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| 8-K - FORM 8-K - BARRACUDA NETWORKS INC | d847252d8k.htm |
Exhibit 99.1
Press Release issued January 8, 2015
Barracuda Reports Record Third Quarter Fiscal 2015 Results
| • | Q3 gross billings up 18% year-over-year to a record $92 million |
| • | Total revenue grew 19% year-over-year to $70 million in Q3 |
| • | Adjusted EBITDA grew 54% year-over-year to $19 million |
| • | Total active subscribers exceed 234,900, up 19% year-over-year |
CAMPBELL, Calif., January 8, 2015 – Barracuda Networks, Inc. (NYSE: CUDA), a leading provider of cloud-connected security and storage solutions, today announced results for its third quarter of fiscal 2015, which ended November 30, 2014.
Billings & Revenue: For the third quarter of fiscal 2015, gross billings grew 18% to $91.5 million, up from $77.5 million in the third quarter of fiscal 2014. Total revenue increased 19% to $70.4 million, up from $59.4 million in the third quarter of fiscal 2014. Appliance revenue in the third quarter of fiscal 2015 increased to $20.7 million up from $18.2 million in the third quarter of fiscal 2014, and subscription revenue grew to $49.7 million in the third quarter of fiscal 2015 up from $41.2 million in the third quarter of fiscal 2014, representing 71% of total revenue.
Net Income: GAAP net loss in the third quarter of fiscal 2015 was $36,000, or $0.00 loss per share, based on a basic share count of 52.1 million. Non-GAAP net income for the third quarter of fiscal 2015 was $3.2 million, or $0.06 earnings per share, based on a diluted share count of 54.0 million. Non-GAAP net income excludes $4.9 million in stock-based compensation expense, $4.7 million in income tax benefit of non-GAAP exclusions, $1.7 million net in other income and expense, $0.8 million in amortization of intangible assets, and $0.6 million in acquisition and other non-recurring charges. The reconciliation between GAAP and non-GAAP information is contained in the tables below.
“We delivered another quarter of strong financial performance across all of our major markets and product categories,” said BJ Jenkins, president and CEO. “In the third quarter, we added more than 9,300 new active subscribers, bringing our total active subscribers to more than 234,900. Our results reflect the continued demand for our storage and network and application security products which continue to drive our top line growth. We also continued to make progress in the public cloud market with more integrations of our products into Microsoft Azure and Amazon Web Services. Given the expanding opportunities for our products, we will continue to invest to grow our sales and R&D efforts while driving toward our long-term model.”
“We achieved record results in gross billings in Q3, which grew 20% year-over-year on a constant currency basis” said David Faugno, CFO. “In the quarter, adjusted EBITDA grew 54% year-over-year to $19 million, or 28% of total revenue. On a trailing 12-month basis, adjusted free cash flow was $46.0 million, growing 49% year-over-year.”
Recent Company Highlights
| • | Storage Product Innovation – Released a number of new product updates across the storage portfolio, including: ArchiveOne version 7.0 that expands information management functionality; and Barracuda Backup 995 with 72 TB of usable storage capacity and 32 TB of suggested backup. |
| • | Security Product Innovation – Launched Total Threat Protection initiative, which is aimed at providing customers advanced security protection, a single point of service, and affordability across multiple threat vectors. Also launched a number of new products and enhancements including: Barracuda Security Suite to provide protection for the three most commonly deployed threat vectors – email, web browsing and network perimeters; and Barracuda Web Application Firewall updates including URL encryption, SSL enhancements, improved user access control, and improved administrative interface. |
| • | Public Cloud Momentum – Announced several new integrations with Microsoft Azure, including commerce-enablement in the Azure Marketplace for the Barracuda Web Application Firewall, Barracuda Spam Firewall, and Barracuda Message Archiver to allow customers to purchase these solutions directly from Microsoft; Barracuda Web Application Firewall integration with Azure Active Directory to streamline authentication and access; and Barracuda Web Application Firewall availability in the new Microsoft Azure Government cloud; and announced the availability of the Barracuda Load Balancer ADC on Amazon Web Services. |
