Acme Packet Reports Results for Third Quarter of 2011

– Company Reaffirms 2011 Revenue and Earnings Estimates –
BEDFORD, Mass., Oct 20, 2011 (BUSINESS WIRE) — Acme Packet, Inc. (NASDAQ: APKT), the leader in session delivery network solutions, today announced results for the third quarter ended September 30, 2011 and reaffirmed its business outlook for 2011.

Results for the Third Quarter of 2011

Total revenue in the third quarter of 2011 was $70.6 million, compared to $56.6 million in the third quarter of 2010 and $79.7 million in the second quarter of 2011. Net income in the third quarter of 2011 was $7.9 million, or $0.11 per share, compared to $10.5 million, or $0.15 per share, in the third quarter of 2010 and $14.0 million, or $0.20 per share, in the second quarter of 2011. Net income on a non-GAAP¹ basis in the third quarter of 2011 was $14.6 million, or $0.21 per share, compared to $13.7 million, or $0.20 per share, in the third quarter of 2010, and $20.4 million, or $0.29 per share, in the second quarter of 2011. All earnings per share results are on a fully diluted basis.

“The fundamentals of our business remain strong, and we remain well positioned to take advantage of the profound shift to Internet-based voice, video and unified communications,” said Andy Ory, President and CEO of Acme Packet, Inc. “We are excited about the new products and partnerships that we have launched to drive the next stage of our growth. We remain confident in our ability to execute on our full year business outlook.”

Company Reaffirms Business Outlook for 2011

The Company today reaffirmed its business outlook for 2011. The Company’s outlook is based on the current indications for its business, which may change at any time. A reconciliation of the Company’s expected GAAP to non-GAAP¹ business outlook, and a statement as to the use of non-GAAP¹ financial measures, is included at the end of this press release. All earnings per share results are on a fully diluted basis.

Business Outlook for Year Ending December 31, 2011
Estimate					Issued October 20, 2011
Total revenue (in millions)					$315-$320
Total revenue growth rate					Approximately 36%-38%
Non-GAAP1 EPS					$1.14-$1.18
Non-GAAP1 EPS growth rate					Approximately 43%-48%
GAAP EPS					$0.78-$0.82
GAAP EPS growth rate					Approximately 24%-30%
Diluted share count (in millions)					71.5

Company to Host Live Conference Call and Webcast

The Company’s management team will host a live conference call and webcast at 4:30 p.m. eastern time today to discuss the financial results as well as management’s outlook for the business. The conference call may be accessed in the United States by dialing 1.800.230.1093 and using access code “APKT”. The conference call may be accessed outside of the United States by dialing +1.612.288.0329 and using access code “APKT”. The conference call will be simultaneously webcast on the Company’s investor relations website, which can be accessed at http://www.ir.acmepacket.com. A replay of the conference call will be available approximately two hours after the call by dialing 1.800.475.6701 or +1.320.365.3844 and using access code 219385 or by accessing the webcast replay on the Company’s investor relations website.

__________________

¹A reconciliation of GAAP to non-GAAP results, and a statement on the use of non-GAAP financial measures, is included at the end of this press release.

About Acme Packet

Acme Packet (NASDAQ: APKT), the leader in session delivery network solutions, enables the trusted, first-class delivery of next-generation voice, data and unified communications services and applications across IP networks. Our Net-Net product family fulfills demanding security, service assurance and regulatory requirements in service provider, enterprise and contact center networks. Based in Bedford, Massachusetts, Acme Packet designs and manufactures its products in the USA, selling them through over 200 reseller partners worldwide. More than 1,525 customers in 107 countries have deployed over 14,000 Acme Packet systems, including 90 of the top 100 service providers and 36 of the Fortune 100. For more information visit http://www.acmepacket.com.

