Press Release

Acacia Communications Reports First Quarter 2018 Results

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MAYNARD, Mass., May 03, 2018 (GLOBE NEWSWIRE) -- Acacia Communications, Inc. (NASDAQ:ACIA), a leading provider of high-speed coherent optical interconnect products, today reported financial results for its first quarter ended March 31, 2018.

“While first quarter revenue, non-GAAP income and non-GAAP diluted EPS were in the high-end of our guidance ranges, the recent activation by the U.S. Department of Commerce of the denial order against ZTE is disappointing,” said Raj Shanmugaraj, President and Chief Executive Officer of Acacia Communications. “Although the denial order will have an adverse impact on our business for the foreseeable future, we are prioritizing several initiatives and opportunities that we believe will help mitigate that impact. We continue to believe that the strength of our balance sheet, technology and product portfolio position us well for opportunities that are key to our future success.”

“Our second quarter 2018 outlook assumes no revenue contribution from ZTE after the effective date of the ZTE denial order,” said John Gavin, Chief Financial Officer of Acacia Communications. “In addition, we have and will continue to take steps to reduce our year-over-year operating expense growth rate while continuing to fund our core strategic projects.”

Results for the First Quarter of 2018

  • Revenue of $72.9 million, decreased 36% year-over-year
  • GAAP gross margin of 33.0%; non-GAAP gross margin* of 42.9%
  • GAAP loss from operations of $14.7 million; non-GAAP income from operations* of $2.2 million
  • GAAP net loss of $9.1 million; non-GAAP net income* of $4.3 million
  • EBITDA* of $(11.5) million; adjusted EBITDA* of $5.4 million
  • GAAP diluted loss per share of $0.23; non-GAAP diluted EPS* of $0.10

Outlook for the Second Quarter of 2018

The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially, as a result of, among other things, the important factors discussed at the end of this press release. Acacia Communications disclaims any obligation to update these forward-looking statements.

Acacia Communications’ guidance for its second quarter ending June 30, 2018 is:

Quarter Ending June 30, 2018            
Revenue (millions)   $ 60.0     to   $ 66.0  
Non-GAAP Net Loss* (millions)   $ (6.2 )   to   $ (1.2 )
Non-GAAP Diluted Loss Per Share*   $ (0.15 )   to   $ (0.03 )

*Non-GAAP gross margin, non-GAAP income from operations, non-GAAP net income (loss), (loss) earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA and non-GAAP diluted earnings (loss) per share are non-GAAP financial measures that are not prepared in accordance with generally accepted accounting principles (GAAP). Please refer below to Use of Non-GAAP Financial Information for descriptions of these non-GAAP financial measures and to the Reconciliation of GAAP Measures to Non-GAAP Measures, attached as Schedule D, for reconciliations of the most directly comparable GAAP financial measures to these non-GAAP financial measures.

Acacia Communications has not reconciled the above second quarter 2018 guidance for GAAP net loss and GAAP diluted loss per share to non-GAAP net loss and non-GAAP diluted loss per share, respectively, because the expected tax benefits derived from any employee equity awards during the second quarter of 2018 cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.

Conference Call

Acacia Communications will host a conference call to discuss its results for the first quarter of 2018, recent developments and the Company’s business outlook and strategy at 5 p.m. Eastern Time today. The live webcast of the call, along with the Company’s earnings press release, can be accessed at the Acacia Communications’ Investor Relations website at http://ir.acacia-inc.com. The U.S. dial-in for the call is 1-877-407-8293 (1-201-689-8349 for non-U.S. callers). Please ask to be joined to the Acacia Communications call. A replay of the conference call will be available until May 17, 2018, at 11:59 p.m. Eastern Time, while an archived version of the webcast will be available on the Acacia Communications’ Investor Relations website for 90 days. The U.S. dial-in for the conference call replay is 1-877-660-6853 (1-201-612-7415 for non-U.S. callers). The replay access code is 13679013.

