Riverbed Technology, Inc. Reports Second Quarter 2008 Financial Results
• Revenue of $81.6 million, increased 51% year-over-year
• Added more than 500 new customers totaling more than
4,500 worldwide
• 44 of the Forbes Global 100 are Riverbed customers
• Cash and marketable securities increased 24% year-over-year
to $269 million
San Francisco, CA, July 24, 2008 – Riverbed Technology, Inc. (NASDAQ: RVBD), the technology and market leader in wide-area data services (WDS), today released financial results for the second fiscal quarter ended June 30, 2008.
Revenues for the second quarter of 2008 were $81.6 million, an increase of 51% from the second quarter of 2007 and an increase of 12% from the first quarter of 2008. Pre-tax GAAP income was $1.4 million in the second quarter of 2008. Due to a GAAP tax rate of 163% in the period, Riverbed® posted a GAAP net loss of $869,000, or $0.01 per share. In the second quarter of 2007, with a GAAP tax rate of 17%, GAAP net income was $3.9 million, or $0.05 per share. Riverbed's second quarter of 2008 GAAP results included $14.0 million of stock-based compensation expenses and related payroll taxes. Excluding the impact of stock-based compensation and related payroll taxes in all periods, as well as related income tax effects, the non-GAAP net income for the second quarter of 2008 was $9.9 million, or $0.13 per share, compared to non-GAAP net income of $11.7 million, or $0.16 per share, in the second quarter of 2007. Our non-GAAP tax rate in the second quarter of 2008 was 35%, and our non-GAAP tax rate for the second quarter of 2007 was 7%.
"We are encouraged by our strong sequential and year-over-year revenue growth, as we posted the highest revenues in company history," said Jerry M. Kennelly, Riverbed president and chief executive officer. "Wide area data services offers compelling productivity and cost benefits, and the technological advantages of Riverbed's products are clearly evident in our competitive win rate and industry-leading customer base. During the second quarter, we added a significant number of new customers across a broad range of verticals, bringing our cumulative customer count to over 4,500. New customers included a number of the world's largest companies, and we now have 44 of the Forbes Global 100, many of which have been won in technical bake-offs against our competition."
"Gross margins increased for both our product and service offerings, and total operating expenses decreased as a percentage of sales compared to the first quarter of 2008," said Randy Gottfried, Riverbed chief financial officer. "Total deferred revenue increased 16% quarter-over-quarter to more than $44 million and we ended the quarter with $269 million in cash and marketable securities, after buying back $12.5 million of Riverbed stock as part of our stock repurchase program announced in April."
Conference Call Information
Riverbed will host a conference call for analysts and investors to discuss its second quarter results today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference call will also be accessible from the "Investor Relations" section of the company's website at www.riverbed.com. Following the webcast, an archived version will be available on the website for 30 days. To hear the replay, parties in the United States and Canada should call 800-405-2236 and enter passcode 11116589. International parties can access the replay at 303-590-3000 and should enter passcode 11116589.
About Riverbed
Riverbed Technology is the technology and market leader in wide-area data services (WDS) solutions for companies worldwide. By enabling application performance over the wide area network (WAN) that is orders of magnitude faster than what users experience today, Riverbed is changing the way people work, and enabling a distributed workforce that can collaborate as if they were local. Additional information about Riverbed (Nasdaq: RVBD) is available at www.riverbed.com.
Forward-Looking Statements
This press release contains forward-looking statements, including statements relating to the expected demand for Riverbed's products and services, statements relating to Riverbed's growth prospects and the growth prospects of the WDS market, and statements relating to Riverbed's ability to meet the needs of distributed organizations, grow market share or grow the market as a whole. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to react to trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs or develop new or enhanced products to meet those needs;
the adoption rate of our products; our ability to establish and maintain successful relationships with our distribution partners; our ability to compete in our industry; fluctuations in demand, sales cycles and prices for our products and services; shortages or price fluctuations in our supply chain; our ability to protect our intellectual property rights; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact Riverbed's business are set forth in our Annual Report on Form 10-K for the year ended December 31, 2007 filed with the SEC on February 15, 2008, as well as subsequent reports on Forms 10-Q and 8-K filed with or furnished to the SEC.
