Acme Packet Reports Record Results for Second Quarter of 2009

Company Posts Record Revenue of $32.9 Million and Non-GAAP1 EPS of $0.07

Company Raises Revenue and Earnings Outlook for 2009
BURLINGTON, Mass.--(Business Wire)--
Acme Packet, Inc. (NASDAQ:APKT), the leader in session border control solutions,
today announced results for the second quarter ended June 30, 2009 and raised
its business outlook for the remainder of 2009. Summary financial results for
the second quarter of 2009 are as follows:

* Record quarterly revenue of $32.9 million, up 6% sequentially;
* Record cash provided by operating activities of $14.0 million and record cash
and equivalents of $155.6 million; and
* GAAP EPS of $0.03 and non-GAAP1 EPS of $0.07.

Results for the Second Quarter of 2009

Total revenue for the second quarter of 2009 was $32.9 million, compared to
$25.7 million in the second quarter of last year and $31.0 million in the first
quarter of 2009. Net income for the second quarter of 2009 was $1.7 million, or
$0.03 per share on a diluted basis, compared to $0.8 million, or $0.01 per share
on a diluted basis, in the same period last year, and $2.8 million, or $0.05 per
share on a diluted basis, in the first quarter of 2009. Net income on a
non-GAAP1 basis for the second quarter of 2009 was $4.5 million, or $0.07 per
share on a diluted basis, compared to $2.0 million, or $0.03 per share on a
diluted basis, in the same period last year, and $4.3 million, or $0.07 per
share on a diluted basis, in the first quarter of 2009. Non-GAAP net income1
differs from GAAP net income in the second quarter of 2009 as it excludes
stock-based compensation expense, amortization of acquired intangible assets,
and merger and integration-related costs, all net of tax, of $2.9 million, or
approximately $0.04 per share. Non-GAAP net income1 differs from GAAP net income
in prior periods as it excludes stock-based compensation expense, net of tax, of
$1.2 million, or approximately $0.03 per share, in the second quarter of 2008
and $1.6 million, or approximately $0.02 per share, in the first quarter of
2009. A reconciliation of GAAP to non-GAAP1 results is included at the end of
this press release.

Results for the First Six Months of 2009

Total revenue for the first six months of 2009 was $63.8 million compared to
$57.3 million in the same period last year. Net income for the first six months
of 2009 was $4.5 million, or $0.07 per share on a diluted basis, compared to
$5.9 million, or $0.09 per share on a diluted basis, in the same period last
year. Net income on a non-GAAP1 basis for the first six months of 2009 was $8.8
million, or $0.15 per share on a diluted basis, compared to $8.1 million, or
$0.12 per share on a diluted basis, in the same period last year. Non-GAAP net
income1 differs from GAAP net income in the first six months of 2009 as it
excludes stock-based compensation expense, amortization of acquired intangible
assets, and merger and integration-related costs, all net of tax, of $4.4
million, or approximately $0.08 per share. Non-GAAP net income1 differs from
GAAP net income in the first six months of 2008 as it excludes stock-based
compensation expense, net of tax, of $2.3 million, or approximately $0.03 per
share. A reconciliation of GAAP to non-GAAP1 results is included at the end of
this press release.

Company Raises Business Outlook for 2009

The Company today raised its full year business outlook for 2009. The Company`s
outlook is based on the current indications for its business, which may change
at any time.

Year Ended December 31, 2009
in Millions except Per Share Previous New

Amounts and Tax Rates
Business Business

Outlook/a
Outlook
Total revenue $128.0-$132.0 $130.0-$134.0
Non-GAAP1 diluted EPS $0.24-$0.28 $0.28-$0.30
Non-GAAP1 tax rate 35% No Change
Diluted share count 62.0 No Change
/a: As previously issued by the Company on April 30, 2009, which included the forecasted impact of the acquisition of Covergence Inc.

Company to Host Live Conference Call and Webcast

The Company`s management team will host a live conference call and webcast at
5:00 p.m. eastern daylight savings 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 (800) 230-1059 and using access code
"APKT". The conference call may be accessed outside of the United States by
dialing (612) 332-0107 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 (800) 475-6701 and
using access code 106559 or by accessing the webcast replay on the Company`s
investor relations website.

About Acme Packet, Inc.

