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Actionable news in CUDA: BARRACUDA NETWORKS Inc,

Barracuda Reports Fourth Quarter And Fiscal Year 2016 Results

The following excerpt is from the company's SEC filing.

Q4 total revenue grew 16% year-over-year to $83.7 million

Q4 non-GAAP earnings per share of $0.15

Q4 dollar-based renewal rate of 96%

CAMPBELL, Calif., April 26, 2016

Barracuda Networks, Inc

. (NYSE: CUDA), a leading provider of cloud-connected security and data protection solutions, today announced results for its fourth quarter and fiscal year 2016, which ended February 29, 2016.

We continue to build momentum in our core focus areas and are pleased with the initial results of our efforts to capitalize on the fastest growing trends in our markets, said BJ Jenkins, President and CEO. We are focusing our efforts to be the leader in security and data protection for our customers. To reach that goal, we have made investments in enhancing our product portfolio, mobilizing our teams, and expanding our avenues to market to meet the growing demand for cost effective cloud-enabled solutions that can be deployed and managed in pay-as-you-go private and public cloud environments.

We delivered better than expected results in the fourth quarter, achieved non-GAAP earnings per share of $0.15, and our active subscriber count grew 14% to 278,000, said David Faugno, CFO. Demonstrating our belief in our strategy, we repurchased approximately $11 million of our shares in the open market during the quarter, bringing our total for the fiscal year to $19 million.

Fourth Quarter 2016 Financial Summary

Total revenue increased 16% to $83.7 million, compared with $72.2 million in the fourth quarter of fiscal year 2015. Appliance revenue was $21.7 million, compared with $20.9 million in the fourth quarter of fiscal year 2015, and recurring subscription revenue grew to $62.1 million, up from $51.2 million in the fourth quarter of fiscal year 2015, representing 74% of total revenue.

Gross billings were $95.8 million, compared with $96.1 million in the fourth quarter of fiscal 2015. The count of active subscribers grew 14% to 278 thousand and the dollar-based renewal rate was 96% for the quarter.

GAAP net income was $3.2 million, or $0.06 per share, based on a diluted share count of 53.1 million, compared to a GAAP net loss of $68.4 million in the fourth quarter of fiscal 2015.

Non-GAAP net income was $7.9 million, or $0.15 per share, based on a diluted share count of 53.1 million. Non-GAAP net income excludes $7.4 million in stock-based compensation expense, $3.8 million of income tax benefits, $3.1 million in amortization of intangibles, $1.4 million in acquisition and other non-recurring benefits, and $0.6 million in other income.

Fiscal Year 2016 Financial Summary

Total revenue increased 15% to $320.2 million, compared with $277.4 million in fiscal year 2015. Appliance revenue grew 7% to $89.3 million, up from $83.1 million in fiscal year 2015, and recurring subscription revenue grew 19% to $230.9 million, up from $194.3 million in fiscal year 2015, representing 72% of total revenue.

Gross billings increased 4% to $377.5 million, compared with $364.3 million in fiscal year 2015.

GAAP net loss was $4.4 million, or $0.08 per share, based on a basic share count of 53.1 million.

Non-GAAP net income was $22.7 million, or $0.42 per share, based on a diluted share count of 54.3 million. Non-GAAP net income excludes $28.8 million in stock-based compensation expense, $12.4 million of income tax benefits, $5.6 million in amortization of intangibles, $5.0 million in acquisition and other non-recurring charges, and $0.1 million in other expense.

The reconciliation between GAAP and non-GAAP information is contained in the tables below.

Recent Company Highlights

Launched Barracuda Essentials for Office 365:

Added a suite of cloud services, with simple per-user licensing, designed to help organizations expand on the security and data protection functionality in Office 365.

Introduced Advanced Security Capabilities:

Announced availability of Anti-Phishing Link Protection and Advanced Threat Detection functionality for protection against targeted email attacks for customers of all sizes in on-premises and cloud-based environments.

Expanded NextGen Firewall Appliances

: Expanded the NextGen Firewall product family with the new Barracuda NextGen Firewall S-Series, which is designed to enable customers to securely connect thousands of machine endpoints, enabling new Internet of Things applications and deployments.

