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| Riverbed Technology, Inc. Reports Record Fourth Quarter and Full Year 2006 Financial Results |
-- Quarterly Revenues Increase by 37% Sequentially and 219%
Year-Over-Year
-- Over 300 New Customers Added
SAN FRANCISCO--(BUSINESS WIRE)--Feb. 7, 2007--Riverbed Technology, Inc. (Nasdaq:RVBD), the performance leader in wide-area data services (WDS), today released financial results for the fourth quarter and full year ended December 31, 2006. Revenues for the fourth quarter of 2006 were $33.8 million, which represents a sequential increase of 37% from the immediately preceding quarter and a year-over-year increase of 219% from the fourth quarter of last year. The net loss on a GAAP basis for the fourth quarter of 2006 was $2.4 million, or $0.04 per share, compared to a net loss of $3.1 million, or $0.16 per share, in the third quarter of 2006 and a net loss of $4.7 million, or $0.43 per share, in the fourth quarter of 2005. Riverbed's fourth quarter of 2006 GAAP results included $4.8 million of non-cash stock-based compensation expenses. Excluding the impact of stock-based compensation in all periods, assuming preferred shares were converted as of the later of their issuance or the beginning of the respective periods, and including dilutive shares in the fourth quarter of 2006, the non-GAAP net income for the fourth quarter of 2006 was $2.4 million, or $0.03 per share, compared to a non-GAAP net loss of $1.0 million, or $0.02 per share, in the third quarter of 2006 and a non-GAAP net loss of $4.2 million, or $0.09 per share, in the fourth quarter of 2005. Revenues for the year ended December 31, 2006 were $90.2 million, a 293% increase from $22.9 million in the prior year. The GAAP net loss for the full year 2006 was $15.8 million, or $0.59 per share, which compares with a GAAP net loss of $17.4 million, or $1.85 per share, in 2005. "Our early and rapid success in the WDS market is testament to our innovative technology, strong competitive position and the business-critical need for wide-area data solutions," noted Jerry Kennelly, Riverbed(R) president and chief executive officer. "As market acceptance and understanding of the capabilities of WDS grows, the Global 2000 are embracing our solutions to overcome the competing demands of globalization and IT centralization." "The fourth quarter of 2006 marked the first quarter in which Riverbed was profitable on a non-GAAP basis, demonstrating the operating leverage in our model," said Randy Gottfried, Riverbed chief financial officer. 2006 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.
-- Initial public offering--Riverbed successfully completed its
initial public offering, raising $87.5 million, net of
underwriting discounts and other transaction expenses.
Riverbed's IPO was the best performing IPO of 2006 as reported
in the Wall Street Journal.
-- Industry recognition--Riverbed's Steelhead(R) Appliance
product family was recognized for its excellence by many
well-respected trade publications in 2006, including InfoWorld
(the Best WAN Accelerator of 2006 and 2007), Byte and Switch
(WAN Optimization), Network Computing (Well-Connected Award,
Remote Office Solution), and eWeek (Excellence Award, Top
Products of 2006, and Top Five Storage Developments of the
Year). In addition, Gartner positioned the company in the
Leaders quadrant in the "WAN Optimization Controller Magic
Quadrant" published in October 2006 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.
-- Product innovation - Riverbed expanded its product line both
at the high- and low-ends of the market, providing customers
with the speed, scale and simplicity needed to meet the
demands of a decentralized workforce and centralized data. The
company began shipping the next generation of the Riverbed
Optimization System (RiOS(TM)), version 3.0, as well as the
Interceptor(TM) appliance and eight new Steelhead appliances
that deliver high scalability and acceleration for up to one
million simultaneous connections at 4 Gbps throughput. In
addition, the company introduced two new smaller-scale
Steelhead appliances that meet the needs of small remote
offices and large-scale deployments.
-- Expanded patent portfolio -- Riverbed was awarded a patent on
its core WDS technology. This system patent is the foundation
for Riverbed's proven technology for speeding application
performance by 5X to 50X and in some cases up to 100X and
addresses the limitations of geography for global businesses.
-- New customer growth--Riverbed rapidly grew its customer base
in 2006. In January, the company announced its 500th customer
and by end-of-year had over 1,600 customers.
-- Customer Wins--Riverbed expanded its success with customers to
global brands, announcing Liz Claiborne, Hilton Grand
Vacations, Asiana Airlines, the UK Royal Navy and LG
Electronics.
-- Global Expansion--Riverbed expanded its presence in 2006,
establishing additional offices worldwide.
