BARRACUDA NETWORKS INC CAMPBELL, Calif., July 7, 2016 /PRNewswire/ -- Barracuda Networks, Inc. (NYSE: CUDA), a leading provider of cloud-enabled security and data protection solutions, today announced results for its first quarter fiscal 2017 that ended May 31, 2016.
http://photos.prnewswire.com/prnvar/20131113/SF16521LOGO
"We delivered strong results in the quarter and exceeded guidance on revenue, billings and earnings per share. We grew revenue 11% year-over-year and more than doubled our non-GAAP earnings when compared with the first quarter of last year," said BJ Jenkins, president and CEO. "Our performance in the quarter was largely driven by execution on our strategy, which includes focusing our efforts to be the leader in security and data protection for our customers and expanding our routes to market, specifically in the MSP and public cloud channels. We made solid progress on these initiatives in the first quarter, and as a result, we believe we are building market momentum, and expect continued growth in our core product areas and in our bottom-line."
First Quarter Fiscal 2017 Financial Summary
-- Total revenue increased 11% to $86.7 million, compared with $78.0
million in the first quarter of fiscal 2016. Recurring subscription
revenue grew to $65.3 million, up 20% from $54.3 million in the first
quarter of fiscal 2016, representing 75% of total revenue, and Appliance
revenue was $21.3 million, compared with $23.7 million in the first
quarter of fiscal 2016.
-- Gross billings were $98.2 million, compared with $94.3 million in the
first quarter of fiscal 2016. The number of active subscribers grew
approximately 14% to over 286,000 and the dollar-based renewal rate was
93% for the quarter.
-- GAAP net income was $2.8 million, or $0.05 per share, based on a diluted
share count of 52.9 million, compared to a GAAP net loss of $3.8
million, or $0.07 per share, in the first quarter of fiscal 2016.
-- Non-GAAP net income was $10.7 million, or $0.20 per share, based on a
diluted share count of 52.9 million. Non-GAAP net income excludes $7.9
million in stock-based compensation expense, $1.9 million in
amortization of intangibles, $1.3 million of income tax effect, $1.0
million in other income and $0.4 million in acquisition and other
non-recurring charges.
Management Changes
As previously announced, Hatem Naguib and Ezra Hookano have joined Barracuda as vice presidents to drive the security business and channel management, respectively, as well as strengthen the leadership team and drive focus in our strategic areas.
After over ten successful years with Barracuda, David Faugno will be stepping down as CFO on August 1, and Dustin Driggs, Barracuda's chief accounting officer and worldwide controller since 2012, will replace Faugno as Barracuda's CFO. "Dave has helped build Barracuda from its earliest days to become the business that so many of our customers rely upon today," said Jenkins. "His contributions to our success have been significant, not the least of which is the tremendous team he has built and grown. He has been grooming Dustin for this position as part of our succession planning, and he and I are confident that Dustin will do a great job leading the organization through its next chapter. We are also fortunate to have Dave continue to help us as an advisor to support a smooth transition."
Driggs has been with Barracuda since 2007, and prior to joining Barracuda, worked at Cisco Systems, Inc. in a variety of financial leadership roles. Driggs began his career in public accounting with Coopers and Lybrand and holds a B.S. in Accounting from Loyola Marymount University and an M.B.A. from Santa Clara University.
Recent Company Highlights
-- Expanded MSP Security Portfolio - Announced availability of Barracuda
NextGen Firewall - Intronis MSP Edition, providing managed service
providers with a comprehensive way to easily deploy and manage
next-generation firewall technology for customers adopting cloud-based
applications and operating dispersed network environments.
-- Continued Public Cloud Momentum - Recognized as 2016 Microsoft Azure
Certified ISV Solution Partner of the Year based on Barracuda's
continued technology innovation in offering solutions designed to help
customers seamlessly move workloads and applications into Azure.
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 investors.barracuda.com, and via replay beginning approximately one hour 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 14, 2016 by dialing 1-877-344-7529 in the U.S. or 1-412-317-0088 for international callers, and entering conference ID 10087504. Additional information can be found in an accompanying supplemental investor slide presentation located at investors.barracuda.com.
