Netezza 8-K Netezza Announces Second Quarter Fiscal Year 2011 Financial Results

Exhibit 99.1

NETEZZA ANNOUNCES SECOND QUARTER
FISCAL YEAR 2011 FINANCIAL RESULTS

Marlborough, MA — August 26, 2010 —Netezza Corporation (NYSE: NZ), the global leader indata warehouse, analytic and monitoring appliances, today reported its financial results for the second fiscal quarter ended July 31, 2010.

     “The momentum we are experiencing this year has resulted in strong financial results for Netezza this quarter, with record revenues and operating income,” said Jim Baum, Netezza’s President and Chief Executive Officer. “Our customers and partners continue to embrace our value proposition and technology. We are excited about our opportunities as we continue to help organizations maximize their use of high-performance data analytics to make critical time-sensitive decisions, predict future events, and dramatically enhance the way they do business.”

Total revenue for the second quarter of fiscal 2011 (fiscal year ending January 31, 2011) increased 45% to $63.8 million compared to $43.9 million for the second quarter of fiscal 2010. Total revenue for the six months ended July 31, 2010 increased 37% to $122.0 million compared to $89.3 million for the same period one year ago.

GAAP net income for the second quarter of fiscal 2011 was $3.2 million, or $0.05 per diluted share, compared to GAAP net income of $0.7 million, or $0.01 per diluted share, for the second quarter of fiscal 2010. GAAP net income for the six months ended July 31, 2010 was $5.9 million, or $0.09 per diluted share, compared to GAAP net income of $0.5 million, or $0.01 per diluted share, for the same period one year ago.

Non-GAAP net income for the second quarter of fiscal 2011 was $5.8 million, or $0.09 per diluted share, compared to non-GAAP net income of $2.3 million, or $0.04 per diluted share, for the second quarter of fiscal 2010. Non-GAAP net income for the six months ended July 31, 2010 was $10.7 million, or $0.16 per diluted share, compared to non-GAAP net income of $3.8 million, or $0.06 per diluted share, for the same period one year ago.

Non-GAAP net income and non-GAAP net income per diluted share exclude non-cash stock-based compensation, amortization of acquired intangible 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 the results for our second fiscal quarter,” said Patrick Scannell, Netezza’s Senior Vice President and Chief Financial Officer. “Our performance in the first half of the fiscal year reflected strength in our business across all verticals, and we expect to see this continue. As a result, we are increasing our guidance for the full fiscal year to approximately 30% annual revenue growth. We will continue to invest across the organization during the second half of the year and expect operating margin improvement year over year.”

Conference Call Information

Date: August 26, 2010
Time: 4:30 p.m. Eastern Time
Toll-free North America: +1-866-730-5763
International dial-in number: +1-857-350-1587
Passcode: 25643884

A telephonic replay of the conference call will also be available two hours after the call and will run 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 41876413.

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, analytic and monitoring 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, Poland, Japan, Korea, Australia and Singapore. For more information about Netezza, please visitwww.netezza.com.

Forward Looking Statements

The statements set forth in this press release 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, among others: market demand for and acceptance of our products; adverse changes in economic conditions; quarterly fluctuation of our business; our limited history of profitability; our dependence on a single product family for nearly all of our revenue; 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, 2010, and Netezza’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2010, 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 August 26, 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 August 26, 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, 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 to measure stock-based compensation expense, 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. The gain on bargain purchase in the three months ended July 31, 2009 resulted from the value of identifiable net assets acquired exceeding the value of the purchase consideration transferred for Netezza’s acquisition of Tizor Systems, Inc. Since Netezza had no gain on bargain purchase in any other 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® and the Netezza “N” 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
(Unaudited)
(In thousands)

