BARRACUDA NETWORKS INC CAMPBELL, Calif., July 9, 2015 /PRNewswire/ -- Barracuda Networks, Inc. (NYSE: CUDA), a leading provider of cloud-connected security and storage solutions, today announced results for its first quarter of fiscal 2016, which ended May 31, 2015.
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Billings & Revenue: For the first quarter of fiscal 2016, gross billings grew to $94.3 million, up from $87.6 million in the first quarter of fiscal 2015. Total revenue increased 18% to $78.0 million, up from $66.2 million in the first quarter of fiscal 2015. Appliance revenue in the first quarter of fiscal 2016 grew to $23.7 million, up from $20.8 million in the first quarter of fiscal 2015, and recurring subscription revenue grew to $54.3 million in the first quarter of fiscal 2016, up from $45.4 million in the first quarter of fiscal 2015, representing 70% of total revenue.
Net Income: GAAP net loss in the first quarter of fiscal 2016 was $3.8 million, or $0.07 loss per share, based on a basic share count of 53.0 million. Non-GAAP net income for the first quarter of fiscal 2016 was $5.1 million, or $0.09 earnings per share, based on a diluted share count of 55.0 million. Non-GAAP net income excludes $6.5 million in stock-based compensation expense, $1.1 million in acquisition and other non-recurring charges, $0.6 million in amortization of intangibles, $0.5 million in other expense, net and $0.2 million in income tax provision of non-GAAP exclusions. The reconciliation between GAAP and non-GAAP information is contained in the tables below.
"We delivered revenue and non-GAAP EPS at the top end of our targeted range," said BJ Jenkins, president and CEO. "During the quarter, we grew total active subscribers, increased gross margin and maintained a 92.5% dollar-based renewal rate, speaking to the underlying strength of our business model."
"Total billings grew by 12% year-over-year on a constant currency basis," said David Faugno, CFO. "In the quarter, non-GAAP operating income grew 40% year-over-year to $7.4 million, or 9.5% of total revenue."
Recent Company Highlights
-- Expanded Market Share: Listed once again as number one for total
integrated PBBA units sold in IDC's Worldwide Quarterly PBBA Tracker CQ1
2015.
-- Extended Channel Reach: Signed a distribution agreement with Tech Data
Corporation to extend the market availability of the company's full
product portfolio in the United States through Tech Data's Advanced
Infrastructure Solutions (AIS) division. This relationship provides
authorized Tech Data resellers access to Barracuda's complete security
and storage product suite of appliances, virtual appliances, SaaS and
cloud solutions.
-- Increased Public Cloud Momentum: Enhanced networking and application
security capabilities to support Microsoft Azure enhancements; and
achieved VMware Ready - vCloud Air(TM) status for Barracuda NG Firewall,
Barracuda Message Archiver, Barracuda Spam Firewall and Barracuda Web
Application Firewall.
-- Continued Product Innovation: Launched new Barracuda Load Balancer FDC
that delivers high 40 Gbps throughput load balancing; updated Barracuda
NG Firewall to include SafeSearch, YouTube for Schools, WiFi Policy
Enforcement, and Remote Access Management for Mac OS X, Windows and iOS
devices; and introduced CudaSign Premium to provide businesses with
multiple options to integrate eSignatures into existing business
processes such as customer relationship management systems, contract
management tools, and productivity tools.
-- Enhanced Mobility Initiatives: Announced product integrations with
Aerohive's HiveOS® devices, including access points, switches and
routers, offering customers more granular visibility and security for
wireless access; and enhanced Barracuda Mobile Device Manager to support
both Android and iOS operating systems.
Conference Call Information
Barracuda will host a conference call and corresponding live webcast at 1:30 p.m. PT today. To access the conference call, dial 1-855-560-2573 for the U.S. or 1-412-542-4159 for international callers. The webcast will be available live on the investor relations section of the company's website at https://investors.barracuda.com, and via replay beginning approximately two hours after the completion of the call for a period of one year. An audio replay of the call will be available to investors beginning at approximately 5:00 p.m. PT today through July 17, 2015 by dialing 1-877-344-7529 in the U.S. or 1-412-317-0088 for international callers, and entering conference ID 10067135. Additional information can be found in an accompanying supplemental investor slide presentation located at https://investors.barracuda.com.
