Websense Reports Third Quarter 2012 Results

SAN DIEGO, Oct. 23, 2012 /PRNewswire/ -- Websense, Inc. (NASDAQ: WBSN) today announced financial results for the third quarter of 2012.

"In the third quarter, we had double-digit growth in sales to new customers and we started to see a recovery in our international sales territories, with sales outside the U.S. growing by 14 percent," said Gene Hodges, Websense® CEO.  "While our customer retention rates remain solid, we were negatively impacted by fewer upgrades from our installed base in the U.S.  Looking ahead, we see good opportunities to upgrade our customers and increase new customer sales.  The need and awareness for content security is increasing, and security experts recognize we have the best solutions to protect against data theft and advanced attacks."

Third Quarter 2012 GAAP Financial Highlights

  • Revenues of $90.4 million, compared with $92.1 million in the third quarter of 2011.
  • Software and service revenues of $82.3 million, compared with $81.8 million in the third quarter of 2011.
  • Appliance revenues of $8.1 million, which consisted of approximately $6.6 million in current-period appliance sales and approximately $1.5 million of deferred appliance revenue primarily from pre-2011 appliance sales, compared with $10.3 million of appliance revenues in the third quarter of 2011, which consisted of approximately $7.7 million in current-period appliance sales and the remainder from deferred appliance revenue primarily from pre-2011 appliance sales.
  • Operating income of $13.8 million, compared with $13.7 million in the third quarter of 2011.
  • Provision for income taxes of $4.6 million, compared with $5.4 million in the third quarter of 2011.
  • Net income of $8.5 million, or 23 cents per diluted share, compared with net income of $8.1 million, or 20 cents per diluted share, in the third quarter of 2011.
  • Weighted average diluted shares outstanding of 36.8 million, compared with 40.4 million in the third quarter of 2011.
  • Cash flow from operations of $5.6 million, compared with $16.7 million in the third quarter of 2011. Cash flow from operations includes one-time tax payments of $14.7 million relating to the company's settlement with the U.S. Internal Revenue Service of certain audit adjustments for tax years 2005 through 2007. The company had expected these payments to total $15 to $16 million in the third quarter.
  • Quarter-end accounts receivable of $54.4 million, compared with $59.8 million at the end of the third quarter of 2011 and $61.8 million at the end of the second quarter of 2012.
  • Days billings outstanding of 60 days, compared with 64 days at the end of the third quarter of 2011 and 65 days billings outstanding at the end of the second quarter of 2012.
  • Deferred revenue of $370.7 million, an increase of $0.9 million compared with deferred revenue of $369.8 million at the end of the third quarter of 2011. Deferred revenue at the end of the third quarter of 2012 included $5.8 million from extended warranties and pre-2011 appliance sales, a decrease of $5.8 million from the year ago period. Deferred revenue from pre-2011 appliance sales will continue to decrease quarterly.

Third Quarter 2012 Non-GAAP1 Financial Highlights

  • Billings of $81.5 million, a decrease of three percent compared with the third quarter of 2011.  Currency exchange rates had a negative impact on billings of approximately $1.9 million in the third quarter of 2012 compared with the prevailing exchange rates in effect during the third quarter of 2011.
  • TRITON™ solution billings of $49.4 million, an increase of nine percent compared with the third quarter of 2011.
  • Non-GAAP operating income of $20.3 million, compared with non-GAAP operating income of $21.8 million in the third quarter of 2011. Non-GAAP operating margin in the third quarter of 2012, calculated as a percentage of revenues, was 22.4 percent, compared with 23.7 percent in the third quarter of 2011.
  • Billings-based operating margin of 14.8 percent, compared with billings-based operating margin of 17.9 percent in the third quarter of 2011. Billings-based operating margin is calculated like revenue-based non-GAAP operating margin, but is computed using billings as the top-line measure and excludes deferred appliance costs to match current period sales activities with current period costs.
  • A non-GAAP tax provision of $3.7 million, based on a long-term effective tax rate of 19 percent, compared with a non-GAAP tax provision of $3.8 million, based on an effective tax rate of 17.7 percent, in the third quarter of 2011.
  • Non-GAAP net income of $15.9 million, or 43 cents per diluted share, compared with $17.9 million, or 44 cents per diluted share, in the third quarter of 2011.

Summary Metrics

Millions, except percentages, number of transactions, duration, and days billings outstanding

 

Q3'12

Q3'11

Y/Y Chg

Total billings

$81.5

$84.3

-3%

U.S. billings

$39.3

$47.2

-17%

International billings

$42.2

$37.1

14%

TRITON solution billings2

$49.4

$45.3

9%

Appliance billings

$6.9

$8.0

-14%

Number of transactions >$100K

144

132

9%

Average contract duration (months)

24.1

23.1

4%

Days billings outstanding (DSOs)

60

64

-4 days

Cash and cash equivalents

$57.6

$75.6

-24%

Balance on revolving credit facility

$68.0

$73.0

-7%

Share repurchases ($)

$2.9

$25.0

-88%

1.

A detailed description of the company's non-GAAP financial measures appears under "Non-GAAP Financial Measures" and a full reconciliation of GAAP to non-GAAP results is included at the end of this news release in the tables "Reconciliation of GAAP to Non-GAAP Financial Measures."

2.

TRITON solutions include the TRITON family of security gateways for web, email, mobile, and data security (including related appliances and technical support subscriptions), Websense Data Security Suite and cloud-based security solutions. Non-TRITON solutions include web filtering products, including Websense Web Filtering, Websense Web Security Suite and related appliances, plus SurfControl email security products.

Outlook for the Fourth Quarter and Fiscal Year 2012
Websense provides guidance on anticipated financial performance for the year based on an assessment of the current business environment, historical seasonal business trends, and prevailing exchange rates between the U.S. dollar and other major currencies. Annual guidance is updated each quarter with the release of quarterly results. In providing guidance, the company emphasizes that all forward-looking statements are based on current expectations, including average contract duration between 23 and 24 months and prevailing currency exchange rates of $1.29 for the Euro and $1.61 for the Pound Sterling. The company disclaims any obligation to update the statements as circumstances change.

Millions, except percentages and per-share amounts

Q4'12 Outlook

Implied

2012 Outlook

Total billings

$112 – 117

$359.5 – 364.5

Appliance billings (% of total billings)

7 – 8%

7 – 8%

Revenues

$90 – 92

$359.8 – 361.8

Non-GAAP gross profit margin

83 – 84%

84 – 85%

Non-GAAP operating margin

16 – 18%

19 – 20%

Non-GAAP earnings per diluted share

$0.32 – 0.35

$1.50 – 1.53

Non-GAAP effective tax rate

19%

19%

Average diluted shares outstanding

37.0 – 37.5

37.0 – 37.5

Cash flow from operations

$8.0 – 11.0

$45.8 – 48.8

Capital expenditures

$3.0 – 3.5

$12.5 – 13.0

Cash taxes (net of refunds)

$3.0 – 4.0

$28.0 – 29.0

Additionally, outlook ranges for 2012 reflect:

  • Billings-based non-GAAP operating margin of 20 to 22 percent.
  • Expected stock repurchases in the fourth quarter of approximately $5 million to more closely align with expected cash flow. 
  • Non-cash items related to the recognition of revenue and costs associated with pre-2011 appliance billings:
    • Remaining deferred revenue of $3.9 million from pre-2011 appliance billings (as of September 30, 2012) that will continue to be recognized ratably according to the original subscription periods, including $1.2 million to be recognized in the fourth quarter of 2012 (compared with $2.1 million in the fourth quarter of 2011).
    • Remaining deferred costs of $1.9 million from pre-2011 appliance billings (as of September 30, 2012) that will continue to be recognized ratably according to the original subscription periods, including $0.5 million to be recognized in the fourth quarter of 2012 (compared with $1.0 million in the fourth quarter of 2011).
    • On January 1, 2011, Websense was required to adopt Accounting Standards Update (ASU) 2009-13 (Multiple Deliverable Revenue Arrangements) and ASU 2009-14 (Certain Revenue Arrangements that Include Software Elements), which require the immediate recognition of appliance revenues upon sale. Prior to January 1, 2011, the company recognized revenue and costs from appliance sales ratably according to the original subscription terms. The schedules below summarize the actual and expected recognition of remaining deferred appliance revenues and costs by quarter for 2011 and 2012:

 

2011 Summary of Amounts Related to pre-2011 Appliance Sales

Millions

Deferred balances

as of 12/31/10

(actual)

2011 Recognition Schedule (actual)

Remaining deferred balances

as of 12/31/11

(actual)

Q1'11

 

Q2'11

 

Q3'11

 

Q4'11

 

2011

 

Revenue

$20.0

$3.5

$3.2

$2.6

$2.1

$11.4

$8.6

Costs

$9.2

$1.6

$1.5

$1.1

$1.0

$5.2

$4.0

 

2012 Summary of Amounts Related to pre-2011 Appliance Sales

Millions

Deferred balances

as of 12/31/11

(actual)

2012 Recognition Schedule

Remaining deferred balances

as of 12/31/12 (expected)

Q1'12

(actual)

Q2'12 (actual)

Q3'12

(actual)

Q4'12

(expected)

2012

(expected)

Revenue

$8.6

$1.7

$1.6

$1.4

$1.2

$5.9

$2.7

Costs

$4.0

$0.8

$0.7

$0.6

$0.5

$2.6

$1.4

Conference Call Details
Management will host a conference call and simultaneous webcast to discuss the financial results and outlook today, October 23, at 2 p.m. Pacific Daylight Time. To participate in the conference call, investors should dial (866) 757-5630 (domestic) or 707-287-9356 (international) 10 minutes prior to the scheduled start of the call. A simultaneous audio-only webcast of the call may be accessed at www.websense.com/investors. An archive of the webcast will be available on the company's website through December 31, 2012, and a recorded replay of the call will be available for one week at (855) 859-2056 and (404) 537-3406, pass code 33392987.

Non-GAAP Financial Measures
This news release provides financial measures for non-GAAP gross profit, operating expenses, operating margin, income from operations, provision for income taxes, net income, and diluted earnings per share that are not calculated in accordance with GAAP. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding performance that enhances management's and investors' ability to evaluate the company's operating results, trends, and prospects and to compare current operating results with historic operating results. Reconciliations of the GAAP and non-GAAP financial measures for the third quarters of 2012 and 2011 are provided at the end of this news release.

This news release also includes financial measures for various categories of billings, billings operating margin and other billings-related measures that are not numerical measures that can be calculated in accordance with GAAP.  Billings-based non-GAAP operating margin is calculated like revenue-based non-GAAP operating margin, but uses billings as the top-line measure and excludes deferred appliance costs to match current period sales activities with current period costs. Websense provides these measurements in reporting financial performance because these measurements provide a consistent basis for understanding the company's sales activities in the current period. The company believes that these measurements are useful to investors because the GAAP measurements of revenues and deferred revenue in the current period include subscription contracts commenced in prior periods. The roll forward of deferred revenue (which includes billings and revenues) for the third quarter of 2012 is set forth at the end of this news release.

About Websense, Inc.
Websense, Inc. (NASDAQ: WBSN), a global leader in unified web security, email security, mobile security, and data loss prevention (DLP) solutions, delivers the best content security for modern threats at the lowest total cost of ownership to tens of thousands of enterprise, mid-market and small organizations around the world. Distributed through a global network of channel partners and delivered as software, appliance and Security-as-a-Service (SaaS), Websense content security solutions help organizations leverage web 2.0 and cloud communication, collaboration, and social media while protecting from advanced persistent threats, preventing the loss of confidential information and enforcing internet use and security policies. Websense is headquartered in San Diego, California with offices around the world. For more information, visit www.websense.com.

Follow Websense on Twitter: www.twitter.com/websense

Join the discussion on Facebook: www.facebook.com/websense

This news release contains forward-looking statements that involve risks, uncertainties, assumptions, and other factors which, if they do not materialize or prove correct, could cause Websense's results to differ materially from historical results or those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including financial estimates; the statements of Gene Hodges; statements about our expected success selling products; statements about the effectiveness of our products; billings, revenues, and growth trends; statements regarding expected repurchases of our common stock; and statements containing the words "planned," "expects," "believes," "strategy," "opportunity," "anticipates," and similar words. The potential risks and uncertainties that contribute to the uncertain nature of these statements include, among others, risks associated with customer acceptance of the company's products and services, product performance, launching new product offerings, products and fee structures in a changing market, the success of Websense's brand development efforts, the volatile and competitive nature of the internet and security industries, changes in domestic and international market conditions (including in continental Europe), fluctuations in currency exchange rates and impacts of macro-economic conditions on our customers, ongoing compliance with the covenants in the company's credit facility, changes in accounting interpretations, and the other risks and uncertainties described in Websense's public filings with the Securities and Exchange Commission, available at www.websense.com/investors. Websense assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.

The following financial information should be read in conjunction with the audited financial statements and notes thereto, included in Websense Inc.'s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission as well as the interim financial statements and notes thereto included in Websense's Quarterly Reports on Form 10-Q.  Certain reclassifications have been made for consistent presentation.

Websense, Inc.

Consolidated Statements of Operations

(Unaudited and in thousands, except per share amounts)










Three Months Ended September 30,


Nine Months Ended September 30,


2012


2011


2012


2011









Revenues:








    Software and service

$   82,285


$   81,803


$ 245,992


$ 243,057

    Appliance

8,078


10,308


23,769


28,393

       Total revenues

90,363


92,111


269,761


271,450

Cost of revenues:








    Software and service

11,643


10,234


33,918


30,993

    Appliance

3,337


4,665


9,929


13,661

       Total cost of revenues

14,980


14,899


43,847


44,654

Gross profit

75,383


77,212


225,914


226,796

Operating expenses:








    Selling and marketing

35,661


38,445


112,226


121,285

    Research and development

15,786


15,084


46,745


43,556

    General and administrative

10,132


9,969


30,960


30,922

       Total operating expenses

61,579


63,498


189,931


195,763

Income from operations

13,804


13,714


35,983


31,033

Interest expense

(644)


(374)


(1,943)


(1,167)

Other income (expense), net

(81)


204


(221)


1,530

Income before income taxes

13,079


13,544


33,819


31,396

Provision for income taxes

4,628


5,426


19,278


10,777

Net income

$     8,451


$     8,118


$   14,541


$   20,619









Basic net income per share

$       0.23


$       0.21


$       0.39


$       0.51

Diluted net income per share

$       0.23


$       0.20


$       0.39


$       0.50

Weighted average shares - basic

36,457


39,575


37,010


40,081

Weighted average shares - diluted

36,782


40,428


37,590


41,273









Financial Data:








Total deferred revenue

$ 370,739


$ 369,750


$ 370,739


$ 369,750









 

      

Websense, Inc.

Consolidated Balance Sheets

(In thousands)






September 30, 2012


December 31, 2011

Assets

(Unaudited)



Current assets:




    Cash and cash equivalents

$                      57,602


$                     76,201

    Accounts receivable, net

54,436


80,147

    Income tax receivable/prepaid income tax

2,187


738

    Current portion of deferred income taxes

30,234


30,021

    Other current assets

11,589


13,793

       Total current assets

156,048


200,900

Cash and cash equivalents - restricted

640


628

Property and equipment, net

18,617


16,832

Intangible assets, net

20,058


26,412

Goodwill

372,445


372,445

Deferred income taxes, less current portion

8,670


8,599

Deposits and other assets

7,348


8,622

Total assets

$                  583,826


$                 634,438





Liabilities and stockholders' equity




Current liabilities:




    Accounts payable

$                        6,404


$                       9,026

    Accrued compensation and related benefits

23,358


22,770

    Other accrued expenses

11,722


16,534

    Current portion of income taxes payable

1,533


3,187

    Current portion of deferred tax liability

86


86

    Current portion of deferred revenue

231,576


250,597

       Total current liabilities

274,679


302,200

Other long term liabilities

2,256


2,600

Income taxes payable, less current portion

10,308


11,955

Secured loan

68,000


73,000

Deferred tax liability, less current portion

2,512


2,501

Deferred revenue, less current portion

139,163


142,437

    Total liabilities

496,918


534,693

Stockholders' equity:




  Common stock

577


568

  Additional paid-in capital

434,089


415,573

  Treasury stock, at cost

(431,290)


(385,544)

  Retained earnings

86,788


72,247

  Accumulated other comprehensive loss

(3,256)


(3,099)

    Total stockholders' equity

86,908


99,745

Total liabilities and stockholders' equity

$                  583,826


$                 634,438





 

      

Websense, Inc.

Consolidated Statements of Cash Flows

(Unaudited and in thousands)






Nine Months Ended September 30,


2012


2011

Operating activities:




Net income

$   14,541


$   20,619

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization 

15,133


19,716

Share-based compensation 

14,675


14,433

Deferred income taxes 

-


(360)

Unrealized loss (gain) on foreign exchange 

412


(47)

Excess tax benefit from share-based compensation

(532)


(2,267)

Changes in operating assets and liabilities:




Accounts receivable 

26,760


21,149

Other assets 

2,412


470

Accounts payable 

(3,437)


2,244

Accrued compensation and related benefits 

451


533

Other liabilities 

(3,761)


(3,385)

Deferred revenue 

(22,297)


(24,575)

Income taxes payable and receivable/prepaid

(6,559)


8,722

Net cash provided by operating activities 

37,798


57,252





Investing activities:




Change in restricted cash and cash equivalents 

(20)


33

Purchase of property and equipment 

(9,576)


(7,176)

Purchase of intangible assets

-


(500)

Net cash used in investing activities 

(9,596)


(7,643)





Financing activities:




Proceeds from secured loan

-


87,000

Principal payments on secured loan 

(5,000)


(81,000)

Principal payments on capital lease obligation

(587)


(569)

Proceeds from exercise of stock options 

2,257


14,461

Proceeds from issuance of common stock for stock purchase plan

3,595


3,446

Excess tax benefit from share-based compensation

532


2,267

Tax payments related to restricted stock unit issuances

(2,830)


(2,824)

Purchase of treasury stock 

(44,674)


(73,998)

Net cash used in financing activities 

(46,707)


(51,217)





Effect of exchange rate changes on cash and cash equivalents 

(94)


(232)

Decrease in cash and cash equivalents 

(18,599)


(1,840)

Cash and cash equivalents at beginning of period

76,201


77,390

Cash and cash equivalents at end of period

$   57,602


$   75,550





Cash paid during the period for:




  Income taxes including interest and penalties, net of refunds

$   25,385


$     5,045

  Interest

$     1,746


$        968





Non-cash financing activities:




    Change in operating assets and liabilities for unsettled purchase

      of treasury stock and exercise of stock options




$   (1,583)


$        994





 

      

Websense, Inc.

Rollforward of Deferred Revenue

(Unaudited and in thousands)












Deferred revenue balance at June 30, 2012


$ 379,606



Net billings during third quarter 2012


81,498



Less revenue recognized during third quarter 2012


(90,363)



Translation adjustment


(2)



Deferred revenue balance at September 30, 2012


$ 370,739







 

      

Websense, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited and in thousands, except per share amounts)










Three Months Ended September 30,


Nine Months Ended September 30,


2012


2011


2012


2011









GAAP Gross profit

$ 75,383


$ 77,212


$ 225,914


$ 226,796

   Amortization of acquired technology (2)

539


646


1,617


1,937

   Share-based compensation (1)

238


276


883


829

     Gross profit adjustment

777


922


2,500


2,766

Non-GAAP Gross profit

$ 76,160


$ 78,134


$ 228,414


$ 229,562









GAAP Operating expenses

$ 61,579


$ 63,498


$ 189,931


$ 195,763

   Amortization of other intangible assets (2)

