ISILON SYSTEMS ANNOUNCES 2008 FIRST QUARTER FINANCIAL RESULTS
SEATTLE, WA — May 7, 2008 — Isilon® Systems (NASDAQ: ISLN), the leader in clustered storage, today announced its financial results for the first quarter of 2008 that ended March 31, 2008. Revenue for the first quarter was $24.1 million, an increase of 35 percent compared with $17.8 million in the first quarter of 2007.
“I am encouraged by these results as we emerge from the challenges of the past few quarters,” said Sujal Patel, President and Chief Executive Officer, Isilon Systems. “Despite recent business headwinds and a seasonally slower first quarter, we witnessed record levels of repeat purchases from existing customers, reflecting Isilon’s strong value proposition and the modular, ‘pay as you grow,’ architecture of our clustered storage systems.”
Financial results for the first quarter of 2008 included the following:
| · | Gross margin for the first quarter of 2008 was 53.5 percent, compared with 48.1 percent in the first quarter last year. On a non-GAAP basis, gross margin for the first quarter was 53.7 percent, compared with 48.2 percent in the first quarter last year. |
| · | Loss from operations for the first quarter of 2008 was $10.8 million, compared with $8.0 million in the first quarter last year. On a non-GAAP basis, loss from operations for the first quarter of 2008 was $9.5 million, compared with $7.5 million in the first quarter last year. |
| · | Net loss for the first quarter of 2008 was $10.1 million, or $0.16 per share, compared with net loss of $6.9 million, or $0.11 per share, in the first quarter last year. Non-GAAP net loss for the first quarter was $8.8 million, or $0.14 per share, compared with non-GAAP net loss of $6.4 million, or $0.11 per share in the first quarter last year. |
| At March 31, 2008, cash, cash equivalents and marketable securities were $78.6 million, compared with $85.9 million at the end of 2007, and the company had no outstanding debt. |
Operating results for the first quarter of 2008 were impacted by $2.8 million, or $0.04 per share, in professional fees and expenses related to the Audit Committee’s independent review, which concluded at the end of the first quarter.
Conference Call
Isilon management will host a conference call today at 2:00 p.m. PT (5:00 p.m. ET) to discuss Isilon’s first quarter financial results. The conference call will be webcast on the Investor Relations section of Isilon’s website at www.isilon.com/company/, where it will be archived. In addition, the conference call will be accessible by telephone at 800-320-2978 or 617-614-4923; the passcode is 71639829.
A replay of the conference call will be available by telephone approximately two hours after the call ends until 9:00 p.m. PT (12:00 midnight ET), May 21, 2008, at 888-286-8010 or 617-801-6888; the passcode for the replay is 81176772.
About Isilon Systems
Isilon Systems (NASDAQ: ISLN) is the worldwide leader in clustered storage systems and software for digital content and unstructured data, enabling enterprises to transform data into information – and information into breakthroughs. Isilon’s award-winning family of IQ clustered storage systems combines Isilon’s OneFS® operating system software with the latest advances in industry-standard hardware to deliver modular, pay-as-you-grow, enterprise-class storage systems. Isilon’s clustered storage solutions speed access to critical business information while dramatically reducing the cost and complexity of storing it. Information about Isilon can be found at http://www.isilon.com.
Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements presented below in accordance with GAAP, this press release includes non-GAAP gross margin, non-GAAP loss from operations, non-GAAP net loss, and non-GAAP loss per share. Isilon provides non-GAAP information to enhance investors’ overall understanding of the company’s current financial performance and the company’s prospects for the future and to aid in comparing current operating results with those of past periods. The company believes the non-GAAP measures provide useful information to management and investors by excluding certain items that may not be indicative of Isilon’s core operating results and business outlook.
Non-GAAP gross margin, non-GAAP loss from operations and non-GAAP net loss exclude charges related to stock-based compensation. Isilon excludes stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that Isilon does not believe reflect core operating results. Stock-based compensation expense is dependent on a number of factors over which management has limited control and is not a factor management utilizes in operating the business.
These non-GAAP measures are not calculated in accordance with GAAP and should be considered supplemental to, and not a substitute for, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Isilon believes that non-GAAP measures have inherent limitations in that they do not reflect all of the amounts associated with Isilon's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Isilon's results of operations in conjunction with the corresponding GAAP measures. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis, prominently disclosing GAAP results and providing reconciliations from GAAP results to operational measures. We expect to continue to incur expenses similar to the non-GAAP adjustments described above, and the exclusion or inclusion of these items from our non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent.
A table following the financial statements provides a reconciliation of the most directly comparable GAAP measures to the non-GAAP measures used by management.
Safe Harbor for Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning our future financial and operating results, the benefits of our products, technologies and services, and our ability to achieve our goals, plans and objectives. These statements are not guarantees of future performance, but are based on management's expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. The use of words such as "intend" and "expect," among others, generally identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements involve risks, uncertainties, and assumptions. 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. There can be no assurances that forward-looking statements will be achieved. Important factors that could cause actual results to differ materially from those indicated in forward-looking statements include the following: risks associated with anticipated growth in the storage of unstructured, digital content; competitive factors, including changes in the competitive environment, pricing pressures, sales cycle time and increased competition; our ability to build and expand our direct sales operations and reseller distribution channels; our ability to build sales backlogs and improve sales linearity; general economic and industry conditions, including expenditure trends for storage-related products; new product introductions and our ability to develop and deliver innovative products; our ability to provide high-quality service and support offerings; our reliance on a limited number of suppliers and our ability to forecast demand for our products and potential shortages or price fluctuations in our supply chain; risks associated with international operations; and, macroeconomic factors affecting the United States. These and other important risk factors and assumptions are described in detail in our 2007 Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. The Company makes no commitment to revise or update any forward-looking statements in order to reflect subsequent events or circumstances.
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Contacts:
Press:
Jay Wampold, Senior Director of Marketing and Communications, Isilon Systems,
+1-206-315-7620, jay.wampold@isilon.com
Investors:
Rosemary Moothart, Director of Investor Relations, Isilon Systems,
+1-206-315-7509, rosemary.moothart@isilon.com
