April 26, 2012

Sonus Networks Reports 2012 First Quarter Results

Reports Strong Year over Year Session Border Controller Growth

WESTFORD, Mass.--(BUSINESS WIRE)-- Sonus Networks, Inc. (Nasdaq: SONS), a global leader in SIP communications, today announced results for the first quarter ending March 30, 2012 and provided its outlook for the second quarter ending Friday, June 29, 2012 and full year ending December 31, 2012.

First Quarter 2012 Highlights

  • Total revenue was $64.3 million
  • SBC total revenue, including maintenance and services, was $17.0 million, compared to $22.5 million in the fourth quarter of 2011 and $4.8 million in the first quarter of 2011
  • SBC product revenue was $13.2 million, compared to $17.5 million in the fourth quarter of 2011 and $2.3 million in the first quarter of 2011

Revenue for the first quarter of fiscal 2012 was $64.3 million, compared to $74.3 million in the fourth quarter of fiscal 2011 and $67.3 million in the first quarter of fiscal 2011. The GAAP net loss for the first quarter of fiscal 2012 was $6.4 million, or $0.02 per share, compared to GAAP net income of $3.7 million, or $0.01 per diluted share, in the fourth quarter of 2011 and a GAAP net loss of $12.4 million, or $0.04 per share, in the first quarter of fiscal 2011. The non-GAAP net loss for the first quarter of fiscal 2012 was $4.2 million, or $0.02 per share, compared to non-GAAP net income of $5.4 million, or $0.02 per diluted share, in the fourth quarter of fiscal 2011 and a non-GAAP net loss of $10.3 million, or $0.04 per share, in the first quarter of fiscal 2011.

"The Company has strong momentum in the high-growth Session Border Controller market," said Ray Dolan, President and Chief Executive Officer. "We believe our current product portfolio is giving us a competitive advantage, enabling us to grow faster than industry growth rates. We will continue to innovate and enhance our SBC product portfolio this year, further expanding our addressable market and strengthening our competitive advantage."

2012 Second Quarter Outlook

The Company's outlook is based on current indications for its business, which may change during the current quarter. A reconciliation of the GAAP to non-GAAP outlook and a statement on the use of non-GAAP financial measures are included at the end of this press release.

For the second quarter of 2012, management provides the following outlook on a non-GAAP basis:

  • Total revenue of $57 million to $59 million
  • SBC total revenue, including maintenance and services, of $14 million to $15 million

    • SBC product revenue of $10 million to $11 million
  • Gross margins between 58% and 59%
  • Operating expenses of $42 million to $43 million
  • Loss per share of $0.03
  • Basic shares of 280 million

Management reiterates the following outlook on a non-GAAP basis for the year ending December 31, 2012:

  • Total revenue of $270 million to $280 million

    • Full year overall revenue growth includes expected media gateway product revenue decline of approximately 10%, offset by strong SBC growth
  • Total SBC revenue, including maintenance and services, between $75 million and $80 million, up 44% to 54% year over year

    • SBC product revenue between $60 million and $65 million, up 58% to 72% year over year
  • Loss per share of $0.01 to $0.02
  • Basic shares of 282 million

Management provides updated ranges of the following outlook on a non-GAAP basis for the year ending December 31, 2012:

  • Gross margins of approximately 60% to 61%
  • Operating expenses of $168 million to $171 million

"Our traction in the Session Border Controller market underscores the value of the investments we are making in order to continue to outpace SBC industry growth in 2012," said Moe Castonguay, Senior Vice President and Chief Financial Officer.

Conference Call Details:

The Company will offer a live, listen-only Webcast of the conference call via the Sonus Networks Investor Web site at http://investors.sonusnet.com/events.cfm where a replay will also be available shortly following the conference call.

Date: April 26, 2012
Time: 4:45 p.m. (EST)
Dial-in number: 800 755 6634
International Callers: +1 212 231 2910

Replay Information:

A telephone playback of the call will be available following the conference call until May 10, 2012 and can be accessed by calling 800 633 8284 or +1 402 977 9140 for international callers. The reservation number for the replay is 21585089.

Accounting Period:

Beginning in fiscal 2012, the Company will report its first, second and third quarters on a 4-4-5 basis. The Company's fiscal year-end will continue to be December 31.

Tags:

Sonus Networks, Sonus, SONS, 2012 first quarter, earnings, results, IP-based network solutions, SBC, SBC 5200, SBC 9000, session border controller, session border control, session management, SIP trunking, Cloud VoIP communications, unified communications, UC, VoIP, IP, TDM.

