[February 09, 2016] |
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Radisys Reports Fourth Quarter and Fiscal 2015 Results
Radisys Corporation (NASDAQ: RSYS), the services acceleration company,
today announced financial results for the fourth quarter ended December
31, 2015.
Fourth Quarter and Recent Highlights
-
Software-Systems revenue of $15.7 million, representing over 50%
year-on-year growth, with gross margin of 61.5%;
-
Received orders totaling approximately $19 million for the Company's
next-generation datacenter infrastructure product, targeted at telecom
and cable operators, from a tier-one North American carrier; and
-
GAAP loss per share improved $0.08 year-on-year. Non-GAAP earnings
were $0.08 per diluted share, an increase of $0.07 per share
year-on-year.
2015 Highlights
-
Software-Systems revenue of $55.0 million, representing over 35%
year-on-year growth;
-
Shipped over $14 million of MediaEngine products in support of a
greenfield LTE rollout by a large Asian carrier;
-
Secured and shipped orders for initial commercial deployment of
FlowEngine products with a tier-one North American carrier;
-
GAAP loss per share improved $0.39 year-on-year. Non-GAAP earnings
were $0.21 per diluted share, an increase of $0.37 per share
year-on-year; and
-
Generated $9.7 million of operating income from the Embedded Products
segment, compared to $2.5 million in 2014.
"As highlighted in our January preannouncement, our fourth quarter
results are indicative of the strong traction we are making across all
of our product lines," said Brian Bronson, Radisys President and CEO.
"For the full year, we shipped over $14 million of MediaEngine product
to our large Asian carrier customer, exceeded expectations by delivering
over $5 million of FlowEngine products predominately to a tier-one North
American carrier and returned CellEngine to revenue growth. These
achievements, coupled with strong operating income from our Embedded
Products segment, enabled us to exceed our initial guidance for both
revenue and earnings in 2015."
"In addition, we received an initial order from a tier-one North
American carrier for our next-generation datacenter product, which
Radisys will formally launch to the market in the coming months. This
significant opportunity positions us to provide more complete solutions
as we enable telecom and cable operators to move from their current
network topology to a datacenter environment. Further, I expect over
time this product will create significant pull-through of our FlowEngine
products, as well as other product and services opportunities. Given the
momentum from this new initiative, and coupled with strength in our
Software-Systems segment, we expect Radisys to achieve consolidated
top-line revenue growth in 2016 while also incrementally growing
earnings as we continue to invest in these growth initiatives to drive
long-term sustainable growth."
Software-Systems Results
For the fourth quarter of 2015, Software-Systems revenue was $15.7
million, compared to $15.5 million in the prior quarter and $10.4
million in the fourth quarter of 2014, representing an increase of over
50% year-on-year. Fourth quarter 2015 revenue included initial
FlowEngine shipments in support of the commercial deployment by a
tier-one North American carrier, as well as growth from both the
MediaEngine and CellEngine product lines.
Gross margins were 61.5%, compared to 58.7% in the prior quarter and
58.3% in the fourth quarter of 2014. The sequential and year-on-year
improvements were the result of continued acceleration in product sales.
Operating income for the fourth quarter was $1.2 million, compared to
$0.7 million in the prior quarter and a loss of $1.5 million in the
fourth quarter of 2014.
Embedded Products Results
For the fourth quarter of 2015, Embedded Products revenue was $28.4
million, compared to $29.3 million in the prior quarter and $37.8
million in the fourth quarter of 2014.
Gross margins were 22.1%, compared to 20.4% in the prior quarter and
26.4% in the fourth quarter of 2014. The year-on-year decline was the
result of last time sales of certain products in the fourth quarter of
2014 containing higher than normal gross margins.
Operating income for the fourth quarter was $1.6 million, compared to
$1.8 million in the prior quarter and $2.0 million in the fourth quarter
of 2014.
Consolidated Results
For the fourth quarter of 2015, consolidated revenue was $44.1 million,
compared to $44.8 million in the prior quarter and $48.2 million in the
fourth quarter of 2014.
On a GAAP basis, gross margin in the fourth quarter of 2015 was 31.6%,
compared to 29.0% in the prior quarter and 29.0% in the fourth quarter
of 2014. Fourth quarter 2015 GAAP research and development and selling,
general, and administrative expenses were $14.0 million, compared to
$13.6 million in the prior quarter and $16.2 million in the fourth
quarter of 2014.
On a non-GAAP basis, fourth quarter 2015 gross margin was 36.1%,
compared to 33.6% in the prior quarter and 33.3% in the fourth quarter
of 2014. Fourth quarter 2015 gross margin improved 250 basis points
sequentially due to improved sales mix within the Software-Systems
segment. Fourth quarter 2015 research and development and selling,
general and administrative expenses on a non-GAAP basis were $13.1
million, compared to $12.5 million in the prior quarter and $15.6
million in the fourth quarter of 2014. The sequential increase is the
result of accelerated hiring in support of our Software-Systems growth
initiatives coupled with higher variable plan compensation.
