Acquisitions

Fiscal 2016

Intronis, Inc.

In October 2015, we acquired all outstanding equity interests of Intronis, a leader in providing data protection solutions to managed service providers. The acquisition is expected to expand our channel reach with the addition of Intronis’ existing customer base and its purpose-built platform designed to streamline how MSPs service the data protection needs of their end-customers. The initial fair values of assets acquired and liabilities assumed were based on a preliminary valuation and our estimates and assumptions were subject to change within the measurement period of one year from the acquisition date. The primary areas of the purchase price allocation that were not yet finalized were related to the valuation of deferred income taxes and residual goodwill.

In the fourth quarter of fiscal 2016, we have finalized the purchase price allocation and valuation of assets acquired and liabilities assumed. The measurement period adjustments impacted the preliminary amounts previously recorded for goodwill and deferred tax liabilities, and do not impact the results of operations. The adjustments decreased the total purchase consideration by $0.2 million for working capital adjustments, which reduced the initial amount held back and the deferred tax liabilities by $0.1 million. The aggregate purchase consideration was $65.3 million in cash. As of February 29, 2016, $6.8 million of the purchase consideration is being held back for potential indemnification obligations of the equityholders of Intronis.

We recorded the assets acquired and liabilities assumed at their estimated fair value, with the difference between the fair value of the net assets acquired and the purchase consideration reflected as goodwill. The following table reflects the fair values of assets acquired and liabilities assumed subsequent to the measurement period adjustments (in thousands):



Cash	$	2,327
Accounts receivable	376
Other current assets	654
Property and equipment	4,203
Other non-current assets	750
Developed technology	21,500
Customer relationships	11,870
Trade name	300
Goodwill	29,718
Accounts payable	(685		)
Accrued expenses	(1,149		)
Deferred revenue (current)	(649		)
Deferred tax liabilities	(3,930		)
Total value of assets acquired and liabilities assumed	$	65,285

As of the acquisition date, Intronis’ developed technology, customer relationships and trade name had weighted-average useful lives of 7.0 years, 7.0 years and 4.0 years, respectively. The total weighted-average useful life of these acquired intangible assets is 7.0 years. The goodwill is primarily attributed to the synergies expected to be realized following the acquisition. Goodwill is not expected to be deductible for income tax purposes.

Included in our results of operations for fiscal 2016 are $9.4 million and $1.3 million of revenue and net loss, respectively, attributable to Intronis since the acquisition.

The following unaudited pro forma information presents the combined results of operations of Barracuda and Intronis as if the acquisition had been completed on March 1, 2014, the beginning of the comparable prior annual reporting period. The unaudited pro forma information includes (i) amortization associated with estimates for the acquired intangible assets; and (ii) the associated tax impact on these unaudited pro forma adjustments and certain changes in judgment of valuation allowance as a combined business. The unaudited pro forma information does not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies. Accordingly, this unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations.



	Year Ended February 28/29,
	2016			2015
	(in thousands)
Pro forma revenue	$	333,963		$	295,738
Pro forma net loss attributable to Barracuda Networks, Inc.	$	(12,727	)	$	(67,665	)

Other

In July 2015, we completed an acquisition for total consideration of approximately $1.1 million, which included an estimated fair value for contingent consideration of $0.3 million. $0.7 million was allocated to intangible assets and $0.3 million to goodwill. The goodwill is primarily attributed to the synergies expected to be realized following the acquisition and is expected to be deductible for income tax purposes. As of the acquisition date, customer relationships and developed technology had weighted-average useful lives of 7.0 years and 1.0 year, respectively. The results of operations, since the acquisition date, and pro forma information were not material to our consolidated results of operations for the year ended February 29, 2016.

As of February 29, 2016, we estimated the fair value for the contingent consideration liability to be $0.1 million. The decrease was due to settlement payments made during fiscal 2016.

Prior Year Acquisition

C2C Systems Limited

In August 2014, we completed our acquisition of C2C, a provider of personal storage table file management, email archiving and information management solutions based in the United Kingdom, and were required to pay contingent consideration up to $4.9 million upon the attainment of certain billings levels and performance integration targets through August 2017. As of February 29, 2016 and February 28, 2015, we estimated the fair value for the contingent consideration liability to be $1.2 million and $3.0 million, respectively. Adjustments were recorded based on the weighted probability assessment of achieving the milestones and resulted in a reversal of the contingent consideration liability, which was recorded in fiscal 2016 as a reduction of research and development and sales and marketing expenses of $1.9 million. As of February 29, 2016, the remaining contingent consideration payable is a maximum of $4.1 million as certain milestone periods have expired.