Violin Memory initiated a turnaround plan under a new CEO a year ago and still has little to show for it.
It’s been a busy year for Violin under CEO Kevin DeNuccio, with several new product rollouts to help the all-flash vendor overhaul its portfolio to remain competitive in a hot area. Still, Violin’s revenues for the fourth quarter of 2014 shrunk from the previous year as did its full year revenues. Losses continue and guidance for this quarter came in light.
The best thing you can say about Violin’s earning results from Thursday was that the vendor lost less money last quarter than it did in the same quarter a year ago. But it lost twice as much in the fourth quarter of 2014 as it did in the third.
Here are the numbers:
• Fourth quarter revenue of $20.5 million was down six percent from last year (excluding revenue from discontinued PCIe flash revenue) and down 10 percent from the previous quarter. It also fell $3.5 million below analysts’ expectations.
• Fourth quarter loss was $46.8 million, compared to third quarter loss of $23.5 million and $56.5 million loss from fourth quarter of 2013.
• Full year revenue of $79 million was down 27 percent from previous year, and full year loss of $108.9 million was an improvement over the loss of $149.8 million from 2013.
• Guidance for this quarter was in the range of $21 million to $24 million, with the high end hitting analysts’ expectations.
DeNuccio said he remains optimistic that he can complete what he calls “one of the greatest technology transitions” he has ever seen. That optimism is based on two factors: Violin’s newly updated Flash Storage Platform (FSP) and the rising wave of flash storage.
“While the fourth quarter was technically challenging, it is important to recognize that we have built a strong foundation in our people, our technology and our financials,” DeNuccio said on Thursday’s call with analysts. “We are not just in a better, stronger place, but we are well positioned at the forefront of one of the greatest technology transitions I’ve witnessed in my career.”
DeNuccio blamed the disappointing fourth quarter on customers holding off on buying until they can test the new FSP systems. He said he expects to increase revenue 10 percent every quarter this year, but gave no timetable for turning a profit.
Violin upgraded its Concerto operating system a month ago, adding features such as lock-level inline deduplication and compression, snapshots, clones, replication, CDP and better management features. The goal is the make Violin’s all-flash arrays better suited for primary storage than for high performance use cases.
Violin executives say the average selling price for the new primary storage arrays will be up to four times that of Violin’s previous platform. CFO Cory Sindelar estimated the new average price will be $500,000 to $1 million range, up from $200,000 to $250,000 for its old systems.
But Violin faces tough competition for those dollars in the flash market, mainly from EMC, IBM and well-funded privately held Pure Storage. None of those vendors are backing off in their dedication to flash, as are any of the other mainstream storage vendors or startup SolidFire. And new flash platforms are still coming into the market, such as SanDisk’s InfiniFlash launched this week.
So that great tech transition is hardly a sure bet.