FREMONT, Calif., April 27, 2015 /PRNewswire/ -- Procera
Networks, Inc. (NASDAQ: PKT), the global Subscriber Experience
company, today reported financial results for its first quarter
ended on March 31, 2015.
First Quarter 2015 Financial & Business
Highlights
- Reported revenue of $20.5
million
- The ratio of bookings to revenue was below one
- Added thirteen new service provider customers
- Added seven new Tier 1 service providers
- Received expansion orders from 44 existing service provider
customers
- Shipped new PL20000 with 100 gigabyte cards
- Announced Virtual Packetlogic and first customer win with
Boingo
Revenue for the first quarter of 2015 was $20.5 million, compared with $14.5 million in the first quarter of 2014,
representing a 41% increase.
GAAP net loss for the first quarter of 2015 was $3.3 million, or $0.16 per diluted share, compared with a GAAP net
loss of $6.0 million, or $0.29 per diluted share, for the first quarter of
2014.
Non-GAAP net loss for the first quarter of 2015 was $0.7 million, or $0.03 per diluted share, compared with a non-GAAP
net loss of $3.9 million, or
$0.19 per diluted share, for the
first quarter of 2014.
A description of the non-GAAP financial measures and
reconciliation to comparable GAAP measures in an accompanying table
is provided in the section entitled "Use of Non-GAAP Financial
Information" below.
Guidance
Revenue for the fiscal year ending
December 31, 2015 is expected to grow
by 15% compared with the fiscal year ended December 31, 2014. This guidance is unchanged
from the guidance provided on February 26,
2015.
This guidance is an estimate only and actual performance could
differ. Procera's financial results historically have been
volatile, and a number of uncertainties and other factors may cause
Procera's future results, performance or achievements to be
materially different from prior results.
Definitive Agreement; Tender Offer
On April 22, 2015 Procera announced that it signed a
definitive agreement to be acquired by private funds managed by
Francisco Partners Management, L.P., a leading global
technology-focused private equity firm, in an all-cash transaction
valued at approximately $240
million. Under the terms of the definitive agreement,
Francisco Partners will commence a tender offer no later than
May 5, 2015 to acquire all
outstanding shares of Procera's common stock for $11.50 per share in cash. Procera's Board
of Directors has unanimously approved the transaction. The closing
of the tender offer will be subject to certain conditions,
including the tender of shares of Procera common stock representing
at least a majority of the total number of outstanding
fully-diluted shares (assuming the exercise of all options and the
vesting of all restricted stock units), the expiration of the
waiting period under any applicable antitrust laws, and other
customary conditions. Upon the completion of the tender offer,
Francisco Partners will acquire all remaining shares through a
second step merger without the need for a stockholder vote under
Delaware law. The closing of the
transaction is not contingent on financing. The parties currently
expect the transaction to close in June
2015. Upon the completion of the proposed transaction,
Procera will become a privately held company.
Conference Call
Due to the pending acquisition of
Procera by Francisco Partners, Procera will not have its customary
earnings conference call.
Additional Information
The tender offer described in
this press release (the "Offer") has not yet commenced, and this
press release is neither an offer to purchase nor a solicitation of
an offer to sell any shares of common stock of Procera or any other
securities. On the commencement date of the Offer, KDR Holding,
Inc. and KDR Acquisition, Inc., affiliates of Francisco Partners
IV, L.P. and Francisco Partners IV-A, L.P., will file a Tender
Offer Statement on Schedule TO ("Schedule TO"), including an offer
to purchase, a letter of transmittal and related documents, with
the United States Securities and Exchange Commission (the "SEC")
and thereafter, Procera will file a Solicitation/Recommendation
Statement on Schedule 14D-9 ("Schedule 14D-9") with the SEC.
