Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - MERU NETWORKS INC | d8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
| Media contact: |
Investors contact: | |
| Neila Matheny |
Karen Haus or Elaine Chen | |
| Engage PR |
Market Street Partners | |
| (510) 748-8200, ext. 215 |
(408) 215-5658 | |
| nmatheny@engagepr.com |
ir@merunetworks.com |
MERU NETWORKS REPORTS RECORD THIRD QUARTER 2010
FINANCIAL RESULTS
Meru adds record number of new customers, posts 41% increase in year-over-year
products and services revenues
SUNNYVALE, Calif., October 27, 2010 – Meru Networks, Inc., (NASDAQ:MERU), the leader in 802.11n virtualized wireless LAN solutions for enterprise networking, today announced its financial results for the quarter ended September 30, 2010.
Third Quarter Financial and Operational Highlights
| • | Total revenues of $21.8 million, up 22% year-over-year. |
| • | Products and services revenues of $19.3 million, up 41% year-over-year. |
| • | Increased installed base to over 4,000 customers, up over 50% year-over-year. |
Third Quarter Fiscal Year 2010 Financial Results
Total revenues for the third quarter of fiscal year 2010 were $21.8 million, up 22% from $17.8 million in the third quarter of fiscal year 2009. Products and services revenues for the third quarter of fiscal year 2010 were $19.3 million, up 41% from the $13.6 million reported in the third quarter of fiscal year 2009.
Net loss as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $0.8 million for the third quarter of 2010, or net loss per share of $0.05, compared to a net loss of $5.0 million, or net loss per share of $13.06, for the same period of fiscal year 2009. GAAP results for the third quarter of 2010 included stock-based compensation expense of $1.1 million. GAAP results for the third quarter of 2009 included stock-based compensation expense of $157,000, and a $5.0 million expense related to the adjustment to fair value of the warrant liability.
Meru reported third quarter fiscal year 2010 non-GAAP net income of $342,000, or $0.02 per fully diluted share, compared to non-GAAP net income of $165,000, or $0.01 per fully diluted share, for the third quarter of fiscal year 2009. Non-GAAP results for both periods exclude the impact of stock-based compensation, and results for the third quarter of 2009 also exclude the impact of adjustments to the fair value of the warrant liability. Please refer to the reconciliation of GAAP to non-GAAP results provided at the end of this release.
“This was another very strong quarter for Meru, with record financial results as well as the addition of more than 500 new customers during the quarter,” said Ihab Abu-Hakima, president and chief executive officer of Meru Networks. “We believe the growing proliferation of wireless devices such as the iPhone, iPad, Android phones and PC tablet devices, as well as the evolution of wireless networks to business critical enterprise infrastructure has helped fuel the strong uptake for our solutions.”
Abu-Hakima continued, “We are pleased to see that what we have referred to as the All-Wireless Enterprise™ is becoming more commonplace, and that more organizations across major verticals and geographies are selecting Meru’s virtualized wireless LAN solution to run their business critical operations.”
Third Quarter Business Highlights
| • | Introduced Meru Networks SG1000 Wireless Security, making Meru the only WLAN provider delivering 802.11n solutions built to the National Institute of Standards and Technology’s highest level FIPS 140-2 Level 3 security specifications. |
| • | Recipient of the 2010 Inc. 500|5000 Award and Deloitte Technology Fast 500 Award. |
| • | Added industry veteran Stan Meresman to its Board of Directors. |
Examples of third quarter wins and production deployments include:
| • | Largest privately-owned furniture retail chain in the UK. |
| • | Project EDUCAT 1X1, a 1 child, 1 PC program, across 130 schools in Spain. |
| • | A municipal government for the world’s largest metropolitan city. |
| • | One of the largest cruise lines. |
| • | One of the largest aircraft manufacturers. |
| • | One of the world’s largest construction & engineering companies. |
Conference Call Information
Meru will host a conference call for analysts and investors to discuss its third quarter results, today, October 27th at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To join the live call, please dial 1-877-852-2926 (domestic) and 1-253-237-1123 (international) and reference conference ID 15037306.
A telephone replay will be available two hours following the conclusion of the call for a period of 30 days and can be accessed by dialing (800) 642-1687 for domestic callers and (706) 645-9291 for international callers. The call ID for the replay is 15037306. The live and archived webcast of the third quarter 2010 financial results conference call will also be available at the investor relations section of Meru’s website at http://investors.merunetworks.com.
