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Fusion-io Reports Fiscal Second Quarter 2012 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 $ (0.08 ) $ 0.05   $ (0.46 ) $ 0.20  




Stock quotes in this article: FIO 

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