SonicWALL Reports First Quarter 2010 Financial Results

SAN JOSE, Calif., April 23 /PRNewswire-FirstCall/ -- SonicWALL, Inc. (Nasdaq: SNWL), today reported performance in the quarter ended March 31, 2010, with revenue of $55.3 million, representing 17% growth year-over-year. The Company shipped 50,000 revenue units in the quarter.  Cash flow from operations was $11.1 million, and the Company ended the first quarter with $127.3 million in deferred revenue.

Net income for the first quarter of 2010 calculated in accordance with U.S. generally-accepted accounting principles (GAAP) was $4.4 million, or $0.08 per diluted share.  In comparison, GAAP net income for the first quarter of 2009 was $1.7 million, or $0.03 per diluted share.  

Non-GAAP net income for the first quarter of 2010 was $6.7 million or $0.12 per diluted share.  In comparison, non-GAAP net income for the first quarter of 2009 was $3.9 million, or $0.07 per diluted share.  Non-GAAP net income excludes amortization of purchased intangible assets and share-based compensation expense primarily associated with the expensing of stock options.  An explanation of our use of non-GAAP measures is included in the section in this press release entitled "Use of Non-GAAP Financial Measures."

Non-GAAP gross margin in the first quarter was 74.4%, compared to 74.0% in the first quarter of 2009.  Non-GAAP operating margin was 18.4%, compared to 11.6% in the first quarter of 2009.  

"SonicWALL had a strong start to 2010," said Matt Medeiros, CEO.  "We believe that our technology leadership will enable us to continue to build momentum in the mid-enterprise and SMB markets throughout the year."

Guidance for Q2 2010

SonicWALL expects second quarter 2010 revenue to be in the range of $55.0-$57.0 million.  The Company expects non-GAAP gross margin to be in the range of 72%-73% of revenue.  SonicWALL expects earnings per share in the second quarter of 2010 to be in the range of $0.10-$0.11 per diluted share on a non-GAAP basis.  On a GAAP basis, inclusive of a total of approximately $4.0 million, before taxes, in combined amortization of purchased intangibles assets, and share-based compensation expense, the Company expects earnings per share to be in the range of $0.08 to $0.09.  Share-based compensation expense associated with the expensing of stock options is estimated to be approximately $2 million for the second quarter of 2010.

This is the only statement SonicWALL will be giving during the quarter with respect to guidance, unless a decision is made to provide an update.

Conference Call

A conference call to discuss first quarter 2010 results will take place today, April 23, 2010, at 5:30 a.m. PT (8:30 a.m. ET).  SonicWALL President and CEO Matt Medeiros and SonicWALL CFO Rob Selvi will host the call.  A web cast of the live call can be accessed at http://www.sonicwall.com/us/company/2518.html.  A replay of the call will be available beginning at approximately 12:00 p.m. PT (3:00 p.m. ET) today at the Company's website or by telephone until 5:00 p.m. PT on April 27 at 888-203-1112 (toll-free) or 719-457-0820 (International), passcode 2524896.

About SonicWALL, Inc.

Founded in 1991, SonicWALL, Inc. designs, develops and manufactures comprehensive network security, email security, secure remote access, and continuous data protection solutions. For more information, contact SonicWALL at +1 (408) 745-9600 or visit the company web site at http://www.sonicwall.com/.

Use of Non-GAAP Financial Measures

To supplement our consolidated financial statements presented in accordance with GAAP, SonicWALL presents certain non-GAAP financial measures.  These non-GAAP financial measures are not intended to replace GAAP results.  GAAP results are the most comprehensive and accurate representation of the performance of the company.  Management does, however, regularly use these non-GAAP financial measures to evaluate certain aspects of the company's operating performance against established business objectives such as departmental operating results in terms of cash operating expenses as a percentage of revenue, and inventory turns exclusive of non-cash expenses.  Management further uses these non-GAAP measures as a benchmark of the company's performance against our competitors who frequently present similar non-GAAP financial measures.  The company has in the past and may again in the future use these non-GAAP financial measures as target metrics for its incentive compensation plans.  Additionally, management establishes its annual operating plan and manages operating expenses each year exclusive of certain recurring expenses which have no impact on cash from operations.  We believe that investors benefit from this additional disclosure as it provides transparency into financial information used by management in our assessment of operating performance, provides a cash basis comparison of operating results against other companies in our industry, and provides the basis of targets established for the incentive compensation plans.

Cautionary Note Regarding Forward-looking Statements

Certain statements in this press release are "forward-looking statements."  The forward-looking statements include without limitation statements regarding our expected revenue for the second quarter of 2010, gross margin on a non-GAAP basis for the second quarter of 2010, earnings per share on a GAAP and non-GAAP basis for the second quarter of 2010, share based compensation expense for the second quarter of 2010, and the opportunity facing SonicWALL in coming quarters.  These forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements.  Factors that could affect SonicWALL's actual results include, but are not limited to, increased competition in each of the geographic areas in which we do business; exchange rate fluctuations; global macroeconomic and geopolitical conditions; increased competition across all of the market segments in which SonicWALL participates; new product and service introductions by our competitors; significant turnover of our key employees; and unpredictability in the rate of growth of spending of our customers for products and services that SonicWALL provides. In addition, for a more detailed description of the risks and uncertainties that could cause our actual results to differ materially from those anticipated in the forward- looking statements, please see the "Risk Factors" described in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2009.  All forward-looking statements included in this release are based upon information available to SonicWALL as of the date of the release, and we assume no obligation to update any such forward-looking statement.

NOTE: SonicWALL is a registered trademark of SonicWALL, Inc.  Other product and company names mentioned herein may be trademarks and/or registered trademarks of their respective companies.

SOURCE SonicWALL, Inc.