OPNET Technologies, Inc. (Nasdaq:OPNT), a leading provider of
solutions for managing applications and networks, today announced
that revenue for the first fiscal quarter, ended June 30, 2010, was
$31.1 million, compared to $27.7 million for the same quarter in
the prior fiscal year. Diluted earnings per share for the first
quarter of fiscal 2011 were $0.06, compared to negative $0.02 for
the same quarter in the prior fiscal year. The Company also
announced today a quarterly dividend of $0.10 per share, which
represents one quarter of the Company's fiscal 2011 annual dividend
target of $0.40, payable on September 29, 2010 to stockholders of
record as of the close of business on September 14, 2010. The
Company paid a total dividend of $0.36 per share during fiscal
2010.
Marc A. Cohen, OPNET's Chairman and CEO, stated, "While we are
disappointed that total revenue fell short of our guidance for the
quarter, we are pleased that the $1.2 million of delayed June deals
discussed during our last conference call have all been closed. As
we also discussed during our last conference call, our application
performance management (APM) products continue to drive our
business and accounted for 63% of our product bookings during the
June quarter. We remain confident that our APM product portfolio
and our market position will enable us to generate long-term growth
in revenue and profitability. We have also recently released
key enhancements to our APM product portfolio that we believe will
strengthen the competitive advantages offered by our products."
The Company's first quarter fiscal 2011 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 First Quarter of
Fiscal 2011:
- Total revenue increased year-over-year 12.1% to $31.1 million
from $27.7 million for the same quarter of fiscal 2010. Total
revenue for the quarter decreased sequentially 9.7% from $34.4
million for the fourth quarter of fiscal 2010.
- Product revenue increased year-over-year by 45.5% to $13.0
million from $8.9 million for the same quarter of fiscal
2010. Product revenue for the quarter decreased sequentially
19.8% from $16.2 million for the fourth quarter of fiscal
2010.
- Deferred revenue increased year-over-year by 21.8% to $40.4
million from $33.2 million at the end of the same quarter of fiscal
2010. Deferred revenue for the quarter decreased sequentially
6.8% from $43.4 million at the end of the fourth quarter of fiscal
2010.
- Gross margin increased year-over-year to 76.4% from 71.9% for
the same quarter of fiscal 2010. Gross margin increased
sequentially from 75.7% in the fourth quarter of fiscal 2010.
- Operating margin increased year-over-year to 7.4% from negative
2.3% for the same quarter of fiscal 2010. Operating margin
decreased sequentially from 9.0% in the fourth quarter of fiscal
2010.
- Earnings per share increased year-over-year to $0.06 from
negative $0.02 for the same quarter of fiscal 2010. Earnings
per share decreased sequentially from $0.11 in the fourth quarter
of fiscal 2010.
Non-GAAP Financial Highlights for the First Quarter of
Fiscal 2011:
- Non-GAAP gross margin increased year-over-year to 77.9% from
73.6% for the same quarter of fiscal 2010. Non-GAAP gross
margin increased sequentially from 77.0% in the fourth quarter of
fiscal 2010.
- Non-GAAP operating margin increased year-over-year to 10.3%
from 1.0% for the same quarter of fiscal 2010. Non-GAAP
operating margin decreased sequentially from 11.7% in the fourth
quarter of fiscal 2010.
- Non-GAAP earnings per share increased year-over-year to $0.09
from $0.01 for the same quarter of fiscal 2010. Non-GAAP
earnings per share decreased sequentially from $0.14 in the fourth
quarter of fiscal 2010.
Second Quarter Fiscal Year 2011 Financial
Outlook
OPNET currently expects fiscal 2011 second quarter GAAP revenue
to be between $32.0 million and $34.5 million, GAAP diluted
earnings per share to be between $0.03 and $0.08, and non-GAAP
diluted earnings per share to be between $0.06 and $0.11. The
non-GAAP net income per diluted share expectation excludes
approximately $583,000 of expense associated with share-based
compensation expense, amortization of acquired intangible assets,
and the related impact of these adjustments on the provision for
income taxes.
OPNET will hold an investor conference call on Thursday, August
5, 2010 at 5:00 pm Eastern Time to review financial results for the
first quarter of fiscal 2011.
To listen to the OPNET investor conference call:
- Call 877-377-7550 in the U.S. or 408-337-0151 for international
callers, or
- Use the webcast at www.opnet.com. 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 800-642-1687 or 706-645-9291
for international callers. For replay, enter passcode #
89676928. The replay will be available from 8:00 pm Eastern
Time August 5th through 11:59 pm Eastern Time August 12th.
The webcast will be available at www.opnet.com, archived for
seven days.
