Science & Technology
Science and Technology
Science and Technology
Fri, January 30, 2009
Thu, January 29, 2009 Data Domain: Data Domain, Inc. Reports Fourth Quarter Financial Results
SANTA CLARA, CA--(Marketwire - January 29, 2009) - Data Domain, Inc. (
Under U.S. generally accepted accounting principles ("GAAP"), Data Domain posted net income of $13.9 million for the fourth quarter of 2008, or $0.21 per diluted share. The fourth quarter net income was positively impacted by the release of $13.2 million related to the Company's deferred tax asset valuation allowance which resulted in a net $5.7 million tax benefit in the fourth quarter of 2008. Without this one-time item, net income would have been $749,000, or $0.01 per diluted share. This compares to GAAP net income of $3.2 million, or $0.05 per diluted share, in the third quarter of 2008, and a GAAP net loss of $76,000, or $0.00 per diluted share, in the fourth quarter of 2007. For the year ended December 31, 2008, GAAP net income was $21.6 million, or $0.33 per diluted share. Excluding the $13.2 million benefit resulting from the release of the deferred tax asset valuation allowance, GAAP net income would have been $8.4 million, or $0.13 per diluted share. This compares to a GAAP net loss of $3.7 million, or $0.09 loss per diluted share, from the year ended December 31, 2007.
Excluding the impact of stock-based compensation and the release of the deferred tax asset valuation allowance, non-GAAP net income for the fourth quarter of 2008 was $6.7 million, or $0.10 per diluted share. This compares to non-GAAP net income of $8.1 million, or $0.12 per diluted share, in the third quarter of 2008, and non-GAAP net income of $5.1 million, or $0.10 per diluted share, in the fourth quarter of 2007. For the year ended December 31, 2008, non-GAAP net income was $29.0 million, or $0.43 per diluted share compared to non-GAAP net income of $8.2 million, or $0.20 per diluted share from the year ended December 31, 2007.
"Data Domain's fourth quarter results were again marked by record revenues and strong gross margins," said Frank Slootman, president and chief executive officer of Data Domain. "A record 383 new customers were added during this past quarter, bringing Data Domain's cumulative customer count to over 2,900 worldwide that have purchased our products since 2004. As the Company continues to offer increasingly higher performance products such as the DD690, larger enterprises are becoming Data Domain customers. We believe that the maturity and stability of our platform, as well as the scalability we've demonstrated with each new generation of product, is attractive to these large organizations."
"Data Domain again executed to plan during the fourth quarter, exceeding its revenue targets while continuing to build out key elements of its infrastructure to position itself for future growth," added Michael Scarpelli, chief financial officer for Data Domain. "Operating margins were very healthy in the quarter at 10% GAAP. In addition, we achieved operating profit while hiring an additional 72 net new employees, bringing total headcount to 777, and we generated approximately $76 million in operating cash flow for the year."
Financial Outlook
-- We estimate revenues for the first quarter of 2009 to be between $79 million and $84 million. -- We estimate that for the first quarter of 2009, GAAP net income (loss) per diluted share will be approximately $(0.01) to $0.01 and non-GAAP net income per diluted share will range from $0.04 to $0.07. The non-GAAP net income per share projections exclude stock-based compensation expense that we estimate will be in the range of $7.5 million to $7.7 million as well as tax benefits that we estimate will be in the range of $3.1 million to $3.3 million related to stock based compensation. -- We estimate revenues for the full year of 2009 will be between $365 million and $385 million.
Fourth Quarter Highlights
-- In October, the Company announced that results from the TheInfoPro's latest Wave 11 Storage Study again cite Data Domain as the top in-use and in-plan deduplication vendor by responding storage professionals surveyed at Fortune 1000 companies and midsize enterprises. Additionally, according to the study's Technology Heat Index -- which gauges the immediacy of user need and planned spending among respondents -- Data Domain continued to be the fastest growing in-plan deduplication technology provider. More recently, in January, the Company announced similar results for the European InfoPro study, namely that among participating European enterprises Data Domain was again ranked lead in-plan deduplication vendor and was at the top of the in-use vendor standings. -- Also in October, Data Domain and F5 Networks announced a new strategic relationship to co-market a joint solution that automates the movement of static and archive data from higher cost primary storage to Data Domain's cost-efficient deduplication storage. Benefits of the joint solution may include considerably lower storage costs, simplified administration and accelerated ROI. -- In the fourth quarter, the Company noted strong performance in the Western United States and European markets, as well as an increased level of adoption of Data Domain systems by larger enterprises. The speed and scalability of the Company's high-end DD690 storage system continues to drive penetration into these larger organizations.
