Grows Revenues for Fourth Straight Quarter to $95.8 Million; Achieves Positive Cash Flow; Adds Five New Customers
SUNNYVALE, CA, Apr 20, 2010 (MARKETWIRE via COMTEX) –Infinera Corporation (NASDAQ:INFN, news, filings), a leading provider of digital optical communications systems, today released financial results for the first quarter ended March 27, 2010.
- GAAP revenues for the first quarter of 2010 were $95.8 million compared to $90.2 million in the fourth quarter of 2009 and $66.6 million in the first quarter of 2009.
- GAAP gross margins for the quarter were 39% compared to 38% in the fourth quarter of 2009 and 30% in the first quarter of 2009. GAAP net loss for the quarter was $20.0 million, or $(0.21) per share, compared to $18.7 million, or $(0.19) per share, in the fourth quarter of 2009 and $24.3 million, or $(0.26) per share, in the first quarter of 2009.
- Non-GAAP gross margins for the first quarter of 2010 were 41% compared to 40% in the fourth quarter of 2009 and 31% in the first quarter of 2009, excluding restructuring and other related costs and non-cash stock-based compensation. Non-GAAP net loss for the first quarter of 2010 was $7.0 million, or $(0.07) per share, compared to net loss of $6.5 million, or $(0.07) per share in the fourth quarter of 2009 and net loss of $17.6 million, or $(0.19) per share, in the first quarter of 2009.
Management Commentary
“Our solid first quarter results demonstrate that market demand remains strong for Infinera’s PIC-based networks, which provide the optical industry’s most cost-effective solution and most advanced intelligent bandwidth management capabilities,” said Tom Fallon, president and chief executive officer. “In the first quarter of 2010, we grew revenue for the fourth consecutive quarter, improved gross margins for the third consecutive quarter and had record bookings for the second quarter in a row.”
“Against the backdrop of an improving technology spending environment, business activity is healthy across all our major markets and customer segments,” said Fallon. “During the first quarter we added five new customers to our roster including one of Japan’s top three service providers, and we continued to grow our footprint across an expanded set of market opportunities.”
The company also noted the following developments:
- With the addition of the five new customers this quarter, the company’s total customer count is 74. Among the new customers, three were from North America, one from Europe and one from Asia. The new Asia-based customer has begun Infinera deployments in both Asia and North America.
- One new ATN win this quarter which brings the company’s total ATN customer count to seven, six of which are existing DTN customers.
- The company won expanded footprint with existing customers including a new significant opportunity with an existing Tier One account for a Latin American deployment, as well as an expanded relationship with another customer that will include participating in a series of large overbuilds in a global capacity expansion.
- The Company generated $2.3 million of cash from operations for the quarter.
- The top 5 customers for the quarter included Level 3, two additional established carriers, and two of the world’s largest internet content providers. Level 3 and one of the leading internet content providers were 10% or greater customers at 22% and 16% of revenue, respectively.
Conference Call Information:
Infinera will host a conference call for analysts and investors to discuss its first quarter results and second quarter outlook today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference call will also be accessible from the “Investor Relations” section of the company’s website at www.infinera.com. Following the webcast, an archived version will be available on the website for 90 days. To hear the replay, parties in the United States and Canada should call 1-866-395-9179. International parties can access the replay at 1-203-369-0503.
About Infinera
Infinera provides Digital Optical Networking systems to telecommunications carriers worldwide. Infinera’s systems are unique in their use of a breakthrough semiconductor technology: the Photonic Integrated Circuit (PIC). Infinera’s systems and PIC technology are designed to provide optical networks with simpler and more flexible engineering and operations, faster time-to-service, and the ability to rapidly deliver differentiated services without reengineering their optical infrastructure. For more information, please visit www.infinera.com.
Forward-Looking Statements
This press release contains forward-looking statements, including statements about our belief that the market demand for our solutions and systems remain strong, our belief that our PIC-based network provides the optical industry’s most cost-effective solution and most advanced intelligent bandwidth management capabilities, our belief that we are seeing an improvement in the technology spending environment, our belief that business activity is healthy across all our major markets and customer segments, and our belief that we are continuing to grow our footprint across an expanded set of market opportunities. These forward-looking statements involve risks and uncertainties, as well as 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. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to react to trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs and develop new or enhanced products to meet those needs; the adoption rate of our products; our ability to establish and maintain successful relationships with our customers; our ability to reduce customer concentration; our ability to compete in our industry; fluctuations in demand, sales cycles and prices for our products and services; shortages or price fluctuations in our supply chain; our ability to protect our intellectual property rights; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our documents filed with or furnished to the U.S. Securities and Exchange Commission (SEC). More information about these and other risks that may impact Infinera’s business are set forth in our annual report on Form 10-K, which was filed with the SEC on March 1, 2010, as well as subsequent reports filed with the SEC. 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 these forward-looking statements.
