News Column

Mavenir Systems® Reports 2014 Second Quarter Financial Results

July 28, 2014

  • Record quarterly revenue of $33.3 million, an increase of 29% year-over-year;
  • Added two Tier 1 operators to our customer list for 4G next-generation solutions;
  • Delivered significant 4G next generation capacity expansions as tier one US customers launch VoLTE;
  • Expanded Evolved Packet Core portfolio with evolved Package Data Gateway (ePDG) enabling mobility for Voice over Wi-Fi solution;
  • Expanded software-based voice and video solution set with client provisioning server to enable Voice over Wi-Fi and Rich Communication Services.

    RICHARDSON, Texas--(BUSINESS WIRE)-- Mavenir Systems (NYSE: MVNR) today reported financial results for the second quarter 2014, provided its outlook for the third quarter and updated its outlook for the full year of 2014.

    Total revenue for the second quarter of 2014 was $33.3 million, an increase of 29% year-over-year and 16% quarter-over-quarter. GAAP operating loss for the second quarter of 2014 was $(2.2) million, compared with $(0.9) million in the second quarter of 2013 and $(2.2) million in the first quarter of 2014. Non-GAAP operating income, which excludes stock-based compensation, foreign exchange gains or losses, depreciation and amortization, was $0.1 million for the second quarter of 2014, compared to $0.2 million for the second quarter of 2013 and a loss of $(0.2) million for the first quarter of 2014. GAAP net loss for the second quarter of 2014 was $(3.9) million, compared to $(3.6) million in the second quarter of 2013 and $(4.0) million for the first quarter of 2014. Non-GAAP net loss for the second quarter of 2014 was $(1.0) million, compared to $(1.6) million for the second quarter of 2013 and $(1.1) million for the first quarter of 2014.

    GAAP gross profit margin was 55% in the quarter, compared to 52% in the second quarter of 2013 and 56% in the first quarter of 2014. Non-GAAP gross profit margin was 57% in the quarter, above the high end of the guidance range provided in our earnings release for the first quarter of 2014, compared to 53% in the second quarter of 2013 and 57% in the first quarter of 2014.

    Net loss per share was $(0.16) for the second quarter of 2014 compared with $(2.72) for the second quarter of 2013 and $(0.17) for the first quarter of 2014. As outlined in the accompanying table entitled “Non-GAAP Net Loss Per Share” included in this press release, the non-GAAP net loss per share was $(0.04) for the second quarter of 2014 compared to $(0.09) for the second quarter of 2013 and $(0.05) for the first quarter of 2014.

    A description of the non-GAAP calculations and reconciliation to comparable GAAP measures is provided in the accompanying table entitled "Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures."

    "We achieved a number of financial and business milestones again this quarter. The company delivered a strong quarter with strong financial results, again setting a new quarterly revenue record with Gross Margin above the high end of our guidance range,” said Pardeep Kohli, president and chief executive officer, Mavenir Systems. “Mavenir is seeing momentum in our two major areas of focus that are driving mobile network transformation - the adoption of all-IP technology and the build out of next generation networks using software-based solutions. LTE network transformation has begun in key markets with several VoLTE launches and announcements in the second quarter indicating that 2014 is the year of VoLTE.”

    Mavenir Second Quarter 2014 Business and Financial Highlights

  • Record quarterly revenue of $33.3 million, an increase of 29% year-over-year;
  • Added two Tier 1 operators to our customer list for next-generation solutions;
  • Expanded end-to-end portfolio of 4G LTE core networking solutions with announcement of evolved Packet Data Gateway;
  • Expanded software-based voice and video solution set with client provisioning server to enable Voice over Wi-Fi and Rich Communication Services;
  • Received key industry awards for our Network Functions Virtualization (NFV) solution, Voice over LTE Leadership and Innovation and Best RCS.

    Guidance

    Mavenir is providing the following third quarter and updated full year 2014 guidance with respect to anticipated total revenue, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss per share.

    Third quarter of 2014

  • Revenue to range from $31.0 million to $33.0 million, reflecting growth of 19% to 27% over the third quarter of 2013.
  • Non-GAAP gross margin to range from 51% to 53%.
  • Non-GAAP operating loss to range from $(3.5) million to $(2.5) million.
  • Non-GAAP net loss to range from $(4.4) million to $(3.4) million.
  • Non-GAAP net loss per share ranging from $(0.16) to $(0.12) (based on a forecasted weighted average number of shares outstanding of 27,350,000).

