Previous Statements by NWK
» Network Equipment Technologies F1Q11 (Qtr End 06/25/2010) Earnings Conference Call Transcript
» Network Equipment Technologies Inc. F4Q10 (Qtr End 03/26/2010) Earnings Call Transcript
» Network Equipment Technologies F3Q10 (Qtr End 12/25/09) Earnings Call Transcript
» Network Equipment Technologies F2Q10 (Qtr End 09/25/09) Earnings Call Transcript
The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Additionally, though an audio archive of this call will be available on the company's website for at least 12 months, the statements made on this conference call are only made as of October 27, 2010 and we disclaim any duty or intention to update forward-looking statements.In addition to financial measures presented in accordance with GAAP, we will also be discussing certain non-GAAP financial measures that are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures should not be considered a substitute for or superior to GAAP results. Please refer to the press release issued today for further detail regarding the non-GAAP measures. Reconciliations to GAAP can be found in the press release, which is posted on our website. Our agenda today begins with David Wagenseller, who will provide a detailed review of our financial results. Nick Keating will then comment on the quarter's business and operational highlights. And David will then offer comments before we open the call for your questions. At this time, I'd like to turn the call over to David. David Wagenseller Thank you, Leigh. In the press release issued today and available on our website, we reported that total revenue for the second quarter of fiscal 2011 was $20.2 million, up 50% from the prior quarter and up 2% from Q2 a year ago. Product revenue in the second quarter was $16.7 million, a 68% increase from the prior quarter and a 16% increase from Q2 a year ago. Product revenue from our government business was $12.3 million, up 84% from the prior quarter and up 5% from Q2 a year ago. We attribute the increase partially to the US government’s fiscal year-end as well as a catch-up from orders that were previously anticipated in the prior quarter. Product revenue from our enterprise business was $4.4 million, up 35% from the prior quarter and up 69% from Q2 a year ago.
Service and other revenue was $3.5 million, flat compared to the prior quarter and down $1.9 million from Q2 a year ago. Our second quarter of the prior year include $1.3 million of other revenue for funded R&D that had been deferred over the prior 18-month period.Gross margin as a percentage of revenue was 49%, up 14 percentage points from the prior quarter and up 10 percentage points from Q2 of the prior year. The increase was primarily the result of higher product revenue. Product gross margin was 56.4%, up 13 percentage points compared to the prior quarter and up 9 percentage points from Q2 of the prior year. The increase in product margin is due to fixed manufacturing costs being spread over more revenue, lower inventory reserve charges, and a credit to freight expense for a favorable ruling and a refund of duty fees paid in prior years. Service and other margin was 13.5%, up 3 percentage points from the prior quarter and down 4 percentage points from Q2 of the prior year. Service and other gross margin in Q2 of prior year was aided by the $1.3 million of funded R&D revenue, which had a gross margin of approximately 30%. Second quarter operating expense was $13 million, up $326,000 from the prior quarter and up $709,000 from Q2 of the prior year. The increases resulted primarily from higher sales expense, increased revenue and related sales commissions, and higher G&A cost for outside legal fees. Total company headcount was 248 employees at the end of Q2, an increase of 4 from the prior quarter and a decrease of 3 from a year ago. Read the rest of this transcript for free on seekingalpha.com