All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements. Any future product, feature or related specification that may be referenced in this release are for informational purposes only and are not commitments to deliver any technology or enhancement. Riverbed reserves the right to modify future product plans at any time.
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons why management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled "Use of Non-GAAP Financial Information" as well as the related tables that follow it.
We anticipate disclosing forward-looking non-GAAP financial information on our July 24, 2008 conference call to discuss our second quarter results, including an estimate of non-GAAP earnings for the third quarter and full fiscal year that excludes stock-based compensation expenses related to employee stock options, purchases of common stock under our Employee Stock Purchase Plan, and related payroll taxes, and the tax impact of non-GAAP adjustments. We cannot readily estimate these expenses because they depend on such factors as our future stock price for purposes of computing such expenses.
A copy of this press release can be found on the investor relations page of Riverbed's website at www.riverbed.com.
Riverbed Technology, Riverbed, Steelhead, RiOS, Interceptor, and the Riverbed logo are trademarks or registered trademarks of Riverbed Technology, Inc. All other trademarks used or mentioned herein belong to their respective owners.
Riverbed Technology, Inc.
GAAP Condensed Consolidated Statements of Operations
In thousands, except per share amounts
Unaudited
Three months ended Six months ended
June 30, June 30,
------------------ -----------------
2008 2007 2008 2007
--------- -------- --------- -------
Revenue:
Product $ 62,607 $ 45,188 $120,336 $80,827
Support and services 18,985 8,814 34,238 15,959
--------- -------- --------- -------
Total revenue 81,592 54,002 154,574 96,786
Cost of revenue:
Cost of product 14,564 12,856 28,500 23,024
Cost of support and services 6,967 3,502 12,977 5,888
--------- -------- --------- -------
Total cost of revenue 21,531 16,358 41,477 28,912
--------- -------- --------- -------
Gross profit 60,061 37,644 113,097 67,874
Operating expenses:
Sales and marketing 34,930 20,804 66,137 37,896
Research and development 15,088 9,036 28,696 16,494
General and administrative 10,133 5,600 19,506 9,637
--------- -------- --------- -------
Total operating expenses 60,151 35,440 114,339 64,027
--------- -------- --------- -------
Operating income (loss) (90) 2,204 (1,242) 3,847
Other income, net 1,472 2,555 3,772 4,274
--------- -------- --------- -------
Income before provision for
income taxes 1,382 4,759 2,530 8,121
Provision for income taxes 2,251 814 2,761 918
--------- -------- --------- -------
Net income (loss) $ (869) $ 3,945 $ (231) $ 7,203
========= ======== ========= =======
Net income (loss) per share,
basic $ (0.01) $ 0.06 $ - $ 0.11
Net income (loss) per share,
diluted $ (0.01) $ 0.05 $ - $ 0.10
Shares used in computing basic
net income (loss) per share 71,143 68,085 70,870 66,561
Shares used in computing diluted
net income (loss) per share 71,143 74,091 70,870 72,221
Stock-based compensation expense
included in above:
Cost of product $ 42 $ 33 $ 77 $ 41
Cost of support and services 1,314 620 2,345 992
Sales and marketing 6,559 3,545 11,948 6,286
Research and development 3,559 1,991 6,460 3,447
General and administrative 2,444 1,251 4,296 2,050
--------- -------- --------- -------
Total stock-based
compensation expense $ 13,918 $ 7,440 $ 25,126 $12,816
========= ======== ========= =======
Riverbed Technology, Inc.
