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Last updated on April 19, 2014 at 13:20 EDT

Ruckus Wireless Reports Second Quarter 2013 Financial Results

July 31, 2013

- Second quarter revenue grew 30.6% year-over-year and 11.6% sequentially to $63.9 million

SUNNYVALE, Calif., July 31, 2013 /PRNewswire/ — Ruckus Wireless, Inc. (NYSE: RKUS) today announced financial results for its second quarter of 2013 ended June 30, 2013.

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Financial Summary
Revenue for the second quarter of 2013 was $63.9 million, an increase of 30.6% from the second quarter of 2012. GAAP net income for the second quarter of 2013 was $0.7 million, compared with GAAP net income of $20.6 million in the second quarter of 2012. Non-GAAP net income for the second quarter of 2013 was $4.7 million, compared with non-GAAP net income of $23.2 million in the second quarter of 2012. Both GAAP and non-GAAP net income for the second quarter of 2012 include $17.5 million of income related to the release of the valuation allowance on our net deferred tax assets.

GAAP net income per diluted share was $0.01 for the second quarter of 2013 compared with $0.17 for the second quarter of 2012, based on net income attributable to common stockholders. Non-GAAP net income per diluted share was $0.05 for the second quarter of 2013 compared with $0.30 for the second quarter of 2012.

A description of the non-GAAP calculations and reconciliation to comparable GAAP measures is provided in the accompanying table entitled “Reconciliation of GAAP to Non-GAAP Financial Measures.”

“We had a solid second quarter, achieving 30.6% year-over-year revenue growth and hitting the top end of our revenue guidance. In the quarter, our service provider business regained momentum with a record number of new wins and network expansion by existing customers. Our strong position in the carrier Wi-Fi market was validated by Infonetics’ Global Service Provider survey published in Q2, which found Ruckus to be the second most installed Wi-Fi brand and the number one brand being evaluated for 2014 deployments,” said Selina Lo, President and Chief Executive Officer at Ruckus Wireless. “Furthermore, our enterprise business continued to perform, adding over 2,900 new end-customers in the quarter.”

Business & Financial Highlights

  • 30.6% year-over-year revenue growth; Americas revenue grew 38.0% over Q2 2012 and EMEA revenue grew 62.1% over Q2 2012.
  • The second most installed Wi-Fi brand and the number one brand being evaluated for 2014, according to Infonetics’ Global Service Provider Wi-Fi survey.
  • In Q2, we added fifteen new service provider end-customers and the number of new and repeat service provider end-customers in Q2 set a new record.
  • On July 23rd, the company announced the acquisition of YFind Technologies, a pioneer in indoor positioning and real-time location analytics technology.

Guidance

For the third quarter of 2013 ending September 30, 2013, the company expects:

  • Total revenues to be in the range of $66 million to $69 million;
  • Non-GAAP net income per share to be approximately $0.04 per share using 93 million to 94 million shares on a diluted basis.

Conference Call Information

Ruckus Wireless is hosting a conference call for analysts and investors to discuss its second quarter 2013 results and outlook for its third quarter of 2013 at 2:00 p.m. Pacific Daylight Time today, July 31, 2013. A live audio webcast of the conference call along with supplemental financial information will also be accessible from the “Investors” section of the company’s website at http://investors.ruckuswireless.com. A replay will be available following the call on the Ruckus Wireless Investor Relations website or for one week at the following numbers: (855) 859-2056 (domestic), (404) 537-3406 (international) using ID# 13085216. An archived version of the audio from the call will be available for at least thirty days on the company’s website at investors.ruckuswireless.com.

Safe Harbor Statement

This press release contains forward-looking statements, including statements regarding Ruckus Wireless’s financial expectations for the third quarter of 2013 and future periods and statements regarding growth drivers for the company’s business, the pace of new and repeat customer orders, competitive position and future customer demand. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those anticipated, including, but not limited to, risks and uncertainties related to: growth of the market for Ruckus Wireless products, the lengthy sales cycle for service provider customers and delays in service provider implementations, unpredictable market conditions in China and other regions, risks associated with Ruckus Wireless’s rapid growth, competition, technological change, difficulties in integrating acquisitions, reliance on third parties, international operations, intellectual property, Ruckus Wireless’s limited operating history, particularly as a new public company; and general market, political, regulatory, economic and business conditions in the United States and internationally.

