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Press release from Business Wire

Acme Packet Reports Record Revenue and Earnings in First Quarter of 2011

<p class='bwalignc'> <i><b>– First Quarter Revenues of $74.0 million, up 45% Year-Over-Year and 5% Sequentially –</b></i> </p> <p class='bwalignc'> <i><b>– First Quarter GAAP EPS of $0.19 and Non-GAAP</b></i><sup><i><b>1</b></i></sup><i><b> EPS of $0.27 –</b></i> </p> <p class='bwalignc'> <i><b>– Company Raises 2011 Revenue and Non-GAAP EPS</b></i><sup><i><b>1</b></i></sup><i><b> Estimates –</b></i> </p>

Tuesday, April 26, 2011

Acme Packet Reports Record Revenue and Earnings in First Quarter of 201116:05 EDT Tuesday, April 26, 2011 BEDFORD, Mass. (Business Wire) -- Acme Packet, Inc. (NASDAQ: APKT), the leader in session delivery network solutions, today announced record results for the quarter ended March 31, 2011 and raised its business outlook for 2011. All earnings per share results are on a fully diluted basis unless otherwise noted. Results for the First Quarter of 2011 Total revenue in the first quarter of 2011 was $74.0 million, compared to $51.1 million in the first quarter of 2010 and $70.2 million in the fourth quarter of last year. Net income in the first quarter of 2011 was $13.7 million, or $0.19 per share, compared to $8.3 million, or $0.13 per share, in the first quarter of 2010 and $14.5 million, or $0.21 per share, in the fourth quarter of last year. Net income on a non-GAAP1 basis in the first quarter of 2011 was $18.9 million, or $0.27 per share, compared to $10.7 million, or $0.16 per share in the first quarter of last year, and $18.1 million, or $0.26 per share, in the fourth quarter of last year. Company Raises Business Outlook for 2011 The Company today raised its business outlook for 2011. The Company's outlook is based on the current indications for its business, which may change at any time.         Business Outlook for Year Ending December 31, 2011Estimate Issued February 1, 2011     IssuedApril 26, 2011 Total revenue (in millions) Approximately $300     $310-$315 Total revenue growth rate Approximately 30% Approximately 35% GAAP diluted EPS Approximately $0.76 $0.77-$0.82 Total GAAP diluted EPS growth rate Approximately 20% Approximately 27% Non-GAAP1 diluted EPS Approximately $1.05 $1.10-$1.15 Total non-GAAP1 diluted EPS growth rate Approximately 30% Approximately 40% Diluted share count (in millions)       71.0     71.5 The Company expects net income on a non-GAAP1 basis to differ from net income on a GAAP basis in 2011 as it is expected to exclude estimated stock-based compensation expense and related payroll taxes, net of tax, of approximately $22.0 million, or $0.31 per share, amortization of acquired intangible assets, net of tax, of approximately $1.2 million, or $0.02 per share, and merger and integration-related costs of $0.2 million, or $0.00 per share. A reconciliation of the Company's expected GAAP to non-GAAP1 business outlook, and a statement as to the use of non-GAAP1 financial measures, is included at the end of this press release. Company to Host Live Conference Call and Webcast The Company's management team plans to host a live conference call and webcast at 4:30 p.m. eastern time today to discuss the financial results as well as management's outlook for the business. The conference call may be accessed in the United States by dialing 1.800.230.1766 and using access code “APKT”. The conference call may be accessed outside of the United States by dialing +1.612.332.0226 and using access code “APKT”. The conference call will be simultaneously webcast on the Company's investor relations website, which can be accessed at www.ir.acmepacket.com. A replay of the conference call will be available approximately two hours after the call by dialing 1.800.475.6701 and using access code 198306 or by accessing the webcast replay on the Company's investor relations website. __________________1A reconciliation of GAAP to non-GAAP results, and a statement on the use of non-GAAP financial measures, is included at the end of this press release. About Acme Packet Acme Packet (NASDAQ: APKT), the leader in session delivery network solutions, enables the trusted, first-class delivery of next-generation voice, data and unified communications services and applications across IP networks. Our Net-Net product family fulfills demanding security, service assurance and regulatory requirements in service provider, enterprise and contact center networks. Based in Bedford, Massachusetts, Acme Packet designs and manufactures its products in the USA, selling them through over 140 reseller partners worldwide. More than 1,350 customers in 105 countries have deployed over 12,000 Acme Packet systems, including 90 of the top 100 service providers and 32 of the Fortune 100. For more information visit www.acmepacket.com. Acme Packet, Inc. Safe Harbor Statement Statements contained herein that are not historical fact (including those in the section “Company Raises Business