Company has blow-out quarter
There was big news last week from Fusion-io. For their fourth fiscal quarter of 2011 ending June 30, Fusion-io reported GAAP revenue of $71.7 million, up from $67.3 million in the prior quarter.
Fusion-io prices its IPO at $19 per share
GAAP earnings were $5.8 million, or $.06 per diluted share. For the full year, revenue was $197.2 million and earnings were $4.6 million. Guidance for Q1 2012 is $60 to $65 million and revenue growth for the full year is projected at 40%. Gross margin is forecast to be in the 58% range, similar to the 57.4% in FY2011.
Commenting on the quarter, CEO David Flynn reported that Facebook and Apple were more than 10% of revenue each, with HP accounting for significant OEM revenue.
The surprise of the day was the announcement that Fusion-io is acquiring VMware storage virtualization and caching software supplier IOTurbine, just weeks after coming out of stealth, for $95 million in cash and stock. While this seems a little rich, it echoed the announcement by STEC today of a virtualization caching software product along with a PCIe-based product line which competes directly with Fusion-io’s products.
Our take: Fusion-io has continued impressive revenue growth, but we feel that additional entrants in the PCIe space including STEC, Micron, OCZ, LSI and future products rumored from foundry owner SanDisk will put gross margin pressure on Fusion-io. The company has good gross margins primarily because it uses heavyweight drivers to perform flash management rather than silicon on the board. While this is an advantage on the cost-of-goods side, it does burden the host with mundane functions that are delegated to PCIe silicon in competitive products. The potential value add of the IOTurbine caching and virtualization layer will be factored into equation, but we feel that Fusion-io will need to develop a major hardware refresh to remain in their leadership position.
