Exhibit 99.1
Riverbed Technology Reports 45% Year-Over-Year Revenue
Growth for First Fiscal Quarter 2011
| • | Product revenue increases 50% year-over-year |
| • | Operating profit increases more than 100% year-over-year |
| • | Cash and investments exceed $564 million |
Riverbed Technology (NASDAQ: RVBD), the IT performance company, today reported financial results for its first quarter ended March 31, 2011 (Q1’11). Revenue for Q1’11 was $163.6 million, up 45% compared to the first quarter of fiscal year 2010 (Q1’10).
Reporting on a GAAP basis, net income for Q1’11 was $13.0 million, or $0.08 per diluted share. This compares to GAAP net income of $1.1 million, or $0.01 per share, in Q1’10. Non-GAAP net income for Q1’11 was $33.9 million, or $0.20 per diluted share, as compared to non-GAAP net income for Q1’10 of $14.8 million, or $0.10 per share.
“We are pleased with the strong results we generated in the first quarter,” said Jerry M. Kennelly, Riverbed® president and CEO. “We demonstrated solid execution. Top-line expansion was fueled by 50% year-over-year product revenue growth, and our operating profit more than doubled over the prior year period. Riverbed’s technology allows enterprises to successfully implement strategic initiatives such as virtualization, consolidation, cloud computing, and disaster recovery without compromising performance. These trends continue to drive our growth.”
Q1’11 Financial Highlights
| • | Total revenue increased 45% year-over-year to $163.6 million |
| • | Product revenue increased 50% year-over-year to $112.2 million |
| • | Service revenue increased 36% year-over-year to $51.4 million |
| • | Non-GAAP gross margin increased to 78.4% from 77.1% in Q1’10 |
| • | Record non-GAAP operating profit of $47.9 million, increased 105% year-over-year |
| • | Record non-GAAP operating margin of 29.3%, compared to 20.8% in Q1’10 |
| • | Record non-GAAP net income of $33.9 million, increased 129% year-over-year |
| • | Cash and investments increased 46% year-over-year to $564.4 million |
| • | Total assets increased 48% year-over-year to $832.0 million |
Q1’11 Business Highlights
| • | Identified as the WAN optimization controller Advanced Platform worldwide market share leader for Q4’10 and calendar year 2010 based on revenue in the Gartner report, “Market Share: Application Acceleration Equipment, Worldwide, 4Q’10 and 2010” published by J. Skorupa, N. Pham on March 3, 2011 |
| • | Awarded IDG’s InfoWorld 2011 Technology of the Year Award in the Best WAN Accelerator category for the sixth consecutive time |
| • | Launched Riverbed Optimization System (RiOS®) 6.5, including a new classification and QoS (Hierarchical Fair Service Curve - HFSC) engine, full-spectrum optimizations for Microsoft Outlook Anywhere as well as native support for SMB v2. Riverbed Steelhead® appliances can now optimize SSL connections that use client-side certificates and can be managed via IPv6. For satellite networks the Riverbed Steelhead® appliance has integration with LTTS, and TCP Westwood as well as SCPS on RSP. |
| • | Introduced Cascade® 9.0, providing customers with fine-grained classification of traffic, including advanced Layer-7 awareness and a single business-level performance view of applications and services |
| • | Received EMC(R) E-Lab(TM) qualification for EMC RecoverPoint, the leading solution for intelligent network-based data protection and disaster recovery, for the Steelhead appliance. |
Conference Call
Riverbed will host a conference call today, April 19, 2011, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its first quarter 2011 results and outlook for the second quarter of 2011. The call will be broadcast live over the Internet atwww.riverbed.com/investors. A replay of the conference call will also be available via webcast for 12 months.
Use of Non-GAAP Financial Information
To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures, including non-GAAP operating profit, non-GAAP operating margin, non-GAAP net income, non-GAAP gross margin and non-GAAP operating margin, that we believe are helpful in understanding our past financial performance and future results. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “GAAP to Non-GAAP Reconciliations.” Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods. Our non-GAAP financial measures include adjustments based on the following items, as well as the related income tax effects, adjustments related to our tax valuation allowance and the interim tax cost of the one-time transfer of intellectual property rights between Riverbed legal entities:
Stock-based compensation expenses: We have excluded the effect of stock-based compensation and related payroll tax expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding
stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.
Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP net income. Amortization of intangible assets is a non-cash expense, and it is not part of our core operations. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.
Acquisition related and other expenses: We incur significant expenses in connection with our acquisitions and also incurred certain other operating expenses, which we would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of transaction costs, costs for transitional employees, other acquired employee related costs, integration related professional services, and adjustments to the fair value of the acquisition related contingent consideration. We believe it is useful for investors to understand the effects of these items on our total operating expenses.
Forward-Looking Statements
This press release contains forward-looking statements, including statements relating to expected future growth. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to react to trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs or develop new or enhanced products to meet those needs; the adoption rate of our products; our ability to establish and maintain successful relationships with our distribution partners; our ability to compete in our industry; fluctuations in demand, sales cycles and prices for our products and services; shortages or price fluctuations in our supply chain; our ability to protect our intellectual property rights; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact Riverbed’s business are set forth in our Form 10-K filed with the SEC for the period ended December 31, 2010. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements. Any future product, feature or related specification that may be referenced in this release are for information purposes only and are not commitments to deliver any technology or enhancement. Riverbed reserves the right to modify future product plans at any time.
About Riverbed
Riverbed delivers performance for the globally connected enterprise. With Riverbed, enterprises can successfully and intelligently implement strategic initiatives such as virtualization, consolidation, cloud computing, and disaster recovery without fear of compromising performance. By giving enterprises the platform they need to understand,
optimize and consolidate their IT, Riverbed helps enterprises to build a fast, fluid and dynamic IT architecture that aligns with the business needs of the organization.
Riverbed and any Riverbed product or service name or logo used herein are trademarks of Riverbed Technology, Inc. All other trademarks used herein belong to their respective owners.
INVESTOR RELATIONS CONTACT
Renee Lyall
Riverbed Technology
415-247-6353
renee.lyall@riverbed.com
MEDIA CONTACT
Jin Woo
Riverbed Technology
415-344-6465
jin.woo@riverbed.com
###
Riverbed Technology, Inc.
GAAP Condensed Consolidated Statements of Operations
In thousands, except per share amounts
Unaudited
| Three months ended March 31, | ||||||||
| 2011 | 2010 | |||||||
Revenue: | ||||||||
Product | $ | 112,152 | $ | 74,737 | ||||
Support and services | 51,411 | 37,686 | ||||||
Total revenue | 163,563 | 112,423 | ||||||
Cost of revenue: | ||||||||
Cost of product | 23,735 | 16,632 | ||||||
Cost of support and services | 15,220 | 11,234 | ||||||
Total cost of revenue | 38,955 | 27,866 | ||||||
Gross profit | 124,608 | 84,557 | ||||||
Operating expenses: | ||||||||
Sales and marketing | 61,084 | 50,068 | ||||||
Research and development | 28,309 | 18,885 | ||||||
General and administrative | 13,683 | 10,746 | ||||||
Acquisition-related costs | — | 2,725 | ||||||
Total operating expenses | 103,076 | 82,424 | ||||||
Operating profit | 21,532 | 2,133 | ||||||
Other income, net | 498 | 115 | ||||||
Income before provision for income taxes | 22,030 | 2,248 | ||||||
Provision for income taxes | 8,985 | 1,165 | ||||||
Net income | $ | 13,045 | $ | 1,083 | ||||
Net income per share, basic | $ | 0.09 | $ | 0.01 | ||||
Net income per share, diluted | $ | 0.08 | $ | 0.01 | ||||
Shares used in computing basic net income per share | 152,034 | 141,138 | ||||||
Shares used in computing diluted net income per share | 166,460 | 149,752 | ||||||
Riverbed Technology, Inc.
