|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|
DevOps at Cloud Expo – being held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Am...
Aug. 28, 2016 03:15 PM EDT Reads: 3,475
Pulzze Systems was happy to participate in such a premier event and thankful to be receiving the winning investment and global network support from G-Startup Worldwide. It is an exciting time for Pulzze to showcase the effectiveness of innovative technologies and enable them to make the world smarter and better. The reputable contest is held to identify promising startups around the globe that are assured to change the world through their innovative products and disruptive technologies. There w...
Aug. 28, 2016 03:00 PM EDT Reads: 721
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
Aug. 28, 2016 01:45 PM EDT Reads: 3,645
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Aug. 28, 2016 01:00 PM EDT Reads: 2,409
SYS-CON Events announced today that StarNet Communications will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. StarNet Communications’ FastX is the industry first cloud-based remote X Windows emulator. Using standard Web browsers (FireFox, Chrome, Safari, etc.) users from around the world gain highly secure access to applications and data hosted on Linux-based servers in a central data center. ...
Aug. 28, 2016 12:15 PM EDT Reads: 834
Traditional on-premises data centers have long been the domain of modern data platforms like Apache Hadoop, meaning companies who build their business on public cloud were challenged to run Big Data processing and analytics at scale. But recent advancements in Hadoop performance, security, and most importantly cloud-native integrations, are giving organizations the ability to truly gain value from all their data. In his session at 19th Cloud Expo, David Tishgart, Director of Product Marketing ...
Aug. 28, 2016 11:45 AM EDT Reads: 666
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Aug. 28, 2016 11:30 AM EDT Reads: 1,944
There is growing need for data-driven applications and the need for digital platforms to build these apps. In his session at 19th Cloud Expo, Muddu Sudhakar, VP and GM of Security & IoT at Splunk, will cover different PaaS solutions and Big Data platforms that are available to build applications. In addition, AI and machine learning are creating new requirements that developers need in the building of next-gen apps. The next-generation digital platforms have some of the past platform needs a...
Aug. 28, 2016 11:00 AM EDT Reads: 674
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Aug. 28, 2016 11:00 AM EDT Reads: 3,115
SYS-CON Events announced today Telecom Reseller has been named “Media Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
Aug. 28, 2016 10:45 AM EDT Reads: 839
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Aug. 28, 2016 10:30 AM EDT Reads: 4,019
As the world moves toward more DevOps and Microservices, application deployment to the cloud ought to become a lot simpler. The Microservices architecture, which is the basis of many new age distributed systems such as OpenStack, NetFlix and so on, is at the heart of Cloud Foundry - a complete developer-oriented Platform as a Service (PaaS) that is IaaS agnostic and supports vCloud, OpenStack and AWS. Serverless computing is revolutionizing computing. In his session at 19th Cloud Expo, Raghav...
Aug. 28, 2016 10:30 AM EDT Reads: 882
StarNet Communications Corp has announced the addition of three Secure Remote Desktop modules to its flagship X-Win32 PC X server. The new modules enable X-Win32 to safely tunnel the remote desktops from Linux and Unix servers to the user’s PC over encrypted SSH. Traditionally, users of PC X servers deploy the XDMCP protocol to display remote desktop environments such as the Gnome and KDE desktops on Linux servers and the CDE environment on Solaris Unix machines. XDMCP is used primarily on comp...
Aug. 28, 2016 09:30 AM EDT Reads: 718
Enterprises have forever faced challenges surrounding the sharing of their intellectual property. Emerging cloud adoption has made it more compelling for enterprises to digitize their content, making them available over a wide variety of devices across the Internet. In his session at 19th Cloud Expo, Santosh Ahuja, Director of Architecture at Impiger Technologies, will introduce various mechanisms provided by cloud service providers today to manage and share digital content in a secure manner....
Aug. 28, 2016 09:30 AM EDT Reads: 764
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, wil...
Aug. 28, 2016 07:30 AM EDT Reads: 787