For the third quarter of fiscal 2014, gross billings grew 19% to $77.5 million, up from $65.0 million in the third quarter of fiscal 2013. Total revenue increased 15% to $59.4 million, up from $51.4 million in the third quarter of fiscal 2013. Appliance revenue in the third quarter of fiscal 2014 grew to $18.2 million and recurring subscription revenue grew to $41.2 million, representing 69% of total revenue.
GAAP net loss in the third quarter of fiscal 2014 was $2.1 million, or $(0.06) per share, based on a share count of 34.3 million. Non-GAAP net income for the third quarter of 2014 was $0.5 million, or $0.01 per share, based on a diluted share count of 48.7 million. Non-GAAP net income excludes $2.4 million in stock compensation expense, $1.3 million in amortization of intangibles, and $0.6 million in acquisition and other non-recurring charges. A reconciliation between GAAP and non-GAAP information is contained in the tables below.
"Our business showed strong performance in the third quarter across both our security and storage segments, and we continue to see positive results from our high growth market segments," said BJ Jenkins, president and CEO. "During the quarter, we added over 6,800 new active subscribers, including both small businesses and large firms, across multiple geographies and industries. We believe that with our recent product releases and expanded distribution channels, Barracuda is well positioned to address the growing market trends of cloud computing, information growth and the increasing adoption of virtualization."
"The results reflect solid financial performance and controls, and we outperformed against our outlook in several key metrics including gross billings, revenue, non-GAAP operating income and adjusted EBITDA," said David Faugno, CFO. "Adjusted EBITDA in the third quarter was $12.6 million, or 21% of total revenue, non-GAAP operating income was $1.3 million, or 2% of total revenue, and adjusted free cash flow in the third quarter was $9.7 million, or 16% of total revenue. The Company closed the quarter with total deferred revenue of $298.8 million, up from $286.8 million in the prior quarter."
Recent Company Highlights
-- Initial Public Offering - On November 12, 2013, Barracuda recognized net proceeds of $75.5 million in cash from an initial public offering and closed the quarter with cash, cash equivalents and investments of $118.5 million. -- Market Share Recognition - Ranked in the top 5 by market share for providers in the global backup and recovery appliances hardware market for open systems in the report, Gartner Competitive Landscape: Backup and Recovery Appliances for Open Systems, Worldwide, November 21, 20131; listed by IDC's Worldwide Quarterly PBBA Tracker, CQ3 2013 as number 2 for total PBBA units sold; and once again named the content security appliance and virtual appliance volume leader as reported by IDC in its Worldwide Quarterly Security Appliance Tracker, Q2, September 2013. -- Expanding Cloud Presence - Announced the availability of its Web Application Firewall, Application Delivery Controller and Next Generation Firewall product lines through Windows Azure and its Web Application Firewall and Next Generation Firewall product lines through Amazon Web Services public cloud platforms. -- Industry Recognition - Named a 2013 Tech Innovator by CRN for Barracuda Backup with Cloud LiveBoot for VMware in the virtualization category; honored by Tech & Learning magazine's 31st Annual Awards of Excellence for Barracuda Web Filter and Barracuda Message Archiver; and earned five-star ratings for Barracuda Web Application Firewall in SC Magazine's 2013 Application and Web Security Group Test and for Barracuda Spam Firewall in SC Magazine's 2013 Email Security and Content Management Group Test. -- New Product Launches - Released the Barracuda Firewall X100 and X101, Barracuda Load Balancer ADC 540, Barracuda Message Archiver version 3.5, and Barracuda Backup-as-a-Service. -- Expanding Channel Reach - Added Arrow Enterprise Computing Solutions as a new distribution partner in North America. Conference Call Information Barracuda will host a conference call and corresponding live webcast at 2:00 p.m. PT today. To access the conference call, dial 1-877-941-2068 for the U.S. and Canada and 480-629-9712 for international callers. The webcast will be available live on the investor relations section of the Company's website at https://investors.barracuda.com, and via replay beginning approximately two hours after the completion of the call for a period of one year. An audio replay of the call will be available to investors beginning at approximately 5:00 p.m. PT today through January 13, 2014 by dialing 1-800-406-7325 in the U.S. and Canada, or 303-590-3030 for international callers, using passcode 4656628#. Additional information can be found in the investor slide presentation located at https://investors.barracuda.com/company/investor-relations/default.aspx.
Forward-Looking Statements This announcement contains forward-looking statements related to future product performance and market growth, that involve risks and uncertainties, including statements regarding the Company's expectations regarding financial performance, the potential impact of the Company's expanded product distribution channels, market growth rates, and product introduction. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including, but not limited to fluctuations in demand for the Company's products and services; a highly competitive business environment for network security and storage solutions; the Company's effectiveness in controlling expenses; the possibility that the Company might experience delays in the development of new technology and products; customer response to its new technology and products; risks related to pending or future litigation; and a dependency on third parties for certain components of the Company's products. The Company undertakes no obligation to update the forward-looking information in this release. More information about potential factors that could affect the Company's business and financial results is included in its filings with the Securities and Exchange Commission, including, without limitation, under the captions: "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Risk Factors," which are on file with the Securities and Exchange Commission."
Non-GAAP Financial Measures
Barracuda provides all financial information required in accordance with generally accepted accounting principles (GAAP). To supplement our consolidated financial statements presented in accordance with GAAP, we are also providing with this press release non-GAAP net income/(loss) and non-GAAP operating income/(loss). In preparing our non-GAAP information, we have excluded, where applicable, the impact of share-based compensation, amortization of intangibles and depreciation, and acquisition and other non-recurring charges. We believe that excluding these items provides both management and investors with additional insight into our current operations and the trends affecting the Company. In particular, management finds it useful to exclude these items in order to more readily correlate the Company's operating activities with the Company's ability to generate cash from operations. Accordingly, management uses these non-GAAP measures, along with the comparable GAAP information, in evaluating our historical performance and in planning our future business activities. Please note that our non-GAAP measures may be different than those used by other companies. The additional non-GAAP financial information we present should be considered in conjunction with, and not as a substitute for, our financial information presented in accordance with GAAP. We have provided a non-GAAP reconciliation of the Condensed Consolidated Statement of Operations for the periods presented in this release, which are adjusted to exclude one-time charges, share-based compensation, amortization of intangibles and depreciation for these periods. These measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures for comparable financial information and understanding of the Company's ongoing performance as a business. Barracuda uses both GAAP and non-GAAP measures to evaluate and manage its operations.
About Barracuda Networks, Inc. (NYSE: CUDA)
Barracuda provides cloud-connected security and storage solutions that simplify IT. These powerful, easy-to-use and affordable solutions are trusted by more than 150,000 organizations worldwide and are delivered in appliance, virtual appliance, cloud and hybrid deployments. Barracuda's customer-centric business model focuses on delivering high-value, subscription-based IT solutions that provide end-to-end network and data security. For additional information, please visit http://www.barracuda.com.