BARRACUDA NETWORKS INC CAMPBELL, Calif., Oct. 10, 2017 /PRNewswire/ -- Barracuda Networks, Inc. (NYSE: CUDA), a leading provider of cloud-enabled security and data protection solutions, today announced results for its second quarter fiscal 2018 that ended August 31, 2017.
"We delivered a strong second quarter achieving core billings growth of 22% year-over-year and gross billings of $108.5 million, which was above our guidance. Our performance was driven by continued traction in the areas of the market where we have been investing, especially email and public cloud security, and we are pleased to see that our efforts are generating stronger top-line results," said BJ Jenkins, president and CEO. "Excluding non-core billings, we have generated four consecutive quarters of double-digit billings growth. We believe we have the right strategy in place, are focused on the right areas of the market, and provide innovative security solutions that are affordable and consumable in the form that is best suited for our customers' needs."
Second Quarter Fiscal 2018 Financial Summary
-- Total revenue increased 7% to $94.3 million, compared with $87.9 million
in the second quarter of fiscal 2017. Subscription revenue grew to $76.0
million, up 14% from $66.9 million in the second quarter of fiscal 2017,
representing 81% of total revenue, and appliance revenue was $18.3
million, compared with $21.0 million in the second quarter of fiscal
2017.
-- Gross billings were $108.5 million, compared with $100.3 million in the
second quarter of fiscal 2017. Billings for core products increased 22%
to $70.9 million, compared with $58.1 million in the second quarter of
fiscal 2017. The number of active subscribers grew 17% to over 348,000
as of August 31, 2017. The annualized renewal rate from subscriptions on
a dollar basis was 91%.
-- GAAP net income was $1.6 million, or $0.03 per share, based on a diluted
share count of 54.6 million, compared to a GAAP net income of $2.4
million, or $0.05 per share, in the second quarter of fiscal 2017.
-- Non-GAAP net income was $9.1 million, or $0.17 per share, based on a
diluted share count of 54.6 million. Non-GAAP net income excludes $9.6
million in stock-based compensation expense, $3.6 million in income tax
benefits, $1.7 million in amortization of intangibles, $1.1 million in
other net income and $0.9 million in acquisition and other charges.
The reconciliation between non-GAAP and their most closely comparable GAAP equivalent is contained in the tables below.
Recent Company Highlights
-- Continued Public Cloud Momentum - Announced several new enhancements to
the Barracuda NextGen Firewall and Barracuda Web Application Firewall
(WAF) to help customers accelerate Microsoft Azure adoption. Barracuda
cloud-ready firewalls now natively send publishing logs to the Microsoft
OMS dashboard. Barracuda NextGen Firewall also includes enhanced SD-WAN
capabilities to easily and cost effectively provide secure, optimized
site-to-cloud connectivity. Additionally, new enhancements to the
Barracuda WAF REST API provides security for automation and
orchestration to DevOps tools, which complements the new integration
with Puppet to give customers greater security control over their web
applications. These enhancements, combined with the addition of
Barracuda Vulnerability Remediation Service, automate the identification
and remediation of vulnerabilities in web-facing applications deployed
in Azure.
-- Expanded Cloud-Based Data Protection Functionality - Announced new
Barracuda Backup feature that provides customers, resellers, and MSPs
with the ability to replicate data securely and efficiently from either
on-premises physical or virtual backup appliances to Amazon Web Services
(AWS). With this new feature, organizations can further leverage the
cloud as a simple and cost-effective way to protect their data from
accidental or malicious data loss, including natural disasters or
security threats like ransomware. The ability to replicate data to AWS
also helps prepare customers for current and future public cloud
migrations.
-- Rebranded MSP Business and Enhanced ECHOPlatform - Launched new
Barracuda MSP brand, formerly known as Intronis MSP Solutions. Along
with the rebranding to Barracuda MSP, Barracuda established two new
educational initiatives - SmarterMSP.com and Ready, Set, Managed! -
designed to help IT channel providers successfully deliver managed
services. Additionally, released a new version of ECHOPlatform which
includes enhancements that further centralize and streamline management
of Barracuda security and data protection solutions for new and existing
MSP partners.
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 Oct. 17, 2017 by dialing 1-877-344-7529 in the U.S. or 1-412-317-0088 for international callers, and entering conference ID 10111827. Additional supplemental financial information will also be accessible on the company's website at investors.barracuda.com.
