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 /CNW/ - 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.
    




For further information:

For further information: Netezza Corporation Investor Contact: Patrick
J. Scannell, Jr., +1-508-665-4623 Senior Vice President & Chief Financial
Officer ir@netezza.com or Media Contact: Virginia Lux, +1-508-665-5794
Director of Marketing Communications vlux@netezza.com

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