Use of Non-GAAP financial information
In addition to disclosing financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP measures that exclude non-cash stock-based compensation expenses and non-recurring restructuring and other related costs. We believe these adjustments are appropriate to enhance an overall understanding of our underlying financial performance and also our prospects for the future and are considered by management for the purpose of making operational decisions. In addition, these results are the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or basic and diluted net income per share prepared in accordance with GAAP. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations. For a description of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section titled, “GAAP to Non-GAAP Reconciliations.” We anticipate disclosing forward-looking non-GAAP information in our conference call to discuss our first quarter 2010 results, including an estimate of non-GAAP earnings for the second quarter of 2010 that excludes non-cash stock-based compensation expenses.
A copy of this press release can be found on the investor relations page of Infinera’s website at www.infinera.com.
Infinera Corporation and the Infinera logo are trademarks or registered trademarks of Infinera Corporation. All other trademarks used or mentioned herein belong to their respective owners.
Infinera Corporation
GAAP Condensed Consolidated Statements of Operations
(In thousands, except share data)
(Unaudited)
Three Months Ended
---------------------------
March 27, March 28,
2010 2009
------------ ------------
Revenue:
Product $ 86,167 $ 59,148
Ratable product and related support
and services 1,614 1,469
Services 7,979 5,963
------------ ------------
Total revenue 95,760 66,580
Cost of revenue (1):
Cost of product 55,440 43,865
Cost of ratable product and related
support and services 755 730
Cost of services 2,542 2,015
Restructuring credit related to cost
of revenue (93) -
------------ ------------
Total cost of revenue 58,644 46,610
Gross profit 37,116 19,970
Operating expenses (1):
Research and development 28,483 22,034
Sales and marketing 13,037 11,123
General and administrative 15,737 10,127
Restructuring and other costs 161 -
------------ ------------
Total operating expenses 57,418 43,284
Loss from operations (20,302) (23,314)
Other income (expense), net:
Interest income 485 918
Other gain (loss), net: (316) (1,814)
------------ ------------
Total other income (expense), net 169 (896)
Loss before provision of income taxes (20,133) (24,210)
Provision for (benefit from) income taxes (142) 118
------------ ------------
Net loss $ (19,991) $ (24,328)
============ ============
Net loss per common share, basic and diluted $ (0.21) $ (0.26)
============ ============
Weighted average shares used in computing
basic and diluted net loss per common share 97,276 94,275
============ ============
(1) The following table summarizes the effects of stock-based compensation
related to employees and non-employees for the three months ended
March 27, 2010 and March 28, 2009:
Three Months Ended
---------------------------
March 27, March 28,
2010 2009
------------ ------------
Cost of revenue $ 569 $ 379
Research and development 3,423 1,732
Sales and marketing 1,847 1,414
General and administration 5,709 2,645
------------ ------------
11,548 6,170
Cost of revenue - amortization from
balance sheet* 1,362 566
------------ ------------
Total stock-based compensation expense $ 12,910 $ 6,736
============ ============
* Stock-based compensation expense deferred to inventory and deferred
inventory costs in prior periods and recognized in the current period.
Infinera Corporation
GAAP to Non-GAAP Reconciliations
(In thousands, except share data)
(Unaudited)
Three Months Ended
----------------------------------------
March 27, December 26, March 28,
2010 2009 2009
------------ ------------ ------------
Reconciliation of Gross Profit:
U.S. GAAP as reported $ 37,116 $ 34,167 $ 19,970
Restructuring and other related
costs (1) (93) 302 -
Stock-based compensation (2) 1,931 1,704 945
------------ ------------ ------------
Non-GAAP as adjusted $ 38,954 $ 36,173 $ 20,915
============ ============ ============
Reconciliation of Gross Margin:
U.S. GAAP as reported 39% 38% 30%
Restructuring and other related
costs (1) -% -% -%
Stock-based compensation (2) 2% 2% 1%
------------ ------------ ------------
Non-GAAP as adjusted 41% 40% 31%
============ ============ ============
Reconciliation of Net Loss:
U.S. GAAP as reported $ (19,991) $ (18,651) $ (24,328)
Restructuring and other related
costs (1) 68 515 -
Stock-based compensation (2) 12,910 11,641 6,736
------------ ------------ ------------
Non-GAAP as adjusted $ (7,013) $ (6,495) $ (17,592)
============ ============ ============
Reconciliation of Net Loss
per Common Share:
U.S. GAAP as reported $ (0.21) $ (0.19) $ (0.26)
Restructuring and other related
costs (1) - 0.01 -
Stock-based compensation (2) 0.14 0.11 0.07
------------ ------------ ------------
Non-GAAP as adjusted $ (0.07) $ (0.07) $ (0.19)
============ ============ ============
Weighted average shares used in
computing basic and diluted net
loss per common share: 97,276 96,573 94,275
============ ============ ============
(1) Adjustment amount represents restructuring and other related costs
recorded in relation to the closure of our Maryland FAB announced on
July 21, 2009. These amounts have been adjusted in arriving at our
non-GAAP results as they are non-recurring in nature and the adjusted
numbers provide a better indication of our underlying business
performance.
