Investor Relations

NYSE: ‘CUDA’ $ 20.33 +0.23 +1.14% Volume: 605,411 April 28, 2017

Barracuda Reports Fourth Quarter and Fiscal 2017 Results

04/17/2017

- Q4 total revenue grew 7% year-over-year to $89.3 million and fiscal year 2017 total revenue grew 10% year-over-year to $352.6 million
- Q4 GAAP earnings per share of $0.06 and non-GAAP earnings per share of $0.19
- Fiscal year 2017 GAAP earnings per share of $0.19 and non-GAAP earnings per share of $0.82
- Total active subscribers increased 15% year-over-year to reach 321,000

CAMPBELL, Calif., April 17, 2017 /PRNewswire/ -- Barracuda Networks, Inc. (NYSE: CUDA), a leading provider of cloud-enabled security and data protection solutions, today 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 midmarket. 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.

The reconciliation between non-GAAP and their most closely comparable GAAP equivalent is contained in the tables below.

Recent Company Highlights

  • Introduced "Cloud Ready" Program: Announced innovative "Cloud Ready" program that 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. Through this program, Barracuda 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. Barracuda Vulnerability Remediation Service 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, 10 Gigabit Ethernet connections are now included with the Barracuda Backup 690, 790, and 890 appliances for a faster data transfer.

Conference Call Information

Barracuda will host a conference call and corresponding live webcast at 1:30 p.m. PT today. To access the conference call, dial 1-855-560-2573 for the U.S. or 1-412-542-4159 for international callers. The webcast will be available live on the investor relations section of the company's website at investors.barracuda.com, and via replay beginning approximately one hour after the completion of the call for a period of one year. An audio replay of the call will be available beginning at approximately 5:00 p.m. PT today through April 24, 2017 by dialing 1-877-344-7529 in the U.S. or 1-412-317-0088 for international callers, and entering conference ID 10102620. Additional supplemental financial information will also be accessible on the company's website at investors.barracuda.com.

Forward-Looking Statements
This announcement contains forward-looking statements related to our strategy and core products, the adoption of our cloud and security and data protection products, potential benefits from newly launched and updated products to customers and partners, and potential results from new initiatives, channels and go-to-market strategies that involve risks and uncertainties, including statements regarding our expectations regarding financial performance, and the potential impact of our new and updated products. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including, but not limited to: fluctuations in demand for our products and services; a highly competitive and evolving business environment for network security and storage solutions; the company's effectiveness in controlling expenses and timing of infrastructure costs; the effects of significant developments in IT infrastructure deployments, particularly cloud computing; the impact of foreign currency fluctuations; the possibility that we might experience delays in the development of new technology and products; risks related to recent or future acquisitions; customer response to our new technology and products; risks related to pending or future litigation and regulatory matters; a dependency on third parties for certain components of our products and the impact of changes in our management team. The company undertakes no obligation to update the forward-looking information in this release. More information about potential factors that could affect our business and financial results is included in our filings with the Securities and Exchange Commission, including, without limitation, under the captions: "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Risk Factors," which are on file with the Securities and Exchange Commission.

Non-GAAP Financial Measures
Barracuda provides all financial information required in accordance with generally accepted accounting principles (GAAP). To supplement our consolidated financial statements presented in accordance with GAAP, we are also providing with this press release and on our conference call with non-GAAP net income, non-GAAP operating income, non-GAAP gross margins, non-GAAP operating expenses, adjusted EBITDA and free cash flow. In preparing our non-GAAP information, we have excluded certain amounts as set forth in the attached financial tables and footnotes. We believe that excluding these items provides both management and investors with additional insight into our current operations and the trends affecting the company. In particular, management finds it useful to exclude these items in order to more readily correlate the company's operating activities with the company's ability to generate cash from operations. Accordingly, management uses these non-GAAP measures, along with the comparable GAAP information, in evaluating our historical performance and in planning our future business activities. Please note that our non-GAAP measures may be different than those used by other companies. The additional non-GAAP financial information we present should be considered in conjunction with, and not as a substitute for, our financial information presented in accordance with GAAP. We have provided reconciliations of these non-GAAP measures to their comparable GAAP measures for the periods presented in this release, which exclude certain amounts as set forth in the attached financial tables and footnotes for these periods. These measures should only be used to evaluate the company's results of operations in conjunction with the corresponding GAAP measures for comparable financial information and understanding of the company's ongoing performance as a business. Barracuda uses both GAAP and non-GAAP measures to evaluate and manage its operations.

