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Barracuda Reports Fourth Quarter and Fiscal Year 2016 Results

CUDA, -0.77% 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 company's 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 investors.barracuda.com.

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 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; 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: "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 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 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. CUDA, -0.77% Barracuda CUDA, -0.77% 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...


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