Enhanced Backup Products and Services:

Announced enhancements to the Barracuda Backup product lines, including new subscription and cloud storage pricing and two new large-scale Barracuda Backup models. These updates offer additional flexibility for data protection and recovery in a single-source solution.

Enhanced Web Application Security Portfolio:

Introduced the new Barracuda Vulnerability Manager, a cloud-based service to help customers detect vulnerabilities in their websites and applications running in on-premises, cloud, and hybrid environments.

Increased Industry Recognition:

Recognized with numerous awards and accolades for channel commitment, customer service, and technology innovation including CRN 5-Star Partner Program, Cloud Partner Program, and Channel Chief; 2016

SC Magazine

Awards for Barracuda NextGen Firewall, Barracuda Web Application Firewall, and for the third time for Best Customer Service; 2016 Cybersecurity Excellence Awards Winner for Network Security for Barracuda NextGen Firewall

F-Series;

2016 Infosecurity Products Guide Gold as Best Security Vendor, Customer Service Department of the Year, and Innovation in Cloud Security; InfoTech Champion for the MSSP use case for next-generation firewalls.

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 companys website at

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, 2016 by dialing 1-877-344-7529 in the U.S. or 1-412-317-0088 for international callers, and entering conference ID 10083175. Additional information can be found in an accompanying supplemental investor slide presentation located at

Forward-Looking Statements

This announcement contains forward-looking statements related to our ability to respond to the shifting market for cloud and SaaS deployments, changes in the growth rate of the markets in which we compete, changes in customer requirements, benefits and potential results related to our new products and product enhancements, 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 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 business environment for network security and storage solutions; the companys 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; and a dependency on third parties for certain components of our products. 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: Managements 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 companys operating activities with the companys 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 companys results of operations in conjunction with the corresponding GAAP measures for comparable financial information and understanding of the companys 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. Barracudas 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 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

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

February 29, 2016

February 28, 2015

Assets

Current assets:

Cash and cash equivalents

118,654

151,373

Marketable securities

36,394

40,754

Accounts receivable, net of allowance for doubtful accounts

36,520

40,725

Inventories, net

Deferred costs

31,943

30,221

Deferred income taxes

Other current assets

12,450

12,260

Total current assets

241,609

280,266

Property and equipment, net

31,910

27,839

Deferred costs, non-current

27,019

27,715

Deferred income taxes, non-current

Other non-current assets

Intangible assets, net

39,386

Goodwill

69,595

39,742

Total assets

419,804

389,345

Liabilities and stockholders deficit

Current liabilities:

Accounts payable

15,939

16,356

Accrued payroll and related benefits

12,371

11,656

Other accrued liabilities

19,495

12,465

Deferred revenue

235,411

209,904

Note payable

Total current liabilities

283,484

251,196

Long-term liabilities:

Deferred revenue, non-current

157,363

163,253

Note payable, non-current

Other long-term liabilities

Stockholders deficit:

Common stock

Additional paid-in capital

337,439

316,035

Accumulated other comprehensive loss

(4,509

(4,233

Accumulated deficit

(365,080

(350,939

Total stockholders deficit

(32,098

(39,084

Total liabilities and stockholders deficit

Condensed Consolidated Statements of Operations

(in thousands, except per share information)

Three months ended February 28/29,

Twelve months ended February 28/29,

Revenue:

21,650

20,942

89,275

83,146

Subscription

62,076

51,236

230,883

194,300

83,726

72,178

320,158

277,446

Cost of revenue

19,879

15,779

70,132

58,667

Gross profit

63,847

56,399

250,026

218,779

Operating expenses:

Research and development

17,120

16,570

71,251

58,737

Sales and marketing

33,504

31,621

138,324

125,526

General and administrative

10,998

47,338

35,438

Total operating expenses

61,622

57,682

256,913

219,701

Income (loss) from operations

(1,283

(6,887

Other income (expense), net

(1,147

(3,674

Income (loss) before income taxes

(2,430

(7,149

(4,596

Benefit from (provision for) income taxes

(65,921

(62,902

Net income (loss)

(68,351

(4,422

(67,498

Net income (loss) per share:

Diluted

Weighted-average shares used to compute net income (loss) per share:

52,746

52,629

53,070

51,898

53,118

Reconciliation of Selected GAAP to Non-GAAP Financial Measures

GAAP cost of revenue

Amortization of intangible assets

Depreciation expense

Stock-based compensation expense

Non-GAAP cost of revenue

16,458

14,302

60,761

52,820

GAAP sales and marketing expense

Acquisition and other non-recurring charges

(1,029

(1,346

Non-GAAP sales and marketing expense

31,493

30,042

130,601

120,303

GAAP research and development expense

Non-GAAP research and development expense

15,402

14,495

60,662

52,152

GAAP general and administrative expense

12,971

Non-GAAP general and administrative expense

27,887

25,114

GAAP total expense

81,501

73,461

327,045

278,368

28,846

17,058

(1,439

Non-GAAP total expense

70,137

65,318

279,911

250,389

Non-GAAP total expense including depreciation

72,405

66,824

287,621

255,577

GAAP operating income (loss)

Non-GAAP operating income

11,321

32,537

21,869

GAAP net income (loss)

Income tax effect on non-GAAP exclusions

(3,793

64,326

(12,435

56,445

Other expense (income) adjustments

22,654

15,068

Non-GAAP diluted earnings per share

Weighted-average shares used to compute diluted earnings per share

54,656

54,337

54,002

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.

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.

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.

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, (ii) costs associated with an intellectual property settlement, and (iii) 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.

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.

. 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.

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.

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA

Deferred revenue, end of period

392,774

372,862

Less: Deferred revenue, beginning of period

(391,617

(357,694

(372,862

(313,157

Less: Deferred costs, end of period

(58,962

(57,936

Deferred costs, beginning of period

59,255

56,114

50,279

Other expense (income), net

Provision for (benefit from) income taxes

(2,727

15,039

20,206

59,133

79,105

. 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 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.

Reconciliation of GAAP Cash Flows from Operating Activities to Adjusted Free Cash Flow

GAAP cash flows from operating activities

15,395

21,030

49,266

54,104

Purchase of property and equipment

(2,318

(5,458

(7,818

(12,517

Adjusted free cash flow

16,450

16,239

46,555

43,604

. 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 intellectual property settlement, (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 and other non-recurring expenses.

. 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.

Reconciliation of GAAP Revenue to Gross Billings

Total deferred revenue, end of period

Less: total deferred revenue, beginning of period

Deferred revenue adjustments

10,905

37,445

27,141

Total change in deferred revenue and adjustments

12,062

23,947

57,357

86,846

(1)(2)

95,788

96,125

377,515

364,292

. 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.

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, 2015, which was the last day of our prior fiscal years 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.

Condensed Consolidated Statements of Cash Flows

Operating activities

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

Depreciation, amortization and impairment expense

13,300

Excess tax benefits from equity compensation plans

(2,195

(3,788

(8,947

(2,665

69,458

(6,592

59,261

(1,759

Changes in operating assets and liabilities:

(12,945

(1,193

Income taxes, net

(3,625

(2,101

(1,112

(8,189

Other assets

(2,138

(2,187

(2,158

Other liabilities

(5,306

(1,526

15,094

19,003

59,341

Net cash provided by operating activities

Investing activities

Proceeds from the sale of marketable securities

10,310

Proceeds from the maturity of marketable securities

20,047

Purchase of marketable securities

(6,981

(30,489

(26,021

(41,977

Purchase of intangible assets

Purchase of investments in non-marketable equity and debt securities

(1,400

(1,200

Business combinations, net of cash acquired

(56,862

(4,791

Net cash used in investing activities

(2,671

(35,063

(61,744

(59,539

Financing activities

Proceeds from issuance of common stock

16,476

Taxes paid related to net share settlement of equity awards

(1,515

(6,734

(5,369

Repurchase of common stock

(11,216

(19,216

Employee loans extended, net of repayment

(2,464

Repayment of note payable

Net cash provided by (used in) financing activities

(11,565

(20,396

21,704

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

(8,522

(32,719

15,494

Cash and cash equivalents at beginning of period

117,073

159,895

135,879

Cash and cash equivalents at end of period

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

Major owner of Barracuda Networks just disposed of 24,240 shares - April 19, 2016
Barracuda Networks's Chief Financial Officer just disposed of 3,076 shares - April 19, 2016
Major owner of Barracuda Networks just disposed of 314 shares - April 5, 2016