OPNET Technologies, Inc. (NASDAQ:OPNT), a leading provider of
solutions for managing networks and applications, today announced
that quarterly revenue for the third fiscal quarter, ended December
31, 2007, was $26 million, compared to $24.5 million for the same
quarter in the prior fiscal year. Earnings per share on a diluted
basis for the third quarter of fiscal 2008 were negative $0.06,
compared to positive $0.14 for the same quarter in the prior fiscal
year. Marc A. Cohen, OPNET�s Chairman and CEO, stated, �We are very
pleased with our fiscal Q3 sales results. We achieved record
quarterly revenue of $26 million while increasing our deferred
revenue sequentially by $4.5 million. Both our total revenue and
deferred revenue growth were driven by record bookings from our
corporate enterprise sales teams, which increased by more than 25%
from fiscal Q3 2007, and increased by more than 50% sequentially.
Our North American enterprise business was particularly strong,
with records in four of six regions. We are also very pleased with
the rapid integration into our business of our new appliance-based
ACE Live solutions, which was accelerated by our acquisition of
certain assets of Network Physics in October of 2007. We believe
that our ACE Live appliance solutions, which contributed revenue in
Q3, have us well-positioned to capitalize on the significant growth
projected for the appliance-based end user monitoring market.
Furthermore, we believe that our comprehensive application
performance management portfolio, which now includes real-time
monitoring and troubleshooting for both networks and systems,
active monitoring, and predictive planning, significantly increases
our addressable market.� Mr. Cohen continued, �While we anticipated
the near term pressure our recent acquisition is putting on
operating income, we believe the resulting acceleration in the
expansion of our application performance management portfolio
greatly enhances the Company�s growth opportunities. We are now in
a stronger position to increase license revenue while managing
expenses to grow operating income.� The Company�s third quarter
fiscal 2008 financial results are presented below. The non-GAAP
results exclude the income statement effects of stock-based
compensation and acquisition-related amortization of intangible
assets. A reconciliation of GAAP results to non-GAAP results has
been provided in the financial statement table following the text
of the press release. For further information, please refer to the
section of the press release titled, �Use of Non-GAAP Measures.�
GAAP Financial Highlights for the Third Quarter of Fiscal 2008:
Grew revenue year-over-year 6.1% to $26 million from $24.5 million
for the same quarter of fiscal 2007. Revenue for the quarter
increased sequentially 4.1% from $25.0 million for the second
quarter of fiscal 2008. License revenue decreased year-over-year by
6.8% to $10.2 million from $11.0 million for the same quarter of
fiscal 2007. License revenue for the quarter increased sequentially
6.1% from $9.6 million for the second quarter of fiscal 2008. Ended
the quarter with deferred revenue of $26.5 million, a 32.5%
increase year-over-year from $20 million for the same quarter of
fiscal 2007 and a 20.5% increase sequentially from $22 million in
the second quarter of fiscal 2008. Gross profit decreased
year-over-year to $19.1 million from $19.4 million for the same
quarter of fiscal 2007. Gross profit increased sequentially from
$19.0 million in the second quarter of fiscal 2008. Operating
income decreased year-over-year to a loss of $2.3 million from
income of $2.7 million for the same quarter of fiscal 2007.
Operating income decreased sequentially from $211 thousand in the
second quarter of fiscal 2008. Non-GAAP Financial Highlights for
the Third Quarter of Fiscal 2008: Non-GAAP gross profit increased
year-over-year to $19.7 million from $19.6 million for the same
quarter of fiscal 2007. Non-GAAP gross profit increased
sequentially from $19.2 million in the second quarter of fiscal
2008. Non-GAAP operating income decreased year-over-year to a loss
of $1.3 million from income of $3.2 million for the same quarter of
fiscal 2007. Non-GAAP operating income decreased sequentially from
$808 thousand in the second quarter of fiscal 2008. Non-GAAP net
(loss) income decreased year-over-year to $(360) thousand from $3.4
million for the same quarter of fiscal 2007. Non-GAAP net (loss)
income decreased sequentially from $1.9 million in the second
quarter of fiscal 2008. Fourth Quarter Fiscal Year 2008 Financial
Outlook OPNET currently expects fiscal 2008 fourth quarter GAAP
revenue to be between $26.5 million and $28.5 million, and GAAP
earnings per share to be between negative $0.05 and positive $0.03.