Forward-Looking Statements
This announcement contains forward-looking statements related to future product performance and potential results from new initiatives that involve risks and uncertainties, including statements regarding the company's expectations regarding financial performance and the potential impact of our new and updated products. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including, but not limited to: fluctuations in demand for the company's products and services; a highly competitive business environment for network security and storage solutions; the company's effectiveness in controlling expenses; the effects of significant developments in IT infrastructure deployments, particularly cloud computing; the impact of foreign currency fluctuations; the possibility that the company might experience delays in the development of new technology and products; customer response to its new technology and products; risks related to pending or future litigation and regulatory matters; and a dependency on third parties for certain components of the company's products. The company undertakes no obligation to update the forward-looking information in this release. More information about potential factors that could affect the company's business and financial results is included in its filings with the Securities and Exchange Commission, including, without limitation, under the captions: "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Risk Factors," which are on file with the Securities and Exchange Commission.
Non-GAAP Financial Measures
Barracuda provides all financial information required in accordance with generally accepted accounting principles (GAAP). To supplement our consolidated financial statements presented in accordance with GAAP, we are also providing with this press release non-GAAP net income, non-GAAP operating income, adjusted EBITDA and adjusted free cash flow. In preparing our non-GAAP information, we have excluded certain amounts as set forth in the attached financial tables and footnotes. We believe that excluding these items provides both management and investors with additional insight into our current operations and the trends affecting the company. In particular, management finds it useful to exclude these items in order to more readily correlate the company's operating activities with the company's ability to generate cash from operations. Accordingly, management uses these non-GAAP measures, along with the comparable GAAP information, in evaluating our historical performance and in planning our future business activities. Please note that our non-GAAP measures may be different than those used by other companies. The additional non-GAAP financial information we present should be considered in conjunction with, and not as a substitute for, our financial information presented in accordance with GAAP. We have provided a non-GAAP reconciliation of the Condensed Consolidated Statement of Operations for the periods presented in this release, which exclude certain amounts as set forth in the attached financial tables and footnotes for these periods. These measures should only be used to evaluate the company's results of operations in conjunction with the corresponding GAAP measures for comparable financial information and understanding of the company's ongoing performance as a business. Barracuda uses both GAAP and non-GAAP measures to evaluate and manage its operations.
About Barracuda Networks Inc. (NYSE: CUDA)
Barracuda provides cloud-connected security and storage solutions that simplify IT. These powerful, easy-to-use and affordable solutions are trusted by more than 150,000 organizations worldwide and are delivered in appliance, virtual appliance, and cloud and hybrid deployments. Barracuda's customer-centric business model focuses on delivering high-value, subscription-based IT solutions that provide end-to-end network and data security. For additional information, please visit http://www.barracuda.com.
Barracuda Networks, Barracuda and the Barracuda Networks logo are registered trademarks or trademarks of Barracuda Networks, Inc. in the US and other countries.
Contacts:
Investor Relations: Adam Carson; +1-408-342-5480; ir@barracuda.com Corporate Communications: Mary Catherine Petermann; +1 404-307-6290; mc@barracuda.com
Barracuda Networks, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
May 31, 2015 February 28, 2015
------------ -----------------
Assets
Current assets:
Cash and cash equivalents $156,062 $151,373
Marketable securities 44,768 40,754
Accounts receivable, net of allowance
for doubtful accounts 43,154 40,725
Inventories, net 4,717 4,454
Deferred costs 31,146 30,221
Deferred income taxes 97 479
Other current assets 11,752 12,260
------
Total current assets 291,696 280,266
Property and equipment, net 27,911 27,839
Deferred costs, non-current 28,109 27,715
Deferred income taxes, non-current 423 443
Other non-current assets 4,059 4,123
Intangible assets, net 8,627 9,217
Goodwill 39,598 39,742
Total assets $400,423 $389,345
======== ========
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable $13,129 $16,356
Accrued payroll and related benefits 11,210 11,656
Other accrued liabilities 11,640 12,465
Deferred revenue 218,131 209,904
Deferred income taxes 420 563
Note payable 255 252
---
Total current liabilities 254,785 251,196
Long-term liabilities:
Deferred revenue, non-current 163,011 163,253
Deferred income taxes, non-current 2,146 2,396
Note payable, non-current 4,317 4,383
Other long-term liabilities 7,504 7,201
Stockholders' deficit:
Common stock 53 53
Additional paid-in capital 325,810 316,035
Accumulated other comprehensive loss (2,432) (4,233)
Accumulated deficit (354,771) (350,939)
---------
Total stockholders' deficit (31,340) (39,084)
Total liabilities and
stockholders' deficit $400,423 $389,345
======== ========
Barracuda Networks, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share information)
(Unaudited)
Three months ended May 31,
--------------------------
2015 2014
---- ----
Revenue:
Appliance $23,682 $20,836
Subscription 54,292 45,373
Total revenue 77,974 66,209
Cost of revenue 15,966 14,406
------ ------
Gross profit 62,008 51,803
Operating expenses:
Research and
development 18,000 12,952
Sales and
marketing 34,132 29,479
General and
administrative 10,698 8,564
Total operating expenses 62,830 50,995
------ ------
Income (loss) from operations (822) 808
Other expense, net (568) (57)
---- ---
Income (loss) before income taxes (1,390) 751
Provision for income taxes (2,442) (600)
------ ----
Net income (loss) $(3,832) $151
======= ====
Net income (loss) per share:
Basic $(0.07) $ -
Diluted $(0.07) $ -
Weighted-average shares used to compute net
income (loss) per share:
Basic 52,996 51,156
Diluted 52,996 53,605
Barracuda Networks, Inc.
