SUNNYVALE, Calif., July 28, 2014 /PRNewswire/ -- Meru Networks,
Inc., (NASDAQ:MERU), a leader in intelligent Wi-Fi networking,
today announced its financial results for the second quarter ended
June 30, 2014.
Second Quarter 2014 Financial Results
Total revenues for the second quarter of 2014 were $23.6 million, down 10.9% from $26.5 million in the second quarter of
2013. Product revenues for the second quarter of 2014 were
$18.8 million, down 13.3% from the
$21.7 million reported in the second
quarter of 2013.
Net loss as reported in accordance with GAAP was $4.2
million for the second quarter of 2014, or a net loss
of ($0.18) per basic and diluted share, compared to a net loss
of $3.1 million, or a net loss of ($0.14) per basic
and diluted share, for the same period of 2013.
Meru reported a second quarter 2014 non-GAAP net loss of
$3.0 million, or ($0.13) loss per basic and diluted share,
compared to a non-GAAP net loss of $1.2
million, or ($0.05) loss per
basic and diluted share, for the same period of 2013. Non-GAAP
results for the second quarter of 2014 exclude the impact of
stock-based compensation expense of $1.2 million and amortization of other
intangibles totaling $0.1 million. Non-GAAP results for the
second quarter of 2013 exclude the impact of stock-based
compensation expense of $1.8 million and amortization of other
intangibles of $0.1 million. Please
refer to the reconciliation of Meru's GAAP to non-GAAP results
provided at the end of this release.
"The accelerating 11ac momentum represents a huge opportunity
for Meru," said Dr. Bami Bastani,
president and CEO, Meru Networks.
"In addition, being first to market with OPENFLOW™ certification
for wireless networking positions Meru as a leader in SDN-enabled
unified wired and wireless networking and expands our addressable
market."
Conference Call Information
Meru will host a conference call for analysts and investors to
discuss its second quarter 2014 results today, July
28, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To join the live
call, individuals may do so by dialing (877) 852-2926 for domestic
callers and (253) 237-1123 for international callers. The
conference ID for the call is 70474316.
The live and archived webcast of the second quarter 2014
financial results conference call will also be available at the
investor relations section of Meru's website at
http://investors.merunetworks.com.
About Meru Networks
Meru Networks (NASDAQ: MERU) is a leader in intelligent 802.11ac
Wi-Fi solutions, delivering uninterrupted user experience for
education, healthcare, hospitality and enterprise. The Meru
MobileFLEX architecture is designed to enable
seamless roaming with traffic separation for critical applications,
providing top performance and high capacity in high-density
environments. Visit www.merunetworks.com or call (408)
215-5300 for more information.
© 2014 Meru Networks, Inc. Meru Networks and Meru are registered
trademarks of Meru Networks, Inc. in the
United States. OPENFLOW™ is a trademark of the Open
Networking Foundation.
Cautionary Statement Regarding Forward Looking
Statements
All statements other than statements of historical facts are
statements that can be deemed forward-looking statements, including
any statements of expectations or beliefs. These
forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from those in
the forward looking statements. Risks and uncertainties that could
cause our results to differ materially from those expressed or
implied by such forward-looking statements include, among others:
business and economic conditions and growth trends in the
networking industry, our vertical markets and various geographic
regions; competition in the industry; our future capital needs may
change; changes in overall information technology spending; failure
to develop new products; and those risks and uncertainties
described in documents filed with or furnished to
the Securities and Exchange Commission ("SEC") by Meru,
including under the caption "Risk Factors" in Meru's Quarterly
Report on Form 10-Q filed with the SEC on April
30, 2014, and any subsequent reports filed with the SEC. All
forward-looking statements in this press release are based on
information available to Meru as of the date hereof, and Meru
assumes no obligation to update these forward-looking statements,
except as required by law.
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, the Company
believes it is appropriate to report certain non-GAAP financial
measures.
