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8-K - FORM 8-K - SOURCEFIRE INCd431859d8k.htm

Exhibit 99.1

 

Media Contact:

Jennifer Leggio

Sourcefire

650-260-4025

jleggio@sourcefire.com

  

Investor Contact:

Staci Mortenson

ICR

203-682-8273

Staci.Mortenson@icrinc.com

SOURCEFIRE ANNOUNCES THIRD QUARTER 2012 RESULTS

Third Quarter 2012:

 

   

Record Revenue: $58.8 million, an increase of 30% year-over-year

   

Adjusted Net Income: $7.6 million, or $0.25 per diluted share

COLUMBIA, Md., November 1, 2012 – Sourcefire, Inc. (Nasdaq:FIRE), a leader in intelligent cybersecurity solutions, today announced financial results for its fiscal third quarter ended September 30, 2012.

“Sourcefire achieved record revenue for the third quarter. We saw broad based strength across our business driven by our market-leading FirePOWER platform and our growing distribution capabilities,” said Marty Roesch, interim CEO of Sourcefire. “Today’s sophisticated threats require an approach that provides continuous capability across all phases of an attack; before it begins, during the time it is in progress and even after it is missed by other defenses. Our threat centric approach addresses the full attack continuum and drives our innovation, resulting in more effective protection for our customers. This, combined with the investments we are making in our go-to-market strategy, is enabling us to achieve significant levels of growth.”

Financial Summary

 

   

Total Revenue - Revenue for the third quarter of 2012 was $58.8 million compared to $45.2 million in the third quarter of 2011, an increase of 30%.

 

   

GAAP Net Income - Net income was $1.2 million for the third quarter of 2012, or $0.04 per diluted share, on the basis of generally accepted accounting principles (GAAP), compared with GAAP net income of $2.0 million, or $0.07 per diluted share, in the third quarter of 2011.

 

   

Adjusted Net Income - Adjusted net income for the third quarter of 2012, which excludes stock-based compensation expense and amortization of acquired intangible assets, and includes an assumed tax rate of 35%, was $7.6 million, or $0.25 per diluted share. This compares to adjusted net income of $5.7 million, or $0.19 per diluted share, for the third quarter of 2011, which excludes stock-based compensation expense, amortization of acquired intangible assets and other acquisition-related expenses, and includes an assumed tax rate of 35%.


   

Cash and Cash Flow - As of September 30, 2012, the Company’s cash, cash equivalents and investments totaled $188.5 million. For the third quarter of 2012, net cash provided by operating activities was $3.7 million and the Company generated free cash flow of $1.6 million.

Recent Company Highlights

Revenue Growth

 

   

Increased U.S. commercial revenue to $24.7 million, up 31% over 3Q11.

 

   

Increased international revenue to $17.7 million, up 69% over 3Q11.

 

   

Increased U.S. federal sector revenue to $16.4 million, up 4% over 3Q11.

Innovation & Recognition

 

   

Announced that FirePOWER appliance excelled in the most recent independent NSS Labs Next-Generation Firewall (NGFW) product analysis - the industry’s most rigorous NGFW testing available to date. The FirePOWER 8250 NGFW protected against 99% of all attacks, demonstrated superior performance and delivered best-in class total cost of ownership.

 

   

Introduced the latest solutions to address critical customer needs for virtualized security — FireAMP™ Virtual and Virtual Next-Generation Intrusion Prevention Systems (NGIPS) with application control. These new solutions deliver Information Superiority by providing large enterprises and government organizations the visibility and control required to address the dynamic nature of constantly changing virtual deployments and evolving threats targeting those systems.

 

   

Announced that Sourcefire Next-Generation Intrusion Prevention Systems (NGIPS) have been named to the U.S. Department of Defense (DoD) Unified Capability Approved Products List (UC APL).

 

   

Commenced Sourcefire Chalk Talks, a complimentary collection of informative cybersecurity videos. The ongoing series will provide viewers with deeper, unbiased knowledge on essential cybersecurity topics, initially focusing on malware and network security.

Fourth Quarter and Full Year 2012 Outlook

Based on information as of October 30, 2012, Sourcefire expects revenue for the fourth quarter of 2012 in the range of $62.0 million to $64.0 million, net income per diluted share in the range of $0.03 to $0.05 and, on an adjusted basis, net income per diluted share in the range of $0.27 to $0.29. Sourcefire’s expectation of adjusted net income per diluted share excludes stock-based compensation expense of $10.0 million to $10.2 million (inclusive of $3.7 million of expense due to vesting acceleration of restricted shares in connection with the retirement of the Company’s former CEO) and amortization of acquired intangible assets of approximately $0.3 million, and includes an assumed 35% tax rate.


For fiscal year 2012 Sourcefire expects revenue in the range of $217.7 million to $219.7 million, net income per diluted share in the range of $0.11 to $0.13 and adjusted net income per diluted share in the range of $0.80 to $0.82. Sourcefire’s expectation of full year 2012 adjusted net income per share excludes stock-based compensation expense in the expected range of $26.1 million to $26.3 million and amortization of acquired intangible assets and other acquisition-related expenses of approximately $2.8 million and includes an assumed tax rate of 35%.

Non-GAAP Measures

To supplement its consolidated financial statements presented in accordance with GAAP, Sourcefire considers certain financial measures that are not prepared in accordance with GAAP, including non-GAAP adjusted net income, adjusted net income per share, adjusted income from operations, adjusted income from operations as a percentage of revenue and free cash flow.

Sourcefire uses these non-GAAP financial measures, in addition to GAAP financial measures, to evaluate its operating and financial performance and to compare such performance to that of prior periods and to the performance of its competitors. The Company also uses these non-GAAP financial measures in making operational and financial decisions and in establishing operational goals. Sourcefire believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, helps investors to evaluate the Company’s operating and financial performance and trends in its business, consistent with how management evaluates such performance and trends. The Company also believes these non-GAAP financial measures may be useful to investors in comparing its performance to the performance of other companies, although Sourcefire’s non-GAAP financial measures are specific to it and the non-GAAP financial measures of other companies may not be calculated in the same manner.

Adjusted Net Income, Adjusted Net Income per Share, Adjusted Income from Operations and Adjusted Income from Operations as a Percentage of Revenue: In evaluating the operating performance of its business, Sourcefire excludes certain charges and credits that are required by GAAP. These non-GAAP measures exclude (i) stock-based compensation, which does not involve the expenditure of cash, (ii) amortization of acquisition-related intangible assets, which does not involve the expenditure of cash, and (iii) other acquisition–related expenses, which are unrelated to the ongoing operation of the Company’s business in the ordinary course. For 2012 Sourcefire expects non-GAAP results to be adjusted to reflect the effect of an assumed tax rate of 35%. This adjustment is intended to normalize the tax rate and provide a tax rate that approximates the Company’s expected long-term GAAP tax rate.

Free Cash Flow: Sourcefire defines free cash flow as net cash provided by operating activities minus capital expenditures. The Company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the purchase of property and equipment, can be used for strategic opportunities, including investing in the business, making strategic acquisitions and strengthening the balance sheet.


These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release.

Conference Call and Webcast

On Thursday, November 1, 2012 at 8:30 a.m. Eastern Time, Sourcefire will host a conference call to review these results. A listen-only web cast of the session will be available at http://investor.sourcefire.com.

Those wishing to participate in the live session should use the following numbers to dial in:

Calling from the United States or Canada: 877-712-7037

Calling from other countries: 253-237-1122

Conference ID number: 39707384

An online replay will be available at http://investor.sourcefire.com following the completion of the live call and will remain available for at least 90 days.

About Sourcefire

Sourcefire, Inc. (Nasdaq:FIRE), a world leader in intelligent cybersecurity solutions, is transforming the way global large- to mid-size organizations and government agencies manage and minimize network security risks. With solutions from a next-generation network security platform to advanced malware protection, Sourcefire provides customers with Agile Security® that is as dynamic as the real world it protects and the attackers against which it defends. Trusted for more than 10 years, Sourcefire has been consistently recognized for its innovation and industry leadership with numerous patents, world-class research, and award-winning technology. Today, the name Sourcefire has grown synonymous with innovation, security intelligence and agile end-to-end security protection. For more information about Sourcefire, please visit www.sourcefire.com.

Sourcefire, the Sourcefire logo, Snort, the Snort and Pig logo, ClamAV, FireAMP, FirePOWER, FireSIGHT and certain other trademarks and logos are trademarks or registered trademarks of Sourcefire, Inc. in the United States and other countries. Other company, product and service names may be trademarks or service marks of others.

Cautionary Language Concerning Forward-Looking Statements

The statements contained in this release that are not historical facts are “forward-looking statements” (as such term is defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties. These statements include expectations regarding financial results for the fourth quarter of 2012 and expectations of future growth.


Management cautions the reader that these forward-looking statements are only predictions and are subject to a number of both known and unknown risks and uncertainties, and actual results, performance, and/or achievements of Sourcefire, Inc. may differ materially from the future results, performance, and/or achievements expressed or implied by these forward-looking statements as a result of a number of factors. These factors include, without limitation, the fact that the outlook for the fourth quarter of 2012 and expectations of future growth could change, the risk that the search for a new CEO or the transition to a new CEO could disrupt the Company’s business and also include, without limitation, those risks and uncertainties described from time to time in the reports filed by Sourcefire, Inc. with the U.S. Securities and Exchange Commission. Sourcefire, Inc. undertakes no obligation to update any forward-looking statements.

# # #


Sourcefire, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2011     2012     2011  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Revenue:

        

Products

   $ 36,690      $ 27,552      $ 92,177      $ 64,207   

Technical support and professional services

     22,142        17,654        63,555        48,235   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     58,832        45,206        155,732        112,442   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue:

        

Products

     10,551        7,986        27,722        18,757   

Technical support and professional services

     2,842        2,141        8,112        6,161   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     13,393        10,127        35,834        24,918   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     45,439        35,079        119,898        87,524   

Operating expenses:

        

Research and development

     10,768        9,260        30,857        24,296   

Sales and marketing

     22,395        16,304        61,363        45,580   

General and administrative

     6,597        5,086        17,952        14,451   

Depreciation and amortization

     1,356        970        3,673        2,858   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     41,116        31,620        113,845        87,185   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     4,323        3,459        6,053        339   

Other expense, net

     (10     (41     (2     (99
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     4,313        3,418        6,051        240   

Provision (benefit) for income taxes

     3,098        1,423        3,656        (1,816
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 1,215      $ 1,995      $ 2,395      $ 2,056   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share - basic

   $ 0.04      $ 0.07      $ 0.08      $ 0.07   

Net income per share - diluted

   $ 0.04      $ 0.07      $ 0.08      $ 0.07   

Weighted average shares outstanding used in computing per share amounts:

        

Basic

     29,996,464        28,733,267        29,647,214        28,503,974   

Diluted

     31,124,052        29,630,833        30,822,440        29,402,275   

Stock-based compensation expense for the three and nine months ended September 30, 2012 and 2011 is included in the Consolidated Statements of Operations as follows (in thousands):

 

     Three Months Ended September 30,      Nine Months Ended September 30,  
     2012      2011      2012      2011  
     (unaudited)      (unaudited)      (unaudited)      (unaudited)  

Cost of revenue (products)

   $ 155       $ 80       $ 326       $ 201   

Cost of revenue (services)

     237         138         614         357   
  

 

 

    

 

 

    

 

 

    

 

 

 

Stock-based comp expense included in cost of revenue

     392         218         940         558   

Research and development

     1,721         974         3,877         2,474   

Sales and marketing

     3,076         1,659         6,959         4,367   

General and administrative

     1,918         1,440         4,307         3,385   
  

 

 

    

 

 

    

 

 

    

 

 

 

Stock-based comp expense included in operating expenses

     6,715         4,073         15,143         10,226   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 7,107       $ 4,291       $ 16,083       $ 10,784   
  

 

 

    

 

 

    

 

 

    

 

 

 


Sourcefire, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

     September 30,
2012
    December 31,
2011
 
     (unaudited)     (unaudited)  

Assets

    

Cash and cash equivalents

   $ 83,288      $ 59,407   

Investments

     105,217        98,407   

Accounts receivable, net

     58,739        54,914   

Inventory

     6,136        4,285   

Deferred tax assets

     10,887        11,339   

Prepaid expenses and other current assets

     8,965        7,718   

Property and equipment, net

     14,215        12,233   

Goodwill

     15,000        15,000   

Intangible assets, net

     4,798        5,822   

Other long-term assets

     20,535        14,802   
  

 

 

   

 

 

 

Total assets

   $ 327,780      $ 283,927   
  

 

 

   

 

 

 

Liabilities

    

Accounts payable and accrued expenses

   $ 24,034      $ 23,237   

Deferred revenue

     71,647        61,570   

Other liabilities

     1,419        1,263   
  

 

 

   

