Fusion-io Reports 43% Year-Over-Year Revenue Growth in Fiscal Second Quarter 2013

 Fusion-io Reports 43% Year-Over-Year Revenue Growth in Fiscal Second Quarter
                                     2013

PR Newswire

SALT LAKE CITY, Jan. 30, 2013

SALT LAKE CITY, Jan. 30, 2013 /PRNewswire/ -- Fusion-io, Inc. (NYSE: FIO)
today announced its financial results for its fiscal second quarter ended
December 31, 2012.

  oRevenue: $120.6 million
  oGAAP Gross Margin of 61.8% and Non-GAAP Gross Margin of 61.9%
  oGAAP Net Earnings per Diluted Share: $0.02
  oNon-GAAP Net Earnings per Diluted Share: $0.13
  oOperating Cash Flow: $10.2 million

Fiscal Second Quarter 2013 GAAP Financial Results

Fusion-io reported record revenue of $120.6 million for the fiscal second
quarter 2013, up 43% from $84.1 million for the same quarter of 2012 and up 2%
from $118.1 million for the preceding quarter. Net income for the fiscal
second quarter of 2013 was $1.7 million, or $0.02 per diluted share, compared
to a net loss of $5.7 million, or a net loss per diluted share of $0.07, in
the fiscal second quarter of 2012. Gross margin for the fiscal second quarter
2013 was 61.8%. Operating margin for the fiscal second quarter 2013 was 5.7%.

Fiscal Second Quarter 2013 Non-GAAP Financial Results

Non-GAAP net income for the fiscal second quarter of 2013 was $13.7 million,
or $0.13 per diluted share, compared to non-GAAP net income of $5.6 million,
or net income per diluted share of $0.05, in the same quarter of 2012.
Non-GAAP gross margin for the fiscal second quarter 2013 was 61.9%. Non-GAAP
operating margin for the fiscal second quarter 2013 was 17.8%. A complete
reconciliation of GAAP to non-GAAP results is set forth in the attachment to
this press release.

"The shift to the cloud from traditional IT, and the shift away from
mechanical storage to solid state, are twin catalysts to our business. We are
well-positioned to capture opportunities as a growing number of customers
decide to migrate away from legacy storage and move to the cloud using new
memory architectures," said David Flynn, Fusion-io chairman and chief
executive officer. "As early adopters of our technology move to all-flash
architectures, the sheer scale of this transformation can lead to lumpiness in
deployments quarter to quarter as customers learn to extract the full
potential of flash to drive even greater efficiency in their infrastructure."

Dennis Wolf, Fusion-io chief financial officer, added: "Our two largest
customers have purchased nearly half a billion from Fusion-io since 2010,
representing robust adoption of our technology. There is a lot of potential
with these key customers, and the change in our guidance reflects a
two-quarter shift in the timing of their bulk purchases. A healthy pipeline
for growth, fueled by new products and partnerships, as well as a solid
financial position, with more than $365 million in cash and equivalents, will
enable us to drive the business forward and create value for our
shareholders."

Other Financial Highlights

  oCash and cash equivalents totaled $368.5 million at the end of fiscal
    second quarter 2013, an increase of $14.6 million compared to the prior
    quarter-end.
  oDeferred revenue at the end of fiscal second quarter 2013 was $38.1
    million, an increase of $3.7 million compared to the prior quarter-end.
  oInventory was $74.2 million at the end of fiscal second quarter 2013, an
    increase of $7.0 million compared to the prior quarter-end.
  oCapital expenditures were $3.5 million in fiscal second quarter 2013.

Recent Business Highlights

  oOn January 16, Fusion-io announced its newest product line, Fusion
    ioScale, providing up to 3.2 terabytes of capacity that is performance
    tuned for the unique needs of webscale and cloud datacenters.

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 2013 financial
results.

Third quarter of fiscal year 2013:

  oRevenue is expected to be approximately $80 million.
  oNon-GAAP gross margin is expected to be in the range of 58 to 60%.
  oNon-GAAP operating loss of approximately $10 to $15 million.
  oDiluted shares outstanding are expected to be approximately 111 million
    shares.

Fiscal Year 2013 guidance:

  oRevenue is expected to be approximately $420 to $440 million.
  oNon-GAAP gross margin is expected to be in the range of 58 to 60%.
  oNon-GAAP operating margin is expected to be approximately 6 to 8%.
  oDiluted shares outstanding are 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:

  oNon-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.
  oNon-GAAP operating margin is calculated as non-GAAP income from operations
    divided by GAAP revenue. Non-GAAP income from operations consists of GAAP
    income from operations excluding the effects of stock-based compensation
    expense, amortization of intangible assets, and acquisition related costs.
  oNon-GAAP net income is calculated as GAAP net income excluding the effects
    of stock-based compensation expense, changes in the fair value of a common
    stock repurchase derivative liability, amortization of intangible assets,
    acquisition related costs, a tax benefit for the reversal of valuation
    allowance as a result of the IO Turbine acquisition, and tax provision
    adjustments related to stock-based awards.
  oNon-GAAP net income per diluted share is calculated as non-GAAP net 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
    income divided by GAAP weighted-average diluted shares outstanding for the
    three months ended December 31, 2012 and the six months ended December 31,
    2011 and 2012. 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,
Wednesday, January 30, 2013, at 5:00 p.m. EST to discuss these financial
results. To access the conference call, dial 1.800.446.2782 or 1.847.413.3235
for international callers. The access code is 3398 7214. 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 Wednesday, February 6, 2013. To access the replay, please dial
1.888.843.7419 or 1.630.652.3042 for international callers. The access code is
3398 7214. 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 delivers the world's data faster. Our Fusion ioMemory platform and
software defined storage solutions accelerate virtualization, databases, cloud
computing, big data and performance applications. From e-commerce retailers to
the world's social media leaders and Fortune Global 500 companies, our
customers are improving the performance and efficiency of their data centers
with Fusion-io technology to accelerate the critical applications of the
information economy.

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 our third fiscal quarter of 2013
and our full fiscal year 2013, the expected benefits and value of our products
and solutions to our customers and end users, our continued focus and
investment on innovation, our efforts to expand our product portfolio, our
position to capture market share and our expectations regarding market trends,
our pipeline for growth, our beliefs concerning the timing of bulk purchases
of our products by customers, our expectations concerning our technologies,
products and solutions, including our ioMemory platform and software products,
and our beliefs concerning the market for and benefits of our products and
solutions, including our recently announced Fusion ioScale product line. 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 ioMemory platform products, growing our sales through OEMs,
resellers and channel partners and maintaining our relationships with OEMs,
resellers and channel partners, including the timely qualification of our
products for promotion and sale by our OEMs, 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, 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, undetected errors, defects or security vulnerabilities in our
products, 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.

Contacts:
Investor Relations: Nancy Fazioli, ir@fusionio.com, 408-416-5779
Media Relations: Robert Brumfield, bbrumfield@fusionio.com, 917-224-7769

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,
                                    2011       2012       2011       2012
Revenue                             $ 84,131   $ 120,569  $ 158,516  $ 238,684
Cost of revenue (1)                 41,206     46,010     68,560     94,004
Gross profit                        42,925     74,559     89,956     144,680
Operating expenses:
Sales and marketing (1)             20,265     28,676     37,742     53,696
Research and development (1), (3)   13,479     22,427     24,631     43,995
General and administrative (1),     13,228     16,562     26,965     31,646
(4)
Total operating expenses            46,972     67,665     89,338     129,337
(Loss) income from operations       (4,047)    6,894      618        15,343
Other income (expense):
Interest income                     66         99         115        213
Interest expense                    (44)       (18)       (90)       (48)
Other (expense) income (2)          (663)      15         132        (14)
(Loss) income before income taxes   (4,688)    6,990      775        15,494
Income tax (expense) benefit (5),   (1,021)    (5,258)    705        (9,829)
(6)
Net (loss) income                   $ (5,709)  $ 1,732    $ 1,480    $ 5,665
Net (loss) income per share:
Basic                               $ (0.07)   $ 0.02     $ 0.02     $ 0.06
Diluted                             $ (0.07)   $ 0.02     $ 0.01     $ 0.05
Weighted-average number of shares
used in per share amounts:
Basic                               84,961     95,838     83,485     95,030
Diluted                             84,961     109,048    104,599    108,737
(1) Includes stock-based
compensation expenses, as follows:
Cost of revenue                     $ 50       $ 19       $ 77       $ 128
Sales and marketing                 1,464      2,501      2,567      4,635
Research and development            1,669      4,582      3,288      9,009
General and administrative          6,774      6,827      13,801     14,046
Total stock-based compensation      $ 9,957    $ 13,929   $ 19,733   $ 27,818
expenses
(2) Includes other expense
(income) related to changes in the  $ 691      $ -        $ (70)     $ -
fair value of a common stock
repurchase derivative liability
(3) Includes amortization of        $ 656      $ 656      $ 1,021    $ 1,312
intangible assets
(4) Includes acquisition related    $ 6        $ -        $ 1,326    $ -
costs
(5) Includes tax benefit for
reversal of valuation allowance as  $ -        $ -        $ (2,782)  $ -
a result of the IO Turbine
acquisition
(6) Includes tax provision
adjustments related to stock-based  $ -        $ (2,632)  $ -        $ (6,195)
awards