Investors and security holders are urged to read both the Schedule
TO and the Schedule 14D-9 regarding the Offer, as each may be
amended from time to time, when they become available because they
will contain important information relevant to making any decision
regarding tendering shares of Procera's common stock. These
materials will be sent free of charge to all stockholders of
Procera when available. In addition, all of these materials (and
all other materials filed by Procera with the SEC) will be
available at no charge from the SEC through its website at
www.sec.gov. Investors and security holders may also obtain free
copies of the documents filed by Procera with the SEC by contacting
Procera's Investor Relations department at 47448 Fremont Boulevard,
Fremont, California 94538;
telephone number (510) 230-2777 or
diane.pope@proceranetworks.com.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking
statements related to Procera Networks, Inc., including statements
about the proposed acquisition of Procera by Francisco Partners,
the parties' ability to close the proposed transaction, the
expected closing date of the proposed transaction, Procera's
expectations for 2015 revenue, long-term growth and the market
opportunity, the strength of Procera's strategic initiatives, the
estimated future value of Procera's recently awarded business, as
well as Procera's general outlook. Statements in this press release
that are not historical or current facts are forward-looking
statements. All forward-looking statements in this press release
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are not
guarantees of future performance and involve known and unknown
risks, uncertainties and other factors that may cause Procera's
actual results, performance or achievements to be materially
different from any future results, performances or achievements
expressed or implied by the forward-looking statements. These risks
and uncertainties include, without limitation, risks and
uncertainties related to whether the proposed transaction will
close; the timing of the closing of the proposed transaction; the
outcome of the regulatory reviews of the proposed transaction; the
ability of the parties to complete the proposed transaction; the
ability of the parties to meet other closing conditions; how many
Procera stockholders tender their shares in the proposed
transaction; the outcome of legal proceedings that may be
instituted against Procera and/or others related to the proposed
transaction; unexpected costs or unexpected liabilities that may
result from the proposed transaction, whether or not consummated;
the possibility that competing offers will be made; effects of
disruption from the proposed transaction making it more difficult
to maintain relationships with employees, customers and other
business partners; the acceptance and adoption of Procera's
products; Procera's ability to service and upgrade its products;
lengthy sales cycles and lab and field trial delays by service
providers; Procera's ability to obtain any follow-on orders from
major customers; Procera's customers canceling orders or awards;
Procera's ability to achieve revenue recognition on awarded
business; Procera's dependence on a limited product line and key
customers; its dependence on key employees; Procera's ability to
compete in its industry with companies that are significantly
larger and have greater resources than Procera; Procera's ability
to manage costs effectively; Procera's ability to protect its
intellectual property rights in a global market; Procera's ability
to manufacture product quickly enough to meet potential demand; and
other risks and uncertainties described more fully in Procera's
documents filed with or furnished to the Securities and Exchange
Commission. More information about these and other risks that may
impact Procera's business are described in the "Risk Factors"
sections of its Annual Report on Form 10-K for the year ended
December 31, 2014, and other reports
filed with the SEC, which are available free of charge on the SEC's
website at http://www.sec.gov and on Procera's website at
http://www.proceranetworks.com. Given these risks and
uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. All
forward-looking statements in this press release are based on
information available to Procera as of the date hereof, and Procera
undertakes no obligation to update, amend or clarify any
forward-looking statement for any reason.
Use of Non-GAAP Financial Information
In addition to
the financial results presented in accordance with U.S. Generally
Accepted Accounting Principles (GAAP), this press release and the
accompanying tables and the related earnings conference call
contain certain non-GAAP financial measures. Our management
regularly uses these supplemental non-GAAP financial measures
internally to understand and manage our business and forecast
future periods and believes that these non-GAAP financial measures,
when taken together with the corresponding GAAP measures, provide
additional insight into the underlying factors and trends affecting
both Procera's performance and its cash-generating potential.
Our non-GAAP financial measures include adjustments for
stock-based compensation expenses; business development expenses;
cost reduction efforts; acquisition-related intangible asset and
deferred compensation amortization; impairment; and income tax
effects. We have excluded the effect of stock-based compensation;
the cost of outside professional services for negotiating and
performing legal, accounting and tax due diligence for potential
mergers and acquisitions; expenses connected with cost reduction
efforts; acquisition-related intangible asset and deferred
compensation amortization; impairment; and income tax effects, from
our non-GAAP gross profit, operating expenses and net income
measures. Stock-based compensation, which represents the estimated
fair value of stock options, restricted stock and restricted stock
units granted to employees, is excluded since grant activities vary
significantly from quarter to quarter in both quantity and fair
value. In addition, although stock-based compensation will recur in
future periods, excluding this expense allows us to better compare
core operating results with those of our competitors who also
generally exclude stock-based compensation from their core
operating results, and who may have different granting patterns and
types of equity awards and who may use different option valuation
assumptions than we do. Business development expenses are necessary
as part of certain growth strategies, such as through mergers and
acquisitions and other strategic transactions, and will occur when
such transactions are pursued. We have excluded these expenses
because they can vary materially from period-to-period and
transaction-to-transaction and expenses associated with these
business development activities are not considered a key measure of
Procera's operating performance. Cost reduction efforts occur with
shifts in objectives and evolving requirements of the business and
can result in fluctuating expenses connected with reducing
employment in certain areas. We have excluded these expenses
because they can vary significantly from period-to-period and are
not considered a key measure of Procera's operating performance.