Conference Call Information
Riverbed will host a conference call for analysts and investors to discuss its fourth quarter 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 11081943. International parties can access the replay at 303-590-3000 and should enter passcode 11081943. About Riverbed Riverbed Technology is the performance 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 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, 2006 filed with the SEC on October 31, 2006, 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. 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 results, including an estimate of non-GAAP earnings for 2007 that excludes non-cash stock-based compensation expenses related to employee stock options and purchases of common stock under our Employee Stock Purchase Plan. 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,
------------------ -------------------
2006 2005 2006 2005
--------- -------- --------- ---------
Revenue: (unaudited)
Product $26,798 $ 8,467 $ 70,967 $ 17,759
Support and services 4,930 910 12,315 1,925
Ratable product and related
support and services 2,097 1,228 6,925 3,257
--------- -------- --------- ---------
Total revenue 33,825 10,605 90,207 22,941
Cost of revenue:
Cost of product 8,927 2,584 23,504 5,843
Cost of support and services 1,897 543 4,748 1,276
Cost of ratable product and
related support and services 456 493 1,900 1,475
--------- -------- --------- ---------
Total cost of revenue 11,280 3,620 30,152 8,594
--------- -------- --------- ---------
Gross Profit 22,545 6,985 60,055 14,347
Operating expenses:
Sales and marketing 16,312 7,364 48,080 19,722
Research and development 6,503 2,761 19,215 8,108
General and administrative 3,279 1,438 9,294 3,531
--------- -------- --------- ---------
Total operating expenses 26,094 11,563 76,589 31,361
--------- -------- --------- ---------
Operating loss (3,549) (4,578) (16,534) (17,014)
Other income (expense) net 1,286 (114) 992 (77)
Loss before provision for
income taxes and cumulative --------- -------- --------- ---------
effect of change in
accounting principle (2,263) (4,692) (15,542) (17,091)
Provision for income taxes 148 33 303 55
Loss before cumulative effect
of change in accounting --------- -------- --------- ---------
principle (2,411) (4,725) (15,845) (17,146)
Cumulative effect of change in
accounting principle - - - 280
--------- -------- --------- ---------
Net loss $(2,411) $(4,725) $(15,845) $(17,426)
========= ======== ========= =========
Net loss per share, basic and
diluted $ (0.04) $ (0.43) $ (0.59) $ (1.85)
Shares used in computing basic
and diluted net loss per share 63,452 10,989 26,977 9,401
Stock-based compensation expense
included in above:
Cost of support and services $ 322 $ 18 $ 520 $ 40
Sales and marketing 2,447 205 4,636 482
Research and development 1,363 170 2,541 397
General and administrative 654 161 1,521 368
--------- -------- --------- ---------
Total stock-based
compensation expense $ 4,786 $ 554 $ 9,218 $ 1,287
========= ======== ========= =========
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) a 10,958
--------- ----------- --------
Gross profit $ 22,545 $ 322 $22,867
========= =========== ========
Reconciliation of operating expenses:
Sales and marketing $ 16,312 $ (2,447) a $13,865
Research and development 6,503 (1,363) a 5,140
General and administrative 3,279 (654) a 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 b 71,540
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) a 29,632
--------- ----------- --------
Gross profit $ 60,055 $ 520 $60,575
========= =========== ========
Reconciliation of operating expenses:
Sales and marketing $ 48,080 $ (4,636) a $43,444
Research and development 19,215 (2,541) a 16,674
General and administrative 9,294 (1,521) a 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 c 55,241
Shares used in computing diluted
net income (loss) per share 26,977 28,264 c 55,241
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 loss and net loss per share, which are
adjusted to exclude stock-based compensation expense, to give
effect to the conversion of preferred stock into common stock
as of the later of the date of their issuance or the beginning
of the applicable accounting period, 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 purpose of making operational
decisions. In addition, these adjusted 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 loss or basic and diluted
net loss 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) Excluded amount represents stock-based compensation expense.
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
in order to compare our financial performance with that of
other companies and between time periods.
(b) 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.
(c) 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.
Riverbed Technology, Inc.
GAAP to Non-GAAP Reconciliation
In thousands, except per share amounts
Unaudited
----------------------------------------------------------------------
Three months ended
December 31, 2005
-----------------------------
GAAP Adjustments Non-GAAP
-------- ----------- ---------
Reconciliation of gross profit:
Total revenue $10,605 $ - $10,605
Total cost of revenue 3,620 (18)a 3,602
-------- ---------- --------
Gross profit $ 6,985 $ 18 $ 7,003
======== ========== ========
Reconciliation of operating expenses:
Sales and marketing $ 7,364 $ (205)a $ 7,159
Research and development 2,761 (170)a 2,591
General and administrative 1,438 (161)a 1,277
-------- ---------- --------
Total operating expenses $11,563 $ (536) $11,027
======== ========== ========
Reconciliation of operating loss, net
loss and net loss per share:
Operating loss $(4,578) $ 554 $(4,024)
Net loss $(4,725) $ 554 $(4,171)
Net loss per share, basic and
diluted $ (0.43) $ (0.09)
Shares used in computing basic and
diluted net loss per share 10,989 35,704 b 46,693
Twelve months ended
December 31, 2005
-------------------------------
GAAP Adjustments Non-GAAP
--------- ----------- ---------
Reconciliation of gross profit:
Total revenue $ 22,941 $ - $ 22,941
Total cost of revenue 8,594 (40) a 8,554
--------- --------- ---------
Gross profit $ 14,347 $ 40 $ 14,387
========= ========= =========
Reconciliation of operating expenses:
Sales and marketing $ 19,722 $ (482)a $ 19,240
Research and development 8,108 (397)a 7,711
General and administrative 3,531 (368)a 3,163
--------- --------- ---------
Total operating expenses $ 31,361 $(1,247) $ 30,114
========= ========= =========
Reconciliation of operating loss, net
loss and net loss per share:
Operating loss $(17,014) $ 1,287 $(15,727)
Net loss $(17,426) $ 1,287 $(16,139)
Net loss per share, basic and
diluted $ (1.85) $ (0.36)
Shares used in computing basic and
diluted net loss per share 9,401 35,704 b 45,105
(a) Excluded amount represents stock-based compensation expense.
