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Gigamon Reports Fourth Quarter and Fiscal Year 2014 Financial Results
- Record Quarterly Revenue of $51.3 million
-Q4 Results Driven by Strong Enterprise and Federal Performance

SANTA CLARA, Calif., Jan. 29, 2015 /PRNewswire/ -- Gigamon® Inc. (NYSE:GIMO), the leader in traffic visibility solutions with the innovative Visibility Fabric™ architecture, today released financial results for the fourth quarter and fiscal year ended December 27, 2014.

Fourth Quarter 2014 Financial Highlights:

  • Revenues were $51.3 million, up 31% sequentially from the third quarter of fiscal 2014 and up 19% year-over-year.
  • GAAP gross margin was 77%, compared to 80% in the fourth quarter of fiscal 2013.
  • Non-GAAP gross margin was 77%, compared to 81% in the fourth quarter of fiscal 2013.
  • GAAP net income was $2.9 million, or $0.09 per diluted share, compared to GAAP net loss of $0.1 million, or $0.00 per diluted share, in the fourth quarter of fiscal 2013.
  • Non-GAAP net income was $6.1 million, or $0.18 per diluted share, compared to non-GAAP net income of $6.0 million, or $0.18 per diluted share, in the fourth quarter of fiscal 2013.

Fiscal Year 2014 Financial Highlights:

  • Revenues were $157.1 million, up 12% from fiscal 2013.
  • GAAP gross margin was 76%, compared to 78% in fiscal 2013.
  • Non-GAAP gross margin was 77%, compared to 81% in fiscal 2013.
  • GAAP net loss was $40.8 million, or $1.27 per diluted share, compared to GAAP net loss of $9.5 million, or $0.39 per diluted share, in fiscal 2013.
  • Non-GAAP net income was $4.0 million, or $0.12 per diluted share, compared to non-GAAP net income of $15.9 million, or $0.53 per diluted share, in fiscal 2013.

"We are very pleased to have delivered record quarterly revenue of $51.3 million in the fourth quarter and a second consecutive quarter of non-GAAP profitability," said Paul Hooper, chief executive officer of Gigamon.  "Our solid results were driven by continued strong performance in our Enterprise and Federal businesses, as well as a number of larger transactions from new and existing customers. We exited 2014 with healthy momentum and remain sharply focused on execution."

Recent Business Highlights:

  • Announced new visibility solutions into emerging threat sources with integrated SSL support and enhancements for multi-tiered security.
  • Received Frost & Sullivan's 2015 Best Practices Award for Global VoLTE Network Monitoring Systems, the 2014 Network World Asia's Readers' Choice Product Excellence Awards for Network Analytics and Traffic Management, and Telecom Asia's Business Analytics Innovation of the Year Award.
  • Announced a strategic initiative to introduce a software only version of our GigaVUE-OS for select third party white box hardware providers.
  • Launched the Gigamon Partner Program, an enhanced worldwide channel program for our VAR partners.
  • Appointed Scott Sullivan as vice president of worldwide channel sales.

Conference Call Information:

Gigamon will host a conference call and live webcast today at 5:00 p.m. ET (2:00 p.m. PT) to discuss its financial results for the fourth quarter and fiscal year ended December 27, 2014.  Parties in the United States and Canada can access the call by dialing +1-888-471-3843, using conference code 7350156. International parties can access the call by dialing +1-719-325-2463, using conference code 7350156.

The webcast will be accessible on Gigamon's investor relations website at http://investor.gigamon.com for a period of one year. A telephonic replay of the conference call will be available through Thursday, February 5, 2015. To access the replay, parties in the United States and Canada should call +1-888-203-1112 and enter conference code 7350156. International parties should call +1-719-457-0820 and enter conference code 7350156.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures that exclude stock-based compensation and related payroll taxes, the income tax effect of these stock-based compensation related expenses and a valuation allowance against deferred tax assets. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies.  Gigamon considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the company, exclusive of unusual events or factors that do not directly affect what we consider to be our core operating performance, and are used by the company's management for that purpose. In addition, investors often use similar measures to evaluate the operating performance of a company. Non-GAAP financial measures are presented for supplemental informational purposes only for understanding the company's operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP financial measures presented by other companies.  Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure attached to this release.

