Riverbed: Fiscal 3Q08 Financial Results

Riverbed Technology reported financial results for its third fiscal quarter ended September 30, 2008 (Q3-08). Revenues for Q3-08 were $86.5 million. Revenues for Q3-08 increased 36.7% from $63.3 million reported in the third quarter of fiscal year 2007 (Q3-07) and increased 6.1% from $81.6 million reported in the second quarter of fiscal year 2008 (Q2-08).

Reporting on a GAAP basis, the net loss for Q3-08 was $12.4 million, or $0.17 loss per diluted share. Q3-08 GAAP results include a one-time $11.0 million charge for the settlement of the patent infringement lawsuit with Quantum Corporation. This compares to a GAAP net loss of $0.9 million in Q2-08, or $0.01 loss per diluted share, and GAAP net income of $2.8 million, or $0.04 per diluted share, in Q3-07.

Non-GAAP net income for Q3-08 was $11.0 million, or $0.15 per share, as compared to non-GAAP net income for Q2-08 of $9.9 million, or $0.13 per share, and non-GAAP net income for Q3-07 of $12.4 million, or $0.17 per share. Q3-08 Non-GAAP net income excludes stock-based compensation, stock-based payroll expenses, and related income tax effects, and a one-time $11.0 million charge for the legal settlement with Quantum. Q2-08 and Q3-07 non-GAAP net income excludes stock-based compensation, stock-based payroll expenses, and related income tax effects. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

"We are very pleased with the results we delivered for our third quarter," stated Jerry M. Kennelly, chairman, president and chief executive officer of Riverbed. "Despite weakness in the global economy, we generated record revenues. Our outperformance in the third quarter was driven by strength in the government vertical, continued deployment within our customer base, and new customer purchases. The cost to deploy Riverbed Steelhead products is fairly low, while the business value they deliver in terms of improved application performance, IT efficiency, and worker productivity is substantial. We believe this return on investment makes WAN optimization a high priority even in a tighter spending environment."

Q3-08 Financial Highlights

• Record revenue of $86.5 million, up 6% sequentially and 37% year-over-year
• Cumulative customer count now exceeds 5,000 after adding more than 500 new customers
• Accounts receivable days sales outstanding improved to 45 days as of September 30, 2008, from 50 days as of June 30, 2008
• Cash flow from operations increased to $26.5 million compared to $9.8 million in Q2-08 and $14.5 million in Q3-07
• Cash, cash equivalents, and marketable securities increased 5% sequentially and 22% year-over-year to $281.5 million after the repurchase of $12.5 million of Riverbed stock in Q3-08

Q3-08 Business Highlights

• Announced an OEM agreement to embed VMware software as the virtualization platform for the Riverbed Services Platform. With the VMware platform inside Steelhead appliances, enterprises can further consolidate their IT infrastructure and improve manageability by running up to five remote office virtual edge services, without the need for separate dedicated servers.
• Accepted into the Microsoft Protocol Optimization Licensing Program, enabling the company to build further on its expertise and success accelerating and optimizing Microsoft Windows-based applications over the wide-area network.
• Continued to strengthen its service provider channel, announcing partnerships with Digital Hands and Pacnet for managed services.
• The company outlined its technology vision at its Analyst Meeting in September, including the vision for the Atlas appliance.

  To read the conference call transcript