Conference Call Information
Data Domain will host a conference call for analysts and investors to discuss its fourth 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 866.783- 2145 (857-350-1604 international) and the participant passcode is 33324249#. 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 47977023#. International parties can access the replay at 617-801-6888 and should enter passcode 47977023#.
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 2,900 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: the Company continuing to offer increasingly higher performance products such as the DD690; larger enterprises becoming Data Domain customers; the scalability we've demonstrated with each new generation of product, is attractive to these large enterprises; our building out our infrastructure to position ourselves for future growth; the speed and scalability of our high-end DD690 storage system continuing to drive penetration into larger organizations; the potential benefits of our strategic relationship with F5 Networks; and as well as 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: the impact of the continuing 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 September 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) December 31, December 31, 2008 2007 ------------ ------------ Current assets: Cash and cash equivalents $ 128,380 $ 102,939 Short-term investments 105,512 104,197 Accounts receivable (net of allowances of $120 and $0) 60,322 35,320 Inventories, net 4,638 2,341 Deferred tax asset, net 7,543 - Prepaid expenses and other current assets 5,116 1,711 ------------ ------------ Total current assets 311,511 246,508 Long-term investments 30,866 - Long-term deferred tax asset, net 13,032 - Intangible asset 133 267 Property, plant and equipment, net 38,854 14,589 ------------ ------------ Total assets $ 394,396 $ 261,364 ============ ============ Current liabilities: Accounts payable $ 10,970 $ 7,251 Accrued compensation and related benefits 16,720 11,992 Other accrued liabilities 10,441 6,731 Income taxes payable 1,063 196 Deferred revenue, current 39,321 16,650 ------------ ------------ Total current liabilities 78,515 42,820 Deferred revenue, non-current 28,399 9,322 Long-term exercised unvested stock options 285 766 Long-term deferred tax liabilities 7,999 - Other liabilities 2,314 594 Stockholders' equity Common stock and additional paid-in capital 295,564 248,078 Accumulated other comprehensive income (loss) (10) 47 Accumulated deficit (18,670) (40,263) ------------ ------------ Total stockholders' equity 276,884 207,862 ------------ ------------ Total liabilities and stockholders' equity $ 394,396 $ 261,364 ============ ============ Data Domain, Inc. Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Three Months Year September Ended December 31, Ended December 31, 30, ------------------ ------------------ --------- 2008 2007 2008 2007 2008 -------- -------- -------- -------- --------- Revenue: Product $ 71,650 $ 39,399 $232,712 $108,869 $ 63,872 Support and services 13,568 5,448 41,286 14,423 11,135 Ratable product and related support and services 11 33 87 330 23 -------- -------- -------- -------- --------- Total revenue 85,229 44,880 274,085 123,622 75,030 -------- -------- -------- -------- --------- Cost of revenue: Cost of product 19,325 10,179 61,133 30,646 16,739 Cost of support and services 5,191 2,119 15,042 5,152 4,226 Cost of ratable product and related support and services 2 3 5 103 1 -------- -------- -------- -------- --------- Total cost of revenue 24,518 12,301 76,180 35,901 20,966 -------- -------- -------- -------- --------- Gross profit 60,711 32,579 197,905 87,721 54,064 -------- -------- -------- -------- --------- Operating expenses: Sales and marketing 32,950 23,508 115,817 60,441 32,150 Research and development 12,358 7,190 41,039 23,463 10,318 General and administrative 6,885 4,102 24,239 11,006 6,028 -------- -------- -------- -------- --------- Total operating expenses 52,193 34,800 181,095 94,910 48,496 -------- -------- -------- -------- --------- Operating income (loss) 8,518 (2,221) 16,810 (7,189) 5,568 -------- -------- -------- -------- --------- Other income (expense), net: Interest income 1,258 1,949 6,256 3,899 1,318 Other income (expense), net (1,542) 164 (1,468) 123 (1,049) -------- -------- -------- -------- --------- Total other income (expense), net (284) 2,113 4,788 4,022 269 Income (loss) before provision for income taxes 8,234 (108) 21,598 (3,167) 