Compellent Technologies, Inc. (
Q3 2010 Earnings Conference Call
October 26, 2010 4:30 PM ET
Jenifer Kirtland – IR, EVC Group
Phil Soran – President and CEO
Jack Judd – CFO
Katie Huberty – Morgan Stanley
Eric Martinuzzi – Craigh Hallum
Aaron Rakers – Stifel Nicolaus
Amit Daryanani – RBC Capital Markets
Patrick Mulvehill – Piper Jaffray
Jayson Noland – Robert W. Baird
Rajeesh Ghai – ThinkEquity
Alex Kurtz – Merriman and Company
Kevin Hunt – Hapoalim Securities
Erin Anthony – Pacific Crest Securities
Ladies and gentlemen, thank you for standing by, and welcome to the Compellent third quarter 2010 financial results conference call.
(Operator Instructions) This conference is being recorded today, Tuesday, October 26, 2010.
I would now like to turn the conference over to Jenifer Kirtland. Please go ahead.
Thank you, operator; and thank you for joining the Compellent conference call and webcast to review financial results for the third quarter of 2010.
Previous Statements by CML
» Compellent Technologies, Inc. Q2 2010 Earnings Call Transcript
» Compellent Technologies Q1 2010 Earnings Call Transcript
» Compellent Technologies, Inc. Q4 2009 Earnings Call Transcript
» Compellent Technologies Inc. Q3 Earning Call Transcript
Before we get started, during the course of this conference call, we will make projections and may make other statements about Compellent’s business that are forward-looking and are subject to many risks and uncertainties that could cause actual results to differ materially from expectations. A detailed discussion of the risks and uncertainties that affect our business is contained in Compellent’s filings with the SEC, including its quarterly reports on Form 10-Q under the heading Risk Factors. Copies of these filings are available online from the SEC or on Compellent’s website. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof and, except as required by law, Compellent disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
In addition, during today’s discussion, management will comment on both actual results and certain non-GAAP results. Reconciliation of actual results with these non-GAAP results is provided in today’s earnings release which is available on our website at compellent.com.
And now I’d like to turn the call over to Phil Soran, President and CEO of Compellent. Phil?
Well, thank you, Jenifer; and thanks, everyone, for joining us today on our third quarter 2010 earnings call. With me is Jack Judd, our Chief Financial Officer.
We're extremely pleased to report Q3 as a record quarter for Compellent. Customer response to our product innovation and enterprise storage efficiency has been tremendous. I have many highlights to share.
We achieved record revenues as third quarter sales reached $42.1 million. That's a 31% increase from one year ago and a 15% sequential increase over the second quarter. We achieved record net income as GAAP net income was $3.3 million or $0.10 a share. Our non-GAAP net income which excludes stock-based compensation expense was $4.9 million or $0.15 per share. Our gross margins were strong at 55.9% compared with 53.6% in the second quarter of 2010.
And we continue to grow our customer base and added 179 new customers in Q3 for a new total of 2,303. That means our Compellent Fluid Data architecture replaced legacy storage for customers including Northrop Grumman, [Milestone] North America, Boston University, the Michigan Court of Appeals and West Point Military Academy. We are very pleased with these results and believe that they demonstrate strong momentum for Compellent.
As further evidence of our continued traction in the marketplace, during the second quarter, Storage magazine once again gave us its quality award. The quality awards are based on user surveys. Compellent was ranked number one in every measured category. We were number in product features, number one in product quality, number one in product reliability, number one in sales force competency, number one in technical support, and number one in overall standing. But the best part of all, 100% of Compellent customers in this survey indicated they would buy Compellent again.
But let me give some examples in the third quarter of the ways customers around the world are implementing Compellent. Take for instance Skechers, the shoe apparel company. With 280 terabytes of capacity, Skechers chose Compellent for differentiation and scalability, ease of use and flexibility. RealPage, a provider of on-demand software-as-a-service products chose Compellent to replace its legacy storage to support its core business and its cloud computing services. With multiple sites, customers like RealPage can easily scale out today and scale up in the future. Philips Plastic Corporation which is implementing Compellent unified storage with solid state drives for its virtual desktop infrastructure, Oracle ERP and Windows environment.
Over in Europe, one of the largest credit management firms, Intrum Justitia, has more than 90,000 clients and 3,000 foreign employees in 22 countries. Its data center in the Netherlands supporting all its European operations chose Compellent for automated tiering, thin provisioning and our perpetual software licensing. These few examples highlight the broad range of customers that are choosing Compellent over incumbent competitors as a result of our rich feature set and highly flexible architecture.
Over the next few quarters you'll see a series of new product releases that expand upon our Fluid Data architecture and scale beyond our existing platform. This expanded feature set, something I like to call Fluid Data 2, will provide enterprise data centers greater performance, scalability, efficiency, ease of use and reliability, and all will be based upon our existing virtualization and dynamic block architecture. Let me give you three examples how we'll scale our technology to take us into more opportunities.