|
| |||||||||||||||
Data Domain, Inc. Reports Third Quarter Financial Results Revenue Increases 23% Compared to the Second Quarter of 2008, 134% Compared to the Third Quarter of 2007 SANTA CLARA, CA--(MARKET WIRE)--Oct 23, 2008 -- Data Domain, Inc. (NasdaqGM:DDUP - News) today
announced results for its third quarter ended September
30, 2008. Net
revenue for the third quarter of 2008 was $75.0 million,
an increase of 23%
from the second quarter of 2008 and an increase of 134%
from the third
quarter of 2007.
Under U.S. generally accepted accounting principles ("GAAP"), Data Domain posted net income of $3.2 million for the third quarter of 2008, or $0.05 per diluted share. This compares to GAAP net income of $1.7 million, or $0.03 per diluted share, in the second quarter of 2008, and a GAAP net loss of $0.9 million, or $0.02 per diluted share, in the third quarter of 2007. Excluding the impact of stock-based compensation and related taxes in all periods, non-GAAP net income for the third quarter of 2008 was $8.1 million, or $0.12 per diluted share, compared to non-GAAP net income of $6.5 million, or $0.10 per diluted share, in the second quarter of 2008, and non-GAAP net income of $2.6 million, or $0.05 per diluted share, in the third quarter of 2007. "Our results for the third quarter of 2008 included record revenues, strong gross margins and significant growth in our customer base," said Frank Slootman, president and chief executive officer of Data Domain. "A record 355 new customers were added during this past quarter, bringing Data Domain's cumulative customer count to over 2,500 worldwide that have purchased our products since 2004. Demand continued to accelerate for the DD690, which we announced in May as the industry's highest performance inline deduplication storage system for backup and other nearline applications. In addition, we noted expanded use of our systems for mixed storage applications such as archiving." "Data Domain has again exceeded its plan, beating its revenue targets for the quarter, while continuing to invest in its infrastructure for growth," added Michael Scarpelli, chief financial officer for Data Domain. "GAAP net income was $3.2 million and gross margins were strong at 72%. In addition, we achieved operating profit while hiring an additional 91 employees, bringing total headcount to 705, and we added approximately $22 million to operating cash flow in the quarter." Financial Outlook
-- We estimate revenues for the fourth quarter of 2008 to be between $80
million and $84 million.
-- We estimate that for the fourth quarter of 2008 GAAP earnings per diluted
share will be approximately $0.01 to $0.03 and non-GAAP earnings per share
will range from $0.09 to $0.11. The non-GAAP earnings per share projections
exclude stock-based compensation expense that we estimate will be in the
range of $6.4 million to $6.6 million as well as tax benefits that we
estimate will be in the range of $900,000 to $1.0 million related to stock-
based compensation.
-- We estimate revenues for the full year of 2008 will be between $269
million and $273 million, up from our previous estimate of $250 million to
$255 million.Third Quarter Highlights
-- During the quarter, we announced multiple new technology partnerships with
leading eDiscovery, archiving and file virtualization vendors. The new
partnerships underscore the flexibility of Data Domain systems to be
applied broadly in mixed storage environments.
-- We also announced new managed services partner agreements with companies
that offer outsourced disaster recovery services, reflecting another market
that can benefit from the cost efficiencies that can be achieved with Data
Domain systems. These service providers leverage our network-efficient
replication to reduce the delivery costs of the disaster recovery services.
