Exhibit 99.1
BLUE COAT REPORTS FINANCIAL RESULTS FOR SECOND QUARTER FISCAL YEAR 2006
ACHIEVES RECORD NET REVENUE AND 10.0% SEQUENTIAL GROWTH
SUNNYVALE, Calif., Nov. 15 /PRNewswire-FirstCall/ -- Blue Coat(R) Systems,
Inc. (Nasdaq: BCSI), a leading provider of proxy appliances, today announced
financial results for its second fiscal quarter of 2006 ended October 31, 2005.
Net revenue for the second quarter was $36.7 million, an increase of 67.4%
compared to net revenue of $21.9 million for the same quarter last year and an
increase of 10.0% compared to net revenue of $33.4 million in the prior quarter.
On a GAAP basis, the Company reported net income of $4.2 million, or $0.28
per diluted share, in the second quarter of fiscal 2006 compared to net income
of $0.6 million, or $0.05 per diluted share, in the same quarter last year and
net income of $3.4 million, or $0.24 per diluted share, in the prior quarter.
On a non-GAAP basis the Company reported net income of $4.7 million, or
$0.32 per diluted share, in the second quarter of fiscal 2006 compared to
non-GAAP net income of $1.1 million, or $0.09 per diluted share, in the same
quarter last year and non-GAAP net income of $3.7 million, or $0.27 per diluted
share, in the prior quarter.
The non-GAAP financial measures presented above exclude the write-off of
capitalized software associated with the failed implementation of a forecast
system in the second quarter of fiscal 2006 and the amortization of intangible
assets in both the second quarter of fiscal 2006 and the prior quarter. For the
second quarter of fiscal 2005, the non-GAAP financial measures exclude the
amortization of intangible assets and stock compensation expense.
Blue Coat ended the quarter with cash, cash equivalents, and restricted
investments totaling $62.5 million, an increase of $7.3 million from the prior
quarter.
"We are pleased with the results of our investments in product development
and our stronghold in the proxy appliance market," said Brian NeSmith, president
and CEO of Blue Coat. "We are continuing our substantial investment in research
and development to further enhance our market position and increase our served
markets."
Operating Highlights
-- Blue Coat SSL Proxy -- Blue Coat recently announced the addition of SSL
proxy functionality to its ProxySG(TM) platform, providing visibility and
granular control of encrypted communications between internal employees
and external Internet applications and enabling protection from malware
hidden in encrypted sessions and the management of rogue applications.
-- New Customers -- Blue Coat signed on over 300 new customers during the
quarter, including US Cellular, Cox Enterprises, ESPN, and
Telecommunication of Thailand.
-- Expansion in Asia-Pacific Region -- During the second quarter, Blue Coat
expanded to nine locations in the Asia-Pacific region in response to
increased demand for proxy solutions.
-- U.S. Government Certification -- Blue Coat's ProxySG(TM) operating system
was certified for use in all U.S. government installations and in other
countries that are participants in the Common Criteria Recognition
Arrangement.
-- ProxyAV(TM) -- Blue Coat's ProxyAV(TM) began "on-proxy" support of
Kaspersky Lab's award-winning anti-virus engine during the second
quarter, increasing the "best of breed" choice we offer on our platform,
expanding our protection capabilities and enhancing our solution for the
needs of mobile operators.
-- Partnership with LogLogic, Inc. -- During the second quarter, analytical
capabilities were added to ProxySG(TM) for Sarbanes-Oxley compliance,
legal inquiries and network forensics through complimentary technology
from LogLogic, Inc.
-- Branch Office Proxy Appliance -- Since introducing the ProxySG(TM) 200
Series appliance during the first quarter of fiscal 2006, Blue Coat has
been able to expand the reach of its platform throughout the enterprise.
The smaller scale appliance allows the enterprise IT organization to
extend the same Web policy controls in place at headquarters out to every
branch office.
Financial Outlook
For the third fiscal quarter of 2006 ending January 31, 2006, the Company
currently anticipates sequential growth in net revenue of 4% - 7%. GAAP net
income is expected to be in the range of $4.4 - $5.1 million, or $0.30 - $0.34
per diluted share. On a non-GAAP basis, net income is expected to be $4.7 - $5.4
million, or $0.32 - $0.36 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 888-428-4479 (toll-free) or 612-332-0107 (toll call) with the passcode:
758622. A replay of the call will be available starting November 15, 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: 758622.
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 25,000 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' expectations, beliefs, intentions or
strategies regarding the future, and including statements regarding the
capabilities and expected performance of Blue Coat Systems' 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.
Forward-looking statements involve risks and uncertainties, which could cause
actual results to differ materially from those projected. These 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, and other
reports filed from time to time with the Securities and Exchange Commission.
NOTE: 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)
October 31, April 30,
2005 2005
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 60,620 $ 47,264
Accounts receivable, net 18,815 11,541
Inventories 955 350
Prepaid expenses and other current assets 3,929 3,460
Total current assets 84,319 62,615
Property and equipment, net 6,846 3,763
Restricted investments 1,855 1,855
Goodwill 24,753 24,753
Identifiable intangible assets, net 3,386 3,993
Other assets 888 883
Total assets $ 122,047 $ 97,862
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,642 $ 3,743
Accrued payroll and related benefits 4,288 3,468
Deferred revenue 20,546 13,592
Accrued restructuring 1,943 2,729
Other accrued liabilities 4,626 3,849
Total current liabilities 37,045 27,381
Accrued restructuring, less current portion 359 914
Deferred rent, less current portion 583 --
Deferred revenue, less current portion 5,105 3,318
Total liabilities 43,092 31,613
Commitments and Contingencies
Stockholders' equity:
Preferred stock -- --
Common stock 2 1
Additional paid-in capital 932,343 927,184
Treasury stock (903) (903)
Deferred stock compensation (3) (10)
Accumulated deficit (852,480) (860,024)
Accumulated other comprehensive income (loss) (4) 1
Total stockholders' equity 78,955 66,249
Total liabilities and stockholders' equity $ 122,047 $ 97,862
BLUE COAT SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
------------------------------------------ October 31,
October 31, July 31, October 31, ---------------------------
2005 2005 2004 2005 2004
------------ ------------ ------------ ------------ ------------
Net revenue:
Product $ 30,674 $ 27,890 $ 17,906 $ 58,564 $ 35,047
Service 6,028 5,478 4,022 11,506 8,005
Total net revenue 36,702 33,368 21,928 70,070 43,052
Cost of revenue:
Product 8,168 8,565 6,096 16,733 11,798
Service 2,475 1,865 1,401 4,340 2,621
Total cost of
revenue 10,643 10,430 7,497 21,073 14,419
Gross profit 26,059 22,938 14,431 48,997 28,633
Operating expenses:
Research and
development 5,928 5,365 3,891 11,293 7,672
Sales and marketing 12,937 11,669 7,871 24,606 14,802
General and
administrative 3,095 2,678 2,077 5,773 3,776
Amortization of
intangible assets 174 174 152 348 304
Total operating
expenses 22,134 19,886 13,991 42,020 26,554
Operating income 3,925 3,052 440 6,977 2,079
Interest income 458 367 150 825 242
Other income (expense) (67) 57 (3) (10) 16
Income before
income taxes 4,316 3,476 587 7,792 2,337
Provision for
income taxes 158 90 (20) 248 50
Net income $ 4,158 $ 3,386 $ 607 $ 7,544 $ 2,287
Basic net income per
common share $ 0.33 $ 0.27 $ 0.05 $ 0.60 $ 0.21
Diluted net income
per common share $ 0.28 $ 0.24 $ 0.05 $ 0.53 $ 0.18
Shares used in computing
basic net income
per common share 12,705 12,353 11,197 12,529 11,131
Shares used in computing
diluted net income
per common share 14,651 13,884 12,283 14,326 12,557
BLUE COAT SYSTEMS, INC.
RECONCILIATION OF NON-GAAP TO GAAP NET INCOME AND EPS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
------------------------------------------ October 31,
October 31, July 31, October 31, ---------------------------
2005 2005 2004 2005 2004
------------ ------------ ------------ ------------ ------------
Net income excluding
certain charges and
benefits (Non-GAAP) $ 4,734 $ 3,690 $ 1,117 $ 8,424 $ 3,313
Amortization of
intangible assets
(Cost of revenue) (130) (130) -- (260) --
Amortization of
intangible assets
(Opex) (174) (174) (152) (348) (304)
Write-off of
capitalized software (272) -- -- (272) --
Stock-based
compensation -- -- (358) -- (722)
Net income $ 4,158 $ 3,386 $ 607 $ 7,544 $ 2,287
Diluted net income per
common share excluding
certain charges and
benefits (Non-GAAP) $ 0.32 $ 0.27 $ 0.09 $ 0.59 $ 0.26
Amortization of
intangible assets
(Cost of revenue) $ (0.01) (0.01) -- (0.02) --
Amortization of
intangible assets
(Opex) (0.01) (0.02) (0.01) (0.02) (0.02)
Write-off of
capitalized software (0.02) -- -- (0.02) --
Stock-based
compensation -- -- (0.03) -- (0.06)
Diluted net income
per share $ 0.28 $ 0.24 $ 0.05 $ 0.53 $ 0.18
Shares used in computing
diluted net income
per common share 14,651 13,884 12,283 14,326 12,557
SOURCE Blue Coat Systems, Inc.
-0- 11/15/2005
/CONTACT: investors, Carla Chun, +1-408-220-2318, or
carla.chun@bluecoat.com, or media, Steve Schick, +1-408-220-2076, or
steve.schick@bluecoat.com, both of Blue Coat Systems/
/Web site: http://www.bluecoat.com/
(BCSI)