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| Riverbed Technology, Inc. Reports Fourth Quarter and Full Fiscal Year 2007 Financial Results |
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-- Quarterly Revenues Increase by 126% Year-Over-Year to $76.3
Million -- Annual Revenues Increase 162% to $236.4 Million -- Cumulative Customer Count Now Exceeds 3,500 SAN FRANCISCO--(BUSINESS WIRE)--Feb. 5, 2008--Riverbed Technology, Inc. (NASDAQ: RVBD), the technology and market leader in wide-area data services (WDS), today released financial results for the fourth quarter and fiscal year ended December 31, 2007. Revenues for the fourth quarter of 2007 were $76.3 million, an increase of 126% from the fourth quarter of 2006 and a 21% increase over the third quarter of 2007. Riverbed(R) posted GAAP net income of $4.8 million, or $0.07 per share, in the fourth quarter of 2007, compared to a net loss of $2.4 million, or a loss of $0.04 per share, in the fourth quarter of 2006. Riverbed's fourth quarter of 2007 GAAP results included $9.8 million of stock-based compensation expenses and related payroll taxes. Excluding the impact of stock-based compensation and related payroll taxes in all periods, the non-GAAP net income for the fourth quarter of 2007 was $14.6 million, or $0.20 per share, compared to non-GAAP net income of $2.4 million, or $0.03 per share, in the fourth quarter of 2006. Revenues for the year ended December 31, 2007 were $236.4 million, a 162% increase from $90.2 million of revenues in the prior year. Riverbed posted its first full year of profitability in 2007. GAAP net income for 2007 was $14.8 million, or $0.20 per share, compared to a GAAP net loss of $15.8 million, or $0.59 per share, in 2006. 2007 GAAP results included $32.6 million of stock-based compensation expenses and related payroll taxes. Non-GAAP net income for 2007 was $47.4 million, or $0.65 per share, which compares to a non-GAAP net loss of $6.6 million, or $0.12 per share for 2006. "Over the past year, we have continued the rapid expansion of our business, growing revenues by 162%, adding over 1,800 customers and building a business that generated over 18% non-GAAP operating margins in 2007 compared to losses in 2006," noted Jerry M. Kennelly, Riverbed president and chief executive officer. "Riverbed's record revenue performance in the fourth quarter and throughout 2007 reflects the explosive growth in demand for WDS solutions and our extremely strong competitive position within this fast growing market. Fourth quarter 2007 sequential revenue growth accelerated from the third quarter to 21% and customer acquisition was also strong. We now have a cumulative customer count of over 3,500 and continue to make inroads with the world's largest corporations." "With the majority of the global workforce working outside of headquarter offices, we believe that wide area data solutions can significantly improve productivity while allowing companies to consolidate expensive equipment and services, saving billions of dollars for companies worldwide. Our competitive leadership in this market remains unchanged and we are leveraging our unique software architecture to enter into attractive new markets," added Mr. Kennelly. "GAAP gross margins reached 75% for the first time in the fourth quarter, significantly ahead of plan and reflecting reduced costs and a positive product mix. We have continued to invest in building out our R&D and sales marketing organizations given what we believe continues to be a large and growing market opportunity," said Randy Gottfried, Riverbed chief financial officer. 2007 Highlights Riverbed's focus on delivering industry-leading performance, scalability, and simplicity to distributed organizations of all sizes was reflected in a number of key business initiatives and milestones.
-- Industry Achievement - Riverbed's Steelhead(R) Appliance
product family continued to be recognized for its excellence
by many well-respected trade publications in 2007, including
InfoWorld (Best WAN Accelerator of 2005, 2006, 2007, and 2008)
Network World (Clear Choice Award for WAN Acceleration),
Infonetics Research (Market Leader in WAN Optimization) and
Gartner (Market Share Leader, five consecutive quarters). In
addition, for the second consecutive year Gartner positioned
the company in the Leaders quadrant in the "WAN Optimization
Controller Magic Quadrant" published in December 2007 and
authored by Andy Rolfe and Joe Skorupa. This report positions
vendors in one of four quadrants based on the companies'
vision and ability to execute on that vision. In addition,
multiple Riverbed customers were named to the InfoWorld 100
for their implementation of Riverbed's Steelhead appliances.
