SUNNYVALE, Calif., May 4, 2015 /PRNewswire/ -- Meru Networks,
Inc. (NASDAQ: MERU), a leader in intelligent Wi-Fi networking,
today announced its financial results for the first quarter ended
March 31, 2015.
First Quarter 2015 Financial Results
Total revenues
for the first quarter of 2015 were $17.4
million, a decrease of 15% from $20.0
million in the first quarter of 2014. Product revenues
for the first quarter of 2015 were $12.9
million, down 18% from $15.8
million reported in the first quarter of 2014.
Net loss as reported in accordance with GAAP was $8.0 million in the first quarter of 2015, or a
net loss of ($0.33) per basic and
diluted share, compared to a net loss of $8.1 million, or a net loss of ($0.35) per basic and diluted share, for the same
period of 2014.
Meru reported a first quarter 2015 non-GAAP net loss of
$3.9 million, or ($0.16) loss per basic and diluted share,
compared to a non-GAAP net loss of $5.4
million, or ($0.23) loss per
basic and diluted share in the first quarter of 2014.
Non-GAAP results for the first quarter of 2015 exclude the impact
of stock-based compensation expense of $1.8
million, restructuring costs of $0.7
million, and $1.8 million from
the impairment of goodwill. Non-GAAP results for the first
quarter of 2014 excluded stock-based compensation expense of
$1.8 million, restructuring costs,
including associated stock-based compensation charges, of
$0.7 million, and $0.1 million from the amortization of
intangibles.
"Meru achieved revenue and earnings results consistent with our
guidance and slightly ahead of analyst consensus for the first
quarter of 2015, and restructured our operations by reducing
operating costs and creating a flatter, more responsive
organization. We've lowered the breakeven point for quarterly sales
to approximately $21 to $22 million,"
said Dr. Bami Bastani, president and
CEO. "During the first quarter, we also launched Meru XPress Cloud, a controller-less Wi-Fi
solution tailored to the needs of small-to-medium enterprises.
We are very pleased with the SDN Excellence Award for Meru
Collaborator, an SDN application that integrates with the Microsoft
Lync platform enabling Meru Wi-Fi users to optimize the performance
and experience of Microsoft Lync over multivendor networks. We
continue to work with Deutsche Bank in exploring various strategic
options for the Company."
Conference Call Information
Meru will host a
conference call for analysts and investors to discuss its 2015
first quarter results today, May 4th,
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 32506132.
The live and archived webcast of the 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 open-standards-based
architecture is designed to enable unified management of wired and
wireless networks. Its end-to-end application QoS enables
enforceable service-level agreements. Meru provides top performance
and high capacity in high-density environments. Visit
www.merunetworks.com or call (408) 215-5300 for more
information.
©2015 Meru Networks. Meru and Meru Networks are registered
trademarks and the Meru logo is a trademark of Meru Networks, Inc.
in the United States.
Investor contact:
Ed Keaney
Market Street Partners
(415) 445-3238
ir@merunetworks.com
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-K filed with
the SEC on February 27, 2015, 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 anon-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 result.
- Impairment of Goodwill. The Company excludes
impairment of Goodwill because it is likewise 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 it is a non-recurring
charge.
- 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 then
on-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)
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
2015
|
|
2014
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$ 11,599
|
|
$
14,881
|
Accounts
receivable, net
|
6,761
|
|
11,891
|
Inventory
|
9,664
|
|
8,982
|
Prepaid
expenses and other current assets
|
1,400
|
|
1,502
|
|
Total current
assets
|
29,424
|
|
37,256
|
|
|
|
|
|
Property and
equipment, net
|
1,633
|
|
1,879
|
Goodwill
|
-
|
|
1,658
|
Other
assets
|
696
|
|
1,937
|
TOTAL
ASSETS
|
$ 31,753
|
|
$
42,730
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
Accounts
payable
|
$ 5,656
|
|
$
7,902
|
|
Accrued
liabilities
|
9,573
|
|
10,223
|
|
Long-term debt,
current portion
|
1,784
|
|
2,803
|
|
Deferred revenue,
current portion
|
12,348
|
|
12,781
|
|
|
Total current
liabilities
|
29,361
|
|
33,709
|
|
|
|
|
|
|
Deferred revenue, net
of current portion
|
6,829
|
|
6,886
|
Other
liabilities
|
28
|
|
38
|
|
|
Total
liabilities
|
36,218
|
|
40,633
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
(DEFICIT):
|
|
|
|
|
Preferred
stock
|
|
-
|
|
-
|
|
Common
stock
|
12
|
|
12
|
|
Additional paid-in
capital
|
290,465
|
|
289,023
|
|
Accumulated other
comprehensive loss
|
(655)
|
|
(688)
|
|
Accumulated
deficit
|
(294,287)
|
|
(286,250)
|
|
|
Total stockholders'
equity (deficit)
|
(4,465)
|
|
2,097
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
|
$ 31,753
|
|
$
42,730
|
|
|
|
|
|
|
MERU NETWORKS,
INC.
