Overland: Fiscal 4Q14 Financial Results

Overland Storage, Inc. reported financial results for its fiscal 2014 fourth quarter and full fiscal year ended June 30, 2014.

“We are pleased to report that we are continuing to execute, innovate and lead the transformation of Overland Storage,” said Eric Kelly, president and CEO. “We are making significant progress on our strategy to increase our scale, broaden our core product portfolio, and invest in new and innovative next-generation technologies that will enable us to evolve into an industry leader that delivers breakthrough data protection, virtualization, enterprise mobility, and cloud offerings. Our acquisition of Tandberg Data in January enabled us to build a solid foundation in storage products, and should provide a clear path to profitability. The planned merger of Overland and Sphere 3D combines our best-of-class storage solutions with Sphere3D’s next-generation technologies for desktop and application virtualization. This creates a strong foundation for the company to emerge as a new, contemporary challenger in the fast-growing virtualization, mobile, cloud and storage markets.“

The following financial highlights for the fourth fiscal quarter and full fiscal year include results attributable to the addition of the Tandberg products to Overland’s product portfolio in January 2014:

• Net revenue for the fourth quarter of FY2014 was $24.2 million, up 20% sequentially and up 101% year over year. Net revenue for FY2014 was $65.7 million, up 37% year over year.
• Product revenue for the fourth quarter of FY2014 was $19.8 million, up 26% sequentially and up 162% year over year. Product revenue for FY2014 was $48.4 million, up 68% year over year.
• Disk system revenue for the fourth quarter was $11.5 million, up 36% sequentially
• RDX revenue for the fourth quarter was $8.2 million, up 31% sequentially
• SnapServer revenue for the fourth quarter was $2.4 million, up 14% sequentially
• Tape revenue for the fourth quarter of FY2014 was $4.0 million, up 4% sequentially

The following financial results for the fiscal quarter ended June 30, 2014 reflect contribution from the Tandberg acquisition, which contribution is not reflected in the comparative results for the fourth quarter of fiscal 2013:

• Net revenue for the fourth quarter of fiscal 2014 was $24.2 million, compared to $12.1 million for the fourth quarter of fiscal 2013 and $20.2 million in the third quarter of fiscal 2014. Product revenue for the fourth quarter of fiscal 2014 was $19.8 million, compared to $7.6 million for the fourth quarter of fiscal 2013 and $15.8 million in the third quarter of fiscal 2014.
• Gross margin for the fourth quarter of fiscal 2014 was 26.9%, compared to 36.5% for the fourth quarter of fiscal 2013 and 32.5% in the third quarter of fiscal 2014.
• Operating expenses for the fourth quarter of fiscal 2014 were $15.0 million, compared to $9.4 million in the fourth quarter of fiscal 2013 and $13.4 million for the third quarter of fiscal 2014.
• Stock compensation expense was $1.2 million in the fourth quarter of fiscal 2014, compared to $1.1 million in the fourth quarter of fiscal 2013 and $1.0 million in the third quarter of fiscal 2014. Depreciation and amortization was $1.0 million in fourth quarter of fiscal 2014, compared to $0.3 million in the fourth quarter of fiscal 2013 and $0.9 million in the third quarter of fiscal 2014.
• Net loss for the fourth quarter of fiscal 2014 was $7.4 million, or a loss of $0.42 per share, compared to a net loss of $5.4 million, or a loss of $0.90 per share, in the fourth quarter of fiscal 2013 and a net loss of $6.6 million, or a loss of $0.44 per share, in the third quarter of fiscal 2014.

The following financial results for the fiscal year ended June 30, 2014 reflect contribution from the Tandberg acquisition for a partial period from January 22, 2014 through June 30, 2014, which contribution is not reflected in the comparative results for the prior year:

• Net revenue for fiscal 2014 was $65.7 million, compared to $48.0 million for fiscal 2013. Product revenue for fiscal 2014 was $48.4 million, compared to $28.8 million for fiscal 2013.
• Gross margin for fiscal 2014 was 30.9%, compared to 35.0% for fiscal 2013.
• Operating expenses for fiscal 2014 were $44.3 million, compared to $35.7 million for fiscal 2013.
• Stock compensation expense was $4.0 million for fiscal 2014, compared to $4.8 million for fiscal 2013. Depreciation and amortization for fiscal 2014 was approximately $2.6 million, compared to $1.2 million for fiscal 2013.
• Net loss for fiscal 2014 was $22.9 million, or a loss of $1.99 per share, compared to a net loss of $19.6 million, or a loss of $3.41 per share, for fiscal 2013.
• Cash and short-term investments at June 30, 2014 were $12.1 million, compared to cash of $8.8 million at June 30, 2013. At June 30, 2014, the company had $5.4 million outstanding under its credit facilities and $14.5 million outstanding under its notes from related parties.

Recent Business Highlights:

• Expanded Tandberg Data RDX disk-based removable storage systems with enterprise functionality.
• Launched GuardianOS 7.6 release enterprise storage software in new desktop design for small businesses and distributed environments.
• Announced collaboration with BitTorrent, Inc. to embed BitTorrent Sync within Overland’s award-winning SnapServer NAS product line.
• As part of the existing partnership with Sphere 3D, launched V3 hyper-converged appliances designed to address the rapidly growing virtualization and cloud markets.
• Settled all claims in our patent infringement litigation filed against BDT Media Automation GmbH, and entered into a patent cross-license agreement with BDT.