Acme Packet, Inc. (NASDAQ: APKT), the leader in session border control
solutions, enables the delivery of trusted, first-class interactive
communications-voice, video and multimedia sessions-and data services across IP
network borders. Our Net-Net family of session border controllers, multiservice
security gateways and session routing proxies supports multiple applications in
service provider, enterprise and contact center networks-from VoIP trunking to
hosted enterprise and residential services to fixed-mobile convergence. They
satisfy critical security, service assurance and regulatory requirements in
wireline, cable and wireless networks; and support multiple protocols-SIP,
H.323, MGCP/NCS, H.248 and RTSP-and multiple border points-service provider
access and interconnect, and enterprise access and trunking. Our products have
been selected by more than 830 customers in 95 countries. They include 48 of the
top 50, and 89 of the top 100 service providers in the world; and 8 of the
Fortune 25. For more information, contact us at +1 781.328.4400, or 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 2009") 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, among other things, to expected financial and operating
results and to 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: difficulties expanding its customer base; difficulties leveraging
market opportunities; difficulties providing solutions that meet the needs of
customers; poor product sales; long sales cycles; difficulty developing new
products; difficulty in relationships with vendors and partners; difficulties in
integrating an acquired business; higher risk in international operations;
difficulty managing rapid growth; difficulty managing its financial performance;
its ability to hire and retain employees and appropriately staff its operations;
the spending of the proceeds of its capital raising activities; its cash needs;
and 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.

1 The Company uses the financial measures "non-GAAP net income" and "non-GAAP
net income per share" to supplement its 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 and non-GAAP net
income per share 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 and non-GAAP net income
per share provides useful information to investors because this financial
measure excludes stock-based compensation expense which is a non-cash charge.
Non-GAAP net income and non-GAAP net income per share for the three and six
months ended June 30, 2009 also excludes amortization of acquired intangible
assets and merger and integration-related costs associated with the Company`s
acquisition of Covergence Inc. on April 30, 2009. By excluding stock-based
compensation expense, amortization of acquired intangible assets and merger and
integration-related expenses, management can compare the Company`s ongoing
operations to prior periods and to the ongoing operations of other companies in
its industry who may have materially different unusual charges. Management does
not consider any of stock-based compensation expense, amortization of acquired
intangible assets and merger and integration-related expenses to be part of the
Company`s ongoing 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 figures 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/or "non-GAAP net income per
share" may differ from similar measures used by other companies and may differ
from period to period. Subject to the review and approval of the audit committee
of the Board of Directors, 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/or "non-GAAP net
income per share" by excluding these expenses and gains.

Acme Packet, Inc.

Condensed Consolidated Statements of Income

(in thousands, except share and per share data)

Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
(unaudited) (unaudited)
Revenue:
Product $ 24,243 $ 19,944 $ 47,294 $ 46,468
Maintenance, support and service 8,618 5,717 16,554 10,873
Total revenue 32,861 25,661 63,848 57,341

Cost of revenue (2) (3):
Product 4,870 4,285 10,102 9,233
Maintenance, support and service 1,207 1,471 2,130 2,607
Total cost of revenue 6,077 5,756 12,232 11,840

Gross profit 26,784 19,905 51,616 45,501

Operating expenses (2) (3):
Sales and marketing 12,608 11,232 23,944 21,776
Research and development 7,078 5,975 13,242 11,376
General and administrative 3,288 2,069 6,421 4,753
Merger and integration-related costs 1,102 - 1,102 -
Total operating expenses 24,076 19,276 44,709 37,905

Income from operations 2,708 629 6,907 7,596

Other income, net 56 762 122 2,054
Income before provision for income taxes 2,764 1,391 7,029 9,650

Provision for income taxes 1,071 575 2,578 3,796

Net income $ 1,693 $ 816 $ 4,451 $ 5,854

Net income per share:
Basic $ 0.03 $ 0.01 $ 0.08 $ 0.10
Diluted $ 0.03 $ 0.01 $ 0.07 $ 0.09

Weighted average number of common shares used in net income per share calculation:
Basic 56,941,547 60,169,035 55,849,118 60,299,199
Diluted 61,418,408 65,018,064 59,817,024 65,246,611

(2) Amounts include stock-based compensation expense, as follows:
Cost of product revenue $ 130 $ 106 $ 256 $ 213
Cost of maintenance, support and service revenue 140 68 261 179
Sales and marketing 1,190 872 2,276 1,765
Research and development 885 657 1,603 770
General and administrative 268 148 526 386
(3) Amounts include amortization of acquired intangible assets, as follows:
Cost of product revenue $ 139 $ - $ 139 $ -
Sales and marketing 9 - 9 -
Research and development 10 - 10 -

Acme Packet, Inc.