Forward-Looking Statements
This announcement contains forward-looking statements related to our strategy and core products, the adoption of our cloud and security and data protection products, our MSP products, and the potential benefits from newly launched and updated products to customers and partners, and potential results from new initiatives, channels and go-to-market strategies that involve risks and uncertainties, including statements regarding our expectations regarding financial performance, and the potential impact of our new and updated products. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including, but not limited to: fluctuations in demand for our products and services; a highly competitive and evolving business environment for network security and storage solutions; the company's effectiveness in controlling expenses and timing of infrastructure costs; 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 recent 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 and on our conference call with non-GAAP net income, non-GAAP operating income, non-GAAP gross margins, non-GAAP operating expenses, adjusted EBITDA and 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 reconciliations of these non-GAAP measures to their comparable GAAP measures 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.
Beginning in the third quarter of fiscal 2017, we modified our reporting practices and our historical presentation of adjusted EBITDA and free cash flow. We no longer adjust for changes in deferred revenue and associated deferred costs in our calculation of adjusted EBITDA, and for free cash flow we will not adjust for the cash payment impact of acquisition and other charges. Prior period information has been recast to conform to the adjusted calculations.
Forward-looking non-GAAP financial measures included in Barracuda's guidance exclude amortization of intangible assets, stock-based compensation expense, acquisition and other charges, income tax effects related to such exclusions and other expense (income) adjustments. Barracuda does not provide reconciliations of its forward-looking non-GAAP financial measures to the corresponding GAAP measures due to the high variability of, and difficulty in making accurate forecasts and projections with respect to, the items excluded from these non-GAAP financial measures. In particular, stock-based compensation and related taxes are impacted by the company's future hiring and retention needs, as well as the future fair market value of its common stock, all of which is difficult to predict and subject to constant change. Accordingly, reconciliations of its forward-looking non-GAAP financial measures to the corresponding GAAP measures are not available without unreasonable effort. The actual amounts of these excluded items will have a significant impact on the company's GAAP operating income (loss) and net income (loss) per diluted share.
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 deployment configurations. Barracuda's customer-centric business model focuses on delivering high-value, subscription-based IT solutions that provide end-to-end network and data protection. For additional information, please visit barracuda.com.
Barracuda Networks, Barracuda, and the Barracuda Networks logo are registered 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 August 31, As of February 28,
2017 (1) 2017
------- ----
Assets
Current assets:
Cash and cash equivalents $125,585 $120,194
Marketable securities 80,991 79,915
Accounts receivable, net of
allowance for doubtful
accounts 40,899 40,560
Inventories, net 6,520 5,847
Deferred costs 34,206 32,598
Other current assets 10,473 16,295
------ ------
Total current assets 298,674 295,409
Property and equipment, net 32,043 29,979
Deferred costs, non-current 30,246 27,285
Deferred income taxes, non-
current 1,023 1,554
Other non-current assets 15,320 8,607
Intangible assets, net 28,692 32,145
Goodwill 70,653 69,795
------ ------
Total assets $476,651 $464,774
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $7,710 $11,439
Accrued payroll and related
benefits 12,825 13,593
Other accrued liabilities 10,773 12,942
Deferred revenue 245,517 239,796
Note payable - 4,115
--- -----
Total current liabilities 276,825 281,885
Long-term liabilities:
Deferred revenue, non-current 168,148 167,286
Deferred income taxes, non-
current 3,073 2,803
Other long-term liabilities 6,776 6,377
Stockholders' equity:
Common stock 53 53
Additional paid-in capital 384,395 370,745
Accumulated other
comprehensive loss (3,076) (5,226)
Accumulated deficit (359,543) (359,149)
-------- --------
Total stockholders' equity 21,829 6,423
------ -----
Total liabilities and
stockholders' equity $476,651 $464,774
======== ========
(1) As of March 1, 2017, we adopted
ASU 2016-09 which allowed for
an accounting policy election
to either estimate the number
of share-based awards that are
expected to vest or account for
forfeitures when they occur. We
elected to account for
forfeitures when they occur and
adopted this change on a
modified retrospective basis.
As a result, we recorded the
cumulative effect of the change
as a $0.4 million increase to
the March 1, 2017 opening
accumulated deficit balance on
the condensed consolidated
balance sheets.
