OPNET Technologies, Inc. (Nasdaq:OPNT), a leading provider of
solutions for application and network performance management, today
announced that revenue for the third fiscal quarter, ended December
31, 2010, was $39.7 million, compared to $33.6 million for the same
quarter in the prior fiscal year. Diluted earnings per share for
the third quarter of fiscal 2011 were $0.19, compared to $0.11 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 March 30, 2011 to stockholders of
record as of the close of business on March 16, 2011.
Marc A. Cohen, OPNET's Chairman and CEO, stated, "We are very
pleased to report strong sales execution during our third fiscal
quarter. Our application performance management (APM) products
continue to drive sales growth and profitability, and allowed us to
achieve financial records including total revenue of $39.7 million,
product revenue of $20.2 million, and operating income of $5.6
million. APM product sales accounted for 71% of our total product
bookings during the quarter, and increased 45% over the same
quarter last year and 22% sequentially.
Mr. Cohen continued, "We believe our growth in APM product sales
is largely the result of taking market share by offering key
competitive advantages, including broad coverage of the
infrastructure, deep instrumentation, and superior analytics. In
addition to strong sales execution during the quarter, we also
completed development of our first Software-as-a-Service (SaaS)
solution offering, AppMapper Xpert. This new solution automatically
produces a run-time application map, identifying the underlying
application and infrastructure components that enable a production
application. We believe this new offering, which leverages
information generated by our performance management solutions,
including AppResponse Xpert and AppInternals Xpert, will further
enhance our competitive position in the APM market."
The Company's third quarter fiscal 2011 financial highlights 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 2011:
- Total revenue increased year-over-year 18.2% to $39.7 million
from $33.6 million for the same quarter of fiscal 2010. Total
revenue for the quarter increased sequentially 9.9% from $36.1
million for the second quarter of fiscal 2011.
- Product revenue increased year-over-year by 30.3% to $20.2
million from $15.5 million for the same quarter of fiscal
2010. Product revenue for the quarter increased sequentially
14.2% from $17.7 million for the second quarter of fiscal
2011.
- Deferred revenue increased year-over-year by 9.8% to $42.9
million from $39.1 million at the end of the same quarter of fiscal
2010. Deferred revenue for the quarter increased sequentially
6.6% from $40.2 million at the end of the second quarter of fiscal
2011.
- Gross margin increased year-over-year to 78.8% from 75.9% for
the same quarter of fiscal 2010. Gross margin increased
sequentially from 76.6% in the second quarter of fiscal
2011.
- Operating margin increased year-over-year to 14.1% from 10.2%
for the same quarter of fiscal 2010. Operating margin
increased sequentially from 12.9% in the second quarter of fiscal
2011.
- Diluted net income per common share increased year-over-year to
$0.19 from $0.11 for the same quarter of fiscal 2010. Diluted
net income per common share was $0.13 in the second quarter of
fiscal 2011.
Non-GAAP Financial Highlights for the Third Quarter of
Fiscal 2011:
- Non-GAAP gross margin increased year-over-year to 80.3% from
77.4% for the same quarter of fiscal 2010. Non-GAAP gross
margin increased sequentially from 78.0% in the second quarter of
fiscal 2011.
- Non-GAAP operating margin increased year-over-year to 17.3%
from 12.9% for the same quarter of fiscal 2010. Non-GAAP
operating margin increased sequentially from 15.4% in the second
quarter of fiscal 2011.
- Non-GAAP diluted net income per common share increased
year-over-year to $0.23 from $0.14 for the same quarter of fiscal
2010. Non-GAAP diluted net income per common share was $0.16
in the second quarter of fiscal 2011.
Fourth Quarter Fiscal Year 2011 Financial
Outlook
OPNET currently expects fiscal 2011 fourth quarter GAAP revenue
to be between $37.5 million and $40.5 million, GAAP diluted net
income per common share to be between $0.13 and $0.18 and non-GAAP
diluted net income per common share to be between $0.16 and
$0.19. The non-GAAP diluted net income per common share
expectation excludes approximately $589,000 of expense associated
with stock-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, January
27, 2011 at 5:00 pm Eastern Time to review financial results for
the third 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 #
37256541. The replay will be available from 8:00 pm Eastern
Time January 27, 2011 through 11:59 pm Eastern Time February 3,
2011.
- 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, non-GAAP gross margin, non-GAAP operating income, non-GAAP
operating margin, non-GAAP net income and non-GAAP diluted net
income per common 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 operating income, non-GAAP
gross profit, non-GAAP gross margin, non-GAAP operating income,
non-GAAP operating margin, non-GAAP net income and non-GAAP diluted
net income per common 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,
non-GAAP gross margin, non-GAAP operating income, non-GAAP
operating margin, non-GAAP net income and non-GAAP diluted net
income per common 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 addition, 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 application and network performance management
solutions. For more information about OPNET and its products, visit
www.opnet.com.