Use of Non-GAAP Financial Information

This press release includes non-GAAP financial measures that are not prepared in accordance with, nor an alternative to, generally accepted accounting principles (GAAP). In addition, these non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies.

Schedule D of this press release provides reconciliations of Acacia Communications’ most comparable GAAP financial measures to non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expenses, non-GAAP sales, general and administrative expenses, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, non-GAAP effective tax rate, EBITDA, adjusted EBITDA and non-GAAP diluted EPS.

Acacia Communications believes that providing these non-GAAP financial measures to investors, in addition to providing the most directly comparable GAAP measures, provides investors the benefit of viewing the Company’s performance using the same financial metrics that its management team uses in making many key decisions and evaluating how its results of operations may look in the future. Acacia Communications’ management does not believe that items not involving cash expenditures, such as non-cash compensation related to equity awards, are part of its critical decision making process. Also, Acacia Communications’ management does not believe that items such as warranty and other charges arising from a manufacturing process quality issue, inventory write-offs due to the seven-year denial of export privileges imposed by the U.S. Department of Commerce against ZTE Kangxun Telecom Co. Ltd. (“ZTE”) or certain litigation related costs and settlement reserves outside the normal course of the Company’s business are reflective of the Company’s underlying operating performance. Additionally, Acacia Communications’ management believes the impacts of the U.S. Tax Cuts and Jobs Act (the “Act”), including the revaluation of its deferred tax assets and liabilities and the repatriation of accumulated foreign earnings, is a unique event that limits comparability with prior periods and does not accurately reflect the underlying performance of its continuing business operations for the period in which they were incurred. Therefore, Acacia Communications excludes those items, as applicable, from non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expenses, non-GAAP sales, general and administrative expenses, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, non-GAAP effective tax rate, non-GAAP diluted EPS, EBITDA and adjusted EBITDA.

Acacia Communications’ non-GAAP financial measures reflect adjustments based on the metrics described below, as well as the related income tax effects. The income tax effect of these non-GAAP adjustments is determined by recalculating income tax expense excluding these adjustments.

Non-GAAP gross profit and gross margin.    Acacia Communications defines non-GAAP gross profit as gross profit as reported on its consolidated statements of operation, excluding the impact of stock-based compensation, which is a non-cash charge, warranty and other charges arising from a manufacturing process quality issue and inventory write-offs due to the denial order against ZTE. Acacia Communications defines non-GAAP gross margin as the non-GAAP gross profit divided by revenue as reported on its consolidated statements of operation. Acacia Communications has presented non-GAAP gross profit and gross margin because the Company believes that the exclusion of stock-based compensation, warranty and other charges arising from a manufacturing process quality issue and inventory write-offs due to the denial order against ZTE facilitates comparisons of its results of operations to other companies in its industry.

Non-GAAP research and development expenses.    Acacia Communications defines non-GAAP research and development expenses as research and development expenses as reported on the Company’s consolidated statements of operation, excluding the impact of stock-based compensation. Acacia Communications has presented non-GAAP research and development expenses because the Company believes that the exclusion of stock-based compensation facilitates comparisons of its results of operations to other companies in its industry.

Non-GAAP sales, general and administrative expenses.    Acacia Communications defines non-GAAP sales, general and administrative expenses as sales, general and administrative expenses as reported on the Company’s consolidated statements of operation, excluding the impact of stock-based compensation and certain litigation related costs and settlement reserves. Acacia Communications has presented non-GAAP sales, general and administrative expenses because the Company believes that the exclusion of stock-based compensation and certain litigation related costs and settlement reserves facilitates comparisons of its results of operations to other companies in its industry.

Non-GAAP operating expenses.    Acacia Communications defines non-GAAP operating expenses as operating expenses as reported on the Company’s consolidated statements of operation, excluding the impact of stock-based compensation and certain litigation related costs and settlement reserves. Acacia Communications has presented non-GAAP operating expenses because the Company believes that the exclusion of stock-based compensation and certain litigation related costs and settlement reserves facilitates comparisons of its results of operations to other companies in its industry.

