BigBand Networks Announces Third Quarter 2009 Results
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REDWOOD CITY, Calif.--(BUSINESS WIRE)-- BigBand Networks, Inc., (NASDAQ: BBND) today reported financial results for the third quarter and nine months ended September 30, 2009.
For the third quarter of 2009, total revenues were $22.2 million, and GAAP net loss was $10.9 million, or ($0.16) per share. This compares to revenues of $48.3 million and GAAP net income of $3.1 million, or $0.05 per diluted share, reported in the third quarter of 2008.
On a non-GAAP basis, the Company reported a net loss of $5.9 million, or ($0.09) per share, in the third quarter of 2009, which compares to non-GAAP net income of $6.5 million, or $0.10 per diluted share, reported in the third quarter of 2008. Third quarter 2009 non-GAAP results exclude $3.8 million of stock-based compensation expense and include a $1.1 million tax benefit for the reduction of taxes provided earlier in the year. The GAAP to non-GAAP reconciling items, for the three and nine month periods ended September 30, 2009 and 2008 can be found in "The Reconciliations of GAAP to Non-GAAP Financial Measures" attached to this press release.
The Company closed the third quarter with $41.8 million in deferred revenue. In addition, cash, cash equivalents and marketable securities were $161.6 million at September 30, 2009.
"We are encouraged by the significant improvement in bookings during the third quarter, compared to the slower order activity experienced in the second quarter of 2009 that resulted in lower revenues in the September period," commented Amir Bassan-Eskenazi, president and CEO of BigBand Networks. "We won major new Switched Digital Video markets, which increased our coverage to more than 28 million homes. In addition, we experienced stronger bookings in other solutions, which increases our confidence for improved operating results in the fourth quarter. Based on interactions with our customers and prospects, we believe operators are preparing to increase capital spending on video equipment in 2010."
For the nine months ended September 30, 2009, total revenues were $105.1 million, and GAAP net loss was $5.5 million, or ($0.08) per share. This compares to total revenues of $131.2 million and GAAP net income of $2.5 million, or $0.04 per diluted share, reported in the nine months ended September 30, 2008. On a non-GAAP basis, the Company reported net income of $6.2 million, or $0.09 per diluted share, in the nine months ended September 30, 2009. This compares to non-GAAP net income of $12.4 million, or $0.18 per diluted share, reported in the nine months ended September 30, 2008.
Fourth Quarter 2009 Business Outlook
For the fourth quarter of 2009, management provides the following outlook:
-- Net revenues are expected to be in the range of $32 million to $34
million.
-- GAAP gross margins are expected to be in the range of 53% to 55%, which
includes $0.6 million in stock-based compensation expense.
-- Non-GAAP gross margins are expected to be in the range of 55% to 57%.
-- GAAP operating expenses are expected to be in the range of $23.5 million
to $24.0 million, which includes $3.3 million of stock-based
compensation expense.
-- Non-GAAP operating expenses are expected to be in the range of $20.5
million to $21.0 million.
-- GAAP provision for income taxes is expected to be a benefit of $0.3
million.
-- Non-GAAP provision for income taxes is expected to be a benefit of $0.8
million.
-- GAAP net loss per share is expected to range from ($0.07) to ($0.10).
-- Non-GAAP net loss per share is expected to be in the range of $0.00 to
($0.03).
The following table shows our non-GAAP business outlook for the quarter ending December 31, 2009 reconciled to our GAAP business outlook. Our non-GAAP business outlook excludes stock-based compensation and income tax benefit.
Estimated loss per share
Low High
GAAP net loss ($0.07) ($0.10)
Stock-based compensation 0.06 0.06
Income tax benefit 0.01 0.01
Non-GAAP net loss $0.00 ($0.03)
Non-GAAP Financial Measures
BigBand reports all financial information required in accordance with U.S. generally accepted accounting principles (GAAP), but we believe that evaluating our ongoing operating results may be difficult to understand if limited to reviewing only GAAP financial measures. Many of our investors have requested that we disclose non-GAAP information because it is useful in understanding our performance as it excludes non-cash and other one-time charges or benefits that many investors feel may obscure our true operating results. Likewise, management uses non-GAAP measures to manage and assess the profitability of our business going forward and does not consider stock-based compensation expense and related income taxes which are non-cash charges. Specifically, management does not consider these expenses when developing and monitoring our budgets and spending. The economic substance behind our decision to exclude stock-based compensation and related income taxes relates to these charges being non-cash in nature. As a result, we use calculations of non-GAAP operating income (loss), net income (loss), net income (loss) per share and gross margin, which exclude these expenses, when evaluating our ongoing operations and allocating resources within the organization.
