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Post Earnings Coverage as Brocade Reported Q1 2017 Results

Upcoming AWS Coverage on NetApp Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 16, 2017 / Active Wall St. announces its post-earnings coverage on Brocade Communications Systems, Inc. (NASDAQ: BRCD). The Company announced its financial results for the first quarter fiscal 2017 (Q1 FY17) on February 23, 2017. On November 02, 2016, Brocade announced that it would be acquired by Broadcom Limited. In light of the pending acquisition, Brocade has not provided fiscal Q2 2017 guidance and did not conduct an earnings conference call to discuss its financial results. Register with us now for your free membership at:

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One of Brocade Communications Systems' competitors within the Data Storage Devices space, NetApp Inc. (NASDAQ: NTAP), reported on February 16, 2017, its financial results for Q3 FY17, ended January 27, 2017. AWS will be initiating a research report on NetApp in the coming days.

Today, AWS is promoting its earnings coverage on BRCD; touching on NTAP. Get our free coverage by signing up to:

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Earnings Reviewed

In Q1 FY17, Brocade reported net revenue of $581.46 million compared to $574.28 million, up 1% y-o-y compared to revenue recorded at the end of Q1 FY16. The computer networking Company's revenue numbers fell below analysts' consensus of $651 million.

The Company reported Q1 FY17, net loss of $5.84 million, or loss per share of $0.01, down from diluted earnings per share of $93.65 million, or $0.23 diluted per share, in Q1 FY16. During Q1 FY17, the Company's non-GAAP diluted EPS was $0.16 compared to $0.29 for Q1 FY16 and $0.33 for Q4 FY16, respectively. The sequential decrease in GAAP or non-GAAP diluted EPS is primarily due to lower IP networking revenue, attributed in part to customer uncertainty surrounding the pending acquisitions of Brocade by Broadcom Ltd and Broadcom's publicly announced post-closing plan to divest Brocade's IP networking business. The Company's earnings results missed Wall Street's expectations for $0.26 per share.

Operating metrics

For Q1 FY17, the Company reported gross margin of $367.12 million, or 63.1% of sales, compared to $388.82 million, or 63.9% of sales, in the prior year's comparable quarter. The Company's operating expenses of $362.83 million compared to $267.85 million at the end of prior period. Brocade's operating income for Q1 FY17 came in at $4.29 million versus $120.97 million in Q1 FY16.

Segment Performance

During Q1 FY17, Brocade's SAN product generated revenue of $308.17 million, down 12% y-o-y compared to $350.31 million in Q1 FY16. The decline was primarily attributed to lower Fibre Channel director and embedded switch sales, each down 20% y-o-y. On a sequential basis, SAN product revenue increased 1%, with fixed-configuration switch revenue up 6%, which was partially offset by lower director and embedded switch revenues, which were down 2% and 8%, respectively. SAN business revenue was $360.50 million compared to $402.00 million in Q1 FY16.

During Q1 FY17, Brocade's IP networking product revenue was $174.44 million compared to $133.74 million, including $72 million of product revenue from Ruckus Wireless which was up 30% y-o-y. In Q1 FY17, the increase was primarily due to added wireless revenue following the acquisition of Ruckus Wireless in Q3 FY16, which was partially offset by lower wired switch and router revenue.

Geographical Contribution

During the reported quarter, Brocade's Domestic revenue was of $273.29 million compared to $315.86 in Q1 FY16. The Company generated 47% of its total sales revenue from domestic market. In Q1 FY17, Brocade's International revenues were of $308.18 million compared to $261.66 million. Furthermore, the Company generated 53% of its total sales revenue from International market which was up from Q1 FY16.

Cash flow and Balance sheet

For the three months ended January 28, 2017, Brocade utilized $2.81 million in cash from operations compared to $112.2 million cash generated from operations in the year ago same period.

The Company had cash and cash equivalents balance of $1.230 billion, as on January 28, 2017, compared to $1.257 billion, at the end of October 29, 2016.

Dividends Share and Repurchase

In its earning press release, Brocade has declared that it will pay its next quarterly cash dividends of $0.055 per share of its common stock. The dividend is payable on April 04, 2017, to stockholders of record at the close of market on March 10, 2017.

Stock Performance

Brocade Communications Systems' share price finished yesterday's trading session at $12.42, marginally up by 0.24%. A total volume of 5.12 million shares exchanged hands, which was higher than the 3 months average volume of 4.49 million shares. The stock has advanced 43.54% and 24.73% in the last six months and past twelve months, respectively. The stock is trading at a PE ratio of 44.04 and has a dividend yield of 1.77%.

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SOURCE: Active Wall Street