The Company's non-GAAP financial measures include the
adjustments as follows:
- Stock‑Based Compensation. When
evaluating the performance of its consolidated results, Meru does
not consider stock‑based compensation charges. Likewise, the Meru
management team excludes stock‑based compensation expense from its
operating plans. In contrast, the Meru management team is held
accountable for cash‑based compensation and such amounts are
included in its operating plans. Further, when considering the
impact of equity award grants, Meru places a greater emphasis on
overall stockholder dilution rather than the accounting charges
associated with such grants. Meru believes it is useful to provide
a non‑GAAP financial measure that excludes stock‑based compensation
in order to better understand the long‑term performance of its
business.
- Restructuring Costs. The Company
excludes restructuring costs because such charges are isolated
one-time charges and the Company does not expect them to recur in
the ordinary course of its business. The Company further believes
those charges are not directly related to its ongoing business
results and do not reflect expected future operating expenses.
- Amortization of intangible assets. The
Company excludes amortization of acquired intangible assets because
it is non‑cash in nature and because the Company believes that the
non‑GAAP financial measures excluding this item provide meaningful
supplemental information regarding operational performance and
liquidity. In addition, excluding this item from various non‑GAAP
measures facilitates internal comparisons to historical operating
results and comparisons to competitors' operating results.
- Amortization of a common stock warrant
issued in connection with debt financing. The Company excludes
amortization of a common stock warrant issued in connection with
debt financing when evaluating the performance of its consolidated
results because the Company believes these costs are unusual in
nature and the Company does not expect them to recur in the
ordinary course of its business. The Company further believes these
costs are unrelated to the ongoing operation of the business in the
ordinary course.
The Company's non-GAAP financial measures include the
following:
- Non‑GAAP net loss - Non-GAAP net loss
is net loss as reported on the Company's condensed consolidated
statements of operations, excluding the impact of stock‑based
compensation expense, restructuring costs, amortization of
intangible assets related to the Company's acquisition of Identity
Networks and amortization of the fair value of a common stock
warrant issued in connection with debt financing.
- Non-GAAP net loss per share of common
stock, basic and diluted - Non-GAAP net loss per share of
common stock, basic and diluted is net loss per share of common
stock, basic, as reported on the Company's condensed consolidated
statements of operations excluding the impact of stock‑based
compensation expense, restructuring costs, amortization of
intangible assets related to the Company's acquisition of Identity
Networks, and amortization of the fair value of a common stock
warrant issued in connection with debt financing.
- Non-GAAP Gross margin - Non-GAAP Gross
margin is gross margin as reported on the Company's condensed
consolidated statements of operations excluding the impact of
stock‑based compensation expense and amortization of intangible
assets related to the Company's acquisition of Identity
Networks.
- Non‑GAAP loss from operations -
Non-GAAP loss from operations is loss from operations as reported
on the Company's condensed consolidated statements of operations,
excluding impact of stock‑based compensation expense, restructuring
costs, and amortization of intangible assets related to the
Company's acquisition of Identity Networks.
Meru believes that its non‑GAAP measures provide useful
information to management and investors regarding financial and
business trends relating to its financial condition and results of
operations. Meru also believes the non‑GAAP measures provide useful
supplemental information for investors to evaluate its operating
results in the same manner as the research analysts that follow
Meru, all of whom will present non‑GAAP projections in their
published reports. As such, the non‑GAAP measures provided by Meru
facilitate a more direct comparison of its performance with the
financial projections published by the analysts as well as its
competitors, many of whom report financial results on a non‑GAAP
basis. The economic substance behind Meru's decision to use such
non‑GAAP measures is that such measures approximate its
controllable operating performance more closely than the most
directly comparable GAAP financial measures. For example, Meru's
management has no control over certain variables that have a major
influence in the determination of stock‑based compensation such as
the volatility of its stock price and changing interest rates. In
addition, Meru's management does not consider the amortization of
intangible assets related to the Company's acquisition of Identity
Networks relevant when comparing its performance to prior periods.
Meru believes that all of these excluded expenses do not accurately
reflect the underlying performance of its continuing operations for
the period in which they are incurred, even though these excluded
items may be incurred and reflected in Meru's GAAP financial
results.
