Sonus Networks Reports 2014 Second Quarter Results
July 30, 2014
Growth-related Revenue up 34% Compared to Second Quarter 2013 GAAP Loss per Share of $0.02 and Non-GAAP Diluted Earnings per Share of $0.02
WESTFORD, Mass., Jul 30, 2014 (BUSINESS WIRE) -- Sonus Networks, Inc.
SONS, a global leader in securing real-time communications, today announced results for the second quarter ended June 27, 2014.
Second Quarter 2014 Highlights
- Total Company revenue was $75.6 million, up 9% compared to the second quarter of 2013.
- Total Growth-related revenue1 was $38.9 million, up 34% compared to the second quarter of 2013.
- Channel sales comprised 29% of product revenue, the highest contribution to-date.
- Company reported revenue from 798 customers, up 48% compared to the second quarter of 2013.
- GAAP gross margins were 62.6%; non-GAAP gross margins were 65.2%.
- GAAP loss per share was $0.02; non-GAAP diluted earnings per share were $0.02.
- Began shipping the Sonus SBC 7000 Session Border Controller (SBC 7000), representing fastest time-to-revenue for any new product in the Company’s history.
Quotes
“Our team has made excellent progress this year, meeting or exceeding all of our financial targets. I’m particularly proud that we have now demonstrated five consecutive quarters of non-GAAP profitability,” said Ray Dolan, president and chief executive officer. “Looking to the second half of 2014, we are well-positioned to deliver on our targets while also continuing to strengthen our strategic relationships with tier one service providers around the globe.”
Mark Greenquist, chief financial officer, commented, “Our growth-related revenue grew 34% year over year. Contributing to this strong performance was approximately $5 million in revenue from the recently launched SBC 7000, which only began shipping in the last week of June. This product launch represented the fastest time-to-revenue of any new product in the Company’s history.” Greenquist continued, “Our revenue guidance for the remainder of this year considers the potential for a large order to be recognized in 2015 instead of this year as originally projected. Despite this timing, based on the strength of our bookings and a robust funnel, we are reiterating our full year revenue forecast of $300 million, including $168 million of growth-related revenue. Higher than projected gross margins in the first half, primarily as a result of greater software-oriented product revenue, coupled with disciplined expense control, allow us to increase our non-GAAP EPS guidance for the year from $0.05 to $0.07.”
SBC 7000
The recently launched Sonus SBC 7000 Session Border Controller has been selected for deployment by several tier one service providers and a leading call center provider, marking the fastest time-to-revenue for any new product in the Company’s history. Providing support for up to 150,000 sessions, the SBC 7000 sets a new performance and capacity standard in the industry for secure, reliable delivery of voice, video and collaboration services. It is purpose-built to support emerging services such as high definition (HD) voice and video, Voice over Long-Term Evolution (VoLTE) and Rich Communications Services (RCS), and effectively addresses the unprecedented traffic demands these services will place on networks at access and interconnect borders.
Share Repurchases
The Company has repurchased 42.3 million shares of common stock (15% of the shares that were outstanding at June 28, 2013) at an average price per share of $3.37. As of June 27, 2014, the Company had 246.3 million shares outstanding. Approximately $32 million remains available to the Company for potential share repurchases under the current stock buyback program.
Cash & Investments
The Company ended the second quarter of 2014 with $149.5 million in cashand investments, including the impact of the share repurchases described above.
Organizational Changes
The Company has made significant progress over the past few years in successfully transitioning the business to sustainable growth and profitability including:
- expanding into high growth next generation communications markets including SBCs (Session Border Controllers) and DSCs (DiameterSignaling Controllers);
- substantially improving product quality while also increasing the pace of innovation;
- establishing a robust global channel program and expanding into the enterprise market;
- improving manufacturing processes, thereby enabling the Company to be more agile and cost effective; and
- driving broad process improvements across the Company, allowing resources to be redirected into growth areas while also delivering sustained increases in profitability.
In an effort to further accelerate the Company’s progress, the following organizational changes are being announced, effective immediately:
- Anthony Scarfo has been named Executive Vice President, Product Management and Corporate Development. Scarfo was most recently Executive Vice President, Technology Development, where he was responsible for helping Sonus establish leadership in a number of key technology areas, including moving the entire Sonus SBC product portfolio into software in order to enable emerging cloud architectures.
- Kevin Riley has been named Vice President, Engineering and Chief Technology Officer. Riley, who will be a direct report to President and CEO, Ray Dolan, has served as the Company’s CTO since January 2014 and has over 20 years of software development and engineering experience. He has been instrumental in the Company’s efforts to drive an industry leading technology roadmap, including the award winning Sonus SBC SWe (software edition) and SBC 7000, the most successful new product introduction in the Company’s history. Riley will continue to drive the Company’s innovation and development activities, with particular focus on enabling SDN and NFV cloud-based architectures of the future.
- Todd Abbott has stepped down as the Company’s Executive Vice President, Strategy and Go-to-Market, but will remain with the Company in an advisory role until mid-October to assist with an orderly transition of his responsibilities. Abbott has been instrumental over the past three years in creating the Company’s channel program and expanding the Company’s presence into the enterprise market.
- Michael Swade, Vice President, North American Sales since May 2014, will assume the role of Interim Senior Vice President, Worldwide Sales and Marketing. Swade has nearly 20 years of experience with various sales and marketing leadership positions within the communications industry. He was most recently Executive Vice President, Sales at Yorktel, a leading global provider of UC&C, cloud, and video managed services for large enterprise and federal government customers. Prior to Yorktel, Swade was at Polycom in various senior leadership roles including Senior Vice President, Field Operations, President, Europe, and Vice President, Service Provider and UC Sales. Swade brings additional leadership experience from Lucent Technologies and Avaya.
Outlook
The Company’s outlook is based on current indications for its business, which may change during the current quarter. Gross margin, operating expenses and EPS are presented on a non-GAAP basis. A reconciliation of the non-GAAP to GAAP outlook and a statement on the use of non-GAAP financial measures are included at the end of this press release. Full year 2014 (FY14) Total Company Revenue outlook of $300 million includes approximately $15 million from Performance Technologies, Incorporated (PT). FY14 Growth-related Revenue outlook of $168 million includes approximately $3 million from PT DSCs. FY14 EPS guidance of $0.07 includes a loss of approximately $0.01 from PT.
| | | | | | | | | | | | | | | Q314 | | | Q414 | | | FY14 | | Total Company Revenue | | | $70 to $73 million | | | $81 to $84 million | | | $300 million | | Growth-related Revenue | | | $39 to $41 million | | | $47.5 to $49.5 million | | | $168 million | | Gross Margin | | | 65% to 66% | | | Not provided | | | Not provided | | Opex | | | $44 to $45 million | | | Not provided | | | Not provided | | EPS | | | $0.01 | | | $0.03 | | | $0.07 | | Diluted Shares Outstanding | | | 249 million | | | 248 million | | | 255 million |
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| 1) Growth-related revenue consists primarily of SBCs and DSCs. Legacy revenue consists primarily of Trunking and SS7 Signaling. Certain of our products can contribute to either growth-related revenue or legacy revenue, depending on the use for which our customers purchase them. For more information about how we determine whether products contribute to growth-related revenue or legacy revenue, please see the presentation materials and transcript from our Q2 FY2014 earnings call. |
