Fusion-IO, Inc. : Fusion-io Reports Fiscal Second Quarter 2012 Financial Results
01/24/2012| 04:10pm US/Eastern
Recommend:
0
Q2 Revenue: $84.1 million
Q2 Net (Loss)/Income: $(5.7) million GAAP; $5.6 million non-GAAP
Q2 (Loss)/Earnings per Share: $(0.07) GAAP; $0.05 non-GAAP
Fusion-io, Inc. (NYSE: FIO), a provider of a next-generation shared data
decentralization platform, today announced its financial results for its
fiscal second quarter ended December 31, 2011.
Fiscal Second Quarter 2012 GAAP Financial Results
Fusion-io reported revenue of $84.1 million for the fiscal second
quarter of 2012, up 169% from $31.2 million for the same quarter of 2011
and up 13% from $74.4 million for the prior quarter. Net loss for the
fiscal second quarter of 2012 was $5.7 million, or a net loss per
diluted share of $0.07. This compared to a net loss of $2.5 million, or
a net loss per diluted share of $0.19 in the same quarter of 2011. Gross
margin for the fiscal second quarter 2012 was 51.0% compared to 58.7%
for the same quarter of 2011. Operating margin for the fiscal second
quarter was a loss of 4.8%.
Fiscal Second Quarter 2012 Non-GAAP Financial Results
Non-GAAP net income for the fiscal second quarter of 2012 was $5.6
million, or $0.05 per diluted share. This compares to a non-GAAP net
loss of $1.0 million, or a net loss per diluted share of $0.08 in the
same quarter of 2011. Non-GAAP gross margin for the fiscal second
quarter 2012 was 51.1% compared to 58.8% for the same quarter of 2011.
Non-GAAP operating margin for the fiscal second quarter 2012 was 7.8%. A
complete reconciliation of GAAP to non-GAAP results is set forth in the
attachment to this press release.
"Fusion-io is at the forefront in developing sophisticated software
architectures that leverage existing hardware and our ioMemory solutions
to significantly improve datacenter efficiency," said David Flynn,
Fusion-io chairman and chief executive officer. "We believe these
innovations in the acceleration of modern computing infrastructure will
fundamentally advance enterprise IT."
"Our execution this past quarter was again quite strong and we emerge
with a healthy balance sheet that provides us with strategic
flexibility," said Dennis Wolf, chief financial officer. "We are in the
process of transitioning to our next generation ioDrive2 product that we
believe will enable us to offer our customers greater performance at a
more attractive price point and increase awareness and adoption of our
solutions."
Other Financial Highlights
In November 2011, Fusion-io completed a follow-on public offering in
which it issued and sold three million shares of common stock, raising
$94.0 million, net of expenses.
Cash and cash equivalents at the end of the quarter were $307.4
million, an increase of $105.5 million over the prior quarter.
Inventory balances at the end of the fiscal second quarter were $65.0
million, a decrease of $6.6 million over the prior quarter.
Deferred revenue at the end of the fiscal second quarter was $15.9
million, an increase of $4.6 million from the prior quarter.
Capital expenditures were $6.1 million in the fiscal second quarter
and $10.3 million in the first six months of fiscal 2012.
Net operating cash flow was $13.5 million for the fiscal second
quarter and $16.6 million in the first six months of fiscal 2012.
Business Highlights
On January 5, 2012, Fusion-io announced that it achieved over one
billion input and output operations per second (IOPS) in a technology
demonstration while previewing the company's Auto Commit Memory (ACM)
extension. ACM leverages the unique architecture of Fusion's ioMemory
subsystem to significantly reduce latency and system overhead in
transferring data.
On December 19, 2011, Fusion-io announced that Shane V. Robison had
joined the company's Board of Directors. Mr. Robison was executive
vice president and chief strategy and technology officer of
Hewlett-Packard Company from May 2002 until his retirement in November
2011.
On December 8, 2011, Fusion-io announced that it had entered into a
reseller agreement with Digital China, a leading provider of
integrated IT services in China, to expand access to Fusion-io
software and hardware technologies in the region.
On November 15, 2011, Fusion-io announced its 10 TB ioDrive
Octal, which features double the ioMemory capacity and density by
integrating eight 1.28 TB MLC ioMemory modules in a single double-wide
PCIe device.
Business Outlook
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially. These statements supersede all prior statements regarding
fiscal 2012 financial results.