Condensed Consolidated Balance Sheets
In thousands
Unaudited
| March 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
| ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 196,948 | $ | 165,726 | ||||
Short-term investments | 274,935 | 259,245 | ||||||
Trade receivables, net | 61,227 | 50,726 | ||||||
Inventory | 15,527 | 15,180 | ||||||
Deferred tax assets | 22,817 | 20,832 | ||||||
Prepaid expenses and other current assets | 27,704 | 30,958 | ||||||
Total current assets | 599,158 | 542,667 | ||||||
Long-term investments | 92,508 | 76,169 | ||||||
Fixed assets, net | 22,466 | 21,522 | ||||||
Goodwill | 25,078 | 25,653 | ||||||
Intangible assets, net | 28,665 | 30,789 | ||||||
Deferred tax assets, non-current | 38,842 | 35,775 | ||||||
Other assets | 25,249 | 3,506 | ||||||
Total assets | $ | 831,966 | $ | 736,081 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 26,961 | $ | 27,015 | ||||
Accrued compensation and related benefits | 29,243 | 32,915 | ||||||
Other accrued liabilities | 16,902 | 18,813 | ||||||
Deferred revenue | 103,237 | 89,026 | ||||||
Total current liabilities | 176,343 | 167,769 | ||||||
Deferred revenue, non-current | 28,898 | 26,511 | ||||||
Other long-term liabilities | 12,026 | 4,381 | ||||||
Total long-term liabilities | 40,924 | 30,892 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 582,010 | 518,052 | ||||||
Retained earnings | 32,354 | 19,309 | ||||||
Accumulated other comprehensive gain | 335 | 59 | ||||||
Total stockholders’ equity | 614,699 | 537,420 | ||||||
Total liabilities and stockholders’ equity | $ | 831,966 | $ | 736,081 | ||||
Riverbed Technology, Inc.
Condensed Consolidated Statements of Cash Flows
In thousands
Unaudited
| Three months ended March 31, | ||||||||
| 2011 | 2010 | |||||||
Operating activities: | ||||||||
Net income | $ | 13,045 | $ | 1,083 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 4,760 | 3,068 | ||||||
Stock-based compensation | 21,941 | 15,450 | ||||||
Deferred taxes | (5,017 | ) | (4,170 | ) | ||||
Excess tax benefit from employee stock plans | (21,220 | ) | (1,486 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Trade receivables | (10,501 | ) | 5,448 | |||||
Inventory | (347 | ) | 3,038 | |||||
Prepaid expenses and other assets | (18,490 | ) | (237 | ) | ||||
Accounts payable | (296 | ) | 1,487 | |||||
Accruals and other liabilities | 2,637 | 4,990 | ||||||
Acquisition-related contingent consideration | — | 4,156 | ||||||
Income taxes payable | 21,679 | 2,992 | ||||||
Deferred revenue | 16,599 | 14,608 | ||||||
Net cash provided by operating activities | 24,790 | 50,427 | ||||||
Investing activities: | ||||||||
Capital expenditures | (3,338 | ) | (2,549 | ) | ||||
Purchase of available for sale securities | (168,242 | ) | (116,075 | ) | ||||
Proceeds from maturities of available for sale securities | 112,956 | 52,468 | ||||||
Proceeds from sales of available for sale securities | 23,205 | — | ||||||
Net cash used in investing activities | (35,419 | ) | (66,156 | ) | ||||
Financing activities: | ||||||||
Proceeds from issuance of common stock under employee stock plans, net of repurchases | 20,338 | 12,533 | ||||||
Excess tax benefit from employee stock plans | 21,220 | 1,486 | ||||||
Net cash provided by financing activities | 41,558 | 14,019 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 293 | (199 | ) | |||||
Net change in cash and cash equivalents | 31,222 | (1,909 | ) | |||||
Cash and cash equivalents at beginning of period | 165,726 | 67,749 | ||||||
Cash and cash equivalents at end of period | $ | 196,948 | $ | 65,840 | ||||
Riverbed Technology, Inc.