Non-GAAP Condensed Consolidated Statements of Operations
In thousands, except per share amounts
Unaudited
Three months Three months
ended ended
June 30, June 30, % change
----------------- ----------------- --------
% of % of
2008 Revenues 2007 Revenues
------- --------- ------- ---------
Revenue:
Product $62,607 77% $45,188 84% 39%
Support and
services 18,985 23% 8,814 16% 115%
------- --------- ------- ---------
Total
revenue 81,592 100% 54,002 100% 51%
Cost of revenue:
Cost of product 14,521 23% (a) 12,823 28% (a) 13%
Cost of support
and services 5,649 30% (a) 2,881 33% (a) 96%
------- --------- ------- ---------
Total cost
of revenue 20,170 25% 15,704 29% 28%
------- --------- ------- ---------
Gross profit 61,422 75% 38,298 71% 60%
Operating expenses:
Sales and
marketing 28,354 35% 17,114 32% 66%
Research and
development 11,512 14% 6,958 13% 65%
General and
administrative 7,684 9% 4,296 8% 79%
------- --------- ------- ---------
Total
operating
expenses 47,550 58% 28,368 53% 68%
------- --------- ------- ---------
Operating income 13,872 17% 9,930 18% 40%
Other income, net 1,472 2% 2,555 5% -42%
------- --------- ------- ---------
Income before
provision for
income taxes 15,344 19% 12,485 23% 23%
Provision for
income taxes 5,417 7% 814 2% 565%
------- --------- ------- ---------
Net income $ 9,927 12% $11,671 22% -15%
======= ========= ======= =========
Net income per
share, basic $ 0.14 $ 0.17
Net income per
share, diluted $ 0.13 $ 0.16
Shares used in
computing basic
net income per
share 71,143 68,085
Shares used in
computing diluted
net income per
share 74,610 74,625
(a)Cost of product and cost of support and services are reflected as
percent of product and support and services revenues,
respectively.
Riverbed Technology, Inc.
Non-GAAP Condensed Consolidated Statements of Operations
In thousands, except per share amounts
Unaudited
Six months ended Six months ended
June 30, June 30, % change
------------------ ----------------- --------
% of % of
2008 Revenues 2007 Revenues
-------- --------- ------- ---------
Revenue:
Product $120,336 78% $80,827 84% 49%
Support and
services 34,238 22% 15,959 16% 115%
-------- --------- ------- ---------
Total
revenue 154,574 100% 96,786 100% 60%
Cost of revenue:
Cost of product 28,422 24% (a) 22,983 28% (a) 24%
Cost of support
and services 10,628 31% (a) 4,895 31% (a) 117%
-------- --------- ------- ---------
Total cost
of
revenue 39,050 25% 27,878 29% 40%
-------- --------- ------- ---------
Gross profit 115,524 75% 68,908 71% 68%
Operating
expenses:
Sales and
marketing 54,156 35% 31,465 33% 72%
Research and
development 22,177 14% 12,960 13% 71%
General and
administrative 15,202 10% 7,534 8% 102%
-------- --------- ------- ---------
Total
operating
expenses 91,535 59% 51,959 54% 76%
-------- --------- ------- ---------
Operating income 23,989 16% 16,949 18% 42%
Other income, net 3,772 2% 4,274 4% -12%
-------- --------- ------- ---------
Income before
provision for
income taxes 27,761 18% 21,223 22% 31%
Provision for
income taxes 9,937 6% 918 1% 982%
-------- --------- ------- ---------
Net income $ 17,824 12% $20,305 21% -12%
======== ========= ======= =========
Net income per
share, basic $ 0.25 $ 0.31
Net income per
share, diluted $ 0.24 $ 0.28
Shares used in
computing basic
net income per
share 70,870 66,561
Shares used in
computing diluted
net income per
share 74,518 72,659
(a)Cost of product and cost of support and services are reflected as
percent of product and support and services revenues,
respectively.
Riverbed Technology, Inc.
