Violin Memory had little to show for its turnaround efforts last quarter. The all-flash vendor’s revenue declined and it continue to lose money, prompting the CEO to tell investors he feels their pain.
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Violin Tuesday reported $9.7 million in revenue for last quarter, down from $12.1 million the previous year and $10.9 million the previous quarter. Its product revenue was only $4.2 million – a paltry sum considering all-flash arrays have a higher average selling price than hybrids and are in demand now.
Violin lost $22.2 million in the quarter, and is down to $49 million in cash. CEO Kevin DeNuccio admitted the company may have to seek additional equity funding to keep it going long enough to complete its turnaround plan. The revenue forecast for this quarter is in the range of $11 million and $13 million, with losses expected to approach $20 million.
DeNuccio ended his opening remarks on the earnings call by telling investors “me, the management team and the board fully understand the pain investors are feeling with the stock price decline and in way we sit today. We are all significant investors personally and continue to believe in the company strategy and equity story going forward. … And we strongly believe that our adjustments and strategy are going to produce a successful outcome from our employees, customers and investors.”
Without much customer quantity, DeNuccio tried to stress the quality of Violin’s customers. He claimed five Fortune 100 enterprises and more than a dozen Global 2000 companies are using Violin Flash Storage Platform (FSP) arrays. He said Violin has gained three Fortune 100 customers this year, calling it “the turning point for the company.”
“Our customers, some of the biggest in the world, believe in our technology and our FSP value proposition,” he added. “I know it’s been tough on our shareholders and investors, but we are energized by the opportunity ahead and committed to the turnaround in our direction.”
Investors were not impressed. The stock priced opened at 32 cents per share today, down from 37 cents at Tuesday’s close and from $3.30 a year ago.
DeNuccio’s other reasons for optimism include a new version of Violin’s Concerto operating system due this year with cloud integration capabilities, a new OEM deal that will combine Violin arrays with software for virtual desktops, and another OEM deal that has been in the works for months. However, DeNuccio said a research and development relationship he talked about last quarter is on hold.
“The Violin business is stabilizing on a number of fronts,” DeNuccio said. “An important barometer regarding the company’s progress is the number of wins since the launch of Violin’s Flash Storage Platform which incorporates a new operating system on next generation hardware. This product line is showing strong traction despite prevailing headwinds, as evidenced by 60 wins since its launch resulting in an average of one win per week.”
But is that a high number of sales? Nimble Storage Tuesday said it has won 55 customers with its Predictive All Flash Arrays in less than one quarter of shipping the system. Nimble sells smaller systems to smaller companies than Violin, but its sales rate is probably more indicative of the all-flash market than Violin’s.