Dialogic Inc. Reports Third Quarter 2012 Financial Results
Dialogic Inc. Reports Third Quarter 2012 Financial Results
Organizational, Operational and Financial initiatives driving positive impact
Business Wire
MILPITAS, Calif. -- November 13, 2012
Dialogic Inc. (NASDAQ: DLGC), a leading provider of products and technologies
that enable operators to provide an enhanced mobile experience, today
announced third quarter financial results for the period ending September 30,
2012.
On a GAAP basis, Dialogic achieved the following financial results for the
third quarter of 2012 as compared to the third quarter of 2011 and the second
quarter of 2012.
* Total revenue for the third quarter of 2012 was $42.4 million, compared to
$47.4 million in the third quarter of 2011 and $38.6 million in the second
quarter of 2012.
* Gross margin for the third quarter of 2012 was 61.8%, compared to 59.8% in
the third quarter of 2011 and 45.9% in the second quarter of 2012.
* Operating expense for the third quarter of 2012 was $26.4 million,
compared to $37.3 million in the third quarter of 2011 and $35.5 million
in the second quarter of 2012.
* Net loss for the third quarter of 2012 was ($0.3) million, or ($0.03) per
share, compared to losses of ($13.1) million, or ($2.09) per share, in the
third quarter of 2011 and ($18.0) million, or ($2.85) per share, in the
second quarter of 2012. Earnings per share results were calculated on a
post-split basis, taking into effect the company’s 5 for 1 reverse stock
split, effected on September 14, 2012, retroactively applied for compared
periods.
As reflected below in the Reconciliation of Condensed Consolidated Statements
of Operations to Adjusted EBITDA Results, on a non-GAAP basis, Dialogic
achieved the following financial results for the third quarter of 2012, as
compared to the third quarter of 2011 and to the second quarter of 2012.
* Total revenue for the third quarter of 2012 was $42.5 million, compared to
$48.0 million in the third quarter of 2011 and $39.3 million in the second
quarter of 2012.
* Gross margin for the third quarter of 2012 was 65.3%, compared to 65.3% in
the third quarter of 2011 and 65.1% in the second quarter of 2012.
* Operating expense for the third quarter of 2012 was $23.9 million,
compared to $30.3 million in the third quarter of 2011 and $27.5 million
in the second quarter of 2012.
* Adjusted EBITDA for the third quarter of 2012 was $3.8 million, compared
to $1.0 million in the third quarter of 2011 and ($2.0) million in the
second quarter of 2012.
“Dialogic is pleased to report that the organizational, operational and
financial initiatives that have been implemented over the past four quarters
are starting to yield better results across key dimensions of our business,”
said Kevin Cook, President and CEO. “We are encouraged that our Next-Gen
portfolio achieved double digit sequential revenue growth. In addition, we
recorded the lowest quarterly non-GAAP operating expenses and the highest
adjusted EBITDA for 2012.”
“Our customers continue to reinforce that we are uniquely enabling the
integration and delivery of complex video, voice and data services across
legacy and Next-Gen IMS/LTE networks,” added Cook. “Throughout the quarter, we
demonstrated success in turning up new Next-Gen networks with our
ControlSwitch system, enhancing existing networks with our BorderNet session
border controllers and expanding the capacity of severely constrained networks
with our Session Bandwidth Optimization portfolio. The company’s ability to
address the breadth of customer opportunities served us well.”
Conference Call Information
Dialogic will hold its third quarter earnings conference call at approximately
4:30 p.m. Eastern Standard Time on Tuesday, November 13, 2012. Dialogic will
offer a live webcast of the conference call on its website at
www.dialogic.com, which will also include forward-looking information. For
parties in the United States, call 1-800-860-2442 to access the conference
call. International parties can access the call at 412-858-4600. A replay of
the webcast will be accessible from the "Investor Relations" section of the
Dialogic website. A telephonic replay of the conference call will also be
available one hour after the call and will run for 30 days. To hear the
telephonic replay, parties in the United States should call 1-877-344-7529 and
enter passcode 10021152#. International parties should call +1-412-317-0088
and enter passcode 10021152#. In addition, Dialogic's press release will be
distributed via Business Wire and posted on the Dialogic website prior to the
conference call.
