SAN storage supplier Compellent has announced a storming quarter, with revenues up 84 per cent. It's also made its first profit, and is seeing continued but slowing growth.
Compellent revenues for the third quarter were $24.6m, compared to Q3 2007's $13.4m. Net income was $464,000 or $0.1 per share with the same period in 2007 showing a loss of $2m or $0.45 a share. This was Compellent's first quarterly profit. Customer numbers rose to 1,086 - up 444 from a year ago. Gross margin was 53.7 per cent, up from 49.9 per cent in Q3 2007.
That's very good indeed, but what about the guidance for the next quarter? Is Compellent seeing a downturn coming?
Crisis? Actually, yes
Chief financial officer Jack Judd gave some strong guidance for the next quarter in the company's earnings call: "Our pipeline remains strong. We therefore forecast another quarter of sequential growth. We currently expect revenue to increase to approximately $25m in the fourth quarter of 2008, compared [with] $16.9m in the same quarter of 2007. Our net income will be similar to the just completed third quarter."
So growth at 1.6 per cent looks essentially flat sequentially, though still stellar on on a year-by-year basis. This is similar to EMC where slowing growth has been forecast.
Compellent president and CEO Phil Soran added a little more colour to this: "Everyone is talking about the economic crisis, but frankly, like I said earlier, we're seeing demand both here in Europe and in the US ... I’ve talked to a lot of people who made out in the past without replacement of tier one storage vendors and now they are looking for real options to do some of that. So that’s why I want to be optimistic but caustically optimistic, so we did announce that we think we can continue to grow in the fourth quarter and that’s kind of what we see in the market right now."
He's saying that the recession is working to Compellent's advantage as its effects are making mid-sized enterprises more aware of Compellent's value for money versus, for example, EMC, and more inclined to buy storage on that basis. Soran is making out that - cliche alert - Compellent in a recession is more compelling.
This seems unjustified as EMC is forecasting a higher growth rate - 4.4 per cent - than Compellent for the next quarter. ®