Acme Packet, Inc. Safe Harbor Statement

Statements contained herein that are not historical fact (including those in the section “Company Reaffirms Business Outlook for 2011”) may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may relate to, among other things, expected financial and operating results, expected growth rates, future stock-based compensation and amortization expenses, future business prospects and market conditions. Such forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated. These include, but are not limited to: the amount of stock-based compensation awarded; the applicable Company stock price used to determine stock-based compensation; the exercise pattern of employee stock options; difficulties expanding the Company’s customer base; difficulties leveraging market opportunities; difficulties providing solutions that meet the needs of customers; poor product sales; long sales cycles; difficulties developing new products; difficulties in relationships with vendors and partners; higher risks in international operations; difficulties managing rapid growth; difficulties managing the Company’s financial performance; the ability to hire and retain employees and appropriately staff operations; the Company’s cash needs; the impact of new accounting pronouncements and increased competition. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in the Company’s recent filings with the Securities and Exchange Commission, including those factors discussed under the caption “Risk Factors” in such filings.

Acme Packet, Inc. Condensed Consolidated Statements of Income (in thousands, except share and per share data) (unaudited)
					Three Months Ended				Nine Months Ended
					September 30,				September 30,
					2011		2010		2011		2010
Revenue:
Product					$53,077		$ 45,328		$ 177,507		$ 129,452
Maintenance, support and service					17,544		11,286		46,814		31,548
Total revenue					70,621		56,614		224,321		161,000
Cost of revenue:
Product					8,778		7,903		30,090		22,886
Maintenance, support and service					3,042		2,556		8,573		6,964
Total cost of revenue					11,820		10,459		38,663		29,850
Gross profit					58,801		46,155		185,658		131,150
Operating expenses:
Sales and marketing					27,201		17,012		75,640		50,062
Research and development					13,249		8,896		37,262		26,235
General and administrative					5,406		3,906		15,771		10,785
Merger and integration-related costs					120		–		300		–
Total operating expenses					45,976		29,814		128,973		87,082
Income from operations					12,825		16,341		56,685		44,068
Other (expense) income, net					(53)		189		(147)		354
Income before provision for income taxes					12,772		16,530		56,538		44,422
Provision for income taxes					4,846		6,065		20,895		15,895
Net income					$7,926		$ 10,465		$35,643		$ 28,527
Net income per share:
Basic					$0.12		$ 0.17		$0.54		$ 0.46
Diluted					$0.11		$ 0.15		$0.50		$ 0.43
Weighted average number of common shares used in the calculation of net income per share:
Basic					66,752,669		62,772,466		66,011,761		61,371,085
Diluted					70,908,590		68,426,272		70,887,241		67,114,486
Margin:
Gross margin					83.3%		81.5%		82.8%		81.5%
Operating margin					18.2%		28.9%		25.3%		27.4%
Net margin					11.2%		18.5%		15.9%		17.7%

Acme Packet, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited)
					September 30,2011		December 31,2010
Assets
Current assets:
Cash and cash equivalents					$156,962		$91,669
Short-term investments					181,660		179,024
Accounts receivable, net					51,246		34,797
Inventory					11,779		6,662
Deferred product costs					1,074		3,572
Deferred tax asset					3,814		3,814
Income taxes receivable					13,404		9,979
Other current assets					6,953		3,231
Total current assets					426,892		332,748
Long-term investments					–		5,030
Property and equipment, net					24,514		17,156
Acquired intangible assets, net					9,095		9,468
Goodwill					3,269		–
Deferred tax asset, net					14,802		14,802
Other assets					425		940
Total assets					$478,997		$380,144
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable					$7,056		$7,161
Accrued expenses and other current liabilities					13,494		14,629
Deferred revenue					28,838		31,998
Total current liabilities					49,388		53,788
Deferred revenue					3,471		1,546
Deferred rent					1,820		4,265
Stockholders’ equity:
Common stock					74		71
Additional paid-in capital					334,254		266,114
Treasury stock, at cost					(37,522)		(37,522)
Other comprehensive income					21		34
Accumulated retained earnings					127,491		91,848
Total stockholders’ equity					424,318		320,545
Total liabilities and stockholders’ equity					$478,997		$380,144

