it excludes stock-based
compensation expense, net of tax, of approximately $1.3 million, or
$0.02 per share. Non-GAAP net income(1) for the fourth quarter of 2006
differs from GAAP net income as it excludes the one-time tax benefit
from the release of the Company's deferred tax asset valuation
allowance of approximately $4.8 million, or $0.08 per share on a
diluted basis, as well as stock-based compensation expense, net of
tax, of approximately $458,000, or $0.01 per share on a diluted basis.
A reconciliation of GAAP to non-GAAP results is included at the end of
this press release.
Results for Fiscal Year 2007
Total revenues for fiscal year 2007 were $113.1 million, an
increase of 34% compared to $84.1 million last year. Earnings before
taxes grew to $30.9 million, an increase of 22% compared to $25.4
million last year. The Company's results for fiscal year 2007 reflect
a fully effective GAAP tax rate of approximately 37% compared to a tax
benefit for fiscal year 2006 when the Company was able to utilize net
operating loss carryforwards and tax credits to offset taxable income.
Net income was $19.6 million, or $0.30 per share on a diluted basis,
compared to $28.9 million, or $0.50 per share on a diluted basis, in
the same period last year. Net income on a non-GAAP basis(1) was $23.9
million, or $0.36 per share on a diluted basis, compared to $25.0
million, or $0.43 per share on a diluted basis, last year. Non-GAAP
net income(1) for fiscal year 2007 differs from GAAP net income as it
excludes stock-based compensation expense, net of tax, of
approximately $4.3 million, or $0.06 per share. Non-GAAP net income(1)
for fiscal year 2006 differs from GAAP net income as it excludes the
one-time tax benefit from the release in the fourth quarter of fiscal
year 2006 of the Company's deferred tax asset valuation allowance of
approximately $4.8 million, or $0.08 per share on a diluted basis,
partially offset by stock-based compensation expense, net of tax, of
approximately $867,000, or $0.02 per share on a diluted basis. A
reconciliation of GAAP to non-GAAP results is included at the end of
this press release.
"Our strong fourth quarter results further demonstrates our
position as the leader in the session border controller market," said
Andy Ory, President and Chief Executive Officer of Acme Packet, Inc.
"By adding over 120 new customers in 2007 our solutions have now been
deployed at nearly 500 customers including 82 of the 100 largest
service providers in the world. In 2008, we look to leverage our
incumbency in the service provider market and expand our presence in
the adjacent enterprise, contact center, and wireless markets to drive
market share gains and growth in both revenue and earnings."
Company Introduces Business Outlook for Fiscal Year 2008
The Company expects total revenues for fiscal year 2008 to range
between $142 million and $147 million. In fiscal year 2008, the
Company expects GAAP net income to range between $0.28 and $0.32 per
share on a diluted basis and non-GAAP(1) net income to range between
$0.38 and $0.42 per share on a diluted basis. Non-GAAP(1) net income
for fiscal year 2008 is expected to differ from GAAP net income as it
is expected to exclude estimated stock-based compensation expense of
approximately $6.4 million, or $0.10 per share. The Company currently
expects interest income to be approximately $5.0 million in fiscal
year 2008. The Company's current business outlook assumes a full year
weighted average share count of approximately 67.0 million and a full
year non-GAAP effective tax rate of 36.5%.
"Based on the visibility we have today and the nature of the
strategic discussions we are having with our customers, we are
forecasting full year revenue growth of between 26% and 30% in 2008,"
said Keith Seidman, Chief Financial Officer of Acme Packet, Inc. "We
plan to continue investing appropriately in 2008 in both our research
and development initiatives as well as our sales and marketing efforts
to extend our market-leading position. We will look to balance the
near term revenue opportunity with these long term investment
requirements with an objective of delivering full year non-GAAP(1)
operating margins of approximately 25% to 26% in 2008."
Operational Highlights
The following milestones were completed or announced since the
Company's third quarter of fiscal year 2007 ended on September 30,
2007:
- The Company announced that Telecom Italia Sparkle, a wholly
owned subsidiary of Telecom Italia, has deployed Acme Packet
Net-Net SBCs in major cities in Italy, Germany and the United
States. With the deployment of over a dozen high-availability
Acme Packet Net-Net SBC configurations in Milan and Palermo,
Italy, Frankfurt, Germany and Newark, NJ, Telecom Italia
Sparkle facilitates secure international VoIP interconnects
with other service providers using SIP, H.323 and SIP-H.323
interworking. TI Sparkle has also joined Acme Packet Connected
Universe as the first Constellation member located in Italy.
