Redback Networks Inc. Announces Pro Forma Profitability and Record Third Quarter Revenue Q3 2000 Net Revenues of $80.6 Million and 65% Growth Over Q2 2000
Over 50% of Revenue From New Products
SUNNYVALE, Calif., Oct 11, 2000 (BUSINESS WIRE) -- Redback Networks, Inc., (Nasdaq: RBAK chart, msgs), a leading provider of advanced networking solutions, today reported record revenues for the quarter ended September 30, 2000, as well as its first profit on a pro forma basis since closing its merger with Siara Systems.
Net revenues for the third quarter of 2000 were $80.6 million, compared with $20.6 million for the same period in the prior year, an increase of 291 percent. Pro forma net income for the third quarter of 2000 was $3.2 million or $0.02 per share diluted, which excludes acquisition-related and stock compensation charges. This compares to the third quarter of 1999 pro forma net loss of $569,000 or $(0.01) per share. Before pro forma adjustments, net loss for the third quarter of 2000 was $308.1 million or $(2.50) per share compared to a net loss of $1.6 million or $(0.02) per share for the same period in the prior year.
"Redback achieved some major milestones during the third quarter," said Vivek Ragavan, chief executive officer and president of Redback. "The Company delivered a profitable quarter and achieved record revenue, with over 50% of that revenue coming from new products." Another key milestone was the Company's acquisition of Abatis Systems of Vancouver, Canada. A leading developer of systems for enabling the scalable deployment of value-added services, Abatis' offerings immediately expand Redback's broadband solution. "Redback acquired Abatis for its powerful set of IP service management solutions and the benefits they will provide for customers as they extend their service offerings."
"The Company continued its momentum in the metropolitan optical networking market with full production shipments of the SmartEdge 800," said Ragavan. The platform has been well received by Redback customers and prospects, and the Company continues to receive multi-million dollar orders from both carriers and service providers, as well as a significant number of system trials globally. "In the subscriber management market, Redback was buoyed by strong demand across our complete line of SMS platforms," said Ragavan, "with particular demand and resulting deployments for the SMS 10000."
About Redback Networks, Inc.
Founded in 1996 and headquartered in Sunnyvale, Calif., Redback Networks, Inc., is a leading provider of advanced networking solutions that enable carriers, cable operators, and service providers to rapidly deploy broadband access and services. The market-leading Redback(R) Subscriber Management Systems (SMS) connect and manage large numbers of subscribers using any of the major broadband access technologies such as Digital Subscriber Line (DSL), cable, and wireless. To deliver integrated transport solutions for metropolitan optical networks, Redback's SmartEdge multi-service platforms leverage powerful advances in application-specific integrated circuit, IP, and optical technology. The Redback Enterprise Service PointTM (ESP) family is a new breed of intelligent carrier-managed CPE devices for value-added IP services. The Redback Service Management Family allows service providers to easily publish, activate and manage IP services and allows their customers to subscribe to these services on demand. With this product portfolio, Redback Networks is the first equipment supplier focused exclusively on developing integrated solutions for the New Access Network.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding Redback Networks' expectations, beliefs, intentions or strategies regarding the future. Forward-looking statements include statements regarding future sales to customers and the migration of service providers and carriers to next-generation products. All forward-looking statements included in this document are based upon information available to Redback Networks as of the date hereof, and Redback Networks assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to Redback Networks' business are set forth in the documents filed by Redback Networks with the Securities and Exchange Commission, specifically the most recent Annual Report on Form 10-K and quarterly report on Form 10-Q, and the other reports filed from time to time with the Securities and Exchange Commission.
Note to Editors: Redback is a U.S. Registered Trademark; Subscriber Management System, SmartEdge and Enterprise Service Point are Trademarks of Redback Networks, Inc. Other trademarks, service marks, and trade names belong to their respective owners.
Redback Networks, Inc.
