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Section 1: 8-K (8-K)

Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
 
 
 
 
 
 
 
Form 8-K
 
 
 
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 2, 2018  
Aerohive Networks, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-36355
 
20-4524700
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
1011 McCarthy Boulevard
Milpitas, California 95035
(Address of Principal Executive Offices including Zip Code)
(408) 510-6100
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report) 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☒





Item 2.02
Results of Operations and Financial Condition.
On May 2, 2018, Aerohive Networks, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter of 2018. In the press release, the Company also announced that it would be holding a conference call on May 2, 2018 to discuss its financial results for the first quarter of 2018 and outlook for its second quarter of fiscal year 2018. A copy of the press release is furnished as Exhibit 99.1 to this report.
This information furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition,” including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01
Financial Statements and Exhibits.
 
(d)
Exhibits.
 
 
 
Exhibit No.
  
Description
 
 
99.1

  
Press release issued by Aerohive Networks, Inc. dated May 2, 2018.

EXHIBIT INDEX
 
 
 
 
Exhibit No.
  
Description
 
 
  

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
AEROHIVE NETWORKS, INC.
 
 
 
 
 
 
By:
 
/s/ Steve Debenham
 
 
 
 
Steve Debenham
 
 
 
 
Vice President, General Counsel & Secretary
 
Date: May 2, 2018



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
Aerohive Networks Reports Q1 2018 Results at the High End of Guidance
MILPITAS, CA — May 2, 2018 — Aerohive NetworksTM (NYSE: HIVE), a Cloud Networking Leader, today announced financial results for its first quarter ended March 31, 2018.

“Our first quarter results, at the high end of our guidance, demonstrate the improvements in our product offering, sales execution and enterprise business contribution, and provide a strong foundation for the rest of the year,” stated David Flynn, President and Chief Executive Officer. “We are committed to delivering innovative solutions and look forward to continuing to ramp our new products throughout 2018.”
Financial Summary
Total revenue for the first quarter of fiscal year 2018 was $35.8 million, compared with $36.3 million for the first quarter of 2017. Subscription and support revenue was $10.7 million, or 30% of total revenue for the first quarter of 2018, compared with $9.4 million, or 26% of total revenue, for the first quarter of 2017.
On a GAAP basis, net loss was $7.3 million for the first quarter of fiscal year 2018, compared with a net loss of $9.1 million for the first quarter of 2017. GAAP gross margin was 66.2% for the first quarter of fiscal year 2018, compared with 67.0% for the first quarter of 2017.
On a non-GAAP basis, net loss was $3.5 million for the first quarter of fiscal year 2018, compared with a net loss of $4.2 million for the first quarter of 2017. Non-GAAP gross margin was 67% for the first quarter of fiscal year 2018, compared with 68% for the first quarter of 2017.
New Accounting Standard
The Company adopted ASC 606, the new accounting standard related to revenue recognition effective January 1, 2018. The Company has adjusted prior-period information to reflect the adoption of this new standard.
Conference Call Information
Aerohive Networks will host a conference call and webcast for analysts and investors to discuss its first quarter 2018 results and outlook for its second quarter of fiscal year 2018 at 2:00 pm Pacific Time today, May 2, 2018. The call may be accessed by dialing 719-457-2642 and providing the passcode 1935059. A live and archived audio webcast of the conference call will be accessible from the “Investor Relations” section of the Company’s website at http://ir.aerohive.com.


Safe Harbor Statement
This press release contains forward-looking statements, including statements regarding Aerohive Networks’ financial expectations and operating performance and expectations for continued momentum, including statements regarding the progress we are making to address challenges in our business, including sales execution issues, our ability to deliver innovative solutions as a full-stack cloud networking company, and our ability to strengthen our financial position. These forward-looking statements 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: our ability to continue to attract, integrate, retain and train skilled personnel, especially skilled R&D and sales personnel, in general and in specific regions, our ability to develop and expand our revenue opportunities and sales capacity and improve the effectiveness of our channel, our ability to resolve challenges related to sales execution and improve our operating and sales execution, general demand for wireless networking in the industry verticals we target or demand for Aerohive® products in particular, our ability to benefit from our participation in the E-Rate program, unpredictable and changing market conditions, risks associated with the deployment, performance and adoption of our new products and services, risks associated with our growth, competitive pressures from existing and new