Non-GAAP Condensed Consolidated Statements of Operations
In thousands, except per share amounts
Unaudited
Three months Three months
ended ended
June 30, March 31, % change
----------------- ----------------- --------
% of % of
2008 Revenues 2008 Revenues
------- --------- ------- ---------
Revenue:
Product $62,607 77% $57,729 79% 8%
Support and
services 18,985 23% 15,253 21% 24%
------- --------- ------- ---------
Total
revenue 81,592 100% 72,982 100% 12%
Cost of revenue:
Cost of product 14,521 23% (a) 13,901 24% (a) 4%
Cost of support
and services 5,649 30% (a) 4,979 33% (a) 13%
------- --------- ------- ---------
Total cost
of revenue 20,170 25% 18,880 26% 7%
------- --------- ------- ---------
Gross profit 61,422 75% 54,102 74% 14%
Operating expenses:
Sales and
marketing 28,354 35% 25,802 35% 10%
Research and
development 11,512 14% 10,665 15% 8%
General and
administrative 7,684 9% 7,518 10% 2%
------- --------- ------- ---------
Total
operating
expenses 47,550 58% 43,985 60% 8%
------- --------- ------- ---------
Operating income 13,872 17% 10,117 14% 37%
Other income, net 1,472 2% 2,300 3% -36%
------- --------- ------- ---------
Income before
provision for
income taxes 15,344 19% 12,417 17% 24%
Provision for
income taxes 5,417 7% 4,520 6% 20%
------- --------- ------- ---------
Net income $ 9,927 12% $ 7,897 11% 26%
======= ========= ======= =========
Net income per
share, basic $ 0.14 $ 0.11
Net income per
share, diluted $ 0.13 $ 0.11
Shares used in
computing basic
net income per
share 71,143 70,597
Shares used in
computing diluted
net income per
share 74,610 74,427
(a)Cost of product and cost of support and services are reflected as
percent of product and support and services revenues,
respectively.
Riverbed Technology, Inc.
GAAP to Non-GAAP Reconciliation
In thousands, except per share amounts
Unaudited
--------------------------------
Three months ended
June 30, 2008
--------------------------------
GAAP Adjustments Non-GAAP
-------- ----------- ---------
Reconciliation of gross profit:
Total revenue $81,592 $ - $ 81,592
Total cost of revenue 21,531 (1,361) (a) 20,170
-------- ----------- --------
Gross profit $60,061 $ 1,361 $ 61,422
======== =========== ========
Reconciliation of operating
expenses:
Sales and marketing $34,930 $ (6,576) (a)$ 28,354
Research and development 15,088 (3,576) (a) 11,512
General and administrative 10,133 (2,449) (a) 7,684
-------- ----------- --------
Total operating expenses $60,151 $ (12,601) $ 47,550
======== =========== ========
Reconciliation of operating income
(loss), net income (loss) and net
income (loss) per share:
Operating income (loss) $ (90) $ 13,962 (a)$ 13,872
Income before provision for income
taxes $ 1,382 $ 13,962 (a)$ 15,344
Income tax provision $ 2,251 $ 3,166 (b)$ 5,417
Net income (loss) $ (869) $ 10,796 $ 9,927
Net income (loss) per share, basic $ (0.01) $ 0.14
Net income (loss) per share,
diluted $ (0.01) $ 0.13
Shares used in computing basic net
income (loss) per share 71,143 71,143
Shares used in computing diluted
net income (loss) per share 71,143 3,467 (c) 74,610
---------------------------------
Six months ended
June 30, 2008
---------------------------------
GAAP Adjustments Non-GAAP
--------- ----------- --------
Reconciliation of gross profit:
Total revenue $154,574 $ - $154,574
Total cost of revenue 41,477 (2,427) (a) 39,050
--------- ----------- --------
Gross profit $113,097 $ 2,427 $115,524
========= =========== ========
Reconciliation of operating
expenses:
Sales and marketing $ 66,137 $ (11,981) (a)$ 54,156
Research and development 28,696 (6,519) (a) 22,177
General and administrative 19,506 (4,304) (a) 15,202
--------- ----------- --------
Total operating expenses $114,339 $ (22,804) $ 91,535
========= =========== ========
Reconciliation of operating income
(loss), net income (loss) and net
income (loss) per share:
Operating income (loss) $ (1,242) $ 25,231 (a)$ 23,989
Income before provision for income
taxes $ 2,530 $ 25,231 (a)$ 27,761
Income tax provision $ 2,761 $ 7,176 (b)$ 9,937
Net income (loss) $ (231) $ 18,055 $ 17,824
Net income (loss) per share, basic $ - $ 0.25
Net income (loss) per share,
diluted $ - $ 0.24
Shares used in computing basic net
income (loss) per share 70,870 - 70,870
Shares used in computing diluted
net income (loss) per share 70,870 3,648 (c) 74,518
Use of Non-GAAP Financial Information:
To supplement our condensed consolidated financial statements
