SANTA CLARA, CA --(Marketwired - September 08, 2016) - Violin Memory®, Inc. , (
Second Quarter Fiscal 2017 Financial Highlights
- Second quarter fiscal 2017 revenue of $7.5 million
- Second quarter fiscal 2017 GAAP 1 gross margin of 3%
- Second quarter fiscal 2017 non-GAAP 2 gross margin of 44%
- Second quarter fiscal 2017 GAAP net loss of $0.82 per share
- Second quarter fiscal 2017 non-GAAP net loss of $0.59 per share
"Violin is proactively taking the actions necessary to return the company to growth by leveraging innovation and technology to meet customer needs, while achieving the lowest cost structure in the industry," said Kevin DeNuccio, President and CEO Violin Memory. "These actions, coupled with expanding Flash Storage Platform Customer engagements, will support the company's effort to attract additional capital to fuel growth through profitability."
Second Quarter Fiscal 2017 Financial Results
Second quarter fiscal 2017 revenue was $7.5 million, 23% lower sequentially compared to $9.7 million reported in the first quarter of fiscal 2017, and 51% lower compared to $15.3 million reported in the second quarter of fiscal 2016.
Second quarter fiscal 2017 GAAP gross margin was 3% compared to 40% reported in the first quarter of fiscal 2017 and compared to 43% reported in the second quarter of fiscal year 2016.
Second quarter fiscal 2017 non-GAAP gross margin was 44% compared to 42% reported in the first quarter of fiscal 2017 and compared to 47% reported in the second quarter of fiscal year 2016.
Second quarter fiscal 2017 GAAP net loss was $20.6 million, or $0.82 per share, compared to first quarter of fiscal 2017 GAAP net loss of $22.2million, or $0.89 per share and compared to second quarter fiscal 2016 GAAP net loss of $24.4 million, or $1.01 per share. All share and per share numbers reflect the Company's 1-for-4 reverse split that occurred on July 6, 2016.
Second quarter fiscal 2017 GAAP net loss included stock-based compensation expense of $3.1 million and an excess and obsolete inventory provision of $2.9 million partially offset by recovery against restructuring charges of $0.3 million.
Excluding special items, second quarter fiscal 2017 non-GAAP net loss was $14.8 million, or $0.59 per share, compared to first quarter fiscal 2017 non-GAAP net loss of $16.4 million, or $0.66 per share, and compared to second quarter fiscal 2016 non-GAAP net loss of $18.4 million, or $0.76 per share.
Cash and cash equivalents, restricted cash and short-term investments totaled $36.4 million as of July 31, 2016.
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 #68499428.
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, 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, provision for excess and obsolete inventory, restructuring charges or recovery and amortization of acquired intangibles.
Forward Looking Statements
This public announcement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the following: Violin Memory's ability to return to growth; Violin Memory's ability to maintain its low cost structure; Violin Memory's ability to expand customer engagements; Violin Memory's ability to attract additional capital and achieve profitability; financial and other benefits that customers and others may realize as the result of using Violin Memory's products and services; the performance and capabilities of Violin Memory's products and services; and Violin Memory's business plans and strategy. There are a significant number of risks and uncertainties that could affect Violin Memory's business performance and financial results, including those set forth under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Violin Memory's Quarterly Report on Form 10-Q for the first quarter of fiscal year 2017, which was filed with the U.S. Securities and Exchange Commission, and which is available on the Violin Memory'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 public announcement are based on information available to Violin Memory as of the date hereof, and Violin Memory 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.
Be Instrumental. Violin Memory, the industry pioneer in All Flash Arrays, is revolutionizing how businesses operate by enabling IT to Be Instrumental in organizations in such ways as unlocking the power of data and creating economic advantage. The consistent high-throughput and predictable low latency showcased by the Flash Storage Platform™ is combined with Concerto™ OS 7, a fully integrated storage operating system that enables complete data protection, business continuity, and data reduction services. Violin Memory's innovative single storage platform solution delivers transformative performance for cloud, enterprise, virtualized business and mission-critical storage applications. The Violin Flash Storage Platform is designed to consolidate high performance and primary storage workloads onto a flexible, uniquely scalable solution called Scale Smart™, while achieving substantive CAPEX and OPEX savings. 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.
