MERU NETWORKS, INC. SUNNYVALE, Calif., July 28, 2014 /PRNewswire/ -- Meru Networks, Inc., (NASDAQ:MERU), a leader in intelligent Wi-Fi networking, today announced its financial results for the second quarter ended June 30, 2014.
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Second Quarter 2014 Financial Results
Total revenues for the second quarter of 2014 were $23.6 million, down 10.9% from $26.5 million in the second quarter of 2013. Product revenues for the second quarter of 2014 were $18.8 million, down 13.3% from the $21.7 million reported in the second quarter of 2013.
Net loss as reported in accordance with GAAP was $4.2 million for the second quarter of 2014, or a net loss of ($0.18) per basic and diluted share, compared to a net loss of $3.1 million, or a net loss of ($0.14) per basic and diluted share, for the same period of 2013.
Meru reported a second quarter 2014 non-GAAP net loss of $3.0 million, or ($0.13) loss per basic and diluted share, compared to a non-GAAP net loss of $1.2 million, or ($0.05) loss per basic and diluted share, for the same period of 2013. Non-GAAP results for the second quarter of 2014 exclude the impact of stock-based compensation expense of $1.2 million and amortization of other intangibles totaling $0.1 million. Non-GAAP results for the second quarter of 2013 exclude the impact of stock-based compensation expense of $1.8 million and amortization of other intangibles of $0.1 million. Please refer to the reconciliation of Meru's GAAP to non-GAAP results provided at the end of this release.
"The accelerating 11ac momentum represents a huge opportunity for Meru," said Dr. Bami Bastani, president and CEO, Meru Networks. "In addition, being first to market with OPENFLOW(TM) certification for wireless networking positions Meru as a leader in SDN-enabled unified wired and wireless networking and expands our addressable market."
Conference Call Information
Meru will host a conference call for analysts and investors to discuss its second quarter 2014 results today, July 28, 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 70474316.
The live and archived webcast of the second quarter 2014 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 MobileFLEX architecture is designed to enable seamless roaming with traffic separation for critical applications, providing top performance and high capacity in high-density environments. Visit www.merunetworks.com or call (408) 215-5300 for more information.
© 2014 Meru Networks, Inc. Meru Networks and Meru are registered trademarks of Meru Networks, Inc. in the United States. OPENFLOW(TM) is a trademark of the Open Networking Foundation.
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-Q filed with the SEC on April 30, 2014, 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 a
non?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 results.
-- 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 the non?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)
June 30, December 31,
2014 2013
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $19,413 $30,938
Accounts receivable, net 12,649 17,088
Inventory 6,629 7,230
Prepaid expenses and other current
assets 1,710 998
----- ---
Total current assets 40,401 56,254
Property and equipment, net 2,244 2,451
Goodwill 1,658 1,658
Intangible assets, net 35 140
Other assets 1,983 1,934
TOTAL ASSETS $46,321 $62,437
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $4,738 $6,139
Accrued
liabilities 8,559 12,535
Long-term debt,
current portion 4,004 3,718
Deferred revenue,
current portion 12,090 13,730
-----------
Total current liabilities 29,391 36,122
Long-term debt, net of current
portion 725 2,797
Deferred revenue, net of current
portion 6,574 5,876
Other liabilities 1,658 1,387
Total liabilities 38,348 46,182
------ ------
STOCKHOLDERS' EQUITY:
Preferred stock - -
Common stock 12 11
Additional paid-
in capital 286,152 282,168
Accumulated other
comprehensive
loss (520) (553)
Accumulated
deficit (277,671) (265,371)
Total stockholders' equity 7,973 16,255
----- ------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $46,321 $62,437
======= =======
MERU NETWORKS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except for share and per share amounts)
Three months ended Six months ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
REVENUES:
Products $18,809 $21,686 $34,642 $42,276
Support and
services 4,762 4,730 9,529 8,833
Ratable products
and services - 35 - 77
Total revenues 23,571 26,451 44,171 51,186
------ ------ ------ ------
COSTS OF REVENUES:
Products 6,846 7,367 12,721 14,684
Support and
services 1,955 1,888 3,857 3,664
Ratable products
and services - 17 - 39
Total costs of
revenues * 8,801 9,272 16,578 18,387
----- ----- ------ ------
Gross margin 14,770 17,179 27,593 32,799
------ ------ ------ ------
OPERATING EXPENSES:
Research and
development * 4,921 3,974 10,373 7,662
Sales and marketing
* 10,778 12,348 22,407 23,768
General and
administrative * 2,859 3,293 6,157 6,578
Total operating
expenses 18,558 19,615 38,937 38,008
------ ------ ------ ------
Loss from
operations (3,788) (2,436) (11,344) (5,209)
Interest expense,
net * (329) (553) (707) (1,163)
Other income
(expense), net 15 11 (1) (51)
--- --- --- ---
Loss before
provision for
income taxes (4,102) (2,978) (12,052) (6,423)
Provision for
income taxes 136 89 248 227
--- --- --- ---
Net loss $(4,238) $(3,067) $(12,300) $(6,650)
======= ======= ======== =======
Net loss per share
of common stock,
basic and diluted $(0.18) $(0.14) $(0.53) $(0.32)
====== ====== ====== ======
Shares used in
computing net loss
per share of
common stock,
basic and diluted 23,373,165 22,268,180 23,221,958 20,926,926
========== ========== ========== ==========
*Includes stock-based compensation expense (1)as
follows:
Costs of revenues $63 $54 $172 $99
Research and
development 170 212 508 370
Sales and marketing 345 582 1,156 1,119
General and
administrative 608 906 1,323 1,620
$1,186 $1,754 $3,159 $3,208
====== ====== ====== ======
(1)This table includes $147,000 of stock-based compensation related to restructuring in the quarter ended March 31, 2014.
