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Gigamon Reports Second Quarter 2016 Financial Results
Record revenue delivers 46% year over year growth
Results driven by strong demand for both Security and Mobility solutions

SANTA CLARA, Calif., July 28, 2016 /PRNewswire/ -- Gigamon Inc. (NYSE:GIMO), the leader in traffic visibility solutions, today released financial results for the second quarter ended July 2, 2016.

Second Quarter 2016 Financial Highlights:

  • Revenue of $75.1 million, up 46% year over year.
  • GAAP gross margin was 82%, compared to 78% in the second quarter of fiscal 2015.
  • Non-GAAP gross margin was 82%, compared to 79% in the second quarter of fiscal 2015.
  • GAAP net income was $34.0 million, or $0.91 per diluted share, compared to GAAP net income of $38,000, or $0.00 per diluted share, in the second quarter of fiscal 2015. The company realized a one-time benefit of $30.5 million to the GAAP income tax provision due to the release of a significant portion of its valuation allowance against deferred tax assets.
  • Non-GAAP net income was $11.5 million, or $0.30 per diluted share, compared to non-GAAP net income of $5.9 million, or $0.16 per diluted share, in the second quarter of fiscal 2015.
  • Cash and investments were $228 million, up $20 million from the first quarter of 2016, and up $49 million from the second quarter of fiscal 2015.

"The continued strong execution across our business has resulted in us delivering revenue growth of 46% year over year this quarter," said Paul Hooper, Chief Executive Officer of Gigamon. "Our first to market Security Delivery Platform continues to set the industry standard for how leading organizations architect their IT security infrastructure, and in doing so realize higher efficiency, greater effectiveness and significantly improved coverage for their security solutions. Our journey is underway, and the runway ahead is exciting and full of opportunity".

Recent Business Highlights:

  • Announced field trials of our Amazon Web Services Elastic Compute Cloud offering - the first visibility solution for information traversing with the public cloud.
  • Introduced automated network topology visualization for managing visibility infrastructure at scale.
  • Vice President of WW Channels, Barbara Spicek, recognized as one of CRN's 2016 Women of the Channel.
  • Announced Fred Studer has joined Gigamon as Chief Marketing Officer.
  • Added Joan Dempsey, cyber security expert, to Board of Directors. 

Conference Call Information:

Gigamon will host a conference call and live webcast for analysts and investors at 5:00 p.m. Eastern time on July 28, 2016. 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)-504-7963, using conference code 9870417.  International parties can access the call by dialing +1 (719)-325-2308, using conference code 9870417. 

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, August 4, 2016. To access the replay, parties in the United States and Canada should call +1 (888)-203-1112 and enter conference code 9870417. International parties should call +1 (719)-457-0820 and enter conference code 9870417.

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 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, 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 measures attached to this release.

During the conference call to discuss these financial results, Gigamon expects to give guidance for the third quarter of fiscal 2016 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 the stock-based compensation and related payroll taxes, income tax effect of stock-based compensation expense and valuation allowance against deferred tax assets, 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 evolution of our marketplace and the goals for our Unified Visibility Fabric™ and our Security Delivery Platform. 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 26, 2015 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


Six Months Ended


July 2, 2016

June 27, 2015


July 2, 2016

June 27, 2015

Revenue:








Product

$

51,308



$

34,814



$

95,970



$

66,966


Service

23,795



16,632



46,344



31,333


Total revenue

75,103



51,446



142,314



98,299


Cost of revenue:








Product

11,510



9,558



22,217



19,003


Service

2,339



1,763



4,421



3,540


Total cost of revenue

13,849



11,321



26,638



22,543


Gross profit

61,254



40,125



115,676



75,756


Operating expenses:








Research and development

17,250



12,227



32,608



23,723


Sales and marketing

28,843



21,171



56,500



40,003


General and administrative

9,147



6,702



17,142



12,721


Total operating expenses

55,240



40,100



106,250



76,447


Income (loss) from operations

6,014



25



9,426



(691)


Other income (expense):








Interest income

219



105



426



224


Other expense, net

(173)



7



(242)



(3)


Income (loss) before income tax benefit (provision)

6,060



137



9,610



(470)


Income tax benefit (provision)

27,899



(99)



27,320



(187)


Net income (loss)

$

33,959



$

38



$

36,930



$

(657)


Net income (loss) per share:








Basic

$

0.97



$



$

1.06



$

(0.02)


Diluted

$

0.91



$



$

1.00



$

(0.02)


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








Basic

35,146



33,429



34,878



33,203


Diluted

37,262



35,666



36,792



33,203


 

Gigamon Inc.