The material limitation associated with the use of non‑GAAP
financial measures is that the non‑GAAP measures may not reflect
the full economic impact of Meru's activities. Meru's non‑GAAP
measures may be calculated differently than non‑GAAP financial
information disclosed by other companies. Accordingly, investors
are cautioned not to place undue reliance on non‑GAAP
information.
MERU NETWORKS,
INC.
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
2014
|
|
2013
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$ 19,413
|
|
$
30,938
|
Accounts
receivable, net
|
12,649
|
|
17,088
|
Inventory
|
6,629
|
|
7,230
|
Prepaid
expenses and other current assets
|
1,710
|
|
998
|
Total current assets
|
40,401
|
|
56,254
|
|
|
|
|
|
|
Property and
equipment, net
|
2,244
|
|
2,451
|
Goodwill
|
1,658
|
|
1,658
|
Intangible assets,
net
|
35
|
|
140
|
Other
assets
|
1,983
|
|
1,934
|
TOTAL
ASSETS
|
$ 46,321
|
|
$
62,437
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
Accounts
payable
|
$ 4,738
|
|
$
6,139
|
|
Accrued
liabilities
|
8,559
|
|
12,535
|
|
Long-term debt,
current portion
|
4,004
|
|
3,718
|
|
Deferred revenue,
current portion
|
12,090
|
|
13,730
|
|
|
Total current
liabilities
|
29,391
|
|
36,122
|
|
|
|
|
|
|
Long-term debt, net
of current portion
|
725
|
|
2,797
|
Deferred revenue, net
of current portion
|
6,574
|
|
5,876
|
Other
liabilities
|
1,658
|
|
1,387
|
|
|
Total
liabilities
|
38,348
|
|
46,182
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
|
Preferred
stock
|
-
|
|
-
|
|
Common
stock
|
12
|
|
11
|
|
Additional paid-in
capital
|
286,152
|
|
282,168
|
|
Accumulated other
comprehensive loss
|
(520)
|
|
(553)
|
|
Accumulated
deficit
|
(277,671)
|
|
(265,371)
|
|
|
Total stockholders'
equity
|
7,973
|
|
16,255
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$ 46,321
|
|
$
62,437
|
|
|
|
|
|
|
MERU NETWORKS,
INC.
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In thousands,
except for share and per share amounts)
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
REVENUES:
|
|
|
|
|
|
|
|
Products
|
$ 18,809
|
|
$ 21,686
|
|
$ 34,642
|
|
$ 42,276
|
Support and
services
|
4,762
|
|
4,730
|
|
9,529
|
|
8,833
|
Ratable
products and services
|
-
|
|
35
|
|
-
|
|
77
|
Total revenues
|
23,571
|
|
26,451
|
|
44,171
|
|
51,186
|
|
|
|
|
|
|
|
|
COSTS OF
REVENUES:
|
|
|
|
|
|
|
|
Products
|
6,846
|
|
7,367
|
|
12,721
|
|
14,684
|
Support and
services
|
1,955
|
|
1,888
|
|
3,857
|
|
3,664
|
Ratable
products and services
|
-
|
|
17
|
|
-
|
|
39
|
Total costs of revenues *
|
8,801
|
|
9,272
|
|
16,578
|
|
18,387
|
|
|
|
|
|
|
|
|
Gross margin
|
14,770
|
|
17,179
|
|
27,593
|
|
32,799
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Research and
development *
|
4,921
|
|
3,974
|
|
10,373
|
|
7,662
|
Sales and
marketing *
|
10,778
|
|
12,348
|
|
22,407
|
|
23,768
|
General and
administrative *
|
2,859
|
|
3,293
|
|
6,157
|
|
6,578
|
Total operating expenses
|
18,558
|
|
19,615
|
|
38,937
|
|
38,008
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(3,788)
|
|
(2,436)
|
|
(11,344)
|
|
(5,209)
|
|
|
|
|
|
|
|
|
Interest expense, net
*
|
(329)
|
|
(553)
|
|
(707)
|
|
(1,163)
|
Other income
(expense), net
|
15
|
|
11
|
|
(1)
|
|
(51)
|
Loss before provision
