EX-99.1 2 b79879exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(LOGO)
NETEZZA ANNOUNCES FOURTH QUARTER AND FULL FISCAL YEAR 2010
FINANCIAL RESULTS
Marlborough, MA — March 3, 2010 — Netezza Corporation (NYSE: NZ), the global leader in data warehouse and analytic appliances, today reported its financial results for the fourth quarter and full fiscal year ended January 31, 2010.
“I am very pleased with our ability to achieve revenue growth over this past year and in our fourth quarter particularly given the challenging economic environment that encompassed most of the year,” said Jim Baum, Netezza’s Chief Executive Officer. “Our continuing innovation with the release of our TwinFin™ platform mid-year and, more recently the announcement of our TwinFin i-Class™ appliance, position us well competitively to benefit from the continuing growth of the data warehousing and analytics market.”
Total revenue for the fourth quarter of fiscal 2010 increased six percent to $53.6 million compared with $50.6 million for the same period one year ago. Total revenue for the full fiscal year 2010 increased two percent to $190.6 million compared with $187.8 million for fiscal year 2009.
GAAP net income for the fourth quarter of fiscal 2010 was $2.8 million, or $0.04 per diluted share, compared to GAAP net income of $22.8 million, or $0.37 per diluted share, for the fourth quarter of fiscal 2009 (which included a significant tax benefit of $20.0 million, or $0.32 per diluted share, related to the release of a valuation allowance on deferred tax assets). GAAP net income for the full fiscal year 2010 was $4.2 million, or $0.07 per diluted share, compared to GAAP net income of $31.5 million, or $0.50 per diluted share, for fiscal year 2009.
Non-GAAP net income for the fourth quarter of fiscal 2010 was $5.0 million, or $0.08 per diluted share, compared to non-GAAP net income of $5.3 million, or $0.09 per diluted share, for the fourth quarter of fiscal 2009. Non-GAAP net income for the full fiscal year 2010 was $11.8 million, or $0.19 per diluted share, compared to non-GAAP net income of $20.0 million, or $0.32 per diluted share, for fiscal year 2009.
Non-GAAP net income and non-GAAP net income per diluted share exclude non-cash stock-based compensation, amortization of acquired intangible assets, the net mark-to-market impact related to an unrealized gain on a put option received for Auction Rate Securities (ARS) offset by the unrealized loss on the underlying ARS, an income tax benefit resulting from the release of a valuation allowance on deferred tax assets, gain on bargain purchase and the related income tax effect of excluding these expenses. 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.”

 

 

Financial Commentary
“We are very pleased with our fourth quarter and full year results,” said Patrick Scannell, Senior Vice President and Chief Financial Officer of Netezza. “We showed reasonable revenue growth and gross margin improvement year-over-year and continued to invest in our products and distribution. Our visibility has improved in recent quarters and we are therefore resuming our practice of providing annual financial guidance. We currently expect we will achieve 20% revenue growth in our fiscal year 2011 over fiscal year 2010. In fiscal year 2011, we will continue to invest in our business and we expect operating margin improvement to accelerate in the second half of the year.”
Conference Call Information
Date: March 3, 2010
Time: 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time)
Toll-free North America: +1-866-730-5764
International dial-in number: +1-857-350-1588
Passcode: 14472900
A telephonic replay of the conference call will also be available two hours after the call and will be available 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 18257982.
The webcast will be accessible from the “Investor Relations” section of Netezza’s Web site (http://www.netezza.com). The webcast will be archived on Netezza’s Web site for a period of one year.
About Netezza Corporation (NYSE: NZ)
Netezza Corporation is the global leader in data warehouse and analytic appliances that dramatically simplify high-performance analytics across an extended enterprise. Netezza’s technology enables organizations to process enormous amounts of captured data at exceptional speed, providing a significant competitive and operational advantage in today’s data-intensive industries, including digital media, energy, financial services, government, health and life sciences, retail and telecommunications. Netezza is headquartered in Marlborough, Massachusetts and has offices in Northern Virginia, the United Kingdom, Germany, France, Japan, Korea, Australia and Singapore. For more information about Netezza, please visit www.netezza.com.
Forward Looking Statements
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; our ability to develop and introduce new products and manage product transitions; 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” sections of Netezza’s Annual Report on Form 10-K for the year ended January 31, 2009 and Netezza’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2009, each of which is on file with the SEC and available in the investor relations section of Netezza’s Web site at http://www.netezza.com and on the SEC Web site at http://www.sec.gov. In addition, any forward-looking statements included in this press release represent our views as of March 3, 2010. 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 March 3, 2010.
Use of Non-GAAP Financial Measures
To supplement Netezza’s unaudited condensed consolidated financial statements presented in accordance with GAAP, Netezza is presenting certain non-GAAP measures of financial performance. 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 or future outlook. 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 presented by Netezza exclude non-cash stock-based compensation, amortization of acquired intangible assets, the net mark-to-market impact related to an unrealized gain on a put option received for ARS offset by the unrealized loss on the underlying ARS, an income tax benefit resulting from the release of a valuation allowance on deferred tax assets, gain on bargain purchase and the related income tax effect of excluding these expenses. Because of the varying valuation methodologies and assumptions that companies use under FAS123(R), 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 comparisons with other companies. Because the amount of amortization of acquired intangible assets varies in amount and frequency and is significantly affected by the timing and size of our acquisitions, Netezza’s management believes that excluding amortization of acquired intangible assets allows investors to analyze Netezza’s recurring business over multiple periods. During the fourth fiscal quarter of 2009, a net mark-to-market charge related to an unrealized gain on a put option received in the quarter for ARS offset by the unrealized loss on the underlying ARS was recorded to other income (expense), net. This amount is excluded to aid in comparing current and future operating results with those of past periods. During the fourth fiscal quarter of 2009, an income tax benefit was realized upon the release of a valuation allowance on specific deferred tax assets that was no longer required. This income tax benefit is excluded from non-GAAP operating results to aid in comparing current and future operating results with those of past periods. The gain on bargain purchase, which was recorded in the three months ended July 31, 2009, resulted from the value of identifiable net assets acquired exceeding the value of the purchase price for Netezza’s acquisition of Tizor Systems, Inc. Since Netezza had no gain on bargain purchase in any prior periods and due to the one-time nature of this charge, Netezza is presenting its operating results without this gain to allow for a more meaningful comparison of current periods to prior year 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.
# # #
Netezza®, TwinFin i-Class™, TwinFin™ and the Netezza logo are either registered trademarks or trademarks of Netezza
Corporation. Other names may be trademarks of their respective owners.
Contact
Netezza Corporation
      Investor Contact:
          Patrick J. Scannell, Jr., +1 508-382-8200
          Senior Vice President & Chief Financial Officer
          ir@netezza.com
      or
      Media Contact:
          Glen Zimmerman +1 508-382-8267
          Director, Public Relations
          gzimmerman@netezza.com