Condensed Consolidated Statements of Cash Flow (in thousands) (unaudited)
					Three Months Ended				Nine Months Ended
					September 30,				September 30
					2011		2010		2011		2010
Cash provided by operating activities					$16,441		$9,715		$36,646		$32,749
Cash provided by (used in) investing activities					10,516		(4,590)		(14,486)		(53,772)
Cash provided by financing activities					9,434		14,894		43,133		41,194

Acme Packet, Inc.
Statement on Use of Non-GAAP Financial Measures and
Reconciliation of Non-GAAP Net Income and Non-GAAP Net Income Per Share
(in thousands, except share and per share data)
(unaudited)

Statement on Use of Non-GAAP Financial Measures:

To supplement its condensed consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company discloses certain non-GAAP financial measures, including “non-GAAP net income”, “net income on a non-GAAP basis”, “non-GAAP net income per share”, “non-GAAP EPS”, “net income per share on a non-GAAP basis” and “non-GAAP EPS growth rate”. These non-GAAP financial measures are not presented in accordance with GAAP and are not meant to be a substitute for the most directly comparable GAAP measures of “net income”, “EPS”, “GAAP EPS growth rate” or “net income per share”. Rather, these non-GAAP financial measures should be evaluated in conjunction with its most directly comparable GAAP financial measure and the Company’s financial statements as a whole.

Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in the Company’s business, to assess its performance relative to its competitors, and to establish operational goals and forecasts that are used in allocating resources. Management uses these non-GAAP financial measures because they exclude stock-based compensation expense which is a non-cash charge and related payroll taxes, amortization of acquired intangible assets and merger and integration-related costs associated with the Company’s acquisition activities all of which are non-operational costs and expenses. By excluding stock-based compensation expense and related payroll taxes, amortization of acquired intangible assets, and merger and integration-related costs, management can compare the Company’s operations to prior periods and to the operations of other companies in its industry who may have materially different unusual, non-operational charges. Management does not consider any of stock-based compensation expense and related payroll taxes, amortization of acquired intangible assets, and merger and integration-related costs to be part of the Company’s operating activities or meaningful in evaluating the Company’s past financial performance or future prospects. Management believes that excluding these items is useful to investors because it is more representative of ongoing costs and therefore more comparable to historical operations.

Because management uses them, management believes that the disclosure of these non-GAAP financial measures to investors provides greater transparency and useful information to help the investor better understand the Company’s operating performance and to evaluate the methodology used by management to evaluate and measure such performance. Notwithstanding their utility to investors in understanding operational trends, these non-GAAP measures should not be considered measures of the Company’s liquidity. In addition, the Company cautions that its definition of “non-GAAP net income”, “non-GAAP EPS” and “non-GAAP net income per share” may differ from similar measures used by other companies and may differ from period to period. Also, in future periods, management may make other adjustments for expenses and gains that it does not consider reflective of core operating performance in a particular period thereby modifying its definition of “non-GAAP net income”, “non-GAAP EPS” and “non-GAAP net income per share” by excluding these other or additional expenses and gains.

Acme Packet, Inc. Non-GAAP Condensed Consolidated Statements of Income (in thousands, except share and per share data) (unaudited)
					Three Months Ended				Nine Months Ended
					September 30,				September 30,
					2011		2010		2011		2010
Revenue:
Product					$53,077		$45,328		$177,507		$129,452
Maintenance, support and service					17,544		11,286		46,814		31,548
Total revenue					70,621		56,614		224,321		161,000
Cost of revenue:
Product					8,066		7,311		27,882		21,172
Maintenance, support and service					2,474		2,268		7,055		6,201
Total cost of revenue					10,540		9,579		34,937		27,373
Gross profit					60,081		47,035		189,384		133,627
Operating expenses:
Sales and marketing					22,316		14,898		62,549		44,448
Research and development					10,309		7,536		29,405		22,459
General and administrative					3,791		3,040		11,873		8,970
Total operating expenses					36,416		25,474		103,827		75,877
Income from operations					23,665		21,561		85,557		57,750
Other (expense) income, net					(53)		189		(147)		354
Income before provision for income taxes					23,612		21,750		85,410		58,104
Provision for income taxes					8,964		8,061		31,393		21,232
Net income					$14,648		$ 13,689		$54,017		$36,872
Net income per share:
Basic					$0.22		$0.22		$0.82		$0.60
Diluted					$0.21		$0.20		$0.76		$0.55
Weighted average number of common shares used in the calculation of net income per share:
Basic					66,752,669		62,772,466		66,011,761		61,371,085
Diluted					70,908,590		68,426,272		70,887,241		67,114,486
Margin:
Gross margin					85.1%		83.1%		84.4%		83.0%
Operating margin					33.5%		38.1%		38.1%		35.9%
Net margin					20.7%		24.2%		24.1%		22.9%

