|By Business Wire||
|July 24, 2014 04:00 PM EDT||
Datalink (Nasdaq: DTLK), a leading provider of data center infrastructure and services, today reported results for its second quarter and six months that ended June 30, 2014. Revenues for the quarter ended June 30, 2014 increased 8% to $159.4 million compared to $147.8 million for the quarter ended June 30, 2013, and increased 14% over revenues of $139.5 million in the first quarter of 2014. Revenues for the six months ended June 30, 2014, increased 6% to $298.9 million compared to $281.3 million for the six months ended June 30, 2013.
On a GAAP basis, the company reported net earnings of $3.6 million or $0.16 per diluted share for the second quarter ended June 30, 2014. This compares to net earnings of $2.9 million or $0.16 per diluted share in the second quarter of 2013. For the six months ended June 30, 2014, the company reported net earnings of $3.9 million or $0.18 per diluted share, compared to net earnings of $4.0 million, or $0.22 per diluted share, for the six months ended June 30, 2013.
Non-GAAP net earnings for the second quarter of 2014 were $4.9 million, or $0.22 per diluted share, compared to non-GAAP net earnings of $4.7 million, or $0.26 per diluted share, in the second quarter of 2013. For the six months ended June 30, 2014, the company reported non-GAAP net earnings of $6.1 million, or $0.28 per diluted share, compared to non-GAAP net earnings of $7.8 million, or $0.43 per diluted share, for the six months ended June 30, 2013. A detailed reconciliation between GAAP and non-GAAP information is contained in the tables included herein.
The company’s results for the quarter and six months ended June 30, 2014, reflect the full impact of the additional 3.8 million common shares issued in connection with the follow-on stock offering which closed on August 14, 2013. The dilution earnings from the additional shares outstanding on the 2014 first quarter and six months were approximately $0.05 and $0.06 per share, respectively.
Highlights of the quarter and six months ended June 30, 2014, include:
- Record second quarter and first six month revenues, exceeding guidance issued in May and fueled in part by placement of orders that had been delayed in the 1st quarter of 2014 as customers evaluated newer solid state storage and hybrid cloud strategies.
- 11% and 13% year-over-year increases in total services revenues during the second quarter and six months, respectively.
- Continued increases in converged data center infrastructure orders, including a 7% quarter-over-quarter and 18% year-over-year increase.
- A 15% increase in the number of customers spending more than $1 million with the company during the first six months of 2014 compared to the first six months of 2013.
- A #1 partner ranking for NetApp FlexPod and clustered Data ONTAP sales in the Americas during NetApp’s 2014 fiscal year, based on revenues.
- Continued investment in Datalink’s Advanced Services offerings, with revenues increasing 43% to $3.1 million in the second quarter of 2014 as compared to the first quarter of 2014.
- A #47 ranking on CRN’s 2014 Solution Provider 500 list of North America’s top technology integrators based on annual revenues, marking a steady climb from #72 just four years ago.
“The second quarter of 2014 saw a partial return to a normal sales cadence as some customers completed their due diligence on newer technologies like flash storage and cloud computing that had postponed sales we originally expected to close in the first quarter. We expect more of these delayed orders to get placed in the third quarter and that is reflected in our guidance,” said Paul Lidsky, Datalink’s president and CEO. “At the same time, the combination of increased services and converged technologies revenues demonstrates the validity of our end-to-end data center product and services model and its potential for building our business.”
Based on the company’s current backlog and sales pipeline, the company projects revenues of $150.0 million to $160.0 million for the third quarter of 2014 compared to $139.6 million for the third quarter of 2013. This represents an increase in expected revenues of between 7% and 15%. The company expects third quarter 2014 net earnings to be between $0.11 and $0.17 per diluted share on a GAAP basis, and net earnings of between $0.16 and $0.22 per diluted share on a non-GAAP basis. This compares to net earnings of $0.04 per diluted share and $0.13 per diluted share on a GAAP and non-GAAP basis, respectively, for the same period in 2013.
Non-GAAP earnings per share exclude the effect of acquisition accounting adjustments from the StraTech acquisition to deferred revenue and costs, integration and transaction costs related to acquisitions, stock-based compensation expense, amortization of intangible assets, and the related effects on income taxes. The company estimates this total effect will be approximately $0.05 per diluted share for the third quarter of 2014.