Reconciliation of Selected GAAP to Non-GAAP Financial Measures
(in thousands)
(Unaudited)
Three months ended May 31,
--------------------------
2015 2014
---- ----
GAAP cost of revenue $15,966 $14,406
Amortization of intangible assets
(1) 404 673
Depreciation expense (2) 1,032 672
Stock-based compensation expense
(3) 211 52
Non-GAAP cost of revenue $14,319 $13,009
======= =======
GAAP sales and marketing expense $34,132 $29,479
Amortization of intangible assets
(1) 174 303
Depreciation expense (2) 26 39
Stock-based compensation expense
(3) 1,550 582
Acquisition and other non-
recurring charges (4) (325) -
Non-GAAP sales and marketing
expense $32,707 $28,555
======= =======
GAAP research and development
expense $18,000 $12,952
Depreciation expense (2) 169 151
Stock-based compensation expense
(3) 1,835 748
Acquisition and other non-
recurring charges (4) 1,105 372
Non-GAAP research and development
expense $14,891 $11,681
======= =======
GAAP general and administrative
expense $10,698 $8,564
Depreciation expense (2) 369 249
Stock-based compensation expense
(3) 2,948 1,700
Acquisition and other non-
recurring charges (4) 293 17
Non-GAAP general and
administrative expense $7,088 $6,598
====== ======
GAAP total expense $78,796 $65,401
Amortization of intangible assets
(1) 578 976
Depreciation expense (2) 1,596 1,111
Stock-based compensation expense
(3) 6,544 3,082
Acquisition and other non-
recurring charges (4) 1,073 389
Non-GAAP total expense $69,005 $59,843
======= =======
Depreciation expense (2) 1,596 1,111
Non-GAAP total expense including
depreciation $70,601 $60,954
======= =======
Barracuda Networks, Inc.
Reconciliation of Selected GAAP to Non-GAAP Financial Measures
(in thousands, except per share information)
(Unaudited)
Three months ended May 31,
--------------------------
2015 2014
---- ----
GAAP operating income (loss) $(822) $808
Amortization of intangible assets
(1) 578 976
Stock-based compensation expense
(3) 6,544 3,082
Acquisition and other non-
recurring charges (4) 1,073 389
Non-GAAP operating income $7,373 $5,255
====== ======
GAAP net income (loss) $(3,832) $151
Amortization of intangible assets
(1) 578 976
Stock-based compensation expense
(3) 6,544 3,082
Acquisition and other non-
recurring charges (4) 1,073 389
Income tax effect of non-GAAP
exclusions (5) 240 (943)
Other expense (income) adjustments
(6) 534 (53)
Non-GAAP net income $5,137 $3,602
====== ======
Non-GAAP diluted earnings per
share (7) $0.09 $0.07
===== =====
Weighted-average shares used to
compute diluted earnings per share 55,034 53,605
====== ======
(1) Amortization of Intangible Assets. We
provide non-GAAP information which
excludes expenses for the amortization
of intangible assets, as well as certain
losses from disposal of such assets,
that primarily relate to purchased
intangible assets associated with our
acquisitions. We believe that
eliminating this expense from our non-
GAAP measures is useful to investors,
because the amortization of intangible
assets can be inconsistent in amount and
frequency and is significantly impacted
by the timing and magnitude of our
acquisition transactions, which also
vary in frequency from period to period.
Accordingly, we analyze the performance
of our operations in each period without
regard to such expenses.
-----------------------------------------
(2) Depreciation Expense. We provide non-
GAAP information which excludes
depreciation expense related to the
amortization of property and equipment,
as well as certain losses from disposal
of such assets. We believe that
eliminating this expense from our non-
GAAP measures is useful to investors,
because the acquisition of property and
equipment, and the corresponding
depreciation expense, can be
inconsistent in amount and can vary from
period to period.