Consolidated Balance Sheets

(In thousands)

(unaudited)



July 2, 2016

December 26, 2015

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$

135,242



$

120,212


Short-term investments

92,839



90,001


Accounts receivable, net

44,715



47,947


Inventories, net

6,325



3,813


Prepaid expenses and other current assets

8,745



7,621


Total current assets

287,866



269,594


Property and equipment, net

10,675



9,416


Deferred tax assets, non-current

30,958



135


Other assets, non-current

908



766


TOTAL ASSETS

$

330,407



$

279,911


LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES:




Accounts payable

$

3,101



$

3,724


Accrued liabilities

28,057



37,334


Deferred revenue

55,571



62,248


Total current liabilities

86,729



103,306


Deferred revenue, non-current

24,285



19,883


Deferred and other tax liabilities, non-current

211



279


Other liabilities, non-current

836



1,087


TOTAL LIABILITIES

112,061



124,555


STOCKHOLDERS' EQUITY




Common stock

4



3


Treasury stock

(12,469)



(12,469)


Additional paid-in-capital

237,347



211,402


Accumulated other comprehensive income (loss)

67



(47)


Accumulated deficit

(6,603)



(43,533)


TOTAL STOCKHOLDERS' EQUITY

218,346



155,356


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

330,407



$

279,911


 

Gigamon Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)



Three Months Ended


Six Months Ended


July 2, 2016

June 27, 2015


July 2, 2016

June 27, 2015

CASH FLOWS FROM OPERATING ACTIVITIES:








Net income (loss)

$

33,959



$

38



$

36,930



$

(657)


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








Depreciation and amortization

1,431



1,457



2,702



2,972


Stock-based compensation expense

10,604



8,568



18,780



15,911


Deferred and other income taxes

(30,774)



(13)



(30,891)




Excess tax benefit from employee stock-based compensation

(2,926)





(3,485)




Inventory write-down

309



519



484



1,012


Write down on fixed assets

215





215




Provision for doubtful accounts

72





97




Changes in operating assets and liabilities:








Accounts receivable

872



(3,306)



3,135



(24)


Inventories

(759)



(845)



(2,832)



310


Prepaid expenses and other current assets

(2,394)



(339)



(1,740)



(1,802)


Accounts payable

(261)



1,064



(515)



(83)


Accrued liabilities and other liabilities

7,413



5,238



(5,663)



(9)


Deferred revenue

1,007



2,694



(2,275)



13,217


Net cash provided by operating activities

18,768



15,075



14,942



30,847


CASH FLOWS FROM INVESTING ACTIVITIES:








Purchase of short-term investments

(34,724)



(7,999)



(63,831)



(7,999)


Proceeds from sales of short-term investments



1,455





1,455


Proceeds from maturities of short-term investments

34,461



12,680



61,247



34,333


Purchase of property and equipment

(2,371)



(1,187)



(4,478)



(2,224)


Net cash (used in) provided by investing activities

(2,634)



4,949



(7,062)



25,565


CASH FLOWS FROM FINANCING ACTIVITIES:








Proceeds from employee stock purchase plan





3,368



2,607


Proceeds from exercise of stock option

2,749



1,523



4,126



2,768


Shares repurchased for tax withholdings on vesting of restricted stock units

(2,444)



(2,707)



(3,829)



(3,969)


Excess tax benefits from employee stock-based compensation

2,926





3,485




Net cash provided by (used in) financing activities

3,231



(1,184)



7,150



1,406


NET INCREASE IN CASH AND CASH EQUIVALENTS

19,365



18,840



15,030



57,818


CASH AND CASH EQUIVALENTS — Beginning of period

115,877



77,919



120,212



38,941


CASH AND CASH EQUIVALENTS — End of period

$

135,242



$

96,759



$

135,242



$

96,759


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:








Income taxes paid during the period

$

527



$

137



$

811



$

266


 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages)

(unaudited)



Three Months Ended


Six Months Ended


July 2, 2016

June 27, 2015


July 2, 2016

June 27, 2015

Total Revenue

$

75,103



$

51,446



$

142,314



$

98,299


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








GAAP gross profit

61,254



40,125



115,676



75,756


Stock-based compensation expense

538



510



1,008



1,059


Stock-based compensation related payroll taxes

20



21



36



44


Non-GAAP gross profit

$

61,812



$

40,656



$

116,720



$

76,859


GAAP gross margin

82

%


78

%


81

%


77

%

Non-GAAP gross margin

82

%


79

%


82

%


78

%

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








GAAP operating income (Loss)

$

6,014



$

25



$

9,426



$

(691)


Stock-based compensation expense

10,605



8,586



18,780



15,929


Stock-based compensation related payroll taxes

274



317



557



629


Non-GAAP operating income

$

16,893



$

8,928



$

28,763



$

15,867


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








GAAP net income (loss) attributable to common stockholders

$

33,959



$

38



$

36,930



$

(657)


Stock-based compensation expense

10,605



8,586



18,780



15,929


Stock-based compensation related payroll taxes

274



317



557



629


Income tax effect of Non-GAAP adjustments

(33,330)



(3,075)



(36,583)



(5,471)


Non-GAAP net income

$

11,508



$

5,866



$

19,684



$

10,430


 

Gigamon Inc.

