GIGAMON INC SANTA CLARA, Calif., July 27, 2017 /PRNewswire/ -- Gigamon Inc. (NYSE:GIMO), the leader in traffic visibility solutions, today released financial results for its second quarter ended July 1, 2017.
Second Quarter 2017 Financial Highlights:
-- Revenue of $69.1 million, compared to $75.1 million in the second
quarter of fiscal 2016.
-- GAAP gross margin was 81%, compared to 82% in the second quarter of
fiscal 2016.
-- Non-GAAP gross margin was 82%, consistent with the second quarter of
fiscal 2016.
-- GAAP net loss was $7.3 million, or $0.20 per basic and diluted share,
compared to GAAP net income of $34.0 million, or $0.91 per diluted
share, in the second quarter of fiscal 2016 that included a one-time tax
benefit of $30.5 million.
-- Non-GAAP net income was $4.0 million or $0.10 per diluted share,
compared to non-GAAP net income of $11.5 million, or $0.30 per diluted
share, in the second quarter of fiscal 2016.
-- Cash and short-term investments were $258.8 million, down $6 million
from the first quarter of 2017 and up $31 million from the second
quarter of fiscal 2016.
"We delivered revenue within our guidance range with continued strong gross margin, and achieved lower than planned operating expenses, generating EPS ahead of our guidance range," said Paul Hooper, Chief Executive Officer of Gigamon. "We also saw a number of positive trends in the quarter, supporting our confidence in a return to growth in the second half of 2017. We had 16 customers with bookings over one-million-dollars in the quarter, our second highest total ever. Further, our flagship GigaVUE-HC2 product revenue rebounded strongly, Asia Pacific posted a record quarter, and we saw record attach rates for our GigaSMART® software modules and our recently released inline SSL solution and our new high-performance and high-density chassis, the GigaVUE-HC3, performed well in the quarter while also building significant pipeline for the second half. We continue to believe our rapid pace of innovation, leadership in the visibility market and seed-and-grow strategy will deliver long-term value to our shareholders."
Recent Business Highlights:
-- Introduced a new Defender Lifecycle Model to address the increasing
speed, volume and polymorphic nature of network cyber threats. This new
approach is based on the GigaSECURE® Security Delivery Platform to
better integrate security technologies that detect, predict and contain
threats throughout networks.
-- Named the market leader in the Network Monitoring Equipment (NME),
Annual Report 2017, by IHS Markit. Gigamon extended to 36 percent market
share, nearly twice the share of its nearest competitor.
-- Announced general availability of the GigaVUE-HC3 high performance
appliance addressing the requirements of compute-intensive traffic
applications in large enterprise data centers.
-- Released a new SSL inline capability to address the requirements of
customers looking to manage encrypted traffic at scale as increased data
volumes are surpassing the capacity and performance of security tools.
-- Extended cloud visibility into Amazon Web Services (AWS) GovCloud
region, enabling compliance with stringent, federal operational
requirements.
-- Appointed Burney Barker, as Senior Vice President of Worldwide Sales to
drive direct and indirect Sales execution.
Conference Call Information:
Gigamon will host a conference call and live webcast for analysts and investors at 5:00 p.m. Eastern time on July 27, 2017. This news release and a supplemental financial presentation will be available on the company's website prior to the conference call. Parties in the United States and Canada can access the call by dialing +1 (888) 417-2254, using conference code 3532506. International parties can access the call by dialing +1 (719) 325-2463, using conference code 3532506.
The webcast will be accessible on Gigamon's investor relations website at http://investor.gigamon.com for a period of one year. A telephonic replay of the conference call will be available through Thursday, August 3, 2017. To access the replay, parties in the United States and Canada should call +1 (866) 375-1919 and enter conference code 3532506. International parties should call +1 (719) 457-0820 and enter conference code 3532506.
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and accompanying tables contain certain non-GAAP financial measures that exclude stock-based compensation and related payroll taxes, income tax effects of stock-based compensation expense, non-recurring items such as advisory services and other costs related to non-routine stockholder matters, and periodic tax items. Non-GAAP financial measures do not have any standardized meaning and our non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies. Gigamon considers these non-GAAP financial measures important because they provide useful measures of the operating performance of the company, exclusive of unusual events or factors that do not directly affect what we consider core to our operating performance, and are used by the company's management for that purpose. In addition, investors often use similar measures to evaluate the operating performance of a company. We present non-GAAP financial measures for supplemental informational purposes only to provide additional information in understanding the company's operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP. Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures attached to this release.