Third quarter of fiscal year 2012:
Revenue is expected to be approximately $85 million.
Non-GAAP gross margin is expected to be in the range of 50%.
Non-GAAP operating margin is expected to be breakeven to 5%.
Diluted shares outstanding is expected to be approximately 115 million
shares.
Fiscal Year 2012:
Revenue growth is expected to be 65 to 70%.
Non-GAAP gross margin is expected to be 54 to 56%.
Non-GAAP operating margin is expected to be approximately 8%.
Diluted shares outstanding is expected to be approximately 110 million
shares.
Non-GAAP Financial Measures
Fusion-io uses certain non-GAAP financial measures in this release.
Generally, a non-GAAP financial measure is a numerical measure of a
company's performance, financial position or cash flows that either
excludes or includes amounts that are not normally excluded or included
in the most directly comparable measure calculated and presented in
accordance with generally accepted accounting principles in the United
States of America, or GAAP. Reconciliation between non-GAAP and GAAP
measures can be found in the accompanying tables and on the investor
relations page of our website at www.fusionio.com.
Non-GAAP financial measures should not be considered as a substitute
for, or superior to, measures of financial performance prepared in
accordance with GAAP. These non-GAAP financial measures do not reflect a
comprehensive system of accounting, differ from GAAP measures with the
same captions and may differ from non-GAAP financial measures with the
same or similar captions that are used by other companies.
Fusion-io's management uses the non-GAAP financial measures in the
accompanying schedules to gain an understanding of Fusion-io's
comparative operating performance and future prospects, and utilizes
these measures in its internal financial statements for purposes of its
internal budgets and financial goals. Management also believes that the
exclusion of the items described below provides an additional measure of
the company's operating results and facilitates comparisons of
Fusion-io's core operating performance against prior periods and
business model objectives. Management believes that investors should
have access to the same set of tools that management uses to analyze
Fusion-io's results. These non-GAAP measures should be considered in
addition to results prepared in accordance with GAAP, but should not be
considered a substitute for or superior to GAAP. Fusion-io endeavors to
compensate for the limitation of the non-GAAP measures presented by also
providing the most directly comparable GAAP measures and descriptions of
the reconciling items and adjustments to derive the non-GAAP measures.
For all periods presented:
Non-GAAP gross margin is calculated as non-GAAP gross profit
divided by GAAP revenue. Non-GAAP gross profit consists of GAAP gross
profit excluding the effects of stock-based compensation expense.
Non-GAAP operating margin is calculated as non-GAAP (loss)
income from operations divided by GAAP revenue. Non-GAAP (loss) income
from operations consists of GAAP (loss) income from operations
excluding the effects of stock-based compensation expense,
amortization of intangible assets and acquisition related costs.
Non-GAAP net (loss) income is calculated as GAAP net (loss)
income excluding the effects of stock-based compensation expense,
amortization of intangible assets, acquisition related costs, changes
in the fair value of a common stock repurchase derivative liability, a
tax benefit for the reversal of valuation allowance as a result of the
IO Turbine acquisition, and non-cash interest expense related to
changes in the fair value of a preferred stock warrant.
Non-GAAP net (loss) income per diluted share is calculated as
non-GAAP net (loss) income divided by non-GAAP weighted-average
diluted shares outstanding for the three months ended December 31,
2011 and is calculated as non-GAAP net (loss) income divided by GAAP
weighted-average diluted shares outstanding for the six months ended
December 31, 2011. Non-GAAP weighted-average diluted shares
outstanding is calculated as GAAP weighted average diluted shares
outstanding including the dilutive impact due to stock options, a
common stock warrant, restricted stock awards, and restricted stock
units.
The accompanying tables provide more details on the GAAP financial
measures that are most directly comparable to the non-GAAP financial
measures described above and the related reconciliations between these
financial measures. With respect to our expectations under "Business
Outlook" above, reconciliation of non-GAAP guidance measures to
corresponding GAAP measures is not available without unreasonable
efforts on a forward-looking basis due to the high variability and low
visibility with respect to the charges which are excluded from these
non-GAAP measures. The effects of stock-based compensation expense
specific to non-employee common stock options are directly impacted by
unpredictable fluctuations in our stock price. We expect the variability
of the above charges to have a significant impact on our GAAP financial
results.
