Sonus Networks Reports 2010 Third Quarter Results
Westford , MA , November 2, 2010 – Sonus Networks, Inc. (Nasdaq: SONS), a market leader in next generation IP-based network solutions, today announced results for the quarter ended September 30, 2010.
Revenue for the third quarter of fiscal 2010 was $42.7 million, compared to $61.2 million in the second quarter of fiscal 2010 and $56.2 million for the third quarter of fiscal 2009. The Company's net loss on a GAAP basis for the third quarter of fiscal 2010 was $22.3 million, or $0.08 per share, compared to net income of $0.3 million, or $0.00 per diluted share, for the second quarter of fiscal 2010, and a net loss of $3.4 million, or $0.01 per share, for the third quarter of fiscal 2009.
"We are pleased with the customer growth we achieved during the third quarter across our entire product line. The timing of revenue from several large orders negatively impacted our third quarter operating results but is not expected to negatively impact our results for the year," said Raymond P. Dolan, President and Chief Executive Officer of Sonus. "We continue to have a positive outlook ahead and remain focused on leveraging all of our product platforms to accelerate growth and profitability."
2010 Guidance
The Company expects to achieve total revenue between $225 and $245 million for 2010. For 2010, Non-GAAP gross margin is expected to be within the range of 58% to 62%, and total Non-GAAP operating expenses are expected to be in the range of $145 to $148 million.
Conference Call Details
Sonus Networks will host a conference call for analysts and investors to discuss its third quarter 2010 results as well as certain forward-looking information today at 4:45 p.m. ET.
To listen live via telephone
Dial-in number: 800-743-4304
International Callers: +1 212-231-2900
To listen via internet
Sonus Networks will host a live webcast of the conference call. To access the webcast, visit www.sonusnet.com, About Us, Investor Relations.
About Sonus Networks
Sonus Networks, Inc. is a leader in IP networking with proven expertise in delivering secure, reliable and scalable next generation infrastructure and subscriber solutions. With customers in over 50 countries across the globe and over a decade of experience in transforming networks to IP, Sonus has enabled service providers and enterprises to capture and retain users and generate significant ROI. Sonus products include media and signaling gateways, policy/routing servers, session border controllers and subscriber feature servers. Sonus products are supported by a global services team with experience in design, deployment and maintenance of some of the world's largest and most complex IP networks. For more information visit www.sonusnet.com.
This release may contain forward-looking statements regarding future events that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are referred to Item 1A "Risk Factors" of Sonus' Annual Report on Form 10-K for the year ended December 31, 2009 and Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. Any forward-looking statements represent Sonus' views only as of today and should not be relied upon as representing Sonus' views as of any subsequent date. While Sonus may elect to update forward-looking statements at some point, Sonus specifically disclaims any obligation to do so, except as required by law.
Sonus is a registered trademark of Sonus Networks, Inc. All other company and product names may be trademarks of the respective companies with which they are associated.
For more information, please contact:
Wayne Pastore
978-614-8291
wpastore@sonusnet.com
Fran Murphy
978-614-8148
fmurphy@sonusnet.com
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended
------------------
September 30, June 30, September 30,
2010 2010 2009
---- ---- ----
Revenue:
Product $19,391 $36,796 $33,544
Service 23,348 24,385 22,621
------ ------ ------
Total revenue 42,739 61,181 56,165
------ ------ ------
Cost of revenue:
Product 7,231 10,826 10,160
Service 11,730 11,842 10,755
------ ------ ------
Total cost of
revenue 18,961 22,668 20,915
------ ------ ------
Gross profit 23,778 38,513 35,250
------ ------ ------
Gross profit %
Product 62.7% 70.6% 69.7%
Service 49.8% 51.4% 52.5%
Total gross
profit % 55.6% 62.9% 62.8%
Operating
expenses:
Research and
development 16,226 15,106 14,141
Sales and
marketing 11,836 12,392 11,527
General and
administrative 17,157 10,971 11,578
Restructuring 1,114 - 1,533
----- --- -----
Total operating
expenses 46,333 38,469 38,779
------ ------ ------
Income (loss)
from operations (22,555) 44 (3,529)
Interest expense (10) (30) (23)
Interest income 439 466 787
Other income, net 1 1 12
--- --- ---
Income (loss)
before income
taxes (22,125) 481 (2,753)
Income tax
provision (153) (170) (644)
---- ---- ----
Net income (loss) $(22,278) $311 $(3,397)
======== ==== =======
Earnings (loss)
per share:
Basic $(0.08) $- $(0.01)
Diluted $(0.08) $- $(0.01)
Shares used to
compute earnings
(loss) per
share:
Basic 275,412 275,051 273,907
Diluted 275,412 276,314 273,907
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Nine months ended
-----------------
September 30, September 30,
2010 2009
---- ----
Revenue:
Product $92,465 $89,267
Service 73,863 69,517
------ ------
Total revenue 166,328 158,784
------- -------
Cost of revenue:
Product 30,358 27,041
Service 35,501 32,986
------ ------
Total cost of revenue 65,859 60,027
------ ------
Gross profit 100,469 98,757
------- ------
Gross profit %
Product 67.2% 69.7%
Service 51.9% 52.6%
Total gross profit % 60.4% 62.2%
Operating expenses:
Research and
development 46,272 45,995
Sales and marketing 37,822 36,018
General and
administrative 38,272 32,259
