MERU NETWORKS, INC. SUNNYVALE, Calif., May 4, 2015 /PRNewswire/ -- Meru Networks, Inc. (NASDAQ: MERU), a leader in intelligent Wi-Fi networking, today announced its financial results for the first quarter ended March 31, 2015.
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First Quarter 2015 Financial Results
Total revenues for the first quarter of 2015 were $17.4 million, a decrease of 15% from $20.0 million in the first quarter of 2014. Product revenues for the first quarter of 2015 were $12.9 million, down 18% from $15.8 million reported in the first quarter of 2014.
Net loss as reported in accordance with GAAP was $8.0 million in the first quarter of 2015, or a net loss of ($0.33) per basic and diluted share, compared to a net loss of $8.1 million, or a net loss of ($0.35) per basic and diluted share, for the same period of 2014.
Meru reported a first quarter 2015 non-GAAP net loss of $3.9 million, or ($0.16) loss per basic and diluted share, compared to a non-GAAP net loss of $5.4 million, or ($0.23) loss per basic and diluted share in the first quarter of 2014. Non-GAAP results for the first quarter of 2015 exclude the impact of stock-based compensation expense of $1.8 million, restructuring costs of $0.7 million, and $1.8 million from the impairment of goodwill. Non-GAAP results for the first quarter of 2014 excluded stock-based compensation expense of $1.8 million, restructuring costs, including associated stock-based compensation charges, of $0.7 million, and $0.1 million from the amortization of intangibles.
"Meru achieved revenue and earnings results consistent with our guidance and slightly ahead of analyst consensus for the first quarter of 2015, and restructured our operations by reducing operating costs and creating a flatter, more responsive organization. We've lowered the breakeven point for quarterly sales to approximately $21 to $22 million," said Dr. Bami Bastani, president and CEO. "During the first quarter, we also launched Meru XPress Cloud, a controller-less Wi-Fi solution tailored to the needs of small-to-medium enterprises. We are very pleased with the SDN Excellence Award for Meru Collaborator, an SDN application that integrates with the Microsoft Lync platform enabling Meru Wi-Fi users to optimize the performance and experience of Microsoft Lync over multivendor networks. We continue to work with Deutsche Bank in exploring various strategic options for the Company."
Conference Call Information
Meru will host a conference call for analysts and investors to discuss its 2015 first quarter results today, May 4th, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To join the live call, individuals may do so by dialing (877) 852-2926 for domestic callers and (253) 237-1123 for international callers. The conference ID for the call is 32506132.
The live and archived webcast of the financial results conference call will also be available at the investor relations section of Meru's website at http://investors.merunetworks.com.
About Meru Networks
Meru Networks (NASDAQ: MERU) is a leader in intelligent 802.11ac Wi-Fi solutions delivering uninterrupted user experience for education, healthcare, hospitality and enterprise. The Meru open-standards-based architecture is designed to enable unified management of wired and wireless networks. Its end-to-end application QoS enables enforceable service-level agreements. Meru provides top performance and high capacity in high-density environments. Visit www.merunetworks.com or call (408) 215-5300 for more information.
©2015 Meru Networks. Meru and Meru Networks are registered trademarks and the Meru logo is a trademark of Meru Networks, Inc. in the United States.
Investor contact:
Ed Keaney
Market Street Partners
(415) 445-3238
ir@merunetworks.com
Cautionary Statement Regarding Forward Looking Statements
All statements other than statements of historical facts are statements that can be deemed forward-looking statements, including any statements of expectations or beliefs. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include, among others: business and economic conditions and growth trends in the networking industry, our vertical markets and various geographic regions; competition in the industry; our future capital needs may change; changes in overall information technology spending; failure to develop new products; and those risks and uncertainties described in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by Meru, including under the caption "Risk Factors" in Meru's Quarterly Report on Form 10-K filed with the SEC on February 27, 2015, and any subsequent reports filed with the SEC. All forward-looking statements in this press release are based on information available to Meru as of the date hereof, and Meru assumes no obligation to update these forward-looking statements, except as required by law.
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company believes it is appropriate to report certain non-GAAP financial measures.
The Company's non-GAAP financial measures include the adjustments as follows:
-- Stock-Based Compensation. When evaluating the performance of its
consolidated results, Meru does not consider stock-based compensation
charges. Likewise, the Meru management team excludes stock-based
compensation expense from its operating plans. In contrast, the Meru
management team is held accountable for cash-based compensation and such
amounts are included in its operating plans. Further, when considering
the impact of equity award grants, Meru places a greater emphasis on
overall stockholder dilution rather than the accounting charges
associated with such grants. Meru believes it is useful to provide
anon-GAAP financial measure that excludes stock-based compensation in
order to better understand the long-term performance of its business.
-- Restructuring Costs. The Company excludes restructuring costs because
such charges are isolated one-time charges and the Company does not
expect them to recur in the ordinary course of its business. The Company
further believes those charges are not directly related to its ongoing
business results and do not reflect expected future operating expenses.
