By a News Reporter-Staff News Editor at Computer Weekly News -- Radisys Corporation (NASDAQ:RSYS), a market leader providing wireless infrastructure solutions for telecom, aerospace and defense applications, announced second quarter 2014 revenues of $50.0 million and a GAAP net loss of $8.2 million or $0.23 per diluted share. Second quarter non-GAAP net loss was $2.5 million or $0.07 per diluted share.
Commenting on second quarter financial and business highlights, Brian Bronson, Radisys President and Chief Executive Officer, stated, "Our second quarter financial results were in-line with the expectations set back in May as we continue to take the necessary steps to return to second half 2014 profitability while at the same time continuing to invest strategically to enable long-term profitable growth.
Revenue increased sequentially by approximately 14% with improvement in Software-Solutions revenue of nearly 33%.
Deferred revenue was up over 14% sequentially due primarily to early Media Resource Function (MRF) product shipments into our new target markets.
We were awarded our first new business with our yet to be announced next generation platforms products. One of these awards was with a large North American carrier while another was with a leading equipment provider.
We now have 25+ MRF trials in support of global Voice over LTE (VoLTE) deployments with both our MPX-12000 system and our virtualized software-only MRF (MPX-OS). These trials continue to progress well with certain customers preparing for network deployment in 2014.
During the quarter, we won another meaningful MRF design win where our partner will be deploying our WebRTC video transcoding capabilities as part of their VoLTE solution.
Non-GAAP R&D and SG&A expense of $16.1 million was at its lowest level in eight years reflecting our continuing progress in restructuring the business.
Our contract manufacturing transition, which is expected to result in approximately $6 million in annual cost of goods sold savings or approximately 3 gross margin points, remains on track for completion by the end of the third quarter of 2014.
Inventory decreased by over $4.0 million sequentially to $19.8 million, its lowest level in nearly four years, reflecting our efforts to optimize working capital. We expect to further reduce inventory during the second half of 2014.
Cash and cash equivalents were $34.6 million at the end of the second quarter. During the quarter, we reduced outstanding debt under our Silicon Valley Bank line of credit by $5.0 million. Second quarter cash consumption excluding changes in debt was $2.7 million and included cash restructuring payments of $1.3 million." Third Quarter and 2014 Outlook Third quarter revenue is expected between $48 million and $54 million with Software-Solutions revenue expected to increase sequentially by 10% to 15%.
Non-GAAP gross margin in the third quarter is expected between 33% and 35% of sales and non-GAAP R&D and SG&A expenses are expected to approximate $16 million.
Third quarter non-GAAP earnings are expected to range from a net loss of ($0.03) to a profit of $0.09 per share and cash generation is expected to be approximately $2 million.
Third quarter profit and cash generation is highly dependent upon the receipt of cash from a large strategic carrier. The due date for this cash is late in our third quarter and if received following September 30, 2014 would result in fourth quarter revenue and profit recognition.
2014 revenue is expected between $190 million and $200 million.
MRF revenue in support of Voice over LTE applications is expected to increase from about $1 million in 2013 to approximately $8 million in 2014.
Non-GAAP gross margins are expected to exit 2014 in the mid to high-30's due to expected growth in high margin Software-Solutions revenue combined with the completed contract manufacturing transition which is expected to add approximately three gross margin points when complete in the fall of 2014.
Overall 2014 non-GAAP EPS is expected to approximate a $0.10 loss implying an annualized fourth quarter exit rate of approximately $0.30. The fourth quarter 2014 exit-rate may not be indicative of our 2015 profitability as we continue to evaluate investment levels required to meet next generation product deliverables.
Mr. Bronson continued, "Over the last 18 to 24 months, we have made significant strategic progress in our core areas of focus and have significantly improved the operational execution of the company. At the same time, we have simplified and dramatically reduced our cost structure by nearly 40%. These actions have put us in a position to be profitable and cash flow positive in the second half of this year. Optimizing our cost structure while also ensuring we adequately invest in next generation products is extremely challenging and I'm very proud of the entire Radisys team for their commitment to get us to this point. Given the strategic progress we continue to make with our next generation products, we believe it is in our shareholder's best interest to at least maintain, if not grow current operating expenses, so as to ensure we capitalize on the significant opportunities in front of us." Conference Call and Webcast Information Radisys will host a conference call on Tuesday, August 5, 2014, at 5:00 p.m. ET to discuss its second quarter 2014 results and financial outlook.
To participate in the live conference call, dial 888-333-0027 in the U.S. and Canada or 706-634-4990 for all other countries and reference conference ID # 76227833. The live conference call will also be available via webcast on the Radisys investor relations website at http://investor.radisys.com/.
Keywords for this news article include: Software, Radisys Corporation.
Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC