SonicWALL Reports Fourth Quarter and Fiscal Year 2009 Financial Results
SAN JOSE, Calif., Feb. 11 /PRNewswire-FirstCall/ -- SonicWALL, Inc. (Nasdaq: SNWL), today reported performance in the quarter ended December 31, 2009, with revenue of $54.1 million. The Company shipped 52,000 revenue units in the quarter. Cash flow from operations was $5.0 million.
Net income for the fourth quarter of 2009 calculated in accordance with U.S. generally-accepted accounting principles (GAAP) was $5 million, or $0.09 per diluted share. In comparison, GAAP net income for the fourth quarter of 2008 was $3.5 million, or $0.06 per diluted share.
Non-GAAP net income for the fourth quarter of 2009 was $6.0 million or $0.11 per diluted share. In comparison, non-GAAP net income for the fourth quarter of 2008 was $5.9 million, or $0.11 per diluted share. Non-GAAP net income excludes amortization of purchased intangible assets, and share-based compensation expense primarily associated with the expensing of stock options. An explanation of our use of non-GAAP measures is included in the section in this press release entitled "Use of Non-GAAP Financial Measures."
For fiscal year 2009 SonicWALL reported revenue of $200.6 million. GAAP net income for fiscal year 2009 was $13.2 million, or $0.24 per diluted share, compared to a GAAP net income of $4.9 million, or $0.08 per diluted share, in fiscal 2008.
Non-GAAP net income for fiscal year 2009 was $20.8 million, or $0.37 per diluted share, compared to $16.9 million, or $0.29 per diluted share in fiscal year 2008. Non-GAAP net income excludes amortization of purchased intangible assets, restructuring charges, and share-based compensation expense primarily associated with the expensing of stock options. An explanation of our use of non-GAAP measures is included in the section in this press release entitled "Use of Non-GAAP Financial Measures."
"I am proud of our accomplishments in 2009," said Matt Medeiros, CEO of SonicWALL. "In a challenging environment, we gained market share, improved operating margin, and generated strong cash flow, all while developing high performance, market-leading products. We are excited about the opportunity for SonicWALL in 2010."
Guidance for Q1 2010
SonicWALL expects first quarter 2010 revenue to be in the range of $52 million to $54 million. The Company expects non-GAAP gross margin to be in the range of 71% to 72% of revenue. SonicWALL expects non-GAAP earnings per share in the first quarter of 2010 to be in the range of $0.09 to $0.10 per diluted share on a non-GAAP basis. On a GAAP basis, inclusive of a total of approximately $4.0 million, before taxes, in combined amortization of purchased intangibles assets, and share-based compensation expense, the Company expects GAAP earnings per share to be in the range of $0.05 to $0.06. Share-based compensation expense associated with the expensing of stock options is estimated to be approximately $3 million for the first quarter of 2010.
This is the only statement SonicWALL will be giving during the quarter with respect to guidance, unless a decision is made to provide an update.
Conference Call
A conference call to discuss fourth quarter and fiscal year 2009 results will take place today, February 11, 2010, at 2:00 p.m. PT (5:00 p.m. ET). SonicWALL President and CEO Matt Medeiros and SonicWALL CFO Rob Selvi will host the call. A web cast of the live call can be found at http://www.sonicwall.com/us/company/2518.html. A replay of the call will be available beginning at approximately 5:00 p.m. PT (8:00 p.m. ET) today at the Company's website or by telephone until 5:00 p.m. PT on February 16 at 888-203-1112 (toll-free) or 719-457-0820 (International), passcode 8045496.
About SonicWALL, Inc.
Founded in 1991, SonicWALL, Inc. designs, develops and manufactures comprehensive network security, email security, secure remote access, and continuous data protection solutions. For more information, contact SonicWALL at +1 (408) 745-9600 or visit the company web site at http://www.sonicwall.com/.
Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in accordance with GAAP, SonicWALL presents certain non-GAAP financial measures. These non-GAAP financial measures are not intended to replace GAAP results. GAAP results are the most comprehensive and accurate representation of the performance of the company. Management does, however, regularly use these non-GAAP financial measures to evaluate certain aspects of the company's operating performance against established business objectives such as departmental operating results in terms of cash operating expenses as a percentage of revenue, and inventory turns exclusive of non-cash expenses. Management further uses these non-GAAP measures as a benchmark of the company's performance against our competitors who frequently present similar non-GAAP financial measures. The company has in the past and may again in the future use these non-GAAP financial measures as target metrics for its incentive compensation plans. Additionally, management establishes its annual operating plan and manages operating expenses each year exclusive of certain recurring expenses which have no impact on cash from operations. We believe that investors benefit from this additional disclosure as it provides transparency into financial information used by management in our assessment of operating performance, provides a cash basis comparison of operating results against other companies in our industry, and provides the basis of targets established for the incentive compensation plans.
Cautionary Note Regarding Forward-looking Statements
Certain statements in this press release are "forward-looking statements." The forward-looking statements include without limitation statements regarding our expected revenue for the first quarter of 2010, gross margin on a non-GAAP basis for the first quarter of 2010, earnings per share on a GAAP and non-GAAP basis for the first quarter of 2010, share based compensation expense for the first quarter of 2010, and our ability to continue to deliver industry leading enterprise security solutions. These forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect SonicWALL's actual results include, but are not limited to, increased competition in each of the geographic areas in which we do business; exchange rate fluctuations; global macroeconomic and geopolitical conditions; increased competition across all of the market segments in which SonicWALL participates; new product and service introductions by our competitors; significant turnover of our key employees; and unpredictability in the rate of growth of spending of our customers for products and services that SonicWALL provides. In addition, for a more detailed description of the risks and uncertainties that could cause our actual results to differ materially from those anticipated in the forward- looking statements, please see the "Risk Factors" described in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2008 and our interim reports on Form 10-Q for quarterly periods thereafter. All forward-looking statements included in this release are based upon information available to SonicWALL as of the date of the release, and we assume no obligation to update any such forward-looking statement.
NOTE: SonicWALL is a registered trademark of SonicWALL, Inc. Other product and company names mentioned herein may be trademarks and/or registered trademarks of their respective companies.
SonicWALL, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Revenue:
Product $22,628 $21,867 $73,847 $90,857
License and service 31,519 32,389 126,728 127,787
------ ------ ------- -------
Total revenue 54,147 54,256 200,575 218,644
------ ------ ------- -------
Cost of revenue:
Product 11,917 11,028 39,038 43,507
License and service 4,079 4,689 15,857 20,102
Amortization of purchased
technology 755 755 3,017 3,017
--- --- ----- -----
Total cost of revenue 16,751 16,472 57,912 66,626
------ ------ ------ ------
Gross profit 37,396 37,784 142,663 152,018
Operating expenses:
Research and development 9,705 9,807 37,858 44,176
Sales and marketing 18,002 18,395 70,000 82,348
General and administrative 4,546 4,479 17,134 18,613
Amortization of purchased
intangible assets 273 273 1,095 1,114
Restructuring charges - - - 1,683
------ ------ ------- -------
Total operating expenses 32,526 32,954 126,087 147,934
------ ------ ------- -------
Income from operations 4,870 4,830 16,576 4,084
Interest income and other expense,
net 787 1,041 3,164 6,368
--- ----- ----- -----
Income before income taxes 5,657 5,871 19,740 10,452
Provision for income taxes (698) (2,418) (6,586) (5,571)
---- ------ ------ ------
Net income $4,959 $3,453 $13,154 $4,881
------ ------ ------- ------
Net income per share:
Basic $0.09 $0.06 $0.24 $0.09
----- ----- ----- -----
Diluted $0.09 $0.06 $0.24 $0.08
----- ----- ----- -----
Shares used in computing net
income per share:
Basic 54,236 53,575 53,914 56,069
Diluted 56,888 54,459 55,568 57,897
SonicWALL, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2009 2008 (1)
---- --------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $39,071 $45,127
Short-term investments 161,079 60,327
Accounts receivable, net 24,909 20,945
Inventories 6,814 8,956
Deferred tax assets 13,126 9,423
Prepaid expenses and other
current assets 8,071 11,861
----- ------
Total current assets 253,070 156,639
Property and equipment, net 9,819 9,543
Goodwill 138,470 138,470
Long-term investments 15,746 61,450
Deferred tax assets, non-current 20,143 18,406
Purchased intangibles and other
assets, net 13,309 17,328
------ ------
Total assets $450,557 $401,836
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $5,393 $10,717
Accrued payroll and related
benefits 13,457 11,554
Other accrued liabilities 6,270 10,307
Deferred revenue 99,252 88,415
------ ------
Total current liabilities 124,372 120,993
Deferred revenue, non current 24,920 15,072
------ ------
Total liabilities 149,292 136,065
------- -------
Shareholders' Equity:
Common stock, no par value 416,388 396,223
Accumulated other comprehensive
loss, net (7,034) (9,209)
Accumulated deficit (108,089) (121,243)
-------- --------
Total shareholders' equity 301,265 265,771
------- -------
Total liabilities and
shareholders' equity $450,557 $401,836
======== ========
(1) December 31, 2008 balances have been derived from the audited
financial statements as of the same date.
