Sourcefire, Inc. (NASDAQ: FIRE), a leader in intelligent
cybersecurity solutions, today announced financial results for its
fiscal second quarter ended June 30, 2013.
Financial Summary
- Total Revenue - Revenue for the second quarter of 2013 was
$65.1 million compared to $50.6 million in the second quarter of
2012, an increase of 29%.
- GAAP Net Income - Net income was $2.2 million for the second
quarter of 2013, or $0.07 per diluted share, on the basis of
generally accepted accounting principles (GAAP), compared with GAAP
net income of $1.1 million, or $0.04 per diluted share, in the
second quarter of 2012.
- Adjusted Net Income - Adjusted net income for the second
quarter of 2013, which excludes stock-based compensation expense
and amortization of acquired intangible assets and includes an
assumed tax rate of 35%, was $6.6 million, or $0.20 per diluted
share. This compares to adjusted net income of $4.9 million, or
$0.16 per diluted share, for the second quarter of 2012, which
excludes stock-based compensation expense, amortization of acquired
intangible assets and other acquisition-related expenses, and
includes an assumed tax rate of 35%.
- Cash and Cash Flow - As of June 30, 2013, the Company's cash,
cash equivalents and investments totaled $237.4 million. For the
second quarter of 2013, net cash provided by operating activities
was $5.9 million and the Company generated free cash flow of $2.5
million.
Recent Company Highlights
Revenue
- Increased U.S. commercial revenue to $32.1 million, up 16% over
2Q12.
- Increased international revenue to $19.9 million, up 35% over
2Q12.
- Increased U.S. federal sector revenue to $13.1 million, up 57%
over 2Q12.
Innovation & Recognition
- Introduced innovative malware trajectory capabilities across
the Advanced Malware Protection portfolio, giving customers
detailed visibility into malware attack activity and enabling them
to detect, remediate and control malware outbreaks. With these
additions, Sourcefire Advanced Malware Protection solutions are the
only offerings that add a continuous capability to its malware
blocking, going beyond point-in-time detection to confirm an
infection, trace its path, analyze its behavior, remediate its
targets and report on its impact regardless of when a file is
determined to be malware.
- Announced enhancements to the FirePOWER™ security platform,
including the 7000 and 8000 series appliances, as well as updates
to the Next-Generation Intrusion Prevention Systems (NGIPS) and
Next-Generation Firewall (NGFW) solutions. With these new features,
Sourcefire offers customers increased flexibility and scalability
to help ensure leading protection for any environment.
- Based on its recent analysis of the intrusion prevention
systems (IPS) market, Frost & Sullivan recognized Sourcefire
with the 2013 Global Frost & Sullivan Award for Product
Leadership. Sourcefire's dedication to understanding, detecting,
and blocking the most advanced enterprise network threats has
enabled its Next-Generation IPS (NGIPS) solution to stand out from
the competition. In addition, Sourcefire was recognized for
providing exceptional customer value in terms of deployment
flexibility, adaptability, and performance.
Non-GAAP Measures
To supplement its consolidated financial statements presented in
accordance with GAAP, Sourcefire considers certain financial
measures that are not prepared in accordance with GAAP, including
non-GAAP adjusted net income, adjusted net income per share,
adjusted income from operations, adjusted income from operations as
a percentage of revenue and free cash flow.
Sourcefire uses these non-GAAP financial measures, in addition
to GAAP financial measures, to evaluate its operating and financial
performance and to compare such performance to that of prior
periods and to the performance of its competitors. The Company also
uses these non-GAAP financial measures in making operational and
financial decisions and in establishing operational goals.
Sourcefire believes that providing these non-GAAP financial
measures to investors, as a supplement to GAAP financial measures,
helps investors to evaluate the Company's operating and financial
performance and trends in its business, consistent with how
management evaluates such performance and trends. The Company also
believes these non-GAAP financial measures may be useful to
investors in comparing its performance to the performance of other
companies, although Sourcefire's non-GAAP financial measures are
specific to it and the non-GAAP financial measures of other
companies may not be calculated in the same manner.