Conference Call and Webcast Today
Datalink will hold a conference call shortly afterward at 4:00 p.m. Central Time during which time Datalink president and chief executive officer, Paul Lidsky, and chief financial officer, Greg Barnum, will discuss company results and provide a business overview. Participants can access the conference call by dialing (866) 510-0712. Participants will be asked to identify the Datalink conference call and provide the designated identification number (54017216). A live webcast of the conference call can be accessed here or via Datalink’s investor relations website at www.datalink.com.
A complete data center solutions and services provider for Fortune 500 and mid-tier enterprises, Datalink transforms data centers so they become more efficient, manageable and responsive to changing business needs. Datalink helps leverage and protect storage, server, and network investments with a focus on long-term value, offering a full lifecycle of services, from consulting and design to implementation, management and support. Datalink solutions span virtualization and consolidation, data storage and protection, advanced network infrastructures, business continuity, and cloud enablement. Each delivers measurable performance gains and maximizes the business value of IT. For more information, call 800.448.6314 or visit www.datalink.com.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. This press release contains forward-looking statements, including our internal projections of certain anticipated 2014 results, which reflect our views regarding future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including those identified below, which could cause actual results to differ materially from historical results or those anticipated. The words "aim,” "believe," "expect," "anticipate," "intend," "estimate," "should" and other expressions which indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending upon a variety of factors, many of which are included under “Risk Factors” in our annual report on Form 10-K for our year ended December 31, 2013, including, but not limited to: the level of continuing demand for data center solutions and services including the effects of current economic and credit conditions and the ability of organizations to outsource data center infrastructure-related services to service providers such as us; the migration of organizations to virtualized server environments, including using a private cloud computing infrastructure; the extent to which customers deploy disk-based backup recovery solutions; the realization of the expected trends identified for advanced network infrastructures; reliance by manufacturers on their data service partners to integrate their specialized products; continued preferred status with certain principal suppliers; competition and pricing pressures and timing of our installations that may adversely affect our revenues and profits; fixed employment costs that may impact profitability if we suffer revenue shortfalls; our ability to hire and retain key technical and sales personnel; continued productivity of our sales personnel; our dependence on key suppliers; our ability to adapt to rapid technological change; success of the implementation of our enterprise resource planning system; risks associated with integrating completed and future acquisitions; the ability to execute our acquisition strategy; fluctuations in our quarterly operating results; future changes in applicable accounting rules; and volatility in our stock price. Furthermore, our revenues for any particular quarter are not necessarily reflected by our backlog of contracted orders, which also may fluctuate unpredictably. We cannot assure you that we can grow or maintain our revenue and backlog from current levels. Additional factors that may cause actual results to differ from our assumptions and expectations include those set forth in our most recent filing on Form 10-K filed with the Securities and Exchange Commission. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Non-GAAP financial measures exclude the impact from acquisition accounting adjustments to deferred revenue and costs, stock-based compensation expense, amortization of acquisition intangible assets, integration and transaction costs related to acquisitions, severance costs and the related effects on income taxes. These non-GAAP measures are not in accordance with, or an alternative 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. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.
These non-GAAP financial measures facilitate management's internal comparisons to our historical operating results and comparisons to competitors' operating results. We include these non-GAAP financial measures in our earnings announcement because we believe they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making, such as employee compensation planning. We believe that the presentation of these non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides useful information to investors and management regarding financial and business trends relating to our financial condition and results of operations.
