Voltaire Announces 35% Sequential Revenue Growth in Third Quarter 2009

http://www.businesswire.com/news/home/20091028005571/en

Revenues reach $14.5 million, continuing growth momentum

Conference call to discuss results scheduled for 10:00 am EDT today
BILLERICA, Mass. and RA’ANANA, Israel--(Business Wire)--
Voltaire Ltd. (NASDAQ: VOLT), a leading provider of scale-out data center
fabrics, today announced financial results for the three- and nine-month periods
ended September 30, 2009.

Main Highlights (compared to second quarter 2009)

* Gross profit reaches $7.4 million, compared to $5.7 million in second quarter
2009
* Narrowed both operating and net loss, on 51.0% gross margin
* Cash, cash equivalents and marketable securities at September 30, 2009 totaled
$50.4 million
* Reiterate 2009 annual revenue guidance of $50 million
* Witnessing growing demand for 40 Gb/s InfiniBand director switches and Unified
Fabric Manager software

Financial Results

Revenues for the third quarter of 2009 totaled $14.5 million, compared to $14.7
million in the third quarter of 2008. Revenues increased 35% sequentially from
$10.7 million in the second quarter of 2009.

Gross profit for the third quarter of 2009 totaled $7.4 million, compared to
$8.0 million in the third quarter of 2008. Gross profit increased 30%
sequentially from $5.7 million in the second quarter 2009. Gross margin for the
third quarter of 2009 totaled 51.0%, compared to 54.5% gross margin for the
third quarter of 2008, and 52.9% gross margin in the second quarter 2009.

Operating loss for the third quarter of 2009 totaled $1.5 million, compared to
an operating loss of $1.2 million in the third quarter of 2008 and an operating
loss of $2.8 million in the second quarter 2009.

Net loss for the third quarter of 2009 totaled $1.5 million, or $0.07 loss per
share, compared to a net loss of $0.9 million, or $0.04 loss per share, in the
third quarter of 2008. Net loss for the second quarter of 2009 totaled $2.9
million, or $0.14 loss per share.

Net loss, on a non-GAAP basis, for the third quarter of 2009 totaled $0.9
million, or $0.05 loss per share, compared to net loss, on a non-GAAP basis, of
$0.4 million, or $0.02 loss per share, in the third quarter of 2008.

Cash, cash equivalents, and marketable bonds and securities as of September 30,
2009, totaled $50.4 million, compared to $50.6 million as of June 30, 2009.

Mr. Ronnie Kenneth, Chairman and CEO of Voltaire commented, "This was a quarter
of strong financial performance and business execution for Voltaire, with
continued order momentum driving higher revenues and gross profit. This growth,
paired with prudent expense management, enabled us to further narrow our
operating and net income, while minimizing cash expenditure. This quarter we
witnessed growing demand for our 40 Gb/s InfiniBand director switches as well as
our Unified Fabric Manager software by the government, HPC and financial
services vertical markets, contributing to the majority of revenues."

Mr. Kenneth added, "In terms of our go-to-market strategy, this quarter we
further expanded our partnerships with our premier server OEM partners. HP
started selling Voltaire`s Unified Fabric Manager software as part of its
scale-out infrastructure portfolio, and IBM became the first of our OEM partners
to sell our new Vantage 8500 low latency, 10 Gigabit Ethernet switches, in
addition to our 20 and 40 Gb/s InfiniBand platforms."

"Looking ahead, we believe we are back on track to generate long term growth,
entering the fourth quarter with a healthy backlog and pipeline, driven by the
increasing demand for our 40 Gb/s InfiniBand director switches, incremental
software business and continued growth in the Asia Pacific region," concluded
Mr. Kenneth.

Outlook

Management reiterates previously announced guidance, and expects revenues for
the full year of 2009 to be around $50 million. Gross margin for the year is
expected to be around 50%, and to return to approximately 55% in 2010. Non-GAAP
operating expense levels for this year are expected to remain at a similar level
to 2008.

Conference Call Details

The Company will be hosting a conference call later today, at 10:00 am EDT. On
the call, management will review and discuss the results and will be available
to answer questions. To participate, please either call one of the following
teleconferencing numbers, or access the live webcast on the Company`s website.
Please begin placing your calls at least 10 minutes before the conference call
is due to commence. If you are unable to connect using the toll-free numbers,
please try the international dial-in number.

US Dial-in Number: 1-888-668-9141 UK Dial-in Number: 0-800-917-5108
Israel Dial-in Number: 03-918-0610 International Dial-in Number: +972-3-918-0610
at 10:00 am Eastern Time; 7:00 am Pacific Time; 2:00 pm UK Time; 4:00 pm Israel Time

The conference call will be broadcast live on the Company`s website. To
participate, please access the investor relations section of Voltaire`s website
- www.voltaire.com, at least 10 minutes before the conference call is due to
commence. A replay of the call will be available following the call under the
Investor Relations section of the website at: www.voltaire.com.

