Q1 2009 Earnings Call
April 20, 2009 4:30 pm EST
Jeff Staszak – Chief Executive Officer
Mike Burns – Vice President and Chief Financial Officer
Previous Statements by VLTR
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First, today's earnings release and financial statements are available on the Investor section of the Company's Website at Volterra.com.
Second, we're going to discuss certain non-GAAP financial measures on this call. We've provided a reconciliation of the GAAP and non-GAAP financial measures in our press release. The non-GAAP measures exclude the effect of stock-based compensation expense and special items such as the effect of accounting changes net of tax. Unless we specifically state otherwise, when we give guidance about a financial measure, we mean the non-GAAP financial measure.
And, finally, I'd like to caution everyone that today's remarks contain forward-looking statements that are based on the Company's current views and expectations. Our actual results or events may differ materially from these forward-looking statements due to a number of risks and uncertainties.
Please review today's press release and our filings with the SEC, including our annual report on Form 10-K filed March 4, 2009, for a detailed discussion of the risk factors that could cause the actual results to differ materially from the forward-looking statements. And, also, please note that the Company undertakes no obligation to update or revise these forward-looking statements.
At this point, I'll turn the call over to Jeff to provide an overview of the business and our results.
Thanks, Mike. Good afternoon, and thanks for joining us today. First, I'll provide a short recap of the Q1 '09 financials. I'll then give a short update on our four focus markets, and, following this, I'll talk about Q2 '09 and provide guidance for the quarter. Finally, I'll hand it over to Mike to review the details of our financial performance for the quarter. And then we will open it up for any additional questions you may have.
In Q1 '09, revenue came in at the high end of our range at $18.3 million versus $23 million in Q1 '08 and $21.9 million in Q4 '08. Non-GAAP EPS was $0.03 versus $0.13 in Q1 '08 and $0.09 in Q4 '08. Non-GAAP gross margins were essentially flat with Q4 '08, at 56%.
Overall, I believe we hit bottom from a business and orders perspective in Q1. As I mentioned on our last call, orders were pretty bleak in the October/November timeframe last year. Order activity picked up in December and continued in January and February with our strongest month of orders occurring in March. We also believe that we are getting better near-term visibility from our customers. Our major customers adjusted their forecasts in January/February timeframe to a more realistic business environment, reflecting the current macroeconomic situation. As a result, our customer orders in Q1 '09 have been much more in line with forecasts than in Q4 '08.
Therefore, I am cautiously optimistic for an improving business scenario through the balance of this year as new platform launches occur and the economy gradually begins to recover.
Now I'd like to talk about our four focus markets and our current and future business opportunities within those markets. Although the current macroeconomic situation has had a negative impact on our short-term business, our long-term growth and profitability prospects remain very strong. We plan on sticking to our proven strategy of gaining market share, adding new customers, and further penetrating our existing base of customers as new products and platforms are launched in these four target markets.
In the server and storage market, we indicated in our last call that our revenue would be down in Q1. As it turned out, our revenue was down as expected, approximately 15% from Q4 '08, mainly due to the macroeconomic situation and a seasonally weak quarter for the server market.
However, looking specifically at the Thurley server platform launch, revenue and orders for Q1 exceeded our expectations. We expect to see continued growth and market share gains as our customers ramp these and other new servers over the next few quarters. Our fifth-generation products for the Thurley platform have been very well received because our customers increased their total system efficiency demands and added more memory on these new servers to support the latest multi-core processors. This new generation of products enable us to provide the highest efficiency requirements in the industry while saving board area.
As evidenced by IBM's last earnings call, they are still seeing strong growth in their high-end P-series server business and expect their X-series business to improve in 2009. We believe their positive outlook for X-series is a result of achieving the highest measured system efficiency per operation by the Standard Performance Evaluation Corporation, or SPEC, power benchmark on their new 2U rack-mounted server, the X-3650M2. Volterra's latest products enable IBM to achieve this best-in-class energy efficiency.
In addition to IBM's new servers, we are also pleased to announce that we have expanded our position on HP servers with the launch of their new G6 server platforms where we are providing integrated power solutions. Examples include HP's DL-360, DL-38, and BL-460. These high-volume server models at HP and IBM allow us to expand our server market share at the two largest enterprise server companies delivering the best energy savings in the industry to their customers.