| • | Industry Recognition – Received a number of industry accolades and achievements, including: Volume Leader in Content Security appliances for Q3 CY2014 by IDC; Number one vendor in unit volume for integrated PBBA by IDC; Five Star review by PC Pro for Barracuda Backup 290; Readers’ Choice awards by TechTarget and Information Security magazine for Barracuda Spam Firewall and Barracuda Web Application Firewall; Excellence Awards for Best Upgraded Products by Tech & Learning magazine for Barracuda Message Archiver, Barracuda Backup, Barracuda Spam Firewall and Barracuda Web Filter; Excellence Awards for Best New Products by Tech & Learning magazine for Barracuda Copy and Barracuda SignNow; Best Buy ratings and Five Star reviews by SC Magazine for both Barracuda Web Application Firewall and Barracuda Spam Firewall; and 2014 Cloud Computing and Disaster Recovery award by TMC Net for Barracuda Backup. |
Conference Call Information
Barracuda will host a conference call and corresponding live webcast at 2:00 p.m. PT today. To access the conference call, dial 1-877-201-0168 for the U.S. and Canada or +1-647-788-4901 for international callers, and enter conference ID 39759612#. The webcast will be available live on the investor relations section of the Company’s website at https://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 January 15, 2015 by dialing 1-855-859-2056 in the U.S. and Canada, or +1-404-537-3406 for international callers, and entering conference ID 39759612#. Additional information can be found in an accompanying supplemental investor slide presentation located at https://investors.barracuda.com.
Forward-Looking Statements
This announcement contains forward-looking statements related to future product performance and potential results from new initiatives that involve risks and uncertainties, including statements regarding the Company’s 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 the Company’s products and services; a highly competitive business environment for network security and storage solutions; the Company’s effectiveness in controlling expenses, the possibility that the Company might experience delays in the development of new technology and products; customer response to its new technology and products; risks related to pending or future litigation and regulatory matters; and a dependency on third parties for certain components of the Company’s products. The Company undertakes no obligation to update the forward-looking information in this release. More information about potential factors that could affect the Company’s business and financial results is included in its 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. Additionally, all forward-looking non-GAAP financial measures discussed on our earnings call exclude certain items such as stock-based compensation, amortization of intangible assets and acquisition and other non-recurring adjustments. While a reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis, in preparing our historical 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. (NYSE: CUDA)
Barracuda provides cloud-connected security and storage solutions that simplify IT. 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 additional information, please visit http://www.barracuda.com.
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
Barracuda Networks, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
| November 30, 2014 | February 28, 2014 | |||||||
| Assets |
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| Current assets: |
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| Cash and cash equivalents |
$ | 159,895 | $ | 135,879 | ||||
| Marketable securities |
11,460 | — | ||||||
| Accounts receivable, net of allowance for doubtful accounts |
40,998 | 27,836 | ||||||
| Inventories, net |
5,137 | 5,648 | ||||||
| Deferred costs |
29,162 | 25,707 | ||||||
| Deferred income taxes |
35,975 | 30,156 | ||||||
| Other current assets |
6,044 | 4,900 | ||||||
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| Total current assets |
288,671 | 230,126 | ||||||
| Property and equipment, net |
24,328 | 20,558 | ||||||
| Deferred costs, non-current |
26,952 | 24,572 | ||||||
| Deferred income taxes, non-current |
33,055 | 28,515 | ||||||
| Other non-current assets |
2,390 | 1,851 | ||||||
| Intangible assets, net |
9,873 | 8,420 | ||||||
| Goodwill |
40,571 | 36,014 | ||||||
