OPNET Announces Results for Second Quarter of Fiscal 2008

OPNET Technologies, Inc. (NASDAQ:OPNT), a leading provider of solutions for managing networks and applications, today announced that quarterly revenue for the second fiscal quarter, ended September 30, 2007, was $25 million, compared to $23.6 million for the same quarter in the prior fiscal year. Earnings per share on a diluted basis for the second quarter of fiscal 2008 were $0.06, compared to $0.08 for the same quarter in the prior fiscal year. Marc A. Cohen, OPNET’s Chairman and CEO, stated, "We are pleased to report record revenue for our second fiscal quarter. Our Q2 revenue was driven by a sequential increase in revenue from new software licenses, and record revenue from software license updates, technical support and services, in addition to professional services. We ended the quarter with strong deferred revenue of $22 million and are encouraged by our strong sales pipeline. We are pleased that we achieved record revenue and that our license revenue increased sequentially. However, we are focused on further increasing the contribution of new software license revenue so that we can achieve our operating margin goals.” Financial Highlights for the Second Quarter of Fiscal 2008: Grew revenue year-over-year 5.8% to $25 million from $23.6 million for the same quarter of fiscal 2007. Revenue for the quarter increased sequentially 7.1% from $23.3 million for the first quarter of fiscal 2008. License revenue decreased year-over-year by 13.8% to $9.6 million from $11.2 million for the same quarter of fiscal 2007. License revenue for the quarter increased sequentially 10.9% from $8.7 million for the first quarter of fiscal 2008. Ended the quarter with deferred revenue of $22 million, flat sequentially from $22 million in the first quarter of fiscal 2008. Gross profit increased year-over-year to $19 million from $18.7 million for the same quarter of fiscal 2007. Gross profit increased sequentially from $17.5 million in the first quarter of fiscal 2008. Operating income decreased year-over-year to $211 thousand from $1.8 million for the same quarter of fiscal 2007. Operating income increased sequentially from a loss of $59 thousand in the first quarter of fiscal 2008. Marc A. Cohen continued, "In October, we completed a transaction in which we acquired substantially all of the assets of Network Physics, Inc. We are very excited about the synergies that the Network Physics product line brings to our application performance management portfolio. We believe that this acquisition will start contributing to revenue immediately, and that it offers tremendous potential for growth and cross-selling with our existing product line.” Third Quarter Fiscal Year 2008 Financial Outlook OPNET currently expects fiscal 2008 third quarter revenue to be between $25 million and $27 million, and earnings per share to be between negative $0.09 and negative $0.02. These estimates represent management’s current expectations about the Company’s future financial performance, based on information available at this time. OPNET will hold an investor conference call on Thursday, November 1, 2007 at 5:00pm EDT to review financial results for the second quarter of fiscal 2008. To listen to the OPNET investor conference call: Call 877-407-9205 in the U.S. or 201-689-8054 for international callers, or Use the webcast at www.opnet.com, or at www.investorcalendar.com (click on OPNT under "VCalls by Date"). Investors are advised to go to the web site at least 15 minutes early to register, download, and install any necessary audio software. To listen to the archived call: Call the replay phone number at 877-660-6853 or 201-612-7415 for international callers. For replay, enter account # 286, conference ID # 258223. The replay will be available from 7:00 pm Eastern Time November 1st through 11:59 pm Eastern Time November 8th. The webcast will be available at www.opnet.com or at www.investorcalendar.com, archived for seven days. About OPNET Technologies, Inc. Founded in 1986, OPNET Technologies, Inc. (NASDAQ:OPNT) is a leading provider of management software for networks and applications. For more information about OPNET and its products, visit www.opnet.com. OPNET and OPNET Technologies, Inc. are trademarks of OPNET Technologies, Inc. All other trademarks are the property of their respective owners. Statements in this press release that are not purely historical facts may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. OPNET Technologies, Inc. ("OPNET”) assumes no obligation to update statements. Forward-looking statements, including comments concerning expected revenue for the third quarter of fiscal 2008, are predictions based upon information available to OPNET as of the date of this press release and involve risks and uncertainties; therefore, actual events or results may differ materially. For a discussion of risk factors, see OPNET’s reports, including its most recent 10-Q and 10-K, filed with the Securities & Exchange Commission. OPNET and OPNET Technologies, Inc. are trademarks of OPNET Technologies, Inc. All other trademarks are the property of their respective owners. Note to editors: The word OPNET is spelled with all upper-case letters.   OPNET TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)           Three Months Ended Six Months Ended September 30, September 30, 2007 2006 2007 2006 Revenue: New software licenses $ 9,637 $ 11,183 $ 18,326 $ 21,509 Software license updates, technical support, and services 8,493 6,983 16,684 13,437 Professional services   6,861     5,451     13,313     11,303   Total revenue   24,991     23,617     48,323     46,249     Cost of revenue: New software licenses 153 195 363 321 Software license updates, technical support, and services 1,071 761 2,239 1,468 Professional services 4,576 3,782 8,892 7,523 Amortization of acquired technology   165     186     329     377   Total cost of revenue   5,965     4,924     11,823     9,689     Gross profit   19,026     18,693     36,500     36,560     Operating expenses: Research and development 6,618 5,373 12,803 10,589 Sales and marketing 9,468 8,904 18,115 16,967 General and administrative   2,729     2,620     5,430     5,388   Total operating expenses   18,815     16,897     36,348     32,944     Income from operations 211 1,796 152 3,616 Interest and other income, net   1,036     988     2,051     1,891   Income before provision for income taxes 1,247 2,784 2,203 5,507 (Benefit) provision for income taxes   (54 )   1,057     255     2,144   Net income $ 1,301   $ 1,727   $ 1,948   $ 3,363     Basic net income per common share $ 0.06   $ 0.09   $ 0.09   $ 0.17   Diluted net income per common share $ 0.06   $ 0.08   $ 0.09   $ 0.16   Basic weighted average common shares outstanding   20,466     20,266     20,541     20,228   Diluted weighted average common shares outstanding   20,984     21,019     21,088     20,920     OPNET TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) (unaudited)     September 30, March 31, 2007 2007 ASSETS   Current assets: Cash and cash equivalents $ 37,560 $ 34,766 Marketable securities 55,670 56,615 Accounts receivable 17,726 21,604 Unbilled accounts receivable 4,654 3,696 Deferred income taxes, prepaid expenses and other current assets   3,934     4,366   Total current assets 119,544 121,047   Property and equipment, net 9,631 8,745 Intangible assets, net 570 899 Goodwill 14,639 14,639 Deferred income taxes and other assets   2,586     2,328   Total assets $ 146,970   $ 147,658     LIABILITIES AND STOCKHOLDERS' EQUITY   Current liabilities: Accounts payable $ 135 $ 276 Accrued liabilities 8,168 8,321 Other income taxes 561 458 Deferred rent 279 210 Deferred revenue   20,589     22,414   Total current liabilities   29,732     31,679     Accrued liabilities 115 259 Deferred rent 1,858 1,956 Deferred revenue 1,437 893 Other income taxes   621     --   Total liabilities   33,763     34,787     Stockholders' equity: Common stock 27 27 Additional paid-in capital 88,350 86,881 Retained earnings 36,253 34,815 Accumulated other comprehensive income 455 394 Treasury stock, at cost   (11,878 )   (9,246 ) Total stockholders’ equity   113,207     112,871   Total liabilities and stockholders’ equity $ 146,970   $ 147,658