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In thousands,
except for share and per share amounts)
|
|
|
|
|
|
Three months
ended
|
|
March
31,
|
|
2015
|
|
2014
|
REVENUES:
|
|
|
|
Products
|
$ 12,917
|
|
$ 15,833
|
Support and
services
|
4,499
|
|
4,767
|
Total revenues
|
17,416
|
|
20,600
|
|
|
|
|
COSTS OF
REVENUES:
|
|
|
|
Products
|
5,514
|
|
5,875
|
Support and
services
|
1,524
|
|
1,902
|
Total costs of revenues *
|
7,038
|
|
7,777
|
|
|
|
|
Gross margin
|
10,378
|
|
12,823
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
Research and
development *
|
4,294
|
|
5,452
|
Sales and
marketing *
|
9,166
|
|
11,629
|
General and
administrative *
|
2,978
|
|
3,298
|
Impairment of
goodwill
|
1,658
|
|
-
|
Total operating expenses
|
18,096
|
|
20,379
|
|
|
|
|
Loss from
operations
|
(7,718)
|
|
(7,556)
|
|
|
|
|
Interest expense, net
*
|
(164)
|
|
(378)
|
Other expense,
net
|
(52)
|
|
(16)
|
Loss before provision
for income taxes
|
(7,934)
|
|
(7,950)
|
|
|
|
|
Provision for income
taxes
|
103
|
|
112
|
Net loss
|
$ (8,037)
|
|
$ (8,062)
|
|
|
|
|
Net loss per share of
common stock, basic and diluted
|
$
(0.33)
|
|
$
(0.35)
|
|
|
|
|
Shares used in
computing net loss per share of common stock, basic and
diluted
|
24,248,016
|
|
23,069,260
|
|
|
|
|
|
|
|
|
|
|
|
|
*Includes stock-based
compensation expense (1)as follows:
|
|
|
|
Costs of
revenues
|
$
117
|
|
$
109
|
Research and
development
|
445
|
|
338
|
Sales and
marketing
|
1,032
|
|
811
|
General and
administrative
|
542
|
|
715
|
|
$ 2,136
|
|
$ 1,973
|
|
|
|
|
(1) This table includes
$346,000 and $147,000 of stock-based compensation expense related
to restructuring in the
quarters ended March 31, 2015 and 2014,
respectively.
|
|
|
|
|
|
|
|
|
|
|
*Includes
restructuring costs(2)as follows:
|
|
|
|
Costs of
revenues
|
$
9
|
|
$
-
|
Research and
development
|
69
|
|
43
|
Sales and
marketing
|
263
|
|
405
|
General and
administrative
|
21
|
|
140
|
|
$
362
|
|
$
588
|
|
|
|
|
(2)This table excludes $346,000 and $147,000 of stock-based
compensation related to restructuring in
the quarter ended March 31,
2015 and 2014, respectively.
|
|
|
|
|
|
|
|
|
|
|
*Includes
amortization of acquisition-related intangible assets as
follows:
|
|
|
|
Costs of
revenues
|
$
-
|
|
$
52
|
|
|
|
|
|
|
|
|
*Includes
amortization of common stock warrant issued
|
|
|
|
in
connection with debt financing as follows:
|
|
|
|
Interest
expense, net
|
$
10
|
|
$
29
|
MERU NETWORKS,
INC.
|
GAAP to Non-GAAP
Reconciliation
|
(Unaudited)
|
(In thousands,
except share and per share amounts)
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March
31,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
GAAP net
loss
|
$ (8,037)
|
|
$ (8,062)
|
|
|
|
.
