[May 05, 2015] |
|
Ixia Announces First Quarter 2015 Results
Ixia (News - Alert) (Nasdaq:XXIA) today reported its financial results for the
first quarter ended March 31, 2015.
Total revenue for the 2015 first quarter was $121.0 million, compared
with $113.7 million reported for the 2014 first quarter and $127.2
million reported for the 2014 fourth quarter.
"We are very pleased with our first quarter financial results as revenue
exceeded our guidance for the second consecutive quarter. Revenue for
our visibility solutions grew 47 percent year-over-year and included a
strong quarter from our largest service provider customer," said Bethany
Mayer, Ixia's president and chief executive officer. "From a market
perspective, we added over 200 new enterprise customer accounts and
continued to build momentum across the portfolio as customers turn to
Ixia to enhance application performance and ensure security resilience."
On a GAAP basis, the company recorded a net loss for the 2015 first
quarter of $9.6 million, or $0.12 per diluted share, compared with a net
loss of $19.5 million, or $0.25 per diluted share, for the 2014 first
quarter. Non-GAAP net income for the 2015 first quarter was $9.7
million, or $0.12 per diluted share, compared with non-GAAP net income
of $4.7 million, or $0.06 per diluted share, for the 2014 first quarter.
Additional non-GAAP information and a reconciliation of our non-GAAP
measures to the most directly comparable GAAP financial measures for the
2015 and 2014 first quarters may be found in the attached financial
tables.
Ixia ended the 2015 first quarter with approximately $196 million in
cash, cash equivalents and investments, compared with $126 million at
December 31, 2014. During the 2015 first quarter, Ixia generated $33.4
million in cash flow from operations and borrowed $40 million under its
$100 million credit facility.
Conference Call and Webcast Information
Ixia will host a conference call today at 4:30 p.m. Eastern time for
analysts and investors to discuss its 2015 first quarter results and its
business outlook for the 2015 second quarter. The call will be open to
the public, and interested parties may listen to the call by dialing
(804) 681-3728. A live audio webcast of the conference call, along with
supplemental financial information, will be accessible from the
"Investors" section of the company's web site (http://www.ixiacom.com).
Following the live webcast, an archived version will be available in the
"Investors" section on the Ixia web site for at least 90 days.
Non-GAAP Financial Measures
To supplement our consolidated financial results prepared in accordance
with Generally Accepted Accounting Principles ("GAAP"), we have included
certain non-GAAP financial measures in this press release and in the
attachments hereto. Specifically, we have provided non-GAAP financial
measures (i.e., non-GAAP net income and non-GAAP diluted earnings per
share) that exclude certain non-cash and/or non-recurring income and
expense items such as expenses relating to internal investigations and
any related remediation efforts, the restatement of our financial
statements for the first and second quarters of 2013 and for the six
months ended June 30, 2013, the pending securities class action and
shareholder derivative action against the company and certain of its
current and former officers and directors as well as an ongoing SEC (News - Alert)
investigation, stock-based compensation expenses, acquisition and other
related costs, restructuring expenses, the amortization of
acquisition-related intangible assets, and the related income tax
effects of these items, as well as certain other non-cash income tax
impacts such as changes in the valuation allowance recorded against
certain deferred tax assets. The aforementioned items represent income
and expense items that may be difficult to estimate from period to
period and/or that we believe are not directly attributable to the
underlying performance of our business operations. We believe that, by
excluding these items, our non-GAAP measures provide supplemental
information to both management and investors that is useful in assessing
our core operating performance, evaluating our ongoing business
operations and comparing our results of operations on a consistent basis
from period to period. These non-GAAP financial measures are provided to
enhance the user's overall understanding of our financial performance.
These non-GAAP financial measures are also used by management to plan
and forecast future periods and to assist management in making operating
and strategic decisions. The presentation of this additional information
is not prepared in accordance with GAAP. The information therefore may
not necessarily be comparable to that of other companies and should be
considered as a supplement to, and not a substitute for or superior to,
the corresponding measures calculated in accordance with GAAP. Investors
are encouraged to review the reconciliations of GAAP to non-GAAP
financial measures, which are included below in the attached financial
tables.
