Press Releases
Visual Networks Reports Third Quarter Results - Revenue Increases 48% Over Prior Year
Company Returns to Profitability and Marks Fourth Consecutive Quarter of Operating Improvement
ROCKVILLE, MD (October 27, 2004) - Visual Networks, Inc.® (Nasdaq: VNWK) today reported financial results for the third quarter ended September 30, 2004. The quarter marked the company's fourth consecutive quarter of improvement in revenue, operating income and net income
Revenue for the third quarter was $13.8 million, compared with $9.4 million for the same period last year, an increase of 48 percent and up 8 percent sequentially from $12.8 million reported in the second quarter. The company returned to profitability in the quarter, reporting $246,000 in net income, or $0.01 per share. Revenue exceeded published analyst consensus estimates.
The balance sheet for the quarter also remained strong. The company exited the quarter with $12.5 million in cash and investments. Accounts receivable of $6.6 million at September 30, 2004 represented 44 days sales outstanding.
"We are very pleased to report a fourth consecutive quarter of significant growth and a return to profitability for the company," said Larry Barker, President and CEO of Visual Networks. "This performance, in conjunction with the continued solid market adoption of our flagship Visual UpTime Select solution, further validates our corporate strategy."
- Exceeded published consensus estimates on revenue and EPS;
- Returned to profitability and maintained a strong balance sheet;
- Achieved strong initial uptake of AppFlows and AppSummary modules, with a number of sales among enterprise customers;
- Hired Jeff Schmitz, who has over 20 years' industry experience, as senior vice president of marketing;
- Added nearly 50 new enterprise customers during the quarter;
- Appointed Grant Thornton, LLC as new auditor;
- Received our first Visual UpTime Select order from Asia/Pacific;
- Entered into a distribution agreement with Getronics Mexico, a leading Latin American systems integrator;
- Addressed nearly 500 prospective customers at four events nationwide as platinum sponsor of Network World's VoIP tour; and
- Presented to 250 Visual Networks' customers at nine UpTime Select roadshow events.
The company expects fourth quarter revenue to be in the range of $14.0 million to $14.5 million and EPS to be in the range of $0.01 to $0.02.
Visual Networks' management will host a discussion of this afternoon's announcement with investors and financial analysts today, Wednesday October 27, 2004, at 4:45 p.m. (EDT). To participate in the teleconference, please call 617-786-2902, confirmation code 76338526. A live web cast of the call will also be available at http://www.visualnetworks.com/events.
For those unable to listen to the live call, a replay will be available from 6:45 PM EDT on October 27, 2004 until 6:45 PM EDT on October 29, 2004 by dialing 617-801-6888 and entering confirmation code 75818842. An archive of the call will be available online shortly following the conclusion of the live call on Visual Networks' Web site at http://www.visualnetworks.com/events.
Visual Networks, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
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For the |
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Three Months Ended |
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Sept. 30, |
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2003 |
2004 |
|
|
|
Revenue |
$ 9,367 |
$ 13,817 |
Cost of revenue |
3,119 |
4,284 |
Gross profit |
6,248 |
9,533 |
Operating expenses: |
|
|
Research and development |
2,621 |
2,378 |
Sales and marketing |
4,026 |
4,054 |
General and administrative |
1,743 |
2,560 |
Total operating expenses |
8,390 |
8,992 |
Income (loss) from operations |
(2,142) |
541 |
Interest expense, net |
(373) |
(295) |
Net income (loss) |
$ (2,515) |
$ 246 |
Basic and diluted income (loss) per share |
$ (0.08) |
$ 0.01 |
Visual Networks, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
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|
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Dec. 31, |
Sept. 30, |
|
2003 |
2004 |
|
|
|
|
|
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| Assets |
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Current assets: |
|
|
Cash and cash equivalents |
$ 15,671 |
$ 12,517 |
Restricted short-term investments |
1,530 |
-- |
Accounts receivable, net |
2,326 |
6,632 |
Inventory, net |
3,346 |
3,157 |
Deferred debt issuance costs |
532 |
304 |
Other current assets |
256 |
843 |
Total current assets |
23,661 |
23,453 |
Property and equipment, net |
2,378 |
2,077 |
Total assets |
$ 26,039 |
$ 25,530 |
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| Liabilities and Stockholders’ Equity |
|
|
Liabilities: |
|
|
Accounts payable and accrued expenses |
$ 8,115 |
$ 9,412 |
Convertible debentures, net of unamortized debt discount |
8,744 |
7,996 |
Deferred revenue |
6,333 |
5,093 |
Total current liabilities |
23,192 |
22,501 |
Stockholders’ equity |
2,847 |
3,029 |
Total liabilities and stockholders' equity |
$ 26,039 |
$ 25,530 |
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Visual Networks, Inc.
Condensed Consolidated Cash Flow Statements
(in thousands)
(unaudited) |
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For the |
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Three Months Ended |
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Sept. 30, |
|
2003 |
2004 |
Cash Flows from Operating Activities: |
|
|
Net income (loss) |
$ (2,515) |
$ 246 |
Adjustments to reconcile net income (loss) to net cash used in |
|
|
operating activities: |
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|
Depreciation and amortization |
643 |
319 |
Bad debt expense |
-- |
58 |
Deferred compensation expense |
-- |
33 |
Non-cash interest expense |
254 |
218 |
Changes in assets and liabilities:
Accounts receivable . |
800 |
(2,054) |
Inventory |
723 |
(1,152) |
Other assets |
651 |
42 |
Accounts payable and accrued expenses |
(1,125) |
1,133 |
Deferred revenue |
368 |
(209) |
Net cash used in operating activities |
(201) |
(1,366) |
Cash Flows from Investing Activities: |
|
|
Net sales of short term investments |
470 |
528 |
Expenditures for property and equipment |
(357) |
(340) |
Net cash provided by investing activities |
113 |
188 |
Cash Flows from Financing Activities: |
|
|
Exercise of stock options and issuance of common stock under employee stock purchase plan |
95 |
140 |
Net cash provided by financing activities |
95 |
140 |
Net increase (decrease) in Cash and Cash Equivalents |
7 |
(1,038) |
Cash and Cash Equivalents, Beginning of Period |
10,064 |
13,555 |
Cash and Cash Equivalents, End of Period |
$ 10,071 |
$ 12,517 |
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Visual Networks, Inc.
Additional Financial Information
The following presents additional financial information about Visual Networks for the three months ended December 31, 2003, March 31, 2004, June 30, 2004 and September 30, 2004, respectively (dollars in thousands).
|
12/31/03 |
3/31/04 |
6/30/04 |
9/30/04 |
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Days Sales Outstanding Calculation: |
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Days sales outstanding (“DSOs”') are calculated as follows: |
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|
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| Accounts Receivable |
$2,326 |
$2,606 |
$4,636 |
$6,632 |
Quarterly sales/Days in quarter |
$10,835/92 |
$11,841/91 |
$12,823/91 |
$13,817/92 |
Days sales outstanding |
19.8 |
20.0 |
32.9 |
44.2 |
Inventory Turns Calculation: |
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Inventory turns are calculated as follows: |
|
|
|
|
| Days in year |
365 |
366 |
366 |
366 |
Inventory/(Quarterly COGS/Days in quarter) |
$3,346/($2,409/92) |
$2,823/($3,323/91) |
$2,005/($4,002/91) |
$3,157/($4,284/92) |
Inventory turns |
2.9 |
4.7 |
8.0 |
5.4 |
Employees: |
|
|
|
|
Research and development |
55 |
54 |
53 |
56 |
Sales and marketing |
62 |
62 |
64 |
65 |
Manufacturing and customer service |
11 |
11 |
10 |
11 |
General and administrative |
28 |
30 |
27 |
31 |
Total Employees |
156 |
157 |
154 |
163 |
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Revenue: |
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UpTime: |
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|
Visual UpTime |
$ 6,440 |
$ 11,056 |
$ 9,588 |
$ 8,089 |
Visual UpTime Select |
-- |
-- |
2,440 |
5,321 |
IP Insight |
4,336 |
728 |
741 |
407 |
Royalties |
59 |
57 |
54 |
-- |
Total |
$ 10,835 |
$ 11,841 |
$ 12,823 |
$ 13,817 |
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Visual Networks, Inc.
Additional Financial Information (continued)
The following presents additional financial information about Visual Networks for the three months ended December 31, 2003, March 31, 2004, June 30, 2004 and September 30, 2004, respectively (in thousands, except per share data).
|
12/31/03 |
3/31/04 |
6/30/04 |
9/30/04 |
|
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|
|
|
Common stock outstanding
|
32,866 |
33,109 |
33,232 |
33,319 |
Weighted average share calculations: |
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|
|
Basic weighted average shares outstanding |
32,790 |
33,011 |
33,185 |
33,283 |
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Effect of dilutive securities: |
|
|
|
|
Employee stock options |
-- |
-- |
-- |
1,842 |
Diluted weighted average shares outstanding |
32,790 |
33,011 |
33,185 |
35,125 |
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|
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Net income (loss) |
$ (1,005) |
$ (490) |
$ (414) |
$ 246 |
Basic and diluted income (loss) per share |
$ (0.03) |
$ (0.01) |
$ (0.01) |
$ 0.01 |
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Visual Networks (Nasdaq: VNWK) is a leading provider of application performance and network management solutions. The company's technologies enable enterprises to reliably and securely manage the delivery of mission-critical applications across their infrastructures. Visual Networks' products increase application and network availability, optimize the use of bandwidth, and reduce operating costs across traditional and IP-based infrastructures. For more information, visit http://www.visualnetworks.com.
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This press release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. The forward-looking information is based upon current information and expectations regarding Visual Networks and its subsidiaries. These estimates and statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results could materially differ from what is expressed, implied, or forecasted in such forward-looking statements. Visual Networks assumes no obligation to update the information contained in this press release. Visual Networks' future results may be impacted by risks associated with market acceptance of Visual UpTime Select, fluctuations in IT budgets and spending, issues related to the Company's distribution channels, the potential repayment of the Company's outstanding debentures, rapid technological change and the emerging services market, potential fluctuations in quarterly operating results, ongoing patent litigation, its dependence upon sole and limited source suppliers and fluctuations in component pricing and availability, its dependence upon key employees, and its ability to retain employees. Visual Networks' future results may also be impacted by other risk factors listed from time to time in its SEC filings, including, but not limited to, the Company's Quarterly Reports on Form 10-Q and its Annual Report on Form 10-K.
© 2004 Visual Networks, Inc.
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