Ixia (Nasdaq: XXIA) today reported its financial results
for the second quarter ended June 30, 2016.
Total revenue for the 2016 second quarter was $120.1 million,
compared with $131.6 million reported for the 2015 second quarter
and $112.7 million reported for the 2016 first quarter.
"In the second quarter we achieved revenue at the high-end of
our guidance range and delivered solid earnings that were driven by
our strong gross margin performance and continued focus on
financial discipline. We also generated $25.5 million in cash flow
from operations and repurchased $6.9 million of Ixia common stock,"
said Bethany Mayer, Ixia’s president and chief executive officer.
"Leveraging technology unique to Ixia, we have continued to add new
capabilities across our test, security, and visibility platforms
and have brought new products to market that we believe further
expand Ixia’s technology leadership over the competition.”
On a GAAP basis, the company recorded net income for the 2016
second quarter of $1.5 million, or $0.02 per diluted share,
compared with net income of $5.8 million, or $0.07 per diluted
share, for the 2015 second quarter, and a net loss of $2.7 million,
or $0.03 per diluted share, for the 2016 first quarter.
Non-GAAP net income for the 2016 second quarter was $14.9
million, or $0.18 per diluted share, compared with non-GAAP net
income of $16.0 million, or $0.19 per diluted share, for the 2015
second quarter, and non-GAAP net income of $7.4 million, or $0.09
per diluted share, for the 2016 first quarter.
Additional non-GAAP information and GAAP to Non-GAAP
reconciliation information may be found in the attached financial
tables.
Ixia ended the 2016 second quarter with $100.8 million in cash,
cash equivalents, and investments, compared with $80.9 million at
March 31, 2016. During the 2016 second quarter, the company
repurchased 707,332 shares of its common stock for $6.9
million.
Sales Leadership Transition
Ixia also announced today that it plans to appoint Patti Key as
its senior vice president, global sales, and that Key has assumed
leadership of Ixia's global sales team. Key has over 20 years of
technology sales experience and has been a valued member of the
Ixia team for the past eight years. Since August 2014, Key has
served as the company’s vice president, sales, Americas. In this
role, she was responsible for the company’s largest multi-national
sales region. Key joined Ixia in February 2008 as vice president,
sales, East and her responsibilities have progressively increased.
Each Ixia sales region led by Key experienced double digit sales
growth over the course of her tenure. Prior to joining Ixia, Key
held several sales and marketing roles with Agilent Technologies
and Hewlett Packard. She graduated magna cum laude with a Bachelor
of Science in Electrical Engineering from North Carolina State
University and has been awarded two patents.
Ixia and Hans-Peter Klaey have mutually agreed that he will step
down from his position as senior vice president, global sales, and
will leave the company, on August 31, 2016.
Conference Call and Webcast Information
Ixia will host a conference call today at 1:30 p.m. Pacific time
(4:30 p.m. Eastern time) for analysts and investors to discuss the
company’s 2016 second quarter and its business outlook and guidance
for the 2016 third quarter. The call will be open to the public,
and interested parties may listen to the call by dialing (804)
681-3728. A live audio webcast of the conference call will be
accessible from the “Investors” section of the company’s website
(http://investor.ixiacom.com/). Following the live webcast, an
archived version will be available in the “Investors” section of
the Ixia website for at least 90 days. Certain supplemental
financial information will be posted promptly to the website
following the issuance of this press release, and additional
supplemental financial information will be posted just prior to the
start of the conference call.
