Topsy-Turvy Q1 For Opsware

Data center software vendor Opsware announced its first-quarter results last night, posting revenues of $12.6 million, up 70 percent on the same quarter last year and just topping analysts estimates of $12.24 million (see Opsware Records Q1 Results).

Opsware registered a net loss for the quarter of 5 cents per share on $5.1 million, although this included non-cash charges of $2 million relating to the acquisition of Rendition Networks (see Opsware to Buy Rendition and Opsware Opens Its Wallet). In the same period last year Opsware registered a net profit of 2 cents per share on $2 million.

Excluding the non-cash charges, Opsware’s non-GAAP net loss was $3.1 million or 3 cents per share, which was in line with analysts’ estimates.

Opsware, which went public in 2001, has earned a reputation as something of a trailblazer in the server automation space, although the performance of its stock has not always matched its technology story. Speaking on a conference call last night, Ben Horowitz, Opsware CEO, said he is not planning any drastic action. “We’re going to keep growing the business and we believe that eventually that will take care of itself.”

However, Horowitz reeled off a list of around 40 customer wins for the quarter, which is double the number clinched in same period last year. Of these organizations, which included USA Today, Sallie Mae, and the U.S. State Department, around 60 percent were new deals and the remainder were upgrades (see Opsware Wins Sallie Mae Contract).The CEO is expecting this to reap dividends later in 2005. ”You will see that in the balance sheet next quarter,” he said. “In the second half of the year that will work its way into revenue.”

Horowitz has also got high hopes for the new version of the company’s Server Automation Software, code-named Darwin, which was launched earlier this week (see Opsware Launches Next-Gen SAS). At a time when companies are wrestling with the demands of Sarbanes-Oxley, the software offers new compliance management features, and Horowitz believes that Darwin will broaden the Opsware footprint.

”Prior to Darwin we didn’t have the ability to get into the small deals,” he said, adding that this will help the vendor compete more effectively with the likes of BladeLogic Inc..

But the company, which ended the quarter with $100 million in cash, confirmed it is still on the prowl for new acquisition targets, after snapping up Rendition Networks and Tangram Enterprise Solutions Inc. back in 2003 (see Opsware Acquires Tangram). "Our strategy is to be an acquirer, but to be very selective and very prudent," said Mark Andreesen, Opsware’s chairman. "We will keep looking at things, but we will be very careful."

Sharlene Abrams, Opsware’s CFO, added the company expects to turn profitable when quarterly revenues reach somewhere between $18 million and $20 million, although she refused to say when this is likely to be. Second-quarter revenues are expected to be in the $13 million to $14 million range and the full-year figures will be somewhere between $53 million and $66 million, she said.In after-hours trading last night, Opsware shares rose 4 cents (0.96 percent) to $4.21.

— James Rogers, Site Editor, Next-gen Data Center Forum