NETEZZA
ANNOUNCES THIRD FISCAL QUARTER 2008 FINANCIAL RESULTS |
Third quarter performance driven by revenue increase of 44% over prior year GAAP diluted EPS increases to $0.02 Framingham, Mass. — November 28, 2007 — Netezza Corporation (NYSE Arca: NZ) today announced its financial results for the third fiscal quarter ended October 31, 2007. Jit Saxena, Netezza's Chairman and Chief Executive Officer, stated, "We are extremely pleased with Netezza's solid performance in our third quarter with record revenues, new customer growth and increased earnings." Highlights: Revenue for the third quarter of fiscal 2008 increased 44% to $33.4 million compared with $23.2 million for the same period one year ago. Revenue for the first three quarters of fiscal 2008 increased 65% to $87.2 million compared with $53.0 million for the same period one year ago. GAAP net income attributable to common stockholders for the third quarter of fiscal 2008 was $1.6 million compared with a GAAP net loss attributable to common stockholders of $3.0 million for the same period one year ago. Non-GAAP net income attributable to common stockholders for the third quarter of fiscal 2008 was $2.9 million compared with a non-GAAP net loss attributable to common stockholders of $1.2 million for the same period one year ago. Non-GAAP net income (loss) attributable to common stockholders and non-GAAP diluted net income per share (reported below) exclude non-cash stock based compensation and accretion of preferred stock dividends. A reconciliation of GAAP to non-GAAP results has been provided in the financial statements included in this press release. An explanation of these measures is also included below under the heading "Use of Non-GAAP Financial Measures." GAAP diluted net income per share for the third quarter of fiscal 2008 was $0.02 compared with a GAAP diluted net loss per share of $0.20 for the same period one year ago. Non-GAAP diluted net income per share for the third quarter of fiscal 2008 was $0.04 compared with a non-GAAP diluted net loss per share of $0.08 for the same period one year ago. At October 31, 2007, total cash and marketable securities were $123.2 million, compared with $5.0 million at January 31, 2007. Netezza's initial public offering in July 2007 raised proceeds of $112.9 million, net of expenses. The company had no outstanding debt at October 31, 2007, compared with $6.5 million at January 31, 2007. Netezza acquired 18 new customers in the third quarter of fiscal 2008, an increase of 100% over the nine new customers acquired in the third quarter of fiscal 2007 and representing the best quarter of new customer growth in Netezza's history. Financial Guidance: "We are pleased with the third quarter financial results which demonstrated continued momentum in our business analytics strategy. We continue to invest in sales and research and development to further penetrate targeted vertical markets and expect revenues of approximately $120 million for fiscal 2008 in total. We further estimate revenues for the next fiscal year to be approximately $160 million, while maintaining our goal to continue to increase profitability," said Patrick Scannell, Senior Vice President and Chief Financial Officer of Netezza. Use of Non-GAAP Financial Measures: To supplement Netezza's unaudited condensed consolidated financial statements presented in accordance with GAAP, Netezza uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Netezza's results of operations as determined in accordance with GAAP. The non-GAAP financial measures used by Netezza include non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP net income (loss) attributable to common stockholders and non-GAAP net income (loss) per share. These non-GAAP measures exclude non-cash stock-based compensation and, where applicable, accretion of preferred stock dividends. Netezza believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding Netezza's performance by excluding certain non-cash items that may not be indicative of Netezza's core business, operating results or future outlook. Because of the varying valuation methodologies and assumptions that companies use under FAS123R, Netezza's management believes that excluding non-cash stock-based compensation allows investors to analyze Netezza's recurring business over multiple periods and provide more meaningful comparison with other companies. Upon the closing of Netezza's public offering, accretion of preferred dividends was no longer applicable due to the conversion of preferred stock to common stock, and is therefore excluded to aid in comparing current and future operating results with those of past periods. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures provided in the financial statements included in this press release. Third Quarter Conference Call: Netezza will host a conference call and webcast at 8:30 AM Eastern Time (5:30 AM Pacific Time) on November 28, 2007 to discuss its third fiscal quarter results and business outlook. The conference call can be accessed by dialing +1 800 561-2731 for participants in the United States and by dialing +1 617 614-3528 for participants outside the United States. The passcode for the conference call is 68188954. A telephonic replay of the conference call will also be available two hours after the call and will run for two weeks. The replay can be accessed by dialing +1 888 286-8010 for participants in the United States and by dialing +1 617 801-6888 for participants outside the United States. The passcode for the replay is 49374446. The webcast will be accessible from the "Investor Relations" section of Netezza's website (http://www.netezza.com). The webcast will be archived on Netezza's website for a period of one year. About Netezza Corporation: Netezza is the global leader in analytic appliances that dramatically simplify high-performance analytics for business users across the extended enterprise, delivering significant competitive and operational advantage in today's information-intensive marketplaces. The Netezza Performance Server(R) (NPS(R)) family of streaming analytic(TM) appliances brings appliance simplicity to a broad range of complex data warehouse and analytic challenges. Based in Framingham, Mass., Netezza has offices in Washington, DC, the United Kingdom and Asia Pacific. For more information about Netezza, please visit www.netezza.com. For Netezza Investors: The statements set forth above include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to Netezza's future financial performance and Netezza's business prospects. These statements involve risk and uncertainties, including: market demand for our products; our limited operating history and history of losses; quarterly fluctuation of our business; our ability to attract and retain key personnel; competition in the data warehouse market; our dependence on certain key customers; our ability to protect our patents and intellectual property; our ability to defend against third party infringement claims, other litigation and contingent liabilities; and risks relating to operating internationally. For a further list and description of risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements in this release, we refer you to the "Risk Factors" section of Netezza's Quarterly Report on Form 10-Q for the quarter ended July 31, 2007, which is on file with the SEC and is available in the investor relations section of Netezza's website at http://www.netezza.com and on the SEC website at http://www.sec.gov. In addition, the forward-looking statements included in this press release represent our views as of November 28, 2007. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to November 28, 2007.