    Full year 2014

  • Revenue is increased to a range from $127 million to $130 million, reflecting growth of 25% to 28% year-over-year.
  • Non-GAAP gross margin to range from 57% to 59%.
  • Non-GAAP operating income is expected to be at approximately a break-even level.

    Conference Call

    Mavenir will discuss its second quarter 2014 results and its business outlook via teleconference today at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). To access this call, investors can dial the toll free number 1-855-302-8830 (domestic) or 1-330-871-6073 with the ID#64789401, or access a live webcast of the conference call at Mavenir’s website http://investor.mavenir.com.

    A replay will be available following the call on Mavenir Systems’ Investor Relations website and for one week at the following numbers: 855-859-2056 (domestic) or 404-537-3406 (international) with ID# 64789401.

    Non-GAAP Financial Measures & Definitions

    In addition to disclosing financial results that are determined in accordance with U.S. GAAP, Mavenir discloses non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss per share, which are non-GAAP financial measures, as supplemental measures. Non-GAAP operating loss represents operating loss before depreciation, amortization and stock-based compensation. Non-GAAP net loss represents non-GAAP operating loss after interest and taxes, as adjusted for uncertain tax positions component. Non-GAAP net loss per share represents non-GAAP net loss divided by our adjusted weighted average common shares outstanding, which assumes the conversion of preferred shares as of the beginning of the period. These measures are used by management to evaluate our business and management believes these measures may help investors evaluate the Company's fundamental operational performance. Management believes these non-GAAP measures facilitate operating performance comparisons from period to period by excluding potential differences caused by variations in capital structures, tax position, depreciation, amortization, stock-based compensation expense and certain other expenses. These measures are not measures of our financial performance under U.S. GAAP and should not be considered in isolation or a substitute for net loss, operating loss or other performance measures as determined in accordance with U.S. GAAP. These measures should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. Please refer to the accompanying tables entitled “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” and “Non-GAAP Net Loss Per Share” for a reconciliation of consolidated GAAP operating loss to non-GAAP operating loss, consolidated GAAP net loss to non-GAAP net loss.

    In determining our guidance for the second quarter and full year of 2014 set forth in “Guidance,” we have chosen to use non-GAAP measures for all metrics other than revenue. The non-GAAP metrics exclude the effects of depreciation, amortization, foreign exchange gains or losses, and stock-based compensation. The effects of these two items are difficult to forecast in advance as they relate to future foreign exchange rates and future stock prices, which are subject to external factors that are difficult to predict. As a result, Mavenir does not give guidance on GAAP metrics other than revenue.

    Forward-Looking Statements

    Statements in this press release that are not purely historical facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include the statements under “Guidance” above, statements regarding Mavenir’s expectations with respect to revenue, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss per share, as well as statements about transformation of mobile networks by mobile service providers, their transition to all-IP technology and software-based solutions and Mavenir’s views about its ability to deliver solutions that enable this transformation and transition. Forward-looking statements can generally be identified by words such as "anticipates," "may," "can," "believes," "expects," "projects," "intends," "likely," “target,” "will," "to be" and other expressions that are predictions or indicate future events, trends or prospects, although not all forward-looking statements contain these identifying words. These forward-looking statements represent management’s current expectations and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Mavenir to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Accordingly, investors should not place undue reliance on these forward-looking statements.

    Factors that could cause actual results to differ materially from those indicated by the forward-looking statements include risks regarding the timing of the adoption of 4G by mobile service providers around the world; mobile service providers’ investment in next-generation communications technology; our ability to sell solutions to mobile service providers, particularly those serving large numbers of customers; the length and variability of the sales cycles for our solutions; actions taken by our competitors; our ability to negotiate acceptable financial terms with our mobile service provider customers; the performance of our solutions when implemented in mobile service provider networks; management’s ability to accurately forecast Mavenir’s financial results; the timing of revenues and the application of complex revenue recognition rules to such revenues; prolonged negative economic conditions in domestic and global markets; and other factors described in our filings with the Securities and Exchange Commission ("the SEC"), including under the caption "Risk Factors" and elsewhere in our annual report on Form 10-K for the year ended December 31, 2013 and in Mavenir’s other SEC filings. There is no assurance that Mavenir’s expectations will be realized. If one or more of these risks or uncertainties materialize, or if Mavenir’s underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected. The statements in this press release are made as of the date of this press release, even though this press release is made available on Mavenir's website or otherwise. Mavenir does not assume any obligation to update the forward-looking statements provided herein to reflect events that occur or circumstances that exist after the date on which the forward-looking statements were made, except as required by law.