 

 

 

Total liabilities

     97,100        86,070   
  

 

 

   

 

 

 

Stockholders’ Equity

    

Common stock

     29        28   

Additional paid-in capital

     243,772        213,402   

Accumulated deficit

     (13,154     (15,549

Accumulated other comprehensive income (loss)

     33        (24
  

 

 

   

 

 

 

Total stockholders’ equity

     230,680        197,857   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 327,780      $ 283,927   
  

 

 

   

 

 

 


Sourcefire, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2011     2012     2011  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Net income

   $ 1,215      $ 1,995      $ 2,395      $ 2,056   

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

     2,527        (2,329     23,658        (2,477
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     3,742        (334     26,053        (421

Net cash provided by (used in) investing activities

     (3,336     11,194        (16,445     (6,699

Net cash provided by financing activities

     5,345        1,463        14,273        4,023   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     5,751        12,323        23,881        (3,097

Cash and cash equivalents at beginning of period

     77,537        38,990        59,407        54,410   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 83,288      $ 51,313      $ 83,288      $ 51,313   
  

 

 

   

 

 

   

 

 

   

 

 

 


Sourcefire, Inc.

Reconciliation of Non-GAAP Measures to GAAP

(in thousands, except share and per share data)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2011     2012     2011  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Reconciliation of adjusted income from operations:

        

GAAP income from operations

   $ 4,323      $ 3,459      $ 6,053      $ 339   

Amortization of acquisition-related intangible assets

     342        252        1,026        756   

Other acquisition-related expenses*

     —          667        1,436        2,123   

Stock-based compensation expense

     7,107        4,291        16,083        10,784   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income from operations

   $ 11,772      $ 8,669      $ 24,598      $ 14,002   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income from operations as % of total revenue

     20.0     19.2     15.8     12.5

Reconciliation of adjusted net income:

        

GAAP net income

   $ 1,215      $ 1,995      $ 2,395      $ 2,056   

Stock-based compensation expense

     7,107        4,291        16,083        10,784   

Amortization of acquisition-related intangible assets

     342        252        1,026        756   

Other acquisition-related expenses**

     —          781        1,436        2,465   

Tax credit for research and experimentation

     —          —          —          (2,001

Income tax adjustment***

     (1,019     (1,637     (4,953     (4,801
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 7,645      $ 5,682      $ 15,987      $ 9,259   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per share - basic

   $ 0.25      $ 0.20      $ 0.54      $ 0.32   

Adjusted net income per share - diluted

   $ 0.25      $ 0.19      $ 0.52      $ 0.31   

Weighted average number of shares - basic

     29,996,464        28,733,267        29,647,214        28,503,974   

Weighted average number of shares - diluted

     31,124,052        29,630,833        30,822,440        29,402,275   

 

* Includes the accrual of retention obligations related to the hiring of former Immunet employees and other acquisition-related costs
** Includes the accrual of retention obligations related to the hiring of former Immunet employees, the increase in the fair value of acquisition-related contingent consideration and other acquisition-related costs.
*** Income tax adjustment is used to adjust the GAAP provision for income taxes to a Non-GAAP provision for income taxes utilizing an assumed tax rate of 35%.

Reconciliation of net cash provided by (used in) operating activities to free cash flow:

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2011     2012     2011  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Net cash provided by (used in) operating activities

   $ 3,742      $ (334   $ 26,053      $ (421

Purchase of property and equipment

     (2,073     (1,630     (6,149     (4,344
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow

   $ 1,669      $ (1,964   $ 19,904      $ (4,765
  

 

 

   

 

 

   

 

 

   

 

 

 


Sourcefire, Inc.

Supplemental Operating Data

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2011     2012     2011  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Number of deals in excess of $ 500,000

     26        18        51        40   

Number of deals in excess of $ 100,000

     117        87        279        207   

Number of new customers

     108        121        290        281   

Percentage of channel-influenced deals

     35     39     41     47

Total channel partners

     723        557       

Number of full-time employees at end of period

     560        434       

Revenue Composition by Geography:

        

United States

     70     77     69     75

International

     30     23     31     25
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100     100     100     100
  

 

 

   

 

 

   

 

 

   

 

 

 

Revenue Composition by Business Distribution:

        

Existing customer product revenue

     36     33     37     37

New customer product revenue

     26     28     22     20

Technical support and professional services

     38     39     41     43
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100     100     100     100