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Xura Announces Fiscal 2015 Second Quarter Results; Conference Call to be Held Today at 8:00 AM

WAKEFIELD, Mass., Sept. 9, 2015 (GLOBE NEWSWIRE) -- Xura, Inc. ("Xura") (NASDAQ:MESG), formerly known as Comverse, Inc. (NASDAQ:CNSI), today announced its results for the second fiscal quarter ended July 31, 2015.

Consolidated Highlights: Below is selected consolidated financial information for the three and six months ended July 31, 2015 and 2014, prepared in accordance with generally accepted accounting principles ("GAAP"), except as noted.

Xura, Inc.: Three Months Ended July 31, Six Months Ended July 31,
(In thousands) 2015 2014 2015 2014
Total revenue $ 61,629 $ 74,988 $ 107,334 $ 140,070
Costs and expenses
Cost of revenue 39,964 57,956 83,721 108,841
Research and development, net 8,235 9,813 16,515 18,172
Selling, general and administrative 19,686 23,059 39,559 48,619
Other operating expenses 4,238 1,171 7,646 3,043
Total costs and expenses 72,123 91,999 147,441 178,675
Loss from operations (10,494) (17,011) (40,107) (38,605)
Expense adjustments 9,878 5,489 17,642 11,366
Xura performance (1) (616) (11,522) (22,465) (27,239)
Depreciation 3,339 3,261 6,706 6,422
Adjusted EBITDA (1) 2,723 (8,261) (15,759) (20,817)
Loss before income tax benefit (expense) (14,697) (20,504) (49,890) (40,139)
Income tax benefit (expense) 2,534 (1,877) (2,253) (4,337)
Loss from continuing operations (12,163) (22,381) (52,143) (44,476)
Income from discontinued operations 175,060 5,515 188,379 11,479
Net income (loss) $ 162,897 $ (16,866) $ 136,236 $ (32,997)
Earnings (loss) per share - basic & diluted:
Continuing operations $ (0.55) $ (1.00) $ (2.38) $ (1.99)
Discontinued operations 7.95 0.25 8.59 0.51
$ 7.40 $ (0.75) $ 6.21 $ (1.48)
Adjusted EBITDA earnings (loss) per share - basic & diluted (1) $ 0.12 $ (0.37) $ (0.72) $ (0.93)
Interest expense (167) (231) (360) (354)
Operating margin (17.0)% (22.7)% (37.4)% (27.6)%
Xura performance margin (1.0)% (15.4)% (20.9)% (19.4)%
Adjusted EBITDA margin 4.4 % (11.0)% (14.7)% (14.9)%
Net cash used in operating activities $ (31,559) $ (13,785) $ (49,263) $ (49,384)
(1) "Xura performance", "Adjusted EBITDA" and "Adjusted EBITDA earnings (loss) per share" have not been prepared in accordance with GAAP. See "Presentation of Non-GAAP Financial Measures" below.

"We are proud to be in a position today to unveil our new company name and brand identity, Xura, along with our new stock symbol, MESG, which effectively redefines our role in enabling digital communications for both consumers and enterprise customers. We are pushing forward aggressively to stake our leadership in the rapidly evolving digital communications space. All the actions we have taken in 2015, including our partnership with Tech Mahindra, completion of the sale of the BSS segment to Amdocs and our acquisition of Acision, have helped position us to achieve the high operational and financial goals we have established for our new, combined company, Xura. We are very excited about leveraging our merged opportunities into strong results and begin truly disrupting digital," said Philippe Tartavull, President and Chief Executive Officer, Xura, Inc.

Discontinued Operations and Segment Information

Pursuant to the Amdocs Purchase Agreement, we agreed to sell substantially all of our assets required for operating the BSS Business. We substantially completed the disposition and have re-classified and reflected its operations as discontinued operations on the consolidated statements of earnings for all periods presented. As of July 31, 2015, certain assets and liabilities continued to meet the held for sale criteria due to deferred closings.

Selected Balance Sheet Highlights: Below is selected balance sheet data:

As of
(In millions) July 31, 2015 April 30, 2015
Cash and cash equivalents $ 346.1 $ 136.1
Restricted cash (including long-term restricted cash) and bank time deposits 60.8 43.8
Total $ 406.9 $ 179.9

As previously disclosed, on August 6, 2015, the company paid approximately $136 million in cash as part of the consideration for the acquisition of Acision.

Conference Call Details

Xura will be conducting a conference call today, September 9, 2015 at 8:00 a.m. ET. To listen to the conference call live, please dial (678) 825-8369. Please dial-in at least ten minutes before the scheduled start time. A live webcast and presentation can be accessed at www.Xura.com by following links to the events and presentations page under the Investors section. Following the call, a replay of the webcast will be archived in the same location.

Xura Performance and Adjusted EBITDA

Our Chief Executive Officer is our chief operating decision maker (or CODM). The CODM uses Xura performance, as defined below, as the primary basis for assessing the financial results of the company. Xura performance, as we define it in accordance with the Financial Accounting Standards Board's guidance relating to segment reporting, is not necessarily comparable to other similarly titled captions of other companies.