About Dialogic
Dialogic (NASDAQ: DLGC) is a leading provider of products and technologies
that enable operators to provide an enhanced mobile experience. Whether our
products are used in mobile value-added service solutions or to transform,
connect and optimize communications services, Dialogic understands that mobile
experience matters. Our technology touches over two billion mobile subscribers
a day and our network solutions carry more than 15 billion minutes of traffic
per month.
For more information on Dialogic and the communications solutions built on
Dialogic® technology, visit www.dialogic.com and www.dialogic.com/showcase.
This press release may contain forward-looking statements regarding future
events that involve risks and uncertainties. Readers are cautioned that these
forward-looking statements are only predictions and may differ materially from
actual future events or results. These forward-looking statements involve
risks and uncertainties, as well as assumptions that if they do not fully
materialize or prove incorrect, could cause our results to differ materially
from those expressed or implied by such forward-looking statements. The risks
and uncertainties that could cause our results to differ materially from those
expressed or implied by such forward-looking statements include but are not
limited to our ability to continue to achieve operational, organizational and
financial savings through initiatives already in process or which may be put
in process, generate positive cash flow and support continued revenue growth,
the potential market for and market acceptance of our products, industry and
competitive market conditions, gross margin expansion, creating new revenue
opportunities, reducing operating expenses and other risks and uncertainties
described more fully in our documents filed with or furnished to the SEC. More
information about these and other risks that may impact Dialogic's business is
set forth in the "Risk Factors" section in our Quarterly Report on Form 10-Q
for the three months ended June 30, 2012, as filed with the SEC. These filings
are available on a website maintained by the SEC http://www.sec.gov/. All
forward-looking statements in this press release are based on information
available to us as of the date hereof, and we assume no obligation to update
these forward-looking statements.
Dialogic is a registered trademark and BorderNet and ControlSwitch are
trademarks of Dialogic Inc. or a subsidiary. All other company and product
names may be trademarks of the respective companies with which they are
associated. (DLGC-IR)
GAAP Financial Tables
DIALOGIC INC.
Condensed Consolidated Statements of Operations (GAAP)
(in thousands, except per share data)
(unaudited)
Three Months Ended September Nine Months Ended
30, September 30,
2012 2011 2012 2011
Revenue:
Products $ 32,140 $ 36,604 $ 92,249 $ 118,428
Services 10,251 10,817 29,808 29,644
Total revenue 42,391 47,421 122,057 148,072
Cost of
revenue:
Products 11,070 13,700 38,038 45,237
Services 5,118 5,358 15,267 16,215
Total cost of 16,188 19,058 53,305 61,452
revenue
Gross profit 26,203 28,363 68,752 86,620
Operating
expenses:
Research and
development, 9,266 13,540 33,459 42,262
net
Sales and 9,261 12,664 31,935 41,829
marketing
General and 7,375 9,391 23,766 27,553
administrative
Restructuring 457 1,674 4,760 6,420
charges
Total operating 26,359 37,269 93,920 118,064
expenses
Loss from (156 ) (8,906 ) (25,168 ) (31,444 )
operations
Other income
(expense):
Interest and
other income 242 (3 ) 95 (3 )
(expense), net
Interest (1,792 ) (4,695 ) (8,836 ) (13,227 )
expense
Change in fair
value of 1,750 - 2,154 -
warrants
Foreign
exchange loss, (278 ) (51 ) (1,047 ) (384 )
net
Total other (78 ) (4,749 ) (7,634 ) (13,614 )
expense, net
Loss before
provision (234 ) (13,655 ) (32,802 ) (45,058 )
(benefit) for
income taxes
Income tax
provision 56 (557 ) 304 588
(benefit)
Net loss $ (290 ) $ (13,098 ) $ (33,106 ) $ (45,646 )
Net loss per
share - basic $ (0.03 ) $ (2.09 ) $ (4.34 ) $ (7.30 )
