Dot Hill Systems Corp. (HILL, Financial) is a recognized leader in software and hardware solutions for storing, sharing, protecting and managing data. Dot Hill solves many of today’s most challenging storage problems – helping IT to improve performance, increase availability, simplify operations, and reduce costs. Dot Hill’s storage solutions deliver outstanding storage performance, efficiency, flexibility and scale.
It provides solutions to combine storage software with the industry’s most flexible and extensive hardware platform to deliver best-in-class SAN storage solutions with Five 9’s of availability. The Company’s solutions are ideally suited for emerging trends such as virtualization, cloud computing and accelerating demand for data storage related to email, databases, and high-performance computing.
The end-user customers include IT managers in media and entertainment, retail, finance, education, defence, healthcare and government, who utilize their unified storage solutions for video streaming, high definition video production, transaction processing, and intelligence gathering and a host of business applications.
First Quarter Results
Revenues
Non-GAAP net revenue during the quarter was $60.3 million for the first quarter of 2015 (when compared to $48.9 million for the first quarter of 2014).
Net Income
Net income for the first quarter of 2015 was $3.9 million, or $0.06 per fully diluted share (as compared to a net loss of $0.4 million, or ($0.01) per fully diluted share, for the first quarter of 2014).
Non-GAAP net income for the first quarter of 2015 was $4.0 million, or $0.06 per fully diluted share (as compared to $1.0 million or $0.02 per share, for the first quarter of 2014).
Gross Margin
Gross margin during the quarter was 34.4% (which when compared to 31.7% for the first quarter of 2014).
Non-GAAP contribution margin (excluding research and development, general and administrative and certain corporate sales and marketing expenses) increased during the first quarter and were 27.7% (compared to 26.6% in the first quarter of 2014).
Vertical Markets non-GAAP contribution margin for the first quarter of 2015 increased and was 35.1% (when compared to 33.6% in the first quarter of 2014).
There was a decrease of OEM non-GAAP gross margin and was 19.2% (when compared to 22.7% in the first quarter of 2014).
Operating Expenses
Operating expenses for the first quarter of 2015 were $17.1 million (which increased from $15.7 million for the first quarter of 2014).
Non-GAAP operating expenses during the first quarter increased from the prior year quarter’s $15.1 million and were $16.4 million.
Cash and Cash Equivalents
The company had $46.3 million as cash and cash equivalents as of the first quarter of 2015.
Outlook for Second Quarter of 2015
The company expects the following for the second quarter:
- Non-GAAP net revenue and fully diluted earnings per share for the second quarter of 2015 are expected to be in the range of $58 million-$62 million and $0.04- $0.08.
- The mid-point of guidance for Q2 that it issued, represents 24% y-o-y growth and about a 3x increase in non-GAAP revenue and earnings per share respectively.
Innovation is Key
For over 20 years, HILL has deployed more than 500,000 storage systems worldwide. It believes in continual innovation and the innovation has resulted in numerous patent awards on its technologies. It recently announced RealStream, a software which triples data ingest throughput while handling more than 5000 parallel data streams for heavy-duty Internet traffic workloads. These parallel workload streams are very dynamic in nature with variations in speed, arrival time, duration, and rate of change.
It also announced about RealSure (next generation storage operating system). This storage software guarantees consistent and predictable performance, scaling as the number of analytic queries increases. It ensures optimized performance for big data analytics in general, as well as in vertical markets such as HPC, oil & gas, video surveillance, and network management.
Recent Deal with Arrow to Broaden the Scope of Expansion
HILL recently entered into a partnership with Arrow Electronics. Through this, Arrow's OEM Computing Solutions business will utilize Dot Hill AssuredSAN OEM storage systems within their OEM solutions throughout Europe, the Middle East and Africa (EMEA), significantly expanding Dot Hill's reaches to systems integrators that architect solutions to key vertical market customers. Arrow has a unique combination of suppliers that complement Dot Hill's OEM storage line.
On a Concluding Note
Innovation is the lifeblood of leaders in the IT industry and it's why Dot Hill has been a perennial supplier of advanced storage solutions for prominent OEM partners for so many years. The company kick-started off to a solid first quarter of 2015 and is expected to grow in the near future. There is more room to grow in the times to coma and it is showing bullish trend. I would recommend this company to the investors. The company looks attractive at the moment. Investors may consider adding this company to their portfolio.
