Blue coat reports financial results for first fiscal quarter ended July 31, 2009
Blue Coat Systems, Inc. (NASDAQ: BCSI), the technology leader in Application Delivery Networking, reported its financial results for its first fiscal quarter ended July 31, 2009. Total net revenue for the first quarter of fiscal 2010 was $116 million, an increase of 13% compared with net revenue of $103 million in the first quarter of fiscal 2009, and an increase of 2% compared with net revenue of $114 million in the fourth quarter of fiscal 2009.
“Blue Coat delivered solid quarterly results in a challenging economic environment,” said Brian NeSmith, president and chief executive officer, Blue Coat Systems. “In the first quarter, our revenue and non-GAAP EPS performance met our expectations, and we experienced good cash generation. Importantly, we improved non-GAAP operating profitability, as driving better leverage in our business model continues to be a strategic initiative for Blue Coat in 2010.”
NeSmith added, “Blue Coat continues to gain share in the WAN optimization market with its Application Delivery Network value proposition, which provides customers with unmatched visibility, acceleration and security. Going forward, we intend to improve operating efficiencies across all areas of the company, while also funding critically important initiatives to strengthen the competitiveness of our solutions and extend our leadership role in the market.”
On a GAAP basis, the Company reported net income of $4 million, or $0.09 per diluted share, in the first quarter of fiscal 2010, compared with net loss of $6 million, or $(0.15) per share, in the first quarter of fiscal 2009, and net loss of $3 million, or $(0.09) per share, in the fourth quarter of fiscal 2009.
The Company reported non-GAAP net income of $10 million, or $0.23 per diluted share, in the first quarter of fiscal 2010, compared with non-GAAP net income of $7 million, or $0.16 per diluted share, in the first quarter of fiscal 2009, and non-GAAP net income of $8 million, or $0.19 per diluted share, in the fourth quarter of fiscal 2009.
Non-GAAP net income excludes charges related to the fair value write-up of acquired inventory sold, stock-based compensation expense, amortization of intangible assets, expenses for matters related to the stock option investigation, restructuring expenses, and assumes a long term effective tax rate of 30% on non-GAAP pre-tax income. A discussion of non-GAAP financial measures is provided under the section “About Non-GAAP Financial Measures” later in this press release. A detailed reconciliation of the GAAP to non-GAAP financial measures is included in Table 2 of this press release.
The Company ended the quarter on July 31, 2009, with cash, cash equivalents, and restricted cash of $123 million, an increase of $8 million from the prior quarter. Cash flow provided by operations in the first quarter of fiscal 2010 was $11 million.
Financial Outlook
For the second quarter ending October 31, 2009, the Company currently expects net revenue in the range of $116 to $121 million. On a GAAP basis, the Company currently expects net income of $0.08 to $0.14 per diluted share. On a non-GAAP basis, the Company currently expects net income of $0.23 to $0.28 per diluted share. For the second quarter of fiscal 2010, the Company is assuming a diluted share count of approximately 45 million shares.
About Non-GAAP Financial Measures
The Company uses non-GAAP financial measures of income for internal evaluation and to report the results of its business. These non-GAAP financial measures include non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, and non-GAAP diluted net income per share. These measures are not in accordance with, nor an alternative to, GAAP. These measures are intended to supplement GAAP financial information, and may be different from non-GAAP financial measures used by other companies. The Company believes that these measures provide useful information to its management, board of directors and investors regarding its ongoing operating activities and business trends related to its financial condition and results of operations. The Company believes that it is useful to provide investors with information to understand how specific line items in the statement of operations are affected by certain items, such as the fair value write-up of acquired inventory sold, stock-based compensation expense, amortization of intangible assets, expenses for matters related to the stock option investigation, restructuring expenses, and income tax adjustments. In addition, the Company’s management and board of directors use certain non-GAAP financial measures in developing operating budgets and in reviewing the Company’s financial results of operations, since items such as expense related to the fair value write-up of acquired inventory sold, stock-based compensation expense, amortization of intangible assets, expenses for matters related to the stock option investigation, restructuring expenses, and income tax adjustments do not impact its current resource allocation decisions. Additionally, the Company believes that inclusion of these non-GAAP financial measures provides consistency and comparability with its past reports of financial results. However, investors should be aware that non-GAAP measures have inherent limitations and should be read in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. Refer to the accompanying tables for a detailed reconciliation of GAAP to non-GAAP gross profit, operating income, net income and net income per share.
Conference Call & Webcast
The Company will hold its quarterly conference call to discuss results for the first quarter and the outlook for the second quarter of fiscal 2010 on Tuesday, August 25, 2009 at 2:00 p.m. Pacific Time (5:00 p.m. EDT). The conference call can be accessed through an audio webcast from the Company’s website, www.bluecoat.com/company/investorelations, or through a dial-in phone conference. Participants in the United States should call (888) 428-4480. International participants should call (651) 291-5254. The passcode for the call is: 111567. A replay of the call will be available starting on Tuesday, August 25, 2009 at 5:00 p.m. PDT (8:00 p.m. EDT), and can be accessed by calling (800) 475-6701 for U.S. participants and (320) 365-3844 for international participants. The passcode for the replay is: 111567.
