Sonus Networks (SONS) Tops Q2 EPS by 7c, Beats on Revenues; Offers Positive Q3 Guidance

Sonus Networks (NASDAQ: SONS) reported Q2 EPS of ($0.02), $0.07 better than the analyst estimate of ($0.09). Revenue for the quarter came in at $55.7 million versus the consensus estimate of $53.86 million.

Management Comments and Outlook

"We've been investing in virtualization for many years, and those investments are now starting to pay off in several strategic engagements. Our large competitive displacement of the incumbent in a North American Tier 1 has already led to a recent win in Mexico to replace an incumbent SBC supplier with our SBC 7000, which we expect to generate revenue in the fourth quarter. We are increasingly viewed as a trusted partner as global service providers continue their move to the cloud,\" said Dolan. \"On the security front, we announced Fortinet as a second technology partner as we build an ecosystem to define a common network perimeter for securing all flows for the enterprise. This will contribute to a managed service offering that can be provided by these service providers going forward, with the first one expected to launch commercially in the third quarter. This progress has been a significant driver in our selection by multiple customers to provide our software-based SBC as a core element of their cloud-based edge architectures. Additionally, in July we received JITC certification for our software-based SBC (SWe), making Sonus the only SW-based vendor-agnostic SBC on the approved list for government purchasing that provides carrier grade resiliency, scale and functionality. Taken together these are significant proof points that our R&D investments are driving opportunities to lead in the new software-based architectures in the years ahead.\"

Susan Villare, Sonus interim chief financial officer, commented, "Our third quarter outlook is solid. We anticipate revenue will be between $70 million and $72 million, with GAAP diluted earnings per share between $0.05 and $0.08 and non-GAAP diluted earnings per share between $0.171 and $0.201. For the full year, our visibility is less certain as a result of the ongoing trend in customer consolidation. For example, we now anticipate that the consummation of the merger of two large Tier 1 service providers could result in a reduction in revenue on a year-over-year basis. Accordingly, our full year revenue outlook no longer supports year-over-year growth and we are now revising our outlook for full year revenue to be flat to a low single-digit percentage decline compared to 2016. We expect our GAAP loss per share will approximate $0.462 and our non-GAAP diluted earnings per share will be $0.261,2."

Please see the reconciliation of non-GAAP and GAAP financial measures in the press release appendix.

GAAP loss per share assumes a basic share count of 49.5 million; non-GAAP diluted earnings per share assumes a share count of 50.0 million.

Q317 GuidanceThe Company\'s guidance is based on current indications for its business, which are subject to change. Gross margin, operating expenses and diluted earnings per share are presented on both a GAAP and non-GAAP basis. A reconciliation of the non-GAAP to GAAP guidance and a statement on the use of non-GAAP financial measures are included at the end of this press release. Please note that the guidance for Q317 and FY17 included in this press release does not include the potential impact of the proposed merger with GENBAND, with the exception of forecasted acquisition-related expenses.

GUIDANCE:

Sonus Networks sees Q3 2017 EPS of $0.17-$0.20, versus the consensus of $0.15. Sonus Networks sees Q3 2017 revenue of $70-72 million, versus the consensus of $69.42 million.

For earnings history and earnings-related data on Sonus Networks (SONS) click here.

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