Acquisition-related intangible asset and deferred compensation
amortization, impairment and tax effects represent non-cash charges
and benefits that result from the accounting for acquisitions. We
have excluded these items because, in any period, they may not
directly correlate to the underlying performance of Procera's
business and these items can vary materially from period-to-period
and transaction-to-transaction. In addition, we exclude these
acquisition-related costs and benefits when evaluating our current
operating performance.
Our non-GAAP financial measures may not reflect the full
economic impact of Procera's activities. Further, these non-GAAP
financial measures may be unique to Procera, as they may be
different from non-GAAP financial measures used by other companies,
including Procera's competitors. As such, this presentation of
non-GAAP financial measures may not enhance the comparability of
Procera's results to the results of other companies. Investors are
cautioned not to place undue reliance on our non-GAAP financial
measures. In addition, investors are cautioned that these non-GAAP
financial measures are not intended to be considered in isolation
and should be read in conjunction with our consolidated financial
statements prepared in accordance with GAAP.
For a reconciliation of these non-GAAP financial measures to the
most directly comparable GAAP financial measures, please see the
section of the accompanying tables titled, "GAAP to Non-GAAP
Reconciliation."
About Procera Networks, Inc.
Procera Networks, Inc.
(NASDAQ: PKT), the global Subscriber Experience company, is
revolutionizing the way operators and vendors monitor, manage and
monetize their network traffic. Elevate your business value and
improve customer experience with Procera's sophisticated
intelligence solutions. For more information, visit
www.proceranetworks.com or follow Procera on Twitter at
@ProceraNetworks.
Procera Networks,
Inc.
|
Condensed
Consolidated Statements of Operations
|
Unaudited
|
(in thousands,
except per share data)
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March
31,
|
|
|
|
|
2015
|
|
2014
|
Sales:
|
|
|
|
|
|
|
Product
sales
|
|
$ 15,172
|
|
$
9,504
|
|
Support
sales
|
|
5,331
|
|
5,037
|
|
|
Total
sales
|
|
20,503
|
|
14,541
|
Cost of
sales:
|
|
|
|
|
|
|
Product cost of
sales
|
|
7,155
|
|
5,091
|
|
Support cost of
sales
|
|
1,238
|
|
1,066
|
|
|
Total cost of
sales
|
|
8,393
|
|
6,157
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
12,110
|
|
8,384
|
|
|
|
|
59.1%
|
|
57.7%
|
Operating
expenses:
|
|
|
|
|
|
Research and
development
|
|
3,431
|
|
4,548
|
|
Sales and
marketing
|
|
7,159
|
|
6,877
|
|
General and
administrative
|
|
4,217
|
|
3,110
|
|
|
Total operating
expenses
|
|
14,807
|
|
14,535
|
|
|
|
|
|
|
|
Loss from
operations
|
|
(2,697)
|
|
(6,151)
|
|
|
|
|
|
|
|
Interest and other
income (expense), net
|
|
(591)
|
|
28
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(3,288)
|
|
(6,123)
|
Income tax provision
(benefit)
|
|
11
|
|
(147)
|
|
Net loss
|
|
|
$ (3,299)
|
|
$
(5,976)
|
|
|
|
|
|
|
|
Net loss per share -
basic and diluted
|
|
$ (0.16)
|
|
$
(0.29)
|
|
|
|
|
|
|
|
Shares used in
computing net loss per share:
|
|
|
|
|
|
Basic and
diluted
|
|
20,674
|
|
20,329
|
Procera Networks,
Inc.
