Riverbed Technology (RVBD)
Q2 2010 Earnings Call
July 22, 2010 5:30 pm ET
Jerry Kennelly - Co Founder, Executive Chairman, Chief Executive Officer, President and Member of Stock Option Committee
Renee Lyall - Director of IR
Eric Wolford - Senior Vice President of Business Development & Marketing
Randy Gottfried - Chief Financial Officer, Principal Accounting Officer and Senior Vice President of Business Services
Sanjiv Wadhwani - Stifel, Nicolaus & Co., Inc.
Scott Zeller - Needham & Company, LLC
John Slack - Citigroup Inc
Alex Henderson - Citigroup
Troy Jensen - Piper Jaffray Companies
John Marchetti - Morgan Stanley
Jess Lubert - Wells Fargo Securities, LLC
Ryan Hutchinson - Lazard Capital Markets LLC
Tim Long - BMO Capital Markets U.S.
Mark Sue - RBC Capital Markets Corporation
Jeffrey Kvaal - Barclays Capital
Daniel Ives - FBR Capital Markets & Co.
Jack Monti - UBS Investment Bank
Jason Ader - William Blair & Company L.L.C.
Min Park - Goldman Sachs Group Inc.
Previous Statements by RVBD
» Riverbed Technology, Inc. Q1 2010 Earnings Call Transcript
» Riverbed Technology, Inc. Q4 2009 Earnings Call Transcript
» Riverbed Technology Inc. Q3 2009 Earnings Call Transcript
Good afternoon. My name is Pia, and I will the conference operator today. At this time, I would like to welcome everyone to the Riverbed Technology Second Quarter 2010 Financial Results Conference Call. [Operator Instructions] Thank you. At this time, I would like to turn the conference over Ms. Renee Lyall, Director of Investor Relations. Ma'am, you may begin.
Thank you. Good afternoon and thank you for joining us on today's conference call to discuss Riverbed's second 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, Chief Financial Officer; and Eric Wolford, Senior Vice President of Marketing and Business Development.
Before we begin, let me cover some administrative items. A press release detailing our second quarter financial results was distributed today at 1:05 p.m. Pacific Time via Businesswire. The press release is also 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 partner, 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 on our Form 10-Q for the quarter ended March 31, 2010. 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 affects. 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 any time. I'd now like to turn the call over to Riverbed's President and CEO, Jerry Kennelly.
Thank you, Renee. Welcome, everyone, and thank you for joining us this afternoon. Riverbed is reporting a record-breaking quarter today, having achieved the highest revenue, operating profit and net income in our history. Revenue for the second quarter was $126.2 million, up 12% sequentially and up 38% compared to the second quarter of last year. Our year-over-year product revenue growth was 40%, the highest growth rate we have experienced in two years.
Our operating profit increased 31% over the previous quarter and doubled over the prior year to $30.5 million as we achieved operating margins of 24.2%. The strength of this quarter was broad-based. We experienced sequential and year-over-year growth in all major geographies with notable strength in EMEA. We also saw sales increase across most major industry verticals, with particular strength in healthcare, pharmaceutical, government and manufacturing.
We exited the quarter with more than 8,300 cumulative customers. New customer additions exceeded 500, and we now count 71 of the Forbes Global 100 as Riverbed customers with the vast majority of these customers still in the very early stages of their potential deployments.
Our second quarter results clearly demonstrate that WAN [wide area network] optimization continues to be a strategic priority as organizations consolidate and virtualize their IT infrastructure. Riverbed is in a very strong position of selling the market-leading technology that makes possible the vision of sharing enterprise resources across the wide area network.
If you think of the enterprise today and how it is evolving, the network is the heart of the IT infrastructure. Collaboration, file sharing, consolidation and its many forms, from VDI to cloud computing, require a high-performance, reliable and fully optimized wide area network. The enterprise WAN supports a heavy load that is only growing as companies embrace the cost savings or productivity gains achieved by leveraging virtualization, consolidation and collaborative applications such as SharePoint and others.
The WAN is the new LAN, and Riverbed's leading technology and products are what enable the network to support these IT initiatives. Our product reach extends beyond the remote office into the data center. We have seen strong uptick of our top-end appliance. We still have 7050 as the data center solution since its launch in February 2010, marking the most successful product launch in our history. We expect sales to continue to ramp in the second half of the year. During the second quarter, the 7050 was qualified to work with EMC SRDF/A for both their DMX and V-Max high-end Symmetrix products. And Riverbed was awarded the 2009 EMC Partner Solution Award offering of the year for Symmetrix.