Netezza Corporation
Condensed Consolidated Balance Sheet
(in thousands)
October 31, January 31,
2007 2007
----------- -----------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 38,701 $ 5,018
Short term marketable securities 84,480 -
Accounts receivable 23,224 31,834
Inventory 33,659 26,239
Other current assets 4,992 1,370
----------- -----------
Total current assets 185,056 64,461
Property and equipment, net 5,051 4,228
Restricted cash 379 379
Other long-term assets 160 131
----------- -----------
Total assets $ 190,646 $ 69,199
=========== ===========
Liabilities, convertible redeemable preferred
stock and stockholders' equity (deficit)
Current liabilities
Accounts payable $ 3,565 $ 12,683
Accrued expenses 9,386 8,678
Current portion of note payable to bank - 2,436
Refundable exercise price for restricted
stock - 24
Deferred revenue 33,562 14,741
----------- -----------
Total current liabilities 46,513 38,562
Long-term deferred revenue 12,781 9,765
Note payable to bank, net of current portion - 4,099
Preferred stock warrant liability - 765
----------- -----------
Total liabilities 59,294 53,191
Total convertible redeemable preferred
stock - 97,131
Total stockholders' equity (deficit) 131,352 (81,123)
----------- -----------
Total liabilities, convertible redeemable
preferred stock and stockholders' equity
(deficit) $ 190,646 $ 69,199
=========== ===========
Netezza Corporation
Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
(unaudited)
For the three For the nine
months ended months ended
October 31 October 31
---------------- ------------------
2007 2006 2007 2006
------- -------- -------- ---------
Revenue
Product $27,319 $19,359 $70,830 $ 42,637
Services 6,099 3,812 16,330 10,316
------- -------- -------- ---------
Total revenue 33,418 23,171 87,160 52,953
Cost of revenue
Product 11,355 8,127 29,231 17,738
Services 1,969 1,448 5,573 3,882
------- -------- -------- ---------
Total cost of revenue 13,324 9,575 34,804 21,620
------- -------- -------- ---------
Gross Profit 20,094 13,596 52,356 31,333
Operating Expenses
Sales and marketing 11,128 9,281 30,759 22,871
Research and development 5,682 4,667 16,738 13,214
General and administrative 2,661 1,135 6,394 3,234
------- -------- -------- ---------
Total operating expenses 19,471 15,083 53,891 39,319
------- -------- -------- ---------
Operating income (loss) 623 (1,487) (1,535) (7,986)
Interest income 1,214 136 1,431 355
Interest expense 2 215 717 503
Other income, net 29 72 249 617
------- -------- -------- ---------
Income (loss) before income taxes $ 1,864 $(1,494) $ (572) $ (7,517)
Provision for income taxes 278 - 843 -
------- -------- -------- ---------
Net income (loss) $ 1,586 $(1,494) $(1,415) $ (7,517)
Accretion to preferred stock - 1,483 2,853 4,448
------- -------- -------- ---------
Net income (loss) attributable to
common stockholders $ 1,586 $(2,977) $(4,268) $(11,965)
======= ======== ======== =========
Net income (loss) per common
share:
Basic $ 0.03 $ (0.20) $ (0.16) $ (0.82)
Diluted $ 0.02 $ (0.20) $ (0.16) $ (0.82)
Shares used in per common share
calculations:
Basic 57,434 14,690 26,419 14,538
Diluted 63,804 14,690 26,419 14,538
Netezza Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share amounts and percentages)
(unaudited)
% Change
for the
three
months
ended
October
31, 2007
as
compared
with the
three
months
For the three For the nine ended
months ended months ended October
October 31 October 31 31, 2006
---------------- ------------------ ---------
2007 2006 2007 2006
------- -------- -------- ---------
Non-GAAP financial
measures and
reconciliation:
GAAP cost of product
revenue $11,355 $ 8,127 $29,231 $ 17,738
Non-cash stock-based
compensation (1) 26 3 71 9
------- -------- -------- ---------
Non-GAAP cost of
product revenue $11,329 $ 8,124 $29,160 $ 17,729
======= ======== ======== =========