Beginning in the third quarter of fiscal 2017, we modified our reporting practices to comply with recent SEC interpretations on the use of non-GAAP measures. As a result, we have modified our historical presentation of adjusted EBITDA and free cash flow. We no longer adjust for changes in deferred revenue and associated deferred costs in our calculation of adjusted EBITDA, and for free cash flow we will not adjust for the cash payment impact of acquisition and other charges. Prior period information has been recast to conform to the adjusted calculations.

Forward-looking non-GAAP financial measures included in Barracuda's guidance exclude amortization of intangible assets, stock-based compensation expense, acquisition and other charges, income tax effects related to such exclusions and other expense (income) adjustments. Barracuda does not provide reconciliations of its forward-looking non-GAAP financial measures to the corresponding GAAP measures due to the high variability of, and difficulty in making accurate forecasts and projections with respect to, the items excluded from these non-GAAP financial measures. In particular, stock-based compensation and related taxes are impacted by the company's future hiring and retention needs, as well as the future fair market value of its common stock, all of which is difficult to predict and subject to constant change. Accordingly, reconciliations of its forward-looking non-GAAP financial measures to the corresponding GAAP measures are not available without unreasonable effort. The actual amounts of these excluded items will have a significant impact on the company's GAAP operating income (loss) and net income (loss) per diluted share.

About Barracuda Networks, Inc. (NYSE: CUDA)
Barracuda (NYSE: CUDA) simplifies IT with cloud-enabled solutions that empower customers to protect their networks, applications, and data, regardless of where they reside. These powerful, easy-to-use and affordable solutions are trusted by more than 150,000 organizations worldwide and are delivered in appliance, virtual appliance, cloud and hybrid deployment configurations. Barracuda's customer-centric business model focuses on delivering high-value, subscription-based IT solutions that provide end-to-end network and data protection. For additional information, please visit barracuda.com.

Barracuda Networks, Barracuda, and the Barracuda Networks logo are registered trademarks or trademarks of Barracuda Networks, Inc. in the US and other countries.

Contacts:
Investor Relations: Maria Riley; +1 415-217-7722; ir@barracuda.com 
Corporate Communications: Mary Catherine Petermann; +1 404-307-6290; mc@barracuda.com

 

Barracuda Networks, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)



As of February
28, 2017


As of February
29, 2016

Assets




Current assets:




Cash and cash equivalents

$

120,194



$

118,654


Marketable securities

79,915



36,394


Accounts receivable, net of allowance for doubtful accounts

40,560



36,520


Inventories, net

5,847



5,648


Deferred costs

32,598



31,943


Other current assets

16,295



12,450


Total current assets

295,409



241,609


Property and equipment, net

29,979



31,910


Deferred costs, non-current

27,285



27,019


Deferred income taxes, non-current

1,554



2,992


Other non-current assets

8,607



7,293


Intangible assets, net

32,145



39,386


Goodwill

69,795



69,595


Total assets

$

464,774



$

419,804


Liabilities and stockholders' equity (deficit)




Current liabilities:




Accounts payable

$

11,439



$

15,939


Accrued payroll and related benefits

13,593



12,371


Other accrued liabilities

12,942



19,495


Deferred revenue

239,796



235,411


Note payable

4,115



268


Total current liabilities

281,885



283,484


Long-term liabilities:




Deferred revenue, non-current

167,286



157,363


Deferred income taxes, non-current

2,803



2,478


Note payable, non-current



4,115


Other long-term liabilities

6,377



4,462


Stockholders' equity (deficit):




Common stock

53



52


Additional paid-in capital

370,745



337,439


Accumulated other comprehensive loss

(5,226)



(4,509)


Accumulated deficit

(359,149)



(365,080)


Total stockholders' equity (deficit)

6,423



(32,098)