Three Months Ended
----------------------------------------------------------
March 27, 2010 December 26, 2009
---------------------------- ----------------------------
Cost of Operating Cost of Operating
Revenue Expenses Total Revenue Expenses Total
-------- -------- -------- -------- -------- --------
Severance and
related
expenses $ (15) $ 55 $ 40 $ (157) $ 57 $ (100)
Equipment and
facility-related
costs (78) - (78) 459 (255) 204
Lease
termination - 106 106 - 411 411
-------- -------- -------- -------- -------- --------
Total $ (93) $ 161 $ 68 $ 302 $ 213 $ 515
======== ======== ======== ======== ======== ========
(2) Stock-based compensation expense is calculated in accordance with the
fair value recognition provisions of Financial Accounting Standards
Board Accounting Standards Codification (ASC) Topic 718, Compensation
-- Stock Compensation effective January 1, 2006. The following table
summarizes the effects of stock-based compensation related to employees
and non-employees:
Three Months Ended
-----------------------------------------
March 27, December 26, March 28,
2010 2009 2009
------------ ------------ ------------
Cost of revenue $ 569 $ 515 $ 379
Research and development 3,423 3,236 1,732
Sales and marketing 1,847 1,782 1,414
General and administration 5,709 4,919 2,645
------------ ------------ ------------
11,548 10,452 6,170
Cost of revenue - amortization
from balance sheet* 1,362 1,189 566
------------ ------------ ------------
Total stock-based compensation
expense $ 12,910 $ 11,641 $ 6,736
============ ============ ============
* Stock-based compensation expense deferred to inventory and deferred
inventory costs in prior periods and recognized in the current period.
Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(Unaudited)
March 27, December 26,
2010 2009
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 104,817 $ 109,859
Short-term investments 160,239 143,350
Short-term restricted cash 1,533 1,533
Accounts receivable 59,382 70,410
Inventories, net 72,016 68,872
Deferred inventory costs 5,830 5,891
Prepaid expenses and other current assets 9,415 8,313
------------ ------------
Total current assets 413,232 408,228
Property, plant and equipment, net 44,060 43,656
Deferred inventory costs, non-current 6,024 4,438
Long-term investments 8,261 18,255
Long-term restricted cash 2,383 2,480
Deferred tax asset 10,849 12,449
Other non-current assets 2,385 2,439
------------ ------------
Total assets $ 487,194 $ 491,945
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 33,545 $ 31,129
Accrued expenses 15,797 13,929
Accrued compensation and related benefits 12,629 19,248
Accrued warranty 5,853 6,091
Deferred revenue 20,277 18,295
Deferred tax liability 11,049 12,649
------------ ------------
Total current liabilities 99,150 101,341
Accrued warranty, non-current 4,797 5,049
Deferred revenue, non-current 8,352 8,080
Other long-term liabilities 8,625 8,968
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value
Authorized shares - 25,000 and no shares
issued and outstanding - -
Common stock, $0.001 par value
Authorized shares - 500,000 as of
March 27, 2010 and December 26, 2009
Issued and outstanding shares - 97,794
as of March 27, 2010 and 96,874 as of
December 26, 2009 98 97
Additional paid-in capital 764,846 747,580
Accumulated other comprehensive loss (1,323) (1,810)
Accumulated deficit (397,351) (377,360)
------------ ------------
Total stockholders' equity 366,270 368,507
------------ ------------
Total liabilities and stockholders'
equity $ 487,194 $ 491,945
============ ============
Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
---------------------------
March 27, March 28,
2010 2009
------------ ------------
Cash Flows from Operating Activities:
Net loss $ (19,991) $ (24,328)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 3,983 3,878
