GIGAMON INC SANTA CLARA, Calif., Jan. 29, 2015 /PRNewswire/ -- Gigamon(® )Inc. (NYSE:GIMO), the leader in traffic visibility solutions with the innovative Visibility Fabric(TM) architecture, today released financial results for the fourth quarter and fiscal year ended December 27, 2014.
Fourth Quarter 2014 Financial Highlights:
-- Revenues were $51.3 million, up 31% sequentially from the third quarter
of fiscal 2014 and up 19% year-over-year.
-- GAAP gross margin was 77%, compared to 80% in the fourth quarter of
fiscal 2013.
-- Non-GAAP gross margin was 77%, compared to 81% in the fourth quarter of
fiscal 2013.
-- GAAP net income was $2.9 million, or $0.09 per diluted share, compared
to GAAP net loss of $0.1 million, or $0.00 per diluted share, in the
fourth quarter of fiscal 2013.
-- Non-GAAP net income was $6.1 million, or $0.18 per diluted share,
compared to non-GAAP net income of $6.0 million, or $0.18 per diluted
share, in the fourth quarter of fiscal 2013.
Fiscal Year 2014 Financial Highlights:
-- Revenues were $157.1 million, up 12% from fiscal 2013.
-- GAAP gross margin was 76%, compared to 78% in fiscal 2013.
-- Non-GAAP gross margin was 77%, compared to 81% in fiscal 2013.
-- GAAP net loss was $40.8 million, or $1.27 per diluted share, compared to
GAAP net loss of $9.5 million, or $0.39 per diluted share, in fiscal
2013.
-- Non-GAAP net income was $4.0 million, or $0.12 per diluted share,
compared to non-GAAP net income of $15.9 million, or $0.53 per diluted
share, in fiscal 2013.
"We are very pleased to have delivered record quarterly revenue of $51.3 million in the fourth quarter and a second consecutive quarter of non-GAAP profitability," said Paul Hooper, chief executive officer of Gigamon. "Our solid results were driven by continued strong performance in our Enterprise and Federal businesses, as well as a number of larger transactions from new and existing customers. We exited 2014 with healthy momentum and remain sharply focused on execution."
Recent Business Highlights:
-- Announced new visibility solutions into emerging threat sources with
integrated SSL support and enhancements for multi-tiered security.
-- Received Frost & Sullivan's 2015 Best Practices Award for Global VoLTE
Network Monitoring Systems, the 2014 Network World Asia's Readers'
Choice Product Excellence Awards for Network Analytics and Traffic
Management, and Telecom Asia's Business Analytics Innovation of the Year
Award.
-- Announced a strategic initiative to introduce a software only version of
our GigaVUE-OS for select third party white box hardware providers.
-- Launched the Gigamon Partner Program, an enhanced worldwide channel
program for our VAR partners.
-- Appointed Scott Sullivan as vice president of worldwide channel sales.
Conference Call Information:
Gigamon will host a conference call and live webcast today at 5:00 p.m. ET (2:00 p.m. PT) to discuss its financial results for the fourth quarter and fiscal year ended December 27, 2014. Parties in the United States and Canada can access the call by dialing +1-888-471-3843, using conference code 7350156. International parties can access the call by dialing +1-719-325-2463, using conference code 7350156.
The webcast will be accessible on Gigamon's investor relations website at http://investor.gigamon.com for a period of one year. A telephonic replay of the conference call will be available through Thursday, February 5, 2015. To access the replay, parties in the United States and Canada should call +1-888-203-1112 and enter conference code 7350156. International parties should call +1-719-457-0820 and enter conference code 7350156.
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures that exclude stock-based compensation and related payroll taxes, the income tax effect of these stock-based compensation related expenses and a valuation allowance against deferred tax assets. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Gigamon considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the company, exclusive of unusual events or factors that do not directly affect what we consider to be our core operating performance, and are used by the company's management for that purpose. In addition, investors often use similar measures to evaluate the operating performance of a company. Non-GAAP financial measures are presented for supplemental informational purposes only for understanding the company's operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP financial measures presented by other companies. Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure attached to this release.