All Violin Memory news releases (financial, acquisitions, manufacturing, products, technology, etc.) are issued exclusively by Marketwired and are immediately thereafter posted on the company's external website. For more information about Violin Memory, including Violin Memory's trademarks, visit www.violin-memory.com .
| VIOLIN MEMORY, INC. | ||||||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||||||
| (Unaudited; in thousands, except per share data) | ||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| July 31, | April 30, | July 31, | July 31, | July 31, | ||||||||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
| Revenue: | ||||||||||||||||||||||
| Product revenue | $ | 2,063 | $ | 4,157 | $ | 9,847 | $ | 6,220 | $ | 16,670 | ||||||||||||
| Service revenue | 5,440 | 5,556 | 5,456 | 10,996 | 10,734 | |||||||||||||||||
| Total revenue | 7,503 | 9,713 | 15,303 | 17,216 | 27,404 | |||||||||||||||||
| Cost of revenue: | ||||||||||||||||||||||
| Cost of product revenue (1) | 4,764 | 3,122 | 5,872 | 7,886 | 10,102 | |||||||||||||||||
| Cost of service revenue (1) | 2,533 | 2,714 | 2,831 | 5,247 | 5,552 | |||||||||||||||||
| Total cost of revenue | 7,297 | 5,836 | 8,703 | 13,133 | 15,654 | |||||||||||||||||
| Gross profit | 206 | 3,877 | 6,600 | 4,083 | 11,750 | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||
| Sales and marketing (1) | 7,516 | 9,032 | 13,655 | 16,548 | 27,095 | |||||||||||||||||
| Research and development (1) | 8,637 | 10,194 | 10,580 | 18,831 | 22,106 | |||||||||||||||||
| General and administrative (1) | 3,236 | 3,412 | 4,708 | 6,648 | 9,859 | |||||||||||||||||
| Restructuring charges (recovery) | (265 | ) | 1,735 | - | 1,470 | - | ||||||||||||||||
| Total operating expenses | 19,124 | 24,373 | 28,943 | 43,497 | 59,060 | |||||||||||||||||
| Loss from operations | (18,918 | ) | (20,496 | ) | (22,343 | ) | (39,414 | ) | (47,310 | ) | ||||||||||||
| Other expense, net | (114 | ) | (194 | ) | (303 | ) | (308 | ) | (47 | ) | ||||||||||||
| Interest and other financing expense | (1,514 | ) | (1,459 | ) | (1,694 | ) | (2,973 | ) | (3,444 | ) | ||||||||||||
| Loss before income taxes | (20,546 | ) | (22,149 | ) | (24,340 | ) | (42,695 | ) | (50,801 | ) | ||||||||||||
| Income taxes | 30 | 10 | 42 | 40 | 83 | |||||||||||||||||
| Net loss | $ | (20,576 | ) | $ | (22,159 | ) | $ | (24,382 | ) | $ | (42,735 | ) | $ | (50,884 | ) | |||||||
| Net loss per share of common stock, basic and diluted | $ | (0.82 | ) | $ | (0.89 | ) | $ | (1.01 | ) | $ | (1.71 | ) | $ | (2.12 | ) | |||||||
| Shares used in computing net loss per share of common stock, basic and diluted | 25,061 | 24,773 | 24,147 | 24,919 | 24,011 | |||||||||||||||||
| (1) Includes stock-based compensation expense as follows: | ||||||||||||||||||||||
| Cost of product revenue | $ | 28 | $ | 6 | $ | 270 | $ | 34 | $ | 521 | ||||||||||||
| Cost of service revenue | 153 | 201 | 334 | 354 | 669 | |||||||||||||||||
| Sales and marketing | 661 | 649 | 1,475 | 1,310 | 2,280 | |||||||||||||||||
| Research and development | 1,181 | 2,160 | 1,977 | 3,341 | 3,955 | |||||||||||||||||
| General and administrative | 1,091 | 1,039 | 1,902 | 2,130 | 3,794 | |||||||||||||||||