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companies, including pricing pressures, changes in the mix and selling prices of Aerohive products, technological change, product development delays, reliance on third parties to manufacture, warehouse and timely deliver Aerohive products, our inability to protect Aerohive intellectual property or to predict or limit exposure to third-party claims relating to its or Aerohive’s intellectual property, Aerohive’s limited operating history, particularly as a public company, uses of Aerohive’s capital and general market, political, regulatory, economic and business conditions in the United States and internationally.
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 http://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 results for its first quarter of fiscal year 2018 reported in this press release and the related earnings conference call include certain non-GAAP financial measures, including:

non-GAAP gross profit and non-GAAP gross margin;
non-GAAP product gross profit and non-GAAP product gross margin;
non-GAAP subscription and support gross profit and non-GAAP subscription and support gross margin;
non-GAAP operating income (loss) and non-GAAP operating margin;
non-GAAP net income (loss) and non-GAAP net income (loss) per share;
non-GAAP operating expenses and non-GAAP functional expenses; and
non-GAAP operating expense percentage and non-GAAP functional expense percentage.

The Company defines non-GAAP financial measures to exclude share-based compensation, adjustments to internal-use software amortization, and certain charges related to litigation and restructuring.
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:


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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 non-GAAP net income (loss) and non-GAAP income (loss) per share do not reflect any 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 this period of the cash requirement to defend such or other litigation;
excluding restructuring charges in the quarter or fiscal year does not reflect the cash requirement relating to the costs associated with restructuring and primarily relates to employee termination costs and benefits; and
other companies, including companies in our industry, may calculate these non-GAAP financial measures 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.

We have provided a description of these non-GAAP financial measures and a reconciliation of the Company’s historical non-GAAP financial measures to their most directly comparable GAAP measures in the financial statement tables included in this press release, and we encourage investors to review the reconciliation.
A reconciliation of non-GAAP guidance measures to corresponding GAAP guidance measures is not available on a forward-looking basis due to the high variability and low visibility with respect to the charges that we exclude from these non-GAAP measures.
About Aerohive Networks
Aerohive (NYSE: HIVE) enables our customers to simply and confidently connect to the information, applications, and insights they need to thrive. Our simple, scalable, and secure platform delivers mobility without limitations. For our customers worldwide, every access point is a starting point. 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” is a registered trademark and “Aerohive Networks” a trademark of Aerohive Networks, Inc. All product and company names used herein are trademarks or registered trademarks of their respective owners. All rights reserved.

Investor Relations Contact:
Melanie Solomon
The Blueshirt Group
(408) 769-6720
ir@aerohive.com

















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AEROHIVE NETWORKS, INC.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except share and per share amounts)

 
Three Months Ended March 31,
 
2018
 
2017
 
 
 
(As Adjusted*)
Revenue:
 
 
 
Product
$
25,066

 
$
26,967

Subscription and support
10,701

 
9,362

Total revenue
35,767

 
36,329

Cost of revenue (1):
 
 
 
Product
8,671

 
8,815

Subscription and support
3,404

 
3,176

Total cost of revenue
12,075

 
11,991

Gross profit
23,692

 
24,338

Operating expenses:
 
 
 
Research and development (1)
9,279

 
9,550

Sales and marketing (1)
15,670

 
17,437

General and administrative (1)
5,954

 
6,297

Total operating expenses
30,903

 
33,284

Operating loss
(7,211
)
 
(8,946
)
Interest income
289

 
140

Interest expense
(164
)
 
(130
)
Other expense, net
(173
)
 
(85
)
Loss before income taxes
(7,259
)
 
(9,021
)
Provision for income taxes
58

 
97

Net loss
$
(7,317
)
 
$
(9,118
)
Net loss per share, basic and diluted
$
(0.13
)
 
$
(0.17
)
Weighted-average shares used in computing net loss per share, basic and diluted
54,332,767

 
52,439,039

 
 
 
 
(1) Includes stock-based compensation as follows:
 
 
 
Cost of revenue
$
246

 
$
271

Research and development
1,046

 
688

Sales and marketing
997

 
1,294

General and administrative
1,382

 
1,300

Total stock-based compensation
$
3,671

 
$
3,553



* The Company has adjusted certain amounts for the retrospective change in accounting policy for revenue recognition.


