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Voltaire Announces 32% Revenue Growth in Q4

Company provides next generation, virtualized data centers and the rapidly expanding cloud computing opportunity

Voltaire Ltd. (NASDAQ: VOLT), a provider of scale-out data center fabrics, on Monday announced financial results for the three- and twelve-month periods ended December 31, 2009.

Main Fourth Quarter Highlights

  • Operating loss on a GAAP basis, narrowed to $0.4 million; operating profit on a non-GAAP basis of $0.3 million;
  • Net loss on a GAAP basis, narrowed to $0.5 million; net income on a non-GAAP basis, of $0.3 million;
  • Cash, cash equivalents and marketable securities as of December 31, 2009 totaled $47.5 million; and
  • Introduced 2010 annual revenue guidance range of $66-69 million, an increase of 31-37% year over year;

Fourth Quarter Results
Revenues for the fourth quarter of 2009 totaled $17.4 million, an increase of 32% compared with $13.2 million reported in the fourth quarter of 2008.

Gross profit for the fourth quarter of 2009 totaled $8.7 million, an increase of 18% compared to $7.3 million in the fourth quarter of 2008. Gross margin for the fourth quarter of 2009 totaled 50.0%, compared to 55.5% gross margin for the fourth quarter of 2008. The comparatively lower gross margin was primarily due to the product mix sold in the quarter.

Operating loss for the fourth quarter of 2009 totaled $0.4 million, a substantial improvement compared to the $2.4 million operating loss in the fourth quarter of 2008. On a non-GAAP basis, the Company reported operating income of $0.3 million compared with an operating loss of $1.7 million in the fourth quarter of 2008.

Net loss for the fourth quarter of 2009 totaled $0.5 million, or $0.02 loss per share. This represents a continued improvement from the $2.4 million net loss, or $0.12 loss per share, in the fourth quarter of 2008.

Net income, on a non-GAAP basis, for the fourth quarter of 2009 totaled $0.3 million, or $0.01 per diluted share, compared to a net loss, on a non-GAAP basis, of $1.7 million, or $0.08 loss per share, in the fourth quarter of 2008.

Cash, cash equivalents and marketable securities as of December 31, 2009, totaled $47.5 million, compared to $50.4 million as of September 30, 2009.

Full Year 2009 Results
Revenues for the twelve months ended December 31, 2009 totaled $50.4 million, compared to revenues of $61.6 million in 2008.

Gross profit for the year 2009 totaled $26.2 million, compared to $30.6 million in 2008. Gross margin for the year 2009 totaled 51.9%, compared to 49.7% in 2008. Operating loss for the year 2009 totaled $10.6 million, compared to $5.7 million in 2008.

Net loss for the year 2009 totaled $11.0 million, or $0.52 loss per share, compared to a net loss of $5.0 million, or $0.24 loss per share in 2008.

On a non-GAAP basis, net loss for the full year 2009 totaled $8.5 million, or $0.41 loss per share, compared to a non-GAAP net loss of $0.9 million, or $0.05 loss per share, in 2008.

Management Comments

Mr. Ronnie Kenneth, Chairman and CEO of Voltaire commented, “During the fourth quarter of 2009, we continued to present a strong business and financial performance, ending the year with over $50 million in revenues, and a return to non–GAAP profitability in the fourth quarter.”

Mr. Kenneth added, “Throughout 2009, Voltaire focused on the long-term, by strengthening its core business fundamentals to position the Company to capitalize on current data center trends. During the year, we forged new server OEM partnerships, enhancing our presence in existing and new verticals, as well as expanded our geographic presence in Asia, where we are witnessing growing demand for our solutions. Furthermore, we built out our product portfolio, introducing several new products, and we enter 2010 with an end-to-end portfolio of switching products and first-in-kind application acceleration and management software that strongly differentiates Voltaire. As a result, Voltaire presented three consecutive quarters of growth, ending the year with a healthy pipeline.”

“Looking ahead, I believe 2010 will be an inflection point for Voltaire and our markets. The principles used in high performance computing of scale-out, low latency and application acceleration is becoming the foundation for next generation, virtualized data centers and the rapidly expanding cloud computing opportunity. We believe that we are well-positioned at the forefront of a coming widespread infrastructure refresh in the data center. We aim to capitalize on this potential and I am excited about the opportunities that lie ahead for Voltaire in the coming months and years.”