Amortization of premium on investments 540 14
Stock-based compensation expense 12,910 6,736
Unrealized loss on Put Rights 2,104 1,967
Unrealized holding gain for trading
securities (2,104) (972)
Non-cash tax benefit (270) -
Loss (gain) on disposal of assets 60 (15)
Other gain (25) -
Changes in assets and liabilities:
Accounts receivable 11,028 24,659
Inventories, net (3,209) (4,880)
Prepaid expenses and other current
assets (708) (491)
Deferred inventory costs (1,555) 668
Other non-current assets 1,627 59
Accounts payable 2,624 (5,276)
Accrued liabilities and other expenses (6,502) (2,899)
Deferred revenue 2,254 (1,813)
Accrued warranty (489) (238)
------------ ------------
Net cash provided by (used in)
operating activities 2,277 (2,931)
Cash Flows from Investing Activities:
Purchase of available-for-sale investments (75,656) (32,013)
Proceeds from maturities and calls of
investments 68,598 22,804
Proceeds from disposal of assets 85 49
Purchase of property and equipment (4,692) (5,960)
Change in restricted cash 99 384
------------ ------------
Net cash used in investing
activities (11,566) (14,736)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 4,397 4,335
Repurchase of common stock (2) (8)
Payments for purchase of assets under
financing arrangement (87) -
------------ ------------
Net cash provided by financing
activities 4,308 4,327
Effect of exchange rate changes on cash (61) (59)
Net change in cash and cash equivalents (5,042) (13,399)
Cash and cash equivalents at beginning of
period 109,859 166,770
------------ ------------
Cash and cash equivalents at end of period $ 104,817 $ 153,371
============ ============
Supplemental disclosures of cash flow
information:
Cash paid for income taxes $ 335 $ 942
Infinera Corporation
Supplemental Financial Information
Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10
----- ----- ----- ----- ----- ----- ----- -----
Revenue (1) $90.8 $80.9 $86.2 $66.6 $68.9 $83.4 $90.2 $95.8
Gross
Margin % (1) 47% 42% 36% 31% 31% 38% 40% 41%
----- ----- ----- ----- ----- ----- ----- -----
Invoiced
Shipment
Composition:
Domestic % 78% 81% 73% 74% 64% 63% 74% 79%
International % 22% 19% 27% 26% 36% 37% 26% 21%
Largest
Customer % 21% 27% 23% 30% 20% 15% 17% 22%
----- ----- ----- ----- ----- ----- ----- -----
Cash Related
Information:
Cash from
Operations $ 5.6 $ 9.9 $(5.4) $(2.9) $(18.8) $(8.3) $(2.7) $ 2.3
Capital
Expenditures $ 4.8 $ 5.9 $ 7.8 $ 6.0 $ 2.8 $ 2.8 $ 4.4 $ 4.7
Depreciation &
Amortization $ 2.9 $ 3.4 $ 4.1 $ 3.9 $ 4.0 $ 4.2 $ 4.5 $ 4.0
DSO's 57 55 74 61 72 61 71 56
----- ----- ----- ----- ----- ----- ----- -----
Inventory
Metrics:
Raw Materials $ 9.2 $10.0 $ 9.1 $ 7.7 $10.1 $ 7.4 $ 6.9 $ 7.5
Work in
Process $34.6 $35.8 $37.9 $43.2 $40.1 $36.2 $32.1 $31.5
Finished
Goods $13.8 $12.8 $12.0 $13.6 $22.3 $29.3 $29.9 $33.0
----- ----- ----- ----- ----- ----- ----- -----
Total
Inventory $57.6 $58.6 $59.0 $64.5 $72.5 $72.9 $68.9 $72.0
Inventory
Turns (1) 3.3 3.2 3.8 2.8 2.6 3.0 3.2 3.2
----- ----- ----- ----- ----- ----- ----- -----
Worldwide
Headcount 853 889 937 962 973 970 974 999
----- ----- ----- ----- ----- ----- ----- -----
(1) Periods from Q2'08 through Q4'08 reflect Adjusted GAAP results and
non-GAAP adjustments. Periods Q1'09 and going forward reflect non-GAAP
results. Adjusted GAAP results reflect our GAAP results reduced for
amounts released from deferred revenue and deferred cost of inventory
balances recorded prior to the second quarter of 2008 and previously
reported in our invoiced shipment results. Non-GAAP adjustments include
restructuring and other related costs and non-cash stock-based
compensation.
Press:
Jeff Ferry
jferry@infinera.com
Infinera Corporation
408-572-5213
Investors/Analysts:
Bob Blair
bblair@infinera.com
Infinera Corporation
408-716-4879
SOURCE: Infinera
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