GIGAMON INC SANTA CLARA, Calif., Oct. 26, 2017 /PRNewswire/ -- Gigamon Inc. (NYSE:GIMO), the leader in traffic visibility solutions, today released financial results for its third quarter ended September 30, 2017.
Third Quarter 2017 Financial Highlights:
-- Revenue of $79.2 million, compared to $83.5 million in the third quarter
of fiscal 2016.
-- GAAP gross margin was 82%, compared to 83% in the third quarter of
fiscal 2016.
-- Non-GAAP gross margin was 82%, compared to 83% in the third quarter of
fiscal 2016.
-- GAAP net income was $2.2 million, or $0.06 per basic and diluted share,
compared to GAAP net income of $6.1 million, or $0.16 per diluted share,
in the third quarter of fiscal 2016.
-- Non-GAAP net income was $9.5 million, or $0.23 per diluted share,
compared to non-GAAP net income of $14.0 million, or $0.36 per diluted
share, in the third quarter of fiscal 2016.
-- Cash and short-term investments were $264.6 million, up $6 million from
the second quarter of 2017 and up $20 million from the third quarter of
fiscal 2016.
Conference Call Information:
In light of the pending acquisition by Elliott Management, Gigamon will not hold its earnings conference call today to discuss its third quarter 2017 results. Additionally, Gigamon will not be providing financial guidance.
Additional Information and Where to Find It
Gigamon will file relevant materials with the Securities and Exchange Commission (the "SEC") in connection with the proposed merger, including a preliminary proxy statement on Schedule 14A. Under the proposed terms, promptly after filing its definitive proxy statement with the SEC, Gigamon will mail or otherwise make available the definitive proxy statement and a proxy card to each stockholder entitled to vote at the special meeting relating to the proposed transaction. GIGAMON STOCKHOLDERS AND OTHER INVESTORS ARE ADVISED TO CAREFULLY READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN RESPECT OF THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE, AS THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND THE PARTIES TO THE PROPOSED MERGER. Gigamon stockholders and other investors may obtain free copies of the definitive proxy statement, the preliminary proxy statement and other relevant materials in connection with the proposed merger (when they become available), along with other documents filed by Gigamon with the SEC, at the SEC's website (http://www.sec.gov).
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events, including the timing of the proposed transaction and other information related to the proposed transaction. 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 the proposed transaction and our expectations, strategy, plans or intentions regarding it. Forward-looking statements in this press release include, but are not limited to, our pending acquisition by Elliott Management. 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 the risk that the transaction may not be completed in a timely manner or at all, which may adversely affect our business and the trading price of our common stock; the failure to satisfy the conditions to closing of the transaction, including obtaining regulatory and shareholder approval; the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement; the potential for litigation relating to the transaction; the risk that the definitive agreement may be terminated in circumstances that require us to pay a termination fee; the effect of the announcement or pendency of the transaction on our business relationships, results of operations and business generally; risks that the proposed transaction disrupts current plans and operations; risk related to diverting management's attention; 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.
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 restructuring charges and 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.
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 Nine Months Ended
September 30, October 1, 2016 September 30, October 1, 2016
2017 2017
---- ----
Revenue:
Product $51,861 $59,835 $139,063 $155,805
Service 27,330 23,677 78,832 70,021
Total revenue 79,191 83,512 217,895 225,826
Cost of revenue:
Product 11,401 12,197 32,429 34,414
Service 3,049 2,141 8,649 6,562
----- ----- ----- -----
Total cost of revenue 14,450 14,338 41,078 40,976
------ ------ ------ ------
Gross profit 64,741 69,174 176,817 184,850
Operating expenses:
Research and development 18,783 18,306 59,451 50,914
Sales and marketing 34,914 31,994 105,247 88,494
General and administrative 10,697 8,887 30,033 26,029
------ ----- ------ ------
Total operating expenses 64,394 59,187 194,731 165,437
------ ------ ------- -------
Income (loss) from operations 347 9,987 (17,914) 19,413
Other income (expense):
Interest income 541 235 1,374 661
Other expense, net (241) (144) (433) (386)
---- ---- ---- ----
Income (loss) before income tax
(provision) benefit 647 10,078 (16,973) 19,688
Income tax benefit (provision) 1,531 (3,999) 9,576 23,321
Net income (loss) $2,178 $6,079 $(7,397) $43,009
====== ====== ======= =======
Net income (loss) per share:
Basic $0.06 $0.17 $(0.20) $1.22
===== ===== ====== =====
Diluted $0.06 $0.16 $(0.20) $1.15
===== ===== ====== =====
Weighted average shares used in computing net income
(loss) per share:
Basic 37,196 35,770 36,885 35,171
====== ====== ====== ======
Diluted 39,574 38,113 36,885 37,341
====== ====== ====== ======
Gigamon Inc.