Use of Non-GAAP Measures
OPNET uses a variety of financial measures that are not in
accordance with generally accepted accounting principles, or GAAP,
as supplemental measures to GAAP to evaluate its operational
performance. These financial measures, which include non-GAAP gross
profit and gross margin, non-GAAP operating income and operating
margin, non-GAAP net income and non-GAAP diluted earnings per
share, 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. A reconciliation of each of these non-GAAP financial
measures to its most comparable GAAP financial measure is also
included below.
Management uses non-GAAP financial measures (a) to evaluate
OPNET'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 who follow OPNET focus on and
publish both historical results and future projections based on
non-GAAP financial measures. OPNET believes that it is in the best
interest of its 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 OPNET's
competitors and may not be directly comparable to similarly titled
measures of OPNET's competitors due to potential differences in the
exact method of calculation. OPNET compensates for these
limitations by using these non-GAAP financial measures only 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 we use to derive these non-GAAP financial
measures, and the basis for such adjustments, are outlined
below:
Amortization of intangibles and its related tax impact. OPNET
incurs amortization of intangibles related to various acquisitions
it has made in recent years. This amortization is included in the
following line items of its GAAP presentation:
- cost of revenue -- amortization of acquired technology and
customer relationships
- operating expenses -- research and development
Management excludes these expenses and their related tax impact
for the purpose of calculating non-GAAP gross profit and gross
margin, non-GAAP operating income and operating margin, non-GAAP
net income and non-GAAP diluted earnings per share when it
evaluates the continuing operational performance of OPNET because
these costs are fixed at the time of an acquisition, 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 OPNET during the applicable time period after a given
acquisition, and it excludes such expenses when evaluating OPNET's
financial performance.
Stock-based compensation expense and its related tax impact.
OPNET incurs expense related to stock-based compensation, which is
included in the following line items of its GAAP presentation:
- cost of revenue -- product updates, technical support and
services
- cost of revenue -- professional services
- operating expenses -- research and development
- operating expenses -- sales and marketing
- operating expenses -- general and administrative
Although stock-based compensation is an expense of OPNET and is
viewed as a form of compensation, management excludes these
expenses for the purpose of calculating non-GAAP gross profit and
gross margin, non-GAAP operating income and operating margin,
non-GAAP net income and non-GAAP diluted earnings per share when it
evaluates the continuing operational performance of OPNET.
Specifically, OPNET excludes stock-based compensation during its
quarterly and annual assessments of OPNET's and management's
performance. In evaluating the performance of senior management,
stock-based compensation is excluded from expenditure and
profitability results.
Diluted weighted average common shares
outstanding. Non-GAAP diluted net income per common
share reflects the elimination of amortization of intangibles,
stock-based compensation expense and the related tax impacts, all
as discussed above. In cases in which the non-GAAP net
income changes from negative to positive when compared to the GAAP
net income, or vice versa, the non-GAAP per-share calculation also
gives effect to an adjustment to the number of diluted weighted
average common shares outstanding reflecting the application of the
treasury method and the fact that shares previously considered
anti-dilutive would now be considered dilutive, or vice versa.
About OPNET Technologies, Inc.
Founded in 1986, OPNET Technologies, Inc. (Nasdaq:OPNT) is a
leading provider of solutions for managing applications and
networks. 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 such
statements. Forward-looking statements, including statements
regarding our ability to generate sustained growth in revenue and
profitability, the impact of enhancements to our APM product
portfolio or our competitive postion and statements concerning
expected revenue and diluted earnings per share for the second
quarter of fiscal 2011, 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. Factors that may cause OPNET's actual results,
levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance
or achievements expressed or implied by such forward-looking
statements include, among others, those factors listed under the
caption "Risk Factors" in OPNET's Annual Report on Form 10-K for
the fiscal year ended March 31, 2010, as filed with the Securities
and Exchange Commission on June 4, 2010. The risk factors set forth
in the Company's Form 10-K under the caption "Risk Factors"
are specifically incorporated by reference into this press release.