Legal Notice Regarding Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements in this press release include, but are not limited to, our business momentum and our strategic product and channel initiatives. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include our ability to continue to deliver and improve our products and successfully develop new products; customer acceptance and purchase of our existing products and new products; our ability to retain existing customers and generate new customers; the market for network traffic visibility solutions not continuing to develop; competition from other products and services; and general market, political, economic and business conditions. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the period ended September 27, 2014. The forward-looking statements in this press release are based on information available to Gigamon as of the date hereof, and Gigamon disclaims any obligation to update any forward-looking statements, except as required by law.
About the Visibility Fabric architecture
At Gigamon we realized that delivering the visibility essential to manage, analyze and secure the complex system that is the IT infrastructure requires a new approach. With millions of traffic flows across thousands of endpoints, visibility needs to be pervasive, intelligent and dynamic. Using our patented, unique technology, we created an innovative new approach for delivering this visibility called the Visibility Fabric architecture. This new approach is intelligent and versatile in its ability to enable visibility into the network. For more information visit http://www.gigamon.com/traffic-visibility-fabric.
About Gigamon
Gigamon provides an intelligent Visibility Fabric(TM) architecture for enterprises, data centers and service providers around the globe. Gigamon's technology empowers infrastructure architects, managers and operators with pervasive and dynamic intelligent visibility of traffic across both physical and virtual environments without affecting the performance or stability of the production network. Through patented technologies and centralized management, the Gigamon GigaVUE portfolio of high availability and high density products intelligently delivers the appropriate network traffic to management, analysis, compliance and security tools. Since 2004 Gigamon has been designing and building traffic visibility products, and its solutions are deployed globally across vertical markets including over half of the Fortune 100 and many government and federal agencies. www.gigamon.com
Gigamon Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Fiscal Year Ended
-----------------
December 27, December 28,
2014 2013 December 27, 2014 December 28, 2013
------------- ------------- ----------------- -----------------
Revenue:
Product $36,790 $31,698 $105,594 $101,717
Services 14,461 11,389 51,536 38,578
------ ------ ------ ------
Total revenue 51,251 43,087 157,130 140,295
Cost of revenue:
Product 10,319 7,646 31,001 26,103
Services 1,722 1,170 6,447 4,727
----- ----- ----- -----
Total cost of revenue 12,041 8,816 37,448 30,830
------ ----- ------ ------
Gross profit 39,210 34,271 119,682 109,465
Operating expenses:
Research and development 10,922 10,341 42,806 42,067
Sales and marketing 20,387 18,004 76,063 72,024
General and administrative 5,015 4,682 20,683 25,575
----- ----- ------ ------
Total operating expenses 36,324 33,027 139,552 139,666
------ ------ ------- -------
Income (loss) from operations 2,886 1,244 (19,870) (30,201)
Other income (expense):
Interest income 92 60 308 95
Other expense, net (31) (17) (94) (94)
--- --- --- ---
Income (loss) before income tax (provision) benefit 2,947 1,287 (19,656) (30,200)
Income tax (provision) benefit (41) (1,375) (21,134) 20,663
--- ------ ------- ------
Net income (loss) 2,906 (88) (40,790) (9,537)
Accretion of preferred stock to redemption value and
issuance costs - - - (1,088)
Earnings distributable to preferred stockholders - - - 1,107
--- --- --- -----
Net income (loss) attributable to common stockholders $2,906 $(88) $(40,790) $(9,518)
====== ==== ======== =======
Net income (loss) per share attributable to common stockholders:
Basic $0.09 $ - $(1.27) $(0.39)
===== === === ====== ======
Diluted $0.09 $ - $(1.27) $(0.39)
Weighted average shares used in computing net income (loss) per
share attributable to common stockholders:
Basic 32,746 31,246 32,200 24,722
====== ====== ====== ======
Diluted 33,606 31,246 32,200 24,722
====== ====== ====== ======
Gigamon Inc.