Fusion-io, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                           June 30,   December 31,
                                           2012       2012
Assets
Current assets:
Cash and cash equivalents                  $ 321,239  $ 368,525
Accounts receivable, net                   56,720     55,968
Inventories                                59,457     74,185
Prepaid expenses and other current assets  9,224      9,614
Total current assets                       446,640    508,292
Property and equipment, net                31,245     34,509
Intangible assets, net                     8,164      6,852
Goodwill                                   54,777     54,777
Other assets                               194        635
Total assets                               $ 541,020  $ 605,065
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                           $ 9,765    $ 9,109
Accrued and other current liabilities      29,187     33,850
Deferred revenue                           20,715     27,203
Total current liabilities                  59,667     70,162
Deferred revenue, less current portion     8,154      10,927
Other liabilities                          12,276     13,591
Commitments and contingencies
Stockholders' equity:
Common stock                               19         19
Additional paid-in capital                 531,478    575,272
Accumulated other comprehensive loss       (15)       (12)
Accumulated deficit                        (70,559)   (64,894)
Total stockholders' equity                 460,923    510,385
Total liabilities and stockholders' equity $ 541,020  $ 605,065

Fusion-io, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                    Three Months Ended    Six Months Ended
                                    December 31,          December 31,
                                    2011       2012       2011       2012
Operating activities:
Net (loss) income                   $ (5,709)  $ 1,732    $ 1,480    $ 5,665
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation and amortization       2,118      3,575      3,710      6,763
Stock-based compensation            9,957      13,929     18,940     27,818
Excess tax benefit from stock-based (1,845)    (5,008)    (1,845)    (9,393)
awards
Deferred taxes                      -          -          (2,782)    -
Other non-cash items                692        -          (70)       -
Changes in operating assets and
liabilities:
Accounts receivable, net            6,365      9,703      17,010     752
Inventories                         6,570      (6,982)    (29,350)   (14,728)
Prepaid expenses and other assets   (610)      (1,288)    (84)       (831)
Accounts payable                    (12,296)   (14,670)   1,808      (656)
Accrued and other liabilities       3,657      5,583      3,877      14,241
Deferred revenue                    4,626      3,651      3,925      9,261
Net cash provided by operating      13,525     10,225     16,619     38,892
activities
Investing activities:
Business acquisition, net of cash   -          -          (17,578)   -
acquired
Proceeds from the sale of property  -          -          1          -
and equipment
Purchases of property and equipment (6,085)    (3,537)    (10,307)   (8,712)
Net cash used in investing          (6,085)    (3,537)    (27,884)   (8,712)
activities
Financing activities:
Repurchases of common stock         (1,067)    -          (1,067)    -
Repayment of capital lease          (10)       -          (89)       -
obligations
Proceeds from exercises of stock    2,493      1,857      2,562      6,136
options
Issuance of restricted stock awards
and restricted stock units, net of  -          (822)      -          (1,877)
repurchases
Proceeds from issuance of common    93,977     -          93,977     -
stock, net of issuance costs
Proceeds from issuance of common
stock under employee stock purchase 835        1,914      1,887      3,373
plan
Excess tax benefit from stock       1,845      5,008      1,845      9,393
option exercises
Net cash provided by financing      98,073     7,957      99,115     17,025
activities
Effect of exchange rate changes on  (10)       (13)       (76)       81
cash and cash equivalents
Net increase in cash and cash       105,503    14,632     87,774     47,286
equivalents
Cash and cash equivalents at        201,875    353,893    219,604    321,239
beginning of period
Cash and cash equivalents at end of $ 307,378  $ 368,525  $ 307,378  $ 368,525
period

