Delaware | 001-36162 | 83-0380411 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit No. | Description | |
10.1* | Form of Indemnification Agreement between the Company and its directors and officers | |
99.1 | Press release issued by Barracuda Networks, Inc., dated April 17, 2017 |
* | Incorporated by reference to Exhibit 10.1 filed with the Company’s Registration Statement on Form S-1 (File No. 333-191510), filed with the Securities and Exchange Commission on October 1, 2013. |
BARRACUDA NETWORKS, INC. | |||
Date: April 17, 2017 | By: | /s/ Diane C. Honda | |
Diane C. Honda | |||
Senior Vice President, General Counsel & Secretary |
Exhibit No. | Description | |
10.1* | Form of Indemnification Agreement between the Company and its directors and officers | |
99.1 | Press release issued by Barracuda Networks, Inc., dated April 17, 2017 |
* | Incorporated by reference to Exhibit 10.1 filed with the Company’s Registration Statement on Form S-1 (File No. 333-191510), filed with the Securities and Exchange Commission on October 1, 2013. |
• | Q4 total revenue grew 7% year-over-year to $89.3 million and fiscal year 2017 total revenue grew 10% year-over-year to $352.6 million |
• | Q4 GAAP earnings per share of $0.06 and non-GAAP earnings per share of $0.19 |
• | Fiscal year 2017 GAAP earnings per share of $0.19 and non-GAAP earnings per share of $0.82 |
• | Total active subscribers increased 15% year-over-year to reach 321,000 |
• | Total revenue increased 7% to $89.3 million, compared with $83.7 million in the fourth quarter of fiscal 2016. Subscription revenue grew to $69.4 million, up 12% from $62.1 million in the fourth quarter of fiscal 2016, representing 78% of total revenue. Appliance revenue was $19.9 million, compared with $21.7 million in the fourth quarter of fiscal 2016. |
• | Gross billings were $103.2 million, compared with $95.8 million in the fourth quarter of fiscal 2016. Billings for core products increased 21% to $63.8 million, compared with $52.6 million in the fourth quarter of fiscal 2016. The number of active subscribers grew approximately 15% year-over-year to reach 321,000 as of February 28, 2017. The dollar-based renewal rate was 89%, or 90% on a constant currency basis, and 93% on an annualized basis. |
• | GAAP net income was $3.2 million, or $0.06 per share, based on a diluted share count of 54.1 million, compared to a GAAP net income of $3.2 million, or $0.06 per share, in the fourth quarter of fiscal 2016. |
• | Non-GAAP net income was $10.0 million, or $0.19 per share, based on a diluted share count of 54.1 million. Non-GAAP net income was favorably impacted by the exclusion of $7.7 million in stock-based compensation expense, $1.8 million in amortization of intangibles and $0.2 million in other expense, partially offset by the exclusion of an income tax effect of $2.4 million and $0.4 million in acquisition and other benefits. |
• | Total revenue increased 10% to $352.6 million, compared with $320.2 million in fiscal year 2016. Subscription revenue grew to $269.9 million, up 17% from $230.9 million in fiscal year 2016, representing 77% of total revenue. Appliance revenue was $82.7 million, compared with $89.3 million in fiscal year 2016. |
• | Gross billings increased 7% to $402.1 million, compared with $377.5 million in fiscal year 2016. Billings for core products increased 23% to $239.5 million, compared with $194.4 million in fiscal 2016. |
• | GAAP net income was $10.2 million, or $0.19 per share, based on a diluted share count of 53.6 million, compared to a GAAP net loss of $4.4 million, or $0.08 per share, on a basic share count of 53.1 in fiscal 2016. |
• | Non-GAAP net income was $43.8 million, or $0.82 per share, based on a diluted share count of 53.6 million. Non-GAAP net income was favorably impacted by the exclusion of $32.7 million in stock-based compensation expense, $7.2 million in amortization of intangibles, $0.6 million in acquisition and other charges and $0.1 million in other expense, partially offset by the exclusion of an income tax effect of $7.0 million. |
• | Introduced "Cloud Ready" Program: Announced innovative "Cloud Ready" program that allows customers to sample the cloud for their new and existing workloads with no upfront costs and without having to determine where or how to |