During the conference call to discuss these financial results, Gigamon expects to give guidance for the third quarter of fiscal 2017 on a non-GAAP basis. Gigamon does not provide reconciliations of its forward-looking non-GAAP financial measures to the corresponding GAAP measures due to the high variability and difficulty in making accurate forecasts and projections with respect to stock-based compensation and related payroll taxes, and income tax effect of stock-based compensation expense, which are excluded from these non-GAAP measures. In particular, stock-based compensation and related taxes are impacted by future hiring and retention needs, as well as the future fair market value of Gigamon's common stock, all of which are difficult to predict and subject to change. The actual amounts of these excluded items will have a significant impact on Gigamon's GAAP net income (loss) per diluted share and GAAP tax provision. Accordingly, reconciliations of Gigamon's forward-looking non-GAAP financial measures to the corresponding GAAP measures are not available without unreasonable effort.
Legal Notice Regarding Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements in this press release include, but are not limited to, our expectations regarding the future growth of our business and our efforts to deliver long-term value to our shareholders. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include our ability to continue to deliver and improve our products and successfully develop new products; customer acceptance and purchase of our existing products and new products; our ability to retain existing customers and generate new customers; the market for network traffic visibility solutions not continuing to develop; competition from other products and services; and general market, political, economic and business conditions. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the period ended December 31, 2016 and our most recently filed quarterly report on Form 10-Q. The forward-looking statements in this press release are based on information available to Gigamon as of the date hereof, and Gigamon disclaims any obligation to update any forward-looking statements, except as required by law.
Gigamon
Gigamon (NYSE: GIMO) provides active visibility into physical and virtual network traffic, enabling stronger security and superior performance. Gigamon's Visibility Fabric and GigaSECURE®, the industry's first Security Delivery Platform, deliver advanced intelligence so that security, network and application performance management solutions in enterprise, government and service provider networks operate more efficiently and effectively. See more at www.gigamon.com, the Gigamon Blog, or follow Gigamon on Twitter, LinkedIn or Facebook.
Gigamon Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016
------------ ------------ ------------ ------------
Revenue:
Product $43,192 $51,308 $87,202 $95,970
Service 25,945 23,795 51,502 46,344
------ ------ ------ ------
Total revenue 69,137 75,103 138,704 142,314
Cost of revenue:
Product 10,424 11,510 21,028 22,217
Service 2,894 2,339 5,600 4,421
----- ----- ----- -----
Total cost of revenue 13,318 13,849 26,628 26,638
------ ------ ------ ------
Gross profit 55,819 61,254 112,076 115,676
Operating expenses:
Research and development 20,519 17,250 40,668 32,608
Sales and marketing 36,892 28,843 70,333 56,500
General and administrative 10,281 9,147 19,336 17,142
------ ----- ------ ------
Total operating expenses 67,692 55,240 130,337 106,250
------ ------ ------- -------
Income (loss) from operations (11,873) 6,014 (18,261) 9,426
Other income (expense):
Interest income 477 219 833 426
Other expense, net (75) (173) (192) (242)
--- ---- ---- ----
Income (loss) before income tax
(provision) benefit (11,471) 6,060 (17,620) 9,610
Income tax benefit (provision) 4,133 27,899 8,045 27,320
Net income (loss) $(7,338) $33,959 $(9,575) $36,930
======= ======= ======= =======
Net income (loss) per share:
Basic $(0.20) $0.97 $(0.26) $1.06
====== ===== ====== =====
Diluted $(0.20) $0.91 $(0.26) $1.00
====== ===== ====== =====
Weighted average shares used in computing net income
(loss) per share:
Basic 36,890 35,146 36,728 34,878
====== ====== ====== ======
Diluted 36,890 37,262 36,728 36,792
====== ====== ====== ======
Gigamon Inc.
Consolidated Balance Sheets
(In thousands)
(unaudited)
July 1, 2017 December 31, 2016
------------ -----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $151,106 $148,926
Short-term investments 107,722 109,238
Accounts receivable, net 63,519 75,522
Inventories, net 14,301 11,347
Prepaid expenses and other current assets 12,176 9,909
------ -----
Total current assets 348,824 354,942
Property and equipment, net 14,299 11,809
Deferred tax assets, non-current 48,866 33,094
Other assets, non-current 1,379 1,154
----- -----
TOTAL ASSETS $413,368 $400,999
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $4,063 $5,208
Accrued liabilities 24,768 34,649
Deferred revenue 65,652 68,997
------ ------
Total current liabilities 94,483 108,854
Deferred revenue, non-current 31,021 28,785
Deferred and other tax liabilities, non-current 475 201
