Kerching! That's the sound of Barracuda customers feeling the ransomware fear

Email threat scans and cloud uptake bolsters firm's fortunes

ransomware

Barracuda's business grew a little faster as customers continued moving to the public cloud and ransomware scared them into securing their emails.

Third quarter fiscal 2017 revenues were $88.8m, a good 10.9 per cent uptick on last year, and a 1 per cent increase sequentially. Net income was $1.8m, 2 per cent of its revenues, and contrasting well with the $1.6m loss a year ago, but less well with the $2.4m profit in the previous quarter.

Prez and CEO BJ Jenkins talked about ”core product billings outpacing our expectations, driven in part by increasing customer adoption of our cloud-based security and data protection solutions. We continue to execute on our strategy to capitalise on market trends as more customers utilise our solutions as they move applications and workloads to the cloud.”

William Blair analyst Jason Ader mentioned Barracuda delivering “a fourth consecutive quarter of billings, revenue, and non-GAAP EPS outperformance”.

In the earnings call Jenkins mentioned; “Third quarter total gross billings grew 13 per cent year-over-year with core product billings coming in ahead of our expectations and growing 30 per cent year-over-year. Third quarter performance for our three core product focus areas email security and management, network and application security and data protection each performed well.”

He added this nugget: “In Q3, we added over 1,000 new customers to Barracuda essentials for Office 365 bringing the total number of customers to over 2000. Additionally, 50 per cent of these customers are net new to Barracuda up from 30 per cent last quarter [and] we’re now over 50 Fortune 1000 customers.“

Why was this?

Jenkins said in the call: “Email security has been growing rapidly. First there is a lot of customer demand out there and movement from on-premise and Office 365, so there is certainly some customer awareness. You put that together with a rise in attacks like ransomware and customers are looking for a false security sweep that will help them protect their email environment and specifically with something like ransomware. The [fact] that we have strong cloud-based email security along with backup and data protection for those customers who are impacted to recover from, I think is driving a lot of awareness and uptick in demand.”

In his analysis, Ader explained: “Strength in the third quarter was driven by continued adoption of cloud-based solutions for email security and management (specifically Barracuda Essentials for Office 365), record billings for next-generation firewall and web application firewall, and solid organic billings growth in data protection. We were particularly encouraged by the data protection results, as this segment of the business has struggled over the past 18 months; we believe an improved data backup market and better execution explain the rebound.”

Barracuda_Q3_fy2017

Ader said he sees Barracuda as making “clear progress in its business transition from on-premises appliances to cloud-based solutions, [but] we are modelling only modest fiscal 2018 billings and revenue growth of 7 per cent and 6 per cent, respectively, as comps get tougher and the legacy parts of the business weigh down performance.”

The legacy parts of the business constitutes appliance-based, on-premises products outside of NG Firewall and Backup. There is a significant installed base here but it will be a smaller portion of total billings as time progresses.

Barracuda is seeing $87m to $89m fourth quarter revenues. At the mid-point that’s a 5.1 per cent jump up from a year ago and implies $351.4m full year revenues – ostenibly a 9.7 per cent increase. ®

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