The InfoWorld 100 honors IT projects that demonstrate the most
creative use of cutting edge technologies to further their
business goals.
-- Product Innovation - Riverbed began shipping the next
generation of the Riverbed Optimization System (RiOS(TM)),
version 4.1, which is enhanced with disaster recovery
intelligence and encryption capability for organizations that
require high levels of security or face compliance
requirements. The company introduced a new Steelhead appliance
model 6120 optimized for disaster recovery, introduced
optimizations for Oracle11i applications, and a patent-pending
new approach to accelerating encrypted web traffic, furthering
its leadership in providing customers with the best
performance for the applications most important to their
businesses. The company also began shipping the Steelhead
Mobile laptop client, which delivers LAN-like application
performance for the mobile workforce.
-- Customer Wins - Riverbed added over 1,800 customers in 2007
and by end-of-year had over 3,500 cumulative customers across
a wide range of verticals and markets. Announced customers
included GeoEngineers, Bank of Korea, Cubist Pharmaceutical
Firm, U.S. Defense Contract Management Agency, New Zealand
Department of Conservation, Hyundai Hysco, Mitsubishi Motors,
and Family Health International.
-- Global Expansion and Distribution - Riverbed dramatically
expanded its global presence in 2007, expanding in nine
additional countries. New offices were added in Latin America,
Eastern Europe, Scandinavia and a number of countries in Asia.
The company also ramped up its distribution capacity by almost
doubling its sales and marketing organization in 2007 to meet
the growing global demand for its products and building our
channel relationships to more than 500 partners.
Conference Call Information
Riverbed will host a conference call for analysts and investors to discuss its fourth quarter and full fiscal year results today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference call will also be accessible from the "Investor Relations" section of the company's website at www.riverbed.com. Following the webcast, an archived version will be available on the website for 30 days. To hear the replay, parties in the United States and Canada should call 800-405-2236 and enter passcode 11107069. International parties can access the replay at 303-590-3000 and should enter passcode 11107069. About Riverbed Riverbed Technology is the technology and market leader in wide-area data services (WDS) solutions for companies worldwide. By enabling application performance over the wide area network (WAN) that is orders of magnitude faster than what users experience today, Riverbed is changing the way people work, and enabling a distributed workforce that can collaborate as if they were local. Additional information about Riverbed (Nasdaq: RVBD) is available at www.riverbed.com. Forward-Looking Statements This press release contains forward-looking statements, including statements relating to the expected demand for Riverbed's products and services, statements relating to the growth prospects of the WDS market, statements relating to Riverbed's ability to enter new markets, and statements relating to Riverbed's ability to meet the needs of distributed organizations, grow market share or grow the market as a whole. 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 filed with the SEC on October 25, 2007, as well as subsequent reports filed with the SEC. 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 informational purposes only and are not commitments to deliver any technology or enhancement. Riverbed reserves the right to modify future product plans at any time. Non-GAAP Financial Measures In addition to disclosing financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons why management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled "Use of Non-GAAP Financial Information" as well as the related tables that follow it. We anticipate disclosing forward-looking non-GAAP financial information in our conference call to discuss our fourth quarter and fiscal year 2007 results, including an estimate of non-GAAP earnings for the first quarter and fiscal year 2008 that excludes stock-based compensation expenses related to employee stock options, purchases of common stock under our Employee Stock Purchase Plan, and related payroll taxes. We cannot readily estimate these expenses because they depend on such factors as our future stock price for purposes of computing such expenses. A copy of this press release can be found on the investor relations page of Riverbed's website at www.riverbed.com. Riverbed Technology, Riverbed, Steelhead, RiOS, Interceptor, and the Riverbed logo are trademarks or registered trademarks of Riverbed Technology, Inc. All other trademarks used or mentioned herein belong to their respective owners.
