Barracuda's 'Refined Strategy' Is Paying Off

Barracuda Networks Inc (NYSE: CUDA) reported its FQ1 results ahead of expectations and announced the departure of its CFO. Pacific Crest’s Rob Owens maintained a Sector Weight rating on the company. The analyst commented that although 2H brings easier comps, there is lack of visibility into spending on sales and marketing as well as the magnitude of upside to the bottom line.

Barracuda reported its FQ1 subscription revenue at $65.3 million, representing 20 percent y/y growth and beating the Pacific Crest forecast by $2.4 million. This highlighted “the success of the underlying shift to cloud-based and subscription revenue components,” analyst Rob Owens said.

The company generated solid FCF and EPS strength during the quarter, backed by the revenue upside as well as lower-than-expected shares and marketing spending, which resulted in meaningful margin upside. “Further, a dollar-based renewal rate of 93% and strong in-period customer additions of 9,000 show the opportunity for further momentum,” Owens wrote.

Related Link: D.A. Davidson Waiting For Headwinds To Subside Before Taking A Bit Of Barracuda Networks

CFO Departure

Barracuda announced that CFO David Faugno would be stepping down on August 1, after a decade of being the financial chief. The analyst mentioned that Mr. Faugno was leaving the company in “fair health” following a tough 2015.

“Focused efforts are paying off...New cloud-based offerings are gaining traction and security continues to be a focus for customers. The announced CFO departure comes at a good time as the ship appears to be righted,” Owens added.