Netezza 8-K Netezza Announces Fourth Quarter and Full Fiscal Year 2010 Financial Results

Exhibit 99.1

NETEZZA ANNOUNCES FOURTH QUARTER AND FULL FISCAL YEAR 2010
FINANCIAL RESULTS

Marlborough, MA — March 3, 2010 —Netezza Corporation (NYSE: NZ), the global leader indata warehouse and analytic appliances, today reported its financial results for the fourth quarter and full fiscal year ended January 31, 2010.

“I am very pleased with our ability to achieve revenue growth over this past year and in our fourth quarter particularly given the challenging economic environment that encompassed most of the year,” said Jim Baum, Netezza’s Chief Executive Officer. “Our continuing innovation with the release of our TwinFin™ platform mid-year and, more recently the announcement of our TwinFin i-Class™ appliance, position us well competitively to benefit from the continuing growth of the data warehousing and analytics market.”

Total revenue for the fourth quarter of fiscal 2010 increased six percent to $53.6 million compared with $50.6 million for the same period one year ago. Total revenue for the full fiscal year 2010 increased two percent to $190.6 million compared with $187.8 million for fiscal year 2009.

GAAP net income for the fourth quarter of fiscal 2010 was $2.8 million, or $0.04 per diluted share, compared to GAAP net income of $22.8 million, or $0.37 per diluted share, for the fourth quarter of fiscal 2009 (which included a significant tax benefit of $20.0 million, or $0.32 per diluted share, related to the release of a valuation allowance on deferred tax assets). GAAP net income for the full fiscal year 2010 was $4.2 million, or $0.07 per diluted share, compared to GAAP net income of $31.5 million, or $0.50 per diluted share, for fiscal year 2009.

Non-GAAP net income for the fourth quarter of fiscal 2010 was $5.0 million, or $0.08 per diluted share, compared to non-GAAP net income of $5.3 million, or $0.09 per diluted share, for the fourth quarter of fiscal 2009. Non-GAAP net income for the full fiscal year 2010 was $11.8 million, or $0.19 per diluted share, compared to non-GAAP net income of $20.0 million, or $0.32 per diluted share, for fiscal year 2009.

Non-GAAP net income and non-GAAP net income per diluted share exclude non-cash stock-based compensation, amortization of acquired intangible assets, the net mark-to-market impact related to an unrealized gain on a put option received for Auction Rate Securities (ARS) offset by the unrealized loss on the underlying ARS, an income tax benefit resulting from the release of a valuation allowance on deferred tax assets, gain on bargain purchase and the related income tax effect of excluding these expenses. A reconciliation of GAAP to non-GAAP results has been provided in the financial statements included in this press release. An explanation of these measures is also included below under the heading “Use of Non-GAAP Financial Measures.”

Financial Commentary

“We are very pleased with our fourth quarter and full year results,” said Patrick Scannell, Senior Vice President and Chief Financial Officer of Netezza. “We showed reasonable revenue growth and gross margin improvement year-over-year and continued to invest in our products and distribution. Our visibility has improved in recent quarters and we are therefore resuming our practice of providing annual financial guidance. We currently expect we will achieve 20% revenue growth in our fiscal year 2011 over fiscal year 2010. In fiscal year 2011, we will continue to invest in our business and we expect operating margin improvement to accelerate in the second half of the year.”

Conference Call Information

Date: March 3, 2010
Time: 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time)
Toll-free North America: +1-866-730-5764
International dial-in number: +1-857-350-1588
Passcode: 14472900

A telephonic replay of the conference call will also be available two hours after the call and will be available for two weeks. The replay can be accessed by dialing +1-888-286-8010 for participants in the United States and by dialing +1-617-801-6888 for participants outside the United States. The passcode for the replay is 18257982.

The webcast will be accessible from the “Investor Relations” section of Netezza’s Web site (http://www.netezza.com). The webcast will be archived on Netezza’s Web site for a period of one year.

About Netezza Corporation (NYSE: NZ)

Netezza Corporation is the global leader in data warehouse and analytic appliances that dramatically simplify high-performance analytics across an extended enterprise. Netezza’s technology enables organizations to process enormous amounts of captured data at exceptional speed, providing a significant competitive and operational advantage in today’s data-intensive industries, including digital media, energy, financial services, government, health and life sciences, retail and telecommunications. Netezza is headquartered in Marlborough, Massachusetts and has offices in Northern Virginia, the United Kingdom, Germany, France, Japan, Korea, Australia and Singapore. For more information about Netezza, please visitwww.netezza.com.

