Sourcefire Announces Record Revenue for Fourth Quarter & Full Year 2012

Sourcefire Announces Record Revenue for Fourth Quarter & Full Year 2012 
Fourth Quarter 2012: 
-- Revenue: $67.4 Million, an Increase of 27% Year-Over-Year 
-- Adjusted Net Income: $8.9 Million, or $0.29 per Diluted Share 
Full Year 2012: 
-- Revenue: $223.1 Million, an Increase of 35% Year-Over-Year 
-- Adjusted Net Income: $24.9 Million, or $0.81 per Diluted Share 
COLUMBIA, MD -- (Marketwire) -- 02/21/13 --  Sourcefire, Inc.
(NASDAQ: FIRE), a leader in intelligent cybersecurity solutions,
today announced financial results for its fiscal fourth quarter and
full year ended December 31, 2012. 
"Sourcefire achieved record revenue for the fourth quarter and full
year driven by strong global demand for our best in class solutions
running on our FirePOWER platform and the successful execution of our
expanded go-to-market strategy," said Marty Roesch, interim CEO of
Sourcefire. "Our threat-centric approach continues to be the key
differentiator for Sourcefire, and our customers are making
increasingly larger commitments to us to keep their extended networks
safe."  
Financial Summary 


 
--  Total Revenue - Revenue for the fourth quarter of 2012 was $67.4
    million compared to $53.2 million in the fourth quarter of 2011, an
    increase of 27%. Revenue for the year ended December 31, 2012 was
    $223.1 million compared to $165.6 million for 2011, an increase of
    35%.
    
    
--  GAAP Net Income - Net income was $2.6 million for the fourth quarter
    of 2012, or $0.08 per diluted share, on the basis of generally
    accepted accounting principles (GAAP), compared with GAAP net income
    of $4.1 million, or $0.14 per diluted share, in the fourth quarter of
    2011. GAAP net income for the year ended December 31, 2012 was $5.0
    million, or $0.16 per diluted share, compared with GAAP net income of
    $6.2 million, or $0.21 per diluted share, for 2011.
    
    
--  Adjusted Net Income - Adjusted net income for the fourth quarter of
    2012, which excludes stock-based compensation expense, amortization of
    acquisition-related intangible assets and includes an assumed tax rate
    of 35%, was $8.9 million, or $0.29 per diluted share. This compares to
    adjusted net income of $7.6 million, or $0.25 per diluted share, in
 
    the fourth quarter of 2011, which excludes stock-based compensation
    expense, amortization of acquisition-related intangible assets and
    other acquisition-related expenses and includes an assumed tax rate of
    35%. Adjusted net income for the year ended December 31, 2012, which
    excludes stock-based compensation expense, amortization of
    acquisition-related intangible assets and includes an assumed tax rate
    of 35%, was $24.9 million, or $0.81 per diluted share. This compares
    to adjusted net income for 2011, which excludes stock-based
    compensation expense, amortization of acquisition-related intangible
    assets and other acquisition-related expenses, and includes an assumed
    tax rate of 35%, of $16.8 million, or $0.57 per diluted share.
    
    
--  Cash and Cash Flow - As of December 31, 2012, the Company's cash, cash
    equivalents and investments totaled $204.0 million. Net cash provided
    by operating activities was $16.6 million in the fourth quarter of
    2012 and $42.7 million for the full year 2012. The Company generated
    free cash flow of $13.8 million in the fourth quarter of 2012 and
    $33.8 million for the full year 2012.

  
Recent Company Highlights
 Revenue Growth 


 
--  Increased 2012 U.S. commercial revenue to $104.0 million, up 17% over
    2011.
--  Increased 2012 international revenue to $74.4 million, up 77% over
    2011.
--  Increased 2012 U.S. federal sector revenue to $44.7 million, up 28%
    over 2011.

  
Innovation & Recognition 


 
--  Announced it has expanded its FirePOWER(TM) appliance family
    performance range with the addition of the 7000 series. The FirePOWER
    performance range is now from 50 Mbps to 40+ Gbps, the broadest in the
    industry.
    