-- During the quarter, we noted strong penetration of the financial and
government vertical markets. These customers are typically large enterprise
data centers that require the high performance characteristics of systems
like the DD690 and the platform stability that Data Domain delivers.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 866.510.0710 (617.597.5378 international) and the participant passcode is 50992752#. A live webcast of the conference call will be accessible from the Investor Relations section of our website at www.datadomain.com. Following the webcast, an archived version will be available on our website for 30 days. To hear the replay, parties in the United States and Canada should call 1.888.286.8010 and enter passcode 72345707#. International parties can access the replay at 617.801.6888 and should enter passcode 72345707#. Use of Non-GAAP Financial Information Data Domain has supplemented the financial measures contained in this press release that are provided in accordance with U.S. 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 the leading provider of deduplication storage systems. Over 2,500 companies worldwide have purchased Data Domain systems to reduce storage costs and simplify data management. Data Domain delivers the performance, reliability and scalability to address the data protection and nearline storage needs of enterprises of all sizes. Data Domain products integrate into existing customer infrastructures and are compatible with leading enterprise backup and archive software products. To find out more about Data Domain, visit www.datadomain.com. Data Domain is headquartered at 2421 Mission College Blvd., Santa Clara, CA 95054 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 within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act, including statements regarding accelerating demand for Data Domain's DD 690 deduplication storage system, all of the information set forth under the heading "Financial Outlook," and other statements identified by forward-looking words such as "anticipated," "believed," "could," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. 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 any weakening of general economic and market conditions and customer budgets for information technology spending, 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; 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" sections in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 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.
Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, December 31,
2008 2007
------------- -------------
Current assets:
Cash and cash equivalents $ 139,042 $ 102,939
Short-term investments 74,898 104,197
Account receivable (net of allowances) 52,233 35,320
Inventories 3,922 2,341
Prepaid expenses and other current assets 4,811 1,711
------------- -------------
Total current assets 274,906 246,508
Long-term investments 28,543 -
Intangible asset 167 267
Property, plant and equipment, net 33,176 14,589
------------- -------------
Total assets $ 336,792 $ 261,364
============= =============
Current liabilities:
Accounts payable $ 10,206 $ 7,251
Accrued compensation and related benefits 13,807 11,992
Other accrued liabilities 9,124 6,731
Income taxes payable 303 196
Deferred revenue, current 31,553 16,650
------------- -------------
Total current liabilities 64,993 42,820
Deferred revenue, non-current 23,164 9,322
Long-term exercised unvested stock options 341 766
Other liabilities 1,549 594
Stockholders' equity:
Common stock 282,284 248,078
Accumulated other comprehensive income
(loss) (2,943) 47
Accumulated deficit (32,596) (40,263)
------------- -------------
Total stockholders' equity 246,745 207,862
------------- -------------
Total liabilities and stockholders'
equity $ 336,792 $ 261,364
============= =============
Data Domain, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three
Months
Three Months Nine Months Ended
Ended September 30, Ended September 30, June 30,
-------------------- -------------------- ---------
2008 2007 2008 2007 2008
--------- --------- --------- --------- ---------
Revenue:
Product $ 63,872 $ 27,992 $ 161,062 $ 69,470 $ 51,970
Support and
services 11,135 4,000 27,718 8,975 9,215