Reconciliation of Non-GAAP Net Income and Non-GAAP Net Income Per Share for the Three and Nine Months Ended September 30, 2011 and September 30, 2010 and the Three Months Ended June 30, 2011:

Acme Packet, Inc. GAAP to Non-GAAP Reconciliation Three Months Ended September 30, 2011 (in thousands, except share and per share data) (unaudited)
					GAAP		Stock-based compensation expense and related payroll taxes		Amortization of acquired intangible assets		Merger and integration- related costs		Non-GAAP1
Revenue:
Product					$53,077		$ –		$ –		$ –		$53,077
Maintenance, support and service					17,544		–		–		–		17,544
Total revenue					70,621		–		–		–		70,621
Cost of revenue:
Product					8,778		(327)		(385)		–		8,066
Maintenance, support and service					3,042		(568)		–		–		2,474
Total cost of revenue					11,820		(895)		(385)		–		10,540
Gross profit					58,801		895		385		–		60,081
Operating expenses:
Sales and marketing					27,201		(4,784)		(101)		–		22,316
Research and development					13,249		(2,929)		(11)		–		10,309
General and administrative					5,406		(1,615)		–		–		3,791
Merger and integration-related costs					120		–		–		(120)		–
Total operating expenses					45,976		(9,328)		(112)		(120)		36,416
Income from operations					12,825		10,223		497		120		23,665
Other income, net					(53)		–		–		–		(53)
Income before provision for income taxes					12,772		10,223		497		120		23,612
Provision for income taxes					4,846		3,896		179		43		8,964
Net income					$7,926		$6,327		$318		$77		$14,648
Net income per share:
Basic					$0.12		$0.09		$0.01		$0.00		$0.22
Diluted					$0.11		$0.09		$0.01		$0.00		$0.21
Weighted average number of common shares used in the calculation of net income per share:
Basic					66,752,669		66,752,669		66,752,669		66,752,669		66,752,669
Diluted					70,908,590		70,908,590		70,908,590		70,908,590		70,908,591
Margin:
Gross margin					83.3%								85.1%
Operating margin					18.2%								33.5%
Net margin					11.2%								20.7%

Acme Packet, Inc. GAAP to Non-GAAP Reconciliation Nine Months Ended September 30, 2011 (in thousands, except share and per share data) (unaudited)
					GAAP		Stock-based compensation expense and related payroll taxes		Amortization of acquired intangible assets		Merger and integration- related costs		Non-GAAP1
Revenue:
Product					$177,507		$ –		$ –		$ –		$177,507
Maintenance, support and service					46,814		–		–		–		46,814
Total revenue					224,321		–		–		–		224,321
Cost of revenue:
Product					30,090		(916)		(1,292)		–		27,882
Maintenance, support and service					8,573		(1,518)		–		–		7,055
Total cost of revenue					38,663		(2,434)		(1,292)		–		34,937
Gross profit					185,658		2,434		1,292		–		189,384
Operating expenses:
Sales and marketing					75,640		(12,804)		(287)		–		62,549
Research and development					37,262		(7,823)		(34)		–		29,405
General and administrative					15,771		(3,898)		–		–		11,873
Merger and integration-related costs					300		–		–		(300)		–
Total operating expenses					128,973		(24,525)		(321)		(300)		103,827
Income from operations					56,685		26,959		1,613		300		85,557
Other (expense), net					(147)		–		–		–		(147)
Income before provision for income taxes					56,538		26,959		1,613		300		85,410
Provision for income taxes					20,895		9,874		581		43		31,393
Net income					$35,643		$17,085		$1,032		$257		$54,017
Net income per share:
Basic					$0.54		$0.26		$0.02		$0.00		$0.82
Diluted					$0.50		$0.24		$0.02		$0.00		$0.76
Weighted average number of common shares used in the calculation of net income per share:
Basic					66,011,761		66,011,761		66,011,761		66,011,761		66,011,761
Diluted					70,887,241		70,887,241		70,887,241		70,887,241		70,887,241
Margin:
Gross margin					82.8%								84.4%
Operating margin					25.3%								38.1%
Net margin					15.9%								24.1%