Non-GAAP Financial Measures
To supplement our consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles ("GAAP"),
we have included certain non-GAAP financial measures in this press
release and in the attachments hereto. Specifically, we have
provided non-GAAP financial measures (i.e., non-GAAP net income and
non-GAAP diluted earnings per share) that exclude certain non-cash
and/or non-recurring income and expense items such as expenses
relating to internal investigations and any related remediation
efforts, the securities class action and shareholder derivative
action against the company and certain of its current and former
officers and directors as well as an ongoing SEC investigation, the
amortization of acquisition-related intangible assets, stock-based
compensation expenses, acquisition and other related costs,
restructuring expenses, and the related income tax effects of these
items, as well as certain other non-cash income tax impacts such as
changes in the valuation allowance recorded against certain
deferred tax assets. The aforementioned items represent income and
expense items that may be difficult to estimate from period to
period and/or that we believe are not directly attributable to
and/or reflective of the underlying performance of our business
operations. We believe that, by excluding these items, our non-GAAP
measures provide supplemental information to both management and
investors that is useful in assessing our core operating
performance, evaluating our ongoing business operations,
identifying and assessing financial and business trends, and
comparing our results of operations on a consistent basis from
period to period. These non-GAAP financial measures are provided to
enhance the user's overall understanding of our financial
performance. These non-GAAP financial measures are also used by
management to plan and forecast future periods and to assist
management in making operating and strategic decisions. The company
also uses these measures in connection with determinations
regarding executive compensation. The presentation of this
additional information is not prepared in accordance with GAAP. The
information may not necessarily be comparable to that of other
companies that may calculate their non-GAAP financial measures
differently and should be considered as a supplement to, and not a
substitute for or superior to, the corresponding measures
calculated in accordance with GAAP. Investors are encouraged to
review the reconciliations of our non-GAAP financial measures to
the most directly comparable GAAP measures, which are included
below in the attached financial tables and also posted on our
website.
Safe Harbor under the Private Securities Litigation Reform
Act of 1995
Certain statements made in this press release may be deemed to
be forward-looking statements including, without limitation,
statements regarding the company’s business and its plan to appoint
Patti Key as the company’s senior vice president, global sales. In
some cases, such forward-looking statements can be identified by
words such as "may," "will," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "project," "predict,"
"potential," or the like. These statements reflect our current
views with respect to future events and are based on assumptions
and are subject to risks and uncertainties. These risks and
uncertainties, as well as other factors, may cause our future
results, performance, or achievements to be materially different
from those expressed or implied by such forward-looking statements.
Factors that could cause the actual results to differ materially
from those expressed or implied in such forward-looking statements
include, among others: our success in developing, producing, and
introducing new products and in keeping pace with the rapid
technological changes that characterize our market; our success in
developing new sales channels and customers; market acceptance of
our products; competition; changes in the global economy and in
market conditions; consistency of orders from significant
customers; our success in leveraging our intellectual property
portfolio, expertise and market opportunities; our expectations
regarding the transition into Software Defined Networks (SDN) and
Network Functions Virtualization (NFV); material weaknesses in our
internal controls; war, terrorism, political unrest, natural
disasters, cybersecurity attacks, and other circumstances that
could, among other consequences, reduce the demand for our
products, disrupt our supply chain, impact the delivery of our
products, and/or change our business strategy, market positioning,
and business plans and focus and/or affect our ability to execute
on such strategy and plans; and, with respect to Key, the company’s
failure to, or decision to not, appoint Key as the company’s senior
vice president, global sales, or Key’s decision to not accept that
position. The factors that may cause future results to differ
materially from our current expectations also include, without
limitation, the risks identified in our Annual Report on Form 10-K
for the year ended December 31, 2015 and in our other filings with
the Securities and Exchange Commission. We undertake no obligation
to update any forward-looking statements, whether as a result of
new information, future events, or otherwise.
About Ixia
Ixia (Nasdaq: XXIA) provides testing, visibility, and security
solutions, strengthening applications across physical and virtual
networks for enterprises, service providers, and network equipment
manufacturers. Ixia offers companies trusted environments in which
to develop, deploy, and operate. Customers worldwide rely on Ixia
to verify their designs, optimize their performance, and ensure
protection of their networks to make their applications
stronger.
Learn more at www.ixiacom.com.
Ixia and the Ixia logo are trademarks or registered trademarks
of Ixia in the United States and other jurisdictions.
