Netezza Announces First Quarter Fiscal 2010 Financial Results

Revenues increased 15% over the prior year quarter
MARLBOROUGH, Mass.--(Business Wire)--
Netezza Corporation (NYSE: NZ), the global leader in data warehouse and analytic
appliances, today reported its financial results for the first fiscal quarter
ended April 30, 2009.

"In spite of the challenging economic environment, we are pleased that Netezza
performed well during our first fiscal quarter. Our customers continue to derive
significant business benefit from our products as they use the technology to
drive some of their most strategic business processes," said Jim Baum, Netezza`s
President and Chief Executive Officer.

Total revenue for the first quarter of fiscal 2010 increased 15% to $45.4
million compared with $39.6 million for the same period one year ago. GAAP net
loss for the first quarter of fiscal 2010 was $0.2 million compared with GAAP
net income of $2.1 million for the same period one year ago. GAAP diluted net
loss per share for the first quarter of fiscal 2010 was $0.00 compared with GAAP
diluted net income per share of $0.03 for the same period one year ago. Non-GAAP
net income for the first quarter of fiscal 2010 was $1.6 million compared with
$3.8 million for the same period one year ago. Non-GAAP diluted net income per
share for the first quarter of fiscal 2010 was $0.03 compared with $0.06 for the
same period one year ago.

Non-GAAP operating income, non-GAAP net income and non-GAAP diluted net income
per share exclude non-cash stock-based compensation, amortization of acquired
intangible assets and the related income tax effect of excluding these expenses.
A reconciliation of GAAP to non-GAAP results has been provided in the financial
statements included in this press release. An explanation of these measures is
also included below under the heading "Use of Non-GAAP Financial Measures."

Financial Commentary:

"We are pleased that, despite the impact of the continued economic decline, we
were still able to achieve 15% revenue growth year on year," said Patrick
Scannell, Senior Vice President and Chief Financial Officer of Netezza. "As we
previously stated, we continued to invest in our products and distribution to
position the company for the longer term. However, with the continued macro
economic uncertainty, we are not in a position to provide any specific financial
guidance for this fiscal year."

Use of Non-GAAP Financial Measures:

To supplement Netezza`s unaudited condensed consolidated financial statements
presented in accordance with GAAP, Netezza is presenting certain non-GAAP
measures of financial performance. Netezza believes that these non-GAAP
financial measures, when taken together with the corresponding GAAP financial
measures, provide meaningful supplemental information regarding Netezza`s
performance by excluding certain non-cash items that may not be indicative of
Netezza`s core business or future outlook. The presentation of these non-GAAP
measures is not intended to be considered in isolation from, as a substitute
for, or superior to, the financial information prepared and presented in
accordance with GAAP, and may be different from non-GAAP measures used by other
companies. In addition, these non-GAAP measures have limitations in that they do
not reflect all of the amounts associated with Netezza`s results of operations
as determined in accordance with GAAP.

The non-GAAP financial measures presented by Netezza exclude non-cash
stock-based compensation, amortization of acquired intangible assets and the
related income tax effect of excluding these expenses. Given the varying
valuation methodologies and assumptions that companies use under FAS123(R) and
that companies use to value and amortize acquired intangible assets, Netezza`s
management believes that excluding non-cash stock-based compensation allows
investors to analyze Netezza`s recurring business over multiple periods and
provide more meaningful comparisons with other companies. In addition, since
Netezza had no amortization of acquired intangible assets in the first quarter
of fiscal 2009, Netezza is presenting its operating results for the first
quarter of fiscal 2010 without this charge to allow for a more meaningful
comparison of current periods to prior year periods. Investors are encouraged to
review the reconciliation of these non-GAAP measures to their most directly
comparable GAAP financial measures provided in the financial statements included
in this press release.

Quarterly Conference Call:

Netezza will host a conference call and webcast at 4:30 p.m. Eastern Time (1:30
p.m. Pacific Time) on May 27, 2009 to discuss its first quarter fiscal year 2010
results and business outlook.

The conference call can be accessed by dialing +1-800-295-4740 for participants
in the United States and by dialing +1-617-614-3925 for participants outside the
United States. The passcode for the conference call is 62670273. A telephonic
replay of the conference call will also be available two hours after the call
and will run for two weeks. The replay can be accessed by dialing
+1-888-286-8010 for participants in the United States and by dialing
+1-617-801-6888 for participants outside the United States. The passcode for the
replay is 52011552.

