Compellent Technologies (CML)
Q1 2010 Earnings Call
April 28, 2010 4:30 pm ET
John Judd - Chief Financial Officer and Principal Accounting Officer
Philip Soran - Co-Founder, Chairman, Chief Executive Officer and President
Jenifer Kirtland - Investor Relations
Jason Ader - William Blair & Company L.L.C.
Troy Jensen - Piper Jaffray Companies
Glenn Hanus - Needham & Company, LLC
Jayson Noland - Robert W. Baird & Co. Incorporated
Hemant Hebbar - Wedbush Securities
Eric Martinuzzi - Craig-Hallum Capital Group LLC
Chad Bennett - Northland Securities Inc.
Alex Kurtz - Merriman Curhan Ford & Co.
Kathryn Huberty - Morgan Stanley
Previous Statements by CML
» Compellent Technologies, Inc. Q4 2009 Earnings Call Transcript
» Compellent Technologies Inc. Q3 Earning Call Transcript
» Compellent Technologies, Inc. Q2 2009 Earnings Call Transcript
Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Compellent First Quarter 2010 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Jenifer Kirtland. Please go ahead, ma'am.
Thanks, operator, and thank you, everyone, for joining the Compellent Conference Call and Webcast to review financial results for the first quarter of 2010.
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 report on Form 10-K for the quarter ended December 31, 2009, 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 as except or 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 Zoran, President and CEO of Compellent. Phil?
Thank you, Jenifer, and thanks, everyone, for joining us today on our 2010 first quarter earnings call. And with me is Jack Judd, our Chief Financial Officer.
This afternoon, we reported our first quarter results in line with the updated guidance we provided on April 7. Revenue totaled $31.8 million. While in this top line guidance given our February 11, the remainder of our P&L solid. We achieved a gross margin of 54.8%, which is 190 basis points above the margin in the fourth quarter of 2009 and 200 basis points higher than the first quarter of 2009. Operating expenses totaled $18.5 million in the first quarter compared with $18.3 million in the fourth quarter. We were able to grow our headcount in sales, marketing and R&D as we continue to build our infrastructure to support future growth with minimal increase on our overall operating expense line. We reported GAAP net loss of $780,000 or $0.02 per share. Non-GAAP net income, excluding stock-based compensation expense was a gain of $544,000 or $0.02 per share profit.
We spent time on the last conference call describing factors affecting first quarter revenue. As we transition to the second quarter, we are focused on lead regeneration, channel development and pipeline quality. The combination of our sales early in the quarter, the pipeline growth in new and existing sales territories and channel mine share provides us with optimism that leads us to guide for sequential growth in the second quarter.
The common area for questions has to do with the competitive landscape. George [ph] has always been competitive and will continue to be so in the future. We always see a variety of tactical and strategic changes based on vendor and geography. From time to time, competitors will focus on being more "channel friendly" or discount when they do not feel competitive technically. We continually adjust our playbook to meet these changes, but we sell with our core advantages. We are the lowest total cost of ownership storage solution in the market and we delivered 100% through our value-added business partner model. We win with our innovation and elegant single-platform implementations. And unlike competitive alternatives, we do not compete with our business partners by taking deals direct, and we do not wax and wane on our channel focus.
As competitors try to catch up with Compellent and discuss similar product features, it can have a positive impact of increased end-user awareness. The Compellent store solution based on our core Fluid Data architecture has proven superior to alternatives. We have gained attention and recognition for our customer benefits and our great customer support experience.
In fact, recently I heard a story where the legacy storage vendor sales rep told a customer that they have a support that is "as good as Compellent." Now when IT managers are looking for a storage solution, Compellent is evaluated more often, and we're displacing legacy vendors everyday.
We continue to expand our reach in the mid-sized enterprise market. The past three months was a great quarter in terms of customer acquisition as many new customers chose us over larger vendors. Some of our new end-user customers include: The Charlotte Bobcats NBA basketball team; American University; the Government Taxation Bureau of China, the Energy Authority, which is a consortium of 39 power utilities which is the nation's leader in public power energy trading and risk management. Another customer is the University of Florida College of Law; Freeman's, a national trade show management company; and the National Ecological Observatory Network, which collects data on the impacts of climate change, land use change and invasive species on our natural resources and biodiversity.