Voltaire Ltd. (VOLT)

Q2 2010 Earnings Conference Call

July 28, 2010 10:00 am ET


Kristin Knies - IR, CCG

Ronnie Kenneth - Chairman & CEO

Josh Siegel - CFO


Tal Liani - Banc of America

Mark Moskowitz - JPMorgan

Daniel Meron - RBC Capital Markets

Glenn Hanus - Needham & Company

Rajesh Ghai - ThinkEquity

Apurva Patel - Ticonderoga Securities



Ladies and gentlemen thank you for standing by. Welcome to Voltaire Second Quarter 2010 Results Conference Call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded July 28, 2010.

I would now like to hand the call over to Mr. Kristin Knies CCG Investor Relations. Mrs. Knies would you like to begin?

Kristin Knies

Thank you operator and good day to everybody. I would like to welcome all of you to Voltaire’s second quarter 2010 results conference call and thank Voltaire’s management for hosting this call.

With us on the line today are Mr. Ronnie Kenneth, Chairman and Chief Executive Officer and Mr. Joshua Siegel, Chief Financial Officer. Before we begin, may I remind our listeners that certain information provided on this call may contain forward-looking statements and the Safe Harbor statement outlined in today’s earnings release also pertains to this call. If you have not received a copy of the release, please view it in the Investor Relations or news section of the company’s website at www.voltaire.com.

In addition, during this call certain non-GAAP financial measures will be discussed. These are used by the management to make strategic decisions, forecast future results and evaluate the company’s current performance. Management believes that the presentation of non-GAAP financial measures is useful to investor’s understanding and assessment of the company’s ongoing core operations and prospects for the future. A full reconciliation of non-GAAP, GAAP financial measures is included in today’s earnings release.

I will now hand over the call to Mr. Ronnie Kenneth, Voltaire’s Chairman and Chief Executive Officer, Ronnie?

Ronnie Kenneth

Thank you Kristin, good day everyone and thank you for joining us for our second quarter 2010 earnings conference call. On the call today, I will highlight our second quarter 2010 results and achievements. I will then turn the call over to Josh Siegel, our Chief Financial Officer, who will discuss the financial results in more detail. After that, we will be happy to take your questions. Again we presented another strong quarter with 54% year-over-year growth in revenue and significantly reduced operating and net loss also by more than 50%. We remain on track to achieving our financial goals in particular that are reaching a sustainable profit by Q4. Our bookings increased during the quarter and we enter the second half of the year with substantial pipeline supporting our ongoing confidence.

George will elaborate on the financials in a minute, will tell you the very different company than it was only a year ago, we have expanded from being a InfiniBand provider into an end-to-end scale-out data center fabric solutions provider.

Today, in addition to InfiniBand we are delivering 10 Gigabit Ethernet so we chose an unique fabric management and application acceleration software. It is giving our expanding customer base performance and efficiency with the choice of underlying fabric technologies.

While the InfiniBand market is in its growth stage and Voltaire continue to dominate the switching segment it is our Ethernet and software offering that we think will further part the companies mid to long term growth and then for the years to come now on the quarter in more detail, we continue to be market leaders in selling switches for InfiniBand scale-out environment. As we announced a few weeks ago, we had a major win this quarter at the Tokyo Institute of Technology with selected Voltaire scale-out fabric for Japan’s most powerful super computer.

When the top 500 list of the world’s largest super computers was announced this quarter, Voltaire shares over the InfiniBand deployments on the list moved up by 50% to 55% putting us at more than double the share of any other InfiniBand systems vendor.

Looking back at the first half of the year, we have seen our Ethernet strategy begin to take hold. We had installation of our Vantage 10 Gigabit Ethernet switches across multiple industries including cloud and web to all government education and oil and gas.

Furthermore, our Ethernet switches are now being sold though multiple OEMs and resellers and over the next several quarter this will enable us to accelerate sales of the 10 Gigabit Ethernet switches through a growing channel network. We are winning business against the competition because as customers redesign the data centers with flatter network, they are evaluating networking partners that can bring efficiency through innovation. And here we win because of Voltaire switches deliver better scaleability performance and efficiency at half the price than traditional networking vendors.

During the quarter we also announced and began shipping the Vantage 6024 a new smaller code count led 2 to 3 top of direct switch to complement our Vantage 8500 core switch. This gives us an end-to-end Ethernet portfolio of switches to build scale-out data center fabrics for customers. These switches also an attractive solution for collocated high frequency trading where rack space is limited, yet performance and obtaining the lowest latency is a must. Another hot selling product this quarter was our new InfiniBand to 10 Gigabit Ethernet gateway. Second quarter was the first full quarter of the product availability and we have already taken more than $1.5 million in order for this product.

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