Gigamon Reports Third Quarter 2014 Financial Results

SANTA CLARA, Calif., Oct. 23, 2014 /PRNewswire/ -- Gigamon® Inc. (NYSE: GIMO), a leader in traffic visibility solutions with the innovative Visibility Fabric™ architecture, today released financial results for the third quarter ended September 27, 2014. 

Third Quarter Fiscal 2014 Financial Highlights:

  • Revenues were $39.3 million, up 13% from the second quarter of fiscal 2014 and up 1% year-over-year.
  • GAAP net loss was $3.0 million, or $0.09 per diluted share, compared to GAAP net income of $1.5 million, or $0.05 per diluted share, in the prior-year period.
  • Non-GAAP net income was $1.2 million, or $0.04 per diluted share, compared to non-GAAP net income of $5.7 million, or $0.18 per diluted share, in the prior-year period.

"We are pleased to have delivered sequential revenue growth of 13% and returned to non-GAAP profitability in the third quarter," said Paul Hooper, chief executive officer of Gigamon. "We achieved solid performance in our Enterprise business, generated strong revenue from North America, and continued to see solid demand for our GigaSMART portfolio. We believe these results reflect a stabilization of our business, and we remain focused on bringing our business back to stronger growth rates as we continue to improve execution across our operations." 

Recent Business Highlights:

  • Expanded the GigaVUE-HC2 portfolio with inline modules addressing the security market, and a module that combines GigaSMART and connectivity features.
  • Collaborated with VMware to extend our visibility portfolio to offer a comprehensive visibility solution for the VMware NSX platform.
  • Received the Network World Asia Award for our Visibility Fabric in the Networking and Monitoring Traffic category.
  • Appointed Helmut Wilke as the senior vice president of worldwide sales.

Conference Call Information:

Gigamon will host an investor conference call and live webcast today at 5:00 p.m. ET (2:00 p.m. PT) to discuss its financial results for the third quarter ended September 27, 2014. To access the conference call, dial 888-417-8516, using conference code 8150271. Callers outside the U.S. and Canada should dial 719-325-2354, using conference code 8150271. A replay of the conference call will be available through Thursday, October 30, 2014. To access the replay, please dial 888-203-1112 and enter pass code 8150271. Callers outside the U.S. and Canada should dial 719-457-0820 and enter pass code 8150271. The live webcast will be accessible on Gigamon's investor relations website at http://investor.gigamon.com and will be archived and available on this site for twelve months.

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 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 expectations regarding the evolution of our marketplace, our growth rates, demand for our product portfolio and goals for our Unified Visibility Fabric architecture. 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 June 28, 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™ 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


Nine Months Ended



September 27,


September 28,


September 27,


September 28,



2014


2013


2014


2013

Revenue:








  Product


$          26,180


$          29,146


$          68,804


$          70,019

  Service


13,088


9,840


37,075


27,189

Total revenue


39,268


38,986


105,879


97,208










Cost of revenue:









  Product


7,396


6,789


20,682


18,457

  Service


1,601


993


4,725


3,557

Cost of revenue


8,997


7,782


25,407


22,014

Gross profit


30,271


31,204


80,472


75,194










Operating expenses:









Research and development


10,086


8,958


31,884


31,726

Sales and marketing


17,948


15,485


55,676


54,020

General and administrative


5,217


4,696


15,668


20,893

Total operating expenses


33,251


29,139


103,228


106,639

(Loss) income from operations


(2,980)


2,065


(22,756)


(31,445)

Other income (expense):









Interest income


82


32


216


35

Other income (expense), net


(28)


(52)


(63)


(77)

(Loss) income before income taxes


(2,926)


2,045


(22,603)


(31,487)

Income tax (expense) benefit 


(66)


(502)


(21,093)


22,038

Net (loss) income


(2,992)


1,543


(43,696)


(9,449)

Accretion of preferred stock


-


-


-


(1,088)

Loss attributable to preferred stock holders


-


-


-


1,107

Net (loss) income to common stock holders


$          (2,992)


$            1,543


$        (43,696)


$          (9,430)










Net (loss) income per share attributable to common stock holders:






Basic and Diluted


$            (0.09)


$              0.05


$            (1.36)


$            (0.42)

Weighted-average number of shares used in per share amounts:







Basic 


32,354


30,933


32,028


22,529

Diluted


32,354


32,554


32,028


22,529

 





Gigamon Inc.

