HPC in the Cloud: SGI Delivers Second Quarter Financial Results

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February 08, 2012

SGI Delivers Second Quarter Financial Results

FREMONT, Feb. 7 -- SGI today announced financial results for its second quarter of fiscal 2012.

Financial Summary for Q2 FY12

Revenue was $195.2 million, up 10% Y/Y
Gross margin was 26.7%, down 275 bps Y/Y
EPS was ($0.07) compared to $0.12 Y/Y; Non-GAAP EPS was $0.04 compared to $0.44 Y/Y
Updating FY2012 guidance to reflect expected higher revenue, lower margins and lower EPS

"Our products are in high demand and we are taking share in the market. At the same time we faced some challenges in Q2 impacting our margins," said SGI's interim CEO, Ron Verdoorn. "Our overall gross margin was adversely affected by challenging economic conditions in Europe and the high cost of doing business there. We are taking decisive action to align our business for sustainable profitable growth and are planning to restructure our European operation. Other contributing factors to the decline in margin, the transition of our service margin profile and the change in product mix are temporary.

Our strategy is solid, and we continue to focus on delivering innovative, differentiated products with the speed and scale required in the High Performance Computing, Big Data and the Cloud spaces. We added approximately 100 new customers in the quarter and our business continues to benefit from robust demand."

Business Highlights for Q2 FY12 including recent events

Customer successes in the second fiscal quarter include Hungarian National Information Infrastructure Development Institute, Institute for Chemical Research at Kyoto University, NASA's selection of SGI's ICE HPC platform for the next Pleiades supercomputer upgrade, Universite de Sherbrooke (the fastest HPC system in Canada), Poznan Supercomputing Center (Poland), WOWOW (Japan), and iVEC (Australia)
Strong revenue contribution from our international business, representing 48% of total revenue
Introduced next-generation ICE X HPC platform
Achieved a world record Hadoop benchmark
Announced world's first power-optimized Hadoop Cluster reference implementation
Achieved the largest certified configuration for Red Hat Enterprise Linux 6

Our channel business contributed 17% and direct was 83% of revenue. Domestic business was 52%, while international contributed 48%. Products were 73% of revenue and services contributed 27%.

Summary of Results


	GAAP Results
	Q2 FY12	Q1 FY12	Q2 FY11
Revenue (million)	$195.2	$178.9	$177.5
Gross Margin	26.7%	29.4%	29.5%
GAAP EPS (Loss)	($0.07)	($0.08)	$0.12
Non-GAAP EPS	$0.04	$0.07	$0.44

SGI ended Q2 FY12 with $95.1 million in cash (including cash equivalents and restricted cash), down from $115.5 million last quarter.

Updated Fiscal Year 2012 Guidance

SGI is updating its previously released guidance for fiscal 2012.


Guidance Metric	Updated FY12 Guidance
Revenue	$770 million to $800 million
Gross Margin	26% to 28%
EPS	($0.30) to ($0.15)
Non-GAAP EPS	$0.15 to $0.30

Conference Call Information

In conjunction with this earnings press release, SGI has posted an earnings presentation which incorporates commentary from James Wheat, SGI's CFO, to the Investor Relations section of its website at investors.sgi.com.

The public is invited to listen to the earnings conference call at 2:00 p.m. PT (5:00 p.m. ET) by dialing (888) 463-5422 (toll-free) or (970) 315-0484 (international). Please dial-in 15 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the earnings conference call will be available on the Investor Relations section of our website at investors.sgi.com.

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. 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: 41860582.

About SGI

SGI, the trusted leader in technical computing, is focused on helping customers solve their most demanding business and technology challenges. Visit sgi.com for more information.

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