Supplemental Financial Information
In thousands
Unaudited
| Three months ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2011 | 2010 | 2010 | ||||||||||
Revenue by Geography | ||||||||||||
United States | $ | 90,339 | $ | 91,661 | $ | 58,311 | ||||||
Europe, Middle East and Africa | 39,049 | 42,987 | 31,413 | |||||||||
Rest of the world | 34,175 | 30,785 | 22,699 | |||||||||
Total revenue | $ | 163,563 | $ | 165,433 | $ | 112,423 | ||||||
As a percentage of total revenues: | ||||||||||||
United States | 55% | 55% | 52% | |||||||||
Europe, Middle East and Africa | 24% | 26% | 28% | |||||||||
Rest of the world | 21% | 19% | 20% | |||||||||
Total revenue | 100% | 100% | 100% | |||||||||
Revenue by Sales Channel | ||||||||||||
Direct | $ | 8,798 | $ | 7,526 | $ | 9,296 | ||||||
Indirect | 154,765 | 157,907 | 103,127 | |||||||||
Total revenue | $ | 163,563 | $ | 165,433 | $ | 112,423 | ||||||
As a percentage of total revenues: | ||||||||||||
Direct | 5% | 5% | 8% | |||||||||
Indirect | 95% | 95% | 92% | |||||||||
Total revenue | 100% | 100% | 100% | |||||||||
Riverbed Technology, Inc.
GAAP to Non-GAAP Reconciliation
In thousands, except per share amounts
Unaudited
| Three months ended | ||||||||||||
| GAAP to Non-GAAP Reconciliations: | March 31, | December 31, | March 31, | |||||||||
| 2011 | 2010 | 2010 | ||||||||||
Reconciliation of Gross Profit: | ||||||||||||
U.S. GAAP as reported | $ | 124,608 | $ | 126,294 | $ | 84,557 | ||||||
Adjustments: | ||||||||||||
Stock-based compensation (1) | 1,741 | 1,732 | 1,383 | |||||||||
Payroll tax on stock-based compensation (2) | 239 | 162 | 26 | |||||||||
Amortization on intangibles (3) | 1,560 | 1,287 | 740 | |||||||||
Inventory fair value adjustment (4) | 114 | 376 | — | |||||||||
As Adjusted | $ | 128,262 | $ | 129,851 | $ | 86,706 | ||||||
Reconciliation of Gross Margin: | ||||||||||||
U.S. GAAP as reported | 76.2% | 76.3% | 75.2% | |||||||||
Adjustments: | ||||||||||||
Stock-based compensation (1) | 1.0% | 1.1% | 1.2% | |||||||||
Payroll tax on stock-based compensation (2) | 0.1% | 0.1% | 0.0% | |||||||||
Amortization on intangibles (3) | 1.0% | 0.8% | 0.7% | |||||||||
Inventory fair value adjustment (4) | 0.1% | 0.2% | 0.0% | |||||||||
As Adjusted | 78.4% | 78.5% | 77.1% | |||||||||
Reconciliation of Operating Profit: | ||||||||||||
U.S. GAAP as reported | $ | 21,532 | $ | 20,593 | $ | 2,133 | ||||||
Adjustments: | ||||||||||||
Stock-based compensation (1) | 21,941 | 20,305 | 15,450 | |||||||||
Payroll tax on stock-based compensation (2) | 2,159 | 1,634 | 424 | |||||||||
Amortization on intangibles (3) | 2,123 | 1,815 | 1,195 | |||||||||
Acquisition-related costs (credits) (5) | — | 1,104 | 4,156 | |||||||||
Inventory fair value adjustment (4) | 114 | 376 | — | |||||||||
As Adjusted | $ | 47,869 | $ | 45,827 | $ | 23,358 | ||||||
Reconciliation of Operating Margin: | ||||||||||||
U.S. GAAP as reported | 13.2% | 12.4% | 1.9% | |||||||||
Adjustments: | ||||||||||||
Stock-based compensation (1) | 13.4% | 12.3% | 13.7% | |||||||||
Payroll tax on stock-based compensation (2) | 1.3% | 1.0% | 0.4% | |||||||||
Amortization on intangibles (3) | 1.3% | 1.1% | 1.1% | |||||||||
Acquisition-related costs (credits) (5) | 0.0% | 0.7% | 3.7% | |||||||||
Inventory fair value adjustment (4) | 0.1% | 0.2% | 0.0% | |||||||||
As Adjusted | 29.3% | 27.7% | 20.8% | |||||||||
Reconciliation of Net Income: | ||||||||||||
U.S. GAAP as reported | $ | 13,045 | $ | 12,611 | $ | 1,083 | ||||||
Adjustments: | ||||||||||||