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 23,114
|
|
$
17,939
|
|
Short-term
investments
|
|
84,537
|
|
84,542
|
|
Accounts receivable,
net of allowance
|
|
15,397
|
|
21,447
|
|
Inventories,
net
|
|
14,949
|
|
14,837
|
|
Prepaid expenses and
other
|
|
4,094
|
|
4,913
|
Total current
assets
|
|
142,091
|
|
143,678
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
7,172
|
|
8,322
|
|
Intangible assets,
net
|
|
2,466
|
|
2,957
|
|
Goodwill
|
|
|
960
|
|
960
|
|
Other non-current
assets
|
|
172
|
|
154
|
Total
assets
|
|
|
$ 152,861
|
|
$
156,071
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$ 3,434
|
|
$
5,207
|
|
Deferred
revenue
|
|
13,577
|
|
11,821
|
|
Accrued
liabilities
|
|
6,226
|
|
7,235
|
Total current
liabilities
|
|
23,237
|
|
24,263
|
|
|
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
|
|
Deferred
revenue
|
|
3,711
|
|
3,113
|
|
Deferred
rent
|
|
520
|
|
583
|
Total
liabilities
|
|
27,468
|
|
27,959
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
-
|
|
-
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common
stock
|
|
21
|
|
21
|
|
Additional paid-in
capital
|
|
226,417
|
|
225,313
|
|
Accumulated other
comprehensive loss
|
|
(3,714)
|
|
(3,190)
|
|
Accumulated
deficit
|
|
(97,331)
|
|
(94,032)
|
Total
stockholders' equity
|
|
125,393
|
|
128,112
|
|
|
|
|
|
|
|
Total liabilities
and stockholders' equity
|
|
$ 152,861
|
|
$
156,071
|
Procera Networks,
Inc.
|
GAAP to Non-GAAP
Reconciliation; and Supplemental Financial
Information
|
Unaudited
|
(in thousands,
except per share data)
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
March
2015
|
|
December
2014
|
|
March
2014
|
Sales:
|
|
|
|
|
|
|
|
|
|
Product
sales
|
|
$ 15,172
|
|
$
18,208
|
|
$ 9,504
|
|
Support
sales
|
|
5,331
|
|
5,947
|
|
5,037
|
|
|
Total
sales
|
|
20,503
|
|
24,155
|
|
14,541
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
Product cost of
sales, GAAP
|
|
7,155
|
|
9,031
|
|
5,091
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation (1)
|
|
(9)
|
|
(10)
|
|
(15)
|
|
|
|
Amortization of
intangibles (2)
|
|
(182)
|
|
(202)
|
|
(262)
|
|
|
|
Cost reduction
efforts (3)
|
|
-
|
|
-
|
|
(237)
|
|
|
Product cost of
sales, non-GAAP
|
|
6,964
|
|
8,819
|
|
4,577
|
|
|
|
|
|
|
|
|
|
|
|
Support cost of
sales, GAAP
|
|
1,238
|
|
1,262
|
|
1,066
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation (1)
|
|
(102)
|
|
(98)
|
|
(82)
|
|
|
Support cost of
sales, non-GAAP
|
|
1,136
|
|
1,164
|
|
984
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales,
non-GAAP
|
|
8,100
|
|
9,983
|
|
5,561
|
|
|
Gross profit,
non-GAAP
|
|
12,403
|
|
14,172
|
|
8,980
|
|
|
|
|
|
60.5%
|
|
58.7%
|
|
61.8%
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
|
3,431
|
|
4,362
|
|
4,548
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation (1)
|
|
(359)
|
|
(429)
|
|
(388)
|
|
|
|
Cost reduction
efforts (3)
|
|
-
|
|
(58)
|
|
(206)
|
|
|
|
Deferred compensation
(4)
|
|
-
|
|
-
|
|
(65)
|
|
|
Research and
development, non-GAAP
|
|
3,072
|
|
3,875
|
|
3,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
7,159
|
|
7,406
|
|
6,877
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation (1)
|
|
(297)
|
|
(276)
|
|
(408)
|
|
|
|
Amortization of
intangibles (2)
|
|
(43)
|
|
(47)
|
|
(113)
|
|
|
|
Cost reduction
efforts (3)
|
|
-
|
|
(91)
|
|
(74)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing,
non-GAAP
|
|
6,819
|
|
6,992
|
|
6,282
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
4,217
|
|
3,426
|
|
3,110
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation (1)
|
|
(440)
|
|
(656)
|
|
(420)
|
|
|
|
Cost reduction
efforts (3)
|
|
-
|
|
-
|
|
(27)
|
|
|
|
Business development
expenses (5)
|
|
(1,191)
|
|
(229)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative, non-GAAP
|
|
2,586
|
|
2,541
|
|
2,663
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses, non-GAAP
|
|
12,477
|
|
13,408
|
|
12,834
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations, non-GAAP
|
|
(74)
|
|
764
|
|
(3,854)
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income (expense), net
|
|
(591)
|
|
(354)
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes, non-GAAP
|
|
(665)
|
|
410
|
|
(3,826)
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit)
|
|
11
|
|
34
|
|
(147)
|
|
|
Non-GAAP adjustment
(6)
|
|
-
|
|
44
|
|
179
|
|
Income tax provision,
non-GAAP
|
|
11
|
|
78
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss),
non-GAAP
|
|
$
(676)
|
|
$
332
|
|
$ (3,858)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share - diluted, non-GAAP
|
|
$
(0.03)
|
|
$
0.02
|
|
$ (0.19)
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computing diluted net income (loss) per share
|
|
20,674
|
|
20,613
|
|
20,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net
Income (Loss):
|
|
|
|
|
|
|
|
U.S.