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

(In thousands, except per share amounts)

(unaudited)



Three Months Ended


Six Months Ended


July 2, 2016

June 27, 2015


July 2, 2016

June 27, 2015

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








GAAP diluted net income (loss) per share

$

0.91



$



$

1.00



$

(0.02)


Stock-based compensation expense

0.28



0.24



0.51



0.48


Stock-based compensation related payroll taxes

0.01



0.01



0.02



0.02


Income tax effect of non-GAAP adjustments

(0.89)



(0.09)



(1.00)



(0.16)


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

(0.01)





(0.01)



(0.03)


Non-GAAP diluted net income per share

$

0.30



$

0.16



$

0.52



$

0.29


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

37,262



35,666



36,792



33,203


Dilutive impact due to stock-based compensation

793



648



786



2,756


Non-GAAP diluted weighted-average number of shares

38,055



36,314



37,578



35,959


 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations

For the Three and Six Months Ended July 2, 2016 and June 27, 2015

(In thousands, except per share amounts and percentages)

(unaudited)



Three Months Ended


Six Months Ended


July 2, 2016

June 27, 2015


July 2, 2016

June 27, 2015


As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP


As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP

Revenue:














Product

$

51,308


$


$

51,308


$

34,814


$


$

34,814



$

95,970


$


$

95,970


$

66,966


$


$

66,966


Service

23,795



23,795


16,632



16,632



46,344



46,344


31,333



31,333


Total revenue

75,103



75,103


51,446



51,446



142,314



142,314


98,299



98,299


Cost of revenue:














Product (1)

11,510


(375)


11,135


9,558


(332)


9,226



22,217


(690)


21,527


19,003


(712)


18,291


Service (1)

2,339


(183)


2,156


1,763


(199)


1,564



4,421


(354)


4,067


3,540


(391)


3,149


Total Cost of Revenue

13,849


(558)


13,291


11,321


(531)


10,790



26,638


(1,044)


25,594


22,543


(1,103)


21,440


Gross profit

61,254


558


61,812


40,125


531


40,656



115,676


1,044


116,720


75,756


1,103


76,859


Product Gross Margin

78

%


78

%

73

%


73

%


77

%


78

%

72

%


73

%

Service Gross Margin

90

%


91

%

89

%


91

%


90

%


91

%

89

%


90

%

Total Gross Margin

82

%


82

%

78

%


79

%


81

%


82

%

77

%


78

%

Operating expenses:














Research and development (1)

17,250


(3,587)


13,663


12,227


(2,740)


9,487



32,608


(6,669)


25,939


23,723


(4,987)


18,736


Sales and marketing (1)

28,843


(3,520)


25,323


21,171


(2,949)


18,222



56,500


(5,887)


50,613


40,003


(5,489)


34,514


General and administrative (1)

9,147


(3,214)


5,933


6,702


(2,683)


4,019



17,142


(5,737)


11,405


12,721


(4,979)


7,742


Total operating expenses

55,240


(10,321)


44,919


40,100


(8,372)


31,728



106,250


(18,293)


87,957


76,447


(15,455)


60,992


Income (loss) from operations

6,014


10,879


16,893


25


8,903


8,928



9,426


19,337


28,763


(691)


16,558


15,867


Other income (expense):














Interest income

219



219


105



105



426



426


224



224


Other expense, net

(173)



(173)


7



7



(242)



(242)


(3)



(3)


Income (loss) before income taxes

6,060


10,879


16,939


137


8,903


9,040



9,610


19,337


28,947


(470)


16,558


16,088


Income tax benefit (provision) (2) (3)

27,899


(33,330)


(5,431)


(99)


(3,075)


(3,174)



27,320


(36,583)


(9,263)


(187)


(5,471)


(5,658)


Net income (loss)

$

33,959


$

(22,451)


$

11,508


$

38


$

5,828


$

5,866



$

36,930


$

(17,246)


$

19,684


$

(657)


$

11,087


$

10,430


Net income (loss) per share:














Basic

$

0.97


$

(0.64)


$

0.33


$


$

0.18


$

0.18



$

1.06


$

(0.50)


$

0.56


$

(0.02)


$

0.33


$

0.31


Diluted

$

0.91


$

(0.61)


$

0.30


$


$

0.16


$

0.16



$

1.00


$

(0.48)


$

0.52


$

(0.02)


$

0.31


$

0.29


Weighted-average shares used in computing per share amounts:














Basic

35,146



35,146


33,429



33,429



34,878



34,878


33,203



33,203


Diluted

37,262


793


38,055


35,666


648


36,314



36,792


786


37,578


33,203


2,756


35,959


 

Notes:


1.

Includes stock-based compensation expense and related payroll taxes in the three and six months ended July 2, 2016 and June 27, 2015.

2.

Includes income tax effect of non-GAAP adjustments in the three and six months ended July 2, 2016 and June 27, 2015.

3.

Amount for the three and six months ended July 2, 2016 includes a benefit for the release of a significant portion of its valuation allowance against deferred tax assets.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gigamon-reports-second-quarter-2016-financial-results-300305849.html

SOURCE Gigamon

Media Contact: Tom Rice, +1 (703) 856-2218, gigamonpr@merrittgrp.com; Investor Contact: Cynthia Hiponia, +1 (408) 831-4100, ir@gigamon.com