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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 8, 2019  
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 8, 2019, Aerohive Networks, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter of 2019. In the press release, the Company also announced that it would be holding a conference call on May 8, 2019 to discuss its financial results for the first quarter of 2019 and outlook for its second quarter of fiscal year 2019. 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 8, 2019.


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 8, 2019



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
Aerohive Networks® Reports Q1 2019 Results
MILPITAS, CA — May 8, 2019 — Aerohive Networks (NYSE: HIVE), a leader in cloud-managed networking, today announced financial results for its first quarter ended March 31, 2019.
"Given our first quarter results, we have taken actions to improve execution and predictability going forward. Looking ahead, we are encouraged by our continued progression to a more SaaS-like business model, the Wi-Fi 6 (802.11ax) upgrade opportunity, and our success in the 2019 E-rate cycle," stated David Flynn, president and chief executive officer, Aerohive Networks.
First Quarter 2019 Financial Summary
Total revenue for the first quarter of fiscal year 2019 was $33.0 million, compared with $35.8 million for the first quarter of 2018. Subscription and support revenue was $12.5 million, or 38% of total revenue, for the first quarter of fiscal year 2019, compared with $10.7 million, or 30% of total revenue, for the first quarter of 2018.
On a GAAP basis, net loss was $8.7 million for the first quarter of fiscal year 2019, compared with a net loss of $7.3 million for the first quarter of 2018. GAAP gross margin was 61.7% for the first quarter of fiscal year 2019, compared with 66.2% for the first quarter of 2018.
On a non-GAAP basis, net loss was $4.8 million for the first quarter of fiscal year 2019, compared with a net loss of $3.5 million for the first quarter of 2018. Non-GAAP gross margin was 62.5% for the first quarter of fiscal year 2019, compared with 67.0% for the first quarter of 2018.
Second Quarter 2019 Business Outlook
For the second quarter of fiscal year 2019, the Company provides the following current business outlook:
Revenue of $37.5 million to $39.0 million
GAAP gross margin of 63.5% to 64.5%; Non-GAAP gross margin of 64% to 65%
GAAP operating margin of (11%) to (8%); Non-GAAP operating margin of (2%) to 1%
GAAP loss per share of ($0.07) to ($0.05) based on approximately 56.7 million shares; Non-GAAP loss per share between ($0.01) and profit of $0.01 using approximately 56.7 and 58.0 million shares for the loss and profit estimates respectively
Conference Call Information
Aerohive Networks will host a conference call and webcast for analysts and investors to discuss its first quarter 2019 results and outlook for its second quarter of fiscal year 2019 at 2:00 pm Pacific Time today, May 8, 2019. 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 Networks’ financial expectations and operating performance, including revenue, gross margin, operating margin and earnings per share, for our second fiscal quarter of fiscal year 2019, and expectations for continued momentum, including statements regarding the progress we are making to address challenges in our business, including sales execution issues, our expectation that we will continue to migrate our business and benefit from a Saas model, that we will benefit over the course of the year from an anticipated increase in education spending under the federal E-rate program, 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

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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, including specifically our family of 802.11ax products, risks associated with our growth, competitive pressures from existing and new 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, 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 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 results for its first quarter of fiscal year 2019 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.
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; and
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.
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.

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A reconciliation of non-GAAP guidance measures to corresponding GAAP guidance measures is not available on a forward-looking basis, including specifically with respect to our Second Quarter 2019 Business Outlook, due to the high variability and low visibility with respect to the charges that we may exclude from these non-GAAP measures.
New Accounting Standard
The Company adopted, effective January 1, 2019, ASC 842, the new accounting standard related to leases. The Company elected not to restate prior-period financial information.
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 https://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.

Investor Relations Contact:
The Blueshirt Group
Melanie Solomon
(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 data)

 
Three Months Ended March 31,
 
2019
 
2018
Revenue:
 
 
 
Product
$
20,486

 
$
25,066

Subscription and support
12,531

 
10,701

Total revenue
33,017

 
35,767

Cost of revenue (1):
 
 
 
Product
8,997

 
8,671

Subscription and support
3,641

 
3,404

Total cost of revenue
12,638

 
12,075

Gross profit
20,379

 
23,692

Operating expenses:
 
 
 
Research and development (1)
8,763

 
9,279

Sales and marketing (1)
14,497

 
15,670

General and administrative (1)
6,011

 
5,954

Total operating expenses
29,271

 
30,903

Operating loss
(8,892
)
 