• | Expanded Cloud-based Application Security Capabilities: Launched Barracuda Vulnerability Remediation Service, a cloud-based service that automates security policy enforcement with on-demand or scheduled scanning and automatic remediation of web application vulnerabilities. The service simplifies security operations for DevOps teams looking to leverage the agility and elasticity of public cloud platforms by integrating security directly into the application development process. Barracuda Vulnerability Remediation Service enables administrators to find, continuously monitor for and automatically fix vulnerabilities. The service can be used for applications deployed on-premises, or in hybrid or cloud-only environments, with policy configurations that can be applied across any number of Web Application Firewall instances. |
• | Enhanced Data Protection Product Portfolio: Announced an appliance refresh across the Barracuda Backup product line, which gives customers increased storage capacity up to 100% in some cases, offering a lower cost per Terabyte and enabling more room for data growth. As part of the refresh, customers with cloud storage subscriptions can now replicate more data to the cloud with no increase in subscription prices. Additionally, 10 Gigabit Ethernet connections are now included with the Barracuda Backup 690, 790, and 890 appliances for a faster data transfer. |
As of February 28, 2017 | As of February 29, 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 120,194 | $ | 118,654 | |||
Marketable securities | 79,915 | 36,394 | |||||
Accounts receivable, net of allowance for doubtful accounts | 40,560 | 36,520 | |||||
Inventories, net | 5,847 | 5,648 | |||||
Deferred costs | 32,598 | 31,943 | |||||
Other current assets | 16,295 | 12,450 | |||||
Total current assets | 295,409 | 241,609 | |||||
Property and equipment, net | 29,979 | 31,910 | |||||
Deferred costs, non-current | 27,285 | 27,019 | |||||
Deferred income taxes, non-current | 1,554 | 2,992 | |||||
Other non-current assets | 8,607 | 7,293 | |||||
Intangible assets, net | 32,145 | 39,386 | |||||
Goodwill | 69,795 | 69,595 | |||||
Total assets | $ | 464,774 | $ | 419,804 | |||
Liabilities and stockholders’ equity (deficit) | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 11,439 | $ | 15,939 | |||
Accrued payroll and related benefits | 13,593 | 12,371 | |||||
Other accrued liabilities | 12,942 | 19,495 | |||||
Deferred revenue | 239,796 | 235,411 | |||||
Note payable | 4,115 | 268 | |||||
Total current liabilities | 281,885 | 283,484 | |||||
Long-term liabilities: | |||||||
Deferred revenue, non-current | 167,286 | 157,363 | |||||
Deferred income taxes, non-current | 2,803 | 2,478 | |||||
Note payable, non-current | — | 4,115 | |||||
Other long-term liabilities | 6,377 | 4,462 | |||||
Stockholders’ equity (deficit): | |||||||
Common stock | 53 | 52 | |||||
Additional paid-in capital | 370,745 | 337,439 | |||||
Accumulated other comprehensive loss | (5,226 | ) | (4,509 | ) | |||
Accumulated deficit | (359,149 | ) | (365,080 | ) | |||
Total stockholders’ equity (deficit) | 6,423 | (32,098 | ) | ||||
Total liabilities and stockholders’ equity (deficit) | $ | 464,774 | $ | 419,804 |
Three Months Ended February 28/29, | Twelve Months Ended February 28/29, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue: | |||||||||||||||
Appliance | $ | 19,908 | $ | 21,650 | $ | 82,732 | $ | 89,275 | |||||||
Subscription | 69,351 | 62,076 | 269,917 | 230,883 | |||||||||||
Total revenue | 89,259 | 83,726 | 352,649 | 320,158 | |||||||||||
Cost of revenue | 22,193 | 19,879 | 83,772 | 70,132 | |||||||||||
Gross profit | 67,066 | 63,847 | 268,877 | 250,026 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 18,790 | 17,120 | 75,070 | 71,251 | |||||||||||
Sales and marketing | 32,865 | 33,504 | 129,707 | 138,324 | |||||||||||
General and administrative | 10,084 | 10,998 | 42,042 | 47,338 | |||||||||||
Total operating expenses | 61,739 | 61,622 | 246,819 | 256,913 | |||||||||||
Income (loss) from operations | 5,327 | 2,225 | 22,058 | (6,887 | ) | ||||||||||
Other income (expense), net | (201 | ) | 604 | (70 | ) | (262 | ) | ||||||||
Income (loss) before income taxes | 5,126 | 2,829 | 21,988 | (7,149 | ) | ||||||||||
Benefit from (provision for) income taxes | (1,905 | ) | 406 | (11,753 | ) | 2,727 | |||||||||
