Sourcefire Inc. (FIRE) filed Quarterly Report for the period ended 2009-09-30.
SOURCEFIRE INC. Snort creator and open source innovator is a world leader in Enterprise Threat Management solutions. Sourcefire is transforming the way Global 2000 organizations and government agencies manage and minimize network security risks with its 3D Approach - Discover Determine Defend - to securing real networks. The Sourcefire 3D System is the first to unify IPS NBA NAC and Vulnerability Assessment technologies under the same management console. This ETM approach equips customers with an efficient and effective layered security defense - protecting network assets before during and after an attack. Today the names Sourcefire and founder Martin Roesch have grown synonymous with innovation and network security intelligence. Sourcefire Inc. has a market cap of $539 million; its shares were traded at around $20.26 with a P/E ratio of 135 and P/S ratio of 7.2.
Highlight of Business Operations:
We use the Black-Scholes option pricing model to estimate the fair value of stock options granted and employee stock purchases. For certain option awards that contain market conditions relating to our stock price achieving specified levels, we use a Lattice option pricing model. The use of option valuation models requires the input of highly subjective assumptions, including the expected term and the expected stock price volatility. Based on the estimated grant date fair value of stock-based awards, we recognized aggregate stock-based compensation expense of $1.9 million and $1.6 million for the three months ended September 30, 2009 and 2008, respectively, and $4.4 million and $3.4 million for the nine months ended September 30, 2009 and 2008, respectively.
The increase in our product revenue for the three months and nine months ended September 30, 2009, as compared to the prior-year periods, was primarily due to higher volume demand for our sensor products, mainly our higher performance 3D products. For the three months and nine months ended September 30, 2009, sensor product revenue increased $3.4 million and $10.7 million, respectively, over the prior-year periods, which included a $3.4 million and $8.1 million increase, respectively, in revenue from our higher performance 3D products.
For the three months and nine months ended September 30, 2009, the increase in product cost of revenue, as compared to the prior-year periods, was primarily due to higher volume demand for our sensor products, for which we must procure and provide the hardware platform to our customers, and write-downs for excess and obsolete inventory as a result of the introduction of newer products. Write-downs as a result of the introduction of newer products for the three months and nine months ended September 30, 2009 were $559,000 and $1.4 million, respectively.
Product gross margin for the three months and nine months ended September 30, 2009 increased compared to the prior-year periods, as higher margins on product revenue, primarily due to the product mix sold favoring products with higher gross margins, were partially offset by write-downs for excess and obsolete inventory as a result of the introduction of newer products. Write-downs as a result of the introduction of newer products for the three months and nine months ended September 30, 2009 were $559,000 and $1.4 million, respectively.
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