Stock-based compensation (1) | 21,941 | 20,305 | 15,450 | |||||||||
Payroll tax on stock-based compensation (2) | 2,159 | 1,634 | 424 | |||||||||
Amortization on intangibles (3) | 2,123 | 1,815 | 1,195 | |||||||||
Acquisition-related costs (credits) (5) | — | 1,104 | 4,156 | |||||||||
Inventory fair value adjustment (4) | 114 | 376 | — | |||||||||
Income tax adjustments (6) | (5,496 | ) | (6,114 | ) | (7,504 | ) | ||||||
As Adjusted | $ | 33,886 | $ | 31,731 | $ | 14,804 | ||||||
| Three months ended | ||||||||||||
| GAAP to Non-GAAP Reconciliations: | March 31, | December 31, | March 31, | |||||||||
| 2011 | 2010 | 2010 | ||||||||||
Reconciliation of Net Income per share, diluted: | ||||||||||||
U.S. GAAP as reported | $ | 0.08 | $ | 0.08 | $ | 0.01 | ||||||
Adjustments: | ||||||||||||
Stock-based compensation (1) | 0.13 | 0.12 | 0.10 | |||||||||
Payroll tax on stock-based compensation (2) | 0.01 | 0.01 | — | |||||||||
Amortization on intangibles (3) | 0.01 | 0.01 | 0.01 | |||||||||
Acquisition-related costs (credits) (5) | — | 0.01 | 0.03 | |||||||||
Income tax adjustments (6) | (0.03 | ) | (0.04 | ) | (0.05 | ) | ||||||
As Adjusted | $ | 0.20 | $ | 0.19 | $ | 0.10 | ||||||
Non-GAAP Net income per share, basic | $ | 0.22 | $ | 0.21 | $ | 0.10 | ||||||
Non-GAAP Net income per share, diluted | $ | 0.20 | $ | 0.19 | $ | 0.10 | ||||||
Shares used in computing basic net income per share (7) | 152,034 | 149,058 | 141,138 | |||||||||
Shares used in computing diluted net income per share (7) | 166,460 | 163,359 | 149,752 | |||||||||
Non-GAAP adjustments: | ||||||||||||
Cost of product | $ | 1,942 | $ | 1,838 | $ | 865 | ||||||
Cost of support and services | 1,712 | 1,719 | 1,284 | |||||||||
Sales and marketing | 10,123 | 9,287 | 7,789 | |||||||||
Research and development | 7,306 | 6,846 | 4,750 | |||||||||
General and administrative | 5,254 | 4,926 | 3,812 | |||||||||
Other acquisition costs (credits) | — | 618 | 2,725 | |||||||||
Provision for income taxes | (5,496 | ) | (6,114 | ) | (7,504 | ) | ||||||
Total Non-GAAP Adjustments | $ | 20,841 | $ | 19,120 | $ | 13,721 | ||||||
| (1) | Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718,Compensation - Stock Compensationeffective January 1, 2006. |
| (2) | Payroll tax on stock-based compensation represents the incremental cost for employer payroll taxes on stock option exercises and restricted stock units vested and released. |
| (3) | The intangible assets recorded at fair value as a result of our acquisitions are amortized over the estimated useful life of the respective asset. |
| (4) | The inventory fair value adjustment recorded pursuant to our acquisition is excluded from our non-GAAP operating expenses as this cost would not have otherwise occurred in the period presented. |
| (5) | We incurred expenses, such as revaluation of the contingent consideration, in connection with our acquisitions, which would not have otherwise occurred in the period presented as part of our operating expenses; therefore, these costs or credits are excluded from our non-GAAP operating expenses. |
| (6) | The non-GAAP tax rate excludes the income tax effects of non-GAAP adjustments. Additionally, the non-GAAP tax rate includes adjustments to our tax valuation allowance on deferred tax assets and excludes the interim tax cost of the one-time transfer of intellectual property rights between our legal entities. |
| (7) | Shares used in computing basic and diluted net income per share is reflective of the stock split for all periods presented. |