Shares of cybersecurity provider Barracuda Networks (NYSE: CUDA) jumped on Wednesday following the release of the company's second-quarter earnings report. Barracuda beat analyst estimates on all fronts, driven by strong growth in subscription sales. At 10:45 a.m. EDT, the stock was up about 12%.
Barracuda reported second-quarter revenue of $87.9 million, up 12.2% year over year and about $2.6 million higher than analysts were expecting. Sales of appliances declined by 5.6% to $21 million, but subscription sales rose 19.3% to $66.9 million, more than offsetting that decline. The number of active subscribers jumped 14% year over year to 298,000, with a dollar-based renewal rate of 96%.
Non-GAAP EPS came in at $0.21, up from $0.10 during the prior-year period and $0.08 higher than analysts were expecting. On a GAAP basis, Barracuda posted a net profit of $0.05 per share, up from a loss of $0.04 per share during the same period last year. A decline in GAAP operating expenses, along with higher revenue, drove earnings higher.
"We continue to innovate and bring new solutions to market that fortify the security fabric across public, private and hybrid cloud deployments and can be centrally managed from a single pane of glass," said Barracuda CEO BJ Jenkins. "We believe Barracuda is well positioned to build on our momentum and be a market leader in our targeted focus areas as customers look to adopt new application and network deployment models and move workloads to the cloud."
Barracuda's shift to subscriptions, which has hurt profitability in recent quarters, is making clear progress. Subscription sales are growing fast, and the company has turned the corner on GAAP profitability. Barracuda has now beat analyst estimates for both revenue and earnings for three quarters in row, driving the stock up 40% year to date including Wednesday's rise.
A solid second quarter for Barracuda, featuring earnings that came in well above analyst expectations, was enough for investors to push the stock higher, carving out a new 52-week high in the process.