For the fourth quarter of 2015, the Company recorded a GAAP net loss of
$1.4 million, or $0.04 per share, compared to a GAAP net loss of $2.1
million, or $0.06 per share, in the prior quarter and GAAP net loss of
$4.5 million, or $0.12 per share, in the fourth quarter of 2014. On a
non-GAAP basis, the Company recorded a profit of $2.8 million, or $0.08
per diluted share, compared to a non-GAAP profit of $2.6 million, or
$0.07 per diluted share, in the prior quarter and non-GAAP profit of
$0.4 million, or $0.01 per diluted share, in the fourth quarter of 2014.
First Quarter 2016 Financial Guidance
-
Revenue is expected between $49 million to $52 million. This guidance
range includes the expected recognition of the approximately $19
million order for next-generation datacenter products. The balance of
revenue guidance assumes year-on-year growth in Software-Systems and a
greater than seasonal decline in core Embedded Products.
-
Non-GAAP gross margin is expected between 27% to 30%, and non-GAAP R&D
and SG&A expenses are expected to approximate $13 million.
-
Non-GAAP earnings are expected to range from $0.01 to $0.05 per
diluted share.
Annual 2016 Financial Guidance
-
Revenue is expected between $180 million to $200 million.
Software-Systems revenue is expected to grow approximately 10%
year-on-year, which represents approximately 20% compound annual
growth over 2014, while Embedded Products revenue is expected to grow
modestly over 2015.
-
Non-GAAP gross margin is expected between 33% to 34%, with
year-on-year improvement in Software-Systems segment gross margins
offset by a reduction in Embedded Products segment gross margins tied
to our new telecom datacenter product initiative.
-
Non-GAAP R&D and SG&A expenses are expected between $51 million and
$55 million.
-
Non-GAAP earnings are expected to range from $0.22 to $0.28 per
diluted share.
Conference Call and Webcast Information
The Company will report full fourth quarter 2015 results on February 9,
2016, after market close at 5:00 p.m. ET. To participate in the live
conference call, dial 888-333-0027 in the U.S. and Canada or
706-634-4990 for all other countries and reference conference ID #
17237163. The live conference call will also be available via webcast on
the Radisys investor relations website at http://investor.radisys.com/.
A replay of the conference call will be available two hours after the
call is complete until 11:59 p.m. on February 23, 2016. To access the
replay, dial 855-859-2056 or 404-537-3406 and reference conference ID#
17237163. A replay of the webcast will be available for an extended
period of time on the Radisys investor relations website at http://investor.radisys.com/.
About Radisys
Radisys (NASDAQ: RSYS) helps communications and content providers, and
their strategic partners, create new revenue streams and drive cost out
of their services delivery infrastructure. Radisys' service aware
traffic distribution platforms, real-time media processing engines and
wireless access technologies enable its customers to maximize,
virtualize and monetize their networks.
Forward-Looking Statements
This press release contains forward-looking statements, including
statements about the Company's business strategy, changes in reporting
segments financial outlook and expectations for the first quarter and
fiscal 2016, and statements related to revenue and gross margins from
our respective segments and product lines, investments in future growth,
expense savings or reductions, increased profitability, product line
focus, operational and administrative efficiencies, revenue growth,
margin improvement, financial performance and other attributes of the
Company. These forward-looking statements are based on the Company's
expectations and assumptions, as of the date such statements are made,
regarding the Company's future operating performance and financial
condition, customer requirements, outcome of product trials, the economy
and other future events or circumstances. Actual results could differ
materially from the outlook guidance and expectations in these
forward-looking statements as a result of a number of risk factors,
including, among others, (a) continued implementation of the Company's
next-generation datacenter product, (b) customer implementation of
traffic management solutions, (c) the outcome of product trials, (d) the
market success of customers' products and solutions, (e) the development
and transition of new products and solutions, (f) the enhancement of
existing products and solutions to meet customer needs and respond to
emerging technological trends, (g) the Company's dependence on certain
customers and high degree of customer concentration, (h) the Company's
use of one contract manufacturer for a significant portion of the
production of its products, including the success of transitioning
contract manufacturing partners, (i) matters affecting the software and
embedded product industry, including changes in industry standards,
changes in customer requirements and new product introductions, (j)
actions by regulatory authorities or other third parties, (k) cash
generation, (l) changes in tariff and trade policies and other risks
associated with foreign operations, (m) fluctuations in currency
exchange rates, (n) the ability of the Company to successfully complete
any restructuring, acquisition or divestiture activities, (o) risks
relating to fluctuations in the Company's operating results, the
uncertainty of revenues and profitability and the potential need to
raise additional funding and (p) other factors listed in the Company's
reports filed with the Securities and Exchange Commission (SEC),
including those listed under "Risk Factors" in Radisys' Annual Report on
Form 10-K for the year ended December 31, 2014, copies of which may be
obtained by contacting the Company at 503-615-1100, from the Company's
investor relations web site at http://investor.radisys.com/,
or at the SEC's website at http://www.sec.gov.