presented on a GAAP basis, Riverbed uses non-GAAP measures of
operating results, net income (loss) and net income (loss) per
share, which are adjusted to exclude stock-based compensation
expense and payroll tax expense related to stock option exercises,
exclude our tax valuation allowance and certain other extraordinary
items from the tax rate, and to include dilutive shares where
applicable. We believe these adjustments are appropriate to enhance
an overall understanding of our past financial performance and also
our prospects for the future. These adjustments to our current
period GAAP results are made with the intent of providing both
management and investors a more complete understanding of Riverbed's
underlying operating results and trends and our marketplace
performance. The non-GAAP results are an indication of our baseline
performance that are considered by management for purpose of making
operational decisions. In addition, these non-GAAP results are the
primary indicators management uses as a basis for our planning and
forecasting of future periods. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for net income (loss) or basic and diluted net income
(loss) per share prepared in accordance with generally accepted
accounting principles in the United States. Non-GAAP financial
measures are not based on a comprehensive set of accounting rules or
principles and are subject to limitations.
GAAP to Non-GAAP Reconciliations:
---------------------------------------------------------------------
(a) Stock-based compensation expense and payroll tax on stock option
exercises
--------------------------------
Three months ended
June 30, 2008
--------------------------------
Payroll
tax on
Stock-based stock
compensation option
expense exercises Total
------------- ---------- -------
Cost of revenue $ 1,356 $ 5 $ 1,361
Sales and marketing 6,559 17 6,576
Research and development 3,559 17 3,576
General and administrative 2,444 5 2,449
------------- ---------- -------
$ 13,918 $ 44 $13,962
============= ========== =======
--------------------------------
Six months ended
June 30, 2008
--------------------------------
Payroll
tax on
Stock-based stock
compensation option
expense exercises Total
------------- ---------- -------
Cost of revenue $ 2,422 $ 5 $ 2,427
Sales and marketing 11,948 33 11,981
Research and development 6,460 59 6,519
General and administrative 4,296 8 4,304
------------- ---------- -------
$ 25,126 $ 105 $25,231
============= ========== =======
Excluded amount represents stock-based compensation expense. Stock-
based compensation is a non-cash expense accounted for in accordance
with the intrinsic value method under Accounting Principles Board
No. 25 through December 31, 2005, and with the fair value
recognition provisions of Statement of Financial Accounting
Standards No. 123(R) effective January 1, 2006. While a large
component of our expense, we believe investors want to exclude the
effects of stock-based compensation expense in order to compare our
financial performance with that of other companies and between time
periods.
---------------------------------------------------------------------
---------------------------------------------------------------------
(b) Income tax provision
-------------------------------
Three months ended
June 30, 2008
-------------------------------
GAAP provision for income taxes $ 2,251
Effects of exclusion of stock-based
compensation and valuation
allowance 3,166
------------
Non-GAAP provision for income taxes $ 5,417
============
---------------------------------------------------------------------
---------------------------------------------------------------------
(b) Income tax provision
--------------------------------
Six months ended
June 30, 2008
--------------------------------
GAAP provision for income taxes $ 2,761
Effects of exclusion of stock-based
compensation and valuation
allowance 7,176
Non-GAAP provision for income taxes $ 9,937
============
The non-GAAP tax rate excludes the effect of stock-based compensation
expense as well as discrete tax benefits on stock option exercises.
Additionally, the non-GAAP tax rate does not assume a full valuation
allowance on our deferred tax assets.
---------------------------------------------------------------------
(c) Non-GAAP diluted earnings per share and non-GAAP diluted weighted
average shares outstanding were calculated excluding the effects of
expensing stock options under SFAS 123(R).