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| Total assets |
$ | 425,840 | $ | 350,056 | ||||
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| Liabilities and stockholders’ equity (deficit) |
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| Current liabilities: |
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| Accounts payable |
$ | 13,839 | $ | 13,743 | ||||
| Accrued payroll and related benefits |
9,212 | 8,494 | ||||||
| Other accrued liabilities |
9,883 | 9,374 | ||||||
| Deferred revenue |
199,054 | 167,562 | ||||||
| Deferred income taxes |
291 | 260 | ||||||
| Note payable |
248 | 237 | ||||||
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| Total current liabilities |
232,527 | 199,670 | ||||||
| Long-term liabilities: |
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| Deferred revenue, non-current |
159,218 | 145,595 | ||||||
| Deferred income taxes, non-current |
939 | 84 | ||||||
| Note payable, non-current |
4,447 | 4,635 | ||||||
| Other long-term liabilities |
7,606 | 5,727 | ||||||
| Stockholders’ equity (deficit): |
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| Common stock |
52 | 52 | ||||||
| Additional paid-in capital |
305,987 | 278,551 | ||||||
| Accumulated other comprehensive loss |
(2,348 | ) | (817 | ) | ||||
| Accumulated deficit |
(282,588 | ) | (283,441 | ) | ||||
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| Total stockholders’ equity (deficit) |
21,103 | (5,655 | ) | |||||
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| Total liabilities and stockholders’ equity (deficit) |
$ | 425,840 | $ | 350,056 | ||||
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Barracuda Networks, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share information)
(Unaudited)
| Three months ended November 30, | Nine months ended November 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenue: |
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| Appliance |
$ | 20,692 | $ | 18,174 | $ | 62,204 | $ | 53,583 | ||||||||
| Subscription |
49,715 | 41,212 | 143,064 | 119,870 | ||||||||||||
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| Total revenue |
70,407 | 59,386 | 205,268 | 173,453 | ||||||||||||
| Cost of revenue |
14,438 | 14,017 | 42,888 | 40,498 | ||||||||||||
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| Gross profit |
55,969 | 45,369 | 162,380 | 132,955 | ||||||||||||
| Operating expenses: |
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| Research and development |
15,389 | 12,083 | 42,167 | 34,563 | ||||||||||||
| Sales and marketing |
33,395 | 28,785 | 93,905 | 86,013 | ||||||||||||
| General and administrative |
8,759 | 7,513 | 25,947 | 22,018 | ||||||||||||
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| Total operating expenses |
57,543 | 48,381 | 162,019 | 142,594 | ||||||||||||
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| Income (loss) from operations |
(1,574 | ) | (3,012 | ) | 361 | (9,639 | ) | |||||||||
| Other income (expense), net |
(1,789 | ) | 121 | (2,527 | ) | (329 | ) | |||||||||
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| Income (loss) before income taxes and non-controlling interest |
(3,363 | ) | (2,891 | ) | (2,166 | ) | (9,968 | ) | ||||||||
| Benefit from income taxes |
3,327 | 599 | 3,019 | 2,735 | ||||||||||||
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| Consolidated net income (loss) |
(36 | ) | (2,292 | ) | 853 | (7,233 | ) | |||||||||
| Net loss attributable to non-controlling interest |
— | 199 | — | 561 | ||||||||||||
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| Net income (loss) attributable to Barracuda Networks, Inc. |
$ | (36 | ) | $ | (2,093 | ) | $ | 853 | $ | (6,672 | ) | |||||
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| Net income (loss) per share attributable to Barracuda |
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| Basic |
$ | — | $ | (0.06 | ) | $ | 0.02 | $ | (0.22 | ) | ||||||
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| Diluted |
$ | — | $ | (0.06 | ) | $ | 0.02 | $ | (0.22 | ) | ||||||
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| Weighted-average shares used to compute net income (loss) per share attributable to Barracuda Networks, Inc.: |
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| Basic |
52,142 | 34,256 | 51,655 | 30,179 | ||||||||||||
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| Diluted |
52,142 | 34,256 | 53,785 | 30,179 | ||||||||||||
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Barracuda Networks, Inc.