-- Amortization of intangible assets. The Company excludes amortization of
acquired intangible assets because it is non-cash in nature and because
the Company believes that the non-GAAP financial measures excluding this
item provide meaningful supplemental information regarding operational
performance and liquidity. In addition, excluding this item from various
non-GAAP measures facilitates internal comparisons to historical
operating results and comparisons to competitors' operating result.
-- Impairment of Goodwill. The Company excludes impairment of Goodwill
because it is likewise non-cash in nature and because the Company
believes that the non-GAAP financial measures excluding this item
provide meaningful supplemental information regarding operational
performance and liquidity. In addition it is a non-recurring
charge.
-- Amortization of a common stock warrant issued in connection with debt
financing. The Company excludes amortization of a common stock warrant
issued in connection with debt financing when evaluating the performance
of its consolidated results because the Company believes these costs are
unusual in nature and the Company does not expect them to recur in the
ordinary course of its business. The Company further believes these
costs are unrelated to the ongoing operation of the business in the
ordinary course.
The Company's non-GAAP financial measures include the following:
-- Non-GAAP net loss - Non-GAAP net loss is net loss as reported on the
Company's condensed consolidated statements of operations, excluding the
impact of stock-based compensation expense, restructuring costs,
amortization of intangible assets related to the Company's acquisition
of Identity Networks and amortization of the fair value of a common
stock warrant issued in connection with debt financing.
-- Non-GAAP net loss per share of common stock, basic and diluted -
Non-GAAP net loss per share of common stock, basic and diluted is net
loss per share of common stock, basic, as reported on the Company's
condensed consolidated statements of operations excluding the impact of
stock-based compensation expense, restructuring costs, amortization of
intangible assets related to the Company's acquisition of Identity
Networks, and amortization of the fair value of a common stock warrant
issued in connection with debt financing.
-- Non-GAAP Gross margin - Non-GAAP Gross margin is gross margin as
reported on the Company's condensed consolidated statements of
operations excluding the impact of stock-based compensation expense and
amortization of intangible assets related to the Company's acquisition
of Identity Networks.
-- Non-GAAP loss from operations - Non-GAAP loss from operations is loss
from operations as reported on the Company's condensed consolidated
statements of operations, excluding impact of stock-based compensation
expense, restructuring costs, and amortization of intangible assets
related to the Company's acquisition of Identity Networks.Meru believes
that its non-GAAP measures provide useful information to management and
investors regarding financial and business trends relating to its
financial condition and results of operations. Meru also believes then
on-GAAP measures provide useful supplemental information for investors
to evaluate its operating results in the same manner as the research
analysts that follow Meru, all of whom will present non-GAAP projections
in their published reports. As such, the non-GAAP measures provided by
Meru facilitate a more direct comparison of its performance with the
financial projections published by the analysts as well as its
competitors, many of whom report financial results on a non-GAAP basis.
The economic substance behind Meru's decision to use such non-GAAP
measures is that such measures approximate its controllable operating
performance more closely than the most directly comparable GAAP
financial measures. For example, Meru's management has no control over
certain variables that have a major influence in the determination of
stock-based compensation such as the volatility of its stock price and
changing interest rates. In addition, Meru's management does not
consider the amortization of intangible assets related to the Company's
acquisition of Identity Networks relevant when comparing its performance
to prior periods. Meru believes that all of these excluded expenses do
not accurately reflect the underlying performance of its continuing
operations for the period in which they are incurred, even though these
excluded items may be incurred and reflected in Meru's GAAP financial
results.The material limitation associated with the use of non-GAAP
financial measures is that the non-GAAP measures may not reflect the
full economic impact of Meru's activities. Meru's non-GAAP measures may
be calculated differently than non-GAAP financial information disclosed
by other companies. Accordingly, investors are cautioned not to place
undue reliance on non-GAAP information.
MERU NETWORKS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
March 31, December 31,
2015 2014
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $11,599 $14,881
Accounts receivable, net 6,761 11,891
Inventory 9,664 8,982
Prepaid expenses and other current assets 1,400 1,502
----- -----
Total current assets 29,424 37,256
Property and equipment, net 1,633 1,879
Goodwill - 1,658
Other assets 696 1,937
TOTAL ASSETS $31,753 $42,730
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $5,656 $7,902
Accrued liabilities 9,573 10,223
Long-term debt, current
portion 1,784 2,803
Deferred revenue,
current portion 12,348 12,781
------------
Total current liabilities 29,361 33,709
Deferred revenue, net of current portion 6,829 6,886
Other liabilities 28 38
Total liabilities 36,218 40,633
------ ------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock - -
Common stock 12 12
Additional paid-in
capital 290,465 289,023
Accumulated other
comprehensive loss (655) (688)
Accumulated deficit (294,287) (286,250)
Total stockholders' equity
(deficit) (4,465) 2,097
------ -----
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $31,753 $42,730
======= =======
MERU NETWORKS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except for share and per share amounts)
Three months ended
March 31,
---------
2015 2014
---- ----
REVENUES:
Products $12,917 $15,833
Support and services 4,499 4,767
Total revenues 17,416 20,600
------ ------
COSTS OF REVENUES:
Products 5,514 5,875
Support and services 1,524 1,902
Total costs of
revenues * 7,038 7,777
----- -----
Gross margin 10,378 12,823
------ ------
OPERATING EXPENSES:
Research and
development * 4,294 5,452
Sales and marketing * 9,166 11,629
General and
administrative * 2,978 3,298
Impairment of goodwill 1,658 -
Total operating
expenses 18,096 20,379
------ ------
Loss from operations (7,718) (7,556)
Interest expense, net
* (164) (378)
Other expense, net (52) (16)
--- ---
Loss before provision
for income taxes (7,934) (7,950)
Provision for income
taxes 103 112
--- ---
Net loss $(8,037) $(8,062)
======= =======
Net loss per share of
common stock, basic
and diluted $(0.33) $(0.35)
====== ======
Shares used in
computing net loss
per share of common
stock, basic and
diluted 24,248,016 23,069,260
========== ==========
*Includes stock-based compensation expense (1)as follows:
Costs of revenues $117 $109
Research and
development 445 338
Sales and marketing 1,032 811
General and
administrative 542 715
$2,136 $1,973
====== ======
(1) This table includes $346,000 and $147,000 of stock-
based compensation expense related to restructuring in the
quarters ended March 31, 2015 and 2014, respectively.
