Sonus Networks, Inc. (Nasdaq: SONS), a global leader in secure and intelligent Cloud communications, today announced results for the second quarter ended June 30, 2016.

Second Quarter 2016 Highlights

• Total Company revenue was $60.9 million, compared to $54.7 million in the second quarter of 2015.
• Product revenue was $35.4 million, compared to $27.0 million in the second quarter of 2015.
• Service revenue was $25.5 million, compared to $27.7 million in the second quarter of 2015.
• GAAP gross margin was 66.1%, compared to 62.9% in the second quarter of 2015.
• Non-GAAP gross margin was 69.2%, compared to 65.9% in the second quarter of 2015.
• GAAP operating expenses were $42.9 million, compared to $49.5 million in the second quarter of 2015.
• Non-GAAP operating expenses were $37.8 million, compared to $40.9 million in the second quarter of 2015.
• GAAP loss per share was $0.06, compared to a GAAP loss per share of $0.31 in the second quarter of 2015.
• Non-GAAP earnings per share was $0.08, compared to a non-GAAP loss per share of $0.10 in the second quarter of 2015.
• Cash and investments were $142.7 million, compared to $142.4 million at the end of the first quarter of 2016.

"I am very pleased with our financial performance in the second quarter of 2016 as we exceeded all metrics related to our financial guidance that we provided on our first quarter of 2016 earnings call," said Ray Dolan, Sonus president and CEO. "Total revenue grew 11% compared to the second quarter of 2015. We continued to have a strong pipeline and we had a solid book-to-bill ratio in the second quarter of 2016."

"Our second quarter results set us up for a strong year, as we consistently invest in the future," continued Dolan. "The Company is executing at a rapid pace and continues to deliver industry-leading, secure, reliable and scalable real-time communications solutions to our service provider and enterprise customers. Our focus moving forward will be to improve profitability as the industry migrates to the Cloud."

Susan Villare, Sonus interim CFO, commented, "Our solid gross margin performance combined with lower operating expenses resulted in a GAAP loss per share of $0.06 compared to a GAAP loss per share of $0.31 in the second quarter of 2015. Non-GAAP diluted earnings per share was $0.08, compared to our guidance of$0.03 to $0.04. GAAP and non-GAAP gross margins in the second quarter of 2016 increased 320 basis points and 330 basis points, respectively, versus the comparable period last year. Our second quarter of 2016 GAAP and non-GAAP operating expenses decreased by $6.5 million and $3 million, respectively, versus our second quarter of 2015 as we realized the full benefit of our 2015 cost reduction program. We ended the second quarter of 2016 with approximately 1,050 employees, which was flat as compared to our first quarter of 2016 and our fiscal year end 2015. Lastly, our balance sheet remained strong and we ended our second quarter of 2016 with cash and equivalents of $142.7 million."

Stock Buyback Program

During the second quarter of 2016, the Company repurchased a total of 0.4 million shares at a weighted average price of $8.61 per share, for a total of $3.5 million. Under the current stock buyback program, the Company is authorized to repurchase up to an additional $10 million of the Company's common stock as of the end of its second quarter of 2016.

2016 Restructuring Program

The Company is announcing a restructuring program to further accelerate its investment in new technologies as the communications industry migrates to a Cloud-based architecture. The Company expects to record between $3 million and $4 million of restructuring expense over the next twelve months in connection with this action, resulting in expected annual savings of approximately $6 million to $8 million. The Company intends to utilize the entire savings to shift headcount towards new strategic initiatives (e.g., new products, expanded go-to-market footprint in selected geographies and discrete vertical markets). The Company plans to provide additional information regarding this program when it reports its third quarter of 2016 results.

Q316 and FY16 GuidanceThe Company's guidance is based on current indications for its business, which is subject to change. Gross margin, operating expenses and diluted earnings per share are presented on both a GAAP and non-GAAP basis.

Accounting Period

Beginning in fiscal 2016, the Company will report its first, second and third quarters on a month-end basis, such that the first quarter ended on March 31, 2016, the second quarter ended on June 30, 2016, and the third quarter will end on September 30, 2016. The Company's fiscal year will continue to end on December 31.

Tags

Sonus Networks, Sonus, SONS, 2016 second quarter, 2016 earnings, results, IP-based network solutions, SBC, DSC, SWe, SDN, software edition, software SBC, session border controller, session management, SIP trunking, Cloud VoIP communications, unified communications, UC, VoIP, IP, media gateway, GSX, NFV

About Sonus Networks

Sonus brings intelligence and security to real-time communications. By helping the world embrace the next generation of Cloud-based SIP and 4G/LTE solutions, Sonus enables and secures latency-sensitive, mission critical traffic for VoIP, video, instant messaging and online collaboration. With Sonus, enterprises can give priority to real-time communications based on smart business rules while service providers can offer reliable, comprehensive and secure on-demand network services to their customers. With solutions deployed in more than 100 countries and nearly two decades of experience, Sonus offers a complete portfolio of hardware-based and virtualized session border controllers (SBCs), diameter signaling controllers (DSCs), policy/routing servers, network intelligence applications, media and signaling gateways and network analytics tools. For more information, visit www.sonus.net or call 1-855-GO-SONUS.