Riverbed Flows Toward Profitability

Vendor reaches profitability and unveils plans for a second public offering

February 8, 2007

3 Min Read
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WAFS specialist Riverbed checked in with fourth-quarter results after the market closed yesterday, recording its first quarter of profitability and solid revenue growth. (See Riverbed Reports FY06 and Riverbed Comes Out at $9.75.)

Riverbed, which went public last September, also announced plans for a secondary public offering of 5 million shares, although execs refused to discuss this move on a conference call last night. (See Riverbed Plans Second Offering.)

CEO Jerry Kennelly was more forthcoming on the firm's financial performance during its first 100 days as a public company. "The pace of our revenue growth accelerated in the fourth quarter - we continue to see strong growth drivers for the company," he said, adding that Riverbed's customer base rose above 1,600, up from around 1,300 in the previous quarter.

The vendor claimed $33.8 million in fourth-quarter revenues, an increase of 37 percent from the previous quarter and 219 percent from the same period last year.

On a non-GAAP basis, the vendor recorded its first quarter of profitability, reporting income of $2.4 million for the quarter, or 3 cents per share, compared to a net loss of $4.2 million, or 9 cents per share, in the same period last year. Analysts had estimated earnings of 1 cent per share.The financial picture was a little less rosy on a GAAP basis. Riverbed remained in the red, although losses narrowed to $2.4 million, or 4 cents per share, compared to a net loss of $4.7 million, or 43 cents per share, in the year-ago quarter. (See Riverbed Flows Toward Breakeven and Riverbed Reports Earnings.)

For the financial year of 2006, Riverbed's revenues were $90.2 million, up 293 percent on the prior year.

Execs on the call also provided some hints as to future products. Riverbed, they explained, will be launching an SSL solution next month and a laptop version of its technology during the summer.

Despite its obvious customer traction, Riverbed finds itself in an increasingly congested market of WAFS and WAN optimization vendors. Cisco, Citrix, and Juniper have all launched products based on technology they picked up by acquiring Riverbed rivals over the past few years. (See Cisco Backs Into Optimization, Cisco Intros Services, Citrix Widens WAN Strategy, and Juniper Advances Solution.)

Brocade, for its part, recently announced a software-only version of the Tapestry WAFS product it OEMs from Packeteer, in a move that raised questions about the best way to use WAFS in IT networks. (See Brocade & Packeteer Widen Target, Brocade Intros Software WAFS, Brocade Busts Out Upgrades, and More Thoughts on WAFS.)Riverbed execs faced a number of questions about the competitive landscape, particularly Cisco, and could not resist taking a swipe at its WAFS and WAN optimization rival. "They generate interest in the space, they validate the space, but they don't have the product that everyone wants to buy," said one exec.

More specifically, Riverbed came up against Cisco in 105 deals during the quarter, according to officials, winning 98.

Recent Riverbed customer wins include law fims Pepper Hamilton and Loeb & Loeb, India's Tamilnad Mercantile Bank, and the Korean Ministries of Labor and Foreign Affairs. (See Law Firms Choose Riverbed, Tamilnad Mercantile Picks Riverbed, and Riverbed Wins in Korea.)

The vendor also raised its guidance for 2007 today, pushing its previous estimate of $150 million to $155 million up to between $165 million and $175 million.

— James Rogers, Senior Editor Byte and Switch

  • Brocade Communications Systems Inc. (Nasdaq: BRCD)

  • Cisco Systems Inc. (Nasdaq: CSCO)

  • Citrix Systems Inc. (Nasdaq: CTXS)

  • Juniper Networks Inc. (Nasdaq: JNPR)

  • Packeteer Inc. (Nasdaq: PKTR)

  • Riverbed Technology Inc.

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