|STATEMENTS OF OPERATIONS|
|(In thousands, except per share data)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Total net sales||159,380||147,779||298,915||281,297|
|Cost of sales:|
|Cost of products||76,411||72,747||143,181||138,813|
|Cost of services||47,486||41,471||90,769||79,090|
|Total cost of sales||123,897||114,218||233,950||217,903|
|Sales and marketing||15,867||15,572||31,531||28,779|
|General and administrative||4,837||5,051||10,138||10,694|
|Integration and transaction costs||-||25||-||73|
|Amortization of intangibles||1,359||1,841||2,775||3,823|
|Total operating expenses||29,509||28,625||59,404||56,493|
|Earnings from operations||5,974||4,936||5,561||6,901|
|Gain on settlement related to StraTech acquisition||-||-||876||-|
|Earnings before income taxes||5,967||4,919||6,449||6,785|
|Income tax expense||2,404||2,015||2,585||2,783|
|Earnings per common share:|
|Weighted average common shares outstanding:|
|(In thousands, except share data)|
|June 30,||December 31,|
|Cash and cash equivalents||$||33,399||$||24,871|
|Short term investments||45,037||51,214|
|Accounts receivable, net||102,211||131,246|
|Current deferred customer support contract costs||98,893||89,304|
|Inventories shipped but not installed||10,580||16,000|
|Income tax receivable||1,481||-|
|Other current assets||1,059||1,279|
|Total current assets||292,678||318,034|
|Deferred customer support contract costs non-current||49,217||49,044|
|Property and equipment, net||6,838||6,722|
|Finite-lived intangibles, net||10,734||13,509|
|Long term lease receivable||2,811||510|
|Liabilities and Stockholders' Equity|
|Floor plan line of credit||$||16,991||$||19,977|
|Accrued sales and use tax||1,713||2,067|
|Accrued expenses, other||5,888||8,033|
|Income tax payable||-||11,586|
|Current deferred taxes||1,694||1,694|
|Current deferred revenue from customer support contracts||123,152||110,567|
|Other current liabilities||1,109||187|
|Total current liabilities||193,934||226,780|
|Deferred revenue from customer support contracts non-current||60,312||59,576|
|Long term lease payable||2,385||-|
|Other liabilities non-current||561||956|
|Common stock, $.001 par value, 50,000,000 shares authorized, 22,492,992 and 22,785,422 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively||22||23|
|Additional paid-in capital||111,907||111,239|
|Total stockholders' equity||150,327||145,796|
|Total liabilities and stockholders' equity||$||407,519||$||433,108|
|RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME|
|(In thousands, except per share data)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Earnings from operations on a GAAP basis||$||5,974||$||4,936||$||5,561||$||6,901|
|GAAP operating margin||3.7||%||3.3||%||1.9||%||2.5||%|
|Purchase accounting adjustment to StraTech deferred revenue and cost, net||51||297||108||809|
|Total gross margin adjustments||51||297||108||809|
|Stock based compensation expense included in sales and marketing||131||334||451||606|
|Stock based compensation expense included in general and administrative||370||302||790||828|
|Stock based compensation expense included in engineering||239||217||483||360|
|Integration and transaction costs||-||25||-||73|
|Amortization of intangible assets||1,359||1,841||2,775||3,823|
|Total operating expense adjustments||2,099||2,719||4,499||5,690|
|Non-GAAP earnings from operations||8,124||7,952||10,168||13,400|
|Non-GAAP operating margin||5.1||%||5.4||%||3.4||%||4.8||%|
|Interest expense, net||(7||)||(17||)||12||(116||)|
|Income tax expense impact including Non-GAAP items||3,247||3,271||4,072||5,471|
|Non-GAAP net earnings||$||4,870||$||4,664||$||6,108||$||7,813|
|Non-GAAP net earnings per share - Basic||$||0.23||$||0.27||$||0.28||$||0.44|
|Non-GAAP net earnings per share - Diluted||$||0.22||$||0.26||$||0.28||$||0.43|
|Shares used in non-GAAP per share calculation - Basic||21,519||17,600||21,528||17,566|
|Shares used in non-GAAP per share calculation - Diluted||22,039||18,103||22,007||17,986|
|STATEMENT OF CASH FLOWS|
|Six Months Ended|
|Cash flows from operating activities:|
|Adjustments to reconcile net earnings to net cash provided by operating activities:|
|Change in fair value of short term investments||4||-|
|Provision (benefit) for bad debts||71||(44||)|
|Amortization of finite-lived intangibles||2,775||3,823|
|Gain on settlement related to StraTech acquisition||(876||)||-|
|Deferred income taxes||316||174|
|Stock based compensation expense||1,724||1,794|
|Changes in operating assets and liabilities:|
|Accounts receivable, net and leases receivable||26,663||50,756|
|Deferred costs/revenues/customer deposits, net||4,211||5,257|
|Accounts payable and leases payable||(25,145||)||(40,386||)|
|Income tax receivable||(1,481||)||2,135|
|Income tax payable||(11,586||)||-|
|Net cash provided by operating activities||6,860||20,196|
|Cash flows from investing activities:|
|Sales of short term investments||6,173||-|
|Purchases of property and equipment||(1,338||)||(1,679||)|
|Net cash provided by (used in) investing activities||4,835||(1,679||)|
|Cash flows from financing activities:|
|Net payments under line of credit||-||(6,000||)|
|Net payments under floor plan line of credit||(2,986||)||-|
|Excess tax from stock compensation||526||277|
|Proceeds from issuance of common stock from option exercise||88||237|
|Tax withholding payments reimbursed by restricted stock||(795||)||(244||)|
|Net cash used in financing activities||(3,167||)||(5,730||)|
|Increase in cash and cash equivalents||8,528||12,787|
|Cash and cash equivalents, beginning of period||24,871||10,315|
|Cash and cash equivalents, end of period||$||33,399||$||23,102|
|Supplemental cash flow information:|
|Cash paid for income taxes||$||14,809||$||242|
|Cash paid for interest expense||$||-||$||68|
“We help people build clusters, in the classical sense of the cluster. We help people put a full stack on top of every single one of those machines. We do the full bare metal install," explained Greg Bruno, Vice President of Engineering and co-founder of StackIQ, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 19, 2014 10:00 PM EST Reads: 1,200
AppZero has announced that its award-winning application migration software is now fully qualified within the Microsoft Azure Certified program. AppZero has undergone extensive technical evaluation with Microsoft Corp., earning its designation as Microsoft Azure Certified. As a result of AppZero's work with Microsoft, customers are able to easily find, purchase and deploy AppZero from the Azure Marketplace. With just a few clicks, users have an Azure-based solution for moving applications to the...