Net income (loss) | $ | 3,221 | $ | 3,235 | $ | 10,235 | $ | (4,422 | ) | ||||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | 0.06 | $ | 0.06 | $ | 0.20 | $ | (0.08 | ) | ||||||
Diluted | $ | 0.06 | $ | 0.06 | $ | 0.19 | $ | (0.08 | ) | ||||||
Weighted-average shares used to compute net income (loss) per share: | |||||||||||||||
Basic | 52,818 | 52,746 | 52,456 | 53,070 | |||||||||||
Diluted | 54,117 | 53,118 | 53,572 | 53,070 |
Three Months Ended February 28/29, | Twelve Months Ended February 28/29, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating activities | |||||||||||||||
Net income (loss) | $ | 3,221 | $ | 3,235 | $ | 10,235 | $ | (4,422 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
Depreciation, amortization, and impairment expense | 3,989 | 5,373 | 16,431 | 13,300 | |||||||||||
Stock-based compensation expense | 7,655 | 7,430 | 32,705 | 28,846 | |||||||||||
Excess tax benefits from equity compensation plans | 114 | (398 | ) | (1,909 | ) | (3,788 | ) | ||||||||
Deferred income taxes | 1,251 | (2,665 | ) | 1,642 | (6,592 | ) | |||||||||
Other | 62 | (1,759 | ) | (493 | ) | (865 | ) | ||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable, net | (1,049 | ) | 5,500 | (4,103 | ) | 4,427 | |||||||||
Inventories, net | (1,133 | ) | 471 | (202 | ) | (1,193 | ) | ||||||||
Income taxes, net | (1,207 | ) | 1,873 | 1,931 | 2,756 | ||||||||||
Deferred costs | (1,292 | ) | 385 | (725 | ) | (1,112 | ) | ||||||||
Other assets | (419 | ) | (388 | ) | (888 | ) | (2,187 | ) | |||||||
Accounts payable | (499 | ) | 957 | (5,388 | ) | (720 | ) | ||||||||
Accrued payroll and related benefits | 135 | (382 | ) | 1,033 | 3,339 | ||||||||||
Other liabilities | 1,043 | (5,306 | ) | 397 | (1,526 | ) | |||||||||
Deferred revenue | 5,621 | 1,069 | 14,537 | 19,003 | |||||||||||
Net cash provided by operating activities | 17,492 | 15,395 | 65,203 | 49,266 | |||||||||||
Investing activities | |||||||||||||||
Purchases of marketable securities | (14,966 | ) | (6,981 | ) | (74,527 | ) | (26,021 | ) | |||||||
Proceeds from the sale of marketable securities | 1,931 | 1,108 | 13,461 | 10,310 | |||||||||||
Proceeds from the maturity of marketable securities | 4,007 | 5,520 | 17,597 | 20,047 | |||||||||||
Purchases of non-marketable investments | (600 | ) | — | (1,236 | ) | (1,400 | ) | ||||||||
Purchases of property and equipment | (2,070 | ) | (2,318 | ) | (6,335 | ) | (7,818 | ) | |||||||
Purchases of intangible assets | — | — | (1,374 | ) | — | ||||||||||
Business combinations, net of cash acquired | (6,707 | ) | — | (6,950 | ) | (56,862 | ) | ||||||||
Net cash used in investing activities | (18,405 | ) | (2,671 | ) | (59,364 | ) | (61,744 | ) | |||||||
Financing activities | |||||||||||||||
Proceeds from issuance of common stock | 1,474 | 133 | 8,899 | 4,845 | |||||||||||
Taxes paid related to net share settlement of equity awards | (1,058 | ) | (765 | ) | (7,061 | ) | (6,734 | ) | |||||||
Repurchases of common stock | (355 | ) | (11,216 | ) | (7,596 | ) | (19,216 | ) | |||||||
Excess tax benefits from equity compensation plans | (114 | ) | 398 | 1,909 | 3,788 | ||||||||||
Repayment of employee loans, net of loans extended | 122 | 24 | — | (2,464 | ) | ||||||||||
Repayment of note payable | (68 | ) | (64 | ) | (268 | ) | (285 | ) | |||||||
Other | — | (75 | ) | — | (330 | ) | |||||||||
Net cash provided by (used in) financing activities | 1 | (11,565 | ) | (4,117 | ) | (20,396 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (7 | ) | 422 | (182 | ) | 155 | |||||||||
Net increase (decrease) in cash and cash equivalents | (919 | ) | 1,581 | 1,540 | (32,719 | ) | |||||||||
Cash and cash equivalents at beginning of period | 121,113 | 117,073 | 118,654 | 151,373 | |||||||||||
Cash and cash equivalents at end of period | $ | 120,194 | $ | 118,654 | $ | 120,194 | $ | 118,654 |
Three Months Ended February 28/29, | Twelve Months Ended February 28/29, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
GAAP cost of revenue | $ | 22,193 | $ | 19,879 | $ | 83,772 | $ | 70,132 | |||||||
Amortization of intangible assets (1) | 1,252 | 1,561 | 5,004 | 3,247 | |||||||||||
Depreciation expense (2) | 1,511 | 1,550 | 6,155 | 5,062 | |||||||||||
Stock-based compensation expense (3) | 408 | 310 | 1,367 | 1,062 | |||||||||||
Non-GAAP cost of revenue | $ | 19,022 | $ | 16,458 | $ | 71,246 | $ | 60,761 | |||||||