5,837 Provision (benefit) for income taxes (5,692) (32) 5 493 2,605 -------- -------- -------- -------- --------- Net income (loss) $ 13,926 $ (76) $ 21,593 $ (3,660) $ 3,232 ======== ======== ======== ======== ========= Net income (loss) per share, basic $ 0.23 $ (0.00) $ 0.37 $ (0.12) $ 0.06 ======== ======== ======== ======== ========= Net income (loss) per share, diluted $ 0.21 $ (0.00) $ 0.33 $ (0.12) $ 0.05 ======== ======== ======== ======== ========= Shares used in computing basic earnings (loss) per share 59,394 53,595 58,254 31,482 58,738 Shares used in computing diluted earnings (loss) per share 66,387 53,595 65,814 31,482 65,422 Data Domain, Inc. GAAP to Non-GAAP Reconciliation (in thousands except per share data) (unaudited) Three Months Ended Three Months Ended December 31, 2008 September 30, 2008 -------------------------- -------------------------- Adjust- Adjust- GAAP ments Non-GAAP GAAP ments Non-GAAP ------- ------- -------- -------- ------- -------- Reconciliation of gross profit: Total revenue $85,229 $ - $ 85,229 $ 75,030 $ - $ 75,030 Total cost of revenue 24,518 (587) 23,931 20,966 (481) 20,485 ------- ------- -------- -------- ------- -------- Gross profit $60,711 $ 587 $ 61,298 $ 54,064 $ 481 $ 54,545 ======= ======= ======== ======== ======= ======== Reconciliation of operating expenses: Sales and marketing $32,950 $(3,029) $ 29,921 $ 32,150 $(2,903) $ 29,247 Research and development 12,358 (1,408) 10,950 10,318 (1,424) 8,894 General and administrative 6,885 (1,381) 5,504 6,028 (1,254) 4,774 ------- ------- -------- -------- ------- -------- Total operating expenses $52,193 $(5,818) $ 46,375 $ 48,496 $(5,581) $ 42,915 ======= ======= ======== ======== ======= ======== Reconciliation of operating income, net, provision (benefit) for income taxes net income and net income per share: Operating income $ 8,518 $ 6,405 $ 14,923 $ 5,568 $ 6,062 $ 11,630 Income before provision for income taxes $ 8,234 $ 6,405 $ 14,639 $ 5,837 $ 6,062 $ 11,899 Provision (benefit) for income taxes $(5,692) $13,668 $ 7,976 $ 2,605 $ 1,164 $ 3,769 Net income $13,926 $(7,263) $ 6,663 $ 3,232 $ 4,898 $ 8,130 Net income per share, basic $ 0.23 $ 0.11 $ 0.06 $ 0.14 Net income per share, diluted $ 0.21 $ 0.10 $ 0.05 $ 0.12 Shares used in computing basic net income per share 59,394 59,394 58,738 58,738 Shares used in computing diluted net income per share 66,387 880 67,267 65,422 2,003 67,425 Stock based compensation expense: Cost of product $ 278 $ 198 Cost of support and services 309 283 Sales and marketing 3,029 2,903 Research and development 1,408 1,424 General and administrative 1,381 1,254 ------- -------- Total stock-based compensation expense $ 6,405 $ 6,062 ======= ======== Data Domain, Inc. GAAP to Non-GAAP Reconciliation (in thousands except per share data) (unaudited) Three Months Ended Three Months Ended December 31, 2008 December 31, 2007 ------------------------- ------------------------- Adjust- Adjust- GAAP ments Non-GAAP GAAP ments Non-GAAP ------- ------- ------- ------- ------- ------- Reconciliation of gross profit: Total revenue $85,229 $ - $85,229 $44,880 $ - $44,880 Total cost of revenue 24,518 (587) 23,931 12,301 (187) 12,114 ------- ------- ------- ------- ------- ------- Gross profit $60,711 $ 587 $61,298 $32,579 $ 187 $32,766 ======= ======= ======= ======= ======= ======= Reconciliation of operating expenses: Sales and marketing $32,950 $(3,029) $29,921 $23,508 $(3,320) $20,188 Research and development 12,358 (1,408) 10,950 7,190 (1,063) 6,127 General and administrative 6,885 (1,381) 5,504 4,102 (775) 3,327 ------- ------- ------- ------- ------- ------- Total operating expenses $52,193 $(5,818) $46,375 $34,800 $(5,158) $29,642 ======= ======= ======= ======= ======= ======= Reconciliation of operating income (loss), net, provision (benefit) for income taxes net income (loss) and net income (loss) per share: Operating income (loss) $ 8,518 $ 6,405 $14,923 $(2,221) $ 5,345 $ 3,124 Income (loss) before provision for income taxes $ 8,234 $ 6,405 $14,639 $ (108) $ 5,345 $ 5,237 Provision (benefit) for income taxes $(5,692) $13,668 $ 7,976 $ (32) $ 145 $ 113 Net income (loss) $13,926 $(7,263) $ 6,663 $ (76) $ 5,200 $ 5,124 Net income (loss) per share, basic $ 0.23 $ 0.11 $ (0.00) $ 0.10 Net income (loss) per share, diluted $ 0.21 $ 0.10 $ (0.00) $ 0.08 Shares used in computing basic net income (loss) per share 59,394 59,394 53,595 53,595 Shares used in computing diluted net income (loss) per share 66,387 880 67,267 53,595 63,951 