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Isilon Systems Q1 2008 Earnings Call Transcript

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2008-05-19 17:25:11.0

Tags: Isilon Systems

Question-and-Answer Session

Operator

The first call comes from Katy Huberty of Morgan Stanley. Please go ahead.

Kathryn Huberty- Morgan Stanley

Sujal, if I just rewind to last month, during the initial conference call post-investigation, it sounded like you were concerned that sequential decline in March could be far worse than what you saw in 2007. Can you help us understand what allowed you to hit a more normal seasonal trend?

Sujal Patel

Your question, as I understood it, was related to whether we saw a more normal trend with respect to seasonality in Q1 based on the message from the last conference call. If you remember back to the last call, we had talked about the fact that our revenue would be sequentially down but would be double-digit growth off of our Q1 2007. And I think that the positive effect that we saw during Q1 2008 was really a strong pattern of reorders from our existing customers. That strong pattern, coupled with large deals, really enabled us to still deliver a good result here.

Kathryn Huberty- Morgan Stanley

Can you just walk us through what linearity looked like in the quarter, and maybe touch on at what point did you see some of the delays in new orders? Was that late in the quarter, or did you see that pattern throughout?

Bill Richter

I’ll take that, and I’ll start with your second question first. In terms of the pattern of elongated sales cycles I would say that it wasn’t any particular concentration in any one month, it was really throughout the quarter. And in terms of your first question, sales linearity, we don’t give out the specific percentages month-by-month, but what I will tell you is that overall we did see some improvement in our linearity, and you can see that reflected in the sequential decline in DSOs.

Operator\

The next question comes from Tom Curlin of RBC. Please proceed.

Thomas Curlin- RBC Capital Markets

Do you feel like you are any closer to being able to provide forward guidance, or is there a timeline for that over the next few quarters? Just any update on a level of conviction on y our pipeline that would allow you to start doing that again.

Bill Richter

As we said, we are not providing any quantitative guidance on Q2 or for the rest of the year. And we constantly evaluate it, and we will certainly let you know when we change our strategy there. What I will say, is that Q2 is seasonally stronger than Q1. That seasonally stronger quarter as we expect it is tempered to some extent by the headwinds that take some time to dissipate after the audit committee investigation terminated, and also to the extent that macro-economic factors effect our business going forward. And it is just hard to tell.

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