Today's Conference Call
Fusion-io will host an investor conference call and live webcast today,
Tuesday, January 24, 2012, at 5:00 p.m. EST to discuss these financial
results. To access the conference call, dial (866) 203-2528 or (617)
213-8847 (international) and enter pass code 16479662. A listen-only
live webcast will be accessible on the investor relations page of our
website at www.fusionio.com
and will be archived and available on this site for at least three
months. A telephone replay of the conference call will be available
through Tuesday, January 31, 2012. To access the replay, please dial
(888) 286-8010 or (617) 801-6888 (international) and enter pass code
19843119. This press release and the financial information discussed on
today's conference call are available on the investor relations page of
our website at www.fusionio.com.
About Fusion-io
Fusion-io has pioneered a next generation storage memory platform for
shared data decentralization that significantly improves the processing
capabilities within a datacenter by relocating process-critical, or
"active", data from centralized storage to the server where it is being
processed, a methodology referred to as data decentralization. Fusion's
integrated hardware and software solutions leverage non-volatile memory
to significantly increase datacenter efficiency and offers enterprise
grade performance, reliability, availability and manageability. Fusion's
data decentralization platform can transform legacy architectures into
next generation datacenters and allows enterprises to consolidate or
significantly reduce complex and expensive high performance storage,
high performance networking and memory-rich servers. Fusion's platform
enables enterprises to increase the utilization, performance and
efficiency of their datacenter resources and extract greater value from
their information assets.
Note on Forward-looking Statements
Certain statements in this release may constitute "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange
Act of 1934 and Section 27A of the Securities Act of 1933, including,
but are not limited to, statements concerning financial guidance for the
third fiscal quarter of 2012 and the full fiscal year 2012, assumptions
underlying the value of our solutions to customers, our continued focus
on innovation, expanding our customer and reseller base and investing in
our growth, our expectations concerning our products, including our next
generation ioMemory solutions, our ACM extension and our 10 TB ioDrive
Octal, and our beliefs concerning modern computing infrastructure and
the evolution of enterprise IT. These statements are based on current
expectations and assumptions regarding future events and business
performance and involve certain risks and uncertainties that could cause
actual results to differ materially from those contained, anticipated,
or implied in any forward-looking statement, including, but not limited
to, risks associated with changes in the demand for our products, our
expectation that large and concentrated purchases by a limited number of
customers will continue to represent a substantial majority of our
revenue and our ability to sustain or increase our revenue from our
large customers or offset the discontinuation of concentrated purchases
by our larger customers with purchases by new or existing customers, the
continued adoption by customers of our storage memory product line,
growing our sales through OEMs, resellers and channel partners and
maintaining our relationships with OEMs, resellers and channel partners,
long and unpredictable sales cycles, changes in the competitive dynamics
of our markets, including the potential for increased pressure on the
pricing of our products, reduced gross margins, increased sales and
marketing expenses, the potential that we or our customers may not
realize the benefits we currently expect from our acquisition of IO
Turbine, our ability to develop or acquire new products to meet customer
needs and expectations, including additional software solutions to be
integrated with our storage memory products, our acquisition and
strategic partner strategy and disruptions in our business, operations
and financial results as a result of acquisitions and strategic partner
relationships, as well as the risks inherent in the integration and
combination of complex products and technologies from acquisitions,
worldwide economic conditions and the impact these conditions have on
levels of spending on datacenter technology like ours, and such other
risks set forth in the registration statements and reports that
Fusion-io files with the U.S. Securities and Exchange Commission, which
are available on the Investor Relations section of our website at www.fusionio.com.
You should not rely upon forward-looking statements as predictions of
future events. Although we believe that the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee that
the future results, levels of activity, performance or events and
circumstances reflected in the forward-looking statements will be
achieved or will occur. Fusion-io undertakes no obligation to update
publicly any forward-looking statement for any reason after the date of
this press release.
