SANTA CLARA, CA --(Marketwired - December 02, 2015) - Violin Memory®, Inc. , (
Third Quarter Fiscal 2016 Financial Highlights
- Third quarter fiscal 2016 revenue of $12.5 million
- Third quarter fiscal 2016 GAAP 1 gross margin of 51%
- Third quarter fiscal 2016 non-GAAP 2 gross margin of 56%
- Third quarter fiscal 2016 GAAP net loss of $0.23 per share
- Third quarter fiscal 2016 non-GAAP net loss of $0.19 per share
"Our strategic shift and product line transition to become a market leader in flash-based primary storage for enterprises continues to create short-term challenges in achieving predictable, consistent growth. However, we believe we are headed in the right direction overall and that our opportunity continues to be extremely attractive," said Kevin DeNuccio, president and chief executive officer, Violin Memory.
The Company also announced today that its Board of Directors has authorized the exploration of strategic alternatives to enhance shareholder value and has retained the services of an investment banking firm to assist with the evaluation process. There is no set timetable for completion of this process and there is no assurance given that the process will result in the consummation of any transaction. The Company does not intend to provide additional information until such time that the Board of Directors approves a specific alternative or the process is otherwise concluded.
"Our stock price remains at a level that we do not believe reflects the true value of our business and developed technology. As a management team, we are committed to act in the best interests of our shareholders, including considering alternate methods of enhancing shareholder value," said DeNuccio.
Third Quarter Fiscal 2016 Financial Results
Third quarter fiscal 2016 revenue was $12.5 million, 18% lower sequentially compared to $15.3 million reported in the second quarter of fiscal 2016, and 42% lower compared to $21.7 million reported in the third quarter of fiscal year 2015.
Third quarter fiscal 2016 GAAP gross margin was 51% compared to 43% reported in the second quarter of fiscal 2016 and compared to 51% reported in the third quarter of fiscal year 2015.
Third quarter fiscal 2016 non-GAAP gross margin was 56% compared to 47% reported in the second quarter of fiscal 2016 and compared to 54% reported in the third quarter of fiscal year 2015.
Third quarter fiscal 2016 GAAP net loss was $22.7 million, or $0.23 per share, compared to second quarter fiscal 2016 GAAP net loss of $24.4 million, or $0.25 per share and compared to third quarter fiscal 2015 GAAP net loss of $23.5 million, or $0.25 per share.
Third quarter fiscal 2016 non-GAAP net loss was $18.6 million, or $0.19 per share, compared to second quarter fiscal 2016 non-GAAP net loss of $18.4 million, or $0.19 per share, and compared to third quarter fiscal 2015 non-GAAP net loss of $17.8 million, or $0.19 per share.
Cash and cash equivalents, restricted cash and short-term investments totaled $95.9 million as of October 31, 2015.
Business Outlook
The Company will provide fourth quarter fiscal year 2016 guidance during today's conference call. Guidance will be posted on Violin Memory's investor relations website at investor.violin-memory.com following the conclusion of the conference call.
All forward-looking non-GAAP measures exclude estimates for items such as stock-based compensation expense, amortization of acquired intangibles, restructuring or impairment charges and litigation settlements. A reconciliation of non-GAAP measures to corresponding GAAP measures is not available on a forward-looking basis.
1 Generally Accepted Accounting Principles.
2 A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading "Non-GAAP Financial Measures."
Violin Memory Conference Call Information
Violin Memory will host a conference call today at 2:00 p.m. Pacific time to discuss financial results and business highlights. This call will be webcast and can be accessed via the Violin Memory website at investor.violin-memory.com . A replay will be available following the call on the same website for one week at the following numbers: (855) 859-2056 (domestic) or (404) 537-3406 (international) using ID #75246928.