The webcast will be accessible from the "Investor Relations" section of
Netezza's Web site (http://www.netezza.com). The webcast will be archived on
Netezza`s Web site for a period of one year.

About Netezza Corporation (NYSE: NZ):

Netezza Corporation is the global leader in data warehouse and analytic
appliances that dramatically simplify high-performance analytics for business
users across the extended enterprise, delivering significant competitive and
operational advantage in today's information-intensive marketplaces. The Netezza
family of appliances brings appliance simplicity to a broad range of complex
data warehouse and analytic challenges. Customers who have realized the benefits
of Netezza appliances include Ahold, Amazon.com, Debenhams, Department of
Veterans Affairs, Epsilon, iBasis, eHarmony, Nationwide, Neiman Marcus, Orange
UK, Premier, Inc., Ross Stores, Ryder System, Inc., The Carphone Warehouse and
Virgin Media. Based in Marlborough, Mass., Netezza has offices in Washington,
DC, the United Kingdom and the Asia Pacific region. For more information about
Netezza, please visit www.netezza.com.

Netezza Performance Server and NPS are trademarks of Netezza Corporation. Other
names may be trademarks of their respective owners.

For Netezza Investors:

The statements set forth above include forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements relate to Netezza`s future financial performance and
Netezza's business prospects. These statements involve risk and uncertainties,
including: market demand for our products; our limited operating history and
history of losses; quarterly fluctuation of our business; our ability to attract
and retain key personnel; our ability to develop and introduce new products and
manage product transitions; competition in the data warehouse market; our
dependence on certain key customers; our ability to protect our patents and
intellectual property; our ability to defend against third party infringement
claims, other litigation and contingent liabilities; and risks relating to
operating internationally. For a further list and description of risks and
uncertainties that could cause actual results to differ materially from those
contained in the forward-looking statements in this release, we refer you to the
"Risk Factors" section of Netezza's Annual Report on Form 10-K for the year
ended January 31, 2009 which is on file with the SEC and available in the
investor relations section of Netezza's Web site at http://www.netezza.com and
on the SEC Web site at http://www.sec.gov. In addition, any forward-looking
statements included in this press release represent our views as of May 27,
2009. We anticipate that subsequent events and developments will cause our views
to change. However, while we may elect to update these forward-looking
statements at some point in the future, we specifically disclaim any obligation
to do so. These forward-looking statements should not be relied upon as
representing our views as of any date subsequent to May 27, 2009.

Netezza Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

April 30, January 31,
2009 2009

Assets

Current assets
Cash and cash equivalents $ 107,395 $ 111,635
Accounts receivable 28,014 34,457
Inventory 17,416 18,409
Deferred tax assets, net 13,015 12,723
Restricted cash 15 379
Prepaid expenses and other current assets 3,073 3,160
Total current assets 168,928 180,763

Property and equipment, net 10,105 9,586
Deferred tax assets, net 9,415 9,415
Goodwill 2,188 2,000
Intangible assets, net 4,864 2,935
Long-term marketable securities 48,990 49,222
Restricted cash 739 739
Other long-term assets 3,592 4,199

Total assets $ 248,821 $ 258,859

Liabilities and stockholders' equity

Current liabilities
Accounts payable $ 6,811 $ 8,424
Accrued expenses 5,185 6,301
Accrued compensation and benefits 4,562 6,352
Current portion of deferred revenue 40,475 46,356
Total current liabilities 57,033 67,433

Long-term deferred revenue 9,022 11,979
Other long-term liabilities 2,825 2,825

Total liabilities 68,880 82,237

Stockholders' equity 179,941 176,622

Total liabilities and stockholders' equity $ 248,821 $ 258,859

Netezza Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

For the three months ended
April 30,
2009 2008

Revenue
Product $ 32,702 $ 31,326
Services 12,665 8,250
Total revenue 45,367 39,576

Cost of revenue
Product 12,344 12,594
Services 3,475 2,104
Total cost of revenue 15,819 14,698

Gross margin 29,548 24,878

Operating expenses
Sales and marketing 14,676 13,330
Research and development 11,620 7,248
General and administrative 3,976 3,113
Total operating expenses 30,272 23,691

Operating income (loss) (724 ) 1,187

Interest income 310 1,743
Interest expense 25 -
Other income (expense), net 131 (133 )

Income (loss) before income tax benefit (expense) (308 ) 2,797

Income tax benefit (expense) 71 (665 )

Net income (loss) $ (237 ) $ 2,132

Net income (loss) per common share:
Basic $ (0.00 ) $ 0.04
Diluted $ (0.00 ) $ 0.03