    
--  Announced the new Advanced Malware Protection for FirePOWER, providing
    users with unmatched visibility and control of modern threats on the
    network -- from point of entry, through propagation, to post-infection
    remediation.
    
    
--  Announced it has expanded its Advanced Malware Protection offerings to
    include new Incident Response Professional Services that assist
    customers in addressing advanced malware challenges. The services
    enable customers to clearly identify an event, evaluate the risk and
    determine the most effective approach to remediate. Experienced in
    incident response techniques, methodology and the actions of malicious
    code, the Sourcefire Incident Response Team helps customers eliminate
    uncertainty and make educated decisions for better protection --
    before, during and after an attack.

  
First Quarter 2013 Outlook  
Based on information as of February 21, 2013, Sourcefire expects
revenue for the first quarter of 2013 in the range of $56.0 million
to $58.0 million, net income per diluted share in the range of $0.01
to $0.03 and, on an adjusted basis, net income per diluted share in
the range of $0.11 to $0.13. Sourcefire's expectation of adjusted net
income per diluted share excludes stock-based compensation expense of
$6.4 million to $6.6 million and amortization of acquired intangible
assets of approximately $0.3 million and includes an assumed 35% tax
rate.  
Non-GAAP Measures 
To supplement its consolidated financial statements presented in
accordance with GAAP, Sourcefire considers certain financial measures
that are not prepared in accordance with GAAP, including non-GAAP
adjusted net income, adjusted net income per share, adjusted income
from operations, adjusted income from operations as a percentage of
revenue and free cash flow.  
Sourcefire uses these non-GAAP financial measures, in addition to
GAAP financial measures, to evaluate its operating and financial
performance and to compare such performance to that of prior periods
and to the performance of its competitors. The Company also uses
these non-GAAP financial measures in making operational and financial
decisions and in establishing operational goals. Sourcefire believes
that providing these non-GAAP financial measures to investors, as a
supplement to GAAP financial measures, helps investors to evaluate
the Company's operating and financial performance and trends in its
business, consistent with how management evaluates such performance
and trends. The Company also believes these non-GAAP financial
measures may be useful to investors in comparing its performance to
the performance of other companies, although Sourcefire's non-GAAP
financial measures are specific to it and the non-GAAP financial
measures of other companies may not be calculated in the same manner. 
Adjusted Net Income, Adjusted Net Income per Share, Adjusted Income
from Operations and Adjusted Income from Operations as a Percentage
of Revenue: In evaluating the operating performance of its business,
Sourcefire excludes certain charges and credits that are required by
GAAP. These non-GAAP measures exclude (i) stock-based compensation,
which does not involve the expenditure of cash, (ii) amortization of
acquisition-related intangible assets, which does not involve the
expenditure of cash, and (iii) other acquisition-related expenses,
which are unrelated to the ongoing operation of the Company's
business in the ordinary cou
rse. For 2012 non-GAAP results are
adjusted to reflect the effect of an assumed tax rate of 35%. This
adjustment is intended to normalize the tax rate and provide a tax
rate that approximates the Company's expected long-term GAAP tax
rate.  
Free Cash Flow: Sourcefire defines free cash flow as net cash
provided by operating activities minus capital expenditures. The
Company considers free cash flow to be a liquidity measure that
provides useful information to management and investors about the
amount of cash generated by the business that, after the purchase of
property and equipment, can be used for strategic opportunities,
including investing in the business, making strategic acquisitions
and strengthening the balance sheet. 
These measures should be considered in addition to results prepared
in accordance with GAAP, but should not be considered a substitute
for, or superior to, GAAP results. The non-GAAP measures included in
this press release have been reconciled to the nearest GAAP measure
in the table following the financial statements attached to this
press release.  
Conference Call and Webcast 
On Thursday, February 21, 2013 at 5:00 p.m. Eastern Time, Sourcefire
will host a conference call to review these results. A listen-only
web cast of the session will be available at
http://investor.sourcefire.com.  
Those wishing to participate in the live session should use the
following numbers to dial in:  
Calling from the United States or Canada: 877-712-7037
 Calling from
other countries: 253-237-1122
 Conference ID number: 86561838 
An online replay will be available at http://investor.sourcefire.com
following the completion of the live call and will remain available
for at least 90 days.  
About Sourcefire 
Sourcefire, Inc. (NASDAQ: FIRE), a world leader in intelligent
cybersecurity solutions, is transforming the way global large- to
mid-size organizations and government agencies manage and minimize
network security risks. With solutions from a next-generation network
security platform to advanced malware protection, Sourcefire provides
customers with Agile Security(R) that is as dynamic as the real world
it protects and the attackers against which it defends. Trusted for
more than 10 years, Sourcefire has been consistently recognized for
its innovation and industry leadership with numerous patents,
world-class research, and award-winning technology. Today, the name
Sourcefire has grown synonymous with innovation, security
intelligence and agile end-to-end security protection. For more
information about Sourcefire, please visit www.sourcefire.com.  
Sourcefire, the Sourcefire logo, Snort, the Snort and Pig logo, Agile
Security and the Agile Security logo, ClamAV, FireAMP, FirePOWER,
FireSIGHT and certain other trademarks and logos are trademarks or
registered trademarks of Sourcefire, Inc. in the United States and
other countries. Other company, product and service names may be
trademarks or service marks of others.  
Cautionary Language Concerning Forward-Looking Statements 
The statements contained in this release that are not historical
facts are "forward-looking statements" (as such term is defined in
the Private Securities Litigation Reform Act of 1995) that involve
risks and uncertainties. These statements include expectations
regarding financial results for the first quarter of 2013.  
Management cautions the reader that these forward-looking statements
are only predictions and are subject to a number of both known and
unknown risks and uncertainties, and actual results, performance,
and/or achievements of Sourcefire, Inc. may differ materially from
the future results, performance, and/or achievements expressed or
implied by these forward-looking statements as a result of a number
of factors. These factors include, without limitation, the fact that
the outlook for the first quarter of 2013 could change, and also
include, without limitation, those risks and uncertainties described
from time to time in the reports filed by Sourcefire, Inc. with the
U.S. Securities and Exchange Commission. Sourcefire, Inc. undertakes
no obligation to update any forward-looking statements.  


