Isilon Refocuses, Finds Profitability After Long Time in Red
Looks like network-attached storage maker Isilon Systems, which supplies large-scale, linear-oriented, clustered systems -- mostly for huge workloads created by media companies and scientific labs -- has turned a financial corner away from potential disaster and stayed on the right path following a two-year downturn.
The Seattle-based storage company, which went public in 2007, reported last week that its revenue for the third quarter ended Sept. 30 was $53.8 million, up 19 percent sequentially over $45.1 million in Q2 2010. More significantly, revenue was up a whopping 77 percent from $30.5 million in the third quarter of 2009.
Isilon's margins have been excellent at 60 percent and above, but R&D and operating expenses have been high, and the company has had trouble getting its face out of the water so it can breathe.
Now here's the most important stat from the Q3 2010 report: Isilon's net income was $4 million, compared with a net loss a year ago of $4.9 million. Not huge numbers by any means, but man, that black ink sure does look nice.
Isilon had been muddling in the red for most of its early existence.
Sujal Patel, who founded Isilon in 2001 and served as its chief technology officer, returned to the company as CEO in the fall 2007 following the resignation of CEO Steve Goldman and CFO Stu Fuhlendorf. In spring 2008, Isilon reported questionable revenue recognition events to the SEC under the previous regime. The audit review found that Isilon bumped up its sales numbers in late 2006 and last year through phantom deals and overstatements.
A number of earning reports submitted to the SEC from 2006 and 2007 were revised. Isilon has since introduced a new revenue recognition policy in order to remedy the previous issues.
Patel refocused Isilon's eye on the ball, giving sharper attention to its key markets. Adding new products to open new markets has allowed the company to spread its wings. Isilon has upgraded its operating system and added two new data management software applications to its product line during its rebound stage.
Nice work. The stock was selling at about $30 Oct. 25, the highest it's been.