CAMPBELL, Calif., April 27, 2015 /PRNewswire/ -- Barracuda Networks, Inc. (NYSE: CUDA), a leading provider of cloud-connected security and storage solutions, today announced results for its fourth quarter and fiscal year 2015, which ended February 28, 2015.

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Fourth Quarter and Full Year 2015 Financial Highlights

Billings: For the fourth quarter, gross billings were $96.1 million which represents 17.2% growth from the prior year and more than 20% growth on a constant currency basis. For fiscal 2015, gross billings grew 17.5% to $364.3 million, up from $310.0 million in fiscal 2014.

Revenue: Total revenue for the fourth quarter grew 19.6% from the fourth quarter of fiscal 2014, to $72.2 million. For the full year, total revenue was $277.4 million. Appliance revenue, in the fourth quarter, reached $20.9 million and for the full year was $83.1 million. Subscription revenue grew to $51.2 million in the fourth quarter of fiscal 2015 up 22.0% from $42.0 million in the fourth quarter of fiscal 2014. For fiscal 2015, subscription revenue was $194.3 million and represented 70.0% of total revenue.

Net Income/Loss: GAAP net loss was $68.4 million in the fourth quarter and $67.5 million for the full fiscal year. The loss per share was $1.30 based on a basic share count of 52.6 million and 51.9 million for the fourth quarter and full year, respectively. The GAAP loss was primarily due to a one-time, non-cash charge of $67.7 million to establish a deferred tax asset valuation allowance. Non-GAAP net income for the fourth quarter of fiscal 2015 was $3.7 million, or $0.07 earnings per share, based on a diluted share count of 54.7 million. Non-GAAP net income excludes $64.3 million in income tax expense and the effect of non-GAAP exclusions, $5.4 million in stock-based compensation expense, $1.1 million net in other income and expense, $0.7 million in acquisition and other non-recurring charges and $0.6 million in amortization of intangibles. For the full year fiscal 2015, non-GAAP net income was $15.1 million, or $0.28 earnings per share, based on a diluted share count of 54.0 million. The reconciliation between GAAP and non-GAAP information is contained in the tables below.

"We closed a strong and exciting year for Barracuda, experiencing continued demand across all major product categories and geographies. On a constant currency basis, quarterly billings growth accelerated for the fourth consecutive quarter, increasing more than 20% in the fourth quarter of Fiscal 2015 compared to the prior year," said BJ Jenkins, president and CEO. "We now have more than 243,000 active subscribers, accelerated the growth in multiproduct customers to nearly 35,000, and the number of Barracuda Shops grew 41% to almost 11,000. We believe our results continue to reflect the progress we have made in strengthening our position as a leading provider of security and storage solutions that simplify the lives of IT professionals."

"We achieved record revenue and billings in the fourth quarter and for the full year. In addition to accelerating revenue growth for fiscal 2015, we also expanded our non-GAAP operating margin by more than 480 basis points," said David Faugno, CFO. "For the full year, adjusted EBITDA grew 50% to $79 million, which was 29% of total revenue."

Recent Company Highlights


    --  Achieved VMware Ready - vCloud Air(TM) status for Barracuda NG Firewall,
        Barracuda Message Archiver, Barracuda Spam Firewall and Barracuda Web
        Application Firewall - now listed on the VMware Solution Exchange
    --  Recognized as one of CRN's 100 Coolest Cloud Computing Vendors and 20
        Coolest Cloud Storage Vendors of 2015
    --  Received SC Magazine Reader Trust Award for Best UTM Security Solution
        for the Barracuda Firewall
    --  Listed as Volume Leader for Content Security by IDC's Worldwide
        Quarterly Security Appliance Tracker CQ4 2014, and listed by IDC's
        Worldwide Quarterly PBBA Tracker CQ4 2014 as number 1 for total
        integrated PBBA units sold
    --  Launched Barracuda Web Application Firewall and Barracuda NG Firewall in
        Microsoft Azure Government, a government-community cloud designed to
        support strategic government scenarios that require speed, scale,
        security, compliance, and economics for U.S. government organizations
    --  Enhanced worldwide partner program to establish global consistency for
        improved discount structure, new tools and resources, expanded lead
        flow, differentiated partner levels, and support for MSP partners
    --  Awarded 5-star Rating in CRN's 2015 Partner Program Guide for the fourth
        consecutive year
    --  Launched Barracuda Mobile Device Manager for Android, expanding mobility
        management across iOS and Android devices
    --  Rebranded SignNow to CudaSign, launched CudaSign Premium with options to
        use as appliance or virtual appliance on-premises or cloud service -
        with eSignature pricing of $1 per user per month for businesses
    --  Received Excellence Awards for Barracuda Copy, CudaSign (formerly
        SignNow), Barracuda Firewall, Barracuda Backup, Barracuda Message
        Archiver, Barracuda Spam Firewall and Barracuda Web Filter from Tech &
        Learning magazine
    --  Awarded Best Buy and 5-Star Rating by SC Magazine for Barracuda Web
        Application Firewall in the Application Security Product Group Test
        review