Xura performance is computed by management as loss from operations adjusted for the following: (i) stock-based compensation expense; (ii) amortization of intangible assets; (iii) compliance-related professional fees; (iv) compliance-related compensation and other expenses; (v) strategic-related costs (vi) write-off of property and equipment; (vii) certain litigation settlements and related costs; (viii) restructuring expenses; and (ix) certain other gains, losses and expenses. Strategic related costs include business strategy evaluation and mergers and acquisition efforts.

Adjusted EBITDA is computed by management by adding depreciation to Xura performance.

Presentation of Non-GAAP Financial Measures

We provide Xura performance, Adjusted EBITDA and Adjusted EBITDA per share, non-GAAP financial measures, as additional information for our operating results. These measures are not in accordance with, or alternatives for, GAAP financial measures and may be different from, or not comparable to similarly titled or other non-GAAP financial measures used by other companies. We believe that the presentation of these non-GAAP financial measures provide useful information to investors regarding certain additional financial and business trends relating to our results of operations as viewed by management in monitoring our businesses, reviewing financial results and for planning purposes. See "Consolidated Reconciliation of GAAP to Non-GAAP Financial Measures" below.

About Xura, Inc.

Xura empowers people to engage with each other, across services, and through devices as part of their digital lifestyle. We help service providers and enterprises deliver and monetize innovative digital experiences through an award-winning portfolio of software solutions, backed by expert services. Our solutions touch more than three billion people through 450 service providers and enterprises in 130+ countries. You can find us at www.Xura.com.

Forward-Looking Statements

This press release includes "forward-looking statements." Forward-looking statements include financial projections, statements of plans and objectives for future operations, statements of future economic performance, and statements of assumptions relating thereto. In some cases, forward-looking statements can be identified by the use of terminology such as "may," "expects," "plans," "anticipates," "estimates," "believes," "potential," "projects," "forecasts," "intends," or the negative thereof or other comparable terminology. By their very nature, forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance and the timing of events to differ materially from those anticipated, expressed or implied by the forward-looking statements in this press release. Such risks or uncertainties may give rise to future claims and increase exposure to contingent liabilities. These risks and uncertainties relate to (among other factors) the market price of our stock, operating expenses and cash flows, variability of our tax provision, and the additional risks described in the sections entitled "Forward-Looking Statements" and Item 1A, "Risk Factors" and elsewhere in the company's Annual Report on Form 10-K, its Quarterly Report on Form 10-Q for the quarter ended July 31, 2015, or in other subsequently filed periodic, current or other reports. We undertake no commitment to update or revise any forward-looking statements except as required by law.

These risks and uncertainties discussed above, as well as others, are discussed in greater detail in our filings with the SEC. The documents and reports we file with the SEC are available through us, or our website, www.Xura.com, or through the SEC's Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) at www.sec.gov.

XURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three Months Ended July 31, Six Months Ended July 31,
2015 2014 2015 2014
Revenue:
Product revenue $ 17,005 $ 20,062 $ 27,112 $ 37,072
Service revenue 44,624 54,926 80,222 102,998
Total revenue 61,629 74,988 107,334 140,070
Costs and expenses:
Product costs 12,715 18,808 25,668 28,703
Service costs 27,249 39,148 58,053 80,138
Research and development, net 8,235 9,813 16,515 18,172
Selling, general and administrative 19,686 23,059 39,559 48,619
Other operating expenses:
Restructuring expenses 4,238 1,171 7,646 3,043
Total other operating expenses 4,238 1,171 7,646 3,043
Total costs and expenses 72,123 91,999 147,441 178,675
Loss from operations (10,494) (17,011) (40,107) (38,605)
Interest income 89 100 173 215
Interest expense (167) (231) (360) (354)
Foreign currency transaction loss, net (4,202) (2,949) (9,775) (930)
Other income (expense), net 77 (413) 179 (465)
Loss before income tax benefit (expense) (14,697) (20,504) (49,890) (40,139)
Income tax benefit (expense) 2,534 (1,877) (2,253) (4,337)
Loss from continuing operations (12,163) (22,381) (52,143) (44,476)
Income from discontinued operations 175,060 5,515 188,379 11,479
Net income (loss) $ 162,897 $ (16,866) $ 136,236 $ (32,997)
Weighted average common shares outstanding:
Basic & diluted 22,005,116 22,401,902 21,936,379 22,348,835
Earnings (loss) per share - basic & diluted:
Continuing operations $ (0.55) $ (1.00) $ (2.38) $ (1.99)
Discontinued operations 7.95 0.25 8.59 0.51
$ 7.40 $ (0.75) $ 6.21 $ (1.48)
XURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
July 31, 2015 January 31, 2015
ASSETS
Current assets:
Cash and cash equivalents $ 346,074 $ 158,121
Restricted cash and bank deposits 55,584 35,802
Accounts receivable, net of allowance of $3,225 and $4,403, respectively 29,653 71,670
Inventories 14,296 17,817
Deferred cost of revenue 2,855 7,059
Deferred income taxes 14,298 13,781
Prepaid expenses 11,288 15,156
Other current assets 31,663 10,570
Total current assets 505,711 329,976
Property and equipment, net 38,496 49,230
Goodwill 67,622 151,217
Intangible assets, net 1,440 4,049
Deferred cost of revenue 19,303 30,437
Deferred income taxes 1,731 3,064
Long-term restricted cash 5,253 7,940
Other assets 16,406 30,439
Total assets $ 655,962 $ 606,352
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 145,151 $ 121,720
Deferred revenue 103,574 185,323
Deferred income taxes 1,593 1,491
Income taxes payable 2,166
Total current liabilities 250,318 310,700
Deferred revenue 62,313 89,999
Deferred income taxes 51,088 56,815
Other long-term liabilities 132,350 135,456
Total liabilities 496,069 592,970
Commitments and contingencies
Equity:
Common stock, $0.01 par value - authorized, 100,000,000 shares; issued 22,908,954 and 22,591,411 shares, respectively; outstanding, 21,993,027 and 21,830,081 shares, respectively 229 226
Preferred stock, $0.01 par value - authorized, 100,000 shares
Treasury stock, at cost, 915,927 and 761,330 shares, respectively (20,353) (17,211)
Accumulated earnings (deficit) 89,845 (46,390)
Additional paid in capital 52,065 45,935
Accumulated other comprehensive income 38,107 30,822
Total equity 159,893 13,382
Total liabilities and equity $ 655,962 $ 606,352
XURA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended July 31,
2015 2014
Cash flows from operating activities:
Net income (loss) $ 136,236 $ (32,997)
Non-cash operating items:
Depreciation and amortization 9,364 9,561
Gain on BSS Business sale (201,602)
Provision for doubtful accounts 331 331
Stock-based compensation expense 6,133 5,923
Deferred income taxes (4,850) 3,131
Inventory write-downs 1,303 1,108
Other non-cash items, net 420 446
Changes in assets and liabilities:
Accounts receivable 3,701 (16,392)
Inventories 1,417 (8,624)
Deferred cost of revenue 4,747 11,592
Prepaid expense and other current assets (32,838) (5,580)
Accounts payable and accrued expense 25,642 (16,195)
Income taxes (4,223) (1,053)
Deferred revenue (4,954) (5,750)
Tax contingencies 15,352 3,598
Other assets and liabilities (5,442) 1,517
Net cash used in operating activities (49,263) (49,384)
Cash flows from investing activities:
Purchases of property and equipment (7,982) (11,472)
Advance payment for acquisition of Solaiemes (2,678)
Net change in restricted cash and bank deposits (18,477) (4,027)
Proceeds from asset sales 110 46
Proceeds from BSS Business sale net of escrow withheld of $26 million 266,081
Net cash provided by (used in) investing activities 239,732 (18,131)
Cash flows from financing activities:
Payment for repurchase of common stock in connection with tax liabilities upon settlement of stock awards (532) (972)
Payment for repurchase of common stock under repurchase program (2,351) (3,573)
Proceeds from exercises of stock options 40
Net cash used in financing activities (2,883) (4,505)
Effects of exchange rates on cash and cash equivalents 367 (973)
Net increase (decrease) in cash and cash equivalents 187,953 (72,993)
Cash and cash equivalents, beginning of period 158,121 254,580
Cash and cash equivalents, end of period $ 346,074 $ 181,587
Non-cash investing transactions:
Accrued but unpaid purchases of property and equipment $ 785 $ 4,587
Inventory transfers to property and equipment $ 824 $ 1,673
XURA, INC. AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three Months Ended July 31, Six Months Ended July 31,
2015 2014 2015 2014
(Dollars in thousands)
Loss from operations $ (10,494) $ (17,011) $ (40,107) $ (38,605)
Expense adjustments:
Stock-based compensation expense 2,589 2,382 4,965 4,535
Amortization of intangible assets 86 172
Compliance-related professional fees 654 335 705 704
Compliance-related compensation and other expenses 229 237 (70)
Strategic related costs 1,875 1,100 3,769 2,390
Write-off of property and equipment 78 169 104 178
Certain litigation settlements and related costs 12 41 54 5
Restructuring expenses 4,201 1,171 7,609 3,043
Loss (gain) on sale of fixed assets 154 (14) 152 (19)
Other 305 (125) 600
Total expense adjustments 9,878 5,489 17,642 11,366
Xura Performance (616) (11,522) (22,465) (27,239)
Depreciation 3,339 3,261 6,706 6,422
Adjusted EBITDA 2,723 (8,261) (15,759) (20,817)
Adjusted EBITDA earnings (loss) per share - basic & diluted $ 0.12 $ (0.37) $ (0.72) $ (0.93)

CONTACT: Luke Todd - Xura, Inc (781) 213-2131 Luke.Todd@xura.com

Source:Xura, Inc.