Acme Packet, Inc. (APKT)
Q2 2009 Earnings Call
July 30, 2009 5:00 pm ET
Brian Norris - Director of IR
Andy Ory - President and CEO
Peter Minihane - CFO and Treasurer
Simona Jankowski - Analyst
Paul Silverstein - Credit Suisse
Catharine Trebnick - Avian Securities
John Marchetti - Cowen
Sanjiv Wadhwani - Stifel Nicolaus
Ted Jackson - Cantor Fitzgerald
Previous Statements by APKT
» Acme Packet, Inc. Q4 2008 Earnings Call Transcript
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» Acme Packet, Inc. Q2 2008 Earnings Call Transcript
I would now like to introduce your host for today's call, Brian Norris, Director of Investor Relations for Acme Packet.
Thank you, Mary. Good afternoon, everyone. With me on the call are Andy Ory our President and Chief Executive Officer and Peter Minihane, our Chief Financial Officer and Treasurer.
The format for today's call is as follows. Andy will begin with an overview of our financial results and an update on the key growth drivers in our business. Peter will then follow with a detailed financial review and a discussion of our outlook for the second half of the year. We will then open the call up to Q&A.
The press release announcing our second quarter results along with our financial statements, and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure, is available on the Investor Relations section of our website at www.ir.acmepacket.com. Please note that all results and projections we review this evening are on a non-GAAP basis, unless we otherwise and explicitly describe them as GAAP.
During this afternoon's call, we'll be referring to non-GAAP net income and non-GAAP net income per share, which are non-GAAP financial measures that exclude stock-based compensation expense for all periods presented. Non-GAAP net income and non-GAAP net income per share for the three-month period ended June 30, 2009, also excludes the amortization of intangible assets and integration and merger-related expenses related to the company's acquisition of Covergence during the second quarter of 2009.
Statements made during this call that are not historical facts, maybe forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such forward-looking statements may relate among other things to expected financial operating results and to future business prospects and market conditions. Such forward-looking statements do not constitute guarantees of future performance, and are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from those anticipated.
A discussion of these risks and uncertainties and additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements is contained in our recent filings with the SEC, including those factors discussed under the caption 'Risk Factors' in such filings. Investors should not place undue reliance on these statements, which are current only as of the date they are made and we disclaim any obligation to update them.
Finally before I turn the call over to Andy, please mark down August 12th, when we'll be in New York for the Morgan Keegan Technology Conference and October 29, when at 5 pm Eastern Time, we'll be hosting our third quarter earnings release conference call. For more details on our IR outreach plan for the third quarter, please feel free to contact me at 781-328-4790.
With that, I'd like to turn the call over to Andy.
Thank you, Brian and good afternoon, everyone. We are excited to be reporting strong financial results for the second quarter, which again reflects solid momentum in all areas of the business.
Revenues increased to a record $32.9 million, reflecting growth of 6% sequentially. This is the fourth consecutive quarter that we achieved sequential revenue growth. Our top line results in the second quarter were strengthened by the addition of over 40 new customers, and the continued expansion of existing deployment within our customer base.
Gross margin expanded to a record 83%, as a greater percentage of our product sales came from our high performance Net-Net 4500, which was introduced in the second half of 2008. Our higher gross margins enabled us to deliver operating margins of 20%.
We reported second quarter non-GAAP EPS ahead of First Call consensus at $0.07. We ended the quarter with a record $155.6 million in cash, further improving our already strong balance sheet.
We also acquired Covergence, an innovative provider of software-based SBCs for Fortune 1000 enterprises for $22.8 million.
While many others have struggled in arguable the worst economic conditions in the last 100 years, our company has continued to perform very well. We are seeing growing demand from enterprises, service providers, contact centers, government agencies and universities, recession-oriented IT-based communications powered by session boarder controllers. Based on the growing strength of the overall business, the growth drivers we are seeing in our key markets and the visibility we have for the remainder of the year, we are again raising our outlook for 2009.
Let me start with what's happening in the enterprise market. Our overall addressable market is growing as enterprises are migrating to IP-based connections for their communication services. SIP trunking and IP connectivity are strong growth trends that are fundamentally changing the way enterprises communicate. For nearly two years, we have been strategically investing to develop a dominant position in this emerging market. That effort is clearly paying off.