About Sonus Networks

Sonus Networks, Inc. is a leader in IP networking with proven expertise in delivering secure, reliable and scalable next-generation infrastructure and subscriber solutions. With customers in over 50 countries across the globe and over a decade of experience in transforming networks to IP, Sonus has enabled service providers and enterprises to capture and retain users and generate significant ROI. Sonus products include session border controllers, policy/routing servers, subscriber feature servers and media and signaling gateways. Sonus products are supported by a global services team with experience in design, deployment and maintenance of some of the world's largest and most complex IP networks. For more information, visit www.sonus.net.

Important Information Regarding Forward-Looking Statements

The information in this release may contain certain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding future events that involve risks and uncertainties. All statements other than statements of historical facts contained in this report are forward-looking statements. Without limiting the foregoing, the words "anticipates", "believes", "could", "estimates", "expects", "intends", "may", "plans", "seeks" and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Although the Company believes that its expectations are based on reasonable assumptions, readers are cautioned that these forward-looking statements are only predictions and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. Such forward-looking statements may relate to, among others, expected growth rates, future business prospects and market conditions. Such forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated. These include, but are not limited to: the timing of the Company's recognition of revenues; the ability to recruit and retain key personnel; difficulties supporting our new strategic focus on channel sales; difficulties expanding the Company's customer base; difficulties leveraging market opportunities; difficulties providing solutions that meet the needs of customers; market acceptance of the Company's products and services; rapid technological and market change; the ability to protect intellectual property rights; the ability to maintain partner, reseller, distribution and vendor support and supply relationships; higher risks in international operations and markets; the ability to hire and retain employees; the impact of increased competition; currency fluctuations; litigation; changes in the market prices of the Company's common stock; actions taken by significant stockholders; failure or circumvention of the Company's controls and procedures and other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission by the Company, including in Part I, Item 1A "Risk Factors", Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Part II, Item 7A "Quantitative and Qualitative Disclosure about Market Risk" in the Company's most recent Annual Report on Form 10-K, and in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations", Part I, Item 3 "Quantitative and Qualitative Disclosures About Market Risk" and Part II, Item 1A "Risk Factors" in the Company's quarterly reports filed thereafter.

Any forward-looking statements represent Sonus' views only as of the date on which such statement is made, and should not be relied upon as representing Sonus' views as of any subsequent date. While Sonus may elect to update forward-looking statements at some point, Sonus specifically disclaims any obligation to do so, except as required by law.

Sonus is a registered trademark of Sonus Networks, Inc. All other company and product names may be trademarks of the respective companies with which they are associated.

 
 
SONUS NETWORKS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except percentages and per share amounts)
(unaudited)
         
         
Three months ended
March 30, December 31, March 31,
  2012     2011     2011  
Revenue:
Product $ 41,411 $ 47,082 $ 35,953
Service   22,928     27,190     31,346  
Total revenue   64,339     74,272     67,299  
 
Cost of revenue:
Product 9,193 13,646 23,161
Service   13,392     13,282     17,513  
Total cost of revenue   22,585     26,928     40,674  
 
Gross profit   41,754     47,344     26,625  
 
Gross margin:
Product 77.8 % 71.0 % 35.6 %
Service 41.6 % 51.2 % 44.1 %
Total gross margin 64.9 % 63.7 % 39.6 %
 
Operating expenses:
Research and development 18,387 17,384 15,608
Sales and marketing 20,585 17,033 14,297
General and administrative   8,979     8,431     8,196  
Total operating expenses   47,951     42,848     38,101  
 
(Loss) income from operations (6,197 ) 4,496 (11,476 )
Interest income, net   215     251     435  
 
(Loss) income before income taxes (5,982 ) 4,747 (11,041 )
Income tax provision   (456 )   (1,017 )   (1,367 )
 
Net (loss) income $ (6,438 ) $ 3,730   $ (12,408 )
 
(Loss) earnings per share:
Basic $ (0.02 ) $ 0.01 $ (0.04 )
Diluted $ (0.02 ) $ 0.01 $ (0.04 )
 
Shares used to compute (loss) earnings per share:
Basic 279,487 279,293 277,712
Diluted 279,487 279,565 277,712
 
 
SONUS NETWORKS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
         
 
March 30, December 31,
  2012     2011  
Assets
Current assets:

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