Gigamon Inc. - FORM 8-K - EX-99.1

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8-K - FORM 8-K - Gigamon Inc.	d576125d8k.htm
EX-10.1 - EX-10.1 - Gigamon Inc.	d576125dex101.htm

Exhibit 99.1

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News Release


MEDIA CONTACT:		INVESTOR CONTACT:
J.T. Eger		Cynthia Hiponia and Alice Kousoum
(408) 493-1247		(408) 493-1399
jt@gigamon.com		IR@gigamon.com

Gigamon Reports Second Quarter 2013 Financial Results

Second Quarter Revenue Growth of 44% year-over-year

Silicon Valley, CALIF., July 29, 2013 – Gigamon^®(NYSE:GIMO), a leader in traffic visibility solutions with the innovative Visibility Fabric™ architecture, today released financial results for the second quarter ended June 29, 2013.

Financial Highlights:

•

Revenues for the second quarter of fiscal 2013 were $32.4 million, compared to $22.5 million in the second quarter of fiscal 2012.

•

GAAP gross margins of 72% in the second fiscal quarter, compared to 80% in the second quarter of fiscal 2012.

•

Non-GAAP gross margins of 82% in the second fiscal quarter, compared to 80% in the second quarter of fiscal 2012.

•

GAAP net loss for the second quarter of fiscal 2013 was $7.9 million, or $0.41 per diluted share, compared to GAAP net income of $1.3 million, or $0.08 per diluted share, in the second quarter of fiscal 2012.

•

Non-GAAP net income for the second quarter of fiscal 2013 was $3.6 million, or $0.13 per diluted share, compared to non-GAAP net income of $3.1 million, or $0.18 per diluted share, in the second quarter of fiscal 2012.

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“In our first quarter as a public company, we delivered solid revenue growth of 44% year-over-year,” said Paul Hooper, CEO of Gigamon. “Our Visibility Fabric enables our customers to gain higher levels of visibility into their IT infrastructure by delivering the right network traffic to the right management system, at the right time. We believe our market is significantly underpenetrated, and through our broad, intelligent and scalable solution, we believe we are well-positioned to capitalize on this exciting growth opportunity.”

Business Highlights:

•

Pricing of our initial public offering, raising $93.4 million, net of expenses, on June 11, 2013.

•

Acquired 72 new customers in the second quarter, bringing the total to 1142 customers that have deployed our visibility solutions.

•

Recognition for the GigaVUE-HD4 which won the ‘Best of Show Grand Prix’ award in its category at Interop Tokyo 2013.

•

Recognition as the ‘Hottest New Networking Company’ at NetEvents Innovation Awards 2013.

•

First shipment of the GigaVUE-HB1 fully integrated “Visibility Fabric in a box” system targeted at managed service providers and midsized enterprises.

•

Announcement of the company’s enhanced strategy to deliver a unified Visibility Fabric™ architecture - designed to provide pervasive visibility across physical, virtual and Software-Defined networks (SDN).

•

Appointment of Shehzad Merchant as Chief Strategy Officer and Peter Finter as Chief Marketing Officer.

Conference Call Information:

Gigamon will host an investor conference call and live webcast today at 5:00 p.m. ET (2:00 p.m. PT) to discuss its financial results for the second quarter ended June 29, 2013. To access the conference call, dial 877-941-1427, using conference code 4627689. Callers outside the U.S. and Canada should dial 480-629-9664, using conference code 4627689. A replay of the conference call will be available through Monday, August 5, 2013. To access the replay, please dial 800-406-7325

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and enter pass code 4627689. Callers outside the U.S. and Canada should dial 303-590-3030 and enter pass code 4627689. The live webcast will be accessible on Gigamon’s investor relations website at http://investor.gigamon.com and will be archived and available on this site for twelve months.

