Press release

Aerohive Networks® Announces Preliminary First Quarter 2019 Financial Results

0
Sponsored by Businesswire

Aerohive Networks (NYSE: HIVE), a leader in cloud-managed networking,
today announced preliminary results for the first quarter ended March
31, 2019, based upon preliminary unaudited financial information.

Revenue for the first quarter is expected to be approximately $33
million, which is below the Company’s previously stated guidance of $36
million to $38 million provided on February 6, 2019.

The Company believes approximately half of the revenue shortfall to be
primarily due to sales execution issues in the United States, and the
other half to be primarily due to two mix shifts in the quarter:

  • An unexpected shift in unit product mix from mid- to lower-priced
    access points. Revenue on lower-priced access point business is more
    heavily weighted toward deferred subscription revenue. The Company
    believes this mix shift was an anomaly in the quarter and not an
    indication of a future trend, and Wi-Fi 6 (802.11ax) access point
    business in the quarter increased sequentially from 15% to 20% of
    total Wi-Fi business.
  • A faster-than-expected transition from licenses to multi-year
    subscriptions. While demonstrating increasing acceptance of Aerohive’s
    subscription-based cloud offering, it resulted in a greater portion of
    revenue being deferred.

These mix shifts resulted in the Company recognizing a higher portion of
shipment value as deferred revenue in the quarter. This generated record
deferred revenue balances, but also reduced in-quarter product revenue.

On a GAAP basis, the Company expects net loss per share for the first
quarter to be in the range of $0.15 to $0.16, compared with previously
stated guidance of a net loss of $0.08 to $0.10 per share. On a non-GAAP
basis, the Company expects net loss per share to be in the range of
$0.09 to $0.10, compared with previously stated guidance of a net loss
of $0.01 to $0.03 per share. The difference in the expected GAAP and
non-GAAP results is primarily stock-based compensation expense.

“While we are disappointed with sales execution in the US and are
implementing measures to improve in this region, we see clear signs that
the US education market is returning to growth and believe we are
well-positioned to benefit. The 2019 E-rate cycle resulted in a 55%
year-over-year increase in funding requests for Aerohive products and
over 10% market share of all funding requested for ‘wireless data
distribution,’ as reported by E-rate Profit Works. We expect E-rate
orders to begin to flow in the second quarter but primarily to
contribute to results in the second half of the year,” stated David
Flynn, president and chief executive officer, Aerohive Networks. “In the
second quarter we expect to see continued progress in our migration to a
more SaaS-like business model, as market demand is dictating more
cloud-based subscription services and this revenue line continues to
grow in the high teens year-over-year.”

During the first quarter of 2019, Aerohive achieved the following
milestones:

  • Continued year-over-year revenue growth in EMEA;
  • Subscription and support revenue showed approximately 17%
    year-over-year growth;
  • Deferred revenue balances grew by approximately 16% year-over-year;
  • The Company was cash generative over the 12-month period ended March
    31, 2019.

These preliminary, unaudited results are based on management’s initial
review of operations for the first quarter ended March 31, 2019 and
remain subject to completion of the Company’s customary quarterly
closing and review procedures.

There will not be a conference call in conjunction with this press
release.

First Quarter 2019 Conference Call to be held on May 8, 2019

Aerohive Networks will release full results for the first quarter 2019
in its regularly scheduled earnings release and conference call after
the U.S. markets close on Wednesday, May 8, 2019. The conference call
and live webcast for analysts and investors will take place at 2:00 p.m.
Pacific time (5:00 p.m. Eastern time) that day. The call may be accessed
by dialing 334-323-0509 and providing the passcode 7886738. A live and
archived audio webcast of the conference call will be accessible from
the “Investor Relations” section of the Company’s website at https://ir.aerohive.com/.

Safe Harbor Statement

This press release contains forward-looking statements, including
statements regarding Aerohive operating performance and preliminary
results for its first quarter of fiscal year 2019; the Company’s
expectations that it will be able to implement and benefit from improved
sales execution measures in its U.S. and other sales regions; the
Company’s expectation that it will continue to migrate its business and
benefit from a SaaS model; and that the Company will over the course of
the current fiscal year benefit from an anticipated increase in
education spending under the federal E-rate program.