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. 123R effective January 1, 2006. While a large
component of our expense, we believe investors want to exclude the
effects of stock-based compensation expense in order to compare our
financial performance with that of other companies and between time
periods.
(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.
Riverbed Technology, Inc.
Condensed Consolidated Balance Sheets
In thousands
December 31, December 31,
2006 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $105,330 $10,410
Marketable securities 3,999 -
Trade receivables, net 18,148 5,357
Other receivables 118 128
Inventory 7,452 3,530
Prepaid expenses and other current assets 5,438 1,650
------------ ------------
Total current assets 140,485 21,075
------------ ------------
Fixed assets, net 7,718 2,324
Other assets 2,566 245
------------ ------------
Total assets $150,769 $23,644
============ ============
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $11,113 $3,970
Current portion of long-term debt - 1,250
Accrued compensation and related benefits 8,285 2,880
Other accrued liabilities 2,931 1,079
Preferred stock warrant liability - 594
Deferred revenue 16,837 4,891
------------ ------------
Total current liabilities 39,166 14,664
------------ ------------
Long-term debt, net of current portion - 1,211
Deferred revenue non-current 2,245 708
Other long-term liabilities 378 587
------------ ------------
Total long-term liabilities 2,623 2,506
------------ ------------
------------ ------------
Convertible preferred stock - 36,385
------------ ------------
Stockholders' equity (deficit):
Common stock and additional paid-in-capital 162,033 10,130
Deferred stock-based compensation (5,704) (8,495)
Accumulated deficit (47,333) (31,488)
Accumulated other comprehensive loss (16) (58)
------------ ------------
Total stockholders' equity (deficit) 108,980 (29,911)
------------ ------------
------------ ------------
Total liabilities, convertible preferred
stock and stockholders' equity (deficit) $150,769 $23,644
============ ============
Riverbed Technology, Inc.
Condensed Consolidated Statements of Cash Flows
In thousands
Twelve months ended
December 31,
-------------------
2006 2005
--------- ---------
Operating activities:
Net loss $(15,845) $(17,426)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation and amortization 2,037 831
Stock-based compensation 9,218 1,287
Amortization of warrants 39 21
Revaluation of warrants to fair value 644 230
Cumulative effect of change in accounting
principle - 280
Provision of trade receivable allowances 474 75
Changes in operating assets and liabilities
(Increase) in trade receivables (13,266) (4,049)
(Increase) in inventory (5,186) (2,901)
(Increase) in prepaid expenses and other assets (3,887) (1,295)
Increase in accounts payable and other current
liabilities 12,362 5,673
Increase in income taxes payable 224 50
Increase in deferred revenue 13,483 4,719
--------- ---------
Net cash provided by (used in) operating
activities 297 (12,505)
Investing activities:
Capital expenditures (5,110) (2,259)
Purchase of available for sale securities (3,999) -
Increase in other assets (1,400) (142)
--------- ---------
Net cash used in investing activities (10,509) (2,401)
Financing activities:
Proceeds from issuance of convertible preferred
stock, net of issuance costs 19,915 -
Proceeds from initial public offering, net of
issuance costs 87,496 -
Proceeds from issuance of common stock, net of
repurchases 179 922
Payments of debt (2,500) -
Proceeds from issuance of debt - 1,066
--------- ---------
Net cash provided by financing activities 105,090 1,988
Effect of exchange rate changes on cash and cash
equivalents 42 (52)
--------- ---------
Net increase (decrease) in cash and cash
equivalents 94,920 (12,970)
Cash and cash equivalents at beginning of period 10,410 23,380
--------- ---------
Cash and cash equivalents at end of period $105,330 $10,410
========= =========
CONTACT: Riverbed Technology, Inc. Randy Gottfried, 415-247-6397 Chief Financial Officer or The Blueshirt Group Chris Danne, 415-217-7722 chris@blueshirtgroup.com SOURCE: Riverbed Technology, Inc. |
