Barracuda Files $100M IPO To Gain Financial Stability, Market Visibility

Network security and storage vendor Barracuda Networks has filed for an IPO in part to increase its financial flexibility and market visibility.

Campbell, Calif.-based Barracuda Networks, which develops a series of security and storage appliances, is looking to raise $100 million, according to its Oct. 1 SEC filing.

The company is looking to go public at a time of mixed results for its peers that have recently had IPOs.

[Related: Longtime EMC Exec Leaves To Head Barracuda Networks ]

Storage vendor Violin Memory, which on Sept. 27 had a $160 million IPO that opened at $7.63 per share, saw its share price peak Oct. 1 at $7.88 before dropping to its late Thursday price of $7.50.

However, IT solution provider and retailer CDW, which on June 27 closed its first day as a public company at $18.37 per share, is as of late Thursday seeing share prices at $23.30.

Formed originally as a security appliance vendor, Barracuda in 2009 acquired Yosemite Technologies to expand its offerings into the storage market. The company is currently headed by former EMC executive BJ Jenkins who a year ago took over as Barracuda president and CEO.

Barracuda has over the years done well with the channel, said Alain Bezahler, president of BCPi, a Sharon, Mass.-based solution provider and one of the vendor's original channel partners.

"Nobody's perfect," Bezahler said. "They're above average. We've dealt with them before they had a sales force, back when they had manufacturers reps who helped them sell only two products."

Bezahler said the IPO should really help Barracuda Networks and its channel.

"It's a fast-growing company," he said. "The next step for a company like that is to go with an IPO. Then the company matures. After the IPO, it can put in new processes and tighten things up."

The one thing Barracuda needs most is to beef up its support team, Bezahler said.

"Barracuda has grown fast but has not added enough support people," he said. "But now they're doing it. And, with an IPO, I expect they will add more resources. They need support to continue their growth."

NEXT: Sales, Losses, The Channel, And More From The SEC Filing

In its SEC filing, Barracuda Networks said its revenue for fiscal 2013 was $198.9 million, up from $160.9 million for fiscal 2012 and $142.1 million for fiscal 2011. Of that revenue, 70 percent was recurring revenue for fiscal 2013, compared to 73 percent in 2012 and 63 percent in 2011. About 26 percent of revenue came from sales outside of North America in fiscal 2013.

The company posted a $7.4 million net loss in fiscal 2013, down from a net income of $600,000 in fiscal 2013 and $3.0 million in fiscal 2012, according to the SEC filing.

The company also wrote in its SEC filing that it has a global network of 5,000 distributors and VARs in addition to its own sales teams.

Among the risk factors the company cited in its filing was a strong competitive environment. This includes competition from companies focusing on security and storage including Blue Coat Systems, Check Point Software Technologies, CommVault Systems, EMC, F5 Networks, Fortinet, Imperva, Juniper Networks, Palo Alto Networks and Symantec, as well as large diversified vendors such as Cisco, Dell, Hewlett-Packard, Intel and IBM, which have been acquiring security and storage vendors.

Barracuda has also run afoul of U.S. law regarding the sale of products to certain countries including Iran, Sudan and Syria, but it said those potential violations were "inadvertent" and happened because the company and certain resellers "did not have sufficient compliance procedures in place to prevent the transactions at issue."

Furthermore, Barracuda is in the early stage of a lawsuit brought against it by Parallel Networks LLC, which Barracuda believes is a "non-practicing entity," a euphemism often used for "patent troll."

PUBLISHED Oct. 3, 2013