Fusion-io: Fiscal 2Q14 Financial Results

Fusion-io, Inc. announced its financial results for its fiscal second quarter ended December 31, 2013.

It reported revenue of $94.5 million for the fiscal second quarter of 2014, compared to $120.6 million for the same quarter of 2013. Net loss for the fiscal second quarter of 2014 was $21.3 million, or a net loss per diluted share of $0.20, compared to net income of $1.7 million, or net income per diluted share of $0.02, in the fiscal second quarter of 2013. Gross margin for the fiscal second quarter of 2014 was 56.1%. Operating margin for the fiscal second quarter of 2014 was a negative 22.2%.

Fiscal second quarter 2014 Non-GAAP financial results
Non-GAAP net loss for the fiscal second quarter of 2014 was $6.4 million, or a net loss per diluted share of $0.06, compared to non-GAAP net income of $13.7 million, or $0.13 per diluted share in the same quarter of 2013. Non-GAAP gross margin for the fiscal second quarter of 2014 was 57.6%. Non-GAAP operating margin for the fiscal second quarter of 2014 was a negative 11.4%. A complete reconciliation of GAAP to non-GAAP results is set forth in the attachment to this press release.

“I am pleased with our execution this past quarter as well as our progress in rounding out a world-class executive team with strong operational experience,” said Shane Robison, Fusion-io chairman and CEO. “Our second quarter results demonstrate validation of our go-to-market strategy, continued traction with our OEM and ISV partners, and we are continuing to diversify our customer base, with nearly 6,000 end-user customers worldwide now using Fusion ioMemory-based solutions to accelerate their data center applications.”

Ted Hull, Fusion-io CFO, added: “We delivered 10% revenue growth over the prior quarter while maintaining a healthy gross margin due to a strong mix of enterprise customers in the quarter. We added $19 million in cash during the second quarter, bringing our total of cash and cash equivalents to $244 million. We believe these results underscore a solid foundation from which we can continue to focus on capturing the opportunity flash creates for data center transformation.”

Other financial highlights

• Cash and cash equivalents totaled $244.0 million at the end of fiscal second quarter 2014, an increase of $18.7 million from the prior quarter-end.
• Inventory was $80.3 million at the end of fiscal second quarter 2014, an increase of $6.2 million from the prior quarter-end.
• Capital expenditures were $2.6 million in fiscal second quarter 2014 and $5.8 million fiscal year-to-date.
• Operating cash flow was $13.0 million for the fiscal second quarter 2014 with cash used in operations of $4.1 million for the fiscal year-to-date.

Recent business highlights

• Separately announced that Charlie Foo will join the company as VP of the AsiaPac Japan region, effective February 3, 2014. Based in Singapore, Foo will oversee sales, marketing, customer service and OEM and channel development.
• In early December, announced the appointments of former Cisco executive, Ted Hull, as CFO, and former Riverbed and Brocade sales executive, Ian Whiting, as EVP, global field operations. In addition, former Yahoo! executive, David Windley, joined Fusion-io as chief human resources officer in October.
• On January 21, announced that the Fusion ioControl hybrid flash array delivers leading performance and scalability for VMs, VDI, as well as application input/output requests, outperforming other hybrid storage arrays by up to 7x, in testing conducted by The Tolly Group.
• On December 17, announced the release of new updates to its ioTurbine caching software that enhance performance and manageability for large-scale enterprise environments. The company also unveiled a new Fast Flash program for enterprises interested in evaluating how caching can provide cost-effective enhancements to customers’ current data systems.
• On October 28, announced new updates to ION Data Accelerator all-flash shared storage solution, including HA in high performance IB and iSCSI environments, as well as FC SAN environments, in support of critical applications like Oracle and SQL Server databases, increased performance and scalability, and simplified sharing and manageability.

Business outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements supersede all prior statements regarding fiscal 2014 financial results.

Third quarter of fiscal year 2014:

• Revenue is expected to be in-line to slightly up sequentially.
• Non-GAAP gross margin is expected to be 51 to 53%.
• Non-GAAP operating margin of approximately negative 15 to 20%.
• Diluted shares outstanding are expected to be approximately 107 million shares.