Ixia Announces Record Revenue for Fourth Quarter and Fiscal Year 2012
Ixia Announces Record Revenue for Fourth Quarter and Fiscal Year 2012
Service Provider and Enterprise Revenue Grows to 50 Percent of Fourth Quarter Revenue
CALABASAS, Calif.--(BUSINESS WIRE)-- Ixia (Nasdaq: XXIA) today reported its financial results for the fourth quarter and year ended December 31, 2012.
Total revenue for the 2012 fourth quarter was a record $124.1 million, compared with $83.7 million reported for the 2011 fourth quarter and $109.6 million reported for the 2012 third quarter. The 2012 fourth quarter includes $30.3 million in revenue from the recent acquisitions of Anue Systems, Inc. ("Anue") and BreakingPoint Systems, Inc. ("BreakingPoint"), which closed in June and August 2012, respectively. Excluding Anue and BreakingPoint, fourth quarter revenue grew 12 percent to $93.8 million in 2012 from $83.7 million a year ago.
Total revenue for the fiscal year 2012 was a record $411.7 million, an increase of 34 percent compared with $308.4 million reported for fiscal year 2011. Fiscal year 2012 includes $54.9 million in revenue attributable to Anue and BreakingPoint. For the full year, excluding Anue and BreakingPoint revenue in calendar 2012, revenue grew 16 percent to $356.8 million.
"Our strong fourth quarter capped off a transformational year that included completing two significant acquisitions and achieving record revenue and profit," commented Vic Alston, Ixia's president and chief executive officer. "In the quarter, demand was strong across our entire solution offering with revenue from our Anue and BreakingPoint solutions exceeding our expectations. We made solid progress expanding our customer base with service provider and enterprise accounts hitting 50 percent of revenue in the quarter."
Alston continued, "Looking forward into 2013, we intend to continue building on our momentum and growing our presence among service providers and enterprises as we help them optimize their networks and datacenters worldwide to accelerate, secure and scale application delivery."
On a GAAP basis, the company recorded net income for the 2012 fourth quarter of $4.6 million, or $0.06 per diluted share, compared with net income of $9.8 million, or $0.14 per diluted share, for the 2011 fourth quarter. The company recorded GAAP net income for fiscal year 2012 of $47.2 million, or $0.61 per diluted share, compared with $23.8 million or $0.33 per diluted share, for fiscal year 2011. GAAP results for the fiscal year 2012 include a tax benefit of approximately $37.4 million, or $0.44 per diluted share, for the reversal of valuation allowances related to deferred tax assets.
Non-GAAP net income for the 2012 fourth quarter was a record $19.5 million, or $0.24 per diluted share, compared with non-GAAP net income of $13.7 million, or $0.18 per diluted share, for the 2011 fourth quarter. The company recorded non-GAAP net income for fiscal year 2012 of $60.7 million, or $0.77 per diluted share, compared with $43.8 million, or $0.59 per diluted share, for fiscal year 2011.
Additional non-GAAP information and a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measures for the 2012 and 2011 fourth quarters and fiscal years may be found in the attached financial tables.
Ixia ended the fourth quarter with approximately $177 million in cash, cash equivalents and investments, compared with $154 million at September 30, 2012.
Conference Call and Webcast Information
Ixia will host a conference call today, at 5:00 p.m., Eastern time, for analysts and investors to discuss its 2012 fourth quarter results and its business outlook for the 2013 first quarter. Open to the public, investors may access the call by dialing 678-825-8347. A live webcast of the conference call, along with supplemental financial information, will be accessible from the "Investors" section of Ixia's web site (www.ixiacom.com). Following the live webcast, an archived version will be available in the "Investors" section on the Ixia web site for 90 days.
Non-GAAP Information
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 income from operations, 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 proceeds and expenses from certain legal and contractual settlements, 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. These non-GAAP financial measures are provided to enhance the user's overall understanding of our financial performance. 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, in evaluating our ongoing business operations and in comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to plan and forecast future periods and to assist 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, 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.
About Ixia
Ixia solutions deliver actionable insight through real-time monitoring, real-world testing, and rapid assessment. This end-to-end visibility provides organizations with a complete understanding into user behavior, security vulnerabilities, network capacity, application performance, and IT resiliency. From the lab to the network to the cloud, Ixia solutions enable its customers to optimize networks and data centers to accelerate, secure, and scale application delivery. For more information, visit www.ixiacom.com.
Safe Harbor under the Private Securities Litigation Reform Act of 1995:
Certain statements made in this press release are forward-looking statements, including, without limitation, statements regarding growth, profitability, financial performance and future business. In some cases, such forward-looking statements can be identified by terms such as may, will, should, expect, plan, believe, estimate, predict or the like. Such statements reflect our current intent, belief and expectations and are subject to risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that may cause future results to differ materially from our current expectations include the risk that the anticipated benefits and synergies of our recent acquisitions of Anue and BreakingPoint will not be realized, changes in the global economy, competition, consistency of orders from significant customers, our success in developing and producing new products, market acceptance of our products, 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. Such factors also include those identified in our Annual Report on Form 10-K for the year ended December 31, 2011, and in our other filings with the U.S. 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.