About Meru Networks, Inc.
Founded in 2002, Meru Networks, Inc, provides a virtualized wireless LAN solution that cost-effectively optimizes the enterprise network to deliver the performance, reliability, predictability and operational simplicity of a wired network, with the advantages of mobility. Meru’s solution represents an innovative approach to wireless networking that utilizes virtualization technology to create an intelligent and self-monitoring wireless network, and enables enterprises to migrate their business-critical applications from wired networks to wireless networks, and become all-wireless enterprises. Meru is headquartered in Sunnyvale, CA, and has operations in the Americas, Europe, the Middle East and Asia Pacific. For more information, visit www.merunetworks.com.
##
This press release contains forward-looking statements and information. All statements other than statements of historical facts on this website, including statements regarding our future financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “might,” “objective,” “estimate,” “continue,” “anticipate,” “project,” “intend,” “will,” “should,” “could,” “plan,” “future,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. These forward-looking statements include but are not limited to our expectations regarding market demand for our products and services and our expectations regarding our business strategy, position, and future business and financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial conditions, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, but not limited to, whether the market for our products and solutions continue to develop and grow, our limited operating history, our ability to compete effectively, our ability to increase market awareness of our brand and solutions and our ability to continue to utilize our technology and protect our intellectual property
rights, and a number of other factors out of our control, that may cause our business, industry, strategy or actual results to differ materially from the forward-looking statements. The risks and uncertainties include those described in Meru Networks’ documents filed with or furnished to the Securities and Exchange Commission.
These forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risk and uncertainties. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. We cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assume responsibility for the accuracy and completeness of the forward-looking statements. Any forward-looking statement speaks only as of its date. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason to conform these statements to actual results or to changes in our expectations.
Non-GAAP Financial Measurements
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Meru reports non-GAAP net income (loss), which excludes stock-based compensation expense and adjustments to the fair value of the warrant liability. Meru believes that its non-GAAP net income (loss) provides useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations. Meru also believes the non-GAAP measures provide useful supplemental information for investors to evaluate its operating results in the same manner as the research analysts that follow Meru, all of whom will present non-GAAP projections in their published reports. As such, the non-GAAP measures provided by Meru facilitate a more direct comparison of its performance with the financial projections published by the analysts as well as its competitors, many of whom report financial results on a non-GAAP basis. The economic substance behind its decision to use such non-GAAP measures is that such measures approximate its controllable operating performance more closely than the most directly comparable GAAP financial measures. For example, Meru’s management has no control over certain variables that have a major influence in the determination of stock-based compensation such as the volatility of its stock price and changing interest rates. Meru believes that all of these excluded expenses and income do not accurately reflect the underlying performance of its continuing operations for the period in which they are incurred, even though these excluded items may be incurred and reflected in Meru’s GAAP financial results.
The material limitation associated with the use of non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of Meru’s activities. Meru’s non-GAAP measures may be calculated differently than non-GAAP financial information disclosed by other companies. Accordingly, investors are cautioned not to place undue reliance on non-GAAP information.