IXIA
Consolidated Balance Sheets
(in thousands)
(unaudited)
June 30, December 31, 2016 2015
Assets Current assets: Cash and cash equivalents $ 60,563 $
52,472 Marketable securities 40,265 14,504 Accounts receivable, net
of allowances of $869 and $1,107, as of June 30, 2016 and December
31, 2015, respectively 89,844 121,932 Inventories 29,915 33,289
Prepaid expenses and other current assets 43,447 44,384
Total current assets 264,034 266,581 Property and equipment,
net 37,625 36,536 Intangible assets, net 84,354 103,660 Goodwill
338,873 338,873 Other assets 31,637 34,227 Total
assets $ 756,523 $ 779,877
Liabilities and
Shareholders’ Equity Current liabilities: Accounts payable $
11,425 $ 15,346 Accrued expenses and other 39,933 70,029 Deferred
revenues 108,452 108,436 Term loan, net 4,048 3,045
Total current liabilities 163,858 196,856 Deferred revenues 27,354
22,117 Other liabilities 8,597 7,406 Term loan, net 31,310
34,487 Total liabilities 231,119 260,866
Shareholders’ equity: Common stock, without par value;
200,000 shares authorized at June 30, 2016 and December 31, 2015;
81,254 and 80,805 shares issued and outstanding as of June 30, 2016
and December 31, 2015, respectively 200,333 201,087 Additional
paid-in capital 233,125 225,432 Retained earnings 92,361 93,525
Accumulated other comprehensive loss (415 ) (1,033 ) Total
shareholders’ equity 525,404 519,011 Total
liabilities and shareholders’ equity $ 756,523 $ 779,877
IXIA
Condensed Consolidated Statements of
Operations
(in thousands, except per share
data)
(unaudited)
Three Months EndedJune 30, Six
Months EndedJune 30, 2016 2015
2016 2015 Revenues: Products $ 76,504 $ 92,806
$ 148,477 $ 178,710 Services 43,594 38,804 84,294
73,862 Total revenues 120,098 131,610
232,771 252,572 Costs and operating expenses: (1)
Cost of revenues – products (2) 20,126 24,185 41,167 48,236 Cost of
revenues – services 3,783 4,364 7,968 8,880 Research and
development 24,473 27,759 51,935 55,385 Sales and marketing 38,957
38,439 77,988 75,960 General and administrative 13,982 17,417
29,870 35,788 Amortization of intangible assets 9,952 10,889 19,931
21,812 Acquisition and other related costs (48 ) 101 (22 ) 683
Restructuring 27 (351 ) (157 ) (561 ) Total costs and
operating expenses 111,252 122,803 228,680
246,183 Income from operations 8,846 8,807 4,091 6,389
Interest income and other, net (127 ) 202 173 (279 ) Interest
expense (470 ) (2,435 ) (984 ) (4,582 ) Income before income taxes
8,249 6,574 3,280 1,528 Income tax expense 6,726 771
4,444 5,336 Net income (loss) $ 1,523 $ 5,803
$ (1,164 ) $ (3,808 ) Income (loss) per share: Basic $ 0.02
$ 0.07 $ (0.01 ) $ (0.05 ) Diluted $ 0.02 $ 0.07 $ (0.01 ) $ (0.05
) Weighted average number of common and common equivalent shares
outstanding: Basic 81,325 79,396 81,170 79,053 Diluted 82,504
81,030 81,170 79,053 (1) Stock-based compensation included
in: Cost of revenues – products $ 36 $ 76 $ 123 $ 171 Cost of
revenues – services 14 29 47 65 Research and development 1,304
1,578 2,997 3,671 Sales and marketing 1,249 1,202 2,897 2,251
General and administrative 1,075 1,858 2,555 3,732 (2)
Cost of revenues – products excludes
amortization of intangible assets related to purchased technologies
of $6.4 million and $12.9 million for the three and six months
ended June 30, 2016, respectively, and $6.4 million and $12.9
million for the three and six months ended June 30, 2015,
respectively, which are included in Amortization of intangible
assets.