These forward-looking statements are based on current expectations and
are subject to completion of the Company’s customary year-end and
quarterly closing and review procedures. The actual outcomes and results
may differ materially from those contemplated by these forward-looking
statements as a result of completion of these procedures. In addition,
forward-looking statements in this press release are based on current
expectations and are subject to inherent uncertainties, risks and
changes in circumstances that are difficult or impossible to predict.
The actual outcomes and results may differ materially from those
contemplated by these forward-looking statements as a result of these
uncertainties, risk and changes in circumstances, including, but not
limited to, risks and uncertainties related to: the Company’s ability to
grow its Dell-related business through OEM partnerships; the Company’s
ability to successfully sell new products and technologies, including a
strengthened solution based on a mature HiveManager NG product and a new
full-stack solution that adds SD-WAN to Access Switching and Wi-Fi
products and new AP form factor that will simplify enterprise Wi-Fi
deployments and topologies; the Company’s ability to capitalize on
changing industry trends, including capitalizing on the transition to
802.11ax as a frontrunner in delivering new 802.11ax access points; the
Company’s ability to expand its hospitality presence; the Company’s
ability to continue to attract, integrate, retain and train skilled
personnel, especially skilled R&D and sales personnel, in general and in
specific regions; the Company’s ability to develop and expand its
revenue opportunities and sales capacity and improve the effectiveness
of its channel; the Company’s ability to improve its operating and sales
execution, general demand for wireless networking in the industry
verticals the Company targets or demand for Aerohive products in
particular; unpredictable and changing market conditions and risks
associated with the deployment, performance and adoption of the
Company’s new products and services; competitive pressures from existing
and new companies, including pricing pressures; changes in the mix and
selling prices of the Company’s products; and general market, political,
regulatory, economic and business conditions in the United States and
internationally, as well as inherent uncertainties, risk and changes in
circumstances.

Additional risks and uncertainties that could affect Aerohive’s
financial and operating results are included under the captions “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” in the Company’s recent annual
report on Form 10-K and quarterly report on Form 10-Q. Aerohive’s SEC
filings are available on the Investor Relations section of the Company’s
website at https://ir.aerohive.com
and on the SEC’s website at www.sec.gov.
All forward-looking statements in this press release are based on
information available to the Company as of the date hereof, and Aerohive
Networks disclaims any obligation to update the forward-looking
statements provided to reflect events that occur or circumstances that
exist after the date on which they were made, except as required by law.

Non-GAAP Financial Measures

Aerohive’s preliminary results for its first quarter of fiscal year 2019
reported in this press release include non-GAAP net loss per share as a
financial measure.

The Company defines non-GAAP net loss per share to exclude share-based
compensation, adjustments to internal-use software amortization and
certain charges related to litigation.

The Company has included certain non-GAAP financial measures in this
press release because the Company believes they are key measures which
can be used to evaluate the business, measure performance, identify
trends affecting the business, formulate financial projections and make
strategic decisions. In particular, the exclusion of certain expenses in
calculating these non-GAAP financial measures can provide a useful
measure for period-to-period comparisons of the Company’s core business.

Although investors frequently use non-GAAP financial measures in their
evaluations of companies, these non-GAAP financial measures have
limitations in that they do not reflect all of the amounts associated
with the Company’s results of operations, as determined in accordance
with GAAP. Some of these limitations are:

  • the non-GAAP measures do not consider the expense related to
    stock-based compensation, which is an ongoing expense for the Company;
  • although amortization of internal-use software is a non-cash charge,
    the assets being amortized often will have to be replaced in the
    future, and the non-GAAP measures do not reflect any future cash
    requirement for such replacements;
  • excluding certain expenses associated with litigation in the quarter
    or fiscal year does not reflect the impact on our ongoing operations
    over these periods of the cash requirement to defend such or other
    litigation;
  • other companies, including companies in our industry, may not exclude
    these as non-GAAP financial measures or may include them but calculate
    them differently, which reduces their usefulness as a comparative
    measure.

Because of these and other limitations, you should consider non-GAAP
financial measures only together with other financial performance
measures, including various cash flow metrics, net loss and other GAAP
results.

About Aerohive Networks

Aerohive® uses Cloud Management, Machine Learning, and Artificial
Intelligence to radically simplify and secure the Access Network. Our
Cloud-Managed Wireless, Switching, Routing, and Security technologies
provide unrivalled flexibility in deployment, management, and licensing.
Credited with pioneering Controller-less Wi-Fi and Cloud Management,
Aerohive delivers continuous innovation at Cloud-speed that constantly
challenges the industry norm, allowing customers to rethink what’s
possible. Our innovations and global cloud footprint radically simplify
Access Network operation for 30,000+ customers and 10+ million daily
users. See how at http://www.aerohive.com/customers.

Aerohive was founded in 2006 and is headquartered in Milpitas, CA. For
more information, please visit www.aerohive.com,
call us at 408-510-6100, follow us on Twitter @Aerohive,
subscribe to our blog,
or become a fan on our Facebook
page
.

“Aerohive” and “Aerohive Networks” are registered trademarks of Aerohive
Networks, Inc. All product and company names used herein are trademarks
or registered trademarks of their respective owners. All rights reserved.