Achieves Record Net Revenue and 11% Sequential Quarterly Revenue Growth
Blue Coat Systems, Inc. (NASDAQ: BCSI), the leader in WAN Application Delivery and Secure Web Gateway, today reported its financial results for its third quarter of fiscal 2008 ended January 31, 2008. Net revenue for the third fiscal quarter of 2008 was $81.4 million, an increase of 73% compared to net revenue of $47.1 million for the same quarter last year and an 11% increase compared to net revenue of $73.4 million in the immediately preceding quarter.
On a GAAP basis, the Company reported net income of $10.5 million, or $0.26 per diluted share, in the third quarter of fiscal 2008, compared to net income of $7.0 million, or $0.17 per diluted share in the second quarter of fiscal 2008. Net income in the third quarter of fiscal 2008 includes $4.0 million in stock-based compensation expense, $0.4 million in expenses associated with the stock option investigation and related restatement of the Company?s consolidated financial statements, and $0.4 million in amortization of intangible assets. In the second quarter of fiscal 2008, net income included $4.0 million in stock-based compensation expense, $0.7 million in expenses associated with the stock option investigation and related restatement of the Company?s consolidated financial statements, $0.4 million in amortization of intangible assets, and approximately $0.3 million in legal settlement expenses.
The Company reported non-GAAP net income of $15.3 million, or $0.38 per diluted share, in the third quarter of fiscal 2008, compared to non-GAAP net income of $12.4 million, or $0.30 per diluted share in the second quarter of fiscal 2008.
"We have experienced dramatic success in the WAN optimization market indicated by record net revenue and sustained double-digit growth, which reflects the value placed by enterprises on a complete solution to application responsiveness and security and control in the branch office, " said Brian NeSmith, president and chief executive officer, Blue Coat Systems. "The platform we have evolved over the past 12 years is now the ideal solution to solve the performance, control and security issues for branch offices, Internet gateway points and remote employees."
Blue Coat ended the quarter on January 31, 2008, with cash, cash equivalents, short-term investments, and restricted investments totaling $168.0 million, an increase of $15.5 million from the prior quarter.
The non-GAAP financial measures presented above exclude stock-based compensation expense, expenses associated with the stock option investigation and related restatement of the Company?s consolidated financial statements, amortization of intangible assets, and legal settlement expenses. Refer to the accompanying tables for a detailed reconciliation of GAAP to non-GAAP net income and earnings per share.
Financial Outlook
For the fiscal quarter ending April 30, 2008, the Company currently anticipates net revenue in the range of $88.0 to $91.0 million. On a GAAP basis, the Company expects earnings per share of $0.23 to $0.27 per diluted share. On a non-GAAP basis, which excludes the amortization of intangible assets, stock-based compensation expense, and expenses associated with the stock option investigation and related restatement of the Company?s consolidated financial statements, the Company expects earnings per share of $0.37 to $0.41 per diluted share.
About Non-GAAP Financial Measures
Blue Coat 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 cost of revenue, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP net income per share. These measures are not in accordance with, or an alternative to, GAAP. The measures are intended to supplement GAAP financial information, and may be different from non-GAAP financial measures used by other companies. Blue Coat 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. Blue Coat 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 stock-based compensation expense, expenses related to the stock option investigation and related restatement of the Company?s consolidated financial statements, amortization of intangible assets, legal settlement expenses, and restructuring expenses. 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 stock-based compensation expense, expenses related to the stock option investigation and related restatement of the Company?s consolidated financial statements, amortization of intangible assets, legal settlement expenses, and restructuring expenses 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.
Conference Call & Webcast
The Company will host a conference call today at 5:00 a.m. Pacific Time (8:00 a.m. Eastern Time). Participants should call (612) 332-0923 with the passcode: 909480. A replay of the call will be available starting Thursday, February 21, 2008 at 7:00 a.m. Pacific Time (10:00 a.m. Eastern Time), and can be accessed by calling (320) 365-3844 with the passcode: 909480. An audio Webcast of the call will also be available at http://www.bluecoat.com/aboutus/investor_relations.
About Blue Coat Systems
Blue Coat secures Web communications and accelerates business applications across the distributed enterprise. Blue Coat?s family of appliances and client-based solutions ? deployed in branch offices, Internet gateways, end points, and data centers ? provide intelligent points of policy-based control enabling IT organizations to optimize security and accelerate performance between users and applications. Blue Coat has installed more than 40,000 appliances worldwide. Blue Coat is headquartered in Sunnyvale, California, and can be reached at (408) 220-2200 or www.bluecoat.com.
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FORWARD LOOKING STATEMENTS: The statements contained in this press release that are not purely historical are forward-looking statements, including: statements regarding the Company?s expected net revenue, GAAP earnings per share and non-GAAP earnings per share in the fourth fiscal quarter of 2008; and statements regarding Blue Coat Systems? expectations, beliefs, intentions or strategies regarding future events, economic and industry conditions, and market acceptance of its products. All forward-looking statements included in this press release are based upon information available to Blue Coat Systems as of the date hereof, and Blue Coat Systems assumes no obligation to update any such forward-looking statements. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to the risks described in the "Risk Factors" section of the Company?s annual report on Form 10-K for the fiscal year ended April 30, 2007 and quarterly report on Form 10-Q for the quarter ended October 31, 2007.
Media Contact: Steve Schick Investor Contact: Carla Chun
Blue Coat Systems Blue Coat Systems
steve.schick@bluecoat.com carla.chun@bluecoat.com
408-220-2076 408-220-2318
Donna Michaels
Loughlin/Michaels Group for Blue Coat Systems
donna@lmgpr.com
408-393-5575
