Data Domain: De-Dupe Is a 'Land Grab'

Data Domain envisions itself in a "land grab" race against EMC, NetApp, and Quantum, and the company is preparing itself accordingly.

During the newly public company's quarterly results conference call last night, CEO Frank Slootman cited solid customer traction for Data Domain's de-duplication offerings, particularly nearline storage products, such as its DDX array. "Early in the quarter, we passed the 1,000 customer mark -- 1,201 [users] have purchased our products since 2004," he said.

Continuing this momentum will mean ramping up Data Domain's sales force, according to execs on last night's call.

At the end of last month, the firm had 180 employees in its sales organization, an increase of 33 on the previous quarter. "We expect to add sales personnel at that rate over the balance of 2007 and 2008," said CFO Michael Scarpelli. "This is one of the drivers of future growth."

"[Developing] new customer accounts is a very specific focus that we have," added Slootman, explaining that the firm added around 228 customers in the third quarter. "There's a race on to get new customers -- it's a land-grab."On last night's call, Slootman also fielded a barrage of questions from analysts eager to measure the impact of rival vendors' de-duplication offerings. "The competitive environment for our part of the market is robust, [but] we have not seen a change in the competitive dynamic," said the CEO. "We probably see EMC more than half of the time, after that it's NetApp -- Quantum rates third."

The exec was unable to resist taking a swipe at legacy storage technology. "It's a foregone conclusion [that tape] is going."

Data Domain's financial report featured narrower losses, though the company is still a ways off from profitability. The vendor, which entered the public arena with a $109 million IPO in early July, reported third-quarter revenues of $32 million, up 189 percent on the same period last year, and up 21 percent on the previous quarter.

The vendor posted a GAAP net loss of $880,000, or 2 cents per share, compared to a GAAP net loss of $1.2 million, or 11 cents per share, in the preceding quarter. For the corresponding quarter last year, GAAP net loss was $934,000, or 12 cents per share.

Data Domain posted non-GAAP net income of $2.6 million, or 4 cents per share, compared to net loss of $607,000, or 8 cents per share, in the third quarter of 2006.Analysts had estimated third quarter revenues of just under $30 million and a net loss of 2 cents per share for the vendor, which announced plans for a secondary public offering yesterday.

"Overall, we're very pleased with our performance," Slootman told analysts last night.

For the fourth quarter, Data Domain estimates revenues between $36 million and $39 million. On a non-GAAP basis, the vendor expects net income between 3 cents and 5 cents per share.

In after-hours trading, Data Domain shares fell 89 cents (2.2 percent) to $39.50.Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.