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Earnings Show Barracuda Networks Is Continuing Its Business Shift Toward Growth

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Earnings Show Barracuda Networks Is Continuing Its Business Shift Toward Growth

Shares of Barracuda Networks Inc (NYSE: CUDA) were trading lower by 3 percent Tuesday morning after the company reported its first-quarter results Monday. The company earned $0.18 per share in the quarter on revenue of $94.2 million while analysts were expecting the company to earn $0.18 per share on revenue of $91.2 million.

Barracuda's earnings report was "solid" as billings and revenues came in ahead of expectations, BTIG's Joel Fishbein said in a research report. While the reported EPS was in line with expectations, the company reaffirmed its full-year guidance.

But more importantly, "core" billings and revenue for the cybersecurity company showed a "methodical" 20-percent-plus growth due to ongoing transition toward newer subscription offerings and a shift away from legacy products and appliances. However, there continues to be "some puts and takes" in the quarter as legacy and non-core business lines were a drag on total growth and investments in head counts, products and cloud initiatives are "tempering the rate of leverage" in the model (see Fishbein's track record here).

Overall, the earnings report is encouraging enough to be bullish on the stock, the analyst added. This is especially true when considering the various high growth opportunities ahead, including email security and public cloud services which can help improve top-line growth and drive the stock higher.

Shares of Barracuda Networks remain Buy rated with an unchanged $30 price target.

At time of publication, shares of Barracuda were down 5.13 percent at $22.76.

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Image Credit: By Cuda-mwolfe (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

Latest Ratings for CUDA

DateFirmActionFromTo
Jan 2018BairdDowngradesOutperformNeutral
Dec 2017JP MorganDowngradesOverweightNeutral
Nov 2017KeyBancDowngradesOverweightSector Weight

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