Consolidated Balance Sheets
(In thousands)
(unaudited)
September 30, December 31,
2017 2016
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $173,182 $148,926
Short-term investments 91,380 109,238
Accounts receivable, net 71,741 75,522
Inventories, net 15,472 11,347
Prepaid expenses and other current assets 12,048 9,909
------ -----
Total current assets 363,823 354,942
Property and equipment, net 20,735 11,809
Deferred tax assets, non-current 50,734 33,094
Other assets, non-current 1,103 1,154
----- -----
TOTAL ASSETS $436,395 $400,999
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $5,585 $5,208
Accrued liabilities 26,897 34,649
Deferred revenue 69,960 68,997
------ ------
Total current liabilities 102,442 108,854
Deferred revenue, non-current 32,126 28,785
Deferred and other tax liabilities, non-current 553 201
Other liabilities, non-current 933 499
--- ---
TOTAL LIABILITIES 136,054 138,339
STOCKHOLDERS' EQUITY
Common stock 4 4
Additional paid-in-capital 298,400 256,774
Accumulated other comprehensive loss (75) (17)
Retained earnings (Accumulated deficit) 2,012 5,899
----- -----
TOTAL STOCKHOLDERS' EQUITY 300,341 262,660
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $436,395 $400,999
======== ========
Gigamon Inc.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
September October 1, September October 1,
30, 2017 2016 30, 2017 2016
-------- ---- -------- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $2,178 $6,079 $(7,397) $43,009
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 2,214 1,642 6,411 4,815
Stock-based compensation expense 10,973 10,104 39,991 28,884
Deferred and other income taxes (1,790) (679) (10,147) (31,570)
Other 6 54 148 366
Changes in operating assets and liabilities:
Accounts receivable (8,221) (14,929) 3,672 (11,567)
Inventories (1,336) (862) (4,761) (4,316)
Prepaid expenses and other assets 78 (1,753) (1,944) (2,991)
Accounts payable 1,757 569 532 54
Accrued liabilities and other
liabilities 1,083 9,227 (9,308) 3,470
Deferred revenue 5,413 3,290 4,304 1,015
Net cash provided by (used in)
operating activities 12,355 12,742 21,501 31,169
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments (8,941) (20,942) (78,099) (84,773)
Proceeds from maturities of short-
term investments 25,300 24,500 96,012 85,747
Purchase of property and equipment (6,977) (1,523) (12,179) (6,001)
------ ------ ------- ------
Net cash provided by (used in)
investing activities 9,382 2,035 5,734 (5,027)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from employee stock
purchase plan 4,487 3,417 9,443 6,785
Proceeds from exercise of stock
options 40 5,528 983 9,654
Shares repurchased for tax
withholdings on vesting of
restricted stock units (4,188) (3,411) (12,592) (7,240)
------
Net cash provided by (used in)
financing activities 339 5,534 (2,166) 9,199
--- ----- ------ -----
NET INCREASE (DECREASE) IN CASH,
CASH EQUIVALENTS AND RESTRICTED
CASH 22,076 20,311 25,069 35,341
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH -Beginning of
period 151,919 135,242 148,926 120,212
------- ------- ------- -------
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH -End of period $173,995 $155,553 $173,995 $155,553
======== ======== ======== ========
Gigamon Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except percentages)
(unaudited)
Three Months Ended Nine Months Ended
September 30,
2017 October 1, September 30, 2017 October 1,
2016 2016
----
Total Revenue $79,191 $83,512 $217,895 $225,826
======= ======= ======== ========
Reconciliation of GAAP Gross Profit and
GAAP Gross Margin to Non-GAAP Gross
Profit and Non-GAAP Gross Margin:
GAAP gross profit 64,741 69,174 176,817 184,850
Stock-based
compensation expense 333 519 1,802 1,527
Stock-based
compensation related
payroll taxes 19 28 79 64
Non-GAAP gross profit $65,093 $69,721 $178,698 $186,441
======= ======= ======== ========
GAAP gross margin 82% 83% 81% 82%
Non-GAAP gross margin 82% 83% 82% 83%
Reconciliation of GAAP Operating Income
(Loss) to Non-GAAP Operating Income:
GAAP operating income
(loss) $347 $9,987 $(17,914) $19,413
Stock-based
compensation expense 10,973 10,104 39,991 28,884
Stock-based
compensation related
payroll taxes 199 414 1,036 971
Non-recurring items 2,305 - 2,891 -
Non-GAAP operating
income $13,824 $20,505 $26,004 $49,268
======= ======= ======= =======
Reconciliation of GAAP Net Income (Loss)
to Non-GAAP Net Income:
GAAP net income (loss) $2,178 $6,079 $(7,397) $43,009
Stock-based
compensation expense 10,973 10,104 39,991 28,884
Stock-based
compensation related
payroll taxes 199 414 1,036 971
Non-recurring items 2,305 - 2,891 -
Income tax effect of
Non-GAAP adjustments (6,189) (2,593) (18,468) (39,176)
Non-GAAP net income $9,466 $14,004 $18,053 $33,688
====== ======= ======= =======
Gigamon Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, October 1, September 30, October 1,
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 $0.06 $0.16 $(0.20) $1.15
----- ----- ------ -----
Stock-based compensation expense 0.27 0.27 1.08 0.77
Stock-based compensation
related payroll taxes 0.01 0.01 0.03 0.03
Non-recurring items 0.06 - 0.08 -
Income tax effect of non-GAAP
adjustments (0.16) (0.07) (0.50) (1.05)
Impact of difference in number
of GAAP and non-GAAP diluted
shares (0.01) (0.01) (0.05) (0.01)
Non-GAAP diluted net income per
share $0.23 $0.36 $0.44 $0.89
===== ===== ===== =====
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 39,574 38,113 36,885 37,341
Dilutive impact due to stock-
based compensation 1,546 544 3,827 673
Non-GAAP diluted weighted-
average number of shares 41,120 38,657 40,712 38,014
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SOURCE Gigamon
