Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Fusion-io plans IPO; Facebook is its largest data center customer

By Larry Dignan | March 9, 2011, 4:43am PST

Enterprise storage company Fusion-io filed for an initial public offering on Wednesday, but the financials reveal an outfit that’s still a work in progress. Meanwhile, Facebook’s data center deployment has accounted for a big chunk of Fusion-io’s revenue.

For the six months ended Dec. 31, Fusion-io reported a net loss of $8.24 million on revenue of $58.3 million. For the same period a year earlier, Fusion-io reported a net loss of $13.2 million on revenue of $11.93 million.

Those results show a lot of growth, but relative to other tech companies that are planning to go public—Skype, LinkedIn and others—or have already gone Fusion-io looks a little green.

Nevertheless, Fusion-io has all the Wall Street heavy hitters as underwriters: Goldman Sachs, Morgan Stanley, J.P. Morgan and Credit Suisse.

Fusion-io has generated a good amount of buzz as a next-gen storage company focused on data decentralization. In a nutshell, Fusion-io’s gear allows active data to be relocated to the server where it’s being processed. Fusion-io’s integrated software and hardware aims to boost data center efficiency. Fusion-io sells direct as well through Dell, HP, IBM and the channel.

It just so happens that storage happy Dell and HP are probably the most likely acquirers of Fusion-io down the line.

Among the key nuggets from Fusion-io’s regulatory filings:

Facebook is Fusion-io’s largest customer and the social network is in rolling out a big data center deployment.
The company is in the process of launching its ioSphere and directCache software, which is in customer trials. These products will be released in the second half of fiscal 2011.
Fusion-io depends on big deployments. For instance, Fusion-io said revenue for the three months ending March 31 will include purchases from two customers with significant data center deployments—one of them Facebook. The rub: Revenue for the quarter ending June 30 will be lower than then March quarter. The company said:

Facebook is currently our largest customer and accounted for a substantial portion of revenue during the six months ended December 31, 2010. We expect revenue from sales to Facebook and one other end-user to account for a substantial portion of revenue for the three months ending March 31, 2011, but that revenue from sales to Facebook and the other end-user will decline significantly for the three months ending June 30, 2011 as they complete their planned deployments.

The competition is fierce. Fusion-io said that the company competes with EMC, Hitachi, NetApp and Oracle in the future. Intel, LSI, Micron Technology, Samsung, Seagate and Western Digital are other rivals.