Procera� Networks Inc. (NYSE Amex: PKT), a developer of Evolved
Deep Packet Inspection (DPI) solutions providing traffic awareness,
control and protection for complex networks, announced its earnings
for the fiscal quarter ending March 31, 2009.
Key Highlights for the first quarter of 2009:
-- Sales pipeline grew and we executed on our plan to improve our net
results: sales increased significantly year-over-year; gross profit margins
widened; reduced operating expenses; net loss narrowed
-- Total bookings were $4.1 million
-- Secured initial orders from 4 global Tier 1 Service Providers
-- Sales increased 72% year-over-year to $2.9 million
-- Good balance of sales activity across North America, Europe and Asia
with the PacketLogic? PL10000 Series representing over 70% of revenue in Q1
2009
-- Non-GAAP gross profit margin widened by 4 percentage points
sequentially to 53%
-- Reduced Non-GAAP operating expense by 28% sequentially and 13% year-
over-year to $2.8 million
-- Continued narrowing of our Non-GAAP net loss to $1.3 million from a
Non-GAAP net loss of $1.7 million in the fourth quarter of 2008; and from a
Non-GAAP net loss of $2.4 million in first quarter of 2008
"During the first quarter of 2009 we continued to gain
significant traction within mobile, cable, and university segments
across all theaters," said James Brear, president and CEO of
Procera. "We added four global Tier 1 operators to our customer
list along with some very prestigious universities in North
America. While we have seen projects pushed out into later in 2009,
we continue to have good visibility into our 2009 prospect funnel,
and a number of key trials are progressing ahead of our
expectations."
The company reported sales of $2.9 million for the quarter ended
March 31, 2009; an increase of 72% compared with $1.7 million for
the quarter ended March 31, 2008. Non-GAAP gross profit margin for
the first quarter was 53% of revenue, widened by 4 percentage
points compared with 51% for the first quarter of 2008. Non-GAAP
operating expenses for the first quarter were $2.8 million, a
decrease of 13% compared with $3.2 million for the first quarter of
2008. Non-GAAP net loss narrowed to $1.3 million, compared with
Non-GAAP net losses of $1.7 million and $2.4 million for the fourth
and first quarters of 2008, respectively. The GAAP net loss
narrowed to $2.3 million or a net loss of $(0.03) per share in the
first quarter ended March 31, 2009, compared with a net loss of
$3.5 million or a net loss of $(0.05) per share in the first
quarter ended March 31, 2008.
An archive of the May 18, 2009 conference call will be available
at the Investor Relations section of Procera Networks' website,
www.proceranetworks.com, by no later than May 20, 2009.
Forward Looking Statements
Safe Harbor Statement: this press release contains
forward-looking statements, including statements relating to the
expected demand for and potential sales of Procera Networks'
products and services and statements relating to Procera Networks'
ability to meet the needs of Tier 1 organizations. 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. The risks
and uncertainties that could cause our results to differ materially
from those expressed or implied by such forward-looking statements
include our limited operating history; our history of operating
losses; our ability to raise capital; the acceptance and adoption
of our recently introduced products; our ability to service and
upgrade our products; our ability to prevail in customer trials;
lengthy sales cycles and lab and field trial delays by service
providers; price competition; our ability to obtain product or
service orders after initial orders, our ability retain customers
and develop new customer relationships and sales channels; the
ability of distributors and resellers to sell our product; our
dependence on a limited product line; our ability to introduce new
products and add product functionality; our dependence on key
employees; our ability to hire or attract new 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; general political, economic and market conditions and
events; 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
Form 10-K filed for the year ended December 31, 2008 and subsequent
reports on Form 10-Q. 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. Any future product, feature or related specification
that may be referenced in this release are for information purposes
only and are not commitments to deliver any technology or
enhancement. Procera Networks reserves the right to modify future
product and operating plans at any time.
Use of Non-GAAP Financial Information
To supplement our 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." Our non-GAAP financial measures are not
meant to be considered in isolation or as a substitute for
comparable GAAP measures and should be read in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
Our management regularly uses our 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. Investors should note that the use
of intangible assets contributed to revenues earned 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, we
continue to evaluate our business performance excluding stock-based
compensation expenses. Stock-based compensation expenses will recur
in future periods.
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(TM) (Datastream Recognition Definition Language), to
provide accurate identification of network traffic in real-time.
PacketLogic is deployed at more than 400 broadband service
providers, telcos, governments and higher education campuses
worldwide. Founded in 2002, Procera (NYSE Amex: PKT) is based in
Silicon Valley and has offices around the globe. More information
is available at www.proceranetworks.com.
Procera Networks is a registered trademark, and PacketLogic and
DRDL are trademarks of Procera Networks, Inc. All rights reserved.
All other products or brands mentioned are trademarks and/or
service marks of their respective owners.