| $ | 3,114 | $ | 4,055 | $ | 5,958 | $ | 7,169 | $ | 11,219 | |||||||||||||
| VIOLIN MEMORY, INC. | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (Unaudited; in thousands) | ||||||||||
| July 31, 2016 | January 31, 2016 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 19,137 | $ | 23,921 | ||||||
| Restricted cash | 5,000 | 10,000 | ||||||||
| Short-term investments | 12,290 | 42,058 | ||||||||
| Accounts receivable, net | 2,567 | 5,308 | ||||||||
| Inventory | 9,794 | 12,001 | ||||||||
| Other current assets | 1,417 | 4,170 | ||||||||
| Total current assets | 50,205 | 97,458 | ||||||||
| Property and equipment, net | 8,545 | 9,322 | ||||||||
| Other assets | 5,460 | 6,067 | ||||||||
| $ | 64,210 | $ | 112,847 | |||||||
| Liabilities and Stockholders' Deficit | ||||||||||
| Current liabilities: | ||||||||||
| Short-term borrowings | $ | 7,073 | $ | 13,398 | ||||||
| Accounts payable | 2,162 | 3,747 | ||||||||
| Accrued liabilities | 11,239 | 13,570 | ||||||||
| Deferred revenue | 11,118 | 13,006 | ||||||||
| Total current liabilities | 31,592 | 43,721 | ||||||||
| Convertible senior notes | 118,089 | 117,464 | ||||||||
| Deferred revenue, noncurrent | 4,771 | 6,239 | ||||||||
| Long-term liabilities | - | 275 | ||||||||
| Total liabilities | 154,452 | 167,699 | ||||||||
| Stockholders' deficit: | ||||||||||
| Preferred stock | - | - | ||||||||
| Common stock | 3 | 10 | ||||||||
| Additional paid-in capital | 512,533 | 505,274 | ||||||||
| Accumulated other comprehensive income | 549 | 456 | ||||||||
| Accumulated deficit | (603,327 | ) | (560,592 | ) | ||||||
| Total stockholders' deficit | (90,242 | ) | (54,852 | ) | ||||||
| $ | 64,210 | $ | 112,847 | |||||||
| VIOLIN MEMORY, INC. | |||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||
| (Unaudited; in thousands) | |||||||||||
| Six Months Ended | |||||||||||
| July 31, | July 31, | ||||||||||
| 2016 | 2015 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (42,735 | ) | $ | (50,884 | ) | |||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation and amortization | 4,055 | 4,697 | |||||||||
| Accretion of debt issuance costs to interest expense | 696 | 878 | |||||||||
| Loss on disposal of property and equipment | 99 | - | |||||||||
| Provision for excess and obsolete inventory | 2,940 | - | |||||||||
| Stock-based compensation | 7,165 | 11,219 | |||||||||
| Changes in operating assets and liabilities, net: | |||||||||||
| Accounts receivable | 2,741 | 9,338 | |||||||||
| Inventory | (2,611 | ) | (2,496 | ) | |||||||
| Other assets | 2,743 | 2,058 | |||||||||
| Accounts payable | (1,297 | ) | (5,597 | ) | |||||||
| Accrued liabilities | (2,605 | ) | (3,915 | ) | |||||||
| Deferred revenue | (3,356 | ) | (3,112 | ) | |||||||
| Net cash used in operating activities | (32,165 | ) | (37,814 | ) | |||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of property and equipment | (1,242 | ) | (3,149 | ) | |||||||
| Decrease in restricted cash | 5,000 | (7,700 | ) | ||||||||
| Purchase of short-term investments | - | (41,139 | ) | ||||||||
| Maturity of short-term investments | 29,780 | 34,915 | |||||||||
