Fusion-io: Fiscal 3Q13 Financial Results

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

• Revenue: $87.7 million
• GAAP Gross Margin: 55.1%
• Non-GAAP Gross Margin: 59.9%
• GAAP Net Loss per Diluted Share: $0.21
• Non-GAAP Net Loss per Diluted Share: $0.03
• Operating Cash Flow: $6.9 million

Fiscal Third Quarter 2013 GAAP Financial Results
Fusion-io reported revenue of $87.7 million for the fiscal third quarter 2013, down 7% from $94.2 million for the same quarter of 2012 and down 27% from $120.6 million for the preceding quarter. Net loss for the fiscal third quarter of 2013 was $20.0 million, or a net loss per diluted share of $0.21, compared to a net loss of $4.7 million, or a net loss per diluted share of $0.05, in the fiscal third quarter of 2012. Gross margin for the fiscal third quarter 2013 was 55.1%. Operating margin for the fiscal third quarter 2013 was a negative 32.5%.

Fiscal Third Quarter 2013
Non-GAAP Financial Results
Non-GAAP net loss for the fiscal third quarter of 2013 was $3.2 million, or a net loss per diluted share of $0.03, compared to non-GAAP net income of $6.9 million, or net income per diluted share of $0.06, in the same quarter of fiscal 2012. Non-GAAP gross margin for the fiscal third quarter 2013 was 59.9%. Non-GAAP operating margin for the fiscal third quarter 2013 was a negative 8.2%.

"We are pleased by our traction this quarter, driven by strength in our core business as well as our healthy pipeline of new hyperscale customers," said David Flynn, Fusion-io chairman and CEO. "With the acquisition of NexGen Storage, Fusion-io is aggressively expanding into the small to medium enterprise market with a hybrid solution that cost-effectively achieves the performance of an all-flash array. NexGen’s hybrid storage system creates growth opportunity in an important market segment and strongly complements our portfolio of software defined, open systems."

Dennis Wolf, Fusion-io CFO, added: "This past quarter we had four customers each order in excess of $5 million and twelve customers each order more than $1 million in verticals ranging from cloud services to telecommunications to the public sector. Our ioScale product is showing notable traction as customers supporting cloud and Big Data applications appreciate our software systems capabilities that offer them a very compelling ROI on their datacenter infrastructure spend."  

Other Financial Highlights

• Cash and cash equivalents totaled $354.6 million at the end of fiscal third quarter 2013, a decrease of $13.9 million compared to the prior quarter-end.
• Deferred revenue at the end of fiscal third quarter 2013 was $35.3 million, a decrease of $2.9 million compared to the prior quarter-end due to the timing of a support and maintenance contract renewal.
• Inventory was $71.1 million at the end of fiscal third quarter 2013, a decrease of $3.1 million compared to the prior quarter-end.
• Capital expenditures were $2.2 million in fiscal third quarter 2013.
• Operating cash flow was $6.9 million for the fiscal third quarter and $45.8 million fiscal year to date.
• Settlement of litigation resulted in $6.9 million of GAAP expenses in the fiscal third quarter 2013.

Recent Business Highlights

• The company separately announced the acquisition of NexGen Storage to expand Fusion-io into the SME market with the first software-defined hybrid storage array that provisions performance for multiple application acceleration independently of capacity. Under the terms of the agreement, It paid approximately $114 million in cash and approximately $5 million in stock for all of the outstanding stock, warrants and vested equity awards of NexGen, subject to the adjustments and escrow and other provisions set forth in the agreement among the parties. In addition, Fusion-io assumed all unvested NexGen employee equity awards.
• On April 7, the firm announced that it is collaborating with global workstation leader HP to integrate the Fusion ioFX into the HP Z820, Z620 and Z420 Workstations. The integrated solutions offering up to 1.6TB of capacity will offer ideal development platforms for professionals in digital content creation (DCC), upstream exploration of oil and gas and CAD.
• On March 18, it announced the acquisition of ID7, n software defined shared storage systems and key developers of SCST, a Linux storage software subsystem utilized by many storage vendors throughout the world.
• On March 5, it achieved 9.6 million IOPS from a single 365GB MLC ioDrive2, highlighting that file systems and application programming interfaces featured in the ioMemory software development kit enable memory-level performance with the persistence of flash.

Business Outlook
for Fourth quarter of fiscal year 2013:

• Revenue is expected to be approximately $110 million.
• Non-GAAP gross margin is expected to be 56% to 58%.
• Non-GAAP operating loss of approximately $5 million.
• Diluted shares outstanding are expected to be approximately 98 million shares.

Fiscal Year 2013 guidance:

• Revenue is expected to be approximately $435 million.
• Non-GAAP gross margin is expected to be in the range of 59% to 60%.
• Non-GAAP operating margin is expected to be in the range of 7% to 8%.
• Diluted shares outstanding are expected to be approximately 109 million shares.