Ratable product
and related
support and
services 23 33 76 297 26
--------- --------- --------- --------- ---------
Total revenue 75,030 32,025 188,856 78,742 61,211
--------- --------- --------- --------- ---------
Cost of revenue:
Cost of product 16,739 8,176 41,808 20,467 13,753
Cost of support
and services 4,226 1,330 9,851 3,033 3,136
Cost of ratable
product and
related support
and services 1 3 3 100 1
--------- --------- --------- --------- ---------
Total cost of
revenue 20,966 9,509 51,662 23,600 16,890
--------- --------- --------- --------- ---------
Gross profit 54,064 22,516 137,194 55,142 44,321
--------- --------- --------- --------- ---------
Operating expenses:
Sales and
marketing 32,150 15,831 82,867 36,933 27,485
Research and
development 10,318 6,111 28,681 16,273 9,627
General and
administrative 6,028 2,816 17,354 6,904 5,720
--------- --------- --------- --------- ---------
Total operating
expenses 48,496 24,758 128,902 60,110 42,832
--------- --------- --------- --------- ---------
Operating income
(loss) 5,568 (2,242) 8,292 (4,968) 1,489
--------- --------- --------- --------- ---------
Other income
(expense), net:
Interest income 1,318 1,614 4,998 1,950 1,517
Other income
(expense), net (1,049) 68 74 (41) (120)
--------- --------- --------- --------- ---------
Total other
income
(expense), net 269 1,682 5,072 1,909 1,397
--------- --------- --------- --------- ---------
Income (loss) before
provision for
income taxes 5,837 (560) 13,364 (3,059) 2,886
Provision for
income taxes 2,605 320 5,697 525 1,192
--------- --------- --------- --------- ---------
Net income (loss) $ 3,232 $ (880) $ 7,667 $ (3,584) $ 1,694
========= ========= ========= ========= =========
Net income (loss)
per share, basic $ 0.06 $ (0.02) $ 0.13 $ (0.15) $ 0.03
========= ========= ========= ========= =========
Net income (loss)
per share, diluted $ 0.05 $ (0.02) $ 0.12 $ (0.15) $ 0.03
========= ========= ========= ========= =========
Shares used in
computing net
income (loss) per
share, basic 58,738 51,880 57,758 23,721 57,570
Shares used in
computing net
income (loss) per
share, diluted 65,422 51,880 65,519 23,721 65,384
Data Domain, Inc.
GAAP to Non-GAAP Reconciliation
(in thousands except per share data)
(unaudited)
Three Months Ended Three Months Ended
September 30, 2008 June 30, 2008
------------------------------ -----------------------------
Adjust- Adjust-
GAAP ments Non-GAAP GAAP ments Non-GAAP
--------- --------- --------- --------- --------- --------
Reconciliation
of Gross
Profit:
Total
revenue $ 75,030 - $ 75,030 $ 61,211 $ - $ 61,211
Total cost
of revenue 20,966 (481) 20,485 16,890 (374) 16,516
--------- --------- --------- --------- --------- --------
Gross
Profit $ 54,064 $ 481 $ 54,545 $ 44,321 $ 374 $ 44,695
========= ========= ========= ========= ========= ========
Reconciliation
of Operating
Expenses:
Sales and
marketing $ 32,150 $ (2,903) $ 29,247 $ 27,485 $ (2,782) $ 24,703
Research
and
development 10,318 (1,424) 8,894 9,627 (1,351) 8,276
General and
administra-
tive 6,028 (1,254) 4,774 5,720 (1,030) 4,690
--------- --------- --------- --------- --------- --------
Total
Operating
Expenses $ 48,496 $ (5,581) $ 42,915 $ 42,832 $ (5,163) $ 37,669
========= ========= ========= ========= ========= ========
Reconciliation
of Operating
Income, net,
provision for
income taxes,
net income
and net income
per share:
Operating
income $ 5,568 $ 6,062 $ 11,630 $ 1,489 $ 5,537 $ 7,026
Income
before
provision
for income
taxes $ 5,837 $ 6,062 $ 11,899 $ 2,886 $ 5,537 $ 8,423
Provision
for income
taxes $ 2,605 $ 1,164 $ 3,769 $ 1,192 $ 712 $ 1,904
Net income $ 3,232 $ 4,898 $ 8,130 $ 1,694 $ 4,825 $ 6,519
Net income
per share,
basic $ 0.06 $ 0.14 $ 0.03 $ 0.11
Net income
per share,
diluted $ 0.05 $ 0.12 $ 0.03 $ 0.10
Shares
used in
computing
basic net
income
per share 58,738 58,738 57,570 57,570
Shares
used in
computing
diluted
net income
per share 65,422 2,003 67,425 65,384 2,015 67,399
Stock-based
compensation
expense:
Cost of
product $ 198 $ 202
Cost of
support
and
services 283 172
Sales and
marketing 2,903 2,782
Research
and
development 1,424 1,351
General
and
administra-
tive 1,254 1,030
--------- ---------
Total
stock-based
compensation
expense $ 6,062 $ 5,537
========= =========
Data Domain, Inc.