Other liabilities, non-current 510 499
--- ---
TOTAL LIABILITIES 126,489 138,339
STOCKHOLDERS' EQUITY
Common stock 4 4
Additional paid-in-capital 287,145 256,774
Accumulated other comprehensive loss (104) (17)
Retained earnings (Accumulated deficit) (166) 5,899
---- -----
TOTAL STOCKHOLDERS' EQUITY 286,879 262,660
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $413,368 $400,999
======== ========
Gigamon Inc.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Three Months Ended Six Months Ended
July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016
------------ ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(7,338) $33,959 $(9,575) $36,930
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 2,176 1,749 4,197 3,173
Stock-based compensation expense 16,464 10,604 29,018 18,780
Deferred and other income taxes (4,220) (30,774) (8,357) (30,891)
Inventory write-down 725 183 931 272
Other 113 287 142 312
Changes in operating assets and liabilities:
Accounts receivable (7,103) 910 11,893 3,362
Inventories (3,403) (1,235) (4,173) (3,593)
Prepaid expenses and other assets 770 (2,110) (2,022) (1,238)
Accounts payable (2,943) (261) (1,225) (515)
Accrued liabilities and other
liabilities 3,797 7,375 (10,574) (5,890)
Deferred revenue 838 1,007 (1,109) (2,275)
Net cash provided by (used in)
operating activities (124) 21,694 9,146 18,427
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments (35,448) (34,724) (69,158) (63,831)
Proceeds from maturities of short-
term investments 33,212 34,461 70,712 61,247
Purchase of property and equipment (2,507) (2,371) (5,202) (4,478)
------ ------ ------ ------
Net cash provided by (used in)
investing activities (4,743) (2,634) (3,648) (7,062)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from employee stock
purchase plan - - 4,956 3,368
Proceeds from exercise of stock
options 362 2,749 943 4,126
Shares repurchased for tax
withholdings on vesting of
restricted stock units (4,065) (2,444) (8,404) (3,829)
------
Net cash provided by (used in)
financing activities (3,703) 305 (2,505) 3,665
------ --- ------ -----
NET INCREASE (DECREASE) IN CASH,
CASH EQUIVALENTS AND RESTRICTED
CASH (8,570) 19,365 2,993 15,030
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH -Beginning of
period 160,489 115,877 148,926 120,212
------- ------- ------- -------
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH -End of period $151,919 $135,242 $151,919 $135,242
======== ======== ======== ========
Gigamon Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except percentages)
(unaudited)
Three Months Ended Six Months Ended
July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016
Total Revenue $69,137 $75,103 $138,704 $142,314
======= ======= ======== ========
Reconciliation of GAAP Gross Profit and
GAAP Gross Margin to Non-GAAP Gross
Profit and Non-GAAP Gross Margin:
GAAP gross profit 55,819 61,254 112,076 115,676
Stock-based
compensation expense 792 538 1,469 1,008
Stock-based
compensation related
payroll taxes 29 20 60 36
Non-GAAP gross profit $56,640 $61,812 $113,605 $116,720
======= ======= ======== ========
GAAP gross margin 81% 82% 81% 81%
Non-GAAP gross margin 82% 82% 82% 82%
Reconciliation of GAAP Operating Income
(Loss) to Non-GAAP Operating Income:
GAAP operating income
(loss) $(11,873) $6,014 $(18,261) $9,426
Stock-based
compensation expense 16,464 10,605 29,018 18,780
Stock-based
compensation related
payroll taxes 330 274 837 557
Non-recurring items 586 - 586 -
Non-GAAP operating
income $5,507 $16,893 $12,180 $28,763
====== ======= ======= =======
Reconciliation of GAAP Net Income (Loss)
to Non-GAAP Net Income:
GAAP net income
(loss) $(7,338) $33,959 $(9,575) $36,930
Stock-based
compensation expense 16,464 10,605 29,018 18,780
Stock-based
compensation related
payroll taxes 330 274 837 557
Non-recurring items 586 - 586 -
Income tax effect of
Non-GAAP
adjustments (6,086) (33,330) (12,279) (36,583)
Non-GAAP net income $3,956 $11,508 $8,587 $19,684
====== ======= ====== =======
Gigamon Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
July 1, July 2, July 1, July 2,
2017 2016 2017 2016
---- ---- ---- ----
Reconciliation of GAAP Diluted Net Income (Loss)
per Share to Non-GAAP Diluted Net Income per
Share:
GAAP diluted net income (loss)
per share $(0.20) $0.91 $(0.26) $1.00
------ ----- ------ -----
Stock-based compensation expense 0.45 0.28 0.79 0.51
Stock-based compensation
related payroll taxes 0.01 0.01 0.02 0.02
Non-recurring items 0.01 - 0.01 -
Income tax effect of non-GAAP
adjustments (0.16) (0.89) (0.33) (1.00)
Impact of difference in number
of GAAP and non-GAAP diluted
shares (0.01) (0.01) (0.02) (0.01)
Non-GAAP diluted net income per
share $0.10 $0.30 $0.21 $0.52
===== ===== ===== =====
Reconciliation of GAAP Diluted Weighted-Average
Number of Shares to Non-GAAP Diluted Weighted-
Average Number of Shares:
GAAP diluted weighted-average
number of shares 36,890 37,262 36,728 36,792
Dilutive impact due to stock-
based compensation 3,987 793 3,776 786
Non-GAAP diluted weighted-
average number of shares 40,877 38,055 40,504 37,578
====== ====== ====== ======
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SOURCE Gigamon
