Barracuda Networks Conference Call Highlights

Barracuda Networks Inc CUDA reported its Q2 earnings. Shares of the company are up 1 percent.

Below are some key highlights and takeaways from its conference call.

• We continue to push innovation in security and storage to the midmarket, and our R&D efforts continue to bear fruit, as the last three months were some of the most productive periods of new and refresh product introduction, and total revenue grew 19% year-over-year to $68.7 million.
• Geographically, we saw good demand across all of our markets, lends in the company's history.
• Billings in the second quarter grew 18% year-over-year to $89 by strong year-over-year billings growth in EMEA.
• We grew active subscribers to more than 225,000, up 18% year-over-year.
• Archiving represents a critical need for our target customers.
• And according to a Radicati Group estimate, the worldwide information archiving market will reach more than $8 billion in 2017.
• In our network and application security category, we continue to see solid demand for our Next Generation Firewall solutions.
• In the second quarter, we saw billings growth of over 50% from the prior year in our Next Generation Firewall solutions.

Financials:

• Billings in the second quarter were $89 million, up 18% year-over-year, driven primarily by the growth of our faster growing categories which continue to become a larger piece of our overall mix.
• Revenue in the second quarter was $68.7 million, up 19% year-over-year.
• To break revenue in the second quarter down by geography, Americas represented 74% of total revenue.
• Appliance revenue in the second quarter grew 15.5% year-over-year to $20.7 million.
• Subscription revenue grew 20.3% year-over-year to $48 million.
• During the second quarter, we added over 11,250 net active subscribers, bringing us to a total of over 225,000 active subscribers.
• Renewal rates which we calculate on a dollars basis were 96.5% which is at the high end of our target range.
• Gross margins in the second quarter were again strong at 81.7%, up from 79.8% in the second quarter last year and 80.4% in the prior quarter.
• Non-GAAP operating expenses were $48.3 million or 70.3% of revenue compared to $43.8 million.
• Research and development expenses for the second quarter were $12.4 million or 18% of revenue.
• The higher R&D expenses were primarily a result of continued investment across our portfolio as BJ highlighted earlier.
• We closed the second quarter with cash and cash equivalents of $156.6 million, up from $141.6 million in the first quarter.
• In the second quarter, we used $5.8 million of cash in acquiring C2C Systems. We were pleased that we were able to complete this transaction with offshore cash.

Guidance:

• For the third quarter, we expect revenue to be in the range of $69 million to $70 million.
• We expect non-GAAP operating income for the third quarter to be between $3.5 million and $4.5 million.
• Non-GAAP earnings per share for the third quarter is expected to be between $0.04 and $0.05 of earnings per share.
• Assume a share count range of 54.5 million to 55.5 million shares for the third quarter and a non-GAAP tax rate range of 30% to 35%.
• For fiscal year 2015, we are raising our guidance from what we shared last quarter.
• We now expect our revenue to be between $274 million and $276 million.
• This range represents year-over-year growth of approximately 17% to 18%. We expect our non-GAAP operating income for fiscal year 2015 to be between $18 million and $20 million.
• Non-GAAP earnings per share for fiscal year 2015 is now expected to be between $0.22 and $0.24 of earnings per share.