Procera Networks, Inc.
Condensed Consolidated Statement of Operations
Unaudited
Three months ended
March 31,
------------------------
2009 2008
----------- -----------
Sales
Product sales $ 2,171,043 $ 1,333,774
Support sales 776,291 382,000
----------- -----------
Total sales 2,947,334 1,715,774
Cost of sales
Product cost of sales 1,668,748 1,089,000
Support cost of sales 119,172 142,000
----------- -----------
Total cost of sales 1,787,920 1,231,000
----------- -----------
Gross profit 1,159,414 484,774
----------- -----------
Operating expenses:
Research and developoment 636,142 662,122
Sales and marketing 1,684,861 2,024,492
General and administrative 1,329,445 1,525,000
----------- -----------
Total operating expenses 3,650,448 4,211,614
----------- -----------
Loss from operations (2,491,034) (3,726,840)
Interest and other income (expense) (23,836) 3,057
----------- -----------
Net loss before benefit from income
taxes (2,514,870) (3,723,783)
Income tax benefit 180,817 239,846
----------- -----------
Net loss (2,334,053) (3,483,937)
Net loss per share - basic and diluted $ (0.03) $ (0.05)
=========== ===========
Average weighted number of common shares
outstanding - basic and diluted 84,498,491 76,118,175
=========== ===========
Procera Networks, Inc.
Condensed Consolidated Balance Sheets
March 31 December 31
2009 2008
------------ ------------
ASSETS Unaudited
Current Assets:
Cash and cash equivalents $ 860,840 $ 1,721,225
Accounts receivable, net of allowance 5,287,015 5,454,745
Inventories, net 3,042,434 3,445,802
Prepaid expenses and other 665,274 824,340
------------ ------------
Total current assets 9,855,562 11,446,112
Property and equipment, net 1,851,309 2,573,045
Purchased intangible assets, net 604,655 964,405
Goodwill 960,209 960,209
Other non-current assets 47,278 47,294
------------ ------------
Total assets $ 13,319,013 $ 15,991,065
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,482,957 $ 2,457,430
Deferred revenue 1,492,106 1,313,092
Accrued liabilities 1,520,701 1,841,442
Notes payable 300,000 550,000
Capital leases payable - 11,543
------------ ------------
Total current liabilities 5,795,764 6,173,507
Non-current liabilities
Deferred rent 23,928 24,234
Deferred tax liability 435,335 695,239
Capital leases payable - 39,584
------------ ------------
Total liabilities 6,255,028 6,932,564
Commitments and contingencies - -
Stockholders' equity:
Common stock 84,498 84,498
Additional paid-in capital 61,473,359 61,142,430
Accumulated other comprehensive gain
(loss) (419,499) (428,107)
Accumulated deficit (54,077,627) (51,740,320)
------------ ------------
Total stockholders' equity 7,063,985 9,058,501
------------ ------------
Total liabilities and stockholders' equity $ 13,319,013 $ 15,991,065
============ ============
Procera Networks, Inc.
GAAP to Non-GAAP Reconciliation
Unaudited
Three months ended
-------------------------------------
March 31 December 31 March 31
2009 2008 2008
----------- ----------- -----------
Sales - U.S. GAAP as reported 2,947,334 4,504,000 1,715,774
Reconciliation of Gross Profit:
U.S. GAAP as reported 1,159,414 1,801,000 484,774
As a percentage of sales 39% 40% 28%
Adjustment:
Amortization on intangibles
(1) 381,500 381,500 381,500
Stock-based compensation (2) 18,059 19,635 6,396
----------- ----------- -----------
As Adjusted 1,558,973 2,202,135 872,670
As a percentage of sales 53% 49% 51%
Reconciliation of Operating Expense:
U.S. GAAP as reported 3,650,448 4,845,000 4,211,614
Adjustment:
Amortization on intangibles
(1) 545,083 545,083 545,083
Stock-based compensation (2) 304,369 389,071 428,736
----------- ----------- -----------
As Adjusted 2,800,995 3,910,846 3,237,795
Reconciliation of Net Loss:
U.S. GAAP as reported (2,334,053) (2,749,000) (3,483,937)
Adjustment:
Amortization on intangibles
(1) 926,583 926,583 926,583
Stock-based compensation (2) 322,428 408,706 435,132
Income tax adjustment (3) (259,904) (259,904) (259,904)
----------- ----------- -----------
As Adjusted (1,344,946) (1,673,615) (2,382,125)
=========== =========== ===========
(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) Income tax benefit from the amortization of intangible assets.
Press Contact: Jon Linden Procera Networks 408-354-9386
jon.linden@proceranetworks.com Investor Relations Contact: John
Liviakis Liviakis Financial Communications, Inc 1-415-389-4670
john@liviakis.com
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