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Sourcefire, Inc. (FIRE)

Q1 2009 Earnings Call

April 30, 2009 05:00 PM ET

Executives

Tania Almond - Investor Relations Officer

John Burris - Chief Executive Officer

Todd Headley - Chief Financial Officer

Tom McDonough - President and Chief Operating Officer

Analysts

Todd Weller - Stifel Nicolaus

Keith Weiss - Morgan Stanley

Aaron Husock - Lanexa Global

Katherine Egbert - Jefferies & Company

Presentation

Operator

Good day, ladies and gentlemen. And welcome to the First Quarter 2009 Sourcefire Earnings Conference Call. My name is Erica and I'll be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions).

I would now like to turn the presentation over to your host for today's call Ms. Tania Almond, Investor Relations Officer with Sourcefire. Please proceed.

Tania Almond

Thank you Erica. This is Tania Almond, Sourcefire's Investor Relations Officer. I want to thank you for joining our first quarter 2009 earnings conference call. Joining me today on the call is John Burris, Sourcefire's Chief Executive Officer; Tom McDonough, Sourcefire's Chief Operating Officer; and Todd Headley, our Chief Financial Officer.

Before we begin, I must remind you that statements made in this conference call and in our public filings, releases and website, which are not historical facts maybe considered 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 belief 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 in our latest Form 10-K, filed with the Securities and Exchange Commission in March 2009.

We disclaim any obligations 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 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 section of the website for at least 90 days.

With that, I'll turn the call over to John Burris, Sourcefire's CEO.

John Burris

Thanks Tania. And thank you for joining us for our first quarter 2009 earnings call. We appreciate you joining us for this call as we realize this is a very busy time slot for tech companies to report. We're considering changing the time of our call next quarter to enable more live participation and be happy to receive your feedback on this.

We'll start today's call with a brief review of the quarterly results, highlight some of our accomplishments in the first quarter and provide an update on trends in the business. I will then conclude with what I know you are all waiting for, our final guidance for the second quarter of 2009.

As we announced in our press release earlier today, total revenues for the first quarter of 2009 were 18.6 million, 36% up above first quarter 2008 revenues. Gross profit for the quarter increased 36% also to 14.5 million or 78% of revenues. GAAP net loss narrowed to 1.1 million in the first quarter of 2009 compared with 3.5 million loss in the year ago period. Adjusted net income was 0.1 million or breakeven on a per share basis.

We had very strong results in all key financial metrics in the first quarter exceeding the top end of our previously announced expectations for revenue, net loss and adjusted net income. Given an increasingly challenging environment and that the first quarter has historically been seasonally weaker than our later quarters I am very pleased with the marked improvement in our bottom-line and the fact that on an adjusted basis we were modestly profitable in the first quarter. This marks the first time in a company's history as a public company, this has occurred in the first quarter of the fiscal year.

We also improvement in our operating expense margins in Q1 '09 versus Q1 '08. And we will continue to focus on the absolute dollars we're spending on all areas especially in light of the macroeconomic environment. We are keenly focused on leveraging our business model to reach and sustain profitability. As I mentioned last time, this is a top priority for the company to make progress on in 2009 and I think we're off to a great start.

We continued our expansion of our international business delivering revenues of 6.4 million this quarter up from 4.1 million in the year ago quarter for an increase of 56%. One notable factor in our success abroad is that our investments in our international channel initiatives are continuing to post returns as sampling of these accomplishments during the first quarter include, Sourcefire being selected by leading international IT security solution provider for their managed services, winning business for the leading telco in Thailand, wining the IPSPs of a large Australian power company project, signing an entirely on a new distributor in Germany, as the new distributor in Germany and signing up a distributor in Cambodia.

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