IXIA
Non-GAAP Information and Reconciliation
to Most Directly Comparable GAAP Financial Measures
(in thousands, except per share
data)
(unaudited)
Three Months EndedJune 30, 2016
2015 GAAP net income $ 1,523 $ 5,803 Adjustments:
Stock-based compensation (a) 3,678 4,743 Amortization of intangible
assets (b) 9,952 10,889 Acquisition and other related costs (c) (48
) 101 Restructuring (d) 27 (351 ) Investigations, shareholder
litigation and related matters (e) 424 1,594 Income tax effect (f)
(685 ) (6,777 )
Non-GAAP net income $ 14,871 $ 16,002
GAAP diluted income per share $ 0.02 $ 0.07
Adjustments: Stock-based compensation (a) 0.04 0.06 Amortization of
intangible assets (b) 0.12 0.13 Acquisition and other related costs
(c) 0.00 0.00 Restructuring (d) 0.00 0.00 Investigations,
shareholder litigation and related matters (e) 0.01 0.02 Income tax
effect (f) (0.01 ) (0.08 ) Convertible senior notes (g) —
(0.01 )
Non-GAAP diluted earnings per share $ 0.18 $
0.19
Shares used in computing GAAP diluted
earnings per common share 82,504 81,030 Effect of reconciling
item (g) — 10,299
Shares used in computing
non-GAAP diluted earnings per common share 82,504 91,329
(a) This reconciling item represents
stock-based compensation. As stock-based compensation represents a
non-cash charge that is not directly attributable to the underlying
performance of our business operations, we believe that by
excluding stock-based compensation, we provide investors
supplemental information that is useful in comparing our operating
results from period to period and in evaluating our core operations
and performance. While we expect to continue to recognize
stock-based compensation in the future, management also excludes
this expense when evaluating current performance, forecasting
future results, measuring core operating results, and making
operating and strategic decisions. (b) This reconciling item
represents the amortization of intangible assets related to the
acquisitions of various businesses and technologies. As
amortization expense represents a non-cash charge that is not
directly attributable to the underlying performance of our business
operations, we believe that by excluding the amortization of
acquisition-related intangible assets, we provide investors with
supplemental information that is useful in evaluating our ongoing
operations and performance. While the amortization of
acquisition-related intangible assets is expected to continue in
the future, management also excludes this expense when evaluating
current performance, forecasting future results, measuring core
operating results, and making operating and strategic decisions.
(c) This reconciling item represents costs associated with
acquisition-related activities. Acquisition and other related costs
consist primarily of transaction and integration-related costs such
as: professional fees for legal, accounting, tax, due diligence,
valuation, and other related services; amortization of deferred
compensation; consulting fees; required regulatory costs; certain
employee, facility and infrastructure costs; and other related
expenses. We believe that by excluding acquisition and other
related costs, we provide investors with supplemental information
that is useful in comparing our ongoing operating results from
period to period and in evaluating our core operations and
performance. (d) This reconciling item represents costs associated
with our restructuring plans. During the first quarter of 2014, we
initiated a plan to restructure certain of our operations following
our December 5, 2013 acquisition of Net Optics, Inc. During the
third quarter of 2014, we implemented a company-wide restructuring
initiative to restructure our operations to better align our
operating costs with our business opportunities. The restructuring
costs associated with our restructuring plans primarily relate to
employee termination benefits, lease exit costs, and other related
costs. We believe that by excluding restructuring costs, we provide
investors with supplemental information that is useful in comparing
our operating results from period to period and in evaluating our
core operations and performance. (e) This reconciling item
represents costs incurred related to (i) internal investigations
and any related remediation efforts, (ii) the securities class
action against the company and certain of its current and former
officers and directors as well as a shareholder derivative action,
and (iii) an SEC investigation. These costs consist primarily of
legal and accounting fees, recruiting and consulting expenses,
severance and retention costs, and other related expenses. We
believe that by excluding these non-recurring costs, we are
providing our investors with supplemental information that is
useful in comparing our operating results from period to period and
in evaluating our core operations and performance. (f) This
adjustment represents the income tax effects of the reconciling
items noted in footnotes (a), (b), (c), (d), and (e), as well as
certain other non-cash income tax impacts such as changes in the
valuation allowance relating to certain deferred tax assets. (g)
This reconciling item for the non-GAAP diluted earnings per share
calculation for the three months ended June 30, 2015 includes the
impact of our convertible senior notes as these were anti-dilutive
for the equivalent GAAP earnings per share calculations.