Outlook for 2011”) may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may relate to, among other things, expected financial and operating results, expected growth rates, future stock-based compensation and amortization expenses, future business prospects and market conditions. Such forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated. These include, but are not limited to: the amount of stock-based compensation awarded; the applicable Company stock price used to determine stock-based compensation; the exercise pattern of employee stock options; difficulties expanding the Company's customer base; difficulties leveraging market opportunities; difficulties providing solutions that meet the needs of customers; poor product sales; long sales cycles; difficulties developing new products; difficulties in relationships with vendors and partners; higher risks in international operations; difficulties managing rapid growth; difficulties managing the Company's financial performance; the ability to hire and retain employees and appropriately staff operations; the Company's cash needs; the impact of new accounting pronouncements and increased competition. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in the Company's recent filings with the Securities and Exchange Commission, including those factors discussed under the caption “Risk Factors” in such filings.       Acme Packet, Inc.Condensed Consolidated Statements of Income(in thousands, except share and per share data)(unaudited)   Three Months Ended March 31,   2011       2010   Revenue:     Product $59,742 $ 42,093 Maintenance, support and service   14,225   8,957   Total revenue   73,967   51,050     Cost of revenue (a) (b): Product 9,945 7,549 Maintenance, support and service   3,006   2,268   Total cost of revenue   12,951   9,817     Gross profit   61,016   41,233     Operating expenses (a) (b): Sales and marketing 23,703 16,427 Research and development 11,294 8,693 General and administrative 4,577 3,284 Merger and integration-related costs   180   -   Total operating expenses   39,754   28,404     Income from operations 21,262 12,829   Other income (expense), net   102   (11)   Income before provision for income taxes 21,364 12,818   Provision for income taxes   7,655   4,485     Net income $13,709$8,333     Net income per share: Basic $0.21 $ 0.14 Diluted $0.19 $ 0.13   Weighted average number of common shares used in  the calculation of net income per share: Basic 65,076,303 59,821,379 Diluted 70,476,973 64,982,898               (a) Amounts include stock-based compensation expense, as follows: Cost of product revenue $224 $ 168 Cost of maintenance, support and service revenue 395 228 Sales and marketing 3,298 1,556 Research and development 1,971 1,148 General and administrative 898 421   (b) Amounts include amortization of acquired intangible assets, as follows: Cost of product revenue 371 379 Sales and marketing 46 30 Research and development 12 26     Acme Packet, Inc.Statement on Use of Non-GAAP Financial Measures andReconciliation of Non-GAAP Net Income and Non-GAAP Net Income Per Share(in thousands, except per share data)(unaudited)Statement on Use of Non-GAAP Financial Measures: The Company uses the financial measures “non-GAAP net income”, “net income on a non-GAAP basis”, “non-GAAP net income per share” and “net income per share on a non-GAAP basis” to supplement its condensed consolidated financial statements, which are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). The presentation of “non-GAAP net income”, “net income on a non-GAAP basis”, “non-GAAP net income per share” and “net income per share on a non-GAAP basis” is not meant to be a substitute for “net income” or “net income per share”, presented in accordance with GAAP, but rather should be evaluated in conjunction with net income and net income per share. The Company's management believes that the presentation of “non-GAAP net income”, “net income on a non-GAAP basis”, “non-GAAP net income per share” and “net income per share on a non-GAAP basis” provides useful information to investors because these financial measures exclude stock-based compensation expense which is a non-cash charge and related payroll taxes, as well as amortization of acquired intangible assets and merger and integration-related costs associated with the Company's acquisition activities. By excluding stock-based compensation expense and related payroll taxes, amortization of acquired intangible assets, and merger and integration-related costs, management can compare the Company's operations to prior periods and to the operations of other companies in its industry who may have materially different unusual charges. Management does not consider any of stock-based compensation expense and related payroll taxes, amortization of acquired intangible assets, and merger and integration-related costs to be part of the Company's operating activities or meaningful in evaluating the Company's past financial performance or future