Gigamon Reports Fourth Quarter and Fiscal Year 2015 Financial Results

Record annual revenue delivers 41% year-over-year growth

Strong results driven by increasing demand for security solutions

28 Jan, 2016, 16:15 ET from Gigamon Inc.

SANTA CLARA, Calif., Jan. 28, 2016 /PRNewswire/ -- Gigamon Inc. (NYSE: GIMO), the leader in traffic visibility solutions, today released financial results for the fourth quarter and fiscal year ended December 26, 2015.

Fourth Quarter 2015 Financial Highlights:

  • Revenue of $67.0 million, up 31% year-over-year.
  • GAAP gross margin was 82%, compared to 77% in the fourth quarter of fiscal 2014.
  • Non-GAAP gross margin was 83%, compared to 77% in the fourth quarter of fiscal 2014.
  • GAAP net income was $2.6 million, or $0.07 per diluted share, compared to GAAP net income of $2.9 million, or $0.09 per diluted share, in the fourth quarter of fiscal 2014.
  • Non-GAAP net income was $10.6 million, or $0.29 per diluted share, compared to non-GAAP net income of $6.1 million, or $0.18 per diluted share, in the fourth quarter of fiscal 2014.

Fiscal Year 2015 Financial Highlights:

  • Revenue of $222.0 million, up 41% from fiscal 2014.
  • GAAP gross margin was 79%, compared to 76% in fiscal 2014.
  • Non-GAAP gross margin was 80%, compared to 77% in fiscal 2014.
  • GAAP net income was $6.2 million, or $0.17 per diluted share, compared to GAAP net loss of $40.8 million, or $1.27 per diluted share, in fiscal 2014.
  • Non-GAAP net income was $29.0 million, or $0.80 per diluted share, compared to non-GAAP net income of $4.0 million, or $0.12 per diluted share, in fiscal 2014.
  • Increased cash and investments to $210 million, up $61 million from fiscal 2014.

"2015 was a very strong year for Gigamon. We delivered over 40% year over year revenue growth, we increased our gross margins to over 80% and significantly increased our cash reserve to over $200 million," said Paul Hooper, Chief Executive Officer of Gigamon. "Our momentum in the security market continues to increase, with Q4 seeing almost 50% of our total business directly related to Security deployments. We enter 2016 with increased leadership in our market and continue to execute with conviction and predictability."

Recent Business Highlights:

  • Expanded functionality of the GigaVUE-OS security capabilities by providing context-aware metadata information in the NetFlow/IPFIX format.
  • Selected by Telefonica Argentina, a subsidiary of the Telefonica Group, to help optimize its subscriber service offerings utilizing selected Gigamon's subscriber visibility solutions.
  • Expanded portfolio of virtualized solutions with the announcement of support for VMware NSX and OpenStack/KVM-powered clouds, which provide tenants and administrators extended traffic visibility into private and service provider cloud environments.
  • Added multiple security vendors to our Ecosystem Partner Program to combat cybersecurity threats.
  • Ranked as a Fastest Growing Company in North America Based on Deloitte's 2015 Technology Fast 500™ for the third year in a row.
  • Appointed Chris Deardurff as Vice President, North America Sales and Barbara Spicek as Vice President, Channel Sales.

Conference Call Information:

Gigamon will host a conference call and live webcast for analysts and investors at 5:00 p.m. Eastern time on January 28, 2016. The news release with the financial results will be accessible from the company's website prior to the conference call.  Parties in the United States and Canada can access the call by dialing +1 (888) 395-3227, using conference code 684468.  International parties can access the call by dialing +1 (719) 457-2645, using conference code 684468.

The webcast will be accessible on Gigamon's investor relations website at http://investor.gigamon.com for a period of one year. A telephonic replay of the conference call will be available through Thursday, February 4, 2016. To access the replay, parties in the United States and Canada should call +1 (888) 203-1112 and enter conference code 684468. International parties should call +1 (719) 457-0820 and enter conference code 684468.

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, income tax effect of stock-based compensation expense, 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, the goals for our Unified Visibility Fabric™ and our Security Delivery Platform and our momentum heading into 2016. 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 Annual Report on Form 10-K for the period ended December 27, 2014 and our most recently available Quarterly Report on Form 10-Q. 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.

Gigamon

Gigamon (NYSE: GIMO) provides active visibility into physical and virtual network traffic, enabling stronger security and superior performance. Gigamon's Visibility Fabric and GigaSECURE®, the industry's first Security Delivery Platform, deliver advanced intelligence so that security, network and application performance management solutions in enterprise, government and service provider networks operate more efficiently and effectively. See more at www.gigamon.com, the Gigamon Blog, or follow Gigamon on Twitter, LinkedIn or Facebook.

 

Gigamon Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)

Three Months Ended

Fiscal Year Ended

December 26, 2015

December 27, 2014

December 26, 2015

December 27, 2014

Revenue:

Product

$

47,051

$

36,790

$

152,734

$

105,594

Service

19,973

14,461

69,241

51,536

Total revenue

67,024

51,251

221,975

157,130

Cost of revenue:

Product

10,262

10,319

38,878

31,001

Service

1,669

1,722

6,917

6,447

Total cost of revenue

11,931

12,041

45,795

37,448

Gross profit

55,093

39,210

176,180

119,682

Operating expenses:

Research and development

13,171

10,922

49,571

42,806

Sales and marketing

26,150

20,387

87,541

76,063

General and administrative

7,788

5,015

27,459

20,683

Total operating expenses

47,109

36,324

164,571

139,552

Income (loss) from operations

7,984

2,886

11,609

(19,870)

Other income (expense):

Interest income

116

92

446

308

Other expense, net

(119)

(31)

(191)

(94)

Income (loss) before income tax provision

7,981

2,947

11,864

(19,656)

Income tax provision

(5,418)

(41)

(5,678)

(21,134)

Net income (loss)

2,563

2,906

6,186

(40,790)

Net income (loss) per share:

Basic

$

0.07

$

0.09

$

0.18

$

(1.27)

Diluted

$

0.07

$

0.09

$

0.17

$

(1.27)

Weighted average shares used in computing net income (loss) per share:

Basic

34,252

32,746

33,618

32,200

Diluted

36,229

33,606

35,866

32,200

 

Gigamon Inc.

Consolidated Balance Sheets

(In thousands)

(unaudited)

December 26, 2015

December 27, 2014

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

120,212

$

38,941

Short-term investments

90,001

110,465

Accounts receivable, net

47,947

28,686

Inventories, net

3,813

6,551

Deferred tax assets

150

Prepaid expenses and other current assets

7,621

5,316

Total current assets

269,594

190,109

Property and equipment, net

9,416

7,387

Deferred tax assets, non-current

135

64

Other assets, non-current

766

426

TOTAL ASSETS

$

279,911

$

197,986

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

3,724

$

2,391

Accrued liabilities

37,334

22,838

Deferred revenue

62,248

42,183

Total current liabilities

103,306

67,412

Deferred revenue, non-current

19,883

13,322

Deferred and other tax liabilities, non-current

279

150

Other liabilities, non-current

1,087

1,667

TOTAL LIABILITIES

124,555

82,551

STOCKHOLDERS' EQUITY

Common stock

3

3

Treasury stock

(12,469)

(12,469)

Additional paid-in-capital

211,402

177,714

Accumulated other comprehensive loss

(47)

(94)

Accumulated deficit

(43,533)

(49,719)

TOTAL STOCKHOLDERS' EQUITY

155,356

115,435

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

279,911

$

197,986

 

Gigamon Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

Three Months Ended

Fiscal Year Ended

December 26, 2015

December 27, 2014

December 26, 2015

December 27, 2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

2,563

$

2,906

$

6,186

$

(40,790)

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

Depreciation and amortization

1,135

1,568

5,577

5,278

Stock-based compensation expense

5,988

6,023

29,768

24,658

Deferred and other income taxes

210

(52)

208

20,825

Excess tax benefit from employee stock-based compensation

(4,706)

(4,706)

Inventory write-down

292

824

1,859

3,760

Gain on disposal of fixed assets

(29)

