Kammersgard continued, "The growth we project is based solely on announced or unannounced customers with whom we have already signed contracts or who have verbally awarded us their business. We expect meaningful revenue growth based on this pipeline to start later in 2013 and accelerate in 2014 and beyond."
2014 Target Operating Model
The Company expects growth to result in non-GAAP net revenue of $231 million to $301 million for the year ending December 31, 2014 and at the midpoint of this range, this represents growth of 23% compared to the midpoint of the guidance range for the year ending December 31, 2013. The Company also stated it expects non-GAAP gross margin to increase modestly to 31% to 32% for the year ending December 31, 2014. Non-GAAP operating expenses are targeted to be in the range of $64 million to $72 million and non-GAAP EPS is projected to be $0.11 to $0.40 for the year ending December 31, 2014.
"Structurally, the Company has many levers to create operating leverage. We outsource our manufacturing; we use a common technology platform across existing and new customers, and our go-to-market partners are responsible for demand generation, all of which contain our capital and operating expense investments," said Hanif Jamal, chief financial officer, Dot Hill Systems. "As a result, we expect revenues in excess of the Company's break-even point of around $200 million annually, to create non-GAAP operating profit of 20% to 30%. Based on our current forecast of the mix of customers in 2014, we are targeting accretion to the bottom line of around 25% from new business."
About Non-GAAP Financial Measures
From 2009 to 2012 and in the 2013 and 2014 financial projections, the Company's non-GAAP financial measures exclude the impact of stock-based compensation expense, legal settlements and their associated expenses, intangible asset amortization, restructuring and severance charges, charges or credits for contingent consideration adjustments, charges for impairment of goodwill and other long-lived assets, the recognition of deferred and amortized revenue and costs related to long-term software contracts which were deferred in the Company's GAAP financial statements, specific and significant warranty claims arising from a supplier's defective products, impacts associated with the AssuredUVS software business, which the Company has substantially closed down, and the effects of foreign currency gains or losses. The Company believes that these non-GAAP financial measures provide meaningful supplemental information to both management and investors that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods. The Company used these non-GAAP measures when evaluating its financial results as well as for internal resource management, planning and forecasting purposes. These non-GAAP measures should not be viewed in isolation from or as a substitute for the Company's financial results in accordance with GAAP.