OCZ: Fiscal 1Q13 Financial Results

OCZ Technology Group, Inc. reports its first quarter (Q1’13) results which ended on May 31, 2012.

Financial Highlights

• Net revenue in Q1’13 was a record $113.6 million, and increased 54% compared with net revenue of $73.8 million reported in Q1’12.
• Q1’13 SSD revenue reached a record $106.5 million; an increase of 54% compared with Q1’12 SSD revenue of $69.1 million.
• Gross margin in Q1’13 25.0% compared with 20.0% in Q1’12
• Net loss for Q1’13 was $6.3 million or $0.09 loss per share compared with a net loss of $9.1 million or $0.20 loss per share in Q1’12.
• Achieved Record Bookings in Q1’13.
• Non-GAAP gross margin was 25.2% compared with 20.0% in Q1’12.
• Non-GAAP net loss for Q1’13 was $11.5 million or $0.17 loss per share as compared with a non-GAAP net profit for Q1’12 of $0.5 million or $0.01 per share.

"We are again pleased to report record revenue for the quarter as demand for our SSDs has been fueled by new product introductions. We continue to gain traction with our SAN replacement products and expect these products to begin to ramp in the third quarter," said Ryan Petersen, CEO of OCZ Technology. "During our first fiscal quarter we successfully launched our next generation Indilinx Everest 2 controller platform and introduced the next generation of Agility and Vertex series SSDs based on this platform."

"During the quarter, we achieved record bookings of nearly $140 million reflecting increased order activity associated with the transition to our new generation Everest 2 based Vertex 4 and Agility 4 product lines introduced during the quarter. As a point of reference, during the quarter we shipped over 100,000 units of these new Everest 2 based products with gross margins of over 30%," added Petersen. "We believe our ongoing investments in technology and sales and marketing provide a clear strategic advantage as we bring innovative SSD products to the market."

Recent Business Highlights

• Z-Drive R4 PCIe SSD series has achieved VMware Ready status. This designation indicates that after a detailed validation process, it achieved VMware’s highest level of endorsement. This qualification signifies to customers that the drives have met specific VMware integration and interoperability standards and work with the VMware infrastructure.
• Following the release of Vertex 4 in April, the company late in the quarter unveiled its new 4 SSD series that delivers a balance of 6Gbps SATA III interface speed, IOPS performance, and enterprise endurance and reliability all in SSD targeted at cost sensitive applications.
• SAS-based Talos 2 SSDs were showcased during Microsoft’s North American TechEd (technology education) conferences. With this partnership, TechEd participants got a look at the upcoming Windows Server 2012 and how it delivers the enterprise storage capabilities. Talos 2 SSDs are also featured in a permanent display at the Microsoft Technology Center in New York City.
• At Computex 2012 in Taiwan, OCZ showcased its PCIe SAN acceleration and replacement solutions, and unveiled the Intrepid 3 enterprise-class SATA III SSD Series based on the Everest 2 architecture. Live demos included the current Z-Drive R4 CloudServ PCIe SSD that delivers over one million IOPS, and a first look at the Z-Drive R5 Series based on the co-developed OCZ-Marvell Kilimanjaro platform that raises the bar in performance, reliability, and endurance. OCZ also showcased the VXL Storage Accelerator software that enables large scale deployment of a virtualized environment for businesses to eliminate the need for costly tier-1 SANs in a range of enterprise IT infrastructures.

Business Outlook:

• Expects net revenue for its second fiscal quarter ending August 31, 2012 (Q2’13), to be in the range of $130 to $140 million.
• Expects net revenue for its fiscal year ending February 28, 2013 (FY’13) to be in the range of $630 to $700 million. This represents a growth rate of approximately 80% at the midpoint; expects, based on historical trends, revenue to be weighted to the second half of the year, with approximately 60% to 65% of revenue to occur in the second half of the year.
• Non-GAAP gross margins expected to increase in Q213 and to exit the year in excess of 30%, with typical sequential gross margin increases of 100 to 250 basis points per quarter throughout the fiscal year, subject to changes in product mix as the SSD landscape continues to evolve.
• Expects non-GAAP operating expenses for Q2’13, to be in the range of $38 to $41 million with expenses exiting the year at between $43 and $47 million per quarter, as OCZ continues to invest in its ongoing growth objectives.