Fusion-io: Fiscal 4Q13 Financial Results
Heavy loss and bad outlook
This is a Press Release edited by StorageNewsletter.com on August 8, 2013 at 2:54 pm| (in $ million) | 4Q12 | 4Q13 | FY12 | FY13 |
| Revenue | 106.6 | 106.1 | 359.3 | 432.4 |
| Growth | -0% | 20% | ||
| Net income (loss) | (2.4) | (23.8) | (5.6) | (38.2) |
Fusion-io, Inc. announced its financial results for its fiscal fourth quarter and fiscal year ended June 30, 2013.
- Revenue: $432.4 million in fiscal 2013 (an increase of 20% over fiscal 2012)
- GAAP Gross Margin: 58.9% in fiscal 2013 and non-GAAP gross margin of 60.1% in fiscal 2013
- GAAP Net Loss per Diluted Share: $0.40 in fiscal 2013 (compared to loss of $0.06 in fiscal 2012)
- Non-GAAP Net Income per Diluted Share: $0.21 in fiscal 2013 (compared to $0.35 in fiscal 2012)
- Operating Cash Flow: $39.4 million in fiscal 2013 (compared to $34.8 million in fiscal 2012)
4Q13 GAAP Financial Results
Fusion-io reported revenue of $106.1 million for the fiscal fourth quarter 2013, up 21% from $87.7 million for the preceding quarter and essentially flat from $106.6 million in the same quarter of 2012. Net loss for the fiscal fourth quarter of 2013 was $23.8 million, or a net loss per diluted share of $0.24, compared to a net loss of $2.4 million, or a net loss per diluted share of $0.03, in the fiscal fourth quarter of 2012. Gross margin for the fiscal fourth quarter 2013 was 58.0%. Operating margin for the fiscal fourth quarter 2013 was a negative 22.4%.
4Q13 Non-GAAP Financial Results
Non-GAAP net loss for the fiscal fourth quarter of 2013 was $3.0 million, or a net loss per diluted share of $0.03, compared to non-GAAP net income of $9.8 million, or net income per diluted share of $0.09, in the same quarter of fiscal 2012. Non-GAAP gross margin for the fiscal fourth quarter 2013 was 59.1%. Non-GAAP operating margin for the fiscal fourth quarter 2013 was a negative 6.0%. A complete reconciliation of GAAP to non-GAAP results is set forth in the attachment to this press release.
"Fusion-io pioneered the all flash data center architecture that the industry is now embracing, and we are well positioned to capture a significant share of the opportunity from enterprise to hyperscale over the next few years," said Shane Robison, Fusion-io chairman and CEO. "To continue to maintain our market leadership, we will increase our focus on our go-to-market strategy, product portfolio and our partnerships as we help customers around the world unlock the business value in real-time information intelligence."
FY13 GAAP Financial Results
Revenue for fiscal year 2013 was $432.4 million, up 20% from $359.3 million in fiscal year 2012. Net loss for the fiscal year 2013 was $38.2 million, or a net loss per diluted share of $0.40. This compared to a net loss of $5.6 million, or a net loss per diluted share of $0.06, in fiscal year 2012. Gross margin for the fiscal year 2013 was 58.9%. Operating margin for fiscal year 2013 was a negative 8.5%.
FY13 Non-GAAP Financial Results
Non-GAAP net income for fiscal year 2013 was $22.4 million, or $0.21 per diluted share. This compares to non-GAAP net income of $37.5 million, or $0.35 per diluted share, for fiscal 2012. Non-GAAP gross margin for the fiscal year 2013 was 60.1%. Non-GAAP operating margin for the fiscal year 2013 was 7.1%.
Dennis Wolf, Fusion-io CFO, added: "We exited fiscal 2013 with a more diversified customer and product base, which we believe provides a sound basis for business expansion going forward. In fiscal 2014, we are intent on improving how we leverage our partnerships and introduce new products to the market while continuing to invest in our technology leadership."
Other Financial Highlights
- Cash and cash equivalents totaled $238.4 million at the end of fiscal fourth quarter 2013, a decrease of $116.3 million from the prior quarter-end following the acquisition of NexGen Storage and compared to $321.2 million at the end of fiscal 2012.
- Deferred revenue at the end of fiscal 2013 was $39.0 million, compared to $28.9 million at the end of fiscal 2012.
- Inventory was $71.2 million at the end of fiscal 2013, an increase of $0.1 million from the prior quarter-end and compared to $59.5 million at the end of fiscal 2012.
- Capital expenditures were $3.5 million in fiscal fourth quarter 2013 and $14.4 million for fiscal 2013.
