Xtera Announces Fiscal First Quarter Financial Results


DALLAS, TEXAS, USA, Feb. 03, 2016 (GLOBE NEWSWIRE) -- Xtera Communications, Inc. (NASDAQ:XCOM), a provider of high-capacity optical transport solutions, today announced financial results for its fiscal first quarter ended December 31, 2015. Revenue for the first quarter of fiscal 2016 was $12.6 million, a decrease of 5.5% compared to $13.4 million for the fiscal first quarter of 2015.

 “After completing our IPO in mid-November, we saw strong demand for our products and solutions in Q1,” reported Jon Hopper, Xtera’s President and Chief Executive Officer. “Our backlog increased considerably during the December quarter and we ended the quarter with a backlog of $80.5 million, up 85% over the prior quarter."

The company's GAAP net loss for the fiscal first quarter of 2016 was $7.2 million, or $0.71 per basic and fully diluted share, compared to a GAAP net loss of $3.2 million, or $3.65 per basic and fully diluted share, for the first fiscal quarter of 2015. The company's non-GAAP net loss for the fiscal first quarter of 2016 was $6.9 million, or $0.68 per basic and fully diluted share, compared to a non-GAAP net loss of $3.0 million, or $3.49 per basic and fully diluted share, for the first fiscal quarter of 2015.

A reconciliation of our fiscal first quarter 2016 operating results from GAAP to non-GAAP is provided below:


Three Months Ended December 31, 2015
(Unaudited, in thousands, except share data)
                  
      Stock Based  Amortization of  Acquisition-Related     
  Non-GAAP  Compensation  Intangible Assets  Costs  GAAP 
Revenue $12,630  $  $  $  $12,630 
Cost of revenue  12,949            12,949 
Gross profit  (319)           (319)
Gross margin  -2.5%  0.0%  0.0%  0.0%  -2.5%
Operating expenses  5,804   52   270      6,126 
Operating loss  (6,123)  (52)  (270)     (6,445)
Interest and other income(expense), net  (768)           (768)
Provision for income taxes  1            1 
Net loss $(6,892) $(52) $(270) $  $(7,214)
Weighted average shares used to compute net
  loss per common share: basic and diluted
  10,183,075   10,183,075   10,183,075   10,183,075   10,183,075 
Net loss per common share: basic and diluted $(0.68) $(0.01) $(0.03) $-  $(0.71)


Conference Call

In conjunction with this announcement, Xtera will host a conference call to discuss its results at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) on Wednesday, February 3, 2016.  Interested parties can listen to a live webcast of the conference call by visiting the Investor Relations section of Xtera’s website at http://ir.xtera.com.  Dial in information for the conference call is available by registering at http://dpregister.com/10078802.  The conference call and webcast will include forward-looking information.  A replay of the conference call will also be available on the Investor Relations section of Xtera’s website at http://ir.xtera.com following the completion of the call.

About Xtera Communications, Inc.

Xtera Communications, Inc. (NASDAQ:XCOM) is a leading provider of high-capacity, cost-effective optical transport solutions, supporting the high growth in global demand for bandwidth.  Xtera sells solutions to telecommunications service providers, content service providers, enterprises and government entities worldwide.  Xtera’s proprietary Wise RamanTM optical amplification technology leads to capacity and reach performance advantages over competitive products.  Xtera’s solutions enable cost-effective capacity to meet customers’ bandwidth requirements of today and to support their increasing bandwidth demand fueled by the development of data centers and related cloud-based services.

For more information, visit www.xtera.com, contact info@xtera.com or connect via LinkedIn, Twitter, Facebook and YouTube.

Use of Non-GAAP Financial Information

The Company uses certain non-GAAP financial measures in this press release to supplement its consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP measures include non-GAAP net income (loss) and non-GAAP basic and diluted income (loss) per share. These non-GAAP measures are provided to enhance the reader's understanding of the Company's operating performance as they primarily exclude certain non-cash charges for stock-based compensation and amortization of acquisition-related intangible assets, and non-recurring acquisition-related costs, which the Company believes are not indicative of its core operating results. Management believes that the non-GAAP measures used in this press release provide investors with important perspectives into the Company's ongoing business performance and management uses these non-GAAP measures to evaluate financial results and to establish operational goals. The presentation of these non-GAAP measures is not meant to be a substitute for results presented in accordance with GAAP, but rather should be evaluated in conjunction with those GAAP results. A reconciliation of the non-GAAP results to the most directly comparable GAAP results is provided in this press release. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.



