Exhibit 99.1
BLUE COAT REPORTS FINANCIAL RESULTS FOR FIRST QUARTER FISCAL YEAR 2006
ACHIEVES RECORD NET REVENUE AND 17.6% SEQUENTIAL GROWTH
SUNNYVALE, Calif., Aug. 16 /PRNewswire-FirstCall/ -- Blue Coat(R) Systems,
Inc. (Nasdaq: BCSI), a leading provider of proxy appliances, today announced
financial results for its first fiscal quarter of 2006 ended July 31, 2005. Net
revenue for the first quarter was $33.4 million, an increase of 58.0% compared
to net revenue of $21.1 million for the same quarter last year and an increase
of 17.6% compared to net revenue of $28.4 million in the prior quarter.
On a GAAP basis, the Company reported net income of $3.4 million, or $0.24
per diluted share, in the first quarter of fiscal 2006 compared to net income of
$1.7 million, or $0.13 per diluted share, in the same quarter last year and net
income of $2.8 million, or $0.21 per diluted share, in the prior quarter. GAAP
net income for the fourth quarter of fiscal 2005 includes a benefit of $0.1
million from the reversal of restructuring reserves and a net benefit of
approximately $0.7 million from the reversal of stock compensation expense
initially recorded in the third quarter of fiscal 2005.
On a non-GAAP basis the Company reported net income of $3.7 million, or
$0.27 per diluted share, in the first quarter of fiscal 2006 compared to non-
GAAP net income of $2.2 million, or $0.17 per diluted share, in the same quarter
last year and non-GAAP net income of $2.3 million, or $0.17 per diluted share,
in the prior quarter.
The non-GAAP financial measures presented above exclude the amortization of
intangible assets, and for the fourth quarter of fiscal 2005 also exclude the
benefits associated with the aforementioned reversal of restructuring reserves
and stock compensation expense.
Blue Coat ended the quarter with cash, cash equivalents, and restricted
investments totaling $55.2 million, an increase of $6.1 million from the prior
quarter.
"We continue to be pleased with the market acceptance of the solutions that
Blue Coat provides as evidenced by the stronger than expected sequential growth
in net revenue," said Brian NeSmith, president and CEO of Blue Coat. "While we
expect demand for Blue Coat products to remain strong, sequential growth is not
expected to continue at the level realized in our most recent quarter. We will
continue to focus on expanding our market presence and making appropriate
investments in our infrastructure to address the growing market demand."
Operating Highlights
-- New Customers -- Blue Coat signed on 315 new customers during the
quarter, including Computer Sciences Corporation, Florida Power & Light,
L'Oreal, and Sony Ericsson.
-- Spyware Interceptor(TM) -- Blue Coat recently announced it has signed
Tech Data Corporation to distribute Blue Coat's Spyware Interceptor to
North American resellers targeting small and medium enterprise companies
of 50 to 1,000 networked PC users. Spyware Interceptor prevents known and
unknown spyware from entering users' networks at the gateway.
-- Blue Coat WebFilter -- Independent testing conducted by Broadband Testing
(Moux, France) shows Blue Coat WebFilter as the most comprehensive URL
filtering database, in a comparison of leading databases. The test
results, available as a download from www.broadband-testing.co.uk, showed
the Blue Coat WebFilter database outperforming its competitors by up to
62% in website coverage.
-- Branch Office Proxy Appliance -- During the quarter Blue Coat introduced
the ProxySG(TM) 200 Series appliance, a proxy appliance that extends Web
security to the branch office. The ProxySG 200 is the newest member of
the Blue Coat family of proxy appliances that allows the enterprise IT
organization to extend the Web policy controls in place at headquarters
out to the branch. The appliance is built upon Blue Coat's SGOS custom
operating system designed for high-performance Web object handling, and
contains all the same powerful features and functionality found in Blue
Coat's 400, 800 and 8000 Series proxy appliances.
Financial Outlook
For the second fiscal quarter of 2006 ending October 31, 2005, the Company
currently anticipates sequential growth in net revenue of 9% - 12%. GAAP net
income is expected to be in the range of $3.2 - $4.0 million, or $0.23 - $0.28
per diluted share. On a non-GAAP basis, net income is expected to be $3.5 - $4.3
million, or $0.25 - $0.30 per diluted share. The non-GAAP financial measures
presented above exclude the amortization of intangible assets.
About Non-GAAP Financial Measures
Blue Coat historically uses the non-GAAP financial measures of income
discussed above for internal evaluation and to report the results of its
business. Blue Coat believes that these measures best allow its management,
board of directors and investors to understand its activities and business
results. The Company believes that inclusion of these non-GAAP financial
measures provide consistency and comparability with past reports of financial
results, as well as comparability to other companies in its industry, most of
which present similar non-GAAP financial measures to investors.
Conference Call & Webcast
The company will host a conference call today at 2:00 p.m. Pacific Time
(5:00 p.m. Eastern Time) to discuss the quarterly results. Participants should
call 866-233-3843 (toll-free) or 612-332-0107 (toll call) with the passcode:
758620. A replay of the call will be available starting August 16, 2005 at 5:00
p.m. Pacific Time (8:00 p.m. Eastern Time), and can be accessed by calling
800-475-6701 (toll-free) or 320-365-3844 (toll call) with the passcode: 758620.
An audio Webcast of the call will also be available at
http://www.bluecoat.com/aboutus/investor_relations.
About Blue Coat Systems
Blue Coat helps organizations make the Web safe and productive for business.
Blue Coat proxy appliances provide visibility and control of Web communications
to protect against risks from spyware, Web viruses, inappropriate Web surfing,
instant messaging (IM), video streaming and peer- to-peer (P2P) file sharing --
while actually improving Web performance. Trusted by many of the world's largest
organizations, Blue Coat has shipped more than 20,000 proxy appliances. Blue
Coat is headquartered in Sunnyvale, California, and can be reached at (408)
220-2200 or www.bluecoat.com.
FORWARD LOOKING STATEMENTS: The statements contained in this press release
that are not purely historical are forward-looking statements, including
statements regarding Blue Coat Systems' future operating performance, future
product performance and future product acceptance in the market, as well as our
expectations, beliefs, intentions or strategies regarding the future. 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.
Forward-looking statements involve risks and uncertainties which could cause
actual results to differ materially from those projected. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements, and other risks relating to Blue Coat Systems'
business, are set forth in Blue Coat Systems' most recently filed Form 10-K for
the fiscal year ended April 30, 2005, which was filed with the Securities and
Exchange Commission on July 14, 2005, and other reports filed from time to time
with the Securities and Exchange Commission.
Copyright (C) 2005, Blue Coat Systems, Inc. All trademarks, trade names or
service marks used or mentioned herein belong to their respective owners.
BLUE COAT SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 31, April 30,
2005 2005
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 53,364 $ 47,264
Accounts receivable, net 14,622 11,541
Inventories 337 350
Prepaid expenses and other current assets 4,084 3,460
Total current assets 72,407 62,615
Property and equipment, net 5,538 3,763
Restricted investments 1,855 1,855
Goodwill 24,753 24,753
Identifiable intangible assets, net 3,690 3,993
Other assets 1,108 883
Total assets $ 109,351 $ 97,862
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,825 $ 3,743
Accrued payroll and related benefits 3,923 3,468
Deferred revenue 17,373 13,592
Accrued restructuring 2,542 2,729
Other accrued liabilities 4,625 3,849
Total current liabilities 34,288 27,381
Accrued restructuring, less current portion 467 914
Deferred revenue, less current portion 4,202 3,318
Total liabilities 38,957 31,613
Commitments and Contingencies
Total stockholders' equity 70,394 66,249
Total liabilities and stockholders' equity $ 109,351 $ 97,862
BLUE COAT SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
--------------------------------------------
July 31, April 30, July 31,
2005 2005 2004
------------ ------------ ------------
Net revenue:
Product $ 27,890 $ 23,316 $ 17,140
Service 5,478 5,069 3,984
Total net revenue 33,368 28,385 21,124
Cost of revenue:
Product 8,565 7,239 5,703
Service 1,865 1,691 1,220
Total cost of revenue 10,430 8,930 6,923
Gross profit 22,938 19,455 14,201
Operating expenses:
Research and development 5,365 4,636 3,756
Sales and marketing 11,669 10,336 6,956
General and administrative 2,678 1,772 1,699
Amortization of intangible assets 174 174 152
Restructuring (reversal) -- (96) --
Total operating expenses 19,886 16,822 12,563
Operating income 3,052 2,633 1,638
Interest income 367 255 92
Other income (expense) 57 (11) 20
Income before income taxes 3,476 2,877 1,750
Provision for income taxes 90 56 70
Net income $ 3,386 $ 2,821 $ 1,680
Basic net income per common share $ 0.27 $ 0.23 $ 0.15
Diluted net income per common share $ 0.24 $ 0.21 $ 0.13
Shares used in computing basic net income per
common share 12,353 12,259 11,065
Shares used in computing diluted net income
per common share 13,884 13,565 12,846
BLUE COAT SYSTEMS, INC.
RECONCILIATION OF NON-GAAP TO GAAP NET INCOME AND EPS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
--------------------------------------------
July 31, April 30, July 31,
2005 2005 2004
------------ ------------ ------------
Net income excluding certain charges and
benefits (Non-GAAP) $ 3,690 $ 2,284 $ 2,196
Amortization of intangible assets (Cost of
revenue) (130) (130) (152)
Amortization of intangible assets (G&A) (174) (174)
Restructuring (reversal) -- 96 --
Stock-based compensation -- 745 (364)
Net income $ 3,386 $ 2,821 $ 1,680
Diluted net income per common share excluding
certain charges and benefits (Non-GAAP) $ 0.27 $ 0.17 $ 0.17
Amortization of intangible assets (Cost of
revenue) (0.01) (0.01) (0.01)
Amortization of intangible assets (G&A) (0.02) (0.02) --
Restructuring (reversal) -- 0.01 --
Stock-based compensation -- 0.06 (0.03)
Diluted net income per share $ 0.24 $ 0.21 $ 0.13
Shares used in computing diluted net income
per common share 13,884 13,565 12,846
SOURCE Blue Coat Systems, Inc.
-0- 08/16/2005
/CONTACT: Kevin Royal, Senior Vice President and Chief Financial Officer,
or Carla Chun, Manager of Investor Relations, both of Blue Coat Systems, Inc.,
+1-408-220-2200/
/Web site: http://www.bluecoat.com /