Non-GAAP Financial Measures
To supplement the reader's overall understanding of both its reported results presented in accordance with U.S. generally accepted accounting principles ("GAAP") and its outlook, the Company also presents non-GAAP measures of gross profit, gross margin, operating expenses, net loss and net loss per share. The Company uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors as a supplement to GAAP measures in evaluating its ongoing operational performance and trends. As the calculation of non-GAAP financial measures differs between companies, the non-GAAP financial measures used by the Company may not be comparable to similarly titled measures used by other companies. As a result, the Company does not use, nor does it intend to use, the non-GAAP financial measures when assessing the Company's performance against that of other companies.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
The Company defines non-GAAP gross profit, operating expenses, net loss and net loss per share as the respective GAAP balances adjusted for stock-based compensation expense, gain on sale of the PCIe product line, litigation settlements, restructuring charges, amortization of acquired intangibles and loss on debt extinguishment.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the following: the Company's ability to become a market leader in flash-based primary storage for enterprises; the Company's ability to overcome challenges and to achieve predictable, consistent growth; the Company's future business opportunities; the Company's exploration of strategic alternatives to enhance shareholder value and the potential results of the Company's exploration of strategic alternatives; the future value of the Company's business and developed technology; and the Company's business plans and strategy. There are a number of risks and uncertainties that could affect the Company's performance and financial results are included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's Report on Form 10-Q for the second quarter of fiscal year 2016 which was filed with the SEC on September 9, 2015, and is available on the Company's investor relations website at investor.violin-memory.com and on the SEC's website at www.sec.gov . All forward-looking statements in this press release are based on information available to the Company as of the date hereof, and the Company does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
About Violin Memory, Inc.
Business in a Flash. Violin Memory, the industry pioneer in All Flash Arrays, is the agile innovator, transforming the speed of business with enterprise-grade data services software on its leadership Flash Storage Platforms™. Violin Concerto™ OS 7 delivers complete data protection and data reduction services and consistent high performance in a storage operating system fully integrated with Violin's patented Flash Fabric Architecture™ for cloud, enterprise and virtualized business and mission-critical storage applications. Violin Flash Storage Platforms are designed for primary storage applications at costs below traditional hard disk arrays and accelerate breakthrough CAPEX and OPEX savings while helping customers build the next generation data center. Violin Flash Storage Platforms and All Flash Arrays enhance business agility while revolutionizing data center economics. Founded in 2005, Violin Memory is headquartered in Santa Clara, California. For more information, visit www.violin-memory.com . Follow us on Twitter at twitter.com/violinmemory .
| VIOLIN MEMORY, INC. | |||||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||||
| (Unaudited; in thousands, except per share data) | |||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| October 31, | July 31, | October 31, | October 31, | October 31, | |||||||||||||||||
| 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| Revenue: | |||||||||||||||||||||
| Product revenue | $ | 6,326 | $ | 9,847 | $ | 16,887 | $ | 22,996 | $ | 43,848 | |||||||||||
| Service revenue | 6,213 | 5,456 | 4,842 | 16,947 | 14,607 | ||||||||||||||||
| Total revenue | 12,539 | 15,303 | 21,729 | 39,943 | 58,455 | ||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||
