NAS vendor Isilon recorded its first profitable quarter to end 2009, three years after becoming a public company. It didn’t make it by much, but it was a milestone nonetheless.
Isilon reported net income of $140,000 for the quarter, or income of $1.6 million on a non-GAAP basis with adjustments for items such as stock-based compensation and legal fees. Its revenue for last quarter was $37.5 million, up 23% from the previous quarter and 18% year over year.
The climb to profitability was a steep one for Isilon, which stumbled after going public in December 2006 with heavy losses and questionable sales tactics that resulted in CTO Sujal Patel taking over as CEO in October 2007. Patel brought in a new management team and reduced spending while expanding Isilon’s product platform last year.
Remaining in the black will require more progress on both fronts. The fourth quarter is traditionally the biggest of the year for storage sales, and Isilon can’t afford much of a dip in sales this quarter if it is to say above break-even. It still lost $18.9 million for the full year in 2009.
Yet Patel says his goal is for a profitable 2010, despite NetApp’s beginning to combine its GX clustered technology in its core operating system, a surge in EMC Celerra NAS sales, and Hewlett-Packard’s increased integration of clustered NAS from the acquisitions of PolyServe and Ibrix.
“We’re planning a profitable year here,” Patel said, adding that Isilon will add new storage platforms and operating systems releases this year. “We’re continuing to innovate and build on our scale-out NAS platform and build our channel program. Most of last year was about making tough decisions that would help us position ourselves well for the future.”
Patel says Isilon’s overall product strategy is to sell storage systems that go beyond its traditional customer base of media/entertainment, life sciences, and online service providers. “The high value opportunities are bigger deals where you’re part of the mission critical infrastructure in medium to large-size customers,” he said.
“We’re going to grow our business by getting in front of larger enterprise customers who want a highly technologically differentiated scale-out NAS solution, and want to buy $500,000 or a couple million dollars of storage every single year.”