Sourcefire Announces Record Revenue for Fourth Quarter & Full Year 2012

COLUMBIA, MD, Feb 21 (Marketwire) --
Sourcefire, Inc. (NASDAQ: FIRE), a leader in intelligent cybersecurity
solutions, today announced financial results for its fiscal fourth
quarter and full year ended December 31, 2012.

"Sourcefire achieved record revenue for the fourth quarter and full year
driven by strong global demand for our best in class solutions running on
our FirePOWER platform and the successful execution of our expanded
go-to-market strategy," said Marty Roesch, interim CEO of Sourcefire.
"Our threat-centric approach continues to be the key differentiator for
Sourcefire, and our customers are making increasingly larger commitments
to us to keep their extended networks safe."

Financial Summary

-- Total Revenue - Revenue for the fourth quarter of 2012 was $67.4
million compared to $53.2 million in the fourth quarter of 2011, an
increase of 27%. Revenue for the year ended December 31, 2012 was
$223.1 million compared to $165.6 million for 2011, an increase of
35%.

-- GAAP Net Income - Net income was $2.6 million for the fourth quarter
of 2012, or $0.08 per diluted share, on the basis of generally
accepted accounting principles (GAAP), compared with GAAP net income
of $4.1 million, or $0.14 per diluted share, in the fourth quarter of
2011. GAAP net income for the year ended December 31, 2012 was $5.0
million, or $0.16 per diluted share, compared with GAAP net income of
$6.2 million, or $0.21 per diluted share, for 2011.

-- Adjusted Net Income - Adjusted net income for the fourth quarter of
2012, which excludes stock-based compensation expense, amortization of
acquisition-related intangible assets and includes an assumed tax rate
of 35%, was $8.9 million, or $0.29 per diluted share. This compares to
adjusted net income of $7.6 million, or $0.25 per diluted share, in
the fourth quarter of 2011, which excludes stock-based compensation
expense, amortization of acquisition-related intangible assets and
other acquisition-related expenses and includes an assumed tax rate of
35%. Adjusted net income for the year ended December 31, 2012, which
excludes stock-based compensation expense, amortization of
acquisition-related intangible assets and includes an assumed tax rate
of 35%, was $24.9 million, or $0.81 per diluted share. This compares
to adjusted net income for 2011, which excludes stock-based
compensation expense, amortization of acquisition-related intangible
assets and other acquisition-related expenses, and includes an assumed
tax rate of 35%, of $16.8 million, or $0.57 per diluted share.

-- Cash and Cash Flow - As of December 31, 2012, the Company's cash, cash
equivalents and investments totaled $204.0 million. Net cash provided
by operating activities was $16.6 million in the fourth quarter of
2012 and $42.7 million for the full year 2012. The Company generated
free cash flow of $13.8 million in the fourth quarter of 2012 and
$33.8 million for the full year 2012.

Recent Company Highlights
Revenue Growth

-- Increased 2012 U.S. commercial revenue to $104.0 million, up 17% over
2011.
-- Increased 2012 international revenue to $74.4 million, up 77% over
2011.
-- Increased 2012 U.S. federal sector revenue to $44.7 million, up 28%
over 2011.

Innovation & Recognition

-- Announced it has expanded its FirePOWER(TM) appliance family
performance range with the addition of the 7000 series. The FirePOWER
performance range is now from 50 Mbps to 40+ Gbps, the broadest in the
industry.

-- Announced the new Advanced Malware Protection for FirePOWER, providing
users with unmatched visibility and control of modern threats on the
network -- from point of entry, through propagation, to post-infection
remediation.

-- Announced it has expanded its Advanced Malware Protection offerings to
include new Incident Response Professional Services that assist
customers in addressing advanced malware challenges. The services
enable customers to clearly identify an event, evaluate the risk and
determine the most effective approach to remediate. Experienced in
incident response techniques, methodology and the actions of malicious
code, the Sourcefire Incident Response Team helps customers eliminate
uncertainty and make educated decisions for better protection --
before, during and after an attack.

First Quarter 2013 Outlook

Based on information as of February 21, 2013, Sourcefire expects revenue
for the first quarter of 2013 in the range of $56.0 million to $58.0
million, net income per diluted share in the range of $0.01 to $0.03 and,
on an adjusted basis, net income per diluted share in the range of $0.11
to $0.13. Sourcefire's expectation of adjusted net income per diluted
share excludes stock-based compensation expense of $6.4 million to $6.6
million and amortization of acquired intangible assets of approximately
$0.3 million and includes an assumed 35% tax rate.

