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Gigamon Reports First Quarter 2017 Financial Results
Service Provider Vertical Drives Solid Results
Industry-Leading Innovation Continues with New Product Introductions

SANTA CLARA, Calif., April 27, 2017 /PRNewswire/ -- Gigamon Inc. (NYSE:GIMO), the leader in traffic visibility solutions, today released financial results for its first quarter ended April 1, 2017.

First Quarter 2017 Financial Highlights:

  • Revenue of $69.6 million, up 4% year-over-year.
  • GAAP gross margin was 81%, compared to 81% in the first quarter of fiscal 2016. 
  • Non-GAAP gross margin was 82%, compared to 82% in the first quarter of fiscal 2016.
  • GAAP net loss was $(2.2) million, or $(0.06) per basic and diluted share, compared to GAAP net income of $3.0 million, or $0.08 per diluted share, in the first quarter of fiscal 2016.
  • Non-GAAP net income was $4.6 million, or $0.12 per diluted share, compared to non-GAAP net income of $8.2 million, or $0.22 per diluted share, in the first quarter of fiscal 2016. 
  • Cash and short-term investments were $265 million, up $7 million from the fourth quarter of 2016 and up $57 million from the first quarter of fiscal 2016.

"We continue to make progress as we focus on a recovery to sustained and strong growth with results this quarter ahead of our expectations, including a healthy bottom line," said Paul Hooper, Chief Executive Officer of Gigamon. "As we enter Q2, we are implementing a number of changes in our business that we expect will drive growth during the second half of the year, including the appointment of our new CMO, Kim DeCarlis, the announcement of our GigaVUE-HC3--the highest performance system in the market--and the introduction of our in-line SSL solution offering new levels of visibility, control and scale to the industry."

Recent Business Highlights:

  • Introduced GigaVUE-HC3, the highest-performance appliance in our HC family to enable pervasive visibility and security intelligence at scale across 10, 40 and 100Gb networks.
  • Gigamon Visibility Platform on Amazon Web Services (AWS) gained momentum with availability in the AWS marketplace and achieved elevated Amazon Partner Network (APN) and Public Sector Program Partner statuses.
  • Announced a significant expansion to Gigamon's GigaSECURE® SSL/TLS decryption solution, with new inline capabilities, bringing enhanced visibility into encrypted data-in-motion.
  • Appointed longtime security veteran Arthur W. Coviello Jr. to its Board of Directors to help guide the company's security strategy and growth.
  • Named industry marketing leader Kim DeCarlis as Chief Marketing Officer to drive increased market opportunities, brand awareness and industry leadership for Gigamon.

Conference Call Information:

Gigamon will host a conference call and live webcast for analysts and investors at 5:00 p.m. Eastern time on April 27, 2017. This news release and a supplemental financial presentation will be available on the company's website prior to the conference call.  Parties in the United States and Canada can access the call by dialing +1 (877)-329-7568, using conference code 6085965.  International parties can access the call by dialing +1 (719)-457-2695, using conference code 6085965.

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, May 4, 2017. To access the replay, parties in the United States and Canada should call +1 (866)-375-1919 and enter conference code 6085965. International parties should call +1 (719)-457-0820 and enter conference code 6085965.

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 accompanying tables contain certain non-GAAP financial measures that exclude stock-based compensation and related payroll taxes, and income tax effects of stock-based compensation expense. Non-GAAP financial measures do not have any standardized meaning and our non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies.  Gigamon considers these non-GAAP financial measures 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 core to our 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.  We present non-GAAP financial measures for supplemental informational purposes only to provide additional information in 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.  Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures attached to this release.

During the conference call to discuss these financial results, Gigamon expects to give guidance for the second quarter of fiscal 2017 on a non-GAAP basis.   Gigamon does not provide reconciliations of its forward-looking non-GAAP financial measures to the corresponding GAAP measures due to the high variability and difficulty in making accurate forecasts and projections with respect to stock-based compensation and related payroll taxes, and income tax effect of stock-based compensation expense, which are excluded from these non-GAAP measures.  In particular, stock-based compensation and related taxes are impacted by future hiring and retention needs, as well as the future fair market value of Gigamon's common stock, all of which is difficult to predict and subject to constant change. The actual amounts of these excluded items will have a significant impact on Gigamon's GAAP net income (loss) per diluted share and GAAP tax provision. Accordingly, reconciliations of Gigamon's forward-looking non-GAAP financial measures to the corresponding GAAP measures are not available without unreasonable effort.

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 expectations regarding the future growth of our business and the impact of changes we are making to enable growth. 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 Annual Report on Form 10-K for the period ended December 31, 2016. 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.

Gigamon

Gigamon (NYSE: GIMO) provides active visibility into physical and virtual network traffic, enabling stronger security and superior performance. Gigamon's Visibility Fabric and GigaSECURE®, the industry's first Security Delivery Platform, deliver advanced intelligence so that security, network and application performance management solutions in enterprise, government and service provider networks operate more efficiently and effectively. See more at www.gigamon.com, the Gigamon Blog, or follow Gigamon on Twitter, LinkedIn, or Facebook.

