Revenue of $31.5 million
Operating Margin of 9.0%
Diluted Earnings Per Share of $0.10
BETHESDA, Md., Feb. 4, 2009 (GLOBE NEWSWIRE) -- OPNET Technologies, Inc. (Nasdaq:OPNT), a leading provider of solutions for managing networks and applications, today announced that revenue for the third fiscal quarter, ended December 31, 2008, was $31.5 million, compared to $26.0 million for the same quarter in the prior fiscal year. Diluted earnings per share for the third quarter of fiscal 2009 were $0.10, compared to diluted earnings per share of negative $0.06 for the same quarter in the prior fiscal year.
Marc A. Cohen, OPNET's Chairman and CEO, stated, "We are pleased to have achieved solid quarterly performance in a challenging economic environment. We generated $31.5 million in revenue, produced operating margin of 9%, and grew deferred revenue to $31 million. During the end of December, we saw a number of deals get postponed, including some large ones, as a result of budgetary constraints."
Cohen further commented, "We continue to see strong demand for our end-to-end application performance management solutions; however, we expect sales cycles to lengthen as certain customers contend with tightening budgets in light of the continued recession. Despite the challenging economic environment, we believe the strong demand for our application performance management solutions will enable us to grow market share."
The Company's third quarter fiscal 2009 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 2009: * Grew revenue year-over-year 21.1% to $31.5 million from $26.0 million for the same quarter of fiscal 2008. Revenue for the quarter decreased sequentially 2.6% from $32.4 million for the second quarter of fiscal 2009. * License revenue increased year-over-year by 32.8% to $13.6 million from $10.2 million for the same quarter of fiscal 2008. License revenue for the quarter decreased sequentially 3.1% from $14.0 million for the second quarter of fiscal 2009. * Ended the quarter with deferred revenue of $31.0 million, a 16.6% increase year-over-year from $26.5 million at the end of the same quarter of fiscal 2008 and a 4.4% increase sequentially from $29.7 million at the end of the second quarter of fiscal 2009. * Gross profit increased year-over-year to $23.6 million from $19.1 million for the same quarter of fiscal 2008. Gross profit decreased sequentially from $24.5 million in the second quarter of fiscal 2009. * Operating income increased year-over-year to $2.8 million from negative $2.3 million for the same quarter of fiscal 2008. Operating income decreased sequentially from $3.1 million in the second quarter of fiscal 2009. * Operating margin increased year-over-year to 9.0% from negative 9.0% for the same quarter of fiscal 2008. Operating margin decreased sequentially from 9.6% in the second quarter of fiscal 2009. Non-GAAP Financial Highlights for the Third Quarter of Fiscal 2009: * Non-GAAP gross profit increased year-over-year to $24.2 million from $19.7 million for the same quarter of fiscal 2008. Non-GAAP gross profit decreased sequentially from $25.1 million in the second quarter of fiscal 2009. * Non-GAAP operating income increased year-over-year to $3.8 million from negative $1.3 million for the same quarter of fiscal 2008. Non-GAAP operating income decreased sequentially from $4.2 million in the second quarter of fiscal 2009. * Non-GAAP operating margin increased year-over year to 12.0% from negative 5.0% for the same quarter of fiscal 2008. Non-GAAP operating margin decreased sequentially from 13.0% in the second quarter of fiscal 2009. * Non-GAAP net income increased year-over-year to $2.6 million from negative $360 thousand for the same quarter of fiscal 2008. Non- GAAP net income decreased sequentially from $2.7 million in the second quarter of fiscal 2009.
Fourth Quarter Fiscal Year 2009 Financial Outlook
OPNET currently expects fiscal 2009 fourth quarter GAAP revenue to be between $29 million and $33.5 million, and GAAP diluted earnings per share to be between negative $0.01 and positive $0.11. 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 Wednesday, February 4, 2009 at 5:00 pm ET to review financial results for the third quarter of fiscal 2009.
To listen to the OPNET investor conference call: * Call 877-719-9801 in the U.S. or 719-325-4832 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 888-203-1112 or 719-457-0820 for international callers. For replay, enter passcode # 3625349. The replay will be available from 8:00 pm ET February 4, 2009 through 11:59 pm ET February 11, 2009. * 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 operating income, non-GAAP 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 to 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 its GAAP presentation of cost of revenue -- amortization of acquired technology and customer relationships and 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 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 its GAAP presentation of cost of revenue -- software license updates, technical support and services, cost of revenue -- professional services, operating expenses -- research and development, operating expenses -- sales and marketing and operating expenses -- general and administrative. Although stock-based compensation is an expense of OPNET and viewed as a form of compensation, management excludes these expenses for the purpose of calculating non-GAAP operating income, non-GAAP gross profit, non-GAAP 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.