Conference Call Information

Barracuda will host a conference call and corresponding live webcast at 2:00 p.m. PT today. To access the conference call, dial 1-866-270-1533 for the U.S. or +1-412-317-0797 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 May 3, 2015 by dialing 1-877-344-7529 in the U.S., or +1-412-317-0088 for international callers, and entering conference ID 10062060. 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 product and solution strength and expectations regarding financial performance. 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 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; continued relations with its partners; 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, 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)


                                                        February 28, 2015                           February 28, 2014
                                                      -----------------                           -----------------

    Assets

    Current assets:

               Cash and cash equivalents                                                 $151,373                       $135,879

               Marketable securities                                                       40,754                              -

                Accounts receivable, net of allowance
                for doubtful accounts                                                      40,725                         27,836

               Inventories, net                                                             4,454                          5,648

               Deferred costs                                                              30,221                         25,707

               Deferred income taxes                                                          479                         30,156

               Other current assets                                                        12,260                          4,900
                                                                                         ------

    Total current assets                                                                280,266                        230,126


               Property and equipment, net                                                 27,839                         20,558

               Deferred costs, non-current                                                 27,715                         24,572

               Deferred income taxes, non-current                                             443                         28,515

               Other non-current assets                                                     4,123                          1,851

               Intangible assets, net                                                       9,217                          8,420

               Goodwill                                                                    39,742                         36,014

    Total assets                                                                       $389,345                       $350,056
                                                                                       ========                       ========


    Liabilities and stockholders' deficit

    Current liabilities:

               Accounts payable                                                           $16,356                        $13,743

               Accrued payroll and related benefits                                        11,656                          8,494

               Other accrued liabilities                                                   12,465                          9,374

               Deferred revenue                                                           209,904                        167,562

               Deferred income taxes                                                          563                            260

               Note payable                                                                   252                            237
                                                                                            ---

    Total current liabilities                                                           251,196                        199,670


    Long-term liabilities:

               Deferred revenue, non-current                                              163,253                        145,595

               Deferred income taxes, non-current                                           2,396                             84

               Note payable, non-current                                                    4,383                          4,635

               Other long-term liabilities                                                  7,201                          5,727


    Stockholders' deficit:

               Common stock                                                                    53                             52

               Additional paid-in capital                                                 316,035                        278,551

               Accumulated other comprehensive loss                                       (4,233)                         (817)

               Accumulated deficit                                                      (350,939)                     (283,441)
                                                                                      ---------

    Total stockholders' deficit                                                        (39,084)                       (5,655)

    Total liabilities and
     stockholders' deficit                                                             $389,345                       $350,056
                                                                                       ========                       ========


                                                                                                      Barracuda Networks, Inc.

                                                                                          Condensed Consolidated Statements of Operations

                                                                                            (in thousands, except per share information)

                                                                                                            (Unaudited)


                                                                       Three months ended February                Twelve months ended February
                                                                                  28,                                          28,
                                                                    ---------------------------                -----------------------------

                                                                                             2015                                       2014                   2015                     2014
                                                                                             ----                                       ----                   ----                     ----


    Revenue:

                Appliance                                $20,942                                       $18,331                                  $83,146                 $71,914

                Subscription                              51,236                                        42,003                                  194,300                 161,873
                ------------

                                    Total revenue                                          72,178                                     60,334                277,446                  233,787


    Cost of revenue                                                                       15,779                                     13,270                 58,667                   53,768
                                                                                          ------                                     ------                 ------                   ------


    Gross profit                                                                          56,399                                     47,064                218,779                  180,019


    Operating expenses:

                 Research and
                 development                              16,570                                        12,579                                   58,737                  47,142

                 Sales and
                 marketing                                31,621                                        28,011                                  125,526                 114,024

