PROCERA NETWORKS INC FREMONT, Calif., Feb. 26, 2015 /PRNewswire/ -- Procera Networks, Inc. (NASDAQ: PKT), the global Subscriber Experience company, today reported financial results for its fourth quarter and fiscal year ended on December 31, 2014.
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Fourth Quarter 2014 Financial & Business Highlights
-- Reported record revenue of $24.2 million
-- The ratio of bookings to revenue was above one
-- Added thirteen new service provider customers
-- Received expansion orders from fifty existing service provider customers
-- Mobile customers represented 56% of product revenue
-- Demonstrated traction with strategic initiatives with delivery of:
-- NFV solution to a wireless service provider
-- Analytics solution to a mobile customer
-- Video analytics to a fixed wireline customer
-- 100GE interface cards to a number of Tier 1 customers
-- The GAAP gross profit rate increased to 59% for the fiscal year 2014,
compared with 55% for fiscal year 2013.
-- The non-GAAP gross profit rate increased to 61% for the fiscal 2014,
compared with 57% for fiscal year 2013.
Revenue for the fourth quarter was $24.2 million, compared with $21.3 million in the fourth quarter of 2013, representing a 13% increase. Revenue for fiscal year 2014 was $75.4 million, compared with $74.7 million for fiscal year 2013, a 1% increase.
GAAP net loss for the fourth quarter of 2014 was $1.7 million, or $0.08 per diluted share, compared with a GAAP net loss of $3.3 million, or $0.16 per diluted share, for the fourth quarter of 2013. GAAP net loss for fiscal year 2014 was $24.8 million, or $1.21 per diluted share, compared with a GAAP net loss of $16.3 million, or $0.81 per diluted share, for fiscal year 2013.
Non-GAAP net income for the fourth quarter of 2014 was $0.3 million, or $0.02 per diluted share, compared with a non-GAAP net income of $7 thousand, or $0.00 per diluted share, for the fourth quarter of 2013. Non-GAAP net loss for fiscal year 2014 was $5.0 million, or $0.25 per diluted share, compared with a non-GAAP net loss of $3.6 million, or $0.18 per diluted share, for fiscal year 2013.
A description of the non-GAAP financial measures and reconciliation to comparable GAAP measures in an accompanying table is provided in the section entitled "Use of Non-GAAP Financial Information" below.
"We ended the year with productivity that demonstrates the strength of our strategic initiatives, achieving a combination of record quarterly revenue and bookings, as well as customer delivery of a number of new strategic products," said James Brear, president and chief executive officer of Procera Networks. "Seeing the initial benefits of our strategic investments are positive indicators toward our goal of returning Procera to solid revenue growth in 2015."
Guidance
Revenue for the fiscal year ending December 31, 2015 is expected to grow by 15% compared with the fiscal year ended December 31, 2014.
This guidance is an estimate only and actual performance could differ. Procera's financial results historically have been volatile, and a number of uncertainties and other factors may cause Procera's future results, performance or achievements to be materially different from prior results.
Conference Call Information
Procera Networks, Inc. is hosting a conference call for analysts and investors to discuss its fourth quarter and fiscal year 2014 results at 1:30 p.m. Pacific time (4:30 p.m. Eastern time) today, February 26, 2015.
To access the conference call, dial 1-877-407-0784 (domestic) or 1-201-689-8560 (international). The live audio webcast of the conference call along with supplemental financial information will also be accessible from the "Investor Relations" section of Procera's website at http://proceranetworks.com/investors. A replay will be available following the call on Procera's Investor Relations website and for one week at the following numbers: 1-877-870-5176 (domestic), 1-858-384-5517 (international) using ID# 13600798.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements related to Procera Networks, Inc., including statements about Procera's expectations for 2015 revenue, long-term growth and the market opportunity, the strength of Procera's strategic initiatives, as well as Procera's general outlook. Statements in this release that are not historical or current facts are forward-looking statements. All forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause Procera's actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, without limitation, risks and uncertainties related to the acceptance and adoption of Procera's products; Procera's ability to service and upgrade its products; lengthy sales cycles and lab and field trial delays by service providers; its ability to obtain any follow-on orders from major customers; its customers canceling orders or awards; its ability to achieve revenue recognition on awarded business; its dependence on a limited product line and key customers; its dependence on key employees; its ability to compete in our industry with companies that are significantly larger and have greater resources than us; its ability to manage costs effectively; its ability to protect its intellectual property rights in a global market; its ability to manufacture product quickly enough to meet potential demand; and other risks and uncertainties described more fully in Procera's documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact Procera Networks' business are described in the "Risk Factors" sections of its Form 10-K filed for the year ended December 31, 2013, its subsequently filed quarterly reports, and other reports filed with the SEC, which are available free of charge on the SEC's website at http://www.sec.gov and on Procera's website at http://www.proceranetworks.com. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements in this press release are based on information available to Procera as of the date hereof, and Procera undertakes no obligation to update, amend or clarify any forward-looking statement for any reason.