Non-GAAP Financial Measurements

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Gigamon considers these non-GAAP financial measures to be 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 to be our core 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. Non-GAAP financial measures are presented for supplemental informational purposes only for 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, and may be different from non- GAAP financial measures presented by other companies. Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure attached to this release.

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 that the market for our products will continue to grow and develop; and our expectations regarding product developments and enhancements and adoption of those products by our customers. 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

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more fully described in our filings with the Securities and Exchange Commission, including our Prospectus related to our initial public offering of common stock filed pursuant to Rule 424(b) under the Securities Act of 1933 (Registration No. 333-182662). 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.

About the Visibility Fabric architecture

At Gigamon we realized that delivering the visibility essential to manage, analyze and secure the complex system that is the IT infrastructure requires a new approach. With millions of traffic flows across thousands of endpoints, visibility needs to be pervasive, intelligent and dynamic. Using our patented, unique technology, we created an innovative new approach for delivering this visibility called the Visibility Fabric architecture. This new approach is intelligent and versatile in its ability to enable visibility into the network. For more information visit http://www.gigamon.com/traffic-visibility-fabric.

About Gigamon

Gigamon provides an intelligent Visibility Fabric™ architecture for enterprises, data centers and service providers around the globe. Our technology empowers infrastructure architects, managers and operators with pervasive and dynamic intelligent visibility of traffic across both physical and virtual environments without affecting the performance or stability of the production network. Through patented technologies and centralized management, the Gigamon GigaVUE portfolio of high availability and high density products intelligently delivers the appropriate network traffic to management, analysis, compliance and security tools. With over eight years’ experience designing and building traffic visibility products in the US, Gigamon solutions are deployed globally across vertical markets including over half of the Fortune 100 and many government and federal agencies. www.gigamon.com

Gigamon Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Three Months Ended						Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net Revenue:
Product	$	23,354		$	16,213		$	40,873		$	27,106
Service		9,055			6,254			17,349			12,063

Total net revenue		32,409			22,467			58,222			39,169

Cost of revenue:
Product		7,098			4,086			11,822			7,451
Service		1,911			453			2,564			945

Cost of revenue (1), (2)		9,009			4,539			14,386			8,396

Gross profit		23,400			17,928			43,836			30,773

Operating expenses:
Research and development (1), (2)		17,097			3,570			22,768			7,515
Sales and marketing (1), (2)		26,114			9,112			38,535			17,335
General and administrative (1), (2)		12,688			2,735			16,197			4,041

Total operating expenses		55,899			15,417			77,500			28,891

(Loss) income from operations		(32,499	)		2,511			(33,664	)		1,882
Other income (expense):
Interest income		1			3			3			6
Other expense, net		(18	)		(7	)		(25	)		(33	)

(Loss) income before income taxes		(32,516	)		2,507			(33,686	)		1,855
Income tax benefit (expense) (3)		24,571			(28	)		24,542			(91	)

Net (loss) income		(7,945	)		2,479			(9,144	)		1,764

Accretion of preferred stock		(503	)		(553	)		(1,088	)		(1,097	)
Loss (earnings) attributable to preferred stock holders		538			(615	)		1,107			(213	)

Net (loss) income to common stock holders	$	(7,910	)	$	1,311		$	(9,125	)	$	454


Net (loss) income per share attributable to common stock holders:
Basic	$	(0.41	)	$	0.08		$	(0.50	)	$	0.03

Diluted	$	(0.41	)	$	0.08		$	(0.50	)	$	0.03

Weighted-average number of shares used in per share amounts:
Basic		19,247			17,300			18,284			17,300

Diluted		19,247			17,300			18,284			17,300

(1) Includes stock-based compensation expenses, as follows:
Cost of revenue	$	2,691		$	2		$	2,709		$	2
Research and development		6,069			32			6,378			32
Sales and marketing		5,263			86			5,692			86
General and administrative		2,674			516			3,511			516

