At Last, Violin Memory Files for $173 Million IPO

Violin Memory, the flash storage company that has been raising money like crazy, just filed to raise about $173 million in an initial public offering, according to documents submitted to the U.S. Securities and Exchange Commission.

The company’s CEO, Don Basile, has been publicly promising an IPO for a few years now and is thought to have initially filed confidentially under the JOBS Act. Violin last quietly raised $130 million in February at an implied valuation of about $800 million. That funding round had ballooned first from $50 million to $80 million.

The company said it will trade on the New York Stock Exchange under the ticker symbol VMEM.

The filing says that Violin booked nearly $74 million in revenue in the fiscal year ended Jan. 31, and that in the first six months of this year, it booked $51.3 million in sales, putting it on track to break the $100 million mark this year. It ran a $110 million loss for the full year ended Jan. 31 and had a $59 million loss in the first half of the current fiscal year.

The filing also shows that the biggest shareholder is the Japanese electronics giant Toshiba, which owns a little more than 14 percent of the shares outstanding. Angel investor Mark Rosenblatt owns a little more than eight percent. Basile, the CEO, owns a little less than five percent. Part of his equity includes 2.5 million shares he stands to receive if the company completes its IPO within 60 days of July 31, which should give you a pretty good idea as to the timing.

The company’s IPO plans appeared to have slid several times. In April of 2012, Basile was confidently predicting that the company would hold its road show during the following summer, and that it would be publicly listed no later than the fall of 2012. But last fall the unexpected end of a resale agreement with Hewlett-Packard appeared to set those plans back.

The filing doesn’t go into any specific detail about what happened with HP, but it does clearly show how much of a blow it appears to have been. During Violin’s 2012 fiscal year, sales via HP amounted to 65 percent of revenue, but less than 10 percent during the first six months of 2013. The loss of HP’s business caused sales to decline by more than 53 percent in the quarter ended April of 2012 from the prior quarter.

This exposure to a small number of customers who buy a lot of Violin’s flash-based storage arrays is listed on the company’s risk factors. “Historically, large purchases by a relatively limited number of customers have accounted for a substantial majority of our revenue, and the composition of the group of our largest customers has changed from period to period,” the company said in the filing. Revenue from the five largest customers now amounts to 37 percent of total sales in fiscal 2013, which ended in January. One customer, CompSec, an IT vendor that supplies government and intelligence agencies, accounted for about 12 percent of sales.

In the first six months of the current fiscal year, five customers amounted to 32 percent of sales, and of that 12 percent went to electronics distributor AvNet, who then resold the Violin gear to a “global retailer.”

According to the company’s press release, J.P. Morgan Securities, Deutsche Bank and BofA Merrill Lynch will act as lead joint book-running managers on the offering. Barclays will be the book-running manager. Baird and Pacific Crest Securities will be co-managers.

It’s turning out to be a big day for IPO filings for the folks at J.P. Morgan and BofA Merrill Lynch. They, along with Goldman Sachs, are helping to run the IPO of RingCentral that was announced earlier today.