SonicWALL Reports Third Quarter Fiscal Year 2007 Financial Results

Revenue from the newly acquired Aventail products was $3.9 million, exceeding management estimates. The Company shipped 47,000 revenue units in the quarter. Cash flow from operations was $17.1 million.

Net loss for the third quarter of 2007 calculated in accordance with U.S. generally accepted accounting principles (GAAP) was $(0.3) million, or $(0.00) per diluted share. In comparison, GAAP net loss for the third quarter of 2006 was $(2.2) million, or $(0.03) per diluted share.

Non-GAAP net income for the third quarter of 2007 was $3.9 million or $0.06 per diluted share as compared to non-GAAP net income for the third quarter of 2006 of $4.3 million or $0.06 per diluted share. Non-GAAP net income excludes amortization of purchased intangible assets, in-process research and development expense, restructuring charges, and share-based compensation expense primarily associated with the expensing of stock options in accordance with Financial Accounting Standards No. 123R (FAS 123R). An explanation of our use of non-GAAP measures is included in the section in this press release entitled "Use of Non-GAAP Financial Measures."

"Our results demonstrate continued execution on our strategy of offering our customers unified, easy-to-use security products integrated with subscription services," said Matt Medeiros, CEO of SonicWALL. "Applied across all of our product lines this strategy responds to the evolving business requirements of our customers and partners, while also growing our deferred revenue and contributing to the predictability of our business."

Continues Share Repurchase

During the third quarter SonicWALL spent $19.7 million to repurchase 2.3 million shares of its common stock on the open market.

Guidance for Q4 2007

SonicWALL expects fourth quarter 2007 revenue to be in the range of $53 million to $56 million, including approximately $4.5-$5.0 million contributed from the Aventail product line. The Company expects non-GAAP gross margin to be in the range of 71% to 72% of revenue.

SonicWALL expects earnings per share in the fourth quarter of 2007 to be in the range of $0.06 to $0.07 per diluted share on a non-GAAP basis. On a GAAP basis, inclusive of a total of approximately $4.6 million, before taxes, in combined amortization of purchased intangibles assets and share-based compensation expense, the Company expects earnings per share to be in the range of $0.01 to $0.02. Share-based compensation expense associated with the expensing of stock options is estimated to be approximately $3.3 million for the fourth quarter of 2007.-SonicWALL