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Fusion-io Reports Fiscal Third Quarter 2014 Results

Companies mentioned in this article: Fusion-io

SALT LAKE CITY, April 23, 2014 /PRNewswire/ -- Fusion-io (NYSE: FIO) today announced its financial results for its fiscal third quarter ended March 31, 2014.

    --  Revenue: $100.5 million
    --  GAAP Gross Margin of 51.0% and Non-GAAP Gross Margin of 52.4%
    --  GAAP Net Loss per Diluted Share: $0.29
    --  Non-GAAP Net Loss per Diluted Share: $0.10
    --  Cash and Cash Equivalents: $225.1 million

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FISCAL THIRD QUARTER 2014 GAAP FINANCIAL RESULTS
Fusion-io reported revenue of $100.5 million for the fiscal third quarter of 2014, compared to $87.7 million for the same quarter of 2013. Net loss for the fiscal third quarter of 2014 was $30.7 million, or a net loss per diluted share of $0.29, compared to a net loss of $20.0 million, or a net loss per diluted share of $0.21, in the fiscal third quarter of 2013. Gross margin for the fiscal third quarter of 2014 was 51.0%. Operating margin for the fiscal third quarter of 2014 was a negative 30.1%.

FISCAL THIRD QUARTER 2014 NON-GAAP FINANCIAL RESULTS
Non-GAAP net loss for the fiscal third quarter of 2014 was $10.5 million, or a net loss per diluted share of $0.10, compared to non-GAAP net loss of $3.2 million, or a net loss per diluted share of $0.03 in the same quarter of 2013. Non-GAAP gross margin for the fiscal third quarter of 2014 was 52.4%. Non-GAAP operating margin for the fiscal third quarter of 2014 was a negative 16.7%. A complete reconciliation of GAAP to non-GAAP results is set forth in the attachment to this press release.

"We are pleased to deliver 6% sequential revenue growth this quarter while making investments in the team, technology and partnerships that we believe will drive the business forward," said Shane Robison, Fusion-io chairman and chief executive officer. "In Q3, we evolved our solutions-based go-to-market strategy through close collaboration with our OEM and ISV partners to offer our customers significant performance gains while lowering their datacenter operating expense."

Ted Hull, Fusion-io chief financial officer, added: "We have a healthy balance sheet with $225 million in cash and cash equivalents that gives us strategic flexibility to invest in our market-leading in-server acceleration solutions as well as in the growth of our all-flash and hybrid appliances. Our ability to offer end-to-end flash memory solutions creates value for customers and differentiates us in the industry, while further diversifying our business."

OTHER FINANCIAL HIGHLIGHTS

    --  Cash and cash equivalents totaled $225.1 million at the end of fiscal
        third quarter 2014, a decrease of $18.8 million from the prior
        quarter-end.
    --  Inventory was $72.7 million at the end of fiscal third quarter 2014, a
        decrease of $7.7 million from the prior quarter-end.
    --  Capital expenditures were $2.9 million in fiscal third quarter 2014 and
        $8.7 million fiscal year-to-date.
    --  Cash used in operations was $18.8 million in fiscal third quarter 2014
        and $22.9 million fiscal year-to-date.

RECENT BUSINESS HIGHLIGHTS

    --  On April 15, Fusion-io announced collaboration with Microsoft to
        optimize performance for new in-memory capabilities built into Microsoft
        SQL Server 2014.  Fusion ioMemory fits natively with SQL Server 2014 to
        provide a 4x improvement in transactions per second and a significant
        reduction in data latencies that translates to faster insights at lower
        costs for Microsoft customers.
    --  On April 2, Fusion-io announced collaboration with Oracle on the
        development of flash-aware interfaces for MySQL, including NVM
        Compression and Atomic Writes, interfaces which allow MySQL to deliver
        up to 4x more flash endurance by streamlining commands to help optimize
        databases for persistent flash memory architectures.
    --  On April 2, Fusion-io also announced partnerships with Percona and
        MariaDB/SkySQL and the availability of NVM Compression, a breakthrough
        software feature unique to Fusion-io that enables applications like
        databases to leverage the native capabilities of flash as a memory to
        reduce the amount of space needed to store data without hindering
        performance.
    --  In early February, Fusion-io announced the general availability of
        Fusion ioVDI software for VMware Horizon View hosted virtual desktop
        environments, as well as comprehensive updates to its suite of
        virtualization solutions which maximize performance and efficiency from
        in-server to hybrid flash acceleration.
    --  On February 6, Fusion-io announced that the all-flash ION Accelerator
        appliance and ioControl Hybrid Storage appliance are being offered as
        fully integrated solutions from Fusion-io value added resellers (VARs)
        for accelerating enterprise applications including Oracle, SAP HANA, and
        Microsoft SQL Server, as well as virtualization workloads.

