BladeLogic Boasts Big Q3

BladeLogic, which completed its IPO last month, reported its first results as a public company last night, posting solid revenue growth. (See BladeLogic Reports Q3, BladeLogic Announces IPO Pricing, and Storage Funding Finds Its Feet.)

The data center automation vendor's third quarter revenue was $16.2 million, up from $7.8 million in the same period last year. Analysts had estimated earnings of $14.3 million.

BladeLogic's losses also narrowed over the same period, with the vendor posting a third quarter net loss of 3 cents per share on a loss of $272,000, compared to losses of 27 cents per share and $2.96 million in the third quarter of 2006. Analysts had estimated break-even earnings per share.

The vendor, which promotes its software as a way for users to centrally manage and provision servers and storage devices, raised just under $80 million in its recent IPO. (See BladeLogic Announces Alliance, Onaro, BladeLogic Team, Right90 Selects BladeLogic, and Storage Left Out of CMDB Loop.)

Speaking on a conference call last night, BladeLogic CEO Dev Ittycheria painted a rosy picture of the vendor's first few weeks as a public company. "We had a terrific quarter -- the company has experienced significant organic revenue growth."The exec pointed to the "massive rise" in the cost and complexity of managing data center hardware as fueling BladeLogic's growth. "It's more expensive to manage a server than it is to buy one," he said, explaining that virtualization is adding yet more complexity to the mix. (See NetApp Reports Q1, Nudges Forward, Up the V Stack, and Application Virtualization Takes Hold.)

BladeLogic execs on last night's call faced a barrage of questions about rival vendor Opsware, which was recently acquired by HP for $1.6 billion. (See HP to Buy Opsware for $1.6B, HP to Acquire Opsware, and HP's Storage Sneaks Up.) Both Ittycheria and the BladeLogic CFO John Gavin could not resist firing a shot across the bows of the competitor. "We're growing four times faster than Opsware was, but we want to do it in a disciplined way," said Gavin.

"We believe that the acquisition is a net positive for us," added Ittycheria, pointing to the difficulties of integrating firms. "As with any acquisition -- people have trouble maintaining focus."

Identifying the "huge" amount of money paid by HP for Opsware, one analyst asked whether BladeLogic could one day become M&A bait itself. "We wouldn't have gone public if we didn't think that we could build an independent market franchise," replied Ittycheria. "We feel very bullish about our business."

BladeLogic execs were also grilled about the current spending climate, with one analyst highlighting the current "meltdown" in the financial markets. (See NetApp Reports Q1, Nudges Forward, Sun Slips on Storage, Overland Struggles With 'Softness', HP's Storage Slowdown, LSI Promises Better, and Isilon: The Honeymoon's Over.)The BladeLogic CEO explained that the vendor has managed to avoid the problems that have blighted many of its storage rivals over recent months. "We don't see any material change, we believe that we're just scratching the surface."

The exec also gave his perspective on last week's $500 million acquisition by Citrix of virtualization vendor XenSource, which is a major rival of BladeLogic's partner VMware. (See Citrix Bags XenSource for $500M, Citrix Acquires XenSource, and Xen & the Art of Virtualization.) "I think that the big overhang is 'what will Microsoft do?'," he said, suggesting that the strong links between Citrix and Microsoft could result in a "deep relationship" built around XenSource's virtualization technology.

For the fourth quarter, BladeLogic expects revenue between $17 million and $17.5 million and earnings between breakeven and 1 cent per share.

In early trading today, shares of BladeLogic fell 39 cents (1.58 percent) to $24.26.