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Barracuda Networks' (CUDA) CEO BJ Jenkins on Q4 2016 Results - Earnings Call Transcript

Q4 2016 Earnings Conference Call

April 26, 2016 05:00 PM ET

Executives

Adam Carson - IR

BJ Jenkins - CEO

David Faugno - CFO

Analysts

Gur Talpaz - Stifel

Ryan Hutchinson - Guggenheim

Michael Kim - Imperial Capital

Srini Nandury - Summit Research

Operator

Good afternoon, and welcome to the Barracuda Networks Fourth Quarter and Fiscal Year 2016 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]

Please note this event is being recorded. I would now like to turn the conference over to Adam Carson, VP of Finance and Investor Relations. Please go ahead.

Adam Carson

Good afternoon and welcome to our fourth quarter fiscal year earnings conference call. Today's call will begin with our President and CEO, BJ Jenkins, who will provide comments on our performance for the 2016 fourth quarter and year that ended on February 29th, 2016. Then our CFO, David Faugno, will review the financial results in more details, and provide guidance for our fiscal 2017 first quarter and year. At that point, we will open the call for your questions.

This afternoon, Barracuda issued a press release announcing the Company's financial results for the fourth quarter ended February 29th, 2016. A copy of this release and supporting financial materials are available in the Investor Relations section of the Company's website at barracuda.com.

During the call, we will make forward-looking statements such as those containing the words may, expects, believes or similar phrases to provide information, which is not historical in nature. These statements involve risks, assumptions and uncertainties.

For a more detailed description of these risks, assumptions and uncertainties, please refer to the Company's filings with the Securities and Exchange Commission, including the risk factors contained in our most recent quarterly report on Form 10-Q. For information on risks and uncertainties that may cause actual results to differ materially from those described in the forward-looking statements.

And with that, I’ll now turn the call over to BJ Jenkins, President and CEO of Barracuda.

BJ Jenkins

Thank you, Adam. Good afternoon and thank you for joining us today to discuss our fourth quarter and fiscal year 2016 results. On today’s call I will discuss three subjects: first, our fourth quarter financial results; second, the trends that have evolved in our markets over the course of the most recent fiscal year; and finally, our strategic plan which we believe will best position Barracuda to capitalize on these trends.

Let’s begin with a summary of our results for the quarter. Total Q4 revenue grew 16% year-over-year to $83.7 million, above our guidance range of $80 million to $82 million. Gross billings came in at $95.8 million and the dollar base renewal rate was 96%.

In Q4 billings continue to shift more toward readable subscription form factors and away from upfront appliance billings. Subscription annual recurring revenue or ARR grew 25% year-over-year to $255 million. On the bottom line, we delivered better than expected results for the quarter. We achieved non-GAAP EPS of $0.15 per share, which on a comparative basis is more than double our EPS in the fourth quarter of last year.

As we discussed last quarter we have begun shifting and reducing expenses in non-core product areas and as a result we have been able to accelerate the competitiveness of our core products including our NG Firewall, E-mail security, Data protection and MSP solutions in Q4.

Now let's turn to the trends occurring in our target market and the impact they have on our business. First, more customer's IT infrastructures are expanding to take advantage of the cloud and our customers are in different stages of this migration. Many continue to utilize appliances for simplicity and tighter control. Others are utilizing our virtual or hybrid offerings and we have seen a growing number moving to public cloud or MSP based cloud solutions.