Momentum Continues with Strong Start to Fiscal 2019
Digi International® Inc. (NASDAQ: DGII), a leading global
provider of mission critical Internet of Things ("IoT") products,
services, and solutions, reported revenue of $62.3 million for the
first fiscal quarter of 2019 compared to $45.0 million in the first
fiscal quarter of 2018 and compared to our guidance range of $56.0
million to $60.0 million. This reflects a 38.6% growth rate
compared to the prior year quarter.
Net income for the first fiscal quarter of 2019 was $4.7
million, or $0.17 per diluted share, compared to a net loss of $4.5
million, or $0.17 loss per diluted share in the first fiscal
quarter of 2018 and compared to our guidance range of $0.03 loss
per diluted share to $0.01 per diluted share. Net income in the
first fiscal quarter of 2019 includes a gain of $4.4 million, or
$0.16 per diluted share (net of tax $3.4 million, or $0.12 per
diluted share) from the sale of our corporate headquarters in
October 2018. Our adjusted net income for the first fiscal quarter
of 2019 was $1.2 million, or $0.04 per diluted share, compared to a
net loss of $1.7 million, or $0.06 loss per diluted share for the
first fiscal quarter of 2018.
Adjusted EBITDA in the first fiscal quarter of 2019 was $6.2
million, or 9.9% of total revenue, compared to our guidance range
of $4.0 million to $6.0 million. In the first fiscal quarter of
2018, our adjusted EBITDA was $3.0 million, or 6.6% of total
revenue.
Reconciliations of GAAP and non-GAAP financial measures,
including Adjusted Net Income (Loss) and Adjusted EBITDA, appear at
the end of this release.
"A great start to fiscal 2019 is especially encouraging since
the first quarter is traditionally our slowest quarter of the
year," said Ron Konezny, President and Chief Executive Officer. "We
are pleased with the performance from each of our business
segments. Our transformation to a premier hardware-enabled,
software, services and subscription company is accelerating."
Financial Results
GAAP Results (in thousands, except per share data)
Q1 2019 Q1 2018
(as adjusted)*
Total Revenue $ 62,313 $ 44,955 Gross Profit $ 29,783 $ 21,959
Gross Margin 47.8 % 48.8 % Operating Income (Loss) ** $ 5,558 $
(1,999 ) Operating Income as % of Total Revenue 8.9 % (4.5 )% Net
Income (Loss) ** $ 4,682 $ (4,487 ) Net Income (Loss) per Diluted
Share $ 0.17 $ (0.17 )
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
** Includes a gain of $4.4 million ($3.4 million net of tax) on
the sale of our corporate headquarters reported in general and
administrative expense on the Condensed Consolidated Statements of
Operations.
Non-GAAP Results** (in thousands, except per share data)
Q1 2019 Q1 2018(as adjusted)* Adjusted
Net Income (Loss) $ 1,160 $ (1,722 ) Adjusted Net Income (Loss) per
Diluted Share $ 0.04 $ (0.06 ) Adjusted EBITDA $ 6,161 $
2,963 Adjusted EBITDA as % of Total Revenue 9.9 % 6.6 %
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
** A reconciliation of GAAP to non-GAAP financial measures
appears at the end of this release.
Business Results for the Three Months
Ended December 31, 2018 and 2017
Revenue Detail Fiscal Year (in thousands) Q1
2019 Q1 2018(as adjusted)* Change
% Change Product $ 50,812 $ 38,454 $ 12,358 32.1%
Services 2,482 2,426 56 2.3% Solutions 9,019 4,075
4,944 121.3% Total revenue $ 62,313 $ 44,955 $ 17,358 38.6%
North America, primarily United States $ 46,335 $ 29,337 $
16,998 57.9% Europe, Middle East and Africa 10,104 10,156 (52)
(0.5)% Asia 5,080 4,528 552 12.2% Latin America 794
934 (140) (15.0)% Total revenue $ 62,313 $ 44,955 $ 17,358
38.6%
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Total revenue increased 38.6% to $62.3 million in the
first fiscal quarter of 2019 from $45.0 million in the first fiscal
quarter of 2018.