	July 31,		January 31,
	2010		2010
ASSETS
Current assets
Cash and cash equivalents	$	66,567	$	40,638
Short-term marketable securities		69,777		64,020
Accounts receivable		32,376		53,450
Inventory		32,160		28,708
Deferred tax assets, net		17,168		14,490
Restricted cash		60		60
Prepaid expenses and other current assets		9,456		4,675
Total current assets		227,564		206,041
Property and equipment, net		11,012		8,469
Deferred tax assets, net		10,290		12,048
Goodwill		2,000		2,000
Intangible assets, net		3,561		4,056
Long-term marketable securities		42,224		49,769
Restricted cash		439		639
Other long-term assets		906		575
Total assets	$	297,996	$	283,597
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	6,537	$	12,604
Accrued expenses		9,767		5,906
Accrued compensation and benefits		7,906		6,776
Current portion of deferred revenue		44,799		49,665
Total current liabilities		69,009		74,951
Long-term deferred revenue		11,665		8,727
Other long-term liabilities		2,332		2,326
Total liabilities		83,006		86,004
Stockholders’ equity		214,990		197,593
Total liabilities and stockholders’ equity	$	297,996	$	283,597

Netezza Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)

	Three months ended					Six months ended
	July 31,					July 31,
	2010			2009		2010			2009
Revenue
Product	$	47,276		$	29,969	$	90,113		$	62,671
Services		16,531			13,965		31,868			26,630
Total revenue		63,807			43,934		121,981			89,301
Cost of revenue
Product		17,259			11,123		32,704			23,467
Services		5,316			3,420		9,646			6,895
Total cost of revenue		22,575			14,543		42,350			30,362
Gross margin		41,232			29,391		79,631			58,939
Operating expenses
Sales and marketing		20,922			15,729		40,072			30,405
Research and development		10,951			9,297		21,780			20,917
General and administrative		4,408			3,974		8,958			7,950
Total operating expenses		36,281			29,000		70,810			59,272
Operating income (loss)		4,951			391		8,821			(333	)
Interest income		243			197		529			507
Interest expense		—			25		—			50
Other income (expense), net		(87	)		247		(133	)		378
Income before income tax expense		5,107			810		9,217			502
Income tax expense		1,923			80		3,361			9
Net income	$	3,184		$	730	$	5,856		$	493
Net income per share
Basic	$	0.05		$	0.01	$	0.10		$	0.01
Diluted	$	0.05		$	0.01	$	0.09		$	0.01
Weighted average common shares outstanding
Basic		61,941			60,232		61,569			60,104
Diluted		65,938			62,847		65,283			62,675