Forward-Looking Statements
This announcement contains forward-looking statements related to our strategy and focus areas, and potential results from new initiatives and new channels and go-to-market strategies that involve risks and uncertainties, including statements regarding our expectations regarding financial performance, 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 our 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 we might experience delays in the development of new technology and products; risks related to pending or future acquisitions; customer response to our new technology and products; risks related to pending or future litigation and regulatory matters; a dependency on third parties for certain components of our products and the impact of changes in our management team. The company undertakes no obligation to update the forward-looking information in this release. More information about potential factors that could affect our business and financial results is included in our 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 Statements 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 (NYSE: CUDA) simplifies IT with cloud-enabled solutions that empower customers to protect their networks, applications, and data, regardless of where they reside. 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 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: Maria Riley; +1 415-217-7722; 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)
As of As of
May 31, 2016 February 29, 2016
------------ -----------------
Assets
Current assets:
Cash and cash equivalents $126,982 $118,654
Marketable securities 39,727 36,394
Accounts receivable, net of allowance
for doubtful accounts 35,501 36,520
Inventories, net 6,011 5,648
Deferred costs 32,072 31,943
Other current assets 13,255 12,450
------
Total current assets 253,548 241,609
Property and equipment, net 31,468 31,910
Deferred costs, non-current 26,989 27,019
Deferred income taxes, non-current 2,993 2,992
Other non-current assets 8,039 7,293
Intangible assets, net 37,516 39,386
Goodwill 70,160 69,595
Total assets $430,713 $419,804
======== ========
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable $12,696 $15,939
Accrued payroll and related benefits 12,521 12,371
Other accrued liabilities 20,031 19,495
Deferred revenue 236,856 235,411
Note payable 273 268
---
Total current liabilities 282,377 283,484
Long-term liabilities:
Deferred revenue, non-current 156,216 157,363
Deferred income taxes, non-current 2,678 2,478
Note payable, non-current 4,044 4,115
Other long-term liabilities 4,654 4,462
Stockholders' deficit:
Common stock 52 52
Additional paid-in capital 346,993 337,439
Accumulated other comprehensive loss (3,838) (4,509)
Accumulated deficit (362,463) (365,080)
---------
Total stockholders' deficit (19,256) (32,098)
Total liabilities and
stockholders' deficit $430,713 $419,804
======== ========
Barracuda Networks, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share information)
(Unaudited)
Three months ended May 31,
--------------------------
2016 2015
---- ----
Revenue:
Appliance $21,333 $23,682
Subscription 65,321 54,292
Total revenue 86,654 77,974
Cost of revenue 20,241 15,966
------ ------
Gross profit 66,413 62,008
Operating expenses:
Research and
development 19,207 18,000
Sales and
marketing 31,330 34,132
General and
administrative 10,772 10,698
Total operating expenses 61,309 62,830
------ ------
Income (loss) from operations 5,104 (822)
Other income (expense), net 990 (568)
--- ----
Income (loss) before income taxes 6,094 (1,390)
Provision for income taxes (3,310) (2,442)
------ ------
Net income (loss) $2,784 $(3,832)
====== =======
Net income (loss) per share:
Basic $0.05 $(0.07)
Diluted $0.05 $(0.07)
Weighted-average shares used to compute net
income (loss) per share:
Basic 52,285 52,996
Diluted 52,854 52,996
Barracuda Networks, Inc.
Reconciliation of Selected GAAP to Non-GAAP Financial Measures
(in thousands)
(Unaudited)
Three months ended May 31,
--------------------------
2016 2015
---- ----
GAAP cost of revenue $20,241 $15,966
Amortization of intangible assets
(1) 1,276 404
Depreciation expense (2) 1,612 1,032
Stock-based compensation expense
(3) 298 211
Non-GAAP cost of revenue $17,055 $14,319
======= =======
GAAP sales and marketing expense $31,330 $34,132
Amortization of intangible assets
(1) 600 174
Depreciation expense (2) 53 26
Stock-based compensation expense
(3) 1,848 1,550
Acquisition and other non-
recurring charges (4) - (325)
Non-GAAP sales and marketing expense $28,829 $32,707
======= =======
GAAP research and development expense $19,207 $18,000
Depreciation expense (2) 153 169
Stock-based compensation expense
(3) 2,464 1,835
Acquisition and other non-
recurring charges (4) 217 1,105
Non-GAAP research and development
expense $16,373 $14,891
======= =======
GAAP general and administrative
expense $10,772 $10,698
Depreciation expense (2) 587 369
Stock-based compensation expense
(3) 3,327 2,948
Acquisition and other non-
recurring charges (4) 175 293
Non-GAAP general and administrative
expense $6,683 $7,088
====== ======
GAAP total expense $81,550 $78,796
Amortization of intangible assets
(1) 1,876 578
Depreciation expense (2) 2,405 1,596
Stock-based compensation expense
(3) 7,937 6,544
Acquisition and other non-
recurring charges (4) 392 1,073
Non-GAAP total expense $68,940 $69,005
======= =======
Depreciation expense (2) 2,405 1,596
Non-GAAP total expense including
depreciation $71,345 $70,601
======= =======
Barracuda Networks, Inc.
