Fusion-io: Fiscal 1Q14 Financial Results

(in $ million)	1Q13	1Q14
Revenue	118.1	86.3
Growth		*-27%*
Net income (loss)	3.9	(27.9)

Fusion-io, Inc. announced its financial results for its fiscal first quarter ended September 30, 2013.

Revenue: $86.3 million
GAAP Gross Margin of 57.7% and Non-GAAP Gross Margin of 59.4%
GAAP Net Loss per Diluted Share: $0.28
Non-GAAP Net Loss per Diluted Share: $0.07
Cash and Cash Equivalents: $225.3 million

Fusion-io reported revenue of $86.3 million for the fiscal first quarter of 2014, compared to $118.1 million for the same quarter of 2013. Net loss for the fiscal first quarter of 2014 was $27.9 million, or a net loss per diluted share of $0.28, compared to net income of $3.9 million, or $0.04 per diluted share, in the fiscal first quarter of 2013. Gross margin for the fiscal first quarter of 2014 was 57.7%. Operating margin for the fiscal first quarter of 2014 was a negative 32.2%.

Non-GAAP net loss for the fiscal first quarter of 2014 was $6.7 million, or a net loss per diluted share of $0.07, compared to non-GAAP net income of $14.9 million, or $0.14 per diluted share in the same quarter of 2013. Non-GAAP gross margin for the fiscal first quarter of 2014 was 59.4%. Non-GAAP operating margin for the fiscal first quarter of 2014 was a negative 13.3%. A complete reconciliation of GAAP to non-GAAP results is set forth in the attachment to this press release.

“We have made progress in the last several months on key technology and strategic initiatives that we believe sharpen our execution and create a strong foundation for future growth,” said Shane Robison, Fusion-io chairman and CEO. “The powerful combination of our application-centric architecture, robust product roadmap, and strengthening ecosystem of partners creates significant opportunity for Fusion-io in an expanding market for accelerating information with flash memory solutions.”

Cash and cash equivalents totaled $225.3 million at the end of fiscal first quarter 2014, a decrease of $13.1 million from the prior quarter-end.

Deferred revenue at the end of fiscal first quarter 2014 was $37.2 million, a decrease of $1.8 million from the prior quarter-end.

Inventory was $74.1 million at the end of fiscal first quarter 2014, an increase of $3.0 million from the prior quarter-end.

Capital expenditures were $3.3 million in fiscal first quarter 2014.

Cash used in operations was $17.1 million for the fiscal first quarter 2014.

Fusion-io executed a new $25 million unsecured credit facility during the quarter.

Business highlights:

Announced that Dr. Edward H. Frank has been appointed to the board of directors effective October 21, 2013; he retired as VP of Macintosh Hardware Systems Engineering at Apple, Inc.
Announces that Dennis Wolf, CFO and EVP, will be leaving after a period of transition to pursue an opportunity at a private company; search for his replacement is underway; in addition, James Dawson, chief sales officer and EVP, is retiring from the company; his replacement is expected to be announced shortly.
Announced that Gary Smerdon, former SVP and GM of the accelerated solutions division (ASD) at LSI Corporation, recently joined Fusion-io as EVP and chief strategy officer; additional recent hires include Robert Hon, former SVP of engineering at Echelon Corporation, who joined as SVP of R&D, and Keith Brown, former VP of enterprise applications and architecture at Aflac Incorporated, who joined as CIO.
ioMemory now being integrated into Quanta QCT’s Rackgo X servers through the Open Compute Project.
On October 22, had entered into an expanded worldwide OEM relationship with Fujitsu whereby ioMemory will be offered by Fujitsu to accelerate applications in PRIMERGY and PRIMEQUEST servers.
On October 15, announced a number of updates to its ioControl hybrid storage solutions for SMEs, including product availability in EMEA, ioControl 3.0, and ioControl SPX server caching solutions, which are the first hybrid solutions to offer server caching for increased application performance.
As of October 7, nine out of 10 VMware VMmark benchmarking submissions submitted by Fusion-io OEM partners, including HP, Dell, Cisco, and Fujitsu, used ioMemory solutions to place among the top scores; six of these benchmarks leveraged the Fusion-io ION Data Accelerator to set new world records for performance.
On September 26, IBM became the first to offer ioScale solutions as the IBM PCIe Flash Adapters; in August, IBM also became first to offer caching solutions based on ioTurbine software with its introduction of the IBM FlashCache Storage Accelerator.
On August 26, announced ioVDI software, a new product for VDI acceleration that is optimized for flash memory to deliver seamless, reliable, and cost-effective virtual desktop performance with consistent low latency response times.

Outlook for 2Q14: