Attached files

file filename
8-K - FORM 8-K - Dialogic Inc.d438813d8k.htm

Exhibit 99.1

Dialogic Inc. Reports Third Quarter 2012 Financial Results

Organizational, Operational and Financial initiatives driving positive impact

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)

Investor Relations:

Andrew Goldberg

Dialogic Inc., 973-967-6425

Senior Vice President, Marketing & Strategy

Andrew.Goldberg@dialogic.com


GAAP Financial Tables

DIALOGIC INC.

Condensed Consolidated Statements of Operations (GAAP)

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended September 30,     Nine Months Ended 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 revenue

     16,188        19,058        53,305        61,452   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     26,203        28,363        68,752        86,620   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development, net

     9,266        13,540        33,459        42,262   

Sales and marketing

     9,261        12,664        31,935        41,829   

General and administrative

     7,375        9,391        23,766        27,553   

Restructuring charges

     457        1,674        4,760        6,420   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     26,359        37,269        93,920        118,064   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (156     (8,906     (25,168     (31,444

Other income (expense):

        

Interest and other income (expense), net

     242        (3     95        (3

Interest expense

     (1,792     (4,695     (8,836     (13,227

Change in fair value of warrants

     1,750        —          2,154        —     

Foreign exchange loss, net

     (278     (51     (1,047     (384
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     (78     (4,749     (7,634     (13,614
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision (benefit) for income taxes

     (234     (13,655     (32,802     (45,058

Income tax provision (benefit)

     56        (557     304        588   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (290   $ (13,098   $ (33,106   $ (45,646
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share - basic and diluted

   $ (0.03   $ (2.09   $ (4.34   $ (7.30

Weighted average shares of common stock used in calculation of net loss per share - basic and diluted

     10,229        6,269        7,634        6,256   
  

 

 

   

 

 

   

 

 

   

 

 

 


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, respectively

     39,393        47,460   

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, net of discount

     64,233        94,675   

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 and 6,295,230 shares, respectively

     14        6   

Additional paid-in capital

     257,049        222,087   

Accumulated other comprehensive loss

     (22,630     (22,206

Accumulated deficit

     (248,429     (215,323
  

 

 

   

 

 

 

Total stockholders’ deficit

     (13,996     (15,436
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 126,697      $ 163,342   
  

 

 

   

 

 

 


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)

 

    GAAP     Depreciation and
Amortization
    Restructuring and
Integration Costs
    Product
Rationalization
    Stock-based
Compensation
Expense
    Purchase
Accounting
Adjustments
    SEC Inquiry     Other
Adjustments
    Adjusted EBITDA  

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, net

    9,266        (324     4        —          (146     73        —          —          8,872   

Sales and marketing

    9,261        (471     19        —          (175     6        —          —          8,641   

General and administrative

    7,375        (269     (486     —          (238     69        (64     —          6,387   

Restructuring charges

    457        —          (457     —          —          —          —          —          —     

Total other expense, net

    (78     —          —          —          —          —          —          78        —     

Income tax provision

    56        —          —          —          —          —          —          (56     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

  $ (290     2,290        920        516        645        (431     64        134      $ 3,848   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share - basic and diluted

  $ (0.03                 $ 0.38   

Weighted average shares of common stock used in calculation of net (loss) income per share - basic and diluted

    10,229                      10,229   
 

 

 

                 

 

 

 


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)

 

    GAAP     Depreciation and
Amortization
    Restructuring and
Integration Costs
    Product
Rationalization
    Stock-based
Compensation
Expense
    Purchase
Accounting
Adjustments
    SEC Inquiry     Other
Adjustments
    Non-GAAP  

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, net

    13,540        (437     (65     —          (239     —          —          —          12,799   

Sales and marketing

    12,664        (1,269     (21     —          (234     —          —          —          11,140   

General and administrative

    9,391        (812     (286     —          (198     —          (1,699     —          6,396   

Restructuring charges

    1,674        —          (1,674     —          —          —          —          —          —     

Total other expense, net

    (4,749     —          —          —          —          —          —          4,749        —     

Income tax benefit

    (557     —          —          —          —          —          —          557        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

  $ (13,098     4,664        2,071        —          760        706        1,699        4,192      $ 994   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share - basic and diluted

  $ (2.09                 $ 0.16   

Weighted average shares of common stock used in calculation of net (loss) income per share - basic and diluted

    6,269                      6,269   
 

 

 

                 

 

 

 


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)

 

    GAAP     Depreciation and
Amortization
    Restructuring and
Integration Costs
    Product
Rationalization
    Stock-based
Compensation
Expense
    Purchase
Accounting
Adjustments
    SEC Inquiry     Other
Adjustments
    Non-GAAP  

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, net

    11,370        (430     —          —          (120     —          —          —          10,820   

Sales and marketing

    11,063        (833     —          —          (154     —          —          —          10,076   

General and administrative

    8,806        (289     (1,264     —          (217     —          (416     —          6,620   

Restructuring charges

    4,246        —          (4,246     —          —          —          —          —          —     

Total other expense, net

    (338     —          —          —          —          —          —          338        —     

Income tax benefit

    (112     —          —          —          —          —          —          112        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

  $ (18,031     3,604        5,510        4,821        565        911        416        226      $ (1,978
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share - basic and diluted

  $ (2.85                 $ (0.31

Weighted average shares of common stock used in calculation of net (loss) income per share - basic and diluted

    6,337                      6,337   
 

 

 

                 

 

 

 


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)

 

    GAAP     Depreciation and
Amortization
    Restructuring and
Integration Costs
    Product
Rationalization
    Stock-based
Compensation
Expense
    Purchase
Accounting
Adjustments
    SEC Inquiry     Other
Adjustments
    Non-GAAP  

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, net

    33,459        (1,106     4        —          (506     73        —          —          31,923   

Sales and marketing

    31,935        (2,119     19        —          (551     6        —          —          29,291   

General and administrative

    23,766        (1,136     (2,197     —          (595     69        (243     —          19,663   

Restructuring charges

    4,760        —          (4,760     —          —          —          —          —          —     

Total other expense, net

    (7,634     —          —          —          —          —          —          7,634        —     

Income tax provision

    304        —          —          —          —          —          —          (304     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

  $ (33,106     9,205        6,934        5,337        1,896        957        243        7,938      $ (595
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share - basic and diluted

  $ (4.34                 $ (0.08

Weighted average shares of common stock used in calculation of net (loss) income per share - basic and diluted

    7,634                      7,634   
 

 

 

                 

 

 

 


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)

 

    GAAP     Depreciation and
Amortization
    Restructuring and
Integration Costs
    Product
Rationalization
    Stock-based
Compensation
Expense
    Purchase
Accounting
Adjustments
    SEC Inquiry     Other
Adjustments
    Non-GAAP  

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, net

    42,262        (1,298     (65     —          (565     —          —          —          40,334   

Sales and marketing

    41,829        (3,888     (21     —          (775     (389     —          —          36,756   

General and administrative

    27,553        (2,404     (286     —          (743     —          (2,526     —          21,594   

Restructuring charges

    6,420        —          (6,420     —          —          —          —          —          —     

Total other expense, net

    (13,614     —          —          —          —          —          —          13,614        —     

Income tax provision

    588        —          —          —          —          —          —          (588     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

  $ (45,646     14,062        6,817        —          2,328        3,726        2,526        14,202      $ (1,985
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share - basic and diluted

  $ (7.30                 $ (0.32

Weighted average shares of common stock used in calculation of net (loss) income per share - basic and diluted

    6,256                      6,256