 

 

Netezza Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                 
    January 31,     January 31,  
    2010     2009  
Assets
                
 
                
Current assets
                
Cash and cash equivalents
   $ 40,638     $ 111,635  
Short-term marketable securities
     64,020       —  
Accounts receivable
     53,450       34,457  
Inventory
     28,708       18,409  
Deferred tax assets, net
     14,490       12,723  
Restricted cash
     60       379  
Prepaid expenses and other current assets
     4,675       3,160  
 
            
Total current assets
     206,041       180,763  
 
                
Property and equipment, net
     8,469       9,586  
Deferred tax assets, net
     12,048       9,415  
Goodwill
     2,000       2,000  
Intangible assets, net
     4,056       2,935  
Long-term marketable securities
     49,769       49,222  
Restricted cash
     639       739  
Other long-term assets
     575       4,199  
 
            
 
                
Total assets
   $ 283,597     $ 258,859  
 
            
 
                
Liabilities and stockholders’ equity
                
 
                
Current liabilities
                
Accounts payable
   $ 12,604     $ 8,424  
Accrued expenses
     5,906       6,301  
Accrued compensation and benefits
     6,776       6,352  
Current portion of deferred revenue
     49,665       46,356  
 
            
Total current liabilities
     74,951       67,433  
 
Long-term deferred revenue
     8,727       11,979  
Other long-term liabilities
     2,326       2,825  
 
            
 
                
Total liabilities
     86,004       82,237  
 
                
Stockholders’ equity
     197,593       176,622  
 
            
 
                
Total liabilities and stockholders’ equity
   $ 283,597     $ 258,859  
 
            

 

Netezza Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
                                 
    Three months ended     Twelve months ended  
    January 31,     January 31,  
    2010     2009     2010     2009  
Revenue
                                
Product
   $ 38,327     $ 38,062     $ 134,340     $ 143,463  
Services
     15,272       12,517       56,295       44,306  
 
                        
Total revenue
     53,599       50,579       190,635       187,769  
 
                                
Cost of revenue
                                
Product
     14,087       14,968       49,856       57,350  
Services
     4,225       3,670       14,692       12,211  
 
                        
Total cost of revenue
     18,312       18,638       64,548       69,561  
 
                        
 
                                
Gross margin
     35,287       31,941       126,087       118,208  
 
                                
Operating expenses
                                
Sales and marketing
     18,757       14,924       65,939       58,429  
Research and development
     10,125       8,889       41,110       32,557  
General and administrative
     3,566       3,866       15,388       14,633  
 
                        
Total operating expenses
     32,448       27,679       122,437       105,619  
 
                                
 
