Net revenue in the first quarter of fiscal 2007 was a record $50.9 million, a 12 percent increase over the prior quarter revenue of $45.5 million and a 23 percent increase over revenue of $41.2 million in the first quarter of the previous year.
The company reported a net loss of $9.8 million or a loss of $0.05 per share in the first quarter of fiscal 2007, compared with a net loss of $9.1 million or a loss of $0.04 per share in the prior quarter and a net loss of $16.9 million or a loss of $0.12 per share in the first quarter of the prior year.
Non-GAAP net loss in the first quarter of fiscal 2007 was $7.2 million or a loss of $0.03 per share, compared with a non-GAAP net loss of $9.1 million or a loss of $0.04 per share in the prior quarter and a non-GAAP net loss of $14.7 million or a loss of $0.10 per share in the first quarter of the prior year. Non-GAAP net loss excludes share-based payments, amortization of intangibles, restructuring charges, and gains (loss) on the disposal of property and equipment.*
Gross margin in the first quarter of fiscal 2007 was 9 percent, an increase of five percentage points over the prior quarter gross margin of 4 percent.
Financial results for the first quarter of fiscal 2007 are subject to review of the accounting for cost reductions from the company's contract manufacturer, which may affect cost of goods sold.
"I am very pleased with our performance this quarter as it marks the company's third consecutive quarter of double-digit revenue growth," said Jo Major, chairman and chief executive officer of Avanex.
"During the quarter, we saw strong growth from new products we announced including our amplifier with integrated optical monitoring capability developed for next-generation deployments that provide the network backbone for the delivery of high-bandwidth triple play services. Also during the quarter, our supply chain initiatives started to take hold, helping reduce our overall product cost. Our operational metrics including yield, on-time shipments and return rates continued to recover following last year's manufacturing transition," said Major.
Q2 FY 2007 Outlook
The company expects revenue in the second quarter of fiscal 2007 to be between $52 million and $55 million and expects gross margin to improve.
Conference Call
About Avanex
Forward-looking Statements
This press release contains forward-looking statements including forward-looking statements regarding expected second quarter of fiscal 2007 operating results and market reception for new products. Actual results could differ materially from those projected in or contemplated by the forward-looking statements. Factors that could cause actual results to differ include general economic conditions, the pace of spending and timing of economic recovery in the telecommunications industry and in particular the optical networks industry, the company's inability to sufficiently anticipate market needs and develop products and product enhancements that achieve market acceptance, problems or delays in reducing the cost structure of the company, the company's inability to achieve the anticipated benefits of previous acquisitions, to effect its restructuring goals or to successfully transfer manufacturing operations to lower cost regions, any slowdown or deferral of new orders for products, higher than anticipated expenses the company may incur in future quarters or the inability to identify expenses which can be eliminated.
Finally, please refer to the risk factors contained in the company's SEC filings including the company's Annual Report on Form 10-K filed with the SEC on Sept. 28.
Avanex assumes no obligation and does not intend to update any forward-looking statements, whether as a result of new information, future events or otherwise.
*Details on the items excluded from non-GAAP net loss and non-GAAP net loss per share are available in the table entitled "Reconciliation of GAAP Net Loss to Non-GAAP Net Loss," following the accompanying financial statements.
Avanex Corporation CONSOLIDATED STATEMENTS OF OPERATION In thousands, except for per share data (Unaudited) Three Months Ended September June 30, September 30, 30, 2006 2006 2005 Net revenue: Third parties $37,354 $35,016 $27,911 Related parties 13,537 10,442 13,322 Total net revenue 50,891 45,458 41,233 Cost of revenue: Cost of revenue except for purchases from related parties 46,168 43,460 37,619 Purchases from related parties 5 225 1,488 Total cost of revenue 46,173 43,685 39,107 Gross profit 4,718 1,773 2,126 Operating expenses: Research and development 5,625 5,703 7,127 Sales and marketing 3,548 3,677 3,788 General and administrative: Third parties 5,687 3,666 3,729 Related parties (11) (320) 1,545 Amortization of intangibles 852 912 1,765 Restructuring (63) (1,225) 40 (Gain) loss on disposal of property and equipment (20) (1,810) 7 Total operating expenses 15,618 10,603 18,001 Loss from operations (10,900) (8,830) (15,875) Interest and other income 1,334 644 551 Interest and other expense (272) (873) (1,599) Net loss $(9,838) $(9,059) $(16,923) Basic and diluted net loss per common share $(0.05) $(0.04) $(0.12) Weighted-average number of shares used in computing basic and diluted net loss per common share 205,389 204,040 145,182 Avanex Corporation RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS In thousands, except for per share data (Unaudited) Three Months Ended September June 30, September 30, 30, 2006 2006 2005 Net loss, GAAP $(9,838) $(9,059) $(16,923) Items reconciling GAAP net loss to non-GAAP net loss: Related to cost of revenue: Share-based payments 278 283 -- Related to operating expenses: Research and development -- share- based payments 614 612 115 Sales and marketing -- share-based payments 208 232 34 General and administrative -- share- based payments 781 996 282 Amortization of intangibles 852 912 1,765 Restructuring: Share-based payments 7 27 11 All other (70) (1,252) 29 (Gain) loss on disposal of property and equipment (20) (1,810) 7 Total related to operating expenses 2,372 (283) 2,243 Total related to net loss 2,650 -- 2,243 Non-GAAP net loss $(7,188) $(9,059) $(14,680) Basic and diluted non-GAAP net loss per common share $(0.03) $(0.04) $(0.10) Weighted-average number of shares used in computing basic and diluted non-GAAP net loss per common share 205,389 204,040 145,182 Avanex Corporation CONSOLIDATED BALANCE SHEET In thousands, except for per share data (Unaudited) September 30, June 30, 2006 2006 Assets Current assets: Cash and cash equivalents $16,358 $28,963 Restricted cash and investments 6,715 6,676 Short-term investments 38,798 38,696 Accounts receivable, net 31,608 26,768 Inventories, net 16,951 18,417 Due from related party 18,151 10,404 Other current assets 12,078 15,473 Total current assets 140,659 145,397 Property and equipment, net 6,040 5,668 Intangibles, net 2,335 3,246 Goodwill 9,408 9,408 Other assets 1,853 1,839 Total assets $160,295 $165,558 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $40,768 $38,276 Accrued compensation 7,088 6,872 Accrued warranty 1,745 1,799 Due to related party 3,914 4,475 Other accrued expenses and deferred revenue 5,804 4,467 Current portion of long-term obligations 543 823 Current portion of accrued restructuring 6,224 6,321 Total current liabilities 66,086 63,033 Long-term liabilities: Accrued restructuring, less current portion 12,006 13,252 Convertible notes 4,282 4,569 Other long-term obligations, less current portion 11,474 11,366 Total liabilities 93,848 92,220 Stockholders' equity: Common stock, $0.001 par value, 300,000,000 shares authorized; 206,715,014 and 204,361,846 shares outstanding (net of 157,656 treasury shares) at September 30, 2006 and June 30, 2006, respectively 207 204 Additional paid-in capital 745,992 742,951 Accumulated other comprehensive income 4,590 4,687 Accumulated deficit (684,342) (674,504) Total stockholders' equity 66,447 73,338 Total liabilities and stockholders' equity $160,295 $165,558
Avanex Corporation