GAAP as reported
|
|
$
(3,299)
|
|
$
(1,720)
|
|
$ (5,976)
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation (1)
|
|
1,207
|
|
1,469
|
|
1,313
|
|
|
|
Amortization of
intangibles (2)
|
|
225
|
|
249
|
|
375
|
|
|
|
Cost reduction
efforts (3)
|
|
-
|
|
149
|
|
544
|
|
|
|
Deferred compensation
(4)
|
|
-
|
|
-
|
|
65
|
|
|
|
Business development
expenses (5)
|
|
1,191
|
|
229
|
|
-
|
|
|
|
Income tax adjustment
(6)
|
|
-
|
|
(44)
|
|
(179)
|
|
As
Adjusted
|
|
$
(676)
|
|
$
332
|
|
$ (3,858)
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Diluted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
U.S.
GAAP as reported
|
|
$
(0.16)
|
|
$
(0.08)
|
|
$ (0.29)
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation (1)
|
|
0.06
|
|
0.07
|
|
0.06
|
|
|
|
Amortization of
intangibles (2)
|
|
0.01
|
|
0.01
|
|
0.02
|
|
|
|
Cost reduction
efforts (3)
|
|
-
|
|
0.01
|
|
0.03
|
|
|
|
Deferred compensation
(4)
|
|
-
|
|
-
|
|
0.00
|
|
|
|
Business development
expenses (5)
|
|
0.06
|
|
0.01
|
|
-
|
|
|
|
Income tax adjustment
(6)
|
|
-
|
|
-
|
|
(0.01)
|
|
As
Adjusted
|
|
$
(0.03)
|
|
$
0.02
|
|
$ (0.19)
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computing diluted net income (loss) per share
|
|
20,674
|
|
20,613
|
|
20,329
|
(1)
|
Stock-based
compensation expense is calculated in accordance with the fair
value recognition provisions of ASC Topic 718.
|
(2)
|
Amortization expense
associated with intangible assets acquired in the Vineyard Networks
acquisition.
|
(3)
|
Severance and other
employee-related costs in connection with the Company's
cost-reduction efforts.
|
(4)
|
Amortization of
amounts paid under retention agreements with Vineyard's three
founders.
|
|
These amounts were
paid during the first quarter of fiscal year 2014, after one year
of continuous employment with the Company.
|
(5)
|
Includes the cost of
outside professional services for negotiating and performing legal,
accounting and tax due diligence for potential mergers,
acquisitions and other significant partnership
arrangements.
|
(6)
|
Income tax benefit
associated with the following Vineyard acquisition related
items:
|
|
- reversal of
Vineyard's pre-existing income tax valuation allowance upon
acquisition;
|
|
- amortization
of acquired intangible assets; and
|
|
- Canadian
valuation allowance and book to tax differences on deferred
revenue.
|
Investor Relations Contact
Michael Bishop
Blueshirt Group (for Procera Networks)
mike@blueshirtgroup.com
1-415-217-4968
Media Contact
Mike
Tomlinson
Engage PR (for Procera Networks)
mtomlinson@engagepr.com
1-510-748-8200 x209
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SOURCE Procera Networks, Inc.