IB Net Payout Yields Model

Riverbed Technology Continues Strong Growth

Even during the Great Recession, Riverbed Technology (RVBD) as able to post strong double digit revenue growth in 2009. For Q4 they posted 23% revenue growth and reported $.21 vs a $.18 estimate. Very solid numbers though it's not likely to push the stock price higher as the market seems to favor stocks that got rocked in 2008 and now have bounced back a little. Though it seems to not be noticed that RVBD peaked out over $50 so it has hardly rebounded even though they are reporting record numbers.

The really impressive number was the generation of $96M in cash during 2009. Cash now totals $326M or nearly 20% of the stock valuation. On a EV basis, RVBD now trades at roughly 13x cash flow (EV of $1.3B/96M cash flow). Its been stuck in the low $20s for a while so the valuation is becoming more and more compelling. Maybe 10x a $125M estimate for 2010. Cheap, cheap, cheap!

Introducing 3 new products for cloud computing. Interesting to hear that Amazon (AMZN) is a customer for these products.

Q4’09 and FY’09 Financial Highlights

  • Q4’09 non-GAAP revenue increased 10% sequentially and 23% year-over-year, with FY’09 non-GAAP revenue increasing 19% (sure didn't experience a recession)
  • Q4’09 non-GAAP gross margin was 77.3%, FY’09 non-GAAP gross margin was 76.9%
  • Q4’09 non-GAAP operating margin was 21.3%, FY’09 non-GAAP operating margin was 19.0% (very high operating margins... mentioned 25% as the goal)
  • Q4’09 non-GAAP net income increased 11% sequentially and 18% year-over-year
  • Days sales outstanding decreased to 39 days from 42 days in the prior quarter
  • Deferred revenue increased 14% sequentially
  • Q4’09 cash flow from operations of $23.1 million, and FY’09 cash flow from operations of $96.5 million (impressive cash flow)
  • Cash, cash equivalents, and marketable securities totaled $325.7 million and no debt as of December 31, 2009


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