Total liabilities and stockholders' equity (deficit)

$

464,774



$

419,804


 

Barracuda Networks, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share information)

(Unaudited)



Three Months Ended February
28/29,


Twelve Months Ended February
28/29,


2017


2016


2017


2016

Revenue:








Appliance

$

19,908



$

21,650



$

82,732



$

89,275


Subscription

69,351



62,076



269,917



230,883


Total revenue

89,259



83,726



352,649



320,158


Cost of revenue

22,193



19,879



83,772



70,132


Gross profit

67,066



63,847



268,877



250,026


Operating expenses:








Research and development

18,790



17,120



75,070



71,251


Sales and marketing

32,865



33,504



129,707



138,324


General and administrative

10,084



10,998



42,042



47,338


Total operating expenses

61,739



61,622



246,819



256,913


Income (loss) from operations

5,327



2,225



22,058



(6,887)


Other income (expense), net

(201)



604



(70)



(262)


Income (loss) before income taxes

5,126



2,829



21,988



(7,149)


Benefit from (provision for) income taxes

(1,905)



406



(11,753)



2,727


Net income (loss)

$

3,221



$

3,235



$

10,235



$

(4,422)


Net income (loss) per share:








Basic

$

0.06



$

0.06



$

0.20



$

(0.08)


Diluted

$

0.06



$

0.06



$

0.19



$

(0.08)


Weighted-average shares used to compute net income (loss) per share:








Basic

52,818



52,746



52,456



53,070


Diluted

54,117



53,118



53,572



53,070


 

Barracuda Networks, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)



Three Months Ended February
28/29,


Twelve Months Ended February
28/29,


2017


2016


2017


2016

Operating activities








Net income (loss)

$

3,221



$

3,235



$

10,235



$

(4,422)



Adjustments to reconcile net income (loss) to net cash provided by operating activities:








Depreciation, amortization, and impairment expense

3,989



5,373



16,431



13,300


Stock-based compensation expense

7,655



7,430



32,705



28,846


Excess tax benefits from equity compensation plans

114



(398)



(1,909)



(3,788)


Deferred income taxes

1,251



(2,665)



1,642



(6,592)


Other

62



(1,759)



(493)



(865)


Changes in operating assets and liabilities:








Accounts receivable, net

(1,049)



5,500



(4,103)



4,427


Inventories, net

(1,133)



471



(202)



(1,193)


Income taxes, net

(1,207)



1,873



1,931



2,756


Deferred costs

(1,292)



385



(725)



(1,112)


Other assets

(419)



(388)



(888)



(2,187)


Accounts payable

(499)



957



(5,388)



(720)


Accrued payroll and related benefits

135



(382)



1,033



3,339


Other liabilities

1,043



(5,306)



397



(1,526)


Deferred revenue

5,621



1,069



14,537



19,003


Net cash provided by operating activities

17,492



15,395



65,203



49,266


Investing activities








Purchases of marketable securities

(14,966)



(6,981)



(74,527)



(26,021)


Proceeds from the sale of marketable securities

1,931



1,108



13,461



10,310


Proceeds from the maturity of marketable securities

4,007



5,520



17,597



20,047


Purchases of non-marketable investments

(600)





(1,236)



(1,400)


Purchases of property and equipment

(2,070)



(2,318)



(6,335)



(7,818)


Purchases of intangible assets





(1,374)




Business combinations, net of cash acquired

(6,707)





(6,950)



(56,862)


Net cash used in investing activities

(18,405)



(2,671)



(59,364)



(61,744)


Financing activities








Proceeds from issuance of common stock

1,474



133



8,899



4,845


Taxes paid related to net share settlement of equity awards

(1,058)



(765)



(7,061)



(6,734)


Repurchases of common stock

(355)



(11,216)



(7,596)



(19,216)


Excess tax benefits from equity compensation plans

(114)



398



1,909



3,788


Repayment of employee loans, net of loans extended

122



24





(2,464)


Repayment of note payable

(68)



(64)



(268)



(285)


Other



(75)





(330)


Net cash provided by (used in) financing activities

1



(11,565)



(4,117)



(20,396)


Effect of exchange rate changes on cash and cash equivalents

(7)



422



(182)



155


Net increase (decrease) in cash and cash equivalents

(919)



1,581



1,540



(32,719)


Cash and cash equivalents at beginning of period

121,113



117,073



118,654



151,373


Cash and cash equivalents at end of period

$

120,194



$

118,654



$

120,194



$

118,654



 

Barracuda Networks, Inc.