Use of Non-GAAP Financial Information
In addition to the financial results presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures. Our management regularly uses these supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods and believes that these non-GAAP financial measures, when taken together with the corresponding GAAP measures, provide additional insight into the underlying factors and trends affecting both Procera's performance and its cash-generating potential.
Our non-GAAP financial measures include adjustments for stock-based compensation expenses; business development expenses; cost reduction efforts; acquisition-related intangible asset and deferred compensation amortization; impairment; and income tax effects. We have excluded the effect of stock-based compensation; the cost of outside professional services for negotiating and performing legal, accounting and tax due diligence for potential mergers and acquisitions; expenses connected with cost reduction efforts; acquisition-related intangible asset and deferred compensation amortization; impairment; and income tax effects, from our non-GAAP gross profit, operating expenses and net income measures. Stock-based compensation, which represents the estimated fair value of stock options, restricted stock and restricted stock units granted to employees, is excluded since grant activities vary significantly from quarter to quarter in both quantity and fair value. In addition, although stock-based compensation will recur in future periods, excluding this expense allows us to better compare core operating results with those of our competitors who also generally exclude stock-based compensation from their core operating results, and who may have different granting patterns and types of equity awards and who may use different option valuation assumptions than we do. Business development expenses are necessary as part of certain growth strategies, such as through mergers and acquisitions and other strategic transactions, and will occur when such transactions are pursued. We have excluded these expenses because they can vary materially from period-to-period and transaction-to-transaction and expenses associated with these business development activities are not considered a key measure of Procera's operating performance. Cost reduction efforts occur with shifts in objectives and evolving requirements of the business and can result in fluctuating expenses connected with reducing employment in certain areas. We have excluded these expenses because they can vary significantly from period-to-period and are not considered a key measure of Procera's operating performance. Acquisition-related intangible asset and deferred compensation amortization, impairment and tax effects represent non-cash charges and benefits that result from the accounting for acquisitions. We have excluded these items because, in any period, they may not directly correlate to the underlying performance of Procera's business and these items can vary materially from period-to-period and transaction-to-transaction. In addition, we exclude these acquisition-related costs and benefits when evaluating our current operating performance.
Our non-GAAP financial measures may not reflect the full economic impact of Procera's activities. Further, these non-GAAP financial measures may be unique to Procera, as they may be different from non-GAAP financial measures used by other companies, including Procera's competitors. As such, this presentation of non-GAAP financial measures may not enhance the comparability of Procera's results to the results of other companies. Investors are cautioned not to place undue reliance on our non-GAAP financial measures. In addition, investors are cautioned that these non-GAAP financial measures are not intended to be considered in isolation and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.
For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, "GAAP to Non-GAAP Reconciliation."
About Procera Networks Inc.
Procera Networks, Inc. (NASDAQ: PKT), the global Subscriber Experience company, is revolutionizing the way operators and vendors monitor, manage and monetize their network traffic. Elevate your business value and improve customer experience with Procera's sophisticated intelligence solutions. For more information, visit www.proceranetworks.com or follow Procera on Twitter at @ProceraNetworks.
Procera Networks, Inc.