                 General and
                 administrative                            9,491                                         7,838                                   35,438                  29,856
                ------------

                                    Total operating expenses                               57,682                                     48,428                219,701                  191,022
                                                                                           ------                                     ------                -------                  -------

    Loss from operations                                                                 (1,283)                                   (1,364)                 (922)                (11,003)


    Other income (expense), net                                                          (1,147)                                       380                (3,674)                      51
                                                                                          ------                                        ---                 ------                      ---


    Loss before income taxes and non-
     controlling interest                                                                (2,430)                                     (984)               (4,596)                (10,952)

    Benefit from (provision for) income
     taxes                                                                              (65,921)                                     3,830               (62,902)                   6,565
                                                                                         -------                                      -----                -------                    -----

    Consolidated net income (loss)                                                      (68,351)                                     2,846               (67,498)                 (4,387)


    Net loss attributable to non-
     controlling interest                                                                      -                                       200                      -                     761

    Net income (loss) attributable to
     Barracuda Networks, Inc.                                                          $(68,351)                                    $3,046              $(67,498)                $(3,626)
                                                                                        ========                                     ======               ========                  =======


    Net income (loss) per share attributable to Barracuda Networks, Inc.:

                Basic                                                                       $(1.30)                                     $0.06                $(1.30)                 $(0.10)


                Diluted                                  $(1.30)                                        $0.06                                  $(1.30)                $(0.10)
                =======


    Weighted-average shares used to compute net income (loss) per share
     attributable to Barracuda Networks, Inc.:

                Basic                                                                        52,629                                     50,883                 51,898                   35,355


                Diluted                                   52,629                                        53,557                                   51,898                  35,355
                =======


                                                       Barracuda Networks, Inc.

                                    Reconciliation of Selected GAAP to Non-GAAP Financial Measures

                                                            (in thousands)

                                                              (Unaudited)


                                                                    Three months ended February                   Twelve months ended February
                                                                               28,                                         28,
                                                                   ----------------------------                    -----------------------------

                                                                           2015                      2014                        2015                  2014
                                                                           ----                      ----                        ----                  ----


    GAAP cost of revenue                                   $15,779                    $13,270                  $58,667                       $53,768

                                Amortization of intangible assets
                                (1)                                           404                       672                       2,283                 3,690

                               Depreciation expense (2)                       930                       623                       3,175                 2,558

                                Stock-based compensation expense
                                (3)                                           143                        55                         389                   201

    Non-GAAP cost of revenue                               $14,302                    $11,920                  $52,820                       $47,319
                                                           =======                    =======                  =======                       =======


    GAAP sales and marketing
     expense                                               $31,621                    $28,011                 $125,526                      $114,024

                                Amortization of intangible assets
                                (1)                                           181                       300                       1,160                 1,641

                               Depreciation expense (2)                        34                        40                         153                   212

                                Stock-based compensation expense
                                (3)                                         1,265                       789                       3,811                 2,067

                                Acquisition and other non-
                                recurring charges (4)                          99                         -                         99                     -

    Non-GAAP sales and
     marketing expense                                     $30,042                    $26,882                 $120,303                      $110,104
                                                           =======                    =======                 ========                      ========


    GAAP research and
     development expense                                   $16,570                    $12,579                  $58,737                       $47,142

                               Depreciation expense (2)                       187                       139                         670                   549

                                Stock-based compensation expense
                                (3)                                         1,510                       900                       4,410                 2,374

                                Acquisition and other non-
                                recurring charges (4)                         378                       372                       1,505                 1,247

    Non-GAAP research and
     development expense                                   $14,495                    $11,168                  $52,152                       $42,972
                                                           =======                    =======                  =======                       =======


    GAAP general and
     administrative expense                                 $9,491                     $7,838                  $35,438                       $29,856

                                Amortization of intangible assets
                                (1)                                             -                        -                          -                   23

                               Depreciation expense (2)                       355                       220                       1,190                   688

                                Stock-based compensation expense
                                (3)                                         2,458                     1,542                       8,448                 6,195

                                Acquisition and other non-
                                recurring charges (4)                         199                        19                         686                   598

    Non-GAAP general and
     administrative expense                                 $6,479                     $6,057                  $25,114                       $22,352
                                                            ======                     ======                  =======                       =======


    GAAP total expense                                     $73,461                    $61,698                 $278,368                      $244,790

                                Amortization of intangible assets
                                (1)                                           585                       972                       3,443                 5,354