GAAP to Non-GAAP Reconciliation
(in thousands except per share data)
(unaudited)
Three Months Ended Three Months Ended
September 30, 2008 September 30, 2007
------------------------------ -----------------------------
Adjust- Adjust-
GAAP ments Non-GAAP GAAP ments Non-GAAP
--------- --------- --------- --------- --------- --------
Reconciliation
of Gross
Profit:
Total
revenue $ 75,030 - $ 75,030 $ 32,025 $ - $ 32,025
Total cost
of revenue 20,966 (481) 20,485 9,509 (164) 9,345
--------- --------- --------- --------- --------- --------
Gross
Profit $ 54,064 $ 481 $ 54,545 $ 22,516 $ 164 $ 22,680
========= ========= ========= ========= ========= ========
Reconciliation
of Operating
Expenses:
Sales and
marketing $ 32,150 $ (2,903) $ 29,247 $ 15,831 $ (1,698) $ 14,133
Research
and
development 10,318 (1,424) 8,894 6,111 (942) 5,169
General and
administra-
tive 6,028 (1,254) 4,774 2,816 (699) 2,117
--------- --------- --------- --------- --------- --------
Total
Operating
Expenses $ 48,496 $ (5,581) $ 42,915 $ 24,758 $ (3,339) $ 21,419
========= ========= ========= ========= ========= ========
Reconciliation
of Operating
Income (loss),
net, provision
for income
taxes, net
income (loss)
and net income
(loss) per share:
Operating
income
(loss) $ 5,568 $ 6,062 $ 11,630 $ (2,242) $ 3,503 $ 1,261
Income
(loss)
before
provision
for income
taxes $ 5,837 $ 6,062 $ 11,899 $ (560) $ 3,503 $ 2,943
Provision
for income
taxes $ 2,605 $ 1,164 $ 3,769 $ 320 $ - $ 320
Net income
(loss) $ 3,232 $ 4,898 $ 8,130 $ (880) $ 3,503 $ 2,623
Net income
(loss)
per share,
basic $ 0.06 $ 0.14 $ (0.02) $ 0.05
Net income
(loss)
per share,
diluted $ 0.05 $ 0.12 $ (0.02) $ 0.05
Shares
used in
computing
basic net
income
(loss)
per share 58,738 58,738 51,880 51,880
Shares
used in
computing
diluted
net income
(loss)
per share 65,422 2,003 67,425 51,880 51,880
Stock based
compensation
expense:
Cost of
product $ 198 $ 74
Cost of
support
and
services 283 90
Sales and
marketing 2,903 1,698
Research
and
development 1,424 942
General
and
administra-
tive 1,254 699
--------- ---------
Total
stock-based
compensation
expense $ 6,062 $ 3,503
========= =========
Data Domain, Inc.
