Second Quarter and Six Month Revenues Up 9% and
2% Year-Over-Year, Respectively
Second Quarter and Six Month Earnings from
Operations Up 212% and 182% Year-Over-Year, Respectively
Datalink (Nasdaq: DTLK), a leading provider of IT services and
solutions, today reported results for its second quarter and six
months that ended June 30, 2016. Revenues for the quarter ended
June 30, 2016, increased 9% to $199.2 million compared to $182.6
million for the quarter ended June 30, 2015, and increased 21% over
revenues of $164.6 million in the first quarter of 2016. Revenues
for the six months ended June 30, 2016, increased 2% to $363.8
million compared to $358.0 million for the six months ended June
30, 2015.
GAAP Results
On a GAAP basis, the company reported net earnings of $3.9
million or $0.18 per diluted share for the second quarter ended
June 30, 2016. This compares to net earnings of $661,000 or $0.03
per diluted share in the second quarter of 2015. For the six months
ended June 30, 2016, the company reported net earnings of $3.4
million or $0.16 per diluted share, compared to net earnings of
$647,000, or $0.03 per diluted share, for the six months ended June
30, 2015. The income tax expense for the quarter and six months
ended June 30, 2016 includes discrete tax benefits of approximately
$1.6 million and $1.4 million, respectively, primarily due to
research and development tax credits for 2012 thru 2016. The
company has determined that certain activities it performs qualify
for research and development tax credits as defined by Internal
Revenue Code Section 41. Excluding this credit, earnings per
diluted share for the quarter and six months ended June 30, 2016
would have been $0.10 and $0.08, respectively.
Non-GAAP Results
Non-GAAP net earnings for the second quarter of 2016 were $3.9
million, or $0.18 per diluted share, compared to non-GAAP net
earnings of $2.7 million, or $0.12 per diluted share, in the second
quarter of 2015. For the six months ended June 30, 2016, the
company reported non-GAAP net earnings of $5.2 million, or $0.24
per diluted share, compared to non-GAAP net earnings of $5.0
million, or $0.22 per diluted share, for the six months ended June
30, 2015. A detailed reconciliation between GAAP and non-GAAP
information is contained in the tables included herein. The income
tax expense for the quarter and six months ended June 30, 2016
includes discrete tax benefits primarily for research and
development tax credits of $500,000 on an annualized basis for
2016. Excluding this credit, non-GAAP earnings per diluted share
for the quarter and six months ended June 30, 2016 would have been
$0.17 and $0.22, respectively.
Highlights
- Second quarter earnings from
operations increased 212% to $3.7 million on a GAAP basis and
35% to $6.4 million on a non-GAAP basis compared to second quarter
2015.
- A 132% year-over-year increase in
sales of all-flash storage, with flash now representing 51% of
the company’s storage sales compared to 21% in 2015. Flash storage
yields lower gross margins than traditional storage but helps to
offset continued declines in traditional storage revenues and also
drives migration and other consulting services when part of a
converged solution.
- A 5% year-over-year increase in
total services revenues, reflecting the company’s emphasis on
growing its services business. Services comprised 41% of the
company’s year to date revenues in 2016, up from 40% in the first
six months of 2015.
- A continued increase in $1 million+
customers, with seven-figure spending by 40 organizations in
the second quarter of 2016 compared to 30 in the same period in
2015.
- A #45 ranking on CRN’s 2016 Solution
Provider 500 list of the top technology integrators, solution
providers and IT consultants in North America by revenue, as well
as its fifth consecutive CRN Tech Elite 250 honor reflecting the
company’s extensive list of advanced technical certifications.
- Strong balance sheet with the
company ending the quarter with over $70.8 million of cash and
investments and no debt.
Outlook
“We had a solid second quarter, highlighted by strong revenue
and earnings growth. Contributing to this growth were several
seven-figure data center modernization contracts that demonstrate
the complex mix of technologies and services required to optimize
data center operations today. Our ability to provide a full range
of consulting, project planning and management, implementation,
data migration and automation services were instrumental in
securing these contracts,” said Paul Lidsky, Datalink’s president
and CEO. “At the same time, the market has accepted flash storage
at a faster rate than we expected earlier in the year, which
impacts our overall revenue growth and gross margins. As a result
we no longer believe our annual growth rate will reach our original
forecast of 4% to 6% and instead our annual growth rate will be
more in line with industry averages.”
Conference Call and Webcast Today
Datalink will hold a conference call shortly afterward at 4:00
p.m. Central Time during which time Datalink president and chief
executive officer, Paul Lidsky, and chief financial officer, Greg
Barnum, will discuss company results and provide a business
overview. Participants can access the conference call by dialing
(855) 826-6150. Participants will be asked to identify the Datalink
conference call and provide the designated identification number
(40503009). A live webcast of the conference call can be
accessed here or via Datalink’s investor relations website at
www.datalink.com.