BUSINESS OUTLOOK
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements supersede all prior statements regarding fiscal 2014 financial results.

Fourth quarter of fiscal year 2014:

    --  Revenue is expected to be in-line to slightly up sequentially.
    --  Non-GAAP gross margin is expected to be 52 to 54%.
    --  Non-GAAP operating margin of approximately negative 13 to 17%.
    --  Diluted shares outstanding are expected to be approximately 108 million
        shares.

NON-GAAP FINANCIAL MEASURES
Fusion-io uses certain non-GAAP financial measures in this release. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. Reconciliation between non-GAAP and GAAP measures can be found in the accompanying tables and on the investor relations page of our website at www.fusionio.com. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures differ from GAAP measures with the same captions, may differ from non-GAAP financial measures with the same or similar captions that are used by other companies, and do not reflect a comprehensive system of accounting.

Fusion-io's management uses the non-GAAP financial measures in the accompanying schedules to gain an understanding of Fusion-io's comparative operating performance and future prospects, and utilizes these measures in its internal financial statements for purposes of its internal budgets and financial goals. Management also believes that the exclusion of the items described below provides an additional measure of the company's operating results and facilitates comparisons of Fusion-io's core operating performance against prior periods and business model objectives. Management believes that investors should have access to the same set of tools that management uses to analyze Fusion-io's results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP. Fusion-io endeavors to compensate for the limitation of the non-GAAP measures presented by also providing the most directly comparable GAAP measures and descriptions of the reconciling items and adjustments to derive the non-GAAP measures.

For all periods presented:

    --  Non-GAAP gross margin is calculated as non-GAAP gross profit divided by
        GAAP revenue. Non-GAAP gross profit consists of GAAP gross profit
        excluding the effects of stock-based compensation expense, amortization
        of intangible assets, and litigation settlement related expenses.
    --  Non-GAAP operating margin is calculated as non-GAAP (loss) income from
        operations divided by GAAP revenue. Non-GAAP (loss) income from
        operations consists of GAAP loss from operations excluding the effects
        of stock-based compensation expense, amortization of intangible assets,
        acquisition related expenses, and litigation settlement related
        expenses.
    --  Non-GAAP net (loss) income is calculated as GAAP net loss excluding the
        effects of stock-based compensation expense, amortization of intangible
        assets, acquisition related expenses, tax provision adjustments related
        to stock-based awards, and litigation settlement related expenses.
    --  Non-GAAP net (loss) income per diluted share is calculated as non-GAAP
        net (loss) income divided by GAAP weighted-average diluted shares
        outstanding for the three months ended March 31, 2013 and for the three
        and nine months ended March 31, 2014 and is calculated as non-GAAP net
        (loss) income divided by non-GAAP weighted-average diluted shares
        outstanding for the nine months ended March 31, 2013. Non-GAAP
        weighted-average diluted shares outstanding is calculated as GAAP
        weighted-average diluted shares outstanding including the dilutive
        impact due to stock options, restricted stock awards, and restricted
        stock units.

The accompanying tables provide more details on the GAAP financial measures that are most directly comparable to the non-GAAP financial measures described above and the related reconciliations between these financial measures. With respect to our expectations under "Business Outlook" above, reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available without unreasonable efforts on a forward-looking basis due to the high variability and low visibility with respect to the charges which are excluded from these non-GAAP measures. The effects of stock-based compensation expense specific to non-employee common stock options are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant impact on our GAAP financial results.

RECLASSIFICATION
Certain expense amounts previously reported as cost of revenue, sales and marketing, research and development, and general and administrative expenses have been reclassified within those categories to conform to fiscal year 2014 presentation. The reclassifications did not change amounts previously reported as income (loss) from operations and net income (loss).

