Riverbed Technology, Inc. Q1 2010 Earnings Call Transcript

Riverbed Technology, Inc. Q1 2010 Earnings Call Transcript
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Riverbed Technology, Inc. (RVBD)

Q1 2010 Earnings Call Transcript

April 22, 2009 4:30 pm ET

Executives

Renee Lyall – Director, IR

Jerry Kennelly – Chairman and CEO

Randy Gottfried – CFO

Eric Wolford – SVP, Marketing and Business Development

Analysts

Troy Jensen – Piper Jaffray

Jason Ader – William Blair

Sanjiv Wadhwani – Stifel Nicolaus

Min Park – Goldman Sachs

Mark Sue – RBC Capital Markets

Alex Henderson – Miller Tabak

Ryan Hutchinson – Lazard Capital Markets

Tim Long – Bank of Montreal

Nikos Theodosopoulos – UBS

Daniel Ives – FBR

Ittai Kidron – Oppenheimer

Paul Mansky – Canaccord Adams

Jess Lubert – Wells Fargo Securities

Alex Kurtz – Merriman & Company

John Marchetti – Cowen and Company

Jonathan Ruykhaver – ThinkEquity

Erik Suppiger – Signal Hill

Rohit Chopra – Wedbush

Kevin Shea – MKM Partners

Douglas Ireland – JMP Securities

Bill Choi – Jefferies

Presentation

Operator

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Good afternoon. My name is Molly and I will be your conference operator today. At this time I would like to welcome everyone to the Riverbed First Quarter 2010 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. I would now like to turn the conference over to Renee Lyall, Director of Investor Relations. You may begin your conference.

Renee Lyall

Thank you, Molly. Good afternoon and thank you for joining us on today’s conference call to discuss Riverbed’s first quarter fiscal year 2010 results. I’m Renee Lyall, Riverbed's Director of Investor Relations. Joining me on the call today are Jerry Kennelly, Riverbed’s President and CEO; Randy Gottfried, Riverbed’s Chief Financial Officer; and Eric Wolford, Riverbed’s Senior Vice President of Marketing and Business Development.

Before we begin, let me cover some administrative items. A press release detailing our fourth quarter financial results was distributed today at 1.05 PM Pacific Time via Business Wire. The press release is available on our website at riverbed.com. This conference call is being webcast live via the Internet at riverbed.com/investors and will be archived on our website for the next 12 months.

The information the presenters discuss today will include forward-looking statements including, without limitation, statements about Riverbed’s current and future products and partners, our financial outlook, our sales pipeline and our competitive and market position. These forward-looking statements are only predictions and involve risks and uncertainties such that actual results may vary significantly. These risks are set forth in detail and on our Form 10-K for the year ended December 31st, 2009.

These forward-looking statements reflect beliefs, estimates, and predictions as of the date of this call. Riverbed disclaims any obligation to update any forward-looking statements. Unless otherwise stated, financial information that we review on today’s conference call is presented on a non-GAAP basis. Non-GAAP net income excludes the impact of stock-based compensation, stock-based payroll expenses, amortization of acquired intangible assets, acquisition related expenses and related income tax effects. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP but not as a substitute for or superior to GAAP results.

The most directly comparable GAAP information, reasons why management uses non-GAAP information, and a reconciliation between non-GAAP and GAAP figures is provided in our Q1 2010 press release, which has been furnished to the SEC on Form 8-K today. Any future product, feature or related specification that may be referenced in today’s call are for informational purposes only and are not commitments to deliver any technology or enhancements. Riverbed reserves the right to modify or cancel future product plans at anytime.

I’d now like to turn the call over to Riverbed’s President and CEO, Jerry Kennelly.

Jerry Kennelly

Thank you, Renee. Welcome, everyone and thank you for joining us this afternoon. Riverbed had a strong first quarter with revenue increasing 27% over the prior year to $112.4 million and net income increasing 61% to $14.8 million.

Q1 was led by momentum in enterprise sales, which grew both sequentially and year-over-year in all major geographies. We exited the quarter with more than 7,800 cumulative customers and our customer acquisition rate was our highest in over a year. As of March 31st, we had $387 million in cash and investments, an increase of $62 million compared to last quarter.

Overall, our financial underpinning remains extremely strong. WAN optimization continues to be a spending priority as organizations consolidate and virtualize their IT infrastructure, as they continue to focus on cost efficiency, while increasing the productivity of their employees and network. Riverbed is in the enviable position of selling the market-leading technology that supports these initiatives.

According to Gartner, Riverbed has gained share in the advanced platform WAN optimization controller market for five consecutive quarters. As of Gartner's most current report, Riverbed's share increased to 34.5% for the December quarter, 9 points ahead of the closest competitor.

Riverbed's technology has made a real difference in the lives of IT professionals across the globe and driven an ever-growing, enthusiastic and loyal customer base with the highest satisfaction marks in this sector. This was confirmed in the recent survey by the InfoPro.

Based on interviews with 235 networking professionals at large and mid-size enterprises in North America and Europe, Riverbed received the highest ratings in strategic vision, technical vision, product quality, product performance, and delivery as promised to its customers. The value support Riverbed delivers to its users is why we continue to gain new customers and market share quarter after quarter.

During the first quarter, we extended our market reach with the addition of the Steelhead 7050, the largest and most scalable data center to data center box in the market. Large enterprises are quickly seeing the value of including the 7050 for faster and more efficient replication in their business continuity and disaster recovery or BCDR solutions. Our 3U Steelhead appliances, the 5050, 6050, and 7050, can all be deployed in the traditional data center to remote office deployment for WAN optimization or as data center to data center solutions.

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