Meru Networks Reports Record First Quarter 2013 Results

SUNNYVALE, Calif., April 30, 2013 /PRNewswire/ -- Meru Networks Inc., (NASDAQ:MERU), a leader in virtualized wireless LAN solutions, today announced its financial results for the quarter ended March 31, 2013.

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First Quarter 2013 Financial Results
Total revenues for the first quarter of 2013 were $24.7 million, up 27% from $19.4 million in the first quarter of 2012. Products revenues for the first quarter of 2013 were $20.6 million, up 30% from the $15.8 million reported in the first quarter of 2012.  

Net loss as reported in accordance with GAAP was $3.6 million for the first quarter of 2013, or a net loss of $0.18 per basic and diluted share, compared to a net loss of $14.5 million, or a net loss of $0.82 per basic and diluted share, for the same period of 2012.

Meru reported a first quarter 2013 non-GAAP net loss of $2.0 million, or $0.10 loss per basic and diluted share, compared to a non-GAAP net loss of $8.9 million, or $0.50 loss per basic and diluted share, for the same period of 2012. Non-GAAP results for the first quarter of 2013 exclude the impact of stock-based compensation expense of $1.5 million, amortization of acquisition-related intangibles and amortization of the fair value of a common stock warrant issued in connection with debt financing totaling $0.1 million. Non-GAAP results for the first quarter of 2012 exclude the impact of stock-based compensation expense of $2.2 million, amortization of acquisition-related intangibles of $0.1 million, chief executive officer transition costs of $0.9 million and a litigation reserve expense of $2.4 million. Please refer to the reconciliation of Meru's GAAP to non-GAAP results provided at the end of this release.

"We are very pleased to have delivered record first quarter revenues," said Dr. Bami Bastani, president and chief executive officer, Meru Networks. "Meru's strategy of focusing on three verticals – education, healthcare and hospitality – combined with ongoing cost controls, continues to be successful in driving the company's turnaround."

"Our first quarter results and our highly successful secondary offering of common stock demonstrate our continued execution against the financial objectives we outlined last year," said Brett White, chief financial officer, Meru Networks.

First Quarter Business Highlights

Technology

• Introduced MobileFLEX Architecture, an innovative new context-aware architecture. MobileFLEX unites all Meru hardware and software solutions and introduces Meru's Context-aware Application Layers (CALs), Apple Bonjour support, enhanced multi-vendor policy enforcement, cloud-focused enhancements and 802.11ac-readiness.

Education

• Won network expansion projects at major universities in North Carolina and Texas and an 802.11n upgrade at an existing higher education customer in Ohio.
• Continued expansion at the fourth largest school district in the U.S., with more than 395 schools and 345,000 students.
• Deployed by a large private university in Japan.

Healthcare

• Introduced the innovative Uninterrupted Care Network (UCN) at HIMSS 2013.
• Displaced a competitive vendor in a major healthcare center in Germany.
• Deployed at a major hospital in Japan.
• Won network expansion project at a healthcare center in Canada and an 802.11n network upgrade at a hospital in the UK.

Hospitality & Retail

• Selected by a major exhibition center in France.
• Won a highly competitive bid at a prominent four-star hotel property in Dubai.
• Selected by major hotel chains in Turkey, South Africa, Singapore and Germany.
• Deployed by the largest clothing retailer in Japan.

Financial

• Strengthened balance sheet by raising $12.8m  proceeds (net of underwriter fees) in a public offering of 3,450,000 shares of Meru common stock.

Conference Call Information
Meru will host a conference call for analysts and investors to discuss its first quarter results, today, April 30 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To join the live call, please dial (877) 852‑2926 (domestic) and (253) 237‑1123 (international) and reference conference ID 32466889.

The live and archived webcast of the first quarter 2013 financial results conference call will also be available at the investor relations section of Meru's website at http://investors.merunetworks.com.

About Meru Networks
Meru Networks (NASDAQ: MERU) is a market leader in the development of mobile access and virtualized Wi-Fi solutions. Meru's MobileFLEX wireless architecture addresses the ever-growing need for higher bandwidth and higher client densities. The Meru Identity Manager solution greatly simplifies secure device onboarding and the company's unique Context-aware Application Layers (CALs) enable dedicated channel assignments for specific applications, devices and usage scenarios. Meru customers include Fortune 500 businesses as well as leaders in education, healthcare and hospitality. Founded in 2002, Meru is headquartered in Sunnyvale, Calif., with operations in North America, Europe, the Middle East, Asia Pacific and Japan. Visit www.merunetworks.com or call (408) 215-5300 for more information.