 
                                                                            
                                                                            
                              Sourcefire, Inc.                              
                   Consolidated Statements of Operations                    
              (in thousands, except share and per share data)               
                                                                            
                            Three Months Ended        Twelve Months Ended   
                               December 31,              December 31,       
                         ------------------------  ------------------------ 
                             2012         2011         2012         2011    
                         ------------ -----------  ------------ ----------- 
Revenue:                  (unaudited) (unaudited)   (unaudited)             
  Products               $     43,313 $    33,959  $    135,490 $    98,166 
  Technical support and                                                     
   professional services       24,045      19,245        87,600      67,480 
                         ------------ -----------  ------------ ----------- 
    Total revenue              67,358      53,204       223,090     165,646 
                         ------------ -----------  ------------ ----------- 
Cost of revenue:                                                            
  Products                     12,973       9,611        40,695      28,368 
  Technical support and                                                     
   professional services        3,209       2,680        11,321       8,841 
                         ------------ -----------  ------------ ----------- 
    Total cost of                                                           
     revenue                   16,182      12,291        52,016      37,209 
                         ------------ -----------  ------------ ----------- 
                                                                            
Gross profit                   51,176      40,913       171,074     128,437 
                                                                            
Operating expenses:                                                         
  Research and                                                              
   development                 10,713       8,849        41,570      33,145 
  Sales and marketing          25,396      19,009        86,759      64,589 
  General and                                                               
   administrative              10,242       5,258        28,194      19,709 
  Depreciation and                                                          
   amortization                 1,514       1,059         5,187       3,917 
                         ------------ -----------  ------------ ----------- 
    Total operating                                                         
     expenses                  47,865      34,175       161,710     121,360 
                         ------------ -----------  ------------ ----------- 
                                                                      