Barracuda Networks, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share information)
(Unaudited)
Three Months Ended August 31, Six Months Ended August 31,
2017 2016 2017 2016
---- ---- ---- ----
Revenue:
Appliance $18,347 $21,034 $38,612 $42,367
Subscription 75,978 66,896 149,892 132,217
------ ------ ------- -------
Total revenue 94,325 87,930 188,504 174,584
Cost of revenue 25,198 20,240 48,846 40,481
------ ------ ------ ------
Gross profit 69,127 67,690 139,658 134,103
Operating expenses:
Research and development 19,440 18,446 38,796 37,653
Sales and marketing 38,561 32,144 74,781 63,474
General and administrative 10,338 10,969 21,282 21,741
------ ------ ------ ------
Total operating expenses 68,339 61,559 134,859 122,868
------ ------ ------- -------
Income from operations 788 6,131 4,799 11,235
Other income, net 1,124 1,515 2,308 2,505
----- ----- ----- -----
Income before income taxes 1,912 7,646 7,107 13,740
Provision for income taxes (358) (5,209) (2,881) (8,519)
---- ------ ------ ------
Net income $1,554 $2,437 $4,226 $5,221
====== ====== ====== ======
Net income per share:
Basic $0.03 $0.05 $0.08 $0.10
Diluted $0.03 $0.05 $0.08 $0.10
Weighted-average shares used to compute net
income per share:
Basic 53,040 52,265 52,958 52,275
Diluted 54,609 53,321 54,470 53,088
Barracuda Networks, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three Months Ended August 31, Six Months Ended August 31,
2017 2016 (2) 2017 2016 (2)
---- ------- ---- -------
Operating activities
Net income $1,554 $2,437 $4,226 $5,221
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization
and impairment expense 4,329 4,186 8,545 8,467
Stock-based compensation
expense 9,628 7,896 17,011 15,833
Excess tax benefits from
equity compensation plans
(1) - (650) - (791)
Deferred income taxes 152 213 804 474
Other 250 (503) (261) (728)
Changes in operating assets and liabilities:
Accounts receivable, net (1,190) 1,717 (318) 2,732
Inventories, net (78) 280 (744) (83)
Income taxes, net (1,234) 2,146 8,122 3,598
Deferred costs (3,314) 366 (4,738) 340
Other assets (816) 1,049 (5,027) (597)
Accounts payable (4,363) (3,396) (3,043) (6,679)
Accrued payroll and related
benefits 621 1,057 (641) 1,126
Other liabilities (832) (507) (481) (762)
Deferred revenue 6,294 4,179 7,755 4,456
----- ----- ----- -----
Net cash provided by
operating activities 11,001 20,470 31,210 32,607
Investing activities
Purchases of marketable
securities (10,960) (10,205) (21,769) (21,777)
Proceeds from the sale of
marketable securities 7,466 4,943 12,250 10,294
Proceeds from the maturity
of marketable securities 3,085 4,187 8,342 8,018
Purchases of non-marketable
investments (4,000) - (4,000) (636)
Purchases of property and
equipment (3,079) (1,020) (7,816) (2,969)
Purchases of intangible
assets - (1,000) - (1,000)
Business combinations, net
of cash acquired - (60) (506) (243)
Payments for the sale of net
liabilities (550) - (800) -
---- --- ---- ---
Net cash used in investing
activities (8,038) (3,155) (14,299) (8,313)
Financing activities
Proceeds from issuance of
common stock 1,696 1,838 3,009 4,869
Taxes paid related to net
share settlement of equity
awards (2,608) (990) (4,474) (2,544)
Repurchases of common stock - (6,961) (6,546) (7,241)
Excess tax benefits from
equity compensation plans
(1) - 650 - 791
Repayment of employee loans,
net of loans extended - 32 31 (2)
Repayment of note payable (4,044) (66) (4,115) (133)
Payments of acquisition-
related liabilities - - (743) -
--- --- ---- ---
Net cash used in financing
activities (4,956) (5,497) (12,838) (4,260)
Effect of exchange rate
changes 907 328 1,335 463
--- --- ----- ---
Net increase in cash, cash
equivalents and restricted
cash (1,086) 12,146 5,408 20,497
Cash, cash equivalents and
restricted cash at
beginning of period 127,331 127,684 120,837 119,333
------- ------- ------- -------
Cash, cash equivalents and
restricted cash at end of
period $126,245 $139,830 $126,245 $139,830
======== ======== ======== ========
(1) As of March 1, 2017, we adopted ASU 2016-09 which
required any excess tax benefits to be classified as an
operating activity. Prior to the new standard, we were
required to present excess tax benefits as a cash inflow
from financing activities with a corresponding cash
outflow from operating activities. We elected to apply
the amendment related to the presentation of excess tax
benefits on the statements of cash flows prospectively,
while the prior period presented has not been adjusted.