*Includes restructuring costs(2)as follows:
Costs of revenues $9 $ -
Research and
development 69 43
Sales and marketing 263 405
General and
administrative 21 140
$362 $588
==== ====
(2)This table excludes $346,000 and $147,000 of stock-
based compensation related to restructuring in the quarter
ended March 31, 2015 and 2014, respectively.
*Includes amortization of acquisition-related intangible
assets as follows:
Costs of revenues $ - $52
*Includes amortization of common stock warrant issued
in connection with debt financing as follows:
Interest expense, net $10 $29
MERU NETWORKS, INC.
GAAP to Non-GAAP Reconciliation
(Unaudited)
(In thousands, except share and per share amounts)
Three months ended
March 31,
---------
2015 2014
---- ----
GAAP net loss $(8,037) $(8,062)
.
Plus:
a) Stock-based compensation 1,790 1,826
b) Stock-based compensation
associated with restructuring 346 147
c) Restructuring costs 362 588
d) Amortization of acquisition-
related intangible assets - -
e) Amortization of common stock
warrant issued in connection with
debt financing 10 29
f) Impairment of goodwill 1,658 -
Non-GAAP net loss $(3,871) $(5,472)
======= =======
GAAP net loss per share of
common stock, basic and
diluted (0.33) (0.35)
Plus:
a) Stock-based compensation 0.07 0.08
b) Stock-based compensation
associated with restructuring 0.01 0.01
c) Restructuring costs 0.02 0.03
d) Amortization of acquisition-
related intangible assets - -
e) Amortization of common stock
warrant issued in connection with
debt financing - -
f) Impairment of goodwill 0.07 -
----
Non-GAAP net loss per share
of common stock, basic and
diluted $(0.16) $(0.24)
====== ======
Shares used in computing basic and diluted non-GAAP net loss
per share of common stock 24,248,016 23,069,260
GAAP gross margin $10,378 $12,823
------- -------
Plus:
Stock-based compensation 117 109
Restructuring costs 9 -
Amortization of acquisition-related
intangible assets - 52
------------------------------------
Non-GAAP gross margin $10,504 $12,984
======= =======
GAAP loss from operations $(7,718) $(7,556)
------- -------
Plus:
Stock-based compensation 1,790 1,826
Stock-based compensation associated
with restructuring 346 147
Restructuring costs 362 588
Amortization of acquisition-related
intangible assets - -
Impairment of goodwill 1,658 -
-----
Non-GAAP loss from operations $(3,562) $(4,995)
======= =======
MERU NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three months ended
March 31,
---------
2015 2014
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(8,037) $(8,062)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Depreciation and
amortization 327 416
Stock-based
compensation 2,136 1,973
Impairment of
goodwill 1,658 -
Accrued interest
on long-term
debt 103 214
Amortization of
issuance costs 15 41
Net provision for
bad debt 112 35
Changes in
operating assets
and liabilities:
Accounts
receivable,
net 5,018 6,825
Inventory (681) (707)
Prepaid
expenses and
other assets 105 81
Accounts
payable (2,246) (1,783)
Accrued
liabilities (1,134) (2,121)
Deferred
revenue (490) (692)
---- ----
Net cash used in operating
activities (3,114) (3,780)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property
and equipment (69) (333)
Proceeds from sale of
investment 1,250 -
Net cash provided by (used
in) investing activities 1,181 (333)
----- ----
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise
of stock options 17 164
Taxes paid related to
net share settlement
of equity awards (371) (406)
Repayment of long-term
debt (1,034) (918)
Net cash used in financing
activities (1,388) (1,160)
------ ------
Effect of exchange rate
changes on cash and
cash equivalents 39 (1)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,282) (5,274)
CASH AND CASH EQUIVALENTS -- Beginning of period 14,881 30,938
CASH AND CASH EQUIVALENTS -- End of period $11,599 $25,664
======= =======
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SOURCE Meru Networks, Inc.
