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Acme Packet Reports Results For Third Quarter Of 2011

Stocks in this article: APKT

Acme Packet, Inc. (NASDAQ: APKT), the leader in session delivery network solutions, today announced results for the third quarter ended September 30, 2011 and reaffirmed its business outlook for 2011.

Results for the Third Quarter of 2011

Total revenue in the third quarter of 2011 was $70.6 million, compared to $56.6 million in the third quarter of 2010 and $79.7 million in the second quarter of 2011. Net income in the third quarter of 2011 was $7.9 million, or $0.11 per share, compared to $10.5 million, or $0.15 per share, in the third quarter of 2010 and $14.0 million, or $0.20 per share, in the second quarter of 2011. Net income on a non-GAAP 1 basis in the third quarter of 2011 was $14.6 million, or $0.21 per share, compared to $13.7 million, or $0.20 per share, in the third quarter of 2010, and $20.4 million, or $0.29 per share, in the second quarter of 2011. All earnings per share results are on a fully diluted basis.

“The fundamentals of our business remain strong, and we remain well positioned to take advantage of the profound shift to Internet-based voice, video and unified communications,” said Andy Ory, President and CEO of Acme Packet, Inc. “We are excited about the new products and partnerships that we have launched to drive the next stage of our growth. We remain confident in our ability to execute on our full year business outlook.”

Company Reaffirms Business Outlook for 2011

The Company today reaffirmed its business outlook for 2011. The Company’s outlook is based on the current indications for its business, which may change at any time. A reconciliation of the Company’s expected GAAP to non-GAAP 1 business outlook, and a statement as to the use of non-GAAP 1 financial measures, is included at the end of this press release. All earnings per share results are on a fully diluted basis.

 
Business Outlook for Year Ending December 31, 2011
Estimate         Issued October 20, 2011
Total revenue (in millions) $315-$320
Total revenue growth rate Approximately 36%-38%
Non-GAAP 1 EPS $1.14-$1.18
Non-GAAP 1 EPS growth rate Approximately 43%-48%
GAAP EPS $0.78-$0.82
GAAP EPS growth rate Approximately 24%-30%
Diluted share count (in millions)         71.5
 

Company to Host Live Conference Call and Webcast

The Company’s management team will host a live conference call and webcast at 4:30 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 1.800.230.1093 and using access code “APKT”. The conference call may be accessed outside of the United States by dialing +1.612.288.0329 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 1.800.475.6701 or +1.320.365.3844 and using access code 219385 or by accessing the webcast replay on the Company’s investor relations website.

__________________

1 A reconciliation of GAAP to non-GAAP results, and a statement on the use of non-GAAP financial measures, is included at the end of this press release.

About Acme Packet

Acme Packet (NASDAQ: APKT), the leader in session delivery network solutions, enables the trusted, first-class delivery of next-generation voice, data and unified communications services and applications across IP networks. Our Net-Net product family fulfills demanding security, service assurance and regulatory requirements in service provider, enterprise and contact center networks. Based in Bedford, Massachusetts, Acme Packet designs and manufactures its products in the USA, selling them through over 200 reseller partners worldwide. More than 1,525 customers in 107 countries have deployed over 14,000 Acme Packet systems, including 90 of the top 100 service providers and 36 of the Fortune 100. For more information visit www.acmepacket.com.

Acme Packet, Inc. Safe Harbor Statement

Statements contained herein that are not historical fact (including those in the section “Company Reaffirms Business Outlook for 2011”) 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 to, among other things, expected financial and operating results, expected growth rates, future stock-based compensation and amortization expenses, future business prospects and market conditions. 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: the amount of stock-based compensation awarded; the applicable Company stock price used to determine stock-based compensation; the exercise pattern of employee stock options; difficulties expanding the Company’s customer base; difficulties leveraging market opportunities; difficulties providing solutions that meet the needs of customers; poor product sales; long sales cycles; difficulties developing new products; difficulties in relationships with vendors and partners; higher risks in international operations; difficulties managing rapid growth; difficulties managing the Company’s financial performance; the ability to hire and retain employees and appropriately staff operations; the Company’s cash needs; 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.

Acme Packet, Inc.

