VOLT Tema Electrification ETF

Voltaire Ltd. (NASDAQ: VOLT), a leading provider of scale-out data center fabrics, today announced financial results for the three- and twelve-month periods ended December 31, 2009.

Main Fourth Quarter Highlights

• Operating loss on a GAAP basis, narrowed to $0.4 million; operating profit on a non-GAAP basis of $0.3 million;
• Net loss on a GAAP basis, narrowed to $0.5 million; net income on a non-GAAP basis, of $0.3 million;
• Cash, cash equivalents and marketable securities as of December 31, 2009 totaled $47.5 million; and
• Introduced 2010 annual revenue guidance range of $66-69 million, an increase of 31-37% year over year;

Fourth Quarter Results

Revenues for the fourth quarter of 2009 totaled $17.4 million, an increase of 32% compared with $13.2 million reported in the fourth quarter of 2008.

Gross profit for the fourth quarter of 2009 totaled $8.7 million, an increase of 18% compared to $7.3 million in the fourth quarter of 2008. Gross margin for the fourth quarter of 2009 totaled 50.0%, compared to 55.5% gross margin for the fourth quarter of 2008. The comparatively lower gross margin was primarily due to the product mix sold in the quarter.

Operating loss for the fourth quarter of 2009 totaled $0.4 million, a substantial improvement compared to the $2.4 million operating loss in the fourth quarter of 2008. On a non-GAAP basis, the Company reported operating income of $0.3 million compared with an operating loss of $1.7 million in the fourth quarter of 2008.

Net loss for the fourth quarter of 2009 totaled $0.5 million, or $0.02 loss per share. This represents a continued improvement from the $2.4 million net loss, or $0.12 loss per share, in the fourth quarter of 2008.

Net income, on a non-GAAP basis, for the fourth quarter of 2009 totaled $0.3 million, or $0.01 per diluted share, compared to a net loss, on a non-GAAP basis, of $1.7 million, or $0.08 loss per share, in the fourth quarter of 2008.

Cash, cash equivalents and marketable securities as of December 31, 2009, totaled $47.5 million, compared to $50.4 million as of September 30, 2009.

Full Year 2009 Results

Revenues for the twelve months ended December 31, 2009 totaled $50.4 million, compared to revenues of $61.6 million in 2008.

Gross profit for the year 2009 totaled $26.2 million, compared to $30.6 million in 2008. Gross margin for the year 2009 totaled 51.9%, compared to 49.7% in 2008. Operating loss for the year 2009 totaled $10.6 million, compared to $5.7 million in 2008.

Net loss for the year 2009 totaled $11.0 million, or $0.52 loss per share, compared to a net loss of $5.0 million, or $0.24 loss per share in 2008.

On a non-GAAP basis, net loss for the full year 2009 totaled $8.5 million, or $0.41 loss per share, compared to a non-GAAP net loss of $0.9 million, or $0.05 loss per share, in 2008.

Management Comments

Mr. Ronnie Kenneth, Chairman and CEO of Voltaire commented, “During the fourth quarter of 2009, we continued to present a strong business and financial performance, ending the year with over $50 million in revenues, and a return to non–GAAP profitability in the fourth quarter.”

Mr. Kenneth added, “Throughout 2009, Voltaire focused on the long-term, by strengthening its core business fundamentals to position the Company to capitalize on current data center trends. During the year, we forged new server OEM partnerships, enhancing our presence in existing and new verticals, as well as expanded our geographic presence in Asia, where we are witnessing growing demand for our solutions. Furthermore, we built out our product portfolio, introducing several new products, and we enter 2010 with an end-to-end portfolio of switching products and first-in-kind application acceleration and management software that strongly differentiates Voltaire. As a result, Voltaire presented three consecutive quarters of growth, ending the year with a healthy pipeline.”

“Looking ahead, I believe 2010 will be an inflection point for Voltaire and our markets. The principles used in high performance computing of scale-out, low latency and application acceleration is becoming the foundation for next generation, virtualized data centers and the rapidly expanding cloud computing opportunity. We believe that we are well-positioned at the forefront of a coming widespread infrastructure refresh in the data center. We aim to capitalize on this potential and I am excited about the opportunities that lie ahead for Voltaire in the coming months and years.”

“I would like to take this opportunity to thank Kevin Kilroy, a director of Voltaire’s Board since January 2002, who resigned from the Board for personal reasons effective January 1, 2010, for his significant contribution to the Company over the years,” added Mr. Kenneth.

Outlook

Management introduces guidance for the full year of 2010.

Management expects that revenues for the full year of 2010 to be in range of $66 - $69 million, reflecting year over year revenue growth of 31 – 37% with the second half of the year, as usual, being seasonally stronger than the first.

Full year gross margin is expected to be in the range of 51-53%, similar to 2009. Gross margin in the second half of the year is expected to be higher than the first half of the year.

