MILPITAS, Calif., May 1 — SGI, the trusted leader in high performance computing and Big Data, today reported financial results for its fiscal third quarter ended Mar. 28, 2014. Total revenue for the fiscal third quarter was $124 million, which compares with $116 million in the previous quarter and $233 million in the third fiscal quarter of 2013.

GAAP net loss for the third quarter was $22 million, or $(0.64) per share, which compares with a GAAP net loss of $14 million, or $(0.40)per share, in the prior quarter, and GAAP net income of $9 million, or $0.27 per diluted share, in the third quarter of fiscal 2013. Non-GAAP net loss for the quarter was $7 million, or $(0.22) per share, which compares with non-GAAP net loss of $7 million, or $(0.20) per share, in the prior quarter and non-GAAP net income of $6 million, or $0.18 per diluted share, in the year-ago period.

• Core revenue, which includes HPC, Big Data, storage, and services, but excludes revenue related to legacy cloud infrastructure and “low-margin deals” in prior periods, was $122 million, which compares with $107 million in the prior quarter and $152 million in the same quarter a year ago.
• Core revenue in the company’s Federal business, which includes U.S. government customers, system integrators, and higher education institutions, was $45 million, up from $44 million in the prior quarter and down from $82 million in the same quarter one year ago.
• Outside of the Federal business (commercial and non-U.S. public sector), core revenue was $77 million, up 24% from $62 million in the prior quarter and up 11% from $69 million in the same quarter a year ago.
• Revenue related to the legacy cloud, which is generally commodity servers for public cloud infrastructure, was $2 million, which compares with $9 million in the prior quarter and $32 million in the fiscal third quarter of 2013.

“Results for the quarter were consistent with our expectations and reflected solid core revenue growth in international public sector and commercial accounts, coupled with continued softness in the spending of certain Federal defense-related customers,” said Jorge Titinger, president and CEO of SGI. “Our core international and commercial business is on track to grow approximately 35% in the fiscal second half; however, in our Federal business we have yet to see the return of historical spending patterns or incremental new program wins to drive immediate growth. As a result, we currently expect total revenue for the fiscal second half to be within the lower end of our previously forecasted range. Looking beyond the current fiscal year, we are confident that we are making the right investments in people and products to drive market share gains and improved ranking among the top providers of supercomputers globally, and to achieve profitable growth in the enterprise through our highly differentiated core offerings for high-performance shared memory analytics.”

Recent Highlights

• On Apr. 30, SGI announced that Massachusetts General Hospital and Harvard Medical School’s Center for Advanced Medical Imaging Sciences (CAMIS) Radiology Department has selected SGI to enhance research capabilities for diagnostic medical imaging. CAMIS chose SGI UV 2000 and SGI UV 20 large shared-memory systems and SGI InfiniteStorage 5000 due to its proven ability to solve large-scale, data-intensive problems with industry-standard components while providing ease-of-use benefits.
• On Apr. 16, SGI announced a partnership with NVIDIA and GIS Federal, a supplier of high performing innovative solutions for big data, cloud computing and intuitive tools across all intelligence disciplines, to power geospatial database that can scale several orders of magnitude higher than other compute databases. The database runs on a 10 terabyte (TB) SGI UV 2000 system, with 16 NVIDIA Tesla K20x graphics processing unit (GPU) accelerators.
• On Apr. 8, 3M and SGI announced the implementation of a fully functional supercomputer developed in collaboration with Intel, using a revolutionary two-phase immersion cooling technology pioneered by 3M that reduces water consumption and energy use — while increasing supercomputer efficiency. The proof-of-concept includes the fifth generation SGI ICE X distributed memory supercomputer with the Intel Xeon processor E5-2600 placed directly into the 3M Novec Engineered Fluid, showcasing this technology as the “Data Center of the Future.”
• On Mar. 3, SGI announced that the Japan Agency for Marine-Earth Science and Technology (JAMSTEC) has selected SGI UV 2000 powered by Intel Xeon processor E5-4600 v2 series for pre and post-processing offline grid simulations for its Earth Simulator supercomputer. JAMSTEC’s SGI UV 2000 solution is one of the largest shared memory systems powered by 2,560 cores of Intel Xeon processor E5-4600 v2 series and provides 49.152 Tflops of computing capacity with 32TB shared memory for a Single System Instance, propelling JAMSTEC to the next level of large scale, fine-grained simulations that were otherwise unthinkable due to memory constraints.
• On Feb. 6, SGI announced a partnership with Cognilytics, combining SGI’s HPC technology for Big Data analytics with Cognilytics’expertise in implementing technologies such as Hadoop and SAP Platform and Analytics solutions — bringing customers a more robust Big Data and HPC offering. Infrastructure solutions delivered through the new SGI and Cognilytics partnership include SGI InfiniteData Cluster and SGI UV.