Total stock-based compensation expenses	$	16,697		$	636		$	18,290		$	636

(2) Includes performance unit plan compensation expenses, as follows:
Cost of revenue	$	353		$	—		$	353		$	—
Research and development		5,188			—			5,188			—
Sales and marketing		7,991			—			7,991			—
General and administrative		6,839			—			6,839			—

Total performance unit plan compensation expenses	$	20,371		$	—		$	20,371		$	—

(3) Includes tax benefit upon conversion of LLC to a C Corporation on May 31, 2013	$	14,811		$	—		$	14,811		$	—

Gigamon Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	June 29, 2013			December 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	121,522		$	18,675
Accounts receivable, net		17,908			20,677
Inventories		3,241			3,736
Deferred income tax asset		4,679			—
Prepaid expenses and other current assets		3,269			3,407

Total current assets		150,619			46,495

Property and equipment, net		3,558			2,686
Deferred income tax asset, non-current		19,906			—
Other assets		17			2,316

Total assets	$	174,100		$	51,497


Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	2,986		$	3,221
Accrued and other current liabilities		36,443			18,710
Deferred revenue		27,662			23,917

Total current liabilities		67,091			45,848

Deferred revenue, non-current		8,639			6,903
Other liabilities		219			447

Commitments and contingencies
Series A preferred stock		—			28,344

Stockholders’ equity (deficit):
Common stock		3			1,625
Treasury stock		(12,469	)		(12,469	)
Additional paid in capital		143,160			1,522
Accumulated deficit		(32,543	)		(20,723	)

Total stockholders’ equity (deficit)		98,151			(30,045	)

Total liabilities, preferred stock and stockholders’ equity (deficit)	$	174,100		$	51,497

Gigamon Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended						Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Operating activities:
Net (loss) income	$	(7,945	)	$	2,479		$	(9,144	)	$	1,764
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		649			282			1,198			538
Stock-based compensation		16,697			636			18,290			636
Deferred income taxes		(24,585	)		—			(24,585	)		—
Inventory (recovery) write-offs		(140	)		404			(140	)		1,382
Loss on disposal of fixed assets		14			—			14			—
Changes in operating assets and liabilities:
Accounts receivable, net		(3,977	)		(1,796	)		2,769			4,760
Inventories		189			1,810			1,652			352
Prepaid expenses and other assets		968			461			230			684
Accounts payable		1,555			(1,469	)		(85	)		(1,288	)
Accrued and other liabilities		20,293			1,816			19,385			3,944
Deferred revenue		1,094			1,783			5,481			2,110

Net cash provided by operating activities		4,812			6,406			15,065			14,882
Investing activities:
Purchases of property and equipment		(1,251	)		(678	)		(2,200	)		(1,240	)

Net cash used in investing activities		(1,251	)		(678	)		(2,200	)		(1,240	)
Financing activities:
Proceeds from initial public offering, net		97,102			—			97,068			—
Proceeds from exercise of stock options		11			—			11			—
Distribution of income to LLC members		(2,276	)		(2,790	)		(7,097	)		(7,440	)

Net cash provided by (used in) financing activities		94,837			(2,790	)		89,982			(7,440	)
Net increase in cash and cash equivalents		98,398			2,938			102,847			6,202
Cash and cash equivalents at beginning of period		23,124			16,366			18,675			13,102

Cash and cash equivalents at end of period	$	121,522		$	19,304		$	121,522		$	19,304

Gigamon Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)


	Three Months Ended						Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Reconciliation of Gross Profit and Gross Margin on a GAAP Basis to Gross Profit and Gross Margin on a Non-GAAP Basis:
Gross profit on a GAAP basis	$	23,400		$	17,928		$	43,836		$	30,773
Stock-based compensation		2,691			2			2,709			2
Performance unit plan compensation expense		353			—			353			—