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
--------- --------- --------- ---------
Net revenues $ 80,558 $ 20,590 $ 163,449 $ 38,194
Cost of revenues 32,030 6,260 54,098 11,522
--------- --------- --------- ---------
Gross margin 48,528 14,330 109,351 26,672
--------- --------- --------- ---------
Operating expenses:
Research and
development 22,639 7,019 58,561 14,257
Selling, general
and administrative 23,732 8,637 53,664 19,294
--------- --------- --------- ---------
Total operating
expenses 46,371 15,656 112,225 33,551
--------- --------- --------- ---------
Pro forma income (loss)
from operations
excluding acquisition
-related and stock
compensation charges 2,157 (1,326) (2,874) (6,879)
Other income
(expense), net 1,071 757 1,869 989
--------- --------- --------- ---------
Pro forma
income (loss)
excluding
acquisition-related
and stock
compensation charges $ 3,228 $ (569) $ (1,005) $ (5,890)
========= ========= ========= =========
Pro forma basic
net income
(loss) per share $ 0.03 $ (0.01) $ (0.01) $ (0.13)
========= ========= ========= =========
Pro forma
diluted net
income (loss)
per share $ 0.02 $ (0.01) $ (0.01) $ (0.13)
========= ========= ========= =========
Shares used
in computing pro
forma basic net
income
(loss) per share 123,478 74,656 110,403 45,478
========= ========= ========= =========
Shares used
in computing
pro forma diluted
net income
(loss) per share 162,689 74,656 110,403 45,478
========= ========= ========= =========
Note 1: The above pro forma condensed consolidated statements of operations is not a presentation in accordance with generally accepted accounting principles as it excludes the effects of the following (in thousands):
During the three and nine months ended September 30, 2000,
amortization of developed technology related to cost of revenues
was $894 and $1,975, respectively, as a result of the merger with
Siara Systems, Inc. and acquisition of Abatis Systems.
During the three and nine months ended September 30, 2000,
amortization of deferred stock compensation related to operating
expenses was $4,835 and $5,884, respectively. During the three and
nine months ended September 30, 1999, amortization of deferred
stock compensation related to operating expenses was $1,053 and
$3,270, respectively.
During the three and nine months ended September 30, 2000,
amortization of intangible assets totaling $280,493 and $630,727,
respectively, as a result of the merger with Siara Systems, Inc.
and acquisition of Abatis Systems.
During the three and nine months ended September 30, 2000,
in-process research and development was $25,100 as a result of the
Abatis acquisition and $40,400, of which $15,300 resulted from
the merger with Siara Systems, Inc., respectively.
Note 2: The above share and per share data reflect the Company's 2-for-1 stock split effective April 3, 2000.
Redback Networks, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
--------- --------- --------- ---------
Net revenues $ 80,558 $ 20,590 $ 163,449 $ 38,194
Cost of revenues 32,924 6,260 56,073 11,522
--------- --------- --------- ---------
Gross margin 47,634 14,330 107,376 26,672
--------- --------- --------- ---------
Operating expenses:
Research and
development 22,639 7,019 58,561 14,257
Selling, general
and administrative 23,732 8,637 53,664 19,294
Amortization of
intangible assets 280,493 -- 630,727 --
In-process research
and development 25,100 -- 40,400 --
Amortization of
deferred stock
compensation 4,835 1,053 5,884 3,270
--------- --------- --------- ---------
Total operating
expenses 356,799 16,709 789,236 36,821
--------- --------- --------- ---------
Loss from
operations (309,165) (2,379) (681,860) (10,149)
Other income
(expense), net 1,071 757 1,869 989
--------- --------- --------- ---------
Net loss $(308,094) $ (1,622) $(679,991) $ (9,160)
========= ========= ========= =========
Basic and diluted
net loss per share $ (2.50) $ (0.02) $ (6.16) $ (0.20)
========= ========= ========= =========
Shares used in
computing net
loss per share 123,478 74,656 110,403 45,478
========= ========= ========= =========
Note: The above share and per share data reflect the Company's 2-for-1 stock split effective April 3, 2000.
Redback Networks, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
September 30, December 31,
2000 1999
------------ -----------
------------ -----------
Assets
Current assets:
Cash, cash equivalents and
investments in marketable
debt securities $ 473,780 $ 56,960
Accounts receivable, net 59,278 15,429
Inventories 11,005 3,960
Other current assets 18,288 1,374
---------- ----------
Total current assets 562,351 77,723
Property and equipment, net 47,832 10,150
Other long-term assets,
principally goodwill 4,456,221 6,957
---------- ----------
Total assets $5,066,404 $ 94,830
========== ==========
Liabilities and
Stockholders' Equity
Current liabilities:
Borrowings, current $ 2,518 $ 878
Accounts payable and
accrued liabilities 93,049 17,102
Deferred revenue 18,776 9,945
---------- ----------
Total current
liabilities 114,343 27,925
Borrowings, noncurrent 507,176 1,012
Stockholders' equity 4,444,885 65,893
---------- ----------
Total liabilities
and stockholders'
equity $5,066,404 $ 94,830
========== ==========
Contact:
Redback Networks
Mark Weiner, 408/571-5047, Public Relations
mark@redback.com
Craig M. Gentner, 408/571-5000, Chief Financial Officer
investor_relations@redback.com |
