Science & Technology
Science and Technology
Science and Technology
Fri, November 6, 2009
Thu, November 5, 2009 Procera Networks Announces Third Quarter 2009 Results
LOS GATOS, CA--(Marketwire - November 5, 2009) - Procera Networks Inc. (
Q3'09 Key Highlights:
-- Record revenue of $4.6 million; increased 70% year-over-year and 42% sequentially -- Sixth consecutive quarter of year-over-year revenue growth -- Announced Tier 1 service provider follow-on order of $4.5 million -- Continued focus on Tier 1 service providers contributes to strong bookings of $6.3 million -- Reduced operating expenses 30% year-over-year
"During the third quarter we achieved record revenue and strong bookings," said James Brear, president and CEO of Procera. "We also secured a $4.5 million Tier-1 follow-on order for our PacketLogic systems, which validates our technology leadership and establishes Procera's credibility as a viable Tier 1 supplier."
Total revenue for the third quarter of 2009 was $4.6 million, an increase of 70% from $2.7 million in the third quarter of 2008. The GAAP net loss for the third quarter of 2009 was $1.6 million, or a net loss of $0.02 per diluted share. This compares to a GAAP net loss of $3.8 million, or a net loss of $0.05 per diluted share, in the third quarter of 2008.
Non-GAAP net loss for the third quarter of 2009 was $870,000, as compared to non-GAAP net loss of $2.6 million in the third quarter of 2008. For an explanation of Non-GAAP financial measures used in this release, and a reconciliation to comparable GAAP measures, please refer to Use of Non-GAAP Financial Information below.
Conference Call Information
Procera Networks will host a conference call at 4:30 p.m. eastern time today to discuss its financial results for the third quarter ended September 30, 2009. Interested parties can access the live call by dialing 877-718-5099 or 719-325-4823 and entering passcode 4157040. An archive of the conference call will be available on the Quarterly Results and Events section of the Procera Networks' Investor Relations Web site at [ www.proceranetworks.com/investors ], on or before November 6, 2009.
Forward Looking Statements
Safe Harbor Statement: this press release contains forward-looking statements, including statements relating to the expected demand for Procera Networks' products and services and the recently announced follow-on order from a Tier 1 service provider. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements, including risks related to our ability to raise capital; the acceptance and adoption of our products; our ability to service and upgrade our products; lengthy sales cycles and lab and field trial delays by service providers; our dependence on a limited product line; our dependence on key employees; our ability to compete in our industry with companies that are significantly larger and have greater resources; our ability to protect our intellectual property rights in a global market; our ability to manufacture product quickly enough to meet potential demand; and other risks and uncertainties described more fully in our 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 set forth in our Forms 10-Qs filed in 2009 and our Form 10-K filed for the year ended December 31, 2008. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.
Use of Non-GAAP Financial Information
Procera's management believes that these non-GAAP financial measures, when taken together with the corresponding consolidated GAAP measures and related segment information, provide incremental insight into the underlying factors and trends affecting both the Company's performance and its cash generating potential. Management believes these non-GAAP measures increase the transparency of the Company's current results and enable investors to more fully understand trends in its current and future performance.
Thus, in addition to the financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures that we believe are helpful in understanding our past financial performance and future results. For reconciliations 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 Reconciliations." Management regularly uses these supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods. Our non-GAAP financial measures include adjustments based on the following items, as well as the related income tax benefits, if any:
Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP net income. Amortization of intangible assets is a non-cash expense, and it is not part of our core operations that requires cash. Investors should note that our intangible assets were essential for generating revenues during the periods presented and will contribute to future period revenues as well.
Stock-based compensation expenses: We have excluded the effect of stock-based compensation from our non-GAAP gross profit, operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees and consultants, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.
Non-cash interest expense: We have excluded the effect of a non-cash charge to interest expense for the amortization of debt discounts related to convertible promissory notes that were issued and converted within the second quarter of 2009.