      
Income from operations          3,311       6,738         9,364       7,077 
Other income (expense),                                                     
 net                               22        (252)           20        (351)
                         ------------ -----------  ------------ ----------- 
Income before income                                                        
 taxes                          3,333       6,486         9,384       6,726 
Provision for income                                                        
 taxes                            701       2,352         4,357         536 
                         ------------ -----------  ------------ ----------- 
Net income               $      2,632 $     4,134  $      5,027 $     6,190 
                         ============ ===========  ============ =========== 
                                                                            
Net income per share -                                                      
 basic                   $       0.09 $      0.14  $       0.17 $      0.22 
Net income per share -                                                      
 diluted                 $       0.08 $      0.14  $       0.16 $      0.21 
                                                                            
Weighted average shares outstanding                                         
 used in computing per share amounts:                                       
  Basic                    30,203,709  28,912,772    29,787,100  28,607,013 
  Diluted                  31,246,472  29,907,917    30,929,210  29,529,525 
                                                                            
Stock-based compensation expense for the three and twelve                   
 months ended December 31, 2012 and 2011 is included in the                 
 Consolidated                                                               
Statements of Operations                                                    
     as follows (in                                                         
       thousands):                                                          
                            Three Months Ended        Twelve Months Ended   
                               December 31,              December 31,       
                         ------------------------  ------------------------ 
                             2012         2011         2012         2011    
                         ------------ -----------  ------------ ----------- 
                          (unaudited) (unaudited)   (unaudited) (unaudited) 
Cost of revenue                                                             
 (product)               $        154 $        72  $        480 $       273 
Cost of revenue                                                             
 (services)                       249         157           863         514 
                         ------------ -----------  ------------ ----------- 
  Stock-based comp                                                          
   expense included in                                                      
   cost of revenue                403         229         1,343         787 
                                                                            
Research and development        1,630         934         5,507       3,408 
Sales and marketing             3,007       1,623         9,966       5,990 
General and                                                                 
 administrative                 5,041       1,311         9,348       4,696 
                         ------------ -----------  ------------ ----------- 
  Stock-based comp                                                          
   expense included in                                                      
   operating expenses           9,678       3,868        24,821      14,094 
                         ------------ -----------  ------------ ----------- 
Total stock-based                                                           
 compensation expense    $     10,081 $     4,097  $     26,164 $    14,881 
                         ============ ===========  ============ =========== 
                                                                            
                                                                            
                                                                            
                              Sourcefire, Inc.                              
                   Condensed Consolidated Balance Sheets                    
                               (in thousands)                               
                                                                            
                                                 December 31,  December 31, 
                                                     2012          2011     
                                                 ------------  ------------ 
Assets                                            (unaudited)   (unaudited) 
  Cash and cash equivalents                      $     96,178  $     59,407 
  Investments                                         107,777        98,407 
  Accounts receivable, net                             77,426        54,914 
  Inventory                                             6,880         4,285 
  Deferred tax assets                                  13,023        11,339 
  Prepaid expenses and other current assets             9,043         7,718 
  Property and equipment, net                          15,438        12,233 
  Goodwill                                             15,000        15,000 
  Intangible assets, net                                4,456         5,822 
  Other long-term assets                               19,453        14,802 
                                                 ------------  ------------ 
  Total assets                                   $    364,674  $    283,927 
                                                 ============  ============ 
                                                                            
Liabilities                                                                 
  Accounts payable and accrued expenses          $     27,783  $     23,237 
  Deferred revenue                                     90,241        61,570 
  Other liabilities                                     1,524         1,263 
                                                 ------------  ------------ 
  Total liabilities                                   119,548        86,070 
                                                 ------------  ------------ 
                                                                            