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,
                                    2011       2012       2011       2012
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        $ 42,925   $ 74,559   $ 89,956   $ 144,680
Stock-based compensation            50         19         77         128
Gross profit on a non-GAAP basis    $ 42,975   $ 74,578   $ 90,033   $ 144,808
Revenue                             $ 84,131   $ 120,569  $ 158,516  $ 238,684
Gross margin on a GAAP basis        51.0%      61.8%      56.7%      60.6%
Gross margin on a non-GAAP basis    51.1%      61.9%      56.8%      60.7%
Reconciliation of Operating (Loss)
Income and Operating Margin on a
GAAP Basis to Operating Income and
Operating Margin on a Non-GAAP
Basis:
Operating (loss) income on a GAAP   $ (4,047)  $ 6,894    $ 618      $ 15,343
basis
Stock-based compensation            9,957      13,929     19,733     27,818
Amortization of intangible assets   656        656        1,021      1,312
Acquisition related costs           6          -          1,326      -
Operating income on a non-GAAP      $ 6,572    $ 21,479   $ 22,698   $ 44,473
basis
Revenue                             $ 84,131   $ 120,569  $ 158,516  $ 238,684
Operating margin on a GAAP basis    -4.8%      5.7%       0.4%       6.4%
Operating margin on a non-GAAP      7.8%       17.8%      14.3%      18.6%
basis
Reconciliation of Net (Loss) Income
on a GAAP Basis to Net Income on a
Non-GAAP Basis:
Net (loss) income on a GAAP basis   $ (5,709)  $ 1,732    $ 1,480    $ 5,665
Stock-based compensation            9,957      13,929     19,733     27,818
Other expense (income) related to
changes in the fair value of a      691        -          (70)       -
common stock repurchase derivative
liability
Amortization of intangible assets   656        656        1,021      1,312
Acquisition related costs           6          -          1,326      -
Tax benefit for reversal of
valuation allowance as a result of  -          -          (2,782)    -
the IO Turbine acquisition
Tax provision adjustments related   -          (2,632)    -          (6,195)
to stock-based awards
Net income on a non-GAAP basis      $ 5,601    $ 13,685   $ 20,708   $ 28,600

Fusion-io, Inc.
Reconciliation of Non-GAAP Financial Measures (continued)
(in thousands, except per share data)
(unaudited)
                                          Three Months Ended  Six Months Ended
                                          December 31,        December 31,
                                          2011       2012     2011     2012
Reconciliation of Diluted Net (Loss)
Income per Share on a GAAP Basis to
Diluted Net Income per Share on a
Non-GAAP Basis:
Diluted net (loss) income per share on a  $ (0.07)   $ 0.02   $ 0.01   $ 0.05
GAAP basis
Stock-based compensation                  0.09       0.12     0.19     0.26
Other expense (income) related to
changes in the fair value of a common     0.01       -        -        -
stock repurchase derivative liability
Amortization of intangible assets         0.01       0.01     0.01     0.01
Acquisition related costs                 -          -        0.01     -
Tax benefit for reversal of valuation
allowance as a result of the IO Turbine   -          -        (0.02)   -
acquisition
Impact of difference in number of GAAP    0.01       -        -        -
and non-GAAP diluted shares
Tax provision adjustments related to      -          (0.02)   -        (0.06)
stock-based awards
Diluted net income per share on a         $ 0.05     $ 0.13   $ 0.20   $ 0.26
non-GAAP basis
Reconciliation of GAAP Diluted
Weighted-Average Number of Shares to
Non-GAAP Diluted Weighted-Average Number
of Shares:
GAAP diluted weighted-average number of   84,961     109,048  104,599  108,737
shares
Dilutive impact due to stock options, a
common stock warrant, restricted stock    20,783     -        -        -
awards, and restricted stock units
Non-GAAP diluted weighted-average number  105,744    109,048  104,599  108,737
of shares

SOURCE Fusion-io, Inc.

Website: http://www.fusionio.com
 
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