- The Company announced that Uniconverse Co. Ltd., the IT
services company of the Hanjin Group, one of the world's
leading transportation conglomerates, is using Acme Packet
Net-Net SBCs to deliver trusted, first-class IP interactive
communications across its enterprise networks. Acme Packet's
SBCs will support unified communications to Hanjin Group
companies by interconnecting branch offices and seamlessly
integrating sites and employees worldwide. Uniconverse
provides internal, converged communications services such as
voice, email, presence and collaboration to Hanjin Group's
Korean companies, including Korean Air.
- The Company announced that Vodafone Portugal, a leading
Portuguese mobile service provider, is leveraging Acme
Packet's Net-Net SBCs to provide secure, high-quality
residential VoIP services throughout Portugal. Deployed as
part of an Ericsson Core IP Multimedia Subsystem (IMS)
solution, Acme Packet's Net-Net SBCs protect Vodafone
Portugal's IMS network as well as provide a solution for
service assurance, service reach maximization and regulatory
compliance.
- The Company announced three service provider customers in the
Caribbean and Latin America are deploying its Net-Net SBCs:
Amzak International, a cable operator and CLEC in El Salvador;
IPLAN Telecomunicaciones, a competitive operator based in
Argentina; and WorldNet Telecommunications, a VoIP provider
and the third largest telecommunications provider in Puerto
Rico. Acme Packet SBCs are now helping service providers in 18
countries throughout the region control their IP network
borders, enabling their customers to fully leverage a wide
range of trusted, first-class IP communications. These new
customers have deployed Acme Packet's Net-Net SBCs to support
enterprise hosted voice services and VoIP peering between
service providers while providing protection to the SBCs
themselves, softswitches and other elements of the service
delivery infrastructure, with access control, topology hiding
and denial of service (DoS) attack protection.
- The Company announced that it has attained ISO 9001:2000
certification. This certification demonstrates adherence to
rigorous quality standards across the company, and is a
reflection of a company constantly striving to improve its
business practices. ISO (International Organization for
Standardization) is a network of national standards instituted
within 157 countries worldwide.
Company to Host Live Conference Call and Webcast
The Company's management team will host a live conference call and
webcast at 5:00 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 (866)
861-5389 and using access code "APKT". The conference call may be
accessed outside of the United States by dialing (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
(800) 475-6701 and using access code 905456 or by accessing the
webcast replay on the Company's investor relations website.
About Acme Packet, Inc.
Acme Packet, Inc. (NASDAQ: APKT), the leader in session border
control solutions, enables the delivery of trusted, first class
interactive communications--voice, video and multimedia sessions--and
data services across IP network borders. Our Net-Net family of session
border controllers and multiservice security gateways supports
multiple applications in service provider, large enterprise and
contact center networks--from VoIP trunking to hosted enterprise and
residential services to fixed-mobile convergence. They satisfy
critical security, service assurance and regulatory requirements in
wireline, cable and wireless networks; and support multiple
protocols--SIP, H.323, MGCP/NCS and H.248--and multiple border
points--interconnect, access and data center. Our products have been
selected by 500 customers in 85 countries, including 24 of the top 25,
and 82 of the top 100 service providers in the world. For more
information, contact us at +1 781.328.4400, or visit
www.acmepacket.com.
Acme Packet, Inc. Safe Harbor Statement
Statements contained herein that are not historical fact
(including those in the quotes above and the section "Company
Introduces Business Outlook for Fiscal Year 2008") 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, among other
things, to the Company's position in the session border controller
market; the Company's expected financial and operating results,
including expected revenue and net income per share (on both a GAAP
and non-GAAP basis) for future periods, including fiscal year 2008;
the amount and impact of stock-based compensation expense; the
Company's definition of "non-GAAP net income" and/or "non-GAAP net
income per share"; its ability to build and grow; the benefits or
advantages of its programs, partnerships, services, or products; the
benefits to the Company and each of Amzak International; IPLAN
Telecomunicaciones, Telecom Italia, Uniconverse Co., Vodafone
Portugal, and WorldNet Telecommunications, expected from the
deployment of the Company's products; its ISO 9001 certification; its
traction in both new and existing customers; its ability to achieve
its goals, plans and objectives; its ability to attract and retain
customers; and its development activities. 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: difficulties growing its customer
base; difficulties leveraging market opportunities; difficulties
providing solutions that meet the needs of customers; poor product
sales; long sales cycles; difficulty developing new products;
difficulty in relationships with vendors and partners; higher risk in
international operations; difficulty managing rapid growth, financial
performance; its ability to hire and retain necessary employees and
appropriately staff its operations; the spending of the proceeds of
its capital raising activities; its cash needs; and 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.