Condensed Consolidated Statements of Income

(in thousands, except share and per share data)

(unaudited)

         
Three Months Ended Nine Months Ended
September 30, September 30,
2011  

2010

2011   2010
Revenue:    
Product $53,077 $ 45,328 $ 177,507 $ 129,452
Maintenance, support and service 17,544 11,286 46,814 31,548
Total revenue 70,621 56,614 224,321 161,000
 
Cost of revenue:
Product 8,778 7,903 30,090 22,886
Maintenance, support and service 3,042 2,556 8,573 6,964
Total cost of revenue 11,820 10,459 38,663 29,850
 
Gross profit 58,801 46,155 185,658 131,150
 
Operating expenses:
Sales and marketing 27,201 17,012 75,640 50,062
Research and development 13,249 8,896 37,262 26,235
General and administrative 5,406 3,906 15,771 10,785
Merger and integration-related costs 120 - 300 -
Total operating expenses 45,976 29,814 128,973 87,082
 
Income from operations 12,825 16,341 56,685 44,068
 
Other (expense) income, net (53) 189 (147) 354
 
Income before provision for income taxes 12,772 16,530 56,538 44,422
 
Provision for income taxes 4,846 6,065 20,895 15,895
 
Net income $7,926 $ 10,465 $35,643 $ 28,527
 
Net income per share:
Basic $0.12 $ 0.17 $0.54 $ 0.46
Diluted $0.11 $ 0.15 $0.50 $ 0.43
 
Weighted average number of common shares used in the calculation of net income per share:
Basic 66,752,669 62,772,466 66,011,761 61,371,085
Diluted 70,908,590 68,426,272 70,887,241 67,114,486
 
Margin:
Gross margin 83.3% 81.5% 82.8% 81.5%
Operating margin 18.2% 28.9% 25.3% 27.4%
Net margin 11.2% 18.5% 15.9% 17.7%
 
 

Acme Packet, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

       
 
September 30,

2011

  December 31,

2010

Assets
Current assets:
Cash and cash equivalents $156,962 $91,669
Short-term investments 181,660 179,024
Accounts receivable, net 51,246 34,797
Inventory 11,779 6,662
Deferred product costs 1,074 3,572
Deferred tax asset 3,814 3,814
Income taxes receivable 13,404 9,979
Other current assets 6,953 3,231
Total current assets 426,892 332,748
Long-term investments - 5,030
Property and equipment, net 24,514 17,156
Acquired intangible assets, net 9,095 9,468
Goodwill 3,269 -
Deferred tax asset, net 14,802 14,802
Other assets 425 940
Total assets $478,997 $380,144
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $7,056 $7,161
Accrued expenses and other current liabilities 13,494 14,629
Deferred revenue 28,838 31,998
Total current liabilities 49,388 53,788
 
Deferred revenue 3,471 1,546
Deferred rent 1,820 4,265
 
Stockholders’ equity:
Common stock 74 71
Additional paid-in capital 334,254 266,114
Treasury stock, at cost (37,522) (37,522)
Other comprehensive income 21 34
Accumulated retained earnings 127,491 91,848
Total stockholders’ equity 424,318 320,545
Total liabilities and stockholders’ equity $478,997 $380,144
 
 

Condensed Consolidated Statements of Cash Flow

(in thousands)

(unaudited)

         
Three Months Ended Nine Months Ended
September 30, September 30
2011   2010 2011   2010
Cash provided by operating activities $16,441   $9,715 $36,646   $32,749
Cash provided by (used in) investing activities 10,516 (4,590) (14,486) (53,772)
Cash provided by financing activities 9,434 14,894 43,133 41,194
 
 

Acme Packet, Inc. Statement on Use of Non-GAAP Financial Measures and Reconciliation of Non-GAAP Net Income and Non-GAAP Net Income Per Share (in thousands, except share and per share data) (unaudited)

Statement on Use of Non-GAAP Financial Measures:

To supplement its condensed consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company discloses certain non-GAAP financial measures, including “non-GAAP net income”, “net income on a non-GAAP basis”, “non-GAAP net income per share”, “non-GAAP EPS”, “net income per share on a non-GAAP basis” and “non-GAAP EPS growth rate”. These non-GAAP financial measures are not presented in accordance with GAAP and are not meant to be a substitute for the most directly comparable GAAP measures of “net income”, “EPS”, “GAAP EPS growth rate” or “net income per share”. Rather, these non-GAAP financial measures should be evaluated in conjunction with its most directly comparable GAAP financial measure and the Company’s financial statements as a whole.

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