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Radisys Corporation (NASDAQ:RSYS), a market leader enabling wireless infrastructure solutions for telecom, aerospace, and defense applications, announced fourth quarter 2012 revenues of $69.3 million and a GAAP net loss of $4.9 million or $0.18 per share. Fourth quarter non-GAAP net income was $0.9 million or $0.03 per diluted share. Fourth quarter non-GAAP results exclude the amortization of acquired intangible assets, stock-based compensation, restructuring and acquisition-related charges, and non-cash tax expense. A reconciliation of GAAP to non-GAAP results is located in the tables included at the bottom of this press release.
Commenting on the fourth quarter results, Brian Bronson, Radisys' President and Chief Executive Officer, stated, “Our fourth quarter revenue and profitability exceeded our expectations. Increased shipments in Software-Solutions, particularly within our MRF business, as well as our ATCA product lines enabled a 9% sequential quarterly increase in total revenue. This improved revenue performance, combined with solid expense management, enabled a return to non-GAAP profitability.”
Fourth Quarter Financial Highlights
Revenue was $69.3 million; ATCA and Software-Solutions revenue accounted for 69% of revenue, growing 21% sequentially when compared to the third quarter of 2012.
Fourth quarter platform design wins spanned a number of different applications such as Femto Gateways, Load Balancers, and Edge Routing.
GAAP gross margin was 30%. Non-GAAP gross margin was 33%. Increased shipments of both Software-Solutions and ATCA products enabled a nearly two percentage point sequential gross margin improvement over the third quarter of 2012.
Total GAAP Research and Development (R&D) and Selling, General and Administrative (SG&A) expenses were $22.9 million and non-GAAP R&D and SG&A expenses were $22.0 million, representing an $0.8 million sequential reduction when compared to the third quarter.
Cash generated from operating activities was $3.0 million, resulting from improved profitability combined with lower working capital levels.
Cash and cash equivalents were $33.2 million at the end of the fourth quarter, a $1.4 million sequential increase from the third quarter.
Fourth Quarter Market & Operational Highlights
Software-Solutions: The market response to our MPX-12000 (Media Resource Function) continues to exceed expectations and when combined with our market-leading audio conferencing position, resulted in 2012 annual revenue growth of over 23% and a ramping funnel of opportunities in 2013. Trials and lab testing of the product's ability to process both voice and video over Next Generation LTE wireless networks at several large Tier 1 customers continue to progress well.
Advanced Telecommunications Computing Architecture (ATCA): During the fourth quarter we achieved a meaningful milestone by releasing to production our full suite of 40G ATCA T-Series products. The market acceptance and resulting product design wins have been strong over the last year and combined with a modestly improved demand environment resulted in a 25% sequential quarterly revenue increase when compared to the third quarter. This rebound came from customers in defense and aerospace as well as South Korean markets. Near-term demand has stabilized and we expect long-term shipments will continue to grow as carriers deploy next-generation networks to meet their customers' data requirements.
Mr. Bronson continued, “At the end of October, we outlined several areas of focus for the company moving forward.
Tighten the strategic focus of the Company – we want to do fewer things exceptionally well. We went through an accelerated strategic review process in the fourth quarter and agreed on our most important areas of investment which predominantly include software, complete hardware systems that are rich in software functionality, and complex solutions targeted primarily at the telecommunications infrastructure market. We have already taken actions as a result, and anticipate more in the future.
Restore profitability – I am pleased we returned to non-GAAP profitability in the fourth quarter.
Bring cash back on the balance sheet – during the fourth quarter we generated $3.0 million in cash from operations and have a number of focused actions in place to generate incremental cash.
Increase our operational focus – renewed focus on meeting customer deliverables enabled revenue at the high end of our guidance range and positive non-GAAP earnings.
We believe the operational improvements made over the last several months are sustainable, and as the macro telecom market demand continues to stabilize and ultimately improve, Radisys is well positioned to deliver continued sustainable profit growth.”