Non-GAAP income from operations.    Acacia Communications defines non-GAAP income from operations as (loss) income from operations as reported on the Company’s consolidated statements of operation, excluding the impact of stock-based compensation, warranty and other charges arising from a manufacturing process quality issue, inventory write-offs due to the denial order against ZTE and certain litigation related costs and settlement reserves. Acacia Communications has presented non-GAAP income from operations because the Company believes that the exclusion of stock-based compensation, warranty and other charges arising from a manufacturing process quality issue, inventory write-offs due to the denial order against ZTE and certain litigation related costs and settlement reserves facilitates comparisons of its results of operations to other companies in its industry.

Non-GAAP net income, non-GAAP effective tax rate and non-GAAP diluted EPS.    Acacia Communications defines non-GAAP net income as net (loss) income as reported on the Company’s consolidated statements of operation, excluding the impact of stock-based compensation which is a non-cash charge, as well as warranty and other charges arising from a manufacturing process quality issue, inventory write-offs due to the denial order against ZTE, certain litigation related costs and settlement reserves and the tax effects of those excluded items. Additionally, the impacts of the Act have been excluded as it is a unique event that limits comparability with prior periods and does not accurately reflect the underlying performance of the Company’s continuing business operations for the period in which they were incurred.

Acacia Communications defines non-GAAP effective tax rate as the non-GAAP (benefit) provision for income taxes divided by non-GAAP income before (benefit) provision for income taxes. Non-GAAP (benefit) provision for income taxes is defined as the (benefit) provision for income taxes as reported on the Company’s consolidated statements of operation, as adjusted for the tax effects of excluding stock-based compensation expense, warranty and other charges arising from a manufacturing process quality issue, inventory write-offs due to the denial order against ZTE, certain litigation related costs and settlement reserves, as well as the impact of the Act. Non-GAAP income before (benefit) provision for income taxes is defined as GAAP (loss) income before (benefit) provision for income taxes, excluding stock-based compensation expense, warranty and other charges arising from a manufacturing process quality issue, inventory write-offs due to the denial order against ZTE and certain litigation related costs and settlement reserves.

In order to calculate non-GAAP diluted EPS, Acacia Communications uses a non-GAAP weighted-average share count. For periods in which there was a GAAP net loss resulting in GAAP diluted net loss per share, the impact of dilutive stock-based awards was added to the GAAP weighted-average share count to calculate the non-GAAP diluted earnings per share.

Acacia Communications has presented non-GAAP net income, non-GAAP effective tax rate and non-GAAP diluted EPS because the Company believes that the exclusion of the items discussed above facilitates comparisons of its results of operations to other companies in its industry and more accurately reflects the underlying performance of our continuing business operations.

EBITDA and Adjusted EBITDA.    Acacia Communications defines EBITDA as net (loss) income as reported on the Company’s consolidated statements of operation before depreciation, interest income, net, and its (benefit) provision for income taxes. Acacia Communications defines adjusted EBITDA as EBITDA excluding the impact of stock-based compensation, warranty and other charges arising from a manufacturing process quality issue, inventory write-offs due to the denial order against ZTE and certain litigation related costs and settlement reserves. Acacia Communications has presented adjusted EBITDA because it is a key measure used by its management and board of directors to understand and evaluate the Company’s operating performance, to establish budgets and to develop operational goals for managing its business. In particular, Acacia Communications believes that the exclusion of the amounts eliminated in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of its core operating performance.

Acacia Communications uses these non-GAAP financial measures to evaluate its operating performance and trends, and make planning decisions. Acacia Communications believes that each of these non-GAAP financial measures helps identify underlying trends in its business that could otherwise be masked by the effect of the items that the Company excludes. Accordingly, Acacia Communications believes that these financial measures provide useful information to investors and others in understanding and evaluating its operating results, enhancing the overall understanding of the Company’s past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by its management in its financial and operational decision-making.