Although forward-looking statements help provide additional information
about Radisys, investors should keep in mind that forward-looking
statements are inherently less reliable than historical information.
Should one or more of these risks or uncertainties materialize (or the
other consequences of such a development worsen), or should underlying
assumptions prove incorrect, actual outcomes may vary materially from
those forecasted or expected. The Company believes its expectations and
assumptions are reasonable, but there can be no assurance that the
expectations reflected herein will be achieved. All information in this
press release is as of February 9, 2016. The Company undertakes no duty
to update any forward-looking statement to conform the statement to
actual results or changes in the Company's expectations.
Non-GAAP Financial Measures
To supplement its consolidated financial statements in accordance with
generally accepted accounting principles (GAAP), the Company's earnings
release contains non-GAAP financial measures that exclude certain
expenses, gains and losses, such as the effects of (a) amortization of
acquired intangible assets, (b) stock-based compensation expense, (c)
restructuring and other charges (reversals), net, (d) non-cash income
tax expense and (e) gain on life insurance asset. The Company believes
that the use of non-GAAP financial measures provides useful information
to investors to gain an overall understanding of its current financial
performance and its prospects for the future. Specifically, the Company
believes the non-GAAP results provide useful information to both
management and investors by excluding certain expenses, gains and losses
that the Company believes are not indicative of its core operating
results. In addition, non-GAAP financial measures are used by management
for budgeting and forecasting as well as subsequently measuring the
Company's performance, and the Company believes that it is providing
investors with financial measures that most closely align to its
internal measurement processes. These non-GAAP measures are considered
to be reflective of the Company's core operating results as they more
closely reflect the essential revenue-generating activities of the
Company and direct operating expenses (resulting in cash expenditures)
needed to perform these revenue-generating activities. The Company also
believes, based on feedback provided to the Company during its earnings
calls' Q&A sessions and discussions with the investment community, that
the non-GAAP financial measures it provides are necessary to allow the
investment community to construct their valuation models to better align
its results and projections with its competitors and market sector, as
there is significant variability and unpredictability across companies
with respect to certain expenses, gains and losses.
The non-GAAP financial information is presented using a consistent
methodology from quarter-to-quarter and year-to-year. These measures
should be considered in addition to results prepared in accordance with
GAAP. In addition, these non-GAAP financial measures are not based on
any comprehensive set of accounting rules or principles. The Company
believes that non-GAAP financial measures have limitations in that they
do not reflect all of the amounts associated with the Company's results
of operations as determined in accordance with GAAP and that these
measures should only be used to evaluate the Company's results of
operations in conjunction with the corresponding GAAP financial measures.
A reconciliation of non-GAAP information to GAAP information is included
in the tables below. The non-GAAP financial measures disclosed by the
Company should not be considered a substitute for or superior to
financial measures calculated in accordance with GAAP, and
reconciliations between GAAP and non-GAAP financial measures included in
this earnings release should be carefully evaluated. The non-GAAP
financial measures used by the Company may be calculated differently
from, and therefore may not be comparable to, similarly titled measures
used by other companies.