Product
Product revenue increased by $12.3 million, or 32.1%, in the
first fiscal quarter of 2019 compared to the first fiscal quarter
of 2018. This increase included $5.2 million of incremental revenue
from Accelerated Concepts, Inc. ("Accelerated"), a provider of
cellular (LTE) networking equipment, which we acquired in January
2018. Additionally, we experienced growth compared to the first
fiscal quarter of 2018 across most of our products, with the
largest growth in our cellular product offerings.
Services
Services revenue increased by $0.1 million, or 2.3%, in the
first fiscal quarter of 2019 compared to the first fiscal quarter
of 2018, related to increased revenues from our Digi Wireless
Design services.
Solutions
Solutions revenue increased by $4.9 million, or 121.3%, in the
first fiscal quarter of 2019 compared to the first fiscal quarter
of 2018. This increase was driven by new customer deployments,
additional purchases from existing customers, and an increase in
our recurring revenue base. We are serving just over 54,000 as of
December 31, 2018, compared to just over 38,000 sites a year ago.
Although a single transportation customer ended their relationship
with this business, we continued to add new sites in multiple
verticals and mitigated the transportation customer loss through
new direct agreements with end customers.
Gross profit was $29.8 million, or 47.8% of revenue in
the first fiscal quarter of 2019 compared to $22.0 million, or
48.8% of revenue for the first fiscal quarter of 2018. This $7.8
million increase was driven primarily by our acquisition of
Accelerated, increased sales from our IoT Solutions segment, and
increased sales from most of our products. Our gross margin decline
was primarily a result of product and customer mix and increased
amortization expense associated with the Accelerated acquisition,
offset partially from an increase in higher margin recurring
revenue and lower costs associated with our manufacturing
transition.
Operating income for the first fiscal quarter of 2019 was
$5.6 million, or 8.9% of revenue, as compared to an operating loss
of $2.0 million, or 4.5% of revenue, for the first fiscal quarter
of 2018, an increase of $7.6 million. This increase was a result of
increased gross profit of $7.8 million described above, offset by
an increase in operating expenses of $0.2 million. The increase in
operating expenses included $2.8 million of incremental costs
associated with Accelerated, $1.7 million of additional
employee-related costs and $0.6 million of increased contingent
consideration expenses. These were mostly offset by a $4.4 million
gain from the sale of our corporate headquarters in October 2018
and lower professional services expenses of $1.3 million as we had
more acquisition costs in the first quarter of fiscal 2018.
Net income was $4.7 million in the first fiscal quarter
of 2019, or $0.17 per diluted share, compared to a net loss of $4.5
million, or $0.17 loss per diluted share, in the first fiscal
quarter of 2018.
Adjusted EBITDA in the first fiscal quarter of 2019 was
$6.2 million, or 9.9% of total revenue, compared to $3.0 million,
or 6.6% of total revenue, in the first fiscal quarter of 2018.
Balance Sheet, Liquidity and Capital
Structure
Digi continues to maintain a strong balance sheet with no debt.
As of December 31, 2018, Digi had:
- Cash and cash equivalents and
marketable securities balance of $76.5 million, an increase of
$13.7 million during the quarter. The increase primarily related to
$10.0 million of proceeds received in the first fiscal quarter of
2019 for the sale of our corporate headquarters. We also
experienced strong cash collections related to accounts
receivable.
- Current and long-term contingent
liabilities of $10.1 million.
- In October 2018, we signed a
thirteen-year lease agreement with minimum lease obligations of
$15.9 million for 59,497 square feet of office space. This is now
our new headquarters location in Hopkins, Minnesota, which is
approximately three miles from our previous headquarters.