MERU NETWORKS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
| September 30, 2010 |
December 31, 2009 |
|||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 68,778 | $ | 21,283 | ||||
| Accounts receivable, net |
5,345 | 5,967 | ||||||
| Inventory |
3,038 | 2,833 | ||||||
| Deferred inventory costs, current portion |
2,046 | 4,547 | ||||||
| Prepaid expenses and other current assets |
1,432 | 1,382 | ||||||
| Total current assets |
80,639 | 36,012 | ||||||
| Property and equipment, net |
753 | 698 | ||||||
| Deferred inventory costs, net of current portion |
95 | 1,419 | ||||||
| Other assets |
347 | 283 | ||||||
| TOTAL ASSETS |
$ | 81,834 | $ | 38,412 | ||||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT): |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable |
$ | 2,411 | $ | 3,310 | ||||
| Accrued liabilities |
9,712 | 6,989 | ||||||
| Long-term debt, current portion |
4,150 | 11,447 | ||||||
| Deferred revenue, current portion |
14,313 | 18,864 | ||||||
| Warrant liability |
— | 18,939 | ||||||
| Total current liabilities |
30,586 | 59,549 | ||||||
| Long-term debt, net of current portion |
— | 2,808 | ||||||
| Deferred revenue, net of current portion |
3,915 | 6,248 | ||||||
| Total liabilities |
34,501 | 68,605 | ||||||
| Convertible preferred stock |
— | 125,255 | ||||||
| STOCKHOLDERS’ EQUITY (DEFICIT): |
||||||||
| Preferred stock |
— | — | ||||||
| Common stock |
8 | 1 | ||||||
| Additional paid-in capital |
241,696 | 3,211 | ||||||
| Accumulated other comprehensive loss |
(43 | ) | (43 | ) | ||||
| Accumulated deficit |
(194,328 | ) | (158,617 | ) | ||||
| Total stockholders’ equity (deficit) |
47,333 | (155,448 | ) | |||||
| TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) |
$ | 81,834 | $ | 38,412 | ||||
MERU NETWORKS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except for share and per share amounts)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| REVENUES: |
||||||||||||||||
| Products |
$ | 16,710 | $ | 12,052 | $ | 45,727 | $ | 31,809 | ||||||||
| Support and services |
2,571 | 1,583 | 7,431 | 3,907 | ||||||||||||
| Ratable products and services |
2,556 | 4,209 | 9,200 | 14,526 | ||||||||||||
| Total revenues |
21,837 | 17,844 | 62,358 | 50,242 | ||||||||||||
| COSTS OF REVENUES: |
||||||||||||||||
| Products |
5,876 | 4,495 | 15,912 | 12,252 | ||||||||||||
| Support and services |
611 | 355 | 1,582 | 595 | ||||||||||||
| Ratable products and services |
1,311 | 2,119 | 4,928 | 7,261 | ||||||||||||
| Total costs of revenues * |
7,798 | 6,969 | 22,422 | 20,108 | ||||||||||||
| Gross profit |
14,039 | 10,875 | 39,936 | 30,134 | ||||||||||||
| OPERATING EXPENSES: |
||||||||||||||||
| Research and development * |
3,124 | 2,386 | 8,960 | 7,086 | ||||||||||||
| Sales and marketing * |
8,653 | 6,106 | 24,168 | 18,723 | ||||||||||||
| General and administrative * |
2,801 | 1,854 | 7,816 | 5,318 | ||||||||||||
| Total operating expenses |
14,578 | 10,346 | 40,944 | 31,127 | ||||||||||||
| Income (loss) from operations |
(539 | ) | 529 | (1,008 | ) | (993 | ) | |||||||||
| Interest expense, net |
(182 | ) | (384 | ) | (660 | ) | (1,512 | ) | ||||||||
| Other income (expense), net |
12 | (5,057 | ) | (33,848 | ) | (6,777 | ) | |||||||||
| Loss before provision for income taxes |
(709 | ) | (4,912 | ) | (35,516 | ) | (9,282 | ) | ||||||||
| Provision for income taxes |
88 | 49 | 195 | 147 | ||||||||||||
| Net loss |
(797 | ) | (4,961 | ) | (35,711 | ) | (9,429 | ) | ||||||||
| Accretion on convertible preferred stock |
— | — | — | 221 | ||||||||||||
| Net loss attributable to common stockholders |
$ | (797 | ) | $ | (4,961 | ) | $ | (35,711 | ) | $ | (9,208 | ) | ||||
| Net loss per share of common stock, basic and diluted |
$ | (0.05 | ) | $ | (13.06 | ) | $ | (3.37 | ) | $ | (24.48 | ) | ||||
| Shares used in computing net loss per share of common stock, basic and diluted |
15,916,542 | 379,742 | 10,595,022 | 376,137 | ||||||||||||
| * Includes stock-based compensation expense as follows: | ||||||||||||||||
| Costs of revenues |
$ | 58 | $ | 15 | $ | 132 | $ | 41 | ||||||||
| Research and development |
231 | 27 | 532 | 70 | ||||||||||||
| Sales and marketing |
308 | 61 | 687 | 188 | ||||||||||||
| General and administrative |
542 | 54 | 1,294 | 139 | ||||||||||||
| $ | 1,139 | $ | 157 | $ | 2,645 | $ | 438 | |||||||||
MERU NETWORKS, INC.
