Riverbed Technology (RVBD)
Q4 2011 Earnings Call
January 26, 2012 4:30 pm ET
Randy Gottfried - Chief Financial Officer, Principal Accounting Officer and Executive Vice President of Business Services
Eric S. Wolford - Executive Vice President of Marketing & Business Development
Jerry M. Kennelly - Co Founder, Executive Chairman, Chief Executive Officer and President
Renee Lyall -
Daniel H. Ives - FBR Capital Markets & Co., Research Division
Jason Ader - William Blair & Company L.L.C., Research Division
Nikos Theodosopoulos - UBS Investment Bank, Research Division
Ittai Kidron - Oppenheimer & Co. Inc., Research Division
Alex B. Henderson - Miller Tabak + Co., LLC, Research Division
Troy D. Jensen - Piper Jaffray Companies, Research Division
Rod B. Hall - JP Morgan Chase & Co, Research Division
Jayson Noland - Robert W. Baird & Co. Incorporated, Research Division
Mark Sue - RBC Capital Markets, LLC, Research Division
Ryan Hutchinson - Lazard Capital Markets LLC, Research Division
Previous Statements by RVBD
» Riverbed Technology's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Riverbed Technology's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Riverbed Technology's CEO Discusses Q4 2010 Results - Earnings Call Transcript
Good afternoon. My name is Kristen, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Riverbed Technology's Fourth Quarter and Full Year 2011 Financial Results Conference Call. [Operator Instructions] And at this time, I'd like to turn the call over to our host, Ms. Renee Lyall, Director of Investor Relations. Please go ahead.
Thank you, and welcome to our conference call for the fourth quarter and full year 2011. The speakers on today's call are Jerry Kennelly, President and CEO; Randy Gottfried, Chief Financial Officer; and Eric Wolford, EVP and GM of our Products group.
A press release detailing our fourth quarter and full year results was distributed today at 1:05 p.m. over Business Wire. The press release is available on our website at riverbed.com. This conference call is being webcast live at riverbed.com/investors and will be archived on our website for the next 12 months on the Quarterly Earnings and Events pages.
Our discussion today will include forward-looking statements, including statements regarding our products, markets, performance, strategies and financial outlook. Forward-looking statements are only predictions and involve risks and uncertainties that may cause our actual results to differ materially from those expressed or implied by these statements. Factors that may affect our results are summarized in our quarterly release and described in detail in our SEC filings. Riverbed disclaims any obligation to update any forward-looking statement. Unless otherwise stated, financial information reviewed on today's conference call is presented on a non-GAAP basis. Historical non-GAAP items are described and reconciled to GAAP results in today's press release and in a supplemental reconciliation available on the Investor Relations portion of our website. Any future products, feature or related specification that maybe referenced during today's call are for informational purposes only and are not commitments to deliver any technology or enhancement. 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.
Jerry M. Kennelly
Thank you, Renee. 2011 was a year of tremendous achievement and record profits for Riverbed. Annual revenues grew 32% to a record $728 million and operating profit grew 52%. Released an operating margin of 29.4%, up more than 300 basis points compared to 25.6% in 2010. We also obtained significant milestones in the fourth quarter, surpassing $200 million in revenue and $1 billion in assets.
Total product revenue increased 6% sequentially with enterprise, nongovernment product revenue growing 21% over the third quarter. In 2011, we expanded our addressable market through internal organic innovation, strategic acquisitions and new partnerships. We delivered major upgrades to our Steelhead product line, including improved integrated support through satellite networks and end-to-end video. We added UDP optimization, which is important for several high-volume replication applications and we now support TCP and UDP protocols over IPv6. We extended support for virtual desktop infrastructure or VDI and offer the broadest and most comprehensive support for Citrix, VMware and Microsoft VDI solutions. We also enhanced Quality of Service or QoS to include deep packet inspection and we integrated Cascade Shark into the Steelhead appliance to deliver on-demand packet capture.
QoS has become more important to enterprise companies today because they have both business and recreational traffic sharing the same link. Our QoS solution protects the business traffic, ensuring it performs reliably. In fact, the QoS of the Steelhead is now so powerful. We have had customers replaced their dedicated QoS product with Steelhead.
Our technology leadership position in our core market has never been better. We received our sixth consecutive InfoWorld Technology of the Year Award for Best WAN Accelerator. Our Advanced Platform WAN optimization market share exceeds 50% and our quarterly revenue is now more than double that of our closest competitor in this space. Gartner also just released their new Magic Quadrant for WAN optimization controllers, and Riverbed is once again in the leader's quadrant. In 2012, we will continue to deliver new enhancements and new products to our core Steelhead platform, making a great product line even better.
You've heard us talk about Granite [ph], a market expanding -- adjacent product to Steelhead that will deliver first of its kind block-level acceleration. Granite is a revolutionary product doing for edge servers and storage, what VDI is doing for the desktop. Granite will allow global enterprises to achieve complete consolidation of edge applications, servers and storage to the data center, while projecting the applications and data to edge locations and desktops thousands of miles away where they perform as if they were local without any compromise in performance.