Additional risks and uncertainties that could affect Ruckus Wireless’s financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the company’s annual report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission on March 5, 2013 and quarterly report on Form 10-Q filed with the SEC on May 10, 2013, both of which are available on the company’s investor relations website at investors.ruckuswireless.com and on the SEC’s website at www.sec.gov. Additional information will also be set forth in other filings that the company makes with the SEC from time to time. All forward-looking statements in this press release are based on information available to the company as of the date hereof, and Ruckus Wireless does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures, including non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin, non-GAAP net income, non-GAAP dilutive net income per share and non-GAAP diluted weighted-average shares outstanding. We also provide projected third quarter 2013 non-GAAP dilutive net income per share and non-GAAP diluted weighted-average shares outstanding. We believe these non-GAAP financial measures are helpful in understanding our past financial performance and future results. Our non-GAAP financial measures should not be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies.

Our non-GAAP financial measures include adjustments based on the following items:

Stock-based compensation expenses: We have excluded the effect of stock-based compensation from our non-GAAP operating results. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.

Employer payroll tax expense associated with stock-based compensation: We have excluded the employer payroll tax expense associated with stock-based compensation in order to provide a complete picture of the company’s recurring core business operating results. Stock-based compensation has been and will continue for the foreseeable future to be a significant recurring expense in the company’s business.

Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating results. Amortization of intangible assets is a non-cash expense, and it is not part of our core operations. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.

Change in fair value of preferred stock warrants: We have excluded the effect of the expense resulting from the change in fair value of preferred stock warrants from our non-GAAP operating results. The change in fair value is a non-cash expense, and it is not part of our core operations. Upon completion of our IPO in November 2012, all preferred stock warrants converted to common stock warrants.

Our non-GAAP Financial Measures are described as follows:

Non-GAAP gross profit and gross margin – Non-GAAP gross profit is gross profit as reported on our condensed consolidated statements of operations, excluding the impact of stock-based compensation, employer payroll tax expense associated with stock-based compensation and intangible asset amortization expense. Non-GAAP gross margin is non-GAAP gross profit divided by net revenue.

Non-GAAP operating income and operating margin – Non-GAAP operating income is income from operations as reported on our condensed consolidated statements of operations, excluding the impact of stock-based compensation, employer payroll tax expense associated with stock-based compensation and intangible asset amortization expense. Non-GAAP operating margin is non-GAAP operating income divided by net revenue.

Non-GAAP net income and diluted income per share – Non-GAAP net income is net income as reported on our condensed consolidated statements of operations, excluding the impact of stock-based compensation, employer payroll tax expense associated with stock-based compensation, intangible asset amortization expense and the change in fair value of preferred stock warrants. Non-GAAP diluted income per share is non-GAAP net income divided by the non-GAAP weighted-average diluted shares outstanding. For periods presented prior to the company’s IPO, non-GAAP diluted weighted-average shares outstanding was computed to give effect to the conversion of all redeemable convertible preferred stock, as if conversion had occurred at the beginning of the period. Upon completion of our IPO in November 2012, all preferred stock converted to common stock.

For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of GAAP to Non-GAAP Financial Measures.”

ABOUT RUCKUS WIRELESS

Headquartered in Sunnyvale, CA, Ruckus Wireless, Inc. (NYSE: RKUS) is a global supplier of advanced wireless systems for the rapidly expanding mobile Internet infrastructure market. The company offers a wide range of indoor and outdoor “Smart Wi-Fi” products to mobile carriers, broadband service providers, and corporate enterprises, and has approximately 27,300 end-customers worldwide. Ruckus technology addresses Wi-Fi capacity and coverage challenges caused by the ever-increasing amount of traffic on wireless networks due to accelerated adoption of mobile devices such as smartphones and tablets. Ruckus invented and has patented state-of-the-art wireless voice, video, and data technology innovations, such as adaptive antenna arrays that extend signal range, increase client data rates, and avoid interference, providing consistent and reliable distribution of delay-sensitive multimedia content and services over standard 802.11 Wi-Fi. For more information, visit www.ruckuswireless.com.

Investor Relations Contact
Nicole Noutsios
NMN Advisors (for Ruckus Wireless)
ir@ruckuswireless.com
1+510-315-1003

Media Contact
Mark Priscaro
Ruckus Wireless
mark.priscaro@ruckuswireless.com
1+408-604-8531

                                                  RUCKUS WIRELESS, INC.
                                     Condensed Consolidated Statements of Operations
                                   (unaudited, in thousands, except per share amounts)

                                                      Three Months Ended               Six Months Ended

                                                           June 30,                        June 30,
                                                           --------                        --------

                                                          2013                   2012              2013     2012
                                                          ----                   ----              ----     ----

    Revenue:

          Product                                      $59,663                $46,150          $112,974  $88,697

          Service                                        4,210                  2,741             8,140    5,208
                                                         -----                  -----             -----    -----