OPNET, OPNET Technologies, Inc., AppMapper Xpert, AppResponse
Xpert, and AppInternals Xpert 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 the impact of enhancements to our APM product portfolio
or our competitive position and statements concerning expected
revenue and diluted net income per common share and Non-GAAP
diluted net income per common share for the fourth 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, as updated from time to
time in subsequent SEC filings. The risk factors set forth in the
Company's Form 10-K under the caption "Risk Factors," as updated
from time to time in subsequent SEC filings, 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 December 31, |
Nine Months Ended
December 31, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Revenue: |
|
|
|
|
Product |
$20,177 |
$15,485 |
$50,822 |
$36,071 |
Product updates,
technical support, and services |
13,908 |
11,960 |
39,280 |
34,913 |
Professional
services |
5,593 |
6,110 |
16,779 |
20,926 |
Total revenue |
39,678 |
33,555 |
106,881 |
91,910 |
|
|
|
|
|
Cost of revenue: |
|
|
|
|
Product |
2,893 |
1,762 |
6,672 |
4,106 |
Product updates,
technical support, and services |
1,269 |
1,172 |
3,827 |
3,575 |
Professional
services |
3,689 |
4,680 |
12,186 |
14,568 |
Amortization of acquired
technology and customer relationships |
553 |
459 |
1,511 |
1,376 |
Total cost of
revenue |
8,404 |
8,073 |
24,196 |
23,625 |
|
|
|
|
|
Gross profit |
31,274 |
25,482 |
82,685 |
68,285 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Research and
development |
8,757 |
7,996 |
25,398 |
23,563 |
Sales and marketing |
13,265 |
11,360 |
35,117 |
31,701 |
General and
administrative |
3,649 |
2,696 |
9,607 |
8,012 |
Total operating
expenses |
25,671 |
22,052 |
70,122 |
63,276 |
|
|
|
|
|
Income from operations |
5,603 |
3,430 |
12,563 |
5,009 |
Interest and other expense, net |
(54) |
(16) |
(85) |
(4) |
Income before provision for income taxes |
5,549 |
3,414 |
12,478 |
5,005 |
Provision for income taxes |
1,225 |
1,074 |
3,900 |
1,491 |
Net income |
$4,324 |
$2,340 |
$8,578 |
$3,514 |
|
|
|
|
|
Basic net income per common share |
$0.19 |
$0.11 |
$0.40 |
$0.17 |
Diluted net income per common share |
$0.19 |
$0.11 |
$0.38 |
$0.17 |
Basic weighted average common shares
outstanding |
21,608 |
20,540 |
21,263 |
20,572 |
Diluted weighted average common shares
outstanding |
22,230 |
20,823 |
21,921 |
20,786 |
|
OPNET TECHNOLOGIES,
INC. |
RECONCILIATION OF GAAP
TO NON-GAAP INCOME |
(in thousands, except
per share data) |
(unaudited) |
|
|
|
|
|
Three Months
Ended |
Three Months
Ended |
|
December
31, |
September 30, |
|
2010 |
2009 |
2010 |
|
|
|
|
GAAP gross profit |
$31,274 |
$25,482 |
$27,667 |
Stock-based compensation
expense included in cost of revenue |
25 |
29 |
23 |
Amortization of
intangibles included in cost of revenue |
552 |
459 |
499 |
Non-GAAP gross profit |
$31,851 |
$25,970 |
$28,189 |
|
|
|
|
GAAP income from operations |
$5,603 |
$3,430 |
$4,652 |
Stock-based compensation
expense -- total (included in cost of revenue and
in operating expenses) |
664 |
424 |
389 |
Amortization of
intangibles -- total (included in cost of revenue and in
research and development expenses) |
578 |
484 |
525 |
Non-GAAP income from operations |
$6,845 |
$4,338 |
$5,566 |
|
|
|
|
GAAP net income |
$4,324 |
$2,340 |
$2,916 |
Stock-based compensation
expense -- total |
664 |
424 |
389 |
Amortization of
intangibles -- total |
578 |
484 |
525 |
Provision for income tax
(1) |
(497) |
(363) |
(366) |
Non-GAAP net income |
$5,069 |
$2,885 |
$3,464 |
|
|
|
|
Diluted net income per common share: |
|
|
|
GAAP |
$0.19 |
$0.11 |
$0.13 |
Non-GAAP |
$0.23 |
$0.14 |
$0.16 |
|
|
|
|
Diluted weighted average common shares
outstanding |
|
|
|
GAAP |
22,230 |
20,823 |
21,788 |
Non-GAAP |
22,230 |
20,823 |
21,788 |
(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) |
|
December 31, |
March 31, |
|
2010 |
2010 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash
equivalents |
$66,026 |
$104,681 |
Marketable securities |
34,951 |
-- |
Accounts receivable, net |
32,084 |
28,015 |
Unbilled accounts
receivable |
1,902 |
4,765 |
Inventory |
336 |
872 |
Deferred income taxes, prepaid
expenses and other current assets |
5,729 |
2,816 |
Total current assets |
141,028 |
141,149 |
|
|
|
Property and equipment, net |
13,017 |
13,245 |
Intangible assets, net |
5,071 |
5,109 |
Goodwill |
15,406 |
14,639 |
Deferred income taxes and other assets |
4,402 |
4,210 |
Total assets |
$178,924 |
$178,352 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$1,680 |
$1,405 |
Accrued liabilities |
11,790 |
10,932 |
Other income taxes |
312 |
498 |
Deferred rent |
200 |
432 |
Deferred revenue |
38,533 |
38,425 |
Total current liabilities |
52,515 |
51,692 |
|
|
|
Accrued liabilities |
75 |
145 |
Deferred rent |
2,025 |
2,138 |
Deferred revenue |
4,364 |
4,946 |
Other income taxes |
594 |
755 |
Total liabilities |
59,573 |
59,676 |
|
|
|
Stockholders' equity: |
|
|
Common stock |
30 |
28 |
Additional paid-in capital |
117,304 |
99,229 |
Retained earnings |
23,745 |
37,920 |
Accumulated other comprehensive
loss |
(882) |
(999) |
Treasury stock, at
cost |
(20,846) |
(17,502) |
Total stockholders' equity |
119,351 |
118,676 |
Total liabilities and
stockholders' equity |
$178,924 |
$178,352 |
CONTACT: OPNET Media Contact:
Sue Cole
OPNET Technologies, Inc.
(919) 461-2445
Media@opnet.com
www.opnet.com
OPNET Investor Relations:
Mel Wesley
OPNET Technologies, Inc.
(240) 497-3000
ir@opnet.com
www.opnet.com
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