Stockholders' Equity                                                        
  Common stock                                             30            28 
  Additional paid-in capital                          255,610       213,402 
  Accumulated deficit                                 (10,522)      (15,549)
  Accumulated other comprehensive income (loss)             8           (24)
                                                 ------------  ------------ 
  Total stockholders' equity                          245,126       197,857 
                                                 ------------  ------------ 
                                                                            
  Total liabilities and stockholders' equity     $    364,674  $    283,927 
                                                 ------------  ------------ 
                                                                            
                                                                            
                                                                            
                              Sourcefire, Inc.                              
              Condensed Consolidated Statements of Cash Flows               
                               (in thousands)                           
    
                                                                            
                            Three Months Ended        Twelve Months Ended   
                               December 31,              December 31,       
                         ------------------------  ------------------------ 
                             2012         2011         2012         2011    
                         -----------  -----------  -----------  ----------- 
                         (unaudited)  (unaudited)  (unaudited)  (unaudited) 
                                                                            
Net income               $     2,632  $     4,134  $     5,027  $     6,190 
Adjustments to reconcile                                                    
 net income to net cash                                                     
 provided by operating                                                      
 activities                   14,000       10,889       37,658        8,412 
                         -----------  -----------  -----------  ----------- 
Net cash provided by                                                        
 operating activities         16,632       15,023       42,685       14,602 
                                                                            
Net cash used in                                                            
 investing activities         (5,853)     (10,250)     (22,298)     (16,949)
                                                                            
Net cash provided by                                                        
 financing activities          2,111        3,321       16,384        7,344 
                         -----------  -----------  -----------  ----------- 
Net increase in cash and                                                    
 cash equivalents             12,890        8,094       36,771        4,997 
Cash and cash                                                               
 equivalents at                                                             
 beginning of period          83,288       51,313       59,407       54,410 
                         -----------  -----------  -----------  ----------- 
Cash and cash                                                               
 equivalents at end of                                                      
 period                  $    96,178  $    59,407  $    96,178  $    59,407 
                         -----------  -----------  -----------  ----------- 
                                                                            
                                                                            
                                                                            
                              Sourcefire, Inc.                              
                Reconciliation of Non-GAAP Measures to GAAP                 
              (in thousands, except share and per share data)               
                                                                            
                            Three Months Ended        Twelve Months Ended   
                               December 31,              December 31,       
                         ------------------------  ------------------------ 
                             2012         2011         2012         2011    
                         -----------  -----------  -----------  ----------- 
                         (unaudited)  (unaudited)  (unaudited)  (unaudited) 
Reconciliation of                                                           
 adjusted income from                                                       
 operations:                                                                
  GAAP income from                                                          
   operations            $     3,311  $     6,738  $     9,364  $     7,077 
  Amortization of                                                           
   acquisition-related                                                      
   intangible assets             342          252        1,368        1,008 
  Other acquisition-                                                        
   related expenses*               -          667        1,436        2,790 
  Stock-based                                                               
   compensation expense       10,081        4,097       26,164       14,881 
                         -----------  -----------  -----------  ----------- 
  Adjusted income from                                                      
   operations            $    13,734  $    11,754  $    38,332  $    25,756 
                         ===========  ===========  ===========  =========== 
  Adjusted income from                                                      
   operations as % of                                                       
   total revenue                20.4%        22.1%        17.2%        15.5%
                                                                            
Reconciliation of                                                           
 adjusted net income:                                                       
  GAAP net income        $     2,632  $     4,134  $     5,027  $     6,190 
  Stock-based                                                               
   compensation expense       10,081        4,097       26,164       14,881 
  Amortization of                                                           
   acquisition-related                                                      
   intangible assets             342          252        1,368        1,008 
  Other acquisition-                                                        
   related expenses**              -          781        1,436        3,246 
  Tax credit for                                                            
   research and                                                             
   experimentation                 -            -            -       (2,001)
  Income tax                                                                
   adjustment***              (4,113)      (1,714)      (9,066)      (6,514)
                         -----------  -----------  -----------  ----------- 
  Adjusted net income    $     8,942  $     7,550  $    24,929  $    16,810 
                         ===========  ===========  ===========  =========== 
                                                                            