Legal Notice Regarding Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements in this press release include, but are not limited to, our business momentum and our strategic product and channel initiatives. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include our ability to continue to deliver and improve our products and successfully develop new products; customer acceptance and purchase of our existing products and new products; our ability to retain existing customers and generate new customers; the market for network traffic visibility solutions not continuing to develop; competition from other products and services; and general market, political, economic and business conditions.  The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the period ended September 27, 2014. The forward-looking statements in this press release are based on information available to Gigamon as of the date hereof, and Gigamon disclaims any obligation to update any forward-looking statements, except as required by law.

About the Visibility Fabric architecture

At Gigamon we realized that delivering the visibility essential to manage, analyze and secure the complex system that is the IT infrastructure requires a new approach. With millions of traffic flows across thousands of endpoints, visibility needs to be pervasive, intelligent and dynamic. Using our patented, unique technology, we created an innovative new approach for delivering this visibility called the Visibility Fabric architecture. This new approach is intelligent and versatile in its ability to enable visibility into the network. For more information visit http://www.gigamon.com/traffic-visibility-fabric.

About Gigamon

Gigamon provides an intelligent Visibility Fabric™ architecture for enterprises, data centers and service providers around the globe. Gigamon's technology empowers infrastructure architects, managers and operators with pervasive and dynamic intelligent visibility of traffic across both physical and virtual environments without affecting the performance or stability of the production network. Through patented technologies and centralized management, the Gigamon GigaVUE portfolio of high availability and high density products intelligently delivers the appropriate network traffic to management, analysis, compliance and security tools. Since 2004 Gigamon has been designing and building traffic visibility products, and its solutions are deployed globally across vertical markets including over half of the Fortune 100 and many government and federal agencies. www.gigamon.com

 

Gigamon Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)





Three Months Ended

Fiscal Year Ended


December 27, 2014

December 28, 2013

December 27, 2014

December 28, 2013

Revenue:









Product

$

36,790


$

31,698


$

105,594


$

101,717


Services

14,461


11,389


51,536


38,578


Total revenue

51,251


43,087


157,130


140,295


Cost of revenue:









Product

10,319


7,646


31,001


26,103


Services

1,722


1,170


6,447


4,727


Total cost of revenue

12,041


8,816


37,448


30,830


Gross profit

39,210


34,271


119,682


109,465


Operating expenses:









Research and development

10,922


10,341


42,806


42,067


Sales and marketing

20,387


18,004


76,063


72,024


General and administrative

5,015


4,682


20,683


25,575


Total operating expenses

36,324


33,027


139,552


139,666


Income (loss) from operations

2,886


1,244


(19,870)


(30,201)


Other income (expense):









Interest income

92


60


308


95


Other expense, net

(31)


(17)


(94)


(94)


Income (loss) before income tax (provision) benefit

2,947


1,287


(19,656)


(30,200)


Income tax (provision) benefit

(41)


(1,375)


(21,134)


20,663


Net income (loss)

2,906


(88)


(40,790)


(9,537)


Accretion of preferred stock to redemption value and issuance costs




(1,088)


Earnings distributable to preferred stockholders




1,107


Net income (loss) attributable to common stockholders

$

2,906


$

(88)


$

(40,790)


$

(9,518)


Net income (loss) per share attributable to common stockholders:









Basic

$

0.09


$


$

(1.27)


$

(0.39)


Diluted

$

0.09


$


$

(1.27)


$

(0.39)


Weighted average shares used in computing net income (loss) per share attributable to common stockholders:









Basic

32,746


31,246


32,200


24,722


Diluted

33,606


31,246


32,200


24,722


 

Gigamon Inc.

