* Revenue increases 12% over prior year
* Cumulative customer count exceeds 6,500
* $269 million in cash and marketable securities and no debt
SAN FRANCISCO -- Riverbed Technology (NASDAQ:RVBD), the IT infrastructure performance company for networks, applications and storage, today reported financial results for its second quarter ended June 30, 2009 (Q2'09).
Total GAAP revenue for Q2'09 was $91.0 million, an increase of 12% from $81.6 million of GAAP revenue reported in the second quarter of fiscal year 2008 (Q2'08). The GAAP net loss for Q2'09 was $290,000, or $0.00 per diluted share. This compares to a GAAP net loss of $869,000, or $0.01 per diluted share, in Q2'08.
Non-GAAP revenue for Q2'09 was $91.6 million, an increase of 12% from $81.6 million of revenue reported in Q2'08. Non-GAAP net income for Q2'09 was $10.3 million, or $0.14 per diluted share, as compared to non-GAAP net income for Q2'08 of $9.9 million, or $0.13 per diluted share.
"Riverbed has continued to deliver revenue growth in a persistently challenging global economic environment, and the second quarter marks our 14th consecutive quarter of year-over-year top line expansion," said Jerry M. Kennelly, Riverbed[R] president and CEO. "We experienced another strong quarter of new customer additions, ending the second quarter with more than 6,500 customers. As we look forward, we believe that Riverbed is well positioned to capture the full opportunity of the WAN optimization market. Our competitive position remains strong, our pipeline is healthy, and we are targeting revenue and profit growth in the third quarter."
Q2'09 Financial Highlights
* Revenue increased 12% year-over-year
* Non-GAAP gross margins increased to 76.1%
* Non-GAAP operating profit increased 11% year over year
* Deferred revenue increased to $70 million
* Cash, cash equivalents, and marketable securities of $269 million and no debt
Q2'09 Business Highlights
* Identified as both the WAN optimization controller (WOC) Advanced Platform and WOC worldwide market share leader for Q1'09 based on revenue in the Gartner report, "Market Share: Application Acceleration Equipment, Worldwide, Q1'09"
* Positioned by Gartner in the leaders quadrant in the "Magic Quadrant for WAN Optimization Controllers 2009"
* Introduced Cascade 8.3, providing 'out-of-the-box' WAN optimization intelligence, with an enhanced level of automation, ease-of-use, and consolidated enterprise visibility
* Partnered with Check Point Software Technologies to offer Check Point Security Gateway R70[TM] on the Riverbed Services Platform, providing customers a comprehensive set of centrally managed security protections
* Partnered with Websense to deliver Websense Web Security on the Riverbed Services Platform, enabling organizations to consolidate WAN and Web security deployments, making their IT infrastructure faster, less expensive, and more secure
* Extended relationship with Microsoft and will support Microsoft Windows Server 2008 R2 and BranchCache on the Riverbed Services Platform
* Awarded the 2009 STAR Award for Best Practices in Emerging Company Support by the Service & Support Professionals Association
Conference Call
Riverbed will host a conference call today, July 23, 2009, at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time) to discuss its second quarter fiscal year 2009 results and outlook for the third quarter of 2009. The call will be broadcast live over the Internet at www.riverbed.com/investors. A replay of the conference call will also be available via webcast at www.riverbed.com/investors for 12 months.
Forward Looking Statements
This press release contains forward-looking statements, including statements relating to revenue and profit growth in the third quarter, the expected demand for Riverbed's products and services and statements relating to Riverbed's ability to meet the needs of distributed organizations. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to react to trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs or develop new or enhanced products to meet those needs; the adoption rate of our products; our ability to establish and maintain successful relationships with our distribution partners; our ability to compete in our industry; fluctuations in demand, sales cycles and prices for our products and services; shortages or price fluctuations in our supply chain; our ability to protect our intellectual property rights; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact Riverbed's business are set forth in our Form 10-Q filed for the quarter ended March 31, 2009. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements. Any future product, feature or related specification that may be referenced in this release are for information purposes only and are not commitments to deliver any technology or enhancement. Riverbed reserves the right to modify future product plans at any time.
Use of Non-GAAP Financial Information
To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures that we believe are helpful in understanding our past financial performance and future results. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, "GAAP to Non-GAAP Reconciliations." Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods. Our non-GAAP financial measures include adjustments based on the following items, as well as the related income tax effects and adjustments related to our tax valuation allowance:
Support deferred revenue: Business combination accounting rules require us to account for the fair value of support contracts assumed in connection with our acquisitions. The book value of our deferred support revenue was reduced by approximately $2.0 million in the adjustment to fair value. Because these are typically one-year contracts, our GAAP revenues for the one year period subsequent to the acquisition of a business do not reflect the full amount of service revenues on assumed support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment is intended to reflect the full amount of such revenues. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business because we have historically experienced high renewal rates on support contracts, although we cannot be certain that customers will renew these contracts.
Stock-based compensation expenses: We have excluded the effect of stock-based compensation and stock-based payroll expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.
Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP net income. Amortization of intangible assets is a non-cash expense, and it is not part of our core operations. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.
Acquisition related and other expenses: We incurred significant expenses in connection with our acquisition of Mazu and also incurred certain other operating expenses, which we would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of transaction costs, costs for transitional employees, other acquired employee related costs, integration related professional services, and adjustments to the fair value of the acquisition related contingent consideration. We believe it is useful for investors to understand the effects of these items on our total operating expenses.
About Riverbed
Riverbed Technology is the IT infrastructure performance company. The Riverbed family of wide area network (WAN) optimization solutions liberates businesses from common IT constraints by increasing application performance, enabling consolidation, and providing enterprise-wide network and application visibility - all while eliminating the need to increase bandwidth, storage or servers. Thousands of companies with distributed operations use Riverbed to make their IT infrastructure faster, less expensive and more responsive. Additional information about Riverbed (NASDAQ: RVBD) is available at www.riverbed.com.
About the Magic Quadrant
The Magic Quadrant is copyrighted 2009 by Gartner, Inc. and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the "Leaders" quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
Riverbed Technology, Riverbed, Steelhead, RiOS, Interceptor, Think Fast, the Riverbed logo, Mazu, Profiler and Cascade are trademarks or registered trademarks of Riverbed Technology, Inc. All other trademarks used or mentioned herein belong to their respective owners.
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