Fusion-io, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
Six Months Ended
December 31,
December 31,
2010
2011
2010
2011
Revenue
$
31,218
$
84,131
$
58,264
$
158,516
Cost of revenue (1)
12,878
41,206
28,290
68,560
Gross profit
18,340
42,925
29,974
89,956
Operating expenses:
Sales and marketing (1)
11,307
20,265
20,416
37,742
Research and development (1), (4)
5,721
13,479
10,541
24,631
General and administrative (1), (5)
3,261
13,228
6,711
26,965
Total operating expenses
20,289
46,972
37,668
89,338
(Loss) income from operations
(1,949
)
(4,047
)
(7,694
)
618
Other income (expense):
Interest income
6
66
20
115
Interest expense (3)
(505
)
(44
)
(529
)
(90
)
Other (expense) income (2)
-
(663
)
3
132
(Loss) income before income taxes
(2,448
)
(4,688
)
(8,200
)
775
Income tax (expense) benefit (6)
(25
)
(1,021
)
(44
)
705
Net (loss) income
$
(2,473
)
$
(5,709
)
$
(8,244
)
$
1,480
Net (loss) income per share:
Basic
$
(0.19
)
$
(0.07
)
$
(0.64
)
$
0.02
Diluted
$
(0.19
)
$
(0.07
)
$
(0.64
)
$
0.01
Weighted-average number of shares used in per share amounts:
Basic
13,271
84,961
12,924
83,485
Diluted
13,271
84,961
12,924
104,599
(1) Includes stock-based compensation expenses, as follows:
Cost of revenue
$
3
$
50
$
6
$
77
Sales and marketing
396
1,464
650
2,567
Research and development
204
1,669
403
3,288
General and administrative
493
6,774
930
13,801
Total stock-based compensation expenses
$
1,096
$
9,957
$
1,989
$
19,733
(2) Includes other expense (income) related to changes in the fair
value of a common stock repurchase derivative liability
$
-
$
691
$
-
$
(70
)
(3) Includes non-cash interest expense related to changes in the
fair value of a preferred stock warrant
$
373
$
-
$
373
$
-
(4) Includes amortization of intangible assets
$
-
$
656
$
-
$
1,021
(5) Includes acquisition related costs
$
-
$
6
$
-
$
1,326
(6) Includes tax benefit for reversal of valuation allowance as a
result of the IO Turbine acquisition
$
-
$
-
$
-
$
(2,782
)
Fusion-io, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
June 30,
December 31,
2011
2011
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
219,604
$
307,378
Accounts receivable, net
44,374
27,364
Inventories
35,622
64,972
Prepaid expenses and other current assets
3,866
3,999
Total current assets
303,466
403,713
Property and equipment, net
13,743
21,582
Intangible assets, net
-
9,479
Goodwill
-
54,777
Other assets
77
76
Total assets
$
317,286
$
489,627
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
9,314
$
11,824
Accrued and other current liabilities
15,043
18,366
Deferred revenue
9,030
11,742
Total current liabilities
33,387
41,932
Deferred revenue, less current portion
2,987
4,200
Other liabilities
6,468
6,812
Commitments and contingencies
Stockholders' equity:
Preferred stock
-
-
Common stock
16
18
Additional paid-in capital
339,389
500,185
Accumulated other comprehensive income (loss)
15
(24
)
Accumulated deficit
(64,976
)
(63,496
)
Total stockholders' equity
274,444
436,683
Total liabilities and stockholders' equity
$
317,286
$
489,627
Fusion-io, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
Six Months Ended
December 31,
December 31,
2010
2011
2010
2011
Operating activities:
Net (loss) income
$
(2,473
)
$
(5,709
)
$
(8,244
)
$
1,480
Adjustments to reconcile net (loss) income from operating activities:
Depreciation and amortization
906
2,118
1,468
3,710
Stock-based compensation
1,096
9,407
1,989
18,390
Non-cash tax benefit from exercise of stock options
-
(1,845
)
-
(1,845
)
Non-cash tax benefit from business acquisition
-
-
-
(2,782
)
Other non-cash items
424
692
432
(70
)
Changes in operating assets and liabilities:
Accounts receivable, net
5,328
6,365
(2,876
)
17,010
Inventories
(17,444
)
6,570
(23,302
)
(29,350
)
Prepaid expenses and other assets
(1,884
)
(610
)
(3,019
)
(84
)
Accounts payable
6,086
(12,296
)
2,694
1,808
Accrued and other liabilities
1,428
4,207
(66
)
4,427
Deferred revenue
(414
)
4,626
3,906
3,925
Net cash (used in) provided by operating activities