    About Mavenir Systems:

    Mavenir Systems (NYSE: MVNR) provides software-based networking solutions that enable mobile service providers to deliver next generation services over 4G LTE networks. Mavenir™ has a fully virtualized end to end portfolio of Voice/Video, Messaging and Mobile Core products that include IP Multimedia Subsystem (IMS), Evolved Packet Core (EPC) and Session Border Controller (SBC). Mavenir’s solutions, based on the award-winning mOne® software platform, leverage NFV and SDN technologies for deployments on cloud-based infrastructure.

    www.mavenir.com

    © 2014 Mavenir Systems, Inc. All rights reserved.

    Mavenir Systems®, mOne®, AirMessenger®, Mavenir™, mStore™, mCloud™, and Transforming Mobile Networks™ are trademarks of Mavenir Systems, Inc.

     
    Mavenir Systems, Inc. and Subsidiaries
    Condensed Consolidated Statements of Operations and Comprehensive Loss
    (in thousands, except per share data)
    (unaudited)
               

    Three months ended

    June 30,

    Three

    months

    ended

    March 31,

    Six months ended



    June 30,

      2014     2013     2014     2014     2013  
     
    Revenues
    Software products $ 27,155 $ 19,537 $ 23,037 $ 50,192 $ 37,264
    Maintenance   6,132     6,215     5,692     11,824     10,926  
      33,287     25,752     28,729     62,016     48,190  
     
    Cost of revenues
    Software products 11,912 10,763 9,953 21,865 17,414
    Maintenance   2,943     1,497     2,744     5,687     2,827  
      14,855     12,260     12,697     27,552     20,241  
     
    Gross profit 18,432 13,492 16,032 34,464 27,949
    55.4 % 52.4 % 55.8 % 55.6 % 58.0 %
    Operating expenses:
    Research and development 7,190 5,376 6,133 13,323 11,498
    Sales and marketing 8,228 4,615 6,871 15,099 9,656
    General and administrative   5,244     4,370     5,250     10,494     9,361  
    Total operating expenses   20,662     14,361     18,254     38,916     30,515  
     
    Operating loss (2,230 ) (869 ) (2,222 ) (4,452 ) (2,566 )
     
    Other expense (income):
    Interest income (18 ) (3 ) (43 ) (61 ) (8 )
    Interest expense 425 665 783 1,208 1,115
    Loss on early extinguishment of debt - - 1,783 1,783 -
    Foreign exchange (gain) loss   849     912     (795 )   54     2,644  
    Total other expense (income), net   1,256     1,574     1,728     2,984     3,751  
     
    Loss before income tax (3,486 ) (2,443 ) (3,950 ) (7,436 ) (6,317 )
     
    Income tax expense   405     1,198     95     500     1,618  
    Net loss $ (3,891 ) $ (3,641 ) $ (4,045 ) $ (7,936 ) $ (7,935 )
     
    Other comprehensive income (loss)
    Foreign currency translation adjustments   776     (70 )   (815 )   (39 )   (102 )
    Total comprehensive loss $ (3,115 ) $ (3,711 ) $ (4,860 ) $ (7,975 ) $ (8,037 )
     
    Net loss per common share:
    Basic $ (0.16 ) $ (2.72 ) $ (0.17 ) $ (0.33 ) $ (5.93 )
    Diluted $ (0.16 ) $ (2.72 ) $ (0.17 ) $ (0.33 ) $ (5.93 )
     
     
    Weighted average common shares outstanding:
    Basic and diluted   24,171     1,341     23,430     23,800     1,339  
       
    Mavenir Systems, Inc. and Subsidiaries
    Condensed Consolidated Balance Sheets
    (in thousands, except share and per share amounts)
    (unaudited)
       
    June 30, 2014

    December 31,

    2013

    Assets:
     
    Current assets:
    Cash and cash equivalents $ 24,772 $ 38,930
    Accounts receivable, net of allowance of $235 and $587 at June 30,
    2014 and December 31, 2013, respectively 29,683 23,641
    Unbilled revenue 13,418 11,213
    Inventories 3,633 7,109
    Prepaid expenses and other current assets 3,742 3,614
    Deferred contract costs   5,955     9,313  
    Total current assets 81,203 93,820
    Non-current assets:
    Property and equipment, net 5,849 5,054
    Intangible assets, net 4,890 5,202
    Deposits and other assets 1,350 1,657
    Goodwill   870     866  
    Total assets $ 94,162   $ 106,599  
     
    Liabilities and shareholders' equity:
     
