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Press Release -- May 2nd, 2012
Source: Acme Packet
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Acme Packet Reports Results for First Quarter of 2012

BEDFORD, MA, May 02, 2012 (MARKETWIRE via COMTEX) --Acme Packet, Inc. (NASDAQ: APKT), the leader in session delivery network solutions, today announced results for the first quarter of 2012. All earnings per share results are on a fully diluted basis.

Results for the First Quarter of 2012 Total revenue for the first quarter of 2012 was $70.8 million, compared to $74.0 million in the first quarter of 2011 and $83.0 million in the fourth quarter of 2011. Net income for the first quarter of 2012 was $2.4 million, or $0.03 per share, compared to $13.7 million, or $0.19 per share, in the first quarter of 2011 and $8.7 million, or $0.12 per share, in the fourth quarter of 2011. Net income on a non-GAAP(1) basis for the first quarter of 2012 was $12.2 million, or $0.17 per share, compared to $18.9 million, or $0.27 per share, in the first quarter of 2011, and $18.3 million, or $0.26 per share, in the fourth quarter of 2011.

Company to Host Live Conference Call and Webcast

The Company's management team plans to 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 1.877.777.1972 and using access code "APKT". The conference call may be accessed outside of the United States by dialing +1.612.332.0932 and using access code "APKT". The conference call will be simultaneously webcast on the Company's investor relations website, which can be accessed at 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 243684 or by accessing the webcast replay on the Company's investor relations website.

(1) A 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, video, 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 230 reseller partners worldwide. More than 1,675 customers in 108 countries have deployed over 18,000 Acme Packet systems, including 88 of the top 100 service providers and 41 of the Fortune 100. For more information visit www.acmepacket.com.

Acme Packet, Inc. Safe Harbor Statement Statements contained herein that are not historical fact 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
                                                           March 31,
                                                  --------------------------
                                                      2012          2011
                                                  ------------  ------------
Revenue:
  Product                                         $     53,464  $     59,742
  Maintenance, support and service                      17,366        14,225
                                                  ------------  ------------
    Total revenue                                       70,830        73,967
                                                  ------------  ------------

Cost of revenue:
  Product                                                9,978         9,945
  Maintenance, support and service                       3,958         3,006
                                                  ------------  ------------
    Total cost of revenue                               13,936        12,951
                                                  ------------  ------------

Gross profit                                            56,894        61,016
                                                  ------------  ------------

Operating expenses:
  Sales and marketing                                   31,002        23,703
  Research and development                              15,097        11,294
  General and administrative                             6,438         4,577
  Merger and integration-related costs                      37           180
                                                  ------------  ------------
    Total operating expenses                            52,574        39,754
                                                  ------------  ------------

Income from operations                                   4,320        21,262

Other income, net                                           94           102

Income before provision for income taxes                 4,414        21,364
                                                  ------------  ------------

Provision for income taxes                               1,985         7,655
                                                  ------------  ------------

Net income                                        $      2,429  $     13,709
                                                  ============  ============

Net income per share:
  Basic                                           $       0.04  $       0.21
  Diluted                                         $       0.03  $       0.19

Weighted average number of common shares used in
 the calculation of net income per share:
  Basic                                             67,953,550    65,076,303
  Diluted                                           70,858,871    70,476,973

                             Acme Packet, Inc.
                   Condensed Consolidated Balance Sheets
                               (in thousands)
                                (unaudited)

                                                   March 31,   December 31,
                                                     2012          2011
                                                 ------------  ------------
                     Assets

Current assets:
  Cash and cash equivalents                      $    128,151  $    160,403
  Short-term investments                              247,713       191,672
  Accounts receivable, net                             60,568        59,739
  Inventory                                            11,003        10,246
  Deferred product costs                                  864         1,515
  Deferred tax asset, net                               4,809         4,809
  Income taxes receivable                               4,634         4,341
  Other current assets                                  5,183         4,385
                                                 ------------  ------------
    Total current assets                              462,925       437,110
Long-term investments                                  25,451        20,096
Property and equipment, net                            27,530        26,252
Intangible assets, net                                  8,078         8,569
Goodwill                                                3,778         3,778
Deferred tax asset, net                                18,371        18,371
Other assets                                              239           230
                                                 ------------  ------------
  Total assets                                   $    546,372  $    514,406
                                                 ============  ============

      Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable                               $      7,125  $     10,318
  Accrued expenses and other current liabilities       13,238        12,715
  Deferred revenue                                     34,822        22,261
                                                 ------------  ------------
    Total current liabilities                          55,185        45,294
                                                 ------------  ------------

Deferred revenue, net of current portion                2,304         2,049
                                                 ------------  ------------
Deferred rent                                           4,495         4,533
                                                 ------------  ------------

Stockholders' equity:
  Common stock                                             75            74
  Additional paid-in capital                          383,191       363,769
  Treasury stock, at cost                             (37,522)      (37,522)
  Accumulated other comprehensive income                    7             1
  Retained earnings                                   138,637       136,208
                                                 ------------  ------------
    Total stockholders' equity                        484,388       462,530
                                                 ------------  ------------
  Total liabilities and stockholders' equity     $    546,372  $    514,406
                                                 ============  ============

               Condensed Consolidated Statements of Cash Flow
                               (in thousands)
                                (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                     ----------------------
                                                        2012        2011
                                                     ----------  ----------
Cash provided by operating activities                $   26,695  $   11,541
Cash used in investing activities                       (65,472)     (4,273)
Cash provided by financing activities                     6,525      19,987

                              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 statements of income 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 EPS", and "net income per share on a non-GAAP basis". 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" 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", "net income on a non-GAAP basis", "non-GAAP EPS" and net income per share on a non-GAAP basis" 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.