Customer Highlights
IoT PRODUCTS & SERVICES
- TrackIt, a Command Alkon company and
leading provider of fleet solutions for transportation and hauling
of construction materials, entered into a multi-year agreement to
use Digi’s Wireless Vehicle Bus Adapter and active vehicle
monitoring services for critical vehicle data. The agreement covers
a minimum of 25,000 vehicles managed by TrackIt over a period of
several years.
- A large retailer selected AT&T's
wireless network with Digi cellular routers to roll out primary and
backup LTE connectivity to over 7,000 locations. They will use our
products as their VPN gateway and firewall with built-in LTE
network access and to provide a second cellular uplink for dual-WAN
functionality. In moving to this solution, all traditional wired
Internet circuits will be eliminated. This project is expected to
complete a full roll-out over approximately 18 months.
- A global leader in the gaming and
lottery industry has selected Digi for a 3G to 4G conversion
project. This project entails upgrading this customer’s existing
connectivity infrastructure across a variety of state contracts off
of a variety of 3G cellular networks to 4G LTE networks. This
project includes the upgrade of roughly 20,000 sites with Digi’s
WR21s over the next twelve months. Digi was selected due to our
comprehensive portfolio, supply chain readiness and packaging
options.
- A major German integrator providing
managed VPN services has made a significant investment in Digi’s
Remote Manager (DRM) to be rolled out across several thousand node
points (Digi routers), used in a variety of applications across
many customers. The aim is to increase efficiency of all processes
around the management and maintenance of their communications
infrastructure. A further major driver was the increased
sensitivity for security risks. DRM now allows them to roll out
security patched across a network of thousands of endpoints within
hours.
- A leading manufacturer of residential
solar energy devices has selected Digi’s XBee3 ZigBee module for
inclusion in their next-generation product. The XBee3 ZigBee will
enable reliable, short-range communication in a meshing environment
containing XBee3 and third-party ZigBee devices. The XBee3’s
Bluetooth Low Energy ("BLE") feature will be used to simplify
product provisioning. In a space where time-to-market is critical,
the XBee3 ZigBee module in this case enabled rapid software
implementation via an easy-to-use API and simple hardware
integration with its new micro form-factor. The company plans to
begin deployments in mid-2019 with annual volumes potentially
reaching 100,000 units.
IoT SOLUTIONS
- One of the nation’s largest retailers
expanded their SmartSense deployment across thousands of pharmacy
locations to ensure compliance with new requirements to monitor
ambient temperature and humidity in the pharmacy. The retailer
trusted SmartSense to project manage the nationwide roll-out.
- Festival Foods, one of Wisconsin’s
largest privately-held grocers, selected SmartSense for task
management and continuous temperature monitoring across all its
locations. The implementations are being made to help improve food
quality and safety, increase employee efficiency and reduce
inventory loss. Festival Foods operates 32 locations across
Wisconsin.
- A leading national grocery chain
selected SmartSense to monitor it’s distribution network in the
Northwest. SmartSense is monitoring over 350 refrigerated trucks
and distribution sites, providing real-time insight into the cold
chain and asset tracking.
- A Midwest grocery chain selected
SmartSense to monitor pharmacies in over 200 locations to ensure
compliance. This same retailer chose SmartSense to implement
digital checklists within the Deli and C-Store operations. The
combined solutions will help to ensure compliance, improve consumer
safety, and reduce inventory loss across the board.
Fiscal 2019 Guidance
For the second fiscal quarter of 2019, Digi projects revenue to
be in a range of $59.0 million to $63.0 million. EPS is projected
to be in a range of $0.01 per diluted share to $0.05 per diluted
share. Adjusted EBITDA is projected to be between $4.5 million and
$6.5 million.
For the full fiscal year 2019, we are not updating our annual
revenue and Adjusted EBITDA guidance ranges of $245 million to $255
million, and $24 million to $28 million, respectively. EPS is
now projected to be in a range of $0.30 per diluted share to $0.45
per diluted share.