As a result, our management believes it is useful, for itself and investors, to review both GAAP information that includes such charges and non-GAAP information that exclude these charges because management believes such information enables such parties to have a better understanding of the overall performance of our ongoing business operations in the periods presented.
Whenever we use a non-GAAP financial measure, we provide a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
Conference Call Details for November 3, 2009
BigBand Networks will host a corresponding conference call and live webcast at 2:00 p.m. Pacific Time today. To access the conference call, dial +1-888-846-5003 for the U.S. or Canada and +1-480-629-9856 for international callers. The webcast will be available live on the Investor Relations section of the Company's corporate website at www.bigbandnet.com and via replay beginning approximately two hours after the completion of the call until the Company's announcement of its financial results for the next quarter. An audio replay of the call will also be available to investors beginning at approximately 4:00 p.m. Pacific Time on November 3, 2009 until 11:59 p.m. Pacific Time on November 10, 2009, by dialing +1-800-406-7325 or +1-303-590-3030 for callers outside the U.S. and Canada, and entering passcode 4171235#.
Cautionary Statement
The statements in this release regarding being encouraged by improvement in bookings, increasing our confidence for improved operating results in future periods, operators preparing to increase capital spending on video equipment in 2010 and our GAAP and non-GAAP business outlook, as applicable, with respect to the fourth quarter of 2009 (including revenues, gross margins, operating expenses, taxes and earnings per share) are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: unexpected fluctuations in our business due to the continuing weakness in the global economy, global credit issues, changes in demand for video services, the market acceptance of our products; the financial strength of our current and potential customers; the fluctuations in our gross margins; the concentration of our customer base; competitive developments including pricing pressures; the timing of recognition of a significant portion of our net revenues given the complex systems integration involved; our ability to manage operating expenses effectively; the level of orders that are received and can be shipped in a given quarter; and the general economic, industry or political conditions in the United States or internationally.
For a detailed discussion of these and other risk factors, please refer to BigBand's most recent Form 10-Q for the quarter ended June 30, 2009 and Form 10-K for fiscal year 2008. You can obtain copies of these reports on the SEC's Web site (www.sec.gov).
Stockholders of BigBand Networks are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. BigBand Networks does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after this November 3, 2009 press release, or to reflect the occurrence of unanticipated events.
About BigBand Networks
BigBand Networks, Inc. (NASDAQ: BBND) provides broadband service providers with innovative network solutions designed to make it easier to move, manage and monetize video. These solutions are based on BigBand's video-networking platforms that are built to enable efficient and reliable delivery across a wide range of services, including digital TV, high definition TV, advanced advertising, video-on-demand and interactive TV. BigBand Networks' customers include more than 200 service providers -- including seven of the ten largest service providers in the U.S. -- and leading cable and telco service providers in North America, Asia and Europe. BigBand Networks is based in Redwood City, Calif., with offices worldwide. For additional information about the company, please call +1.650.995.5000, email info@bigbandnet.com or visit www.bigbandnet.com.
BigBand Networks' brand and product names are service marks, trademarks or registered trademarks of BigBand Networks, Inc. in the United States and other countries. All other marks are the property of their respective owners.
