BakBone: Fiscal 3Q10 Financial Results

(in US$ millions)	3Q09	3Q10	9 mo. 09	9 mo. 10
Revenues	14.3	15.2	41.6	47.1
*Growth*		6%		*13%*
Net income (loss)	0.6	0.6	(4.5)	2.4

BakBone Software, Inc. announced its financial results for the third quarter of fiscal 2010, ended December 31, 2009.

Third Quarter Fiscal 2010 financial
and operational highlights include:

GAAP Revenues $15.2 million
Operating Income $0.8 million
Net Income $0.6 million
Net Income per Share $0.01
Total Bookings $15.3 million

"Our third fiscal quarter results demonstrate the success of our focus on managing the business for profitability, while we continue to make investments in ColdSpark and other growth opportunities," said Jim Johnson, president and CEO, BakBone. "We reported a six percent increase in revenue in the recent third fiscal quarter compared with the same quarter last year and generated a profit of $0.6 million. Our bookings and GAAP revenues reflected strength in Europe and Asia, as well as strong maintenance contract renewals from existing customers across geographies."

"The improvement to positive operating income compared with a loss the prior year reflected significantly reduced operating expenses overall. We continued to make strategic investments in R&D and sales, and marketing initiatives that should further position BakBone as a leader in the enterprise messaging and infrastructure space, as well as in its core backup and recovery business," continued Mr. Johnson.

In mid-October, the Company introduced the newest version of its flagship product NetVault: Backup and new disk-based backup and deduplication options with NetVault: SmartDisk. NetVault: SmartDisk is based on BakBone’s Open Data Protection Platform, which offers more affordable, long-term disk-based storage to customers with additional features such as data deduplication. "Our new NetVault: Backup and NetVault: SmartDisk product offerings have been well received in the market and we are delivering this new version to our client base around the world," commented Mr. Johnson.

During the quarter, ColdSpark introduced a new managed services offering for e-mail management and delivery that will help customers reduce the costs and complexity of managing e-mail infrastructures. This, along with the new versions of the ColdSpark SparkEngine, Compliance Catalyst and MailFusion that were launched in October, is targeted at ColdSpark’s key markets including financial services, healthcare and other regulated industries.

"ColdSpark expanded its footprint with a well-known global financial services company in the third quarter. We continue to focus on expanding our presence with global healthcare companies. We believe we are making good progress in our pursuit of new accounts, and as we’ve stated previously, the e-mail management and infrastructure business has a relatively long selling cycle and is characterized by large orders and unpredictable timing. As a result of anticipated lower near-term bookings from ColdSpark and slowness in the new license bookings for backup and recovery products in North America, we have revised our guidance for expected consolidated bookings in fiscal 2010 to $56.5 to $57.5 million."

"We remain very optimistic about the opportunities for ColdSpark and for backup and recovery and are working aggressively to grow these businesses. We are committed to sustained profitability, while we invest the necessary resources to maintain our technological lead and drive a more efficient, productive sales and marketing effort. We are focused on execution and believe that our success will generate increased revenue and profitability and enhanced valuation for BakBone shareholders," concluded Mr. Johnson.

Financial Results
Total revenue grew six percent to $15.2 million in the third quarter of fiscal 2010 from $14.3 million in the third quarter of fiscal 2009. Operating income totaled $0.8 million for the third quarter ended December 31, 2009, compared with an operating loss of $1.1 million in the third quarter of the prior fiscal year. The increase in operating income in the third quarter ended December 31, 2009, was the result of higher revenue and a significant reduction in general and administrative costs primarily associated with accounting and auditing fees incurred in the prior fiscal year.

The Company reported net income of $0.6 million, or $0.01 per share, in the third quarter compared with net income of $0.6 million, or $0.01 per share, in the third quarter last year.

For the nine months ended December 31, 2009, revenue grew 13% to $47.1 million compared with $41.6 million through the nine months ended December 31, 2008. Net income for the recent nine-month period totaled $2.4 million, or $0.02 per diluted share, compared with a net loss of $4.6 million for the comparable period in the prior year, or $(0.07) per share.

Total cash at December 31, 2009, totaled $5.7 million.