Reconciliation of Selected GAAP to Non-GAAP Financial Measures
(in thousands)
(Unaudited)
| Three months ended November 30, | Nine months ended November 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| GAAP cost of revenue |
$ | 14,438 | $ | 14,017 | $ | 42,888 | $ | 40,498 | ||||||||
| Amortization of intangible assets (1) |
533 | 889 | 1,879 | 3,018 | ||||||||||||
| Depreciation expense (2) |
817 | 907 | 2,245 | 1,935 | ||||||||||||
| Stock-based compensation expense (3) |
121 | 58 | 246 | 146 | ||||||||||||
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| Non-GAAP cost of revenue |
$ | 12,967 | $ | 12,163 | $ | 38,518 | $ | 35,399 | ||||||||
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| GAAP sales and marketing expense |
$ | 33,395 | $ | 28,785 | $ | 93,905 | $ | 86,013 | ||||||||
| Amortization of intangible assets (1) |
238 | 424 | 979 | 1,341 | ||||||||||||
| Depreciation expense (2) |
42 | 55 | 119 | 172 | ||||||||||||
| Stock-based compensation expense (3) |
1,143 | 578 | 2,546 | 1,278 | ||||||||||||
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| Non-GAAP sales and marketing expense |
$ | 31,972 | $ | 27,728 | $ | 90,261 | $ | 83,222 | ||||||||
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| GAAP research and development expense |
$ | 15,389 | $ | 12,083 | $ | 42,167 | $ | 34,563 | ||||||||
| Depreciation expense (2) |
176 | 146 | 483 | 410 | ||||||||||||
| Stock-based compensation expense (3) |
1,250 | 209 | 2,900 | 1,474 | ||||||||||||
| Acquisition and other non-recurring charges (4) |
372 | 375 | 1,127 | 875 | ||||||||||||
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| Non-GAAP research and development expense |
$ | 13,591 | $ | 11,353 | $ | 37,657 | $ | 31,804 | ||||||||
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| GAAP general and administrative expense |
$ | 8,759 | $ | 7,513 | $ | 25,947 | $ | 22,018 | ||||||||
| Amortization of intangible assets (1) |
— | 6 | — | 23 | ||||||||||||
| Depreciation expense (2) |
312 | 206 | 835 | 468 | ||||||||||||
| Stock-based compensation expense (3) |
2,350 | 1,578 | 5,990 | 4,653 | ||||||||||||
| Acquisition and other non-recurring charges (4) |
213 | 212 | 487 | 579 | ||||||||||||
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| Non-GAAP general and administrative expense |
$ | 5,884 | $ | 5,511 | $ | 18,635 | $ | 16,295 | ||||||||
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| GAAP total expense |
$ | 71,981 | $ | 62,398 | $ | 204,907 | $ | 183,092 | ||||||||
| Amortization of intangible assets (1) |
771 | 1,319 | 2,858 | 4,382 | ||||||||||||
| Depreciation expense (2) |
1,347 | 1,314 | 3,682 | 2,985 | ||||||||||||
| Stock-based compensation expense (3) |
4,864 | 2,423 | 11,682 | 7,551 | ||||||||||||
| Acquisition and other non-recurring charges (4) |
585 | 587 | 1,614 | 1,454 | ||||||||||||
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| Non-GAAP total expense |
$ | 64,414 | $ | 56,755 | $ | 185,071 | $ | 166,720 | ||||||||
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| Depreciation expense (2) |
1,347 | 1,314 | 3,682 | 2,985 | ||||||||||||
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| Non-GAAP total expense including depreciation |
$ | 65,761 | $ | 58,069 | $ | 188,753 | $ | 169,705 | ||||||||
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Barracuda Networks, Inc.