BigBand Networks, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
As of September 30, As of December 31,
2009 2008
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 27,527 $ 50,981
Marketable securities 134,111 123,654
Total cash, cash equivalents and 161,638 174,635
marketable securities
Accounts receivable, net 23,942 26,361
Inventories, net 4,868 6,123
Prepaid expenses and other current 3,918 3,716
assets
Total current assets 194,366 210,835
Property and equipment, net 11,810 15,358
Goodwill 1,656 1,656
Other non-current assets 8,947 6,273
Total assets $ 216,779 $ 234,122
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,048 $ 8,350
Accrued compensation and related 6,004 11,433
benefits
Current portion of deferred revenues, 27,938 39,433
net
Current portion of other liabilities 6,511 9,221
Total current liabilities 49,501 68,437
Deferred revenues, net, less current 13,911 21,129
portion
Other liabilities, less current portion 2,097 2,392
Accrued long-term Israeli severance pay 4,067 3,745
Stockholders' equity:
Common stock 66 65
Additional paid-in capital 278,850 265,176
Accumulated other comprehensive income 668 58
Accumulated deficit (132,381 ) (126,880 )
Total stockholders' equity 147,203 138,419
Total liabilities and stockholders' $ 216,779 $ 234,122
equity
BigBand Networks, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts, Unaudited)
Three Months Ended September Nine Months Ended September 30,
30,
2009 2008 2009 2008
Net revenues:
Products $ 12,647 $ 38,337 $ 68,795 $ 104,188
Services 9,555 9,946 36,321 27,012
Total net 22,202 48,283 105,116 131,200
revenues
Cost of net
revenues:
Products 8,211 16,781 34,193 43,459
Services 2,885 2,941 9,169 9,440
Total cost of 11,096 19,722 43,362 52,899
net revenues
Gross profit 11,106 28,561 61,754 78,301
Operating
expenses:
Research and 11,698 13,218 34,308 40,430
development
Sales and 6,009 7,057 18,313 21,923
marketing
General and 4,612 5,411 14,109 15,599
administrative
Restructuring - 737 1,356 2,230
charges
Amortization
of intangible - 112 - 398
assets
Class action
litigation - - 477 -
charges
Total
operating 22,319 26,535 68,563 80,580
expenses
Operating (11,213 ) 2,026 (6,809 ) (2,279 )
(loss) income
Interest 544 1,215 2,137 4,086
income
Other income 31 (145 ) (62 ) 1,302
(expense), net
(Loss) income
before
provision for (10,638 ) 3,096 (4,734 ) 3,109
(benefit from)
income taxes
Provision for
(benefit from) 220 (35 ) 767 651
income taxes
Net (loss) $ (10,858 ) $ 3,131 $ (5,501 ) $ 2,458
income
Basic net
(loss) income $ (0.16 ) $ 0.05 $ (0.08 ) $ 0.04
per common
share
Diluted net
(loss) income $ (0.16 ) $ 0.05 $ (0.08 ) $ 0.04
per common
share
Shares used in
GAAP basic net
(loss) income 66,368 64,061 65,666 63,286
per common
share
Shares used in
GAAP diluted
net (loss) 66,368 67,116 65,666 67,208
income per
common share
BigBand Networks, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts, Unaudited)
Three Months Ended September 30, 2009
Stock-based Non-GAAP
GAAP Results Compensation Results
and Income Taxes
Net revenues:
Products $ 12,647 $ - $ 12,647
Services 9,555 - 9,555
Total net revenues 22,202 - 22,202
Cost of net revenues:
Products 8,211 (326 ) 7,885
Services 2,885 (236 ) 2,649
Total cost of net revenues 11,096 (562 ) 10,534
Gross profit 11,106 562 11,668
Operating expenses:
Research and development 11,698 (1,346 ) 10,352
Sales and marketing 6,009 (687 ) 5,322
General and administrative 4,612 (1,210 ) 3,402
Total operating expenses 22,319 (3,243 ) 19,076
Operating loss (11,213 ) 3,805 (7,408 )
Interest income 544 - 544
Other income 31 - 31
Loss before provision for (benefit (10,638 ) 3,805 (6,833 )
from) income taxes
Provision for (benefit from) income 220 (1,114 ) (894 )
taxes
Net loss $ (10,858 ) $ 4,919 $ (5,939 )
Basic net loss per common share $ (0.16 ) $ (0.09 )
Diluted net loss per common share $ (0.16 ) $ (0.09 )
Shares used in basic net loss per 66,368 66,368
