DALLAS, TEXAS, USA, Aug. 11, 2016 (GLOBE NEWSWIRE) -- Xtera Communications, Inc. (NASDAQ:XCOM), a provider of high-capacity optical transport solutions, today announced financial results for its fiscal third quarter ended June 30, 2016. Revenue for the third quarter of fiscal 2016 was $5.3 million compared to $16.2 million for the fiscal third quarter of 2015.
“We continue to see strong interest in the market for the increased bandwidth that our Wise Raman™ technology can uniquely provide by extending a network’s reach and capacity. Our backlog at the end of Q3 was approximately $90 million,” said Jon Hopper, Xtera’s President and Chief Executive Officer. “Fulfilling that demand was a challenge in the third quarter given our liquidity challenges. We are actively working with our existing lenders and others to address this issue as soon as possible as well as exploring strategic alternatives. We have engaged Cowen and Company to assist us on these efforts,” said Hopper.
The company's GAAP net loss for the fiscal third quarter of 2016 was $(23.6) million, or $(1.37) per basic and fully diluted share, compared to a GAAP net loss of $(4.6) million, or $(4.38) per basic and fully diluted share, for the third fiscal quarter of 2015. The company's non-GAAP net loss for the fiscal third quarter of 2016 was $(23.3) million, or $(1.35) per basic and fully diluted share, compared to a non-GAAP net loss of $(4.3) million, or $(4.24) per basic and fully diluted share, for the third fiscal quarter of 2015.
A reconciliation of our fiscal third quarter 2016 and 2015 operating results from GAAP to non-GAAP are provided below:
| Three Months Ended June 30, 2016 | ||||||||||||||||
| (Unaudited, in thousands, except share data) | ||||||||||||||||
| Stock Based | Amortization of | |||||||||||||||
| GAAP | Compensation | Intangible Assets | Non-GAAP | |||||||||||||
| Revenue | $ | 5,347 | $ | — | $ | — | $ | 5,347 | ||||||||
| Cost of revenue | 19,121 | — | — | 19,121 | ||||||||||||
| Gross profit | (13,774 | ) | — | — | (13,774 | ) | ||||||||||
| Gross margin | -257.60 | % | 0.00 | % | 0.00 | % | -257.60 | % | ||||||||
| Sales and marketing | 1,833 | — | — | 1,833 | ||||||||||||
| Research and development | 3,402 | — | 269 | 3,133 | ||||||||||||
| General and administrative | 2,849 | 39 | — | 2,810 | ||||||||||||
| Operating Expenses | 8,084 | 39 | 269 | 7,776 | ||||||||||||
| Operating loss | (21,858 | ) | (39 | ) | (269 | ) | (21,550 | ) | ||||||||
| Interest and other income (expense), net | (1,777 | ) | — | — | (1,777 | ) | ||||||||||
| Provision for income taxes | 2 | — | — | 2 | ||||||||||||
| Net loss | $ | (23,637 | ) | $ | (39 | ) | $ | (269 | ) | $ | (23,329 | ) | ||||
| Weighted average shares used to compute net loss per common share: basic and diluted | 17,218,907 | 17,218,907 | 17,218,907 | 17,218,907 | ||||||||||||
| Net loss per common share: basic and diluted | $ | (1.37 | ) | $ | (0.00 | ) | $ | (0.02 | ) | $ | (1.35 | ) | ||||
| Three Months Ended June 30, 2015 | ||||||||||||||||
| (Unaudited, in thousands, except share data) | ||||||||||||||||
| Stock Based | Amortization of | |||||||||||||||
| GAAP | Compensation | Intangible Assets | Non-GAAP | |||||||||||||
| Revenue | $ | 16,170 | $ | — | $ | — | $ | 16,170 | ||||||||
| Cost of revenue | 15,082 | — | — | 15,082 | ||||||||||||