GAAP cost of service
revenue $ 1,969 $ 1,448 $ 5,573 $ 3,882
Non-cash stock-based
compensation (1) 31 6 84 10
------- -------- -------- ---------
Non-GAAP cost of
service revenue $ 1,938 $ 1,442 $ 5,489 $ 3,872
======= ======== ======== =========
GAAP gross profit $20,094 $13,596 $52,356 $ 31,333
Non-cash stock-based
compensation (1) 57 9 155 19
------- -------- -------- ---------
Non-GAAP gross profit $20,151 $13,605 $52,511 $ 31,352
======= ======== ======== =========
GAAP sales and
marketing expenses $11,128 $ 9,281 $30,759 $ 22,871 20%
Non-cash stock-based
compensation (1) 362 63 868 132
------- -------- -------- ---------
Non-GAAP sales and
marketing expenses $10,766 $ 9,218 $29,891 $ 22,739 17%
======= ======== ======== =========
GAAP research and
development expenses $ 5,682 $ 4,667 $16,738 $ 13,214 22%
Non-cash stock-based
compensation (1) 332 34 657 86
------- -------- -------- ---------
Non-GAAP research and
development expenses $ 5,350 $ 4,633 $16,081 $ 13,128 15%
======= ======== ======== =========
GAAP general and
administrative
expenses $ 2,661 $ 1,135 $ 6,394 $ 3,234 134%
Non-cash stock-based
compensation (1) 515 195 1,401 281
------- -------- -------- ---------
Non-GAAP general and
administrative
expenses $ 2,146 $ 940 $ 4,993 $ 2,953 128%
======= ======== ======== =========
GAAP operating expenses $19,471 $15,083 $53,891 $ 39,319 29%
Non-cash stock-based
compensation (1) 1,209 292 2,926 499
------- -------- -------- ---------
Non-GAAP operating
expenses $18,262 $14,791 $50,965 $ 38,820 23%
======= ======== ======== =========
GAAP operating income
(loss) $ 623 $(1,487) $(1,535) $ (7,986)
Non-cash stock-based
compensation (1) 1,266 301 3,081 518
------- -------- -------- ---------
Non-GAAP operating
income (loss) $ 1,889 $(1,186) $ 1,546 $ (7,468)
======= ======== ======== =========
GAAP net income (loss)
attributable to common
stockholders $ 1,586 $(2,977) $(4,268) $(11,965)
Non-cash stock-based
compensation (1) 1,266 301 3,081 518
Accretion to preferred
stock (2) - 1,483 2,853 4,448
------- -------- -------- ---------
Non-GAAP net income
(loss) attributable to
common
stockholders $ 2,852 $(1,193) $ 1,666 $ (6,999)
======= ======== ======== =========
GAAP net income (loss)
per common share -
basic $ 0.03 $ (0.20) $ (0.16) $ (0.82)
Non-cash stock-based
compensation (1) 0.02 0.02 0.12 0.03
Accretion to preferred
stock (2) - 0.10 0.10 0.31
------- -------- -------- ---------
Non-GAAP net income
(loss) per common
share -basic $ 0.05 $ (0.08) $ 0.06 $ (0.48)
======= ======== ======== =========
GAAP net income (loss)
per common share -
diluted $ 0.02 $ (0.20) $ (0.16) $ (0.82)
Non-cash stock-based
compensation (1) 0.02 0.02 0.12 0.03
Accretion to preferred
stock (2) - 0.10 0.10 0.31
------- -------- -------- ---------
Non-GAAP net income
(loss) per common
share - diluted $ 0.04 $ (0.08) $ 0.06 $ (0.48)
======= ======== ======== =========
Shares used in per
common share
calculations:
Basic 57,434 14,690 26,419 14,538
Diluted 63,804 14,690 26,419 14,538
Footnotes - Adjustments
(1) Represents non-cash compensation charges associated with stock
options granted as follows:
For the three For the nine
months ended months ended
October 31 October 31
---------------- ------------------
2007 2006 2007 2006
------- -------- -------- ---------
Cost of product revenue $ 26 $ 3 $ 71 $ 9
Cost of services
revenue 31 6 84 10
Sales and marketing 362 63 868 132
Research and
development 332 34 657 86
General and
administrative 515 195 1,401 281
------- -------- -------- ---------
Total non-cash stock-
based compensation
expense $ 1,266 $ 301 $ 3,081 $ 518
======= ======== ======== =========
(2) Represents accretion of preferred stock dividends on Netezza's
Series A through D convertible redeemable preferred stock prior to
its conversion to common stock on July 24, 2007.
CONTACT: Netezza Corporation |