- Cash used in operations was $6.4 million for the fiscal fourth quarter 2013 and cash provided by operations was $39.4 million for fiscal 2013.
Recent Business Highlights
- On May 8, Fusion-io announced that Shane Robison was named chairman, CEO and president. Director of the Fusion-io board of directors since December 2011, she succeeds co-founder David Flynn.
- On July 23 at the Open Source Convention (OSCON), Fusion-io announced the first steps to accelerating the adoption of flash aware applications by contributing NVMKV (non-volatile memory key value) API to the Open Compute Project and the flash-aware demand paging extension to Linux community. In addition, Fusion-io announced that the Fusion-io Atomic Writes API contributed for standardization to the T10 SCSI Storage Interfaces Technical Committee is now in use by leading MySQL databases.
- On June 24, it announced the upgrade of its ioTurbine software. Unified virtualization software solution, ioTurbine enables caching choice across IT architectures with customer options for hypervisor caching, virtualization-aware caching in the guest VM, and dynamic reallocation of cache memory during live migration of VMs with VMware vMotion.
- On June 21 at Cisco Live 2013, it announced the availability of its server acceleration solutions in Cisco’s C-Series Rack servers.
- On June 12 at HP Discover, it showcased its ION Data Accelerator software achieving 24 GB/s ultra low latency data throughput and over two million IO/s in an HP server system.
- During the week of June 10 at IBM’s Edge 2013 Conference, it demonstrated how server-side caching and IBM’s High IO/s MLC Adapters, both powered by Fusion-io technology, can increase application performance by up to 40x, double VM density and offload SAN workload by up to 30%.
Business Outlook
First quarter of fiscal year 2014:
Revenue of $80 to $90 million.
- Non-GAAP gross margin of approximately 56% to 58%.
- Non-GAAP operating margin of approximately negative 15% to 25%.
- Diluted shares outstanding of approximately 100 million shares, equal to the basic shares outstanding, given the expected net loss.
Fiscal Year 2014 guidance:
Revenue growth of approximately 20%.
- Non-GAAP gross margin in the range of 52% to 54%.
- Non-GAAP operating margin in the range of 2% to 5%, which includes the full effect of the acquisition of NexGen Storage Systems, Inc.
- Diluted shares outstanding of approximately 113 million shares.
Comments
Abstracts the earnings call transcript:
Shane Robison, chairman and CEO:
"Let me now quickly cover the trends that we saw in fourth quarter. We had a number of significant hyperscale wins with strong future potential. 11 customers exceeded $1 million in orders, of which approximately half purchased ioScale. These include wins at LinkedIn and a large U.K.-based financial services institution.
"The average orders per quarter by customers ordering greater than $1 million were up approximately 30% year-over-year, which we believe demonstrates increased customer satisfaction and a broader market acceptance. International orders from APAC were up more than 100% year-over-year. EMEA was up approximately 80%. We have expanded our international footprint significantly over the past year. And while this is good progress, we have more work to do to penetrate the international markets."
Lance Smith, COO:
"We also anticipate that NAND market economics will hold firm, with supply and demand remaining balanced. To expand further on the NAND market, 2X or 25-nanometer NAND continues to show supply constraints, with upper pricing pressure being offset by 2Y or 20-nanometer NAND cost declines. Do not anticipate short-term conditions over the next 6 months to change significantly, as additional supply is not expected to exceed the growing demand in the marketplace.
"Our unit shipments were up 35% sequentially, driven by a healthy increase in our ioScale products. Our highest-density 3.2 terabyte product saw a 3x increase in volume, and we continue to see stability in ASPs, driven by higher capacity even as dollars per gigabyte pricing is coming down across the market."
Dennis Wolf, CFO:
"R&D expense was 17% of revenue this past year, up from 14% in the prior year, as we accelerated our software investments and broadened our product portfolio. Sales and marketing increased to 27% of revenue from 23% in the prior year, as we invested in expanding our go-to-market strategy globally.
"Our year-end headcount stood nearly 940 people, up approximately 270 employees from the prior year, primarily in sales and R&D, including the addition of nearly 60 employees from the recent acquisition of NexGen Storage Systems.
"Customers who represented more than 10% of revenue included Facebook at 36% and HP at 15% of revenue, respectively. Apple contributed less than 10% to revenue in Q4. Facebook demand was higher in Q4 than we had anticipated at the beginning of the quarter. And one new large customer shifted an anticipated order from Q4 to the first half of fiscal 2014. In addition, revenue generated from our OEM partners came in softer than expected. International revenue was approximately 28% for the quarter and is sensitive to customer concentration. Support and maintenance revenue in the fourth quarter was $9.3 million and approximately $35 million for the full year. This is essentially flat from the prior quarter."
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