(1,512)


(3,159)


(4,535)


(9,479)

   Share-based compensation (1)

(4,192)


(4,004)


(13,792)


(13,605)

     Operating expense adjustment

(5,704)


(7,163)


(18,327)


(23,084)

Non-GAAP Operating expenses

$ 55,875


$ 56,335


$ 171,604


$ 172,679









GAAP Income from operations

$ 13,804


$ 13,714


$   35,983


$   31,033

     Gross profit adjustment

777


922


2,500


2,766

     Operating expense adjustment

5,704


7,163


18,327


23,084

Non-GAAP Income from operations

$ 20,285


$ 21,799


$   56,810


$   56,883









GAAP Provision for income taxes

$   4,628


$   5,426


$   19,278


$   10,777

        Provision for income taxes adjustment (3, 5)

(900)


(1,592)


(8,861)


(153)

Non-GAAP Provision for income taxes

$   3,728


$   3,834


$   10,417


$   10,624









GAAP Net income

$   8,451


$   8,118


$   14,541


$   20,619

     Gross profit adjustment

777


922


2,500


2,766

     Operating expense adjustment

5,704


7,163


18,327


23,084

     Amortization of deferred financing fees (4)

59


60


178


179

     Provision for income tax adjustment

900


1,592


8,861


153

Non-GAAP Net income

$ 15,891


$ 17,855


$   44,407


$   46,801









GAAP Net income per diluted share

$     0.23


$     0.20


$       0.39


$       0.50

   Non-GAAP adjustments as described above

   per share, net of tax (1-5)

0.20


0.24


0.79


0.63

Non-GAAP Net income per diluted share

$     0.43


$     0.44


$       1.18


$       1.13









(1) Share-based compensation. Consists of non-cash expenses for employee stock options, restricted stock units and our employee stock purchase plan determined in accordance with the fair value method of accounting for share-based compensation. When evaluating the performance of our business and developing short and long-term plans, we do not consider share-based compensation charges. Although share-based compensation is necessary to attract and retain quality employees, our consideration of share-based compensation places its primary emphasis on overall shareholder dilution rather than the accounting charges associated with such grants. Because of varying available valuation methodologies, subjective assumptions and the variety of award types, we believe that the exclusion of share-based compensation allows for more accurate comparison of our financial results to previous periods. In addition, we believe it is useful to investors to understand the specific impact of the application of the fair value method of accounting for share-based compensation on our operating results.

(2) Amortization of acquired technology and other intangible assets. When conducting internal development of intangible assets (including developed technology, customer relationships, trademarks, etc.), GAAP accounting rules require that we expense the costs as incurred. In the case of acquired businesses, however, we are required to allocate a portion of the purchase price to the accounting value assigned to intangible assets acquired and amortize this amount over the estimated useful lives of the acquired intangibles. The acquired company, in most cases, has itself previously expensed the costs incurred to develop the acquired intangible assets, and the purchase price allocated to these assets is not necessarily reflective of the cost we would incur in developing the intangible asset. We eliminate these amortization charges from our non-GAAP operating results to provide better comparability of pre- and post-acquisition operating results and comparability to results of businesses utilizing internally developed intangible assets.

(3) Non-GAAP effective tax rate. The company's annual non-GAAP effective tax rate is calculated by dividing the company's estimated annual non-GAAP tax expense by its estimated annual non-GAAP taxable income. The company's estimated non-GAAP taxable income is determined by adjusting its estimated GAAP taxable income for its non-GAAP adjustments on a country-by-country basis. The company determines its annual estimated non-GAAP tax expense by adding together the estimated non-GAAP tax expense for each country based on each country's applicable tax rate.  The company determines its interim non-GAAP effective tax expense in accordance with the general principles of ASC 740, Accounting for Income Taxes. In 2012, the company's effective tax rate is based on the company's anticipated long term annual non-GAAP tax expense divided by the company's long term annual non-GAAP taxable income on a country by country basis.               