*Includes restructuring costs(2)as follows:
Research and
development $ - $ - $43 $ -
Sales and marketing - - 355 -
General and
administrative - - 140 -
$ - $ - $538 $ -
=============== =============== ==== ===============
(2)This table excludes $147,000 of stock-based compensation related to restructuring in the quarter ended March 31, 2014.
*Includes amortization of acquisition-related
intangible assets as follows:
Costs of revenues $53 $53 $105 $105
Sales and marketing - 20 - 40
$53 $73 $105 $145
=== === ==== ====
*Includes amortization of common stock warrant
issued in connection with debt financing as
follows:
Interest expense,
net $25 $42 $54 $87
MERU NETWORKS, INC.
GAAP to Non-GAAP Reconciliation
(Unaudited)
(In thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
GAAP net loss $(4,238) $(3,067) $(12,300) $(6,650)
Plus:
a) Stock-based compensation 1,186 1,754 3,012 3,208
b) Stock-based compensation
associated with restructuring - - 147 -
c) Restructuring costs - - 538 -
d) Amortization of acquisition-
related intangible assets 53 73 105 145
e) Amortization of common stock
warrant issued in connection
with debt financing 25 42 54 87
Non-GAAP net loss $(2,974) $(1,198) $(8,444) $(3,210)
======= ======= ======= =======
GAAP net loss per share of
common stock, basic (0.18) (0.14) $(0.53) $(0.32)
Plus:
a) Stock-based compensation 0.05 0.08 0.13 0.15
b) Stock-based compensation
associated with restructuring - - 0.01 -
c) Restructuring costs - - 0.02 -
d) Amortization of acquisition-
related intangible assets - 0.01 0.01 0.01
e) Amortization of common stock
warrant issued in connection
with debt financing - - - 0.01
-------------------------------
Non-GAAP net loss per share
of common stock, basic and
diluted $(0.13) $(0.05) $(0.36) $(0.15)
====== ====== ====== ======
Shares used in computing
basic and diluted non-GAAP
net loss per share of
common stock 23,373,165 22,268,180 23,221,958 20,926,926
GAAP gross margin $14,770 $17,179 $27,593 $32,799
------- ------- ------- -------
Plus:
Stock-based compensation 63 54 172 99
Amortization of acquisition-
related intangible assets 53 53 105 105
---
Non-GAAP gross margin $14,886 $17,286 $27,870 $33,003
======= ======= ======= =======
GAAP loss from operations $(3,788) $(2,436) $(11,344) $(5,209)
------- ------- -------- -------
Plus:
Stock-based compensation 1,186 1,754 3,012 3,208
Stock-based compensation
associated with restructuring - - 147 -
Restructuring costs - - 538 -
Amortization of acquisition-
related intangible assets 53 73 105 145
---
Non-GAAP loss from
operations $(2,549) $(609) $(7,542) $(1,856)
======= ===== ======= =======
MERU NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six months ended
June 30,
--------
2014 2013
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(12,300) $(6,650)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Depreciation and
amortization 835 762
Stock-based
compensation 3,159 3,208
Accrued interest
on long-term
debt 345 493
Amortization of
issuance costs 77 123
Provision for bad
debt 96 29
Changes in
operating assets
and liabilities:
Accounts
receivable,
net 4,343 909
Inventory 601 2,074
Prepaid
expenses and
other assets (756) (517)
Accounts
payable (1,401) 574
Accrued
liabilities
and other
liabilities (3,541) (2,004)
Deferred
revenue (942) (775)
---- ----
Net cash used in
operating activities (9,484) (1,774)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property
and equipment (476) (442)
Net cash used in
investing activities (476) (442)
---- ----
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the
issuance of common
stock, net of
offering costs - 12,565
Proceeds from exercise
of stock options 319 237
Proceeds from employee
stock purchase plan 506 358
Taxes paid related to
net share settlement
of equity awards (521) (86)
Repayment of long-
term debt (1,862) (1,652)
Net cash provided by
(used in) financing
activities (1,558) 11,422
------ ------
Effect of exchange
rate changes on cash
and cash equivalents (7) (107)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (11,525) 9,099
CASH AND CASH EQUIVALENTS -- Beginning of period 30,938 22,855
CASH AND CASH EQUIVALENTS -- End of period $19,413 $31,954
======= =======
Investor contact:
Ed Keaney
Market Street Partners
(415) 445-3238
ir@merunetworks.com
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SOURCE Meru Networks, Inc.
