Brocade Communications Systems, Inc. (NASDAQ:BRCD) Q3 2016 Earnings Conference Call - Final Transcript

Aug 25, 2016 • 05:30 pm ET


Brocade Communications Systems, Inc. (NASDAQ:BRCD) Q3 2016 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen. Thank you for standing by. Welcome to Brocade's Third Fiscal Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

And now, I would like to turn the program over to our speaker, Michael Iburg, Senior Director of IR with Brocade. Sir, please go ahead.

Michael Iburg

Thank you, Ronia. Good afternoon and welcome to Brocade's third quarter fiscal 2016 earnings call. By now, you should have seen our press release and prepared comments, which are available on our website at Those materials also were furnished to the SEC, and the press release will be distributed by Marketwired. (Forward-Looking Cautionary Statements).

After brief opening remarks, we will open the call to questions. Here to take your questions today are Lloyd Carney, CEO; Dan Fairfax, CFO; Jeff Lindholm, Senior VP of Worldwide Sales; Ken Cheng, CTO and Senior VP of Corporate Development and Emerging Businesses; Jason Nolet, Senior VP of Switching, Routing, and Analytics; and Jack Rondoni, VP Storage Networking.

With that, I will now turn the call over to Lloyd Carney, our CEO. Lloyd?

Lloyd Carney

Good afternoon and thank you, everyone. Q3 was a productive quarter for Brocade. Against the backdrop of a mixed macro environment, we posted solid results with total revenue at the high end of our guidance range. In addition, we closed our acquisition of Ruckus Wireless and continued a strong year of new product introductions across our portfolio.

Beginning with SAN, our revenue was consistent with the Q3 outlook we provided on our last earnings call. Fixed switch revenue was up by 3% year-over-year, largely driven by pull-through demand from all-flash array deployments. Over the same period, we saw a decline in director sales, as sales cycles elongated reflecting the sluggish storage environment reported by many of our partners. However, we were encouraged by the early demands for Gen 6 directors from a number of leading-edge customers.

During the quarter, we achieved a significant milestone with the launch of industry's first Gen 6 Fibre Channel director, the Brocade X6, which we have already begun shipping for revenue. The Brocade X6 extends our technology leadership and expands upon our portfolio of Gen 6 solutions, including the Brocade G620 switch that we launched in March.

Widespread enthusiasm for Brocade Fibre Channel Gen 6 technology was echoed in our announcement by more than 20 partners and industry analysts, who affirmed the value of our portfolio and roadmap. Moreover, the Gen 6 ecosystem is developing faster than previous generations, a strong indication of the market readiness for this technology

Today, three of our OEM partners are shipping Gen 6 directors, with most others expected to launch within the next several months. Further, by early 2017, several of our largest OEM partners will have 32-gig storage arrays in the market, which will be ideally choosed to connect with our