EX-99.1 2 d575099dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

Media Contact:

Jennifer Leggio

Sourcefire

650-260-4025

jleggio@sourcefire.com

   

Investor Contact:

Staci Mortenson

ICR

203-682-8273

Staci.Mortenson@icrinc.com

SOURCEFIRE ANNOUNCES SECOND QUARTER 2013 RESULTS

Second Quarter 2013:

   

Revenue: $65.1 million, an increase of 29% year-over-year

   

Adjusted Net Income: $6.6 million, or $0.20 per diluted share

COLUMBIA, Md., July 29, 2013 – Sourcefire, Inc. (Nasdaq:FIRE), a leader in intelligent cybersecurity solutions, today announced financial results for its fiscal second quarter ended June 30, 2013.

Financial Summary

 

   

Total Revenue - Revenue for the second quarter of 2013 was $65.1 million compared to $50.6 million in the second quarter of 2012, an increase of 29%.

 

   

GAAP Net Income - Net income was $2.2 million for the second quarter of 2013, or $0.07 per diluted share, on the basis of generally accepted accounting principles (GAAP), compared with GAAP net income of $1.1 million, or $0.04 per diluted share, in the second quarter of 2012.

 

   

Adjusted Net Income - Adjusted net income for the second quarter of 2013, which excludes stock-based compensation expense and amortization of acquired intangible assets and includes an assumed tax rate of 35%, was $6.6 million, or $0.20 per diluted share. This compares to adjusted net income of $4.9 million, or $0.16 per diluted share, for the second quarter of 2012, which excludes stock-based compensation expense, amortization of acquired intangible assets and other acquisition-related expenses, and includes an assumed tax rate of 35%.

 

   

Cash and Cash Flow - As of June 30, 2013, the Company’s cash, cash equivalents and investments totaled $237.4 million. For the second quarter of 2013, net cash provided by operating activities was $5.9 million and the Company generated free cash flow of $2.5 million.

Recent Company Highlights

Revenue

 

   

Increased U.S. commercial revenue to $32.1 million, up 16% over 2Q12.

 

   

Increased international revenue to $19.9 million, up 35% over 2Q12.

 

   

Increased U.S. federal sector revenue to $13.1 million, up 57% over 2Q12.


Innovation & Recognition

 

   

Introduced innovative malware trajectory capabilities across the Advanced Malware Protection portfolio, giving customers detailed visibility into malware attack activity and enabling them to detect, remediate and control malware outbreaks. With these additions, Sourcefire Advanced Malware Protection solutions are the only offerings that add a continuous capability to its malware blocking, going beyond point-in-time detection to confirm an infection, trace its path, analyze its behavior, remediate its targets and report on its impact regardless of when a file is determined to be malware.

 

   

Announced enhancements to the FirePOWER™ security platform, including the 7000 and 8000 series appliances, as well as updates to the Next-Generation Intrusion Prevention Systems (NGIPS) and Next-Generation Firewall (NGFW) solutions. With these new features, Sourcefire offers customers increased flexibility and scalability to help ensure leading protection for any environment.

 

   

Based on its recent analysis of the intrusion prevention systems (IPS) market, Frost & Sullivan recognized Sourcefire with the 2013 Global Frost & Sullivan Award for Product Leadership. Sourcefire’s dedication to understanding, detecting, and blocking the most advanced enterprise network threats has enabled its Next-Generation IPS (NGIPS) solution to stand out from the competition. In addition, Sourcefire was recognized for providing exceptional customer value in terms of deployment flexibility, adaptability, and performance.

Non-GAAP Measures

To supplement its consolidated financial statements presented in accordance with GAAP, Sourcefire considers certain financial measures that are not prepared in accordance with GAAP, including non-GAAP adjusted net income, adjusted net income per share, adjusted income from operations, adjusted income from operations as a percentage of revenue and free cash flow.

Sourcefire uses these non-GAAP financial measures, in addition to GAAP financial measures, to evaluate its operating and financial performance and to compare such performance to that of prior periods and to the performance of its competitors. The Company also uses these non-GAAP financial measures in making operational and financial decisions and in establishing operational goals. Sourcefire believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, helps investors to evaluate the Company’s operating and financial performance and trends in its business, consistent with how management evaluates such performance and trends. The Company also believes these non-GAAP financial measures may be useful to investors in comparing its performance to the performance of other companies, although Sourcefire’s non-GAAP financial measures are specific to it and the non-GAAP financial measures of other companies may not be calculated in the same manner.

Adjusted Net Income, Adjusted Net Income per Share, Adjusted Income from Operations and Adjusted Income from Operations as a Percentage of Revenue: In evaluating the operating performance of its business, Sourcefire excludes certain charges and credits that are required by GAAP. These non-GAAP measures exclude (i) stock-based compensation, which does not involve the expenditure of cash, (ii) amortization of acquisition-related intangible assets, which does not involve the expenditure of cash, and (iii) other acquisition–related expenses, which are unrelated to the ongoing operation of the Company’s business in the ordinary course. For


2013, we expect non-GAAP results to be adjusted to reflect the effect of an assumed tax rate of 35%. This adjustment is intended to normalize the tax rate and provide a tax rate that approximates the Company’s expected long-term GAAP tax rate.