Non-GAAP Measures

To supplement its consolidated financial statements presented in
accordance with GAAP, Sourcefire considers certain financial measures
that are not prepared in accordance with GAAP, including non-GAAP
adjusted net income, adjusted net income per share, adjusted income from
operations, adjusted income from operations as a percentage of revenue
and free cash flow.

Sourcefire uses these non-GAAP financial measures, in addition to GAAP
financial measures, to evaluate its operating and financial performance
and to compare such performance to that of prior periods and to the
performance of its competitors. The Company also uses these non-GAAP
financial measures in making operational and financial decisions and in
establishing operational goals. Sourcefire believes that providing these
non-GAAP financial measures to investors, as a supplement to GAAP
financial measures, helps investors to evaluate the Company's operating
and financial performance and trends in its business, consistent with how
management evaluates such performance and trends. The Company also
believes these non-GAAP financial measures may be useful to investors in
comparing its performance to the performance of other companies, although
Sourcefire's non-GAAP financial measures are specific to it and the
non-GAAP financial measures of other companies may not be calculated in
the same manner.

Adjusted Net Income, Adjusted Net Income per Share, Adjusted Income from
Operations and Adjusted Income from Operations as a Percentage of
Revenue: In evaluating the operating performance of its business,
Sourcefire excludes certain charges and credits that are required by
GAAP. These non-GAAP measures exclude (i) stock-based compensation, which
does not involve the expenditure of cash, (ii) amortization of
acquisition-related intangible assets, which does not involve the
expenditure of cash, and (iii) other acquisition-related expenses, which
are unrelated to the ongoing operation of the Company's business in the
ordinary course. For 2012 non-GAAP results are adjusted to reflect the
effect of an assumed tax rate of 35%. This adjustment is intended to
normalize the tax rate and provide a tax rate that approximates the
Company's expected long-term GAAP tax rate.

Free Cash Flow: Sourcefire defines free cash flow as net cash provided by
operating activities minus capital expenditures. The Company considers
free cash flow to be a liquidity measure that provides useful information
to management and investors about the amount of cash generated by the
business that, after the purchase of property and equipment, can be used
for strategic opportunities, including investing in the business, making
strategic acquisitions and strengthening the balance sheet.

These measures should be considered in addition to results prepared in
accordance with GAAP, but should not be considered a substitute for, or
superior to, GAAP results. The non-GAAP measures included in this press
release have been reconciled to the nearest GAAP measure in the table
following the financial statements attached to this press release.

Conference Call and Webcast

On Thursday, February 21, 2013 at 5:00 p.m. Eastern Time, Sourcefire will
host a conference call to review these results. A listen-only web cast of
the session will be available at http://investor.sourcefire.com.

Those wishing to participate in the live session should use the following
numbers to dial in:

Calling from the United States or Canada: 877-712-7037
Calling from
other countries: 253-237-1122
Conference ID number: 86561838

An online replay will be available at http://investor.sourcefire.com
following the completion of the live call and will remain available for
at least 90 days.

About Sourcefire

Sourcefire, Inc. (NASDAQ: FIRE), a world leader in intelligent
cybersecurity solutions, is transforming the way global large- to
mid-size organizations and government agencies manage and minimize
network security risks. With solutions from a next-generation network
security platform to advanced malware protection, Sourcefire provides
customers with Agile Security(R) that is as dynamic as the real world it
protects and the attackers against which it defends. Trusted for more
than 10 years, Sourcefire has been consistently recognized for its
innovation and industry leadership with numerous patents, world-class
research, and award-winning technology. Today, the name Sourcefire has
grown synonymous with innovation, security intelligence and agile
end-to-end security protection. For more information about Sourcefire,
please visit www.sourcefire.com.

Sourcefire, the Sourcefire logo, Snort, the Snort and Pig logo, Agile
Security and the Agile Security logo, ClamAV, FireAMP, FirePOWER,
FireSIGHT and certain other trademarks and logos are trademarks or
registered trademarks of Sourcefire, Inc. in the United States and other
countries. Other company, product and service names may be trademarks or
service marks of others.

Cautionary Language Concerning Forward-Looking Statements

The statements contained in this release that are not historical facts
are "forward-looking statements" (as such term is defined in the Private
Securities Litigation Reform Act of 1995) that involve risks and
uncertainties. These statements include expectations regarding financial
results for the first quarter of 2013.