These non-GAAP financial measures are not consistent with GAAP because they do not fully reflect non-cash expenses. The above-mentioned non-GAAP measures are generated by adjusting the related GAAP measures solely to reverse the effect of the above mentioned non-cash expenses. The Company uses these financial measures to provide additional insight into current operating and business trends not readily apparent from the GAAP results.
Management believes users of Procera's financial statements will benefit from greater transparency in referring to these non-GAAP financial measures when assessing the Company's operating results, as well as when forecasting and analyzing future periods. However, management recognizes that:
-- these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company's GAAP financial measures; -- these non-GAAP financial measures should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP -- these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company's GAAP financial measures; -- these non-GAAP financial measures should not be considered to be superior to the Company's GAAP financial measures; -- these non-GAAP financial measures were not prepared in accordance with GAAP and investors should not assume that the non-GAAP financial measures presented in this earnings release were prepared under a comprehensive set of rules or principles; and -- management intends to continue to track and present these non-GAAP financial measures for future periods.
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. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company's results to the results of other companies.
A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure or measures appears at the end of this press release.
About Procera Networks Inc.
Procera Networks Inc. delivers Evolved DPI solutions that give service providers awareness, control and protection of their applications and networks. Its core product suite, the PacketLogic line of platforms, leverages the company's advanced identification engine, DRDL™ (Datastream Recognition Definition Language), to provide accurate identification of network traffic in real-time. PacketLogic is deployed at more than 600 broadband service providers, telcos, governments and higher education campuses worldwide. Founded in 2002, Procera (
Procera Networks, Inc. Condensed Consolidated Statements of Operations Unaudited Three Months Ended Nine Months Ended September 30, September 30, -------------------------- --------------------------- 2009 2008 2009 2008 ------------ ------------ ------------ ------------- Sales Product sales $ 3,787,205 $ 2,209,605 $ 8,509,093 $ 5,748,372 Support sales 796,279 479,568 2,255,444 1,271,874 ------------ ------------ ------------ ------------- Total sales 4,583,484 2,689,173 10,764,537 7,020,246 Cost of sales Product cost of sales 2,969,853 1,788,622 6,909,181 4,209,445 Support cost of sales 125,699 125,654 330,188 423,797 ------------ ------------ ------------ ------------- Total cost of sales 3,095,552 1,914,276 7,239,369 4,633,242 ------------ ------------ ------------ ------------- Gross profit 1,487,932 774,897 3,525,168 2,387,004 ------------ ------------ ------------ ------------- 32% 29% 33% 34% Operating expenses: Research and development 583,738 809,201 1,903,187 2,497,734 Sales and marketing 1,622,291 2,094,101 4,961,082 6,435,501 General and administrative 1,088,302 1,896,837 3,807,342 5,392,988 ------------ ------------ ------------ ------------- Total operating expenses 3,294,331 4,800,139 10,671,611 14,326,223 ------------ ------------ ------------ ------------- Loss from operations (1,806,399) (4,025,242) (7,146,443) (11,939,219) ------------ ------------ ------------ ------------- Other income (expense) Interest and other income 11,234 27,371 36,503 53,254 Interest and other expense (75,752) (14,569) (1,843,205) (49,373) ------------ ------------ ------------ ------------- Total other income (expense) (64,518) 12,802 (1,806,702) 3,881 Loss before income taxes (1,870,917) (4,012,440) (8,953,145) (11,935,338) Income tax benefit 275,870 259,904 691,450 782,295 ------------ ------------ ------------ ------------- Net loss $ (1,595,047) $ (3,752,536) $ (8,261,695) $ (11,153,043) ============ ============ ============ ============= Net loss per share - basic and diluted $ (0.02) $ (0.05) $ (0.09) $ (0.14) ============ ============ ============ ============= Shares used in computing net loss per share-basic and diluted 94,082,724 79,018,207 88,516,837 77,424,517 Procera Networks, Inc. Condensed Consolidated Balance Sheets September 30, December 31, 2009 2008 ------------- ------------ ASSETS Unaudited Current Assets: Cash and cash equivalents $ 2,389,449 $ 1,721,225 Accounts receivable, net of allowance 5,677,625 5,454,745 Inventories, net 2,104,103 3,445,802 Prepaid expenses and other 546,521 824,340 ------------- ------------ Total current assets 10,717,698 11,446,112 Property and equipment, net 732,419 2,573,045 Purchased intangible assets, net - 964,405 Goodwill 960,209 960,209 Other non-current assets 47,223 47,294 ------------- ------------ Total assets $ 12,457,549 $ 15,991,065 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,302,241 $ 2,457,430 Deferred revenue 1,923,597 1,313,092 Accrued liabilities 1,525,608 1,841,442 Notes payable 500,000 550,000 Capital leases payable - 11,543 ------------- ------------ Total current liabilities 5,251,447 6,173,507 Non-current liabilities Deferred rent 38,540 24,234 Deferred tax liability - 695,239 Capital leases payable - 39,584 ------------- ------------ Total liabilities 5,289,987 6,932,564 Commitments and contingencies - - Stockholders' equity: Common stock 94,083 84,498 Additional paid-in capital 67,356,581 61,142,430 Accumulated other comprehensive loss (281,086) (428,107) Accumulated deficit (60,002,016) (51,740,320) ------------- ------------ Total stockholders' equity 7,167,562 9,058,501 ------------- ------------ Total liabilities and stockholders' equity $ 12,457,549 $ 15,991,065 ============= ============ Procera Networks, Inc. GAAP to Non-GAAP Reconciliation; and Supplemental Financial Information Unaudited Three Months Ended Nine Months Ended ------------------------------------- ------------------------- September September September September 30, June 30, 30, 30, 30, 2009 2009 2008 2009 2008 ----------- ----------- ----------- ----------- ------------ Sales - U.S. GAAP as reported 4,583,484 3,233,720 2,689,173 10,764,537 7,020,246 Reconciliation of Gross Profit: U.S. GAAP as reported 1,487,932 877,822 774,897 3,525,168 2,387,004 As a percentage of sales 32% 27% 29% 33% 34% Adjustment: Amortization on intangibles (1) 254,333 381,500 381,500 1,017,333 1,144,500 Stock-based compensation (2) 15,943 16,395 18,193 50,397 31,434 ----------- ----------- ----------- ----------- ------------ As Adjusted 1,758,208 1,275,717 1,174,590 4,592,898 3,562,938 As a percentage of sales 38% 39% 44% 43% 51% Reconciliation of Operating Expense: U.S. GAAP as reported 3,294,331 3,726,832 4,800,139 10,671,611 14,326,223 Adjustment: Amortization on intangibles (1) 371,074 545,083 545,083 1,461,240 1,635,249 Stock-based compensation (2) 259,901 271,285 447,317 835,555 1,254,763 ----------- ----------- ----------- ----------- ------------ As Adjusted 2,663,356 2,910,464 3,807,739 8,374,816 11,436,211 Reconciliation of Net Loss: U.S. GAAP as reported (1,595,047) (4,332,595) (3,752,536) (8,261,695) (11,153,043) Adjustment: Amortization on intangibles (1) 625,407 926,583 926,583 2,478,573 2,779,749 Stock-based compensation (2) 275,844 287,680 465,510 885,952 1,286,197 Interest related to beneficial conversion feature (3) - 1,644,756 - 1,644,756 - Income tax adjustment (4) (176,687) (259,904) (259,904) (696,495) (779,712) ----------- ----------- ----------- ----------- ------------ As Adjusted (870,483) (1,733,480) (2,620,346) (3,948,909) (7,866,809) =========== =========== =========== =========== ============ (1) The intangible assets recorded at fair value as a result of our acquisitions are amortized over the estimated useful life of the respective asset. (2) Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Statements of Financial Accounting Standards No. 123 (R). (3) Interest expense related to beneficial conversion feature of convertible promissory notes. (4) Income tax benefit from the amortization of intangible assets.