                        
Operating income
     2,839       4,262       3,650       12,589  
 
                                
Interest income
     281       421       952       4,045  
Interest expense
     16       24       90       40  
Other income (expense), net
     (4 )     (240 )     366       (495 )
 
                        
 
                                
Income before income tax expense (benefit)
     3,100       4,419       4,878       16,099  
 
                                
Income tax expense (benefit)
     253       (18,363 )     688       (15,420 )
 
                        
 
                                
Net income
   $ 2,847     $ 22,782     $ 4,190     $ 31,519  
 
                        
 
                                
Net income per common share:
                                
Basic
   $ 0.05     $ 0.38     $ 0.07     $ 0.53  
Diluted
   $ 0.04     $ 0.37     $ 0.07     $ 0.50  
 
                                
Shares used in per common share calculations:
                                
Basic
     60,925       59,709       60,447       58,967  
Diluted
     63,807       62,334       63,062       62,791  

 

Netezza Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
                                 
    Three months ended     Twelve months ended  
    January 31,     January 31,  
    2010     2009     2010     2009  
Non-GAAP financial measures and reconciliation:
                                
GAAP cost of product revenue
   $ 14,087     $ 14,968     $ 49,856     $ 57,350  
Non-cash stock-based compensation (1)
     15       46       49       176  
Amortization of acquired intangible assets (2)
     97       —       360       4  
 
                        
Non-GAAP cost of product revenue
   $ 13,975     $ 14,922     $ 49,447     $ 57,170  
 
                        
GAAP cost of service revenue
   $ 4,225     $ 3,670     $ 14,692     $ 12,211  
Non-cash stock-based compensation (1)
     99       62       393       227  
Amortization of acquired intangible assets (2)
     88       82       346       275  
 
                        
Non-GAAP cost of service revenue
   $ 4,038     $ 3,526     $ 13,953     $ 11,709  
 
                        
GAAP gross margin
   $ 35,287     $ 31,941     $ 126,087     $ 118,208  
Non-cash stock-based compensation (1)
     114       108       442       403  
Amortization of acquired intangible assets (2)
     185       82       706       279  
 
                        
Non-GAAP gross margin
   $ 35,586     $ 32,131     $ 127,235     $ 118,890  
 
                        
GAAP sales and marketing expenses
   $ 18,757     $ 14,924     $ 65,939     $ 58,429  
Non-cash stock-based compensation (1)
     861       695       3,268       2,535  
Amortization of acquired intangible assets (2)
     73       55       285       119  
 
                        
Non-GAAP sales and marketing expenses
   $ 17,823     $ 14,174     $ 62,386     $ 55,775  
 
                        
GAAP research and development expenses
   $ 10,125     $ 8,889     $ 41,110     $ 32,557  
Non-cash stock-based compensation (1)
     759       538       2,793       2,067  
Amortization of acquired intangible assets (2)
     10       —       40       48  
 
                        
Non-GAAP research and development expenses
   $ 9,356     $ 8,351     $ 38,277     $ 30,442  
 
                        
GAAP general and administrative expenses
   $ 3,566     $ 3,866     $ 15,388     $ 14,633  
Non-cash stock-based compensation (1)
     879       771       3,311       2,768  
Amortization of acquired intangible assets (2)
     1       (1 )     7       19  
 
                        
Non-GAAP general and administrative expenses
   $ 2,686     $ 3,096     $ 12,070     $ 11,846  
 
                        
GAAP operating expenses
   $ 32,448     $ 27,679     $ 122,437     $ 105,619  
Non-cash stock-based compensation (1)
     2,499       2,004       9,372       7,370  
Amortization of acquired intangible assets (2)
     84       54       332       186  
 
                        
Non-GAAP operating expenses
   $ 29,865     $ 25,621     $ 112,733     $ 98,063  
 
                        
GAAP operating income
   $ 2,839     $ 4,262     $ 3,650     $ 12,589  
Non-cash stock-based compensation (1)
     2,613       2,112       9,814       7,773  
Amortization of acquired intangible assets (2)
     269       136       1,038       465  
 
                        
Non-GAAP operating income
   $ 5,721     $ 6,510     $ 14,502     $ 20,827  
 
                        
GAAP other income (expense), net
   $ (4 )   $ (240 )   $ 366     $ (495 )
Impairment loss on investment (3)
     —       228       —       228  
Gain on bargain purchase (6)
     —       —       (365 )     —  
 
                        
Non-GAAP other income (expense), net
   $ (4 )   $ (12 )   $ 1     $ (267 )
 
                        
GAAP income tax expense (benefit)
   $ 253     $ (18,363 )   $ 688     $ (15,420 )
Tax benefit adjustments (4)
     —       19,950       —       19,950  
Income tax effect (5)
     741       —       2,872       —  
 
