On Tuesday, shares of cloud-enabled security provider Barracuda Networks plunged, down around 16% for most of the day after the company reported fourth-quarter fiscal 2017 results yesterday.
Barracuda reported earnings of 8 cents per share (this number excludes 2 cents from non-recurring items), surpassing the Zacks Consensus Estimate of 5 cents per share. Revenues grew 7% year-over-year to $89.3 million, also beating our consensus estimate of $88 million. Subscription revenue increased 12% to $69.4 million, representing 78% of total revenue, and appliance revenue was $19.9 million.
The number of active subscribers grew roughly 15% year-over-year to reach 321,000. Gross billings were $103.2 million, compared with $95.8 million in the year ago period. Billings for core products increased 21% to $63.8 million.
What hurt CUDA stock, though, was Barracuda’s disappointing guidance and a declining renewal rate. During the company’s earnings call, it projected first-quarter revenues of $90 million to $92 million on non-GAAP earnings of 17 cents to 19 cents per share (vs. consensus of $91.1 million on earnings of 18 cents per share). Barracuda also guided gross billings of $103 million to $105 million for the upcoming quarter.
Barracuda’s declining renewal rate is also a concern to investors. For Q4, the dollar-based renewal rate was 89%, down from 92% in the prior-year period. As a result, analysts at Piper Jaffray and Morgan Stanley lowered their price targets to $29 from $32 and to $24 from $25, respectively.
Currently, CUDA is a #3 (Hold) on the Zacks Rank.
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Here's Why Barracuda Networks (CUDA) Stock Plunged 16% Today
On Tuesday, shares of cloud-enabled security provider Barracuda Networks plunged, down around 16% for most of the day after the company reported fourth-quarter fiscal 2017 results yesterday.
Barracuda reported earnings of 8 cents per share (this number excludes 2 cents from non-recurring items), surpassing the Zacks Consensus Estimate of 5 cents per share. Revenues grew 7% year-over-year to $89.3 million, also beating our consensus estimate of $88 million. Subscription revenue increased 12% to $69.4 million, representing 78% of total revenue, and appliance revenue was $19.9 million.
The number of active subscribers grew roughly 15% year-over-year to reach 321,000. Gross billings were $103.2 million, compared with $95.8 million in the year ago period. Billings for core products increased 21% to $63.8 million.
What hurt CUDA stock, though, was Barracuda’s disappointing guidance and a declining renewal rate. During the company’s earnings call, it projected first-quarter revenues of $90 million to $92 million on non-GAAP earnings of 17 cents to 19 cents per share (vs. consensus of $91.1 million on earnings of 18 cents per share). Barracuda also guided gross billings of $103 million to $105 million for the upcoming quarter.
Barracuda’s declining renewal rate is also a concern to investors. For Q4, the dollar-based renewal rate was 89%, down from 92% in the prior-year period. As a result, analysts at Piper Jaffray and Morgan Stanley lowered their price targets to $29 from $32 and to $24 from $25, respectively.
Currently, CUDA is a #3 (Hold) on the Zacks Rank.
Sell These Stocks. Now.
Just released: today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>