(1)The Company uses the financial measures "non-GAAP net income"
and "non-GAAP net income per share" to supplement its consolidated
financial statements, which are presented in accordance with
accounting principles generally accepted in the United States
("GAAP"). The presentation of non-GAAP net income and non-GAAP net
income per share is not meant to be a substitute for "net income" or
"net income per share", presented in accordance with GAAP but rather
should be evaluated in conjunction with net income and net income per
share. The Company's management believes that the presentation of
non-GAAP net income and non-GAAP net income per share provides useful
information to investors because this financial measure excludes
stock-based compensation expense which is a non-cash charge.
Management does not consider this item to be part of the Company's
on-going operating activities or meaningful in evaluating the
Company's past financial performance or future prospects. Management
believes that excluding stock-based compensation expense is useful to
investors because it is more representative of ongoing costs and
therefore more comparable to historical operations. With respect to
"non-GAAP net income" and "non-GAAP net income per share" relating to
fiscal year 2006, the benefit of the release of the Company's deferred
tax asset valuation allowance is a one-time event occurring in the
fourth quarter of fiscal year 2006 and is not expected to reoccur in
subsequent fiscal years. Management believes that excluding this
one-time event is useful to investors because it is more
representative of ongoing costs and therefore more comparable to
historical operations. In addition, each of non-GAAP net income and
non-GAAP net income per share is a primary financial indicator that
the Company's management uses to evaluate the Company's financial
results and forecast anticipated financial results for future periods.
Management also uses these non-GAAP figures to make financial and
operational decisions as these numbers exclude non-operational
activities. These non-GAAP measures should not be considered measures
of the Company's liquidity. The Company's definition of "non-GAAP net
income" and/or "non-GAAP net income per share" may differ from similar
measures used by other companies and may differ from period to period.
From time to time, subject to the review and approval of the audit
committee of the Board of Directors, management may make other
adjustments for expenses and gains that it does not consider
reflective of core operating performance in a particular period and
may modify "non-GAAP net income" and/or "non-GAAP net income per
share" by excluding these expenses and gains.
Acme Packet, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
Three Months Ended Twelve Months Ended
--------------------- ---------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2007 2006 2007 2006
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Revenue:
Product $26,163 $19,840 $94,906 $71,810
Maintenance, support and
service 5,211 3,856 18,146 12,260
---------- ---------- ---------- ----------
Total revenue 31,374 23,696 113,052 84,070
---------- ---------- ---------- ----------
Cost of revenue (1):
Product 4,717 4,000 18,281 14,624
Maintenance, support and
service 1,035 933 4,062 2,951
---------- ---------- ---------- ----------
Total cost of revenue 5,752 4,933 22,343 17,575
---------- ---------- ---------- ----------
Gross profit 25,622 18,763 90,709 66,495
---------- ---------- ---------- ----------
Operating expenses (1):
Sales and marketing 10,193 7,294 35,387 23,759
Research and development 5,593 3,798 20,058 12,988
General and
administrative 2,771 2,270 10,732 6,566
---------- ---------- ---------- ----------
Total operating expenses 18,557 13,362 66,177 43,313
Income from operations 7,065 5,401 24,532 23,182
Other income, net 1,585 1,330 6,369 2,239
---------- ---------- ---------- ----------
Income before provision for
(benefit from) income
taxes 8,650 6,731 30,901 25,421
Provision for (benefit
from) for income taxes 3,493 (4,070) 11,340 (3,443)
---------- ---------- ---------- ----------
Net income $5,157 $10,801 $19,561 $28,864
========== ========== ========== ==========
Net income per share
applicable to common
stockholders (2)
Basic $0.09 $0.20 $0.33 $0.57
========== ========== ========== ==========
Diluted $0.08 $0.18 $0.30 $0.50
========== ========== ========== ==========
Weighted average number of
common shares used in net
income per common share
calculation (2)
Basic 60,196,834 53,262,134 59,385,082 50,437,801
========== ========== ========== ==========
Diluted 65,992,936 61,190,434 66,016,411 57,418,796
========== ========== ========== ==========
----------------------------------------------------------------------
(1) Amounts include stock-
based compensation
expense, as follows:
Cost of product revenue $91 $14 $267 $27
Cost of maintenance,
support and service
revenue 34 33 294 49
Sales and marketing 788 156 2,377 337
Research and development 731 138 2,118 296
General and
administrative 221 117 994 158
----------------------------------------------------------------------
(2) In the three and twelve-month periods ended December 31, 2006, net
income per share calculations were computed using the two-class
method. Under the two-class method, basic net income per share is
computed by dividing the net income applicable to common stockholders
by the weighted-average number of common shares outstanding for the
fiscal period. Diluted net income per share is computed using the
more dilutive of (a) the two-class method or (b) the if-converted
method. The Company allocates net income first to preferred
stockholders based on dividend rights under the Company's charter and
then to common stockholders based on ownership interests.