Riverbed Technology, Inc.
GAAP to Non-GAAP Reconciliation
In thousands, except per share amounts
Unaudited
--------------------------------
Three months ended
June 30, 2007
--------------------------------
GAAP Adjustments Non-GAAP
------- ----------- --------
Reconciliation of gross profit:
Total revenue $54,002 $ - $ 54,002
Total cost of revenue 16,358 (654) (a) 15,704
------- ----------- --------
Gross profit $37,644 $ 654 $ 38,298
======= =========== ========
Reconciliation of operating
expenses:
Sales and marketing $20,804 $ (3,690) (a) $ 17,114
Research and development 9,036 (2,078) (a) 6,958
General and administrative 5,600 (1,304) (a) 4,296
------- ----------- --------
Total operating expenses $35,440 $ (7,072) $ 28,368
======= =========== ========
Reconciliation of operating income,
net income and net income per
share:
Operating income (loss) $ 2,204 $ 7,726 (a) $ 9,930
Net income $ 3,945 $ 7,726 $ 11,671
Net income per share, basic $ 0.06 $ 0.17
Net income per share, diluted $ 0.05 $ 0.16
Shares used in computing basic net
income per share 68,085 68,085
Shares used in computing diluted
net income per share 74,091 534 (b) 74,625
---------------------------------
Six months ended
June 30, 2007
---------------------------------
GAAP Adjustments Non-GAAP
-------- ----------- --------
Reconciliation of gross profit:
Total revenue $ 96,786 $ - $96,786
Total cost of revenue 28,912 (1,034) (a) 27,878
-------- ----------- --------
Gross profit $ 67,874 $ 1,034 $68,908
======== =========== ========
Reconciliation of operating
expenses:
Sales and marketing $ 37,896 $ (6,431) (a) $31,465
Research and development 16,494 (3,534) (a) 12,960
General and administrative 9,637 (2,103) (a) 7,534
-------- ----------- --------
Total operating expenses $ 64,027 $ (12,068) $51,959
======== =========== ========
Reconciliation of operating income,
net income and net income per
share:
Operating income (loss) $ 3,847 $ 13,102 (a) $16,949
Net income $ 7,203 $ 13,102 $20,305
Net income per share, basic $ 0.11 $ 0.31
Net income per share, diluted $ 0.10 $ 0.28
Shares used in computing basic net
income per share 66,561 66,561
Shares used in computing diluted
net income per share 72,221 438 (b) 72,659
GAAP to Non-GAAP Reconciliations:
---------------------------------------------------------------------
(a) Stock-based compensation expense and payroll tax on stock option
exercises
--------------------------------
Three months ended
June 30, 2007
--------------------------------
------------- ----------- ------
Payroll tax
Stock-based on stock
compensation option
expense exercises Total
------------- ----------- ------
Cost of revenue $ 653 $ 1 $ 654
Sales and marketing 3,545 145 3,690
Research and development 1,991 87 2,078
General and administrative 1,251 53 1,304
------------- ----------- ------
$ 7,440 $286 $7,726
============= =========== ======
---------------------------------
Six months ended
June 30, 2007
---------------------------------
------------- ----------- -------
Payroll tax
Stock-based on stock
compensation option
expense exercises Total
------------- ----------- -------
Cost of revenue $ 1,033 $ 1 $ 1,034
Sales and marketing 6,286 145 6,431
Research and development 3,447 87 3,534
General and administrative 2,050 53 2,103
------------- ----------- -------
$ 12,816 $286 $13,102
============= =========== =======
Excluded amount represents stock-based compensation expense. Stock-
based compensation is a non-cash expense accounted for in accordance
with the intrinsic value method under Accounting Principles Board
No. 25 through December 31, 2005, and with the fair value
recognition provisions of Statement of Financial Accounting
Standards No. 123(R) effective January 1, 2006. While a large
component of our expense, we believe investors want to exclude the
effects of stock-based compensation expense in order to compare our
financial performance with that of other companies and between time
periods.