TODAY'S CONFERENCE CALL
Fusion-io will host an investor conference call and live webcast today, Wednesday, April 23, 2014, at 5:00 p.m. EDT to discuss these financial results. To access the conference call, dial 1.888.771.4371 or 1.847.585.4405 for international callers. The access code is 3700 4909. A listen-only live webcast will be accessible on the investor relations page of our website at www.fusionio.com and will be archived and available on this site for at least three months. A telephone replay of the conference call will be available through Wednesday, April 30, 2014. To access the replay, please dial 1.888.843.7419 or 1.630.652.3042 for international callers. The access code is 3700 4909. This press release and the financial information discussed on today's conference call are available on the investor relations page of our website at www.fusionio.com.

ABOUT FUSION-IO
Fusion-io delivers the world's data faster. Our Fusion ioMemory platform and software defined storage solutions accelerate virtualization, databases, cloud computing, big data and performance applications. From e-commerce retailers to the world's social media leaders and Fortune Global 500 companies, our customers are improving the performance and efficiency of their data centers with Fusion-io technology to accelerate the critical applications of the information economy.

NOTE ON FORWARD-LOOKING STATEMENTS
Certain statements in this release may constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, including, but are not limited to, statements concerning financial guidance for our fourth quarter of our fiscal year 2014, our progress on our go-to-market strategy, the effect of our efforts to diversify our customer base, our strategic flexibility, our expectations as to recent management changes, our sales execution efforts, our expectations regarding the market opportunity, expectations concerning our product portfolio and our strategic partnerships, and benefits and value of our products and solutions to our customers and end users. These statements are based on current expectations and assumptions regarding future events and business performance and involve certain risks and uncertainties that could cause actual results to differ materially from those contained, anticipated, or implied in any forward-looking statement, including, but not limited to, risks associated with changes in the demand for our products, our expectation that large and concentrated purchases by a limited number of customers will continue to represent a substantial majority of our revenue and our ability to sustain or increase our revenue from our large customers or offset the discontinuation of concentrated purchases by our larger customers with purchases by new or existing customers, the risk that expected large transactions anticipated to close in one fiscal quarter may be delayed until a subsequent quarter or indefinitely, the continued adoption by customers of our ioMemory platform products, growing our sales through OEMs, resellers and channel partners and maintaining our relationships with OEMs, resellers and channel partners, including the timely qualification of our products for promotion and sale by our OEMs, long and unpredictable sales cycles, changes in the competitive dynamics of our markets, including the potential for increased pressure on the pricing of our products, reduced gross margins, increased sales and marketing expenses, the potential that we or our customers may not realize the benefits we currently expect from our acquisitions of ID7 and NexGen Storage, our ability to develop or acquire new products to meet customer needs and expectations, including additional software solutions to be integrated with our storage memory products, our acquisition and strategic partner strategy and disruptions in our business, operations and financial results as a result of acquisitions and strategic partner relationships, as well as the risks inherent in the integration and combination of complex products and technologies from acquisitions, undetected errors, defects or security vulnerabilities in our products, worldwide economic conditions and the impact these conditions have on levels of spending on datacenter technology like ours, our ability to recruit and retain new executive officers, and such other risks set forth in the registration statements and reports that Fusion-io files with the U.S. Securities and Exchange Commission, which are available on the Investor Relations section of our website at www.fusionio.com. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or will occur. Fusion-io undertakes no obligation to update publicly any forward-looking statement for any reason after the date of this press release.

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Contacts


    Stefanie Cannon                               Nancy Fazioli

    Fusion-io Communications                      Fusion-io Investor Relations

    408.597.1494                                  408.416.5779

    prteam@fusionio.com                           ir@fusionio.com



                                                  Fusion-io, Inc.

                                  Condensed Consolidated Statements of Operations

                                       (in thousands, except per share data)

                                                    (unaudited)


                    Three Months Ended           Nine Months Ended

                         March 31,                   March 31,
                         ---------                   ---------

                                    2013                          2014                2013            2014
                                    ----                          ----                ----            ----


    Revenue                      $87,650                      $100,528            $326,334        $281,322

    Cost of
     revenue
     (1), (2),
     (5)                          39,521                        49,291             133,734         127,319
                                  ------                        ------             -------         -------

    Gross profit                  48,129                        51,237             192,600         154,003


    Operating
     expenses:

    Sales and
     marketing
     (1), (2)                     33,584                        39,334              88,837         109,621

    Research and
     development
     (1), (2)                     26,035                        30,548              71,767          86,746

    General and
     administrative
     (1), (3),
     (5)                          16,977                        11,617              45,120          36,660

