Riverbed on Tuesday launched its Stingray family of appliances designed to bolster Web application delivery, content optimization and firewalls.
The Stingray family is based on Riverbed's July acquisitions of Zeus Technology and Aptimize. The Stingray portfolio is likely to be closely watched. Riverbed reported strong earnings last week, but analysts remain concerned that the wide area network optimization market is slowing. Toss in concerns about enterprise spending and Riverbed's strong quarter wasn't enough to allay worries about the company’s growth trajectory.
The Stingray portfolio includes the following:
- Stingray Traffic Manager, which is a virtual application delivery controller (ADC), focuses on enterprise software hosted on servers. The Traffic Manager comes in three flavors targeting large companies down to SMBs. Monthly subscriptions start at less than $200 a month.
- Stingray Web Application Firewall is designed to protect Web applications against threats directly. The Firewall can be an add-on to Traffic Manager or separate.
- Stingray Aptimizer is built to deliver internal software and Web sites faster. Aptimizer is a set up to cut network latency and cut page load times.
These new product launches are critical for Riverbed to continue its growth curve. Speaking on Riverbed's third quarter earnings conference call, CEO Jerry Kennelly said Zeus and Aptimize complete the company's virtual offering. "It is still early, but we are tracking to the milestones we set for ourselves. These acquisitions are generating growth, and we expect them to be accretive in the first half of 2012," said Kennelly.
For its third quarter, Riverbed reported earnings of $40 million, or 12 cents a share, on revenue of $190.6 million. Non-GAAP earnings were 24 cents a share, three cents better than Wall Street estimates.
Riverbed's third quarter was carried by government accounts and analysts were mixed on the results. Jefferies analyst George Notter said:
We remain concerned that the rate of growth in the WAN optimization market will slow going forward. Our fear is that some of the “low-hanging fruit” in the WAN optimization market has already been picked and market growth rates will diminish. Also, we note that macroeconomic uncertainties will continue to generate concerns among investors.
Riverbed's fourth quarter outlook was in line with Wall Street estimates.
The big question for Riverbed is whether Europe and the government account can represent sustainable growth. Sanjiv Wadhwani, an analyst at Stifel Nicolaus, said:
Riverbed delivered a stellar quarter after two quarters of lackluster performance. Europe made a strong comeback, posting 26% sequential growth. The big driver for the quarter though was the government vertical, up more than 80% sequentially by our calculation. The non-government, enterprise segment however, was down around 2% sequentially. The non-government segment has trended on the weaker side over the last 3 quarters. While we do not want to take away from the company’s performance (and the fact that the government is also a paying and customer), the lack of enterprise momentum is concerning.