Restructuring 1,114 3,510
----- -----
Total operating
expenses 123,480 117,782
------- -------
Loss from operations (23,011) (19,025)
Interest expense (53) (94)
Interest income 1,420 3,513
Other income, net 12 24
--- ---
Loss before income
taxes (21,632) (15,582)
Income tax benefit
(provision) (469) 341
---- ---
Net loss $(22,101) $(15,241)
======== ========
Loss per share:
Basic $(0.08) $(0.06)
Diluted $(0.08) $(0.06)
Shares used to compute
loss per share:
Basic 275,107 273,518
Diluted 275,107 273,518
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, December 31,
2010 2009
---- ----
Assets
Current assets:
Cash and cash equivalents $81,245 $125,323
Marketable securities 247,908 239,223
Accounts receivable, net 34,710 47,998
Inventory, net 26,982 21,925
Deferred income taxes 650 562
Other current assets 19,657 17,508
------ ------
Total current assets 411,152 452,539
Property and equipment, net 16,588 14,646
Intangible assets, net 1,928 341
Goodwill 5,056 5,053
Investments 84,314 49,598
Deferred income taxes 960 711
Other assets 22,427 17,849
------ ------
$542,425 $540,737
======== ========
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $19,040 $5,337
Accrued expenses 24,126 19,292
Current portion of deferred
revenue 56,014 74,748
Current portion of long-term
liabilities 492 753
--- ---
Total current liabilities 99,672 100,130
Deferred revenue 35,818 25,242
Long-term liabilities 911 1,127
--- -----
Total liabilities 136,401 126,499
------- -------
Commitments and contingencies
Stockholders equity:
Common stock 279 277
Additional paid-in capital 1,299,983 1,286,326
Accumulated deficit (900,911) (878,810)
Accumulated other comprehensive
income 6,940 6,712
Treasury stock (267) (267)
---- ----
Total stockholders' equity 406,024 414,238
------- -------
$542,425 $540,737
======== ========
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine months ended
-----------------
September 30, September 30,
2010 2009
---- ----
Cash flows from operating
activities:
Net loss $(22,101) $(15,241)
Adjustments to reconcile
net loss to cash flows
provided by operating
activities:
Depreciation and
amortization of property
and equipment 8,134 7,497
Amortization of intangible
assets 413 184
Stock-based compensation 12,410 9,889
Loss on disposal of
property and equipment 81 173
Deferred income taxes 60 (137)
Changes in operating
assets and liabilities:
Accounts receivable 13,471 41,600
Inventory (10,360) (4,217)
Other operating assets 1,484 (7,516)
Accounts payable 12,704 (3,212)
Accrued expenses 4,477 (12,999)
Accrued litigation
settlements - (9,600)
Deferred revenue (8,347) 4,240
------ -----
Net cash provided by
operating activities 12,426 10,661
------ ------
Cash flows from investing
activities:
Purchases of property and
equipment (9,193) (4,813)
Purchase of intangible
assets (2,000) -
Purchases of marketable
securities (283,461) (179,416)
Sale/maturities of
marketable securities 236,698 228,979
------- -------
Net cash provided by (used
in) investing activities (57,956) 44,750
------- ------
Cash flows from financing
activities:
Sale of common stock in
connection with employee
stock purchase plan 1,353 1,119
Proceeds from exercise of
stock options 327 32
Payment of tax withholding
obligations related to
net share settlements of
restricted stock awards (572) (531)
Principal payments of
capital lease obligations (194) (189)
---- ----
Net cash provided by
financing activities 914 431
--- ---
Effect of exchange rate
changes on cash and cash
equivalents 538 856
--- ---
Net increase (decrease) in
cash and cash equivalents (44,078) 56,698
Cash and cash equivalents,
beginning of year 125,323 122,207
------- -------
Cash and cash equivalents,
end of period $81,245 $178,905
======= ========
SONUS NETWORKS, INC.
Supplemental Information
(In thousands)
(unaudited)
The following tables provide the details of stock-based compensation
and amortization of intangible assets included in the Company's
Condensed Consolidated Statements of Operations and the line items
in which these amounts are reported. Additional information
regarding these items is available in the Investor Relations section
of our website at . The information
contained on our website or that can be accessed through our website
should not be considered to be part of, or incorporated into, this
press release.
Three months ended
------------------
September September
30, June 30, 30,
2010 2010 2009
---- ---- ----
Stock-based compensation
Cost of revenue - product $105 $89 $67
Cost of revenue - service 396 404 483
--- --- ---
Cost of revenue 501 493 550
--- --- ---
Research and development
expense 617 665 774
Sales and marketing expense 647 688 885
General and administrative
expense 4,947 1,366 930
----- ----- ---
Operating expense 6,211 2,719 2,589
----- ----- -----
Total stock-based
compensation $6,712 $3,212 $3,139
====== ====== ======
Amortization of intangible
assets
Cost of revenue - product $37 $38 $40
Research and development 100 100 -
--- --- ---
Total amortization of
intangible assets $137 $138 $40
==== ==== ===
Nine months ended
-----------------
September September
30, 30,
2010 2009
---- ----
Stock-based compensation
Cost of revenue - product $265 $298
Cost of revenue - service 1,219 1,335
----- -----
Cost of revenue 1,484 1,633
----- -----
Research and development
expense 1,888 2,643
Sales and marketing expense 2,064 3,419
General and administrative
expense 6,974 2,194
----- -----
Operating expense 10,926 8,256
------ -----
Total stock-based
compensation $12,410 $9,889
======= ======
Amortization of intangible
assets
Cost of revenue - product $113 $184
Research and development 300 -
--- ---
Total amortization of
intangible assets $413 $184
==== ====