The Company undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
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 June 30, |
|
2010 |
2009 |
|
|
|
Revenue: |
|
|
Product |
$ 12,972 |
$ 8,914 |
Product updates, technical support, and
services |
12,322 |
11,300 |
Professional services |
5,791 |
7,513 |
Total revenue |
31,085 |
27,727 |
|
|
|
Cost of revenue: |
|
|
Product |
1,292 |
1,106 |
Product updates, technical support, and
services |
1,288 |
1,227 |
Professional services |
4,302 |
5,031 |
Amortization of acquired technology and
customer relationships |
459 |
436 |
Total cost of revenue |
7,341 |
7,800 |
|
|
|
Gross profit |
23,744 |
19,927 |
|
|
|
Operating expenses: |
|
|
Research and development |
8,063 |
7,886 |
Sales and marketing |
10,450 |
10,303 |
General and administrative |
2,923 |
2,362 |
Total operating expenses |
21,436 |
20,551 |
|
|
|
Income (loss) from
operations |
2,308 |
(624) |
Interest and other (expense) income, net |
(30) |
68 |
Income (loss) before provision for income
taxes |
2,278 |
(556) |
Provision (benefit) for income taxes |
939 |
(197) |
Net income (loss) |
$ 1,339 |
$ (359) |
|
|
|
Basic net income (loss) per common share |
$ 0.06 |
$ (0.02) |
Diluted net income (loss) per common
share |
$ 0.06 |
$ (0.02) |
Basic weighted average common shares
outstanding |
20,926 |
20,439 |
Diluted weighted average common shares
outstanding |
21,562 |
20,439 |
|
|
|
|
|
|
OPNET TECHNOLOGIES,
INC. RECONCILIATION OF GAAP TO NON-GAAP INCOME (in thousands,
except per share data) (unaudited) |
|
|
|
|
|
|
Three Months
Ended June 30, |
Three Months Ended March
31, |
|
2010 |
2009 |
2010 |
|
|
|
|
GAAP gross profit |
$ 23,744 |
$ 19,927 |
$ 26,057 |
Stock-based compensation expense included
in cost of revenue |
22 |
39 |
5 |
Amortization of intangibles included in
cost of revenue |
459 |
436 |
459 |
Non-GAAP gross profit |
$ 24,225 |
$ 20,402 |
$ 26,521 |
|
|
|
|
GAAP income (loss) from operations |
$ 2,308 |
$ (624) |
$ 3,098 |
Stock-based compensation expense – total
(included in cost of revenue and in operating expenses) |
397 |
427 |
432 |
Amortization of intangibles -- total
(included in cost of revenue and in research and development
expenses) |
484 |
486 |
484 |
Non-GAAP income from operations |
$ 3,189 |
$ 289 |
$ 4,014 |
|
|
|
|
GAAP net income (loss) |
$ 1,339 |
$ (359) |
$ 2,309 |
Stock-based compensation expense --
total |
397 |
427 |
432 |
Amortization of intangibles -- total |
484 |
486 |
484 |
Provision for income tax (1) |
(352) |
(365) |
(366) |
Non-GAAP net income |
$ 1,868 |
$ 189 |
$ 2,859 |
|
|
|
|
Diluted net income (loss) per common
share: |
|
|
|
GAAP |
$ 0.06 |
$ (0.02) |
$ 0.11 |
Non-GAAP |
$ 0.09 |
$ 0.01 |
$ 0.14 |
|
|
|
|
Diluted weighted average common shares
outstanding |
|
|
|
GAAP |
21,562 |
20,439 |
21,153 |
Non-GAAP |
21,562 |
20,439 |
21,153 |
(1) Reflects the tax effect of
non-GAAP adjustments above at the statutory rate of 40% |
|
|
|
OPNET TECHNOLOGIES,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except
per share data) (unaudited) |
|
|
|
|
|
|
June 30, |
March 31, |
|
2010 |
2010 |
ASSETS |
Current assets: |
|
|
Cash and cash equivalents |
$ 87,971 |
$ 104,681 |
Marketable securities |
23,588 |
-- |
Accounts receivable, net |
22,915 |
28,015 |
Unbilled accounts receivable |
2,579 |
4,765 |
Inventory |
876 |
872 |
Deferred income taxes, prepaid expenses
and other current assets |
3,753 |
2,816 |
Total current assets |
141,682 |
141,149 |
|
|
|
Property and equipment, net |
13,092 |
13,245 |
Intangible assets, net |
4,625 |
5,109 |
Goodwill |
14,639 |
14,639 |
Deferred income taxes and other assets |
3,772 |
4,210 |
Total assets |
$ 177,810 |
$ 178,352 |
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
Current liabilities: |
|
|
Accounts payable |
$ 987 |
$ 1,405 |
Accrued liabilities |
9,602 |
10,932 |
Other income taxes |
419 |
498 |
Deferred rent |
353 |
432 |
Deferred revenue |
36,899 |
38,425 |
Total current liabilities |
48,260 |
51,692 |
|
|
|
Accrued liabilities |
69 |
145 |
Deferred rent |
2,099 |
2,138 |
Deferred revenue |
3,541 |
4,946 |
Other income taxes |
650 |
755 |
Total liabilities |
54,619 |
59,676 |
|
|
|
Stockholders' equity: |
|
|
Common stock |
29 |
28 |
Additional paid-in capital |
105,253 |
99,229 |
Retained earnings |
37,132 |
37,920 |
Accumulated other comprehensive loss |
(1,198) |
(999) |
Treasury stock, at cost |
(18,025) |
(17,502) |
Total stockholders' equity |
123,191 |
118,676 |
Total liabilities and stockholders'
equity |
$ 177,810 |
$ 178,352 |
CONTACT: OPNET Technologies, Inc.
Media Contact:
Margarita Castillo
(240) 497-3000
Media@opnet.com
Investor Relations:
Mel Wesley
(240) 497-3000
ir@opnet.com
www.opnet.com
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