Reconciliation of Selected GAAP to Non-GAAP Financial Measures
(in thousands, except per share information)
(Unaudited)
Three months ended May 31,
--------------------------
2016 2015
---- ----
GAAP operating income (loss) $5,104 $(822)
Amortization of intangible assets
(1) 1,876 578
Stock-based compensation expense
(3) 7,937 6,544
Acquisition and other non-
recurring charges (4) 392 1,073
Non-GAAP operating income $15,309 $7,373
======= ======
GAAP net income (loss) $2,784 $(3,832)
Amortization of intangible assets
(1) 1,876 578
Stock-based compensation expense
(3) 7,937 6,544
Acquisition and other non-
recurring charges (4) 392 1,073
Income tax effect on non-GAAP
exclusions (5) (1,287) 240
Other expense (income) adjustments
(6) (977) 534
Non-GAAP net income $10,725 $5,137
======= ======
Non-GAAP diluted earnings per share (7) $0.20 $0.09
Weighted-average shares used to compute
diluted earnings per share 52,854 55,034
(1) Amortization of Intangible Assets.We provide non-GAAP information
which excludes expenses for the amortization of intangible assets,
as well as certain losses on disposal and impairment 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 and settlements 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 consist of realized gains and losses from the sale of
marketable securities and 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-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,
--------------------------
2016 2015
---- ----
GAAP net income (loss) $2,784 $(3,832)
Deferred revenue, end of period 393,072 381,003
Less: Deferred revenue, beginning
of period (392,774) (372,862)
Less: Deferred costs, end of
period (59,061) (59,255)
Deferred costs, beginning of
period 58,962 57,936
Other expense (income), net (990) 568
Provision for income taxes 3,310 2,442
Acquisition and other non-
recurring charges 392 1,073
Stock-based compensation expense 7,937 6,544
Amortization of intangible assets 1,876 578
Depreciation expense 2,405 1,596
Adjusted EBITDA (1) $17,913 $15,791
======= =======
(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 income
taxes, (iii)
acquisition
and other
non-
recurring
charges,
(iv) stock-
based
compensation
expense, (v)
amortization
of
intangible
assets,
including
certain
losses on
disposal and
impairment
of
intangible
assets, and
(vi)
depreciation
expense,
including
certain
losses on
disposal of
fixed
assets. The
deferred
revenue
balances for
the periods
presented
exclude any
remaining
acquisition
date
deferred
revenue
amounts
assumed in
connection
with our
acquisition
of C2C
Systems
Limited,
which closed
in the
second
quarter of
fiscal 2015.
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,
--------------------------
2016 2015
---- ----
GAAP cash flows from operating
activities $12,114 $6,302
Purchases of property and
equipment (1,949) (1,876)
Acquisition and other non-
recurring charges (1) 745 886
Adjusted free cash flow (2) $10,910 $5,312
======= ======
(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,
--------------------------
2016 2015
---- ----
GAAP Revenue $86,654 $77,974
Total deferred revenue, end of
period 393,072 381,003
Less: total deferred revenue,
beginning of period (392,774) (372,862)
Deferred revenue adjustments 11,249 8,159
Total change in deferred
revenue and adjustments 11,547 16,300
Gross billings (1)(2) $98,201 $94,274
======= =======
(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 for
the periods
presented
exclude any
remaining
acquisition
date
deferred
revenue
amounts
assumed in
connection
with our
acquisition
of C2C
Systems
Limited,
which closed
in the
second
quarter of
fiscal 2015.
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,
2015, 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,
--------------------------
2016 2015
---- ----
Operating activities
Net income (loss) $2,784 $(3,832)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, amortization and
impairment expense 4,281 2,174
Stock-based compensation expense 7,937 6,544
Excess tax benefits from equity
compensation plans (141) (2,144)
Deferred income taxes 261 145
Other (225) 337
Changes in operating assets and
liabilities:
Accounts receivable, net 1,015 (2,339)
Inventories, net (363) (263)
Income taxes, net 1,452 2,289
Deferred costs (26) (1,379)
Other assets (1,669) 283
Accounts payable (3,283) (3,113)
Accrued payroll and related
benefits 69 (61)
Other liabilities (255) (352)
Deferred revenue 277 8,013
Net cash provided by operating
activities 12,114 6,302
Investing activities
Proceeds from the sale of
marketable securities 5,351 3,203
Proceeds from the maturity of
marketable securities 3,831 3,026
Purchases of marketable securities (11,572) (8,493)
Purchases of property and
equipment (1,949) (1,876)
Purchases of non-marketable
investments (636) -
Business combinations, net of cash
acquired (183) -
Net cash used in investing activities (5,158) (4,140)
Financing activities
Proceeds from issuance of common
stock 3,031 3,248
Taxes paid related to net share
settlement of equity awards (1,554) (2,176)
Repurchases of common stock (280) -
Employee loans extended, net of
repayment (34) (276)
Excess tax benefits from equity
compensation plans 141 2,144
Repayment of note payable (67) (63)
Other - (156)
Net cash provided by financing
activities 1,237 2,721
Effect of exchange rate changes on
cash and cash equivalents 135 (194)
--- ----
Net increase in cash and cash
equivalents 8,328 4,689
Cash and cash equivalents at
beginning of period 118,654 151,373
Cash and cash equivalents at end of
period $126,982 $156,062
======== ========
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SOURCE Barracuda Networks, Inc.