and diluted
Weighted
average shares
of common stock
used in 10,229 6,269 7,634 6,256
calculation of
net loss per
share - basic
and diluted
DIALOGIC INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
September 30, 2012 December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents $ 2,661 $ 10,353
Restricted cash 1,000 1,497
Accounts receivable, net of
allowance of $3,797 and $3,622, 39,393 47,460
respectively
Inventory 9,741 20,127
Other current assets 7,845 9,157
Total current assets 60,640 88,594
Property and equipment, net 6,479 7,947
Intangible assets, net 26,675 33,267
Goodwill 31,223 31,223
Other assets 1,680 2,311
Total assets $ 126,697 $ 163,342
LIABILITIES AND STOCKHOLDERS'
DEFICIT
Current liabilities:
Accounts payable $ 19,414 $ 21,569
Accrued liabilities 18,298 22,449
Deferred revenue, current portion 13,503 14,872
Bank indebtedness 10,709 12,509
Income taxes payable 920 1,665
Interest payable, related parties 50 3,452
Total current liabilities 62,894 76,516
Long-term debt, related parties, 64,233 94,675
net of discount
Warrants 4,917 -
Other long-term liabilities 8,649 7,587
Total liabilities 140,693 178,778
Commitments and contingencies
Preferred stock, $0.001 par value:
Authorized - 10,000,000 shares; - -
Issued and outstanding - 1 share
Stockholders' deficit:
Common stock, $0.001 par value:
Authorized - 200,000,000 shares;
Issued and outstanding 14,401,747 14 6
and 6,295,230 shares, respectively
Additional paid-in capital 257,049 222,087
Accumulated other comprehensive (22,630 ) (22,206 )
loss
Accumulated deficit (248,429 ) (215,323 )
Total stockholders' deficit (13,996 ) (15,436 )
Total liabilities and stockholders' $ 126,697 $ 163,342
deficit
Use of Non-GAAP Financial Measures
Some of the measures in this press release are non-GAAP financial measures
within the meaning of the SEC Regulation G. Dialogic believes that presenting
non-GAAP Adjusted EBITDA is useful to investors, because it reflects the
operating performance of Dialogic. Dialogic management uses these non-GAAP
measures as important indicators of the company's past performance and in
planning and forecasting performance in future periods. Dialogic considers
EBITDA, as adjusted, an important measure of its ability to generate cash
flows to fund operating activities, service debt, fund capital expenditures
and fund other corporate investing and financing activities. EBITDA, as
adjusted, eliminates the non-cash effect of tangible asset depreciation and
amortization of intangible assets and stock-based compensation, as well as
certain nonrecurring expenses. EBITDA should be considered in addition to,
rather than as a substitute for, pre-tax income, net income and cash flows
from operating activities. The non-GAAP financial information Dialogic
presents may not be comparable to similarly-titled financial measures used by
other companies, and investors should not consider non-GAAP financial measures
in isolation from, or in substitution for, financial information presented in
compliance with GAAP. You are encouraged to review the reconciliation of GAAP
financial measures to non-GAAP financial measures included elsewhere in this
press release.
In respect of the foregoing, Dialogic provides the following supplemental
information to provide additional context for the use and consideration of the
non-GAAP financial measures used elsewhere in this press release:
"EBITDA" is defined as earnings before interest, income taxes, depreciation
and amortization. "Adjusted EBITDA" is defined as EBITDA, plus adjustments for
nonrecurring items or other adjustments. Adjusted EBITDA includes EBITDA and
also restructuring and integration costs, product rationalization, non-cash
stock compensation expense, purchase accounting adjustments, SEC inquiry
expenses and other income (expense) items, which includes the change in the
fair value of warrants and foreign exchange gain (loss). Dialogic considers
Adjusted EBITDA as a key metric in evaluating its financial performance.
Non-GAAP Financial Tables
DIALOGIC INC.
