Packeteer(R), Inc. (Nasdaq: PKTR), the global leader in high-performance, intelligent WAN Application Delivery, today announced results of operations for the quarter ended March 31, 2007.
Net revenues for the first quarter 2007 were $34.7 million, compared with $32.3 million for the first quarter 2006, an increase of 7%. Although slightly higher than our preliminary estimate reported on April 4, 2007, net revenues decreased sequentially nearly 19% from the $42.7 million reported in the fourth quarter 2006. GAAP net loss for the first quarter 2007 was $6.1 million or $0.17 per diluted share. This compares to first quarter 2006 GAAP net income of $4.5 million or $0.13 per diluted share.
Non-GAAP net loss for the first quarter 2007 was $3.1 million or $0.09 per diluted share, compared to non-GAAP net income for the first quarter 2006 of $7.2 million or $0.20 per diluted share. Non-GAAP net income (loss) includes adjustments for stock-based compensation and amortization of purchased intangible assets, net of the related tax impact. See our "Reconciliation of GAAP Net Income to Non-GAAP Net Income" for further information.
Total cash and investments at March 31, 2007 was $84.1 million compared to $76.6 million at December 31, 2006. Accounts receivable of $24.0 million represents 62 days sales outstanding (DSO), compared to $31.7 million representing 68 DSO at December 31, 2006. The lower receivable balance and related DSO were primarily due to lower and more linear quarterly revenues compared to the fourth quarter of 2006. Total inventories increased to $6.0 million at March 31, 2007 compared to $4.0 million at December 31, 2006, primarily due to the decrease in sales in the quarter.
"After reviewing the most recent quarter, we believe that the revenue shortfall resulted mostly from longer product evaluations and proof of concept trials performed by various customers," said Dave Cote, president and CEO of Packeteer. We believe this resulted from an increasingly competitive marketplace, and our inability to deliver several product enhancements to our acceleration product lines by quarter end. We currently expect to deliver these enhancements by mid May, and as a result expect a 5-10% sequential revenue increase in our upcoming second quarter.
"Along with modestly slowing our planned second and third quarter investments in various functional areas in the company, and continuing to accelerate the development and launch of several new products later in the year, we remain very optimistic about our long-term business opportunities. We also recognize the importance of returning to our target levels of profitability as quickly as possible, while delivering new products that are important to our customers and the expanding market."
A Conference Call with company management will be held April 19, 2007 at 2:00 pm Pacific Time. The call will be simulcast on the Internet at http://www.packeteer.com and http://www.companyboardroom.com . A replay of the call will be available on the website until April 26, 2007. Management's accompanying script will remain on the website. Additional investor information can be accessed at http://www.packeteer.com or by calling Packeteer's Investor Relations Department at (408) 873-4422.
About Packeteer
Packeteer (NASDAQ: PKTR) is the global market leader in Application Traffic Management for wide area networks. Deployed at more than 7,000 companies in 50 countries, Packeteer solutions empower IT organizations with patented network visibility, control, and acceleration capabilities delivered through a family of intelligent, scalable appliances. For more information, contact Packeteer via telephone at +1 (408) 873-4400, fax at +1 (408) 873-4410, or by email at info@packeteer.com, or visit the Company's website at http://www.packeteer.com . Packeteer is headquartered in Cupertino, CA.
Safe Harbor Clause
The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding Packeteer's expectations, beliefs, intentions or strategies regarding the future. Forward-looking statements include, but are not limited to, express or implied statements regarding future revenues, revenue growth and profitability, spending levels by existing and prospective customers, the markets for our products, new product development, liquidity and macro economic conditions. All forward-looking statements included in this press release are based upon information available to Packeteer as of the date hereof. Packeteer assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. Actual results may differ materially due to a number of factors including the perceived need for our products, our ability to convince potential customers of our value proposition, the costs of competitive solutions, continued capital spending by prospective customers and macro economic conditions. These and other risks relating to Packeteer's business are set forth in Packeteer's Form 10-K filed with the Securities and Exchange Commission on March 15, 2007, and Packeteer's Form 10-Qs and other reports filed from time to time with the Securities and Exchange Commission.
NOTE: Packeteer, PacketShaper, PacketShaper Express are trademarks or registered trademarks of Packeteer, Inc. All other products and services are the trademarks of their respective owners.
PACKETEER, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
(unaudited)
Three months ended
March 31,
2007 2006
Net revenues
Product revenues $23,841 $24,694
Service revenues 10,887 7,591
Total net revenues 34,728 32,285
Cost of revenues
Product costs 7,735 5,104
Service 3,570 2,321
Amortization of purchased intangible assets 635 394
Total cost of revenues 11,940 7,819
Gross profit 22,788 24,466
Operating expenses:
Research and development 9,227 6,456
Sales and marketing (includes amortization
of purchased intangible assets of $316 and
$0 for the three months ended March 31, 2007
and 2006, respectively) 17,348 10,954
General and administrative 4,080 2,922
Total operating expenses 30,655 20,332
Operating income (loss) (7,867) 4,134
Other income, net 832 1,240
Income (loss) before provision for
(benefit from) income taxes (7,035) 5,374
Provision for (benefit from) income taxes (948) 860
Net income (loss) $(6,087) $4,514
Basic net income (loss) per share $(0.17) $0.13
Diluted net income (loss) per share $(0.17) $0.13
Shares used in computing basic net income
(loss) per share 35,740 34,416
Shares used in computing diluted net income
(loss) per share 35,740 35,377
Stock-based compensation included in
the costs and expense line items:
Product costs $111 $96
Service costs 214 169
Research and development 1,098 817
Sales and marketing 1,042 1,059
General and administrative 780 695
Total amortization of
stock-based compensation $3,245 $2,836
PACKETEER, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(in thousands, except per share amounts)
(unaudited)
Three months ended
March 31,
2007 2006
Non-GAAP net income (loss) $(3,132) $7,227
Stock-based compensation from awards (3,245) (2,734)
Amortization of purchased intangible assets (952) (394)
Stock-based compensation from acquisition (22) (102)
Tax impact of above 1,264 517
GAAP net income (loss) $(6,087) $4,514
Basic non-GAAP net income
(loss) per share excluding amortization
of purchased intangible assets and
stock-based compensation, net of taxes $(0.09) $0.21
Diluted non-GAAP net income
(loss) per share excluding amortization
of purchased intangible assets and
stock-based compensation, net of taxes $(0.09) $0.20
Shares used in computing
basic net income (loss) per share 35,740 34,416
Shares used in computing
diluted net income (loss) per share 35,740 35,377
PACKETEER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, December 31,
2007 2006
Assets:
Cash, cash equivalents and investments $84,097 $76,557
Accounts receivable, net 24,004 31,743
Inventories 5,965 3,957
Property and equipment, net 4,513 3,968
Other assets 33,203 31,042
Goodwill and other intangible assets, net 68,749 69,701
Total assets $220,531 $216,968
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued liabilities $27,222 $28,176
Deferred rent and other 385 179
Deferred revenue 31,677 29,104
Total liabilities 59,284 57,459
Stockholders' equity 161,247 159,509
Total liabilities and stockholders' equity $220,531 $216,968
PACKETEER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended
March 31,
2007 2006
Net cash provided by operating activities $3,703 $9,264
Net cash provided by
(used in) investing activities 7,345 (12,311)
Net cash provided by financing activities 5,200 3,498
Net increase in cash and cash equivalents 16,248 451
Cash and cash equivalents at beginning of period 39,640 36,221
Cash and cash equivalents at end of period 55,888 36,672
Investments 28,209 98,028
Total cash, cash equivalents and investments $84,097 $134,700