These estimates represent management�s current expectations about
the Company�s future financial performance, based on information
available at this time. OPNET will hold an investor conference call
on Monday, February 4, 2008 at 5:00pm EST to review financial
results for the third quarter of fiscal 2008. To listen to the
OPNET investor conference call: Call 877-407-9205 in the U.S. or
201-689-8054 for international callers, or Use the webcast at
www.opnet.com, or at www.investorcalendar.com (click on OPNT under
"VCalls by Date"). Investors are advised to go to the web site at
least 15 minutes early to register, download, and install any
necessary audio software. To listen to the archived call: Call the
replay phone number at 877-660-6853 or 201-612-7415 for
international callers. For replay, enter account # 286, conference
ID # 258223. The replay will be available from 7:00 pm Eastern Time
February 4th through 11:59 pm Eastern Time February 11th. The
webcast will be available at www.opnet.com or at
www.investorcalendar.com, archived for seven days. Use of Non-GAAP
Measures The Company uses non-GAAP operating income, non-GAAP
operating profit margin, non-GAAP net income and non-GAAP diluted
earnings per share as supplemental measures to GAAP to evaluate the
Company's operational performance. These financial measures exclude
the impact of certain items and, therefore, have not been
calculated in accordance with GAAP. A detailed explanation of each
of the adjustments to such financial measures is described below.
This press release also contains a reconciliation of each of these
non-GAAP financial measures to its most comparable GAAP financial
measure. Management uses non-GAAP financial measures (a) to
evaluate the Company's historical and prospective financial
performance as well as its performance relative to its competitors,
and (b) to measure operational profitability and the accuracy of
forecasting. In addition, many financial analysts that follow our
Company focus on and publish both historical results and future
projections based on non-GAAP financial measures. We believe that
it is in the best interest of our investors to provide this
information to analysts so that they accurately report the non-GAAP
financial information. Moreover, investors have historically
requested these non-GAAP financial measures as a means of providing
consistent and comparable information with past reports of
financial results. While management believes that these non-GAAP
financial measures provide useful supplemental information to
investors, there are limitations associated with the use of these
non-GAAP financial measures. These non-GAAP financial measures are
not prepared in accordance with GAAP, are not reported by all of
the Company's competitors and may not be directly comparable to
similarly titled measures of the Company's competitors due to
potential differences in the exact method of calculation. The
Company compensates for these limitations by using these non-GAAP
financial measures as supplements to GAAP financial measures and by
providing the reconciliations of the non-GAAP financial measures to
their most comparable GAAP financial measures. The adjustments to
these non-GAAP financial measures, and the basis for such
adjustments, are outlined below: Amortization of intangibles and
its related tax impact. The Company incurs amortization of
intangibles, which is included in its GAAP presentation of
amortization of acquired technology and customer relationships, and
research and development, related to various acquisitions it has
made in recent years. Management excludes these expenses and their
related tax impact for the purpose of calculating non-GAAP
operating income, non-GAAP operating profit margin, non-GAAP net
income and non-GAAP diluted earnings per share when it evaluates
the continuing operational performance of the Company because these
costs are fixed at the time of an acquisition, and are then
amortized over a period of three to five years after the
acquisition and generally cannot be changed or influenced by
management after the acquisition. Accordingly, management does not
consider these expenses for purposes of evaluating the performance
of the Company during the applicable time period after a given
acquisition, and it excludes such expenses when evaluating the
Company�s financial performance. Stock-based compensation expense
and its related tax impact. The Company incurs expense related to
stock-based compensation, which is included in its GAAP
presentation of cost of software license updates, technical support
and services, cost of professional services, research and
development expense, sales and marketing expense and general and
administrative expense. Although stock-based compensation is an
expense of the Company and viewed as a form of compensation,
management excludes these expenses for the purpose of calculating
non-GAAP operating income, non-GAAP operating profit margin,
non-GAAP net income and non-GAAP diluted earnings per share when it
evaluates the continuing operational performance of the Company.
Specifically, the Company excludes stock-based compensation during
its quarterly and annual assessments of the Company's and
management's performance. In evaluating the performance of senior
management, stock-based compensation is excluded from expenditure
and profitability results. About OPNET Technologies, Inc. Founded
in 1986, OPNET Technologies, Inc. (NASDAQ:OPNT) is a leading
provider of solutions for managing networks and applications. For
more information about OPNET and its products, visit www.opnet.com.
OPNET and OPNET Technologies, Inc. are trademarks of OPNET
Technologies, Inc. All other trademarks are the property of their
respective owners. Statements in this press release that are not
purely historical facts may constitute forward-looking statements
as defined in the Private Securities Litigation Reform Act of 1995.