Consolidated Balance Sheets
(In thousands)
(unaudited)
December 27, December 28,
2014 2013
---- ----
Assets
Current assets:
Cash and cash equivalents $38,941 $79,908
Short-term investments 110,465 58,242
Accounts receivable, net 28,686 24,528
Inventories, net 6,551 1,484
Deferred tax assets 150 3,574
Prepaid expenses and other current assets 5,316 5,606
----- -----
Total current assets 190,109 173,342
Property and equipment, net 7,387 4,389
Deferred tax assets, non-current 64 17,315
Other assets 426 471
Total assets $197,986 $195,517
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,391 $1,405
Accrued liabilities 22,838 22,401
Deferred revenue 42,183 37,592
Gigamon LLC members' distribution payable - 476
--- ---
Total current liabilities 67,412 61,874
Deferred revenue, non-current 13,322 9,884
Deferred tax liability, non-current 150 -
Other liabilities 1,667 321
Stockholders' equity:
Common stock 3 3
Treasury stock (12,469) (12,469)
Additional paid in capital 177,714 144,810
Accumulated other comprehensive (loss) income (94) 23
Accumulated deficit (49,719) (8,929)
------- ------
Total stockholders' equity 115,435 123,438
Total liabilities and stockholders' equity $197,986 $195,517
======== ========
Gigamon Inc.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Three Months Ended Fiscal Year Ended
------------------ -----------------
December 27, December 28, December 27, December 28,
2014 2013 2014 2013
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $2,906 $(88) $(40,790) $(9,537)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,568 886 5,278 2,850
Stock-based compensation expense 6,023 7,186 24,658 32,543
Deferred income taxes (52) 1,293 20,825 (20,889)
Inventory write-down 824 207 3,760 852
Loss on disposal of fixed assets - - - 14
Changes in operating assets and liabilities:
Accounts receivable (9,117) 2,507 (4,158) (3,851)
Inventories (633) (1,671) (8,229) 1,400
Prepaid expenses and other current assets 1,234 (1,005) (950) (3,274)
Accounts payable (526) (115) 963 (1,758)
Accrued liabilities and other liabilities 7,620 6,532 1,709 8,302
Deferred revenue 6,117 6,531 8,029 16,656
Net cash provided by operating activities 15,964 22,263 11,095 23,308
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments (15,607) (19,383) (87,698) (59,725)
Proceeds from sales of short-term investments 1,010 2,000 3,010 2,000
Proceeds from maturities of short-term
investments 11,100 - 32,607 -
Purchase of property and equipment (514) (1,216) (7,614) (4,042)
---- ------ ------ ------
Net cash used in investing activities (4,011) (18,599) (59,695) (61,767)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from employee stock purchase plan - - 5,878 -
Proceeds from exercise of stock option 449 1,608 5,364 1,719
Proceeds from (costs paid for) initial public
offering, net - (111) (8) 95,280
Proceeds from follow-on public offering, net - 10,232 - 10,232
Shares repurchased for tax withholdings on
vesting of restricted stock units (514) (518) (3,125) (518)
Distribution of income to Gigamon LLC members - (24) (476) (7,021)
--- --- ---- ------
Net cash (used in) provided by financing
activities (65) 11,187 7,633 99,692
--- ------ ----- ------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 11,888 14,851 (40,967) 61,233
CASH AND CASH EQUIVALENTS -Beginning of
period 27,053 65,057 79,908 18,675
------ ------ ------ ------
CASH AND CASH EQUIVALENTS - End of period $38,941 $79,908 $38,941 $79,908
======= ======= ======= =======
Gigamon Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except percentages)
(unaudited)
Three Months Ended Fiscal Year Ended
------------------ -----------------
December 27, December 28, December 27, December 28,
2014 2013 2014 2013
---- ---- ---- ----
Revenue 51,251 43,087 157,130 140,295
Reconciliation of Gross Profit and
Gross Margin to Non-GAAP Gross
Profit and Non-GAAP Gross Margin:
GAAP gross profit 39,210 34,271 119,682 109,465
Stock-based
compensation expense 317 449 1,679 3,496
Stock-based
compensation related
payroll taxes 3 - 64 -
Performance unit plan
compensation expense - 353
- -
Non-GAAP gross profit $39,530 $34,720 $121,425 $113,314
======= ======= ======== ========
GAAP gross margin 77% 80% 76% 78%
Non-GAAP gross margin 77% 81% 77% 81%
Reconciliation of Operating Income
(loss) and Operating Margin to Non-
GAAP Operating Income and Non-GAAP
Operating Margin:
GAAP operating income
(loss) 2,886 1,244 (19,870) (30,201)
Stock-based
compensation expense 6,024 7,186 24,658 32,543
Stock-based
compensation related
payroll taxes 23 - 821 -
Performance unit plan
compensation expense - - - 20,371
Non-GAAP operating
income $8,933 $8,430 $5,609 $22,713
====== ====== ====== =======
Reconciliation of Net Income (Loss)
Attributable To Common Stockholders
to Non-GAAP Net Income:
GAAP net income (loss)
attributable to common
stock holders $2,906 $(88) $(40,790) $(9,518)
Stock-based
compensation expense 6,024 7,186 24,658 32,543
Stock-based
compensation related
payroll taxes 23 - 821 -
Accretion of preferred
stock - - - 1,088
Loss attributable to
preferred stock
holders - - - (1,107)
Performance unit plan
compensation expense - - - 20,371
Tax benefit upon
conversion of LLC to a
C Corporation - - 14,811
-
Income tax effect of
Non-GAAP adjustments (2,811) (1,128) 19,271 (42,295)
Non-GAAP net income $6,142 $5,970 $3,960 $15,893
====== ====== ====== =======
Gigamon Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Fiscal Year Ended
------------------ -----------------
December 27, December 28, December 27, December 28,
2014 2013 2014 2013
---- ---- ---- ----
Reconciliation of Diluted Net Income
(Loss) per Share to Non-GAAP Diluted Net
Income (Loss) per Share:
GAAP diluted net income (loss)
per share $0.09 $ - $(1.27) $(0.39)
Stock-based compensation
expense 0.18 0.23 0.79 1.32
Stock-based compensation
related payroll taxes - - - -
Accretion of preferred stock - - - 0.04
Loss attributable to preferred
stock holders - - - (0.04)
Performance unit plan
compensation expense - - - 0.82
Tax benefit upon conversion of
LLC to a C corporation - - - 0.60
Income tax effect of non-GAAP
adjustments (0.08) (0.04) 0.60 (1.71)
Impact of difference in number
of GAAP and non-GAAP diluted
shares - (0.01) (0.11)
-
---
Non-GAAP diluted net income
(loss) per share $0.18 $0.18 $0.12 $0.53
===== ===== ===== =====
Reconciliation of Diluted Weighted-
Average Number of Shares to Non-GAAP
Diluted Weighted-Average Number of
Shares:
GAAP diluted weighted-average
number of shares 33,606 31,246 32,200 24,722
Dilutive impact due to stock-
based compensation 580 2,100 1,394 5,323
Non-GAAP diluted weighted-
average number of shares 34,186 33,346 33,594 30,045
====== ====== ====== ======
Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations
For the Three months and Fiscal Year Ended December 27, 2014 and December 28, 2013
(In thousands, except per share amounts and percentages)
(unaudited)
Three Months Ended Fiscal Year Ended
------------------ -----------------
December 27, 2014 December 28, 2013 December 27, 2014 December 28, 2013
----------------- ----------------- ----------------- -----------------
As Adjustments Non-GAAP As Adjustments Non-GAAP As Adjustments Non-GAAP As Adjustments Non-GAAP
Reported Reported Reported Reported
-------- -------- -------- --------
Revenue:
Product $36,790 $ - $36,790 $31,698 $ - $31,698 $105,594 $ - $105,594 $101,717 $ - $101,717
Service 14,461 - $14,461 11,389 - $11,389 51,536 - $51,536 38,578 - $38,578
------ --- ------ --- ------ --- ------ ---
Total revenue 51,251 - 51,251 43,087 - 43,087 157,130 - 157,130 140,295 - 140,295
Cost of revenue:
Product (1) (3) 10,319 (130) 10,189 7,646 (215) 7,431 31,001 (959) 30,042 26,103 (2,308) 23,795
Service (1) (3) 1,722 (190) 1,532 1,170 (234) 936 6,447 (784) 5,663 4,727 (1,541) 3,186