    Current liabilities:
    Trade accounts payable $ 4,066 $ 7,152
    Accrued liabilities 11,435 11,939
    Deferred revenue 11,351 15,785
    Income tax payable 483 765
    Current portion of debt   1,563     -  
    Total current liabilities 28,898 35,641
    Non-current liabilities:
    Uncertain tax positions 2,823 3,153
    Other long-term liabilities 431 351
    Long-term debt   23,365     23,423  
    Total liabilities   55,517     62,568  
     
    Commitments and contingencies
     
    Shareholders' equity:
    Common stock, $0.001 par value. 300,000,000 shares authorized; 24,659,338
    and 23,420,59 shares issued and outstanding at June 30, 2014 and
    December 31, 2013, respectively 24 23
    Additional paid-in capital 157,786 155,198
    Accumulated deficit (120,123 ) (112,187 )
    Accumulated other comprehensive income   958     997  
    Total shareholders' equity   38,645     44,031  
    Total liabilities and shareholders' equity $ 94,162   $ 106,599  
       
    Mavenir Systems, Inc. and Subsidiaries
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
    (unaudited)
       
    Six months ended June 30,
      2014     2013  
     
    Operating activities:
    Net loss $ (7,936 ) $ (7,935 )
    Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation of property and equipment 1,634 1,082
    Amortization of intangible assets 975 712
    Amortization of debt discount 108 87
    Net change in allowance for doubtful accounts (312 ) 301
    Stock-based compensation expense 1,714 300
    Unrealized foreign currency gain (1,437 ) 955
    Loss on early extinguishment of debt 1,783 -
    Changes in operating assets and liabilities:
    Accounts receivable (5,536 ) (4,416 )
    Unbilled revenue (1,976 ) 2,072
    Deposits and other current assets (189 ) (146 )
    Inventories 3,475 (1,712 )
    Prepaid expenses 111 (1,806 )
    Deferred contract costs 3,469 (2,791 )
    Deferred revenue (4,596 ) 1,346
    Accounts payable and accrued liabilities   (4,204 )   1,776  
    Net cash used in operating activities   (12,917 )   (10,175 )
    Investing activities:
    Purchases of property and equipment   (3,018 )   (1,413 )
    Net cash used in investing activities   (3,018 )   (1,413 )
    Financing activities:
    Borrowing from long-term debt 25,000 15,000
    Borrowing from line of credit - 12,000
    Repayments of long-term debt (15,000 ) (2,000 )
    Repayments of line of credit borrowing (10,000 ) -
    Exercise of options and warrants to purchase common stock   873     7  
    Net cash provided by financing activities   873     25,007  
    Effect of foreign currency exchange rate changes on cash and cash equivalents   904     (368 )
    Net (decrease) increase in cash and cash equivalents (14,158 ) 13,051
    Cash and cash equivalents at beginning of period   38,930     7,402  
    Cash and cash equivalents at end of period $ 24,772   $ 20,453  
     
    Supplemental cash flow information:
    Cash paid for interest $ 1,196   $ 771  
    Income tax payments, net $ 378   $ 136  
             
    Mavenir Systems, Inc. and Subsidiaries
    Revenue Metrics
    (in thousands)
    (unaudited)
     
       

    Three Months ended

    June 30,

    Three months

    ended March

    31,

    Six Months ended

    June 30,

    20142013201420142013
     
    Revenue by type:
    Software products $ 27,155 $ 19,537 $ 23,037 $ 50,192 $ 37,264
    Maintenance   6,132   6,215   5,692   11,824   10,926
    Total $ 33,287 $ 25,752 $ 28,729 $ 62,016 $ 48,190
     
    Revenue by Product Group:
    Video/Voice $ 20,259 $ 9,511 $ 22,611 $ 42,870 $ 14,840
    Enhanced Messaging   13,028   16,241   6,118   19,146   33,350
    Total $ 33,287 $ 25,752 $ 28,729 $ 62,016 $ 48,190
     
    Revenue by Geographic Area:
    Americas $ 19,676 $ 12,906 $ 13,635 $ 33,311 $ 21,336
    EMEA 9,375 10,057 12,422 21,797 17,596
    APAC   4,236   2,789   2,672   6,908   9,258
    Total $ 33,287 $ 25,752 $ 28,729 $ 62,016 $ 48,190
         
    Mavenir Systems, Inc. and Subsidiaries
    Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
    (in thousands)
    (unaudited)
         
     