Shares used in per common share calculations:
Basic 59,917 57,944
Diluted 59,917 64,079

Netezza Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)

For the three months ended
April 30,
2009 2008

Non-GAAP financial measures and reconciliation:

GAAP cost of product revenue $ 12,344 $ 12,594
Non-cash stock-based compensation (1) 11 43
Amortization of acquired intangible assets (2) 69 -
Non-GAAP cost of product revenue $ 12,264 $ 12,551

GAAP cost of service revenue $ 3,475 $ 2,104
Non-cash stock-based compensation (1) 97 45
Amortization of acquired intangible assets (2) 82 -
Non-GAAP cost of service revenue $ 3,296 $ 2,059

GAAP gross margin $ 29,548 $ 24,878
Non-cash stock-based compensation (1) 108 88
Amortization of acquired intangible assets (2) 151 -
Non-GAAP gross margin $ 29,807 $ 24,966

GAAP sales and marketing expenses $ 14,676 $ 13,330
Non-cash stock-based compensation (1) 750 571
Amortization of acquired intangible assets (2) 68 -
Non-GAAP sales and marketing expenses $ 13,858 $ 12,759

GAAP research and development expenses $ 11,620 $ 7,248
Non-cash stock-based compensation (1) 634 441
Amortization of acquired intangible assets (2) 10 -
Non-GAAP research and development expenses $ 10,976 $ 6,807

GAAP general and administrative expenses $ 3,976 $ 3,113
Non-cash stock-based compensation (1) 743 560
Amortization of acquired intangible assets (2) 2 -
Non-GAAP general and administrative expenses $ 3,231 $ 2,553

GAAP total operating expenses $ 30,272 $ 23,691
Non-cash stock-based compensation (1) 2,127 1,572
Amortization of acquired intangible assets (2) 80 -
Non-GAAP total operating expenses $ 28,065 $ 22,119

GAAP operating income (loss) $ (724 ) $ 1,187
Non-cash stock-based compensation (1) 2,235 1,660
Amortization of acquired intangible assets (2) 231 -
Non-GAAP operating income $ 1,742 $ 2,847

GAAP income tax benefit (expense) $ 71 $ (665 )
Income tax effect (3) (662 ) -
Non-GAAP income tax benefit (expense) $ (591 ) $ (665 )

GAAP net income (loss) $ (237 ) $ 2,132
Non-cash stock-based compensation (1) 2,235 1,660
Amortization of acquired intangible assets (2) 231 -
Income tax effect (3) (662 ) -
Non-GAAP net income $ 1,567 $ 3,792

GAAP net income (loss) per common share - basic $ (0.00 ) $ 0.04
Non-cash stock-based compensation (1) 0.04 0.03
Amortization of acquired intangible assets (2) 0.00 -
Income tax effect (3) (0.01 ) -
Non-GAAP net income per common share - basic $ 0.03 $ 0.07

GAAP net income (loss) per common share - diluted $ (0.00 ) $ 0.03
Non-cash stock-based compensation (1) 0.04 0.03
Amortization of acquired intangible assets (2) 0.00 -
Income tax effect (3) (0.01 ) -
Non-GAAP net income per common share - diluted $ 0.03 $ 0.06

Shares used in per common share calculations:
Basic 59,917 57,944
Diluted 59,917 64,079

Footnotes - Adjustments

(1) Represents non-cash compensation charges associated with stock options granted and accounted for in
accordance with the fair market provisions of Statement of Financial Accounting Standards No. 123(R) as follows:

For the three months ended
April 30,
2009 2008

Cost of product revenue $ 11 $ 43
Cost of services revenue 97 45
Sales and marketing 750 571
Research and development 634 441
General and administrative 743 560
Total non-cash stock-based compensation expense $ 2,235 $ 1,660

(2) Represents amortization of acquired intangible assets:

For the three months ended
April 30,
2009 2008

Cost of product revenue $ 69 $ -
Cost of services revenue 82 -
Sales and marketing 68 -
Research and development 10 -
General and administrative 2 -
Total amortization expense $ 231 $ -

(3) Income tax effect of excluding stock-based compensation and amortization of acquired intangible assets.
There was no adjustment for the comparable period in fiscal year 2009.

Netezza Corporation
Investor Contact:
Patrick J. Scannell, Jr., +1 508-382-8584
Senior Vice President & Chief Financial Officer
ir@netezza.com
or
Media Contact:
Glen Zimmerman, +1 508-382-8267
Director, Public Relations
gzimmerman@netezza.com

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