Voltaire: Fiscal 4Q09 Financial Results

Voltaire Ltd. announced financial results for the three- and twelve-month periods ended December 31, 2009.

Main Fourth Quarter Highlights:

• Operating loss on a GAAP basis, narrowed to $0.4 million; operating profit on a non-GAAP basis of $0.3 million;
• Net loss on a GAAP basis, narrowed to $0.5 million; net income on a non-GAAP basis, of $0.3 million;
• Cash, cash equivalents and marketable securities as of December 31, 2009 totaled $47.5 million; and
• Introduced 2010 annual revenue guidance range of $66-69 million, an increase of 31-37% year over year.

Fourth Quarter Results

Revenues for the fourth quarter of 2009 totaled $17.4 million, an increase of 32% compared with $13.2 million reported in the fourth quarter of 2008.

Gross profit for the fourth quarter of 2009 totaled $8.7 million, an increase of 18% compared to $7.3 million in the fourth quarter of 2008. Gross margin for the fourth quarter of 2009 totaled 50.0%, compared to 55.5% gross margin for the fourth quarter of 2008. The comparatively lower gross margin was primarily due to the product mix sold in the quarter.

Operating loss for the fourth quarter of 2009 totaled $0.4 million, a substantial improvement compared to the $2.4 million operating loss in the fourth quarter of 2008. On a non-GAAP basis, the Company reported operating income of $0.3 million compared with an operating loss of $1.7 million in the fourth quarter of 2008.

Net loss for the fourth quarter of 2009 totaled $0.5 million, or $0.02 loss per share. This represents a continued improvement from the $2.4 million net loss, or $0.12 loss per share, in the fourth quarter of 2008.

Net income, on a non-GAAP basis, for the fourth quarter of 2009 totaled $0.3 million, or $0.01 per diluted share, compared to a net loss, on a non-GAAP basis, of $1.7 million, or $0.08 loss per share, in the fourth quarter of 2008.

Cash, cash equivalents and marketable securities as of December 31, 2009, totaled $47.5 million, compared to $50.4 million as of September 30, 2009.

Full Year 2009 Results

Revenues for the twelve months ended December 31, 2009 totaled $50.4 million, compared to revenues of $61.6 million in 2008.

Gross profit for the year 2009 totaled $26.2 million, compared to $30.6 million in 2008. Gross margin for the year 2009 totaled 51.9%, compared to 49.7% in 2008. Operating loss for the year 2009 totaled $10.6 million, compared to $5.7 million in 2008.

Net loss for the year 2009 totaled $11.0 million, or $0.52 loss per share, compared to a net loss of $5.0 million, or $0.24 loss per share in 2008. On a non-GAAP basis, net loss for the full year 2009 totaled $8.5 million, or $0.41 loss per share, compared to a non-GAAP net loss of $0.9 million, or $0.05 loss per share, in 2008.

Mr. Ronnie Kenneth, Chairman and CEO of Voltaire commented: “During the fourth quarter of 2009, we continued to present a strong business and financial performance, ending the year with over $50 million in revenues, and a return to non–GAAP profitability in the fourth quarter.”

Mr. Kenneth added: “Throughout 2009, Voltaire focused on the long-term, by strengthening its core business fundamentals to position the Company to capitalize on current data center trends. During the year, we forged new server OEM partnerships, enhancing our presence in existing and new verticals, as well as expanded our geographic presence in Asia, where we are witnessing growing demand for our solutions. Furthermore, we built out our product portfolio, introducing several new products, and we enter 2010 with an end-to-end portfolio of switching products and first-in-kind application acceleration and management software that strongly differentiates Voltaire. As a result, Voltaire presented three consecutive quarters of growth, ending the year with a healthy pipeline."

"Looking ahead, I believe 2010 will be an inflection point for Voltaire and our markets. The principles used in high performance computing of scale-out, low latency and application acceleration is becoming the foundation for next generation, virtualized data centers and the rapidly expanding cloud computing opportunity. We believe that we are well-positioned at the forefront of a coming widespread infrastructure refresh in the data center. We aim to capitalize on this potential and I am excited about the opportunities that lie ahead for Voltaire in the coming months and years."

"I would like to take this opportunity to thank Kevin Kilroy, a director of Voltaire’s Board since January 2002, who resigned from the Board for personal reasons effective January 1, 2010, for his significant contribution to the Company over the years," added Mr. Kenneth.

Guidance for the full year of 2010

Management expects that revenues for the full year of 2010 to be in range of $66 – $69 million, reflecting year over year revenue growth of 31 – 37% with the second half of the year, as usual, being seasonally stronger than the first.

Full year gross margin is expected to be in the range of 51-53%, similar to 2009. Gross margin in the second half of the year is expected to be higher than the first half of the year.

Non-GAAP operating expenses are expected to increase by up to 15% to between $38-39.5 million in 2010. In 2009, the Company embarked on deep cost cutting in order to weather the global economic crisis. The increase in operating expenses in 2010 is in order to enable the Company to fully capitalize on the current and emerging market opportunities, as well as support the accelerated forecasted growth of both the InfiniBand and Ethernet-based product lines. The Company targets a sustainable non-GAAP operating profit by Q4 2010.