The result represents an increase of 64% compared to net revenue of $62.4 million for the same quarter last year and a 16% increase on net revenues of $88.2 million in the preceding quarter. Excluding net revenue associated with the acquisition of Packeteer on 6 June, net revenue for the first fiscal quarter of 2009 was $86.4 million.
On a GAAP basis, the company reported a net loss of $5.8 million – or $0.15 per diluted share – in the first quarter of fiscal 2009, compared to net income of $12.5 million or $0.32 per diluted share in the fourth quarter of fiscal 2008.
The company has also reported non-GAAP net income of $6.8 million, or $0.16 per diluted share, in the first quarter of fiscal 2009, compared to non-GAAP net income of $13.1 million, or $0.33 per diluted share, in the fourth quarter of fiscal 2008.
Non-GAPP net income
Non-GAAP net income includes $4.8 million of expense for integration activities related to the acquisition of Packeteer. It excludes $6.1 million in expense related to the write-up of acquired inventory to its assessed fair value, $4.2 million in stock-based compensation expense, $2.1 million in amortization of intangible assets, $1.5 million in restructuring expense related to severance costs and $0.7 million in expenses associated with matters related to the stock option investigation.
Non-GAAP net income includes $2.1 million in additional income tax expense based on a 30% effective tax rate applied to non-GAAP pre-tax income.
In the fourth quarter of fiscal 2008, non-GAAP net income excluded $4.0 million in stock-based compensation expense, $0.4 million in amortization of intangible assets and $1.3 million in expenses associated with matters related to the stock option investigation.
Also excluded from non-GAAP net income in the fourth quarter of fiscal 2008 was a net tax benefit on a GAAP basis of $3.6 million related to the partial reversal of a valuation allowance on deferred tax assets, partially offset by a charge related to the implementation of a new global business structure. Non-GAAP net income also included $1.5 million in additional income tax expense based upon the effective tax rate.
“Now that we have completed the acquisition of Packeteer we’re focusing on integrating the two companies into a single organisation and reaping the cost, management, technology and market synergies of doing so,” commented Brian NeSmith, president and chief executive officer at Blue Coat Systems. “We remain unique with a combination of technologies for WAN and Internet gateway visibility, acceleration and security that solves the growing application delivery challenges faced by enterprises and organisations.”
Blue Coat ended the quarter on 31 July 2008 with cash, cash equivalents and restricted cash of $76.3 million, a decrease of $111.8 million from the prior quarter. Cash flow provided by operations in the first quarter of fiscal 2009 was $5.5 million.
Planning ahead: the financial outlook
For the fiscal quarter ending 31 October 2008, the company currently anticipates net revenue in the range of $116.0 to $120.0 million. On a GAAP basis, the company expects a net loss of ($0.16) to ($0.10) per share, while on a non-GAAP basis Blue Coat expects earnings of $0.15 to $0.20 per diluted share.
Forecasted earnings per diluted share for the second quarter of fiscal 2009 includes an estimate of $5.5 to $6.5 million of expense for integration activities related to the acquisition of Packeteer.
Non-GAAP earnings per diluted share excludes expense related to the write-up of acquired inventory to its assessed fair value, stock-based compensation expense, the amortization of intangible assets, expenses associated with the stock option investigation and assumes an effective tax rate of 30%.
About non-GAAP financial measures
Blue Coat uses non-GAAP financial measures of income for internal evaluation, and to report the results of its business. These non-GAAP financial measures include non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share.
These measures are not in accordance with – nor an alternative to – GAAP. These measures are intended to supplement GAAP financial information, and may be different from non-GAAP financial measures used by other companies. Blue Coat believes that these measures provide useful information to its management, Board of Directors and investors regarding its ongoing operating activities and business trends related to its financial condition and results of operations.
The company’s management and Board use certain non-GAAP financial measures in developing operating budgets and in reviewing the Company’s financial results of operations, since items such as expense related to the write-up of acquired inventory to its assessed fair value, stock-based compensation expense, amortization of intangible assets, restructuring expenses, expenses associated with matters related to the stock option investigation and tax adjustments do not impact its current resource allocation decisions.
Additionally, the company believes that inclusion of these non-GAAP financial measures provides consistency and comparability with its past reports of financial results. However, investors should be aware that non-GAAP measures have inherent limitations and should be read in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP.
Blue Coat Systems: the main points
Blue Coat secures web communications and accelerates business applications across the distributed enterprise. Its family of appliances and client-based solutions – deployed in branch offices, Internet gateways, end points and data centres – provide intelligent points of policy-based control enabling IT organisations to optimize security and accelerate performance between users and applications.