Condensed Consolidated Statements of
Operations
Unaudited
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Sales:
Product sales $18,208 $16,191 $54,000 $56,520
Support sales 5,947 5,139 21,413 18,153
Total sales 24,155 21,330 75,413 74,673
Cost of sales:
Product cost of
sales 9,031 8,011 26,676 30,461
Support cost of
sales 1,262 957 4,531 3,399
Total cost of sales 10,293 8,968 31,207 33,860
------ ----- ------ ------
Gross profit 13,862 12,362 44,206 40,813
------ ------ ------ ------
57.4% 58.0% 58.6% 54.7%
Operating expenses:
Research and
development 4,362 5,016 16,722 17,548
Sales and
marketing 7,406 7,959 27,831 29,251
General and
administrative 3,426 2,537 11,738 12,036
Impairment of
goodwill and
purchased
intangible assets - - 12,380 -
Total operating expenses 15,194 15,512 68,671 58,835
------ ------ ------ ------
Loss from operations (1,332) (3,150) (24,465) (18,022)
------ ------ ------- -------
Interest and other income (expense), net (354) 359 (599) 561
---- --- ---- ---
Loss before income
taxes (1,686) (2,791) (25,064) (17,461)
Income tax benefit 34 511 (248) (1,177)
--- --- ---- ------
Net loss $(1,720) $(3,302) $(24,816) $(16,284)
Net loss per share - basic and diluted $(0.08) $(0.16) $(1.21) $(0.81)
====== ====== ====== ======
Shares used in computing net loss per
share:
Basic and diluted 20,613 20,144 20,450 20,091
Procera Networks, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2014 2013
---- ----
(unaudited)
ASSETS
Current Assets:
Cash and cash
equivalents $17,939 $90,774
Short-term
investments 84,542 15,789
Accounts
receivable,
net of
allowance 21,447 25,008
Inventories,
net 14,837 18,836
Prepaid
expenses and
other 4,913 2,128
Total current assets 143,678 152,535
Property and
equipment, net 8,322 7,121
Intangible
assets, net 2,957 6,270
Goodwill 960 12,326
Deferred tax
asset - 1,101
Other non-
current assets 154 83
Total assets $156,071 $179,436
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts
payable $5,207 $7,305
Deferred
revenue 11,821 11,633
Accrued
liabilities 7,235 6,721
Total current liabilities 24,263 25,659
Non-current liabilities:
Deferred
revenue 3,113 3,273
Deferred tax
liability - 1,690
Deferred rent 583 143
Total liabilities 27,959 30,765
Commitments and contingencies - -
Stockholders' equity:
Common stock 21 21
Additional
paid-in
capital 225,313 219,763
Accumulated
other
comprehensive
loss (3,190) (1,897)
Accumulated
deficit (94,032) (69,216)
Total stockholders' equity 128,112 148,671
------- -------
Total liabilities and stockholders'
equity $156,071 $179,436
======== ========
Procera Networks, Inc.
GAAP to Non-GAAP Reconciliation; and Supplemental Financial Information
Unaudited
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
------------------ -------------------
December September December December December
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Sales:
Product sales $18,208 $11,164 $16,191 $54,000 $56,520
Support sales 5,947 4,945 5,139 21,413 18,153
Total sales 24,155 16,109 21,330 75,413 74,673
Cost of sales:
Product cost of
sales, GAAP 9,031 4,774 8,011 26,676 30,461
Non-GAAP
adjustments:
Stock-based compensation (1) (10) (7) (26) (39) (84)
Amortization of intangibles (2) (202) (264) (275) (995) (1,094)
Cost reduction efforts (3) - - - (237) -
--- --- --- ---- ---
Product cost of
sales, non-GAAP 8,819 4,503 7,710 25,405 29,283
Support cost of
sales, GAAP 1,262 1,118 957 4,531 3,399
Non-GAAP
adjustments:
Stock-based compensation (1) (98) (85) (79) (351) (302)
Cost reduction efforts (3) - - - - -
--- --- --- --- ---
Support cost of
sales, non-GAAP 1,164 1,033 878 4,180 3,097
----- ----- --- ----- -----
Total cost of
sales, non-GAAP 9,983 5,536 8,588 29,585 32,380
----- ----- ----- ------ ------
Gross profit,
non-GAAP 14,172 10,573 12,742 45,828 42,293
------ ------ ------ ------ ------
58.7% 65.6% 59.7% 60.8% 56.6%
Operating expenses:
Research and
development 4,362 4,096 5,016 16,722 17,548
Non-GAAP
adjustments:
Stock-based compensation (1) (429) (314) (292) (1,427) (1,226)
Cost reduction efforts (3) (58) - - (264) -
Deferred compensation (5) - - (753) (65) (2,946)
--- --- ---- --- ------
Research and
development,
non-GAAP 3,875 3,782 3,971 14,966 13,376
Sales and marketing 7,406 6,497 7,959 27,831 29,251
Non-GAAP
adjustments:
Stock-based compensation (1) (276) (443) (334) (1,525) (1,682)
Amortization of intangibles (2) (47) (114) (119) (389) (472)
Cost reduction efforts (3) (91) (327) - (606) -
Deferred compensation (5) - - (777) - (2,863)