Consolidated Balance Sheets

(In thousands)

(unaudited)






September 27,


December 28,


2014


2013

Assets




Current assets:




Cash and cash equivalents

$          27,053


$         79,908

Short-term investments

107,030


58,242

Accounts receivable, net

19,569


24,528

Inventories, net

6,763


1,484

Deferred tax assets

-


3,574

Prepaid expenses and other current assets

7,020


5,606

   Total current assets

167,435


173,342





Property and equipment, net

8,070


4,389

Deferred tax assets, non-current

12


17,315

Other assets

458


471

Total assets

$        175,975


$       195,517





Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$            2,895


$           1,405

Accrued liabilities

15,266


22,401

Deferred revenue

38,432


37,592

Gigamon LLC members' distribution payable

-


476

   Total current liabilities

56,593


61,874





Deferred revenue, non-current

10,956


9,884

Other liabilities

1,717


321





Stockholders' equity:




Common stock

3


3

Treasury stock

(12,469)


(12,469)

Additional paid in capital

171,773


144,810

Accumulated other comprehensive income

27


23

Accumulated deficit

(52,625)


(8,929)

    Total stockholders' equity

106,709


123,438

       Total liabilities and stockholders' equity

$        175,975


$       195,517

 

Gigamon Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)










Three Months Ended


Nine Months Ended


September 27,


September 28,


September 27,


September 28,


2014


2013


2014


2013

Operating activities:








Net (loss) income

$          (2,992)


$            1,543


$        (43,696)


$          (9,449)

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:








Depreciation and amortization

1,473


766


3,710


1,964

Stock-based compensation expense

4,738


7,067


18,635


25,357

Deferred income taxes

-


401


20,877


(22,182)

Inventory write-down

351


183


2,936


645

Loss on disposal of fixed assets

-


-


-


14

Changes in operating assets and liabilities:








Accounts receivable, net

(2,282)


(9,127)


4,959


(6,358)

Inventories

488


2,175


(7,596)


3,071

Prepaid expenses and other assets

(1,087)


(2,499)


(2,184)


(2,269)

Accounts payable

(1,860)


(1,558)


1,489


(1,643)

Accrued and other liabilities

(1,294)


(17,615)


(5,911)


1,770

Deferred revenue

1,345


4,644


1,912


10,125

  Net cash (used in) provided by operating activities

(1,120)


(14,020)


(4,869)


1,045









Investing activities:








Purchases of short-term investments

(11,447)


(40,342)


(72,091)


(40,342)

Proceeds from sales of short-term investments

-


-


2,000


-

Proceeds from maturities of short-term investments

8,095


-


21,507


-

Purchases of property and equipment

(2,368)


(626)


(7,100)


(2,826)

  Net cash used in investing activities

(5,720)


(40,968)


(55,684)


(43,168)









Financing activities:








Proceeds from employee stock purchase plan

2,015


-


5,878


-

Proceeds from exercise of stock options, net

1,344


100


4,915


111

Proceeds from initial public offering, net of costs

-


(1,677)


(8)


95,391

Shares repurchased for tax withholdings on vesting of restricted stock units and other exercises

(389)


-


(2,611)


-

Distribution of income to Gigamon LLC members

-


100


(476)


(6,997)

  Net cash provided by (used in) financing activities

2,970


(1,477)


7,698


88,505

Net (decrease) increase in cash and cash equivalents

(3,870)


(56,465)


(52,855)


46,382

Cash and cash equivalents at beginning of period

30,923


121,522


79,908


18,675

Cash and cash equivalents at end of period

$          27,053


$          65,057


$          27,053


$          65,057

 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages)

(unaudited)














Three Months Ended


Nine Months Ended




September 27,


September 28,


September 27,


September 28,




2014


2013


2014


2013

Revenue


$       39,268


$       38,986


$      105,879


$         97,208











Reconciliation of Gross Profit and Gross Margin to Non-GAAP Gross Profit and Non-GAAP Gross Margin:









GAAP gross profit


$       30,271


$       31,204


$        80,472


$         75,194

Stock-based compensation expense


444


340


1,363


3,049

Stock-based compensation related payroll taxes

2


-


61


-

Performance unit plan compensation expense


-


-


-


353

Non-GAAP gross profit


$       30,717


$       31,544


$        81,896


$         78,596











    GAAP gross margin


77%


80%


76%


77%

    Non-GAAP gross margin


78%


81%


77%


81%











Reconciliation of Operating (Loss) Income and Operating Margin to Non-GAAP Operating Income (Loss) and Non-GAAP Operating Margin:









GAAP operating (loss) income


$       (2,980)


$         2,065


$      (22,756)


$       (31,445)

Stock-based compensation expense


4,738


7,067


18,635


25,357

Stock-based compensation related payroll taxes

41


-


798


-

Performance unit plan compensation expense


-


-


-


20,371

Non-GAAP operating income (loss)


$         1,799


$         9,132


$        (3,323)


$         14,283











Reconciliation of Net (Loss) Income Attributable To Common Stockholders to Non-GAAP Net Income (Loss):









GAAP net (loss) income attributable to common stock holders

$       (2,992)


$         1,543


$      (43,696)


$         (9,430)

 Stock-based compensation expense


4,738


7,067


18,635


25,357

 Stock-based compensation related payroll taxes

41


-


798


-

    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


(604)


(2,872)


22,080


(41,167)

Non-GAAP net income (loss)


$         1,183


$         5,738


$        (2,183)


$           9,923

 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

(In thousands, except per share data)

(unaudited)














Three Months Ended


 Nine Months Ended 




September 27,


September 28,


September 27,


September 28,




2014


2013


2014


2013

Reconciliation of Diluted Net (Loss) Income per Share to Non-GAAP Diluted Net Income (Loss) per Share:









GAAP diluted net (loss) income per share


$          (0.09)


$           0.05


$        (1.36)


$       (0.42)

Stock-based compensation expense


0.15


0.22


0.58


1.13

Stock-based compensation related payroll taxes

-


-


0.02


-

Accretion of preferred stock


-


-


-


0.05

Loss attributable to preferred stock holders 


-


-


-


(0.05)

Performance unit plan compensation expense


-


-


-


0.90

Tax benefit upon conversion of LLC to a C corporation

-


-


-


0.66

Income tax effect on non-GAAP adjustments


(0.02)


(0.09)


0.69


(1.83)

Impact of difference in number of GAAP and non-GAAP diluted shares

-


-


-


(0.10)

Non-GAAP diluted net income (loss) per share


$            0.04


$           0.18


$        (0.07)


$        0.34











Reconciliation of Diluted Weighted-Average Number of Shares to Non-GAAP Diluted Weighted-Average Number of Shares:









GAAP diluted weighted-average number of shares


32,354


32,554


32,028


22,529

Dilutive impact due to stock-based compensation

898


223


-


6,288

Non-GAAP diluted weighted-average number of shares

33,252


32,777


32,028


28,817

 

Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations

For the Three and Nine Months Ended September 27, 2014 and September 28, 2013

(In thousands, except per share amounts and percentages)

(unaudited)

























(In thousands)

Three Months Ended September 27, 2014


Three Months Ended September 28, 2013


Nine Months Ended September 27, 2014


Nine Months Ended September 28, 2013


As Reported


Adjustments


Non-GAAP


As Reported


Adjustments


Non-GAAP


As Reported


Adjustments


Non-GAAP


As Reported


Adjustments


Non-GAAP

Revenue:
























  Product

$   26,180


$         -


$ 26,180


$   29,146


$        -


$  29,146


$    68,804


$        -


$ 68,804


$    70,019


$           -


$70,019

  Service

13,088


-


13,088


9,840


-


9,840


37,075


-


37,075


27,189


-


27,189

Total revenue

39,268


-


39,268


38,986


-


38,986


105,879


-


105,879


97,208


-


97,208

























Cost of revenue:
























  Product (1) (3)

7,396


(288)


7,108


6,789


(129)


6,660


20,682


(829)


19,853


18,457


(2,093)


16,364

  Service (1) (3)