First Fiscal Quarter 2019 Conference
Call Details
As announced on January 3, 2019, Digi will discuss its first
fiscal quarter 2019 results on a conference call on Thursday,
January 31, 2019 after market close at 5:00 p.m. ET (4:00 p.m. CT).
The call will be hosted by Ron Konezny, President and Chief
Executive Officer and Gokul Hemmady, Chief Financial Officer.
Digi invites all those interested in hearing management's
discussion of its quarter to access a live webcast of the
conference call through the investor relations section of Digi's
website at www.digi.com. Participants may also join the call
directly by dialing (855) 638-5675 and entering passcode 8398846.
International participants may access the call by dialing (262)
912-4765 and entering passcode 8398846. A replay will be available
within approximately three hours after the completion of the call,
and for one week following the call, by dialing (855) 859-2056 for
domestic participants or (404) 537-3406 for international
participants and entering access code 8398846 when prompted. A
replay of the webcast will be available for one week through Digi's
website.
A copy of this earnings release can be accessed through the
financial releases page of the investor relations section of Digi's
website at www.digi.com.
For more news and information on us, please visit www.digi.com/aboutus/investorrelations.
About Digi International
Digi International (NASDAQ: DGII) is a leading global provider
of Internet of Things ("IoT") connectivity products, services and
solutions. We help our customers create next-generation connected
products and deploy and manage critical communications
infrastructures in demanding environments with high levels of
security and reliability. Founded in 1985, we’ve helped our
customers connect over 100 million things, and growing. For more
information, visit Digi's website at www.digi.com, or call
877–912–3444 (U.S.) or 952–912–3444 (International).
Forward-Looking
Statements
This press release contains forward-looking statements that are
based on management’s current expectations and assumptions. These
statements often can be identified by the use of forward-looking
terminology such as "anticipate," "believe," "estimate," "looking
forward," "may," "will," "expect," "plan," "project," "should," or
"continue" or the negative thereof or other variations thereon or
similar terminology. Among other items, these statements relate to
expectations of the business environment in which the company
operates, projections of future performance, perceived marketplace
opportunities and statements regarding our mission and vision. Such
statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions. Among others, these
include risks related to the highly competitive market in which our
company operates, rapid changes in technologies that may displace
products sold by us, declining prices of networking products, our
reliance on distributors and other third parties to sell our
products, delays in product development efforts, uncertainty in
user acceptance of our products, the ability to integrate our
products and services with those of other parties in a commercially
accepted manner, potential liabilities that can arise if any of our
products have design or manufacturing defects, our ability to
defend or settle satisfactorily any litigation, uncertainty in
global economic conditions and economic conditions within
particular regions of the world which could negatively affect
product demand and the financial solvency of customers and
suppliers, the impact of natural disasters and other events beyond
our control that could negatively impact our supply chain and
customers, potential unintended consequences associated with
restructuring or other similar business initiatives that may impact
our ability to retain important employees, the ability to achieve
the anticipated benefits and synergies associated with acquisitions
or divestitures, and changes in our level of revenue or
profitability which can fluctuate for many reasons beyond our
control. These and other risks, uncertainties and assumptions
identified from time to time in our filings with the United States
Securities and Exchange Commission, including without limitation,
our annual report on Form 10-K for the year ended September 30,
2018 and subsequent quarterly reports on Form 10-Q and other
filings, could cause the company's future results to differ
materially from those expressed in any forward-looking statements
made by us or on our behalf. Many of such factors are beyond our
ability to control or predict. These forward-looking statements
speak only as of the date for which they are made. We disclaim any
intent or obligation to update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Presentation of Non-GAAP Financial
Measures
This release includes adjusted net income, adjusted net income
per diluted share and adjusted EBITDA, each of which is a non-GAAP
measure.