--- --- ---- --- ------
Sales and
marketing, non-
GAAP 6,992 5,613 6,729 25,311 24,234
General and
administrative 3,426 2,760 2,537 11,738 12,036
Non-GAAP
adjustments:
Stock-based compensation (1) (656) (429) (512) (1,856) (1,763)
Cost reduction efforts (3) - - - (27) -
Business development expenses (6) (229) - - - (1,616)
---- --- --- --- ------
General and
administrative,
non-GAAP 2,541 2,331 2,025 9,855 8,657
----- ----- ----- ----- -----
Impairment of
goodwill and
purchased intangible
assets - 12,380 - 12,380 -
Non-GAAP
adjustments:
Impairment of goodwill and
purchased intangible assets (4) - (12,380) - (12,380) -
--- ------- --- ------- ---
Impairment of
goodwill and
purchased intangible
assets, non-GAAP - - - - -
--- --- --- --- ---
Total operating
expenses, non-
GAAP 13,408 11,726 12,725 50,132 46,267
------ ------ ------ ------ ------
Income (loss) from operations, non-GAAP 764 (1,153) 17 (4,304) (3,974)
--- ------ --- ------ ------
Interest and other income (expense), net (354) (356) 359 (599) 561
---- ---- --- ---- ---
Income (loss) before
income taxes, non-
GAAP 410 (1,509) 376 (4,903) (3,413)
Income tax provision (benefit) 34 (160) 511 (248) (1,177)
Non-GAAP
adjustment (7) 44 192 (142) 622 1,408
--- --- ---- --- -----
Income tax provision
(benefit), non-GAAP 78 32 369 374 231
Net income (loss),
non-GAAP $332 $(1,541) $7 $(5,277) $(3,644)
Net income (loss) per share - diluted, non-GAAP $0.02 $(0.08) $0.00 $(0.26) $(0.18)
===== ====== ===== ====== ======
Shares used in computing diluted net income
(loss) per share 20,613 20,500 20,144 20,450 20,091
Reconciliation of Net Income (Loss):
U.S. GAAP as reported $(1,720) $(15,712) $(3,302) $(24,816) $(16,284)
Non-GAAP
adjustments:
Stock-based compensation (1) 1,469 1,278 1,243 5,198 5,057
Amortization of intangibles (2) 249 378 394 1,384 1,566
Cost reduction efforts (3) 149 327 - 1,134 -
Impairment of goodwill and
purchased intangible assets (4) - 12,380 - 12,380 -
Deferred compensation (5) - - 1,530 65 5,809
Business development expenses (6) 229 - - - 1,616
Income tax adjustment (7) (44) (192) 142 (622) (1,408)
As Adjusted $332 $(1,541) $7 $(5,277) $(3,644)
Reconciliation of Diluted Net Income (Loss) Per
Share:
U.S. GAAP as reported $(0.08) $(0.77) $(0.16) $(1.21) $(0.81)
Non-GAAP
adjustments:
Stock-based compensation (1) 0.07 0.06 0.06 0.25 0.25
Amortization of intangibles (2) 0.01 0.02 0.02 0.06 0.08
Cost reduction efforts (3) 0.01 0.02 - 0.06 -
Impairment of goodwill and
purchased intangible assets (4) - 0.60 - 0.61 -
Deferred compensation (5) - - 0.08 - 0.29
Business development expenses (6) 0.01 - - - 0.08
Income tax adjustment (7) - (0.01) 0.01 (0.03) (0.07)
--- ----- ---- ----- -----
As Adjusted $0.02 $(0.08) $0.00 $(0.26) $(0.18)
Shares used in computing diluted net income
(loss) per share 20,613 20,500 20,144 20,450 20,091
(1) Stock-based compensation
expense is calculated in
accordance with the fair value
recognition provisions of ASC
Topic 718.
(2) Amortization expense associated
with intangible assets acquired in
the Vineyard Networks acquisition.
(3) Severance and other employee-
related costs in connection with
the Company's cost-reduction
efforts.
(4) Impairment charges to write-
down the carrying value of
goodwill and purchased intangible
assets associated with the
Vineyard acquisition as a result
of lower than anticipated total
addressable market and revenue
growth of NAVL products.
(5) Amortization of amounts paid
under retention agreements with
Vineyard's three founders. These
amounts were paid during the first
quarter of fiscal year 2014, after
one year of continuous employment
with the Company.
(6) Includes the cost of outside
professional services for
negotiating and performing legal,
accounting and tax due diligence
for potential mergers,
acquisitions and other significant
partnership arrangements.
(7) Income tax benefit associated
with the following Vineyard
acquisition related items:
- reversal of Vineyard's pre-
existing income tax valuation
allowance upon acquisition;
-amortization of acquired
intangible assets; and
-Canadian valuation allowance and
book to tax differences on
deferred revenue.
Investor Relations Contact
Michael Bishop
Blueshirt Group (for Procera Networks)
mike@blueshirtgroup.com
1-415-217-4968
Media Contact
Bob Eastwood
Engage PR (for Procera Networks)
beastwood@engagepr.com
1-510-748-8200 x215
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SOURCE Procera Networks, Inc.
