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Data Domain, Inc. Reports Third Quarter Financial Results Revenue Increases 21% Compared to Second Quarter 2007, and 189% Compared to Third Quarter 2006 SANTA CLARA, CA--(MARKET WIRE)--Oct 23, 2007 -- Data Domain, Inc. (NasdaqGM:DDUP - News) today
announced results for its third quarter ended September
30, 2007. Net
revenue for the third quarter of 2007 was $32.0 million,
an increase of 21%
from the second quarter of 2007 and an increase of 189%
from the third
quarter of 2006. Net revenue for the nine months ended September
30, 2007
was $78.7 million, an increase of 176% from the nine months
ended September
30, 2006.
Data Domain posted a GAAP net loss for the third quarter of 2007 of $880,000, or $0.02 per share. This compares to a GAAP net loss of $1.2 million, or $0.11 per share, in the immediately preceding second quarter of 2007, and a GAAP net loss of $934,000, or $0.12 per share, in the third quarter of 2006. Excluding the impact of stock-based compensation and related payroll taxes in all periods, the non-GAAP net income for the third quarter of 2007 was $2.6 million, or $0.04 per fully diluted share, compared to a non-GAAP net loss of $607,000, or $0.08 per share, in the third quarter of 2006. "Data Domain's strong revenue growth in the third quarter reinforces the continuing demand for our industry-leading technology and the rapid expansion of our market," commented Frank Slootman, president and chief executive officer of Data Domain. "During the past quarter, Data Domain added approximately 228 new customers, bringing its cumulative customer count to approximately 1,200 worldwide since it first began shipping its Enterprise Protection Storage systems in 2004." "In addition to exceeding our revenue plan for the quarter, we had a gross margin of 70%, and generated positive cash flow from operations again this quarter, while increasing our number of employees by 60," added Michael Scarpelli, chief financial officer of Data Domain. Recent Highlights Data Domain's focus on delivering its industry-leading technologies to an increasingly broad spectrum of enterprises worldwide was reflected in a number of key business initiatives and recent milestones.
-- Data Domain introduced a new version of its file system software that
significantly broadens system support for a wide range of nearline
workloads and use cases beyond its core data protection markets.
-- Announced a new strategic partnership with Vizioncore, a leading
provider of management tools for VMware virtual environments. Through its
partnership with Vizioncore, Data Domain has significantly strengthened the
value proposition it offers to VMware users for protection of their
virtualized environments.
-- During the third quarter, 228 new Data Domain customers were acquired,
more than in any single quarter in the company's history.
-- Strong sales of Data Domain's top-of-line DD580 system (first
introduced during the second quarter of 2007) underscore the company's
penetration of increasingly larger enterprises.Conference Call Information Data Domain will host a conference call for analysts and investors to discuss its third quarter results today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The dial-in number for this conference call is 800-638-5439 (617-614-3945 international) and the call identification number is 24057102. A live webcast of the conference call will be accessible from the Investor Relations section of the Company's website at www.datadomain.com. Following the webcast, an archived version will be available on the company's website for 30 days. To hear the replay, parties in the United States and Canada should call 1-888-286-8010 and enter passcode 25044662. International parties can access the replay at 1-617-801-6888 and should enter passcode 25044662. Use of Non-GAAP Financial Information Data Domain has supplemented the financial measures contained in this press release that are provided in accordance with generally accepted accounting principles ("GAAP") with non-GAAP financial measures. Data Domain believes that these non-GAAP financial measures better reflect its core operating results and thus are appropriate to enhance the overall understanding of its past financial performance and its prospects for the future. These adjustments to Data Domain's GAAP results are made with the intent of providing both management and investors a more complete understanding of Data Domain's underlying operational results and trends and performance. Management uses these non-GAAP measures to evaluate Data Domain's financial results, develop budgets and manage expenditures. The method Data Domain uses to produce non-GAAP financial results may differ from the methods used by other companies. Data Domain's reference to these non-GAAP financial results should be considered in addition to results that are prepared under current accounting standards but should not be considered as a substitute for, or superior to, the financial results that are presented as consistent with GAAP. Reconciliation of the non-GAAP financial measures to the nearest GAAP financial measures is included in the financial measures attached hereto. ABOUT DATA DOMAIN Data Domain® is a leading provider of deduplication storage appliances for disk-based backup and network-based disaster recovery. Approximately 1,200 companies worldwide have purchased Data Domain's storage systems to reduce costs and simplify data management. Data Domain delivers the performance, reliability and scalability to address the data protection needs of enterprises of all sizes. Data Domain's products integrate into existing customer infrastructures and are compatible with leading enterprise backup software products. To find out more about Data Domain, visit www.datadomain.com. Data Domain is headquartered at 2300 Central Expressway, Santa Clara, CA 95050 and can be contacted by phone at 1-866-933-3873 or by e-mail at sales@datadomain.com. Forward-Looking Statements This press release contains forward-looking statements regarding the continuing demand for our industry-leading technology and the rapid expansion of our market, our penetration of increasingly larger enterprises, our support of a wide range of nearline workloads and use cases beyond our core data protection markets, and the strengthened value proposition we offer to VMware users for protection of their virtualized environments. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties include our ability to react to trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs or develop new or enhanced products to meet those needs; market acceptance of our products; our ability to scale our distribution channels; our ability to recruit and retain personnel; our ability to compete in our industry; our ability to maintain and expand relationships with technology partners; our ability to protect our intellectual property; shortages or price fluctuations in our supply chain and the performance of our contract manufacturer; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact our business are set forth in the "Risk Factors" section of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 filed with the SEC. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements. Data Domain and the Data Domain logo are trademarks or registered trademarks of Data Domain, Inc. All other trademarks used or mentioned herein belong to their respective owners. A copy of this press release can be found on the Investor Relations page of Data Domain's website at www.datadomain.com
Data Domain, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, December 31,
2007 2006
------------- ------------
Current Assets:
Cash and cash equivalents $ 86,831 $ 11,857
Short-term investments 42,448 -
Accounts receivable, net (net of allowances
of $0 and $10, respectively) 23,303 15,454
Inventories 4,047 1,193
Prepaid expenses and other current assets 2,019 311
------------- ------------
Total current assets 158,648 28,815
Intangible asset 300 400
Property, plant and equipment, net 6,807 1,698
------------- ------------
Total assets $ 165,755 $ 30,913
============= ============
Current Liabilities:
Accounts payable $ 4,806 $ 3,590
Accrued compensation and related benefits 7,322 3,688
Other accrued liabilities 8,557 1,781
Income taxes payable 428 246
Deferred revenue, current 12,499 6,654
------------- ------------
Total current liabilities 33,612 15,959
Deferred revenue, non-current 6,933 2,641
Long-term exercised unvested stock options 979 1,046
Other liability - 3,319
Commitments and contingencies
Mandatorily redeemable convertible preferred
stock - 41,514
Stockholders' equity (deficit):
Common stock and additional paid-in capital 164,464 3,049
Accumulated other comprehensive income (46) 3
Stockholder note receivable - (15)
Accumulated deficit (40,187) (36,603)
------------- ------------
Total stockholders' equity (deficit) 124,231 (33,566)
------------- ------------
Total liabilities, mandatorily
redeemable convertible preferred stock
and stockholders' equity (deficit) $ 165,755 $ 30,913
============= ============
Data Domain, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
========== ========== ========== ==========
September September September September
30, 30, 30, 30,
2007 2006 2007 2006
========== ========== ========== ==========
Revenue:
Product $ 27,992 $ 8,717 $ 69,470 $ 21,149
Support and services 4,000 776 8,975 1,400
Ratable product and
related support and
services 33 1,583 297 6,006
---------- ---------- ---------- ----------
Total revenue 32,025 11,076 78,742 28,555
---------- ---------- ---------- ----------
Cost of revenue:
Cost of product 8,176 2,888 20,467 6,976
Cost of support and
services 1,330 480 3,033 1,246
Cost of ratable
product and related
support and services 3 374 100 1,429
---------- ---------- ---------- ----------
Total cost of
revenue 9,509 3,742 23,600 9,651
---------- ---------- ---------- ----------
Gross profit 22,516 7,334 55,142 18,904
---------- ---------- ---------- ----------
Operating expenses:
Sales and marketing 15,831 5,182 36,933 12,386
Research and
development 6,111 2,665 16,273 7,162
General and
administrative 2,816 574 6,904 1,505
---------- ---------- ---------- ----------
Total
operating
expenses 24,758 8,421 60,110 21,053
---------- ---------- ---------- ----------
Operating loss (2,242) (1,087) (4,968) (2,149)
---------- ---------- ---------- ----------
Other income (expense),
net:
Interest income 1,614 130 1,950 391
Other income
(expense), net 68 62 (41) 196
---------- ---------- ---------- ----------
Total other
income
(expense),
net 1,682 192 1,909 587
---------- ---------- ---------- ----------
Loss before income taxes (560) (895) (3,059) (1,562)
Provision for income taxes 320 39 525 72
---------- ---------- ---------- ----------
Net loss $ (880) $ (934) $ (3,584) $ (1,634)
========== ========== ========== ==========
Net loss per share, basic
and diluted $ (0.02) $ (0.12) $ (0.14) $ (0.21)
========== ========== ========== ==========
Shares used in computing
basic and diluted net loss
per share 53,405 8,074 24,988 7,798
========== ========== ========== ==========
Shares used in computing
diluted net loss per share 53,405 8,074 24,988 7,798
========== ========== ========== ==========
Stock-based compensation
expense included in above:
Cost of product $ 74 $ 6 $ 116 $ 13
Cost of support and
services 90 6 204 8
Sales and marketing 1,698 121 2,993 267
Research and
development 942 148 1,918 333
General and
administrative 699 46 1,475 121
---------- ---------- ---------- ----------
Total stock-based
compensation
expense $ 3,503 $ 327 $ 6,706 $ 742
========== ========== ========== ==========
Data Domain, Inc.
GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
(unaudited)
Three months ended
September 30, 2007
======== =========== =========
GAAP Adjustments Non-GAAP
======== =========== =========
Reconciliation of gross profit:
Total revenue $ 32,025 $ - $ 32,025
Total cost of revenue 9,509 (164) 9,345
-------- ----------- ---------
Gross profit $ 22,516 $ (164) $ 22,680
======== =========== =========
Reconciliation of operating expenses:
Sales and marketing $ 15,831 $ (1,698) $ 14,133
Research and development 6,111 (942) 5,169
General and administrative 2,816 (699) 2,117
-------- ----------- ---------
Total operating expenses $ 24,758 $ (3,339) $ 21,419
======== =========== =========
Reconciliation of operating income (loss),
net income and net
income per share:
Operating income (loss) $ (2,242) $ 3,503 $ 1,261
Net income (loss) $ (880) $ 3,503 $ 2,623
Net income (loss) per share, basic $ (0.02) $ 0.05
Net income (loss) per share,
diluted $ (0.02) $ 0.04
Shares used in computing basic net
income (loss) per share 53,405 53,405
Shares used in computing diluted
net income (loss) per share 53,405 63,057
Stock-based compensation expense:
Cost of product $ 74
Cost of support and services 90
Sales and marketing 1,698
Research and development 942
General and administrative 699
--------
Total stock-based compensation
expense $ 3,503
========
Nine months ended
September 30, 2007
======== =========== =========
GAAP Adjustments Non-GAAP
======== =========== =========
Reconciliation of gross profit:
Total revenue $ 78,742 $ - $ 78,742
Total cost of revenue 23,600 (320) 23,280
-------- ----------- ---------
Gross profit $ 55,142 $ (320) $ 55,462
======== =========== =========
Reconciliation of operating expenses:
Sales and marketing $ 36,933 $ (2,993) $ 33,940
Research and development 16,273 (1,918) 14,355
General and administrative 6,904 (1,475) 5,429
-------- ----------- ---------
Total operating expenses $ 60,110 $ (6,386) $ 53,724
======== =========== =========
Reconciliation of operating income (loss),
net income and net
income per share:
Operating income (loss) $ (4,968) $ 6,706 $ 1,738
Net income (loss) $ (3,584) $ 6,706 $ 3,122
Net income (loss) per share, basic $ (0.14) $ 0.12
Net income (loss) per share,
diluted $ (0.14) $ 0.09
Shares used in computing basic net
income (loss) per share 24,988 24,988
Shares used in computing diluted
net income (loss) per share 24,988 34,640
Stock-based compensation expense:
Cost of product $ 116
Cost of support and services 204
Sales and marketing 2,993
Research and development 1,918
General and administrative 1,475
--------
Total stock-based compensation
expense $ 6,706
========
Data Domain, Inc.
GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
(unaudited)
Three months ended
September 30, 2006
======== =========== ========
GAAP Adjustments Non-GAAP
======== =========== ========
Reconciliation of gross profit:
Total revenue $ 11,076 $ - $ 11,076
Total cost of revenue 3,742 (12) 3,730
-------- ----------- --------
Gross profit $ 7,334 $ (12) $ 7,346
======== =========== ========
Reconciliation of operating expenses:
Sales and marketing $ 5,182 $ (121) $ 5,061
Research and development 2,665 (148) 2,516
General and administrative 574 (46) 528
-------- ----------- --------
Total operating expenses $ 8,421 $ (315) $ 8,105
======== =========== ========
Reconciliation of operating income (loss),
net income and net
income per share:
Operating income (loss) $ (1,087) $ 327 $ (760)
Net income (loss) $ (934) $ 327 $ (607)
Net loss per share, basic $ (0.12) $ (0.08)
Net loss per share, diluted $ (0.12) $ (0.08)
Shares used in computing basic net
loss per share 8,074 8,074
Shares used in computing diluted
net loss per share 8,074 8,074
Stock-based compensation expense:
Cost of product $ 6
Cost of support and services 6
Sales and marketing 121
Research and development 148
General and administrative 46
--------
Total stock-based compensation
expense $ 327
========
Nine months ended
September 30, 2006
======== =========== ========
GAAP Adjustments Non-GAAP
======== =========== ========
Reconciliation of gross profit:
Total revenue $ 28,555 $ - $ 28,555
Total cost of revenue 9,651 (21) 9,630
-------- ----------- --------
Gross profit $ 18,904 $ (21) $ 18,925
======== =========== ========
Reconciliation of operating expenses:
Sales and marketing $ 12,386 $ (267) $ 12,119
Research and development 7,162 (333) 6,828
General and administrative 1,505 (121) 1,384
-------- ----------- --------
Total operating expenses $ 21,053 $ (721) $ 20,331
======== =========== ========
Reconciliation of operating income (loss),
net income and net
income per share:
Operating income (loss) $ (2,149) $ 742 $ (1,407)
Net income (loss) $ (1,634) $ 742 $ (892)
Net loss per share, basic $ (0.14) $ (0.11)
Net loss per share, diluted $ (0.14) $ (0.11)
Shares used in computing basic net
loss per share 7,798 7,798
Shares used in computing diluted
net loss per share 7,798 7,798
Stock-based compensation expense:
Cost of product $ 13
Cost of support and services 8
Sales and marketing 267
Research and development 333
General and administrative 121
--------
Total stock-based compensation
expense $ 742
========
Data Domain, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
============ ============
September 30, September 30,
2007 2006
============ ============
Operating Activities:
Net loss $ (3,584) $ (1,634)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 1,188 734
Stock-based compensation 6,706 742
Accounts receivable allowance 10 10
Provision for inventories 264 -
Amortization of evaluation inventory 1,870 951
Settlement expense - -
Common stock issued for services - 6
Changes in operating assets and
liabiilties:
(Increase) in accounts receivable (7,859) (5,999)
(Increase) in inventories (4,988) (1,144)
(Increase) in prepaid expenses and other
current
assets (1,708) (258)
(Increase) in prepaid offering costs - -
Increase in accounts payable 1,216 1,536
Increase in accrued compensation and
related benefits 3,634 963
Increase in other accrued liabilities 6,785 546
Increase in income taxes payable 182 -
Increase in deferred revenue 10,137 1,725
------------ ------------
Net cash provided by (used in) operating
activities 13,853 (1,822)
------------ ------------
Investing activities:
Purchase of property, plant and equipment (6,197) (838)
Purchases of available for sale
securities (49,248) -
Proceeds from available for sale
securities 6,800 -
------------ ------------
Net cash used in investing activities: (48,645) (838)
------------ ------------
Financing activities:
Proceeds from issuance of mandatorily
redeemable convertible
preferred stock, net of issuance costs - -
Cost foroffering costs associated
Proceeds from initial public offering, net
of offering costs of $3.9 million 109,162 -
Repayment of shareholder note receivable 15 -
Proceeds from issuance of common
stock, net of repurchases 638 319
------------ ------------
Net cash provided by financing activities 109,815 319
------------ ------------
Effect of exchange rate changes on cash
and cash equivalents (49) (89)
------------ ------------
Net increase (decrease) in cash and cash
equivalents 74,974 (2,430)
Cash and cash equivalents at beginning of
period 11,857 12,505
------------ ------------
Cash and cash equivalents at end of period $ 86,831 $ 10,075
============ ============
Supplemental schedule of cash flow data:
Cash paid for income taxes $ 374 $ 12
============ ============
Non-cash operating activity:
Issuance of common stock for Quantum
settlement $ 3,319 $ -
============ ============
Non-cash financing activities:
Conversation of mandatorily redeemable
convertible preferred stock to common
stock and additional paid in capital $ 41,514 $ -
============ ============Contact: Contact:
Michael P. Scarpelli
Chief Financial Officer
ir@datadomain.com
408.980.4800
Source: Data Domain
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