We understand that there are material limitations on the use of
non-GAAP measures. Non-GAAP measures are not substitutes for GAAP
measures, such as net income, for the purpose of analyzing
financial performance. The disclosure of these measures does not
reflect all charges and gains that were actually recognized by the
company. These non-GAAP measures are not in accordance with, or an
alternative for measures prepared in accordance with, generally
accepted accounting principles and may be different from non-GAAP
measures used by other companies or presented by us in prior
reports. In addition, these non-GAAP measures are not based on any
comprehensive set of accounting rules or principles. We believe
that non-GAAP measures have limitations in that they do not reflect
all of the amounts associated with our results of operations as
determined in accordance with GAAP and that these measures should
only be used to evaluate our results of operations in conjunction
with the corresponding GAAP measures. Additionally, Adjusted EBITDA
does not reflect our cash expenditures, the cash requirements for
the replacement of depreciated and amortized assets, or changes in
or cash requirements for our working capital needs.
We believe that providing historical and adjusted income and
income per diluted share, respectively, exclusive of such items as
reversals of tax reserves, discrete tax benefits and restructuring
permits investors to compare results with prior periods that did
not include these items. Management uses the aforementioned
non-GAAP measures to monitor and evaluate ongoing operating results
and trends and to gain an understanding of our comparative
operating performance. In addition, certain of our stockholders
have expressed an interest in seeing financial performance measures
exclusive of the impact of matters such as the impact of decisions
related to taxes and restructuring, which while important, are not
central to the core operations of our business. Additionally,
management believes that the presentation of adjusted EBITDA and as
a percentage of revenue is useful because it provides a reliable
and consistent approach to measuring our performance from year to
year and in assessing our performance against that of other
companies. We believe this information helps compare operating
results and corporate performance exclusive of the impact of our
capital structure and the method by which assets were acquired.
For more information, visit Digi's website at www.digi.com, or
call 877-912-3444 (U.S.) or 952-912-3444 (International).
Digi International Inc. Condensed Consolidated
Statements of Operations (In thousands, except per share
amounts) (Unaudited)
Three months endedDecember 31,
2018 2017 (as adjusted)* Revenue: Product $ 50,812 $
38,454 Services and solutions 11,501 6,501
Total revenue 62,313 44,955 Cost of sales: Cost of product
25,813 19,210 Cost of services and solutions 5,977 3,179
Amortization of intangibles 740 607
Total cost of sales 32,530 22,996 Gross
profit 29,783 21,959 Operating expenses: Sales and marketing 11,657
9,760 Research and development 9,518 7,751 General and
administrative 3,117 6,447 Restructuring reversal (67 )
— Total operating expenses 24,225
23,958 Operating income 5,558 (1,999 ) Other income,
net: Interest income, net 116 205 Other income (expense), net
48 (45 ) Total other income, net 164
160 Income (loss) before income taxes 5,722
(1,839 ) Income tax provision 1,040 2,648
Net income (loss) $ 4,682 $ (4,487 ) Net
income (loss) per common share: Basic $ 0.17 $ (0.17 )
Diluted $ 0.17 $ (0.17 ) Weighted average common shares:
Basic 27,513 26,748 Diluted
28,075 26,748
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Digi International Inc. Condensed Consolidated
Statements of Comprehensive Income (Loss) (In thousands)
(Unaudited) Three months endedDecember
31, 2018 2017 (as adjusted)* Net income (loss) $
