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Achieves Record Net Revenue and 11% Sequential Quarterly Revenue Growth

Blue Coat Systems, Inc. (NASDAQ: BCSI), the leader in WAN Application Delivery and Secure Web Gateway, today reported its financial results for its third quarter of fiscal 2008 ended January 31, 2008. 

Net revenue for the third fiscal quarter of 2008 was $81.4 million, an increase of 73% compared to net revenue of $47.1 million for the same quarter last year and an 11% increase compared to net revenue of $73.4 million in the immediately preceding quarter. 

On a GAAP basis, the Company reported net income of $10.5 million, or $0.26 per diluted share, in the third quarter of fiscal 2008, compared to net income of $7.0 million, or $0.17 per diluted share in the second quarter of fiscal 2008.  Net income in the third quarter of fiscal 2008 includes $4.0 million in stock-based compensation expense, $0.4 million in expenses associated with the stock option investigation and related restatement of the Company’s consolidated financial statements, and $0.4 million in amortization of intangible assets. 

In the second quarter of fiscal 2008, net income included $4.0 million in stock-based compensation expense, $0.7 million in expenses associated with the stock option investigation and related restatement of the Company’s consolidated financial statements, $0.4 million in amortization of intangible assets, and approximately $0.3 million in legal settlement expenses. 

The Company reported non-GAAP net income of $15.3 million, or $0.38 per diluted share, in the third quarter of fiscal 2008, compared to non-GAAP net income of $12.4 million, or $0.30 per diluted share in the second quarter of fiscal 2008.

“We have experienced dramatic success in the WAN optimization market indicated by record net revenue and sustained double-digit growth, which reflects the value placed by enterprises on a complete solution to application responsiveness and security and control in the branch office, " said Brian NeSmith, president and chief executive officer, Blue Coat Systems. “The platform we have evolved over the past 12 years is now the ideal solution to solve the performance, control and security issues for branch offices, Internet gateway points and remote employees."

Blue Coat ended the quarter on January 31, 2008, with cash, cash equivalents, short-term investments, and restricted investments totaling $168.0 million, an increase of $15.5 million from the prior quarter.

The non-GAAP financial measures presented above exclude stock-based compensation expense, expenses associated with the stock option investigation and related restatement of the Company’s consolidated financial statements, amortization of intangible assets, and legal settlement expenses. 

Refer to the accompanying tables for a detailed reconciliation of GAAP to non-GAAP net income and earnings per share. 
 
Financial Outlook
For the fiscal quarter ending April 30, 2008, the Company currently anticipates net revenue in the range of $88.0 to $91.0 million.  On a GAAP basis, the Company expects earnings per share of $0.23 to $0.27 per diluted share. 

On a non-GAAP basis, which excludes the amortization of intangible assets, stock-based compensation expense, and expenses associated with the stock option investigation and related restatement of the Company’s consolidated financial statements, the Company expects earnings per share of $0.37 to $0.41 per diluted share.

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