(2) We early adopted ASU 2016-18 which requires that a
statement of cash flows explain the change during the
period for the total of cash, cash equivalents and
restricted cash. Therefore, restricted cash has been
included with cash and cash equivalents when reconciling
the beginning-of-period and end-of-period total
amounts presented and has been applied retrospectively
to the prior period presented. Net cash flows for the
three and six months ended August 31, 2016 did not
significantly change as a result.
Barracuda Networks, Inc.
Reconciliation of Selected GAAP to Non-GAAP Financial Measures
(in thousands)
(Unaudited)
Three Months Ended August 31, Six Months Ended August 31,
2017 2016 2017 2016
---- ---- ---- ----
GAAP cost of revenue $25,198 $20,240 $48,846 $40,481
Amortization of intangible
assets (1) 1,220 1,257 2,441 2,533
Depreciation expense (2) 1,825 1,565 3,506 3,177
Stock-based compensation
expense (3) 496 338 922 636
Acquisition and other charges (4) 847 - 847 -
--- --- --- ---
Non-GAAP cost of revenue $20,810 $17,080 $41,130 $34,135
======= ======= ======= =======
GAAP sales and marketing
expense $38,561 $32,144 $74,781 $63,474
Amortization of intangible
assets (1) 506 599 1,012 1,199
Depreciation expense (2) 87 55 159 108
Stock-based compensation
expense (3) 3,400 1,943 5,534 3,791
-----
Non-GAAP sales and marketing
expense $34,568 $29,547 $68,076 $58,376
======= ======= ======= =======
GAAP research and development
expense $19,440 $18,446 $38,796 $37,653
Depreciation expense (2) 140 138 305 291
Stock-based compensation
expense (3) 3,121 2,608 5,808 5,072
Acquisition and other charges
(4) - - (160) 217
--- --- ---- ---
Non-GAAP research and
development expense $16,179 $15,700 $32,843 $32,073
======= ======= ======= =======
GAAP general and
administrative expense $10,338 $10,969 $21,282 $21,741
Depreciation expense (2) 549 572 1,120 1,159
Stock-based compensation
expense (3) 2,611 3,007 4,747 6,334
Acquisition and other charges
(4) 8 409 1,087 584
--- --- ----- ---
Non-GAAP general and
administrative expense $7,170 $6,981 $14,328 $13,664
====== ====== ======= =======
GAAP total expense $93,537 $81,799 $183,705 $163,349
Amortization of intangible
assets (1) 1,726 1,856 3,453 3,732
Depreciation expense (2) 2,601 2,330 5,090 4,735
Stock-based compensation
expense (3) 9,628 7,896 17,011 15,833
Acquisition and other charges
(4) 855 409 1,774 801
--- --- ----- ---
Non-GAAP total expense $78,727 $69,308 $156,377 $138,248
======= ======= ======== ========
Depreciation expense (2) 2,601 2,330 5,090 4,735
----- ----- ----- -----
Non-GAAP total expense
including depreciation $81,328 $71,638 $161,467 $142,983
======= ======= ======== ========
Barracuda Networks, Inc.
Reconciliation of Selected GAAP to Non-GAAP Financial Measures
(in thousands, except per share information)
(Unaudited)
Three Months Ended August 31, Six Months Ended August 31,
2017 2016 2017 2016
---- ---- ---- ----
GAAP operating income $788 $6,131 $4,799 $11,235
Amortization of intangible assets
(1) 1,726 1,856 3,453 3,732
Stock-based compensation expense
(3) 9,628 7,896 17,011 15,833
Acquisition and other charges (4) 855 409 1,774 801
--- --- ----- ---
Non-GAAP operating income $12,997 $16,292 $27,037 $31,601
======= ======= ======= =======
GAAP net income $1,554 $2,437 $4,226 $5,221
Amortization of intangible assets
(1) 1,726 1,856 3,453 3,732
Stock-based compensation expense
(3) 9,628 7,896 17,011 15,833
Acquisition and other charges (4) 855 409 1,774 801
Income tax effect on non-GAAP
exclusions (5) (3,556) 316 (5,310) (971)
Other income adjustments (6) (1,078) (1,497) (2,044) (2,474)
------ ------ ------ ------
Non-GAAP net income $9,129 $11,417 $19,110 $22,142
====== ======= ======= =======
Non-GAAP diluted earnings per
share (7) $0.17 $0.21 $0.35 $0.42
Weighted-average shares used to
compute diluted earnings per
share 54,609 53,321 54,470 53,088
(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 stock-based compensation expense
allows for financial results that are
more indicative of our continuing
operations. We also 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 Charges. We
exclude certain expense items resulting
from acquisitions and other charges,
which we believe are non-recurring,
infrequent, and/or unusual in nature,
can vary significantly in amount and
frequency, and are unrelated to our
ongoing operating performance. 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) acquisition-related expenses for
legal, accounting, and other
professional fees, integration costs,
fair value remeasurements of contingent
consideration obligations and
contingent consideration payments made
under the terms of acquisition
agreements, and (ii) other costs,
losses and gains that are non-
recurring, infrequent, and/or unusual
in nature, such as expenses incurred in
connection with litigation, export
compliance, intellectual property
settlement, indirect tax costs, and
other matters, as well as a gain
resulting from the disposition of net
liabilities related to our CudaCam
product offerings.