4,682 $ (4,487 ) Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment (1,569 ) 271 Change in net
unrealized gain (loss) on investments 5 (21 ) Less income tax
(provision) benefit (2 ) 3 Other comprehensive
(loss) income, net of tax (1,566 ) 253
Comprehensive income (loss) $ 3,116 $ (4,234 )
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Digi International Inc. Condensed Consolidated
Balance Sheets (In thousands) (Unaudited)
December 31,2018
September 30, 2018(as adjusted)* ASSETS Current
assets: Cash and cash equivalents $ 72,222 $ 58,014 Marketable
securities 4,247 4,736 Accounts receivable, net 46,371 49,819
Inventories 47,036 41,644 Other 3,814 2,613 Assets held for sale
— 5,220 Total current assets 173,690
162,046 Property, equipment and improvements, net 11,827 8,354
Identifiable intangible assets, net 36,772 39,320 Goodwill 153,578
154,535 Deferred tax assets 5,503 6,600 Other 357
1,291 Total assets $ 381,727 $ 372,146
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts
payable $ 16,021 $ 12,911 Accrued compensation 6,672 8,190 Unearned
revenue 7,812 3,177 Contingent consideration on acquired businesses
5,944 5,890 Other 4,322 5,405 Total
current liabilities 40,771 35,573 Income taxes payable 785 851
Deferred tax liabilities 566 334 Contingent consideration on
acquired businesses 4,203 4,175 Other non-current liabilities
392 720 Total liabilities 46,717 41,653
Stockholders’ equity: Preferred stock, $.01 par value; 2,000,000
shares authorized; none issued and outstanding — — Common stock,
$.01 par value; 60,000,000 shares authorized; 34,076,394 and
33,812,838 shares issued 341 338 Additional paid-in capital 258,010
255,936 Retained earnings 156,643 151,961 Accumulated other
comprehensive loss (25,092 ) (23,526 ) Treasury stock, at cost,
6,435,618 and 6,385,336 shares (54,892 ) (54,216 )
Total stockholders’ equity 335,010 330,493
Total liabilities and stockholders’ equity $ 381,727
$ 372,146
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Digi International Inc. Condensed Consolidated
Statements of Cash Flows (In thousands)
(Unaudited) Three months ended December
31, 2018 2017 (as adjusted)* Operating activities:
Net income (loss) $ 4,682 $ (4,487 ) Adjustments to reconcile net
income (loss) to net cash provided by (used in) operating
activities: Depreciation of property, equipment and improvements
1,133 759 Amortization of identifiable intangible assets 2,540
1,694 Stock-based compensation 1,414 1,053 Deferred income tax
provision 1,333 2,995 Gain on sale of property, equipment and
improvements (4,396 ) — Change in fair value of contingent
consideration 243 (407 ) Bad debt/product return provision 206 14
Inventory obsolescence 450 450 Restructuring reversal (67 ) — Other
113 57 Changes in operating assets and liabilities (net of
acquisitions) (1,540 ) (3,456 ) Net cash provided by
(used in) operating activities 6,111 (1,328 )
Investing activities: Proceeds from maturities and sales of
marketable securities 491 4,296 Proceeds from sale of Etherios —
2,000 Acquisition of businesses, net of cash acquired — (40,084 )
Proceeds from sale of property and equipment 10,047 — Purchase of
property, equipment, improvements and certain other identifiable
intangible assets (1,775 ) (453 ) Net cash provided
by (used in) investing activities 8,763
(34,241 ) Financing activities: Acquisition earn-out payments (161
) — Proceeds from stock option plan transactions 662 2,972 Proceeds
from employee stock purchase plan transactions 289 380 Purchases of
common stock (964 ) (636 ) Net cash (used in)
provided by financing activities (174 ) 2,716 Effect of exchange
rate changes on cash and cash equivalents (492 ) 241
Net increase (decrease) in cash and cash equivalents 14,208
(32,612 ) Cash and cash equivalents, beginning of period
58,014 78,222 Cash and cash equivalents, end
of period $ 72,222 $ 45,610 Supplemental
