Barracuda: Fiscal 2Q17 Financial Results

Sales up 12% Y/Y, 1% Q/Q, and profitable
This is a Press Release edited by on 2016.10.12

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(in $ million) 2Q16 2Q17 6 mo. 16 6 mo. 17
Revenue 78.4 87.9 156.3 174.6
Growth   12%   12%
Net income (loss) (2.2) 2.4 (6.1) 5.2

Barracuda Networks, Inc. announced results for its second quarter fiscal 2017 that ended August 31, 2016.

"In the second quarter, we are pleased with our financial results, and continue to execute on our strategy to position Barracuda as the clear choice to help customers protect their email, networks, applications and data across diverse and distributed deployments. Our total revenue grew 12% year-over-year, gross billings reached $100.3 million and our non-GAAP earnings per share more than doubled year-over-year to reach $0.21 per share," said BJ Jenkins, president and CEO. "We continue to innovate and bring new solutions to market that fortify the security fabric across public, private and hybrid cloud deployments and can be centrally managed from a single pane of glass. We believe Barracuda is well positioned to build on our momentum and be a market leader in our targeted focus areas as customers look to adopt new application and network deployment models and move workloads to the cloud."

Second Quarter Fiscal 2017 Financial Summary

  • Total revenue increased 12% to $87.9 million, compared with $78.4 million in the second quarter of fiscal 2016. Subscription revenue grew to $66.9 million, up 19% from $56.1 million in the second quarter of fiscal 2016, representing 76% of total revenue, and appliance revenue was $21.0 million, compared with $22.3 million in the second quarter of fiscal 2016.
  • Gross billings were $100.3 million, compared with $98.4 million in the second quarter of fiscal 2016. The number of active subscribers grew approximately 14% to over 298,000 and the dollar-based renewal rate was 96% for the quarter.
  • GAAP net income was $2.4 million, or $0.05 per share, based on a diluted share count of 53.3 million, compared to a GAAP net loss of $2.2 million, or $0.04 per share, in the second quarter of fiscal 2016.
  • Non-GAAP net income was $11.4 million, or $0.21 per share, based on a diluted share count of 53.3 million. Non-GAAP net income excludes $7.9 million in stock-based compensation expense, $1.9 million in amortization of intangibles, $0.4 million in acquisition and other non-recurring charges, $0.3 million of income tax effect, and $1.5 million in other income.

Recent company Highlights

  • Continued Office 365 Security Momentum: With the number of advanced threats on the rise and affecting companies of all sizes, Barracuda recently announced the availability of the new Barracuda Email Threat Scan for Office 365, a cloud-based service that identifies latent threats, including hidden advanced persistent threats, within Microsoft Office 365 email accounts. With this launch, the company provides solutions to detect, prevent and recover against ransomware and other advanced attacks, offering multi-layered protection for its customers. Email Threat Scan provides customers with an immediate view of their email security posture and enables resellers and MSPs to build a more robust email security and data protection offering.
  • Expanded Cloud-Based Data Protection Functionality: Launched SharePoint Online backup capability for Barracuda Cloud-to-Cloud Backup, which is available as a standalone product and as part of Barracuda Essentials for Office 365. The firm now offers granular backup and recovery options for SharePoint Online to help IT departments restore deleted, corrupted or stolen files that have been encrypted by ransomware - without having to perform a full site recovery of the SharePoint environment. With this launch, Barracuda offers solutions to help customers running Office 365 detect, prevent and recover from ransomware and other malicious attacks, and to centrally secure and manage data in Exchange Online, OneDrive for Business, and SharePoint Online.
  • Expanded Cloud-Ready Next-Generation Firewall Technology: Announced availability of Barracuda NextGen Firewall F-Series version 7.0, which is designed for organizations adopting cloud-based applications, operating dispersed network environments, and leveraging cloud platforms. It provides intelligent network perimeters, and leverages Barracuda's global threat intelligence framework to help prevent data exfiltration from botnets and spyware for on-premises or cloud-based networks, allowing customers to more cost effectively scale by connecting on-premises and cloud networks through multiple uplinks with dynamic failover, traffic balancing and WAN optimization.
  • Enhanced Data Protection Services: Launched Barracuda Backup version 6.3 which includes enhancements that enable fast backup and recovery performance, improved public cloud support and expanded storage capacity at competitive price points.

Our Comments

Abstracts of the earnings call transcript:

Dustin Driggs, CFO:
"On a geographic basis, we derived 76% of total second quarter revenue from the Americas; revenue from EMEA was 18% of total revenue; and APAC was 6% of total revenue. Our number of active subscribers in the second quarter exceeded 298,000, which was an increase of 14% year-over-year. Renewal rates, which we calculate on a dollar basis, were 96% in Q2 and our average contract lengths were consistent with the prior quarter.
"We closed the quarter with cash, cash equivalents and marketable securities of approximately $180 million.
"For Q3 FY17, we expect billings to be in the range of $97 million to $100 million. We expect revenue to be in the range of $85 million to $87 million."