EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

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Adriel Lares

Vice President of Finance and

Chief Financial Officer

      (510) 413-5999

3PAR Reports Financial Results for Third Quarter of Fiscal 2008

Fremont, Calif. – January 31, 2008 – 3PAR Inc. (NYSE Arca: PAR), a leading global provider of utility storage, today reported results for the third quarter of fiscal year 2008 which ended December 31, 2007. Revenue for the third fiscal quarter was $30.8 million, an increase of 51% compared to revenue of $20.4 million for the same period a year ago and an increase of 10% compared to $28.0 million in the prior quarter, which ended September 30, 2007.

For the third fiscal quarter, GAAP net loss was $1.9 million, or ($0.05) per share compared to GAAP net loss of $45,000, or ($0.00) per share for the same period in the prior year. Non-GAAP net loss, which excludes the impact of stock-based compensation expense, for the third fiscal quarter of 2008 was $664,000, or ($0.02) per share, compared to non-GAAP net income of $381,000, or $0.01 per share for the same period a year ago.

“We are delighted with 3PAR’s strong revenue growth and excellent performance,” said David Scott, Chief Executive Officer. “We are making significant progress in top tier accounts as we ride the adoption waves of virtualization and utility computing.”

Additional Third Quarter Fiscal 2008 Financial Information

3PAR reports operating loss, net loss, and earnings (loss) per share (EPS) on a GAAP and on a non-GAAP basis, which excludes the impact of stock-based compensation expense. The non-GAAP measures are described in greater detail below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.

 

   

GAAP operating loss for the third quarter of fiscal 2008 was $2.3 million, or 8% of revenue. This compares to GAAP operating loss of $2.4 million, or 9% of revenue, in the second quarter of fiscal 2008. Non-GAAP operating loss in the third quarter of fiscal 2008 was $1.1 million, or 4% of revenue. This compares to non-GAAP operating loss of $1.8 million, or 6% of revenue, in the second quarter of fiscal 2008. GAAP net loss for the third quarter of fiscal 2008 was $1.9 million as compared to $2.4 million in the second quarter of fiscal 2008. Non-GAAP net loss in the third quarter of fiscal 2008 was $664,000, compared to $1.7 million in the second quarter of fiscal 2008.


   

GAAP basic and diluted EPS for the third quarter of fiscal 2008 was ($0.05) on 39.8 million weighted average shares outstanding, compared to ($0.13) for the second quarter of fiscal 2008 on 18.5 million weighted average shares outstanding. Non-GAAP basic and diluted EPS in the third quarter of fiscal 2008 was ($0.02), compared to ($0.09) in the second quarter of fiscal 2008.

 

   

Non-GAAP operating loss, non-GAAP net loss, and non-GAAP EPS are computed net of stock-based compensation (SBC). In the third quarter of fiscal 2008, the charge related to SBC was $1.2 million as compared to $639,000 in the second quarter of fiscal 2008.

Reconciliations of Non-GAAP measures to GAAP operating income, net income, and EPS are included at the end of this release.

Webcast and Conference Call Information

3PAR will host a conference call for analysts and investors to discuss its fiscal third quarter results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). A live webcast of the conference call will also be accessible from the “Investors” section of the Company's website at www.3PAR.com. Following the webcast, an archived version will be available on the website for twelve months. To hear the replay, parties in the United States and Canada should call 888-286-8010 and enter passcode 34100634. International parties can access the replay at +1-617-801-6888 and enter passcode 34100634.

About 3PAR Inc.

3PAR is the leading global provider of utility storage, a category of highly virtualized tiered-storage arrays built for utility computing. 3PAR Utility Storage allows users to reliably serve more with less. Organizations creating virtualized IT infrastructures for workload consolidation and flexible resource allocation use 3PAR to reduce the costs of allocated storage capacity, storage administration and SAN infrastructure. Distinct advantages in simplicity, efficiency, and massive scalability make 3PAR Utility Storage well-suited for open systems storage consolidation, integrated data lifecycle management, and performance-intensive applications. For more information, visit the 3PAR Website at: www.3PAR.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements concerning 3PAR’s financial guidance for the fourth quarter and full year of fiscal 2008 and for the full 2008 fiscal year, including revenue, gross margin and total operating cost projections, and the anticipated demand for its storage solution. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, including the potential for slower than expected growth of the utility storage market or in customer adoption of the Company’s storage solutions, particularly in light of substantial uncertainty about macroeconomic trends in the United States and globally and their potential impact on information technology spending; the impact of competitive conditions, including the potential that competitors may offer substantial pricing discounts or pursue aggressive competitive tactics to attract and maintain customers and market share; the impact of


technological developments and competitive products and technologies; the Company’s reliance on third-parties to sell its storage solution; whether end users continue to adopt the Company’s storage solutions; pricing and availability of suppliers’ products, which could result in variability in the Company’s gross margins; general industry trends; and the Company’s capital and operating requirements to grow its business and changes in industry standards and interfaces. Any one or more of these factors could cause actual results to differ materially from the statements contained herein. Further information on potential risk factors that could affect 3PAR’s business and its financial results are detailed in its Form S-1 as filed with the Securities and Exchange Commission on November 15, 2007, in connection with its initial public offering, and will be contained in the Quarterly Report on Form 10-Q that will be filed with the SEC for the quarter ended December 31, 2007. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. 3PAR undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events. Additional information will also be set forth in the Quarterly Report on Form 10-Q.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain the following non-GAAP financial measures: non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP earnings per share (EPS). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Non-GAAP operating income (loss), net income (loss) and EPS. 3PAR defines non-GAAP operating income (loss) and net income (loss) as operating loss and net loss plus stock-based compensation expenses. 3PAR defines non-GAAP EPS as non-GAAP net income (loss) divided by the weighted average basic and diluted shares outstanding. 3PAR's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the company's performance by excluding certain non-cash stock-based compensation expenses. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FAS 123R, 3PAR's management believes that providing these non-GAAP financial measures allows investors to compare these results with those of other companies, as well as providing management with an important tool for financial and operational decision making and for evaluating the company's operating results (excluding the impact of these non-cash charges) over different periods of time.

There are a number of limitations related to the use of non-GAAP operating income (loss), net income (loss) and EPS versus operating loss, net loss and EPS calculated in accordance with GAAP. First, these non-GAAP financial measures exclude some costs, namely, stock-based compensation expenses that are recurring. Stock-based expenses have been and will continue to be for the foreseeable future a significant recurring expense in 3PAR's business. Second, stock-based awards are an important part of 3PAR's employees' compensation and impact their performance. Third, the components of the costs that 3PAR excludes in its calculation of non-GAAP net income (loss) may differ from the components that its peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their most directly comparable financial measures calculated in accordance with GAAP. The accompanying tables have more details on these non-GAAP financial measures, including reconciliations between these financial measures and their most directly comparable GAAP equivalents.

A copy of this press release can be found on the “Investors” page of 3PAR’s website at www.3PAR.com.


3PAR Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

     December 31,
2007
   March 31,
2007
 

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 106,116    $ 16,722  

Short-term investments

     14,417      17,988  

Accounts receivable, net

     26,265      19,037  

Inventory

     14,393      13,507  

Deferred cost

     3,810      3,012  

Prepaid and other current assets

     2,225      1,203  
               

Total current assets

     167,226      71,469  
               

Property and equipment, net

     10,802      5,988  

Deferred cost, non-current

     359      747  

Other non-current assets

     357      357  
               

Total assets

   $ 178,744    $ 78,561  
               

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)

     

Current liabilities:

     

Line of credit

   $ 4,000    $ 5,830  

Accounts payable

     9,868      7,957  

Accrued liabilities

     13,067      11,494  

Deferred revenue

     20,764      15,018  

Accrued warranty

     3,498      3,212  

Current portion of notes payable

     1,306      1,602  
               

Total current liabilities

     52,503      45,113  

Long-term portion of notes payable

     —        860  

Accrued warranty, non-current

     2,720      2,336  

Deferred revenue, non-current

     6,062      4,184  

Other long-term liabilities

     1,074      995  
               

Total liabilities

     62,359      53,488  
               

Redeemable convertible preferred stock

     —        94,343  

Stockholders’ equity (deficit)

     116,385      (69,270 )
               

Total liabilities redeemable convertible preferred stock and stockholders’ equity (deficit)

   $ 178,744    $ 78,561  
               


3PAR Inc.

