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Violin Memory: Fiscal 3Q15 Financial Results

Revenue up 17% sequentially but far from profitability

(in $ million) 3Q14 3Q15 9 mo. 14 9 mo. 15
Revenues 28.3 21.7 79.6 58.5
Growth   -23%   -27%
Net income (loss) (34.1) (23.5) (93.3) (62.1)

Violin Memory, Inc. announced financial results for the third fiscal quarter ended October 31, 2014.

3Q15 Financial Highlights

  • revenue of $21.7 million
  • GAAP gross margin of 51%
  • non-GAAP gross margin of 54%
  • GAAP net loss of $0.25 per share
  • non-GAAP net loss of $0.19 per share
  • raised $115 million of net proceeds from offering of convertible senior notes

With our momentum building and strong execution by our team, we delivered a successive quarter of sequential revenue growth and rapidly accelerating bookings,” said Kevin DeNuccio, president and CEO,. “We’re now growing at a 40 to 50% annualized rate while beginning to build a backlog that should further improve our performance going forward.

With renewed growth and increasing customer confidence in our technology and balance sheet, we’re gaining significant traction in the primary storage segment as large enterprise and cloud data centers begin to transition from disk to flash,” added DeNuccio.

3Q15 Financial Results

  • revenue was $21.7 million, 17% higher than the $18.6 million reported in 2Q15, and 23% lower than the $28.3 million recorded in 3Q14.
  • GAAP gross margin was 51%, compared to 52% reported in 2Q15, and 54% recorded in 3Q14.
  • non-GAAP gross margin was 54%, compared to 55% reported in 2Q15, and 55% recorded in 3Q14.
  • GAAP net loss was $23.5 million, or $0.25 per share, compared to 2Q15 GAAP net loss of $8.4 million, or $0.09 per share. 2Q15 GAAP net loss included a gain on the sale of the PCIe product line of $17.4 million, or $0.19 per share. 2Q15 GAAP net loss compares to 3Q14 GAAP net loss of $34.1 million, or $0.85 per share.
  • non-GAAP net loss was $17.8 million, or $0.19 per share, compared to 2Q15 non-GAAP net loss of $19.0 million, or $0.21 per share. 3Q15 2015 non-GAAP net loss compares to 3Q14 non-GAAP net loss of $25.7 million, or $0.64 per share.

Comments

Abstracts of the earnings call transcript:

Kevin DeNuccio, president and CEO:
"Our top five transactions in the third fiscal quarter represent a 48% of total revenue. With two of these transactions exceeding 10% of total revenue. These customers include a Top 5 global retailer that continued a major disk to flash migration for a second consecutive quarter. A Top 20 cloud services company that is globally deploying our thought solutions to enable their core cloud based apps and storage offering and a Top 10 web based digital media company that is transitioning all of their primary storage to flash.
"With the positive impact of our Concerto sales, third quarter software revenue was approximately 13% of product revenue more than doubled the prior quarter.
"Our third quarter revenues were up significantly to $21.7 million or 17% sequentially, reflecting our growing sales momentum and contributions from initial sales of Concerto. Third quarter product revenue grew sequentially by 19%, an increase of 11% sequential growth in the second quarter.
"We believe that our revenue will grow sequentially between 5% and 15% and anticipate revenue will be in range of $23 million to $25 million."

Cory Sindelar, CFO:
"From a geographical perspective, we saw strength in the Americas partially offset by weakness in Europe. Specifically, the Americas generated $16.7 million of revenue in Q3, which represents an increase of $4.2 million as compared to last quarter.
"In Europe, we saw revenue of $2.4 million, a decrease of $1.3 million from the $3.7 million reported last quarter. We are experiencing increase competitive pressure and some seasonality in Europe. And in Asia-Pacific, we saw slight increase of $0.2 million to $2.6 million in Q3. Similar to last quarter, approximately 15% of our revenue came from new customers and roughly a third of revenue was direct with end users."

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