Ixia (XXIA, Financial) filed Quarterly Report for the period ended 2009-09-30.
Ixia is a leading provider of performance test systems for IP-based infrastructure and services. It is highly scalable solutions generate capture characterize and emulate network and application traffic establishing definitive performance and conformance metrics of network devices or systems under test. Its test systems are used by network and telephony equipment manufacturers semiconductor manufacturers service providers governments and enterprises to validate the functionality and reliability of complex IP networks devices and applications. Its Triple Play test systems address the growing need to test voice video and data services and network capability under real-world conditions. Its vision is to be the world's pre-eminent provider of solutions to enable testing of next generation IP Triple Play networks. Ixia has a market cap of $422.4 million; its shares were traded at around $6.76 with and P/S ratio of 2.4.
Revenues. In the third quarter of 2009, total revenues decreased 2.0% to $46.4 million from the $47.3 million recorded in the third quarter of 2008. As a result of our acquisition of Catapult in June 2009, the third quarter of 2009 included a full quarter of Catapult revenue of $7.5 million. Revenues from products decreased to $37.1 million in the third quarter of 2009 from $39.9 million in the same period in 2008. Excluding the Catapult product revenue of $5.5 million, the decrease of $8.3 million was primarily due to a $6.0 million decrease in shipments of our hardware products (primarily our Ethernet interface cards) and a $2.0 million decrease in shipments of our software products (primarily our IxLoad and IxChariot software products) in the third quarter of 2009 over the same period in 2008. Excluding the Catapult services revenues of $2.0 million, services revenues in the third quarter of 2009 were $7.3 million compared to $7.4 million in the third quarter of 2008.
In the first nine months of 2009, total revenues decreased 9.6% to $121.9 million from $134.9 million recorded in the same period of 2008. As a result of our acquisition of Catapult in June 2009, the first nine months of 2009 included $10.4 million of revenue related to Catapult. Revenues from products decreased to $97.6 million in the first nine months of 2009 from $113.6 million in the same period in 2008. Excluding the Catapult product revenue of $8.4 million, the decrease in product revenue was primarily due to a $20.7 million decrease in shipments of our hardware products (primarily our Ethernet interface cards) in the first nine months of 2009 over the same period in 2008 and by a $3.6 million decrease in shipments of our software products (primarily our IxLoad and IxChariot software products) in the first nine months of 2009 over the same period in 2008. Excluding the Catapult services revenues of $2.0 million, services revenues increased by $1.0 million in the first nine months of 2009 compared to the same period in 2008 primarily due to a net increase in the ratable recognition of our PCS arrangements and extended warranty contracts.
As a percentage of total revenues, our total cost of revenues increased to 23.4% in the first nine months of 2009 from 20.8% in the first nine months of 2008. As a result of our acquisition of Catapult in June 2009, the first nine months of 2009 included cost of goods sold attributable to Catapult of $2.4 million. Excluding the Catapult cost of product revenues of $2.0 million, our cost of product revenues decreased to $24.0 million in the first nine months of 2009 from $24.9 million in the same period of 2008 primarily due to the decrease in product revenues and lower compensation and related employee costs of $322,000, partially offset by higher inventory related charges for slow moving and excess inventory. Excluding the Catapult cost of services revenues of approximately $400,000, our cost of services revenues decreased to $2.2 million in the first nine months of 2009 from $3.2 million in the same period of 2008 primarily due to a decline in warranty repair costs and lower compensation and related employee costs of $241,000. The decrease in compensation and related employee costs in the first nine months of 2009 as compared to the same period of 2008 was primarily due to the elimination of bonuses in 2009.
For the first nine months of 2009, sales and marketing expenses decreased $1.2 million to $43.0 million from $44.2 million in the same period of 2008. As a result of our acquisition of Catapult in June 2009, the first nine months of 2009 included $3.9 million of Catapult sales and marketing costs. Excluding the incremental Catapult sales and marketing costs, the decrease of $5.1 million was primarily due to lower compensation and related employee costs, including travel, of $3.0 million, lower facilities and depreciation costs of $995,000 and lower external training and programs of $828,000. The decrease in compensation and related employee costs in the first nine months of 2009 as compared to the same period of 2008 was primarily due to lower commissions, the elimination of bonuses in 2009 and favorable foreign currency exchange rates, particularly in Great Britain, where the local currency weakened against the U.S. Dollar in the first nine months of 2009 as compared to the same period of 2008.
General and Administrative Expenses. In the third quarter of 2009, general and administrative expenses increased $833,000 to $7.4 million from the $6.5 million incurred in the third quarter of 2008. As a result of our acquisition of Catapult in June 2009, the third quarter of 2009 included a full quarter of Catapult general and administrative costs of $1.0 million. Excluding the incremental Catapult general and administrative costs, the decrease of $206,000 was primarily due to lower facilities and depreciation costs of $390,000 and lower compensation and related employee costs of $215,000. These decreases were partially offset by higher litigation related expenses of $425,000 in the third quarter of 2009 compared to the same period in 2008.
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Ixia is a leading provider of performance test systems for IP-based infrastructure and services. It is highly scalable solutions generate capture characterize and emulate network and application traffic establishing definitive performance and conformance metrics of network devices or systems under test. Its test systems are used by network and telephony equipment manufacturers semiconductor manufacturers service providers governments and enterprises to validate the functionality and reliability of complex IP networks devices and applications. Its Triple Play test systems address the growing need to test voice video and data services and network capability under real-world conditions. Its vision is to be the world's pre-eminent provider of solutions to enable testing of next generation IP Triple Play networks. Ixia has a market cap of $422.4 million; its shares were traded at around $6.76 with and P/S ratio of 2.4.
Highlight of Business Operations:
Sales to our largest customer, Cisco Systems, accounted for approximately $6.4 million, or 13.7%, and $20.3 million, or 16.7%, of our total revenues for the three and nine months ended September 30, 2009, respectively, and $9.2 million, or 19.5%, and $29.0 million, or 21.5%, of our total revenues for the three and nine months ended September 30, 2008, respectively. To date, we have sold the majority of our products to network equipment manufacturers. While we expect that we will continue to have customer concentration for the foreseeable future, we continue to sell our products to a wider variety and increasing number of customers. To the extent that we continue to develop a broader and more diverse customer base, our reliance on any one customer or customer type should diminish. From a geographic perspective, we generate a majority of our revenues from product shipments to customer locations within the United States. We generated revenues from product shipments to international locations of $19.1 million, or 41.3%, and $49.3 million, or 40.5%, of our total revenues for the three and nine months ended September 30, 2009, respectively, and $16.6 million, or 35.1%, and $47.4 million, or 35.2%, of our total revenues for the three and nine months ended September 30, 2008, respectively. We intend to continue increasing our sales efforts internationally with specific focus on Europe and the Asia Pacific regions. Looking forward, and given the recent acquisitions of Catapult and the N2X Business, we expect our international revenues to continue to grow on an annualized basis as a percentage of our total revenues.Revenues. In the third quarter of 2009, total revenues decreased 2.0% to $46.4 million from the $47.3 million recorded in the third quarter of 2008. As a result of our acquisition of Catapult in June 2009, the third quarter of 2009 included a full quarter of Catapult revenue of $7.5 million. Revenues from products decreased to $37.1 million in the third quarter of 2009 from $39.9 million in the same period in 2008. Excluding the Catapult product revenue of $5.5 million, the decrease of $8.3 million was primarily due to a $6.0 million decrease in shipments of our hardware products (primarily our Ethernet interface cards) and a $2.0 million decrease in shipments of our software products (primarily our IxLoad and IxChariot software products) in the third quarter of 2009 over the same period in 2008. Excluding the Catapult services revenues of $2.0 million, services revenues in the third quarter of 2009 were $7.3 million compared to $7.4 million in the third quarter of 2008.
In the first nine months of 2009, total revenues decreased 9.6% to $121.9 million from $134.9 million recorded in the same period of 2008. As a result of our acquisition of Catapult in June 2009, the first nine months of 2009 included $10.4 million of revenue related to Catapult. Revenues from products decreased to $97.6 million in the first nine months of 2009 from $113.6 million in the same period in 2008. Excluding the Catapult product revenue of $8.4 million, the decrease in product revenue was primarily due to a $20.7 million decrease in shipments of our hardware products (primarily our Ethernet interface cards) in the first nine months of 2009 over the same period in 2008 and by a $3.6 million decrease in shipments of our software products (primarily our IxLoad and IxChariot software products) in the first nine months of 2009 over the same period in 2008. Excluding the Catapult services revenues of $2.0 million, services revenues increased by $1.0 million in the first nine months of 2009 compared to the same period in 2008 primarily due to a net increase in the ratable recognition of our PCS arrangements and extended warranty contracts.
As a percentage of total revenues, our total cost of revenues increased to 23.4% in the first nine months of 2009 from 20.8% in the first nine months of 2008. As a result of our acquisition of Catapult in June 2009, the first nine months of 2009 included cost of goods sold attributable to Catapult of $2.4 million. Excluding the Catapult cost of product revenues of $2.0 million, our cost of product revenues decreased to $24.0 million in the first nine months of 2009 from $24.9 million in the same period of 2008 primarily due to the decrease in product revenues and lower compensation and related employee costs of $322,000, partially offset by higher inventory related charges for slow moving and excess inventory. Excluding the Catapult cost of services revenues of approximately $400,000, our cost of services revenues decreased to $2.2 million in the first nine months of 2009 from $3.2 million in the same period of 2008 primarily due to a decline in warranty repair costs and lower compensation and related employee costs of $241,000. The decrease in compensation and related employee costs in the first nine months of 2009 as compared to the same period of 2008 was primarily due to the elimination of bonuses in 2009.
For the first nine months of 2009, sales and marketing expenses decreased $1.2 million to $43.0 million from $44.2 million in the same period of 2008. As a result of our acquisition of Catapult in June 2009, the first nine months of 2009 included $3.9 million of Catapult sales and marketing costs. Excluding the incremental Catapult sales and marketing costs, the decrease of $5.1 million was primarily due to lower compensation and related employee costs, including travel, of $3.0 million, lower facilities and depreciation costs of $995,000 and lower external training and programs of $828,000. The decrease in compensation and related employee costs in the first nine months of 2009 as compared to the same period of 2008 was primarily due to lower commissions, the elimination of bonuses in 2009 and favorable foreign currency exchange rates, particularly in Great Britain, where the local currency weakened against the U.S. Dollar in the first nine months of 2009 as compared to the same period of 2008.
General and Administrative Expenses. In the third quarter of 2009, general and administrative expenses increased $833,000 to $7.4 million from the $6.5 million incurred in the third quarter of 2008. As a result of our acquisition of Catapult in June 2009, the third quarter of 2009 included a full quarter of Catapult general and administrative costs of $1.0 million. Excluding the incremental Catapult general and administrative costs, the decrease of $206,000 was primarily due to lower facilities and depreciation costs of $390,000 and lower compensation and related employee costs of $215,000. These decreases were partially offset by higher litigation related expenses of $425,000 in the third quarter of 2009 compared to the same period in 2008.
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