Call me sentimental. Call me a sap. Call me crazy. But I love Secure Computing
- It's easily misunderstood. Briefing.com reported that Secure missed estimates for fourth-quarter revenue. Not true. This maker of data-security products reports non-GAAP numbers to accurately portray the performance of its acquired businesses. On that basis, Secure's $69.9 million in revenue easily beat the average estimate of $68 million.
-
Businesses can't compromise on security. And they aren't compromising. Secure Computing's chief financial officer, Tim Steinkopf, told analysts in the conference call that his company booked seven seven-digit deals -- two of which required some short-term price cuts that affected gross margin -- and 131 six-figure deals in Q4. Both were new records, set in a time of massive economic uncertainty, and in spite of top competitors such as Cisco
, Websense(Nasdaq: CSCO) , and EMC's(Nasdaq: WBSN) RSA business unit.(NYSE: EMC) - Cash flow, cash flow, cash flow. Thanks to excellent free cash flow, Secure paid off $44 million in debt during 2007, including more than $12 million in the final quarter of the year.
Growth, too, is going gangbusters. Secure expects per-share earnings to rise by 45% to 50% over each of the next two years. Revenue, on a normalized, non-GAAP basis, is expected to improve by 13.7% to $295 million.
Why the discrepancy? Margins. With each passing year, Secure is becoming better at squeezing cash from its operations. Behold:
Metrics |
2007 |
2006 |
2005 |
2004 |
---|---|---|---|---|
Non-GAAP revenue |
$259.4 |
$193.2 |
$109.2 |
$93.4 |
Free cash flow |
$41.1 |
$24.3 |
$25.0 |
$12.2 |
FCF margin |
15.8% |
12.6% |
22.9% |
13.1% |
A rich market opportunity. Excellent and growing free cash flow. Rapidly rising margins. Warms the heart, doesn't it?
Get your clicks with related Foolishness:
- Secure should be one of your top stocks under $10.
- The Q3 numbers weren't up to par for some.
- But that's just silly.