| Cost of product revenue (1) | 3,383 | 5,872 | 8,477 | 13,485 | 22,077 | ||||||||||||||||
| Cost of service revenue (1) | 2,785 | 2,831 | 2,099 | 8,337 | 5,968 | ||||||||||||||||
| Total cost of revenue | 6,168 | 8,703 | 10,576 | 21,822 | 28,045 | ||||||||||||||||
| Gross profit | 6,371 | 6,600 | 11,153 | 18,121 | 30,410 | ||||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Sales and marketing (1) | 14,049 | 13,655 | 15,660 | 41,144 | 47,000 | ||||||||||||||||
| Research and development (1) | 10,110 | 10,580 | 12,537 | 32,216 | 41,367 | ||||||||||||||||
| General and administrative (1) | 3,456 | 4,708 | 4,890 | 13,315 | 15,876 | ||||||||||||||||
| Gain on sale of PCIe product line | - | - | - | - | (17,448 | ) | |||||||||||||||
| Restructuring charges | - | - | - | - | 3,062 | ||||||||||||||||
| Litigation settlement | - | - | - | - | 652 | ||||||||||||||||
| Total operating expenses | 27,615 | 28,943 | 33,087 | 86,675 | 90,509 | ||||||||||||||||
| Loss from operations | (21,244 | ) | (22,343 | ) | (21,934 | ) | (68,554 | ) | (60,099 | ) | |||||||||||
| Other income (expense), net | 126 | (303 | ) | (427 | ) | 79 | (489 | ) | |||||||||||||
| Interest expense | (1,649 | ) | (1,694 | ) | (1,122 | ) | (5,093 | ) | (1,414 | ) | |||||||||||
| Loss before income taxes | (22,767 | ) | (24,340 | ) | (23,483 | ) | (73,568 | ) | (62,002 | ) | |||||||||||
| Provision for (benefit from) income taxes | (98 | ) | 42 | 44 | (15 | ) | 80 | ||||||||||||||
| Net loss | $ | (22,669 | ) | $ | (24,382 | ) | $ | (23,527 | ) | $ | (73,553 | ) | $ | (62,082 | ) | ||||||
| Net loss per share of common stock, basic and diluted | $ | (0.23 | ) | $ | (0.25 | ) | $ | (0.25 | ) | $ | (0.76 | ) | $ | (0.69 | ) | ||||||
| Shares used in computing net loss per share of common stock, basic and diluted | 97,556 | 96,588 | 92,373 | 96,552 | 90,292 | ||||||||||||||||
| (1) Includes stock-based compensation expense as follows: | |||||||||||||||||||||
| Cost of product revenue | $ | 233 | $ | 270 | $ | 156 | $ | 753 | $ | 614 | |||||||||||
| Cost of service revenue | 383 | 334 | 210 | 1,052 | 390 | ||||||||||||||||
| Sales and marketing | 785 | 1,475 | 1,291 | 3,066 | 3,919 | ||||||||||||||||
| Research and development | 1,582 | 1,977 | 1,735 | 5,537 | 7,835 | ||||||||||||||||
| General and administrative | 1,052 | 1,902 | 1,861 | 4,846 | 4,951 | ||||||||||||||||
| $ | 4,035 | $ | 5,958 | $ | 5,253 | $ | 15,254 | $ | 17,709 | ||||||||||||
| VIOLIN MEMORY, INC. | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (Unaudited; in thousands) | ||||||||||
| Assets | October 31, 2015 | January 31, 2015 | ||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 29,613 | $ | 93,432 | ||||||
| Restricted cash | 10,000 | 2,300 | ||||||||
| Short-term investments | 56,272 | 60,483 | ||||||||
| Accounts receivable, net | 9,512 | 15,080 | ||||||||
| Inventory | 12,258 | 10,322 | ||||||||
| Other current assets | 4,883 | 5,949 | ||||||||
| Total current assets | 122,538 | 187,566 | ||||||||
| Property and equipment, net | 9,810 | 9,863 | ||||||||
| Intangibles and other assets | 8,996 | 10,806 | ||||||||
| $ | 141,344 | $ | 208,235 | |||||||
| Liabilities and Stockholders' Equity (Deficit) | ||||||||||
| Current liabilities: | ||||||||||
| Short-term borrowings | $ | 13,894 | $ | 10,000 | ||||||
| Accounts payable | 6,361 | 11,065 | ||||||||
| Accrued liabilities | 13,942 | 18,024 | ||||||||
| Deferred revenue, current | 15,125 | 15,635 | ||||||||
| Total current liabilities | 49,322 | 54,724 | ||||||||
| Convertible senior notes | 120,000 | 120,000 | ||||||||
| Deferred revenue | 7,090 | 10,398 | ||||||||
| Long-term liabilities | 658 | 1,707 | ||||||||
| Total liabilities | 177,070 | 186,829 | ||||||||
| Stockholders' equity (deficit): | ||||||||||
| Preferred stock | - | - | ||||||||
| Common stock | 10 | 9 | ||||||||
| Additional paid-in capital | 498,886 | 482,674 | ||||||||
| Accumulated other comprehensive income | 455 | 248 | ||||||||
| Accumulated deficit | (535,077 | ) | (461,525 | ) | ||||||
| Total stockholders' equity (deficit) | (35,726 | ) | 21,406 | |||||||
| $ | 141,344 | $ | 208,235 | |||||||