    Total revenue                                       63,873                 48,891           121,114   93,905
                                                        ------                 ------           -------   ------

    Cost of revenue:

          Product                                       18,923                 16,280            35,494   31,916

          Service                                        2,447                  1,014             4,734    1,959
                                                         -----                  -----             -----    -----

    Total cost of
     revenue                                            21,370                 17,294            40,228   33,875
                                                        ------                 ------            ------   ------

    Gross profit                                        42,503                 31,597            80,886   60,030

    Operating expenses:

          Research and
           development                                  14,934                  9,438            28,712   18,187

          Sales and marketing                           19,564                 12,707            36,415   24,910

          General and
           administrative                                6,950                  5,456            14,882    8,437
                                                         -----                  -----            ------    -----

    Total operating
     expenses                                           41,448                 27,601            80,009   51,534
                                                        ------                 ------            ------   ------

    Operating income                                     1,055                  3,996               877    8,496

          Interest income
           (expense)                                        48                   (244)               82     (472)

          Other expense, net                              (150)                  (724)             (227)    (967)
                                                          ----                   ----              ----     ----

    Income before
     income taxes                                          953                  3,028               732    7,057

          Income tax expense
           (benefit)                                       251                (17,600)             (284) (17,316)
                                                           ---                -------              ----  -------

    Net income                                            $702                $20,628            $1,016  $24,373
                                                          ====                =======            ======  =======

    Net income
     attributable to
     common
     stockholders                                         $702                 $5,123            $1,016   $6,162
                                                          ====                 ======            ======   ======

    Net income per share attributable to common
     stockholders:

          Basic                                          $0.01                  $0.28             $0.01    $0.34
                                                         =====                  =====             =====    =====

          Diluted                                        $0.01                  $0.17             $0.01    $0.20
                                                         =====                  =====             =====    =====

    Weighted average shares used in computing net
     income per share attributable to common
     stockholders:

          Basic                                         75,352                 18,304            74,779   18,200
                                                        ======                 ======            ======   ======

          Diluted                                       92,595                 30,482            93,649   30,197
                                                        ======                 ======            ======   ======

                                                      Ruckus Wireless, Inc.
                                      Reconciliation of GAAP to Non-GAAP Financial Measures
                                       (unaudited, in thousands, except per share amounts)

                                                           Three Months Ended                 Six Months Ended

                                                                June 30,                          June 30,
                                                                --------                          --------

                                                              2013                      2012               2013     2012
                                                              ----                      ----               ----     ----

    Gross Profit Reconciliation:
    ----------------------------

    GAAP gross profit:                                     $42,503                   $31,597            $80,886  $60,030

    Stock-based compensation                                   206                        30                382       53

    Stock-based payroll tax
     expense                                                    14                         -                 14        -

    Amortization of
     intangible assets                                         330                       330                660      660
                                                               ---                       ---                ---      ---

    Non-GAAP gross profit:                                 $43,053                   $31,957            $81,942  $60,743
                                                           -------                   -------            -------  -------

    Gross Margin Reconciliation:
    ----------------------------

    GAAP gross margin:                                        66.5%                     64.6%              66.8%    63.9%

    Stock-based compensation                                   0.4%                      0.1%               0.3%     0.1%

    Stock-based payroll tax
     expense                                                    -%                       -%                -%      -%

    Amortization of
     intangible assets                                         0.5%                      0.7%               0.6%     0.7%
                                                               ---                       ---                ---      ---

    Non-GAAP gross margin:                                    67.4%                     65.4%              67.7%    64.7%
                                                              ----                      ----               ----     ----

    Operating Income Reconciliation:
    --------------------------------

    GAAP operating income:                                  $1,055                    $3,996               $877   $8,496

    Stock-based compensation                                 4,313                     1,960              8,343    2,878

    Stock-based payroll tax
     expense                                                   447                         -                447        -

    Amortization of
     intangible assets                                         330                       330                660      660
                                                               ---                       ---                ---      ---

    Non-GAAP operating
     income:                                                $6,145                    $6,286            $10,327  $12,034
                                                            ------                    ------            -------  -------

    Operating Margin Reconciliation:
    --------------------------------

    GAAP operating margin:                                     1.6%                      8.2%               0.7%     9.0%

    Stock-based compensation                                   6.8%                      4.0%               6.9%     3.1%

    Stock-based payroll tax
     expense                                                   0.7%                       -%               0.4%      -%

    Amortization of
     intangible assets                                         0.5%                      0.7%               0.5%     0.7%
                                                               ---                       ---                ---      ---

    Non-GAAP operating
     margin:                                                   9.6%                     12.9%               8.5%    12.8%
                                                               ---                      ----                ---     ----

    Net Income Reconciliation:
    --------------------------

    GAAP net income:                                          $702                   $20,628             $1,016  $24,373

    Stock-based compensation                                 4,313                     1,960              8,343    2,878

    Stock-based payroll tax
     expense                                                   447                         -                447        -

    Amortization of
     intangible assets                                         330                       330                660      660

    Change in fair value of
     preferred stock
     warrants                                                    -                       319                  -      433

    Income tax effect of
     non-GAAP exclusions
     (1)                                                    (1,130)                      (35)            (2,929)    (128)
                                                            ------                       ---             ------     ----

    Non-GAAP net income:                                    $4,662                   $23,202             $7,537  $28,216
                                                            ------                   -------             ------  -------

    Non-GAAP diluted net
     income per share:                                       $0.05                     $0.30              $0.08    $0.37

    Shares used in computing Non-GAAP Net Income per
     share reconciliation
    ------------------------------------------------

    Weighted-average shares
     outstanding used in
     calculating GAAP
     diluted net income per
     share                                                  92,595                    30,482             93,649   30,197

    Additional dilutive
     securities for non-
     GAAP income                                                 -                       230                  -      225

    Conversion of
     convertible preferred
     stock and other upon
     IPO                                                         -                    47,855                  -   46,817
                                                               ---                    ------                ---   ------

    Weighted-average shares
     outstanding used in
     calculating non-GAAP
     diluted net income per
     share                                                  92,595                    78,567             93,649   77,239
                                                            ------                    ------             ------   ------

    (1)            The company presents income tax
                   related to non-GAAP adjustments
                   using the effective tax rate
                   calculated for GAAP purposes. For
                   the year ended December 31, 2012,
                   however, the non-GAAP effective
                   tax rate was modified for certain
                   one-time items such as the
                   release of the valuation
                   allowance for better
                   comparability of effects on other
                   periods presented

                                                         RUCKUS WIRELESS, INC.
                                                 Condensed Consolidated Balance Sheets
                                          (unaudited, in thousands, except per share amounts)

                                                            June 30,                          December 31,

                                                                          2013                                 2012
                                                                          ----                                 ----

    ASSETS

    Current assets:

          Cash and cash equivalents                                    $71,066                             $133,386

          Short-term investments                                        53,726                                    -

          Accounts receivable, net of
           allowance for doubtful
           accounts of $123 and $140
           as of June 30, 2013 and
           December 31, 2012,
           respectively                                                 52,649                               41,296

          Inventories                                                   19,822                               19,041

          Deferred costs                                                 4,511                                5,188

          Deferred tax assets                                            9,055                                9,055

          Prepaid expenses and other
           current assets                                                4,175                                2,722
                                                                         -----                                -----

                Total current assets                                   215,004                              210,688

    Property and equipment, net                                         10,295                                8,959

    Goodwill                                                             9,031                                9,031

    Intangible assets, net                                               4,331                                4,991

    Noncurrent deferred tax
     asset                                                               9,680                                9,214

    Restricted cash                                                      5,000                                    -

    Other assets                                                           958                                  956
                                                                           ---                                  ---

                Total assets                                          $254,299                             $243,839
                                                                      ========                             ========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:

          Accounts payable                                             $14,925                              $16,164

          Accrued compensation                                          10,939                                9,447

          Accrued liabilities                                            5,087                                5,371

          Liabilities related to
           acquisitions                                                  1,000                                2,000

          Deferred revenue                                              32,767                               36,613
                                                                        ------                               ------

                Total current liabilities                               64,718                               69,595

    Noncurrent deferred revenue                                          5,736                                3,873

    Other noncurrent liabilities                                           139                                  160
                                                                           ---                                  ---

                Total liabilities                                       70,593                               73,628

    Stockholders' equity:

          Common stock, $0.001 par
           value; 250,000 shares
           authorized as of June 30,
           2013 and December 31, 2012;
           76,820 and 74,166 shares
           issued and outstanding as
           of June 30, 2013 and
           December 31, 2012,
           respectively                                                     77                                   74

          Additional paid-in capital                                   206,245                              193,731

          Accumulated other
           comprehensive loss                                              (38)                                   -

          Accumulated deficit                                          (22,578)                             (23,594)
                                                                       -------                              -------

                Total stockholders' equity                             183,706                              170,211
                                                                       -------                              -------

                Total liabilities and
                 stockholders' equity                                 $254,299                             $243,839
                                                                      ========                             ========

SOURCE Ruckus Wireless, Inc.


Source: PR Newswire