SonicWALL, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Cash flows from operating
activities:
Net cash provided by
operating activities $5,013 $5,362 $35,846 $19,233
------ ------ ------- -------
Cash flows from investing
activities:
Purchase of property
and equipment (1,259) (1,208) (5,299) (5,035)
Change in restricted
cash in escrow - (1) 5,104 1,375
Maturity and sale
of investments,
net of purchases (72,439) 682 (52,686) 66,736
------- --- ------- ------
Net cash provided by
(used in) investing
activities (73,698) (527) (52,881) 63,076
------- ---- ------- ------
Cash flows from financing
activities:
Issuance of common stock under
employee stock option and
purchase plans 841 - 3,144 5,306
Repurchase of common stock - - - (79,408)
Excess tax benefits
from share-based
compensation 7,835 1,609 7,835 3,596
----- ----- ----- -----
Net cash provided by
(used in) financing
activities 8,676 1,609 10,979 (70,506)
----- ----- ------ -------
Net increase
(decrease) in cash
and cash equivalents (60,009) 6,444 (6,056) 11,803
Cash and cash equivalents at
beginning of period 99,080 38,683 45,127 33,324
------ ------ ------ ------
Cash and cash equivalents at
end of period $39,071 $45,127 $39,071 $45,127
======= ======= ======= =======
SonicWALL, Inc.
RECONCILIATION of GAAP to NON-GAAP
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
GAAP net income $4,959 $3,453 $13,154 $4,881
Share-based compensation 2,854 2,535 9,186 10,617
Amortization of purchased
intangible assets 1,029 1,028 4,112 4,131
Restructuring charges - - - 1,683
Tax effect of adjustments (2,832) (1,073) (5,638) (4,376)
------ ------ ------ ------
Net effect of pro forma
adjustments 1,051 2,490 7,660 12,055
----- ----- ----- ------
Non-GAAP net income $6,010 $5,943 $20,814 $16,936
====== ====== ======= =======
Diluted GAAP net income per share $0.09 $0.06 $0.24 $0.08
----- ----- ----- -----
Diluted Non-GAAP net
income per share $0.11 $0.11 $0.37 $0.29
----- ----- ----- -----
GAAP gross margin $37,396 $37,784 $142,663 $152,018
Share-based compensation 143 136 501 532
Amortization of
purchased technology 755 754 3,017 3,017
--- --- ----- -----
Non-GAAP gross margin $38,294 $38,674 $146,181 $155,567
======= ======= ======== ========
Non-GAAP gross margin
percentage of revenue 70.7% 71.3% 72.9% 71.2%
GAAP income from operations $4,870 $4,830 $16,576 $4,084
Cost of revenue - share-
based compensation 143 136 501 532
Cost of revenue - amortization of
purchased technology 755 754 3,017 3,017
Research and development - share-
based compensation 822 728 2,763 3,290
Sales and marketing - share-
based compensation 990 933 3,285 3,802
General and administrative -
shared-
based compensation 899 738 2,637 2,993
Amortization of purchased
intangible assets 274 274 1,095 1,114
Restructuring charges - - - 1,683
--- --- --- -----
Non-GAAP income from operations $8,753 $8,393 $29,874 $20,515
====== ====== ======= =======
Non-GAAP operating margin
percentage of revenue 16.2% 15.5% 14.9% 9.4%
SOURCE SonicWALL, Inc.
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