    Three Months Ended

    June 30,

    Three Months

    Ended March

    31,

    Six Months Ended

    June 30,

      2014     2013     2014     2014     2013  
     
    Software Products
    Revenue $ 27,155 $ 19,537 $ 23,037 $ 50,192 $ 37,264
    Cost of Revenue 11,912 10,763 9,953 21,865 17,414
    Amortization and Depreciation 242 126 234 476 242
    Stock Based Compensation 132 - 78 210 -
    Gross Profit (GAAP) 15,243 8,774 13,084 28,327 19,850
    Gross Profit (Non-GAAP) 15,617 8,900 13,396 29,013 20,092
     
    Maintenance
    Revenue 6,132 6,215 5,692 11,824 10,926
    Cost of Revenue 2,943 1,497 2,744 5,687 2,827
    Gross Profit (GAAP) 3,189 4,718 2,948 6,137 8,099
    Gross Profit (Non-GAAP) 3,189 4,718 2,948 6,137 8,099
     
    Total Revenue 33,287 25,752 28,729 62,016 48,190
    Total Gross Profit (GAAP) 18,432 13,492 16,032 34,464 27,949
    Gross Profit Margin % (GAAP) 55.4 % 52.4 % 55.8 % 55.6 % 58.0 %
    Gross Profit (Non-GAAP) 18,806 13,618 16,344 35,150 28,191
    Gross Profit Margin % (Non-GAAP) 56.5 % 52.9 % 56.9 % 56.7 % 58.5 %
     
    Operations Expenses
    R&D (GAAP) 7,190 5,376 6,133 13,323 11,498
    Amortization and Depreciation 483 260 574 1,057 493
    Stock Based Compensation   220     -     98     318     -  
    R&D (Non-GAAP) 6,487 5,116 5,461 11,948 11,005
     
    S&M (GAAP) 8,228 4,615 6,871 15,099 9,656
    Amortization and Depreciation - - - - -
    Stock Based Compensation   277     -     130     407     -  
    S&M (Non-GAAP) 7,951 4,615 6,741 14,692 9,656
     
    G&A (GAAP) 5,244 4,370 5,250 10,494 9,361
    Amortization and Depreciation 521 567 556 1,077 1,059
    Stock Based Compensation   468     136     311     779     300  
    G&A (Non-GAAP) 4,255 3,667 4,383 8,638 8,002
     
    Total Operating Expenses (GAAP) 20,662 14,361 18,254 38,916 30,515
    Operating Expenses (Non-GAAP) 18,693 13,398 16,585 35,278 28,663
     
    Operating Loss (GAAP) $ (2,230 ) $ (869 ) $ (2,222 ) $ (4,452 ) $ (2,566 )
    Net Interest 407 662 740 1,147 1,107
    Loss on early extinguishment of debt - - 1,783 1,783 -
    Foreign exchange (gain)/loss 849 912 (795 ) 54 2,644
    Income Taxes   405     1,198     95     500     1,618  
    Net Loss (GAAP) $ (3,891 ) $ (3,641 ) $ (4,045 ) $ (7,936 ) $ (7,935 )
     
    Operating Income (Loss) (Non-GAAP) $ 113 $ 220 $ (241 ) $ (128 ) $ (472 )
    Net Interest 407 662 740 1,147 1,107
    Income Taxes 405 1,198 95 500 1,618
    Adjusted for Uncertain Tax Positions Component   286     -     -     286     -  
    Net Loss (Non-GAAP) $ (985 ) $ (1,640 ) $ (1,076 ) $ (2,061 ) $ (3,197 )
             
    Mavenir Systems, Inc. and Subsidiaries
    Non-GAAP Net Loss Per Share

    (In thousands, except share and per share data)

    (Unaudited)
     
     

    Three months ended June 30,

    Three

    months ended

    March 31,

    Six months ended June 30,

      2014     2013     2014     2014     2013  
     
    GAAP weighted average common shares outstanding 24,170,641 1,340,710 23,429,820 23,800,231 1,338,211
    Conversion of preferred shares *   -     16,452,467     -     -     16,452,467  
    Adjusted weighted average common shares outstanding 24,170,641 17,793,177 23,429,820 23,800,231 17,790,678
     
    Non-GAAP net loss $ (985 ) $ (1,640 ) $ (1,076 ) $ (2,061 ) $ (3,197 )
     
    Non-GAAP net loss per share $ (0.04 ) $ (0.09 ) $ (0.05 ) $ (0.09 ) $ (0.18 )
     
    * Assumes conversion of preferred shares at beginning of period





    Mavenir Systems, Inc.

    Terry Hungle, 469-916-4393 x 5010

    ir@mavenir.com

    or

    Maryvonne Tubb, 469-916-4393 x 5080


    Source: Mavenir Systems


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