Violin Memory: Fiscal 2Q16 Financial Results

(in $ million)	2Q15	2Q16	6 mo. 15	6 mo. 16
Revenue	18.6	15.3	36.7	27.4
*Growth*		-18%		*-25%*
Net income (loss)	(8.4)	(24.4)	(38.6)	(50.9)

Violin Memory, Inc. announced financial results for the second fiscal quarter ended July 31, 2015.

Second Quarter Fiscal 2016 Financial Highlights

revenue of $15.3 million
GAAP gross margin of 43%
non-GAAP gross margin of 47%
GAAP net loss of $0.25 per share
non-GAAP net loss of $0.19 per share

“Our second quarter revenue grew substantially, driven by higher sales of Flash Storage Platform (FSP) primary storage solutions to Fortune Global 500 and Fortune 1000-ranked enterprises,” said Kevin DeNuccio, president and CEO. “While our top-line result came in below prior guidance, our continued strong focus on financial management contributed to a bottom line result better than the consensus view.”

“With renewed growth in the second quarter and improving execution, we anticipate continued growth over the next several quarters fueled by new FSP wins and repeat purchases as customers begin to expand their initial FSP installations,” added DeNuccio.

Second Quarter Fiscal 2016 Financial Results

Revenue was $15.3 million, 26% higher sequentially compared to $12.1 million reported in the first quarter of fiscal 2016, and 18% lower compared to $18.6 million reported in the second quarter of fiscal year 2015.
GAAP gross margin was 43% compared to 43% reported in the first quarter of fiscal 2016 and compared to 52% reported in the second quarter of fiscal year 2015.
Non-GAAP gross margin was 47% compared to 48% reported in the first quarter of fiscal 2016 and compared to 55% reported in the second quarter of fiscal year 2015.
GAAP net loss was $24.4 million, or $0.25 per share, compared to first quarter fiscal 2016 GAAP net loss of $26.5 million, or $0.28 per share and compared to second quarter fiscal 2015 GAAP net loss of $8.4 million, or $0.09 per share.
Non-GAAP net loss was $18.4 million, or $0.19 per share, compared to first quarter fiscal 2016 non-GAAP net loss of $21.2 million, or $0.22 per share, and compared to second quarter fiscal 2015 non-GAAP net loss of $19.0 million, or $0.21 per share.

Cash and cash equivalents, restricted cash and short-term investments totaled $120.2 million as of July 31, 2015.

Comments

Kevin DeNuccio, president and CEO:
"Revenue for the second quarter was $15.3 million, up 26% sequentially but slightly below the low end of our guidance range. Related to this, during the quarter, we financed a large cloud deployment that caused us to recognize the associated revenue over time, which if fully recognized within the quarter would have resulted in our top-line revenue being within our guidance range.
"Bookings were up 67% sequentially while the pipeline for our new FSP increased more than 2.5 times. FSP revenue grew 83% sequentially; it is now fully driving our top-line growth and the future of the Company. However, we continue to see some delays in closing transactions due to extended customer testing including our stretch clustering technology which was just released at the end of the first quarter.
"In the third quarter, we believe we can grow bookings and revenue again by more than 20% quarter-on-quarter.
"For the first time, FSP also represented more than half of our total product revenue for the quarter. One transaction in FSP based primary storage win within a fortune global 500 company, exceeded 10% of quarterly revenue."

Cory Sindelar, CFO:
"Of total revenue, 65% came from the Americas, which is down from 68% last quarter. New customers accounted for less than 10% of our revenue and about 25% of our total revenue was direct with end user customers. Typically our direct business is about a third of revenue. For the third quarter, we expect revenue to be between $16 million and $20 million with FSP making up the substantial majority of product revenue."