Acacia Communications’ non-GAAP financial measures are not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures rather than gross profit, gross margin, research and development expenses, sales, general and administrative expenses, operating expenses, (loss) income from operations, net (loss) income, effective tax rate or diluted (loss) earnings per share, which are the most directly comparable GAAP measures. Some of these limitations are:

  • Acacia Communications excludes stock-based compensation expense from each of its non-GAAP financial measures, although it has recently been, and will continue to be for the foreseeable future, a significant recurring expense for its business and an important part of the Company’s compensation strategy;
     
  • Acacia Communications excludes the tax benefits generated from the exercise of non-qualified stock options, the disqualifying disposition of incentive stock options and ESPP shares, and the vesting of restricted stock units, including any excess tax benefits and shortfalls recognized by the Company in the year of the taxable transaction, in calculating its non-GAAP effective tax rate, non-GAAP net income, and non-GAAP diluted EPS. The Company believes that excluding these tax benefits enables investors to see the full effect that excluding stock-based compensation expense had on the operating results. These benefits are tied to the exercise or vesting of underlying employee equity awards and the price of our common stock at the time of exercise or vesting, which factors may vary from period to period independent of the operating performance of the Company’s business. Similar to stock-based compensation expense, the Company believes that excluding these tax benefits provides investors and management with greater visibility to the underlying performance of its business operations and facilitates comparison with other periods as well as the results of other companies in its industry;
     
  • Acacia Communications excludes warranty and other charges arising from a manufacturing process quality issue from its non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP net income, non-GAAP effective tax rate, non-GAAP diluted EPS and adjusted EBITDA measures, as management does not believe the charges are reflective of the Company’s underlying operating performance;
     
  • Acacia Communications excludes inventory write-offs due to the denial order against ZTE from its non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP net income, non-GAAP effective tax rate, non-GAAP diluted EPS and adjusted EBITDA measures, as management believes the activity is not related to the Company’s normal course of business and is not reflective of the Company’s underlying operating performance;
     
  • Acacia Communications excludes certain litigation related costs and settlement reserves from its non-GAAP sales, general and administrative expenses, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, non-GAAP effective tax rate, non-GAAP diluted EPS and adjusted EBITDA measures, if management believes the activity is not related to the Company’s normal course of business and is not reflective of the Company’s underlying operating performance. These expenses may continue in the future;
     
  • Non-GAAP net income, non-GAAP effective tax rate and non-GAAP diluted EPS do not reflect the impact of the Act, part of which is federal taxes incurred on the repatriation of accumulated foreign earnings which will be paid over an eight-year period;
     
  • EBITDA and adjusted EBITDA exclude depreciation expense and, although this is a non-cash expense, the assets being depreciated may have to be replaced in the future;
     
  • EBITDA and adjusted EBITDA do not reflect interest income, which increases cash available to the Company, as this income is not generated by the Company’s core operations;
     
  • EBITDA and adjusted EBITDA do not reflect the (benefit) provision for income tax which may impact cash available to the Company; and
     
  • the expenses and other items that the Company excludes in its calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results.

Because of these limitations, non-GAAP financial measures should be considered along with other operating and financial performance measures presented in accordance with GAAP.

Acacia Communications’ use of non-GAAP financial measures, and the underlying methodology when excluding certain items, is not necessarily an indication of the results of operations that may be expected in the future, or that Acacia Communications will not, in fact, record such items in future periods.

Investors should consider Acacia Communications’ non-GAAP financial measures in conjunction with the corresponding GAAP financial measures.

About Acacia Communications

Acacia Communications develops, manufactures and sells high-speed coherent optical interconnect products that are designed to transform communications networks through improvements in performance, capacity and cost. By leveraging silicon technology to build optical interconnects, a process Acacia Communications refers to as the “siliconization of optical interconnect,” Acacia Communications is able to offer products at higher speeds and density with lower power consumption, that meet the needs of cloud and service providers and can be easily integrated in a cost-effective manner with existing network equipment. www.acacia-inc.com.