Free Cash Flow: Sourcefire defines free cash flow as net cash provided by operating activities minus capital expenditures. The Company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the purchase of property and equipment, can be used for strategic opportunities, including investing in the business, making strategic acquisitions and strengthening the balance sheet.

These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release.

About Sourcefire

Sourcefire, Inc. (Nasdaq:FIRE), a world leader in intelligent cybersecurity solutions, is transforming the way global large- to mid-size organizations and government agencies manage and minimize security risks to their dynamic networks, endpoints, mobile devices and virtual environments. With solutions from a next-generation network security platform to advanced malware protection, Sourcefire’s threat-centric approach provides customers with Agile Security® that delivers protection Before, During and After™ an attack. Trusted for more than 10 years, Sourcefire has earned a reputation for innovation, consistent security effectiveness and world-class research all focused on detecting, understanding and stopping threats. For more information about Sourcefire, please visit www.sourcefire.com.

Sourcefire, the Sourcefire logo, Snort, the Snort and Pig logo, Agile Security and the Agile Security logo, ‘Before, During, and After,’ ClamAV, FireAMP, FirePOWER, FireSIGHT and certain other trademarks and logos are trademarks or registered trademarks of Sourcefire, Inc. in the United States and other countries. Other company, product and service names may be trademarks or service marks of others.

Cautionary Language Concerning Forward-Looking Statements

The statements contained in this release that are not historical facts are “forward-looking statements” (as such term is defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties. These statements include expectations regarding financial results for the second quarter of 2013 and expectations of future growth.

Management cautions the reader that these forward-looking statements are only predictions and are subject to a number of both known and unknown risks and uncertainties, and actual results, performance, and/or achievements of Sourcefire, Inc. may differ materially from the future results, performance, and/or achievements expressed or implied by these forward-looking statements as a result of a number of factors. These factors include, without limitation, those risks and uncertainties described from time to time in the reports filed by Sourcefire, Inc. with the U.S. Securities and Exchange Commission. Sourcefire, Inc. undertakes no obligation to update any forward-looking statements.

#  #  #


Sourcefire, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013     2012      2013     2012  
     (unaudited)     (unaudited)      (unaudited)     (unaudited)  

Revenue:

         

Products

   $ 38,088      $ 29,794       $ 68,880      $ 55,487   

Technical support and professional services

     26,964        20,804         52,336        41,413   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total revenue

     65,052        50,598         121,216        96,900   
  

 

 

   

 

 

    

 

 

   

 

 

 

Cost of revenue:

         

Products

     10,891        8,682         20,917        17,171   

Technical support and professional services

     3,578        2,837         6,776        5,270   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total cost of revenue

     14,469        11,519         27,693        22,441   
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     50,583        39,079         93,523        74,459   

Operating expenses:

         

Research and development

     12,255        10,661         23,450        20,089   

Sales and marketing

     25,792        19,764         50,902        38,968   

General and administrative

     8,138        5,911         14,542        11,355   

Depreciation and amortization

     1,660        1,133         3,263        2,317   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating expenses

     47,845        37,469         92,157        72,729   
  

 

 

   

 

 

    

 

 

   

 

 

 

Income from operations

     2,738        1,610         1,366        1,730   

Other income (expense), net

     (149     11         (190     8   
  

 

 

   

 

 

    

 

 

   

 

 

 

Income before income taxes

     2,589        1,621         1,176        1,738   

Provision (benefit) for income taxes

     372        508         (1,015     558   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

   $ 2,217      $ 1,113       $ 2,191      $ 1,180   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income per share – basic

   $ 0.07      $ 0.04       $ 0.07      $ 0.04   

Net income per share – diluted

   $ 0.07      $ 0.04       $ 0.07      $ 0.04   

Weighted average shares outstanding used in computing per share amounts:

         

Basic

     31,314,224        29,714,500         30,983,817        29,470,671   

Diluted

     32,129,720        30,961,421         31,892,619        30,669,716   

Stock-based compensation expense for the three and six months ended June 30, 2013 and 2012 is included in the Consolidated Statements of Operations as follows (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2012      2013      2012  
     (unaudited)      (unaudited)      (unaudited)      (unaudited)  

Cost of revenue (product)

   $             152       $               93       $             309       $             171   

Cost of revenue (services)

     305         211         564         377   
  

 

 

    

 

 

    

 

 

    

 

 

 

Stock-based comp expense included in cost of revenue

     457         304         873         548   

Research and development

     1,758         1,184         3,328         2,156   

Sales and marketing

     3,176         2,137         6,144         3,883   

General and administrative

     1,803         1,244         3,156         2,389   
  

 

 

    

 

 

    

 

 

    

 

 

 

Stock-based comp expense included in operating expenses

     6,737         4,565         12,628         8,428   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 7,194       $ 4,869       $ 13,501       $ 8,976   
  

 

 

    

 

 

    

 

 

    

 

 

 