Gigamon Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)

(unaudited)



Three Months Ended


April 1, 2017


April 2, 2016

Revenue:




Product

$

44,010



$

44,662


Service

25,557



22,549


Total revenue

69,567



67,211


Cost of revenue:




Product

10,604



10,707


Service

2,706



2,082


Total cost of revenue

13,310



12,789


Gross profit

56,257



54,422


Operating expenses:




Research and development

20,149



15,358


Sales and marketing

33,441



27,657


General and administrative

9,055



7,995


Total operating expenses

62,645



51,010


Income (loss) from operations

(6,388)



3,412


Other income (expense):




Interest income

356



207


Other expense, net

(117)



(69)


Income (loss) before income tax (provision) benefit

(6,149)



3,550


Income tax benefit (provision)

3,912



(579)


Net income (loss)

$

(2,237)



$

2,971


Net income (loss) per share:




Basic

$

(0.06)



$

0.09


Diluted

$

(0.06)



$

0.08


Weighted average shares used in computing net income (loss) per share:




Basic

36,563



34,633


Diluted

36,563



36,546


 

Gigamon Inc.

Consolidated Balance Sheets

(In thousands)

(unaudited)



April 1, 2017


December 31, 2016

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$

159,676



$

148,926


Short-term investments

105,504



109,238


Accounts receivable, net

56,526



75,522


Inventories, net

11,908



11,347


Prepaid expenses and other current assets

12,137



9,909


Total current assets

345,751



354,942


Property and equipment, net

12,448



11,809


Deferred tax assets, non-current

44,458



33,094


Other assets, non-current

2,272



1,154


TOTAL ASSETS

$

404,929



$

400,999


LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES:




Accounts payable

$

6,591



$

5,208


Accrued liabilities

20,490



34,649


Deferred revenue

67,484



68,997


Total current liabilities

94,565



108,854


Deferred revenue, non-current

28,351



28,785


Deferred and other tax liabilities, non-current

288



201


Other liabilities, non-current

312



499


TOTAL LIABILITIES

123,516



138,339


STOCKHOLDERS' EQUITY




Common stock

4



4


Additional paid-in-capital

274,287



256,774


Accumulated other comprehensive loss

(49)



(17)


Accumulated equity

7,171



5,899


TOTAL STOCKHOLDERS' EQUITY

281,413



262,660


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

404,929



$

400,999


 

Gigamon Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)



Three Months Ended


April 1, 2017

April 2, 2016

CASH FLOWS FROM OPERATING ACTIVITIES:




Net income (loss)

$

(2,237)



$

2,971


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




Depreciation and amortization

2,021



1,271


Stock-based compensation expense

12,554



8,176


Deferred and other income taxes

(4,137)



(117)


Inventory write-down, net

206



175


Write down of fixed assets

29




Bad debt expense



25


Changes in operating assets and liabilities:




Accounts receivable

18,996



2,263


Inventories

(770)



(2,073)


Prepaid expenses and other assets

(2,792)



654


Accounts payable

1,718



(254)


Accrued liabilities and other liabilities

(14,371)



(13,076)


Deferred revenue

(1,947)



(3,282)


Net cash provided by (used in) operating activities

9,270



(3,267)


CASH FLOWS FROM INVESTING ACTIVITIES:




Purchase of short-term investments

(33,710)



(29,107)


Proceeds from maturities of short-term investments

37,500



26,786


Purchase of property and equipment

(2,695)



(2,107)


Net cash provided by (used in) investing activities

1,095



(4,428)


CASH FLOWS FROM FINANCING ACTIVITIES:




Proceeds from employee stock purchase plan

4,956



3,368


Proceeds from exercise of stock options

581



1,377


Shares repurchased for tax withholdings on vesting of restricted stock units

(4,339)



(1,385)


Net cash provided by financing activities

1,198



3,360


NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

11,563



(4,335)


CASH, CASH EQUIVALENTS AND RESTRICTED CASH - Beginning of period

148,926



120,212


CASH, CASH EQUIVALENTS AND RESTRICTED CASH - End of period

$

160,489



$

115,877






 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages)

(unaudited)



Three Months Ended


April 1, 2017


April 2, 2016

Total Revenue

$

69,567



$

67,211


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




GAAP gross profit

56,257



54,422


Stock-based compensation expense

677



470


Stock-based compensation related payroll taxes

31



16


Non-GAAP gross profit

$

56,965



$

54,908


GAAP gross margin

81

%


81

%

Non-GAAP gross margin

82

%


82

%

Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Operating Income:




GAAP operating income (loss)

$

(6,388)



$

3,412


Stock-based compensation expense

12,554



8,176


Stock-based compensation related payroll taxes

507



282


Non-GAAP operating income

$

6,673



$

11,870


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




GAAP net income (loss)

$

(2,237)



$

2,971


Stock-based compensation expense

12,554



8,176


Stock-based compensation related payroll taxes

507



282


Income tax effect of Non-GAAP adjustments

(6,193)



(3,253)


Non-GAAP net income

$

4,631



$

8,176


 

Gigamon Inc.

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

(In thousands, except per share amounts)

(unaudited)



Three Months Ended


April 1, 2017


April 2, 2016

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




GAAP diluted net income (loss) per share

$

(0.06)



$

0.08


Stock-based compensation expense

0.35



0.22


Stock-based compensation related payroll taxes

0.01



0.01


Income tax effect of non-GAAP adjustments

(0.17)



(0.09)


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

(0.01)




Non-GAAP diluted net income per share

$

0.12



$

0.22


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




GAAP diluted weighted-average number of shares

36,563



36,546


Dilutive impact due to stock-based compensation

3,400



578


Non-GAAP diluted weighted-average number of shares

39,963



37,124


 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gigamon-reports-first-quarter-2017-financial-results-300447497.html

SOURCE Gigamon Inc.

INVESTOR CONTACT: Jennifer Gianola, +1 (408) 831-4452, jennifer.gianola@gigamon.com, MEDIA CONTACT: Judy Kaneko, +1 (408) 831-4238, judy.kaneko@gigamon.com

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