Reconciliation of Selected GAAP to Non-GAAP Financial Measures

(in thousands)

(Unaudited)



Three Months Ended February
28/29,


Twelve Months Ended February
28/29,


2017


2016


2017


2016

GAAP cost of revenue

$

22,193



$

19,879



$

83,772



$

70,132


Amortization of intangible assets (1)

1,252



1,561



5,004



3,247


Depreciation expense (2)

1,511



1,550



6,155



5,062


Stock-based compensation expense (3)

408



310



1,367



1,062


Non-GAAP cost of revenue

$

19,022



$

16,458



$

71,246



$

60,761


GAAP sales and marketing expense

$

32,865



$

33,504



$

129,707



$

138,324


Amortization of intangible assets (1)

507



1,544



2,242



2,343


Depreciation expense (2)

64



(69)



246



160


Stock-based compensation expense (3)

2,072



1,565



8,074



6,566


Acquisition and other charges (4)



(1,029)





(1,346)


Non-GAAP sales and marketing expense

$

30,222



$

31,493



$

119,145



$

130,601


GAAP research and development expense

$

18,790



$

17,120



$

75,070



$

71,251


Depreciation expense (2)

111



113



528



657


Stock-based compensation expense (3)

2,842



2,141



11,651



8,247


Acquisition and other charges (4)

(419)



(536)



(202)



1,685


Non-GAAP research and development expense

$

16,256



$

15,402



$

63,093



$

60,662


GAAP general and administrative expense

$

10,084



$

10,998



$

42,042



$

47,338


Depreciation expense (2)

544



674



2,256



1,831


Stock-based compensation expense (3)

2,333



3,414



11,613



12,971


Acquisition and other charges (4)

64



126



814



4,649


Non-GAAP general and administrative expense

$

7,143



$

6,784



$

27,359



$

27,887


GAAP total expense

$

83,932



$

81,501



$

330,591



$

327,045


Amortization of intangible assets (1)

1,759



3,105



7,246



5,590


Depreciation expense (2)

2,230



2,268



9,185



7,710


Stock-based compensation expense (3)

7,655



7,430



32,705



28,846


Acquisition and other charges (4)

(355)



(1,439)



612



4,988


Non-GAAP total expense

$

72,643



$

70,137



$

280,843



$

279,911


Depreciation expense (2)

2,230



2,268



9,185



7,710


Non-GAAP total expense including depreciation

$

74,873



$

72,405



$

290,028



$

287,621


 

Barracuda Networks, Inc.

Reconciliation of Selected GAAP to Non-GAAP Financial Measures

(in thousands, except per share information)

(Unaudited)



Three Months Ended February
28/29,


Twelve Months Ended February
28/29,


2017


2016


2017


2016

GAAP operating income (loss)

$

5,327



$

2,225



$

22,058



$

(6,887)


Amortization of intangible assets (1)

1,759



3,105



7,246



5,590


Stock-based compensation expense (3)

7,655



7,430



32,705



28,846


Acquisition and other charges (4)

(355)



(1,439)



612



4,988


Non-GAAP operating income

$

14,386



$

11,321



$

62,621



$

32,537


GAAP net income (loss)

$

3,221



$

3,235



$

10,235



$

(4,422)


Amortization of intangible assets (1)

1,759



3,105



7,246



5,590


Stock-based compensation expense (3)

7,655



7,430



32,705



28,846


Acquisition and other charges (4)

(355)



(1,439)



612



4,988


Income tax effect on non-GAAP exclusions (5)

(2,396)



(3,793)



(7,029)



(12,435)


Other expense (income) adjustments (6)

154



(631)



58



87


Non-GAAP net income

$

10,038



$

7,907



$

43,827



$

22,654


Non-GAAP diluted earnings per share (7)

$

0.19



$

0.15



$

0.82



$

0.42


Weighted-average shares used to compute diluted earnings per share

54,117



53,118



53,572



54,337




(1)

Amortization of Intangible Assets. We provide non-GAAP information which excludes expenses for the amortization of intangible assets, as well as certain losses on disposal and impairment of such assets that primarily relate to purchased intangible assets associated with our acquisitions. We believe that eliminating this expense from our non-GAAP measures is useful to investors because the amortization of intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of our acquisition transactions, which also vary in frequency from period to period. Accordingly, we analyze the performance of our operations in each period without regard to such expenses.