XTERA COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
    
   Three Months Ended December 
  2015  2014 
Revenue:        
Products $10,842  $12,179 
Services  1,788   1,186 
Total revenue  12,630   13,365 
Cost of revenue:        
Products  12,189   9,224 
Services  760   562 
Total cost of revenue  12,949   9,786 
Gross profit  (319)  3,579 
Operating expenses:        
Sales and marketing  1,525   1,193 
Research and development  2,764   2,752 
General and administrative  1,837   1,617 
Total operating expense  6,126   5,562 
Operating loss  (6,445)  (1,983)
Other income (expense):        
Interest expense  (405)  (661)
Interest expense, related party     (343)
Foreign exchange loss  (363)  (242)
Total other expense  (768)  (1,246)
Loss before income taxes  (7,213)  (3,229)
Income tax provision  1   15 
Net loss $(7,214) $(3,244)
Preferred dividend     (3,374)
Net loss available to common stockholders $(7,214) $(6,618)
Loss per common share – basic and diluted $(0.71) $(3.65)
Weighted average shares – basic and diluted  10,183,075   1,814,630 





XTERA COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
       
   As of  December 31,  As of  September 30, 
  2015  2015 
Assets        
Current assets        
Cash and cash equivalents $6,714  $1,753 
Restricted cash  277   1,120 
Accounts receivable, net  5,550   6,580 
Unbilled receivables  8,725   6,119 
Inventories, net  10,938   10,540 
Deferred cost  7,149   780 
Prepaid expenses and other current asset  843   1,185 
Total current assets  40,196   28,077 
Property and equipment, net  3,270   3,399 
Restricted cash  3,526   152 
Intangible assets, net  7,284   7,554 
Other assets  90   90 
Total assets $54,366  $39,272 
Liabilities and Stockholders’ Equity        
Current liabilities        
Accounts payable $12,318  $13,589 
Accrued compensation and employee benefits  1,046   760 
Deferred revenue  1,172   1,058 
Warranty reserve  1,936   1,735 
Current portion of long-term debt  11,301   10,707 
Other accrued liabilities  7,293   4,966 
Total current liabilities  35,066   32,815 
Long-term debt less current portion     2,133 
Other long-term liabilities  647   631 
Total liabilities  35,713   35,579 
Commitments and contingencies        
Stockholders’ equity (deficit)        
Series A-3 convertible preferred stock, $0.001 par value, Authorized shares: 0 and 40,500,000
  as of December 31, 2015 and September 30, 2015; Issued and outstanding shares:
  0 and 39,663,482 as of December 31, 2015 and September 30, 2015
     40 
Series B-3 convertible preferred stock, $0.001 par value, Authorized shares: 0 and 39,500,000
  as of December 31, 2015 and September 30, 2015;  Issued and outstanding shares:
  0 and 38,589,303 as of December 31, 2015 and September 30, 2015
     39 
Series C-3 convertible preferred stock, $0.001 par value, Authorized shares: 0 and 25,000,000
  as of December 31, 2015 and September 30, 2015; Issued and outstanding shares:
  0 and 19,081,778 as of December 31, 2015 and September 30, 2015
     19 
Series D-3 convertible preferred stock, $0.001 par value, Authorized shares: 0 and 60,000,000
  as of December 31, 2015 and September 30, 2015; Issued and outstanding shares:
  0 and 52,509,212 as of December 31, 2015 and September 30, 2015
     53 
Series E-3 convertible preferred stock, $0.001 par value, Authorized shares: 0 and 120,000,000
  as of December 31, 2015 and September 30, 2015; Issued and outstanding shares:
  0 and 114,679,639 as of December 31, 2015 and September 30, 2015
     115 
Preferred Stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding      
Common Stock, $0.001 par value, Authorized shares: 100,000,000 and 350,000,000 as of
  December 31, 2015 and September 30, 2015; Issued and outstanding shares: 17,114,364 and
  1,936,056 as of December 31, 2015 and September 30, 2015
  17   2 
Additional paid-in-capital  410,119   388,047 
Accumulated deficit  (391,899)  (384,685)
Accumulated other comprehensive income, net  416   63 
Total stockholders’ equity (deficit)  18,653   3,693 
Total liabilities and stockholders’ equity $54,366  $39,272 






XTERA COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
    
   Three Months Ended December 31, 
  2015  2014 
Operating Activities:        
Net loss $(7,214) $(3,244)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  715   658 
Provision for inventory obsolescence  1,134   602 
Provision for loss on contracts  1,039    
Warranty provision  230   215 
Share-based compensation  52   9 
Interest expense  66   31 
Changes in operating assets and liabilities        
Accounts receivable  1,024   (5,480)
Unbilled accounts receivable  (2,606)  (1,454)
Inventories  (1,533)  (2,386)
Deferred costs  (6,369)  (2,548)
Prepaid expenses and other assets  341   126 
Accounts payable  (1,266)  3,626 
Other accrued liabilities  1,489   (161)
Deferred revenue  118   5,699 
Net cash used in operating activities  (12,780)  (4,307)
Investing Activities:        
Changes in restricted cash  (2,530)  (115)
Purchases of property and equipment  (326)  (185)
Net cash used in investing activities  (2,856)  (300)
Financing Activities:        
Repayment of debt  (11,237)  (4,612)
Proceeds from debt  9,633   8,909 
Payment of capital lease obligations  (22)   
Proceeds from issuance of common stock  21,764    
Net cash provided by financing activities  20,138   4,297 
Effect of exchange rate changes on cash  459   260 
Net increase(decrease) in cash and cash equivalents  4,961   (50)
Cash and cash equivalents at beginning of period  1,753   1,920 
Cash and cash equivalents at end of period $6,714  $1,870 
Supplemental disclosure of cash flow information:        
Cash paid for interest $312  $274 
Cash paid for income taxes $1  $15 



            

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