Isilon: Fiscal 3Q10 Financial Results

Isilon Systems, Inc. announced its financial results for the quarter ended September 30, 2010.

Revenue for the quarter was $53.8 million, up 19% sequentially compared to $45.1 million in the second quarter of 2010 and up 77% from $30.5 million in the third quarter of 2009. 

"Isilon’s record third quarter growth is the strongest indication to date that there is a fundamental shift occurring in the enterprise data center," said Sujal Patel, chief executive officer, Isilon. "Enterprises have grown increasingly aware of the critically important role that scale-out architectures play in the future of their rapidly expanding data centers," said Patel. "As the leading provider of unified scale-out storage solutions, Isilon is very well-positioned to take an increasing share of this expanding sector." 

Financial results for the third quarter of 2010
included the following: 

• Gross margin for the third quarter of 2010 was 63.5%, compared with 62.0% in the second quarter of 2010 and 56.9% in the third quarter of 2009.
• Net income for the third quarter of 2010 was $4.0 million, or $0.05 per diluted share, compared with net income of $2.0 million, or $0.03 per diluted share in the second quarter of 2010. Net loss in the third quarter of 2009 was $4.9 million, or $0.08 per diluted share. The third quarter 2009 net loss per share included $2.0 million, or $0.03 per share, of expenses related to the class action legal settlement.  Non-GAAP net income for the third quarter of 2010 was $6.9 million, or $0.09 per diluted share, compared with non-GAAP net income of $4.1 million, or $0.06 per diluted share in the second quarter of 2010. Non-GAAP net loss in the third quarter of 2009 was $1.4 million, or $0.02 per diluted share.
• In connection with the SEC’s civil action against our former CFO, the Company, pursuant to its indemnification obligations, has incurred and will likely continue to incur substantial legal expenses. Legal expenses associated with such indemnification obligations, along with discovery related costs incurred by the Company and certain other related costs, net for the third quarter of 2010 were $2.3 million, or $0.03 per diluted share, compared with $0.1 million, or $0.00 per diluted share, in the third quarter of 2009. These expenses are included in both our GAAP and non-GAAP results of operations.
• Cash flows generated from operations in the third quarter of 2010 were $13.1 million compared with $10.0 million in the second quarter of 2010 and $0.9 million in the third quarter of 2009. 
• As of September 30, 2010, cash, cash equivalents and marketable securities were $114 million, compared with $100 million as of June 30, 2010.