Riverbed Technology, Inc.
GAAP Condensed Consolidated Statements of Operations
In thousands, except per share amounts
Three months ended Twelve months ended
December 31, December 31,
-------------------- --------------------
2007 2006 2007 2006
--------- ---------- --------- ----------
Revenue:
Product $ 61,342 $ 26,798 $ 189,218 $ 70,967
Support and services 12,688 4,930 38,460 12,315
Ratable product and related
support and services 2,280 2,097 8,728 6,925
--------- ---------- --------- ----------
Total revenue 76,310 33,825 236,406 90,207
Cost of revenue:
Cost of product 13,467 8,927 49,009 23,504
Cost of support and services 4,754 1,897 14,451 4,748
Cost of ratable product and
related support and
services 651 456 2,464 1,900
--------- ---------- --------- ----------
Total cost of revenue 18,872 11,280 65,924 30,152
--------- ---------- --------- ----------
Gross profit 57,438 22,545 170,482 60,055
Operating expenses:
Sales and marketing 32,617 16,312 95,652 48,080
Research and development 12,312 6,503 39,696 19,215
General and administrative 8,020 3,279 24,834 9,294
--------- ---------- --------- ----------
Total operating expenses 52,949 26,094 160,182 76,589
--------- ---------- --------- ----------
Operating income (loss) 4,489 (3,549) 10,300 (16,534)
Other income, net 2,705 1,286 9,733 992
--------- ---------- --------- ----------
Income (loss) before
provision for income taxes 7,194 (2,263) 20,033 (15,542)
Provision for income taxes 2,367 148 5,235 303
--------- ---------- --------- ----------
Net income (loss) $ 4,827 $ (2,411) $ 14,798 $ (15,845)
========= ========== ========= ==========
Net income (loss) per share,
basic $ 0.07 $ (0.04) $ 0.22 $ (0.59)
Net income (loss) per share,
diluted $ 0.07 $ (0.04) $ 0.20 $ (0.59)
Shares used in computing
basic net income (loss) per
share 69,887 63,452 68,020 26,977
Shares used in computing
diluted net income (loss)
per share 74,176 63,452 73,244 26,977
Stock-based compensation
expense included in above:
Cost of product $ 33 $ - $ 101 $ -
Cost of support and services 778 322 2,576 520
Sales and marketing 4,419 2,447 15,160 4,636
Research and development 2,635 1,363 8,593 2,541
General and administrative 1,757 654 5,371 1,521
--------- ---------- --------- ----------
Total stock-based
compensation expense $ 9,622 $ 4,786 $ 31,801 $ 9,218
========= ========== ========= ==========
Riverbed Technology, Inc.
GAAP to Non-GAAP Reconciliation
In thousands, except per share amounts
Unaudited
------------------------------------
Three months ended
December 31, 2007
-----------------------------------
GAAP Adjustments Non-GAAP
-------------- ----------- --------
Reconciliation of gross profit
Total revenue $ 76,310 $ - $76,310
Total cost of revenue 18,872 (812) 18,060
-------------- ----------- --------
Gross profit $ 57,438 $ 812 $58,250
============== =========== ========
Reconciliation of operating
expenses:
Sales and marketing $ 32,617 $ (4,564) $28,053
Research and development 12,312 (2,670) 9,642
General and administrative 8,020 (1,771) 6,249
-------------- ----------- --------
Total operating expenses $ 52,949 $ (9,005) $43,944
============== =========== ========
Reconciliation of operating
income, net income and net income
per share:
Operating income $ 4,489 $ 9,817 $14,306
Income before provision for
income taxes $ 7,194 $ 9,817 $17,011
Net income $ 4,827 $ 9,817 $14,644
Net income per share, basic $ 0.07 $ 0.21
Net income per share, diluted $ 0.07 $ 0.20
Shares used in computing basic
net income per share 69,887 69,887
Shares used in computing diluted
net income per share 74,176 74,176
------------------------------------
Reconciliation of GAAP to Non- Payroll Tax
GAAP Adjustments: Stock-based on Stock
compensation Option
expense (a) Exercises Total
-------------- ----------- --------
Cost of revenue $ 811 $ 1 $ 812