----------------------------------------
(3) Stock-Based Compensation Expense. We
provide non-GAAP information which
excludes expenses for stock-based
compensation. We believe the exclusion
of this item allows for financial
results that are more indicative of our
continuing operations. We believe that
the exclusion of stock-based
compensation expense provides for a
better comparison of our operating
results to prior periods and to our peer
companies as the calculations of stock-
based compensation vary from period to
period and company to company due to
different valuation methodologies,
subjective assumptions and the variety
of award types.
-----------------------------------------
(4) Acquisition and Other Non-Recurring
Charges. We exclude certain expense
items resulting from acquisitions and
other non-recurring charges, which we
do not expect to recur in our continuing
operating results. We believe that
adjusting for these charges allows us to
better compare results from period to
period in order to assess the ongoing
operating results of our business. The
charges include: (i) costs associated
with an internal investigation of export
control compliance and (ii) legal,
valuation consulting and other expenses
incurred in connection with
acquisitions, the fair value
remeasurements of contingent
considerations, the payments made under
the terms of certain acquisition
agreements and other non-recurring
expenses.
-----------------------------------------
(5) Income Tax Effect of Non-GAAP
Exclusions. We believe providing
financial information with and without
the income tax effect of excluding items
related to our non-GAAP financial
measures provide our management and
users of the financial statements with
better clarity regarding the ongoing
performance and future liquidity of our
business. Excluded items include, but
are not limited to: (i) amortization
expense of intangible assets, (ii)
stock-based compensation expense, (iii)
acquisition and other non-recurring
charges, and (iv) quarterly changes to
the valuation allowance previously
established.
-----------------------------------------
(6) Other Expense (Income) Adjustments. We
provide non-GAAP information that
excludes the effect of certain other
income and losses. These adjustments
most significantly consist of foreign
currency remeasurement gains and losses.
For all non-functional currency account
balances, the remeasurement of such
balances to the functional currency will
result in either a foreign exchange gain
or a loss which is recorded in other
expense, net. We believe that
eliminating these items from our non-
GAAP measures is useful to investors,
because foreign currency remeasurement
adjustments can be inconsistent in
amount and can vary from period to
period.
-----------------------------------------
(7) Non-GAAP Diluted Earnings Per Share. We
provide non-GAAP diluted earnings per
share. The non-GAAP diluted earnings per
share amount is calculated based on our
non-GAAP net income divided by the
weighted-average diluted shares
outstanding for the period.
----------------------------------------
Barracuda Networks, Inc.
Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA
(in thousands)
(Unaudited)
Three months ended May
31,
-----------------------
2015 2014
---- ----
GAAP net income (loss) $(3,832) $151
Deferred revenue, end of period 381,003 328,488
Less: Deferred revenue, beginning
of period (372,862) (313,157)
Less: Deferred costs, end of
period (59,255) (52,549)
Deferred costs, beginning of
period 57,936 50,279
Other expense, net 568 57
Provision for income taxes 2,442 600
Acquisition and other non-
recurring charges 1,073 389
Stock-based compensation expense 6,544 3,082
Amortization of intangible assets 578 976
Depreciation expense 1,596 1,111
Adjusted EBITDA (1) $15,791 $19,427
======= =======
(1) Adjusted EBITDA. We define adjusted
EBITDA as net income (loss) plus
increases in deferred revenue and
increases in the associated deferred
costs, plus non-cash and non-
operating charges which include: (i)
other expense, net, (ii) provision for
income taxes, (iii) acquisition and
other non-recurring charges, (iv)
stock-based compensation expense, (v)
amortization of intangible assets,
including certain losses on disposal
of intangible assets, and (vi)
depreciation expense, including
certain losses on disposal of fixed
assets. The deferred revenue balances
as of May 31, 2015 and February 28,
2015 exclude the remaining acquisition
date deferred revenue amounts assumed
in connection with our acquisition of
C2C Systems Limited. We believe
adjusted EBITDA provides an indication
of profitability from our operations,
and provides a consistent measure of
our performance from period to period.
--------------------------------------
Barracuda Networks, Inc.
Reconciliation of GAAP Cash Flows from Operating
Activities to Adjusted Free Cash Flow
(in thousands)
(Unaudited)
Three months ended
May 31,
-------------------
2015 2014
---- ----
GAAP
cash
flows
from
operating
activities $6,302 $5,407
Purchase
of
property
and
equipment (1,876) (1,589)
Acquisition
and
other
non-
recurring
charges
(1) 886 385
Adjusted
free
cash
flow
(2) $5,312 $4,203
====== ======
(1) Acquisition and Other Non-
Recurring Charges. We exclude
the cash flow impact resulting
from acquisitions and other
non-recurring charges, which
we do not expect to recur in
our continuing operating
results. We believe that
adjusting for these cash
outflows allows us to better
compare results from period to
period in order to assess the
ongoing operating results of
our business. The cash flows
include: (i) payments
associated with an internal
investigation of export control
compliance and (ii) payments
related to legal, valuation
consulting and other expenses
incurred in connection with
acquisitions, as well as the
payments under the terms of
certain acquisition agreements
and other non-recurring
expenses.