    Total
     operating
     expenses                     76,596                        81,499             205,724         233,027
                                  ------                        ------             -------         -------

    Loss from
     operations                  (28,467)                      (30,262)            (13,124)        (79,024)

    Other income
     (expense):

     Interest
      income                          82                            23                 295              92

     Interest
      expense                        (44)                          (45)                (92)           (157)

     Other
      (expense)
      income                         (40)                          (27)                (54)            182
                                     ---                           ---                 ---             ---

    Loss before
     income
     taxes                       (28,469)                      (30,311)            (12,975)        (78,907)

    Income tax
     benefit
     (expense)
     (4)                           8,422                          (343)             (1,407)           (944)
                                   -----                          ----              ------            ----

    Net loss                    $(20,047)                     $(30,654)           $(14,382)       $(79,851)
                                ========                      ========            ========        ========


    Net loss per
     common
     share:

    Basic                         $(0.21)                       $(0.29)             $(0.15)         $(0.77)

    Diluted                       $(0.21)                       $(0.29)             $(0.15)         $(0.77)

    Weighted-
     average
     number of
     shares:

    Basic                         96,805                       106,541              95,621         103,736

    Diluted                       96,805                       106,541              95,621         103,736



    (1) Includes
     stock-
     based
     compensation
     expenses,
     as follows:

    Cost of
     revenue                        $132                          $156                $269            $469

    Sales and
     marketing                     2,663                         3,062               7,370           8,016

    Research and
     development                   4,891                         4,453              13,979          12,519

    General and
     administrative                5,422                         3,758              19,308          12,814

    Total stock-
     based
     compensation
     expenses                    $13,108                       $11,429             $40,926         $33,818
                                 =======                       =======             =======         =======


    (2) Includes
     amortization
     of
     intangible
     assets, as
     follows:

    Cost of
     revenue                         $75                        $1,306                 $75          $3,918

    Sales and
     marketing                         -                            81                   -             243

    Research and
     development                     656                           656               1,968           1,968

    Total
     amortization
     of
     intangible
     assets                         $731                        $2,043              $2,043          $6,129
                                    ====                        ======              ======          ======


    (3) Includes
     acquisition
     related
     expenses                       $559               $             -                $559             $36


    (4) Includes
     tax
     provision
     adjustments
     related to
     stock-
     based
     awards                      $(4,377)                       $6,706            $(10,572)        $16,368


    (5) Includes
     litigation
     settlement
     related
     expenses,
     as follows:

    Cost of
     revenue                      $4,052               $             -              $4,052  $            -

    General and
     administrative                2,805                             -               2,805               -

    Total
     litigation
     settlement
     related
     expenses                     $6,857               $             -              $6,857  $            -
                                  ======               ===============              ======  ==============



                                     Fusion-io, Inc.

                          Condensed Consolidated Balance Sheets

                                     (in thousands)

                                       (unaudited)


                                            June 30,            March 31,

                                                      2013                2014
                                                      ----                ----

    Assets

    Current assets:

    Cash and cash equivalents                     $238,351            $225,146

    Accounts receivable, net                        69,107              74,211

    Inventories                                     71,160              72,659

    Prepaid expenses and other
     current assets                                  9,530              11,339
                                                     -----              ------

    Total current assets                           388,148             383,355


    Property and equipment,
     net                                            35,272              31,656

    Restricted cash                                  4,860                 179

    Intangible assets, net                          28,268              21,591

    Goodwill                                       149,467             149,467

    Other assets                                     1,433               1,098
                                                     -----               -----

    Total assets                                  $607,448            $587,346
                                                  ========            ========


    Liabilities and Stockholders' Equity

    Current liabilities:

    Accounts payable                               $14,170             $27,703

    Accrued and other current
     liabilities                                    44,425              46,886

    Deferred revenue                                24,848              19,779
                                                    ------              ------

    Total current liabilities                       83,443              94,368


    Deferred revenue, less
     current portion                                14,167              18,389

    Other liabilities                               19,421              15,200


    Commitments and contingencies

    Stockholders' equity:

    Common stock                                        20                  21

    Additional paid-in capital                     599,292             648,376

    Accumulated other
     comprehensive loss                               (110)               (372)

    Accumulated deficit                           (108,785)           (188,636)

        Total stockholders' equity                 490,417             459,389
                                                   -------             -------

        Total liabilities and
         stockholders' equity                     $607,448            $587,346
                                                  ========            ========



                                    Fusion-io, Inc.