IXIA
Non-GAAP Information and Reconciliation
to Most Directly Comparable GAAP Financial Measures
(in thousands, except per share
data)
(unaudited)
Six Months EndedJune 30, 2016
2015 GAAP net loss $ (1,164 ) $ (3,808 ) Adjustments:
Stock-based compensation (a) 8,619 9,890 Amortization of intangible
assets (b) 19,931 21,812 Acquisition and other related costs (c)
(22 ) 683 Restructuring (d) (157 ) (561 ) Investigations,
shareholder litigation and related matters (e) 1,415 4,282 Income
tax effect (f) (6,358 ) (6,586 )
Non-GAAP net income $
22,264 $ 25,712
GAAP diluted loss per
share $ (0.01 ) $ (0.05 ) Adjustments: Stock-based compensation
(a) 0.10 0.13 Amortization of intangible assets (b) 0.24 0.28
Acquisition and other related costs (c) 0.00 0.00 Restructuring (d)
0.00 (0.01 ) Investigations, shareholder litigation and related
matters (e) 0.02 0.05 Income tax effect (f) (0.08 ) (0.08 )
Convertible senior notes (g) — (0.01 )
Non-GAAP diluted
earnings per share $ 0.27 $ 0.31
Shares
used in computing GAAP diluted loss per common share 81,170
79,053 Effect of reconciling item (g)(h) 1,216 11,857
Shares used in computing non-GAAP diluted earnings per common
share 82,386 90,910 (a) This
reconciling item represents stock-based compensation. As
stock-based compensation represents a non-cash charge that is not
directly attributable to the underlying performance of our business
operations, we believe that by excluding stock-based compensation,
we provide investors supplemental information that is useful in
comparing our operating results from period to period and in
evaluating our core operations and performance. While we expect to
continue to recognize stock-based compensation in the future,
management also excludes this expense when evaluating current
performance, forecasting future results, measuring core operating
results, and making operating and strategic decisions. (b) This
reconciling item represents the amortization of intangible assets
related to the acquisitions of various businesses and technologies.
As amortization expense represents a non-cash charge that is not
directly attributable to the underlying performance of our business
operations, we believe that by excluding the amortization of
acquisition-related intangible assets, we provide investors with
supplemental information that is useful in evaluating our ongoing
operations and performance. While the amortization of
acquisition-related intangible assets is expected to continue in
the future, management also excludes this expense when evaluating
current performance, forecasting future results, measuring core
operating results, and making operating and strategic decisions.
(c) This reconciling item represents costs associated with
acquisition-related activities. Acquisition and other related costs
consist primarily of transaction and integration-related costs such
as: professional fees for legal, accounting, tax, due diligence,
valuation, and other related services; amortization of deferred
compensation; consulting fees; required regulatory costs; certain
employee, facility and infrastructure costs; and other related
expenses. We believe that by excluding acquisition and other
related costs, we provide investors with supplemental information
that is useful in comparing our ongoing operating results from
period to period and in evaluating our core operations and
performance. (d) This reconciling item represents costs associated
with our restructuring plans. During the first quarter of 2014, we
initiated a plan to restructure certain of our operations following
our December 5, 2013 acquisition of Net Optics, Inc. During the
third quarter of 2014, we implemented a company-wide restructuring
initiative to restructure our operations to better align our
operating costs with our business opportunities. The restructuring
costs associated with our restructuring plans primarily relate to
employee termination benefits, lease exit costs, and other related
costs. We believe that by excluding restructuring costs, we provide
investors with supplemental information that is useful in comparing
our operating results from period to period and in evaluating our
core operations and performance. (e) This reconciling item
represents costs incurred related to (i) internal investigations
and any related remediation efforts, (ii) the securities class
action against the company and certain of its current and former
officers and directors as well as a shareholder derivative action,
and (iii) an SEC investigation. These costs consist primarily of
legal and accounting fees, recruiting and consulting expenses,
severance and retention costs, and other related expenses. We
believe that by excluding these non-recurring costs, we are
providing our investors with supplemental information that is
useful in comparing our operating results from period to period and
in evaluating our core operations and performance. (f) This
adjustment represents the income tax effects of the reconciling
items noted in footnotes (a), (b), (c), (d), and (e), as well as
certain other non-cash income tax impacts such as changes in the
valuation allowance relating to certain deferred tax assets. (g)
This reconciling item for the non-GAAP diluted earnings per share
calculation for the six months ended June 30, 2015 includes the
impact of our convertible senior notes as these were anti-dilutive
for the equivalent GAAP earnings per share calculations. (h) This
adjustment represents any adjustments required due to a change from
a net loss to a net income position.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160802006828/en/
Investor Relations Contact:The Blueshirt GroupMaria
Riley, 415-217-7722Investor Relations
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