Forward Looking Statements

The statements set forth above include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to Netezza’s future financial performance and Netezza’s business prospects. These statements involve risk and uncertainties, including: market demand for our products; our limited operating history and history of losses; quarterly fluctuation of our business; our ability to attract and retain key personnel; our ability to develop and introduce new products and manage product transitions; competition in the data warehouse market; our dependence on certain key customers; our ability to protect our patents and intellectual property; our ability to defend against third party infringement claims, other litigation and contingent liabilities; and risks relating to operating internationally. For a further list and description of risks and

uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements in this release, we refer you to the “Risk Factors” sections of Netezza’s Annual Report on Form 10-K for the year ended January 31, 2009 and Netezza’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2009, each of which is on file with the SEC and available in the investor relations section of Netezza’s Web site athttp://www.netezza.com and on the SEC Web site athttp://www.sec.gov. In addition, any forward-looking statements included in this press release represent our views as of March 3, 2010. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to March 3, 2010.

Use of Non-GAAP Financial Measures

To supplement Netezza’s unaudited condensed consolidated financial statements presented in accordance with GAAP, Netezza is presenting certain non-GAAP measures of financial performance. Netezza believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding Netezza’s performance by excluding certain non-cash items that may not be indicative of Netezza’s core business or future outlook. The presentation of these non-GAAP measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Netezza’s results of operations as determined in accordance with GAAP.

The non-GAAP financial measures presented by Netezza exclude non-cash stock-based compensation, amortization of acquired intangible assets, the net mark-to-market impact related to an unrealized gain on a put option received for ARS offset by the unrealized loss on the underlying ARS, an income tax benefit resulting from the release of a valuation allowance on deferred tax assets, gain on bargain purchase and the related income tax effect of excluding these expenses. Because of the varying valuation methodologies and assumptions that companies use under FAS123(R), Netezza’s management believes that excluding non-cash stock-based compensation allows investors to analyze Netezza’s recurring business over multiple periods and provide more meaningful comparisons with other companies. Because the amount of amortization of acquired intangible assets varies in amount and frequency and is significantly affected by the timing and size of our acquisitions, Netezza’s management believes that excluding amortization of acquired intangible assets allows investors to analyze Netezza’s recurring business over multiple periods. During the fourth fiscal quarter of 2009, a net mark-to-market charge related to an unrealized gain on a put option received in the quarter for ARS offset by the unrealized loss on the underlying ARS was recorded to other income (expense), net. This amount is excluded to aid in comparing current and future operating results with those of past periods. During the fourth fiscal quarter of 2009, an income tax benefit was realized upon the release of a valuation allowance on specific deferred tax assets that was no longer required. This income tax benefit is excluded from non-GAAP operating results to aid in comparing current and future operating results with those of past periods. The gain on bargain purchase, which was recorded in the three months ended July 31, 2009, resulted from the value of identifiable net assets acquired exceeding the value of the purchase price for Netezza’s acquisition of Tizor Systems, Inc. Since Netezza had no gain on bargain purchase in any prior periods and due to the one-time nature of this charge, Netezza is presenting its operating results without this gain to allow for a more meaningful comparison of current periods to prior year periods.Investors are

encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures provided in the financial statements included in this press release.

# # #

Netezza^®, TwinFin i-Class™,TwinFin™ and the Netezza logo are either registered trademarks or trademarks of Netezza
Corporation. Other names may be trademarks of their respective owners.

Contact

Netezza Corporation
      Investor Contact:
          Patrick J. Scannell, Jr., +1 508-382-8200
          Senior Vice President & Chief Financial Officer
          ir@netezza.com
      or
      Media Contact:
          Glen Zimmerman +1 508-382-8267
          Director, Public Relations
          gzimmerman@netezza.com

Netezza Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

	January 31,		January 31,
	2010		2009
Assets
Current assets
Cash and cash equivalents	$	40,638	$	111,635
Short-term marketable securities		64,020		—
Accounts receivable		53,450		34,457
Inventory		28,708		18,409
Deferred tax assets, net		14,490		12,723
Restricted cash		60		379
Prepaid expenses and other current assets		4,675		3,160
Total current assets		206,041		180,763
Property and equipment, net		8,469		9,586
Deferred tax assets, net		12,048		9,415
Goodwill		2,000		2,000
Intangible assets, net		4,056		2,935
Long-term marketable securities		49,769		49,222
Restricted cash		639		739
Other long-term assets		575		4,199
Total assets	$	283,597	$	258,859
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	12,604	$	8,424
Accrued expenses		5,906		6,301
Accrued compensation and benefits		6,776		6,352
Current portion of deferred revenue		49,665		46,356
Total current liabilities		74,951		67,433
Long-term deferred revenue		8,727		11,979
Other long-term liabilities		2,326		2,825
Total liabilities		86,004		82,237
Stockholders’ equity		197,593		176,622
Total liabilities and stockholders’ equity	$	283,597	$	258,859