---------------------------------------------------------------------
(b) Non-GAAP diluted earnings per share and non-GAAP diluted weighted
average shares outstanding were calculated excluding the effects of
expensing stock options under SFAS 123(R).
Riverbed Technology, Inc.
GAAP to Non-GAAP Reconciliation
In thousands, except per share amounts
Unaudited
-------------------------------------
Three months ended
March 31, 2008
-------------------------------------
GAAP Adjustments Non-GAAP
------------- ----------- --------
Reconciliation of gross profit:
Total revenue $ 72,982 $ - $72,982
Total cost of revenue 19,946 (1,066) (a) 18,880
------------- ----------- --------
Gross profit $ 53,036 $ 1,066 $54,102
============= =========== ========
Reconciliation of operating
expenses:
Sales and marketing $ 31,207 $ (5,405) (a) $25,802
Research and development 13,608 (2,943) (a) 10,665
General and administrative 9,373 (1,855) (a) 7,518
------------- ----------- --------
Total operating expenses $ 54,188 $ (10,203) $43,985
============= =========== ========
Reconciliation of operating
income, net income and net
income per share:
Operating income (loss) $ (1,152) $ 11,269 (a) $10,117
Income before provision for
income taxes $ 1,148 $ 11,269 (a) $12,417
Income tax provision $ 510 $ 4,010 (b) $ 4,520
Net income $ 638 $ 7,259 $ 7,897
Net income per share, basic $ 0.01 $ 0.11
Net income per share, diluted $ 0.01 $ 0.11
Shares used in computing basic
net income per share 70,597 70,597
Shares used in computing
diluted net income per share 73,959 468 (c) 74,427
GAAP to Non-GAAP
Reconciliations:
------------------------------ -------------------------------------
(a) Stock-based compensation expense and payroll tax on stock option
exercises
Payroll tax
Stock-based on stock
compensation option
expense exercises Total
------------- ----------- --------
Cost of revenue $ 1,066 $ - $ 1,066
Sales and marketing 5,389 16 5,405
Research and development 2,901 42 2,943
General and administrative 1,852 3 1,855
------------- ----------- --------
$ 11,208 $ 61 $11,269
============= =========== ========
Excluded amount represents stock-based compensation expense. Stock-
based compensation is a non-cash expense accounted for in
accordance with the intrinsic value method under Accounting
Principles Board No. 25 through December 31, 2005, and with the
fair value recognition provisions of Statement of Financial
Accounting Standards No. 123(R) effective January 1, 2006. While a
large component of our expense, we believe investors want to
exclude the effects of stock-based compensation expense in order to
compare our financial performance with that of other companies and
between time periods.
--------------------------------------------------------------------
--------------------------------------------------------------------
(b) Income tax provision
GAAP provision for income
taxes $ 510
Effects of exclusion of stock-
based compensation and
valuation allowance 4,010
-------------
Non-GAAP provision for income
taxes $ 4,520
=============
The non-GAAP tax rate excludes the effect of stock-based
compensation expense as well as discrete tax benefits on stock
option exercises. Additionally, the non-GAAP tax rate does not
assume a full valuation allowance on our deferred tax assets.
--------------------------------------------------------------------
(c) Non-GAAP diluted earnings per share and non-GAAP diluted
weighted average shares outstanding were calculated excluding the
effects of expensing stock options under SFAS 123(R).
Riverbed Technology, Inc.
Supplemental Financial Information
In thousands
Unaudited
Revenue by
Geography
-----------------------------------------------------
Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08
-----------------------------------------------------
Customers
within the
United States $29,579 $32,883 $38,736 $46,973 $40,502 $47,596
Customers
outside the
United States 13,205 21,119 24,574 29,337 32,480 33,996
-----------------------------------------------------
Total
revenue $42,784 $54,002 $63,310 $76,310 $72,982 $81,592
=====================================================
As a percentage
of total
revenues:
Customers
within the
United States 69% 61% 61% 62% 55% 58%
Customers
outside the
United States 31% 39% 39% 38% 45% 42%
-----------------------------------------------------
Total
revenue 100% 100% 100% 100% 100% 100%
=====================================================
Revenue by Sales
Channel
-----------------------------------------------------
Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08
-----------------------------------------------------
Direct $ 4,023 $ 5,256 $ 7,516 $ 9,251 $ 8,063 $ 7,290
Indirect 38,761 48,746 55,794 67,059 64,919 74,302
-----------------------------------------------------
Total
revenue $42,784 $54,002 $63,310 $76,310 $72,982 $81,592
=====================================================
As a percentage
of total
revenues:
Direct 9% 10% 12% 12% 11% 9%
Indirect 91% 90% 88% 88% 89% 91%
-----------------------------------------------------
Total
revenue 100% 100% 100% 100% 100% 100%
=====================================================
Riverbed Technology, Inc.