Gross profit on a Non-GAAP basis	$	26,444		$	17,930		$	46,898		$	30,775


Revenue	$	32,409		$	22,467		$	58,222		$	39,169
Gross margin on a GAAP basis		72	%		80	%		75	%		79	%
Gross margin on a Non-GAAP basis		82	%		80	%		81	%		79	%
Reconciliation of Operating (Loss) Income and Operating Margin on a GAAP Basis to Operating (Loss) Income and Operating Margin on a Non-GAAP Basis:
Operating (loss) income on a GAAP basis	$	(32,499	)	$	2,511		$	(33,664	)	$	1,882
Stock-based compensation		16,697			636			18,290			636
Performance unit plan compensation expense		20,371			—			20,371			—

Operating income on a Non-GAAP basis	$	4,569		$	3,147		$	4,997		$	2,518


Operating margin on a GAAP basis		–100	%		11	%		–58	%		5	%
Operating margin on a Non-GAAP basis		14	%		14	%		9	%		6	%
Reconciliation of Net (Loss) income attributable to common stockholders on a GAAP Basis to Net Income attributable to common stockholders on a Non-GAAP Basis:

Net (loss) income attributable to common stock holders on a GAAP basis	$	(7,910	)	$	1,311		$	(9,125	)	$	454
Accretion of preferred stock		503			553			1,088			1,097
(Loss) earnings attributable to preferred stock holders		(538	)		615			(1,107	)		213
Stock-based compensation		16,697			636			18,290			636
Performance unit plan compensation expense		20,371			—			20,371			—
Tax benefit upon conversion of LLC to a C Corporation		(14,811	)		—			(14,811	)		—
Income tax effect of Non-GAAP adjustments		(10,675	)		—			(10,675	)

Net income on a Non-GAAP basis	$	3,637		$	3,115		$	4,031		$	2,400

Gigamon Inc.

Reconciliation of Non-GAAP Financial Measures (continued)

(in thousands, except per share data)

(unaudited)


	Three Months Ended						Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Reconciliation of Diluted Net (Loss) Income per Share on a GAAP Basis to Diluted Net Income per Share on a Non-GAAP Basis:

Diluted net (loss) income per share on a GAAP basis	$	(0.41	)	$	0.08		$	(0.50	)	$	0.03

Accretion of preferred stock		0.03			0.03			0.06			0.06
(Loss) earnings attributable to preferred stock holders		(0.03	)		0.04			(0.06	)		0.01
Stock-based compensation		0.87			0.04			1.00			0.04
Performance unit plan compensation		1.06			—			1.11			—
Tax benefit upon conversion of LLC to a C corporation		(0.77	)		—			(0.81	)		—
Income tax effect on non-GAAP adjustments		(0.55	)		—			(0.58	)		—
Impact of difference in number of GAAP and non-GAAP diluted shares		(0.07	)		(0.01	)		(0.07	)		—

Diluted net income per share on a Non-GAAP basis	$	0.13		$	0.18		$	0.15		$	0.14


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		19,247			17,300			18,284			17,300
Dilutive impact due to stock options, a common stock warrant, restricted stock awards, and restricted stock units		8,209			113			8,542			44

Non-GAAP diluted weighted-average number of shares		27,456			17,413			26,826			17,344

Condensed Non-GAAP Consolidated Income Statements

Impact of Non-GAAP Adjustments on Reported Net (Loss) Income

For the Three and Six Months Ended June 29, 2013 and June 30, 2012

(In thousands, except per share amounts)

(unaudited)


	Three Months Ended June 29, 2013									Three Months Ended June 30, 2012									Six Months Ended June 29, 2013									Six Months Ended June 30, 2012
	As Reported			Adjustments			Non-GAAP			As Reported			Adjustments			Non-GAAP			As Reported			Adjustments			Non-GAAP			As Reported			Adjustments			Non-GAAP
Net Revenue:
Product	$	23,354		$	—		$	23,354		$	16,213		$	—		$	16,213		$	40,873		$	—		$	40,873		$	27,106		$	—		$	27,106
Service		9,055			—			9,055			6,254			—			6,254			17,349			—			17,349			12,063			—			12,063

