Violin Memory: Fiscal 4Q16 Financial Results

Violin Memory, Inc. announced financial results for the fiscal fourth quarter and fiscal year ended January 31, 2016.

The company also announced a restructuring plan focused on aligning its expense structure with current revenue expectations. In connection with the restructuring plan, the company reduced headcount by approximately 25% from the ending headcount as of October 31, 2015. The company has notified those affected by the workforce reduction and has taken steps to ensure a smooth transition.

The company anticipates these actions to result in a reduction of quarterly non-GAAP operating expenses of approximately 33% when compared to the fiscal third quarter ended October 31, 2015. As a result, the company expects operating expenses to be between $16 million and $17 million per quarter and its cash burn rate to be less than $10 million per quarter beginning with its fiscal second quarter ending July 31, 2016.

Fourth Quarter Fiscal 2016 Financial Highlights

• revenue of $10.9 million
• GAAP gross margin of 38%
• non-GAAP gross margin of 48%
• GAAP net loss of $0.26 per share
• non-GAAP net loss of $0.20 per share

Fiscal Year 2016 Financial Highlights

• revenue of $50.9 million
• GAAP gross margin of 44%
• non-GAAP gross margin of 49%
• net loss of $1.02 per share
• non-GAAP net loss of $0.80 per share

“The review of strategic alternatives, which Violin conducted with Jefferies, has produced multiple strategic go-to-market and technology relationship opportunities, which we intend to pursue. We have also concluded the formal review process, thereby returning the company’s focus to growth and profitability. In support of this, Violin has reset its cost structure to provide a pathway to profitability over the next 18-24 months without the need to raise additional capital,” said Kevin DeNuccio, president and CEO. “Furthermore, the Flash Storage Platform, which achieved $17 million in sales in its first year of release, is positioned as the feature and performance standard for primary storage, a market segment that is poised to accelerate.”

Fourth Quarter Fiscal 2016 Financial Results

• revenue was $10.9 million, 13% lower sequentially compared to $12.5 million reported in the third quarter of fiscal 2016, and 47% lower compared to $20.5 million reported in the fourth quarter of fiscal year 2015.
• GAAP gross margin was 38% compared to 51% reported in the third quarter of fiscal 2016 and compared to (50)% reported in the fourth quarter of fiscal year 2015.
• non-GAAP gross margin was 48% compared to 56% reported in the third quarter of fiscal 2016 and compared to 50% reported in the fourth quarter of fiscal year 2015.
• GAAP net loss was $25.5 million, or $0.26 per share, compared to third quarter fiscal 2016 GAAP net loss of $22.7 million, or $0.23 per share and compared to fourth quarter fiscal 2015 GAAP net loss of $46.8 million, or $0.50 per share.
• GAAP net loss included stock-based compensation expense of $6.1 million. Excluding stock-based compensation expense, fourth quarter fiscal 2016 non-GAAP net loss was $19.4 million, or $0.20 per share, compared to third quarter fiscal 2016 non-GAAP net loss of $18.6 million, or $0.19 per share, and compared to fourth quarter fiscal 2015 non-GAAP net loss of $18.1 million, or $0.19 per share.
• Cash and cash equivalents, restricted cash and short-term investments totaled $76.0 million as of January 31, 2016.

Fiscal Year 2016 Financial Results

• revenue was $50.9 million, 36% lower compared to $79.0 million reported for fiscal year 2015.
• GAAP gross margin was 44% compared to 26% reported in fiscal year 2015. Fiscal year 2016 non-GAAP gross margin was 49% compared to 52% reported in fiscal year 2015.
• GAAP net loss was $99.1 million, or $1.02 per share, compared to fiscal year 2015 GAAP net loss of $108.9 million, or $1.20 per share.
• GAAP net loss included stock-based compensation expense of $21.4 million. Excluding stock-based compensation, fiscal year 2016 non-GAAP net loss was $77.7 million, or $0.80 per share, compared to fiscal year 2015 non-GAAP net loss of $76.0 million, or $0.84 per share.