Sales and marketing 4,419 145 4,564
Research and development 2,635 35 2,670
General and administrative 1,757 14 1,771
-------------- ----------- --------
$ 9,622 $ 195 $ 9,817
============== =========== ========
----------------------------------
Twelve months ended
December 31, 2007
----------------------------------
GAAP Adjustments Non-GAAP
------------- ----------- --------
Reconciliation of gross profit
Total revenue $ 236,406 $ - $236,406
Total cost of revenue 65,924 (2,679) 63,245
------------- ----------- --------
Gross profit $ 170,482 $ 2,679 $173,161
============= =========== ========
Reconciliation of operating
expenses:
Sales and marketing $ 95,652 $(15,616) $ 80,036
Research and development 39,696 (8,814) 30,882
General and administrative 24,834 (5,482) 19,352
------------- ----------- --------
Total operating expenses $ 160,182 $(29,912) $130,270
============= =========== ========
Reconciliation of operating income,
net income and net income per
share:
Operating income $ 10,300 $ 32,591 $ 42,891
Income before provision for income
taxes $ 20,033 $ 32,591 $ 52,624
Net income $ 14,798 $ 32,591 $ 47,389
Net income per share, basic $ 0.22 $ 0.70
Net income per share, diluted $ 0.20 $ 0.65
Shares used in computing basic net
income per share 68,020 68,020
Shares used in computing diluted
net income per share 73,244 73,244
----------------------------------
Reconciliation of GAAP to Non-GAAP Payroll Tax
Adjustments: Stock-based on Stock
compensation Option
expense (a) Exercises Total
------------- ----------- --------
Cost of revenue $ 2,677 $ 2 $ 2,679
Sales and marketing 15,160 456 $ 15,616
Research and development 8,593 221 $ 8,814
General and administrative 5,371 111 $ 5,482
------------- ----------- --------
$ 31,801 $ 790 $ 32,591
============= =========== ========
Use of Non-GAAP Financial Information:
To supplement our condensed consolidated financial statements
presented on a GAAP basis, Riverbed uses non-GAAP measures of
operating results, net income and net income per share, which are
adjusted to exclude stock-based compensation expense and payroll
tax expense related to stock option exercises, and to include
dilutive shares where applicable. We believe these adjustments
are appropriate to enhance an overall understanding of our past
financial performance and also our prospects for the future.
These adjustments to our current period GAAP results are made
with the intent of providing both management and investors a more
complete understanding of Riverbed's underlying operating results
and trends and our marketplace performance. The non-GAAP results
are an indication of our baseline performance that are considered
by management for the purpose of making operational decisions. In
addition, these non-GAAP results are the primary indicators
management uses as a basis for our planning and forecasting of
future periods. The presentation of this additional information
is not meant to be considered in isolation or as a substitute for
net income or basic and diluted net income per share prepared in
accordance with generally accepted accounting principles in the
United States. Non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles and are
subject to limitations.
(a) Stock-based compensation is a non-cash expense accounted for in
accordance with the intrinsic value method under Accounting
Principles Board No. 25 through December 31, 2005 and with the
fair value recognition provisions of Statement of Financial
Accounting Standards No. 123(R) effective January 1, 2006. While
a large component of our expense, we believe investors want to
exclude the effects of stock-based compensation expense and
payroll taxes related to stock option exercises in order to
compare our financial performance with that of other companies
and between time periods.
Riverbed Technology, Inc.
