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Gigamon Reports Third Quarter 2015 Financial Results
Record revenue delivers 44% year-over-year growth
Margins continue to expand driven by Security & Software portfolio

SANTA CLARA, Calif., Oct. 22, 2015 /PRNewswire/ -- Gigamon® Inc. (NYSE:GIMO), the leader in traffic visibility solutions, today released financial results for the third quarter ended September 26, 2015.

Third Quarter 2015 Financial Highlights:

  • Revenue of $56.7 million, up 44% year-over-year.
  • GAAP gross margin was 80%, compared to 77% in the third quarter of fiscal 2014.
  • Non-GAAP gross margin was 81%, compared to 78% in the third quarter of fiscal 2014.
  • GAAP net income was $4.3 million, or $0.12 per diluted share, compared to GAAP net loss of $3.0 million, or $0.09 per basic and diluted share, in the third quarter of fiscal 2014.
  • Non-GAAP net income was $8.0 million, or $0.22 per diluted share, compared to non-GAAP net income of $1.2 million, or $0.04 per diluted share, in the third quarter of fiscal 2014.
  • Increased cash and investments to $186 million, up $52 million from the third quarter of fiscal 2014.

"We continue to differentiate ourselves in this disruptive and high growth market through the delivery of innovative technology and outstanding financial performance," said Paul Hooper, chief executive officer of Gigamon.  "The demand for our Security Delivery Platform portfolio continues to accelerate following 20 of the world's leading security instrumentation vendors supporting our platform. Our leadership position in the visibility market and our rapidly expanding presence in the security market establishes a healthy momentum entering what is typically our strongest quarter of the fiscal year."

Recent Business Highlights:

  • In conjunction with VMWare, announced automated visibility for Software Defined Data Centers using VMware NSX Dynamic Service Insertion.
  • Released the Gigamon® Visibility App for Splunk, which provides Visibility Fabric™ health and analytics of the Gigamon platform within a Splunk environment.
  • Announced a collaboration with RSA, the Security Division of EMC, to provide pervasive visibility into Software Defined Data Center (SDDC) traffic by leveraging our Security Delivery Platform, GigaSECURE®.
  • Launched version 4.4 of our market-leading visibility software, GigaVUE-OS®.
  • Appointed Simon Gibson, formerly a member of the information security team at Bloomberg L.P. and an advisor to the World Economic Forum on cyber-security, as Fellow, Security Architect.
  • Appointed Carlos Perea as Vice President, Sales for Latin America.

Conference Call Information:

Gigamon will host a conference call and live webcast for analysts and investors at 5:00 p.m. Eastern time on October 22, 2015. The news release with the financial results will be accessible from the company's website prior to the conference call.  Parties in the United States and Canada can access the call by dialing +1 (888) 632-3384, using conference code 793805.  International parties can access the call by dialing +1 (785) 424-1675, using conference code 793805.

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, October 29, 2015. To access the replay, parties in the United States and Canada should call +1 (888) 203-1112 and enter conference code 793805. International parties should call +1 (719) 457-0820 and enter conference code 793805.

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, income tax effect of stock-based compensation expense, 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 expectations regarding the evolution of our marketplace, the goals for our Unified Visibility Fabric™ and our Security Delivery Platform and our momentum heading into our fourth fiscal quarter. 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 27, 2014 and our most recently available Quarterly Report on Form 10-Q. 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 Operations

(In thousands, except per share amounts)

(unaudited)





Three Months Ended

Nine Months Ended


September 26, 2015

September 27, 2014

September 26, 2015

September 27, 2014

Revenue:





Product

$

38,717


$

26,180


$

105,683


$

68,804


Service

17,935


13,088


49,268


37,075


Total revenue

56,652


39,268


154,951


105,879


Cost of revenue:





Product

9,613


7,396


28,616


20,682


Service

1,708


1,601


5,248


4,725


Total cost of revenue

11,321


8,997


33,864


25,407


Gross profit

45,331


30,271


121,087


80,472


Operating expenses:





Research and development

12,677


10,086


36,400


31,884


Sales and marketing

21,388


17,948


61,391


55,676


General and administrative

6,950


5,217


19,671


15,668


Total operating expenses

41,015


33,251


117,462


103,228


Income (loss) from operations

4,316


(2,980)


3,625


(22,756)


Interest income

106


82


330


216


Other expense, net

(69)


(28)


(72)


(63)


Income (loss) before income tax provision

4,353


(2,926)


3,883


(22,603)


Income tax provision

(73)


(66)


(260)


(21,093)


Net income (loss)

4,280


(2,992)


3,623


(43,696)


Net income (loss) per share:





Basic

$

0.13


$

(0.09)


$

0.11


$

(1.36)


Diluted

$

0.12


$

(0.09)


$

0.10


$

(1.36)


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





Basic

33,830


32,354


33,412


32,028


Diluted

35,872


32,354


35,497


32,028


 

Gigamon Inc.

Consolidated Balance Sheets

(In thousands)

(unaudited)





September 26, 2015

December 27, 2014

ASSETS



CURRENT ASSETS:



Cash and cash equivalents

$

96,544


$

38,941


Short-term investments

89,693


110,465


Accounts receivable, net

41,738


28,686


Inventories

4,113


6,551


Deferred tax assets

296


150


Prepaid expenses and other current assets

6,747


5,316


Total current assets

239,131


190,109


Property and equipment, net

7,686


7,387


Deferred tax assets, non-current

92


64


Other assets, non-current

800


426


TOTAL ASSETS

$

247,709


$

197,986


LIABILITIES AND STOCKHOLDERS' EQUITY



CURRENT LIABILITIES:



Accounts payable

$

3,486


$

2,391


Accrued liabilities

28,810


22,838


Deferred revenue

52,434


42,183


Total current liabilities

84,730


67,412


Deferred revenue, non-current

16,805


13,322


Deferred tax liability, non-current

296


150


Other liabilities, non-current

1,326


1,667


TOTAL LIABILITIES

103,157


82,551


STOCKHOLDERS' EQUITY



Common stock

3


3


Treasury stock

(12,469)


(12,469)


Additional paid-in capital

203,082


177,714


Accumulated other comprehensive income (loss)

32


(94)


Accumulated deficit

(46,096)


(49,719)


TOTAL STOCKHOLDERS' EQUITY

144,552


115,435


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

247,709


$

197,986


 

Gigamon Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)





Three Months Ended

Nine Months Ended


September 26,

September 27,

September 26,

September 27,


2015

2014

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:





Net income (loss)

$

4,280


$

(2,992)


$

3,623


$

(43,696)


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





Depreciation and amortization

1,470


1,473


4,442


3,710


Stock-based compensation expense

7,869


4,738


23,780


18,635


Deferred income taxes

(2)



(2)


20,877


Inventory write-down

555


499


1,567


2,936


Loss on disposal of fixed assets

12



12



Changes in operating assets and liabilities:





Accounts receivable

(13,028)


(2,282)


(13,052)


4,959


Inventories

634


340


944


(7,596)


Prepaid expenses and other assets

(342)


(1,087)


(2,144)


(2,184)


Accounts payable

935


(1,860)


852


1,489


Accrued liabilities and other liabilities

5,525


(1,294)


5,516


(5,911)


Deferred revenue

517


1,345


13,734


1,912


Net cash provided by (used in) operating activities

8,425


(1,120)


39,272


(4,869)


CASH FLOWS FROM INVESTING ACTIVITIES:





Purchase of short-term investments

(32,169)


(11,447)


(40,168)


(72,091)


Proceeds from sale of short-term investments

551



2,006


2,000


Proceeds from maturities of short-term investments

24,485


8,095


58,818


21,507


Purchase of property and equipment

(1,761)


(2,368)


