Isilon Systems, Inc.
Q1 2010 Earnings Call Transcript
April 22, 2010 8:30 am ET
Chris Blessington – Senior Director of Marketing and Communications
Sujal Patel – President and CEO
Bill Richter – VP, Finance and CFO
Katie Huberty – Morgan Stanley
Amit Daryanani – RBC Capital Markets
Brent Bracelin – Pacific Crest
Sid Parakh – McAdams Wright
Jason Ader – William Blair
Aaron Rakers – Stifel Nicolaus
Rajesh Ghai – ThinkEquity
Glenn Hanus – Needham & Company
Alex Kurtz – Merriman
Previous Statements by ISLN
» Islon Systems Q2 2009 Earnings Transcript
» Isilon Systems, Inc. Q1 2009 Earnings Call Transcript
» Isilon Systems, Inc. Q4 2008 Earnings Call Transcript
Good day, ladies and gentlemen and welcome to the Isilon Systems 2010 first quarter financial results conference call. My name is Sheenal and I'll be your coordinator for today. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards at the end of this conference. (Operator Instructions)
I would now like to turn the presentation over of today's call, Mr. Chris Blessington, Senior Director of Marketing and Communications. Please proceed.
Thank you, Sheenal and good morning everyone. The purpose of our call today is to discuss results for the first quarter of fiscal year 2010. With me this morning are Isilon's CEO; Sujal Patel and CFO, Bill Richter. Following their prepared remarks, we will open the call up to questions.
If you haven't seen a copy of today's press release announcing these results, it's available on the Investor Relations section of our website at www.isilon.com/company. A recording of this conference call will be available on the website later this evening through midnight Eastern Time on April 29. Details on the playback are included in the press release mentioned earlier.
On this conference call, we will be referencing both GAAP and non-GAAP financial measures. When we review gross margin, operating expenses, operating margin and net income or loss, we may be speaking in non-GAAP terms, which excludes stock-based compensation.
We believe that excluding these expenses gives our management and investors a better indication of our operating results. You can find additional disclosures regarding these non-GAAP measures including reconciliations with comparable GAAP measures in our press release.
During this conference call, we will make forward-looking statements about our business and expectations for the future, including but not limited to statements regarding our financial and operating results and outlook, our business strategy, opportunities and priorities, the benefits of our products and services and broadening of our addressable markets.
These forward-looking statements are based on expectations as of today and are inherently subject to risks, uncertainties and changes in circumstances that are difficult to predict. If the risks or uncertainties ever materialize, or the assumptions prove incorrect, our actual results may differ materially from those expressed or implied by our forward-looking statements.
Any forward-looking statements should be considered in light of very various important factors including the risks and uncertainties previously noted, as well as others including those set forth in our documents filed with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K and other filings. Except as required by law, the company makes no commitment to revise or update any forward-looking statements in order to reflect subsequent events or circumstances.
And with that, I will now turn the call over to Sujal.
Thanks, Chris. Good morning everyone and thank you for joining us today. Before I share my thoughts about Isilon's continued business progress, I want to take a moment to acknowledge how well the Isilon team executed in Q1. From our employees to our extended network of channel markets around the world, I want to thank each of them for their dedication and contribution. With that I would like to ask Bill to start off by providing a review of the Q1 financial results. Bill?
Thanks Sujal and good morning to everyone on the call. Isilon had a particularly strong Q1 with record sales, gross margin profit, and cash flows. As you know, we devoted substantial effort throughout 2009 to invest in our products and technology while creating a leveraged operating model to drive profitable growth and as you can imagine, we're pleased with their early validation of our success.
With that, let me get to our financial results. Total revenue in the first quarter of 2010 was $39.3 million, up 46% from $26.9 million in the first quarter of the previous year. Sequentially total revenue increased 5% from $37.5 million in Q4. Before I move on to the details, let me just comment on our selling patterns in the first quarter.
Over the past several years, Q1 has typically been a seasonally slower quarter. This Q1 in contrast was particularly strong in January and February, reflecting a need on the part of our customers to catch up on the lack of investments made through the downturn, a pattern we saw emerge in Q4 of last year. This early quarter momentum contributed to these strong revenue results.
Let me give you some detail on our Q1 revenue. Geographically 66% of revenue was generated in North America and 34% came from our international locations. Our international contribution was the highest it’s been since Q4 of 2008, driven by both AMEA and Asia.
We've put substantial investments into these geographies and are pleased to see their positive contributions in Q1. Overall, the channel drove 62% of revenue in Q1, an all time record for the company. Breaking out North America separately, the channel generated 45% of revenue which was roughly flat with Q4 but up significantly over Q1 of last year.