Non-GAAP operating expenses are expected to increase by up to 15% to between $38-39.5 million in 2010. In 2009, the Company embarked on deep cost cutting in order to weather the global economic crisis. The increase in operating expenses in 2010 is in order to enable the Company to fully capitalize on the current and emerging market opportunities, as well as support the accelerated forecasted growth of both the InfiniBand and Ethernet-based product lines. The Company targets a sustainable non-GAAP operating profit by Q4 2010.

Conference Call Details

The Company will be hosting a conference call later today, February 8th, 2010, at 10:00 am ET. On the call, management will review and discuss the results of the three- and twelve-month periods ended December 31, 2009 and will be available to answer questions. To participate, please either call one of the following teleconferencing numbers, or access the live webcast on the Company’s website. Please begin placing your calls at least 10 minutes before the conference call is due to commence. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Number:

 

1-888-668-9141

     

UK Dial-in Number:

 

0-800-917-5108

Israel Dial-in Number:

03-918-0609

International Dial-in Number:

+972-3-918-0609

The call will be at 10:00 am Eastern Time; 7:00 am Pacific Time; 3:00 pm UK Time; 5:00 pm Israel Time. The conference call will be broadcast live on the Company’s website. To participate, please access the link on the investor relations page of Voltaire’s website – www.voltaire.com, a few minutes before the conference call is due to commence. A replay of the call will be available following the call under the Investor Relations section of the website at: www.voltaire.com.

Use of Non-GAAP Financial Measure

Voltaire reports its results of operations in accordance with GAAP and, additionally, on a non-GAAP basis. Non-GAAP operating income (loss) and non-GAAP net income (loss) are calculated based on the operating income (loss) or net income (loss) in Voltaire’s financial statements excluding (i) non-cash equity-based compensation charges recorded in accordance with SFAS 123R, and (ii) the $2.1 million expense recorded in the first quarter of 2008 under cost of revenues for the one-time repayment of grants to the Office of the Israeli Chief Scientist. Reconciliation of this non-GAAP measure to operating income (loss) and net income (loss), the most comparable GAAP measures, is provided in the schedules attached to this release. Voltaire provides these non-GAAP financial measures because its management believes that they are useful in enhancing investors’ understanding of Voltaire’s ongoing performance. Voltaire uses internally the Non-GAAP information to evaluate the Company’s ongoing performance. Voltaire is providing this information to investors to enable them to perform comparisons of operating results in a manner similar to how the Company analyzes its operating results.

About Voltaire

Voltaire (NASDAQ: VOLT) is a leading provider of scale-out computing fabrics for data centers, high performance computing and cloud environments. Voltaire’s family of server and storage fabric switches and advanced management software improve performance of mission-critical applications, increase efficiency and reduce costs through infrastructure consolidation and lower power consumption. Used by more than 30 percent of the Fortune 100 and other premier organizations across many industries, including many of the TOP500 supercomputers, Voltaire products are included in server and blade offerings from Bull, HP, IBM, NEC, SGI and Sun. Founded in 1997, Voltaire is headquartered in Ra’anana, Israel and Chelmsford, Massachusetts. More information is available at www.voltaire.com or by calling 1-800-865-8247.

Forward Looking Statements

Information provided in this press release contains statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to Voltaire's plans, objectives and expectations for future operations and are based upon management's current estimates and projections of future results or trends. They also include third-party projections regarding expected industry growth rates. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. These factors include in particular, but are not limited to, the impact of the economic downturn on capital expenditures by our customers and our product mix during the balance of the year. These factors and others are discussed in detail under the heading "Risk Factors" in Voltaire’s annual report on Form 20-F for the year ended December 31, 2008. These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

VOLTAIRE LTD.

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

    December 31, December 31, 2009 2008 (unaudited) (audited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$ 12,896 $ 24,768 Short term investments 20,074 28,252 Restricted deposits 1,733 1,478 Accounts receivable: Trade 13,056 9,787 Other 1,862 1,486 Inventories   5,795     5,198   Total current assets   55,416     70,969   INVESTMENTS: Restricted long-term deposit 1,139 321 Long-term deposits 219 183 Marketable securities 11,614 987 Funds in respect of employee rights upon retirement   2,522     1,631   Total investments   15,494     3,122     DEFERRED INCOME TAXES 97 1,125 PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization   7,149     3,657   Total assets $ 78,156   $ 78,873     LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accruals: Trade $ 10,470 $ 4,539 Other 4,246 4,408 Deferred revenues   4,308     3,469   Total current liabilities   19,024     12,416   LONG-TERM LIABILITIES: Accrued severance pay 3,454 2,634 Deferred revenues 3,647 3,311 Other long-term liabilities   621     861   Total long-term liabilities   7,722     6,806   Total liabilities   26,746     19,222     SHAREHOLDERS’ EQUITY: Ordinary shares of NIS 0.01 par value 2,787 2,787 Additional Paid-in capital 152,770 150,129 Accumulated other comprehensive income 130 16 Accumulated deficit   (104,277 )   (93,281 ) Total shareholders’ equity   51,410     59,651   Total liabilities and shareholders’ equity $ 78,156   $ 78,873  

VOLTAIRE LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except per share data)    

