Financial

posted on 25 July 2008 09:40

Deduplication storage array vendor Data Domain reported strong revenue growth for its second 2008 quarter.

Net revenues were $61.2 million, an impressive 131 percent increase on Q2 07's $46.72 million and a sequential rise of 16 percent from Q1 07's $52.76 million. The revenue number exceeded the company's guidance of $57 million - $59 million.

Q2 08 GAAP net income was $1.7 million ($0.03/share) compared to the year ago quarter's net loss of -$1.2 million (-$0.12/share). Sequentially though it was down as Q1 08's net income was $2.7 million ($0.4/share).

Frank Slootman, Data Domain president and CEO, said: "Our results for the second quarter of 2008 included record revenues, strong gross margins and significant growth in our customer base, which has more than doubled in the past year. Approximately 340 new customers were added during this past quarter, bringing Data Domain’s cumulative customer count to over 2,100 worldwide."

"Demand was strong for our new high end product, the DD690, which is the industry’s highest performance inline deduplication storage system for backup and other nearline applications. The DD690, in combination with our DD120 remote office appliance and our advanced replication capabilities, positions Data Domain to address the full range of needs for large distributed enterprises.”

Michael Scarpelli, the company's CFO, said: “Data Domain has again executed to plan, exceeding its revenue targets for the quarter, while continuing to invest in its infrastructure for growth. “GAAP net income was $1.7 million and gross margins were strong at 72%. In addition, we achieved operating profit while hiring an additional 87 employees, bringing total headcount to 614, and we continued to be cash flow positive.”

Data Domain’s customer count passed the 2,000 point in Q2 08. This is double the 1,000 reported in June, 2007. The supposition is that Data Domain has a strong pipeline for its high-end DD690 product and sales will continue to grow in the second half of this year with larger deal sizes being attainable.

The company is benefitting from a trend for enterprises to start consolidating non-frontline transactional data onto space-efficient - meaning de-duplicated - storage arrays. This rising tide is helping to lift all deduplication boats and the company faces a challenge in the years ahead of differentiating its products once all the storage majors offer similar functionality.

An expected product future is to offer clustering of its products, such as the DD690. This might happen within three months.

^{[Chris Mellor.]}