OPNET Technologies, Inc. (�OPNET�) assumes no obligation to update
statements. Forward-looking statements, including comments
concerning expected revenue for the fourth quarter of fiscal 2008,
are predictions based upon information available to OPNET as of the
date of this press release and involve risks and uncertainties;
therefore, actual events or results may differ materially. For a
discussion of risk factors, see OPNET�s reports, including its most
recent 10-Q and 10-K, filed with the Securities & Exchange
Commission. OPNET and OPNET Technologies, Inc. are trademarks of
OPNET Technologies, Inc. All other trademarks are the property of
their respective owners. Note to editors: The word OPNET is spelled
with all upper-case letters. OPNET TECHNOLOGIES, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per
share data) (unaudited) � � Three Months Ended�December 31, � Nine
Months Ended December 31, � 2007 � � 2006 � 2007 � � 2006 Revenue:
New software licenses $ 10,224 $ 10,974 $ 28,550 $ 32,483 Software
license updates, technical support, and services 8,889 7,185 25,573
20,622 Professional services � 6,904 � 6,363 � 20,217 � 17,666
Total revenue � 26,017 � 24,522 � 74,340 � 70,771 � Cost of
revenue: New software licenses 370 197 733 518 Software license
updates, technical support, and services 1,066 752 3,305 2,220
Professional services 4,886 4,033 13,778 11,556 Amortization of
acquired technology and customer relationships � 604 � 182 � 933 �
559 Total cost of revenue � 6,926 � 5,164 � 18,749 � 14,853 � Gross
profit � 19,091 � 19,358 � 55,591 � 55,918 � Operating expenses:
Research and development 7,190 5,512 19,993 16,101 Sales and
marketing 10,744 8,259 28,859 25,226 General and administrative �
3,503 � 2,854 � 8,933 � 8,242 Total operating expenses � 21,437 �
16,625 � 57,785 � 49,569 � (Loss) income from operations (2,346)
2,733 (2,194) 6,349 Interest and other income, net � 902 � 993 �
2,953 � 2,884 (Loss) income before provision for income taxes
(1,444) 3,726 759 9,233 (Benefit) provision for income taxes �
(132) � 702 � 123 � 2,847 Net (loss) income $ (1,312) $ 3,024 $ 636
$ 6,386 � Basic net (loss) income per common share $ (0.06) $ 0.15
$ 0.03 $ 0.32 Diluted net (loss) income per common share $ (0.06) $
0.14 $ 0.03 $ 0.30 Basic weighted average common shares outstanding
� 20,273 � 20,365 � 20,389 � 20,270 Diluted weighted average common
shares outstanding � 20,273 � 21,387 � 20,711 � 21,125 OPNET
TECHNOLOGIES, INC. RECONCILATION OF GAAP TO NON-GAAP INCOME (in
thousands, except per share data) (unaudited) � � � Three Months
Ended December 31, Three Months Ended September 30, 2007 2006 2007
GAAP gross profit $ 19,091 $ 19,358 $ 19,026 Stock-based
compensation expense 36 26 54 Amortization of intangibles � 604 � �
182 � 165 � Total adjustments to GAAP gross profit � 640 � � 208 �
219 � Non-GAAP gross profit $ 19,731 � $ 19,566 $ 19,245 � � GAAP
(loss) income from operations $ (2,346 ) $ 2,733 $ 211 Stock-based
compensation expense 362 284 432 Amortization of intangibles � 686
� � 182 � 165 � Total adjustments to GAAP (loss) income from
operations � 1,048 � � 466 � 597 � Non-GAAP (loss) income from
operations $ (1,298 ) $ 3,199 $ 808 � � GAAP net (loss) income $
(1,312 ) $ 3,024 $ 1,301 Stock-based compensation expense 362 284
432 Amortization of intangibles � 686 � � 182 � 165 � Total
adjustments to GAAP income before provision for income taxes �
1,048 � � 466 � 597 � Provision (benefit) provision for income tax
� 96 � � 86 � (27 ) Non-GAAP net (loss) income $ (360 ) $ 3,404 $
1,925 � � Diluted net (loss) income per common share: GAAP $ (0.06
) $ 0.14 $ 0.06 � Non-GAAP $ (0.02 ) $ 0.16 $ 0.09 � � Diluted
weighted average common shares outstanding GAAP (1) � 20,273 � �
21,387 � 20,926 � (1) No adjustment has been made to the GAAP
diluted weighted average common shares outstanding. OPNET
TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands, except per share data) (unaudited) � � � � � December
31, 2007 March 31, 2007 ASSETS Current assets: Cash and cash
equivalents $ 29,461 $ 34,766 Marketable securities 52,295 56,615
Accounts receivable 20,344 21,604 Unbilled accounts receivable
5,213 3,696 Inventory 268 -- Deferred income taxes, prepaid
expenses and other current assets � 4,124 � � 4,366 � Total current
assets � 111,705 � � 121,047 � � Property and equipment, net 10,590
8,745 Intangible assets, net 9,275 899 Goodwill 14,639 14,639
Deferred income taxes and other assets � 3,334 � � 2,328 � Total
assets $ 149,543 � $ 147,658 � � LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 471 $ 276 Accrued
liabilities 8,880 8,321 Other income taxes 243 458 Deferred rent
234 210 Deferred revenue � 25,272 � � 22,414 � Total current
liabilities � 35,100 � � 31,679 � � Accrued liabilities 59 259
Deferred rent 1,853 1,956 Deferred revenue 1,275 893 Other income
taxes � 550 � � -- � Total liabilities � 38,837 � � 34,787 � �
Stockholders' equity: Common stock 27 27 Additional paid-in capital
88,951 86,881 Retained earnings 34,942 34,815 Accumulated other
comprehensive income 459 394 Treasury stock, at cost � (13,673 ) �
(9,246 ) Total stockholders� equity � 110,706 � � 112,871 � Total
liabilities and stockholders� equity $ 149,543 � $ 147,658 �
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