Cautionary Statement Regarding Forward Looking Statements

All statements other than statements of historical facts are statements that can be deemed forward‑looking statements, including any statements of expectations or beliefs.  These forward‑looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements.  These risks and uncertainties are described in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by Meru, including under the caption "Risk Factors" in Meru's Annual Report on Form 10‑K filed with the SEC on March 20, 2013,  and any subsequent reports filed with the SEC.  All forward‑looking statements in this press release are based on information available to Meru as of the date hereof, and Meru assume no obligation to update these forward‑looking statements, except as required by law.

Non‑GAAP Financial Measurements

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Meru reports non‑GAAP net income (loss), non‑GAAP income (loss) from operations and non‑GAAP net loss per common share, basic and diluted each of which exclude stock‑based compensation expense, amortization of intangible assets related to the company's acquisition of Identity Networks in the third fiscal quarter of 2011, chief executive officer transition costs, amortization of the fair value of a common stock warrant issued in connection with debt financing and other items outside the ordinary course of business such as litigation reserve expense. Meru believes that its non‑GAAP net income (loss) and non‑GAAP income (loss) from operations provide useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations. Meru also believes the non‑GAAP measures provide useful supplemental information for investors to evaluate its operating results in the same manner as the research analysts that follow Meru, all of whom typically present non‑GAAP projections in their published reports. As such, the non‑GAAP measures provided by Meru facilitate a more direct comparison of its performance with the financial projections published by the analysts as well as its competitors, many of whom report financial results on a non‑GAAP basis. The economic substance behind Meru's decision to use such non‑GAAP measures is that such measures approximate its controllable operating performance more closely than the most directly comparable GAAP financial measures. For example, Meru's management has no control over certain variables that have a major influence in the determination of stock‑based compensation such as the volatility of its stock price and changing interest rates. In addition, Meru's management does not consider the amortization of intangible assets related to the company's acquisition of Identity Networks relevant when comparing its performance to prior periods. Meru believes that the inclusion of these excluded expenses does not accurately reflect the underlying performance of its continuing operations for the period in which they are incurred, even though these excluded items may be incurred and reflected in Meru's GAAP financial results.

The material limitation associated with the use of non‑GAAP financial measures is that the non‑GAAP measures may not reflect the full economic impact of Meru's activities. Meru's non‑GAAP measures may be calculated differently than non‑GAAP financial information disclosed by other companies. Accordingly, investors are cautioned not to place undue reliance on non‑GAAP information.

Use of Non‑GAAP Financial Information

In addition to the reasons stated above, which are generally applicable to each of the items Meru excludes from its non‑GAAP financial measures, the company believes it is appropriate to exclude certain items for the following reasons:

Stock‑Based Compensation. When evaluating the performance of its consolidated results, Meru does not consider stock‑based compensation charges when operating its business (rather, when considering the impact of equity award grants, the company places a greater emphasis on overall stockholder dilution). Likewise, the Meru management team excludes stock‑based compensation expense from its operating plans and is held accountable for cash‑based compensation. Meru excludes stock‑based compensation charges from its non‑GAAP financial measures primarily because they are non‑cash expenses that it does not consider part of ongoing operating results when assessing the performance of our business, and the exclusion of these expenses facilitates the comparison of results and business outlook for future periods with results for prior periods in order to better understand the long‑term performance of its business.

Amortization of intangible assets.The company excludes amortization of acquired intangible assets because it is non‑cash in nature and because the company believes that the non‑GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. In addition, excluding this item from various non‑GAAP measures facilitates internal comparisons to historical operating results and comparisons to competitors' operating results.

Chief Executive Officer transition costs.  The company excludes the chief executive officer transition costs when evaluating the performance of its consolidated results.  The company believes these costs are unusual in nature and the company does not expect them to recur in the ordinary course of its business.  The company further believes these costs are unrelated to the ongoing operation of the business in the ordinary course.  

Other Items.  The company excludes items such as litigation reserves expense and the amortization of the fair value of a common stock warrant issued in connection with debt financing when evaluating the performance of its consolidated results.  The company believes these costs are unusual in nature and the company does not expect them to recur in the ordinary course of its business.  The company further believes these costs are unrelated to the ongoing operation of the business in the ordinary course.  

Investors contact:
Steve Pasko
Market Street Partners
(415) 445‑3238 [email protected]

SOURCE Meru Networks, Inc.

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