                        
Non-GAAP income tax expense (benefit)
   $ 994     $ 1,587     $ 3,560     $ 4,530  
 
                        
GAAP net income
   $ 2,847     $ 22,782     $ 4,190     $ 31,519  
Non-cash stock-based compensation (1)
     2,613       2,112       9,814       7,773  
Amortization of acquired intangible assets (2)
     269       136       1,038       465  
Impairment loss on investment (3)
     —       228       —       228  
Tax benefit adjustments (4)
     —       (19,950 )     —       (19,950 )
Income tax effect (5)
     (741 )     —       (2,872 )     —  
Gain on bargain purchase (6)
     —       —       (365 )     —  
 
                        
Non-GAAP net income
   $ 4,988     $ 5,308     $ 11,805     $ 20,035  
 
                        
GAAP net income per common share — basic
   $ 0.05     $ 0.38     $ 0.07     $ 0.53  
Non-cash stock-based compensation (1)
     0.04       0.04       0.17       0.13  
Amortization of acquired intangible assets (2)
     0.00       0.00       0.02       0.01  
Impairment loss on investment (3)
     —       0.00       —       0.00  
Tax benefit adjustments (4)
     —       (0.33 )     —       (0.33 )
Income tax effect (5)
     (0.01 )     —       (0.05 )     —  
Gain on bargain purchase (6)
     —       —       (0.01 )     —  
 
                        
Non-GAAP net income per common share — basic
   $ 0.08     $ 0.09     $ 0.20     $ 0.34  
 
                        
GAAP net income per common share — diluted
   $ 0.04     $ 0.37     $ 0.07     $ 0.50  
Non-cash stock-based compensation (1)
     0.04       0.04       0.16       0.13  
Amortization of acquired intangible assets (2)
     0.01       0.00       0.02       0.01  
Impairment loss on investment (3)
     —       0.00       —       0.00  
Tax benefit adjustments (4)
     —       (0.32 )     —       (0.32 )
Income tax effect (5)
     (0.01 )     —       (0.05 )     —  
Gain on bargain purchase (6)
     —       —       (0.01 )     —  
 
                        
Non-GAAP net income per common share — diluted
   $ 0.08     $ 0.09     $ 0.19     $ 0.32  
 
                        
Shares used in per common share calculations:
                                
Basic
     60,925       59,709       60,447       58,967  
Diluted
     63,807       62,334       63,062       62,791  

 

 

Footnotes – Adjustments
 
(1)   Represents non-cash stock-based compensation expense as follows:
                                 
    Three months ended     Twelve months ended  
    January 31,     January 31,  
    2010     2009     2010     2009  
Cost of product revenue
   $ 15     $ 46     $ 49     $ 176  
Cost of services revenue
     99       62       393       227  
Sales and marketing
     861       695       3,268       2,535  
Research and development
     759       538       2,793       2,067  
General and administrative
     879       771       3,311       2,768  
 
                        
Total non-cash stock-based compensation expense
   $ 2,613     $ 2,112     $ 9,814     $ 7,773  
 
                        
 
(2)   Represents amortization of acquired intangible assets:
                                 
    Three months ended     Twelve months ended  
    January 31,     January 31,  
    2010     2009     2010     2009  
Cost of product revenue
   $ 97     $ —     $ 360     $ 4  
Cost of services revenue
     88       82       346       275  
Sales and marketing
     73       55       285       119  
Research and development
     10       —       40       48  
General and administrative
     1       (1 )     7       19  
 
                        
Total amortization expense
   $ 269     $ 136     $ 1,038     $ 465  
 
                        
 
(3)   Represents net mark-to-market impact related to an unrealized gain on a put option received for ARS offset by the unrealized loss
on the underlying ARS.
                                 
    Three months ended     Twelve months ended  
    January 31,     January 31,  
    2010     2009     2010     2009  
Impairment loss on investment
   $ —     $ 228     $ —     $ 228  
 
                        
 
(4)   Represents income tax benefit resulting from the release of the tax valuation allowance on deferred tax assets that is no longer deemed necessary.
                                 
    Three months ended     Twelve months ended  
    January 31,     January 31,  
    2010     2009     2010     2009  
Utilization of deferred tax credit
   $ —     $ (836 )   $ —     $ (836 )
Benefit from reclass of valuation allowance
     —       20,786       —       20,786  
 
                        
Total tax benefit adjustments
   $ —     $ 19,950     $ —     $ 19,950  
 
                        
 
(5)   Income tax effect of excluding stock-based compensation, amortization of acquired intangible assets and gain on bargain purchase.
There was no adjustment for the comparable period in FY2009.
 
(6)   Represents gain on bargain purchase resulting from the value of identifiable net assets acquired exceeding the value of the purchase price for Netezza’s acquisition of Tizor Systems, Inc.