OPNET Announces Results for Third Quarter of Fiscal 2007

OPNET Technologies, Inc. (NASDAQ:OPNT), a leading provider of management software for networks and applications, today announced that quarterly revenue for the third fiscal quarter, ended December 31, 2006, was $24.5 million, compared to $20.1 million for the same quarter in the prior fiscal year. Earnings per share on a diluted basis for the third quarter of fiscal 2007 were $0.14, compared to $0.06 for the same quarter in the prior fiscal year. Marc A. Cohen, OPNET’s Chairman and CEO, stated, "I am very pleased to report that during fiscal Q3 we recorded our sixth consecutive quarter of record revenue, which enabled us to record $19.4 million of gross profit and achieve double-digit operating margin of 11.1%. We also ended the quarter with record deferred revenue of $20 million and increased our cash, cash equivalents and marketable securities to $91.1 million.” Financial Highlights for the Third Quarter of Fiscal Year 2007 Grew revenue year-over-year 22% to $24.5 million from $20.1 million for the same quarter of fiscal 2006. Revenue for the quarter grew sequentially 3.8% from $23.6 million for the second quarter of fiscal 2007. Grew license revenue year-over-year 30.1% to $11 million from $8.4 million for the same quarter of fiscal 2006. License revenue for the quarter decreased sequentially 1.9% to $11 million from $11.2 million for the second quarter of fiscal 2007. Achieved record deferred revenue of $20 million, up sequentially from $19.6 million. Improved our gross profit sequentially to $19.4 million during the third quarter of fiscal 2007 from $18.7 million in the second quarter of fiscal 2007. Improved our operating income to $2.7 million, which represents a $937 thousand increase from the second quarter of fiscal 2007. Mr. Cohen continued, "Legislation passed during fiscal Q3 that retroactively reinstated the Research and Development Tax Credit back to January 1, 2006. We adjusted our tax provision during the quarter to reflect the estimated tax benefit of this credit back to January 1, 2006. The sequential decrease in our effective tax rate from 38% in Q2 to 18.8% this quarter was primarily the result of adjusting our Q3 tax provision for this credit.” Fourth Quarter Fiscal Year 2007 Financial Outlook OPNET currently expects fiscal 2007 fourth quarter revenue to be between $23.5 and $25.5 million, and earnings per share to be between $0.04 and $0.10. 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 Wednesday, January 31, 2007 at 5:00 pm Eastern Time to discuss the overall results of Q3. To listen to the OPNET investor conference call: Dial 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: Dial the replay phone number at 877-660-6853 or 201-612-7415 for international callers. For replay, enter account # 286, conference ID # 227468. The replay will be available from 7:00 pm Eastern Time January 31st through 11:59 pm Eastern Time February 6th. 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 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. 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 December 31, Nine Months Ended December 31, 2006  2005  2006  2005    Revenue: New software licenses $ 10,974  $ 8,436  $ 32,483  $ 22,646  Software license updates and technical support 7,185  6,198  20,622  17,922  Professional services 6,363  5,464  17,666  14,271  Total revenue 24,522  20,098  70,771  54,839    Cost of revenue: New software licenses 197  184  518  546  Software license updates and technical support 752  639  2,220  1,932  Professional services 4,033  3,517  11,556  9,961  Amortization of acquired technology 182  192  559  575  Total cost of revenue 5,164  4,532  14,853  13,014    Gross profit 19,358  15,566  55,918  41,825    Operating expenses: Research and development 5,512  4,608  16,101  13,796  Sales and marketing 8,259  6,813  25,226  18,989  General and administrative 2,854  3,826  8,242  9,867  Total operating expenses 16,625  15,247  49,569  42,652    Income (loss) from operations 2,733  319  6,349  (827) Interest and other income, net 993  746  2,884  1,873  Income before provision for income taxes 3,726  1,065  9,223  1,046  Provision (benefit) for income taxes 702  (101) 2,847  (106) Net income $ 3,024  $ 1,166  $ 6,386  $ 1,152    Basic net income per common share $ 0.15  $ 0.06  $ 0.32  $ 0.06  Diluted net income per common share $ 0.14  $ 0.06  $ 0.30  $ 0.06  Basic weighted average common shares outstanding 20,365  20,229  20,270  20,345  Diluted weighted average common shares outstanding 21,387  20,523  21,125  20,607  OPNET TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) (unaudited)   December 31, March 31, 2006  2006  ASSETS Current assets: Cash and cash equivalents $ 36,913  $ 66,710  Marketable securities 54,200  19,151  Accounts receivable 16,928  12,765  Unbilled accounts receivable 3,481  2,616  Deferred income taxes, prepaid expenses and other current assets 3,639  2,339  Total current assets 115,161  103,581    Property and equipment, net 6,409  6,088  Intangible assets, net 1,063  1,240  Goodwill 14,639  14,639  Deferred income taxes and other assets 1,922  1,799  Total assets $ 139,194  $ 127,347    LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 278  $ 1,019  Accrued liabilities 7,264  8,539  Deferred and accrued income taxes 283  527  Notes payable --  47  Deferred rent --  89  Deferred revenue 19,377  15,800  Total current liabilities 27,202  26,021    Accrued liabilities 189  --  Notes payable --  103  Deferred rent 1,215  1,033  Deferred revenue 652  779  Deferred income taxes 15  13  Total liabilities 29,273  27,949    Stockholders' equity: Common stock 27  27  Additional paid-in capital 84,869  80,984  Deferred compensation --  (393) Retained earnings 33,236  26,850  Accumulated other comprehensive income (loss) 361  (345) Treasury stock, at cost (8,572) (7,725) Total stockholders’ equity 109,921  99,398  Total liabilities and stockholders’ equity $ 139,194  $ 127,347