Reconciliation of Condensed Consolidated Statement of Operations to Adjusted EBITDA Results
Three Months Ended September 30, 2012
(in thousands, except per share data)
(unaudited)
Depreciation Stock-based Purchase
and Restructuring Product Compensation Accounting SEC Other Adjusted
and
GAAP Amortization Integration Rationalization Expense Adjustments Inquiry Adjustments EBITDA
Costs
Revenue:
Products $ 32,140 - - - - 165 - - $ 32,305
Services 10,251 - - - - (77 ) - - 10,174
Cost of
revenue:
Products 11,070 (1,226 ) - (516 ) (86 ) 371 - - 9,613
Services 5,118 - - - - - - 5,118
Operating
expenses:
Research and
development, 9,266 (324 ) 4 - (146 ) 73 - - 8,872
net
Sales and 9,261 (471 ) 19 - (175 ) 6 - - 8,641
marketing
General and 7,375 (269 ) (486 ) - (238 ) 69 (64 ) - 6,387
administrative
Restructuring 457 - (457 ) - - - - - -
charges
Total other (78 ) - - - - - - 78 -
expense, net
Income tax 56 - - - - - - (56 ) -
provision
Net (loss) $ (290 ) 2,290 920 516 645 (431 ) 64 134 $ 3,848
income
Net (loss)
income per $ (0.03 ) $ 0.38
share - basic
and diluted
Weighted
average shares
of common
stock used in
calculation of 10,229 10,229
net (loss)
income per
share - basic
and diluted
DIALOGIC INC.
Reconciliation of Condensed Consolidated Statement of Operations to Adjusted EBITDA Results
Three Months Ended September 30, 2011
(in thousands, except per share data)
(unaudited)
Depreciation Stock-based Purchase
and Restructuring Product Compensation Accounting SEC Other
and
GAAP Amortization Integration Rationalization Expense Adjustments Inquiry Adjustments Non-GAAP
Costs
Revenue:
Products $ 36,604 - - - - 155 - - $ 36,759
Services 10,817 - - - - 413 - - 11,230
Cost of
revenue:
Products 13,700 (2,146 ) - - (89 ) (138 ) - - 11,327
Services 5,358 - (25 ) - - - - - 5,333
Operating
expenses:
Research and
development, 13,540 (437 ) (65 ) - (239 ) - - - 12,799
net
Sales and 12,664 (1,269 ) (21 ) - (234 ) - - - 11,140
marketing
General and 9,391 (812 ) (286 ) - (198 ) - (1,699 ) - 6,396
administrative
Restructuring 1,674 - (1,674 ) - - - - - -
charges
Total other (4,749 ) - - - - - - 4,749 -
expense, net
Income tax (557 ) - - - - - - 557 -
benefit
Net (loss) $ (13,098 ) 4,664 2,071 - 760 706 1,699 4,192 $ 994
income
Net (loss)
income per $ (2.09 ) $ 0.16
share - basic
and diluted
Weighted
average shares
of common
stock used in
calculation of 6,269 6,269
net (loss)
income per
share - basic
and diluted
DIALOGIC INC.
Reconciliation of Condensed Consolidated Statement of Operations to Adjusted EBITDA Results
Three Months Ended June 30, 2012
(in thousands, except per share data)
(unaudited)
Depreciation Stock-based Purchase
and Restructuring Product Compensation Accounting SEC Other
and
GAAP Amortization Integration Rationalization Expense Adjustments Inquiry Adjustments Non-GAAP
Costs
Revenue:
Products $ 28,599 - - - - 100 - - $ 28,699
Services 9,960 - - - - 596 - - 10,556
Cost of
revenue:
Products 15,901 (2,052 ) - (4,821 ) (74 ) (215 ) - - 8,739
Services 4,978 - - - - - - - 4,978
Operating
expenses:
Research and
development, 11,370 (430 ) - - (120 ) - - - 10,820
net
Sales and 11,063 (833 ) - - (154 ) - - - 10,076
marketing
General and 8,806 (289 ) (1,264 ) - (217 ) - (416 ) - 6,620
administrative
Restructuring 4,246 - (4,246 ) - - - - - -
charges
Total other (338 ) - - - - - - 338 -
expense, net
Income tax (112 ) - - - - - - 112 -
benefit
Net (loss) $ (18,031 ) 3,604 5,510 4,821 565 911 416 226 $ (1,978 )
income
Net (loss)
income per $ (2.85 ) $ (0.31 )
share - basic
and diluted
Weighted
average shares
of common
stock used in
calculation of 6,337 6,337
net (loss)
income per
share - basic
and diluted
DIALOGIC INC.