Consolidated Balance Sheets

(In thousands)

(unaudited)





December 27,

December 28,


2014


2013


Assets





Current assets:





Cash and cash equivalents

$

38,941


$

79,908


Short-term investments

110,465


58,242


Accounts receivable, net

28,686


24,528


Inventories, net

6,551


1,484


Deferred tax assets

150


3,574


Prepaid expenses and other current assets

5,316


5,606


Total current assets

190,109


173,342


Property and equipment, net

7,387


4,389


Deferred tax assets, non-current

64


17,315


Other assets

426


471


Total assets

$

197,986


$

195,517


Liabilities and Stockholders' Equity





Current liabilities:





Accounts payable

$

2,391


$

1,405


Accrued liabilities

22,838


22,401


Deferred revenue

42,183


37,592


Gigamon LLC members' distribution payable


476


Total current liabilities

67,412


61,874


Deferred revenue, non-current

13,322


9,884


Deferred tax liability, non-current

150



Other liabilities

1,667


321







Stockholders' equity:





Common stock

3


3


Treasury stock

(12,469)


(12,469)


Additional paid in capital

177,714


144,810


Accumulated other comprehensive (loss) income

(94)


23


Accumulated deficit

(49,719)


(8,929)


Total stockholders' equity

115,435


123,438


Total liabilities and stockholders' equity

$

197,986


$

195,517


 

Gigamon Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)





Three Months Ended

Fiscal Year Ended


December 27,

December 28,

December 27,

December 28,


2014


2013


2014


2013


CASH FLOWS FROM OPERATING ACTIVITIES:









Net income (loss)

$

2,906


$

(88)


$

(40,790)


$

(9,537)


Adjustments to reconcile net income (loss) to net cash provided by operating activities:









Depreciation and amortization

1,568


886


5,278


2,850


Stock-based compensation expense

6,023


7,186


24,658


32,543


Deferred income taxes

(52)


1,293


20,825


(20,889)


Inventory write-down

824


207


3,760


852


Loss on disposal of fixed assets




14


Changes in operating assets and liabilities:









Accounts receivable

(9,117)


2,507


(4,158)


(3,851)


Inventories

(633)


(1,671)


(8,229)


1,400


Prepaid expenses and other current assets

1,234


(1,005)


(950)


(3,274)


Accounts payable

(526)


(115)


963


(1,758)


Accrued liabilities and other liabilities

7,620


6,532


1,709


8,302


Deferred revenue

6,117


6,531


8,029


16,656


   Net cash provided by operating activities

15,964


22,263


11,095


23,308


CASH FLOWS FROM INVESTING ACTIVITIES:









Purchase of short-term investments

(15,607)


(19,383)


(87,698)


(59,725)


Proceeds from sales of short-term investments

1,010


2,000


3,010


2,000


Proceeds from maturities of short-term investments

11,100



32,607



Purchase of property and equipment

(514)


(1,216)


(7,614)


(4,042)


   Net cash used in investing activities

(4,011)


(18,599)


(59,695)


(61,767)


CASH FLOWS FROM FINANCING ACTIVITIES:









Proceeds from employee stock purchase plan



5,878



Proceeds from exercise of stock option

449


1,608


5,364


1,719


Proceeds from (costs paid for) initial public offering, net


(111)


(8)


95,280


Proceeds from follow-on public offering, net


10,232



10,232


Shares repurchased for tax withholdings on vesting of restricted stock units

(514)


(518)


(3,125)


(518)


Distribution of income to Gigamon LLC members


(24)


(476)


(7,021)


   Net cash (used in) provided by financing activities

(65)


11,187


7,633


99,692


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

11,888


14,851


(40,967)


61,233


CASH AND CASH EQUIVALENTS — Beginning of period

27,053


65,057


79,908


18,675


CASH AND CASH EQUIVALENTS — End of period

$

38,941


$

79,908


$

38,941


$

79,908


 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages)

(unaudited)





Three Months Ended


Fiscal Year Ended



December 27,


December 28,


December 27,


December 28,



2014


2013


2014


2013


Revenue

51,251


43,087


157,130


140,295


Reconciliation of Gross Profit and Gross Margin to Non-GAAP Gross Profit and Non-GAAP Gross Margin:









GAAP gross profit

39,210


34,271


119,682


109,465


Stock-based compensation expense

317


449


1,679


3,496


Stock-based compensation related payroll taxes

3



64



Performance unit plan compensation expense




353


Non-GAAP gross profit

$

39,530


$

34,720


$

121,425


$

113,314


GAAP gross margin

77

%

80

%

76

%

78

%

Non-GAAP gross margin

77

%

81

%

77

%

81

%

Reconciliation of Operating Income (loss) and Operating Margin to Non-GAAP Operating Income and Non-GAAP Operating Margin:









GAAP operating income (loss)

2,886


1,244


(19,870)


(30,201)


Stock-based compensation expense

6,024


7,186


24,658


32,543


Stock-based compensation related payroll taxes

23



821



Performance unit plan compensation expense




20,371


Non-GAAP operating income

$

8,933


$

8,430


$

5,609


$

22,713


Reconciliation of Net Income (Loss) Attributable To Common Stockholders to Non-GAAP Net Income:









GAAP net income (loss) attributable to common stock holders

$

2,906


$

(88)


$

(40,790)


$

(9,518)


Stock-based compensation expense

6,024


7,186


24,658


32,543


Stock-based compensation related payroll taxes

23



821



Accretion of preferred stock




1,088


Loss attributable to preferred stock holders




(1,107)


Performance unit plan compensation expense




20,371


Tax benefit upon conversion of LLC to a C Corporation




14,811


Income tax effect of Non-GAAP adjustments

(2,811)


(1,128)


19,271


(42,295)


Non-GAAP net income

$

6,142


$

5,970


$

3,960


$

15,893


 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

(In thousands, except per share amounts)

(unaudited)





Three Months Ended

Fiscal Year Ended


December 27,

December 28,

December 27,

December 28,


2014


2013


2014


2013


Reconciliation of Diluted Net Income (Loss) per Share to Non-GAAP Diluted Net Income (Loss) per Share:









GAAP diluted net income (loss) per share

$

0.09


$


$

(1.27)


$

(0.39)


Stock-based compensation expense

0.18


0.23


0.79


1.32


Stock-based compensation related payroll taxes





Accretion of preferred stock




0.04


Loss attributable to preferred stock holders




(0.04)


Performance unit plan compensation expense




0.82


Tax benefit upon conversion of LLC to a C corporation




0.60


Income tax effect of non-GAAP adjustments

(0.08)


(0.04)


0.60


(1.71)


Impact of difference in number of GAAP and non-GAAP diluted shares


(0.01)


 


(0.11)


Non-GAAP diluted net income (loss) per share

$

0.18


$

0.18


$

0.12


$

0.53


Reconciliation of Diluted Weighted-Average Number of Shares to Non-GAAP Diluted Weighted-Average Number of Shares:









GAAP diluted weighted-average number of shares

33,606


31,246


32,200


24,722


Dilutive impact due to stock-based compensation

580


2,100


1,394


5,323


Non-GAAP diluted weighted-average number of shares

34,186


33,346


33,594


30,045


 

 Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations

For the Three months and Fiscal Year Ended December 27, 2014 and December 28, 2013

(In thousands, except per share amounts and percentages)

(unaudited)






Three Months Ended


Fiscal Year Ended


December 27, 2014

December 28, 2013


December 27, 2014

December 28, 2013


As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP


As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP

Revenue:


























Product

$

36,790


$


$

36,790


$

31,698


$


$

31,698



$

105,594


$


$

105,594


$

101,717


$


$

101,717


Service

14,461



$

14,461


11,389



$

11,389



51,536



$

51,536


38,578



$

38,578


Total revenue

51,251



51,251


43,087



43,087



157,130



157,130


140,295



140,295


Cost of revenue:


























Product (1) (3)

10,319


(130)


10,189


7,646


(215)


7,431



31,001


(959)


30,042


26,103


(2,308)


23,795


Service (1) (3)

1,722


(190)


1,532


1,170


(234)


936



6,447


(784)


5,663


4,727


(1,541)


3,186



12,041


(320)


11,721


8,816


(449)


8,367



37,448


(1,743)


35,705


30,830


(3,849)


26,981


Gross profit

39,210


320


39,530


34,271


449


34,720



119,682


1,743


121,425


109,465


3,849


113,314


Product Gross Margin

72

%



72

%

76

%



77

%


71

%



72

%

74

%



77

%

Service Gross Margin

88

%



89

%

90

%



92

%


87

%



89

%

88

%



92

%

Total Gross Margin

77

%



77

%

80

%



81

%


76

%



77

%

78

%



81

%

Operating expenses:


























Research and development (1) (3)

10,922


(2,186)


8,736


10,341


(2,620)


7,721



42,806


(8,523)


34,283


42,067


(16,655)


25,412


Sales and marketing (1) (3)

20,387


(1,934)


18,453


18,004


(2,606)


15,398



76,063


(8,433)


67,630


72,024


(19,025)


52,999


General and administrative (1) (3)

5,015


(1,607)


3,408


4,682


(1,511)


3,171



20,683


(6,780)


13,903


25,575


(13,385)


12,190


Total operating expenses

36,324


(5,727)


30,597


33,027


(6,737)


26,290



139,552


(23,736)


115,816


139,666


(49,065)


90,601


Income (loss) from operations

2,886


6,047


8,933


1,244


7,186


8,430



(19,870)


25,479


5,609


(30,201)


52,914


22,713


Other income (expense):


























Interest income

92



92


60



60



308



308


95



95


Other expense, net

(31)



(31)


(17)



(17)



(94)



(94)


(94)



(94)


Income (loss) before income taxes

2,947


6,047


8,994


1,287


7,186


8,473



(19,656)


25,479


5,823


(30,200)


52,914


22,714


Income tax (expense) benefit (2) (4) (5)

(41)


(2,811)


(2,852)


(1,375)


(1,128)


(2,503)



(21,134)


19,271


(1,863)


20,663


(27,484)


(6,821)


Net income (loss)

2,906


3,236


6,142


(88)


6,058


5,970



(40,790)


44,750


3,960


(9,537)


25,430


15,893


Accretion of preferred stock











(1,088)


1,088



Loss attributable to preferred stock holders











1,107


(1,107)



Net income (loss) to common stock holders

$

2,906


$

3,236


$

6,142


$

(88)


$

6,058


$

5,970



$

(40,790)


$

44,750


$

3,960


$

(9,518)


$

25,411


$

15,893


Net income (loss) per share attributable to common stockholders:


























Basic

$

0.09


$

0.10


$

0.19


$


$

0.19


$

0.19



$

(1.27)


$

1.39


$

0.12


$

(0.39)


$

1.03


$

0.64


Diluted

$

0.09


$

0.09


$

0.18


$


$

0.18


$

0.18



$

(1.27)


$

1.39


$

0.12


$

(0.39)


$

0.91


$

0.53


Weighted-average number of shares used in per share amounts:


























Basic

32,746



32,746


31,246



31,246



32,200



32,200


24,722



24,722


Diluted

33,606


580


34,186


31,246


2,100


33,346



32,200


1,394


33,594


24,722


5,323


30,045


Notes:

  1. Includes stock-based compensation expense and related payroll taxes in three months and fiscal years ended December 27, 2014 and December 28, 2013.
  2. Includes income tax effect of non-GAAP adjustments in the three months and fiscal years ended December 27, 2014 and December 28, 2013.
  3. Includes performance unit plan compensation related expenses in the fiscal year ended December 28, 2013.
  4. Amount for the fiscal year ended December 28, 2013 includes tax benefit recorded upon the conversion from an LLC to a C Corporation on May 31, 2013.
  5. Amount for the fiscal year ended December 27, 2014 includes establishment of valuation allowance against the deferred tax asset.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gigamon-reports-fourth-quarter-and-fiscal-year-2014-financial-results-300028108.html

SOURCE Gigamon Inc.

Katie Al-Khoury, +1 (206) 576-5507, KAlKhoury@webershandwick.com, INVESTOR CONTACT: Cynthia Hiponia, +1 (408) 831-4100, IR@gigamon.com

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