(in thousands, except per share data)

Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
(unaudited) (unaudited)

Reconciliation of non-GAAP net income (1):
Net income $ 1,693 $ 816 $ 4,451 $ 5,854
Adjustments:
Stock-based compensation expense, net of taxes 1,826 1,224 3,390 2,257
Amortization of acquired intangible assets 103 - 103 -
Merger and integration-related costs, net of taxes 903 - 903 -
Non-GAAP net income (1) $ 4,525 $ 2,040 $ 8,847 $ 8,111

Non-GAAP net income per share (1):
Basic $ 0.08 $ 0.03 $ 0.16 $ 0.13
Diluted $ 0.07 $ 0.03 $ 0.15 $ 0.12

Other operational data:
Depreciation and amortization $ 1,186 $ 1,291 $ 2,113 $ 2,623
Capital expenditures $ 1,082 $ 1,268 $ 2,191 $ 2,165

(1) The Company uses the financial measures "non-GAAP net income" and "non-GAAP
net income per share" to supplement its 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 and non-GAAP net
income per share 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 and non-GAAP net income
per share provides useful information to investors because this financial
measure excludes stock-based compensation expense which is a non-cash charge.
Non-GAAP net income and non-GAAP net income per share for the three and six
months ended June 30, 2009 also excludes amortization of acquired intangible
assets and merger and integration-related costs associated with the Company`s
acquisition of Covergence Inc. on April 30, 2009. By excluding stock-based
compensation expense, amortization of acquired intangible assets and merger and
integration-related expenses, management can compare the Company`s ongoing
operations to prior periods and to the ongoing operations of other companies in
its industry who may have materially different unusual charges. Management does
not consider any of stock-based compensation expense, amortization of acquired
intangible assets and merger and integration-related expenses to be part of the
Company`s ongoing 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 figures 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/or "non-GAAP net income per
share" may differ from similar measures used by other companies and may differ
from period to period. Subject to the review and approval of the audit committee
of the Board of Directors, 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/or "non-GAAP net
income per share" by excluding these expenses and gains.

Acme Packet, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

June 30, December 31,
2009 2008
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 155,623 $ 125,723
Accounts receivable, net 19,954 26,163
Inventory 7,888 7,008
Deferred tax asset 1,684 1,262
Other current assets 4,321 1,362
Total current assets 189,470 161,518
Property and equipment, net 6,475 5,485
Intangible assets, net 10,809 -
Other assets 237 467
Deferred tax asset, net 10,576 6,540
Total assets $ 217,567 $ 174,010

Liabilities and Stockholders` Equity
Current liabilities:
Accounts payable $ 2,652 $ 3,364
Accrued expenses and other current liabilities 9,484 6,865
Deferred revenue 23,344 15,283
Total current liabilities 35,480 25,512

Deferred rent - 96
Deferred revenue 2,453 1,591

Stockholders` equity:
Common stock 65 61
Treasury stock, at cost (37,522 ) (37,522 )
Additional paid-in capital 180,935 152,567
Retained earnings 36,156 31,705
Total stockholders` equity 179,634 146,811
Total liabilities and stockholders` equity $ 217,567 $ 174,010

Condensed Consolidated Statements of Cash Flow

(in thousands)

Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
(unaudited) (unaudited)

Cash provided by operating activities $ 14,031 $ 6,039 $ 25,050 $ 19,078
Cash provided by (used in) investing activities 4,757 (1,268 ) 3,648 (2,165 )
Cash provided by (used in) financing activities 928 (1,617 ) 1,202 (5,422 )

Investor Relations:
Acme Packet
Brian Norris, 781-328-4790;
bnorris@acmepacket.com
or
Industry Analysts/Trade and Business Press:
Connect2 Communications
Carmen Harris, 919-554-3532, ext. 5;
carmen@connect2comm.com

Copyright Business Wire 2009

http://www.businesswire.com/news/home/20090730006264/en