GAAP to Non-GAAP Reconciliation
(in thousands except per share data)
(unaudited)
Nine Months Ended September Nine Months Ended September
30, 2008 30, 2007
---------------------------- -----------------------------
Adjust- Adjust-
GAAP ments Non-GAAP GAAP ments Non-GAAP
--------- -------- --------- -------- -------- --------
Reconciliation
of Gross
Profit:
Total revenue $ 188,856 $ - $ 188,856 $ 78,742 $ - $ 78,742
Total cost of
revenue 51,662 (1,111) 50,551 23,600 (321) 23,279
--------- -------- --------- -------- -------- --------
Gross Profit $ 137,194 $ 1,111 $ 138,305 $ 55,142 $ 321 $ 55,463
========= ======== ========= ======== ======== ========
Reconciliation
of Operating
Expenses:
Sales and
marketing $ 82,867 $ (8,476) $ 74,391 $ 36,933 $ (2,993) $ 33,940
Research and
development 28,681 (4,096) 24,585 16,273 (1,918) 14,355
General and
administra-
tive 17,354 (3,296) 14,058 6,904 (1,474) 5,430
--------- -------- --------- -------- -------- --------
Total
Operating
Expenses $ 128,902 (15,868) $ 113,034 $ 60,110 $ (6,385) $ 53,725
========= ======== ========= ======== ======== ========
Reconciliation
of Operating
Income (loss),
net, provision
for income
taxes, net
income (loss)
and net income
(loss) per
share:
Operating
income (loss) $ 8,292 $ 16,979 $ 25,271 $ (4,968) $ 6,706 $ 1,738
Income (loss)
before
provision for
income taxes $ 13,364 $ 16,979 $ 30,343 $ (3,059) $ 6,706 $ 3,647
Provision for
income taxes $ 5,697 $ 2,316 $ 8,013 $ 525 $ - $ 525
Net income
(loss) $ 7,667 $ 14,663 $ 22,330 $ (3,584) $ 6,706 $ 3,122
Net income
(loss) per
share, basic $ 0.13 $ 0.39 $ (0.15) $ 0.13
Net income
(loss) per
share,
diluted $ 0.12 $ 0.33 $ (0.15) $ 0.13
Shares used
in computing
basic net
income (loss)
per share 57,758 57,758 23,721 23,721
Shares used
in computing
diluted net
income (loss)
per share 65,519 1,986 67,505 23,721 23,721
Stock-based
compensation
expense:
Cost of
product $ 536 $ 117
Cost of
support
and services 575 204
Sales and
marketing 8,476 2,993
Research and
development 4,096 1,918
General and
administra-
tive 3,296 1,474
--------- --------
Total
stock-
based
compen-
sation
expense $ 16,979 $ 6,706
========= ========
Data Domain, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine months ended
September 30,
--------------------
2008 2007
--------- ---------
Operating Activities:
Net income (loss) $ 7,667 $ (3,584)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 4,367 1,188
Stock-based compensation 16,979 6,706
Tax benefit for excess stock option deduction 5,057 --
Provision (release) for accounts receivable
allowances 21 (10)
Provision for inventories -- 264
Amortization of evaluation units in inventory 1,984 1,870
Changes in operating assets and liabilities:
Increase in accounts receivable (16,934) (7,839)
Increase in inventories (3,565) (4,988)
Increase in prepaid expenses and other current
assets (3,100) (1,708)
Increase in accounts payable 2,955 1,216
Increase in accrued compensation and related
benefits 1,815 3,634
Increase in other accrued liabilities 3,337 6,785
Increase in income taxes payable 107 182
Increase in deferred revenue 28,745 10,137
--------- ---------
Net cash provided by operating activities 49,435 13,853
--------- ---------
Investing activities:
Purchase of property, plant and equipment (22,854) (6,197)
Purchases of available for sale securities (117,637) (49,248)
Proceeds from available for sale securities 115,481 6,800
--------- ---------
Net cash used in investing activities (25,010) (48,645)
--------- ---------
Financing activities:
Proceeds from issuance of common
stock, net of repurchases 11,757 109,161
Repayment of shareholder note receivable -- 15
Payment for initial public offering costs -- 639
--------- ---------
Net cash provided by financing activities 11,757 109,815
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents (79) (49)
--------- ---------
Net increase in cash and cash equivalents 36,103 74,974
Cash and cash equivalents at beginning of period 102,939 11,857
--------- ---------
Cash and cash equivalents at end of period $ 139,042 $ 86,831
========= =========
Non-cash operating activity:
Issuance of common stock for settlement $ -- $ 3,319
========= =========
Non-cash financing activity:
Conversion of mandatorily redeemable convertible
preferred stock to common stock and additional
paid in capital $ -- $ 41,514
========= =========
Supplemental schedule of cash flow data:
Cash paid for income taxes $ 568 $ 374
========= =========Contact: Contact:
Michael P. Scarpelli
Chief Financial Officer
ir@datadomain.com
(408) 980-4800
Source: Data Domain
|  | ||||||||||||||