Three months ended

Year ended

December 31,

December 31,

2009   2008 2009   2008 (unaudited) (unaudited) (audited) REVENUES $ 17,388 $ 13,211 $ 50,369 $ 61,592 COST OF REVENUES   8,700     5,872     24,212     30,957   GROSS PROFIT   8,688     7,339     26,157     30,635   OPERATING EXPENSES: Research and development 4,177 4,641 16,267 15,692 Sales and marketing 3,195 3,159 12,210 13,205 General and administrative   1,740     1,955     8,310     7,396   Total operating expenses   9,112     9,755     36,787     36,293  

LOSS FROM OPERATIONS

(424 ) (2,416 ) (10,630 ) (5,658 ) FINANCIAL INCOME 61 299 382 1,452 FINANCIAL EXPENSES   -     (20 )   (206 )   (26 ) LOSS BEFORE TAX (363 ) (2,137 ) (10,454 ) (4,232 ) TAX EXPENSES   (105 )   (277 )   (542 )   (776 )   NET LOSS $ (468 ) $ (2,414 ) $ (10,996 ) $ (5,008 )     Net loss per share- basic and diluted $ (0.02 ) $ (0.12 ) $ (0.52 ) $ (0.24 )

Weighted average number of shares used in computing net loss per share, basic and diluted

  21,046,342     20,933,708     21,006,644     20,777,243  

VOLTAIRE LTD.RECONCILIATION BETWEEN GAAP TO NON-GAAP RESULTS(U.S. dollars in thousands, except per share data)

The non-GAAP financial information presented herein was not prepared under a comprehensive set of accounting rules or principles and should not be viewed as a substitute for the Company’s GAAP financial information.

 

Three months ended

 

Year ended

December 31,

December 31,

2009   2008 2009   2008 (unaudited) (unaudited) GAAP Net loss $ (468 ) $ (2,414 ) $ (10,996 ) $ (5,008 )

Termination of the participation in the Chief Scientist grant program

  -     -     -   $ 2,075     Equity based compensation expenses included in:   Cost of revenues 13 10 44 23 Research and development 126 133 482 391 Sales and marketing 159 181 625 512 General and administrative   465     370     1,320     1,069     763     694     2,471     1,995     Non-GAAP Net income (loss) $ 295   $ (1,720 ) $ (8,525 ) $ (938 )   Non-GAAP Net income (loss) per share - Basic $ 0.01   $ (0.08 ) $ (0.41 ) $ (0.05 ) Diluted $ 0.01   $ (0.08 ) $ (0.41 ) $ (0.05 )  

Weighted average number of shares used in computing net income (loss) per share:

  Basic   21,046,342     20,933,708     21,006,644     20,777,243   Diluted   22,865,461     20,933,708     21,006,644     20,777,243   VOLTAIRE LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

   

Three months ended

Year ended

December 31,

December 31,

2009   2008 2009   2008 (unaudited) (unaudited) (audited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (468 ) $ (2,414 ) $ (10,996 ) $ (5,008 )

Adjustments required to reconcile net loss to net cash used in operating activities:

  Depreciation of property and equipment 749 563 2,656 1,676 Amortization of discount and premium related to marketable securities, net 27 (32 ) 56 (121 ) Deferred income taxes 697 268 773 360 Change in accrued severance pay 166 (51 ) 663 785 Loss (gain) in funds in respect of employee rights upon retirement (16 ) 132 (280 ) 132 Non-cash share-based compensation expense 763 694 2,471 1,995 Excess tax benefit on options exercised (18 ) (566 ) (70 ) (566 ) Changes in operating asset and liability items: Decrease (increase) in accounts receivable (3,389 ) 1,657 (3,297 ) 696 Increase (decrease) in accounts payable and accruals and deferred revenues 2,513 (4,672 ) 6,872 (2,435 ) Decrease (increase) in inventories   (2,027 )   741     (597 )   485   Net cash used in operating activities   (1,003 )   (3,680 )   (1,749 )   (2,001 ) CASH FLOWS FROM INVESTING ACTIVITIES: Increase in restricted deposits (62 ) (204 ) (1,073 ) (1,558 ) Purchase of property and equipment (1,727 ) (887 ) (6,146 ) (2,323 ) Investment in marketable securities (8,322 ) (18,555 ) (50,229 ) (79,705 ) Investment in short term deposit, net 5,123 (901 ) 101 (901 ) Proceeds from sale of marketable securities 8,550 18,416 47,590 58,721 Amounts funded in respect of employee rights upon Retirement, net (146 ) 25 (500 ) (622 ) Increase in long-term deposits   (36 )   (5 )   (36 )   (23 ) Net cash provided by (used in) investing activities   3,380     (2,111 )   (10,293 )   (26,411 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of options 26 62 100 375 Excess tax benefit on options exercised   18     566     70     566   Net cash provided by financing activities   44     628     170     941   INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,421 (5,163 ) (11,872 ) (27,471 ) BALANCE OF CASH, CASH EQUIVALENTS AT BEGINNING OF PERIOD   10,475     29,931     24,768     52,239   BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,896   $ 24,768   $ 12,896   $ 24,768