Radisys® is a registered trademark of Radisys
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except per share amounts, unaudited)
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Three Months Ended
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Year Ended
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December 31,
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December 31,
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2015
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2014
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2015
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2014
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Revenues
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$
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44,077
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$
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48,174
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$
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184,593
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$
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192,742
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Cost of sales:
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Cost of sales
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28,232
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32,179
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124,579
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132,730
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Amortization of purchased technology
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1,927
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2,045
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7,862
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8,210
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Gross margin
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13,918
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13,950
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52,152
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51,802
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Operating expenses:
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Research and development
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5,911
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7,474
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25,529
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31,958
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Selling, general and administrative
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8,092
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8,759
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30,628
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35,862
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Intangible assets amortization
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1,260
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1,260
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5,040
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5,077
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Restructuring and other charges, net
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178
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761
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5,020
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4,205
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Loss from operations
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(1,523
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)
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(4,304
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)
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(14,065
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)
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(25,300
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)
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Interest expense
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(98
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)
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(293
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)
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(515
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)
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(1,242
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)
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Other income, net
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518
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654
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1,644
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1,453
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Loss before income tax expense
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(1,103
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)
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(3,943
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)
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(12,936
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)
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(25,089
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)
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Income tax expense
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337
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524
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1,742
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2,492
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Net loss
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$
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(1,440
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)
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$
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(4,467
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)
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$
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(14,678
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)
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$
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(27,581
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Net loss per share:
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Basic
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$
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(0.04
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)
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$
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(0.12
