Fusion-io sees strong year as customers favor storage tech
(Reuters) - Fusion-io Inc (FIO.N) projected strong growth over the next year on a widening customer base, while a surprise bounce-back in margins helped the storage drive maker handily beat fourth-quarter profit estimates.
Fusion-io shares rose 27 percent in extended trading.
The company said increasing orders for its storage devices that have been incorporated into products from large hardware vendors such as IBM Corp (IBM.N) and Hewlett-Packard Co (HPQ.N), helped it capture market share.
The company had 3,500 end customers by the fourth quarter ended June 30, up from 1,500 when it went public in June last year.
"Our new products and the growth of our salesforce and channel have allowed us to expand our customer reach rapidly this past year," Chief Executive David Flynn said on a call with analysts.
Fusion-io sells its hard drives and software used in servers and data centers through original equipment manufacturers like IBM and Dell DELL.O, as well as straight to end customers like Apple Inc (AAPL.O) and Facebook Inc (FB.O) who engineer and operate their own server farms.
It expects revenue to grow 45-50 percent in fiscal 2013, which translates into revenue of $521 million to $539 million. That compares with the $478.8 million expected by analysts, according to Thomson Reuters I/B/E/S.
The company, which employs Apple Inc (AAPL.O) co-founder Steve Wozniak as its chief scientist, makes solid state memory drives using NAND flash technology.
But unlike competitors such as STEC Inc STEC.O and OCZ Technology OCZ.O, the company uses proprietary software drivers that it claims can more efficiently compress and access data.
A surprise uptick in gross margins helped it post a bigger-than expected adjusted profit in the quarter, allaying investor concerns that chasing new customers was costing too much.
Gross margins had shrunk to a low of 51 percent in the fiscal second quarter, but bounced back to 57.5 percent in the fourth quarter.
Fusion-io expects to maintain those gains and guided gross margins of 56 percent to 58 percent for 2013.
"Sequential improvement was a result of product mix that favored enterprise as well as NAND cost improvements," CEO Flynn said.
NAND prices have fallen as much as 60 percent in the last year, according to chip industry tracker DRAMeXchange, hurting memory makers such as SanDisk Corp (SNDK.O) and Micron Technology Inc (MU.O), but helping buyers such as Fusion-io.
The company reported a loss of $2.4 million, or 3 cents a share, in the fourth quarter, compared with a profit of $5.8 million, or 6 cents a share, last year.
Excluding share compensation expenses, the company reported adjusted earnings of 9 cents a share, on revenue that rose almost 50 percent to $106.6 million.
Analysts on average had expected a profit of 4 cents on revenue of $95.8 million.
Shares of the Salt Lake City, Utah-based company were trading at $26.77 after the bell. They had closed at $21.02 on the New York Stock Exchange on Thursday.
(Reporting by Himank Sharma, Editing by Anthony Kurian)
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