Netezza Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

	Three months ended						Twelve months ended
	January 31,						January 31,
	2010			2009			2010		2009
Revenue
Product	$	38,327		$	38,062		$	134,340	$	143,463
Services		15,272			12,517			56,295		44,306
Total revenue		53,599			50,579			190,635		187,769
Cost of revenue
Product		14,087			14,968			49,856		57,350
Services		4,225			3,670			14,692		12,211
Total cost of revenue		18,312			18,638			64,548		69,561
Gross margin		35,287			31,941			126,087		118,208
Operating expenses
Sales and marketing		18,757			14,924			65,939		58,429
Research and development		10,125			8,889			41,110		32,557
General and administrative		3,566			3,866			15,388		14,633
Total operating expenses		32,448			27,679			122,437		105,619
Operating income		2,839			4,262			3,650		12,589
Interest income		281			421			952		4,045
Interest expense		16			24			90		40
Other income (expense), net		(4	)		(240	)		366		(495	)
Income before income tax expense (benefit)		3,100			4,419			4,878		16,099
Income tax expense (benefit)		253			(18,363	)		688		(15,420	)
Net income	$	2,847		$	22,782		$	4,190	$	31,519
Net income per common share:
Basic	$	0.05		$	0.38		$	0.07	$	0.53
Diluted	$	0.04		$	0.37		$	0.07	$	0.50
Shares used in per common share calculations:
Basic		60,925			59,709			60,447		58,967
Diluted		63,807			62,334			63,062		62,791

Netezza Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share amounts)

(unaudited)

	Three months ended						Twelve months ended
	January 31,						January 31,
	2010			2009			2010			2009
Non-GAAP financial measures and reconciliation:
GAAP cost of product revenue	$	14,087		$	14,968		$	49,856		$	57,350
Non-cash stock-based compensation (1)		15			46			49			176
Amortization of acquired intangible assets (2)		97			—			360			4
Non-GAAP cost of product revenue	$	13,975		$	14,922		$	49,447		$	57,170
GAAP cost of service revenue	$	4,225		$	3,670		$	14,692		$	12,211
Non-cash stock-based compensation (1)		99			62			393			227
Amortization of acquired intangible assets (2)		88			82			346			275
Non-GAAP cost of service revenue	$	4,038		$	3,526		$	13,953		$	11,709
GAAP gross margin	$	35,287		$	31,941		$	126,087		$	118,208
Non-cash stock-based compensation (1)		114			108			442			403
Amortization of acquired intangible assets (2)		185			82			706			279
Non-GAAP gross margin	$	35,586		$	32,131		$	127,235		$	118,890
GAAP sales and marketing expenses	$	18,757		$	14,924		$	65,939		$	58,429
Non-cash stock-based compensation (1)		861			695			3,268			2,535
Amortization of acquired intangible assets (2)		73			55			285			119
Non-GAAP sales and marketing expenses	$	17,823		$	14,174		$	62,386		$	55,775
GAAP research and development expenses	$	10,125		$	8,889		$	41,110		$	32,557
Non-cash stock-based compensation (1)		759			538			2,793			2,067
Amortization of acquired intangible assets (2)		10			—			40			48
Non-GAAP research and development expenses	$	9,356		$	8,351		$	38,277		$	30,442
GAAP general and administrative expenses	$	3,566		$	3,866		$	15,388		$	14,633
Non-cash stock-based compensation (1)		879			771			3,311			2,768
Amortization of acquired intangible assets (2)		1			(1	)		7			19
Non-GAAP general and administrative expenses	$	2,686		$	3,096		$	12,070		$	11,846
GAAP operating expenses	$	32,448		$	27,679		$	122,437		$	105,619
Non-cash stock-based compensation (1)		2,499			2,004			9,372			7,370
Amortization of acquired intangible assets (2)		84			54			332			186
Non-GAAP operating expenses	$	29,865		$	25,621		$	112,733		$	98,063
GAAP operating income	$	2,839		$	4,262		$	3,650		$	12,589
Non-cash stock-based compensation (1)		2,613			2,112			9,814			7,773
Amortization of acquired intangible assets (2)		269			136			1,038			465
Non-GAAP operating income	$	5,721		$	6,510		$	14,502		$	20,827
GAAP other income (expense), net	$	(4	)	$	(240	)	$	366		$	(495	)
Impairment loss on investment (3)		—			228			—			228
Gain on bargain purchase (6)		—			—			(365	)		—
Non-GAAP other income (expense), net	$	(4	)	$	(12	)	$	1		$	(267	)
GAAP income tax expense (benefit)	$	253		$	(18,363	)	$	688		$	(15,420	)
Tax benefit adjustments (4)		—			19,950			—			19,950
Income tax effect (5)		741			—			2,872			—
Non-GAAP income tax expense (benefit)	$	994		$	1,587		$	3,560		$	4,530
GAAP net income	$	2,847		$	22,782		$	4,190		$	31,519
Non-cash stock-based compensation (1)		2,613			2,112			9,814			7,773
Amortization of acquired intangible assets (2)		269			136			1,038			465
Impairment loss on investment (3)		—			228			—			228
Tax benefit adjustments (4)		—			(19,950	)		—			(19,950	)
Income tax effect (5)		(741	)		—			(2,872	)		—
Gain on bargain purchase (6)		—			—			(365	)		—
Non-GAAP net income	$	4,988		$	5,308		$	11,805		$	20,035
GAAP net income per common share — basic	$	0.05		$	0.38		$	0.07		$	0.53
Non-cash stock-based compensation (1)		0.04			0.04			0.17			0.13
Amortization of acquired intangible assets (2)		0.00			0.00			0.02			0.01
Impairment loss on investment (3)		—			0.00			—			0.00
Tax benefit adjustments (4)		—			(0.33	)		—			(0.33	)
Income tax effect (5)		(0.01	)		—			(0.05	)		—
Gain on bargain purchase (6)		—			—			(0.01	)		—
Non-GAAP net income per common share — basic	$	0.08		$	0.09		$	0.20		$	0.34
GAAP net income per common share — diluted	$	0.04		$	0.37		$	0.07		$	0.50
Non-cash stock-based compensation (1)		0.04			0.04			0.16			0.13
Amortization of acquired intangible assets (2)		0.01			0.00			0.02			0.01
Impairment loss on investment (3)		—			0.00			—			0.00
Tax benefit adjustments (4)		—			(0.32	)		—			(0.32	)
Income tax effect (5)		(0.01	)		—			(0.05	)		—
Gain on bargain purchase (6)		—			—			(0.01	)		—
Non-GAAP net income per common share — diluted	$	0.08		$	0.09		$	0.19		$	0.32
Shares used in per common share calculations:
Basic		60,925			59,709			60,447			58,967
Diluted		63,807			62,334			63,062			62,791

