Isilon Systems News
Isilon Systems Announces 2008 First Quarter Financial Results
"I am encouraged by these results as we emerge from the challenges of the past few quarters," said
Financial results for the first quarter of 2008 included the following: * Gross margin for the first quarter of 2008 was 53.5 percent, compared with 48.1 percent in the first quarter last year. On a non-GAAP basis, gross margin for the first quarter was 53.7 percent, compared with 48.2 percent in the first quarter last year. * Loss from operations for the first quarter of 2008 was $10.8 million, compared with $8.0 million in the first quarter last year. On a non-GAAP basis, loss from operations for the first quarter of 2008 was $9.5 million, compared with $7.5 million in the first quarter last year. * Net loss for the first quarter of 2008 was $10.1 million, or $0.16 per share, compared with net loss of $6.9 million, or $0.11 per share, in the first quarter last year. Non-GAAP net loss for the first quarter was $8.8 million, or $0.14 per share, compared with non-GAAP net loss of $6.4 million, or $0.11 per share in the first quarter last year. * At March 31, 2008, cash, cash equivalents and marketable securities were $78.6 million, compared with $85.9 million at the end of 2007, and the company had no outstanding debt.
Operating results for the first quarter of 2008 were impacted by
Conference Call
Isilon management will host a conference call today at
A replay of the conference call will be available by telephone approximately two hours after the call ends until
About Isilon Systems
Isilon Systems (NASDAQ: ISLN) is the worldwide leader in clustered storage systems and software for digital content and unstructured data, enabling enterprises to transform data into information - and information into breakthroughs. Isilon's award-winning family of IQ clustered storage systems combines Isilon's OneFS(R) operating system software with the latest advances in industry-standard hardware to deliver modular, pay-as-you-grow, enterprise- class storage systems. Isilon's clustered storage solutions speed access to critical business information while dramatically reducing the cost and complexity of storing it. Information about Isilon can be found at http://www.isilon.com.
Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements presented below in accordance with GAAP, this press release includes non-GAAP gross margin, non- GAAP loss from operations, non-GAAP net loss, and non-GAAP loss per share. Isilon provides non-GAAP information to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future and to aid in comparing current operating results with those of past periods. The company believes the non-GAAP measures provide useful information to management and investors by excluding certain items that may not be indicative of Isilon's core operating results and business outlook.
Non-GAAP gross margin, non-GAAP loss from operations and non-GAAP net loss exclude charges related to stock-based compensation. Isilon excludes stock- based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that Isilon does not believe reflect core operating results. Stock-based compensation expense is dependent on a number of factors over which management has limited control and is not a factor management utilizes in operating the business.
These non-GAAP measures are not calculated in accordance with GAAP and should be considered supplemental to, and not a substitute for, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Isilon believes that non-GAAP measures have inherent limitations in that they do not reflect all of the amounts associated with Isilon's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Isilon's results of operations in conjunction with the corresponding GAAP measures. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis, prominently disclosing GAAP results and providing reconciliations from GAAP results to operational measures. We expect to continue to incur expenses similar to the non-GAAP adjustments described above, and the exclusion or inclusion of these items from our non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent.
A table following the financial statements provides a reconciliation of the most directly comparable GAAP measures to the non-GAAP measures used by management.
Safe Harbor for Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning our future financial and operating results, the benefits of our products, technologies and services, and our ability to achieve our goals, plans and objectives. These statements are not guarantees of future performance, but are based on management's expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. The use of words such as "intend" and "expect," among others, generally identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements involve risks, uncertainties, and assumptions. If the risks or uncertainties ever materialize, or the assumptions prove incorrect, our actual results may differ materially from those expressed or implied by our forward-looking statements. There can be no assurances that forward-looking statements will be achieved. Important factors that could cause actual results to differ materially from those indicated in forward- looking statements include the following: risks associated with anticipated growth in the storage of unstructured, digital content; competitive factors, including changes in the competitive environment, pricing pressures, sales cycle time and increased competition; our ability to build and expand our direct sales operations and reseller distribution channels; our ability to build sales backlogs and improve sales linearity; general economic and industry conditions, including expenditure trends for storage-related products; new product introductions and our ability to develop and deliver innovative products; our ability to provide high-quality service and support offerings; our reliance on a limited number of suppliers and our ability to forecast demand for our products and potential shortages or price fluctuations in our supply chain; risks associated with international operations; and, macroeconomic factors affecting