                    Condensed Consolidated Statements of Cash Flows

                                     (in thousands)

                                      (unaudited)


                                                  Three Months Ended       Nine Months Ended

                                                      March 31,                March 31,
                                                      ---------                ---------

                                                     2013           2014      2013            2014
                                                     ----           ----      ----            ----

    Operating activities:

    Net loss                                     $(20,047)      $(30,654) $(14,382)       $(79,851)

    Adjustments to reconcile net loss to net
     cash provided by (used in)

       operating activities:

    Depreciation
     and
     amortization                                   4,005          5,872    10,768          17,666

    Stock-based
     compensation                                  13,108         11,429    40,926          33,818

    Excess tax
     benefit
     from stock-
     based
     awards                                         8,945             (3)     (448)             (8)

    Other non-
     cash items                                        11          1,415        11           1,440

    Changes in operating assets and
     liabilities:

    Accounts
     receivable,
     net                                            5,492        (23,797)    6,244          (5,104)

    Inventories                                     3,096          7,681   (11,632)         (1,499)

    Prepaid
     expenses
     and other
     assets                                           890           (174)       59              26

    Accounts
     payable                                          (48)         6,986      (704)         13,533

    Accrued and
     other
     liabilities                                   (5,653)         1,773     8,588          (2,074)

    Deferred
     revenue                                       (2,879)           713     6,382            (847)
                                                   ------            ---     -----            ----

      Net cash
       provided by
       (used in)
       operating
       activities                                   6,920        (18,759)   45,812         (22,900)


    Investing activities:

    Business
     acquisition,
     net of cash
     acquired                                      (5,861)             -    (5,861)              -

    Purchases of
     property
     and
     equipment                                     (2,186)        (2,896)  (10,898)         (8,732)
                                                   ------         ------   -------          ------

      Net cash
       used in
       investing
       activities                                  (8,047)        (2,896)  (16,759)         (8,732)


    Financing activities:

    Repayment of
     notes
     payable                                         (623)             -      (623)              -

    Proceeds
     from
     exercises
     of stock
     options                                          866          2,092     7,002          12,583

    Issuance of restricted stock awards and
     restricted stock units,

    net of
     repurchases                                     (838)          (863)   (2,715)         (2,661)

    Proceeds from issuance of common stock
     under employee stock

    purchase
     plan                                           1,720          1,669     5,093           5,298

    Excess tax
     benefit
     from stock
     option
     exercises                                     (8,945)             3       448               8

    Change in
     restricted
     cash                                          (4,843)             -    (4,843)          3,181
                                                   ------            ---    ------           -----

      Net cash
       (used in)
       provided by
       financing
       activities                                 (12,663)         2,901     4,362          18,409

    Effect of
     exchange
     rate
     changes on
     cash and
     cash
     equivalents                                      (88)           (56)       (7)             18
                                                      ---            ---       ---             ---

    Net
     (decrease)
     increase in
     cash and
     cash
     equivalents                                  (13,878)       (18,810)   33,408         (13,205)

    Cash and
     cash
     equivalents
     at
     beginning
     of period                                    368,525        243,956   321,239         238,351
                                                  -------        -------   -------         -------

    Cash and
     cash
     equivalents
     at end of
     period                                      $354,647       $225,146  $354,647        $225,146
                                                 ========       ========  ========        ========



                                                           Fusion-io, Inc.

                                            Reconciliation of Non-GAAP Financial Measures

                                                           (in thousands)

                                                             (unaudited)


                                    Three Months
                                        Ended                      Nine Months Ended

                                     March 31,                         March 31,
                                     ---------                         ---------

                                                2013                              2014                2013              2014
                                                ----                              ----                ----              ----

    Reconciliation of
     Gross Profit and
     Gross Margin on
     a GAAP Basis to
     Gross Profit and
     Gross Margin on
     a Non-GAAP
     Basis:

    Gross profit on a
     GAAP basis                              $48,129                           $51,237            $192,600          $154,003

    Stock-based
     compensation              132                          156                              269               469

    Amortization of
     intangible
     assets                     75                        1,306                               75             3,918

    Litigation
     settlement
     related expenses        4,052                                                  -               4,052                 -