About Datalink
Datalink is a complete IT services provider that helps companies
transform their technology, operations, and service delivery to
meet business challenges. Combining extensive experience, a full
lifecycle of services and a comprehensive approach to producing IT
innovations that empower positive business outcomes, Datalink
delivers success across cloud IT transformation, next generation
technology, and security. For more information, call 800.448.6314
or visit www.datalink.com.
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for certain forward-looking statements. This press
release contains forward-looking statements, including (i)
anticipated margin pressure and plans to drive profitable growth,
and (ii) Datalink’s projections of certain anticipated 2016
results, which reflect our views regarding future events and
financial performance. These forward-looking statements are subject
to certain risks and uncertainties, including those identified
below, which could cause actual results to differ materially from
historical results or those anticipated. The words "aim,”
"believe," "expect," "anticipate," "intend," "estimate," "should"
and other expressions which indicate future events and trends
identify forward-looking statements. Actual future results and
trends may differ materially from historical results or those
anticipated depending upon a variety of factors, many of which are
included under “Risk Factors” in our annual report on Form 10-K for
our year ended December 31, 2015, including, but not limited to:
the level of continuing demand for IT services and solutions
including the effects of current economic and credit conditions and
the ability of organizations to outsource data center
infrastructure-related services to service providers such as us;
the migration of organizations to virtualized server environments,
including using a private cloud computing infrastructure; the
extent to which customers deploy disk-based backup recovery
solutions; the realization of the expected trends identified for
advanced network infrastructures; reliance by manufacturers on
their data service partners to integrate their specialized
products; customers switching to solid state storage solutions;
continued preferred status with certain principal suppliers;
competition and pricing pressures and timing of our installations
that may adversely affect our revenues and profits; fixed
employment costs that may impact profitability if we suffer revenue
shortfalls; our ability to hire and retain key technical and sales
personnel; continued productivity of our sales personnel; our
dependence on key suppliers; our ability to adapt to rapid
technological change; risks associated with integrating completed
and future acquisitions (including a failure of anticipated
synergies to materialize); the ability to execute our acquisition
strategy; fluctuations in our quarterly operating results; future
changes in applicable accounting rules; and volatility in our stock
price. Furthermore, our revenues for any particular quarter are not
necessarily reflected by our backlog of contracted orders, which
also may fluctuate unpredictably. We cannot assure you that we can
grow or maintain our revenue and backlog from current levels.
Additional factors that may cause actual results to differ from our
assumptions and expectations include those set forth in our most
recent filing on Form 10-K filed with the Securities and Exchange
Commission. Any forward-looking statement made by us in this press
release is based only on information currently available to us and
speaks only as of the date on which it is made. We undertake no
obligation to publicly update any forward-looking statement,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise.
Non-GAAP Details
Non-GAAP financial measures exclude the impact from acquisition
accounting adjustments to deferred revenue and costs, stock-based
compensation expense, amortization of acquisition intangible
assets, integration and transaction costs related to acquisitions,
severance costs and the related effects on income taxes. These
non-GAAP measures are not in accordance with, or an alternative for
measures prepared in accordance with, GAAP and may be different
from non-GAAP measures used by other companies. In addition, these
non-GAAP measures are not based on any comprehensive set of
accounting rules or principles. We believe that non-GAAP measures
have limitations in that they do not reflect all of the amounts
associated with our results of operations as determined in
accordance with GAAP and that these measures should only be used to
evaluate our results of operations in conjunction with the
corresponding GAAP measures.
These non-GAAP financial measures facilitate management's
internal comparisons to our historical operating results and
comparisons to competitors' operating results. We include these
non-GAAP financial measures in our earnings announcement because we
believe they are useful to investors in allowing for greater
transparency with respect to supplemental information used by
management in its financial and operational decision making, such
as employee compensation planning. We believe that the presentation
of these non-GAAP measures when shown in conjunction with the
corresponding GAAP measures provides useful information to
investors and management regarding financial and business trends
relating to our financial condition and results of operations.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160728006630/en/
DatalinkInvestors &
AnalystsGreg BarnumVice President and CFOPhone:
952-279-4816Email: gbarnum@datalink.comorPressJill SchmidtJill Schmidt
PR847-904-2912jill@jillschmidtpr.com
Datalink Corp. (NASDAQ:DTLK)
Historical Stock Chart
From Mar 2024 to Apr 2024
Datalink Corp. (NASDAQ:DTLK)
Historical Stock Chart
From Apr 2023 to Apr 2024