Violin Memory Announces Second Quarter Fiscal Year 2017 Financial Results
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SANTA CLARA, CA -- (Marketwired) -- 09/08/16 -- Violin Memory®, Inc., (NYSE: VMEM), a global pioneer of award-winning all flash storage platform solutions for primary storage and active workloads, today announced financial results for the second fiscal quarter ended July 31, 2016.
Second Quarter Fiscal 2017 Financial Highlights
- Second quarter fiscal 2017 revenue of $7.5 million
- Second quarter fiscal 2017 GAAP1 gross margin of 3%
- Second quarter fiscal 2017 non-GAAP2 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
---------------------------- ------------------
April
July 31, 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, January 31,
2016 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
---------------------------- ------------------
April
July 31, 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 DorovskikhViolin Memory, Inc. [email protected] Contact:Tanya TranViolin Memory, Inc. [email protected]
Source: Violin Memory, Inc.
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