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)
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$
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(0.40
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)
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$
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(0.79
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)
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Diluted
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$
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(0.04
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)
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$
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(0.12
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)
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$
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(0.40
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)
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$
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(0.79
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)
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Weighted average shares outstanding
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Basic
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36,936
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36,504
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36,789
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34,699
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Diluted
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36,936
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36,504
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36,789
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34,699
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands, unaudited)
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December 31, 2015
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December 31, 2014
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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20,764
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$
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31,242
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Accounts receivable, net
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60,942
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43,845
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Deferred cost of sales
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14,113
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176
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Inventories and inventory deposit, net
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16,812
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18,475
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Other current assets
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14,098
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9,600
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Total current assets
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126,729
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103,338
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Property and equipment, net
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6,134
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9,786
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Intangible assets, net
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30,322
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43,224
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Other assets, net
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3,884
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4,548
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Total assets
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$
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167,069
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$
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160,896
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
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Accounts payable
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$
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43,451
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$
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33,679
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Deferred revenue
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23,062
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6,380
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Other accrued liabilities
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16,654
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12,261
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Line of credit
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15,000
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10,000
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Convertible senior notes
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-
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18,000
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Total current liabilities
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98,167
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80,320
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Other long-term liabilities
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2,985
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2,800
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Total liabilities
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101,152
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83,120
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Shareholders' equity:
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Common stock
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338,165
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334,024
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Accumulated deficit
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(271,349
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)
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(256,671
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Accumulated other comprehensive income
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(899
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)
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423
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Total shareholders' equity
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65,917
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77,776
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Total liabilities and shareholders' equity