Condensed Consolidated Statements of Operations
(GAAP to Non-GAAP Reconciliation)
(Unaudited)
(In thousands, except share and per share amounts)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| GAAP net loss |
$ | (797 | ) | $ | (4,961 | ) | $ | (35,711 | ) | $ | (9,429 | ) | ||||
| Plus: |
||||||||||||||||
| a) Stock-based compensation |
1,139 | 157 | 2,645 | 438 | ||||||||||||
| b) Adjustment of fair value of warrant liability |
— | 4,969 | 33,620 | 6,583 | ||||||||||||
| Non-GAAP net income (loss) |
$ | 342 | $ | 165 | $ | 554 | $ | (2,408 | ) | |||||||
| GAAP net loss per share of common stock, basic |
$ | (0.05 | ) | $ | (13.06 | ) | $ | (3.37 | ) | $ | (24.48 | )* | ||||
| Plus: |
||||||||||||||||
| a) Stock-based compensation |
0.07 | 0.41 | 0.25 | 1.17 | ||||||||||||
| b) Adjustment of fair value of warrant liability |
— | 13.08 | 3.17 | 17.50 | ||||||||||||
| Non-GAAP net income (loss) per share of common stock, basic |
$ | 0.02 | $ | 0.43 | $ | 0.05 | $ | (5.81 | )* | |||||||
| Non-GAAP net income (loss) per share of common stock, diluted |
$ | 0.02 | $ | 0.01 | $ | 0.03 | $ | (5.81 | )* | |||||||
| Shares used in computing basic net income (loss) per share of common stock |
15,916,542 | 379,742 | 10,595,022 | 376,137 | ||||||||||||
| Shares used in computing diluted Non-GAAP net income (loss) per share of common stock |
17,611,167 | 11,640,733 | 16,128,719 | 376,137 | ||||||||||||
| GAAP income (loss) from operations |
$ | (539 | ) | $ | 529 | $ | (1,008 | ) | $ | (993 | ) | |||||
| Plus stock-based compensation: |
||||||||||||||||
| Costs of revenues |
58 | 15 | 132 | 41 | ||||||||||||
| Research and development |
231 | 27 | 532 | 70 | ||||||||||||
| Sales and marketing |
308 | 61 | 687 | 188 | ||||||||||||
| General and administrative |
542 | 54 | 1,294 | 139 | ||||||||||||
| $ | 1,139 | $ | 157 | $ | 2,645 | $ | 438 | |||||||||
| Non-GAAP income (loss) from operations |
$ | 600 | $ | 686 | $ | 1,637 | $ | (555 | ) | |||||||
| * | Per share calculation reflects $221K accretion on convertible preferred stock in Q1 2009. |
MERU NETWORKS, INC.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
(In thousands)
| Nine months ended September 30, |
||||||||
| 2010 | 2009 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ | (35,711 | ) | $ | (9,429 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
434 | 408 | ||||||
| Stock-based compensation |
2,645 | 438 | ||||||
| Adjustment of fair value of warrant liability |
33,620 | 6,583 | ||||||
| Accrued interest on convertible promissory notes |
— | 201 | ||||||
| Amortization of debt issuance costs |
81 | 101 | ||||||
| Bad debt expense |
(57 | ) | 23 | |||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, net |
679 | (410 | ) | |||||
| Inventory |
(205 | ) | 257 | |||||
| Deferred inventory costs |
3,825 | 6,029 | ||||||
| Prepaid expenses and other assets |
(784 | ) | (274 | ) | ||||
| Accounts payable |
(899 | ) | 1,131 | |||||
| Accrued liabilities |
3,353 | 743 | ||||||
| Deferred revenue |
(6,884 | ) | (8,997 | ) | ||||
| Net cash provided by (used in) operating activities |
97 | (3,196 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Purchase of property and equipment |
(489 | ) | (60 | ) | ||||
| Net cash used in investing activities |
(489 | ) | (60 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Proceeds from initial public offering, net |
57,075 | — | ||||||
| Proceeds from exercise of stock options |
265 | 30 | ||||||
| Proceeds from exercise of convertible preferred stock warrants |
716 | — | ||||||
| Proceeds from issuance of convertible preferred stock and warrants, net of issuance costs |
— | 20,632 | ||||||
| Proceeds from issuance of convertible promissory notes |
— | 3,170 | ||||||
| Proceeds from long-term debt and line of credit |
4,986 | 16,803 | ||||||
| Repayment of long-term debt and line of credit |
(15,172 | ) | (19,374 | ) | ||||
| Net cash provided by financing activities |
47,870 | 21,261 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
17 | (5 | ) | |||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS |
47,495 | 18,000 | ||||||
| CASH AND CASH EQUIVALENTS — Beginning of period |
21,283 | 5,172 | ||||||
| CASH AND CASH EQUIVALENTS — End of period |
$ | 68,778 | $ | 23,172 | ||||