Safe Harbor under the Private Securities Litigation Reform Act of 1995
Certain statements made in this press release may be deemed to be
forward-looking statements including, without limitation, statements
regarding the company's future business and opportunities. In some
cases, such forward-looking statements can be identified by words such
as "may," "will," "should," "could," "would," "expect," "plan,"
"anticipate," "believe," "estimate," "project," "predict," "potential"
or the like. These statements reflect our current views with respect to
future events and are based on assumptions and are subject to risks and
uncertainties. These risks and uncertainties, as well as other factors,
may cause our future results, performance or achievements to be
materially different from those expressed or implied by such
forward-looking statements. Factors that could cause the actual results
to differ materially from those expressed or implied in such
forward-looking statements include, among others: changes in the global
economy and in market conditions; competition; consistency of orders
from significant customers; our success in leveraging our intellectual
property portfolio, expertise and market opportunities; our expectations
regarding the transition into Software Defined Networks (SDN), Network
Functions Virtualization (NFV) and virtualized networks; our success in
developing, producing and introducing new products and to keep pace with
the rapid technological changes that characterize our market; our
success in developing new sales channels and customers; market
acceptance of our products; recent changes in management; and war,
terrorism, political unrest, natural disasters, and other circumstances
that could, among other consequences, reduce the demand for our
products, disrupt our supply chain and/or impact the delivery of our
products. The factors that may cause future results to differ materially
from our current expectations also include, without limitation, the
risks identified in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2014 and in our other filings with the Securities and
Exchange Commission. We undertake no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
About Ixia
Ixia (Nasdaq: XXIA) provides application performance and security
resilience solutions to validate, secure, and optimize businesses'
physical and virtual networks. Enterprises, service providers, network
equipment manufacturers, and governments worldwide rely on Ixia's
solutions to deploy new technologies and achieve efficient, secure,
ongoing operation of their networks. Ixia's powerful and versatile
solutions, expert global support, and professional services enable
organizations to exceed customer expectations and achieve better
business outcomes. Learn more at www.ixiacom.com.
Ixia and the Ixia logo are trademarks or registered trademarks of Ixia
in the U.S. and other countries.
IXIA
|
Consolidated Balance Sheets
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
72,140
|
|
|
|
$
|
46,394
|
|
Restricted cash
|
|
|
|
10,000
|
|
|
|
-
|
|
Marketable securities
|
|
|
|
33,740
|
|
|
|
79,760
|
|
Marketable securities, restricted
|
|
|
|
80,000
|
|
|
|
-
|
|
Accounts receivable, net of allowances of $694 and $1,011, as of
March 31, 2015 and December 31, 2014, respectively
|
|
|
|
90,755
|
|
|
|
99,528
|
|
Inventories
|
|
|
|
36,811
|
|
|
|
44,826
|
|
Prepaid expenses and other current assets
|
|
|
|
48,180
|
|
|
|
47,077
|
|
Total current assets
|
|
|
|
371,626
|
|
|
|
317,585
|
|
Property and equipment, net
|
|
|
|
38,444
|
|
|
|
37,648
|
|
Intangible assets, net
|
|
|
|
134,411
|
|
|
|
145,108
|
|
Goodwill
|
|
|
|
338,873
|
|
|
|
338,873
|
|
Other assets
|
|
|
|
27,585
|
|
|
|
30,697
|
|
Total assets
|
|
|
|
$
|
910,939
|
|
|
|
$
|
869,911
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
12,178
|
|
|
|
$
|
16,902
|
|
Accrued expenses and other
|
|
|
|
46,760
|
|
|
|
45,271
|
|
Deferred revenues
|
|
|
|
107,392
|
|
|
|
100,170
|
|
Convertible senior notes
|
|
|
|
200,000
|
|
|
|
200,000
|
|
Term loan
|
|
|
|
2,000
|
|
|
|
-
|
|
Total current liabilities
|
|
|
|
368,330
|
|
|
|
362,343
|
|
Deferred revenues
|
|
|
|
17,601
|
|
|
|
18,046
|
|
Other liabilities
|
|
|
|
9,812
|
|
|
|
8,431
|
|
Term loan
|
|
|
|
38,000
|
|
|
|
-
|
|
Total liabilities
|
|
|
|
433,743
|
|
|
|
388,820
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
|
Common stock, without par value; 200,000 shares authorized at
March 31, 2015 and December 31, 2014; 78,866 and 78,575 shares
issued and outstanding as of March 31, 2015 and December 31, 2014,
respectively
|
|
|
|
188,048
|
|
|
|
187,397
|
|
Additional paid-in capital
|
|
|
|
211,908
|
|
|
|
206,913
|
|
Retained earnings
|
|
|
|
77,963
|
|
|
|
87,574
|
|
Accumulated other comprehensive loss
|
|
|
|
(723
|
)
|
|
|
(793
|
)
|
Total shareholders' equity
|
|
|
|
477,196
|
|
|
|
481,091
|
|
Total liabilities and shareholders' equity