GAAP sales and marketing expense | $ | 32,865 | $ | 33,504 | $ | 129,707 | $ | 138,324 | |||||||
Amortization of intangible assets (1) | 507 | 1,544 | 2,242 | 2,343 | |||||||||||
Depreciation expense (2) | 64 | (69 | ) | 246 | 160 | ||||||||||
Stock-based compensation expense (3) | 2,072 | 1,565 | 8,074 | 6,566 | |||||||||||
Acquisition and other charges (4) | — | (1,029 | ) | — | (1,346 | ) | |||||||||
Non-GAAP sales and marketing expense | $ | 30,222 | $ | 31,493 | $ | 119,145 | $ | 130,601 | |||||||
GAAP research and development expense | $ | 18,790 | $ | 17,120 | $ | 75,070 | $ | 71,251 | |||||||
Depreciation expense (2) | 111 | 113 | 528 | 657 | |||||||||||
Stock-based compensation expense (3) | 2,842 | 2,141 | 11,651 | 8,247 | |||||||||||
Acquisition and other charges (4) | (419 | ) | (536 | ) | (202 | ) | 1,685 | ||||||||
Non-GAAP research and development expense | $ | 16,256 | $ | 15,402 | $ | 63,093 | $ | 60,662 | |||||||
GAAP general and administrative expense | $ | 10,084 | $ | 10,998 | $ | 42,042 | $ | 47,338 | |||||||
Depreciation expense (2) | 544 | 674 | 2,256 | 1,831 | |||||||||||
Stock-based compensation expense (3) | 2,333 | 3,414 | 11,613 | 12,971 | |||||||||||
Acquisition and other charges (4) | 64 | 126 | 814 | 4,649 | |||||||||||
Non-GAAP general and administrative expense | $ | 7,143 | $ | 6,784 | $ | 27,359 | $ | 27,887 | |||||||
GAAP total expense | $ | 83,932 | $ | 81,501 | $ | 330,591 | $ | 327,045 | |||||||
Amortization of intangible assets (1) | 1,759 | 3,105 | 7,246 | 5,590 | |||||||||||
Depreciation expense (2) | 2,230 | 2,268 | 9,185 | 7,710 | |||||||||||
Stock-based compensation expense (3) | 7,655 | 7,430 | 32,705 | 28,846 | |||||||||||
Acquisition and other charges (4) | (355 | ) | (1,439 | ) | 612 | 4,988 | |||||||||
Non-GAAP total expense | $ | 72,643 | $ | 70,137 | $ | 280,843 | $ | 279,911 | |||||||
Depreciation expense (2) | 2,230 | 2,268 | 9,185 | 7,710 | |||||||||||
Non-GAAP total expense including depreciation | $ | 74,873 | $ | 72,405 | $ | 290,028 | $ | 287,621 |
Three Months Ended February 28/29, | Twelve Months Ended February 28/29, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
GAAP operating income (loss) | $ | 5,327 | $ | 2,225 | $ | 22,058 | $ | (6,887 | ) | ||||||
Amortization of intangible assets (1) | 1,759 | 3,105 | 7,246 | 5,590 | |||||||||||
Stock-based compensation expense (3) | 7,655 | 7,430 | 32,705 | 28,846 | |||||||||||
Acquisition and other charges (4) | (355 | ) | (1,439 | ) | 612 | 4,988 | |||||||||
Non-GAAP operating income | $ | 14,386 | $ | 11,321 | $ | 62,621 | $ | 32,537 | |||||||
GAAP net income (loss) | $ | 3,221 | $ | 3,235 | $ | 10,235 | $ | (4,422 | ) | ||||||
Amortization of intangible assets (1) | 1,759 | 3,105 | 7,246 | 5,590 | |||||||||||
Stock-based compensation expense (3) | 7,655 | 7,430 | 32,705 | 28,846 | |||||||||||
Acquisition and other charges (4) | (355 | ) | (1,439 | ) | 612 | 4,988 | |||||||||
Income tax effect on non-GAAP exclusions (5) | (2,396 | ) | (3,793 | ) | (7,029 | ) | (12,435 | ) | |||||||
Other expense (income) adjustments (6) | 154 | (631 | ) | 58 | 87 | ||||||||||
Non-GAAP net income | $ | 10,038 | $ | 7,907 | $ | 43,827 | $ | 22,654 | |||||||
Non-GAAP diluted earnings per share (7) | $ | 0.19 | $ | 0.15 | $ | 0.82 | $ | 0.42 | |||||||
Weighted-average shares used to compute diluted earnings per share | 54,117 | 53,118 | 53,572 | 54,337 |
(1) | Amortization of Intangible Assets. We provide non-GAAP information which excludes expenses for the amortization of intangible assets, as well as certain losses on disposal and impairment of such assets that primarily relate to purchased intangible assets associated with our acquisitions. We believe that eliminating this expense from our non-GAAP measures is useful to investors because the amortization of intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of our acquisition transactions, which also vary in frequency from period to period. Accordingly, we analyze the performance of our operations in each period without regard to such expenses. |
(2) | Depreciation Expense. We provide non-GAAP information which excludes depreciation expense related to the amortization of property and equipment, as well as certain losses from disposal of such assets. We believe that eliminating this expense from our non-GAAP measures is useful to investors because the acquisition of property and equipment, and the corresponding depreciation expense, can be inconsistent in amount and can vary from period to period. |
