Voltaire Presents Continued Growth in Revenues and Profitability in Second Quarter 2008
Voltaire Presents Continued Growth in Revenues and Profitability
in Second Quarter 2008
Revenues up 46% YoY to $17.1 million; Gross margin reaches record 54%
Continue to generate net income
BILLERICA, Mass. and HERZLIYA, Israel – July 30, 2008 – Voltaire Ltd. (NASDAQ: VOLT), a leading provider of grid backbone solutions for data centers, today announced financial results for the three-month period ended June 30, 2008.
Second Quarter Highlights (compared to second quarter 2007)
- Revenues up 46% reaching $17.1 million
- Gross margin reaches record 54.5%, compared to 39.6% in second quarter 2007
- Non-GAAP net income reaches $0.8 million; GAAP net income totals $0.4 million
- Strong increase in order generation in financial services, manufacturing and life science vertical markets
- Introduce third quarter revenue guidance of $17–$18 million; non-GAAP EPS $0.02 - $0.04
Revenues for the second quarter of 2008 totaled $17.1 million, an increase of 46% compared to $11.7 million in the second quarter 2007.
Gross profit for the second quarter of 2008 totaled $9.3 million, an increase of 101% compared to $4.6 million in the second quarter 2007. Gross profit, as a percent of revenues, for the second quarter of 2008, totaled 54.5%, a substantial increase from the 39.6% gross profit, as a percent of revenues, for the second quarter 2007.
Operating profit for the second quarter of 2008 totaled $0.3 million, an improvement from the GAAP operating loss of $1.3 million in the second quarter of 2007. Net profit for the second quarter of 2008 totaled $0.4 million, or $0.02 per diluted share, compared to a net loss, after non-cash accretion of redeemable preferred shares, of $6.8 million, or $9.79 loss per diluted share, in the second quarter of 2007.
Operating profit, on a non-GAAP basis, for the second quarter of 2008 totaled $0.7 million, a substantial increase compared to the non-GAAP operating loss of $1.0 million in the second quarter of 2007.
Net income, on a non-GAAP basis, for the second quarter of 2008 totaled $0.8 million, or $0.04 per diluted share, compared to a non-GAAP net loss of $1.0 million, or $0.07 loss per diluted share, in the second quarter 2007.
“This quarter our three pronged growth strategy comprised of our vertical market approach, OEM partnerships and leading and differentiated products contributed to our strong business and financial performance. We continued to see demand from our main commercial verticals with orders from the financial services vertical doubling over the previous quarter adding more than 10 new customers, closely followed by strong order growth in both the manufacturing and life science verticals,” said Ronnie Kenneth, Chairman and CEO of Voltaire.
“In terms of financial performance, we continue to execute, presenting once again healthy year over year growth in all our financial parameters. Since going public just over a year ago, we have showed steady growth and execution by presenting strong quarterly financial results that are clearly in line with our defined long term targets,” added Mr. Kenneth.
Outlook
Revenues for the third quarter of 2008 are expected to be in the range of $17 - $18 million, with revenues for the nine months of 2008 expected to be in the range of $50.7 – $51.7 million, an increase of 43% over the nine months 2007. Earnings per share, on a non-GAAP basis, in the third quarter 2008 expected to be in the range of $0.02 to $0.04 per share. Revenues in the second half of the year are expected to be seasonally stronger than the first half of the year.
Conference Call Details
The Company will be hosting a conference call later today, at 10:00 am ET. On the call, management will review and discuss the results 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: 1-888-407-2553
UK Dial-in Number: 0-800-917-5108
Israel Dial-in Number: 03-918-0650
International Dial-in Number: +972-3-918-0650
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 investor relations section of Voltaire's website – www.voltaire.com, at least 10 minutes before the conference call is due to commence. A replay of the call will be available starting several hours following the call. The replay will be accessible under the Investor Relations section 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 non-cash equity-based compensation charges recorded in accordance with SFAS 123R, the non-cash expense recorded in relation to the accretion of redeemable convertible preferred shares, expenses related to changes in fair value of outstanding warrants, the amortization of deferred charges on these warrants and the $2.1 million expense recorded in Q1-2008 under cost of revenues for the one-time repayment 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 an understanding of the 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.
Accretion of Redeemable Convertible Preferred Shares
The charge for the accretion of redeemable convertible preferred shares represents a non-cash charge to the income statement because preferred shareholders had the option to put their shares back to the company at the shares' current fair market value. As the put option was eliminated when the shares converted into ordinary shares at the IPO, the charge in 2007 represents the change in value of those preferred shares accrued through to the IPO date, July 25th 2007, based upon the initial public offering (IPO) valuation. The entire balance in temporary equity has now been rolled into additional paid in capital on the balance sheet.
About Voltaire
Voltaire (NASDAQ: VOLT) designs and develops server and storage switching and software solutions that enable high-performance grid computing within the data center. Voltaire refers to its server and storage switching and software solutions as the Voltaire Grid Backbone™. Voltaire’s products leverage InfiniBand technology and include director-class switches, multi-service switches, fixed-port configuration switches, Ethernet and Fibre Channel routers and standards-based driver and management software. Voltaire’s solutions have been sold to a wide range of end customers including governmental, research and educational organizations, as well as enterprises in the manufacturing, oil and gas, entertainment, life sciences and financial services industries.
Founded in 1997, Voltaire Ltd. is headquartered in Herzliya, Israel, and has its U.S. headquarters in Billerica, Massachusetts.
Forward Looking Statements
Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the Voltaire's plans, objectives and expectations for future operations and are based upon management's current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. These factors include, but are not limited to, those discussed under the heading "Risk Factors" in Voltaire’s annual report on Form 20-F filed with the Securities and Exchange Commission on May 5, 2008. These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.