Isilon Systems, Inc. Condensed Consolidated Statements of Operations Three Months Ended March 31, April 1, 2008 2007 Restated* (In thousands, except per share data) Revenue: Product $19,752 $14,966 Services 4,372 2,880 Total revenue 24,124 17,846 Cost of revenue: Product 8,409 7,760 Services (1) 2,820 1,508 Total cost of revenue 11,229 9,268 Gross profit 12,895 8,578 Operating expenses: Research and development (1) 5,490 4,674 Sales and marketing (1) 11,800 9,009 General and administrative (1) 6,396 2,876 Total operating expenses 23,686 16,559 Loss from operations (10,791) (7,981) Other income (expense), net Interest income and other 802 1,164 Total other income, net 802 1,164 Loss before income tax expense (9,989) (6,817) Income tax expense (109) (39) Net loss $(10,098) $(6,856) Net loss per common share, basic and diluted $(0.16) $(0.11) Shares used in computing basic and diluted net loss per common share 62,749 60,733 (1) Includes stock-based compensation as follows: Cost of revenue $60 $19 Research and development 181 99 Sales and marketing 631 152 General and administrative 425 188 * For further reference, please see the company's Quarterly Report on Form 10-Q for the third quarter of 2007 and its 2007 Annual Report on Form 10-K filed April 2, 2008, with the Securities and Exchange Commission. Isilon Systems, Inc. Condensed Consolidated Balance Sheets As of March 31, December 30, 2008 2007 (In thousands) ASSETS Current assets: Cash and cash equivalents $38,580 $38,999 Marketable securities 40,052 46,862 Trade receivables, net of allowances of $331 and $324, respectively 17,798 20,152 Inventories 12,820 9,430 Other current assets 6,121 5,524 Total current assets 115,371 120,967 Property and equipment, net 10,442 10,571 Total assets $125,813 $131,538 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $10,515 $10,962 Accrued liabilities 6,698 5,182 Accrued compensation and related benefits 4,594 5,180 Deferred revenue 13,668 12,392 Total current liabilities 35,475 33,716 Deferred revenue, net of current portion 6,935 5,819 Deferred rent, net of current portion 3,374 3,414 Total liabilities 45,784 42,949 Stockholders' equity: Common stock 1 1 Additional paid-in capital 192,571 191,254 Accumulated other comprehensive loss 145 (76) Accumulated deficit (112,688) (102,590) Total stockholders' equity 80,029 88,589 Total liabilities and stockholders' equity $125,813 $131,538 Isilon Systems, Inc. Condensed Consolidated Statements of Cash Flows Period Ended March 31, April 1, 2008 2007 Restated* (In thousands) Cash flows from operating activities Net loss $(10,098) $(6,856) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 1,518 1,181 Amortization of discount on marketable securities (79) - Stock-based compensation expense 1,297 458 Changes in operating assets and liabilities: Accounts receivable, net 2,354 3,297 Inventories (3,390) (661) Other current assets (584) (1,795) Accounts payable (943) 5,469 Accrued liabilities, compensation payable and deferred rent 959 (606) Deferred revenue 2,392 852 Net cash (used in) provided by operating activities (6,574) 1,339 Cash flows from investing activities Purchases of property and equipment (812) (1,214) Purchases of marketable securities (9,078) - Proceeds from sales and maturities of marketable securities 16,050 - Net cash provided by (used in) investing activities 6,160 (1,214) Cash flows from financing activities Proceeds from issuance of common stock - 17 Repurchases of unvested common stock (13) - Payments of offering costs - (600) Net cash used in financing activities (13) (583) Effect of exchange rate changes on cash and cash equivalents 8 (3) Net decrease in cash and cash equivalents (419) (461) Cash and cash equivalents at beginning of period 38,999 99,899 Cash and cash equivalents at end of period $38,580 $99,438 * For further reference, please see the company's Quarterly Report on Form 10-Q for the third quarter of 2007 and its 2007 Annual Report on Form 10-K filed April 2, 2008, with the Securities and Exchange Commission. Isilon Systems, Inc. Reconciliation of GAAP to non-GAAP results (in thousands, except percentages and per share data) Operating Expenses Research General Gross and Sales and margin develop- and administ- % ment marketing rative Total Three Months Ended March 31, 2008 GAAP 53.5% $5,490 $11,800 $6,396 $23,686 Adjustments: Stock-based compensation 0.2% (181) (631) (425) (1,237) Non-GAAP 53.7% $5,309 $11,169 $5,971 $22,449 April 1, 2007, Restated* GAAP 48.1% $4,674 $9,009 $2,876 $16,559 Adjustments: Stock-based compensation 0.1% (99) (152) (188) (439) Non-GAAP 48.2% $4,575 $8,857 $2,688 $16,120 Shares used in computing Net basic and loss per diluted common net loss share, Loss from per common basic and operations Net loss share diluted Three Months Ended March 31, 2008 GAAP $(10,791) $(10,098) 62,749 $(0.16) Adjustments: Stock-based compensation 1,297 1,297 Non-GAAP $(9,494) $(8,801) 62,749 $(0.14) April 1, 2007, Restated* GAAP $(7,981) $(6,856) 60,733 $(0.11) Adjustments: Stock-based compensation 458 458 Non-GAAP $(7,523) $(6,398) 60,733 $(0.11) * For further reference, please see the company's Quarterly Report on Form 10-Q for the third quarter of 2007 and its 2007 Annual Report on Form 10-K filed April 2, 2008, with the Securities and Exchange Commission.
SOURCE Isilon Systems
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