                               Depreciation expense (2)                     1,506                     1,022                       5,188                 4,007

                                Stock-based compensation expense
                                (3)                                         5,376                     3,286                      17,058                10,837

                                Acquisition and other non-
                                recurring charges (4)                         676                       391                       2,290                 1,845

    Non-GAAP total expense                                 $65,318                    $56,027                 $250,389                      $222,747
                                                           =======                    =======                 ========                      ========

                               Depreciation expense (2)                     1,506                     1,022                       5,188                 4,007

    Non-GAAP total expense
     including depreciation                                $66,824                    $57,049                 $255,577                      $226,754
                                                           =======                    =======                 ========                      ========


                                                       Barracuda Networks, Inc.

                                    Reconciliation of Selected GAAP to Non-GAAP Financial Measures

                                             (in thousands, except per share information)

                                                              (Unaudited)


                                                                    Three months ended February                   Twelve months ended February
                                                                               28,                                         28,
                                                                   ----------------------------                    -----------------------------

                                                                           2015                      2014                        2015                  2014
                                                                           ----                      ----                        ----                  ----


    GAAP operating loss                                   $(1,283)                  $(1,364)                  $(922)                    $(11,003)

                                Amortization of intangible assets
                                (1)                                           585                       972                       3,443                 5,354

                                Stock-based compensation expense
                                (3)                                         5,376                     3,286                      17,058                10,837

                                Acquisition and other non-
                                recurring charges (4)                         676                       391                       2,290                 1,845

    Non-GAAP operating income                               $5,354                     $3,285                  $21,869                        $7,033
                                                            ======                     ======                  =======                        ======


    GAAP net income (loss)
     attributable to Barracuda
     Networks, Inc.                                      $(68,351)                    $3,046                $(67,498)                     $(3,626)

                                Amortization of intangible assets
                                (1)                                           585                       972                       3,443                 5,354

                                Stock-based compensation expense
                                (3)                                         5,376                     3,286                      17,058                10,837

                                Acquisition and other non-
                                recurring charges (4)                         676                       391                       2,290                 1,845

                                Income tax effect of non-GAAP
                                exclusions (5)                             64,326                   (3,982)                     56,445               (7,968)

                                Other expense (income) adjustments
                                (6)                                         1,111                     (508)                      3,330                 (602)

                               Non-controlling interest (7)                     -                    (200)                          -                (761)

    Non-GAAP net income                                     $3,723                     $3,005                  $15,068                        $5,079
                                                            ======                     ======                  =======                        ======


    Non-GAAP diluted earnings
     per share (8)                                           $0.07                      $0.06                    $0.28                         $0.10
                                                             =====                      =====                    =====                         =====

    Weighted-average shares
     used to compute diluted
     earnings per share                                                  54,656                    53,557                      54,002                49,051
                                                                         ======                    ======                      ======                ======


             (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, and the payments made
                     under the terms of certain acquisition
                     agreements.
                    ----------------------------------------


             (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, and (iii)
                     acquisition and other non-recurring
                     charges. In addition, we excluded a tax
                     charge for establishing a valuation
                     allowance. In assessing the
                     realizability of our deferred tax
                     assets, we recorded a non-cash charge
                     to income tax expense to establish a
                     valuation allowance against a
                     significant portion of those assets,
                     including U.S. federal and state
                     deferred tax assets and certain foreign
                     deferred tax assets. As part of
                     establishing the valuation allowance,
                     we will assess and record any necessary
                     quarterly changes to the valuation
                     allowance and the corresponding income
                     tax expense or benefit, which will be
                     excluded for non-GAAP purposes as we
                     believe it will provide investors with
                     a better view of ongoing performance
                     and future liquidity of our business.
                    ---------------------------------------


             (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 income
                     (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-Controlling Interest. We provide
                     non-GAAP information that includes the
                     results related to entities in which we
                     hold a minority interest. We believe
                     that adjusting for these amounts allows
                     us to better compare results from
                     period to period in order to assess the
                     ongoing operating results of our
                     business, including entities for which
                     we own a minority interest.
                    ---------------------------------------


             (8)    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 February                   Twelve months ended February
                                                                              28,                                          28,
                                                                  ----------------------------                    -----------------------------

                                                                           2015                      2014                       2015                     2014
                                                                           ----                      ----                       ----                     ----


    GAAP net income (loss)
     attributable to Barracuda
     Networks, Inc.                                     $(68,351)                    $3,046                 $(67,498)                   $(3,626)