Reconciliation of GAAP to Non-GAAP Financial Measures for the Three Months Ended March 31, 2012, March 31, 2011 and December 31, 2011:

                              Acme Packet, Inc.
            Reconciliation of GAAP to Non-GAAP Financial Measures
                      Three Months Ended March 31, 2012
                    (in thousands, except per share data)
                                 (unaudited)

                            Stock-based
                           compensation
                            expense and  Amortization   Merger and
                              related     of acquired  integration
                              payroll     intangible     -related     Non-
                    GAAP       taxes        assets        costs      GAAP(1)
                  -------- ------------  ------------  -----------  --------
Cost of revenue:
  Product         $  9,978 $       (428) $       (434) $         -  $  9,116
  Maintenance,
   support and
   service           3,958         (702)            -            -     3,256

Operating
 expenses:
  Sales and
   marketing        31,002       (6,414)          (57)           -    24,531
  Research and
   development      15,097       (4,295)            -            -    10,802
  General and
   administrative    6,438       (2,077)            -            -     4,361
  Merger and
   integration-
   related costs        37            -             -          (37)        -

Provision for
 income taxes        1,985        4,473           188            -     6,646

Net income        $  2,429 $      9,443  $        303  $        37  $ 12,212

Net income per
 share:
  Basic           $   0.04 $       0.14  $       0.00  $      0.00  $   0.18
  Diluted         $   0.03 $       0.13  $       0.00  $      0.00  $   0.17

                              Acme Packet, Inc.
            Reconciliation of GAAP to Non-GAAP Financial Measures
                      Three Months Ended March 31, 2011
                    (in thousands, except per share data)
                                 (unaudited)

                            Stock-based
                           compensation
                            expense and  Amortization   Merger and
                              related     of acquired  integration
                              payroll     intangible     -related     Non-
                    GAAP       taxes        assets        costs      GAAP(1)
                  -------- ------------  ------------  -----------  --------
Cost of revenue:
  Product         $  9,945 $       (262) $       (371) $         -  $  9,312
  Maintenance,
   support and
   service           3,006         (451)            -            -     2,555

Operating
 expenses:
  Sales and
   marketing        23,703       (3,579)          (46)           -    20,078
  Research and
   development      11,294       (2,242)          (12)           -     9,040
  General and
   administrative    4,577         (980)            -            -     3,597
  Merger and
   integration-
   related costs       180            -             -         (180)        -

Provision for
 income taxes        7,655        2,737           156            -    10,548

Net income        $ 13,709 $      4,777  $        273  $       180  $ 18,939

Net income per
 share:
  Basic           $   0.21 $       0.07  $       0.00  $      0.00  $   0.29
  Diluted         $   0.19 $       0.07  $       0.00  $      0.00  $   0.27

                              Acme Packet, Inc.
            Reconciliation of GAAP to Non-GAAP Financial Measures
                    Three Months Ended December 31, 2011
                    (in thousands, except per share data)
                                 (unaudited)

                                      Stock-based
                                     compensation
                                      expense and  Amortization
                                        related     of acquired
                                        payroll     intangible
                             GAAP        taxes        assets     Non-GAAP(1)
                         ----------- ------------  ------------  -----------
Cost of revenue:
  Product                $    12,155 $       (314) $       (385) $    11,456
  Maintenance, support
   and service                 3,118         (577)            -        2,541

Operating expenses:
  Sales and marketing         29,940       (4,857)         (100)      24,983
  Research and
   development                14,221       (3,063)          (11)      11,147
  General and
   administrative              6,073       (1,574)            -        4,499

Provision for income
 taxes                         8,681        1,148           174       10,003

Net income               $     8,717 $      9,237  $        322  $    18,276

Net income per share:
  Basic                  $      0.13 $       0.14  $       0.00  $      0.27
  Diluted                $      0.12 $       0.13  $       0.00  $      0.26

                              Acme Packet, Inc.
                           Other Operational Data
                                 (unaudited)

                                               Three Months Ended
                                     --------------------------------------
                                       March 31,  December 31,   March 31,
                                         2012         2011         2011
                                     ------------ ------------ ------------
Other operational data:
Depreciation and amortization (in
 thousands)                          $      2,958 $      2,944 $      2,358
Capital expenditures (in thousands)  $      3,745 $      4,186 $      4,644
Days sales outstanding                         77           65           53
Total headcount                               764          752          641
Quarterly inventory turnover -
 annualized                                  3.76         4.41         5.79
Investor Relations Contact:
Brian Norris
Acme Packet
+1.781.328.4790
Email Contact

Media and Analyst Contact:
Mike O'Malley
Acme Packet
+1.781.869.2975
Email Contact

SOURCE: Acme Packet

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