Download 2011 Annual Report - Opnet

Letter To Shareholders
Dear Shareholders,
Fiscal 2011 was a year of growth for OPNET. We achieved record
revenue of approximately $148 million, up by 17% relative to the
prior fiscal year. We also increased new software license revenue
by 39% to $72.4 million, grew operating income by 132% to $18.8
million, and increased deferred revenue to $47.5 million. We accom-
plished this with relatively flat headcount.
Due to OPNET’s strong cash position and the ability we have shown
to generate positive cash flow from operations, we increased our
dividend distribution to $.10 per share for each of the four quarters
in fiscal 2011. Additionally, we paid a one-time special dividend
of $0.75 per share. Notwithstanding these dividend distributions,
OPNET increased its cash position during fiscal 2011 to a record
$114.7 million, up from $104.7 at the end of fiscal 2010.
In fiscal 2011, OPNET continued its broad initiative to expand its
activities in Service Assurance, aligning its solution portfolio and
service offerings with two highly complementary sectors: Applica-
tion Performance Management (APM) and Network Performance
Management (NPM). OPNET is a leader among IT management
software vendors in promoting the view that NPM is, in fact, a key
component of APM. OPNET and its customers have demonstrated
that while NPM can be viewed as an IT discipline in its own right,
it delivers far more value to the enterprise when viewed from an
APM perspective, allowing a much more powerful service assur-
ance capability to be developed. As a result
of OPNET’s innovative approach, increased
market share, and visibility in the IT service
management space, we were pleased to
be recognized by multiple leading industry
analysts as a significant player in APM. OPNET
is now viewed as a prominent technology
supplier with unique advantages due to its
ability to span both APM and NPM. We believe
that OPNET can achieve much deeper market
penetration in this large and growing space,
and have significantly expanded our market-
ing programs in order to achieve this goal.
OPNET Technologies, Inc. 2011 Annual Report
Marc A. Cohen
Chairman and Chief Executive Officer
1
We believe that our results in fiscal 2011 demonstrate that our
strategy is working to grow our market recognition and our sales
momentum. In fiscal 2011, OPNET continued to expand its network
of sales partners and independent resellers, both in the US and
overseas. Our channel program now generates over 20% of new
product sales. In fiscal 2011, APM sales increased by 41% relative to
the prior fiscal year – the third consecutive year of strong double-
digit growth. During fiscal 2011, APM represented nearly 70% of
product bookings.
During fiscal 2011 we also generated cash flow from operations of
$26.7 million, maintained a strong balance sheet with no debt, and
invested 24% of our total revenue into research and development.
Despite the soft economy, we grew operating margin to 12.7% from
6.4% in fiscal 2010. We believe our expanded presence in the APM
sector has positioned OPNET for long-term growth in revenue and
profitability.
None of this would have been possible without the dedication and
hard work of our staff and their successful track record of continu-
ous innovation. During fiscal 2011, OPNET filed ten new patent
applications, further building on our base of intellectual property
and extending barriers to entry.
In summary, fiscal 2011 was a year of significant accomplishments
for OPNET. We believe that we are uniquely positioned to be a lead-
Alain J. Cohen
ing global provider of IT Service Management
solutions in a market where growth is driven
by increasing infrastructure complexity, more
stringent performance demands, and a need
for greater automation in order to drive down
costs.
We would like to thank all the employees of
OPNET, our customers, and our shareholders
for their commitment to our solutions and
belief in our vision.
President and Chief Technology Officer