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Network Engines Reports Q3
Network Engines reported financial results for its fiscal third quarter ended June 30, 2007
August 2, 2007
3 Min Read
CANTON, Mass. -- Network Engines, Inc. (NASDAQ: NENG), a leading provider of storage and security server appliance products and services, today reported financial results for its fiscal third quarter ended June 30, 2007.
Third Quarter Financial Performance
Net revenues of $28.0 million in line with guidance of $27 million to $30 million, compared to $32.0 million in the fiscal third quarter of 2006.
Gross profit of 19.0 percent of net revenues in line with guidance of 18 to 19 percent compared to 16.8 percent in the fiscal third quarter of 2006.
Operating expenses of $5.4 million, including $560,000 of stock-based compensation expense, below guidance of $6.1 to $6.4 million. Operating expenses compared to $6.9 million, which included $716,000 of stock-based compensation in fiscal third quarter of 2006.
Net income on a GAAP basis was $416,000, or $0.01 per share, which included $604,000 of stock-based compensation charges, better than the guided range of net loss of $(300,000) to net income of $100,000. The net income on a GAAP basis compared to a net loss of $(1.1) million, or $(0.03) per share, in the third fiscal quarter of 2006.
Non-GAAP net income, which excludes the stock-based compensation expenses, was $1.0 million, or $0.02 per share, exceeding guidance of between $350,000 and $750,000. The non-GAAP net income compared to a non-GAAP net loss of $(334,000), or $(0.01) per share, in the fiscal third quarter of 2006.
Cash, cash equivalents and short-term investments totaled $40.1 million at the close of the quarter, compared to $38.7 million at the end of March 2007 and exceeded the guidance of $36 million to $38 million.
EMC comprised 81% of total revenues during the fiscal third quarter, unchanged compared to the year-ago quarter, with revenues from other customers representing $5.3 million in the 2007 quarter compared to $6.2 million in the year-ago quarter. Revenues from Network Intelligence are now being included under EMC revenues since its acquisition by EMC in September 2006. Excluding Network Intelligence revenues from the year-ago quarter, revenues from other customers grew 10% during the fiscal third quarter of 2007. This growth was driven by an increase of revenue from new customer design wins secured in the first half of fiscal 2007, which includes ongoing service of Microsoft Whale customers.
I am pleased that Network Engines reported a profitable third quarter as the Company continued to make progress in the core elements of our long-term strategy,” commented Greg Shortell, President and Chief Executive Officer of Network Engines. “While we are not satisfied that overall revenues were lower compared with the prior year, our efforts to diversify our customer base increased revenues from non-EMC customers by 10% when excluding Network Intelligence revenues from the year-ago quarter. Our progress this quarter in this respect was due primarily to the integration of new design wins that we secured earlier in the year. As importantly, we closely managed expenses while making the necessary investments in our business, which led to our second consecutive quarter of GAAP profitably and the generation of $1.4 million in cash.”Network Engines Inc.
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