----- ---- ----- ----- ---- --- ----- ---- ----- ----- ------ -----
12,041 (320) 11,721 8,816 (449) 8,367 37,448 (1,743) 35,705 30,830 (3,849) 26,981
------ ---- ------ ----- ---- ----- ------ ------ ------ ------ ------ ------
Gross profit 39,210 320 39,530 34,271 449 34,720 119,682 1,743 121,425 109,465 3,849 113,314
------ --- ------ ------ --- ------ ------- ----- ------- ------- ----- -------
Product Gross Margin 72% 72% 76% 77% 71% 72% 74% 77%
Service Gross Margin 88% 89% 90% 92% 87% 89% 88% 92%
Total Gross Margin 77% 77% 80% 81% 76% 77% 78% 81%
Operating expenses:
Research and development
(1) (3) 10,922 (2,186) 8,736 10,341 (2,620) 7,721 42,806 (8,523) 34,283 42,067 (16,655) 25,412
Sales and marketing (1)
(3) 20,387 (1,934) 18,453 18,004 (2,606) 15,398 76,063 (8,433) 67,630 72,024 (19,025) 52,999
General and
administrative (1) (3) 5,015 (1,607) 3,408 4,682 (1,511) 3,171 20,683 (6,780) 13,903 25,575 (13,385) 12,190
----- ------ ----- ----- ------ ----- ------ ------ ------ ------ ------- ------
Total operating expenses 36,324 (5,727) 30,597 33,027 (6,737) 26,290 139,552 (23,736) 115,816 139,666 (49,065) 90,601
------ ------ ------ ------ ------ ------ ------- ------- ------- ------- ------- ------
Income (loss) from
operations 2,886 6,047 8,933 1,244 7,186 8,430 (19,870) 25,479 5,609 (30,201) 52,914 22,713
----- ----- ----- ----- ----- ----- ------- ------ ----- ------- ------ ------
Other income (expense):
Interest income 92 - 92 60 - 60 308 - 308 95 - 95
Other expense, net (31) - (31) (17) - (17) (94) - (94) (94) - (94)
--- --- --- --- --- --- --- --- --- --- --- ---
Income (loss) before
income taxes 2,947 6,047 8,994 1,287 7,186 8,473 (19,656) 25,479 5,823 (30,200) 52,914 22,714
Income tax (expense)
benefit (2) (4) (5) (41) (2,811) (2,852) (1,375) (1,128) (2,503) (21,134) 19,271 (1,863) 20,663 (27,484) (6,821)
Net income (loss) 2,906 3,236 6,142 (88) 6,058 5,970 (40,790) 44,750 3,960 (9,537) 25,430 15,893
===== ===== ===== === ===== ===== ======= ====== ===== ====== ====== ======
Accretion of preferred
stock - - - - - - - - - (1,088) 1,088 -
Loss attributable to
preferred stock holders - - - - - - - - - 1,107 (1,107) -
Net income (loss) to
common stock holders $2,906 $3,236 $6,142 $(88) $6,058 $5,970 $(40,790) $44,750 $3,960 $(9,518) $25,411 $15,893
====== ====== ====== ==== ====== ====== ======== ======= ====== ======= ======= =======
Net income (loss) per share
attributable to common stockholders:
Basic $0.09 $0.10 $0.19 $ - $0.19 $0.19 $(1.27) $1.39 $0.12 $(0.39) $1.03 $0.64
===== ===== ===== === === ===== ===== ====== ===== ===== ====== ===== =====
Diluted $0.09 $0.09 $0.18 $ - $0.18 $0.18 $(1.27) $1.39 $0.12 $(0.39) $0.91 $0.53
===== ===== ===== === === ===== ===== ====== ===== ===== ====== ===== =====
Weighted-average number of shares
used in per share amounts:
Basic 32,746 - 32,746 31,246 - 31,246 32,200 - 32,200 24,722 - 24,722
====== === ====== ====== === ====== ====== === ====== ====== === ======
Diluted 33,606 580 34,186 31,246 2,100 33,346 32,200 1,394 33,594 24,722 5,323 30,045
====== === ====== ====== ===== ====== ====== ===== ====== ====== ===== ======
Notes:
1. Includes stock-based compensation expense and related payroll taxes in
three months and fiscal years ended December 27, 2014 and December 28,
2013.
2. Includes income tax effect of non-GAAP adjustments in the three months
and fiscal years ended December 27, 2014 and December 28, 2013.
3. Includes performance unit plan compensation related expenses in the
fiscal year ended December 28, 2013.
4. Amount for the fiscal year ended December 28, 2013 includes tax benefit
recorded upon the conversion from an LLC to a C Corporation on May 31,
2013.
5. Amount for the fiscal year ended December 27, 2014 includes establishment
of valuation allowance against the deferred tax asset.
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SOURCE Gigamon Inc.
