Dialogic Inc. Reports Second Quarter 2013 Financial Results

  Dialogic Inc. Reports Second Quarter 2013 Financial Results

Business Wire

MILPITAS, Calif. -- August 14, 2013

Dialogic Inc. (OTCQB: DLGC), the Network Fuel™ company, today announced second
quarter results for the period ending June 30, 2013.

GAAP Results

Total Revenue for the second quarter of 2013 was $31.1 million compared to
$33.8 million in the first quarter of 2013 and $36.9 million in the second
quarter of 2012. Gross Margin for the second quarter of 2013 was 57.6%
compared to 57.9% in the first quarter of 2013 and 45.2% in the second quarter
of 2012. Operating Expense for the second quarter of 2013 was $23.2 million
compared to $25.5 million in the first quarter of 2013 and $35.5 million in
the second quarter of 2012. Net Loss for the second quarter of 2013 was $5.7
million, or $0.36 per share compared to $10.4 million, or $0.68 per share, in
the first quarter of 2013 and $19.0 million, or $3.00 per share, in the second
quarter of 2012. Cash on hand for the second quarter of 2013 was $8.4 million
compared to $4.4 million in the first quarter of 2013 and $6.5 million in the
second quarter of 2012.

Non-GAAP Results

Total Revenue for the second quarter of 2013 was $31.3 million compared to
$34.0 million in the first quarter of 2013 and $37.6 million in the second
quarter of 2012. Gross Margin for the second quarter of 2013 was 61.8%
compared to 62.4% in the first quarter of 2013 and 65.2% in the second quarter
of 2013. Operating Expense for the second quarter of 2013 was $20.6 million
compared to $22.1 million in the first quarter of 2013 and $27.5 million in
the second quarter of 2012. Adjusted EBITDA for the second quarter of 2013 was
($1.2) million compared to ($0.9) million in the first quarter of 2013 and
($3.0) million in the second quarter of 2012.

About Dialogic:

Dialogic (OTCQB:DLGC), the Network Fuel™ company, inspires the world's leading
service providers and application developers to elevate the performance of
media-rich communications across the most advanced networks. We boost the
reliability of any-to-any network connections, supercharge the impact of
applications and amplify the capacity of congested networks. Forty-eight of
the world's top 50 mobile operators and nearly 3,000 application developers
rely on Dialogic to redefine the possible and exceed user expectations.

For more information on Dialogic and the communications solutions energized by
our technology, visit www.dialogic.com and www.dialogic.com/en/showcase. Also,
visit our social media newsroom for the latest news, videos and blog posts.

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 March 31, 2013, 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 Network Fuel is a trademark of Dialogic
Inc. or a subsidiary. (DLGC-IR)

GAAP Financial Tables

Dialogic Inc.
Consolidated Statements of Operations (GAAP)
(In thousands, except per share data)
                                                          
                         Three Months Ended June    Six Months Ended June 30,
                         30,
                         2013         2012         2013         2012
Revenue:
   Products              $  22,751     $ 26,954      $ 47,484      $ 59,442
   Services                8,324     9,960      17,386     19,557  
       Total revenue       31,075    36,914     64,870     78,999  
                                                                   
Cost of revenue:
   Products                 8,868        15,264        18,445        26,675
   Services                4,303     4,978      8,944      10,149  
       Total cost of       13,171    20,242     27,389     36,824  
       revenue
       Gross profit        17,904    16,672     37,481     42,175  
                                                                   
Operating expenses:
   Research and             7,083        11,370        15,116        24,193
   development, net
   Sales and                8,356        11,063        17,604        22,674
   marketing
   General and              7,629        8,806         15,589        16,391
   administrative
   Restructuring           114       4,246      326        4,303   
   charges
       Total
       operating           23,182    35,485     48,635     67,561  
       expenses
Loss from operations        (5,278 )     (18,813 )     (11,154 )     (25,386 )
                                                                   
