Riverbed: Fiscal 4Q09 Financial Results

Riverbed Technology reported financial results for its fourth quarter (Q4’09) and fiscal year ended December 31, 2009 (FY’09).

Total GAAP revenue for Q4’09 was $112.9 million, an increase of 11% from $102.0 million reported in the third quarter of fiscal year 2009 (Q3’09) and an increase of 22% from $92.2 million reported in the fourth quarter of fiscal year 2008 (Q4’08). For fiscal year 2009 (FY’09), GAAP revenue was $394.1 million, up 18% from $333.3 million in fiscal year 2008 (FY’08). Non-GAAP revenue for Q4’09 was $113.2 million, an increase of 10% from $102.6 million of non-GAAP revenue reported in Q3’09 and an increase of 23% from $92.2 million of revenue reported in Q4’08. FY’09 non-GAAP revenue was $395.9 million, up 19% from $333.3 million in FY’08.

GAAP net income for Q4’09 was $0.9 million, or $0.01 per share. This compares to GAAP net income of $5.5 million, or $0.08 per share, in Q3’09 and $23.3 million, or $0.33 per share, in Q4’08. GAAP net income for FY’09 was $7.1 million, or $0.10 per share, compared to GAAP net income of $10.6 million, or $0.14 per diluted share, in FY’08. Non-GAAP net income for Q4’09 was $16.1 million, or $0.21 per diluted share. This compares to non-GAAP net income for Q3’09 of $14.5 million, or $0.19 cents per diluted share, and non-GAAP net income for Q4’08 of $13.6 million, or $0.19 per share. Non-GAAP net income for FY’09 was $50.1 million, or $0.68 per diluted share, which compares to non-GAAP net income of $42.5 million, or $0.57 per diluted share in FY’08.

“2009 was a year of significant achievement for Riverbed characterized by market share gains every reported quarter,” said Jerry M. Kennelly, Riverbed chairman and CEO. “We executed well in a difficult economy, achieving strong revenue and profit growth while still advancing our technology. For the full year, both non-GAAP revenue and earnings per share increased 19 percent.”

“Sales momentum continued in the fourth quarter driven by growth in enterprise sales across all major geographies,” continued Kennelly. “Product revenue increased 12 percent sequentially and 15 percent year-over-year. In addition to providing a solid return on investment, WAN optimization was recognized as a critical enabler to the success of a variety of important IT projects including virtualization and consolidation, firmly establishing WAN optimization as a top priority item on IT spending surveys.”

Q4’09 and FY’09 Financial Highlights

• Q4’09 non-GAAP revenue increased 10% sequentially and 23% year-over-year, with FY’09 non-GAAP revenue increasing 19%
• Q4’09 non-GAAP gross margin was 77.3%, FY’09 non-GAAP gross margin was 76.9%
• Q4’09 non-GAAP operating margin was 21.3%, FY’09 non-GAAP operating margin was 19.0%
• Q4’09 non-GAAP net income increased 11% sequentially and 18% year-over-year
• Days sales outstanding decreased to 39 days from 42 days in the prior quarter
• Deferred revenue increased 14% sequentially
• Q4’09 cash flow from operations of $23.1 million, and FY’09 cash flow from operations of $96.5 million
• Cash, cash equivalents, and marketable securities totaled $325.7 million and no debt as of December 31, 2009

FY’09 Business Highlights

• Identified as the WAN optimization controller (WOC) Advanced Platform worldwide market share leader for Q1’09, Q2’09 and Q3’09 based on revenue in the Gartner report, Market Share: Application Acceleration Equipment, Q3’09
• Positioned by Gartner in the leaders quadrant in the Magic Quadrant for WAN Optimization Controllers 2009
• Completed the acquisition of Mazu Networks allowing Riverbed to offer the most compelling enterprise-wide system for closed-loop application performance delivery over the WAN
• Added EMC Select as distribution channel and achieved E-lab qualification with certain EMC products to accelerate disaster recovery and business continuity solutions
• Achieved qualification with Hitachi TrueCopy Remote Replication and Hitachi Universal Replicator products for business continuity and disaster recovery
• Extended relationship with Microsoft by announcing an OEM agreement to license Windows Server 2008 and support for Microsoft Windows Server 2008 R2 and BranchCache on the Riverbed Services Platform (RSP)
• Included as the only WAN optimization vendor in HP ProCurve ONE
• Cumulative customer count exceeding 7,300
• Launched multiple new software releases including Riverbed Optimization System (RiOS) 6.0, Steelhead Mobile 3.0, Cascade 8.3, and Central Management Console-Virtual Edition (CMC-VE)
• Added four qualified solutions to RSP including Check Point Security Gateway R70™, Microsoft Windows Server 2008, Websense Web Security, and Riverbed’s Mobile SMC-VE