schedule of non-cash investing and financing activities: Transfer
of inventory to property, equipment and improvements $ (200 ) $
(312 ) Accrual for purchase of property, equipment,
improvements and certain other identifiable intangible assets $
(2,883 ) $ (27 )
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
DIGI INTERNATIONAL INC. CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
Accumulated Additional
Other Total Common Stock Treasury Stock Paid-In Retained
Comprehensive Stockholders’ (in thousands) Shares Par Value Shares
Value Capital Earnings* Loss Equity Balances, September 30, 2017
33,008 $ 330 6,437 $ (54,533 ) $ 245,528 $ 150,363 $ (22,659 ) $
319,029 Cumulative-effect adjustment from adoption of ASU 2016-09
52 (33 ) 19 Net income (4,487 ) (4,487 ) Other comprehensive loss
253 253 Employee stock purchase plan issuances (46 ) 389 (9 ) 380
Repurchase of common stock 64 (636 ) (636 ) Issuance of stock under
stock award plans 473 5 2,967 2,972 Stock-based compensation
expense 1,053
1,053 Balances, December 31, 2017 33,481 $ 335
6,455 $ (54,780 ) $ 249,591 $ 145,843 $
(22,406 ) $ 318,583 Balances, September 30, 2018
33,813 $ 338 6,385 $ (54,216 ) $ 255,936 $ 151,961 $ (23,526 ) $
330,493 Net income 4,682 4,682 Other comprehensive income (1,566 )
(1,566 ) Employee stock purchase plan issuances (33 ) 288 1 289
Repurchase of common stock 84 (964 ) (964 ) Issuance of stock under
stock award plans 263 3 659 662 Stock-based compensation
expense 1,414
1,414 Balances, December 31, 2018 34,076 $ 341
6,436 $ (54,892 ) $ 258,010 $ 156,643 $
(25,092 ) $ 335,010
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Non-GAAP Financial
Measures
TABLE 1
Reconciliation of Net Income (Loss) and Net Income (Loss)
per Diluted Share to Adjusted Net Income (Loss) and Adjusted
Net Income (Loss) per Diluted Share
(In thousands, except per share
amounts)
Three months ended December 31, 2018
2017 (as adjusted)* Net income (loss) and net income (loss) per
diluted share $ 4,682 $ 0.17 $ (4,487 )
$ (0.17 ) Restructuring reversal (67 ) — — — Gain on sale of
building (4,396 ) (0.16 ) — — Tax effect from restructuring
reversal and gain on sale of building 1,047 0.04 — — Discrete tax
(benefits) expense (1) (106 ) — 2,765
0.10 Adjusted net income (loss) and adjusted
net income (loss) per diluted share (2) $ 1,160 $ 0.04
$ (1,722 ) $ (0.06 ) Diluted weighted average common shares
28,075 26,748
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
(1) Discrete tax (benefits) expense includes one-time
adjustments for the re-measurement of deferred tax assets and
adoption of ASU 2016-09 relating to the accounting for the tax
effects of stock compensation. This was partially offset by a net
tax benefits for the release of a valuation allowance against U.S.
federal capital loss carryforward related to expected capital gains
tax in fiscal 2019 as a result of the sale of our corporate
headquarters in October 2018 and reversals of tax reserves due to
the expiration of statutes of limitation and certain domestic tax
credits.
(2) Adjusted net income per diluted share may not add due to the
use of rounded numbers.
TABLE 2
Reconciliation of Net Income to Adjusted EBITDA
(In thousands)
Three months ended December 31, 2018
2017 (as adjusted)* % of totalrevenue %
of totalrevenue Total revenue $ 62,313 100.0 % $ 44,955
100.0 % Net income $ 4,682 $ (4,487 ) Interest
income, net (116 ) (205 ) Income tax provision 1,040 2,648
Depreciation and amortization 3,673 2,453 Stock-based compensation
1,414 1,053 Gain on sale of building (4,396 ) — Restructuring
reversal (67 ) — Acquisition expense (69 ) 1,501
Adjusted EBITDA $ 6,161 9.9 % $ 2,963 6.6 %
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
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version on businesswire.com: https://www.businesswire.com/news/home/20190131005880/en/
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