(7,211
)
Interest income
496

 
289

Interest expense
(207
)
 
(164
)
Other income (expense), net
3

 
(173
)
Loss before income taxes
(8,600
)
 
(7,259
)
Provision for income taxes
52

 
58

Net loss
$
(8,652
)
 
$
(7,317
)
Net loss per share, basic and diluted
$
(0.15
)
 
$
(0.13
)
Weighted-average shares used in computing net loss per share, basic and diluted
56,029,568

 
54,332,767

 
 
 
 
(1) Includes stock-based compensation as follows:
 
 
 
Cost of revenue
$
226

 
$
246

Research and development
1,086

 
1,046

Sales and marketing
926

 
997

General and administrative
1,347

 
1,382

Total stock-based compensation
$
3,585

 
$
3,671

 
 
 
 



4



AEROHIVE NETWORKS, INC.
Condensed Consolidated Balance Sheets
(unaudited) (in thousands)
 
March 31,
 
December 31,
 
2019
 
2018
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
20,380

 
$
26,049

Short-term investments
61,218

 
66,052

Accounts receivable, net
18,804

 
16,185

Inventories
15,318

 
16,117

Prepaid expenses and other current assets
6,428

 
6,399

Total current assets
122,148

 
130,802

Property and equipment, net
5,328

 
5,947

Operating lease right-of-use assets
3,956

 

Goodwill
513

 
513

Other assets
4,287

 
4,255

Total assets
$
136,232

 
$
141,517

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable
$
12,240

 
$
16,129

Accrued liabilities
7,390

 
8,937

Operating lease liabilities, current
927

 

Debt, current

 
20,000

Deferred revenue, current
39,681

 
38,786

Total current liabilities
60,238

 
83,852

Debt, non-current
20,000

 

Deferred revenue, non-current
39,327

 
38,475

Operating lease liabilities, non-current
3,086

 

Other liabilities
1,234

 
1,582

Total liabilities
123,885

 
123,909

Stockholders’ equity:
 
 
 
Preferred stock

 

Common stock
56

 
56

Additional paid–in capital
297,273

 
293,910

Treasury stock
(10,584
)
 
(10,584
)
Accumulated other comprehensive income (loss)
14

 
(14
)
Accumulated deficit
(274,412
)
 
(265,760
)
Total stockholders’ equity
12,347

 
17,608

Total liabilities and stockholders’ equity
$
136,232

 
$
141,517

 
 
 
 

5



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

 
Three Months Ended March 31,
 
2019
 
2018
Cash flows from operating activities
 
 
 
Net loss
$
(8,652
)
 
$
(7,317
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
763

 
708

Stock-based compensation
3,585

 
3,671

Other
(318
)
 
(116
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(2,619
)
 
(1,812
)
Inventories
799

 
(63
)
Prepaid expenses and other current assets
(189
)
 
191

Operating lease right-of-use assets and other assets
339

 
(109
)
Accounts payable
(3,743
)
 
(56
)
Accrued liabilities and other current liabilities
(1,819
)
 
(792
)
Operating lease liabilities, non-current and other liabilities
(181
)
 
12

Deferred revenue
1,747

 
838

Net cash used in operating activities
(10,288
)
 
(4,845
)
Cash flows from investing activities
 
 
 
Purchases of property and equipment
(290
)
 
(1,185
)
Maturities of short-term investments
30,800

 
22,950

Purchases of short-term investments
(25,620
)
 
(21,587
)
Net cash provided by investing activities
4,890

 
178

Cash flows from financing activities
 
 
 
Proceeds from exercise of vested stock options and employee stock purchase plan
21

 
28

Payment for shares withheld for tax withholdings on vesting of restricted stock units
(243
)
 
(1,080
)
Payment on finance lease (capital lease prior to adoption of ASC 842)
(49
)
 
(46
)
Net cash used in financing activities
(271
)
 
(1,098
)
Net decrease in cash and cash equivalents
(5,669
)
 
(5,765
)
Cash and cash equivalents at beginning of period
26,049

 
27,249

Cash and cash equivalents at end of period
$
20,380

 
$
21,484

 
 
 
 


6



AEROHIVE NETWORKS, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited) (in thousands, except share and per share data)
 
 
Three Months Ended March 31,
 
 
2019
 
2018
 
 
 
 
 
 
 
 
Amount
Margin
 
Amount
Margin
Gross Profit and Gross Margin Reconciliations:
 
 
 
