Blue Coat Systems Inc. (BCSI) reported fiscal 2010 fourth-quarter results after the closing bell on Thursday. The company swung to a GAAP net income of $23.6 million from a GAAP net loss of $3.5 million in the year-ago period. Excluding special items, the company posted adjusted earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate of 33 cents.
Blue Coat offers an Application Delivery Network Infrastructure that provides the visibility, acceleration and security required to optimize and secure the flow of information to any user, on any network, anywhere. This application intelligence enables enterprises to tightly align network investments with business requirements, speed decision making and secure business applications for long-term competitive advantage.
Quarterly Details
Blue Coat’s total revenue during the quarter recorded a 16.7% growth to $132.6 million from $113.6 million in the year-ago period. The growth was mainly attributable to an 18.0% year-over-year expansion in product revenue to $87.8 million coupled with a 14.2% growth in service revenue to $44.8 million.
Gross profit in the quarter rose 25.1% year-over-year to $102.8 million, while gross margin grew 520 basis points (bps) to 77.5% primarily due to robust product margins. Total operating expenses increased 7.4% year-over-year to $86.2 million primarily due to higher research and development expenses. However, strong revenue growth and gross margins more than offset the increase in operating expenses. Consequently, Blue Coat’s operating income surged to $16.6 million from $1.9 million in the year-ago period, while operating margin expanded 1080 bps to 12.5%.
Balance Sheet & Cash Flow
Blue Coat exited the quarter with cash and cash equivalents of $236.3 million, compared to $114.2 million in the prior year quarter. During fiscal 2010, the company generated $96.8 million of cash from operations and utilized $17.8 million towards capital expenditure.
Guidance and Zacks Consensus
Looking ahead, Blue Coat anticipates revenues of $121 million to $126 million during the first quarter of fiscal 2011. Pro forma earnings for the quarter is expected in the range of 35 cents to 40 cents per share. The guidance is above the Zacks Consensus Estimate of 31 cents per share, which dipped by 2 cents in just the past week. The Zacks Consensus Estimate for fiscal 2011 is currently pegged at $1.47 per share, which moved up 3 cents over the past week as 2 of 7 covering analysts raised expectations.
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