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Gigamon Reports Third Quarter 2016 Financial Results
Record revenue delivers 47% year-over-year growth
Results driven by strong demand for both Security and Mobility solutions

SANTA CLARA, Calif., Oct. 27, 2016 /PRNewswire/ -- Gigamon Inc. (NYSE:GIMO), the leader in traffic visibility solutions, today released financial results for the third quarter ended October 1, 2016.

Third Quarter 2016 Financial Highlights:

  • Revenue of $83.5 million, up 47% year-over-year.
  • GAAP gross margin was 83%, compared to 80% in the third quarter of fiscal 2015.
  • Non-GAAP gross margin was 83%, compared to 81% in the third quarter of fiscal 2015.
  • GAAP net income was $6.1 million, or $0.16 per diluted share, compared to GAAP net income of $4.3 million, or $0.12 per diluted share, in the third quarter of fiscal 2015.
  • Non-GAAP net income was $14.0 million, or $0.36 per diluted share, compared to non-GAAP net income of $8.0 million, or $0.22 per diluted share, in the third quarter of fiscal 2015.
  • Cash and investments were $245 million, up $17 million from the second quarter of 2016, and up $58 million from the third quarter of fiscal 2015.

"Gigamon posted another strong set of results for our third quarter, delivering record revenue with a growth rate of 47 percent year-over-year," said Paul Hooper, Chief Executive Officer of Gigamon. "Our business continues to accelerate with Q3 representing our third consecutive quarter of an increasing year-over-year revenue growth rate. We continue to invest in our platform and solutions resulting in our new GigaVUE-HC1 product, which extends our GigaSECURE Security Delivery Platform to mid-sized enterprises and out to the edge of large enterprises. With our increasingly strong leadership and momentum in the industry, our security-enabling, network visibility platform has become an essential component of modern IT infrastructure."

Recent Business Highlights:

  • Announced availability of GigaVUE-HC1, expanding the reach of the GigaSECURE Security Delivery Platform from large data centers to small enterprises and remote sites in distributed enterprises.
  • Enhanced our existing channel program by launching the Sell Smart Incentive Program for GigaSECURE Resellers.
  • Introduced a new solution to automate visibility to information-in-motion in Software-Defined Data Centers.
  • Enhanced our GigaSECURE Metadata solution through the inclusion of encryption certificates. 

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 27, 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 (800)-344-6698, using conference code 6038205.  International parties can access the call by dialing +1 (785) 830-7979, using conference code 6038205.

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, November 3, 2016. To access the replay, parties in the United States and Canada should call +1 (866) 375-1919 and enter conference code 6038205. International parties should call +1 (719) 457-0820 and enter conference code 6038205.

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 fourth 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 the 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 Income

(In thousands, except per share amounts)

(unaudited)



Three Months Ended


Nine Months Ended


October 1, 2016

September 26, 2015


October 1, 2016

September 26, 2015

Revenue:








Product

$

59,835



$

38,717



$

155,805



$

105,683


Service

23,677



17,935



70,021



49,268


Total revenue

83,512



56,652



225,826



154,951


Cost of revenue:








Product

12,197



9,613



34,414



28,616


Service

2,141



1,708



6,562



5,248


Total cost of revenue

14,338



11,321



40,976



33,864


Gross profit

69,174



45,331



184,850



121,087


Operating expenses:








Research and development

18,306



12,677



50,914



36,400


Sales and marketing

31,994



21,388



88,494



61,391


General and administrative

8,887



6,950



26,029



19,671


Total operating expenses

59,187



41,015



165,437



117,462


Income from operations

9,987



4,316



19,413



3,625


Other income (expense):








Interest income

235



106



661



330


Other expense, net

(144)



(69)



(386)



(72)


Income before income tax (provision) benefit

10,078



4,353



19,688



3,883


Income tax (provision) benefit

(3,999)



(73)



23,321



(260)


Net income

$

6,079



$

4,280



$

43,009



$

3,623


Net income per share:








Basic

$

0.17



$

0.13



$

1.22



$

0.11


Diluted

$

0.16



$

0.12



$

1.15



$

0.10


Weighted average shares used in computing net income per share:








Basic

35,770



33,830



35,171



33,412


Diluted

38,113



35,872



37,341



35,497


 

 

Gigamon Inc.