|
|
|
|
$
|
910,939
|
|
|
|
$
|
869,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IXIA
|
Condensed Consolidated Statements of Operations
|
(in thousands, except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2015
|
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
|
Products
|
|
|
|
$
|
85,904
|
|
|
|
$
|
81,165
|
|
Services
|
|
|
|
35,058
|
|
|
|
32,568
|
|
Total revenues
|
|
|
|
120,962
|
|
|
|
113,733
|
|
Costs and operating expenses:(1)
|
|
|
|
|
|
|
|
Cost of revenues - products (2)
|
|
|
|
24,051
|
|
|
|
25,411
|
|
Cost of revenues - services
|
|
|
|
4,516
|
|
|
|
3,948
|
|
Research and development
|
|
|
|
27,626
|
|
|
|
30,035
|
|
Sales and marketing
|
|
|
|
37,521
|
|
|
|
38,839
|
|
General and administrative
|
|
|
|
18,371
|
|
|
|
17,882
|
|
Amortization of intangible assets
|
|
|
|
10,923
|
|
|
|
12,635
|
|
Acquisition and other related
|
|
|
|
582
|
|
|
|
1,932
|
|
Restructuring
|
|
|
|
(210
|
)
|
|
|
3,564
|
|
Total costs and operating expenses
|
|
|
|
123,380
|
|
|
|
134,246
|
|
Loss from operations
|
|
|
|
(2,418
|
)
|
|
|
(20,513
|
)
|
Interest income and other, net
|
|
|
|
(481
|
)
|
|
|
337
|
|
Interest expense
|
|
|
|
(2,147
|
)
|
|
|
(1,943
|
)
|
Loss before income taxes
|
|
|
|
(5,046
|
)
|
|
|
(22,119
|
)
|
Income tax expense (benefit)
|
|
|
|
4,565
|
|
|
|
(2,647
|
)
|
Net loss
|
|
|
|
$
|
(9,611
|
)
|
|
|
$
|
(19,472
|
)
|
Loss per share:
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
(0.12
|
)
|
|
|
$
|
(0.25
|
)
|
Diluted
|
|
|
|
$
|
(0.12
|
)
|
|
|
$
|
(0.25
|
)
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
|
78,706
|
|
|
|
76,951
|
|
Diluted
|
|
|
|
78,706
|
|
|
|
76,951
|
|
|
|
|
|
|
|
|
|
(1) Stock-based compensation included in:
|
|
|
|
|
|
|
|
Cost of revenues - products
|
|
|
|
$
|
95
|
|
|
|
$
|
48
|
|
Cost of revenues - services
|
|
|
|
36
|
|
|
|
18
|
|
Research and development
|
|
|
|
2,093
|
|
|
|
1,879
|
|
Sales and marketing
|
|
|
|
1,049
|
|
|
|
1,928
|
|
General and administrative
|
|
|
|
1,874
|
|
|
|
945
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
Cost of revenues - products excludes amortization of intangible
assets related to purchased technology of $6.4 million and $8.1
million for the three months ended March 31, 2015 and 2014,
respectively, which is included in Amortization of intangible assets.
|
|
|
|
IXIA
|
Non-GAAP Information and Reconciliation to Most Directly
Comparable GAAP Financial Measures
|
(in thousands, except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2015
|
|
|
2014
|
GAAP net loss
|
|
|
|
$
|
(9,611
|
)
|
|
|
$
|
(19,472
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
Stock-based compensation (a)
|
|
|
|
5,147
|
|
|
|
4,818
|
|
Amortization of intangible assets (b)
|
|
|
|
10,923
|
|
|
|
12,635
|
|
Acquisition and other related costs (c)
|
|
|
|
582
|
|
|
|
1,932
|
|
Restructuring (d)
|
|
|
|
(210
|
)
|
|
|
3,564
|
|
Investigations, shareholder litigation and related matters (e)
|
|
|
|
2,688
|
|
|
|
5,157
|
|
Inventory adjustments (f)
|
|
|
|
-
|
|
|
|
1,393
|
|
Income tax effect (g)
|
|
|
|
191
|
|
|
|
(5,278
|
)
|
Non-GAAP net income
|
|
|
|
$
|
9,710
|
|
|
|
$
|
4,749
|
|
|
|
|
|
|
|
|
|
GAAP diluted loss per share
|
|
|
|
$
|
(0.12
|
)
|
|
|
$
|
(0.25
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
Stock-based compensation (a)
|
|
|
|
0.06
|
|
|
|
0.06
|
|
Amortization of intangible assets (b)
|
|
|
|
0.14
|
|
|
|
0.16
|
|
Acquisition and other related costs (c)
|
|
|
|
0.01
|
|
|
|
0.02
|
|
Restructuring (d)
|
|
|
|
-
|
|
|
|
0.05
|
|
Investigations, shareholder litigation and related matters (e)
|
|
|
|
0.03
|
|
|
|
0.07
|
|
Inventory adjustments (f)
|
|
|
|
-
|
|
|
|
0.02
|
|
Income tax effect (g)
|
|
|
|
-
|
|
|
|
(0.07
|
)
|
Convertible senior notes (h)
|
|
|
|
-
|
|
|
|
-
|
|
Non-GAAP diluted earnings per share
|
|
|
|
$
|
0.12
|
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
Shares used in computing GAAP diluted earnings per common share
|
|
|
|
78,706
|
|
|
|
76,951
|
|
Effect of reconciling item (h)(i)
|
|
|
|
11,568
|
|
|
|
1,080
|
|
Shares used in computing non-GAAP diluted earnings per common
share
|
|
|
|
90,274
|
|
|
|
78,031
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
This reconciling item represents stock-based compensation. As
stock-based compensation represents a non-cash charge that is not
directly attributable to the underlying performance of our business
operations, we believe that by excluding stock-based compensation,
we provide investors supplemental information that is useful in
comparing our operating results from period to period and in
evaluating our core operations and performance. While we expect to
continue to recognize stock-based compensation in the future,
management also excludes this expense when evaluating current
performance, forecasting future results, measuring core operating
results, and making operating and strategic decisions.