Sourcefire, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

     June 30,
2013
    December 31,
2012
 
     (unaudited)     (unaudited)  

Assets

    

Cash and cash equivalents

   $ 128,720      $ 96,178   

Investments

     108,729        107,777   

Accounts receivable, net

     71,092        77,426   

Inventory

     7,107        6,880   

Deferred tax assets

     24,027        13,023   

Prepaid expenses and other current assets

     10,438        9,043   

Property and equipment, net

     16,666        15,438   

Goodwill

     15,000        15,000   

Intangible assets, net

     3,773        4,456   

Other long-term assets

     18,570        19,453   
  

 

 

   

 

 

 

Total assets

   $ 404,122      $ 364,674   
  

 

 

   

 

 

 

Liabilities

    

Accounts payable and accrued expenses

   $ 28,872      $ 27,783   

Deferred revenue

     94,073        90,241   

Other liabilities

     2,252        1,524   
  

 

 

   

 

 

 

Total liabilities

     125,197        119,548   
  

 

 

   

 

 

 

Stockholders’ Equity

    

Common stock

     31        30   

Additional paid-in capital

     287,775        255,610   

Accumulated deficit

     (8,331     (10,522

Accumulated other comprehensive income (loss)

     (550     8   
  

 

 

   

 

 

 

Total stockholders’ equity

     278,925        245,126   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 404,122      $ 364,674   
  

 

 

   

 

 

 


Sourcefire, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013     2012  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Net income

   $ 2,217      $ 1,113      $ 2,191      $ 1,180   

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

     3,643        1,521        19,548        21,131   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     5,860        2,634        21,739        22,311   

Net cash used in investing activities

     (4,768     (7,573     (7,862     (13,109

Net cash provided by financing activities

     2,853        5,087        18,665        8,928   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in cash and cash equivalents

     3,945        148        32,542        18,130   

Cash and cash equivalents at beginning of period

     124,775        77,389        96,178        59,407   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 128,720      $ 77,537      $ 128,720      $ 77,537   
  

 

 

   

 

 

   

 

 

   

 

 

 


Sourcefire, Inc.

Reconciliation of Non-GAAP Measures to GAAP

(in thousands, except share and per share data)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2013     2012     2013     2012  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Reconciliation of adjusted income from operations:

        

GAAP income from operations

   $ 2,738      $ 1,610      $ 1,366      $ 1,730   

Amortization of acquisition-related intangible assets

     342        342        684        684   

Other acquisition-related expenses*

     —          769        —          1,436   

Stock-based compensation expense

     7,194        4,869        13,501        8,976   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income from operations

   $ 10,274      $ 7,590      $ 15,551      $ 12,826   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income from operations as % of total revenue

     15.8     15.0     12.8     13.2

Reconciliation of adjusted net income:

        

GAAP net income

   $ 2,217      $ 1,113      $ 2,191      $ 1,180   

Stock-based compensation expense

     7,194        4,869        13,501        8,976   

Amortization of acquisition-related intangible assets

     342        342        684        684   

Other acquisition-related expenses*

     —          769        —          1,436   

Tax credit for research and experimentation

     (601     —          (2,064     —     

Income tax adjustment**

     (2,571     (2,152     (4,327     (3,934
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 6,581      $ 4,941      $ 9,985      $ 8,342   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per share – basic

   $ 0.21      $ 0.17      $ 0.32      $ 0.28   

Adjusted net income per share – diluted

   $ 0.20      $ 0.16      $ 0.31      $ 0.27   

Weighted average number of shares – basic

     31,314,224        29,714,500        30,983,817        29,470,671   

Weighted average number of shares – diluted

     32,129,720        30,961,421        31,892,619        30,669,716   

 

* Includes the accrual of retention obligations related to the hiring of former Immunet employees.

 

** Income tax adjustment is used to adjust the GAAP provision for income taxes to a Non-GAAP provision for income taxes utilizing an estimated tax rate of 35%.

Reconciliation of net cash provided by operating activities to free cash flow:

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2013     2012     2013     2012  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Net cash provided by operating activities

   $          5,860      $          2,634      $        21,739      $        22,311   

Purchase of property and equipment

     (3,371     (1,534     (4,606     (4,076
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 2,489      $ 1,100      $ 17,133      $ 18,235   
  

 

 

   

 

 

   

 

 

   

 

 

 


Sourcefire, Inc.

Supplemental Operating Data

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013     2012  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Number of deals in excess of $500,000

     28        13        41        25   

Number of deals in excess of $100,000

     120        83        206        162   

Number of new customers

     126        98        225        182   

Percentage of channel-influenced deals

     39     43     45     47

Percentage of install base on FirePOWER

     38     15    

Total channel partners

     814        691       

Number of full-time employees at end of period

     674        519       

Revenue Composition by Geography:

        

United States

     69     71     67     69

International

     31     29     33     31
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100     100     100     100
  

 

 

   

 

 

   

 

 

   

 

 

 

Revenue Composition by Business Distribution:

        

Existing customer product revenue

     42     41     41     38

New customer product revenue

     16     18     16     20

Services revenue

     42     41     43     42
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100     100     100     100