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AEROHIVE NETWORKS, INC.
Condensed Consolidated Balance Sheets
(unaudited, in thousands, except share and per share amounts)
 
March 31,
 
December 31,
 
2018
 
2017
 
 
 
(As Adjusted*)
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
21,484

 
$
27,249

Short-term investments
56,388

 
57,675

Accounts receivable, net
19,474

 
17,662

Inventories
13,558

 
13,495

Prepaid expenses and other current assets
6,205

 
6,396

Total current assets
117,109

 
122,477

Property and equipment, net
6,988

 
6,381

Goodwill
513

 
513

Other assets
5,009

 
4,900

Total assets
$
129,619

 
$
134,271

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable
$
12,020

 
$
11,946

Accrued liabilities
7,811

 
8,602

Debt, current
20,000

 

Deferred revenue, current
33,885

 
33,279

Total current liabilities
73,716

 
53,827

Debt, non-current

 
20,000

Deferred revenue, non-current
33,993

 
33,761

Other liabilities
1,734

 
1,769

Total liabilities
109,443

 
109,357

Stockholders’ equity:
 
 
 
Preferred stock

 

Common stock
55

 
55

Additional paid–in capital
281,146

 
278,528

Treasury stock
(6,216
)
 
(6,216
)
Accumulated other comprehensive loss
(69
)
 
(30
)
Accumulated deficit
(254,740
)
 
(247,423
)
Total stockholders’ equity
20,176

 
24,914

Total liabilities and stockholders’ equity
$
129,619

 
$
134,271


* The Company has adjusted certain amounts for the retrospective change in accounting policy for revenue recognition.


5



AEROHIVE NETWORKS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)

 
Three Months Ended March 31,
 
2018
 
2017
 
 
 
(As Adjusted*)
Cash flows from operating activities
 
 
 
Net loss
$
(7,317
)
 
$
(9,118
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
708

 
842

Stock-based compensation
3,671

 
3,553

Other
(116
)
 
(15
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(1,812
)
 
4,562

Inventories
(63
)
 
961

Prepaid expenses and other current assets
191

 
(562
)
Other assets
(109
)
 
(57
)
Accounts payable
(56
)
 
(885
)
Accrued liabilities
(792
)
 
144

Other liabilities
12

 
(6
)
Deferred revenue
838

 
(975
)
Net cash used in operating activities
(4,845
)
 
(1,556
)
Cash flows from investing activities
 
 
 
Purchases of property and equipment
(1,185
)
 
(223
)
Maturities of short-term investments
22,950

 
4,200

Purchases of short-term investments
(21,587
)
 
(7,709
)
Net cash provided by (used in) investing activities
178

 
(3,732
)
Cash flows from financing activities
 
 
 
Proceeds from exercise of vested stock options and employee stock purchase plan
28

 
218

Payment for shares withheld for tax withholdings on vesting of restricted stock units
(1,080
)
 
(326
)
Payment on capital lease obligations
(46
)
 
(43
)
Net cash used in financing activities
(1,098
)
 
(151
)
Net decrease in cash and cash equivalents
(5,765
)
 
(5,439
)
Cash and cash equivalents at beginning of period
27,249

 
34,346

Cash and cash equivalents at end of period
$
21,484

 
$
28,907


* The Company has adjusted certain amounts for the retrospective change in accounting policy for revenue recognition.



6



AEROHIVE NETWORKS, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share amounts)
 
 
Three Months Ended March 31,
 
 
2018
 
2017
 
 
 
 
 
(As Adjusted*)
 
 
Amount
Margin
 
Amount
Margin
Gross Profit and Gross Margin Reconciliations:
 
 
 
 
 
 
GAAP gross profit
 
$
23,692

66.2
 %
 
$
24,338

67.0
 %
Stock-based compensation
 
246

0.7
 %
 
271

0.8
 %
Amortization of internal-use software
 
35

0.1
 %
 
35

0.1
 %
Restructuring charges
 

 %
 
51

0.1
 %
Non-GAAP gross profit
 
$
23,973

67.0
 %
 
$
24,695

68.0
 %
 
 
 
 
 
 
 
Product Gross Profit and Product Gross Margin Reconciliations:
 
 
 
 
 
 
GAAP product gross margin
 
$
16,395

65.4
 %
 
$
18,152

67.3
 %
Stock-based compensation
 
30

0.1
 %
 
51

0.2
 %
Restructuring charges
 

 %
 
51

0.2
 %
Non-GAAP product gross margin
 
$
16,425

65.5
 %
 
$
18,254

67.7
 %
 
 
 