for income taxes
|
(4,102)
|
|
(2,978)
|
|
(12,052)
|
|
(6,423)
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
136
|
|
89
|
|
248
|
|
227
|
Net loss
|
$ (4,238)
|
|
$ (3,067)
|
|
$ (12,300)
|
|
$ (6,650)
|
|
|
|
|
|
|
|
|
Net loss per share of
common stock, basic and diluted
|
$ (0.18)
|
|
$ (0.14)
|
|
$ (0.53)
|
|
$ (0.32)
|
|
|
|
|
|
|
|
|
Shares used in
computing net loss per share of common stock, basic and
diluted
|
23,373,165
|
|
22,268,180
|
|
23,221,958
|
|
20,926,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Includes stock-based
compensation expense (1)as follows:
|
|
|
|
|
|
|
|
Costs of
revenues
|
$
63
|
|
$
54
|
|
$ 172
|
|
$
99
|
Research and
development
|
170
|
|
212
|
|
508
|
|
370
|
Sales and
marketing
|
345
|
|
582
|
|
1,156
|
|
1,119
|
General and
administrative
|
608
|
|
906
|
|
1,323
|
|
1,620
|
|
$ 1,186
|
|
$ 1,754
|
|
$ 3,159
|
|
$ 3,208
|
|
|
|
|
|
|
|
|
(1)This table includes $147,000 of stock-based compensation
related to restructuring in the quarter ended March 31,
2014.
|
|
|
|
|
|
|
|
|
*Includes
restructuring costs(2)as follows:
|
|
|
|
|
|
|
|
Research and
development
|
$
-
|
|
$
-
|
|
$
43
|
|
$
-
|
Sales and
marketing
|
-
|
|
-
|
|
355
|
|
-
|
General and
administrative
|
-
|
|
-
|
|
140
|
|
-
|
|
$
-
|
|
$
-
|
|
$ 538
|
|
$
-
|
|
|
|
|
|
|
|
|
(2)This table excludes $147,000 of stock-based compensation
related to restructuring in the quarter ended March 31,
2014.
|
|
|
|
|
|
|
|
|
*Includes
amortization of acquisition-related intangible assets as
follows:
|
|
|
|
|
|
|
|
Costs of
revenues
|
$
53
|
|
$
53
|
|
$ 105
|
|
$ 105
|
Sales and
marketing
|
-
|
|
20
|
|
-
|
|
40
|
|
$
53
|
|
$
73
|
|
$ 105
|
|
$ 145
|
|
|
|
|
|
|
|
|
*Includes amortization of common stock warrant
issued in connection with debt financing as
follows:
|
|
|
|
|
|
|
|
Interest
expense, net
|
$
25
|
|
$
42
|
|
$
54
|
|
$
87
|
|
|
|
|
|
|
|
|
MERU NETWORKS,
INC.
|
GAAP to Non-GAAP
Reconciliation
|
(Unaudited)
|
(In thousands,
except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
$ (4,238)
|
|
$ (3,067)
|
|
$ (12,300)
|
|
$ (6,650)
|
|
|
|
|
|
|
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
a) Stock-based
compensation
|
1,186
|
|
1,754
|
|
3,012
|
|
3,208
|
|
b) Stock-based
compensation associated with restructuring
|
-
|
|
-
|
|
147
|
|
-
|
|
c) Restructuring
costs
|
-
|
|
-
|
|
538
|
|
-
|
|
d) Amortization of
acquisition-related intangible assets
|
53
|
|
73
|
|
105
|
|
145
|
|
e) Amortization of
common stock warrant issued in connection with debt
financing
|
25
|
|
42
|
|
54
|
|
87
|
Non-GAAP net
loss
|
$ (2,974)
|
|
$ (1,198)
|
|
$ (8,444)
|
|
$ (3,210)
|
|
|
|
|
|
|
|
|
|
GAAP net loss per
share of common stock, basic
|
(0.18)
|
|
(0.14)
|
|
$ (0.53)
|
|
$ (0.32)
|
|
|
|
|
|
|
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
a) Stock-based
compensation
|
0.05
|
|
0.08
|
|
0.13
|
|
0.15
|
|
b) Stock-based
compensation associated with restructuring
|
-
|
|
-
|
|
0.01
|
|
-
|
|
c) Restructuring
costs
|
-
|
|
-
|
|
0.02
|
|
-
|
|
d) Amortization of
acquisition-related intangible assets
|
-
|
|
0.01
|
|
0.01
|
|
0.01
|
|
e) Amortization of
common stock warrant issued in connection with debt
financing
|
-
|
|
-
|
|
-
|
|
0.01