(2)

Depreciation Expense. We provide non-GAAP information which excludes depreciation expense related to the amortization of property and equipment, as well as certain losses from disposal of such assets. We believe that eliminating this expense from our non-GAAP measures is useful to investors because the acquisition of property and equipment, and the corresponding depreciation expense, can be inconsistent in amount and can vary from period to period.



(3)

Stock-Based Compensation Expense. We provide non-GAAP information which excludes expenses for stock-based compensation. We believe the exclusion of stock-based compensation expense allows for financial results that are more indicative of our continuing operations. We also believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types.



(4)

Acquisition and Other Charges. We exclude certain expense items resulting from acquisitions and other charges, which we believe are non-recurring, infrequent, and/or unusual in nature, can vary significantly in amount and frequency, and are unrelated to our ongoing operating performance. We believe that adjusting for these charges allows us to better compare results from period to period in order to assess the ongoing operating results of our business. The charges include: (i) acquisition-related expenses for legal, accounting, and other professional fees, integration costs, fair value remeasurements of contingent consideration obligations and contingent consideration payments made under the terms of acquisition agreements, and (ii) other costs that are non-recurring, infrequent, and/or unusual in nature, such as expenses incurred in connection with litigation, export compliance, intellectual property settlement, and other matters.



(5)

Income Tax Effect of Non-GAAP Exclusions. We believe providing financial information with and without the income tax effect of excluding items related to our non-GAAP financial measures provide our management and users of the financial statements with better clarity regarding the ongoing performance and future liquidity of our business. Excluded items include, but are not limited to: (i) amortization expense of intangible assets, (ii) stock-based compensation expense, (iii) acquisition and other charges, and (iv) quarterly changes to the valuation allowance previously established.



(6)

Other Expense (Income) Adjustments. We provide non-GAAP information that excludes the effect of certain other income and losses. These adjustments consist of realized gains and losses from the sale of marketable securities, foreign currency remeasurement gains and losses and impairment charges related to non-marketable investments. For all non-functional currency account balances, the remeasurement of such balances to the functional currency will result in either a foreign exchange gain or a loss which is recorded in other income (expense), net. We believe that eliminating these items from our non-GAAP measures is useful to investors, because these items can be inconsistent in amount and can vary from period to period.



(7)

Non-GAAP Diluted Earnings Per Share. We provide non-GAAP diluted earnings per share. Non-GAAP diluted earnings per share is calculated based on our non-GAAP net income divided by the weighted-average diluted shares outstanding for the period.

 

Barracuda Networks, Inc.

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA

(in thousands)

(Unaudited)



Three Months Ended February
28/29,


Twelve Months Ended February
28/29,


2017


2016


2017


2016

GAAP net income (loss)

$

3,221



$

3,235



$

10,235



$

(4,422)


Other expense (income), net

201



(604)



70



262


Provision for (benefit from) income taxes

1,905



(406)



11,753



(2,727)


Acquisition and other charges

(355)



(1,439)



612



4,988


Stock-based compensation expense

7,655



7,430



32,705



28,846


Amortization of intangible assets

1,759



3,105



7,246



5,590


Depreciation expense

2,230



2,268



9,185



7,710


Adjusted EBITDA (1)

$

16,616



$

13,589



$

71,806



$

40,247




(1)