Adjusted Net Income, Adjusted Net Income per Share, Adjusted
Income from Operations and Adjusted Income from Operations as a
Percentage of Revenue: In evaluating the operating performance of
its business, Sourcefire excludes certain charges and credits that
are required by GAAP. These non-GAAP measures exclude (i)
stock-based compensation, which does not involve the expenditure of
cash, (ii) amortization of acquisition-related intangible assets,
which does not involve the expenditure of cash, and (iii) other
acquisition-related expenses, which are unrelated to the ongoing
operation of the Company's business in the ordinary course. For
2013, we expect non-GAAP results to be adjusted to reflect the
effect of an assumed tax rate of 35%. This adjustment is intended
to normalize the tax rate and provide a tax rate that approximates
the Company's expected long-term GAAP tax rate.
Free Cash Flow: Sourcefire defines free cash flow as net cash
provided by operating activities minus capital expenditures. The
Company considers free cash flow to be a liquidity measure that
provides useful information to management and investors about the
amount of cash generated by the business that, after the purchase
of property and equipment, can be used for strategic opportunities,
including investing in the business, making strategic acquisitions
and strengthening the balance sheet.
These measures should be considered in addition to results
prepared in accordance with GAAP, but should not be considered a
substitute for, or superior to, GAAP results. The non-GAAP measures
included in this press release have been reconciled to the nearest
GAAP measure in the table following the financial statements
attached to this press release.
About Sourcefire
Sourcefire, Inc. (NASDAQ: FIRE), a world leader in intelligent
cybersecurity solutions, is transforming the way global large- to
mid-size organizations and government agencies manage and minimize
security risks to their dynamic networks, endpoints, mobile devices
and virtual environments. With solutions from a next-generation
network security platform to advanced malware protection,
Sourcefire's threat-centric approach provides customers with Agile
Security® that delivers protection Before, During and After™ an
attack. Trusted for more than 10 years, Sourcefire has earned a
reputation for innovation, consistent security effectiveness and
world-class research all focused on detecting, understanding and
stopping threats. For more information about Sourcefire, please
visit www.sourcefire.com.
Sourcefire, the Sourcefire logo, Snort, the Snort and Pig logo,
Agile Security and the Agile Security logo, 'Before, During, and
After,' ClamAV, FireAMP, FirePOWER, FireSIGHT and certain other
trademarks and logos are trademarks or registered trademarks of
Sourcefire, Inc. in the United States and other countries. Other
company, product and service names may be trademarks or service
marks of others.
Cautionary Language Concerning Forward-Looking
Statements
The statements contained in this release that are not historical
facts are "forward-looking statements" (as such term is defined in
the Private Securities Litigation Reform Act of 1995) that involve
risks and uncertainties. These statements include expectations
regarding financial results for the second quarter of 2013 and
expectations of future growth.
Management cautions the reader that these forward-looking
statements are only predictions and are subject to a number of both
known and unknown risks and uncertainties, and actual results,
performance, and/or achievements of Sourcefire, Inc. may differ
materially from the future results, performance, and/or
achievements expressed or implied by these forward-looking
statements as a result of a number of factors. These factors
include, without limitation, those risks and uncertainties
described from time to time in the reports filed by Sourcefire,
Inc. with the U.S. Securities and Exchange Commission. Sourcefire,
Inc. undertakes no obligation to update any forward-looking
statements.