Stock based compensation expense: Cost of product $ 278 $ 101 Cost of support and services 309 86 Sales and marketing 3,029 3,320 Research and development 1,408 1,063 General and administrative 1,381 775 ------- ------- Total stock-based compensation expense $ 6,405 $ 5,345 ======= ======= Data Domain, Inc. GAAP to Non-GAAP Reconciliation (in thousands except per share data) (unaudited) Year Ended Year Ended December 31, 2008 December 31, 2007 --------------------------- ---------------------------- Adjust- Adjust- GAAP ments Non-GAAP GAAP ments Non-GAAP -------- -------- -------- -------- -------- -------- Reconciliation of gross profit: Total revenue $274,085 $ - $274,085 $123,622 $ - $123,622 Total cost of revenue 76,180 (1,698) 74,482 35,901 (507) 35,394 -------- -------- -------- -------- -------- -------- Gross profit $197,905 $ 1,698 $199,603 $ 87,721 $ 507 $ 88,228 ======== ======== ======== ======== ======== ======== Reconciliation of operating expenses: Sales and marketing $115,817 $(11,505) $104,312 $ 60,441 $ (6,313) $ 54,128 Research and development 41,039 (5,504) 35,535 23,463 (2,981) 20,482 General and administrative 24,239 (4,677) 19,562 11,006 (2,250) 8,756 -------- -------- -------- -------- -------- -------- Total operating expenses $181,095 $(21,686) $159,409 $ 94,910 $(11,544) $ 83,366 ======== ======== ======== ======== ======== ======== Reconciliation of operating income (loss), net, provision for income taxes, net income (loss) and net income (loss) per share: Operating income (loss) $ 16,810 $ 23,384 $ 40,194 $ (7,189) $ 12,051 $ 4,862 Income (loss) before provision for income taxes $ 21,598 $ 23,384 $ 44,982 $ (3,167) $ 12,051 $ 8,884 Provision for income taxes $ 5 $ 15,984 $ 15,989 $ 493 $ 145 $ 638 Net income (loss) $ 21,593 $ 7,400 $ 28,993 $ (3,660) $ 11,906 $ 8,246 Net income (loss) per share, basic $ 0.37 $ 0.50 $ (0.12) $ 0.26 Net income (loss) per share, diluted $ 0.33 $ 0.43 $ (0.12) $ 0.20 Shares used in computing basic net income (loss) per share 58,254 58,254 31,482 31,482 Shares used in computing diluted net income (loss) per share 65,814 1,753 67,567 31,482 - 40,478 Stock based compensation expense: Cost of product $ 814 $ 217 Cost of support and services 884 290 Sales and marketing 11,505 6,313 Research and development 5,504 2,981 General and administrative 4,677 2,250 -------- -------- Total stock-based compensation expense $ 23,384 $ 12,051 ======== ======== Data Domain, Inc. Consolidated Statements of Cash Flows (in thousands) (unaudited) Year ended December 31, -------------------- 2008 2007 --------- --------- Operating activities: Net income (loss) $ 21,593 $ (3,660) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 6,498 1,885 Stock-based compensation 23,384 12,051 Tax benefit for excess stock option deduction 11,092 109 Deferred income taxes (12,564) - Provision (release) for accounts receivable allowances 120 (10) Amortization of evaluation inventory 2,536 2,596 Changes in operating assets and liabiilties: (Increase) in accounts receivable (25,122) (19,856) (Increase) in inventories (4,832) (3,744) (Increase) in prepaid expenses and other current assets (3,405) (1,400) Increase in accounts payable 3,719 3,661 Increase in accrued compensation and related benefits 4,728 8,304 Increase in other accrued liabilities 5,419 5,554 Increase (decrease) in income taxes payable 855 (50) Increase in deferred revenue 41,747 16,677 --------- --------- Net cash provided by operating activities 75,768 22,117 --------- --------- Investing activities: Purchase of property, plant and equipment (30,629) (14,643) Purchases of available for sale securities (145,604) (120,022) Proceeds from maturities of available for sale securities 144,627 15,825 Purchases of long-term investments (30,866) -- --------- --------- Net cash used in investing activities (62,472) (118,840) --------- --------- Financing activities: Proceeds from issuance of common stock, net of repurchases 12,539 187,746 Repayment of shareholder note receivable - 15 --------- --------- Net cash provided by financing activities 12,539 187,761 --------- --------- Effect of exchange rate changes on cash and cash equivalents (397) 44 --------- --------- Net increase in cash and cash equivalents 25,441 91,082 Cash and cash equivalents at beginning of period 102,939 11,857 --------- --------- Cash and cash equivalents at end of period $ 128,380 $ 102,939 ========= ========= 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 $ 723 $ 494 ========= =========