(17)

Provision for doubtful accounts

309

309

Changes in operating assets and liabilities:

Accounts receivable

(6,518)

(9,117)

(19,570)

(4,158)

Inventories

6

(633)

950

(8,229)

Prepaid expenses and other current assets

(844)

1,234

(2,988)

(950)

Accounts payable

413

(526)

1,265

963

Accrued liabilities and other liabilities

12,450

7,620

17,966

1,709

Deferred revenue

12,892

6,117

26,626

8,029

Net cash provided by operating activities

24,161

15,964

63,433

11,095

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of short-term investments

(21,557)

(15,607)

(61,725)

(87,698)

Proceeds from sales of short-term investments

1,010

2,006

3,010

Proceeds from maturities of short-term investments

21,003

11,100

79,821

32,607

Purchase of property and equipment

(2,304)

(514)

(6,289)

(7,614)

Net cash (used in) provided by investing activities

(2,858)

(4,011)

13,813

(59,695)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from employee stock purchase plan

5,099

5,878

Proceeds from exercise of stock option

878

449

4,403

5,364

Costs paid for initial public offering, net

(8)

Shares repurchased for tax withholdings on vesting of restricted stock units

(3,219)

(514)

(10,183)

(3,125)

Excess tax benefits from employee stock-based compensation

4,706

4,706

Distribution of income to Gigamon LLC members

(476)

Net cash provided by (used in) financing activities

2,365

(65)

4,025

7,633

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

23,668

11,888

81,271

(40,967)

CASH AND CASH EQUIVALENTS — Beginning of period

96,544

27,053

38,941

79,908

CASH AND CASH EQUIVALENTS — End of period

$

120,212

$

38,941

$

120,212

$

38,941

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Income taxes paid during the period

$

390

$

243

$

738

$

484

 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages)

(unaudited)

Three Months Ended

Fiscal Year Ended

December 26, 2015

December 27, 2014

December 26, 2015

December 27, 2014

Total Revenue

67,024

51,251

221,975

157,130

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

GAAP gross profit

55,093

39,210

176,180

119,682

Stock-based compensation expense

342

317

1,872

1,679

Stock-based compensation related payroll taxes

8

3

68

64

Non-GAAP gross profit

$

55,443

$

39,530

$

178,120

$

121,425

GAAP gross margin

82

%

77

%

79

%

76

%

Non-GAAP gross margin

83

%

77

%

80

%

77

%

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

GAAP operating income (loss)

7,984

2,886

11,609

(19,870)

Stock-based compensation expense

5,988

6,024

29,768

24,658

Stock-based compensation related payroll taxes

151

23

942

821

Non-GAAP operating income

$

14,123

$

8,933

$

42,319

$

5,609

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

GAAP net income (loss) attributable to common stock holders

$

2,563

$

2,906

$

6,186

$

(40,790)

Stock-based compensation expense

5,988

6,024

29,768

24,658

Stock-based compensation related payroll taxes

151

23

942

821

Income tax effect of Non-GAAP adjustments

1,868

(2,811)

(7,913)

19,271

Non-GAAP net income

$

10,570

$

6,142

$

28,983

$

3,960

 

Gigamon Inc.

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

(In thousands, except per share amounts)

(unaudited)

Three Months Ended

Fiscal Year Ended

December 26, 2015

December 27, 2014

December 26, 2015

December 27, 2014

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

GAAP diluted net income (loss) per share

$

0.07

$

0.09

$

0.17

$

(1.27)

Stock-based compensation expense

0.17

0.17

0.83

0.79

Stock-based compensation related payroll taxes

0.03

Income tax effect of non-GAAP adjustments

0.05

(0.08)

(0.22)

0.60

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

(0.01)

Non-GAAP diluted net income per share

$

0.29

$

0.18

$

0.80

$

0.12

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

GAAP diluted weighted-average number of shares

36,229

33,606

35,866

32,200

Dilutive impact due to stock-based compensation

330

580

491

1,394

Non-GAAP diluted weighted-average number of shares

36,559

34,186

36,357

33,594

 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations

For the Three months and Fiscal Year Ended December 26, 2015 and December 27, 2014

