Feeds

Server flash-pusher Fusion-io is running out of steam

Record revenues ... but firm still reports $5m Q3 loss

Maximizing your infrastructure through virtualization

Fusion-io is something of a contradiction. If it's so hot why isn't it making bucketloads of cash? That's the question that comes to mind after hearing hot server flash product market Fusion-io reported a loss of almost $5m in its third fiscal 2012 quarter.

Fusion revenues were a record $94.2m – 40 per cent more than a year ago and $10.1m up on the previous quarter – meaning 12 per cent sequential growth. In fact the revenue number was higher than the $85.6m expected by Wall St.

Should we whisper it? Is Fusion-io's growth rate slowing? Look at the chart below. It actually looks as if it is accelerating after slight growth over the past three quarters. But then there's the forecast of no growth for the next quarter, as we shall see.

Fusion-io Revenue and Profit or loss to Q3 fy2012

Andrew Nowinski of Piper Jaffray thinks there is a lot of growth to come: "Fourth quarter revenue is expected to remain flat (but still above the Street) due to the delayed qualification at the company's OEMs. These are typical growing pains of a young company in rapid growth mode. More importantly, the demand environment remains exceptionally strong as evidenced by the strong growth in both core and strategic customers."

He also reckons Cisco is likely coming on board in July as an OEM customer which indicates more revenues to come.

Income-wise Fusion is not doing well, with two quarters of losses after three profitable ones. Its CFO, Dennis Wolf, indicated why, saying: "We believe our vision is resonating with customers and strategic partners, and we will continue to prioritise the expansion of our market footprint along with investment in innovation.”

Operating expenses this quarter were $4m, 100 per cent up on a year ago, and its gross margin went down to 52.1 per cent from 53.2 per cent.

The company wants growth more than profits at this stage of the game. It's also limited by having relatively few and relatively large customers as a major part of its revenue stream thus far. It can't easily ramp up sales through such customers, which include Apple and Facebook, and its OEM channels.

Revenue in the fourth quarter is expected to be around $94m again; no growth there then.

Nowinski was not fazed by this: "Management expects revenue to remain flat in [the fourth quarter], but stated this is not indicative of the demand environment. The bookings suggest demand is significantly higher, but due to the ongoing qualification process at OEM partners, Fusion-io must wait to recognise the revenue until the products actually ship. ... we view this qualification delay as typical "growing pains" of a young company in rapid growth mode."

It's a queer business when a quarter of no growth is equated to rapid growth. Investors will have to hope he's right. ®

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
Carbon tax repeal won't see data centre operators cut prices
Rackspace says electricity isn't a major cost, Equinix promises 'no levy'
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.