Forward Looking Statements

This press release includes statements concerning Acacia Communications and its future expectations, plans and prospects that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions are intended to identify forward-looking statements. Acacia Communications has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that the Company believes may affect its business, financial condition and results of operations. These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions including, without limitation, the Company’s ability to sustain or increase revenue from its larger customers, generate revenues from new customers, or offset the discontinuation of concentrated purchases by its larger customers with purchases by new or existing customers, the Company’s expectations regarding expenses and revenue, its ability to maintain and expand gross profit, the sufficiency of the Company’s cash resources and needs for additional financing, the Company’s ability to produce products free of problems, defects, errors and vulnerabilities, the Company’s anticipated growth strategies, its expectations regarding competition, the anticipated trends and challenges in its business and the market in which it operates, the Company’s expectations regarding, and the capacity and stability of, its supply chain and manufacturing, the size and growth of the potential markets for its products and the ability to serve those markets, the scope, progress, expansion and costs of developing and commercializing its products, the timing, rate and degree of introducing any of its products into the market and the market acceptance of any of its products, the Company’s ability to establish and maintain development partnerships, its ability to attract or retain key personnel, the Company’s expectations regarding federal, state and foreign regulatory requirements, including export controls, tax law changes and interpretations, economic sanctions and anti-corruption regulations, regulatory developments in the United States and foreign countries, including under export control laws or regulations that could impede its ability to sell its products to its customer ZTE Kangxun Telecom Co. Ltd. or any of its affiliates or that could impede its ability to sell products to other customers in certain foreign jurisdictions, particularly in China, the Company’s ability to obtain and maintain intellectual property protection for its products, and the pending purported securities class action and derivative lawsuits against the Company and its ability to defend against them, and other risks set forth under the caption “Risk Factors” in the Company’s public reports filed with the SEC, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC and its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018 to be filed with the SEC and in other filings that the Company may make with the SEC in the future. Acacia Communications assumes no obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

 
SCHEDULE A
ACACIA COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
  March 31, 2018   December 31, 2017
ASSETS      
Current assets:      
Cash and cash equivalents $ 85,135     $ 67,495  
Marketable securities 222,540     211,933  
Accounts receivable 74,765     86,602  
Inventory 57,156     62,232  
Prepaid expenses and other current assets 19,481     18,985  
Total current assets 459,077     447,247  
Marketable securities - long-term 59,831     85,182  
Property and equipment, net 30,426     28,175  
Deferred tax asset 45,089     41,901  
Other assets 8,517     8,745  
Total assets $ 602,940     $ 611,250  
       
LIABILITIES AND STOCKHOLDERS EQUITY      
Current liabilities:      
Accounts payable $ 34,527     $ 47,819  
Accrued liabilities 42,782     37,234  
Deferred revenue 1,360     573  
Total current liabilities 78,669     85,626  
Income taxes payable 19,205     21,034  
Other long-term liabilities 4,857     2,540  
Total liabilities 102,731     109,200  
       
Stockholders’ equity:      
Common stock 4     4  
Additional paid-in capital 332,426     324,944  
Accumulated other comprehensive loss (722 )   (320 )
Retained earnings 168,501     177,422  
Total stockholders’ equity 500,209     502,050  
Total liabilities and stockholders’ equity $ 602,940     $ 611,250  
               

 

 
SCHEDULE B
ACACIA COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
  Three Months Ended March 31,
  2018   2017
Revenue $ 72,941     $ 114,667  
Cost of revenue 48,870     58,367  
Gross profit 24,071     56,300  
Operating expenses:      
Research and development 24,445     17,728  
Sales, general and administrative 14,288     8,691  
Total operating expenses 38,733     26,419  
(Loss) income from operations (14,662 )   29,881  
Other income, net:      
Interest income, net 1,354     445  
Other expense, net (71 )   (38 )
Total other income, net 1,283     407  
(Loss) income before benefit from income taxes (13,379 )   30,288  
Benefit from income taxes (4,301 )   (5,421 )
Net (loss) income $ (9,078 )   $ 35,709  
(Loss) earnings per share:      
Basic $ (0.23 )   $ 0.93  
Diluted $ (0.23 )   $ 0.86  
Weighted-average shares used to compute (loss) earnings per share:      
Basic 39,836     38,308  
Diluted 39,836     41,654  
           