Reconciliation of Selected GAAP to Non-GAAP Financial Measures
(in thousands, except per share information)
(Unaudited)
| Three months ended November 30, | Nine months ended November 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| GAAP operating income (loss) |
$ | (1,574 | ) | $ | (3,012 | ) | $ | 361 | $ | (9,639 | ) | |||||
| Amortization of intangible assets (1) |
771 | 1,319 | 2,858 | 4,382 | ||||||||||||
| Stock-based compensation expense (3) |
4,864 | 2,423 | 11,682 | 7,551 | ||||||||||||
| Acquisition and other non-recurring charges (4) |
585 | 587 | 1,614 | 1,454 | ||||||||||||
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| Non-GAAP operating income |
$ | 4,646 | $ | 1,317 | $ | 16,515 | $ | 3,748 | ||||||||
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| GAAP net income (loss) attributable to Barracuda Networks, Inc. |
$ | (36 | ) | $ | (2,093 | ) | $ | 853 | $ | (6,672 | ) | |||||
| Amortization of intangible assets (1) |
771 | 1,319 | 2,858 | 4,382 | ||||||||||||
| Stock-based compensation expense (3) |
4,864 | 2,423 | 11,682 | 7,551 | ||||||||||||
| Acquisition and other non-recurring charges (4) |
585 | 587 | 1,614 | 1,454 | ||||||||||||
| Income tax effect of non-GAAP exclusions (5) |
(4,695 | ) | (1,277 | ) | (7,881 | ) | (3,986 | ) | ||||||||
| Other income adjustments (6) |
1,703 | (267 | ) | 2,219 | (94 | ) | ||||||||||
| Non-controlling interest (7) |
— | (199 | ) | — | (561 | ) | ||||||||||
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| Non-GAAP net income |
$ | 3,192 | $ | 493 | $ | 11,345 | $ | 2,074 | ||||||||
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| Non-GAAP diluted earnings per share (8) |
$ | 0.06 | $ | 0.01 | $ | 0.21 | $ | 0.04 | ||||||||
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| Weighted-average shares used to compute diluted earnings per share |
54,007 | 48,721 | 53,785 | 47,602 | ||||||||||||
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Barracuda Networks, Inc.
Reconciliation of Selected GAAP to Non-GAAP Financial Measures
(in thousands, except per share information)
(Unaudited)
| (1) | Amortization of Intangible Assets. We provide non-GAAP information which excludes expenses for the amortization of intangible assets, as well as certain losses from disposal 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. |
| (2) | 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. |
| (3) | 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. |
| (4) | 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 associated with an internal investigation of export control compliance and (ii) legal, accounting and advisory fees, to the extent associated with acquisitions, as well as contingent consideration payments under the terms of certain acquisition agreements. |
| (5) | 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, and (iii) acquisition and other non-recurring charges. |
| (6) | Other Income Adjustments. We provide non-GAAP information that excludes the effect of certain other income and losses. These adjustments most significantly consist of foreign currency re-measurement gains and losses. For all non-functional currency account balances, the re-measurement 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 re-measurement adjustments can be inconsistent in amount and can vary from period to period. |
| (7) | Non-Controlling Interest. We provide non-GAAP information that includes the results related to entities in which we hold a minority interest. We believe that adjusting for these amounts allows us to better compare results from period to period in order to assess the ongoing operating results of our business, including entities for which we own a minority interest. |
| (8) | 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. |
Barracuda Networks, Inc.
Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA
(in thousands)
(Unaudited)
| Three months ended November 30, | Nine months ended November 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| GAAP net income (loss) attributable to Barracuda Networks, Inc. |
$ | (36 | ) | $ | (2,093 | ) | $ | 853 | $ | (6,672 | ) | |||||
| Deferred revenue, end of period |
357,694 | 298,823 | 357,694 | 298,823 | ||||||||||||
| Less: Deferred revenue, beginning of period |
(342,663 | ) | (286,792 | ) | (313,157 | ) | (261,243 | ) | ||||||||
| Less: Deferred costs, end of period |
(56,114 | ) | (48,270 | ) | (56,114 | ) | (48,270 | ) | ||||||||
| Deferred costs, beginning of period |
54,582 | 46,058 | 50,279 | 39,470 | ||||||||||||
| Other expense (income), net |
1,789 | (121 | ) | 2,527 | 329 | |||||||||||
| Benefit from income taxes |
(3,327 | ) | (599 | ) | (3,019 | ) | (2,735 | ) | ||||||||
| Acquisition and other non-recurring charges |
585 | 587 | 1,614 | 1,454 | ||||||||||||
| Stock-based compensation expense |
4,864 | 2,423 | 11,682 | 7,551 | ||||||||||||
| Amortization of intangible assets |
771 | 1,319 | 2,858 | 4,382 | ||||||||||||
| Depreciation expense |
1,347 | 1,314 | 3,682 | 2,985 | ||||||||||||
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| Adjusted EBITDA (1) |
$ | 19,492 | $ | 12,649 | $ | 58,899 | $ | 36,074 | ||||||||
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| (1) | Adjusted EBITDA. 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 of intangible assets, and (vi) depreciation expense, including certain losses on disposal of fixed assets. The deferred revenue balances as of November 30, 2014 and August 31, 2014 exclude the amounts related to acquisition date deferred revenue assumed from C2C Systems Limited. We believe adjusted EBITDA provides an indication of profitability from our operations, and provides a consistent measure of our performance from period to period. |
Barracuda Networks, Inc.
