Riverbed Technology Reports Third Quarter 2008 Financial Results
• Record revenue of $86.5 million increases 37% over prior year
• More than 500 new customers added in the September quarter
• Generated more than $26 million in operating cash flow
• Cash and marketable securities total $281.5 million at
September 30 and zero debt
San Francisco, CA, October 23, 2008 – Riverbed Technology (Nasdaq:RVBD), the technology and market leader in wide-area data services (WDS), today reported financial results for its third fiscal quarter ended September 30, 2008 (Q3-08). Revenues for Q3-08 were $86.5 million. Revenues for Q3-08 increased 36.7% from $63.3 million reported in the third quarter of fiscal year 2007 (Q3-07) and increased 6.1% from $81.6 million reported in the second quarter of fiscal year 2008 (Q2-08).
Reporting on a GAAP basis, the net loss for Q3-08 was $12.4 million, or $0.17 loss per diluted share. Q3-08 GAAP results include a one-time $11.0 million charge for the settlement of the patent infringement lawsuit with Quantum Corporation. This compares to a GAAP net loss of $0.9 million in Q2-08, or $0.01 loss per diluted share, and GAAP net income of $2.8 million, or $0.04 per diluted share, in Q3-07.
Non-GAAP net income for Q3-08 was $11.0 million, or $0.15 per share, as compared to non-GAAP net income for Q2-08 of $9.9 million, or $0.13 per share, and non-GAAP net income for Q3-07 of $12.4 million, or $0.17 per share. Q3-08 Non-GAAP net income excludes stock-based compensation, stock-based payroll expenses, and related income tax effects, and a one-time $11.0 million charge for the legal settlement with Quantum. Q2-08 and Q3-07 non-GAAP net income excludes stock-based compensation, stock-based payroll expenses, and related income tax effects. A reconciliation between GAAP and non-GAAP information is contained in the tables below.
"We are very pleased with the results we delivered for our third quarter," stated Jerry M. Kennelly, chairman, president and chief executive officer of Riverbed(R). "Despite weakness in the global economy, we generated record revenues. Our outperformance in the third quarter was driven by strength in the government vertical, continued deployment within our customer base, and new customer purchases. The cost to deploy Riverbed Steelhead(R) products is fairly low, while the business value they deliver in terms of improved application performance, IT efficiency, and worker productivity is substantial. We believe this return on investment makes WAN optimization a high priority even in a tighter spending environment."
Q3-08 Financial Highlights
- Record revenue of $86.5 million, up 6% sequentially and 37% year-over-year
- Cumulative customer count now exceeds 5,000 after adding more than 500 new customers
- Accounts receivable days sales outstanding improved to 45 days as of September 30, 2008, from 50 days as of June 30, 2008
- Cash flow from operations increased to $26.5 million compared to $9.8 million in Q2-08 and $14.5 million in Q3-07
- Cash, cash equivalents, and marketable securities increased 5% sequentially and 22% year-over-year to $281.5 million after the repurchase of $12.5 million of Riverbed stock in Q3-08
Q3-08 Business Highlights
- Announced an OEM agreement to embed VMware software as the virtualization platform for the Riverbed Services Platform. With the VMware platform inside Steelhead appliances, enterprises can further consolidate their IT infrastructure and improve manageability by running up to five remote office virtual edge services, without the need for separate dedicated servers.
- Accepted into the Microsoft Protocol Optimization Licensing Program, enabling the company to build further on its expertise and success accelerating and optimizing Microsoft Windows-based applications over the wide-area network.
- Continued to strengthen its service provider channel, announcing partnerships with Digital Hands and Pacnet for managed services.
- The company outlined its technology vision at its Analyst Meeting in September, including the vision for the Atlas appliance.
Conference Call
Riverbed will host a conference call today, October 23, 2008, at 2:45 p.m. PT (5:45 p.m. ET) to discuss its third quarter results. The call will be broadcast live over the Internet at www.riverbed.com/investors. A replay of the conference call will also be available via webcast at www.riverbed.com/investors for
12 months.
Steelhead Products
Riverbed WDS solutions enable organizations of all sizes to overcome a host of severe problems, including poor application performance and insufficient bandwidth at remote sites. By speeding the performance of applications between data centers, remote offices and mobile workers by five to 50 times and in some cases up to 100 times, the Riverbed award-winning Steelhead WDS products enable
companies to consolidate IT, improve backup and replication processes to ensure data integrity, and improve staff productivity and collaboration. Steelhead products have been deployed in organizations ranging from the world's largest corporations with offices around the globe to small companies with a couple of sites that are just miles apart. To learn more, view Riverbed's demo: www.riverbed.com/pr/jack.
Forward Looking Statements
This press release contains forward-looking statements, including statements relating to the expected demand for Riverbed's products and services, and statements relating to Riverbed's ability to meet the needs of distributed organizations. 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-Q filed with the SEC on July 29, 2008. 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 Technology is the technology and market leader in wide-area data services (WDS) solutions for companies worldwide. By enabling application performance over the wide area network (WAN) that is orders of magnitude faster than what users experience today, Riverbed is changing the way people work, and enabling a distributed workforce that can collaborate as if they were local. Additional
information about Riverbed (Nasdaq:RVBD) is available at www.riverbed.com.
Riverbed Technology, Riverbed, Steelhead, RiOS, Interceptor, and the Riverbed logo are trademarks or registered trademarks of Riverbed Technology, Inc. All other trademarks used or mentioned herein belong to their respective owners.
Riverbed Technology, Inc.
GAAP Condensed Consolidated
Statements of Operations
In thousands, except per
share amounts
Unaudited
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
---------- --------- ---------- ---------
Revenue:
Product $ 65,238 $ 52,508 $ 185,574 $ 133,335
Support and services 21,309 10,802 55,547 26,761
---------- --------- ---------- ---------
Total revenue 86,547 63,310 241,121 160,096
Cost of revenue:
Cost of product 16,653 14,029 45,153 37,053
Cost of support and
services 7,174 4,111 20,151 9,999
---------- --------- ---------- ---------
Total cost of revenue 23,827 18,140 65,304 47,052
---------- --------- ---------- ---------
Gross profit 62,720 45,170 175,817 113,044
Operating expenses:
Sales and marketing 34,855 25,139 100,992 63,035
Research and development 14,582 10,890 43,278 27,384
General and administrative 10,419 7,177 29,925 16,814
Other charges 11,000 - 11,000 -
---------- --------- ---------- ---------
Total operating
expenses 70,856 43,206 185,195 107,233
---------- --------- ---------- ---------
Operating income (loss) (8,136) 1,964 (9,378) 5,811
Other income, net 1,287 2,754 5,059 7,028
---------- --------- ---------- ---------
Income (loss) before
provision for income
taxes (6,849) 4,718 (4,319) 12,839
Provision for income taxes 5,574 1,950 8,335 2,868
---------- --------- ---------- ---------
Net income (loss) $ (12,423) $ 2,768 $ (12,654) $ 9,971
========== ========= ========== =========
Net income (loss) per share,
basic $ (0.17) $ 0.04 $ (0.18) $ 0.15
Net income (loss) per share,
diluted $ (0.17) $ 0.04 $ (0.18) $ 0.14
Shares used in computing
basic net income (loss) per
share 71,005 69,069 70,915 67,397
Shares used in computing
diluted net income (loss)
per share 71,005 74,360 70,915 72,934
Stock-based compensation
expense included in above:
Cost of product $ 54 $ 27 $ 131 $ 68
Cost of support and
services 1,125 806 3,470 1,798
Sales and marketing 5,921 4,455 17,869 10,741
Research and development 3,419 2,511 9,879 5,958
General and administrative 2,512 1,564 6,808 3,614
---------- --------- ---------- ---------
Total stock-based
compensation
expense $ 13,031 $ 9,363 $ 38,157 $ 22,179
========== ========= ========== =========
Riverbed Technology, Inc.
Non-GAAP Condensed Consolidated Statements of Operations
In thousands, except per share amounts
Unaudited
Three months Three months
ended ended
September 30, September 30, % change
----------------- ----------------- ---------
% of % of
2008 Revenues 2007 Revenues
------- --------- ------- ---------
Revenue:
Product $65,238 75% $52,508 83% 24%
Support and
services 21,309 25% 10,802 17% 97%
------- --------- ------- ---------
Total
revenue 86,547 100% 63,310 100% 37%
Cost of revenue:
Cost of product 16,598 25% (a) 14,002 27% (a) 19%
Cost of support (a) (a)
and services 6,049 28% 3,304 31% 83%
------- --------- ------- ---------
Total cost
of revenue 22,647 26% 17,306 27% 31%
------- --------- ------- ---------
Gross profit 63,900 74% 46,004 73% 39%
Operating
expenses:
Sales and
marketing 28,924 33% 20,518 32% 41%
Research and
development 11,151 13% 8,280 13% 35%
General and
administrative 7,885 9% 5,569 9% 42%
Other charges - -
------- --------- ------- ---------
Total
operating
expenses 47,960 55% 34,367 54% 40%
------- --------- ------- ---------
Operating income 15,940 18% 11,637 18% 37%
Other income, net 1,287 1% 2,754 4% -53%
------- --------- ------- ---------
Income before
provision for
income taxes 17,227 20% 14,391 23% 20%
Provision for
income taxes 6,236 7% 1,950 3% 220%
------- --------- ------- ---------
Net income $10,991 13% $12,441 20% -12%
======= ========= ======= =========
Net income per
share, basic $ 0.15 $ 0.18
Net income per
share, diluted $ 0.15 $ 0.17
Shares used in
computing basic
net income per
share 71,005 69,069
Shares used in
computing diluted
net income per
share 74,472 75,002
(a) Cost of product and cost of support and services are reflected as
percent of product and support and services revenues,
respectively.
Riverbed Technology, Inc.
Non-GAAP Condensed Consolidated Statements of Operations
In thousands, except per share amounts
Unaudited
Nine months ended Nine months ended
September 30, September 30, % change
----------------- ----------------- --------
% of % of
2008 Revenues 2007 Revenues
-------- -------- -------- --------
Revenue:
Product $185,574 77% $133,335 83% 39%
Support and
services 55,547 23% 26,761 17% 108%
-------- -------- -------- --------
Total
revenue 241,121 100% 160,096 100% 51%
Cost of revenue:
Cost of product 45,020 24% (a) 36,985 28% (a) 22%
Cost of support (a) (a)
and services 16,677 30% 8,199 31% 103%
-------- -------- -------- --------
Total cost
of revenue 61,697 26% 45,184 28% 37%
-------- -------- -------- --------
Gross profit 179,424 74% 114,912 72% 56%
Operating expenses:
Sales and
marketing 83,080 34% 51,983 32% 60%
Research and
development 33,328 14% 21,240 13% 57%
General and
administrative 23,087 10% 13,103 8% 76%
Other charges - -
-------- -------- -------- --------
Total
operating
expenses 139,495 58% 86,326 53% 62%
-------- -------- -------- --------
Operating income 39,929 17% 28,586 18% 40%
Other income, net 5,059 2% 7,028 4% -28%
-------- -------- -------- --------
Income before
provision for
income taxes 44,988 19% 35,614 22% 26%
Provision for
income taxes 16,173 7% 2,868 2% 464%
-------- -------- -------- --------
Net income $ 28,815 12% $ 32,746 20% -12%
======== ======== ======== ========
Net income per
share, basic $ 0.41 $ 0.49
Net income per
share, diluted $ 0.39 $ 0.45
Shares used in
computing basic
net income per
share 70,915 67,397
Shares used in
computing diluted
net income per
share 74,503 73,440
(a) Cost of product and cost of support and services are reflected as
percent of product and support and services revenues,
respectively.
Riverbed Technology, Inc.
Non-GAAP Condensed Consolidated Statements of Operations
In thousands, except per share amounts
Unaudited
Three months Three months
ended ended
September 30, June 30, % change
---------------- ---------------- --------
% of % of
2008 Revenues 2008 Revenues
------- -------- ------- --------
Revenue:
Product $65,238 75% $62,607 77% 4%
Support and
services 21,309 25% 18,985 23% 12%
------- -------- ------- --------
Total revenue 86,547 100% 81,592 100% 6%
Cost of revenue:
Cost of product 16,598 25% (a) 14,521 23% (a) 14%
Cost of support (a) (a)
and services 6,049 28% 5,649 30% 7%
------- -------- ------- --------
Total cost of
revenue 22,647 26% 20,170 25% 12%
------- -------- ------- --------
Gross profit 63,900 74% 61,422 75% 4%
Operating expenses:
Sales and
marketing 28,924 33% 28,354 35% 2%
Research and
development 11,151 13% 11,512 14% -3%
General and
administrative 7,885 9% 7,684 9% 3%
Other charges - -
------- -------- ------- --------
Total
operating
expenses 47,960 55% 47,550 58% 1%
------- -------- ------- --------
Operating income 15,940 18% 13,872 17% 15%
Other income, net 1,287 1% 1,472 2% -13%
------- -------- ------- --------
Income before
provision for
income taxes 17,227 20% 15,344 19% 12%
Provision for
income taxes 6,236 7% 5,417 7% 15%
------- -------- ------- --------
Net income $10,991 13% $ 9,927 12% 11%
======= ======== ======= ========
Net income per share,
basic $ 0.15 $ 0.14
Net income per share,
diluted $ 0.15 $ 0.13
Shares used in
computing basic net
income per share 71,005 71,143
Shares used in
computing diluted
net income per share 74,472 74,610
(a) Cost of product and cost of support and services are reflected as
percent of product and support and services revenues,
respectively.
Riverbed Technology, Inc.
GAAP to Non-GAAP Reconciliation
In thousands, except per share amounts
Unaudited
Three months ended
September 30, 2008
--------------------------------------
GAAP Adjustments Non-GAAP
-------------- ----------- --------
Reconciliation
of gross
profit:
Total revenue $ 86,547 $ - $ 86,547
Total cost of
revenue 23,827 (1,180) (a) 22,647
-------------- ----------- --------
Gross profit $ 62,720 $ 1,180 $ 63,900
============== =========== ========
Reconciliation
of operating
expenses:
Sales and
marketing $ 34,855 $ (5,931) (a)$ 28,924
Research and
development 14,582 (3,431) (a) 11,151
General and
administrative 10,419 (2,534) (a) 7,885
Other charges 11,000 (11,000) (d) -
-------------- ----------- --------
Total
operating
expenses $ 70,856 $ (22,896) $ 47,960
============== =========== ========
Reconciliation
of operating
income (loss),
net income
(loss) and net
income (loss)
per share:
Operating
income (loss) $ (8,136) $ 24,076 (a)$ 15,940
Income (loss)
before
provision for
income taxes $ (6,849) $ 24,076 (a)$ 17,227
Income tax
provision $ 5,574 $ 662 (b)$ 6,236
Net income
(loss) $ (12,423) $ 23,414 $ 10,991
Net income
(loss) per
share, basic $ (0.17) $ 0.15
Net income
(loss) per
share, diluted$ (0.17) $ 0.15
Shares used in
computing
basic net
income (loss)
per share 71,005 71,005
Shares used in
computing
diluted net
income (loss)
per share 71,005 3,467 (c) 74,472
Nine months ended
September 30, 2008
--------------------------------------
GAAP Adjustments Non-GAAP
------------- ----------- ---------
Reconciliation
of gross
profit:
Total revenue $ 241,121 $ - $ 241,121
Total cost of
revenue 65,304 (3,607) (a) 61,697
------------- ----------- ---------
Gross profit $ 175,817 $ 3,607 $ 179,424
============= =========== =========
Reconciliation
of operating
expenses:
Sales and
marketing $ 100,992 $ (17,912) (a)$ 83,080
Research and
development 43,278 (9,950) (a) 33,328
General and
administrative 29,925 (6,838) (a) 23,087
Other charges 11,000 (11,000) (d) -
------------- ----------- ---------
Total
operating
expenses $ 185,195 $ (45,700) $ 139,495
============= =========== =========
Reconciliation
of operating
income (loss),
net income
(loss) and net
income (loss)
per share:
Operating
income (loss) $ (9,378) $ 49,307 (a)$ 39,929
Income (loss)
before
provision for
income taxes $ (4,319) $ 49,307 (a)$ 44,988
Income tax
provision $ 8,335 $ 7,838 (b)$ 16,173
Net income
(loss) $ (12,654) $ 41,469 $ 28,815
Net income
(loss) per
share, basic $ (0.18) $ 0.41
Net income
(loss) per
share, diluted $ (0.18) $ 0.39
Shares used in
computing
basic net
income (loss)
per share 70,915 70,915
Shares used in
computing
diluted net
income (loss)
per share 70,915 3,588 (c) 74,503
Use of Non-GAAP Financial Information:
To supplement our condensed consolidated financial statements
presented on a GAAP basis, Riverbed uses non-GAAP measures of
operating results, net income (loss) and net income (loss) per
share, which are adjusted to exclude stock-based compensation
expense and payroll tax expense related to stock option exercises,
other one time charges, exclude our tax valuation allowance and
certain other extraordinary items from the tax rate, and to include
dilutive shares where applicable. We believe these adjustments are
appropriate to enhance an overall understanding of our past
financial performance and also our prospects for the future. These
adjustments to our current period GAAP results are made with the
intent of providing both management and investors a more complete
understanding of Riverbed's underlying operating results and trends
and our marketplace performance. The non-GAAP results are an
indication of our baseline performance that are considered by
management for the purpose of making operational decisions. In
addition, these non-GAAP results are the primary indicators
management uses as a basis for our planning and forecasting of
future periods. The presentation of this additional information is
not meant to be considered in isolation or as a substitute for net
income (loss) or basic and diluted net income (loss) per share
prepared in accordance with generally accepted accounting principles
in the United States. Non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles and are subject
to limitations.
GAAP to Non-GAAP Reconciliations:
---------------------------------------------------------------------
(a) Stock-based compensation expense and payroll tax on stock option
exercises
--------------------------------------
Three months ended
September 30, 2008
--------------------------------------
Payroll tax
Stock-based on stock
compensation option
expense exercises Total
-------------- ----------- --------
Cost of revenue $ 1,179 $ 1 $ 1,180
Sales and
marketing 5,921 10 5,931
Research and
development 3,419 12 3,431
General and
administrative 2,512 22 2,534
-------------- ----------- --------
$ 13,031 $ 45 $ 13,076
============== =========== ========
--------------------------------------
Nine months ended
September 30, 2008
--------------------------------------
Payroll tax
Stock-based on stock
compensation option
expense exercises Total
-------------- ----------- --------
Cost of revenue $ 3,601 $ 6 $ 3,607
Sales and
marketing 17,869 43 17,912
Research and
development 9,879 71 9,950
General and
administrative 6,808 30 6,838
-------------- ----------- --------
$ 38,157 $ 150 $ 38,307
============== =========== ========
Excluded amount represents stock-based compensation expense. Stock-
based compensation is a non-cash expense accounted for in accordance
with the intrinsic value method under Accounting Principles Board
No. 25 through December 31, 2005, and with the fair value
recognition provisions of Statement of Financial Accounting
Standards No. 123(R) effective January 1, 2006. While a large
component of our expense, we believe investors want to exclude the
effects of stock-based compensation expense in order to compare our
financial performance with that of other companies and between time
periods.
---------------------------------------------------------------------
---------------------------------------------------------------------
(b) Income tax provision
Three months ended
September 30, 2008
---------------------------------
GAAP provision
for income
taxes $ 5,574
Effects of
exclusion of
stock-based
compensation
and valuation
allowance 662
--------------
Non-GAAP
provision for
income taxes $ 6,236
==============
Nine months ended
September 30, 2008
-------------------------
GAAP provision
for income
taxes $ 8,335
Effects of
exclusion of
stock-based
compensation
and valuation
allowance 7,838
-----------
Non-GAAP
provision for
income taxes $ 16,173
===========
The non-GAAP tax rate excludes the effect of stock-based compensation
expense as well as discrete tax benefits on stock option exercises.
Additionally, the non-GAAP tax rate does not assume a full valuation
allowance on our deferred tax assets.
----------------------------------------------------------------------
(c) Non-GAAP diluted earnings per share and non-GAAP diluted weighted
average shares outstanding were calculated excluding the effects of
expensing stock options under SFAS 123(R).
(d) Excluded amount represents litigation settlement.
Riverbed Technology, Inc.
GAAP to Non-GAAP Reconciliation
In thousands, except per share amounts
Unaudited
-------------------------------------
Three months ended
September 30, 2007
-------------------------------------
GAAP Adjustments Non-GAAP
------------- ----------- --------
Reconciliation
of gross
profit:
Total revenue $ 63,310 $ - $ 63,310
Total cost of
revenue 18,140 (834) (a) 17,306
------------- ----------- --------
Gross profit $ 45,170 $ 834 $ 46,004
============= =========== ========
Reconciliation
of operating
expenses:
Sales and
marketing $ 25,139 $ (4,621) (a)$ 20,518
Research and
development 10,890 (2,610) (a) 8,280
General and
administrative 7,177 (1,608) (a) 5,569
------------- ----------- --------
Total
operating
expenses $ 43,206 $ (8,839) $ 34,367
============= =========== ========
Reconciliation
of operating
income, net
income and net
income per
share:
Operating
income $ 1,964 $ 9,673 (a)$ 11,637
Net income $ 2,768 $ 9,673 $ 12,441
Net income per
share, basic $ 0.04 $ 0.18
Net income per
share, diluted $ 0.04 $ 0.17
Shares used in
computing
basic net
income per
share 69,069 69,069
Shares used in
computing
diluted net
income per
share 74,360 642 (b) 75,002
-------------------------------------
Nine months ended
September 30, 2007
-------------------------------------
GAAP Adjustments Non-GAAP
------------- ----------- --------
Reconciliation
of gross
profit:
Total revenue $ 160,096 $ - $160,096
Total cost of
revenue 47,052 (1,868) (a) 45,184
------------- ----------- --------
Gross profit $ 113,044 $ 1,868 $114,912
============= =========== ========
Reconciliation
of operating
expenses:
Sales and
marketing $ 63,035 $ (11,052) (a)$ 51,983
Research and
development 27,384 (6,144) (a) 21,240
General and
administrative 16,814 (3,711) (a) 13,103
------------- ----------- --------
Total
operating
expenses $ 107,233 $ (20,907) $ 86,326
============= =========== ========
Reconciliation
of operating
income, net
income and net
income per
share:
Operating
income $ 5,811 $ 22,775 (a)$ 28,586
Net income $ 9,971 $ 22,775 $ 32,746
Net income per
share, basic $ 0.15 $ 0.49
Net income per
share, diluted $ 0.14 $ 0.45
Shares used in
computing
basic net
income per
share 67,397 67,397
Shares used in
computing
diluted net
income per
share 72,934 506 (b) 73,440
GAAP to Non-GAAP Reconciliations:
---------------------------------------------------------------------
(a) Stock-based compensation expense and payroll tax on stock option
exercises
-------------------------------------
Three months ended
September 30, 2007
-------------------------------------
------------- ----------- --------
Payroll tax
Stock-based on stock
compensation option
expense exercises Total
------------- ----------- --------
Cost of revenue $ 833 $ 1 $ 834
Sales and
marketing 4,455 166 4,621
Research and
development 2,511 99 2,610
General and
administrative 1,564 44 1,608
------------- ----------- --------
$ 9,363 $ 310 $ 9,673
============= =========== ========
-------------------------------------
Nine months ended
September 30, 2007
-------------------------------------
------------- ----------- --------
Payroll tax
Stock-based on stock
compensation option
expense exercises Total
------------- ----------- --------
Cost of revenue $ 1,866 $ 2 $ 1,868
Sales and
marketing 10,741 311 11,052
Research and
development 5,958 186 6,144
General and
administrative 3,614 97 3,711
------------- ----------- --------
$ 22,179 $ 596 $ 22,775
============= =========== ========
Excluded amount represents stock-based compensation expense. Stock-
based compensation is a non-cash expense accounted for in accordance
with the intrinsic value method under Accounting Principles Board
No. 25 through December 31, 2005, and with the fair value
recognition provisions of Statement of Financial Accounting
Standards No. 123(R) effective January 1, 2006. While a large
component of our expense, we believe investors want to exclude the
effects of stock-based compensation expense in order to compare our
financial performance with that of other companies and between time
periods.