 

 
SCHEDULE C
ACACIA COMMUNICATIONS, INC.
CONSENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
(unaudited)
  Three Months Ended March 31,  
  2018   2017  
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net (loss) income $ (9,078 )   $ 35,709    
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation 3,266     2,877    
Stock-based compensation 6,538     4,632    
Deferred income taxes (3,239 )   (1,490 )  
Other non-cash charges 45     76    
Changes in operating assets and liabilities:        
Accounts receivable 11,837     (6,764 )  
Inventory 5,076     (2,003 )  
Prepaid expenses and other current assets (665 )   (5,435 )  
Other assets 208     (3,566 )  
Accounts payable (12,105 )   (11,533 )  
Accrued liabilities 5,527     1,790    
Deferred revenue 3,358     211    
Income taxes payable (1,829 )      
Other long-term liabilities 121     356    
Net cash provided by operating activities 9,060     14,860    
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property and equipment (6,704 )   (5,608 )  
Purchases of marketable securities (73,534 )   (116,652 )  
Sales and maturities of marketable securities 87,830     38,900    
Deposits 20        
Net cash provided by (used in) investing activities 7,612     (83,360 )  
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Payment of public offering costs     (188 )  
Proceeds from the issuance of common stock under stock-based compensation plans 968     883    
Net cash provided by financing activities 968     695    
         
Net increase (decrease) in cash, cash equivalents and restricted cash 17,640     (67,805 )  
Cash, cash equivalents and restricted cash—Beginning of period 67,495     208,032    
Cash, cash equivalents and restricted cash—End of period $ 85,135     $ 140,227    
         
Supplemental cash flow disclosures:        
Refunds received for income taxes, net $ (72 )   $ (134 )  
                 

 

 
SCHEDULE D
ACACIA COMMUNICATIONS, INC.
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
 (in thousands, except for per share data)
(unaudited)
    Three Months Ended
    Q1 2018   Q4 2017   Q1 2017
Non-GAAP Gross Profit            
GAAP gross profit   $ 24,071     $ 40,016     $ 56,300  
Stock-based compensation -  cost of revenue   521     524     442  
Warranty and other charges due to manufacturing process quality issue   (375 )   (1,992 )    
Inventory write-offs   7,063          
Non-GAAP gross profit   $ 31,280     $ 38,548     $ 56,742  
GAAP gross margin   33.0 %   46.2 %   49.1 %
Non-GAAP gross margin   42.9 %   44.5 %   49.5 %
             
    Three Months Ended
    Q1 2018   Q4 2017   Q1 2017
Non-GAAP R&D Expenses            
GAAP research and development expenses   $ 24,445     $ 24,430     $ 17,728  
Stock-based compensation   3,788     3,634     2,992  
Non-GAAP research and development expenses   $ 20,657     $ 20,796     $ 14,736  
             
    Three Months Ended
    Q1 2018   Q4 2017   Q1 2017
Non-GAAP SG&A Expenses            
GAAP sales, general and administrative expenses   $ 14,288     $ 10,643     $ 8,691  
Stock-based compensation   2,229     2,053     1,198  
Litigation related costs and settlement reserves   3,621          
Non-GAAP sales, general and administrative expenses   $ 8,438     $ 8,590     $ 7,493  
             
    Three Months Ended
    Q1 2018   Q4 2017   Q1 2017
Non-GAAP Operating Expenses            
GAAP operating expenses   $ 38,733     $ 35,073     $ 26,419  
Stock-based compensation   6,017     5,687     4,190  
Litigation related costs and settlement reserves   3,621          
Non-GAAP operating expenses   $ 29,095     $ 29,386     $ 22,229  
             
    Three Months Ended
    Q1 2018   Q4 2017   Q1 2017
Non-GAAP Income from Operations            
GAAP (loss) income from operations   $ (14,662 )   $ 4,943     $ 29,881  
Stock-based compensation   6,538     6,211     4,632  
Warranty and other charges due to manufacturing process quality issue   (375 )   (1,992 )    
Litigation related costs and settlement reserves   3,621          
Inventory write-offs   7,063          
Non-GAAP income from operations   $ 2,185     $ 9,162     $ 34,513  
                         