--------------------------------
(2) Adjusted Free Cash Flow. We
define adjusted free cash flow
as cash flows from operating
activities less the purchases
of property and equipment plus
the cash flow effect of
acquisition and other non-
recurring charges. We believe
that adjusting free cash flow
to exclude these charges allows
us to better compare results
from period to period in order
to assess the ongoing free cash
flow of our business. We
believe adjusted free cash flow
is an important liquidity
measure that reflects the cash
generated by the business after
the purchase of property and
equipment that can then be used
for, among other things,
strategic acquisitions,
investments in the business and
funding ongoing operations.
-------------------------------
Barracuda Networks, Inc.
Reconciliation of GAAP Revenue to Gross Billings
(in thousands)
(Unaudited)
Three months ended May
31,
-----------------------
2015 2014
---- ----
GAAP Revenue $77,974 $66,209
Total deferred revenue, end of
period 381,003 328,488
Less: total deferred revenue,
beginning of period (372,862) (313,157)
Deferred revenue adjustments 8,159 6,060
Total change in deferred
revenue and adjustments 16,300 21,391
Gross billings
(1)(2) $94,274 $87,600
======= =======
(1) Gross Billings. We define gross
billings as total revenue plus
the change in deferred revenue
and other adjustments, which
primarily consist of returns
and reserves with respect to
the 30-day right of return we
provide to customers, as well
as rebates for certain channel
partner activities. The
deferred revenue balances as of
May 31, 2015 and February 28,
2015 exclude the remaining
acquisition date deferred
revenue amounts assumed in
connection with our acquisition
of C2C Systems Limited. We
believe that gross billings
provide insight into the sales
of our solutions and
performance of our business.
-------------------------------
(2) In order to determine how our
business performed exclusive of
the effect of foreign currency
fluctuations, we compare the
percentage change in our gross
billings from one period to
another using a constant
currency. To present this gross
billings information, the
current and comparative prior
period results for entities
that operate in other than U.S.
dollars are converted into U.S.
dollars at constant exchange
rates. For example, the rates
in effect at May 31, 2014,
which was the last day of our
prior fiscal year's comparable
quarter, were used to convert
current and comparable prior
period gross billings rather
than the actual exchange rates
in effect during the respective
period.
Barracuda Networks, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three months ended May 31,
--------------------------
2015 2014
---- ----
Operating activities
Net income (loss) $(3,832) $151
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization
expense 2,174 2,087
Stock-based compensation expense 6,544 3,082
Excess tax benefits from equity
compensation plans (2,144) (1,772)
Deferred income taxes 145 (3,254)
Other 337 12
Changes in operating assets and
liabilities:
Accounts receivable, net (2,339) (5,094)
Inventories, net (263) 730
Income taxes, net 2,289 1,024
Deferred costs (1,379) (2,282)
Other assets 283 (30)
Accounts payable (3,113) (4,579)
Accrued payroll and related
benefits (61) 23
Other liabilities (352) (31)
Deferred revenue 8,013 15,340
Net cash provided by operating
activities 6,302 5,407
Investing activities
Proceeds from the sale of
marketable securities 3,203 -
Proceeds from the maturity of
marketable securities 3,026 -
Purchase of marketable securities (8,493) -
Purchase of property and equipment (1,876) (1,589)
Purchase of investments in non-
marketable equity and debt
securities - (600)
Net cash used in investing
activities (4,140) (2,189)
Financing activities
Proceeds from issuance of common
stock 3,248 2,340
Taxes paid related to net share
settlement of equity awards (2,176) (1,125)
Employee loans extended, net of
repayment (276) (463)
Excess tax benefits from equity
compensation plans 2,144 1,772
Repayment of note payable (63) (60)
Other (156) -
Net cash provided by financing
activities 2,721 2,464
Effect of exchange rate changes on
cash and cash equivalents (194) (3)
---- ---
Net increase in cash and cash
equivalents 4,689 5,679
Cash and cash equivalents at
beginning of period 151,373 135,879
Cash and cash equivalents at end of
period $156,062 $141,558
======== ========
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SOURCE Barracuda Networks, Inc.