|
(b)
|
|
This reconciling item represents the amortization of intangible
assets related to the acquisitions of various businesses and
technologies. As amortization expense represents a non-cash charge
that is not directly attributable to the underlying performance of
our business operations, we believe that by excluding the
amortization of acquisition-related intangible assets, we provide
investors with supplemental information that is useful in evaluating
our ongoing operations and performance. While the amortization of
acquisition-related intangible assets is expected to continue in the
future, management also excludes this expense when evaluating
current performance, forecasting future results, measuring core
operating results, and making operating and strategic decisions.
|
(c)
|
|
This reconciling item represents costs associated with
acquisition-related activities. Acquisition and other related costs
consist primarily of transaction and integration-related costs such
as: professional fees for legal, accounting, tax, due diligence,
valuation and other related services; amortization of deferred
compensation; consulting fees; required regulatory costs; certain
employee, facility and infrastructure costs; and other related
expenses. We believe that by excluding acquisition and other related
costs, we provide investors with supplemental information that is
useful in comparing our ongoing operating results from period to
period and in evaluating our core operations and performance.
|
(d)
|
|
This reconciling item represents costs associated with our
restructuring plans. During the first quarter of 2014, we initiated
a plan to restructure certain of our operations following our
December 5, 2013 acquisition of Net Optics (News - Alert), Inc. During the third
quarter of 2014, we implemented a company-wide restructuring
initiative to restructure our operations to better align our
operating costs with our business opportunities. The restructuring
costs associated with our restructuring plans primarily relate to
employee termination benefits, lease exit costs and other related
costs. We believe that by excluding restructuring costs, we provide
investors with supplemental information that is useful in comparing
our operating results from period to period and in evaluating our
core operations and performance.
|
(e)
|
|
This reconciling item represents costs incurred related to (i)
internal investigations and any related remediation efforts, (ii)
the June 2014 restatement of our financial statements for the first
quarter of 2013 and for the three and six months ended June 30,
2013, and (iii) the securities class action against the company and
certain of its current and former officers and directors as well as
a shareholder derivative action, and for an SEC investigation. These
costs consist primarily of legal and accounting fees, recruiting and
consulting expenses, severance and retention costs, and other
related expenses. We believe that by excluding these non-recurring
costs, we are providing our investors with supplemental information
that is useful in comparing our operating results from period to
period and in evaluating our core operations and performance.
|
(f)
|
|
This reconciling item for the first quarter of 2014 represents the
amortization of the purchase price accounting adjustment related to
the fair value of inventory as a result of our acquisition of Net
Optics, Inc. While we may have additional amortization charges in
the future resulting from purchase price accounting adjustments,
management excludes these expenses when evaluating current
performance, forecasting future results, measuring core operating
results, and making operating and strategic decisions. We believe
that by excluding these charges, we provide investors with
supplemental information that is useful in comparing our operating
results from period to period and in evaluating our core operations
and performance.
|
(g)
|
|
This adjustment represents the income tax effects of the reconciling
items noted in footnotes (a), (b), (c), (d), (e), and (f), as well
as certain other non-cash income tax impacts such as changes in the
valuation allowance relating to certain deferred tax assets.
|
(h)
|
|
This reconciling item for the non-GAAP diluted earnings per share
calculation includes the impact of our convertible senior notes as
this was anti-dilutive for the equivalent GAAP earnings per share
calculations.
|
(i)
|
|
This adjustment represents the effects of stock-based compensation
on diluted common equivalent shares outstanding as well as any
adjustments required due to a change from a net loss to a net income
position.
|
[ Back To TMCnet.com's Homepage ]
|