Barracuda: Fiscal 3Q16 Financial Results

Barracuda Networks, Inc. announced results for its third quarter of fiscal 2016, which ended November 30, 2015.

Total revenue increased 14% to $80.1 million, up from $70.4 million in the third quarter of fiscal 2015.

Appliance revenue in the third quarter of fiscal 2016 grew to $21.7 million, up from $20.7 million in the third quarter of fiscal 2015, and recurring subscription revenue grew to $58.4 million in the third quarter of fiscal 2016, up from $49.7 million in the third quarter of fiscal 2015, representing 73% of total revenue.

For the third quarter of fiscal 2016, gross billings were $89.0 million, compared with $91.5 million in the third quarter of fiscal 2015.

GAAP net loss in the third quarter of fiscal 2016 was $1.6 million, or $0.03 per share, based on a basic share count of 53.3 million. Non-GAAP net income for the third quarter of fiscal 2016 was $4.0 million, or $0.07 per share, based on a diluted share count of 54.3 million. Non-GAAP net income excludes $8.5 million of income tax benefits, $7.7 million in stock-based compensation expense, $4.7 million in acquisition and other non-recurring charges, $1.3 million in amortization of intangibles and $0.3 million in other expense.

“We delivered third quarter revenue and earnings consistent with our guidance; however, billings came in below our expectations,” said BJ Jenkins, president and CEO. “While we see various dynamics impacting billings in each of our markets, the shift from traditional and solely on-premises IT solution deployments to hybrid, public cloud and managed service solutions is accelerating faster than we expected and is becoming pervasive across more of our markets.“

Jenkins continued: “We have seen encouraging early results and believe we have a leadership and differentiated position in cloud security deployments in the product categories where we invested, such as our next generation firewall and web application firewall products, and have introduced a number of virtual appliances and subscription-only solutions with cloud delivered and pay-as-you-go deployment options. We are adjusting and accelerating our investments in our cloud-based solutions in order to focus more of our resources on products areas that we believe will provide stronger long-term growth.”

“Non-GAAP operating income for the quarter increased by 24% year-over-year to $5.7 million while our deferred revenue ended the quarter at $391.7 million,” said David Faugno, CFO. “Additionally, we successfully launched a $50 million stock repurchase program and repurchased approximately 430,000 shares in the open market in the third quarter.”

Recent company highlights

• MSPs Traction: Completed the acquisition of Intronis, Inc., in providing data protection solutions to MSPs, a growing channel delivering IT services to small and medium-sized businesses.
• Public Cloud Momentum: Announced the availability of Barracuda’s cloud solutions on AWS GovCloud (US), an isolated AWS Region designed to allow organizations such as US government agencies, nonprofits, educational institutions, and private sector companies with stringent regulatory and compliance requirements to move sensitive workloads and data to the cloud.
• Expanded Cloud Suite with New Archiving Service: Introduced Cloud Archiving Service, a new cloud-based email archiving service that helps organizations address a variety of compliance and eDiscovery requests efficiently and easily when used with Exchange, Microsoft Office 365, and other on-premises, cloud or hybrid environments.
• Virtual Appliance Momentum: Introduced Barracuda Backup virtual appliances to reduce storage and bandwidth requirements and easily scale storage capacity.
• New NextGen Firewall Appliances: Launched four new NextGen Firewall desktop appliances aimed at organizations with distributed networks to provide branch offices and other remote sites with advanced security functionality and network performance as those offices access private and public cloud-based applications.