Reconciliation of GAAP Cash Flows from Operating Activities to Adjusted Free Cash Flow
(in thousands)
(Unaudited)
| Three months ended November 30, | Nine months ended November 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| GAAP cash flows from operating activities |
$ | 12,192 | $ | 10,593 | $ | 33,074 | $ | 22,676 | ||||||||
| Purchase of property and equipment |
(3,284 | ) | (1,328 | ) | (7,059 | ) | (5,857 | ) | ||||||||
| Acquisition and other non-recurring charges (1) |
575 | 447 | 1,350 | 3,916 | ||||||||||||
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| Adjusted free cash flow (2) |
$ | 9,483 | $ | 9,712 | $ | 27,365 | $ | 20,735 | ||||||||
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| (1) | Acquisition and Other Non-Recurring Charges. 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 our previous CEO transition, (ii) payments associated with an internal investigation of export control compliance, and (iii) legal, accounting and advisory fee payments, to the extent associated with acquisitions, as well as contingent consideration payments under the terms of certain acquisition agreements. |
| (2) | Adjusted Free Cash Flow. 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. |
On a trailing 12-month basis, adjusted free cash flow was the following:
|
Three months ended |
Trailing 12-month as of November 30, 2014 |
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| February 28, 2014 |
May 31, 2014 |
August 31, 2014 |
November 30, 2014 |
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| GAAP cash flows from operating activities |
$ | 19,534 | $ | 5,407 | $ | 15,475 | $ | 12,192 | $ | 52,608 | ||||||||||
| Purchase of property and equipment |
(1,759 | ) | (1,589 | ) | (2,186 | ) | (3,284 | ) | (8,818 | ) | ||||||||||
| Acquisition and other non-recurring charges |
902 | 385 | 390 | 575 | 2,252 | |||||||||||||||
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| Adjusted free cash flow |
$ | 18,677 | $ | 4,203 | $ | 13,679 | $ | 9,483 | $ | 46,042 | ||||||||||
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Barracuda Networks, Inc.
Reconciliation of GAAP Revenue to Gross Billings
(in thousands)
(Unaudited)
| Three months ended November 30, | Nine months ended November 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| GAAP Revenue |
$ | 70,407 | $ | 59,386 | $ | 205,268 | $ | 173,453 | ||||||||
| Total deferred revenue, end of period |
357,694 | 298,823 | 357,694 | 298,823 | ||||||||||||
| Less: total deferred revenue, beginning of period |
(342,663 | ) | (286,792 | ) | (313,157 | ) | (261,243 | ) | ||||||||
| Deferred revenue adjustments |
6,094 | 6,054 | 18,362 | 16,926 | ||||||||||||
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| Total change in deferred revenue and adjustments |
21,125 | 18,085 | 62,899 | 54,506 | ||||||||||||
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| Gross billings (1)(2) |
$ | 91,532 | $ | 77,471 | $ | 268,167 | $ | 227,959 | ||||||||
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| (1) | Gross Billings. 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 as of November 30, 2014 and August 31, 2014 exclude the amounts related to acquisition date deferred revenue assumed from C2C Systems Limited. We believe that gross billings provide insight into the sales of our solutions and performance of our business. |
| (2) | 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 November 30, 2013, which was the last day of our prior fiscal year’s 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. |
Barracuda Networks, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| Three months ended November 30, | Nine months ended November 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Operating activities |
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| Consolidated net income (loss) |