                               Deferred revenue, end of period            372,862                   313,157                    372,862                  313,157

                                Less: Deferred revenue, beginning
                                of period                               (357,694)                (298,823)                 (313,157)               (261,243)

                                Less: Deferred costs, end of
                                period                                   (57,936)                 (50,279)                  (57,936)                (50,279)

                                Deferred costs, beginning of
                                period                                     56,114                    48,270                     50,279                   39,470

                               Other expense (income), net                  1,147                     (380)                     3,674                     (51)

                                Provision for (benefit from)
                                income taxes                               65,921                   (3,830)                    62,902                  (6,565)

                                Acquisition and other non-
                                recurring charges                             676                       391                      2,290                    1,845

                               Stock-based compensation expense             5,376                     3,286                     17,058                   10,837

                               Amortization of intangible assets              585                       972                      3,443                    5,354

                               Depreciation expense                         1,506                     1,022                      5,188                    4,007

    Adjusted EBITDA (1)                                   $20,206                    $16,832                   $79,105                     $52,906
                                                          =======                    =======                   =======                     =======


             (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 (income), net, (ii)
                     provision for (benefit from)
                     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 February
                     28, 2015 and November 30, 2014
                     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                 Twelve months ended
                                       February 28,                    February 28,
                                    -------------------               --------------------

                                         2015                   2014                   2015        2014
                                         ----                   ----                   ----        ----


     GAAP
     cash
     flows
     from
     operating
     activities                       $21,030                $19,534                $54,104     $42,210

     Purchase
     of
     property
     and
     equipment                        (5,458)               (1,759)              (12,517)    (7,616)

     Acquisition
     and
     other
     non-
     recurring
     charges
     (1)                                 667                    902                  2,017       4,818

     Adjusted
     free
     cash
     flow
     (2)                             $16,239                $18,677                $43,604     $39,412
                                      =======                =======                =======     =======



             (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 our previous CEO
                     transition, (ii) payments
                     associated with an internal
                     investigation of export control
                     compliance, and (iii) 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.
                     --------------------------------

             (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.
                     --------------------------------


    On a trailing 12-month basis, adjusted free cash flow was the following:


                                                                                                                        Trailing 12-month
                                                                                                                        as of February 28,
                                                                                                                                                      2015
                                                                                                                                                      ----

                                                May 31,                      August 31,          November 30,             February 28,
                                                              2014                          2014                   2014                          2015
                                                              ----                          ----                   ----                          ----


    GAAP cash
     flows from
     operating
     activities                                             $5,407                       $15,475                $12,192                       $21,030           $54,104

    Purchase of
     property and
     equipment                                             (1,589)                      (2,186)               (3,284)                      (5,458)         (12,517)

    Acquisition
     and other
     non-
     recurring
     charges                                                   385                           390                    575                           667             2,017

    Adjusted free
     cash flow                                              $4,203                       $13,679                 $9,483                       $16,239           $43,604
                                                            ======                       =======                 ======                       =======           =======


                                                  Barracuda Networks, Inc.

                                      Reconciliation of GAAP Revenue to Gross Billings

                                                       (in thousands)

                                                        (Unaudited)


                                                           Three months ended February                Twelve months ended February
                                                                      28,                                      28,
                                                          ----------------------------                -----------------------------

                                                                   2015                    2014                     2015                     2014
                                                                   ----                    ----                     ----                     ----


    GAAP Revenue                                  $72,178                    $60,334              $277,446                    $233,787

                           Total deferred revenue, end of
                           period                                 372,862                 313,157                  372,862                  313,157

                           Less:  total deferred revenue,
                           beginning of period                  (357,694)              (298,823)               (313,157)               (261,243)

                          Deferred revenue adjustments              8,779                   7,371                   27,141                   24,297
                                                                  -----

                           Total change in deferred
                           revenue and adjustments                 23,947                  21,705                   86,846                   76,211

    Gross billings (1)(2)                         $96,125                    $82,039              $364,292                    $309,998
                                                  =======                    =======              ========                    ========


             (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
                     February 28, 2015 and November
                     30, 2014 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 February 28, 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 February               Twelve months ended February
                                                                                                                  28,                                       28,
                                                                                                      ----------------------------                -----------------------------

                                                                                                               2015                   2014                       2015                      2014
                                                                                                               ----                   ----                       ----                      ----