|
|
Plus:
|
|
|
|
|
a) Stock-based
compensation
|
1,790
|
|
1,826
|
|
b) Stock-based
compensation associated with restructuring
|
346
|
|
147
|
|
c) Restructuring
costs
|
362
|
|
588
|
|
d) Amortization of
acquisition-related intangible assets
|
-
|
|
-
|
|
e) Amortization of
common stock warrant issued in connection with debt
financing
|
10
|
|
29
|
|
f) Impairment of
goodwill
|
1,658
|
|
-
|
Non-GAAP net
loss
|
$ (3,871)
|
|
$ (5,472)
|
|
|
|
|
|
GAAP net loss per
share of common stock, basic and diluted
|
(0.33)
|
|
(0.35)
|
|
|
|
|
|
Plus:
|
|
|
|
|
a) Stock-based
compensation
|
0.07
|
|
0.08
|
|
b) Stock-based
compensation associated with restructuring
|
0.01
|
|
0.01
|
|
c) Restructuring
costs
|
0.02
|
|
0.03
|
|
d) Amortization of
acquisition-related intangible assets
|
-
|
|
-
|
|
e) Amortization of
common stock warrant issued in connection with debt
financing
|
-
|
|
-
|
|
f) Impairment of
goodwill
|
0.07
|
|
-
|
|
|
|
|
|
Non-GAAP net loss
per share of common stock, basic and diluted
|
$ (0.16)
|
|
$
(0.24)
|
|
|
|
|
|
Shares used in
computing basic and diluted non-GAAP net loss
|
|
|
|
|
per share of common
stock
|
24,248,016
|
|
23,069,260
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
margin
|
$ 10,378
|
|
$ 12,823
|
|
|
|
|
|
Plus:
|
|
|
|
|
Stock-based
compensation
|
117
|
|
109
|
|
Restructuring
costs
|
9
|
|
-
|
|
Amortization of
acquisition-related intangible assets
|
-
|
|
52
|
Non-GAAP gross
margin
|
$ 10,504
|
|
$ 12,984
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from
operations
|
$ (7,718)
|
|
$ (7,556)
|
|
|
|
|
|
Plus:
|
|
|
|
|
Stock-based
compensation
|
1,790
|
|
1,826
|
|
Stock-based
compensation associated with restructuring
|
346
|
|
147
|
|
Restructuring
costs
|
362
|
|
588
|
|
Amortization of
acquisition-related intangible assets
|
-
|
|
-
|
|
Impairment of
goodwill
|
1,658
|
|
-
|
|
|
|
|
|
Non-GAAP loss from
operations
|
$ (3,562)
|
|
$ (4,995)
|
MERU NETWORKS,
INC.
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
2015
|
|
2014
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net loss
|
$ (8,037)
|
|
$ (8,062)
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
327
|
|
416
|
|
|
Stock-based
compensation
|
2,136
|
|
1,973
|
|
|
Impairment of
goodwill
|
1,658
|
|
-
|
|
|
Accrued interest on
long-term debt
|
103
|
|
214
|
|
|
Amortization of
issuance costs
|
15
|
|
41
|
|
|
Net provision for bad
debt
|
112
|
|
35
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable,
net
|
5,018
|
|
6,825
|
|
|
|
Inventory
|
(681)
|
|
(707)
|
|
|
|
Prepaid expenses and
other assets
|
105
|
|
81
|
|
|
|
Accounts
payable
|
(2,246)
|
|
(1,783)
|
|
|
|
Accrued
liabilities
|
(1,134)
|
|
(2,121)
|
|
|
|
Deferred
revenue
|
(490)
|
|
(692)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
(3,114)
|
|
(3,780)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchases of property
and equipment
|
(69)
|
|
(333)
|
|
Proceeds from sale of
investment
|
1,250
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) investing activities
|
1,181
|
|
(333)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from
exercise of stock options
|
17
|
|
164
|
|
Taxes paid related to
net share settlement of equity awards
|
(371)
|
|
(406)
|
|
Repayment of
long-term debt
|
(1,034)
|
|
(918)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
financing activities
|
(1,388)
|
|
(1,160)
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
39
|
|
(1)
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
(3,282)
|
|
(5,274)
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS -- Beginning of period
|
14,881
|
|
30,938
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS -- End of period
|
$ 11,599
|
|
$ 25,664
|
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SOURCE Meru Networks, Inc.