    Gross profit on a
     non-GAAP basis                          $52,388                           $52,699            $196,996          $158,390
                                             =======                           =======            ========          ========

    Revenue                                  $87,650                          $100,528            $326,334          $281,322

        Gross margin on a
         GAAP basis           54.9%                        51.0%                            59.0%             54.7%

        Gross margin on a
         non-GAAP basis       59.8%                        52.4%                            60.4%             56.3%


    Reconciliation of
     Operating Loss
     and Operating
     Margin on a GAAP
     Basis to
     Operating (Loss)
     Income and
     Operating Margin
     on a Non-GAAP
     Basis:

    Operating loss on
     a GAAP basis         $(28,467)                    $(30,262)                                  $(13,124)         $(79,024)

    Stock-based
     compensation           13,108                       11,429                           40,926            33,818

    Amortization of
     intangible
     assets                    731                        2,043                            2,043             6,129

    Acquisition
     related expenses          559                                                  -                 559                36

    Litigation
     settlement
     related expenses        6,857                                                  -               6,857                 -

    Operating (loss)
     income on a non-
     GAAP basis                              $(7,212)                         $(16,790)            $37,261          $(39,041)
                                             =======                          ========             =======          ========

    Revenue                                  $87,650                          $100,528            $326,334          $281,322

        Operating margin
         on a GAAP basis     -32.5%                       -30.1%                            -4.0%            -28.1%

        Operating margin
         on a non-GAAP
         basis                -8.2%                       -16.7%                            11.4%            -13.9%


    Reconciliation of
     Net Loss on a
     GAAP Basis to
     Net (Loss)
     Income on a Non-
     GAAP Basis:

    Net loss on a
     GAAP basis           $(20,047)                    $(30,654)                                  $(14,382)         $(79,851)

    Stock-based
     compensation           13,108                       11,429                           40,926            33,818

    Amortization of
     intangible
     assets                    731                        2,043                            2,043             6,129

    Acquisition
     related expenses          559                                                  -                 559                36

     Tax provision
      adjustments
      related to
      stock-based
      awards                (4,377)                       6,706                         (10,572)            16,368

    Litigation
     settlement
     related expenses        6,857                                                  -               6,857                 -

    Net (loss) income
     on a non-GAAP
     basis                                   $(3,169)                         $(10,476)            $25,431          $(23,500)
                                             =======                          ========             =======          ========



                                                              Fusion-io, Inc.

                                         Reconciliation of Non-GAAP Financial Measures (continued)

                                                   (in thousands, except per share data)

                                                                (unaudited)


                                  Three Months Ended                Nine Months Ended

                                      March 31,                         March 31,
                                      ---------                         ---------

                                                  2013                              2014              2013            2014
                                                  ----                              ----              ----            ----

    Reconciliation of
     Diluted Net Loss
     per Share on a
     GAAP Basis to
     Diluted Net
     (Loss) Income
     per Share on a
     Non-GAAP Basis:

    Diluted net loss
     per share on a
     GAAP basis                                 $(0.21)                           $(0.29)           $(0.15)         $(0.77)

    Stock-based
     compensation            0.14                          0.11                              0.42              0.32

    Amortization of
     intangible
     assets                  0.01                          0.02                              0.02              0.06

    Acquisition
     related expenses        0.01                                                     -              0.01               -

     Tax provision
      adjustments
      related to
      stock-based
      awards               (0.05)                          0.06                             (0.11)             0.16

    Litigation
     settlement
     related expenses        0.07                                                     -              0.07               -

    Impact of
     difference in
     number of GAAP
     and non-GAAP
     diluted shares                                 -                                 -             (0.03)              -

    Diluted net
     (loss) income
     per share on a
     non-GAAP basis                             $(0.03)                           $(0.10)            $0.23          $(0.23)
                                                ======                            ======             =====          ======


    Reconciliation of
     GAAP Diluted
     Weighted-
     Average Number
     of Shares to
     Non-GAAP
     Diluted
     Weighted-
     Average Number
     of Shares:

    GAAP diluted
     weighted-
     average number
     of shares             96,805                       106,541                            95,621           103,736

    Dilutive impact
     due to stock
     options,
     restricted stock
     awards,

            and restricted
             stock units                            -                                 -            13,009               -

    Non-GAAP diluted
     weighted-
     average number
     of shares             96,805                       106,541                           108,630           103,736
                           ======                       =======                           =======           =======

SOURCE Fusion-io