Condensed Consolidated Statement of Operations

(On a GAAP basis)

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
December 31,
    Nine Months Ended
December 31,
 
     2007     2006     2007     2006  

Revenue:

        

Product

   $ 28,961     $ 19,969     $ 78,859     $ 53,709  

Support

     1,801       422       3,692       803  
                                

Total revenue

     30,762       20,391       82,551       54,512  
                                

Cost of revenue:

        

Product

     10,401       6,322       27,637       19,164  

Support

     344       60       799       145  
                                

Total cost of revenue (1)

     10,745       6,382       28,436       19,309  
                                

Gross profit

     20,017       14,009       54,115       35,203  
                                

Operating expenses:

        

Research and development (1)

     8,320       6,074       25,036       16,275  

Sales and marketing (1)

     11,762       6,637       32,155       19,213  

General and administrative (1)

     2,284       1,597       6,550       4,224  
                                

Total operating expenses

     22,366       14,308       63,741       39,712  
                                

Loss from operations

     (2,349 )     (299 )     (9,626 )     (4,509 )
                                

Other income, net:

        

Interest income

     877       437       1,715       1,327  

Interest expense

     (308 )     (199 )     (925 )     (553 )

Other income (expense), net

     (59 )     36       18       (7 )
                                

Total other income, net

     510       274       808       767  
                                

Loss before provision for income taxes

     (1,839 )     (25 )     (8,818 )     (3,742 )

Provision for income taxes

     (38 )     (20 )     (106 )     (50 )
                                

Net loss

   $ (1,877 )   $ (45 )   $ (8,924 )   $ (3,792 )
                                

Net loss per common share

     ($0.05 )     ($0.00 )     ($0.35 )     ($0.21 )
                                

Shares used to compute basic and diluted net loss per common share

     39,825       17,845       25,537       17,655  
                                

(1)    Includes stock-based compensation as follows:

        

Cost of revenues

     60       45       139       115  

Research and development

     414       137       824       449  

Sales and marketing

     488       110       900       320  

General and administrative

     251       134       529       459  


3PAR Inc.

Condensed Consolidated Statement of Operations

(GAAP to non-GAAP reconciliation)

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
December 31,
    Nine Months Ended
December 31,
 
     2007     2006     2007     2006  

GAAP operating loss

   $ (2,349 )   $ (299 )   $ (9,626 )   $ (4,509 )

Plus:

        

Stock-based compensation

     1,213       426       2,392       1,343  
                                

Non-GAAP operating income (loss)

   $ (1,136 )   $ 127     $ (7,234 )   $ (3,166 )
                                

GAAP net loss

   $ (1,877 )   $ (45 )   $ (8,924 )   $ (3,792 )

Plus:

        

Stock-based compensation

     1,213       426       2,392       1,343  
                                

Non-GAAP net income (loss)

   $ (664 )   $ 381     $ (6,532 )   $ (2,449 )
                                

GAAP net loss per common share basic and diluted

     ($0.05 )     ($0.00 )     ($0.35 )     ($0.21 )

Plus:

        

Stock-based compensation

     0.03       0.02       0.09       0.08  
                                

Non-GAAP net income (loss) per common share basic

     ($0.02 )   $ 0.02       ($0.26 )     ($0.13 )
                                

Non-GAAP net income (loss) per common share diluted

     ($0.02 )   $ 0.01       ($0.26 )     ($0.13 )
                                

Shares used in computing basic non-GAAP net income (loss) per common share

     39,825       17,845       25,537       17,655  
                                

Shares used in computing diluted non-GAAP net income (loss) per common share

     39,825       54,855       25,537       17,655