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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good day, ladies and gentlemen, and welcome to the first quarter fiscal 2009 3PAR earnings conference call. My name is Gina, and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference.
(OPERATOR INSTRUCTIONS)
As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to the company. You may proceed.
UNIDENTIFIED CORPORATE REPRESENTATIVE: Good afternoon, and welcome to our fiscal year 2009, first quarter earnings release conference call. This conference call will include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended.
These forward-looking statements include, among others, statements about our financial projections for the second quarter and full year of fiscal 2009, as well as financial projections and growth trends for the overall storage market and segments thereof, anticipated demands for our storage solution and adoption trends in our customer's market.
All of these forward-looking statements involve known and unknown risks, uncertainties, and important factors that may cause our actual results, levels of activity, performance or achievements, or those in our industry, to differ from those expressed or implied by the statements we make.
In evaluating these forward-looking statements, you should specifically consider various risk factors, including the risk factors detailed from time to time in our filings with the Securities and Exchange Commission, including, but not limited to, those set forth in our annual report on form 10-K for the fiscal year ended March 31, 2008.
Additional risk factors and other information you should consider will also be set forth in our quarterly report on form 10-Q for the quarter ended June 30, 2008, which will be filed with the SEC in August. These factors may cause our results to differ materially from the forward-looking statements we make on this call.
We cannot guarantee future results, levels of activity, performance or achievements. Our future results will depend on numerous factors, including, among others, the impact of macroeconomic trends on information technology spending, market acceptance of our Utility Storage solutions, and competitive practices in our industry. These forward-looking statements are made only as of today's date, and we expressly disclaim any obligation to update or revise the information contained in them.
Please also note this conference call will provide listeners with certain financial metrics determined on a non-GAAP basis, both for a comparison to previous quarters and the previous fiscal year, and for our outlook for the current quarter.
These financial metrics, together with the reconciliation to comparable GAAP financial measures are contained in today's financial results press release, which we have posted on our website at Investor Relations on 3PAR.com, surprisingly under "Press Releases," and have furnished to the SEC under form 8-K. We encourage listeners to review these items. I'd now like to turn the call over to David Scott, CEO of 3Par. David?
DAVID SCOTT, PRESIDENT, CEO, 3PAR INC.: Good afternoon, and thanks for joining us for our first quarter fiscal year 2009 earnings call. Let's start with the highlights. We're delighted to report revenue of $43 million, 80% higher than our revenue in this period a year ago, and a sequential increase of 21%.
Please note that out of the $39.9 million of product revenue, $2.2 million reflects a one-time accelerated recognition of deferred revenue related to the establishment of the SOE for ratable revenue deferred from our March 2007 quarter. Without this one-time revenue recognition of deferred ratable revenue, we would have reported total revenue of $40.7 million, 71% higher than our revenue in this period a year ago, and a sequential increase of 15%.
In this quarter we achieved gross margin of 65%, and, for the first time, a GAAP profit of $678,000. Excluding the impact of the $2.2 million one-time revenue recognition, we would have reported a GAAP loss of $827,000. This quarter we also increased our profit on a non-GAAP EPS basis to $0.03 per share. Excluding the impact of the $2.2 million one-time revenue recognition, we would have reported a non-GAAP EPS of $0.01 per share.
Our GAAP EPS was a positive $0.01 per share. Excluding the impact of the $2.2 million one-time revenue recognition, our GAAP EPS would have been a negative $0.01. These results show that 3PAR continues to grow its market share, despite tighter budgets and a slower economy. Our business may not prove to be completely recession-proof, but at this stage we believe, based on our results, that the economic environment is clearly favoring solutions like 3PAR's, that demonstrate strong return on investment and lower total cost of ownership.
Also, I'm pleased to announce today that our Board of Directors has improved an investment of up to $10 million for the purchase of shares of 3PAR common stock in the open market under a new buy back program. The approval of this repurchase program by the Board demonstrates the commitment 3Par has to increase shareholder value. We believe our common stock is an attractive value at recent trading prices, and the deployment of some of 3PAR's capital into this investment is warranted.
Moving on, I'd like to talk about a few other recent achievements in the areas of international expansion, expanding our solution integration for virtualized utility computing environments, bringing in the innovative new environmental program to the market, as well as detailing our continued success with new customers and partners.
Last week we publicly announced in Japan the ITOCHU Technosolutions Corporation, known as CTC, and 3PAR have signed an agreement for CTC to resell the 3PAR InServ platform into the Japanese market. Since CTC is the largest independent storage provider in Japan, we believe this partnership has a potential to be an extremely important extension of our channel in that country.
This quarter we also announced a reseller relationship with SYSDBA in South Africa. Our international expansion efforts in Europe and other parts of Asia Pacific continued with our first customer wins in China and the Netherlands. We now have sold 3PAR InServ platforms into 18 countries worldwide.
Over the last few months, we've extended our integration plans with VMware as we continue to build out what we believe to be the strongest virtualized utility computing platform in the industry. 3PAR participated in VMware's introduction of its Site Recovery Manager Solution with the announcement of the 3PAR Replication Adapter.
This product integrates VMware's Site Recovery Manager with 3PAR's remote copy replication facility to provide an end-to-end disaster recovery solution for utility computing IT architectures. This can form the basis of resilient cloud computing delivery models to service providers as well as enabling self-service computing for large-scale enterprises and government organizations.
In addition, we recently announced the 3PAR Thin Copy Desktop solution for VMware's Virtual Desktop infrastructure, which lets customers provision hundreds of high-performance virtual desktops that consume only a fraction of the bandwidth and storage capacity that would otherwise have to be used with traditional storage approaches. This integrated solution extends utility computing-based IT architectures to efficiently handle the user interface for both self-service and cloud computing models.
We continue to encourage environmental responsibility, most recently with a new program called the 3PAR Virtual Technology Incentive Program, or VTIP. It combines the efficiency-related benefits of 3PAR Utility Storage and our previously announced carbon-neutral storage program with new financial incentive from selected utilities companies.
As part of this VTIP program, the Pacific Gas & Electricity Utility, PG&E, in recognition of 3PAR's energy-saving storage virtualization and Thin Provisioning technology, now offers energy rebates to qualifying 3PAR customers in Northern California. Customers now have an even greater financial incentive to be environmentally conscious. We're actively exploring extending this program into areas served by other utilities.
During this quarter we maintained our momentum in cloud computing with Terremark, a leading managed hosting provider, announcing that 3PAR Utility Storage was the foundation for its new infrastructure utility computing platform that offers shared infrastructure services.
We also became a strategic supply to DataPipe, another leading hosting service provider. In addition, after thorough competition we were awarded a win at the new operational standard for all mid-tier storage at salesforce.com, an acknowledged leader in the SaaS segment, as well as the new standard platform for all engineering and development within the account.
We also announced customer success stories with NASA Ames Kepler Project to search for new Earth-like planets; NewsGator, a SaaS pioneer in really simple syndication; or RSS technology, for the web; and Demand Media, a web 2.0 social media company. Our repeat business from existing customers continued to be extremely healthy with 81% of our business in the first fiscal quarter coming from existing customers, excluding support-related revenue.
In addition, we had excellent success with new business wins this quarter. Before turning to Adriel for the details of the financial results, I'd like to congratulate the 3PAR team for their continued...
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