Consolidated Balance Sheets

(In thousands)

(unaudited)



October 1, 2016


December 26, 2015

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$

155,553



$

120,212


Short-term investments

89,183



90,001


Accounts receivable, net

60,184



47,947


Inventories, net

6,953



3,813


Prepaid expenses and other current assets

10,448



7,621


Total current assets

322,321



269,594


Property and equipment, net

11,381



9,416


Deferred tax assets, non-current

31,608



135


Other assets, non-current

1,034



766


TOTAL ASSETS

$

366,344



$

279,911


LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES:




Accounts payable

$

3,910



$

3,724


Accrued liabilities

33,696



37,334


Deferred revenue

59,663



62,248


Total current liabilities

97,269



103,306


Deferred revenue, non-current

23,483



19,883


Deferred and other tax liabilities, non-current

182



279


Other liabilities, non-current

661



1,087


TOTAL LIABILITIES

121,595



124,555


STOCKHOLDERS' EQUITY




Common stock

4



3


Treasury stock

(12,469)



(12,469)


Additional paid-in-capital

257,702



211,402


Accumulated other comprehensive income (loss)

36



(47)


Accumulated deficit

(524)



(43,533)


TOTAL STOCKHOLDERS' EQUITY

244,749



155,356


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

366,344



$

279,911


 

 

Gigamon Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)



Three Months Ended


Nine Months Ended


October 1, 2016

September 26, 2015


October 1, 2016

September 26, 2015

CASH FLOWS FROM OPERATING ACTIVITIES:








Net income

$

6,079



$

4,280



$

43,009



$

3,623


Adjustments to reconcile net income to net cash provided by operating activities:








Depreciation and amortization

1,642



1,804



4,815



5,162


Stock-based compensation expense

10,104



7,869



28,884



23,780


Deferred and other income taxes

(679)



(2)



(31,570)



(2)


Excess tax benefit from employee stock-based compensation

(4,773)





(8,258)




Inventory write-down

40



504



312



1,374


Write down on fixed assets

4



12



219



12


Provision for doubtful accounts

50





147




Changes in operating assets and liabilities:








Accounts receivable

(15,519)



(13,028)



(12,384)



(13,052)


Inventories

(1,422)



491



(5,015)



76


Prepaid expenses and other assets

(1,753)



(482)



(2,991)



(1,803)


Accounts payable

569



935



54



852


Accrued liabilities and other liabilities

10,337



5,525



4,674



5,516


Deferred revenue

3,290



517



1,015



13,734


Net cash provided by operating activities

7,969



8,425



22,911



39,272


CASH FLOWS FROM INVESTING ACTIVITIES:








Purchase of short-term investments

(20,942)



(32,169)



(84,773)



(40,168)


Proceeds from sales of short-term investments



551





2,006


Proceeds from maturities of short-term investments

24,500



24,485



85,747



58,818


Purchase of property and equipment

(1,523)



(1,761)



(6,001)



(3,985)


Net cash provided by (used in) investing activities

2,035



(8,894)



(5,027)



16,671


CASH FLOWS FROM FINANCING ACTIVITIES:








Proceeds from employee stock purchase plan

3,417



2,492



6,785



5,099


Proceeds from exercise of stock options

5,528



757



9,654



3,525


Shares repurchased for tax withholdings on vesting of restricted stock units

(3,411)



(2,995)



(7,240)



(6,964)


Excess tax benefits from employee stock-based compensation

4,773





8,258




Net cash provided by financing activities

10,307



254



17,457



1,660


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

20,311



(215)



35,341



57,603


CASH AND CASH EQUIVALENTS — Beginning of period

135,242



96,759



120,212



38,941


CASH AND CASH EQUIVALENTS — End of period

$

155,553



$

96,544



$

155,553



$

96,544


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:








Income taxes paid during the period

$

2,032



$

83



$

2,843



$

348


 

 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages)

(unaudited)



Three Months Ended


Nine Months Ended


October 1, 2016

September 26, 2015


October 1, 2016

September 26, 2015

Total Revenue

$

83,512



$

56,652



$

225,826



$

154,951


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








GAAP gross profit

69,174



45,331



184,850



121,087


Stock-based compensation expense

519



471



1,527



1,530


Stock-based compensation related payroll taxes

28



16



64



60


Non-GAAP gross profit

$

69,721



$

45,818



$

186,441



$

122,677


GAAP gross margin

83

%


80

%


82

%


78

%

Non-GAAP gross margin

83

%


81

%


83

%


79

%

Reconciliation of GAAP Operating Income to Non-GAAP Operating Income:








GAAP operating income

$

9,987



$

4,316



$

19,413



$

3,625


Stock-based compensation expense

10,104



7,851



28,884



23,780


Stock-based compensation related payroll taxes

414



162



971



791


Non-GAAP operating income

$

20,505



$

12,329



$

49,268



$

28,196


Reconciliation of GAAP Net Income to Non-GAAP Net Income:








GAAP net income

$

6,079



$

4,280



$

43,009



$

3,623


Stock-based compensation expense

10,104



7,851



28,884



23,780


Stock-based compensation related payroll taxes

414



162



971



791


Income tax effect of Non-GAAP adjustments

(2,593)



(4,310)



(39,176)



(9,781)


Non-GAAP net income

$

14,004



$

7,983



$

33,688



$

18,413


 

 


Gigamon Inc.