common share
Shares used in diluted net loss per 66,368 66,368
common share
BigBand Networks, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts, Unaudited)
Nine Months Ended September 30, 2009
Stock-based Class
GAAP Results Compensation Realignment action Non-GAAP
and Income Expenses litigation Results
Taxes charges
Net revenues:
Products $ 68,795 $ - $ - $ - $ 68,795
Services 36,321 - - - 36,321
Total net 105,116 - - - 105,116
revenues
Cost of net
revenues:
Products 34,193 (878 ) 73 - 33,388
Services 9,169 (643 ) - - 8,526
Total cost of 43,362 (1,521 ) 73 - 41,914
net revenues
Gross profit 61,754 1,521 (73 ) - 63,202
Operating
expenses:
Research and 34,308 (3,566 ) - - 30,742
development
Sales and 18,313 (1,751 ) - - 16,562
marketing
General and 14,109 (3,460 ) - - 10,649
administrative
Restructuring 1,356 - (1,356 ) - -
charges
Class action
litigation 477 - - (477 ) -
charges
Total
operating 68,563 (8,777 ) (1,356 ) (477 ) 57,953
expenses
Operating (6,809 ) 10,298 1,283 477 5,249
(loss) income
Interest 2,137 - - - 2,137
income
Other expense (62 ) - - - (62 )
(Loss) income
before (4,734 ) 10,298 1,283 477 7,324
provision for
income taxes
Provision for 767 352 - - 1,119
income taxes
Net (loss) $ (5,501 ) $ 9,946 $ 1,283 $ 477 $ 6,205
income
Basic net
(loss) income $ (0.08 ) $ 0.09
per common
share
Diluted net
(loss) income $ (0.08 ) $ 0.09
per common
share
Shares used in
basic net
(loss) income 65,666 65,666
per common
share
Shares used in
diluted net
(loss) income 65,666 68,619
per common
share
BigBand Networks, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts and percentages, Unaudited)
Three Months Ended September Nine Months Ended September 30,
30,
2009 2008 2009 2008
GAAP and
Non-GAAP net $ 22,202 $ 48,283 $ 105,116 $ 131,200
revenues as
reported
GAAP cost of
net revenues $ 11,096 $ 19,722 $ 43,362 $ 52,899
as reported
Inventory
recovery - 18 73 773
relating to
CMTS platform
Stock-based
compensation (562 ) (390 ) (1,521 ) (1,279 )
expense
Non-GAAP cost
of net $ 10,534 $ 19,350 $ 41,914 $ 52,393
revenues
GAAP gross
profit as $ 11,106 $ 28,561 $ 61,754 $ 78,301
reported
Inventory
recovery - (18 ) (73 ) (773 )
relating to
CMTS platform
Stock-based
compensation 562 390 1,521 1,279
expense
Non-GAAP gross $ 11,668 $ 28,933 $ 63,202 $ 78,807
profit
As a
percentage of
net revenues:
GAAP gross
profit as 50.0 % 59.2 % 58.7 % 59.7 %
reported
Non-GAAP gross 52.6 % 59.9 % 60.1 % 60.1 %
profit
GAAP operating
(loss) income $ (11,213 ) $ 2,026 $ (6,809 ) $ (2,279 )
as reported
Inventory
recovery - (18 ) (73 ) (773 )
relating to
CMTS platform
Stock-based
compensation
expense:
- Cost of net 562 390 1,521 1,279
revenues
- Research and 1,346 984 3,566 2,879
development
- Sales and 687 659 1,751 1,907
marketing
- General and 1,210 1,007 3,460 2,638
administrative
Restructuring - 737 1,356 2,230
charges
Amortization
of intangible - 112 - 398
assets
Class action
litigation - - 477 -
charges
Non-GAAP
operating $ (7,408 ) $ 5,897 $ 5,249 $ 8,279
(loss) income
GAAP net
(loss) income $ (10,858 ) $ 3,131 $ (5,501 ) $ 2,458
as reported
Inventory
recovery - (18 ) (73 ) (773 )
relating to
CMTS platform
Stock-based
compensation 3,805 3,040 10,298 8,703
expense
Restructuring - 737 1,356 2,230
charges
Amortization
of intangible - 112 - 398
assets
Class action
litigation - - 477 -
charges
Tax benefits 1,114 (502 ) (352 ) (609 )
(adjustments)
Non-GAAP net $ (5,939 ) $ 6,500 $ 6,205 $ 12,407
(loss) income
Basic Non-GAAP
net (loss) $ (0.09 ) $ 0.10 $ 0.09 $ 0.20
income per
common share
Diluted
Non-GAAP net
(loss) income $ (0.09 ) $ 0.10 $ 0.09 $ 0.18
per common
share
Shares used in
Basic Non-GAAP
net (loss) 66,368 64,061 65,666 63,286
income per
common share
Shares used in
Diluted
Non-GAAP net 66,368 67,116 68,619 67,208
(loss) income
per common
share
Source: BigBand Networks, Inc.
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