Barracuda Networks (CUDA) Shares Slammed after Earnings

Shares of Barracuda Networks Inc. were down -6.11 or -15.62 percent to $33.01 per share in Friday's premarket after the company announced disappointing first quarter earnings after the market close yesterday. Barracuda Networks stock closed at $39.12 per share, up +0.41 or +1.06 percent in yesterday's regular trading session.

Founded in 2003, Campbell, California based Barracuda Networks is an industry leader in Information Technology or IT security.
The company's products service three distinct markets: content security, data storage and protection and disaster recovery and network and application delivery. The company provides storage and security for over 150,000 organizations worldwide. Some of its customers include Spokane Public Schools, IBM (IBM), Citibank (C), Coca-Cola (KO), Federal Express (FDX) and Harvard University.

Barracuda Networks reported a loss of -$3.8 million, or $0.07 per share in its fiscal first quarter ended on May 31st. This compares to a profit of $151,000 in the same period one year ago.

With the exclusion of some items such as acquisition costs and stock based compensation, the company earned $0.09 per share on revenue of $78 million. The analyst consensus was for the company to report net income of $0.08 per share on revenue of $77.5 million.

B.J. Jenkins, Barracuda's President and Chief Executive Officer said at the company's analyst conference yesterday that, "In Q1, we saw a reduction in the number of these larger deals. Typically, these larger deals also have longer subscription terms. As a result, in Q1, we also experienced an overall decrease in the average subscription contract length for the storage business, which negatively impacts billings growth in the category by several points.

"Looking forward, the pipeline of larger deals is increasing. And, we have seen a stronger start and better execution in Q2, including closing some deals which we expected in Q1. One highlight in our overall business is our continued success in the cloud, and with virtual solutions. Sales of our virtual and cloud products grew by more than 57% over last year, on a constant currency basis.

In addition to signing fewer large contracts, the loss in the first quarter was in part attributed to the strength of the U.S. Dollar, which affected overseas revenue, and the growing preference of customers to choose virtual and cloud products. Nevertheless, the company said that it had signed some large storage contracts after the end of the first quarter.

For the second quarter, Barracuda expects to report an adjusted profit of approximately $0.09 per share on revenue of between $78 and $79 million. Analyst expected second quarter guidance to expect a profit of $0.09 on revenue of $80.0 million.

The company maintained its full year guidance for adjusted income of $0.36 to $0.41 per share on revenue of $325 million to $330 million. The analyst consensus was for the company to forecast adjusted income of $0.38 per share on revenue of $328 million.

Barracuda Networks stock will open significantly lower this morning after yesterday's earnings report. Nevertheless, the stock was under $25 per share in September of last year and traded as high as $46 per share as recently as last April.

Other News About CUDA

Enhancements to Barracuda Web Application Firewall Streamline On-Premises Central Management

Company now offers enhanced support for Security Assertion Markup Language or SAML.

Barracuda Ranked Number One in Integrated Systems for Purpose Built Backup Appliance Units Shipped

Company has led integrated PBBA unit shipment for the last 13 consecutive quarters.

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Published on Jul 10, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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