WESTFORD, Mass.--(BUSINESS WIRE)--Sonus Networks, Inc. (Nasdaq:SONS), a global leader in enabling and securing real-time communications, today announced that it is updating its previous guidance. The Company has also initiated a company-wide review of its cost structure to help ensure that it is well-positioned to continue investing in its technology development and growth initiatives, while also driving positive financial returns. The Company no longer expects to receive certain orders this quarter that had been expected to be received at the back end of the first quarter, and believes its planned cost reduction initiatives will help better align the Company’s cost structure in light of these longer decision cycles. The Company expects to announce the results of this cost reduction review when it reports its financial results for the first quarter on April 22, 2015.
For the first quarter ending March 27, 2015, revenue is now expected to be in the range of $47 million to $50 million compared to previous guidance of $74 million. First quarter non-GAAP loss per share is expected to be in the range of $0.29 to $0.34 compared to previous guidance of non-GAAP diluted earnings per share of $0.03. The Company currently anticipates that revenue for the full year will be up to 25% below the midpoint of its previous annual guidance of $326 million to $330 million. The Company expects to continue to benefit from a strong balance sheet with at least $100 million in cash and marketable securities and no debt at the end of the first quarter. The Company will provide further details on its recent performance and will update its outlook for the remainder of the year when it announces its first quarter results.
Ray Dolan, president and chief executive officer, said, “All of us at Sonus, including the Board of Directors, our management team and our many talented employees, are fully engaged on successfully moving the Company through the current operating environment. As a result of the review announced today, we expect to achieve a cost structure that will ensure we are well-equipped to return to positive cash flow by the end of this fiscal year despite the volatility we are facing.”
Dolan continued, “Sonus continues to benefit from strong business fundamentals that are underpinned by solid relationships with a growing number of tier one service providers around the world, leading technology and a strong balance sheet. These strengths, together with the positive feedback from current and prospective customers, give us confidence that we can move through this period and that Sonus has the right product portfolio and strategy to be the strategic supplier of choice to cloud-based network providers of the future.”
First Quarter 2015 Results Conference Call Details
Date: April 22, 2015
Time: 8:30 a.m. (ET)
Dial-in number: 800 736 4594
International Callers: +1 212 231 2918
The Company will also offer a live, listen-only webcast of the conference call via the Sonus Networks Investor Relations website at http://investors.sonusnet.com/events.cfm where supporting materials including a presentation and supplementary financial and operational data have also been posted.
A telephone playback of the call will be available following the conference call until May 6, 2015 and can be accessed by calling 800 633 8284 or +1 402 977 9140 for international callers. The reservation number for the replay is 21765615.
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About Sonus Networks
Sonus brings intelligence and security to real-time communications. By helping the world embrace the next generation of cloud-based SIP and 4G/LTE solutions, Sonus enables and secures latency-sensitive, mission critical traffic for VoIP, video, instant messaging and online collaboration. With Sonus, enterprises can give priority to real-time communications based on smart business rules while service providers can offer reliable, comprehensive and secure on-demand network services to their customers. With solutions deployed in more than 100 countries and nearly two decades of experience, Sonus offers a complete portfolio of hardware-based and virtualized Session Border Controllers (SBCs), Diameter Signaling Controllers (DSCs), Network as a Service capabilities, policy/routing servers and media and signaling gateways. For more information, visit www.sonus.net or call 1-855-GO-SONUS.
Important Information Regarding Forward-Looking Statements
The information in this release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to a number of risks and uncertainties. All statements other than statements of historical facts contained in this release, including statements regarding our future results of operations and financial position, industry developments, business strategy, plans and objectives of management for future operations and plans for future cost reductions are forward-looking statements. Without limiting the foregoing, the words “anticipates”, “believes”, “could”, “estimates”, “expects”, “expectations”, “intends”, “may”, “plans”, “seeks”, “projects” 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.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the timing of our recognition of revenues; economic conditions; adjustments identified in the course of the Company’s quarter-end accounting review; our ability to recruit and retain key personnel; difficulties supporting our strategic focus on channel sales; difficulties retaining and expanding our customer base; difficulties leveraging market opportunities; the impact of restructuring activities; our ability to realize benefits from the NET and PT acquisitions and the Treq asset acquisition; the effects of disruption from the PT and Treq transactions, making it more difficult to maintain relationships with employees, customers, business partners or government entities; the success implementing the integration strategies of NET, PT and Treq assets; litigation; actions taken by significant stockholders; difficulties providing solutions that meet the needs of customers; market acceptance of our products and services; rapid technological and market change; our ability to protect our intellectual property rights; our ability to maintain partner, reseller, distribution and vendor support and supply relationships; higher risks in international operations and markets; the impact of increased competition; currency fluctuations; the impact of the reverse split of our common stock and changes in the market price of our common stock; and/or failure or circumvention of our controls and procedures. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We therefore caution you against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in these forward-looking statements are discussed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” and Part I, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2015. Any forward-looking statement made by us in this release speaks only as of the date of this release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be 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.
