Meru Networks Reports Record Fourth Quarter and Full Year 2010 Financial Results

SUNNYVALE, Calif., Feb. 2, 2011 /PRNewswire/ -- Meru Networks, Inc., (Nasdaq: MERU), the leader in 802.11n virtualized wireless LAN solutions for enterprise networking, today announced its financial results for the quarter and full fiscal year ended December 31, 2010.

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Fourth Quarter Financial and Operational Highlights

• Products and services revenues (excluding ratable) of $20.5 million, up 34% year-over-year.
• Our Non-GAAP gross margin of 65.2% improved 490 basis points year-over-year.
• Total customer install base up approximately 50% year-over-year.

Fourth Quarter Fiscal Year 2010 Financial Results

Total revenues for the fourth quarter of fiscal year 2010 were $22.6 million, up 18% from $19.3 million in the fourth quarter of fiscal year 2009. Products and services revenues (excluding ratable) for the fourth quarter of fiscal year 2010 were $20.5 million, up 34% from the $15.3 million reported in the fourth quarter of fiscal year 2009.

Net loss as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $0.9 million for the fourth quarter of 2010, or $0.06 per basic share, compared to a net loss of $8.0 million, or $20.27 per basic share, for the same period of fiscal year 2009.

Meru reported fourth quarter fiscal year 2010 non-GAAP net income of $305,000, or $0.02 per fully diluted share, compared to $119,000, or $0.01 per fully diluted share, for the fourth quarter of fiscal year 2009.  Non-GAAP results for the fourth quarter of 2010 exclude stock-based compensation expense of $1.2 million.  Non-GAAP results for the fourth quarter of 2009 exclude stock-based compensation expense of $429,000 and a $7.6 million expense related to the adjustment to the fair value of the warrant liability. Please refer to the reconciliation of GAAP to non-GAAP results provided at the end of this release.

Fiscal Year 2010 Financial Results

Revenues for the fiscal year ended December 31, 2010 were $85.0 million, an increase of 22% from $69.5 million in fiscal year 2009.  Products and services revenues (excluding ratable) for fiscal year 2010 were $73.7 million, up 44% from the $51.1 million reported in fiscal year 2009. GAAP net loss for fiscal year 2010 was $36.6 million, or $3.06 per share, compared to a net loss of $17.2 million, or $45.15 per share in fiscal year 2009.  Non-GAAP net income for fiscal year 2010 was $859,000, or $0.05 per fully diluted share, compared to a net loss of $2.3 million, or $5.44 per fully diluted share in fiscal year 2009.  

"2010 was an outstanding year for Meru," said Ihab Abu-Hakima, president and chief executive officer, Meru Networks. "Throughout the year we were able to leverage our product differentiation and innovations to gain market share.  We delivered record revenues and expanded our gross margins as more organizations in more verticals around the world adopted Meru's virtualized wireless LAN solution to migrate their edge networking infrastructure to All Wireless networking environments."

Fourth Quarter Business Highlights

• Introduced the AP1000i, the newest entry-level, high-value enterprise access point solution in Meru's product family with breakthrough connectivity, mobility and security and designed to be the industry's simplest to deploy and easiest to manage WLAN solution.
• Notable fourth quarter wins and production deployments include:
  • Several top universities in the United States and Asia.
  • Two Fortune Global 500 Japanese consumer electronics manufacturers.
  • A Fortune 100 financial services insurance company.
  • A large regional medical center.
  • A world leading solar panel manufacturer.
• Received four notable industry awards for leadership and innovation:
  • The 2010 CRN Specialist Vendor of the Year.
  • CRN's 2010 Top 100 Healthcare Vendor.
  • Tech & Learning's 2010 Award of Excellence, Product of the Year AP320i.
  • The "Coolest Product of 2010" Service Assurance Platform, by Health Management Technology.

Conference Call Information

Meru will host a conference call for analysts and investors to discuss its fourth quarter and full fiscal year 2010 results, today, February 2nd at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).  To join the live call, please dial 1-877-852-2926 (domestic) and 1-253-237-1123 (international) and reference conference ID 35568742.

A telephone replay will be available two hours following the conclusion of the call for a period of seven days and can be accessed by dialing (800) 642-1687 for domestic callers and (706) 645-9291 for international callers. The call ID for the replay is 35568742. The live and archived webcast of the fourth quarter and full fiscal year 2010 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, Inc.

Founded in 2002, Meru Networks, Inc, provides a virtualized wireless LAN solution that cost-effectively optimizes the enterprise network to deliver the performance, reliability, predictability and operational simplicity of a wired network, with the advantages of mobility. Meru's solution represents an innovative approach to wireless networking that utilizes virtualization technology to create an intelligent and self-monitoring wireless network, and enables enterprises to migrate their business-critical applications from wired networks to wireless networks, and become all-wireless enterprises. Meru is headquartered in Sunnyvale, CA, and has operations in the Americas, Europe, the Middle East and Asia Pacific. For more information, visit www.merunetworks.com.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements and information. All statements other than statements of historical facts on this website, including statements regarding our future financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "might," "objective," "estimate," "continue," "anticipate," "project," "intend," "will," "should," "could," "plan," "future," "expect," "predict," "potential," or the negative of these terms or other similar expressions. These forward-looking statements include but are not limited to our expectations regarding the ability to leverage product differentiation and innovations to gain market share, organizations adopting Meru's virtualized wireless LAN solution and the migration of edge networking infrastructure to all wireless networking environments. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial conditions, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, but not limited to, whether the market for our products and solutions continue to develop and grow, our limited operating history, our ability to compete effectively, our ability to increase market awareness of our brand and solutions and our ability to continue to utilize our technology and protect our intellectual property rights, and a number of other factors out of our control, that may cause our business, industry, strategy or actual results to differ materially from the forward-looking statements. The risks and uncertainties include those described under the caption "Risk Factors" in Meru Networks' quarterly report on Form 10-Q filed with the Securities and Exchange Commission, or the SEC, on November 5, 2010 and the company's other filings with the SEC.

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), which excludes stock-based compensation expense and adjustments to the fair value of the warrant liability.  Meru believes that its non-GAAP net income (loss) provides 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 will 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 its 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.  Meru believes that all of these excluded expenses and income do 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 do 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.

SOURCE Meru Networks