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$
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167,069
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$
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160,896
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(In thousands, unaudited)
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Three Months Ended
|
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Year Ended
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|
|
|
December 31,
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|
|
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December, 31
|
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|
|
2015
|
|
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2014
|
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2015
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2014
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Cash flows from operating activities:
|
|
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|
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Net loss
|
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$
|
(1,440
|
)
|
|
|
$
|
(4,467
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)
|
|
|
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$
|
(14,678
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)
|
|
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$
|
(27,581
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)
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Adjustments to reconcile net loss to net cash
|
|
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provided by (used in) operating activities:
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|
|
|
|
|
|
|
|
|
|
|
|
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Depreciation and amortization
|
|
|
|
4,422
|
|
|
|
|
4,883
|
|
|
|
|
|
18,478
|
|
|
|
|
20,240
|
|
Stock-based compensation expense
|
|
|
|
981
|
|
|
|
|
738
|
|
|
|
|
|
3,952
|
|
|
|
|
4,097
|
|
Other
|
|
|
|
186
|
|
|
|
|
2,150
|
|
|
|
|
|
1,336
|
|
|
|
|
5,766
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(17,096
|
)
|
|
|
|
70
|
|
|
|
|
|
(17,121
|
)
|
|
|
|
(2,262
|
)
|
Inventories and deferred cost of sales
|
|
|
|
(15,546
|
)
|
|
|
|
(1,778
|
)
|
|
|
|
|
(13,801
|
)
|
|
|
|
4,313
|
|
Other receivables
|
|
|
|
(7,914
|
)
|
|
|
|
(377
|
)
|
|
|
|
|
(5,040
|
)
|
|
|
|
(3,689
|
)
|
Accounts payable
|
|
|
|
15,763
|
|
|
|
|
1,857
|
|
|
|
|
|
9,853
|
|
|
|
|
(1,534
|
)
|
Deferred revenue
|
|
|
|
15,534
|
|
|
|
|
80
|
|
|
|
|
|
16,682
|
|
|
|
|
(1,875
|
)
|
Other operating assets and liabilities
|
|
|
|
3,065
|
|
|
|
|
(2,981
|
)
|
|
|
|
|
5,396
|
|
|
|
|
(4,272
|
)
|
Net cash provided by (used in) operating activities
|
|
|
|
(2,045
|
)
|
|
|
|
175
|
|
|
|
|
|
5,057
|
|
|
|
|
(6,797
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(571
|
)
|
|
|
|
(535
|
)
|
|
|
|
|
(2,224
|
)
|
|
|
|
(2,396
|
)
|
Proceeds from sale of assets
|
|
|
|
-
|
|
|
|
|
200
|
|
|
|
|
|
-
|
|
|
|
|
200
|
|
Net cash used in investing activities
|
|
|
|
(571
|
)
|
|
|
|
(335
|
)
|
|
|
|
|
(2,224
|
)
|
|
|
|
(2,196
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings on line of credit
|
|
|
|
5,000
|
|
|
|
|
-
|
|
|
|
|
|
13,500
|
|
|
|
|
-
|
|
Payments on line of credit
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
(8,500
|
)
|
|
|
|
(5,000
|
)
|
Repayment of convertible senior notes
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
(18,000
|
)
|
|
|
|
-
|
|
Proceeds from issuance of common stock
|
|
|
|
81
|
|
|
|
|
105
|
|
|
|
|
|
331
|
|
|
|
|
21,186
|
|
Other financing activities, net
|
|
|
|
(40
|
)
|
|
|
|
(331
|
)
|
|
|
|
|
(142
|
)
|
|
|
|
(882
|
)
|
Net cash provided by (used in) financing activities
|
|
|
|
5,041
|
|
|
|
|
(226
|
)
|
|
|
|
|
(12,811
|
)
|
|
|
|
15,304
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(37
|
)
|
|
|
|
(310
|
)
|
|
|
|
|
(500
|
)
|
|
|
|
(551
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
2,388
|
|
|
|
|
(696
|
)
|
|
|
|
|
(10,478
|
)
|
|
|
|
5,760
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
18,376
|
|
|
|
|
31,938
|
|
|
|
|
|
31,242
|
|
|
|
|
25,482
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
20,764
|
|
|
|
$
|
31,242
|
|
|
|
|
$
|
20,764
|
|
|
|
$
|
31,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES, GROSS MARGIN AND INCOME (LOSS) FROM OPERATIONS BY
OPERATING SEGMENT
|
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
2015
|
|
|
2014
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software-Systems
|
|
|
$
|
15,670
|
|
|
|
$
|
10,420
|
|
|
|
|
$
|
55,006
|
|
|
|
$
|
40,281
|
|
Embedded Products and Hardware Services
|
|
|
|
28,407
|
|
|
|
|
37,754
|
|
|
|
|
|
129,587
|
|
|
|
|
152,461
|
|
Total revenues
|
|
|
$
|
44,077
|
|
|
|
$
|
48,174
|
|
|
|
|
$
|
184,593
|
|
|
|
$
|
192,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
2015
|
|
|
2014
|
Gross margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software-Systems
|
|
|
$
|
9,643
|
|
|
|
$
|
6,078
|
|
|
|
|
$
|
31,997
|
|
|
|
$
|
24,949
|
|
Embedded Products and Hardware Services
|
|
|
|
6,268
|
|
|
|
|
9,977
|
|
|
|
|
|
28,311
|
|
|
|
|
35,449
|
|
Corporate and other
|
|
|
|
(1,993
|
)
|
|
|
|
(2,105
|
)
|
|
|
|
|
(8,156
|
)
|
|
|
|
(8,596
|
)
|
Total gross margin
|
|
|
$
|
13,918
|
|
|
|
$
|
13,950
|
|
|
|
|
$
|
52,152
|
|
|
|
$
|
51,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
2015
|
|
|
2014
|
Income (loss) from operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software-Systems
|
|
|
$
|
1,226
|
|
|
|
$
|
(1,470
|
)
|
|
|
|
$
|
(1,900
|
)
|
|
|
$
|
(6,169
|
)
|
Embedded Products and Hardware Services
|
|
|
|
1,597
|
|
|
|
|
1,969
|
|
|
|
|
|
9,709
|
|
|
|
|
2,457
|
|
Corporate and other
|
|
|
|
(4,346
|
)
|
|
|
|
(4,803
|
)
|
|
|
|
|
(21,874
|
)
|
|
|
|
(21,588
|
)
|
Total loss from operations
|
|
|
$
|
(1,523
|
)
|
|
|
$
|
(4,304
|
)
|
|
|
|
$
|
(14,065
|
)
|
|
|
$
|
(25,300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES BY GEOGRAPHY
|
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
2015
|
|
|
2014
|
North America
|
|
|
$
|
24,094
|
|
54.6
|
%
|
|
|
$
|
22,545
|
|
46.8
|
%
|
|
|
|
$
|
82,564
|
|
44.7
|
%
|
|
|
$
|
76,709
|
|
39.8
|
%
|
Asia Pacific
|
|
|
|
12,639
|
|
28.7
|
|
|
|
|
18,754
|
|
38.9
|
|
|
|
|
|
70,655
|
|
38.3
|
|
|
|
|
73,152
|
|
38.0
|
|
Europe, the Middle East and Africa
|
|
|
|
7,344
|
|
16.7
|
|
|
|
|
6,875
|
|
14.3
|
|
|
|
|
|
31,374
|
|
17.0
|
|
|
|
|
42,881
|
|
22.2
|
|
Total
|
|
|
$
|
44,077
|
|
100.0
|
%
|
|
|
$
|
48,174
|
|
100.0
|
%
|
|
|
|
$
|
184,593
|
|
100.0
|
%
|
|
|
$
|
192,742
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES AND AS A
PERCENT OF REVENUES
|
(In thousands, except per share amounts, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
2015
|
|
|
2014
|