Outlook 

SGI provides high-performance computing and data management solutions to large government, higher education, and commercial customers. Any given customer deal can include a varying mix of compute and storage hardware, software, and services, and generally will carry terms that result in most of the product revenue associated with the deal being recognized upon final shipment or acceptance of the system. The timing of booking, installation, and acceptance of large deals is difficult to predict and can cause significant swings in quarterly revenue. The company derives a significant portion of its revenue from the U.S. government and from third parties and educational institutions that receive funding from the U.S. government. Government shutdowns, protracted Federal budget deliberations, and other disruptions in the timely funding or acceptance of government-related programs can impact the award, deployment, and final acceptance of systems. Management provides guidance on revenue and other items based on its current expectations of the timing of revenue and associated costs; however, there can be no assurance that revenues and associated costs will be recognized according to expected schedules and management assumes no obligation to update its guidance if the timing of revenues or other circumstances in the business differ from current expectations.

The company is providing the following guidance for the fiscal fourth quarter and fiscal half ending Jun. 27, 2014:

• Total revenue for the fiscal second half is expected to be in the range of $260 to $270 million. Total revenue for the fiscal fourth quarter is expected to be in the range of $135 to $145 million.
• Excluding Federal, core revenue for the second half of fiscal 2014 is expected to be in the range of $170 to $175 million, up approximately 35% from the second half of fiscal 2013, including expected year-over-year growth of at least 60% in the fiscal fourth quarter.
• GAAP net loss for the fiscal fourth quarter is expected to be in the range of $8 – $11 million, or $(0.23) to $(0.30) per share. Non-GAAP net loss for the fiscal fourth quarter is expected to be in the range of $3 – $6 million, or $(0.08) to $(0.15) per share. Non-GAAP net loss is expected to exclude approximately $5 million of adjustments, including stock-based compensation expense, restructuring and severance costs, intangibles amortization and other items. Both EPS calculations assume 34.8 million weighted average shares outstanding.

Webcast and Conference Call Information

A live webcast of the earnings conference call will be available on the Investor Relations section of the Company’s website at investors.sgi.com beginning at 2:00 p.m. PT (5:00 p.m. ET). A replay of the webcast will be available approximately two hours after the conclusion of the call and will remain available until the next earnings call.

The public can also listen to the earnings conference call by dialing (888) 463-5422 (toll-free) or (970) 315-0484 (international). An audio replay of the conference call will also be made available approximately two hours after the conclusion of the call. The audio replay will remain available for five days and can be accessed by dialing (855) 859-2056 (toll-free) or (404) 537-3406 (international) and entering the confirmation code: 29326971.

About SGI

SGI, the trusted leader in high performance computing (HPC) and Big Data, is focused on helping customers solve their most demanding business and technology challenges by delivering technical computing, Big Data analytics, cloud computing, and petascale storage solutions that accelerate time to discovery, innovation, and profitability. Visit sgi.com (sgi.com/) for more information.

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Source: SGI