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Netezza CEO Discusses F2Q2011 Results - Earnings Call Transcript

Netezza CEO Discusses F2Q2011 Results - Earnings Call Transcript

Netezza Corporation (NZ)

F2Q2011 Earnings Call Transcript

August 26, 2010 4:30 pm ET


Deb Murphy – VP & Corporate Controller

Jim Baum – President & CEO

Pat Scannell – SVP, CFO & Treasurer


Alex Kurtz – Merriman & Company

Katy Huberty – Morgan Stanley

Nabil Eisheshai – Pacific Crest Securities

Paul Mansky – Canaccord Adams

Jayson Noland – Robert W. Baird

Nathan Schneiderman – ROTH Capital

Rajesh Ghai – ThinkEquity

Glenn Hanus – Needham & Company

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Brad Reback – Oppenheimer



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Good afternoon, ladies and gentlemen, and welcome to the second quarter fiscal 2011 Netezza Corporation earnings conference call. My name is Tony and I will be your coordinator today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes.

I will now like to hand the call over to your host for today, Ms. Deb Murphy, Netezza's Vice President and Corporate Controller. Please proceed.

Deb Murphy

Thank you, Tony. Good afternoon, everyone and thank you for joining us on our earnings release conference call for our second quarter of fiscal 2011, which ended July 31st, 2010. Speaking today will be Jim Baum, President and Chief Executive Officer; and Pat Scannell, Senior Vice President and Chief Financial Officer.

Before we begin, I would like to remind you that some of the statements made on this call may be forward-looking statements. While these statements reflect our current outlook, they are subject to a number of risks and uncertainties that could cause actual results to differ materially. These risk factors are described in our most recent Quarterly Report on Form 10-Q, which is on file with the SEC.

In addition, any forward-looking statements represent our views only as of today, and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change.

On this conference call, we will be referencing both GAAP and non-GAAP financial measures. We provided GAAP and non-GAAP reconciliation information in the press release we issued earlier today announcing our Q2 results. The press release is available on the homepage of the Investor Relations section of our website at The webcast of this call will be archived in the same section.

I would now like to turn the call over to Jim.

Jim Baum

Thank you, Deb and welcome to you all and thank you for joining us on our fiscal Q2 2011 earnings call. During the call, I will provide an overview of our business and the environment we operated in during the quarter and I will then turn the call over to Pat Scannell for his commentary on the detailed operations of the business and a discussion of guidance.

As you can see from our earnings release, we had a very strong second quarter. We are extremely pleased with the results and we believe they are direct results of our continued strong positioning in an increasingly strategic market segment. The momentum we described the last time we spoke with you is translating into customer transactions as we continue to be able to convert our growing pipeline into closed business.

During the quarter, we closed 28 new customers and experienced significant wins in digital media, financial services, telecommunications, and retail. And geographically, we saw good traction across all geographies.

Our pipeline continues to grow as a direct result of our sales and marketing programs with notable growth in EMEA and North America. We are encouraged by our coverage metrics as they continue to trend upward over the course of the year. We continue to invest in our organization, growing from 447 to 469 employees during the quarter. We hired across the board, but primarily focused our efforts on expanding sales, partnering, and development.

We opened a satellite development office in Cambridge, Massachusetts that is now staffed like our other development offices with extraordinarily talented engineers. We also initiated our operations in China, having now hired the country manager and we signed our first partner agreement in China with Longtop, a leader in IT solutions for the Chinese financial services industry.

We recently imitated our professional services business and have hired the leader and some initial personnel at this point. As we stated in the past, our objective in offering professional services is to provide only high-value architectural level consulting services to our clients to help them architect and design the applications they wish to deploy on our appliances. We don't expect the services business to become a significant revenue contributor during this fiscal year, although we view the ability to provide these services to a select few accounts as highly strategic.

Our investment in developing strategic partnerships to support both our horizontal selling efforts, as well as our vertical strategy continues. During the quarter, we announced a partnership with Cloudera, an emerging leader in providing Hadoop platforms. This partnership will accelerate our ability to leverage the emerging Hadoop distributed storage and processing environment, effectively allowing our customers to create solutions that leverage the strengths of both Hadoop and our analytical database appliances.

In addition, our partnership with NEC continues to progress. We are constantly working with them to enable their sales force, providing training sessions each month to their industry sales teams. The response has been positive and we are seeing increasing pipeline demand as a result. We still see that it will take ongoing effort on our part to help ramp their distribution and we are still early in this process.

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