Acme Packet, Inc.
Table of Reconciliation from GAAP to Non-GAAP
(in thousands, except per share data)
Three Months Twelve Months
Ended Ended
----------------- -----------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2007 2006 2007 2006
----------------- -----------------
(unaudited) (unaudited)
Reconciliation of non-GAAP net
income (1):
Net income $ 5,157 $ 10,801 $ 19,561 $ 28,864
Adjustments:
Stock-based compensation expense,
net of taxes 1,320 458 4,303 867
Benefit related to the release of
deferred tax asset valuation
allowance - (4,775) - (4,775)
-------- -------- -------- --------
Non-GAAP net income (1) $ 6,477 $ 6,484 $ 23,864 $ 24,956
======== ======== ======== ========
Non-GAAP net income per share (1)
applicable to common stockholders
Basic $ 0.11 $ 0.12 $ 0.40 $ 0.49
======== ======== ======== ========
Diluted $ 0.10 $ 0.11 $ 0.36 $ 0.43
======== ======== ======== ========
(1)The Company uses the financial measures "non-GAAP net income"
and "non-GAAP net income per share" to supplement its consolidated
financial statements, which are presented in accordance with
accounting principles generally accepted in the United States
("GAAP"). The presentation of non-GAAP net income and non-GAAP net
income per share is not meant to be a substitute for "net income" or
"net income per share" presented in accordance with GAAP but rather
should be evaluated in conjunction with net income and net income per
share. The Company's management believes that the presentation of
non-GAAP net income and non-GAAP net income per share provides useful
information to investors because this financial measure excludes
stock-based compensation expense which is a non-cash charge.
Management does not consider this item to be part of the Company's
on-going operating activities or meaningful in evaluating the
Company's past financial performance or future prospects. Management
believes that excluding stock-based compensation expense is useful to
investors because it is more representative of ongoing costs and
therefore more comparable to historical operations. With respect to
"non-GAAP net income" and "non-GAAP net income per share" relating to
fiscal year 2006, the benefit of the release of the Company's deferred
tax asset valuation allowance is a one-time event occurring in the
fourth quarter of fiscal year 2006 and is not expected to reoccur in
subsequent fiscal years. Management believes that excluding this
one-time event is useful to investors because it is more
representative of ongoing costs and therefore more comparable to
historical operations. In addition, each of non-GAAP net income and
non-GAAP net income per share is a primary financial indicator that
the Company's management uses to evaluate the Company's financial
results and forecast anticipated financial results for future periods.
Management also uses these non-GAAP figures to make financial and
operational decisions as these numbers exclude non-operational
activities. These non-GAAP measures should not be considered measures
of the Company's liquidity. The Company's definition of "non-GAAP net
income" and/or "non-GAAP net income per share" may differ from similar
measures used by other companies and may differ from period to period.
From time to time, subject to the review and approval of the audit
committee of the Board of Directors, management may make other
adjustments for expenses and gains that it does not consider
reflective of core operating performance in a particular period and
may modify "non-GAAP net income" and/or "non-GAAP net income per
share" by excluding these expenses and gains.
Acme Packet, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Dec. 31, Dec. 31,
2007 2006
-------- --------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $136,420 $118,714
Accounts receivable, net 29,998 14,337
Inventory 5,784 7,211
Deferred tax asset 1,346 3,515
Other current assets 2,095 1,681
-------- --------
Total current assets 175,643 145,458
Property and equipment, net 7,343 6,857
Other assets 347 343
Deferred tax asset 3,242 1,265
-------- --------
Total assets $186,575 $153,923
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 4,659 $ 5,354
Accrued expenses and other liabilities 8,510 7,859
Deferred revenue 9,974 9,401
-------- --------
Total current liabilities 23,143 22,614
-------- --------
Deferred rent 265 372
Stockholders' equity:
Common stock 60 59
Additional paid-in capital 142,974 130,306
Retained earnings 20,133 572
-------- --------
Total stockholders' equity 163,167 130,937
-------- --------
Total liabilities and stockholders' equity $186,575 $153,923
======== ========
CONTACT:
Investor Relations:
Acme Packet
Brian Norris, 781-328-4790; bnorris@acmepacket.com
or
Industry Analysts/Trade and Business Press:
Connect2 Communications
Rich Williams, 919-554-3532; rmwilliams@connect2comm.com
SOURCE:
Acme Packet, Inc.
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Acme Packet
