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OCZ: Fiscal 1Q12 Financial Results

SSD revenues at record $69 million, +418% compared with 1Q11

(in US$ millions) 1Q11  1Q12
 Revenues 34.3  73.8
 Growth   115%
 Net income (loss) (4.8) (9.1)

OCZ Technology Group, Inc. reports its first quarter results for the fiscal year 2012 (Q1’12), which ended on May 31, 2011.

Q1’12 Financial Highlights

  • Net revenues in Q1’12 were a record $73.8 million, and increased
    115% compared with net revenues of $34.3 million reported in Q1’11, and
    increased 14% compared with the $64.6 million reported in Q4’11
  • SSD revenues reached a record $69.1 million, an increase of 418%
    compared with Q1’11 SSD revenues of $13.3 million, and a 19% increase
    compared with Q4’11 SSD revenues of $58.2 million and represented 94% of
    total revenue compared to 39% in first quarter of 2011
  • Gross margin increased to 20.0% versus 12.1% in Q1’11, and 16.6% in Q4’11
  • Non-GAAP operating profit of $1.0 million and non-GAAP net income per share of $0.01
  • Raised $93.7 million in net proceeds from its April follow-on offering

GAAP operating loss for Q1’12 was $4.3 million compared to a GAAP
operating loss of $3.4 million in Q1’11. Non-GAAP operating profit for
Q1’12 was $1.0 million compared to a non-GAAP operating loss of $2.2
million in Q1’11.

GAAP net loss for Q1’12 was $9.1 million or $0.20 loss per share
compared to a GAAP net loss of $4.8 million or $0.19 loss per share in
Q1’11. Non-GAAP net income for Q1’12 was $0.5 million, or $0.01 per
share as compared to a non-GAAP net loss for Q1’11 of $2.7 million, or
$0.11 loss per share. The increased GAAP loss was primarily due to
increased non-cash expenses for warrant revaluation and stock based
compensation, along with Indilinx acquisition related costs.

"We are proud to have achieved our 7th consecutive quarter of
sequential revenue growth for our solid state drive products as SSD
revenues grew to $69.1 million from $13.3 million during the same period
last year
," said Ryan Petersen, CEO of OCZ Technology. "We
accomplished a great deal in the first quarter, completing the
acquisition of Indilinx, raising a substantial amount of working
capital, increasing our gross margins, and reporting non-GAAP net income
."

"Our strengthened balance sheet coupled with the Indilinx acquisition
will allow us to realize substantial cost savings going forward.
Moreover, we continue to release award-winning new products while
enhancing our technology through investment in R&D. We are also
expanding our sales infrastructure which helps position OCZ for
continued growth in the higher margin enterprise and server segments
."

     
Quarterly net revenues by product groups
      
by delivery location ($000)’s
(Unaudited):
ocz_1q12_fiscal_540
(a) Beginning in 1QFY12 Memory revenue is immaterial and included in Power Supplies/Other 

Recent Business Highlights:

  • Acquired Indilinx Co., Ltd, a privately-held fabless provider of
    SSD controllers and firmware, which is expected to expand OCZ’s presence
    in the embedded, hybrid storage, and industrial markets. The
    acquisition is also intended to broaden OCZ’s flash controller related
    intellectual property portfolio.
  • Achieved a performance benchmark of 1.0 million 4k write IOPS and
    1.5 million maximum IOPS as we demonstrated our latest enterprise PCIe
    Z-Drive R4 utilizing our second generation Virtualized Controller
    Architecture(TM) (VCA). This PCIe based enterprise solution enables
    maximum performance with enterprise class reliability and full PowerFail
    protection for use in datacenters, and features an expanded enterprise
    feature-set allowing storage architects to better take advantage of PCIe
    based SSDs in the datacenter.
  • Demonstrated at Computex in early June the first workstation class
    hybrid PCIe SSD from the RevoDrive family, which utilizes a NAND flash
    read/write cache coupled with high density rotational media in a single
    direct attach device. The Revo Hybrid features cache management software
    which distributes and manages data across the storage elements, to
    deliver balanced performance to density ratios for workstation use.
  • Announced the Talos series line of High Capacity SAS SSDs designed
    for enterprise applications that require ultra-fast, high capacity
    solutions equipped with MLC NAND. Talos brings new strength to the
    Company’s storage lineup by expanding the availability of OCZ’s
    proprietary VCA technology to the SAS interface segment.
  • Unveiled the Arowana Flash Translation Layer (FTL) from Indilinx
    for both existing and upcoming Indilinx controllers. This firmware
    subset improves performance and adds support for 2xnm based MLC NAND
    with current generation Indilinx SSD controllers.  

Business Outlook:

  • OCZ expects revenue for fiscal year 2012, to be in the range of
    $310−$345 million, an increase of approximately 65%−80% compared with
    $190 million reported in fiscal year 2011.
  • OCZ’s previously published long term non-GAAP model showed targeted
    gross margins to be in the range of 28% to 32%. As a result of recent
    product releases and the Company’s anticipation of increased market
    acceptance of its enterprise products, the Company is increasing its
    long term gross margin target range to 30%-40%.
  • OCZ plans to continue to invest in its R&D, sales, and marketing
    efforts to execute on its initiatives in the enterprise and server
    markets. The Company anticipates that supporting the higher enterprise
    mix levels will increase its operating costs on a long term basis to
    between 18% and 22% of revenue. The Company is currently targeting a
    long term operating income range of 15% – 20%.
  • Key assumptions critical to the Company’s long term model include an
    increased mix of enterprise SSD sales, including but not limited to the
    PCIe SSD Segment, cost savings related to increased purchasing power and
    scale, and ability to capitalize on our technological leadership.

To read the earnings call transcript

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