$ | (36 | ) | $ | (2,292 | ) | $ | 853 | $ | (7,233 | ) | |||||
| Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities: |
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| Depreciation and amortization |
2,118 | 2,381 | 6,540 | 7,115 | ||||||||||||
| Stock-based compensation |
4,864 | 2,423 | 11,682 | 7,551 | ||||||||||||
| Excess tax benefits from equity incentive plan |
(2,414 | ) | (148 | ) | (6,752 | ) | (374 | ) | ||||||||
| Loss on disposal of property and equipment |
66 | 260 | 97 | 296 | ||||||||||||
| Deferred income taxes |
(3,999 | ) | (2,873 | ) | (10,197 | ) | (8,340 | ) | ||||||||
| Other |
107 | — | 107 | — | ||||||||||||
| Changes in operating assets and liabilities: |
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| Accounts receivable, net |
(4,258 | ) | (3,525 | ) | (12,785 | ) | (4,541 | ) | ||||||||
| Inventories, net |
44 | 288 | 507 | (1,227 | ) | |||||||||||
| Income taxes, net |
67 | 3,061 | 3,140 | 2,547 | ||||||||||||
| Deferred costs |
(1,676 | ) | (2,213 | ) | (6,088 | ) | (8,801 | ) | ||||||||
| Other current assets |
86 | 919 | (161 | ) | 17 | |||||||||||
| Other non-current assets |
41 | 172 | 141 | 383 | ||||||||||||
| Accounts payable |
863 | (2,043 | ) | (404 | ) | (2,307 | ) | |||||||||
| Accrued payroll and related benefits |
332 | 454 | 303 | (1,429 | ) | |||||||||||
| Other accrued liabilities |
1,311 | 1,514 | 1,787 | 1,211 | ||||||||||||
| Other long-term liabilities |
2 | 260 | 57 | 331 | ||||||||||||
| Deferred revenue |
14,674 | 11,955 | 44,247 | 37,477 | ||||||||||||
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| Net cash provided by operating activities |
12,192 | 10,593 | 33,074 | 22,676 | ||||||||||||
| Investing activities |
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| Purchase of marketable securities |
(11,488 | ) | — | (11,488 | ) | — | ||||||||||
| Purchase of property and equipment |
(3,284 | ) | (1,328 | ) | (7,059 | ) | (5,857 | ) | ||||||||
| Purchase of intangible assets |
(38 | ) | — | (38 | ) | (28 | ) | |||||||||
| Purchase of investment in non-marketable equity and debt securities |
(500 | ) | — | (1,100 | ) | (310 | ) | |||||||||
| Business combinations, net of cash acquired |
— | — | (4,791 | ) | (8,475 | ) | ||||||||||
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| Net cash used in investing activities |
(15,310 | ) | (1,328 | ) | (24,476 | ) | (14,670 | ) | ||||||||
| Financing activities |
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| Net proceeds from initial public offering |
— | 78,404 | — | 78,257 | ||||||||||||
| Proceeds from issuance of common stock |
5,314 | 1,488 | 12,560 | 1,929 | ||||||||||||
| Taxes paid related to net share settlement of equity awards |
(1,514 | ) | 393 | (3,854 | ) | (798 | ) | |||||||||
| Repurchase of common stock |
— | — | — | (723 | ) | |||||||||||
| Dividends paid |
— | — | — | (1,419 | ) | |||||||||||
| Repayment of employee loans, net of loans extended |
841 | (1,376 | ) | 771 | 1,743 | |||||||||||
| Excess tax benefits from equity incentive plan |
2,414 | 148 | 6,752 | 374 | ||||||||||||
| Repayment of note payable |
(59 | ) | (55 | ) | (177 | ) | (166 | ) | ||||||||
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| Net cash provided by financing activities |
6,996 | 79,002 | 16,052 | 79,197 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents |
(542 | ) | (14 | ) | (634 | ) | (49 | ) | ||||||||
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| Net increase in cash and cash equivalents |
3,336 | 88,253 | 24,016 | 87,154 | ||||||||||||
| Cash and cash equivalents at beginning of period |
156,559 | 28,996 | 135,879 | 30,095 | ||||||||||||
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| Cash and cash equivalents at end of period |
$ | 159,895 | $ | 117,249 | $ | 159,895 | $ | 117,249 | ||||||||
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