Riverbed: Fiscal 4Q14 Financial Results

Riverbed Technology, Inc. reported financial results for its fourth quarter and fiscal year 2014 ended December 31, 2014.

Q4’14 and FY’14 GAAP Financials

• GAAP revenue for Q4’14 was $283 million, flat with the Q4’13. For FY’14, GAAP revenue was $1.1 billion, up 5% compared to fiscal year ended December 31, 2013 (FY’13).
• GAAP net income for Q4’14 was $49.7 million, or $0.31 per diluted share, compared to GAAP net income of $8.4 million, or $0.05 per diluted share, in Q4’13. GAAP net income for FY’14 was $71.3 million, or $0.44 per diluted share, compared to GAAP net loss of $12.4 million, or ($0.08) per diluted share, for FY’13.

Q4’14 and FY’14 Non-GAAP Financials
Non-GAAP revenue for Q4’14 was $284 million, compared to $285 million in Q4’13. For FY’14, non-GAAP revenue was $1.1 billion, up 3% compared to FY’13.

Non-GAAP net income for Q4’14 was $54.1 million, or $0.34 per diluted share, compared to non-GAAP net income of $50.8 million, or $0.31 per diluted share, in Q4’13. For FY’14, non-GAAP net income was $185.9 million, compared to non-GAAP net income of $169.3 million in FY’13. Earnings for FY’14 were $1.14 per diluted share, compared to $1.01 per diluted share in FY’13, representing a 13% increase year-over-year.

“Riverbed achieved revenue of $1.1 billion in 2014, supported by ongoing momentum in both our SteelCentral performance management suite and our innovative SteelFusion product, nicely complementing our market leading SteelHead family. Riverbed today offers the most complete portfolio of solutions that provide CIOs with unparalleled optimization, visibility, and control across the hybrid enterprise, helping to ensure all on-premises, cloud and SaaS applications perform as needed to drive their business forward without technical constraints,” said Jerry M. Kennelly, chairman and CEO.

“We delivered double digit EPS growth for the calendar year, underscoring our continued focus on driving operational efficiencies. We continue to take definitive actions to enhance profitability and focus on our core competencies; in the fourth quarter, we completed our previously announced restructuring plans and closed the sale of our SteelStore cloud backup and storage product line. Taking into account the revenue impact from the sale of SteelStore, our fourth quarter revenue performance was consistent with our original expectations, while we exceeded the top end of our EPS range due in part to a more favorable tax rate. We ended the year on solid financial footing, growing our cash and investments to $614 million and generating $72 million in free cash flow in the quarter, or 25% of Q4’14 revenue,” continued Kennelly.

In light of the pending acquisition of the company by Thoma Bravo, the company will not be holding an earnings conference call to discuss its financial results.

Q4’14 Business Highlights

• Entered a definitive agreement to be acquired by leading private equity investment firm Thoma Bravo, LLC and Teachers’ Private Capital, the private investor department of Ontario Teachers’ Pension Plan. Under the terms of the agreement, Riverbed stockholders will receive $21.00 per share in cash, or a total of approximately $3.6 billion. The transaction, which is expected to close in the first half of 2015, is subject to approval by Riverbed stockholders, regulatory approvals, and other customary closing conditions.
• Announced SteelHead 9.0 and SteelCentral AppResponse 9.5, the next generation product innovations which together deliver the most complete visibility, control, and optimization solution to accelerate performance of on-premises, cloud, and SaaS applications.
• Strengthened partner ecosystem by launching the Riverbed-Ready Technology Alliance program with 17 charter program members. The program gives partners access to our advanced APIs, innovative technologies and market-leading products to extend the value of the Riverbed Application Performance Platform and offer more complete and competitive solutions for managing hybrid enterprises. Partners can assure customers that their Riverbed-Ready solutions are tested, verified, and supported.
• Premiered Riverbed FORCE, an user conference attended by hundreds of our largest customers and dozens of technology partners. It featured keynotes from Shell and Intel and 80 technical sessions on Riverbed solutions and the Riverbed Application Performance Platform. Sponsors included Microsoft, VMware, EMC, IBM, Avaya, Amazon, and others in the Technology Partner Pavilion. The theme of the conference The Hybrid Enterprise: How to Make Yours Perform at Its Peak, explored how to manage the combination of on-premises and SaaS apps, and public and private networks, which businesses run today and is fast becoming the new normal.
• Sold the SteelStore cloud backup and recovery business to NetApp for approximately $80 million. Divesting the SteelStore product line enables the company to focus on businesses and opportunities which both leverage our core competencies and allow us to deliver the best solutions in the application performance infrastructure market. The company recognized a gain of $57.5 million related to the sale of our SteelStore product line. This gain represents a one-time, non-recurring, item that is not representative of the ongoing operations of the business and excluded from the non-GAAP results.