| VIOLIN MEMORY, INC. | |||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||
| (In thousands) | |||||||||||
| Nine Months Ended October 31, | |||||||||||
| 2015 | 2014 | ||||||||||
| (Unaudited) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (73,553 | ) | $ | (62,082 | ) | |||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation and amortization | 6,655 | 8,368 | |||||||||
| Gain on sale of PCIe product line | - | (17,448 | ) | ||||||||
| Accretion of debt discount and debt issuance costs to interest expense | 1,287 | 541 | |||||||||
| Provision for excess and obsolete inventory | - | 1,033 | |||||||||
| Stock-based compensation | 15,254 | 17,709 | |||||||||
| Changes in operating assets and liabilities, net: | |||||||||||
| Accounts receivable | 5,568 | 2,516 | |||||||||
| Inventory | (1,800 | ) | 10,409 | ||||||||
| Other assets | 911 | (3,001 | ) | ||||||||
| Accounts payable | (5,313 | ) | (9,675 | ) | |||||||
| Accrued liabilities | (5,131 | ) | (16,462 | ) | |||||||
| Deferred revenue | (3,818 | ) | 1,590 | ||||||||
| Net cash used in operating activities | (59,940 | ) | (66,502 | ) | |||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of property and equipment and intangibles, net | (5,451 | ) | (8,474 | ) | |||||||
| Proceeds from sale of PCIe product line | - | 23,000 | |||||||||
| Increase in restricted cash | (7,700 | ) | (2,300 | ) | |||||||
| Purchase of short-term investments | (49,913 | ) | (35,261 | ) | |||||||
| Proceeds from sales and maturities of short-term investments | 54,107 | 54,222 | |||||||||
| Net cash provided by (used in) investing activities | (8,957 | ) | 31,187 | ||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from issuance of convertible notes, net of issuance costs | - | 115,397 | |||||||||
| Proceeds from issuance of common stock, net of related costs | 962 | 3,371 | |||||||||
| Proceeds from debt and line of credit, net of facility set-up costs | 31,617 | 36,776 | |||||||||
| Repayment of debt and line of credit | (27,723 | ) | (26,395 | ) | |||||||
| Taxes paid related to net share settlement of equity awards | - | (3,872 | ) | ||||||||
| Net cash provided by financing activities | 4,856 | 125,277 | |||||||||
| Effect of exchange rates on cash and cash equivalents | 222 | (101 | ) | ||||||||
| Net increase (decrease) in cash and cash equivalents | (63,819 | ) | 89,861 | ||||||||
| Cash and cash equivalents at beginning of year | 93,432 | 40,273 | |||||||||
| Cash and cash equivalents at end of period | $ | 29,613 | $ | 130,134 | |||||||
| VIOLIN MEMORY, INC. | |||||||||||||
| Reconciliation of GAAP to Non-GAAP Measures | |||||||||||||
| (In thousands, except per share data) | |||||||||||||
| Three Months Ended | |||||||||||||
| October 31, | July 31, | October 31, | |||||||||||
| 2015 | 2015 | 2014 | |||||||||||
| (Unaudited) | |||||||||||||
| Gross profit (GAAP) | $ | 6,371 | $ | 6,600 | $ | 11,153 | |||||||
| Stock-based compensation | 616 | 604 | 366 | ||||||||||
| Amortization of acquired intangibles | - | - | 111 | ||||||||||
| Gross profit (Non-GAAP) | $ | 6,987 | $ | 7,204 | $ | 11,630 | |||||||
| Operating expenses (GAAP) | $ | 27,615 | $ | 28,943 | $ | 33,087 | |||||||
| Stock-based compensation | (3,419 | ) | (5,354 | ) | (4,887 | ) | |||||||
| Operating expenses (Non-GAAP) | $ | 24,196 | $ | 23,589 | $ | 28,200 | |||||||
| Net loss (GAAP) | $ | (22,669 | ) | $ | (24,382 | ) | $ | (23,527 | ) | ||||
| Stock-based compensation | 4,035 | 5,958 | 5,253 | ||||||||||
| Amortization of acquired intangibles | - | - | 111 | ||||||||||
| Loss on debt extinguishment | - | - | 372 | ||||||||||
| Net loss (Non-GAAP) | $ | (18,634 | ) | $ | (18,424 | ) | $ | (17,791 | ) | ||||
| Net loss per common share, basic and diluted (GAAP) | $ | (0.23 | ) | $ | (0.25 | ) | $ | (0.25 | ) | ||||
| Stock-based compensation | 0.04 | 0.06 | 0.06 | ||||||||||
| Amortization of acquired intangibles | - | - | - | ||||||||||
| Loss on debt extinguishment | - | - | - | ||||||||||
| Net loss per common share, basic and diluted (Non-GAAP) | $ | (0.19 | ) | $ | (0.19 | ) | $ | (0.19 | ) | ||||
Contacts: Violin Memory, Inc. Investor Relations Olga Dorovskikh 650-396-1525 ir@vmem.com