(3) | Stock-Based Compensation Expense. We provide non-GAAP information which excludes expenses for stock-based compensation. We believe the exclusion of stock-based compensation expense allows for financial results that are more indicative of our continuing operations. We also believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. |
(4) | Acquisition and Other Charges. We exclude certain expense items resulting from acquisitions and other charges, which we believe are non-recurring, infrequent, and/or unusual in nature, can vary significantly in amount and frequency, and are unrelated to our ongoing operating performance. We believe that adjusting for these charges allows us to better compare results from period to period in order to assess the ongoing operating results of our business. The charges include: (i) acquisition-related expenses for legal, accounting, and other professional fees, integration costs, fair value remeasurements of contingent consideration obligations and contingent consideration payments made under the terms of acquisition agreements, and (ii) other costs that are non-recurring, infrequent, and/or unusual in nature, such as expenses incurred in connection with litigation, export compliance, intellectual property settlement, and other matters. |
(5) | Income Tax Effect of Non-GAAP Exclusions. We believe providing financial information with and without the income tax effect of excluding items related to our non-GAAP financial measures provide our management and users of the financial statements with better clarity regarding the ongoing performance and future liquidity of our business. Excluded items include, but are not limited to: (i) amortization expense of intangible assets, (ii) stock-based compensation expense, (iii) acquisition and other charges, and (iv) quarterly changes to the valuation allowance previously established. |
(6) | Other Expense (Income) Adjustments. We provide non-GAAP information that excludes the effect of certain other income and losses. These adjustments consist of realized gains and losses from the sale of marketable securities, foreign currency remeasurement gains and losses and impairment charges related to non-marketable investments. For all non-functional currency account balances, the remeasurement of such balances to the functional currency will result in either a foreign exchange gain or a loss which is recorded in other income (expense), net. We believe that eliminating these items from our non-GAAP measures is useful to investors, because these items can be inconsistent in amount and can vary from period to period. |
(7) | Non-GAAP Diluted Earnings Per Share. We provide non-GAAP diluted earnings per share. Non-GAAP diluted earnings per share is calculated based on our non-GAAP net income divided by the weighted-average diluted shares outstanding for the period. |
Three Months Ended February 28/29, | Twelve Months Ended February 28/29, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
GAAP net income (loss) | $ | 3,221 | $ | 3,235 | $ | 10,235 | $ | (4,422 | ) | ||||||
Other expense (income), net | 201 | (604 | ) | 70 | 262 | ||||||||||
Provision for (benefit from) income taxes | 1,905 | (406 | ) | 11,753 | (2,727 | ) | |||||||||
Acquisition and other charges | (355 | ) | (1,439 | ) | 612 | 4,988 | |||||||||
Stock-based compensation expense | 7,655 | 7,430 | 32,705 | 28,846 | |||||||||||
Amortization of intangible assets | 1,759 | 3,105 | 7,246 | 5,590 | |||||||||||
Depreciation expense | 2,230 | 2,268 | 9,185 | 7,710 | |||||||||||
Adjusted EBITDA (1) | $ | 16,616 | $ | 13,589 | $ | 71,806 | $ | 40,247 |
(1) | Adjusted EBITDA. Beginning in the third quarter of fiscal 2017, we modified our reporting practices to comply with recent SEC interpretations on the use of non-GAAP measures. As a result, we have modified our historical presentation of adjusted EBITDA and will no longer adjust for changes in deferred revenue and associated deferred costs in our calculation of adjusted EBITDA. These changes do not impact our current and historical presentation of GAAP results. Prior period information has been recast to conform to the adjusted calculation. We define adjusted EBITDA as net income (loss) plus non-cash and non-operating charges which include: (i) other expense (income), net, (ii) provision for (benefit from) income taxes, (iii) acquisition and other charges, (iv) stock-based compensation expense, (v) amortization of intangible assets, including certain losses on disposal and impairment of intangible assets, and (vi) depreciation expense, including certain losses on disposal of fixed assets. We believe adjusted EBITDA provides an indication of profitability from our operations, and provides a consistent measure of our performance from period to period. |
Three Months Ended February 28/29, | Twelve Months Ended February 28/29, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Increase in deferred revenue | $ | 5,782 | $ | 1,157 | $ | 14,308 | $ | 19,912 | |||||||
Increase (decrease) in deferred costs | $ | 1,332 | $ | (293 | ) | $ | 921 | $ | 1,026 |
Three Months Ended February 28/29, | Twelve Months Ended February 28/29, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
GAAP cash flows from operating activities | $ | 17,492 | $ | 15,395 | $ | 65,203 | $ | 49,266 | |||||||
Purchases of property and equipment | (2,070 | ) | (2,318 | ) | (6,335 | ) | (7,818 | ) | |||||||
Free cash flow (1) | $ | 15,422 | $ | 13,077 | $ | 58,868 | $ | 41,448 |
(1) | Free Cash Flow. Beginning in the third quarter of fiscal 2017, we modified our reporting practices to comply with recent SEC interpretations on the use of non-GAAP measures. As a result, we have modified our historical presentation of free cash flow and will no longer adjust free cash flow for the cash payment impact of acquisition and other charges. These changes do not impact our current and historical presentation of GAAP results. Prior period information has been recast to conform to the adjusted calculation. We define free cash flow as cash flows from operating activities less the purchases of property and equipment. We believe free cash flow is an important liquidity measure that reflects the cash generated by the business after the purchase of property and equipment that can then be used for, among other things, strategic acquisitions, investments in the business, and funding ongoing operations. |
Three Months Ended February 28/29, | Twelve Months Ended February 28/29, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
GAAP Revenue | $ | 89,259 | $ | 83,726 | $ | 352,649 | $ | 320,158 | |||||||
Total deferred revenue, end of period | 407,082 | 392,774 | 407,082 | 392,774 | |||||||||||
Less: total deferred revenue, beginning of period | (401,300 | ) | (391,617 | ) | (392,774 | ) | (372,862 | ) | |||||||
Deferred revenue adjustments | 8,178 | 10,905 | 35,160 | 37,445 | |||||||||||
Total change in deferred revenue and adjustments | 13,960 | 12,062 | 49,468 | 57,357 | |||||||||||
Gross billings (1)(2) | $ | 103,219 | $ | 95,788 | $ | 402,117 | $ | 377,515 |
(1) | Gross Billings. We define gross billings as total revenue plus the change in deferred revenue and other adjustments, which primarily consist of returns and reserves with respect to the 30-day right of return we provide to customers, as well as rebates for certain channel partner activities. We believe that gross billings provide insight into the sales of our solutions and performance of our business. The deferred revenue balances for the prior fiscal year's comparable periods exclude amounts related to the deferred revenue assumed in connection with our acquisition of C2C Systems Limited, which closed in the second quarter of fiscal 2015. |
(2) | In order to determine how our business performed exclusive of the effect of foreign currency fluctuations, we compare the percentage change in our gross billings from one period to another using a constant currency. To present this gross billings information, the current and comparative prior period results for entities that operate in other than U.S. dollars are converted into U.S. dollars at constant exchange rates. For example, the rates in effect at February 29, 2016, which was the last day of our prior fiscal year’s comparable quarter, were used to convert current and comparable prior period gross billings rather than the actual exchange rates in effect during the respective period. |