Websense Still Targets Growth (WBSN)

Websense, Inc. (NASDAQ: WBSN) has posted earnings.  The results from the web filtering and data security player are initially being viewed as a disappointment, but the company is actually offering guidance for 2009 and even out to 2010.

The company posted earnings of $0.31 non-GAAP EPS, but a net loss of-$0.27 EPS after GAAP items.  Revenues were $79.3 million.  First Callhad estimates pegged at $0.29 non-GAAP EPS and $84.25 million inrevenues.  It does expect the trend of modest sequential revenuedeclines to continue for the first half, but what is interesting isthat the company believes it will start to see revenue growth in thesecond half of the year.

For fiscal 2009 it has the following targets: Billings in a range of$365 to $375 million, with 75% to 80% coming from renewals.  It seesnon-GAAP revenues in a range of $342 to $350 million, with non-GAAPmargins at 25% to 28%.  It is even giving guidance on earnings, withnon-GAAP earnings at $1.20 to $1.30 EPS.  Billings guidance for 2009assumes an average contract duration in the 20 to 22 month range.Websense sees GAAP cash flow from operations for 2009 to exceed $80million, up from the level of $67.4 million in 2008.  Non-GAAP guidancefor fiscal year 2009 revenue and earnings includes approximately $16.1million in subscription revenue from SurfControl.

But the company is offering full forward goals to 2010 as well.Websense believes that it has the potential to generate earnings growthto $1.50 EPS on a non-GAAP basis.  Be advised that this is a highlysubjective target.  It assumes that 2009 billings will come withinguidance and then assumes that expenses grow in a range of 6% to 7% in2009 and 2010.

First Call targets for 2009 are $1.39 EPS and $353.88 million.

Shares closed up over 4% today at $13.95, but shares are indicatedlower in after-hours trading.  It seems that there are probably somedoubters about the return of growth in an environment where major techcompanies won’t even offer any guidance at all.  Shares have alreadycome down by almost half as the 52-week trading range is $12.01 to$24.60.

Jon C. Ogg
January 27, 2009