GAAP to Non-GAAP Reconciliation
In thousands, except per share amounts
Unaudited
---------------------------------------
Three months ended
December 31, 2006
--------------------------------------
GAAP Adjustments Non-GAAP
------------- -------------- ---------
Reconciliation of gross
profit:
Total revenue $33,825 $ - $33,825
Total cost of revenue 11,280 (322) 10,958
------------- ----------- ---------
Gross profit $22,545 $ 322 $22,867
============= =========== =========
Reconciliation of operating
expenses:
Sales and marketing $16,312 $(2,447) $13,865
Research and development 6,503 (1,363) 5,140
General and administrative 3,279 (654) 2,625
------------- ----------- ---------
Total operating expenses $26,094 $(4,464) $21,630
============= =========== =========
Reconciliation of operating
income (loss), net income
(loss) and net income (loss)
per share:
Operating income (loss) $(3,549) $ 4,786 $ 1,237
Net income (loss) $(2,411) $ 4,786 $ 2,375
Net income (loss) per share,
basic $ (0.04) $ 0.04
Net income (loss) per share,
diluted $ (0.04) $ 0.03
Shares used in computing
basic net income (loss) per
share 63,452 - 63,452
Shares used in computing
diluted net income (loss)
per share 63,452 8,088 (a) 71,540
---------------------------------------
Reconciliation of GAAP to Payroll Tax
Non-GAAP Adjustments: on Stock
Stock-based Option
compensation Exercises
expense (c) (d) Total
------------- -------------- ---------
Cost of revenue $ 322 $ - $ 322
Sales and marketing 2,447 - 2,447
Research and development 1,363 - 1,363
General and administrative 654 - 654
------------- ----------- ---------
$ 4,786 $ - $ 4,786
============= =========== =========
-------------------------------------
Twelve months ended
December 31, 2006
-------------------------------------
GAAP Adjustments Non-GAAP
------------- -------------- --------
Reconciliation of gross profit:
Total revenue $ 90,207 $ - $90,207
Total cost of revenue 30,152 (520) 29,632
------------- ----------- --------
Gross profit $ 60,055 $ 520 $60,575
============= =========== ========
Reconciliation of operating
expenses:
Sales and marketing $ 48,080 $(4,636) $43,444
Research and development 19,215 (2,541) 16,674
General and administrative 9,294 (1,521) 7,773
------------- ----------- --------
Total operating expenses $ 76,589 $(8,698) $67,891
============= =========== ========
Reconciliation of operating
income (loss), net income
(loss) and net income (loss)
per share:
Operating income (loss) $(16,534) $ 9,218 $(7,316)
Net income (loss) $(15,845) $ 9,218 $(6,627)
Net income (loss) per share,
basic $ (0.59) $ (0.12)
Net income (loss) per share,
diluted $ (0.59) $ (0.12)
Shares used in computing basic
net income (loss) per share 26,977 28,264 (b) 55,241
Shares used in computing
diluted net income (loss) per
share 26,977 28,264 (b) 55,241
-------------------------------------
Reconciliation of GAAP to Non- Payroll Tax
GAAP Adjustments: on Stock
Stock-based Option
compensation Exercises
expense (c) (d) Total
------------- -------------- --------
Cost of revenue $ 520 $ - $ 520
Sales and marketing 4,636 - 4,636
Research and development 2,541 - 2,541
General and administrative 1,521 - 1,521
------------- ----------- --------
$ 9,218 $ - $ 9,218
============= =========== ========
(a) Represents options to purchase common stock that were excluded
from diluted earnings per share on a GAAP basis because we
reported a net loss and including such options would have an
antidilutive effect. These options are included in non-GAAP
diluted shares outstanding because on a non-GAAP basis, we have
net income.
(b) Represents common shares from the conversion of convertible
preferred shares as if the shares were converted as of the later
of their issuance or the beginning of the applicable period.
Convertible preferred shares were converted into common shares as
of September 20, 2006, the effective date of our IPO. We believe
investors want to give effect to the conversion for prior periods
in order to compare our financial performance with that of other
companies and between time periods.