Management cautions the reader that these forward-looking statements are
only predictions and are subject to a number of both known and unknown
risks and uncertainties, and actual results, performance, and/or
achievements of Sourcefire, Inc. may differ materially from the future
results, performance, and/or achievements expressed or implied by these
forward-looking statements as a result of a number of factors. These
factors include, without limitation, the fact that the outlook for the
first quarter of 2013 could change, and also include, without limitation,
those risks and uncertainties described from time to time in the reports
filed by Sourcefire, Inc. with the U.S. Securities and Exchange
Commission. Sourcefire, Inc. undertakes no obligation to update any
forward-looking statements.

Sourcefire, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share data)

Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2012 2011 2012 2011
------------ ----------- ------------ -----------
Revenue: (unaudited) (unaudited) (unaudited)
Products $ 43,313 $ 33,959 $ 135,490 $ 98,166
Technical support and
professional services 24,045 19,245 87,600 67,480
------------ ----------- ------------ -----------
Total revenue 67,358 53,204 223,090 165,646
------------ ----------- ------------ -----------
Cost of revenue:
Products 12,973 9,611 40,695 28,368
Technical support and
professional services 3,209 2,680 11,321 8,841
------------ ----------- ------------ -----------
Total cost of
revenue 16,182 12,291 52,016 37,209
------------ ----------- ------------ -----------

Gross profit 51,176 40,913 171,074 128,437

Operating expenses:
Research and
development 10,713 8,849 41,570 33,145
Sales and marketing 25,396 19,009 86,759 64,589
General and
administrative 10,242 5,258 28,194 19,709
Depreciation and
amortization 1,514 1,059 5,187 3,917
------------ ----------- ------------ -----------
Total operating
expenses 47,865 34,175 161,710 121,360
------------ ----------- ------------ -----------

Income from operations 3,311 6,738 9,364 7,077
Other income (expense),
net 22 (252) 20 (351)
------------ ----------- ------------ -----------
Income before income
taxes 3,333 6,486 9,384 6,726
Provision for income
taxes 701 2,352 4,357 536
------------ ----------- ------------ -----------
Net income $ 2,632 $ 4,134 $ 5,027 $ 6,190
============ =========== ============ ===========

Net income per share -
basic $ 0.09 $ 0.14 $ 0.17 $ 0.22
Net income per share -
diluted $ 0.08 $ 0.14 $ 0.16 $ 0.21

Weighted average shares outstanding
used in computing per share amounts:
Basic 30,203,709 28,912,772 29,787,100 28,607,013
Diluted 31,246,472 29,907,917 30,929,210 29,529,525

Stock-based compensation expense for the three and twelve
months ended December 31, 2012 and 2011 is included in the
Consolidated
Statements of Operations
as follows (in
thousands):
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2012 2011 2012 2011
------------ ----------- ------------ -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Cost of revenue
(product) $ 154 $ 72 $ 480 $ 273
Cost of revenue
(services) 249 157 863 514
------------ ----------- ------------ -----------
Stock-based comp
expense included in
cost of revenue 403 229 1,343 787

Research and development 1,630 934 5,507 3,408
Sales and marketing 3,007 1,623 9,966 5,990
General and
administrative 5,041 1,311 9,348 4,696
------------ ----------- ------------ -----------
Stock-based comp
expense included in
operating expenses 9,678 3,868 24,821 14,094
------------ ----------- ------------ -----------
Total stock-based
compensation expense $ 10,081 $ 4,097 $ 26,164 $ 14,881
============ =========== ============ ===========

Sourcefire, Inc.
Condensed Consolidated Balance Sheets
(in thousands)

December 31, December 31,
2012 2011
------------ ------------
Assets (unaudited) (unaudited)
Cash and cash equivalents $ 96,178 $ 59,407
Investments 107,777 98,407
Accounts receivable, net 77,426 54,914
Inventory 6,880 4,285
Deferred tax assets 13,023 11,339
Prepaid expenses and other current assets 9,043 7,718
Property and equipment, net 15,438 12,233
Goodwill 15,000 15,000
Intangible assets, net 4,456 5,822
Other long-term assets 19,453 14,802
------------ ------------
Total assets $ 364,674 $ 283,927
============ ============

Liabilities
Accounts payable and accrued expenses $ 27,783 $ 23,237
Deferred revenue 90,241 61,570
Other liabilities 1,524 1,263
------------ ------------
Total liabilities 119,548 86,070
------------ ------------

Stockholders' Equity
Common stock 30 28
Additional paid-in capital 255,610 213,402
Accumulated deficit (10,522) (15,549)
Accumulated other comprehensive income (loss) 8 (24)
------------ ------------
Total stockholders' equity 245,126 197,857
------------ ------------

Total liabilities and stockholders' equity $ 364,674 $ 283,927
------------ ------------