prospects. Management believes that excluding these items is useful to investors because it is more representative of ongoing costs and therefore more comparable to historical operations. Non-GAAP net income and non-GAAP net income per share are primary financial indicators that the Company's management uses to evaluate the Company's financial results and forecast anticipated financial results for future periods. Management also uses these non-GAAP measures to make financial and operational decisions as these numbers exclude non-operational activities. These non-GAAP measures should not be considered measures of the Company's liquidity. The Company's definition of non-GAAP net income and non-GAAP net income per share may differ from similar measures used by other companies and may differ from period to period. Management may make other adjustments for expenses and gains that it does not consider reflective of core operating performance in a particular period and may modify non-GAAP net income and non-GAAP net income per share by excluding these expenses and gains. Reconciliation of Non-GAAP Net Income and Diluted Non-GAAP Net Income Per Share for the Three Months Ended March 31, 2011, December 31, 2010 and March 31, 2010 (unaudited):       Three Months EndedMarch 31, 2011       December 31, 2010       March 31, 2010 Reconciliation of non-GAAP net income:             Net income $13,709 $ 14,510 $ 8,333 Adjustments: Stock-based compensation expense and related payroll taxes, net of taxes 4,777 3,098 2,097 Amortization of acquired intangible assets, net of taxes 273 292 283 Merger and integration-related costs   180   223   - Non-GAAP net income $18,939$18,123$10,713   Reconciliation of diluted non-GAAP net income per share: Net income per share $0.19 $ 0.21 $ 0.13 Adjustments: Stock-based compensation expense, and related payroll taxes, net of taxes 0.08 0.05 0.03 Amortization of acquired intangible assets, net of taxes - - - Merger and integration-related costs   -   -   - Non-GAAP net income per share $0.27$0.26$0.16     Reconciliation of Expected Non-GAAP Net Income and Diluted Non-GAAP Net Income Per Share for the Year Ending December 31, 2011 (Unaudited):           Twelve Months Ending December 31, 2011Low     High   Revenue$310,000$315,000   Reconciliation of non-GAAP net income: Net income $55,400$59,000 Adjustments: Stock-based compensation expense and related payroll taxes, net of taxes 22,00022,000 Amortization of acquired intangible assets, net of taxes 1,2001,200 Merger and integration-related costs   200   200 Non-GAAP net income $78,800$82,400   Reconciliation of diluted non-GAAP net income per share: Net income per share $0.77$0.82 Adjustments: Stock-based compensation expense and related payroll taxes, net of taxes 0.310.31 Amortization of acquired intangible assets, net of taxes 0.020.02 Merger and integration-related costs   0.00   0.00 Non-GAAP net income per share $1.10$1.15           Acme Packet, Inc.Other Operational Data  (in thousands)(unaudited)   Three Months EndedMarch 31, 2011       December 31, 2010       March 31, 2010 Other operational data:             Depreciation and amortization $2,358 $ 2,177 $ 1,853 Capital expenditures 4,644 2,770 2,767             Acme Packet, Inc.Condensed Consolidated Balance Sheets(in thousands)(unaudited)   March 31,2011         December 31, 2010 Assets Current assets: Cash and cash equivalents $118,924 $ 91,669 Short-term investments 169,907 179,024 Accounts receivable, net 43,275 34,797 Inventory 7,069 6,662 Deferred product costs 1,690 3,572 Deferred tax asset 3,814 3,814 Income taxes receivable 13,787 9,979 Other current assets   4,873     3,231   Total current assets 363,339 332,748 Long-term investments 9,238 5,030 Property and equipment, net 19,891 17,156 Acquired intangible assets, net 10,279 9,468 Goodwill 3,259 - Deferred tax asset, net 14,802 14,802 Other assets   888     940   Total assets $421,696   $380,144     Liabilities and Stockholders' Equity Current liabilities: Accounts payable $8,625 $ 7,161 Accrued expenses and other current liabilities 7,920 14,629 Deferred revenue   37,850     31,998   Total current liabilities   54,395     53,788     Deferred revenue   2,213     1,546   Deferred rent   4,053     4,265     Stockholders' equity: Common stock 72 71 Treasury stock, at cost (37,522) (37,522 ) Additional paid-in capital 292,886 266,114 Other comprehensive income 42 34 Retained earnings   105,557     91,848   Total stockholders' equity   361,035     320,545   Total liabilities and stockholders' equity $421,696   $380,144           Condensed Consolidated Statements of Cash Flow(in thousands)(unaudited)   Three Months Ended March 31,   2011         2010 Cash provided by operating activities $11,541 $ 7,973 Cash used in investing activities 4,273 26,641 Cash provided by financing activities 19,987 8,767 Investor Relations:Acme PacketBrian Norris, +1-781-328-4790bnorris@acmepacket.comorMedia and Analyst Contact:CHEN PRChris Carleton, +1-781-672-3115ccarleton@chenpr.com