(4) Amortization of deferred financing fees. This is a non-cash charge that is disregarded by the company's management when evaluating our ongoing performance and/or predicting our earnings trends, and is excluded by us when presenting our non-GAAP financial measures. Further, we believe it is useful to investors to understand the specific impact of this charge on our operating results.

(5) Tax related adjustments from other discrete items.  This amount represents the non-recurring tax effect from the transfer of customer relationship intangible assets and the related deferred tax liabilities from a higher tax rate jurisdiction to a lower tax rate jurisdiction.  The tax benefit is reflected in the first quarter of 2011 upon the completion of our global distribution restructuring and is not expected to recur.

Websense, Inc.

Non-GAAP Billings Operating Margin Reconciliation

(Unaudited and in thousands, except percentages)





































Three Months Ended September 30,


Nine Months Ended September 30,

Billings:

2012


2011


2012


2011


Software and service billings

$ 74,585


91.5%


$ 76,332


90.5%


$ 227,631


92.0%


$ 226,896


91.9%


Appliance billings

6,913


8.5%


7,983


9.5%


19,839


8.0%


19,981


8.1%


  Total billings

81,498


100.0%


84,315


100.0%


247,470


100.0%


246,877


100.0%


















Non-GAAP Cost of billings:

















Software and service cost of billings

10,866


14.6%


9,312


12.2%


31,418


13.8%


28,227


12.4%


Appliance cost of billings (1)

2,716


39.3%


3,553


44.5%


7,842


39.5%


9,512


47.6%


  Non-GAAP Cost of billings

13,582


16.7%


12,865


15.3%


39,260


15.9%


37,739


15.3%


















Non-GAAP Gross margin:

















Software and service gross margin

63,719


85.4%


67,020


87.8%


196,213


86.2%


198,669


87.6%


Appliance gross margin

4,197


60.7%


4,430


55.5%


11,997


60.5%


10,469


52.4%


  Non-GAAP Gross margin

67,916


83.3%


71,450


84.7%


208,210


84.1%


209,138


84.7%


















Non-GAAP Operating expenses:

















Selling and marketing

32,627


40.0%


33,953


40.3%


102,370


41.4%


107,494


43.5%


Research and development

14,689


18.0%


14,123


16.7%


43,206


17.4%


40,669


16.5%


General and administrative

8,559


10.5%


8,259


9.8%


26,028


10.5%


24,516


9.9%


  Non-GAAP Operating expenses

55,875


68.5%


56,335


66.8%


171,604


69.3%


172,679


69.9%


















Non-GAAP Billings operating margin

$ 12,041


14.8%


$ 15,115


17.9%


$   36,606


14.8%


$   36,459


14.8%




































(1) Excluding deferred appliance expenses associated with pre-2011 appliance sales.

 

The non-GAAP financial measures included in the tables above and in the tables on the preceding page are non-GAAP gross profit, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP provision for income taxes, non-GAAP net income and non-GAAP net income per share, billings, non-GAAP cost of billings, non-GAAP gross margin and non-GAAP billings operating margin which adjust for the following items: acquisition related adjustments, share-based compensation expense, amortization of intangible assets, deferred expenses and certain other items. We believe the presentation of these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding the company's operating performance for the reasons discussed below. Our management uses these non-GAAP financial measures in assessing the company's operating results, as well as when planning, forecasting and analyzing future periods. The annual operating plan approved by our Board of Directors is based upon non-GAAP financial measures and our management incentive plans also use non-GAAP financial measures as performance objectives. We believe that these non-GAAP financial measures also facilitate comparisons of the company's performance to prior periods and to our peers and that investors benefit from an understanding of these non-financial measures.

INVESTOR CONTACT:

MEDIA CONTACT:

Avelina Kauffman

Patricia Hogan

Websense, Inc.

Websense, Inc.

(858) 320-9364

(858) 320-9393

akauffman@websense.com

phogan@websense.com  

SOURCE Websense, Inc.



RELATED LINKS
http://www.websense.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.