Sourcefire, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)

Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)

Net income $ 2,632 $ 4,134 $ 5,027 $ 6,190
Adjustments to reconcile
net income to net cash
provided by operating
activities 14,000 10,889 37,658 8,412
----------- ----------- ----------- -----------
Net cash provided by
operating activities 16,632 15,023 42,685 14,602

Net cash used in
investing activities (5,853) (10,250) (22,298) (16,949)

Net cash provided by
financing activities 2,111 3,321 16,384 7,344
----------- ----------- ----------- -----------
Net increase in cash and
cash equivalents 12,890 8,094 36,771 4,997
Cash and cash
equivalents at
beginning of period 83,288 51,313 59,407 54,410
----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
period $ 96,178 $ 59,407 $ 96,178 $ 59,407
----------- ----------- ----------- -----------

Sourcefire, Inc.
Reconciliation of Non-GAAP Measures to GAAP
(in thousands, except share and per share data)

Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Reconciliation of
adjusted income from
operations:
GAAP income from
operations $ 3,311 $ 6,738 $ 9,364 $ 7,077
Amortization of
acquisition-related
intangible assets 342 252 1,368 1,008
Other acquisition-
related expenses* - 667 1,436 2,790
Stock-based
compensation expense 10,081 4,097 26,164 14,881
----------- ----------- ----------- -----------
Adjusted income from
operations $ 13,734 $ 11,754 $ 38,332 $ 25,756
=========== =========== =========== ===========
Adjusted income from
operations as % of
total revenue 20.4% 22.1% 17.2% 15.5%

Reconciliation of
adjusted net income:
GAAP net income $ 2,632 $ 4,134 $ 5,027 $ 6,190
Stock-based
compensation expense 10,081 4,097 26,164 14,881
Amortization of
acquisition-related
intangible assets 342 252 1,368 1,008
Other acquisition-
related expenses** - 781 1,436 3,246
Tax credit for
research and
experimentation - - - (2,001)
Income tax
adjustment*** (4,113) (1,714) (9,066) (6,514)
----------- ----------- ----------- -----------
Adjusted net income $ 8,942 $ 7,550 $ 24,929 $ 16,810
=========== =========== =========== ===========

Adjusted net income
per share - basic $ 0.30 $ 0.26 $ 0.84 $ 0.59
Adjusted net income
per share - diluted $ 0.29 $ 0.25 $ 0.81 $ 0.57

Weighted average
number of shares -
basic 30,203,709 28,912,772 29,787,100 28,607,013
Weighted average
number of shares -
diluted 31,246,472 29,907,917 30,929,210 29,529,525

* Includes the accrual of retention obligations related to the hiring of
former Immunet employees and other acquisition-related costs.
** Includes the accrual of retention obligations related to the hiring of
former Immunet employees, the increase in the fair value of acquisition-
related contingent consideration and other acquisition-related costs.
*** Income tax adjustment is used to adjust the GAAP provision for income
taxes to a Non-GAAP provision for income taxes utilizing an assumed tax
rate of 35%.

Reconciliation of net cash provided by operating activities to free cash
flow:

Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)

Net cash provided by
operating activities $ 16,632 $ 15,023 $ 42,685 $ 14,602
Purchase of property and
equipment (2,786) (2,167) (8,935) (6,511)
----------- ----------- ----------- -----------
Free cash flow $ 13,846 $ 12,856 $ 33,750 $ 8,091
----------- ----------- ----------- -----------

Sourcefire, Inc.
Supplemental Operating Data

Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)

Number of deals in
excess of $500,000 25 28 76 68
Number of deals in
excess of $100,000 127 126 406 333
Number of new customers 162 171 452 452
Percentage of channel-
influenced deals 56% 59% 46% 51%
Total channel partners 738 576
Number of full-time
employees at end of
period 599 451

Revenue Composition by
Geography:
United States 61% 74% 67% 75%
International 39% 26% 33% 25%
----------- ----------- ----------- -----------
Total 100% 100% 100% 100%
=========== =========== =========== ===========

Revenue Composition by Business
Distribution:
Existing customer
product revenue 32% 31% 36% 35%
New customer product
revenue 32% 33% 25% 24%
Services revenue 36% 36% 39% 41%
----------- ----------- ----------- -----------
Total 100% 100% 100% 100%
=========== =========== =========== ===========

Media Contact:
Jennifer Leggio
Sourcefire
650-260-4025
jleggio@sourcefire.com

Investor Contact:
Staci Mortenson
ICR
203-682-8273
Staci.Mortenson@icrinc.com

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