3PAR: Fiscal 1Q09 Financial Results

3PAR, Inc. reported results for the first quarter of fiscal year 2009, which ended June 30, 2008. Revenue for the first fiscal quarter was $43.0 million, an increase of 80% compared to revenue of $23.8 million for the same period a year ago and an increase of 21% compared to $35.5 million in the prior quarter, which ended March 31, 2008.

For the first fiscal quarter, GAAP net income was $678,000 or $0.01 per share compared to GAAP net loss of $4.7 million or ($0.26) per share for the same period in the prior year. Non-GAAP net income, which excludes the impact of stock-based compensation expense, for the first fiscal quarter of 2009 was $2.0 million or $0.03 per share compared to non-GAAP net loss of $4.1 million or ($0.23) per share for the same period in the prior year.

This quarter, 3PAR benefited from the recognition of certain product revenue that had previously been recognized on a ratable basis. As a result of establishing fair value during this quarter for the support services bundled with these transactions back in March 2007, 3PAR recognized $2.2 million of deferred revenue that relates to the product portion of the March 2007 transactions. Excluding this one-time revenue recognition, product revenue would have been $37.7 million, total revenue would have been $40.7 million, and 3PAR would have reported a GAAP net loss of $827,000 or ($0.01) per share. Also, excluding this one-time revenue recognition, 3PAR’s non-GAAP net income would have been $460,000 or $0.01 per share.

"We are pleased to see 3PAR deliver another strong quarter of improved revenue growth and operating leverage," said David Scott, President and Chief Executive Officer for 3PAR. "We are also delighted that, taking into account the recognition of previously deferred revenue, we reached an important milestone of profitability on a GAAP basis."

In addition, 3PAR also announced today that its Board of Directors has approved the investment of up to $10 million for the purchase of shares of 3PAR common stock in the open market under a stock repurchase program. The program will be conducted in accordance with applicable securities laws, rules, and regulations. Repurchases under the program will be made at 3PAR’s discretion and at times and in amounts deemed as appropriate based on factors such as market conditions, legal requirements, and other corporate considerations.
"The approval of this repurchase program by the Board of Directors demonstrates 3PAR’s commitment to increasing shareholder value," said Scott.

Additional First Quarter Fiscal 2009 Financial Information
3PAR reports operating income (loss), net income (loss), and earnings (loss) per share (EPS) on a GAAP and on a non-GAAP basis, which excludes the impact of stock-based compensation expense. The non-GAAP measures are described in greater detail below and are reconciled to the corresponding GAAP measures in the accompanying financial tables. The following data concerning GAAP operating results include the $2.2 million in deferred revenue benefit described above.

• GAAP operating income for the first quarter of fiscal 2009 was $95,000, or 0% of revenue. This compares to GAAP operating loss of $2.4 million in the fourth quarter of fiscal 2008 or 7% of revenue. Non-GAAP operating income in the first quarter of fiscal 2009 was $1.4 million or 3% of revenue. This compares to non-GAAP operating loss of $1.1 million or 3% of revenue in the fourth quarter of fiscal 2008. GAAP net income for the first quarter of fiscal 2009 was $678,000 as compared to a net loss of $1.2 million in the fourth quarter of fiscal 2008. Non-GAAP net income in the first quarter of fiscal 2009 was $2.0 million, compared to $60,000 in the fourth quarter of fiscal 2008.
• GAAP basic and diluted EPS for the first quarter of fiscal 2009 was $0.01 on 60.2 million and 62.8 million weighted average basic and diluted shares outstanding, respectively, compared to ($0.02) for the fourth quarter of fiscal 2008 on 60.0 million weighted average shares outstanding. Non-GAAP basic and diluted EPS in the first quarter of fiscal 2009 was $0.03, compared to $0.00 in the fourth quarter of fiscal 2008.
• Non-GAAP operating loss, non-GAAP net income (loss), and non-GAAP EPS are computed net of stock-based compensation. In the first quarter of fiscal 2009 and fourth quarter of fiscal 2008, the charge related to stock- based compensation was $1.3 million and $1.2 million, respectively.