Condensed Consolidated Balance Sheets (in thousands) (unaudited) | ||||||
December 31, | December 31, | |||||
2012 | 2011 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 47,508 | $ | 42,729 | ||
Short-term investments in marketable securities | 126,851 | 156,684 | ||||
Accounts receivable, net | 103,587 | 65,357 | ||||
Inventories | 37,612 | 27,239 | ||||
Prepaid expenses and other current assets | 40,278 | 12,700 | ||||
Total current assets | 355,836 | 304,709 | ||||
Investments in marketable securities | 3,119 | 185,608 | ||||
Property and equipment, net | 28,763 | 25,060 | ||||
Intangible assets, net | 157,050 | 46,028 | ||||
Goodwill | 260,457 | 66,429 | ||||
Other assets | 9,723 | 6,633 | ||||
Total assets | $ | 814,948 | $ | 634,467 | ||
Liabilities and Shareholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 12,264 | $ | 5,005 | ||
Accrued expenses and other | 51,524 | 28,196 | ||||
Deferred revenues | 70,628 | 40,963 | ||||
Total current liabilities | 134,416 | 74,164 | ||||
Deferred revenues | 14,091 | 10,092 | ||||
Other liabilities | 25,049 | 5,849 | ||||
Convertible senior notes | 200,000 | 200,000 | ||||
Total liabilities | 373,556 | 290,105 | ||||
Shareholders' equity: | ||||||
Common stock, without par value; 200,000 shares authorized at December 31, 2012 and 2011; 74,126 and 70,240 shares issued and outstanding as of December 31, 2012 and 2011, respectively | 158,933 | 132,330 | ||||
Additional paid-in capital | 168,980 | 145,840 | ||||
Retained earnings | 111,190 | 63,962 | ||||
Accumulated other comprehensive income | 2,289 | 2,230 | ||||
Total shareholders' equity | 441,392 | 344,362 | ||||
Total liabilities and shareholders' equity | $ | 814,948 | $ | 634,467 | ||
IXIA Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited) | ||||||||||||||||
Three months ended | Year ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenues: | ||||||||||||||||
Products | $ | 97,481 | $ | 67,689 | $ | 331,118 | $ | 249,670 | ||||||||
Services | 26,638 | 15,962 | 80,539 | 58,686 | ||||||||||||
Total revenues | 124,119 | 83,651 | 411,657 | 308,356 | ||||||||||||
Costs and operating expenses:(1) | ||||||||||||||||
Cost of revenues - products | 21,765 | 15,602 | 71,276 | 56,801 | ||||||||||||
Cost of revenues - services | 2,898 | 1,838 | 10,493 | 6,520 | ||||||||||||
Research and development | 29,220 | 19,105 | 98,380 | 75,101 | ||||||||||||
Sales and marketing | 37,506 | 22,486 | 117,302 | 87,011 | ||||||||||||
General and administrative | 11,779 | 7,756 | 45,443 | 33,648 | ||||||||||||
Amortization of intangible assets | 10,758 | 4,262 | 30,121 | 15,980 | ||||||||||||
Acquisition and other related | 3,389 | 249 | 11,861 | 1,100 | ||||||||||||
Restructuring | 1,979 | — | 4,077 | — | ||||||||||||
Total costs and operating expenses | 119,294 | 71,298 | 388,953 | 276,161 | ||||||||||||
Income from operations | 4,825 | 12,353 | 22,704 | 32,195 | ||||||||||||
Interest income and other, net | 615 | 246 | 2,255 | 2,059 | ||||||||||||
Interest expense | (1,815 | ) | (1,800 | ) | (7,215 | ) | (7,200 | ) | ||||||||
Income before income taxes | 3,625 | 10,799 | 17,744 | 27,054 | ||||||||||||
Income tax (benefit) expense | (970 | ) | 1,035 | (29,484 | ) | 3,279 | ||||||||||
Net income | $ | 4,595 | $ | 9,764 | $ | 47,228 | $ | 23,775 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.06 | $ | 0.14 | $ | 0.65 | $ | 0.34 | ||||||||
Diluted | $ | 0.06 | $ | 0.14 | $ | 0.61 | $ | 0.33 | ||||||||
Weighted average number of common and common equivalent shares outstanding: | ||||||||||||||||
Basic | 73,746 | 70,012 | 72,183 | 69,231 | ||||||||||||
Diluted | 75,521 | 71,821 | 84,505 | 71,664 | ||||||||||||
(1) Stock-based compensation included in: | ||||||||||||||||
Cost of revenues - products | $ | 167 | $ | 73 | $ | 423 | $ | 402 | ||||||||
Cost of revenues - services | 63 | 28 | 162 | 153 | ||||||||||||
Research and development | 2,686 | 912 | 6,242 | 4,286 | ||||||||||||
Sales and marketing | 2,375 | 750 | 5,352 | 3,296 | ||||||||||||
General and administrative | 2,316 | 840 | 7,462 | 4,454 | ||||||||||||
IXIA Non-GAAP Information and Reconciliation to Most Directly Comparable GAAP Financial Measures (in thousands, except per share data) (unaudited) | ||||||||||||||||
Three months ended December 31, | Year ended December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
GAAP income from operations | $ | 4,825 | $ | 12,353 | $ | 22,704 | $ | 32,195 | ||||||||
Adjustments: | ||||||||||||||||
Stock-based compensation(a) | 7,607 | 2,603 | 19,641 | 12,591 | ||||||||||||
Amortization of intangible assets(b) | 10,758 | 4,262 | 30,121 | 15,980 | ||||||||||||
Acquisition and other related(c) | 3,389 | 249 | 11,861 | 1,100 | ||||||||||||
Restructuring(d) | 1,979 | — | 4,077 | — | ||||||||||||
Legal, contract settlements and other(e) | — | (900 | ) | 2,083 | — | |||||||||||
Inventory adjustments(f) | 664 | — | 996 | — | ||||||||||||
Non-GAAP income from operations | $ | 29,222 | $ | 18,567 | $ | 91,483 | ||||||||||