    Operating activities

    Consolidated net income
     (loss)                                                                                 $(68,351)                     $2,846             $(67,498)                   $(4,387)

    Adjustments to reconcile consolidated net income (loss) to
     net cash provided by operating activities:

                                                                  Depreciation and amortization                 2,091                  1,994                      8,631                     9,109

                                                                  Stock-based compensation                      5,376                  3,286                     17,058                    10,837

                                                                   Excess tax benefits from equity
                                                                   compensation plans                         (2,195)               (1,139)                   (8,947)                  (1,513)

                                                                   Loss on disposal of property and
                                                                   equipment                                       61                      8                        158                       304

                                                                  Deferred income taxes                        69,458                (4,293)                    59,261                  (12,633)

                                                                  Other                                           221                   (61)                       328                      (61)

    Changes in operating assets and liabilities:

                                                                  Accounts receivable, net                      (160)                   910                   (12,945)                  (3,631)

                                                                  Inventories, net                                682                    718                      1,189                     (509)

                                                                  Income taxes, net                           (3,625)                   149                      (485)                    2,696

                                                                  Deferred costs                              (2,101)               (2,008)                   (8,189)                 (10,809)

                                                                  Other current assets                          (726)                 (473)                     (887)                    (456)

                                                                  Other non-current assets                    (1,412)                 (275)                   (1,271)                      108

                                                                  Accounts payable                              3,239                  3,490                      2,835                     1,183

                                                                   Accrued payroll and related
                                                                   benefits                                     1,656                  1,217                      1,959                     (212)

                                                                  Other accrued liabilities                     1,691                (1,229)                     3,478                      (18)

                                                                  Other long-term liabilities                      31                     74                         88                       405

                                                                  Deferred revenue                             15,094                 14,320                     59,341                    51,797
                                                                                                             ------

    Net cash provided by
     operating activities                                                                                    21,030                 19,534                     54,104                    42,210


    Investing activities

                                                                   Proceeds from the sale of
                                                                   marketable securities                          249                  1,516                        249                     1,516

                                                                   Proceeds from the maturity of
                                                                   marketable securities                          735                      -                       735                         -

                                                                  Purchase of marketable securities          (30,489)                     -                  (41,977)                        -

                                                                  Purchase of property and equipment          (5,458)               (1,759)                  (12,517)                  (7,616)

                                                                  Purchase of intangible assets                     -                     -                      (38)                     (28)

                                                                   Purchase of investment in non-
                                                                   marketable equity and debt
                                                                   securities                                   (100)                     -                   (1,200)                    (310)

                                                                   Business combinations, net of cash
                                                                   acquired                                         -                     -                   (4,791)                  (8,475)
                                                                  ---------------------------------

    Net cash used in investing
     activities                                                                                            (35,063)                 (243)                  (59,539)                 (14,913)


    Financing activities

                                                                   Net proceeds from initial public
                                                                   offering                                         -               (2,767)                         -                   75,490

                                                                   Proceeds from issuance of common
                                                                   stock                                        3,916                  1,381                     16,476                     3,310

                                                                   Taxes paid related to net share
                                                                   settlement of equity awards                (1,515)               (2,303)                   (5,369)                  (3,101)

                                                                  Repurchase of common stock                        -                     -                         -                    (723)

                                                                  Dividends paid                                    -                     -                         -                  (1,419)

                                                                   Repayment of employee loans, net
                                                                   of loans extended                            1,150                  1,912                      1,921                     3,655

                                                                   Excess tax benefits from equity
                                                                   compensation plans                           2,195                  1,139                      8,947                     1,513

                                                                  Repayment of note payable                      (60)                  (56)                     (237)                    (222)

                                                                  Other                                          (34)                     -                      (34)                        -
                                                                  -----

    Net cash provided by (used
     in) financing activities                                                                                 5,652                  (694)                    21,704                    78,503


    Effect of exchange rate
     changes on cash and cash
     equivalents                                                                                              (141)                    33                      (775)                     (16)
                                                                                                               ----                    ---                       ----                       ---

    Net increase (decrease) in
     cash and cash equivalents                                                                              (8,522)                18,630                     15,494                   105,784


    Cash and cash equivalents
     at beginning of period                                                                                 159,895                117,249                    135,879                    30,095

    Cash and cash equivalents
     at end of period                                                                        $151,373                    $135,879              $151,373                    $135,879
                                                                                             ========                    ========              ========                    ========

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SOURCE Barracuda Networks, Inc.