Data Domain: Fiscal 2Q08 Financial Results

Data Domain, Inc. announced results for its second quarter ended June 30, 2008. Net revenue for the second quarter of 2008 was $61.2 million, an increase of 16% from the first quarter of 2008 and an increase of 131% from the second quarter of 2007.

Under U.S. generally accepted accounting principles (GAAP), Data Domain posted a net income of $1.7 million for the second quarter of 2008, or $0.03 per diluted share. This compares to GAAP net income of $2.7 million, or $0.04 per diluted share in the immediately preceding first quarter of 2008, and a GAAP net loss of $1.2 million, or $0.12 per diluted share in the second quarter of 2007.

Excluding the impact of stock-based compensation and related taxes in all periods, the non-GAAP net income for the second quarter of 2008 was $6.5 million, or $0.10 per diluted share, compared to non-GAAP net income of $7.7 million, or $0.11 per diluted share in the immediately preceding first quarter of 2008, and non-GAAP net income of $0.9 million, or $0.09 per diluted share in the second quarter of 2007.

"Our results for the second quarter of 2008 included record revenues, strong gross margins and significant growth in our customer base, which has more than doubled in the past year," said Frank Slootman, president and chief executive officer of Data Domain. "Approximately 340 new customers were added during this past quarter, bringing Data Domain’s cumulative customer count to over 2,100 worldwide. Demand was strong for our new high end product, the DD690, which is the industry’s highest performance inline deduplication storage system for backup and other nearline applications. The DD690, in combination with our DD120 remote office appliance and our advanced replication capabilities, positions Data Domain to address the full range of needs for large distributed enterprises."

"Data Domain has again executed to plan, exceeding its revenue targets for the quarter, while continuing to invest in its infrastructure for growth," added Michael Scarpelli, chief financial officer for Data Domain. "GAAP net income was $1.7 million and gross margins were strong at 72%. In addition, we achieved operating profit while hiring an additional 87 employees, bringing total headcount to 614, and we continued to be cash flow positive."

Second Quarter Highlights

• In June 2008, Data Domain announced its Data Domain Retention Lock software option, the industry’s first software to allow file locking for IT regulatory governance with high throughput inline deduplication.
• Also in June 2008, the Company announced enhancements to its enterprise VTL software offering that simplify the provisioning and management of its VTL interface and incorporate support for multiple 4 GB/s Fibre Channel interfaces. In addition, Data Domain announced that its VTL software has now been certified for use with a wide range of additional protection software offerings from industry leading vendors such as Oracle, IBM, HP and CommVault.
• In May 2008, Data Domain announced the DD690, the industry’s highest performance inline deduplication storage system, further validating the long term scalability of its SISL (Stream-Informed Segment Layout) scaling architecture and enhancing the Company’s ability to address the needs of increasingly larger enterprises and data centers.
• In May 2008, TheInfoPro’s Wave 10 European Storage Study cited Data Domain as the ‘top deduplication vendor in-plan’ among IT storage users at European large enterprises.
• During the second quarter of 2008, Data Domain’s customer count passed the 2,000 mark. After passing the 1,000 customer milestone as of June 2007, in the past year the Company has doubled the number of customers that have purchased the Company’s products since 2004.