---------------------------------------------------------------------
(b) Non-GAAP diluted earnings per share and non-GAAP diluted weighted
average shares outstanding were calculated excluding the effects of
expensing stock options under SFAS 123(R).
Riverbed Technology, Inc.
GAAP to Non-GAAP Reconciliation
In thousands, except per share amounts
Unaudited
-------------------------------------
Three months ended
June 30, 2008
-------------------------------------
GAAP Adjustments Non-GAAP
------------- ----------- --------
Reconciliation of gross profit:
Total revenue $ 81,592 $ - $81,592
Total cost of revenue 21,531 (1,361) (a) $20,170
------------- ----------- --------
Gross profit $ 60,061 $ 1,361 $61,422
============= =========== ========
Reconciliation of operating
expenses:
Sales and marketing $ 34,930 $ (6,576) (a) $28,354
Research and development 15,088 (3,576) (a) $11,512
General and administrative 10,133 (2,449) (a) $ 7,684
------------- ----------- --------
Total operating expenses $ 60,151 $ (12,601) $47,550
============= =========== ========
Reconciliation of operating income, net income
and net income per share:
Operating income (loss) $ (90) $ 13,962 (a) $13,872
Income before provision for (a)
income taxes $ 1,382 $ 13,962 $15,344
Income tax provision $ 2,251 $ 3,166 (b) $ 5,417
Net income $ (869) $ 10,796 $ 9,927
Net income per share, basic $ (0.01) $ 0.14
Net income per share, diluted $ (0.01) $ 0.13
Shares used in computing basic
net income per share 71,143 71,143
Shares used in computing diluted
net income per share 71,143 3,467 (c) 74,610
GAAP to Non-GAAP
Reconciliations:
---------------------------------------------------------------------
(a) Stock-based compensation expense and payroll tax on
stock option exercises
Payroll tax
Stock-based on stock
compensation option
expense exercises Total
------------- ----------- --------
Cost of revenue $ 1,356 $ 5 $ 1,361
Sales and marketing 6,559 17 6,576
Research and development 3,559 17 3,576
General and administrative 2,444 5 2,449
------------- ----------- --------
$ 13,918 $ 44 $13,962
============= =========== ========
Excluded amount represents stock-based compensation expense. Stock-
based compensation is a non-cash expense accounted for in accordance
with the intrinsic value method under Accounting Principles Board
No. 25 through December 31, 2005, and with the fair value
recognition provisions of Statement of Financial Accounting
Standards No. 123(R) effective January 1, 2006. While a large
component of our expense, we believe investors want to exclude the
effects of stock-based compensation expense in order to compare our
financial performance with that of other companies and between time
periods.
---------------------------------------------------------------------
---------------------------------------------------------------------
(b) Income tax provision
GAAP provision for income taxes $ 2,251
Effects of exclusion of stock-
based compensation and
valuation allowance 3,166
-------------
Non-GAAP provision for income
taxes $ 5,417
=============
The non-GAAP tax rate excludes the effect of stock-based compensation
expense as well as discrete tax benefits on stock option exercises.
Additionally, the non-GAAP tax rate does not assume a full valuation
allowance on our deferred tax assets.
---------------------------------------------------------------------
(c) Non-GAAP diluted earnings per share and non-GAAP diluted weighted
average shares outstanding were calculated excluding the effects of
expensing stock options under SFAS 123(R).
Riverbed Technology, Inc.
Supplemental Financial Information
In thousands
Unaudited
Revenue by Geography
----------------------------------------
Q3-07 Q4-07 Q1-08 Q2-08 Q3-08
----------------------------------------
Customers within the United
States $38,736 $46,973 $40,502 $47,596 $54,289
Customers within Europe,
Middle East and Africa 12,661 15,670 19,623 19,270 20,476
Customers within the rest of
the world 11,913 13,667 12,857 14,726 11,782
----------------------------------------
Total revenue $63,310 $76,310 $72,982 $81,592 $86,547
========================================
As a percentage of total
revenues:
Customers within the United
States 61% 62% 55% 58% 63%
Customers within Europe,
Middle East and Africa 20% 21% 27% 24% 24%
Customers within the rest of
the world 19% 17% 18% 18% 13%
----------------------------------------
Total revenue 100% 100% 100% 100% 100%
========================================
Revenue by Sales Channel
----------------------------------------
Q3-07 Q4-07 Q1-08 Q2-08 Q3-08
----------------------------------------
Direct $ 7,516 $ 9,251 $ 8,063 $ 7,290 $ 5,649
Indirect 55,794 67,059 64,919 74,302 80,898
----------------------------------------
Total revenue $63,310 $76,310 $72,982 $81,592 $86,547
========================================
As a percentage of total
revenues:
Direct 12% 12% 11% 9% 7%
Indirect 88% 88% 89% 91% 93%
----------------------------------------
Total revenue 100% 100% 100% 100% 100%
========================================
Riverbed Technology, Inc.