Adjusted EBITDA. Beginning in the third quarter of fiscal 2017, we modified our reporting practices to comply with recent SEC interpretations on the use of non-GAAP measures. As a result, we have modified our historical presentation of adjusted EBITDA and will no longer adjust for changes in deferred revenue and associated deferred costs in our calculation of adjusted EBITDA. These changes do not impact our current and historical presentation of GAAP results. Prior period information has been recast to conform to the adjusted calculation. We define adjusted EBITDA as net income (loss) plus non-cash and non-operating charges which include: (i) other expense (income), net, (ii) provision for (benefit from) income taxes, (iii) acquisition and other charges, (iv) stock-based compensation expense, (v) amortization of intangible assets, including certain losses on disposal and impairment of intangible assets, and (vi) depreciation expense, including certain losses on disposal of fixed assets. We believe adjusted EBITDA provides an indication of profitability from our operations, and provides a consistent measure of our performance from period to period.

 

In addition to adjusted EBITDA, we also monitor the changes in deferred revenue and associated deferred costs to facilitate a supplemental comparison of our performance from period to period as set forth in the table below (in thousands):



Three Months Ended February
28/29,


Twelve Months Ended February
28/29,


2017


2016


2017


2016

Increase in deferred revenue

$

5,782



$

1,157



$

14,308



$

19,912


Increase (decrease) in deferred costs

$

1,332



$

(293)



$

921



$

1,026


 

Barracuda Networks, Inc.

Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow

(in thousands)

(Unaudited)



Three Months Ended February
28/29,


Twelve Months Ended February
28/29,


2017


2016


2017


2016

GAAP cash flows from operating activities

$

17,492



$

15,395



$

65,203



$

49,266


Purchases of property and equipment

(2,070)



(2,318)



(6,335)



(7,818)


Free cash flow (1)

$

15,422



$

13,077



$

58,868



$

41,448




(1)

Free Cash Flow. Beginning in the third quarter of fiscal 2017, we modified our reporting practices to comply with recent SEC interpretations on the use of non-GAAP measures. As a result, we have modified our historical presentation of free cash flow and will no longer adjust free cash flow for the cash payment impact of acquisition and other charges. These changes do not impact our current and historical presentation of GAAP results. Prior period information has been recast to conform to the adjusted calculation. We define free cash flow as cash flows from operating activities less the purchases of property and equipment. We believe free cash flow is an important liquidity measure that reflects the cash generated by the business after the purchase of property and equipment that can then be used for, among other things, strategic acquisitions, investments in the business, and funding ongoing operations.

 

Barracuda Networks, Inc.

Reconciliation of GAAP Revenue to Gross Billings

(in thousands)

(Unaudited)



Three Months Ended February
28/29,


Twelve Months Ended February
28/29,


2017


2016


2017


2016

GAAP Revenue

$

89,259



$

83,726



$

352,649



$

320,158


Total deferred revenue, end of period

407,082



392,774



407,082



392,774


Less: total deferred revenue, beginning of period

(401,300)



(391,617)



(392,774)



(372,862)


Deferred revenue adjustments

8,178



10,905



35,160



37,445


Total change in deferred revenue and adjustments

13,960



12,062



49,468



57,357


Gross billings (1)(2)

$

103,219



$

95,788



$

402,117



$

377,515




(1)

Gross Billings. We define gross billings as total revenue plus the change in deferred revenue and other adjustments, which primarily consist of returns and reserves with respect to the 30-day right of return we provide to customers, as well as rebates for certain channel partner activities. We believe that gross billings provide insight into the sales of our solutions and performance of our business. The deferred revenue balances for the prior fiscal year's comparable periods exclude amounts related to the deferred revenue assumed in connection with our acquisition of C2C Systems Limited, which closed in the second quarter of fiscal 2015.



(2)

In order to determine how our business performed exclusive of the effect of foreign currency fluctuations, we compare the percentage change in our gross billings from one period to another using a constant currency. To present this gross billings information, the current and comparative prior period results for entities that operate in other than U.S. dollars are converted into U.S. dollars at constant exchange rates. For example, the rates in effect at February 29, 2016, which was the last day of our prior fiscal year's comparable quarter, were used to convert current and comparable prior period gross billings rather than the actual exchange rates in effect during the respective period.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/barracuda-reports-fourth-quarter-and-fiscal-2017-results-300440403.html

SOURCE Barracuda Networks, Inc.

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