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Meru Networks Reports Fourth Quarter and Full Year 2011 Financial Results
Feb 01, 2012 (03:02 PM EST)
Products and services revenue increased 18% in FY2011
Total installed base of over 6,000 Customers
SUNNYVALE, Calif., Feb. 1, 2012 /PRNewswire/ -- Meru Networks, Inc., (NASDAQ:MERU), today announced its financial results for the quarter and full year ended December 31, 2011.
Fourth Quarter 2011 Financial Results
Total revenues for the fourth quarter of 2011 were $23.3 million, up 3% from $22.6 million in the fourth quarter of 2010. Products and services revenues (excluding ratable revenues) for the fourth quarter of 2010 were $23.3 million, up 13% from the $20.5 million reported in the fourth quarter of 2010.
Net loss as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $8.2 million for the fourth quarter of 2011, or $0.46 per basic and diluted share, compared to a net loss of $0.9 million, or $0.06 per basic and diluted share, for the same period of 2010. GAAP results for the fourth quarter of 2011 included stockbased compensation expense of $1.6 million, amortization of acquisitionrelated intangibles of $0.1 million and chief executive officer transition costs of $1.1 million. GAAP results for the fourth quarter of 2010 included stockbased compensation expense of $1.2 million.
Meru reported fourth quarter 2011 non-GAAP net loss of $5.4 million, or $0.30 loss per basic and diluted share, compared to non-GAAP net income of $305,000, or $0.02 income per diluted share, for the fourth quarter of 2010. Please refer to the reconciliation of GAAP to non-GAAP results provided at the end of this release.
2011 Financial Results
Revenues for the year ended December 31, 2011 were $90.5 million, an increase of 6% from $85.0 million in 2010. Products and services revenues (excluding ratable revenues) for 2011 were $87.2 million, up 18% from the $73.7 million reported in 2010. GAAP net loss for 2011 was $26.7 million, or $1.54 per basic and diluted share, compared to a net loss of $36.6 million, or $3.06 per basic and diluted share in 2010. GAAP results for 2011 included stockbased compensation expense of $6.2 million, litigation reserve expense of $7.3 million, amortization of acquisitionrelated intangibles of $0.1 million and chief executive officer transition costs of $1.1 million. GAAP results for 2010 included stockbased compensation expense of $3.8 million and $33.6 million for the adjustment to fair value of the warrant liability. Non-GAAP net loss for 2011 was $12.1 million, or $0.69 loss per basic and diluted share, compared to non-GAAP net income of $859,000, or $0.05 income per diluted share in 2010.
"2011 was a year of building for Meru," said Ihab Abu-Hakima, president and chief executive officer, Meru Networks. "We have doubled our sales headcount from the end of 2010, with the majority of this headcount joining since the beginning of the fourth quarter. In addition, we have significantly expanded our product portfolio, and increased our marketing investment. We expect to reap the benefit of these investments beginning in the second half of 2012 as our expanded sales headcount begins to reach full productivity and the BYOD-driven, worldwide mobile workforce continues to expand, increasing the demand for seamless, secure, reliable access to enterprise wireless networks. Meru's innovative approach is designed to enable organizations to meet the demands of their high density mobile environments where business-essential execution increasingly depends on all wireless mobile edge networks."
Fourth Quarter Business Highlights
Conference Call Information
Meru will host a conference call for analysts and investors to discuss its fourth quarter and full year 2011 results, today, February 1st at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To join the live call, please dial (877) 852-2926 (domestic) and (253) 237-1123 (international) and reference conference ID 42269912.
A telephone replay will be available two hours following the conclusion of the call for a period of seven days and can be accessed by dialing (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. The call ID for the replay is 42269912. The live and archived webcast of the fourth quarter and full year 2011 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 provides a virtualized wireless LAN architecture that cost-effectively delivers the performance, reliability, predictability and operational simplicity of a wired network, with the advantages of mobility. Meru's solution represents an innovative, yet standards-based approach to wireless networking that utilizes virtualization technology to create an intelligent and self-monitoring wireless network, enabling enterprises to migrate their business-critical applications from wired networks to wireless networks, to become all-wireless enterprises. Meru's solutions have been adopted in all major industry vertical markets, including Fortune 500 enterprises, healthcare, education, retail, manufacturing, hospitality and government. Meru is headquartered in Sunnyvale, California, and has operations in the Americas, Europe, the Middle East and Asia Pacific. For more information, visit Meru Investor Information or call (408) 215-5300.