 
 
 
 
Subscription and Support Gross Profit and Subscription and Support Gross Margin Reconciliations:
 
 
 
 
 
 
GAAP subscription and support gross margin
 
$
7,297

68.2
 %
 
$
6,186

66.1
 %
Stock-based compensation
 
216

2.0
 %
 
220

2.3
 %
Amortization of internal-use software
 
35

0.3
 %
 
35

0.4
 %
Non-GAAP software subscription and support gross margin
 
$
7,548

70.5
 %
 
$
6,441

68.8
 %
 
 
 
 
 
 
 
Operating Loss and Operating Margin Reconciliations:
 
 
 
 
 
 
GAAP operating loss
 
$
(7,211
)
(20.2
)%
 
$
(8,946
)
(24.6
)%
Stock-based compensation
 
3,671

10.3
 %
 
3,553

9.8
 %
Restructuring charges
 

 %
 
1,327

3.6
 %
Charges related to securities litigation
 
89

0.2
 %
 

 %
Amortization of internal-use software
 
35

0.1
 %
 
35

0.1
 %
Non-GAAP operating loss
 
$
(3,416
)
(9.6
)%
 
$
(4,031
)
(11.1
)%
 
 
 
 
 
 
 
Net Loss and Net Loss per Share Reconciliations:
 
 
 
 
 
 
GAAP net loss
 
$
(7,317
)
$
(0.13
)
 
$
(9,118
)
$
(0.17
)
Stock-based compensation
 
3,671

0.07

 
3,553

0.07

Amortization of internal-use software
 
35

0.00
 
35

0.00
Restructuring charges
 


 
1,327

0.02

Charges related to securities litigation
 
89

0.00
 


Non-GAAP net loss, basic and diluted
 
$
(3,522
)
$
(0.06
)
 
$
(4,203
)
$
(0.08
)
 
 
 
 
 
 
 
Shares Used in Computing non-GAAP Basic and Diluted Net Loss per Share
 
 
 
 
 
 
Weighted average shares used in computing net loss per share, basic and diluted
 
54,332,767
 
 
52,439,039
 
 
 
 
 
 
 
 
* The Company has adjusted certain amounts for the retrospective change in accounting policy for revenue recognition.

7



AEROHIVE NETWORKS, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share amounts)
 
 
Three Months Ended March 31,
 
 
2018
 
2017
 
 
 
 
 
(As Adjusted*)
 
 
Amount
% of Revenue
 
Amount
% of Revenue
 
 
 
 
 
 
 
Operating and Functional Expenses and Expenses Percentage Reconciliation
 
 
 
 
 
 
GAAP research and development
 
$
9,279

25.9
%
 
$
9,550

26.3
%
Stock-based compensation
 
1,046

2.9
%
 
688

1.9
%
Restructuring charges
 

%
 
838

2.3
%
Non-GAAP research and development
 
$
8,233

23.0
%
 
$
8,024

22.1
%
 
 
 
 
 
 
 
GAAP sales and marketing
 
$
15,670

43.8
%
 
$
17,437

48.0
%
Stock-based compensation
 
997

2.8
%
 
1,294

3.5
%
Restructuring charges
 

%
 
243

0.7
%
Non-GAAP sales and marketing
 
$
14,673

41.0
%
 
$
15,900

43.8
%
 
 
 
 
 
 
 
GAAP general and administrative
 
$
5,954

16.6
%
 
$
6,297

17.3
%
Stock-based compensation
 
1,382

3.9
%
 
1,300

3.6
%
Restructuring charges
 

%
 
195

0.5
%
Charges related to securities litigation
 
89

0.2
%
 

%
Non-GAAP general and administrative
 
$
4,483

12.5
%
 
$
4,802

13.2
%
 
 
 
 
 
 
 
GAAP operating expenses
 
$
30,903

86.4
%
 
$
33,284

91.6
%
Stock-based compensation
 
3,425

9.6
%
 
3,282

9.0
%
Restructuring charges
 

%
 
1,276

3.5
%
Charges related to securities litigation
 
89

0.2
%
 

%
Non-GAAP operating expenses
 
$
27,389

76.6
%
 
$
28,726

79.1
%
 
 
 
 
 
 
 
* The Company has adjusted certain amounts for the retrospective change in accounting policy for revenue recognition.



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