Condensed Consolidated Balance Sheets
In thousands
June 30, December 31,
2008 2007
----------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 115,679 $ 162,979
Marketable securities 153,624 83,103
Trade receivables, net 45,055 50,072
Other receivables 493 1,273
Inventory 12,883 9,413
Prepaid expenses and other current assets 7,604 5,136
----------- ------------
Total current assets 335,338 311,976
----------- ------------
Fixed assets, net 22,403 18,826
Other assets 7,794 6,800
----------- ------------
Total assets $ 365,535 $ 337,602
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,077 $ 20,325
Accrued compensation and related benefits 12,981 14,290
Other accrued liabilities 12,158 9,381
Deferred revenue 35,755 26,845
----------- ------------
Total current liabilities 75,971 70,841
----------- ------------
Deferred revenue non-current 8,599 6,634
Other long-term liabilities 317 409
----------- ------------
Total long-term liabilities 8,916 7,043
----------- ------------
Stockholders' equity:
Common stock and additional paid-in-capital 315,400 295,487
Deferred stock-based compensation (2,001) (3,287)
Accumulated deficit (32,766) (32,535)
Accumulated other comprehensive loss 15 53
----------- ------------
Total stockholders' equity 280,648 259,718
----------- ------------
----------- ------------
Total liabilities and stockholders' equity $ 365,535 $ 337,602
=========== ============
Riverbed Technology, Inc.
Condensed Consolidated Statements of Cash Flows
In thousands
Unaudited
Six months ended
June 30,
-------------------
2008 2007
--------- ---------
Operating activities:
Net income (loss) $ (231) $ 7,203
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 4,532 2,203
Stock-based compensation 25,126 12,816
Excess tax benefit from employee stock plans (1,427) -
Changes in operating assets and liabilities:
(Increase) decrease in trade receivables 4,107 (7,742)
Increase in inventory (5,900) (2,184)
(Increase) decrease in prepaid expenses and
other assets (1,962) 470
Decrease in accounts payable and other current
liabilities (741) (198)
Increase in income taxes payable 1,284 779
Increase in deferred revenue 11,108 7,262
--------- ---------
Net cash provided by operating activities 35,896 20,609
Investing activities:
Capital expenditures (8,120) (3,488)
Purchase of available for sale securities (94,641) (66,078)
Proceeds from sales and maturities of available
for sale securities 24,003 4,000
Increase in other assets - (1,600)
--------- ---------
Net cash used in investing activities (78,758) (67,166)
Financing activities:
Proceeds from public offering, net of expenses - 87,681
Proceeds from issuance of common stock under
employee stock plans, net of repurchases 6,540 5,215
Payments for repurchases of common stock (12,484) -
Excess tax benefit from employee stock plans 1,427 -
--------- ---------
Net cash provided by (used in) financing
activities (4,517) 92,896
Effect of exchange rate changes on cash and cash
equivalents 79 18
--------- ---------
Net increase (decrease) in cash and cash
equivalents (47,300) 46,357
Cash and cash equivalents at beginning of period 162,979 105,330
--------- ---------
Cash and cash equivalents at end of period $115,679 $151,687
========= =========
MEDIA CONTACTS
Renee Lyall
Riverbed Technology
415-247-6353
ir@riverbed.com
Chris Danne
The Blueshirt Group
415-217-7722
chris@blueshirtgroup.com
###