Sourcefire, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share data)
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- --------------------------
2013 2012 2013 2012
------------- ------------- ------------ ------------
Revenue: (unaudited) (unaudited) (unaudited) (unaudited)
Products $ 38,088 $ 29,794 $ 68,880 $ 55,487
Technical support
and professional
services 26,964 20,804 52,336 41,413
------------- ------------- ------------ ------------
Total revenue 65,052 50,598 121,216 96,900
------------- ------------- ------------ ------------
Cost of revenue:
Products 10,891 8,682 20,917 17,171
Technical support
and professional
services 3,578 2,837 6,776 5,270
------------- ------------- ------------ ------------
Total cost of
revenue 14,469 11,519 27,693 22,441
------------- ------------- ------------ ------------
Gross profit 50,583 39,079 93,523 74,459
Operating expenses:
Research and
development 12,255 10,661 23,450 20,089
Sales and
marketing 25,792 19,764 50,902 38,968
General and
administrative 8,138 5,911 14,542 11,355
Depreciation and
amortization 1,660 1,133 3,263 2,317
------------- ------------- ------------ ------------
Total operating
expenses 47,845 37,469 92,157 72,729
------------- ------------- ------------ ------------
Income from
operations 2,738 1,610 1,366 1,730
Other income
(expense), net (149) 11 (190) 8
------------- ------------- ------------ ------------
Income before income
taxes 2,589 1,621 1,176 1,738
Provision (benefit)
for income taxes 372 508 (1,015) 558
------------- ------------- ------------ ------------
Net income $ 2,217 $ 1,113 $ 2,191 $ 1,180
============= ============= ============ ============
Net income per share
- basic $ 0.07 $ 0.04 $ 0.07 $ 0.04
Net income per share
- diluted $ 0.07 $ 0.04 $ 0.07 $ 0.04
Weighted average shares
outstanding used in computing per
share amounts:
Basic 31,314,224 29,714,500 30,983,817 29,470,671
Diluted 32,129,720 30,961,421 31,892,619 30,669,716
Stock-based compensation expense for the three
and six months ended June 30, 2013 and 2012 is
included in the Consolidated Statements of
Operations as follows (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- --------------------------
2013 2012 2013 2012
------------- ------------- ------------ ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Cost of revenue
(product) $ 152 $ 93 $ 309 $ 171
Cost of revenue
(services) 305 211 564 377
------------- ------------- ------------ ------------
Stock-based comp
expense
included in
cost of revenue 457 304 873 548
Research and
development 1,758 1,184 3,328 2,156
Sales and
marketing 3,176 2,137 6,144 3,883
General and
administrative 1,803 1,244 3,156 2,389
------------- ------------- ------------ ------------
Stock-based comp
expense
included in
operating
expenses 6,737 4,565 12,628 8,428
------------- ------------- ------------ ------------
Total stock-based
compensation
expense $ 7,194 $ 4,869 $ 13,501 $ 8,976
============= ============= ============ ============
Sourcefire, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2013 2012
------------- -------------
Assets (unaudited) (unaudited)
Cash and cash equivalents $ 128,720 $ 96,178
Investments 108,729 107,777
Accounts receivable, net 71,092 77,426
Inventory 7,107 6,880
Deferred tax assets 24,027 13,023
Prepaid expenses and other current assets 10,438 9,043
Property and equipment, net 16,666 15,438
Goodwill 15,000 15,000
Intangible assets, net 3,773 4,456
Other long-term assets 18,570 19,453
------------- -------------
Total assets $ 404,122 $ 364,674
============= =============
Liabilities
Accounts payable and accrued expenses $ 28,872 $ 27,783
Deferred revenue 94,073 90,241
Other liabilities 2,252 1,524
------------- -------------
Total liabilities 125,197 119,548
------------- -------------
Stockholders' Equity
Common stock 31 30
Additional paid-in capital 287,775 255,610
Accumulated deficit (8,331) (10,522)
Accumulated other comprehensive income
(loss) (550) 8
------------- -------------
Total stockholders' equity 278,925 245,126
------------- -------------
Total liabilities and stockholders' equity $ 404,122 $ 364,674
============= =============
Sourcefire, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- --------------------------
2013 2012 2013 2012
------------- ------------- ------------ ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Net income $ 2,217 $ 1,113 $ 2,191 $ 1,180
Adjustments to
reconcile net
income to net
cash provided by
operating
activities 3,643 1,521 19,548 21,131
------------- ------------- ------------ ------------
Net cash provided
by operating
activities 5,860 2,634 21,739 22,311
Net cash used in
investing
activities (4,768) (7,573) (7,862) (13,109)
Net cash provided
by financing
activities 2,853 5,087 18,665 8,928
------------- ------------- ------------ ------------
Net increase in
cash and cash
equivalents 3,945 148 32,542 18,130
Cash and cash
equivalents at
beginning of
period 124,775 77,389 96,178 59,407
------------- ------------- ------------ ------------
Cash and cash
equivalents at
end of period $ 128,720 $ 77,537 $ 128,720 $ 77,537
============= ============= ============ ============
Sourcefire, Inc.