 

 
SCHEDULE D (Cont.)
ACACIA COMMUNICATIONS, INC.
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
 (in thousands, except for per share data)
(unaudited) 
 
    Three Months Ended
    Q1 2018   Q4 2017   Q1 2017
Non-GAAP Net Income            
GAAP net (loss) income   $ (9,078 )   $ (20,364 )   $ 35,709  
Stock-based compensation   6,538     6,211     4,632  
Warranty and other charges due to manufacturing process quality issue   (375 )   (1,992 )    
Litigation related costs and settlement reserves   3,621          
Inventory write-offs   7,063          
Tax effect of excluded items   (3,491 )   (4,148 )   (8,297 )
Impact of the U.S. Tax Cuts and Jobs Act       31,425      
Non-GAAP net income   $ 4,278     $ 11,132     $ 32,044  
             
    Three Months Ended
    Q1 2018   Q4 2017   Q1 2017
Non-GAAP Effective Tax Rate            
GAAP effective tax rate   32.1 %   439.9 %   (17.9 )%
Tax effect of excluded items   (55.5 )%   (141.2 )%   26.1 %
Impact of the U.S. Tax Cuts and Jobs Act   %   (307.7 )%   %
Non-GAAP effective tax rate   (23.4 )%   (9.0 )%   8.2 %
             
    Three Months Ended
    Q1 2018   Q4 2017   Q1 2017
(Loss) earnings before interest, taxes, depreciation and amortization and Adjusted EBITDA            
GAAP net (loss) income   $ (9,078 )   $ (20,364 )   $ 35,709  
Depreciation   3,266     3,179     2,877  
Interest income, net   (1,354 )   (1,128 )   (445 )
(Benefit) provision for income taxes   (4,301 )   26,355     (5,421 )
(Loss) earnings before interest, taxes, depreciation and amortization   (11,467 )   8,042     32,720  
Stock-based compensation   6,538     6,211     4,632  
Warranty and other charges due to manufacturing process quality issue   (375 )   (1,992 )    
Litigation related costs and settlement reserves   3,621          
Inventory write-offs   7,063          
Adjusted EBITDA   $ 5,380     $ 12,261     $ 37,352  
                         

 

 
SCHEDULE D (Cont.)
ACACIA COMMUNICATIONS, INC.
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
 (in thousands, except for per share data)
(unaudited)
    Three Months Ended
    Q1 2018   Q4 2017   Q1 2017
Non-GAAP Diluted EPS            
GAAP Diluted net (loss) income per share   $ (0.23 )   $ (0.52 )   $ 0.86  
Stock-based compensation   0.16     0.16     0.11  
Warranty and other charges due to manufacturing process quality issue   (0.01 )   (0.05 )    
Litigation related costs and settlement reserves   0.09          
Inventory write-offs   0.18          
Tax effect of excluded items   (0.09 )   (0.11 )   (0.20 )
Impact of the U.S. Tax Cuts and Jobs Act       0.81      
Dilutive stock-based awards       (0.02 )    
Non-GAAP diluted EPS   $ 0.10     $ 0.27     $ 0.77  
             
Weighted-average shares used to compute GAAP diluted net (loss) income per share   39,836     39,440     41,654  
Dilutive stock-based awards   2,084     2,284      
Weighted-average shares used to compute non-GAAP diluted EPS   41,920     41,724     41,654  
                   

SOURCE Acacia Communications, Inc.

For further information:

Investor Relations Contact:
Monica Gould
Office: (212) 871-3927
Email: IR@acacia-inc.com 

Lindsay Savarese
Office: (212) 331-8417
Email: IR@acacia-inc.com 

Public Relations Contact:
Ed Harrison 
Office: (781) 966-4158
Email: ed@inkhouse.com 

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Source: Acacia Communications, Inc.