Can Barracuda Networks Inc. (NYSE: CUDA) Continue Revenue Gains?


Barracuda Networks Inc. (NYSE: CUDA) delivered a pleasant surprise in 1Q2016 whereby revenue and EPS grew over the previous year and also exceeded the average projection of Wall Street analysts covering the stock. But investor focus is on the future not the past, which leads to the important question about whether the network security vendor can continue beating expectations in the coming quarters and possibly years.

If you listened to what Barracuda’s CEO, B.J. Jenkins, address at the earnings conference call, the impression you get is that the management believes the best moments for the company are still ahead. For instance, Jenkins talked about the positive performance in 1Q being driven by strong execution strategy. He added that the strategy of the team he leads is to make Barracuda the leading provider of network security and data protection.

The major takeaway from Barracuda Networks Inc. (NYSE: CUDA)’s CEO was that 1Q only provided a glimmer into what is achievable in the company if management continues with strong execution on the various initiatives the team is working on. He promised that more robust growth in topline and bottom-line figures is within reach for Barracuda.

Because you should expect CEO Jenkins to know the company’s position better than any outsider, his promise is something to take seriously. But it is not just promises being talked about here. The 1Q results go a long way to show that the efforts being made at Barracuda are bearing fruit.

Barracuda Networks Inc. (NYSE: CUDA)’s 1Q at a glance

Barracuda Networks Inc. (NYSE:CUDA) generated revenue of $86.7 million in 1Q, an increase of 11% over revenue generated in a similar quarter a year ago. The revenue figure also exceeded the consensus estimate by nearly $3 million. Perhaps something that should make Barracuda investors excited is that recurring revenue, which already accounts for more than 50% of total revenue, rose 20% to $65.3 million in the latest quarter. Coming to bottom-line, Barracuda posted adjusted EPS of $0.20, which compared to $0.09 a year ago. Analysts were looking for EPS of $0.09.

Barracuda Networks Inc. (NYSE: CUDA) also posted a 14% growth in active subscribers.

What about the future?

Barracuda Networks Inc. (NYSE: CUDA) is expecting 2Q revenue to be in the band of $84 to $86 million with EPS coming in the range of $0.12 to $0.13.


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