(In thousands, except per share amounts and percentages)

(unaudited)

Three Months Ended

Fiscal Year Ended

December 26, 2015

December 27, 2014

December 26, 2015

December 27, 2014

As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP

Revenue:

Product

$

47,051

$

$

47,051

$

36,790

$

$

36,790

$

152,734

$

$

152,734

$

105,594

$

$

105,594

Service

19,973

$

19,973

14,461

$

14,461

69,241

$

69,241

51,536

$

51,536

Total revenue

67,024

67,024

51,251

51,251

221,975

221,975

157,130

157,130

Cost of revenue:

Product (1)

10,262

(267)

9,995

10,319

(130)

10,189

38,878

(1,338)

37,540

31,001

(959)

30,042

Service (1)

1,669

(83)

1,586

1,722

(190)

1,532

6,917

(602)

6,315

6,447

(784)

5,663

11,931

(350)

11,581

12,041

(320)

11,721

45,795

(1,940)

43,855

37,448

(1,743)

35,705

Gross profit

55,093

350

55,443

39,210

320

39,530

176,180

1,940

178,120

119,682

1,743

121,425

Product Gross Margin

78

%

79

%

72

%

72

%

75

%

75

%

71

%

72

%

Service Gross Margin

92

%

92

%

88

%

89

%

90

%

91

%

87

%

89

%

Total Gross Margin

82

%

83

%

77

%

77

%

79

%

80

%

76

%

77

%

Operating expenses:

Research and development (1)

13,171

(2,014)

11,157

10,922

(2,186)

8,736

49,571

(9,533)

40,038

42,806

(8,523)

34,283

Sales and marketing (1)

26,150

(1,769)

24,381

20,387

(1,934)

18,453

87,541

(9,792)

77,749

76,063

(8,433)

67,630

General and administrative (1)

7,788

(2,006)

5,782

5,015

(1,607)

3,408

27,459

(9,445)

18,014

20,683

(6,780)

13,903

Total operating expenses

47,109

(5,789)

41,320

36,324

(5,727)

30,597

164,571

(28,770)

135,801

139,552

(23,736)

115,816

Income (loss) from operations

7,984

6,139

14,123

2,886

6,047

8,933

11,609

30,710

42,319

(19,870)

25,479

5,609

Other income (expense):

Interest income

116

116

92

92

446

446

308

308

Other expense, net

(119)

(119)

(31)

(31)

(191)

(191)

(94)

(94)

Income (loss) before income taxes

7,981

6,139

14,120

2,947

6,047

8,994

11,864

30,710

42,574

(19,656)

25,479

5,823

Income tax (expense) benefit (2) (3)

(5,418)

1,868

(3,550)

(41)

(2,811)

(2,852)

(5,678)

(7,913)

(13,591)

(21,134)

19,271

(1,863)

Net income (loss)

2,563

8,007

10,570

2,906

3,236

6,142

6,186

22,797

28,983

(40,790)

44,750

3,960

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

Basic

$

0.07

$

0.24

$

0.31

$

0.09

$

0.10

$

0.19

$

0.18

$

0.68

$

0.86

$

(1.27)

$

1.39

$

0.12

Diluted

$

0.07

$

0.22

$

0.29

$

0.09

$

0.09

$

0.18

$

0.17

$

0.63

$

0.80

$

(1.27)

$

1.39

$

0.12

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

Basic

34,252

34,252

32,746

32,746

33,618

33,618

32,200

32,200

Diluted

36,229

330

36,559

33,606

580

34,186

35,866

491

36,357

32,200

1,394

33,594

Notes:

1.

Includes stock-based compensation expense and related payroll taxes in the three months and fiscal years ended December 26, 2015 and December 27, 2014.

2.

Includes income tax effect of non-GAAP adjustments in the three months and fiscal years ended December 26, 2015 and December 27, 2014.

3.

Amount for the fiscal year ended December 27, 2014 includes establishment of valuation allowance against the deferred tax asset.

 

 

SOURCE Gigamon Inc.



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http://www.gigamon.com