Riverbed: Fiscal 1Q13 Financial Results

(in US$ million)	1Q12	1Q13
Revenues	182.4	246.1
*Growth*		35%
Net income (loss)	6.9	(8.1)

Riverbed Technology, Inc. reported financial results for its first quarter ended March 31, 2013.

GAAP revenue for Q1’13 was $246 million, compared to $182 million in Q1’12, representing 35% year-over-year growth.

GAAP net loss for Q1’13 was $8.1 million, or $0.05 per diluted share, compared to GAAP net income of $6.9 million, or $0.04 per diluted share, in Q1’12.

Non-GAAP revenue for Q1’13 was $253 million, an increase of 38% compared to $183 million in Q1’12. Non-GAAP net income for Q1’13 was $39 million, or $0.23 per diluted share, compared to non-GAAP net income of $33 million, or $0.20 per diluted share, in Q1’12.

"Non-GAAP revenue grew 38% over the prior year and 10% without the benefit of $52 million contributed by OPNET in the quarter," said Jerry M. Kennelly, chairman and CEO.

"Despite weak government spending and general economic softness impacting results, WAN optimization revenue increased 6% year-over-year," continued Kennelly. "Our market expanding products outside of WAN optimization and OPNET generated more than 40% year-over-year growth. Over the long-term, we believe our multi-product strategy to deliver unmatched application performance will allow us to accelerate the company’s revenue growth."

Q1’13 Business Highlights

Riverbed Steelhead was awarded Infoworld Technology of the Year for Best WAN Accelerator for the seventh consecutive time
Riverbed Granite was awarded Infoworld Technology of the Year recognizing Riverbed for developing the technology that enables complete consolidation of branch servers and storage while ensuring consistent performance for remote users
Strengthened VMware alliance with certification of Granite for VMware Horizon View 5.2, enabling performance remote and branch office virtual desktop deployments
Riverbed and T-Systems demonstrated acceleration of enterprise applications on an android tablet as part of T-Systems’ Mobile Application Performance Management
Riverbed Stingray was named as a winner in the Web Services Excellence Category of the 2012-2013 Cloud Awards program
Introduced larger Whitewater virtual appliances and Whitewater OS (WWOS) 2.1 supporting Amazon Glacier storage and Google Cloud Storage
Launched FlyScript developer tools which allow IT to create a programmable infrastructure that is flexible and in-line with the needs of modern virtualized and software-defined IT architectures
Introduced Riverbed Splash, an online community where customers can learn more about using FlyScript to get better performance, control, and scale for their applications
Appointed new board members and key executives: Kimberly Stevenson, board of directors, currently serves as VP and CIO of Intel Corporation; Satya Nadella, board of directors, currently serves as president of Microsoft Corporation’s Server and Tools Business; David Wu, CTO, member of Riverbed’s founding team since 2003; Ernie Maddock, CFO, joins following fifteen-year tenure in finance and operations at Lam Research; Jeff Pancottine, SVP and GM of application delivery business unit, joins from Juniper Networks emerging technology business group following a six-year tenure at F5 Networks.

Comments

Abstracts of the earnings call transcript:

Jerry Kennelly, chairman, president and CEO:
"Still, our Q1 results were below our expectations. The government vertical was most notably below our original forecast with predict - particular weakness due to sequestration.
"We added 29 new Granite customers in the first quarter.
"Combined, our total revenue in the second quarter is expected to be in the range of $255 million to $260 million. And we expect better growth in the second half of the year, particularly if the economy broadly improves."

Eric Wolford, president of products group:
"I think a couple of important statistics that reinforce our strategy are: first, that 25% of Granite customers are net new to Riverbed; and second, approximately 40% of the Granite installations are to sites where Steelhead had not yet been previously deployed. Before the end of this year, we will add new functionality to the Steelhead to address the increasing demand of direct-to-net, driven by the prevalence of SaaS adoption.
"With more than 200,000 Steelhead units shipped."

Ernie Maddock, CFO:
"79% of our Q1 revenue came from indirect channels, while 21% was sold direct. Two distributors contributed more than 10% to revenue in the quarter, with Arrow contributing 15% and Avnet contributing 11%. We had no 10% end-user customers in the first quarter. Relative to year-on-year comparatives, we saw growth across all major geographies. The Americas represented 65% of total revenue; EMEA, 23%; and APJ, 12%.
"We ended the March quarter with total assets of $2 billion, while cash and investments totaled $503 million."