 
GAAP gross profit
 
$
20,379

61.7
 %
 
$
23,692

66.2
 %
Stock-based compensation
 
226

0.7
 %
 
246

0.7
 %
Amortization of internal-use software
 
35

0.1
 %
 
35

0.1
 %
Non-GAAP gross profit
 
$
20,640

62.5
 %
 
$
23,973

67.0
 %
 
 
 
 
 
 
 
Product Gross Profit and Product Gross Margin Reconciliations:
 
 
 
 
GAAP product gross margin
 
$
11,489

56.1
 %
 
$
16,395

65.4
 %
Stock-based compensation
 
29

0.1
 %
 
30

0.1
 %
Non-GAAP product gross margin
 
$
11,518

56.2
 %
 
$
16,425

65.5
 %
 
 
 
 
 
 
 
Subscription and Support Gross Profit and Subscription and Support Gross Margin Reconciliations:
 
 
 
 
GAAP subscription and support gross margin
 
$
8,890

70.9
 %
 
$
7,297

68.2
 %
Stock-based compensation
 
197

1.6
 %
 
216

2.0
 %
Amortization of internal-use software
 
35

0.3
 %
 
35

0.3
 %
Non-GAAP subscription and support gross margin
 
$
9,122

72.8
 %
 
$
7,548

70.5
 %
 
 
 
 
 
 
 
Operating Income (Loss) and Operating Margin Reconciliations:
 
 
 
 
GAAP operating loss
 
$
(8,892
)
(26.9
)%
 
$
(7,211
)
(20.2
)%
Stock-based compensation
 
3,585

10.9
 %
 
3,671

10.3
 %
Amortization of internal-use software
 
35

0.1
 %
 
35

0.1
 %
Charges related to securities litigation
 
195

0.6
 %
 
89

0.2
 %
Non-GAAP operating loss
 
$
(5,077
)
(15.4
)%
 
$
(3,416
)
(9.6
)%
 
 
 
 
 
 
 
 
 
Amount
Per share
 
Amount
Per share
Net Loss and Net Loss per Share Reconciliations:
 
 
 
 
GAAP net loss
 
$
(8,652
)
$
(0.15
)
 
$
(7,317
)
$
(0.13
)
Stock-based compensation
 
3,585

0.06

 
3,671

0.07

Amortization of internal-use software
 
35


 
35


Charges related to securities litigation
 
195


 
89


Non-GAAP net loss
 
$
(4,837
)
$
(0.09
)
 
$
(3,522
)
$
(0.06
)
 
 
 
 
 
 
 
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
 
56,029,568

 
 
54,332,767

 
 
 
 
 
 
 
 


7




AEROHIVE NETWORKS, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited) (in thousands, except share and per share data)
 
 
Three Months Ended March 31,
 
 
2019
 
2018
 
 
 
 
 
 
 
 
Amount
% of Revenue
 
Amount
% of Revenue
Operating and Functional Expenses and Expenses Percentages Reconciliations:
 
 
 
 
 
 
GAAP research and development
 
$
8,763

26.5
 %
 
$
9,279

25.9
 %
Stock-based compensation
 
(1,086
)
(3.3
)%
 
(1,046
)
(2.9
)%
Non-GAAP research and development
 
$
7,677

23.3
 %
 
$
8,233

23.0
 %
 
 
 
 
 
 
 
GAAP sales and marketing
 
$
14,497

43.9
 %
 
$
15,670

43.8
 %
Stock-based compensation
 
(926
)
(2.8
)%
 
(997
)
(2.8
)%
Non-GAAP sales and marketing
 
$
13,571

41.1
 %
 
$
14,673

41.0
 %
 
 
 
 
 
 
 
GAAP general and administrative
 
$
6,011

18.2
 %
 
$
5,954

16.6
 %
Stock-based compensation
 
(1,347
)
(4.1
)%
 
(1,382
)
(3.9
)%
Charges related to securities litigation
 
(195
)
(0.6
)%
 
(89
)
(0.2
)%
Non-GAAP general and administrative
 
$
4,469

13.5
 %
 
$
4,483

12.5
 %
 
 
 
 
 
 
 
GAAP operating expenses
 
$
29,271

88.7
 %
 
$
30,903

86.4
 %
Stock-based compensation
 
(3,359
)
(10.2
)%
 
(3,425
)
(9.6
)%
Charges related to securities litigation
 
(195
)
(0.6
)%
 
(89
)
(0.2
)%
Non-GAAP operating expenses
 
$
25,717

77.9
 %
 
$
27,389

76.6
 %
 
 
 
 
 
 
 












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