Barracuda: Fiscal 4Q17 Financial Results

Barracuda Networks, Inc. announced results for its fourth quarter and fiscal year 2017, which ended Feb. 28, 2017.

“Barracuda delivered a solid fourth quarter and finished the year strong with total gross billings surpassing $400 million, driven by continued momentum in our core focus areas. Our performance led to record earnings and the highest free cash flow in our company’s history at $58.9 million,” said BJ Jenkins, president and CEO. “We are proud of our team’s execution as we aligned our investments, product portfolio, and routes to market to strengthen Barracuda’s position as a leading comprehensive security platform for the mid-market. We believe our results demonstrate our momentum and foundation for growth as customers move their applications and data to the cloud.”

Fourth Quarter Fiscal 2017 Financial Summary

• Total revenue increased 7% to $89.3 million, compared with $83.7 million in the fourth quarter of fiscal 2016. Subscription revenue grew to $69.4 million, up 12% from $62.1 million in the fourth quarter of fiscal 2016, representing 78% of total revenue. Appliance revenue was $19.9 million, compared with $21.7 million in the fourth quarter of fiscal 2016.
• Gross billings were $103.2 million, compared with $95.8 million in the fourth quarter of fiscal 2016. Billings for core products increased 21% to $63.8 million, compared with $52.6 million in the fourth quarter of fiscal 2016. The number of active subscribers grew approximately 15% year-over-year to reach 321,000 as of February 28, 2017. The dollar-based renewal rate was 89%, or 90% on a constant currency basis, and 93% on an annualized basis.
• GAAP net income was $3.2 million, or $0.06 per share, based on a diluted share count of 54.1 million, compared to a GAAP net income of $3.2 million, or $0.06 per share, in the fourth quarter of fiscal 2016.
• Non-GAAP net income was $10.0 million, or $0.19 per share, based on a diluted share count of 54.1 million. Non-GAAP net income was favorably impacted by the exclusion of $7.7 million in stock-based compensation expense, $1.8 million in amortization of intangibles and $0.2 million in other expense, partially offset by the exclusion of an income tax effect of $2.4 million and $0.4 million in acquisition and other benefits.

Fiscal Year 2017 Financial Summary

• Total revenue increased 10% to $352.6 million, compared with $320.2 million in fiscal year 2016. Subscription revenue grew to $269.9 million, up 17% from $230.9 million in fiscal year 2016, representing 77% of total revenue. Appliance revenue was $82.7 million, compared with $89.3 million in fiscal year 2016.
• Gross billings increased 7% to $402.1 million, compared with $377.5 million in fiscal year 2016. Billings for core products increased 23% to $239.5 million, compared with $194.4 million in fiscal 2016.
• GAAP net income was $10.2 million, or $0.19 per share, based on a diluted share count of 53.6 million, compared to a GAAP net loss of $4.4 million, or $0.08 per share, on a basic share count of 53.1 in fiscal 2016.
• Non-GAAP net income was $43.8 million, or $0.82 per share, based on a diluted share count of 53.6 million. Non-GAAP net income was favorably impacted by the exclusion of $32.7 million in stock-based compensation expense, $7.2 million in amortization of intangibles, $0.6 million in acquisition and other charges and $0.1 million in other expense, partially offset by the exclusion of an income tax effect of $7.0 million.

Recent company Highlights

• Introduced Cloud Ready Program: It allows customers to sample the cloud for their new and existing workloads with no upfront costs and without having to determine where or how to allocate security resources. Customers that purchase certain Barracuda Web Application Firewall or Barracuda NextGen Firewall hardware products receive a cloud license to deploy the same solution in Amazon Web Services and Microsoft Azure at no additional cost. This program, gives customers a path to adopt cloud infrastructures, with the ability to deploy the same powerful security capabilities and intuitive management interface whether deployed on-premises or in the cloud.
• Expanded Cloud-based Application Security Capabilities: Launched Barracuda Vulnerability Remediation Service, a cloud-based service that automates security policy enforcement with on-demand or scheduled scanning and automatic remediation of web application vulnerabilities. The service simplifies security operations for DevOps teams looking to leverage the agility and elasticity of public cloud platforms by integrating security directly into the application development process. It enables administrators to find, continuously monitor for and automatically fix vulnerabilities. The service can be used for applications deployed on-premises, or in hybrid or cloud-only environments, with policy configurations that can be applied across any number of Web Application Firewall instances.
• Enhanced Data Protection Product Portfolio: Announced an appliance refresh across the Barracuda Backup product line, which gives customers increased storage capacity up to 100% in some cases, offering a lower cost per terabyte and enabling more room for data growth. As part of the refresh, customers with cloud storage subscriptions can now replicate more data to the cloud with no increase in subscription prices. Additionally, 10GbE connections are now included with the Barracuda Backup 690, 790, and 890 appliances for a faster data transfer.

To read the earnings call transcript