Reconciliation of Condensed Consolidated Statement of Operations to Adjusted EBITDA Results
Nine Months Ended September 30, 2012
(in thousands, except per share data)
(unaudited)
Depreciation Stock-based Purchase
and Restructuring Product Compensation Accounting SEC Other
and
GAAP Amortization Integration Rationalization Expense Adjustments Inquiry Adjustments Non-GAAP
Costs
Revenue:
Products $ 92,249 - - - - 434 - - $ 92,683
Services 29,808 - - - - 827 - - 30,635
Cost of
revenue:
Products 38,038 (4,844 ) - (5,337 ) (149 ) 156 - - 27,864
Services 15,267 - - - (95 ) - - - 15,172
Operating
expenses:
Research and
development, 33,459 (1,106 ) 4 - (506 ) 73 - - 31,923
net
Sales and 31,935 (2,119 ) 19 - (551 ) 6 - - 29,291
marketing
General and 23,766 (1,136 ) (2,197 ) - (595 ) 69 (243 ) - 19,663
administrative
Restructuring 4,760 - (4,760 ) - - - - - -
charges
Total other (7,634 ) - - - - - - 7,634 -
expense, net
Income tax 304 - - - - - - (304 ) -
provision
Net (loss) $ (33,106 ) 9,205 6,934 5,337 1,896 957 243 7,938 $ (595 )
income
Net (loss)
income per $ (4.34 ) $ (0.08 )
share - basic
and diluted
Weighted
average shares
of common
stock used in
calculation of 7,634 7,634
net (loss)
income per
share - basic
and diluted
DIALOGIC INC.
Reconciliation of Condensed Consolidated Statement of Operations to Adjusted EBITDA Results
Nine Months Ended September 30, 2011
(in thousands, except per share data)
(unaudited)
Depreciation Stock-based Purchase
and Restructuring Product Compensation Accounting SEC Other
and
GAAP Amortization Integration Rationalization Expense Adjustments Inquiry Adjustments Non-GAAP
Costs
Revenue:
Products $ 118,428 - - - - 2,664 - - $ 121,092
Services 29,644 - - - - 1,801 - - 31,445
Cost of
revenue:
Products 45,237 (6,472 ) - - (182 ) 1,128 - - 39,711
Services 16,215 - (25 ) - (63 ) - - - 16,127
Operating
expenses:
Research and
development, 42,262 (1,298 ) (65 ) - (565 ) - - - 40,334
net
Sales and 41,829 (3,888 ) (21 ) - (775 ) (389 ) - - 36,756
marketing
General and 27,553 (2,404 ) (286 ) - (743 ) - (2,526 ) - 21,594
administrative
Restructuring 6,420 - (6,420 ) - - - - - -
charges
Total other (13,614 ) - - - - - - 13,614 -
expense, net
Income tax 588 - - - - - - (588 ) -
provision
Net (loss) $ (45,646 ) 14,062 6,817 - 2,328 3,726 2,526 14,202 $ (1,985 )
income
Net (loss)
income per $ (7.30 ) $ (0.32 )
share - basic
and diluted
Weighted
average shares
of common
stock used in
calculation of 6,256 6,256
net (loss)
income per
share - basic
and diluted
Contact:
Investor Relations:
Dialogic Inc.
Andrew Goldberg, 973-967-6425
Senior Vice President, Marketing & Strategy
Andrew.Goldberg@dialogic.com
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