OCZ: Fiscal 2Q12 Financial Results
SSD revenues up 252% from 2Q11, 3% from 1Q12
This is a Press Release edited by StorageNewsletter.com on October 6, 2011 at 2:59 pm| (in US$ millions) | 2Q11 | 2Q12 | 6 mo. 11 | 6 mo. 12 |
| Revenues | 38.0 | 78.5 | 72.3 | 152.2 |
| Growth | 106% | 111% | ||
| Net income (loss) | (7.6) | 3.3 | (12.4) | (5.9) |
OCZ Technology Group, Inc. reports its second quarter results for the fiscal year 2012 (Q2’12), which ended on August 31, 2011.
Q2’12 Financial Highlights
- Net revenue in Q2’12 was a record $78.5 million, and increased 106% compared with net revenue of $38.0 million reported in Q2’11, and increased 6% compared with the $73.8 million reported in Q1’12
- SSD revenue reached a record $71.1 million, an increase of 252% compared with Q2’11 SSD revenue of $20.2 million, and a 3% increase compared with Q1’12 SSD revenue of $69.1 million
- Gross margin increased to 21.6% compared with 4.3% in Q2’11, and 20.0% in Q1’12
- GAAP net income in Q2’12 of $3.2 million or $0.06 per share
GAAP net income for Q2’12 was $3.2 million or $0.06 income per share compared with a GAAP net loss of $7.6 million or $0.29 loss per share in Q2’11. Non-GAAP net loss for Q2’12 was $1.4 million or $0.03 loss per share as compared with a non-GAAP net loss for Q2’11 of $9.7 million, or $0.36 loss per share.
The non-GAAP loss for Q2’12 includes an increase in R&D expense including approximately $2.3 million related primarily to R&D prototyping, intellectual property and other specific engineering project expenses which are not reflective of R&D expense on a run-rate basis. A reconciliation between GAAP and non-GAAP information is contained in the tables below.
"We are pleased to report another quarter of record revenue and increased margins driven by the increased market adoption of our cost-effective, high performance SSDs, and we believe this continued momentum positions us well moving forward," said Ryan Petersen, CEO of OCZ Technology. "Moreover, our ongoing transition to the enterprise and server marketplaces continues on track and is supported by an increased, highly focused investment in research and development, particularly with today’s announcement of the acquisition of the UK-based Design Team and certain related IP licenses."
"During the second quarter we launched a number of important new PCIe products including our Z-Drive R4 PCIe solution for cloud computing and enterprise storage, our RevoDrive 3 line of workstation PCIe SSDs, and our RevoDrive Hybrid PCIe storage solution," added Petersen. "Indilinx Co. LTD, acquired in March, has now been completely integrated, facilitating the introduction of the unique Everest Series SSD platform, which we began shipping to laptop OEMs in Q2, and which will be implemented into our other product segments over the course of the next two quarters."
Recent Business Highlights
- Released the Z-Drive Revision 4 (R4) PCIe storage solutions featuring OCZ’s second generation proprietary Virtualized Controller Architecture (VCA) 2.0 which allows data centers, for the first time, to rely on a PCIe-based SSD as their primary tier one storage solution. The Z-Drive R4 was recently tested side by side with competing PCIe SSD solutions and was hailed as "one of the best enterprise storage devices available" by independent industry leading storage publications such as storagereview.com. The Z-Drive R4 is expected to begin generating revenue in the current fiscal quarter ending November 2011.
- Launched the RevoDrive 3 and RevoDrive 3 X2 lineup of PCIe SSDs. Designed to deliver maximum throughput in intensive, multithreaded workstation and non-intensive server applications including high performance computing, content creation, and workstation applications.
- Released the RevoDrive Hybrid PCIe storage solution utilizing a combination of SSD and HDD technology in partnership with Toshiba. This product is a revolutionary step forward in hybrid technology, enabling performance in SME applications of over 100K IOPS per LUN at a price of less than $0.50 per GB – the lowest price per GB of any high performance storage solution in the market. The RevoDrive Hybrid is expected to begin shipping in the current fiscal quarter ending November 2011.
- Unveiled the Indilinx Everest SATA 3.0 SSD platform which features support of 6Gbps interface speeds, delivering high transactional performance that is optimized for compressed files, and is available in configurations with maximum capacities up to 1TB. Everest based SSDs began shipping to major notebook OEMS, including LG Electronics, late in the second quarter and are expected to be deployed in a significant percentage of OCZ SSDs in the 2nd half of the current fiscal year.
- Displayed the newest generation of OCZ PCIe and SAS/SATA powered servers and storage arrays from key OEM partners such as Quanta Computers’ Cloud Computing Business Unit, ZT Systems, SGI, and SuperMicro Computer. Shown at a number of recent trade events, these next-generation OCZ equipped products are expected to provide a foundation for OCZ’s continuing drive into the enterprise segment.
Quarterly net revenue by product groups ($000)’s:
(a) Beginning in 1QFY12 Memory revenue is immaterial and included in Power Supplies/Other
Business Outlook:
- OCZ increases revenue guidance for fiscal year 2012, to be in the range of $320−$350 million, an increase of approximately 68%−85% compared with $190 million of net revenue in fiscal year 2011.
- The Company is reiterating its long term gross margin target range of 30%-40%, but in light of recent developments, the company expects gross margins to approach the target model range during latter part of the next fiscal year as opposed to the previously stated 2-3 years.
Comments
Abstracts of the earnings call transcript:
Ryan Petersen, CEO:
"Enterprise class SSD revenue increased over 60% sequentially and represented almost 20% of our SSD sales during the quarter.
"Server and high-performance products class SSD revenue as expected was slightly down sequentially and represented roughly 75% of our SSD sales during the quarter.
Consumer class SSDs increased about 70% sequentially and represented roughly 5% of our SSD sales during the quarter.
"As we previously discussed, we expect to see major improvements in our cost structure as we continue to shift our NAND flash purchasing from the stock market to buying directly from the manufacturer. We had previously reported that by the end of the fiscal year, our goal was to purchase about 75% of our NAND directly from the fab. We exited the quarter achieving that goal and are confident of being able to achieve the same on a quarterly run rate basis going forward.
"We're on track to double our manufacturing capacity during the third quarter to about $140 million per quarter in revenue at an average utilization rate of below 60%.
"Now, either directly or through OEMs, OCZ SSDs have recently been deployed to enterprise and data center clients such as AOL, eBay, SAP, Prudential, Marketwire, EdgeCast, ASK.Com, NTT DOCOMO, South Korean Telecom, Boxel, Boeing, Chevron, Carbonite, Honda, Bloomberg.
"In regards to our OEM partners, we've grown the list substantially in recent months. Our partners include companies such as Dell and HP, SGI, Quanta Cloud Computing, Supermicro, Panzura, Tegile, Astute Networks, Penguin Computing, Wistron, JVL, Flextronics."
Arthur Knapp, president and CFO:
"Looking at the second quarter revenue by major geographic areas based on shipping destination, North America grew 36% year-over-year representing 33% of revenue. EMEA grew 189% and accounted for 53% of revenue, the rest of world grew 139% representing 14% of revenue. On a sequential basis, revenue from North America grew to 24% primarily due to 20% higher SSD revenues. EMEA grew 2% and the rest of the world declined 10%.
"Turning to the Q2 balance sheet, our cash was approximately $46 million, a decrease of $19 million from Q1 as we invested in growing our inventory levels which increased by $24 million to $59 million compared to $35 million in Q1 and only $15 million a year ago."
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