(c) Stock-based compensation is a non-cash expense accounted for in
accordance with the intrinsic value method under Accounting
Principles Board No. 25 through December 31, 2005 and with the
fair value recognition provisions of Statement of Financial
Accounting Standards No. 123(R) effective January 1, 2006. While
a large component of our expense, we believe investors want to
exclude the effects of stock-based compensation expense and
payroll taxes related to stock option exercises in order to
compare our financial performance with that of other companies
and between time periods.
(d) No payroll tax expense related to employee stock option exercises
was incurred during 2006.
Riverbed Technology, Inc.
Condensed Consolidated Balance Sheets
In thousands
December 31, December 31,
2007 2006
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 162,979 $ 105,330
Marketable securities 83,103 3,999
Trade receivables, net 50,072 18,148
Other receivables 1,273 118
Inventory 9,413 7,452
Prepaid expenses and other current assets 5,136 5,438
------------ ------------
Total current assets 311,976 140,485
------------ ------------
Fixed assets, net 18,826 7,718
Other assets 6,800 2,566
------------ ------------
Total assets $ 337,602 $ 150,769
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,325 $ 11,113
Accrued compensation and related benefits 14,290 8,285
Other accrued liabilities 9,381 2,931
Deferred revenue 26,845 16,837
------------ ------------
Total current liabilities 70,841 39,166
------------ ------------
Deferred revenue non-current 6,634 2,245
Other long-term liabilities 409 378
------------ ------------
Total long-term liabilities 7,043 2,623
------------ ------------
Stockholders' equity:
Common stock and additional paid-in-capital 295,487 162,033
Deferred stock-based compensation (3,287) (5,704)
Accumulated deficit (32,535) (47,333)
Accumulated other comprehensive income
(loss) 53 (16)
------------ ------------
Total stockholders' equity 259,718 108,980
------------ ------------
------------ ------------
Total liabilities and stockholders' equity $ 337,602 $ 150,769
============ ============
Riverbed Technology, Inc.
Condensed Consolidated Statements of Cash Flows
In thousands
Twelve months ended
December 31,
---------------------
2007 2006
---------- ----------
Operating activities:
Net income (loss) $ 14,798 $ (15,845)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 5,052 2,037
Stock-based compensation 31,801 9,218
Revaluation and amortization of warrants - 683
Provision of trade receivable allowances 461 474
Excess tax benefit from stock options (850) -
Changes in operating assets and liabilities
(Increase) in trade receivables (32,726) (13,266)
(Increase) in inventory (5,160) (5,186)
(Increase) in prepaid expenses and other
assets (1,614) (3,887)
Increase in accounts payable and other current
liabilities 16,893 12,362
Increase in income taxes payable 4,597 224
Increase in deferred revenue 14,916 13,483
---------- ----------
Net cash provided by operating activities 48,168 297
Investing activities:
Capital expenditures (9,709) (5,110)
Purchase of available for sale securities (129,098) (3,999)
Proceeds from maturities and sales of available
for sale securities 49,980 -
Increase in other assets (2,100) (1,400)
---------- ----------
Net cash used in investing activities (90,927) (10,509)
Financing activities:
Proceeds from issuance of convertible preferred
stock, net of issuance costs - 19,915
Proceeds from public offerings, net of issuance
costs 87,681 87,496
Proceeds from issuance of common stock, net of
repurchases 11,792 179
Payments of debt - (2,500)
Excess tax benefit from stock options 850 -
---------- ----------
Net cash provided by financing activities 100,323 105,090
Effect of exchange rate changes on cash and cash
equivalents 85 42
---------- ----------
Net increase in cash and cash equivalents 57,649 94,920
Cash and cash equivalents at beginning of period 105,330 10,410
---------- ----------
Cash and cash equivalents at end of period $ 162,979 $ 105,330
========== ==========
CONTACT: Riverbed Technology, Inc.Randy Gottfried, Chief Financial Officer, 415-247-6397 ir@riverbed.com or The Blueshirt Group Chris Danne, 415-217-7722 chris@blueshirtgroup.com SOURCE: Riverbed Technology, Inc. |