| Gross profit | 1,088 | — | — | 1,088 | ||||||||||||
| Gross margin | 6.73 | % | 0.00 | % | 0.00 | % | 6.73 | % | ||||||||
| Sales and marketing | 966 | — | — | 966 | ||||||||||||
| Research and development | 2,772 | — | 270 | 2,502 | ||||||||||||
| General and administrative | 1,435 | 8 | — | 1,427 | ||||||||||||
| Operating Expenses | 5,173 | 8 | 270 | 4,895 | ||||||||||||
| Operating loss | (4,085 | ) | (8 | ) | (270 | ) | (3,807 | ) | ||||||||
| Interest and other income (expense), net | (524 | ) | — | — | (524 | ) | ||||||||||
| Provision for income taxes | 2 | — | — | 2 | ||||||||||||
| Net loss | (4,611 | ) | (8 | ) | (270 | ) | (4,333 | ) | ||||||||
| Preferred Dividend | (3,337 | ) | — | (3,337 | ) | |||||||||||
| Net loss available to common | $ | (7,948 | ) | $ | (8 | ) | $ | (270 | ) | $ | (7,670 | ) | ||||
| Weighted average shares used to compute net loss per common share: basic and diluted | 1,816,175 | 1,816,175 | 1,816,175 | 1,816,175 | ||||||||||||
| Net loss per common share: basic and diluted | $ | (4.38 | ) | $ | (0.00 | ) | $ | (0.15 | ) | $ | (4.22 | ) | ||||
Conference Call
In conjunction with this announcement, Xtera will host a conference call to discuss its results at 3:30 p.m. Central Time (4:30 p.m. Eastern Time) on Thursday, August 11, 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/10078845. 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.
Please visit http://ir.xtera.com for a copy of Xtera’s quarterly report on Form 10-Q, as filed with the Securities and Exchange Commission today.
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.
Forward-Looking Statements
This press release contains forward-looking statements based on Xtera’s current expectations. All statements, other than statements of historical facts, included herein are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “seek” and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements reflect the current views and assumptions of Xtera and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Xtera may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on Xtera’s forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to, risks related to Xtera’s ability to restructure its debt or obtain waivers under its existing debt; Xtera’s ability to obtain additional capital; Xtera’s ability to continue as a going concern; Xtera’s expectations for the future business and financial performance of the Company; the growing recognition of the importance and adoption of Xtera’s Wise Raman™ technology to solve the capacity and reach requirements of telecommunication and content service providers as well as enterprises and government entities; the long-term goals and growth prospects for Xtera; Xtera’s success in improving its internal controls and processes; the development of new products that Xtera believes will continue to help its customers expand capacity on their networks; Xtera’s history of significant operating losses; fluctuations in Xtera’s operating results and gross margin; and other factors included in Xtera’s filings with the Securities and Exchange Commission, including its 10-Q filed with the SEC on August 11, 2016. Subsequent events may cause these expectations to change, and Xtera disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.