Other income
(expense):
   Interest and
   other expense,           (13    )     (66     )     (53     )     (149    )
   net
   Interest expense         (2,532 )     (2,943  )     (4,899  )     (7,043  )
   Change in fair           2,479        3,338         1,273         405
   value of warrants
   Foreign exchange        (550   )   (667    )   (911    )   (769    )
   loss, net
       Total other         (616   )   (338    )   (4,590  )   (7,556  )
       expense, net
Loss before
(benefit) provision         (5,894 )     (19,151 )     (15,744 )     (32,942 )
for income taxes
Income tax (benefit)       (207   )   (112    )   303        248     
provision
Net loss                 $  (5,687 )  $ (19,039 )  $ (16,047 )  $ (33,190 )
                                                                   
Net loss per share -     $  (0.36  )   $ (3.00   )   $ (1.03   )   $ (5.25   )
basic and diluted
Weighted average
shares of common
stock used in
calculation of net
loss per share -           15,907    6,337      15,590     6,318   
basic and diluted
                                                                             
                                                                             

Dialogic Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)

                                              June 30,      December 31,
                                                   2013          2012
                                                   (unaudited)
ASSETS                                                          
Current assets:
  Cash and cash equivalents                        $ 8,389        $ 6,501
  Restricted cash                                    1,180          900
  Accounts receivable, net of allowance of           24,482         32,422
  $2,211 and $1,217, respectively
  Inventory                                          6,246          8,874
  Other current assets                              6,754       8,993    
    Total current assets                             47,051         57,690
Property and equipment, net                          4,995          5,978
Intangible assets, net                               22,129         25,089
Goodwill                                             31,223         31,223
Other assets                                        2,111       2,147    
                Total assets                       $ 107,509    $ 122,127  
                                                                  
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable                                 $ 10,089       $ 16,994
  Accrued liabilities                                18,367         21,270
  Deferred revenue, current portion                  14,067         12,742
  Bank indebtedness                                  15,188         11,717
  Income taxes payable                              889         1,007    
    Total current liabilities                        58,600         63,730
Long-term debt, related parties, net of              70,692         66,536
discount
Warrants                                             712            1,985
Other long-term liabilities                         7,706       8,978    
                Total liabilities                    137,710        141,229
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 15,948,782 and 14,415,652        16             14
    shares, respectively
  Additional paid-in capital                         262,418        257,658
  Accumulated other comprehensive loss               (22,237  )     (22,423  )
  Accumulated deficit                               (270,398 )   (254,351 )
    Total stockholders' deficit                     (30,201  )   (19,102  )
                Total liabilities and              $ 107,509    $ 122,127  
                stockholders' 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 but
excludes restructuring and integration costs, product rationalization,
non-cash stock compensation expense, purchase accounting adjustments, SEC
inquiry expenses and other non-recurring transactions such as revenue
reversals and bad debt charges, as well as other income (expense) items which
include 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 June 30, 2013
(in thousands, except per share data)
(unaudited)
                                                                                                                           
                                   Depreciation   Restructuring                     Stock-based    Purchase
                     GAAP         and           and            Product          Compensation  Accounting   SEC      Other        Adjusted
                                   Amortization   Integration     Rationalization   Expense        Adjustments   Inquiry   Adjustments   EBITDA
                                                  Costs
Revenue:
  Products           $ 22,751      -              -               -                 -              92            -         -             $ 22,843
  Services             8,324       -              -               -                 -              131           -         -               8,455
                                                                                                                                         
Cost of revenue:
  Products             8,868       (1,167   )     -               -                 (40     )      -             -         -               7,661
  Services             4,303       -              -               -                 -              -             -         -               4,303
                                                                                                                                         