Dec. 19, 2014 08:00 PM EST Reads: 744
The cloud is becoming the de-facto way for enterprises to leverage common infrastructure while innovating and one of the biggest obstacles facing public cloud computing is security. In his session at 15th Cloud Expo, Jeff Aliber, a global marketing executive at Verizon, discussed how the best place for web security is in the cloud. Benefits include: Functions as the first layer of defense Easy operation –CNAME change Implement an integrated solution Best architecture for addressing network-l...
Dec. 19, 2014 07:00 PM EST Reads: 1,185
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
Dec. 19, 2014 07:00 PM EST Reads: 736
“In the past year we've seen a lot of stabilization of WebRTC. You can now use it in production with a far greater degree of certainty. A lot of the real developments in the past year have been in things like the data channel, which will enable a whole new type of application," explained Peter Dunkley, Technical Director at Acision, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 19, 2014 06:00 PM EST Reads: 1,160
The BPM world is going through some evolution or changes where traditional business process management solutions really have nowhere to go in terms of development of the road map. In this demo at 15th Cloud Expo, Kyle Hansen, Director of Professional Services at AgilePoint, shows AgilePoint’s unique approach to dealing with this market circumstance by developing a rapid application composition or development framework.
Dec. 19, 2014 04:45 PM EST Reads: 807
The major cloud platforms defy a simple, side-by-side analysis. Each of the major IaaS public-cloud platforms offers their own unique strengths and functionality. Options for on-site private cloud are diverse as well, and must be designed and deployed while taking existing legacy architecture and infrastructure into account. Then the reality is that most enterprises are embarking on a hybrid cloud strategy and programs. In this Power Panel at 15th Cloud Expo (http://www.CloudComputingExpo.com...
Dec. 19, 2014 11:30 AM EST Reads: 2,295
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 19, 2014 11:00 AM EST Reads: 1,851
SYS-CON Media announced today that Aruna Ravichandran, VP of Marketing, Application Performance Management and DevOps at CA Technologies, has joined DevOps Journal’s authors. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Aruna's inaugural article "Four Essential Cultural Hacks for DevOps Newbies" discusses how to demonstrate the...
Dec. 19, 2014 10:00 AM EST Reads: 1,691
The move in recent years to cloud computing services and architectures has added significant pace to the application development and deployment environment. When enterprise IT can spin up large computing instances in just minutes, developers can also design and deploy in small time frames that were unimaginable a few years ago. The consequent move toward lean, agile, and fast development leads to the need for the development and operations sides to work very closely together. Thus, DevOps become...
Dec. 19, 2014 10:00 AM EST Reads: 1,960
"Our premise is Docker is not enough. That's not a bad thing - we actually love Docker. At ActiveState all our products are based on open source technology and Docker is an up-and-coming piece of open source technology," explained Bart Copeland, President & CEO of ActiveState Software, in this SYS-CON.tv interview at DevOps Summit at Cloud Expo®, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 19, 2014 09:00 AM EST Reads: 1,886
Verizon Enterprise Solutions is simplifying the cloud-purchasing experience for its clients, with the launch of Verizon Cloud Marketplace, a key foundational component of the company's robust ecosystem of enterprise-class technologies. The online storefront will initially feature pre-built cloud-based services from AppDynamics, Hitachi Data Systems, Juniper Networks, PfSense and Tervela. Available globally to enterprises using Verizon Cloud, Verizon Cloud Marketplace provides a one-stop shop fo...
Dec. 19, 2014 08:00 AM EST Reads: 1,877
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, p...
Dec. 19, 2014 07:00 AM EST Reads: 2,163
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover ...
Dec. 19, 2014 06:30 AM EST Reads: 2,158
ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ -- IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's