(6,947
)
13,525
(27,018
)
16,619
Investing activities:
Proceeds from the sale of short-term investments
-
-
11,964
-
Proceeds from the sale of property and equipment
-
-
-
1
Purchases of property and equipment
(1,871
)
(6,085
)
(2,505
)
(10,307
)
Business acquisition, net of cash acquired
-
-
-
(17,578
)
Net cash (used in) provided by investing activities
(1,871
)
(6,085
)
9,459
(27,884
)
Financing activities:
Repurchases of common stock
-
(1,067
)
-
(1,067
)
Proceeds from a loan from a financial institution
3,000
-
11,000
-
Repayment of notes payable and capital lease obligations
(75
)
(10
)
(142
)
(89
)
Repurchases of vested restricted stock
-
-
-
-
Proceeds from exercises of stock options
245
2,492
278
2,561
Proceeds from issuance of common stock
-
93,977
-
93,977
Proceeds from employee stock purchase plan
-
835
-
1,887
Tax benefit from exercise of stock options
-
1,846
-
1,846
Change in restricted cash
-
-
695
-
Net cash provided by financing activities
3,170
98,073
11,831
99,115
Effect of exchange rate changes on cash and cash equivalents
(3
)
(10
)
2
(76
)
Net (decrease) increase in cash and cash equivalents
(5,651
)
105,503
(5,726
)
87,774
Cash and cash equivalents at beginning of period
9,144
201,875
9,219
219,604
Cash and cash equivalents at end of period
$
3,493
$
307,378
$
3,493
$
307,378
Fusion-io, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
Three Months Ended
Six Months Ended
December 31,
December 31,
2010
2011
2010
2011
Reconciliation of Gross Profit and Gross Margin on a GAAP Basis
to Gross Profit and Gross Margin on a Non-GAAP Basis:
Gross profit on a GAAP basis
$
18,340
$
42,925
$
29,974
$
89,956
Stock-based compensation
3
50
6
77
Gross profit on a non-GAAP basis
$
18,343
$
42,975
$
29,980
$
90,033
Revenue
$
31,218
$
84,131
$
58,264
$
158,516
Gross Margin on a GAAP basis
58.7
%
51.0
%
51.4
%
56.7
%
Gross Margin on a Non-GAAP basis
58.8
%
51.1
%
51.5
%
56.8
%
Reconciliation of Operating (Loss) Income and Operating Margin on
a GAAP Basis to Operating (Loss) Income and Operating Margin on a
Non-GAAP Basis:
Operating (loss) income on a GAAP basis
$
(1,949
)
$
(4,047
)
$
(7,694
)
$
618
Stock-based compensation
1,096
9,957
1,989
19,733
Amortization of intangible assets
-
656
-
1,021
Acquisition related costs
-
6
-
1,326
Operating (loss) income on a non-GAAP basis
$
(853
)
$
6,572
$
(5,705
)
$
22,698
Revenue
$
31,218
$
84,131
$
58,264
$
158,516
Operating Margin on a GAAP basis
-6.2
%
-4.8
%
-13.2
%
0.4
%
Operating Margin on a Non-GAAP basis
-2.7
%
7.8
%
-9.8
%
14.3
%
Reconciliation of Net (Loss) Income on a GAAP Basis to Net (Loss)
Income on a Non-GAAP Basis:
Net (loss) income on a GAAP basis
$
(2,473
)
$
(5,709
)
$
(8,244
)
$
1,480
Stock-based compensation
1,096
9,957
1,989
19,733
Other expense (income) related to changes in the fair value of a
common stock repurchase derivative liability
-
691
-
(70
)
Non-cash interest expense related to changes in the fair value of
a preferred stock warrant
373
-
373
-
Amortization of intangible assets
-
656
-
1,021
Acquisition related costs
-
6
-
1,326
Tax benefit for reversal of valuation allowance as a result of the
IO Turbine acquisition
-
-
-
(2,782
)
Net (loss) income on a non-GAAP basis
$
(1,004
)
$
5,601
$
(5,882
)
$
20,708
Reconciliation of Diluted Net (Loss) Income per Share on a GAAP
Basis to Diluted Net (Loss) Income per Share on a Non-GAAP Basis:
Diluted net (loss) income per share on a GAAP basis
$
(0.19
)
$
(0.07
)
$
(0.64
)
$
0.01
Stock-based compensation
0.08
0.10
0.15
0.19
Other expense (income) related to changes in the fair value of a
common stock repurchase derivative liability
-
0.01
-
-
Non-cash interest expense related to changes in the fair value of
a preferred stock warrant
0.03
-
0.03
-
Amortization of intangible assets
-
0.01
-
0.01
Acquisition related costs
-
-
-
0.01
Tax benefit for reversal of valuation allowance as a result of the
IO Turbine acquisition
-
-
-
(0.02
)
Diluted net (loss) income per share on a non-GAAP basis
Recommend:
