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Q4 2012 Earnings Call
February 21, 2013 5:00 pm ET
Staci Mortenson - Managing Director of Technology Software and Information Technology Services
Martin F. Roesch - Founder, Interim Chief Executive Officer, Chief Technology Officer and Director
Todd P. Headley - Chief Financial Officer, Principal Accounting Officer, Treasurer and Assistant Secretary
Thomas M. McDonough - President and Chief Operating Officer
Jonathan Ho - William Blair & Company L.L.C., Research Division
Brent Thill - UBS Investment Bank, Research Division
Keith Weiss - Morgan Stanley, Research Division
Rob D. Owens - Pacific Crest Securities, Inc., Research Division
Scott Zeller - Needham & Company, LLC, Research Division
Michael Turits - Raymond James & Associates, Inc., Research Division
Aaron Schwartz - Jefferies & Company, Inc., Research Division
Gray Powell - Wells Fargo Securities, LLC, Research Division
Walter H. Pritchard - Citigroup Inc, Research Division
Daniel T. Cummins - B. Riley & Co., LLC, Research Division
Tal Liani - BofA Merrill Lynch, Research Division
Previous Statements by FIRE
» Sourcefire's Management Presents at UBS Global Technology Conference (Transcript)
» Sourcefire's CEO Discusses Q3 2012 Results - Earnings Call Transcript
» Sourcefire's Management Present at Citi Technology Conference (Transcript)
Thank you. This is Staci Mortenson, Sourcefire's Investor Relations representative. I want to thank you for joining our fourth quarter and full year 2012 earnings conference call. Joining me today on this call is Marty Roesch, Interim Chief Executive Officer; Todd Headley, Chief Financial Officer; and Tom McDonough, Chief Operating Officer.
Before we begin, I must remind you that statements made in this conference call and in our public filings, releases and websites, which are not historical facts may be considered to be forward-looking statements that involve risks and uncertainties and are subject to change at any time. We caution investors that any forward-looking statements made by us are management’s beliefs based on currently available information and should not be taken as a guarantee of future results or performance, which may differ materially as a result of a variety of factors discussed in our earnings release that was issued today and our Form 10-K and most recent Form 10-Q filed with the Securities and Exchange Commission.
We disclaim any obligation to update any of these forward-looking statements or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments. There is a more complete information regarding forward-looking statements, risks and uncertainties in the company’s filings with the SEC available on our website, www.sourcefire.com.
In addition, we may discuss non-GAAP financial information on the call. This information is reconciled to comparable GAAP financial information in the earnings release. The full earnings release can be found on our website. An online replay of this call will be available on the Investor Relations section of our website for at least 90 days.
With that, I will turn the call over to Marty Roesch, Sourcefire’s Interim CEO.
Martin F. Roesch
Thanks, Staci, and good afternoon, everyone. Welcome to our fourth quarter and full year 2012 earnings call. Fourth quarter was an exceptionally strong ending to a record-breaking year for Sourcefire. Our Agile Security vision continues to cut through the confusion that exists in the security market today and delivers meaningful solutions that protect our customers' networks from sophisticated and growing threats. Our success during the quarter and full year 2012 was driven by several key factors, all grounded in our threat-centric approach, which enables us to address cybersecurity issues wherever they exist, whether on a network, endpoints, mobile devices, or virtual environments. We also benefited from increased distribution capabilities, more time and territory for our sales teams and partners, and new customer wins coupled with expanding commitments from existing customers.
Before handing the call out to our CFO, Todd Headley, who will provide more detailed and financial information, including our guidance for the first quarter and our initial thoughts on the full year 2013, I want to talk to you about 3 specific items: first, a brief overview of our financial results for the fourth quarter and full year 2012; second, a more in-depth look at our threat-centric approach and why we believe it will drive long-term sustainable growth; and finally, our key strategic initiatives for 2013.
Okay, first, the financial results. Revenue for the fourth quarter of 2012 came in at a record $67.4 million, an increase of 27% over the year-ago period, and we generated adjusted net income of $8.9 million or $0.29 per diluted share. For the full year 2012, total revenue was $223.1 million, an increase of 35% over 2011, while adjusted net income was $24.9 million or $0.81 per diluted share. These are outstanding results and a product of our broad-based growth across all our geographies and lines of business.
We continued building additional global sales capacity by adding more than 150 net new partners during the calendar year for an annual increase of nearly 30%. While we will continue to track the addition of new partners to our programs, our primary focus will be on the quality and enablement of these partners. And we believe there is significant room to expand productivity.
During the fourth quarter, significant training activity resulted in more partners being certified on our solutions than in any previous quarter since we've started our global channel program. Channel-influenced deals were 56% during the quarter, reflecting the seasonal rebound from the third quarter. We saw more partners adding pipeline and actively driving deals through registrations, demonstrations and competitive bakeoffs. Q4 continued our positive trend of landing big deals as we closed 25 transactions over $0.5 million, including several 7-figured deals. Overall, our customers continue making larger commitments to Sourcefire, both on their initial purchase and through subsequent expansion across their network infrastructure. For example, for deals in excess of $500,000 for 2012, the growth value associated with those deals were 37% higher than in 2011. Our new customers are often enterprises that already have some IPS in their infrastructure, but realize that to be better protected, they need to expand their deployments. They look to Sourcefire because of our FirePOWER platform and our continued commitment to innovation.