(3,985)


(7,100)


Net cash (used in) provided by investing activities

(8,894)


(5,720)


16,671


(55,684)


CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from employee stock purchase plan

2,492


2,015


5,099


5,878


Proceeds from exercise of stock options

757


1,344


3,525


4,915


Costs paid for initial public offering, net




(8)


Shares repurchased for tax withholdings on vesting of restricted stock units

(2,995)


(389)


(6,964)


(2,611)


Distribution of income to Gigamon LLC members




(476)


Net cash provided by financing activities

254


2,970


1,660


7,698


NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(215)


(3,870)


57,603


(52,855)


CASH AND CASH EQUIVALENTS — Beginning of period

96,759


30,923


38,941


79,908


CASH AND CASH EQUIVALENTS — End of period

$

96,544


$

27,053


$

96,544


$

27,053


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:





Income taxes paid during the period

$

83


$

72


$

348


$

241


 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages)

(unaudited)





Three Months Ended

Nine Months Ended


September 26,

September 27,

September 26,

September 27,


2015

2014

2015

2014

Total Revenue

$

56,652


$

39,268


$

154,951


$

105,879


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





GAAP gross profit

45,331


30,271


121,087


80,472


Stock-based compensation expense

471


444


1,530


1,363


Stock-based compensation related payroll taxes

16


2


60


61


Non-GAAP gross profit

$

45,818


$

30,717


$

122,677


$

81,896


GAAP gross margin

80

%

77

%

78

%

76

%

Non-GAAP gross margin

81

%

78

%

79

%

77

%

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





GAAP operating income (loss)

$

4,316


$

(2,980)


$

3,625


$

(22,756)


Stock-based compensation expense

7,851


4,738


23,780


18,635


Stock-based compensation related payroll taxes

162


41


791


798


Non-GAAP operating income (loss)

$

12,329


$

1,799


$

28,196


$

(3,323)


GAAP operating margin

8

%

(8)

%

2

%

(21)

%

Non-GAAP operating margin

22

%

5

%

18

%

(3)

%

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





GAAP net income (loss) attributable to common stock holders

$

4,280


$

(2,992)


$

3,623


$

(43,696)


Stock-based compensation expense

7,851


4,738


23,780


18,635


Stock-based compensation related payroll taxes

162


41


791


798


Income tax effect of Non-GAAP adjustments

(4,310)


(604)


(9,781)


22,080


Non-GAAP net income (loss)

$

7,983


$

1,183


$

18,413


$

(2,183)


 

Gigamon Inc.

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

(In thousands, except per share amounts)

(unaudited)





Three Months Ended

Nine Months Ended


September 26,

September 27,

September 26,

September 27,


2015

2014

2015

2014

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





GAAP diluted net income (loss) per share

$

0.12


$

(0.09)


$

0.10


$

(1.36)


Stock-based compensation expense

0.22


0.15


0.67


0.58


Stock-based compensation related payroll taxes



0.02


0.02


Income tax effect of non-GAAP adjustments

(0.12)


(0.02)


(0.27)


0.69


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



(0.01)



Non-GAAP diluted net income (loss) per share

$

0.22


$

0.04


$

0.51


$

(0.07)


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

35,872


32,354


35,497


32,028


Dilutive impact due to stock-based compensation

498


1,444


726



Non-GAAP diluted weighted-average number of shares

36,370


33,798


36,223


32,028


 

Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations

For the Three and Nine Months Ended September 26, 2015 and September 27, 2014

(In thousands, except per share amounts and percentages)

(unaudited)



Three Months Ended

Nine Months Ended


September 26, 2015

September 27, 2014

September 26, 2015

September 27, 2014


As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP

Revenue:













Product

$

38,717


$


$

38,717


$

26,180


$


$

26,180


$

105,683


$


$

105,683


$

68,804


$


$

68,804


Service

17,935




17,935


13,088




13,088


49,268




49,268


37,075




37,075


Total revenue

56,652



56,652


39,268



39,268


154,951



154,951


105,879



105,879


Cost of revenue:













Product (1)

9,613


(359)


9,254


7,396


(288)


7,108


28,616


(1,071)


27,545


20,682


(829)


19,853


Service (1)

1,708


(128)


1,580


1,601


(158)


1,443


5,248


(519)


4,729


4,725


(595)


4,130


Total cost of revenue

11,321


(487)


10,834


8,997


(446)


8,551


33,864


(1,590)


32,274


25,407


(1,424)


23,983


Gross profit

45,331


487


45,818


30,271


446


30,717


121,087


1,590


122,677


80,472


1,424


81,896


Product Gross Margin

75

%


76

%

72

%


73

%

73

%


74

%

70

%


71

%

Service Gross Margin

90

%


91

%

88

%


89

%

89

%


90

%

87

%


89

%

Total Gross Margin

80

%


81

%

77

%


78

%

78

%


79

%

76

%


77

%

Operating expenses:













Research and development (1)

12,677


(2,532)


10,145


10,086


(1,288)


8,798


36,400


(7,519)


28,881


31,884


(6,335)


25,549


Sales and marketing (1)

21,388


(2,534)


18,854


17,948


(1,095)


16,853


61,391


(8,023)


53,368


55,676


(6,501)


49,175


General and administrative (1)

6,950


(2,460)


4,490


5,217


(1,950)


3,267


19,671


(7,439)


12,232


15,668


(5,173)


10,495


Total operating expenses

41,015


(7,526)


33,489


33,251


(4,333)


28,918


117,462


(22,981)


94,481


103,228


(18,009)


85,219


Income (loss) from operations

4,316


8,013


12,329


(2,980)


4,779


1,799


3,625


24,571


28,196


(22,756)


19,433


(3,323)


Other income (expense):













Interest income

106



106


82



82


330



330


216



216


Other expense, net

(69)



(69)


(28)



(28)


(72)



(72)


(63)



(63)


Income (loss) before income taxes

4,353


8,013


12,366


(2,926)


4,779


1,853


3,883


24,571


28,454


(22,603)


19,433


(3,170)


Income tax (expense) benefit (2) (3)

(73)


(4,310)


(4,383)


(66)


(604)


(670)


(260)


(9,781)


(10,041)


(21,093)


22,080


987


Net income (loss)

$

4,280


$

3,703


$

7,983


$

(2,992)


$

4,175


$

1,183


$

3,623


$

14,790


$

18,413


$

(43,696)


$

41,513


$

(2,183)


Net income (loss) per share:













Basic

$

0.13


$

0.11


$

0.24


$

(0.09)


$

0.13


$

0.04


$

0.11


$

0.44


$

0.55


$

(1.36)


$

1.29


$

(0.07)


Diluted

$

0.12


$

0.10


$

0.22


$

(0.09)


$

0.13


$

0.04


$

0.10


$

0.41


$

0.51


$

(1.36)


$

1.29


$

(0.07)


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













Basic

33,830



33,830


32,354



32,354


33,412



33,412


32,028



32,028


Diluted

35,872


498


36,370


32,354


1,444


33,798


35,497


726


36,223


32,028



32,028




Notes:




1.

Includes stock-based compensation expense and related payroll taxes in the three and nine months ended September 26, 2015 and September 27, 2014.



2.

Includes the income tax effect of non-GAAP adjustments in the three months and nine months ended September 26, 2015 and September 27, 2014.



3.

Includes the income tax effect of a valuation allowance against deferred tax assets in the nine months ended September 27, 2014.

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gigamon-reports-third-quarter-2015-financial-results-300164937.html

SOURCE Gigamon

Media Contact: Chris McKie, +1 (408) 831-4440, Chris.Mckie@gigamon.com, or Investor Contact: Cynthia Hiponia, +1 (408) 831-4100, IR@gigamon.com