Operating
expenses:
  Research and
  development,         7,083       (265     )     -               -                 (53     )      -             -         -               6,765
  net
  Sales and            8,356       (373     )     -               -                 (120    )      -             -         -               7,863
  marketing
  General and          7,629       (484     )     (558      )     -                 (448    )      -             28        (216     )      5,951
  administrative
  Restructuring        114         -              (114      )     -                 -              -             -         -               -
  charges
                                                                                                                                         
Total other            (616    )   -              -               -                 -              -             -         616             -
expense, net
Income tax            (207    )  -            -             -               -            -           -       207          -      
benefit
Net loss             $ (5,687  )  2,289        672           -               661          223         (28   )  625         $ (1,245 )
                                                                                                                                         
Net loss per
share - basic        $ (0.36   )                                                                                                         $ (0.08  )
and diluted
Weighted average
shares of common
stock used in
calculation of
net loss per          15,907                                                                                                            15,907 
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   Restructuring                     Stock-based    Purchase
                     GAAP         and           and            Product          Compensation  Accounting   SEC      Other        Non-GAAP
                                   Amortization   Integration     Rationalization   Expense        Adjustments   Inquiry   Adjustments
                                                  Costs
Revenue:
  Products           $ 26,954      -              -               -                 -              100           -         -             $ 27,054
  Services             9,960       -              -               -                 -              596           -         -               10,556
                                                                                                                                         
Cost of revenue:
  Products             15,264      (2,052   )     -               (4,821     )      (74     )      (215    )     -         -               8,102
  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             $ (19,039 )  3,604        5,510         4,821           565          911         416     226         $ (2,986 )
                                                                                                                                         
Net loss per
share - basic        $ (3.00   )                                                                                                         $ (0.47  )
and diluted
Weighted average
shares of common
stock used in
calculation of
net loss per          6,337                                                                                                             6,337  
share - basic
and diluted
                                                                                                                                         
                                                                                                                                         
Dialogic Inc.
Reconciliation of Condensed Consolidated Statement of Operations to Adjusted EBITDA Results
Three Months Ended March 31, 2013
(in thousands, except per share data)
(unaudited)
                                                                                                                                         
                                   Depreciation   Restructuring                     Stock-based    Purchase
                     GAAP         and           and            Product          Compensation  Accounting   SEC      Other        Non-GAAP
                                   Amortization   Integration     Rationalization   Expense        Adjustments   Inquiry   Adjustments
                                                  Costs
Revenue:
  Products           $ 24,733      -              -               -                 -              25            -         -             $ 24,758
  Services             9,062       -              -               -                 -              133           -         -               9,195
                                                                                                                                         
Cost of revenue:
  Products             9,577       (1,178   )     -               (198       )      (73     )      -             -         -               8,128
  Services             4,641       -              -               -                 -              -             -         -               4,641
                                                                                                                                         
Operating
expenses:
  Research and
  development,         8,033       (282     )     -               -                 (43     )      -             -         -               7,708
  net
  Sales and            9,248       (370     )     -               -                 (153    )      -             -         -               8,725
  marketing
  General and          7,960       (515     )     (418      )     -                 (368    )      -             63        (1,048   )      5,674
  administrative
  Restructuring        212         -              (212      )     -                 -              -             -         -               -
  charges
                                                                                                                                         
Total other            (3,974  )   -              -               -                 -              -             -         3,974           -
expense, net
Income tax            510       -            -             -               -            -           -       (510     )    -      
provision
Net loss             $ (10,360 )  2,345        630           198             637          158         (63   )  5,532       $ (923   )
                                                                                                                                         
Net loss per
share - basic        $ (0.68   )                                                                                                         $ (0.06  )
and diluted
Weighted average
shares of common
stock used in
calculation of
net loss per          15,270                                                                                                            15,270 
share - basic
and diluted

Contact:

Investor Relations:
Dialogic Inc.
Andrew Goldberg, 973-967-6425
Senior Vice President, Marketing & Strategy
Andrew.Goldberg@dialogic.com
 
Press spacebar to pause and continue. Press esc to stop.