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 and earnings per share for the fourth quarter of fiscal 2009, 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" of OPNET's Annual Report on Form 10-K for the fiscal year ended March 31, 2008, as filed with the Securities and Exchange Commission on June 9, 2008 and the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2008. The risk factors set forth in the Form 10-K and Form 10-Q 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 Nine Months Ended
December 31, December 31,
----------------- -----------------
2008 2007 2008 2007
------- ------- ------- -------
Revenue:
New software licenses $13,578 $10,224 $40,525 $28,550
Software license updates,
technical support,
and services 11,078 8,889 32,034 25,573
Professional services 6,859 6,904 21,408 20,217
------- ------- ------- -------
Total revenue 31,515 26,017 93,967 74,340
------- ------- ------- -------
Cost of revenue:
New software licenses 1,208 370 2,384 733
Software license updates,
technical support,
and services 1,223 1,066 3,496 3,305
Professional services 4,911 4,886 15,992 13,778
Amortization of acquired
technology and customer
relationships 543 604 1,700 933
------- ------- ------- -------
Total cost of revenue 7,885 6,926 23,572 18,749
------- ------- ------- -------
Gross profit 23,630 19,091 70,395 55,591
------- ------- ------- -------
Operating expenses:
Research and development 7,341 7,190 23,045 19,993
Sales and marketing 10,691 10,744 31,615 28,859
General and administrative 2,766 3,503 8,837 8,933
------- ------- ------- -------
Total operating expenses 20,798 21,437 63,497 57,785
------- ------- ------- -------
Income (loss) from operations 2,832 (2,346) 6,898 (2,194)
Interest and other income, net 265 902 1,060 2,953
------- ------- ------- -------
Income before provision
(benefit) for income taxes 3,097 (1,444) 7,958 759
Provision (benefit)
for income taxes 1,135 (132) 3,155 123
------- ------- ------- -------
Net income (loss) $ 1,962 $(1,312) $ 4,803 $ 636
======= ======= ======= =======
Basic net income (loss)
per common share $ 0.10 $ (0.06) $ 0.24 $ 0.03
======= ======= ======= =======
Diluted net income (loss)
per common share $ 0.10 $ (0.06) $ 0.23 $ 0.03
======= ======= ======= =======
Basic weighted average
common shares outstanding 20,315 20,273 20,267 20,389
======= ======= ======= =======
Diluted weighted average
common shares outstanding 20,652 20,273 20,578 20,711
======= ======= ======= =======
OPNET TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP INCOME
(in thousands, except per share data)
(unaudited)
Three
Months
Three Months Ended Ended
December 31, Sept 30,
----------------- -------
2008 2007 2008
------- ------- -------
GAAP gross profit $23,630 $19,091 $24,527
Stock-based compensation expense 30 36 36
Amortization of intangibles 543 604 578
------- ------- -------
Non-GAAP gross profit $24,203 $19,731 $25,141
======= ======= =======
GAAP income (loss) from operations $ 2,832 $(2,346) $ 3,121
Stock-based compensation expense 363 362 410
Amortization of intangibles 593 686 662
------- ------- -------
Non-GAAP income (loss) from operations $ 3,788 $(1,298) $ 4,193
======= ======= =======
GAAP net income (loss) $ 1,962 $(1,312) $ 2,034
Stock-based compensation expense 363 362 410
Amortization of intangibles 593 686 662
Provision for income tax (348) (96) (446)
------- ------- -------
Non-GAAP net income (loss) $ 2,570 $ (360) $ 2,660
======= ======= =======
Diluted net income (loss)
per common share:
GAAP $ 0.10 $ (0.06) $ 0.10
======= ======= =======
Non-GAAP $ 0.12 $ (0.02) $ 0.13
======= ======= =======
Diluted weighted average common
shares outstanding
GAAP and Non-GAAP 20,652 20,273 20,682
======= ======= =======
OPNET TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
Dec 31, March 31,
2008 2008
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 88,798 $ 71,410
Marketable securities -- 7,451
Accounts receivable, net 24,681 20,780
Unbilled accounts receivable 5,820 5,366
Inventory 163 319
Deferred income taxes, prepaid expenses
and other current assets 3,227 3,627
-------- --------
Total current assets 122,689 108,953
-------- --------
Marketable securities -- 6,968
Property and equipment, net 13,905 10,884
Intangible assets, net 6,715 8,633
Goodwill 14,639 14,639
Deferred income taxes and other assets 4,827 3,461
-------- --------
Total assets $162,775 $153,538
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 790 $ 489
Accrued liabilities 11,302 8,555
Other income taxes 279 658
Deferred rent 327 326
Deferred revenue 28,404 28,722
-------- --------
Total current liabilities 41,102 38,750
-------- --------
Accrued liabilities 59 59
Deferred rent 2,671 1,762
Deferred revenue 2,561 1,772
Other income taxes 484 550
-------- --------
Total liabilities 46,877 42,893
-------- --------
Stockholders' equity:
Common stock 28 28
Additional paid-in capital 92,351 89,878
Retained earnings 39,641 34,838
Accumulated other comprehensive (loss) income (978) 160
Treasury stock, at cost (15,144) (14,259)
-------- --------
Total stockholders' equity 115,898 110,645
-------- --------
Total liabilities and stockholders' equity $162,775 $153,538
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