Use of Non-GAAP Financial Measure

Voltaire reports its results of operations in accordance with GAAP and,
additionally, on a non-GAAP basis. Non-GAAP operating income (loss) and non-GAAP
net income (loss) are calculated based on the operating income (loss) or net
income (loss) in Voltaire`s financial statements excluding (i) non-cash
equity-based compensation charges recorded in accordance with SFAS 123R, and
(ii) the $2.1 million expense recorded in the first quarter of 2008 under cost
of revenues for the one-time repayment of grants to the Office of the Israeli
Chief Scientist. Reconciliation of this non-GAAP measure to operating income
(loss) and net income (loss), the most comparable GAAP measures, is provided in
the schedules attached to this release. Voltaire provides these non-GAAP
financial measures because its management believes that they are useful in
enhancing an understanding of Voltaire`s ongoing performance. Voltaire uses
internally the Non-GAAP information to evaluate the Company`s ongoing
performance. Voltaire is providing this information to investors to enable them
to perform comparisons of operating results in a manner similar to how the
Company analyzes its operating results.

About Voltaire

Voltaire is a leading provider of scale-out computing fabrics for data centers,
high performance computing and cloud environments. Voltaire`s family of server
and storage fabric switches and advanced management software improve performance
of mission-critical applications, increase efficiency and reduce costs through
infrastructure consolidation and lower power consumption. Used by more than 30
percent of the Fortune 100 and other premier organizations across many
industries, including many of the TOP500 supercomputers, Voltaire products are
included in server and blade offerings from Bull, HP, IBM, NEC and Sun and
provide the internal server-to-storage connectivity for the HP-Oracle Database
Machine. Founded in 1997, Voltaire is headquartered in Ra`anana, Israel and
Billerica, Massachusetts. More information is available at www.voltaire.com or
by calling 1-800-865-8247.

Forward Looking Statements

Information provided in this press release contains statements relating to
current expectations, estimates, forecasts and projections about future events
that are "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements generally relate
to Voltaire's plans, objectives and expectations for future operations and are
based upon management's current estimates and projections of future results or
trends. They also include third-party projections regarding expected industry
growth rates. Actual future results may differ materially from those projected
as a result of certain risks and uncertainties.These factors include in
particular, but are not limited to, the impact of the economic downturn on
capital expenditures by our customers and our product mix during the balance of
the year.These factors and others are those discussed in detail under the
heading "Risk Factors" in Voltaire`s annual report on Form 20-F for the year
ended December 31, 2008. These forward-looking statements are made only as of
the date hereof, and we undertake no obligation to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise.

- FINANCIAL TABLES -

VOLTAIRE LTD.
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)

September 30, December 31,
2009 2008
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,475 $ 24,768
Short term investments 33,304 28,252
Restricted deposits 1,733 1,478
Accounts receivable:
Trade 9,847 9,787
Other 1,467 1,486
Inventories 3,768 5,198
Total current assets 60,594 70,969
INVESTMENTS:
Restricted long-term deposit 1,077 321
Long-term deposits 183 183
Marketable securities 3,788 987
Funds in respect of employee rights upon retirement 2,360 1,631
Total investments 7,408 3,122

DEFERRED INCOME TAXES 1,117 1,125
PROPERTY AND EQUIPMENT,net of accumulated depreciation and amortization 6,297 3,657
Total assets $ 75,416 $ 78,873
LIABILITIES AND SHAREHOLDERS` EQUITY
CURRENT LIABILITIES:
Accounts payable and accruals:
Trade $ 7,369 $ 4,539
Other 4,520 4,408
Deferred revenues 4,200 3,469
Total current liabilities 16,089 12,416
LONG-TERM LIABILITIES:
Accrued severance pay 3,288 2,634
Deferred revenues 3,655 3,311
Other long-term liabilities 1,154 861
Total long-term liabilities 8,097 6,806
Total liabilities 24,186 19,222

SHAREHOLDERS` EQUITY:
Ordinary shares of NIS 0.01 par value 2,787 2,787
Additional paid-in capital 151,963 150,129
Accumulated other comprehensive income 289 16
Accumulated deficit (103,809 ) (93,281 )
Total shareholders` equity 51,230 59,651
Total liabilities and shareholders` equity $ 75,416 $ 78,873

VOLTAIRE LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except per share data)

Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
(unaudited) (unaudited)
REVENUES $ 14,502 $ 14,666 $ 32,981 $ 48,381
COST OF REVENUES 7,102 6,679 15,512 25,085
GROSS PROFIT 7,400 7,987 17,469 23,296
OPERATING EXPENSES:
Research and development 3,909 3,914 12,090 11,051
Sales and marketing 3,347 3,350 9,015 10,046
General and administrative 1,622 1,890 6,570 5,441
Total operating expenses 8,878 9,154 27,675 26,538
LOSS FROM OPERATIONS (1,478 ) (1,167 ) (10,206 ) (3,242 )
FINANCIAL INCOME 75 335 323 1,154
FINANCIAL EXPENSES (24 ) (9 ) (208 ) (7 )
LOSS BEFORE TAX (1,427 ) (841 ) (10,091 ) (2,095 )
TAX EXPENSES (105 ) (77 ) (437 ) (499 )
NET LOSS $ (1,532 ) $ (918 ) $ (10,528 ) $ (2,594 )

Net loss per share- Basic and Diluted $ (0.07 ) $ (0.04 ) $ (0.50 ) $ (0.13 )

Weighted average number of shares used in 21,017,932 20,898,748 20,993,266 20,724,708
computing net loss per share- Basic and Diluted

VOLTAIRE LTD.
RECONCILIATION BETWEEN GAAP TO NON-GAAP RESULTS
(U.S. dollars in thousands, except per share data)
The non-GAAP financial information presented herein was not prepared under a comprehensive set of accounting rules or principles and should not be viewed as a substitute for the Company`s GAAP financial information.

Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
(unaudited) (unaudited)
GAAP Net loss $ (1,532 ) $ (918 ) $ (10,528 ) $ (2,594 )
Termination of the participation in the Chief
Scientist grant program - - - 2,075

Equity based compensation expenses included in:

Cost of revenues 13 5 31 14
Research and development 127 96 356 258
Sales and marketing 157 122 466 331
General and administrative 286 252 855 699
583 475 1,708 1,302

Non-GAAP Net income (loss) $ (949 ) $ (443 ) $ (8,820 ) $ 783

Non-GAAPNet income (loss) per share -
Basic $ (0.05 ) $ (0.02 ) $ (0.42 ) $ 0.04
Diluted $ (0.05 ) $ (0.02 ) $ (0.42 ) $ 0.03

Weighted average number of shares:
Basic 21,017,932 20,898,748 20,993,266 20,724,708
Diluted 21,017,932 20,898,748 20,993,266 22,630,255

VOLTAIRE LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)

Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,532 ) $ (918 ) $ (10,528 ) $ (2,594 )
Adjustments required to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation of property and equipment 688 405 1,907 1,113
Amortization of discount and premium related to marketable securities, net 20 (40 ) 29 (89 )
Deferred income taxes (148 ) 31 76 92
Change in accrued severance pay 310 166 497 836
Gain in funds in respect of employee rights upon retirement (298 ) - (264 ) -
Non-cash share-based compensation expenses 583 475 1,708 1,302
Excess tax benefit on options exercised (52 ) - (52 ) -
Changes in operating asset and liability items:
Decrease (increase) in accounts receivable (1,717 ) 2,649 92 (961 )
Increase in accounts payable and accruals and deferred revenues 2,936 1,928 4,359 2,236
Decrease (increase) in inventories 106 (1,625 ) 1,430 (256 )
Net cash provided by (used in) operating activities 896 3,071 (746 ) 1,679
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash 199 (853 ) (1,011 ) (1,354 )
Purchase of property and equipment (1,071 ) (699 ) (4,419 ) (1,436 )
Investment in marketable securities (8,263 ) (26,918 ) (41,907 ) (61,150 )
Investment in short-term deposit, net (399 ) - (5,022 ) -
Proceeds from sale of marketable securities 4,513 2,992 20,568 3,992
Proceeds from maturities of marketable securities 3,722 18,045 18,472 36,313
Amounts funded in respect of employee rights upon retirement (149 ) (139 ) (354 ) (647 )
Increase in long-term deposits (8 ) (1 ) - (18 )
Net cash used in investing activities (1,456 ) (7,573 ) (13,673 ) (24,300 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options 32 8 74 313
Excess tax benefit on options exercised 52 - 52 -
Net cash provided by financing activities 84 8 126 313
DECREASE IN CASH AND CASH EQUIVALENTS (476 ) (4,494 ) (14,293 ) (22,308 )
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,951 34,425 24,768 52,239
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,475 $ 29,931 $ 10,475 $ 29,931

Media Contact:
Voltaire
Christy Lynch, 978-439-5407
christyl@voltaire.com
or
Investor Relations Contact:
CCGK Investor Relations
Ehud Helft / Fiona Darmon
Tel. +1 646 797 2868 / +972 52 695 4400
info@gkir.com

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