GROSS MARGIN:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin
|
|
|
$
|
13,918
|
|
|
31.6
|
%
|
|
|
$
|
13,950
|
|
|
29.0
|
%
|
|
|
|
$
|
52,152
|
|
|
28.3
|
%
|
|
|
$
|
51,802
|
|
|
26.9
|
%
|
(a) Amortization of acquired intangible assets
|
|
|
|
1,927
|
|
|
|
|
|
|
2,045
|
|
|
|
|
|
|
|
7,862
|
|
|
|
|
|
|
8,210
|
|
|
|
(b) Stock-based compensation
|
|
|
|
66
|
|
|
|
|
|
|
60
|
|
|
|
|
|
|
|
294
|
|
|
|
|
|
|
386
|
|
|
|
Non-GAAP gross margin
|
|
|
$
|
15,911
|
|
|
36.1
|
%
|
|
|
$
|
16,055
|
|
|
33.3
|
%
|
|
|
|
$
|
60,308
|
|
|
32.7
|
%
|
|
|
$
|
60,398
|
|
|
31.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESEARCH AND DEVELOPMENT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development
|
|
|
$
|
5,911
|
|
|
13.4
|
%
|
|
|
$
|
7,474
|
|
|
15.5
|
%
|
|
|
|
$
|
25,529
|
|
|
13.8
|
%
|
|
|
$
|
31,958
|
|
|
16.6
|
%
|
(b) Stock-based compensation
|
|
|
|
227
|
|
|
|
|
|
|
135
|
|
|
|
|
|
|
|
868
|
|
|
|
|
|
|
818
|
|
|
|
Non-GAAP research and development
|
|
|
$
|
5,684
|
|
|
12.9
|
%
|
|
|
$
|
7,339
|
|
|
15.2
|
%
|
|
|
|
$
|
24,661
|
|
|
13.4
|
%
|
|
|
$
|
31,140
|
|
|
16.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELLING, GENERAL AND ADMINISTRATIVE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP selling, general and administrative
|
|
|
$
|
8,092
|
|
|
18.4
|
%
|
|
|
$
|
8,759
|
|
|
18.2
|
%
|
|
|
|
$
|
30,628
|
|
|
16.6
|
%
|
|
|
$
|
35,862
|
|
|
18.6
|
%
|
(b) Stock-based compensation
|
|
|
|
689
|
|
|
|
|
|
|
543
|
|
|
|
|
|
|
|
2,791
|
|
|
|
|
|
|
2,893
|
|
|
|
Non-GAAP selling, general and administrative
|
|
|
$
|
7,403
|
|
|
16.8
|
%
|
|
|
$
|
8,216
|
|
|
17.1
|
%
|
|
|
|
$
|
27,837
|
|
|
15.1
|
%
|
|
|
$
|
32,969
|
|
|
17.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from operations
|
|
|
$
|
(1,523
|
)
|
|
(3.5
|
)%
|
|
|
$
|
(4,304
|
)
|
|
(8.9
|
)%
|
|
|
|
$
|
(14,065
|
)
|
|
(7.6
|
)%
|
|
|
$
|
(25,300
|
)
|
|
(13.1
|
)%
|
(a) Amortization of acquired intangible assets
|
|
|
|
3,187
|
|
|
|
|
|
|
3,304
|
|
|
|
|
|
|
|
12,902
|
|
|
|
|
|
|
13,286
|
|
|
|
(b) Stock-based compensation
|
|
|
|
981
|
|
|
|
|
|
|
738
|
|
|
|
|
|
|
|
3,952
|
|
|
|
|
|
|
4,097
|
|
|
|
(c) Restructuring and acquisition-related charges, net
|
|
|
|
178
|
|
|
|
|
|
|
761
|
|
|
|
|
|
|
|
5,020
|
|
|
|
|
|
|
4,205
|
|
|
|
Non-GAAP income (loss) from operations
|
|
|
$
|
2,823
|
|
|
6.4
|
%
|
|
|
$
|
499
|
|
|
1.0
|
%
|
|
|
|
$
|
7,809
|
|
|
4.2
|
%
|
|
|
$
|
(3,712
|
)
|
|
(1.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
|
|
$
|
(1,440
|
)
|
|
(3.3
|
)%
|
|
|
$
|
(4,467
|
)
|
|
(9.3
|
)%
|
|
|
|
$
|
(14,678
|
)
|
|
(8.0
|
)%
|
|
|
$
|
(27,581
|
)
|
|
(14.3
|
)%
|
(a) Amortization of acquired intangible assets
|
|
|
|
3,187
|
|
|
|
|
|
|
3,304
|
|
|
|
|
|
|
|
12,902
|
|
|
|
|
|
|
13,286
|
|
|
|
(b) Stock-based compensation
|
|
|
|
981
|
|
|
|
|
|
|
738
|
|
|
|
|
|
|
|
3,952
|
|
|
|
|
|
|
4,097
|
|
|
|
(c) Restructuring and acquisition-related charges, net
|
|
|
|
178
|
|
|
|
|
|
|
761
|
|
|
|
|
|
|
|
5,020
|
|
|
|
|
|
|
4,205
|
|
|
|
(d) Income taxes
|
|
|
|
(72
|
)
|
|
|
|
|
|
73
|
|
|
|
|
|
|
|
562
|
|
|
|
|
|
|
762
|
|
|
|
(e) Gain on Life Insurance asset
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
(361
|
)
|
|
|
Non-GAAP net income (loss)
|
|
|
$
|
2,834
|
|
|
6.4
|
%
|
|
|
$
|
409
|
|
|
0.8
|
%
|
|
|
|
$
|
7,758
|
|
|
4.2
|
%
|
|
|
$
|
(5,592
|
)
|
|
(2.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted average diluted shares
|
|
|
|
36,936
|
|
|
|
|
|
|
36,504
|
|
|
|
|
|
|
|
36,789
|
|
|
|
|
|
|
34,699
|
|
|
|
Dilutive equity awards included in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-GAAP earnings per share
|
|
|
|
137
|
|
|
|
|
|
|
270
|
|
|
|
|
|
|
|
151
|
|
|
|
|
|
|
-
|
|
|
|
Non-GAAP weighted average diluted shares
|
|
|
|
37,073
|
|
|
|
|
|
|
36,774
|
|
|
|
|
|
|
|
36,940
|
|
|
|
|
|
|
34,699
|
|
|
|
GAAP net loss per share (diluted)
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
$
|
(0.12
|
)
|
|
|
|
|
|
$
|
(0.40
|
)
|
|
|
|
|
$
|
(0.79
|
)
|
|
|
Non-GAAP adjustments detailed above
|
|
|
|
0.12
|
|
|
|
|
|
|
0.13
|
|
|
|
|
|
|
|
0.61
|
|
|
|
|
|
|
0.63
|
|
|
|
Non-GAAP net income (loss) per share (diluted)
|
|
|
$
|
0.08
|
|
|
|
|
|
$
|
0.01
|
|
|
|
|
|
|
$
|
0.21
|
|
|
|
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE
|
NET INCOME (LOSS) PER SHARE
|
(In millions, except per share amounts, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
For the year Ended
|
|
|
|
March 31, 2016
|
|
|
|
December 31, 2016
|
|
|
|
Low End
|
|
|
High End
|
|
|
|
Low End
|
|
|
High End
|
GAAP net loss
|
|
|
|
(5.1
|
)
|
|
|
|
(3.3
|
)
|
|
|
|
|
(10.6
|
)
|
|
|
|
(9.0
|
)
|
(a) Amortization of acquired intangible assets
|
|
|
|
3.2
|
|
|
|
|
3.2
|
|
|
|
|
|
12.7
|
|
|
|
|
12.7
|
|
(b) Stock-based compensation
|
|
|
|
1.0
|
|
|
|
|
1.2
|
|
|
|
|
|
4.0
|
|
|
|
|
5.0
|
|
(c) Restructuring and acquisition-related charges, net
|
|
|
|
1.0
|
|
|
|
|
0.5
|
|
|
|
|
|
1.5
|
|
|
|
|
0.8
|
|
(d) Income taxes
|
|
|
|
0.2
|
|
|
|
|
0.4
|
|
|
|
|
|
0.8
|
|
|
|
|
1.2
|
|
Total adjustments
|
|
|
|
5.4
|
|
|
|
|
5.3
|
|
|
|
|
|
19.0
|
|
|
|
|
19.7
|
|
Non-GAAP net income
|
|
|
$
|
0.3
|
|
|
|
$
|
2.0
|
|
|
|
|
$
|
8.4
|
|
|
|
$
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted average shares
|
|
|
|
37,000
|
|
|
|
|
37,000
|
|
|
|
|
|
37,600
|
|
|
|
|
37,600
|
|
Non-GAAP adjustments
|
|
|
|
300
|
|
|
|
|
300
|
|
|
|
|
|
300
|
|
|
|
|
900
|
|
Non-GAAP weighted average shares (diluted)
|
|
|
|
37,300
|
|
|
|
|
37,300
|
|
|
|
|
|
37,900
|
|
|
|
|
38,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per share
|
|
|
|
(0.14
|
)
|
|
|
|
(0.09
|
)
|
|
|
|
|
(0.28
|
)
|
|
|
|
(0.24
|
)
|
Non-GAAP adjustments detailed above
|
|
|
|
0.15
|
|
|
|
|
0.14
|
|
|
|
|
|
0.50
|
|
|
|
|
0.52
|
|
Non-GAAP net income per share (diluted)
|
|
|
$
|
0.01
|
|
|
|
$
|
0.05
|
|
|
|
|
$
|
0.22
|
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE
|
GROSS MARGIN
|
(unaudited)
|
|
|
|
|
|
|
|
Estimates at the midpoint of the guidance range
|
|
|
|
Three Months Ended
|
|
|
For the Year Ended
|
|
|
|
March 31, 2016
|
|
|
December 31, 2016
|
GAAP
|
|
|
24.5
|
%
|
|
|
29.2
|
%
|
(a) Amortization of acquired intangible assets
|
|
|
3.8
|
|
|
|
4.1
|
|
(b) Stock-based compensation
|
|
|
0.2
|
|
|
|
0.2
|
|
Non-GAAP
|
|
|
28.5
|
%
|
|
|
33.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE
|
RESEARCH AND DEVELOPMENT EXPENSE AND
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
|
(In millions, unaudited)
|
|
|
|
|
|
|
|
Estimates at the midpoint of the guidance range
|
|
|
|
Three Months Ended
|
|
|
For the Year Ended
|
|
|
|
March 31, 2016
|
|
|
December 31, 2016
|
GAAP
|
|
|
$
|
14.0
|
|
|
$
|
57.0
|
(b) Stock-based compensation
|
|
|
1.0
|
|
|
4.0
|
Non-GAAP
|
|
|
$
|
13.0
|
|
|
$
|
53.0
|
|
|
|
|
|
|
|
|
|
Non-GAAP financial measures includes the performance of Software-Systems
and Embedded Products and Hardware Services.