Acme Packet, Inc. GAAP to Non-GAAP Reconciliation Three Months Ended September 30, 2010 (in thousands, except share and per share data) (unaudited)
					GAAP		Stock-based compensation expense and related payroll taxes		Amortization of acquired intangible assets		Non-GAAP1
Revenue:
Product					$ 45,328		$ –		$ –		$45,328
Maintenance, support and service					11,286		–		–		11,286
Total revenue					56,614		–		–		56,614
Cost of revenue:
Product					7,903		(213)		(379)		7,311
Maintenance, support and service					2,556		(288)		–		2,268
Total cost of revenue					10,459		(501)		(379)		9,579
Gross profit					46,155		501		379		47,035
Operating expenses:
Sales and marketing					17,012		(2,069)		(45)		14,898
Research and development					8,896		(1,349)		(11)		7,536
General and administrative					3,906		(866)		–		3,040
Total operating expenses					29,814		(4,284)		(56)		25,474
Income from operations					16,341		4,785		435		21,561
Other income, net					189		–		–		189
Income before provision for income taxes					16,530		4,785		435		21,750
Provision for income taxes					6,065		1,835		161		8,061
Net income					$ 10,465		$2,950		$274		$ 13,689
Net income per share:
Basic					$ 0.17		$0.04		$0.01		$0.22
Diluted					$ 0.15		$0.04		$0.01		$0.20
Weighted average number of common shares used in the calculation of net income per share:
Basic					62,772,466		62,772,466		62,772,466		62,772,466
Diluted					68,426,272		68,426,272		68,426,272		68,426,272
Margin:
Gross margin					81.5%						83.1%
Operating margin					28.9%						38.1%
Net margin					18.5%						24.2%

Acme Packet, Inc. GAAP to Non-GAAP Reconciliation Nine Months Ended September 30, 2010 (in thousands, except share and per share data) (unaudited)
					GAAP		Stock-based compensation expense and related payroll taxes		Amortization of acquired intangible assets		Non-GAAP1
Revenue:
Product					$ 129,452		$ –		$ –		$129,452
Maintenance, support and service					31,548		–		–		31,548
Total revenue					161,000		–		–		161,000
Cost of revenue:
Product					22,886		(577)		(1,137)		21,172
Maintenance, support and service					6,964		(763)		–		6,201
Total cost of revenue					29,850		(1,340)		(1,137)		27,373
Gross profit					131,150		1,340		1,137		133,627
Operating expenses:
Sales and marketing					50,062		(5,479)		(135)		44,448
Research and development					26,235		(3,743)		(33)		22,459
General and administrative					10,785		(1,815)		–		8,970
Total operating expenses					87,082		(11,037)		(168)		75,877
Income from operations					44,068		12,377		1,305		57,750
Other income, net					354		–		–		354
Income before provision for income taxes					44,422		12,377		1,305		58,104
Provision for income taxes					15,895		4,870		467		21,232
Net income					$28,527		$7,507		$838		$36,872
Net income per share:
Basic					$0.46		$0.12		$0.01		$0.60
Diluted					$0.43		$0.11		$0.01		$0.55
Weighted average number of common shares used in the calculation of net income per share:
Basic					61,371,085		61,371,085		61,371,085		61,371,085
Diluted					67,114,486		67,114,486		67,114,486		67,114,486
Margin:
Gross margin					81.5%						83.0%
Operating margin					27.4%						35.9%
Net margin					17.7%						22.9%