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

	Three months ended						Six months ended
	July 31,						July 31,
	2010			2009			2010			2009
Non-GAAP financial measures and reconciliation:
GAAP cost of product revenue	$	17,259		$	11,123		$	32,704		$	23,467
Non-cash stock-based compensation (1)		30			11			53			22
Amortization of acquired intangible assets (2)		97			97			191			166
Non-GAAP cost of product revenue	$	17,132		$	11,015		$	32,460		$	23,279
GAAP cost of services revenue	$	5,316		$	3,420		$	9,646		$	6,895
Non-cash stock-based compensation (1)		185			98			331			195
Amortization of acquired intangible assets (2)		53			88			138			170
Non-GAAP cost of services revenue	$	5,078		$	3,234		$	9,177		$	6,530
GAAP gross margin	$	41,232		$	29,391		$	79,631		$	58,939
Non-cash stock-based compensation (1)		215			109			384			217
Amortization of acquired intangible assets (2)		150			185			329			336
Non-GAAP gross margin	$	41,597		$	29,685		$	80,344		$	59,492
GAAP sales and marketing expenses	$	20,922		$	15,729		$	40,072		$	30,405
Non-cash stock-based compensation (1)		1,172			816			2,194			1,566
Amortization of acquired intangible assets (2)		74			72			144			140
Non-GAAP sales and marketing expenses	$	19,676		$	14,841		$	37,734		$	28,699
GAAP research and development expenses	$	10,951		$	9,297		$	21,780		$	20,917
Non-cash stock-based compensation (1)		892			683			1,720			1,317
Amortization of acquired intangible assets (2)		9			10			18			20
Non-GAAP research and development expenses	$	10,050		$	8,604		$	20,042		$	19,580
GAAP general and administrative expenses	$	4,408		$	3,974		$	8,958		$	7,950
Non-cash stock-based compensation (1)		1,150			839			2,110			1,582
Amortization of acquired intangible assets (2)		2			2			4			4
Non-GAAP general and administrative expenses	$	3,256		$	3,133		$	6,844		$	6,364
GAAP operating expenses	$	36,281		$	29,000		$	70,810		$	59,272
Non-cash stock-based compensation (1)		3,214			2,338			6,024			4,465
Amortization of acquired intangible assets (2)		85			84			166			164
Non-GAAP operating expenses	$	32,982		$	26,578		$	64,620		$	54,643
GAAP operating income (loss)	$	4,951		$	391		$	8,821		$	(333	)
Non-cash stock-based compensation (1)		3,429			2,447			6,408			4,682
Amortization of acquired intangible assets (2)		235			269			495			500
Non-GAAP operating income	$	8,615		$	3,107		$	15,724		$	4,849
GAAP other income (expense), net	$	(87	)	$	247		$	(133	)	$	378
Gain on bargain purchase (4)		—			(365	)		—			(365	)
Non-GAAP other income (expense), net	$	(87	)	$	(118	)	$	(133	)	$	13
GAAP income tax expense	$	1,923		$	80		$	3,361		$	9
Income tax effect (3)		1,056			803			2,108			1,465
Non-GAAP income tax expense	$	2,979		$	883		$	5,469		$	1,474
GAAP net income	$	3,184		$	730		$	5,856		$	493
Non-cash stock-based compensation (1)		3,429			2,447			6,408			4,682
Amortization of acquired intangible assets (2)		235			269			495			500
Income tax effect (3)		(1,056	)		(803	)		(2,108	)		(1,465	)
Gain on bargain purchase (4)		—			(365	)		—			(365	)
Non-GAAP net income	$	5,792		$	2,278		$	10,651		$	3,845
GAAP net income per share — basic	$	0.05		$	0.01		$	0.10		$	0.01
Non-cash stock-based compensation (1)		0.06			0.05			0.10			0.07
Amortization of acquired intangible assets (2)		0.00			0.00			0.01			0.01
Income tax effect (3)		(0.02	)		(0.01	)		(0.04	)		(0.02	)
Gain on bargain purchase (4)		—			(0.01	)		—			(0.01	)
Non-GAAP net income per share — basic	$	0.09		$	0.04		$	0.17		$	0.06
GAAP net income per share — diluted	$	0.05		$	0.01		$	0.09		$	0.01
Non-cash stock-based compensation (1)		0.06			0.05			0.10			0.07
Amortization of acquired intangible assets (2)		0.00			0.00			0.01			0.01
Income tax effect (3)		(0.02	)		(0.01	)		(0.04	)		(0.02	)
Gain on bargain purchase (4)		—			(0.01	)		—			(0.01	)
Non-GAAP net income per share — diluted	$	0.09		$	0.04		$	0.16		$	0.06
Weighted average common shares outstanding
Basic		61,941			60,232			61,569			60,104
Diluted		65,938			62,847			65,283			62,675

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

	Three months ended				Six months ended
	July 31,				July 31,
	2010		2009		2010		2009
Cost of product revenue	$	30	$	11	$	53	$	22
Cost of services revenue		185		98		331		195
Sales and marketing		1,172		816		2,194		1,566
Research and development		892		683		1,720		1,317
General and administrative		1,150		839		2,110		1,582
Total non-cash stock-based compensation expense	$	3,429	$	2,447	$	6,408	$	4,682

(2) Represents amortization of acquired intangible assets:

	Three months ended				Six months ended
	July 31,				July 31,
	2010		2009		2010		2009
Cost of product revenue	$	97	$	97	$	191	$	166
Cost of services revenue		53		88		138		170
Sales and marketing		74		72		144		140
Research and development		9		10		18		20
General and administrative		2		2		4		4
Total amortization expense	$	235	$	269	$	495	$	500

(3)	Income tax effect of excluding stock-based compensation, amortization of acquired intangible assets and gain on bargain purchase.
(4)	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.