Cautionary Statement Regarding Forward Looking Statements
This press release contains forward-looking statements and information. All statements other than statements of historical facts that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward- looking statements. Such statements include, but are not limited to those statements regarding the company's expectation that it will reap the benefit, beginning in the second half of 2012, of the increases in sales headcount, expanded product portfolio and marketing investment it made in 2011; the company's belief that driven by BYOD, the worldwide mobile workforce will continue to expand, resulting in increasing the demand for seamless, secure and reliable access to enterprise wireless networks; Meru's belief that to meet the demands of high density environments where business-essential execution applications will continue and depends on all wireless mobile edge networks and that that the company's approach will enable organizations to do so. We have identified some of these forward-looking statements with words like "believe," "may," "will," "should," "expect," "intend," "plan," "predict," "anticipate," "estimate" or "continue" and other words and terms of similar meaning. These forward-looking statements involve risks and uncertainties, including the risk that the market for Meru's solutions may not grow as the company expects; risks related to a lengthening customer approval processes, including lengthening of budget approval processes and funding uncertainty for domestic education customers; the risk that continuing investment in sales and marketing coverage and capacity will fail to diversify the company's customer mix or mitigate against the uncertainty of governmental funding; and the other risks and uncertainties described under the caption "Risk Factors" in Meru Networks' quarterly report on Form 10-Q filed with the Securities and Exchange Commission, or the SEC, on November 8, 2011, as well as additional reports filed with the SEC. These forward-looking statements also involve assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. 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. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update or revise these forward-looking statements, whether as a result of new information, new developments or otherwise.
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),and non-GAAP income (loss) from operations which both exclude stock-based compensation expense, amortization of intangible assets related to the company's acquisition of Identity Networks in the third fiscal quarter of 2011, chief executive officer transition costs, and other items outside the ordinary course of business such as litigation reserves expense or adjustment to fair value of the warrant liability. Meru believes that its non-GAAP net income (loss) and non-GAAP income (loss) from operations provide 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 Meru's 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. In addition, Meru's management does not consider the amortization of intangible assets related to the company's acquisition of Identity Networks relevant when comparing its performance to prior periods. Meru believes that all of these excluded expenses 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 may 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.
Use of Non-GAAP Financial Information
In addition to the reasons stated above, which are generally applicable to each of the items Meru Networks excludes from its non-GAAP financial measures, the company believes it is appropriate to exclude certain items for the following reasons:
Stock-Based Compensation. When evaluating the performance of its consolidated results, Meru Networks does not consider stock-based compensation charges. Likewise, the Meru Networks management team excludes stock-based compensation expense from its operating plans. In contrast, the Meru Networks management team is held accountable for cash-based compensation and such amounts are included in its operating plans. Further, when considering the impact of equity award grants, Meru Networks places a greater emphasis on overall stockholder dilution rather than the accounting charges associated with such grants. Meru Networks believes it is useful to provide a non-GAAP financial measure that excludes stock-based compensation in order to better understand the long-term performance of its business.
Amortization of intangible assets. The company excludes amortization of acquired intangible assets because it is non-cash in nature and because the company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. In addition, excluding this item from various non-GAAP measures facilitates internal comparisons to historical operating results and comparisons to competitors' operating results.
Chief Executive Officer transition costs. The company excludes the chief executive officer transition costs when evaluating the performance of its consolidated results. The company believes these costs are unusual in nature and the company does not expect them to recur in the ordinary course of its business. The company further believes these costs are unrelated to the ongoing operation of the business in the ordinary course.
Other Items. The company excludes items such as litigation reserves expense or adjustment to fair value of the warrant liability when evaluating the performance of its consolidated results. The company believes these costs are unusual in nature and the company does not expect them to recur in the ordinary course of its business. The company further believes these costs are unrelated to the ongoing operation of the business in the ordinary course.
SOURCE Meru Networks, Inc.