Reconciliation of Non-GAAP Measures to GAAP
(in thousands, except share and per share data)
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- --------------------------
2013 2012 2013 2012
------------- ------------- ------------ ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Reconciliation of
adjusted income
from operations:
GAAP income from
operations $ 2,738 $ 1,610 $ 1,366 $ 1,730
Amortization of
acquisition-
related
intangible
assets 342 342 684 684
Other
acquisition-
related
expenses* - 769 - 1,436
Stock-based
compensation
expense 7,194 4,869 13,501 8,976
------------- ------------- ------------ ------------
Adjusted income
from operations $ 10,274 $ 7,590 $ 15,551 $ 12,826
============= ============= ============ ============
Adjusted income
from operations
as % of total
revenue 15.8% 15.0% 12.8% 13.2%
Reconciliation of
adjusted net
income:
GAAP net income $ 2,217 $ 1,113 $ 2,191 $ 1,180
Stock-based
compensation
expense 7,194 4,869 13,501 8,976
Amortization of
acquisition-
related
intangible
assets 342 342 684 684
Other
acquisition-
related
expenses* - 769 - 1,436
Tax credit for
research and
experimentation (601) - (2,064) -
Income tax
adjustment** (2,571) (2,152) (4,327) (3,934)
------------- ------------- ------------ ------------
Adjusted net
income $ 6,581 $ 4,941 $ 9,985 $ 8,342
============= ============= ============ ============
Adjusted net
income per
share - basic $ 0.21 $ 0.17 $ 0.32 $ 0.28
Adjusted net
income per
share - diluted $ 0.20 $ 0.16 $ 0.31 $ 0.27
Weighted average
number of
shares - basic 31,314,224 29,714,500 30,983,817 29,470,671
Weighted average
number of
shares -
diluted 32,129,720 30,961,421 31,892,619 30,669,716
* Includes the accrual of retention obligations related to the hiring of
former Immunet employees.
** Income tax adjustment is used to adjust the GAAP provision for income
taxes to a Non-GAAP provision for income taxes utilizing an estimated tax
rate of 35%.
Reconciliation of net cash provided by operating activities to free cash
flow:
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- --------------------------
2013 2012 2013 2012
------------- ------------- ------------ ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Net cash provided
by operating
activities $ 5,860 $ 2,634 $ 21,739 $ 22,311
Purchase of
property and
equipment (3,371) (1,534) (4,606) (4,076)
------------- ------------- ------------ ------------
Free cash flow $ 2,489 $ 1,100 $ 17,133 $ 18,235
============= ============= ============ ============
Sourcefire, Inc.
Supplemental Operating Data
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- --------------------------
2013 2012 2013 2012
------------- ------------- ------------ ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Number of deals in
excess of
$500,000 28 13 41 25
Number of deals in
excess of
$100,000 120 83 206 162
Number of new
customers 126 98 225 182
Percentage of
channel-
influenced deals 39% 43% 45% 47%
Percentage of
install base on
FirePOWER 38% 15%
Total channel
partners 814 691
Number of full-
time employees at
end of period 674 519
Revenue
Composition by
Geography:
United States 69% 71% 67% 69%
International 31% 29% 33% 31%
------------- ------------- ------------ ------------
Total 100% 100% 100% 100%
============= ============= ============ ============
Revenue
Composition by
Business
Distribution:
Existing customer
product revenue 42% 41% 41% 38%
New customer
product revenue 16% 18% 16% 20%
Services revenue 42% 41% 43% 42%
------------- ------------- ------------ ------------
Total 100% 100% 100% 100%
============= ============= ============ ============
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Media Contact: Jennifer Leggio Sourcefire 650-260-4025
jleggio@sourcefire.com Investor Contact: Staci Mortenson ICR
203-682-8273 Staci.Mortenson@icrinc.com
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