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 intangible assets 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 June 30, | Nine Months Ended June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue: | ||||||||||||||||
| Products | $ | 4,147 | $ | 14,892 | $ | 30,125 | $ | 39,847 | ||||||||
| Services | 1,200 | 1,278 | 4,931 | 3,805 | ||||||||||||
| Total revenue | 5,347 | 16,170 | 35,056 | 43,652 | ||||||||||||
| Cost of revenue: | ||||||||||||||||
| Products | 18,182 | 14,579 | 45,408 | 32,944 | ||||||||||||
| Services | 939 | 503 | 2,685 | 1,727 | ||||||||||||
| Total cost of revenue | 19,121 | 15,082 | 48,093 | 34,671 | ||||||||||||
| Gross profit | (13,774 | ) | 1,088 | (13,037 | ) | 8,981 | ||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 1,833 | 966 | 4,823 | 3,215 | ||||||||||||
| Research and development | 3,402 | 2,772 | 9,446 | 8,198 | ||||||||||||
| General and administrative | 2,849 | 1,435 | 6,956 | 4,487 | ||||||||||||
| Total operating expense | 8,084 | 5,173 | 21,225 | 15,900 | ||||||||||||
| Operating loss | (21,858 | ) | (4,085 | ) | (34,262 | ) | (6,919 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (715 | ) | (631 | ) | (1,477 | ) | (1,917 | ) | ||||||||
| Interest expense, related party | — | (377 | ) | — | (1,056 | ) | ||||||||||
| Foreign exchange loss | (1,059 | ) | 484 | (1,704 | ) | (146 | ) | |||||||||
| Other loss | (3 | ) | — | (5 | ) | — | ||||||||||
| Total other expense | (1,777 | ) | (524 | ) | (3,186 | ) | (3,119 | ) | ||||||||
| Loss before income taxes | (23,635 | ) | (4,609 | ) | (37,448 | ) | (10,038 | ) | ||||||||
| Income tax provision | 2 | 2 | 4 | 38 | ||||||||||||
| Net loss | $ | (23,637 | ) | $ | (4,611 | ) | $ | (37,452 | ) | $ | (10,076 | ) | ||||
| Preferred dividend | — | (3,337 | ) | — | (10,011 | ) | ||||||||||
| Net loss available to common stockholders | $ | (23,637 | ) | $ | (7,948 | ) | $ | (37,452 | ) | $ | (20,087 | ) | ||||
| Loss per common share – basic and diluted | $ | (1.37 | ) | $ | (4.38 | ) | $ | (2.52 | ) | $ | (11.06 | ) | ||||
| Weighted average shares – basic and diluted | 17,218,907 | 1,816,175 | 14,837,954 | 1,815,496 | ||||||||||||
| XTERA COMMUNICATIONS, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except share data) | ||||||||
| (Unaudited) | ||||||||
| June 30, | September 30, | |||||||
| 2016 | 2015 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 614 | $ | 1,753 | ||||
| Restricted cash | 328 | 1,120 | ||||||
| Accounts receivable, net | 5,198 | 6,580 | ||||||
| Unbilled receivables | 11,263 | 6,119 | ||||||
| Inventories, net | 11,724 | 10,540 | ||||||
| Deferred cost | 5,010 | 780 | ||||||
| Prepaid expenses and other current asset | 1,092 | 1,185 | ||||||
| Total current assets | 35,229 | 28,077 | ||||||
| Property and equipment, net | 3,923 | 3,399 | ||||||
| Restricted cash | 3,476 | 152 | ||||||
| Intangible assets, net | 6,745 | 7,554 | ||||||
| Other assets | 90 | 90 | ||||||
| Total assets | $ | 49,463 | $ | 39,272 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 25,340 | $ | 13,589 | ||||
| Accrued compensation and employee benefits | 1,178 | 760 | ||||||
| Deferred revenue | 2,966 | 1,058 | ||||||
| Warranty reserve | 2,569 | 1,735 | ||||||
| Current portion of long-term debt | 12,103 | 10,707 | ||||||
| Other accrued liabilities | 14,677 | 4,966 | ||||||
| Total current liabilities | 58,833 | 32,815 | ||||||
| Long-term debt less current portion | — | 2,133 | ||||||
| Other long-term liabilities | 619 | 631 | ||||||
| Total liabilities | 59,452 | 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 June 30, 2016 and September 30, 2015; Issued and outstanding shares: 0 and 39,663,482 as of June 30, 2016 and September 30, 2015 | — | 40 | ||||||