Condensed Consolidated Balance Sheets
In thousands
September 30, December 31,
2008 2007
------------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 117,324 $ 162,979
Marketable securities 164,180 83,103
Trade receivables, net 43,245 50,072
Other receivables 1,022 1,273
Inventory 13,796 9,413
Prepaid expenses and other current assets 10,396 5,136
------------- ------------
Total current assets 349,963 311,976
------------- ------------
Fixed assets, net 21,614 18,826
Other assets 9,146 6,800
------------- ------------
Total assets $ 380,723 $ 337,602
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,539 $ 20,325
Accrued compensation and related benefits 13,029 14,290
Other accrued liabilities 27,469 9,381
Deferred revenue 40,451 26,845
------------- ------------
Total current liabilities 99,488 70,841
------------- ------------
Deferred revenue non-current 9,836 6,634
Other long-term liabilities 302 409
------------- ------------
Total long-term liabilities 10,138 7,043
------------- ------------
Stockholders' equity:
Common stock and additional paid-in-capital 318,067 295,487
Deferred stock-based compensation (1,469) (3,287)
Accumulated deficit (45,189) (32,535)
Accumulated other comprehensive loss (312) 53
------------- ------------
Total stockholders' equity 271,097 259,718
------------- ------------
------------- ------------
Total liabilities and stockholders' equity $ 380,723 $ 337,602
============= ============
Riverbed Technology, Inc.
Condensed Consolidated Statements of Cash Flows
In thousands
Unaudited
Nine months ended
September 30,
--------------------
2008 2007
---------- ---------
Operating activities:
Net income (loss) $ (12,654) $ 9,971
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 7,338 3,418
Stock-based compensation 38,157 22,179
Provision for inventory 4,797 935
Excess tax benefit from employee stock plans (1,427) -
Changes in operating assets and liabilities:
Trade receivables 5,521 (19,645)
Inventory (12,517) (5,394)
Prepaid expenses and other assets (5,065) (174)
Accounts payable and other current liabilities 16,102 12,139
Income taxes payable 4,762 2,645
Deferred revenue 17,385 9,051
---------- ---------
Net cash provided by operating activities 62,399 35,125
Investing activities:
Capital expenditures (10,761) (5,707)
Purchase of available for sale securities (121,077) (69,132)
Proceeds from sales and maturities of available
for sale securities 39,803 10,980
Increase in other assets (1,404) (2,100)
---------- ---------
Net cash used in investing activities (93,439) (65,959)
Financing activities:
Proceeds from public offering, net of expenses - 87,681
Proceeds from issuance of common stock under
employee stock plans, net of repurchases 9,119 7,094
Payments for repurchases of common stock (24,992) -
Excess tax benefit from employee stock plans 1,427 -
---------- ---------
Net cash provided by (used in) financing
activities (14,446) 94,775
Effect of exchange rate changes on cash and cash
equivalents (169) 74
---------- ---------
Net increase (decrease) in cash and cash
equivalents (45,655) 64,015
Cash and cash equivalents at beginning of period 162,979 105,330
---------- ---------
Cash and cash equivalents at end of period $ 117,324 $169,345
========== =========
Source: Riverbed Technology
MEDIA CONTACT
Kristalle Ward
Riverbed Technology
415-247-8140
Kristalle.Ward@riverbed.com
INVESTOR RELATIONS CONTACT
Renee Lyall
Riverbed Technology
415-247-6353
Renee.Lyall@riverbed.com
###