Total net revenue		32,409			—			32,409			22,467			—			22,467			58,222			—			58,222			39,169			—			39,169

Cost of revenue:
Product (1), (2)		7,098			(1,952	)		5,146			4,086			(2	)		4,084			11,822			(1,964	)		9,858			7,451			(2	)		7,449
Service (1), (2)		1,911			(1,092	)		819			453			—			453			2,564			(1,098	)		1,466			945			—			945

Cost of revenue		9,009			(3,044	)		5,965			4,539			(2	)		4,537			14,386			(3,062	)		11,324			8,396			(2	)		8,394

Gross profit		23,400			3,044			26,444			17,928			2			17,930			43,836			3,062			46,898			30,773			2			30,775


Operating expenses:
Research and development (1), (2)		17,097			(11,257	)		5,840			3,570			(32	)		3,538			22,768			(11,566	)		11,202			7,515			(32	)		7,483
Sales and marketing (1), (2)		26,114			(13,254	)		12,860			9,112			(86	)		9,026			38,535			(13,683	)		24,852			17,335			(86	)		17,249
General and administrative (1), (2)		12,688			(9,513	)		3,175			2,735			(516	)		2,219			16,197			(10,350	)		5,847			4,041			(516	)		3,525

Total operating expenses		55,899			(34,024	)		21,875			15,417			(634	)		14,783			77,500			(35,599	)		41,901			28,891			(634	)		28,257

(Loss) income from operations		(32,499	)		37,068			4,569			2,511			636			3,147			(33,664	)		38,661			4,997			1,882			636			2,518

Other income (expense):
Interest income		1			—			1			3			—			3			3			—			3			6			—			6
Other expense, net		(18	)		—			(18	)		(7	)		—			(7	)		(25	)		—			(25	)		(33	)		—			(33	)

(Loss) income before income taxes		(32,516	)		37,068			4,552			2,507			636			3,143			(33,686	)		38,661			4,975			1,855			636			2,491
Income tax benefit (expense) (3), (4)		24,571			(25,486	)		(915	)		(28	)		—			(28	)		24,542			(25,486	)		(944	)		(91	)		—			(91	)

Net (loss) income		(7,945	)		11,582			3,637			2,479			636			3,115			(9,144	)		13,175			4,031			1,764			636			2,400

Accretion of preferred stock		(503	)		503			—			(553	)		553			—			(1,088	)		1,088			—			(1,097	)		1,097			—
Loss (earnings) attributable to preferred stock holders		538			(538	)		—			(615	)		615			—			1,107			(1,107	)		—			(213	)		213			—

Net (loss) income to common stock holders	$	(7,910	)	$	11,547		$	3,637		$	1,311		$	1,804		$	3,115		$	(9,125	)	$	13,156		$	4,031		$	454		$	1,946		$	2,400


Net (loss) income per share attributable to common stockholders:
Basic	$	(0.41	)	$	0.60		$	0.19		$	0.08		$	0.10		$	0.18		$	(0.50	)	$	0.72		$	0.22		$	0.03		$	0.11		$	0.14

Diluted	$	(0.41	)	$	0.54		$	0.13		$	0.08		$	0.10		$	0.18		$	(0.50	)	$	0.65		$	0.15		$	0.03		$	0.11		$	0.14

Weighted-average number of shares used in per share amounts:
Basic		19,247			—			19,247			17,300			—			17,300			18,284			—			18,284			17,300			—			17,300

Diluted		19,247			8,209			27,456			17,300			113			17,413			18,284			8,542			26,826			17,300			44			17,344

Notes:

(1)	Stock-based compensation

(2)	Performance unit plan compensation

(3)	Tax benefit upon conversion from an LLC to a C Corporation on May 31, 2013

(4)	Income tax effect on non-GAAP adjustments

Gigamon Inc. - FORM 8-K - EX-99.1 - July 29, 2013

Attached files

Gigamon Inc. Reports