“I would like to take this opportunity to thank Kevin Kilroy, a director of Voltaire’s Board since January 2002, who resigned from the Board for personal reasons effective January 1, 2010, for his significant contribution to the Company over the years,” added Mr. Kenneth.

Outlook

Management introduces guidance for the full year of 2010.

Management expects that revenues for the full year of 2010 to be in range of $66 - $69 million, reflecting year over year revenue growth of 31 – 37% with the second half of the year, as usual, being seasonally stronger than the first.

Full year gross margin is expected to be in the range of 51-53%, similar to 2009. Gross margin in the second half of the year is expected to be higher than the first half of the year.

Non-GAAP operating expenses are expected to increase by up to 15% to between $38-39.5 million in 2010. In 2009, the Company embarked on deep cost cutting in order to weather the global economic crisis. The increase in operating expenses in 2010 is in order to enable the Company to fully capitalize on the current and emerging market opportunities, as well as support the accelerated forecasted growth of both the InfiniBand and Ethernet-based product lines. The Company targets a sustainable non-GAAP operating profit by Q4 2010.

Conference Call Details

The Company will be hosting a conference call later today, February 8th, 2010, at 10:00 am ET. On the call, management will review and discuss the results of the three- and twelve-month periods ended December 31, 2009 and will be available to answer questions. To participate, please either call one of the following teleconferencing numbers, or access the live webcast on the Company’s website. Please begin placing your calls at least 10 minutes before the conference call is due to commence. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Number:

 

1-888-668-9141

     

UK Dial-in Number:

 

0-800-917-5108

Israel Dial-in Number:

03-918-0609

International Dial-in Number:

+972-3-918-0609

The call will be at 10:00 am Eastern Time; 7:00 am Pacific Time; 3:00 pm UK Time; 5:00 pm Israel Time. The conference call will be broadcast live on the Company’s website. To participate, please access the link on the investor relations page of Voltaire’s website – www.voltaire.com, a few minutes before the conference call is due to commence. A replay of the call will be available following the call under the Investor Relations section of the website at: www.voltaire.com.

Use of Non-GAAP Financial Measure

Voltaire reports its results of operations in accordance with GAAP and, additionally, on a non-GAAP basis. Non-GAAP operating income (loss) and non-GAAP net income (loss) are calculated based on the operating income (loss) or net income (loss) in Voltaire’s financial statements excluding (i) non-cash equity-based compensation charges recorded in accordance with SFAS 123R, and (ii) the $2.1 million expense recorded in the first quarter of 2008 under cost of revenues for the one-time repayment of grants to the Office of the Israeli Chief Scientist. Reconciliation of this non-GAAP measure to operating income (loss) and net income (loss), the most comparable GAAP measures, is provided in the schedules attached to this release. Voltaire provides these non-GAAP financial measures because its management believes that they are useful in enhancing investors’ understanding of Voltaire’s ongoing performance. Voltaire uses internally the Non-GAAP information to evaluate the Company’s ongoing performance. Voltaire is providing this information to investors to enable them to perform comparisons of operating results in a manner similar to how the Company analyzes its operating results.

About Voltaire

Voltaire (NASDAQ: VOLT) is a leading provider of scale-out computing fabrics for data centers, high performance computing and cloud environments. Voltaire’s family of server and storage fabric switches and advanced management software improve performance of mission-critical applications, increase efficiency and reduce costs through infrastructure consolidation and lower power consumption. Used by more than 30 percent of the Fortune 100 and other premier organizations across many industries, including many of the TOP500 supercomputers, Voltaire products are included in server and blade offerings from Bull, HP, IBM, NEC, SGI and Sun. Founded in 1997, Voltaire is headquartered in Ra’anana, Israel and Chelmsford, Massachusetts. More information is available at www.voltaire.com or by calling 1-800-865-8247.

More Stories By Salvatore Genovese

Salvatore Genovese is a Cloud Computing consultant and an i-technology blogger based in Rome, Italy. He occasionally blogs about SOA, start-ups, mergers and acquisitions, open source and bleeding-edge technologies, companies, and personalities. Sal can be reached at hamilton(at)sys-con.com.

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