Acme Packet, Inc. GAAP to Non-GAAP Reconciliation Three Months Ended June 30, 2011 (in thousands, except share and per share data) (unaudited)
					GAAP		Stock-based compensation expense and related payroll taxes		Amortization of acquired intangible assets		Non-GAAP1
Revenue:
Product					$64,688		$ –		$ –		$64,688
Maintenance, support and service					15,045		–		–		15,045
Total revenue					79,733		–		–		79,733
Cost of revenue:
Product					11,367		(327)		(536)		10,504
Maintenance, support and service					2,525		(499)		–		2,026
Total cost of revenue					13,892		(826)		(536)		12,530
Gross profit					65,841		826		536		67,203
Operating expenses:
Sales and marketing					24,736		(4,441)		(140)		20,155
Research and development					12,719		(2,652)		(11)		10,056
General and administrative					5,788		(1,303)		–		4,485
Total operating expenses					43,243		(8,396)		(151)		34,696
Income from operations					22,598		9,222		687		32,507
Other (expense), net					(196)		–		–		(196)
Income before provision for income taxes					22,402		9,222		687		32,311
Provision for income taxes					8,394		3,241		246		11,881
Net income					$14,008		$5,981		$441		$20,430
Net income per share:
Basic					$0.21		$0.09		$0.01		$0.31
Diluted					$0.20		$0.08		$0.01		$0.29
Weighted average number of common shares used in the calculation of net income per share:
Basic					66,141,163		66,141,163		66,141,163		66,141,163
Diluted					71,033,614		71,033,614		71,033,614		71,033,614
Margin:
Gross margin					82.6%						84.3%
Operating margin					28.3%						40.8%
Net margin					17.6%						25.6%

Reconciliation of Expected Non-GAAP Net Income and Non-GAAP Net Income Per Share for the Year Ending December 31, 2011 (unaudited):

		Twelve Months Ending December 31, 2011 (unaudited) (in thousands, except per share data)
		Low		High
Revenue		$315,000		$320,000
Reconciliation of non-GAAP net income:
Net income		$55,800		$58,700
Adjustments:
Stock-based compensation expense and related payroll taxes, net of taxes		24,100		24,100
Amortization of acquired intangible assets, net of taxes		1,200		1,200
Merger and integration-related costs		200		200
Non-GAAP net income		$81,300		$84,200
Reconciliation of diluted non-GAAP net income per share:
Net income per share		$0.78		$0.82
Adjustments:
Stock-based compensation expense and related payroll taxes, net of taxes		0.34		0.34
Amortization of acquired intangible assets, net of taxes		0.02		0.02
Merger and integration-related costs		–		–
Non-GAAP net income per share		$1.14		$1.18

Acme Packet, Inc. Other Operational Data (unaudited)
				Three Months Ended							Nine Months Ended
				September 30, 2011		June 30, 2011		September 30, 2010			September 30, 2011		September 30, 2010
Other operational data:
Depreciation and amortization (in thousands)				$2,835		$1,894		$2,065			$7,087		$5,826
Capital expenditures (in thousands)				5,570		2,598		4,479			12,812		10,546
Days sales outstanding				65		60		48			–		–
Total headcount				741		710		529			–		–
Quarterly inventory turnover – annualized				3.27		5.42		5.21			–		–

SOURCE: Acme Packet, Inc.

Investor Relations:
Acme Packet
Brian Norris, +1-781-328-4790
bnorris@acmepacket.com
or
Media and Analysts:
Acme Packet
Mike O’Malley, +1-781-869-2975
momalley@acmepacket.com

PR Archives: Latest, By Company, By Date