FREMONT, CA -- (Marketwired) -- 10/10/13 -- SGI (NASDAQ: SGI), the trusted leader in high performance computing and Big Data, today reported preliminary financial results for its fiscal first quarter ended Sept. 27, 2013. The company also updated its outlook for the fiscal year ending June 27, 2014, based primarily on current uncertainty related to the timing of various IT projects funded by the U.S. government.
- Total revenue for the fiscal first quarter is expected to be approximately $147 million, which compares with guidance of $160 to $170 million as provided in the fiscal Q4FY13 earnings press release of Aug. 6, 2013. The revenue shortfall was primarily due to the impending government shutdown at quarter-end, which led to the freezing of funds for a Federal project; and to delayed acceptance of a non-Federal project.
- Core revenue related primarily to High-Performance Computing (HPC), Big Data, Storage, and services is expected to be approximately $134 million, representing 91% of total revenue for the quarter. This reflects sequential growth of 6% over the prior quarter core revenue of $126 million. Consistent with the company's strategic withdrawal from commodity server markets, legacy cloud revenue for the fiscal first quarter is expected to decline to approximately $14 million, which compares with $45 million in the prior quarter.
- GAAP net loss for the fiscal first quarter is expected to be $6 to $7 million, or $(0.21) to $(0.18) per share, which compares with guidance of a GAAP net loss of $(0.14) to $(0.07) per share.
- Non-GAAP net income for the quarter is expected to be $1 to $1.5 million, or $0.02 to $0.04 per diluted share, which compares with guidance of non-GAAP net income of $0.07 to $0.14 per diluted share.
- Cash as of the end of the fiscal first quarter was $165 million, which compares with $179 million for the prior quarter and $96 million (net of debt outstanding) as of the same period a year ago. The change in cash for the quarter was primarily related to changes in working capital.
- A conference call is scheduled for today, Oct. 10, at 2:00 pm Pacific Time. Final results are expected to be announced on Oct. 30, 2013.
A reconciliation of the company's preliminary GAAP to non-GAAP results is included in the table accompanying this press release.
"In the first quarter, we grew core revenues 6% sequentially and managed the initial wind-down of our legacy cloud business," said Jorge Titinger, president and CEO of SGI. "Although we began Q1 expecting ongoing budget uncertainty in the Federal space similar to what we experienced through the fiscal cliff and the sequester, we could not have anticipated the unprecedented halt in all transaction activity that occurred in late September due to the looming government shutdown. In addition, as we transition our revenue mix from legacy cloud to more core HPC, Big Data, and Storage solutions, we are competing for larger deals that have longer sales cycles, outside funding requirements, and final acceptance criteria. These factors are driving a back-end loaded year. We continue to be optimistic about our ability to grow our core business, including Federal, in the current fiscal year. However, with the Federal government shutdown, it is virtually impossible to transact business with most of our Federal customers at this time, which adds significant risk to our near-term revenue outlook and impairs our visibility as to the timing of the expected restart of Federal projects."
The company provides technical computing solutions to large government, public, 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 final delivery or acceptance of large deals is difficult to predict and can cause significant swings in quarterly revenue. Management