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss
per share of common stock, basic and diluted
|
$ (0.13)
|
|
$ (0.05)
|
|
$ (0.36)
|
|
$ (0.15)
|
|
|
|
|
|
|
|
|
|
Shares used in computing basic and diluted non-GAAP
net loss per share of common stock
|
23,373,165
|
|
22,268,180
|
|
23,221,958
|
|
20,926,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
margin
|
$ 14,770
|
|
$ 17,179
|
|
$ 27,593
|
|
$ 32,799
|
|
|
|
|
|
|
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
63
|
|
54
|
|
172
|
|
99
|
|
Amortization of
acquisition-related intangible assets
|
53
|
|
53
|
|
105
|
|
105
|
Non-GAAP gross
margin
|
$ 14,886
|
|
$ 17,286
|
|
$ 27,870
|
|
$ 33,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from
operations
|
$ (3,788)
|
|
$ (2,436)
|
|
$ (11,344)
|
|
$ (5,209)
|
|
|
|
|
|
|
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
1,186
|
|
1,754
|
|
3,012
|
|
3,208
|
|
Stock-based
compensation associated with restructuring
|
-
|
|
-
|
|
147
|
|
-
|
|
Restructuring
costs
|
-
|
|
-
|
|
538
|
|
-
|
|
Amortization of
acquisition-related intangible assets
|
53
|
|
73
|
|
105
|
|
145
|
|
|
|
|
|
|
|
|
|
Non-GAAP loss from
operations
|
$ (2,549)
|
|
$ (609)
|
|
$ (7,542)
|
|
$ (1,856)
|
|
|
|
|
|
|
|
|
|
MERU NETWORKS,
INC.
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended
|
|
|
|
|
|
June
30,
|
|
|
|
|
|
2014
|
|
2013
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net loss
|
$(12,300)
|
|
$ (6,650)
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
835
|
|
762
|
|
|
Stock-based
compensation
|
3,159
|
|
3,208
|
|
|
Accrued interest on
long-term debt
|
345
|
|
493
|
|
|
Amortization of
issuance costs
|
77
|
|
123
|
|
|
Provision for bad
debt
|
96
|
|
29
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable,
net
|
4,343
|
|
909
|
|
|
|
Inventory
|
601
|
|
2,074
|
|
|
|
Prepaid expenses and
other assets
|
(756)
|
|
(517)
|
|
|
|
Accounts
payable
|
(1,401)
|
|
574
|
|
|
|
Accrued liabilities
and other liabilities
|
(3,541)
|
|
(2,004)
|
|
|
|
Deferred
revenue
|
(942)
|
|
(775)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
(9,484)
|
|
(1,774)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchases of property
and equipment
|
(476)
|
|
(442)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
(476)
|
|
(442)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from the
issuance of common stock, net of offering costs
|
-
|
|
12,565
|
|
Proceeds from
exercise of stock options
|
319
|
|
237
|
|
Proceeds from
employee stock purchase plan
|
506
|
|
358
|
|
Taxes paid related to
net share settlement of equity awards
|
(521)
|
|
(86)
|
|
Repayment of
long-term debt
|
(1,862)
|
|
(1,652)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) financing activities
|
(1,558)
|
|
11,422
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(7)
|
|
(107)
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
(11,525)
|
|
9,099
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS -- Beginning of period
|
30,938
|
|
22,855
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS -- End of period
|
$ 19,413
|
|
$31,954
|
Investor contact:
Ed Keaney
Market Street Partners
(415) 445-3238
ir@merunetworks.com
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SOURCE Meru Networks, Inc.