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

(In thousands, except per share amounts)

(unaudited)



Three Months Ended


Nine Months Ended


October 1,
2016

September 26,
2015


October 1,
2016

September 26,
2015

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








GAAP diluted net income per share

$

0.16



$

0.12



$

1.15



$

0.10


Stock-based compensation expense

0.27



0.22



0.77



0.67


Stock-based compensation related payroll taxes

0.01





0.03



0.02


Income tax effect of non-GAAP adjustments

(0.07)



(0.12)



(1.05)



(0.27)


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

(0.01)





(0.01)



(0.01)


Non-GAAP diluted net income per share

$

0.36



$

0.22



$

0.89



$

0.51


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

38,113



35,872



37,341



35,497


Dilutive impact due to stock-based compensation

544



498



673



726


Non-GAAP diluted weighted-average number of shares

38,657



36,370



38,014



36,223


 

Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Consolidated Statements of Income

For the Three and Nine Months Ended October 1, 2016 and September 26, 2015

(In thousands, except per share amounts and percentages)

(unaudited)





Three Months Ended


Nine Months Ended


October 1, 2016

September 26, 2015


October 1, 2016

September 26, 2015


As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP


As

Reported

Adjustments

Non-GAAP

As

Reported

Adjustments

Non-GAAP

Revenue:














Product

$

59,835


$


$

59,835


$

38,717


$


$

38,717



$

155,805


$


$

155,805


$

105,683


$


$

105,683


Service

23,677



23,677


17,935



17,935



70,021



70,021


49,268



49,268


Total revenue

83,512



83,512


56,652



56,652



225,826



225,826


154,951



154,951


Cost of revenue:














Product (1)

12,197


(351)


11,846


9,613


(359)


9,254



34,414


(1,041)


33,373


28,616


(1,071)


27,545


Service (1)

2,141


(196)


1,945


1,708


(128)


1,580



6,562


(550)


6,012


5,248


(519)


4,729


Total Cost of Revenue

14,338


(547)


13,791


11,321


(487)


10,834



40,976


(1,591)


39,385


33,864


(1,590)


32,274


Gross profit

69,174


547


69,721


45,331


487


45,818



184,850


1,591


186,441


121,087


1,590


122,677


Product Gross Margin

80

%


80

%

75

%


76

%


78

%


79

%

73

%


74

%

Service Gross Margin

91

%


92

%

90

%


91

%


91

%


91

%

89

%


90

%

Total Gross Margin

83

%


83

%

80

%


81

%


82

%


83

%

78

%


79

%

Operating expenses:














Research and development (1)

18,306


(3,506)


14,800


12,677


(2,532)


10,145



50,914


(10,175)


40,739


36,400


(7,519)


28,881


Sales and marketing (1)

31,994


(3,204)


28,790


21,388


(2,534)


18,854



88,494


(9,091)


79,403


61,391


(8,023)


53,368


General and administrative (1)

8,887


(3,261)


5,626


6,950


(2,460)


4,490



26,029


(8,998)


17,031


19,671


(7,439)


12,232


Total operating expenses

59,187


(9,971)


49,216


41,015


(7,526)


33,489



165,437


(28,264)


137,173


117,462


(22,981)


94,481


Income from operations

9,987


10,518


20,505


4,316


8,013


12,329



19,413


29,855


49,268


3,625


24,571


28,196


Other income (expense):














Interest income

235



235


106



106



661



661


330



330


Other expense, net

(144)



(144)


(69)



(69)



(386)



(386)


(72)



(72)


Income before income taxes

10,078


10,518


20,596


4,353


8,013


12,366



19,688


29,855


49,543


3,883


24,571


28,454


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

(3,999)


(2,593)


(6,592)


(73)


(4,310)


(4,383)



23,321


(39,176)


(15,855)


(260)


(9,781)


(10,041)


Net income

$

6,079


$

7,925


$

14,004


$

4,280


$

3,703


$

7,983



$

43,009


$

(9,321)


$

33,688


$

3,623


$

14,790


$

18,413


Net income per share:














Basic

$

0.17


$

0.22


$

0.39


$

0.13


$

0.11


$

0.24



$

1.22


$

(0.26)


$

0.96


$

0.11


$

0.44


$

0.55


Diluted

$

0.16


$

0.20


$

0.36


$

0.12


$

0.10


$

0.22



$

1.15


$

(0.26)


$

0.89


$

0.10


$

0.41


$

0.51


Weighted-average shares used in computing per share amounts:














Basic

35,770



35,770


33,830



33,830



35,171



35,171


33,412



33,412


Diluted

38,113


544


38,657


35,872


498


36,370



37,341


673


38,014


35,497


726


36,223




Notes:


1.

Includes stock-based compensation expense and related payroll taxes in the three and nine months ended October 1, 2016 and September 26, 2015.

2.

Includes income tax effect of non-GAAP adjustments in the three and nine months ended October 1, 2016 and September 26, 2015.

3.

Amount for the nine months ended October 1, 2016 includes a benefit for the release of a significant portion of our valuation allowance against deferred tax assets.

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gigamon-reports-third-quarter-2016-financial-results-300353022.html

SOURCE Gigamon Inc.

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