Discussion of Non-GAAP Financial Measures
Sonus management uses a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, making operating decisions, planning and forecasting future periods, and determining payments under compensation programs. Our annual financial plan is prepared both on a GAAP and non-GAAP basis, and the non-GAAP annual financial plan is approved by our board of directors. Continuous budgeting and forecasting for revenue and expenses are conducted on a non-GAAP basis (in addition to GAAP) and actual results on a non-GAAP basis are assessed against the annual financial plan. We consider the use of non-GAAP financial measures helpful in assessing the core performance of our continuing operations and liquidity, and when planning and forecasting future periods. By continuing operations we mean the ongoing results of the business excluding certain expenses and credits, including, but not limited to: stock-based compensation, amortization of intangible assets, acquisition-related costs and restructuring. We consider the use of non-GAAP earnings (loss) per share helpful in assessing the performance of the continuing operations of our business. While our management uses non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, GAAP measures. In addition, our presentations of these measures may not be comparable to similarly titled measures used by other companies. These non-GAAP financial measures should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP.
Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to Sonus’ financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future.
Stock-based compensation is different from other forms of compensation, as it is a non-cash expense. For example, a cash salary generally has a fixed and unvarying cash cost. In contrast, the expense associated with an equity-based award is generally unrelated to the amount of cash ultimately received by the employee, and the cost to us is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time. We believe that excluding non-cash stock-based compensation expense from our operating results facilitates the ability of readers of our financial statements to compare our financial results to our historical operating results and to other companies in our industry.
We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amortization amounts are inconsistent in frequency and amount and are significantly impacted by the timing and size of acquisitions. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that intangible assets contribute to revenue generation. We believe that excluding the non-cash amortization of intangible assets facilitates the comparison of our financial results to our historical operating results and to other companies in our industry as if the acquired intangible assets had been developed internally rather than acquired.
We consider certain transition, integration and other acquisition-related costs to be unpredictable and dependent on a significant number of factors that may be outside of our control. We do not consider these acquisition-related costs to be related to the continuing operations of the acquired business or the Company. In addition, the size, complexity and/or volume of an acquisition, which often drives the magnitude of acquisition-related costs, may not be indicative of such future costs. We believe that excluding acquisition-related costs facilitates the comparison of our financial results to our historical operating results and to other companies in our industry.
We have recorded restructuring expense to streamline operations and reduce operating costs by closing and consolidating certain facilities and reducing our worldwide workforce. We review our restructuring accruals regularly and record adjustments to these estimates as required. We expect to record such an adjustment to our results for the current quarter, the effect of which will be a restructuring credit of $0.3 million. We believe that excluding restructuring expense facilitates the comparison of our financial results to our historical operating results and to other companies in our industry.
We believe that providing non-GAAP information to investors, in addition to the GAAP presentation, will allow investors to view the financial results in the way management views the operating results. We further believe that providing this information helps investors to better understand our financial performance and evaluate the efficacy of the methodology and information used by our management to evaluate and measure such performance.
|SONUS NETWORKS, INC.|
|Reconciliation of Non-GAAP and GAAP Financial Measures - Updated Outlook|
|(in millions, except percentages and per share amounts)|
|Three months ending|
|March 27, 2015|
|Loss per share|
|GAAP updated outlook||$||(0.45||)||$||(0.50||)|
|Stock-based compensation expense||0.14||0.14|
|Amortization of intangible assets||0.02||0.02|
|Restructuring - change in estimate||(0.01||)||(0.01||)|
|Non-GAAP updated outlook||$||(0.29||)||$||(0.34||)|