----------------------------------------
(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 charges, and (iv) quarterly
changes to the valuation allowance
previously established.
---------------------------------------
(6) Other Income Adjustments. We provide
non-GAAP information that excludes the
effect of certain other income and
losses. These adjustments may consist
of realized gains and losses from the
sale of marketable securities, foreign
currency remeasurement gains and losses
and impairment charges related to non-
marketable investments. 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,
net. We believe that eliminating these
items from our non-GAAP measures is
useful to investors, because these
items 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. Non-GAAP diluted earnings per
share 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 to Adjusted EBITDA
(in thousands)
(Unaudited)
Three Months Ended August 31, Six Months Ended August 31,
2017 2016 2017 2016
---- ---- ---- ----
GAAP net income $1,554 $2,437 $4,226 $5,221
Other income, net (1,124) (1,515) (2,308) (2,505)
Provision for income taxes 358 5,209 2,881 8,519
Acquisition and other
charges 855 409 1,774 801
Stock-based compensation
expense 9,628 7,896 17,011 15,833
Amortization of intangible
assets 1,726 1,856 3,453 3,732
Depreciation expense 2,601 2,330 5,090 4,735
----- ----- ----- -----
Adjusted EBITDA (1) $15,598 $18,622 $32,127 $36,336
======= ======= ======= =======
(1) Adjusted EBITDA. Beginning in the
third quarter of fiscal 2017, we
modified our reporting practices
and our historical presentation of
adjusted EBITDA by no longer
adjusting for changes in deferred
revenue and associated deferred
costs. These changes do not impact
our current and historical
presentation of GAAP results.
Prior period information has been
recast to conform to the adjusted
calculation. We define adjusted
EBITDA as net income plus non-
cash and non-operating charges
which include: (i) other income,
net, (ii) provision for income
taxes, (iii) acquisition and other
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. 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 Free Cash Flow
(in thousands)
(Unaudited)
Three Months Ended August 31, Six Months Ended August 31,
2017 2016 2017 2016
---- ---- ---- ----
GAAP cash flows from
operating activities $11,001 $20,470 $31,210 $32,607
Purchases of property
and equipment (3,079) (1,020) (7,816) (2,969)
Free cash flow (1) $7,922 $19,450 $23,394 $29,638
====== ======= ======= =======
(1) Free Cash Flow. Beginning in
the third quarter of fiscal
2017, we modified our
reporting practices and our
historical presentation of
adjusted free cash flow by no
longer adjusting free cash
flow for the cash payment
impact of acquisition and
other charges. These changes
do not impact our current and
historical presentation of
GAAP results. Prior period
information has been recast to
conform to the adjusted
calculation. We define free
cash flow as cash flows from
operating activities less the
purchases of property and
equipment. We believe 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 August 31, Six Months Ended August 31,
2017 2016 2017 2016
---- ---- ---- ----
GAAP Revenue $94,325 $87,930 $188,504 $174,584
Total deferred revenue,
end of period 413,665 398,878 413,665 398,878
Less: total deferred
revenue, beginning of
period (407,524) (393,072) (407,082) (392,774)
Deferred revenue
adjustments 8,032 6,562 18,635 17,811
----- ----- ------ ------
Total change in deferred
revenue and adjustments 14,173 12,368 25,218 23,915
------ ------ ------ ------
Gross billings (1)(2) $108,498 $100,298 $213,722 $198,499
======== ======== ======== ========
(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. 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 average
exchange rates for the second
quarter of fiscal 2018 were
used to convert current and
comparable prior period gross
billings rather than the actual
exchange rates in effect during
the respective period.
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SOURCE Barracuda Networks, Inc.
