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Secure Computing Reports 2Q

Secure Computing Corporation announced second quarter GAAP revenue of $57.6 million

SAN JOSE, Calif. -- Secure Computing Corporation (Nasdaq: SCUR), a leading enterprise gateway security company, today announced second quarter GAAP revenue of $57.6 million. This represents a 49% increase in revenue compared to $38.7 million in the same quarter last year. Second quarter non-GAAP revenue was $63.7 million. This represents a 65% increase compared to the same quarter last year. On a GAAP basis, net loss was $10.9 million or $0.18 per share. Second quarter non-GAAP net income was $5.0 million or $0.07 per fully-diluted share. The company generated $12.7 million of cash from operations and reduced the long term debt balance by $10.0 million. Billings for the quarter were $70.7 million, a 75% increase compared to the same quarter last year.

"Q2 was another solid quarter for Secure Computing, and was a continuation of the momentum that was achieved in the second half of 2006 and in the first quarter of 2007," said John McNulty, chairman, president and chief executive officer of Secure Computing. "The escalating threat environment creates demands for the sophisticated security products that we offer. Our team used our best of breed products and good execution to turn in a strong quarter. With the vast majority of our acquisition integration work behind us and continuing market demand we are looking forward to a bright future."

Second Quarter Financial Highlights:

  • GAAP revenue for the second quarter was $57.6 million. This represents a 49% increase compared to $38.7 million in the same quarter last year and a 7% increase compared to revenue of $53.8 million in the prior quarter. Non-GAAP revenue for the quarter was $63.7 million. This represents a 65% increase compared to the same quarter last year and a 5% increase compared to non-GAAP revenue of $60.5 million in the prior quarter.
  • Billings for the second quarter were $70.7 million. This represents a 75% increase compared to $40.5 million in the same quarter last year and a 7% increase compared to billings of $66.3 million in the prior quarter.
  • GAAP gross profit in the second quarter was 70% of revenue or $40.6 million. Non-GAAP gross profit in the second quarter was 75.5% of revenue or $48.1 million. These non-GAAP results compare to 78% of non-GAAP revenue, or $30.3 million, in the year ago quarter and 75% of non-GAAP revenue, or $45.4 million, in the prior quarter.
  • Second quarter GAAP operating expenses were $47.2 million, or 82% of revenue. Non-GAAP operating expenses for the quarter were $40.4 million or 63% of non-GAAP revenue. These non-GAAP results compare to 69% of non-GAAP revenue in the year ago quarter and 65% in the prior quarter.
  • GAAP operating loss for the second quarter was $6.6 million. Second quarter non-GAAP operating income was $7.7 million or 12% of non-GAAP revenue, compared to 9% in the same quarter last year and 10% in the prior quarter.
  • GAAP net loss for the second quarter was $10.9 million or $0.18 per share. Second quarter non-GAAP net income was $5.0 million or $0.07 per fully-diluted share, compared to non-GAAP net income of $5.0 million, or $0.08 per fully diluted share in the year ago quarter, and $3.4 million, or $0.05 per fully-diluted share in the prior quarter.
  • Deferred revenue increased $11.7 million, or 9%, bringing the total deferred revenue balance to $142.3 million at the end of June.
  • Days sales outstanding (DSOs) were 86 days. As we have experienced in previous quarters, the change in DSOs from the prior quarter correlates to the change in deferred revenue. Excluding the impact of the increase in deferred revenue, DSOs were 68 days.
  • Cash and restricted cash was $9.3 million at June 30, 2007. Cash generated from operations in the quarter was $12.7 million.

"In the second quarter, we experienced very solid financial performance across virtually all key metrics," said Tim Steinkopf, senior vice president of operations and chief financial officer. "In particular, we are very pleased with our ability to generate strong cash flow from operations. We continue to view cash flow from operations as an important metric to consider when evaluating the underlying strength of our business."

Secure Computing Corp. (Nasdaq: SCUR)

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