| Series B-3 convertible preferred stock, $0.001 par value, Authorized shares: 0 and 39,500,000 as of June 30, 2016 and September 30, 2015; Issued and outstanding shares: 0 and 38,589,303 as of June 30, 2016 and September 30, 2015 | — | 39 | ||||||
| Series C-3 convertible preferred stock, $0.001 par value, Authorized shares: 0 and 25,000,000 as of June 30, 2016 and September 30, 2015; Issued and outstanding shares: 0 and 19,081,778 as of June 30, 2016 and September 30, 2015 | — | 19 | ||||||
| Series D-3 convertible preferred stock, $0.001 par value, Authorized shares: 0 and 60,000,000 as of June 30, 2016 and September 30, 2015; Issued and outstanding shares: 0 and 52,509,212 as of June 30, 2016 and September 30, 2015 | — | 53 | ||||||
| Series E-3 convertible preferred stock, $0.001 par value, Authorized shares: 0 and 120,000,000 as of June 30, 2016 and September 30, 2015; Issued and outstanding shares: 0 and 114,679,639 as of June 30, 2016 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 395,000,000 as of June 30, 2016 and September 30, 2015; Issued and outstanding shares: 17,224,624 and 1,936,056 as of June 30, 2016 and September 30, 2015 | 17 | 2 | ||||||
| Additional paid-in-capital | 410,421 | 388,047 | ||||||
| Accumulated deficit | (422,137 | ) | (384,685 | ) | ||||
| Accumulated other comprehensive income, net | 1,710 | 63 | ||||||
| Total stockholders’ equity (deficit) | (9,989 | ) | 3,693 | |||||
| Total liabilities and stockholders’ equity | $ | 49,463 | $ | 39,272 | ||||
| XTERA COMMUNICATIONS, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Nine Months Ended June 30, | ||||||||
| 2016 | 2015 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | (37,452 | ) | $ | (10,076 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 2,264 | 1,986 | ||||||
| Provision for inventory obsolescence | 4,219 | 1,001 | ||||||
| Provision for loss on contracts | 6,639 | — | ||||||
| Warranty provision | 959 | 769 | ||||||
| Share-based compensation | 333 | 25 | ||||||
| Warrant amortization expense | 77 | 152 | ||||||
| (Gain) loss on disposition of assets | 5 | — | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | 1,357 | 3,623 | ||||||
| Unbilled accounts receivable | (5,144 | ) | (3,014 | ) | ||||
| Inventories | (6,720 | ) | (2,415 | ) | ||||
| Deferred costs | (4,230 | ) | (733 | ) | ||||
| Prepaid expenses and other assets | 357 | (350 | ) | |||||
| Accounts payable | 11,837 | 9,097 | ||||||
| Other accrued liabilities | 3,409 | 872 | ||||||
| Deferred revenue | 1,982 | (2,215 | ) | |||||
| Net cash used in operating activities | (20,108 | ) | (1,278 | ) | ||||
| Investing Activities: | ||||||||
| Changes in restricted cash | (2,532 | ) | 378 | |||||
| Purchases of property and equipment | (996 | ) | (866 | ) | ||||
| Net cash used in investing activities | (3,528 | ) | (488 | ) | ||||
| Financing Activities: | ||||||||
| Repayment of debt | (21,771 | ) | (27,747 | ) | ||||
| Proceeds from debt | 20,957 | 23,847 | ||||||
| Proceeds from issuance of bridge loans | — | 500 | ||||||
| Proceeds from issuance of bridge loans, related party | — | 4,300 | ||||||
| Payment of capital lease obligations | (69 | ) | — | |||||
| Proceeds from issuance of common stock | 21,790 | 1 | ||||||
| Net cash provided by financing activities | 20,907 | 901 | ||||||
| Effect of exchange rate changes on cash | 1,590 | 141 | ||||||
| Net increase (decrease) in cash and cash equivalents | (1,139 | ) | (724 | ) | ||||
| Cash and cash equivalents at beginning of period | 1,753 | 1,920 | ||||||
| Cash and cash equivalents at end of period | $ | 614 | $ | 1,196 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 912 | $ | 986 | ||||
| Cash paid for income taxes | 2 | $ | 38 | |||||
| Noncash investing and finance activities: | ||||||||
| Issuance of warrants | $ | — | $ | 264 | ||||
| Inventory converted to depreciable assets | $ | 1,316 | $ | — | ||||