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WatchGuard Announces Q2

Revenues grow 15% sequentially to $17.8M, but thanks largely to the acquisition of RapidStream, GAAP net loss more than doubles to $11.7M

July 26, 2002

2 Min Read

SEATTLE -- WatchGuard Technologies, Inc. (Nasdaq: WGRD), a leading provider of Internet security solutions, today announced its financial results for the second quarter ended June 30, 2002. WatchGuard reported net revenue of $17.8 million for the second quarter of 2002, up 15% from $15.5 million in the first quarter of 2002. Product revenue was $12.5 million, up 18% from $10.6 million in the previous quarter. Service revenue was $5.3 million, up 8% from $5.0 million in the previous quarter. As anticipated, the company incurred higher operating expenses during the second quarter primarily as a result of transitional expenses relating to the acquisition and integration of RapidStream, and the accelerated rollout of the company's new Firebox Vclass and RapidStream appliances. The second quarter results also include a $4.3 million restructuring charge to eliminate duplicate resources resulting from the acquisition of RapidStream, primarily related to a reduction in post-acquisition workforce, a consolidation of office facilities, and contract terminations. Pro forma net loss for the second quarter, excluding amortization of acquisition-related costs and acquired in-process technology, non-cash stock-based compensation, and restructuring charges, was $4.6 million, or ($0.14) per share, compared to a pro forma net loss of $3.3 million, or ($0.12) per share in the previous quarter. On a GAAP basis, WatchGuard reported a net loss of $11.7 million, or ($0.36) per share, compared to a net loss of $4.6 million, or ($0.17) per share in the previous quarter. WatchGuard ended June 30, 2002 with $92.7 million in cash and securities. "We are pleased with our continued revenue growth and the solid execution of our long-term strategy in the face of challenging economic conditions," said Jim Cady, President and Chief Executive Officer of WatchGuard. "We saw continued improvements in revenues, gross margins, DSOs, inventory turns, LiveSecurity renewals, and unit shipments, which all exceeded our expectations." WatchGuard Technologies Inc.

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