The Company excludes the following corporate and other expenses,
reversals, gains and losses from its non-GAAP financial measures, when
applicable:
(a) Amortization of acquired intangible assets: Amortization of
acquisition-related intangible assets primarily relate to core and
existing technologies, trade name and customer relationships that were
acquired with the acquisitions of Continuous Computing and Pactolus. The
Company excludes the amortization of acquisition-related intangible
assets because it does not reflect the Company's ongoing business and it
does not have a direct correlation to the operation of the Company's
business. In addition, in accordance with GAAP, the Company generally
recognizes expenses for internally-developed intangible assets as they
are incurred, notwithstanding the potential future benefit such assets
may provide. Unlike internally-developed intangible assets, however, and
also in accordance with GAAP, the Company generally capitalizes the cost
of acquired intangible assets and recognizes that cost as an expense
over the useful lives of the assets acquired. As a result of their GAAP
treatment, there is an inherent lack of comparability between the
financial performance of internally-developed intangible assets and
acquired intangible assets. Accordingly, the Company believes it is
useful to provide, as a supplement to its GAAP operating results,
non-GAAP financial measures that exclude the amortization of acquired
intangibles in order to enhance the period-over-period comparison of its
operating results, as there is significant variability and
unpredictability across companies with respect to this expense.
(b) Stock-based compensation: Stock-based compensation consists
of expenses recorded under GAAP, in connection with stock awards such as
stock options, restricted stock awards and restricted stock units
granted under the Company's equity incentive plans and shares issued
pursuant to the Company's employee stock purchase plan. The Company
excludes stock-based compensation from non-GAAP financial measures
because it is a non-cash measurement that does not reflect the Company's
ongoing business and because the Company believes that investors want to
understand the impact on the Company of the adoption of the applicable
GAAP surrounding share based payments; the Company believes that the
provision of non-GAAP information that excludes stock-based compensation
improves the ability of investors to compare its period-over-period
operating results, as there is significant variability and
unpredictability across companies with respect to this expense.
(c) Restructuring and other charges, net: Restructuring and other
charges, net relates to costs associated with non-recurring events.
These include costs incurred for employee severance, acquisition or
divestiture activities, excess facility costs, certain legal costs,
asset related charges and other expenses associated with business
restructuring activities. Restructuring and other charges are excluded
from non-GAAP financial measures because they are not considered core
operating activities. Although the Company has engaged in various
restructuring activities over the past several years, each has been a
discrete event based on a unique set of business objectives. The Company
does not engage in restructuring activities in the ordinary course of
business. As such, the Company believes it is appropriate to exclude
restructuring charges from its non-GAAP financial measures because it
enhances the ability of investors to compare the Company's
period-over-period operating results.
(d) Income taxes: Non-GAAP income tax expense is equal to the
Company's projected cash tax expense. Adjustments to GAAP income tax
expense are required to eliminate the recognition of tax expense from
profitable entities where we utilize deferred tax assets to offset
current period tax liabilities. We believe that providing this non-GAAP
figure is useful to our investors as it more closely represents the true
economic impact of our tax positions.
(e) Gain on life insurance asset: Includes a death benefit
received from life insurance assets which were a component of the
Company's deferred compensation plan. This transaction is not part of
the Company's ordinary course of business and therefore has been
excluded from its non-GAAP financial measures because it enhances the
ability of investors to compare the Company's period-over-period
operating results.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160209006620/en/
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