Fusion-io's first quarterly results since its IPO show revenues exploding, and it is buying IO Turbine for virtual server caching software on the back of that.
PCIe interface ioDrive flash memory cards from Fusion-io accelerate server applications because they don't have to wait for data to be fetched from slow and sometimes networked disk drive storage arrays. Fusion-io went public earlier this year and since then its shares have risen in value by some 40 per cent.
For its fourth fiscal 2011 quarter (Q4 fy11) which ended on 30 June, revenues were $71.7m, 556 per cent higher than the year-ago quarter's $10.9m, but up just 7 per cent on the third fiscal 1011 quarter. Net income was $5.8m compared to the $11.9m loss a year ago.
The full year 2011 figures were no less impressive in terms of growth, with revenues of $197m, 445 per cent higher than fiscal 2010's $36.2m. Net revenue of $4.6m contrasts with a fiscal 2010 net loss of $32.5m.
The outlook is less rosy than this though. In the first fiscal 2012 quarter Fusion expects to make revenues of $60-65m, lower than Q4 fy11. Its full fiscal 2012 is expected to show 40 per cent growth over fy11, which would be $276m.
Buying IO Turbine
Fusion is buying start-up IO Turbine for $95m in cash and stocks. The cash amount will be no more than $25m and the overall amount may be altered "subject to purchase price adjustments, for all outstanding securities of IO Turbine."
IO Turbine makes caching software that is plugged into VMware's ESXi and so shared between a physical server's virtual machines. Fusion CEO and chairman David Flynn said: "We believe integrating ioMemory and IO Turbine adds a critical and previously missing performance component to virtualised IT environments that will accelerate the adoption of Fusion-io technology."
The combination of Fusion-io's ioMemory and IO Turbine software should increase the number of virtual machines per physical server.
The purchase should close by the end of August and dilute Fusion-io's earnings in fy2012 but increase them in fy2013.
PCIe flash drive competition
There appears to be competitive tension building between PCIe flash drive suppliers such as Fusion-io and STEC on the one hand, and storage array vendors like Dell, EC and NetApp on the other.
Fusion and STEC are getting involved in caching software to improve the efficacy of their PCIe flash drives. Dell, EMC and NetApp have initiatives to improve storage array data delivery to server applications by managing server PCIe flash themselves, with EMC's Project Lightning being the most visible of these initiatives.
One outcome may be that a storage array vendor buys a PCIe flash vendor. A wild card here could be sharable all-flash arrays connected to servers by a PCIe fabric, such as the one sold by Virtensys, not that any products have emerged that do this.
Fusion-io is the PCIe flash drive market leader, the one all the other PCIe flash drive vendors have to catch, such as OCZ, STEC now and, soon, Intel. Fusion-io has the best known server supercharger as it were, and we expect a product technology refresh to come fairly soon, lifting the bar for its competitors.
Could server vendors produce their own PCIe flash, with the stuff becoming a commodity? For Fusion-io, having caching software that works with your own PCIe flash and delivers better server performance results than coming commodity PCIe flash could be a great defence against this. ®