  Adjusted net income                                                       
   per share - basic     $      0.30  $      0.26  $      0.84  $      0.59 
  Adjusted net income                                                       
   per share - diluted   $      0.29  $      0.25  $      0.81  $      0.57 
                                                                            
  Weighted average                                                          
   number of shares -                                                       
   basic                  30,203,709   28,912,772   29,787,100   28,607,013 
  Weighted average                                                          
   number of shares -                                                       
   diluted                31,246,472   29,907,917   30,929,210   29,529,525 
                                                                            
* Includes the accrual of retention obligations related to the hiring of    
former Immunet employees and other acquisition-related costs.               
** Includes the accrual of retention obligations related to the hiring of   
former Immunet employees, the increase in the fair value of acquisition-    
related contingent consideration and other acquisition-related costs.       
*** Income tax adjustment is used to adjust the GAAP provision for income   
taxes to a Non-GAAP provision for income taxes utilizing an assumed tax     
rate of 35%.                                                              
  
                                                                            
                                                                            
Reconciliation of net cash provided by operating activities to free cash    
flow:                                                                       
                                                                            
                            Three Months Ended        Twelve Months Ended   
                               December 31,              December 31,       
                         ------------------------  ------------------------ 
                             2012         2011         2012         2011    
                         -----------  -----------  -----------  ----------- 
                         (unaudited)  (unaudited)  (unaudited)  (unaudited) 
                                                                            
Net cash provided by                                                        
 operating activities    $    16,632  $    15,023  $    42,685  $    14,602 
Purchase of property and                                                    
 equipment                    (2,786)      (2,167)      (8,935)      (6,511)
                         -----------  -----------  -----------  ----------- 
Free cash flow           $    13,846  $    12,856  $    33,750  $     8,091 
                         -----------  -----------  -----------  ----------- 
                                                                            
                                                                            
                                                                            
                              Sourcefire, Inc.                              
                        Supplemental Operating Data                         
                                                                            
                                                                            
                            Three Months Ended        Twelve Months Ended   
                               December 31,              December 31,       
                         ------------------------  ------------------------ 
                             2012         2011         2012         2011    
                         -----------  -----------  -----------  ----------- 
                         (unaudited)  (unaudited)  (unaudited)  (unaudited) 
                                                                            
Number of deals in                                                          
 excess of $500,000               25           28           76           68 
Number of deals in                                                          
 excess of $100,000              127          126          406          333 
Number of new customers          162          171          452          452 
Percentage of channel-                                                      
 influenced deals                 56%          59%          46%          51%
Total channel partners           738          576                           
Number of full-time                                                         
 employees at end of                                                        
 period                          599          451                           
                                                                            
Revenue Composition by                                                      
 Geography:                                                                 
United States                     61%          74%          67%          75%
International                     39%          26%          33%          25%
                         -----------  -----------  -----------  ----------- 
  Total                          100%         100%         100%         100%
                         ===========  ===========  ===========  =========== 
                                                                            
Revenue Composition by Business                                             
 Distribution:                                                              
Existing customer                                                           
 product revenue                  32%          31%          36%          35%
New customer product                                                        
 revenue                          32%          33%          25%          24%
Services revenue                  36%          36%          39%          41%
                         -----------  -----------  -----------  ----------- 
  Total                          100%         100%         100%         100%
                         ===========  ===========  ===========  =========== 

  
Media Contact:
Jennifer Leggio
Sourcefire
650-260-4025
jleggio@sourcefire.com 
Investor Contact:
Staci Mortenson
ICR
203-682-8273
Staci.Mortenson@icrinc.com 
 
 
Press spacebar to pause and continue. Press esc to stop.