Isilon: Fiscal 2Q09 Financial Results

(in US$ millions)	2Q08	2Q09	6 mo. 08	6 mo. 09
Revenues	28.1	29.0	52.3	55.9
*Growth*		+3%		*+7%*
Net income (loss)	(5.8)	(3.7)	(15.9)	(14.1)

Isilon Systems, Inc. announced its financial results for the second quarter ended June 30, 2009. Revenue for the quarter was $29.0 million, up 8 percent sequentially compared with $26.9 million in the first quarter of 2009 and up 3 percent compared with $28.2 million in the second quarter of 2008.

"Isilon’s solid second quarter revenue growth and close management of operating expenses have enabled us to continue our steady progress toward profitability," said Sujal Patel, President and Chief Executive Officer, Isilon Systems. "Our strong gross margin in Q2 and improving EPS primarily reflect improvements in our supply chain and services management. They also reflect a growing awareness of the value that Isilon’s scale-out NAS platform is creating for customers. At a time when enterprise IT buyers are required to meet ever-growing business demands with shrinking capital and operating budgets, Isilon’s scale-out NAS solutions provide clear and compelling economic and business value."

Financial results for the second quarter of 2009
included the following:

Gross margin for the second quarter of 2009 was 57.0%, compared with 40.3% in the first quarter of 2009 and 56.9% in the second quarter of 2008. Gross margin for the first quarter of 2009 was reduced by 14 percentage points due to a non-cash inventory write-down of $3.8 million.
Net loss for the second quarter of 2009 was $3.7 million, or $0.06 per share, compared with net loss of $10.4 million, or $0.16 per share in the first quarter of 2009. Net loss in the second quarter of 2008 was $5.8 million, or $0.09 per share. Non-GAAP net loss for the second quarter was $2.0 million, or $0.03 per share, compared with non-GAAP net loss of $8.9 million, or $0.14 per share in the first quarter of 2009. Non-GAAP net loss in the second quarter of 2008 was $4.3 million, or $0.07 per share. GAAP and non-GAAP net loss for the first quarter of 2009 includes $3.8 million, or $0.06 per share, related to the non-cash inventory write-down.
As of June 30, 2009, cash, cash equivalents and marketable securities were $75.5 million, compared with $76.3 million as of March 31, 2009.

Comments

Abstracts of the earnings call transcript:

Bill Richter, interim CFO:

"Geographically, the breakdown was 71%, North America and 29%, International. Our International business made up most of the sequential gains in second quarter revenue, particularly the Asia Pacific territory. On North America and EMEA were about flat with Q1. Having said that from an order trend perspective, North America was strongest followed by Asia while EMEA continue to be challenging.

"In Q2, sales through channel partners contributed 57% of total revenue; up from 51% in Q1. In North America, sales through channel partners contributed 45% of revenue; up from 37% in Q1 and up from 30% in the fourth quarter of last year

Sujal Patel, president and CEO:

"I was encouraged to see that the number ticked up from 48 new customers in Q1 to 57 new customers in Q2.

"And our competition continues to be largely against NetApp and EMC; NetApp more often than EMC."