Footnotes – Adjustments

(1) Represents non-cash stock-based compensation expense as follows:

	Three months ended				Twelve months ended
	January 31,				January 31,
	2010		2009		2010		2009
Cost of product revenue	$	15	$	46	$	49	$	176
Cost of services revenue		99		62		393		227
Sales and marketing		861		695		3,268		2,535
Research and development		759		538		2,793		2,067
General and administrative		879		771		3,311		2,768
Total non-cash stock-based compensation expense	$	2,613	$	2,112	$	9,814	$	7,773

(2) Represents amortization of acquired intangible assets:

	Three months ended					Twelve months ended
	January 31,					January 31,
	2010		2009			2010		2009
Cost of product revenue	$	97	$	—		$	360	$	4
Cost of services revenue		88		82			346		275
Sales and marketing		73		55			285		119
Research and development		10		—			40		48
General and administrative		1		(1	)		7		19
Total amortization expense	$	269	$	136		$	1,038	$	465

(3) Represents net mark-to-market impact related to an unrealized gain on a put option received for ARS offset by the unrealized loss
on the underlying ARS.

	Three months ended				Twelve months ended
	January 31,				January 31,
	2010		2009		2010		2009
Impairment loss on investment	$	—	$	228	$	—	$	228

(4) Represents income tax benefit resulting from the release of the tax valuation allowance on deferred tax assets that is no longer deemed necessary.

	Three months ended					Twelve months ended
	January 31,					January 31,
	2010		2009			2010		2009
Utilization of deferred tax credit	$	—	$	(836	)	$	—	$	(836	)
Benefit from reclass of valuation allowance		—		20,786			—		20,786
Total tax benefit adjustments	$	—	$	19,950		$	—	$	19,950

(5)	Income tax effect of excluding stock-based compensation, amortization of acquired intangible assets and gain on bargain purchase. There was no adjustment for the comparable period in FY2009.
(6)	Represents gain on bargain purchase resulting from the value of identifiable net assets acquired exceeding the value of the purchase price for Netezza’s acquisition of Tizor Systems, Inc.