| Net cash provided by (used in) investing activities | 33,538 | (17,073 | ) | ||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from line of credit | 12,847 | 17,723 | |||||||||
| Repayment of line of credit | (19,172 | ) | (14,000 | ) | |||||||
| Proceeds from exercise of common stock options | 87 | 955 | |||||||||
| Net cash used in financing activities | (6,238 | ) | 4,678 | ||||||||
| Effect of exchange rates on cash and cash equivalents | 81 | 228 | |||||||||
| Net increase in cash and cash equivalents | (4,784 | ) | (49,981 | ) | |||||||
| Cash and cash equivalents at beginning of year | 23,921 | 93,432 | |||||||||
| Cash and cash equivalents at end of period | $ | 19,137 | $ | 43,451 | |||||||
| VIOLIN MEMORY, INC. | |||||||||||||||||||||
| Reconciliation of GAAP to Non-GAAP Measures | |||||||||||||||||||||
| (Unaudited; in thousands, except per share data) | |||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
| July 31, | April 31, | July 31, | July 31, | July 31, | |||||||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
| Gross profit (GAAP) | $ | 206 | $ | 3,877 | $ | 6,600 | $ | 4,083 | $ | 11,750 | |||||||||||
| Stock-based compensation | 181 | 207 | 604 | 388 | 1,190 | ||||||||||||||||
| Provision for excess and obsolete inventory | 2,940 | - | - | 2,940 | - | ||||||||||||||||
| Amortization of acquired intangibles | - | - | 14 | - | 28 | ||||||||||||||||
| Gross profit (Non-GAAP) | $ | 3,327 | $ | 4,084 | $ | 7,218 | $ | 7,411 | $ | 12,968 | |||||||||||
| Operating expenses (GAAP) | $ | 19,124 | $ | 24,373 | $ | 28,943 | 43,497 | $ | 59,060 | ||||||||||||
| Stock-based compensation | (2,933 | ) | (3,848 | ) | (5,354 | ) | (6,781 | ) | (10,029 | ) | |||||||||||
| Restructuring charges (recovery) | 265 | (1,735 | ) | - | (1,470 | ) | - | ||||||||||||||
| Operating expenses (Non-GAAP) | $ | 16,456 | $ | 18,790 | $ | 23,589 | $ | 35,246 | $ | 49,031 | |||||||||||
| Net loss (GAAP) | $ | (20,576 | ) | $ | (22,159 | ) | $ | (24,382 | ) | $ | (42,735 | ) | $ | (50,884 | ) | ||||||
| Stock-based compensation | 3,114 | 4,055 | 5,958 | 7,169 | 11,219 | ||||||||||||||||
| Provision for excess and obsolete inventory | 2,940 | - | - | 2,940 | - | ||||||||||||||||
| Restructuring charges (recovery) | (265 | ) | 1,735 | - | 1,470 | ||||||||||||||||
| Amortization of acquired intangibles | - | - | 14 | - | 28 | ||||||||||||||||
| Net loss (Non-GAAP) | $ | (14,787 | ) | $ | (16,369 | ) | $ | (18,410 | ) | $ | (31,156 | ) | $ | (39,638 | ) | ||||||
| Net loss per common share, basic and diluted (GAAP) | $ | (0.82 | ) | $ | (0.89 | ) | $ | (1.01 | ) | $ | (1.72 | ) | $ | (2.12 | ) | ||||||
| Stock-based compensation | 0.12 | 0.16 | 0.25 | 0.28 | 0.47 | ||||||||||||||||
| Provision for excess and obsolete inventory | 0.12 | - | - | 0.12 | - | ||||||||||||||||
| Restructuring charges (recovery) | (0.01 | ) | 0.07 | - | 0.06 | - | |||||||||||||||
| Amortization of acquired intangibles | - | - | 0.00 | - | 0.00 | ||||||||||||||||
| Net loss per common share, basic and diluted (Non-GAAP) | $ | (0.59 | ) | $ | (0.66 | ) | $ | (0.76 | ) | $ | (1.25 | ) | $ | (1.65 | ) | ||||||
Investor Relations Contact: Olga Dorovskikh Violin Memory, Inc. 650-396-1525 ir@vmem.com Media Contact: Tanya Tran Violin Memory, Inc. 650-396-1489 ttran@vmem.com