1,601


(158)


1,443


993


(211)


782


4,725


(595)


4,130


3,557


(1,309)


2,248


8,997


(446)


8,551


7,782


(340)


7,442


25,407


(1,424)


23,983


22,014


(3,402)


18,612

Gross profit

30,271


446


30,717


31,204


340


31,544


80,472


1,424


81,896


75,194


3,402


78,596

























Product Gross Margin

72%




73%


77%




77%


70%




71%


74%




77%

Service Gross Margin

88%




89%


90%




92%


87%




89%


87%




92%

Total Gross Margin

77%




78%


80%




81%


76%




77%


77%




81%

























Operating expenses:
























Research and development (1) (3)

10,086


(1,288)


8,798


8,958


(2,468)


6,490


31,884


(6,335)


25,549


31,726


(14,034)


17,692

Sales and marketing (1) (3)

17,948


(1,095)


16,853


15,485


(2,735)


12,750


55,676


(6,501)


49,175


54,020


(16,418)


37,602

General and administrative (1) (3)

5,217


(1,950)


3,267


4,696


(1,524)


3,172


15,668


(5,173)


10,495


20,893


(11,874)


9,019

Total operating expenses

33,251


(4,333)


28,918


29,139


(6,727)


22,412


103,228


(18,009)


85,219


106,639


(42,326)


64,313

(Loss) income from operations

(2,980)


4,779


1,799


2,065


7,067


9,132


(22,756)


19,433


(3,323)


(31,445)


45,728


14,283

Other income (expense):
























Interest income

82


-


82


32


-


32


216


-


216


35


-


35

Other expense, net

(28)


-


(28)


(52)


-


(52)


(63)


-


(63)


(77)


-


(77)

(Loss) income before income taxes

(2,926)


4,779


1,853


2,045


7,067


9,112


(22,603)


19,433


(3,170)


(31,487)


45,728


14,241

Income tax (expense) benefit (2) (4) (5)

(66)


(604)


(670)


(502)


(2,872)


(3,374)


(21,093)


22,080


987


22,038


(26,356)


(4,318)

Net (loss) income

(2,992)


4,175


1,183


1,543


4,195


5,738


(43,696)


41,513


(2,183)


(9,449)


19,372


9,923

Accretion of preferred stock

-


-


-


-


-


-


-


-


-


(1,088)


1,088


-

Loss attributable to preferred stock holders

-


-


-


-


-


-


-


-


-


1,107


(1,107)


-

Net (loss) income to common stock holders

$    (2,992)


$    4,175


$   1,183


$     1,543


$  4,195


$    5,738


$  (43,696)


$ 41,513


$  (2,183)


$     (9,430)


$   19,353


$  9,923

























Net (loss) income per share attributable to common stockholders:
























Basic

$      (0.09)


$      0.13


$     0.04


$       0.05


$    0.14


$      0.19


$      (1.36)


$     1.29


$    (0.07)


$       (0.42)


$       0.86


$    0.44

Diluted

$      (0.09)


$      0.13


$     0.04


$       0.05


$    0.13


$      0.18


$      (1.36)


$     1.29


$    (0.07)


$       (0.42)


$       0.76


$    0.34

Weighted-average number of shares used in per share amounts:
























Basic

32,354


-


32,354


30,933


-


30,933


32,028


-


32,028


22,529


-


22,529

Diluted

32,354


898


33,252


32,554


223


32,777


32,028


-


32,028


22,529


6,288


28,817

Notes:


















(1) Includes stock-based compensation expense and related payroll taxes in the three and nine months ended September 27, 2014 and September 28, 2013.

(2) Includes income tax effect on non-GAAP adjustments in the three and nine months ended September 27, 2014 and September 28, 2013.

(3) Includes performance unit plan compensation related expenses in the nine months ended September 28, 2013.



(4) Amount for the nine months ended September 28, 2013 includes tax benefit recorded upon the conversion from an LLC to a C Corporation on May 31, 2013.

(5) Amount for the nine months ended September 27, 2014 includes establishment of valuation allowance against the deferred tax asset .


 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gigamon-reports-third-quarter-2014-financial-results-170568927.html

SOURCE Gigamon Inc.

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.