10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 001-35188

FUSION-IO, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-4232255
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
2855 E. Cottonwood Parkway, Suite 100 Salt Lake City, Utah	84121
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (801) 424-5500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Name of each exchange on which registered:
Common stock, $0.0002 par value	The New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ¨

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was approximately $910 million based on a closing sale price of $24.20 per share as reported for the New York Stock Exchange on December 30, 2011, which is the last business day of the registrant’s most recently completed second fiscal quarter. For the purpose of this calculation, shares of common stock held by the registrant’s current officers and directors and shares of common stock held by persons who hold more than 10% of the outstanding common stock of the registrant have been excluded from this calculation because such persons may be deemed affiliates. This determination of executive officer or affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of the registrant’s common stock, $0.0002 par value per share, outstanding as of August 20, 2012 was 94,748,949.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this annual report on Form 10-K incorporates by reference portions of the registrant’s Proxy Statement for its 2012 Annual Meeting of Stockholders to be held on November 6, 2012.

Fusion-io, Inc.

Form 10-K

For the Fiscal Year Ended June 30, 2012

Contents

Part I			2
	Item 1.	Business	2
	Item 1A.	Risk Factors	11
	Item 1B.	Unresolved Staff Comments	31
	Item 2.	Properties	32
	Item 3.	Legal Proceedings	32
	Item 4.	Mine Safety Disclosures	33
Part II			33
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
	Item 6.	Selected Financial Data	37
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	56
	Item 8.	Consolidated Financial Statements and Supplementary Data	57
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	57
	Item 9A.	Controls and Procedures	57
	Item 9B.	Other Information	58
Part III			58
	Item 10.	Directors, Executive Officers, and Corporate Governance	58
	Item 11.	Executive Compensation	58
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	58
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	58
	Item 14.	Principal Accounting Fees and Services	58
Part IV			59
	Item 15.	Exhibits, Consolidated Financial Statements, and Financial Statement Schedules	59

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Fusion-io, Inc.

Form 10-K

For the Fiscal Year Ended June 30, 2012

Special Note Regarding Forward-Looking Statements

In addition to historical information, this Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the views of our management regarding current expectations and projections about future events and are based on currently available information. These forward-looking statements include, but are not limited to, statements concerning our possible or assumed future results of operations, business strategies, financing plans, technological leadership, market opportunity, expectations regarding product acceptance, ability to innovate new products and bring them to market in a timely manner, ability to successfully increase sales of our software offerings as part of our overall sales strategy, expectations concerning our technologies, products and solutions, including our ioMemory platform, our recently introduced ION Data Accelerator software, our ioTurbine virtualization caching software, and our software development kit, or SDK, competitive position and the effects of competition, industry environment, potential growth opportunities, ability to expand internationally, the impact of quarterly fluctuations of revenue and operating results, changes to and expectations concerning gross margin, expectations concerning relationships with third parties, including channel partners, key customers and original equipment manufacturers, or OEMs, such as our recently announced OEM relationship with Cisco, levels of capital expenditures, future capital requirements and availability to fund operations and growth, the adequacy of facilities, impact of the acquisition of IO Turbine, Inc., the adequacy of our intellectual property rights, expectations concerning pending legal proceedings and related costs, the sufficiency of our issued patents and patent applications to protect our intellectual property rights, the effects of a natural disaster on us or our suppliers, our ability to resell inventory that we cannot use in our products due to obsolescence, our ability to grow our sales through OEMs and other channel partners and maintaining our relationships with those channel partners, including the timely qualification of our products for promotion and sale through those channels, particularly OEMs, OEM’s continuing to design our products into their products, and the importance of software innovation. Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts, “projects,” “should,” “will,” “would,” or similar expressions and the negatives of those terms.

These forward-looking statements are inherently subject to uncertainties, risks, and changes in circumstances that are difficult to predict. Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, but not limited to, those discussed in the section entitled “Risk Factors” in Part II, Item 1A and elsewhere in this report. Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, and results of operations. Accordingly, readers should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Form 10-K.

We are not under any obligation to, and do not intend to, publicly update or review any of these forward-looking statements, whether as a result of new information, future events, or otherwise, even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized, except to the extent required by applicable securities laws. Please carefully review and consider the various disclosures made in this report and in our other reports filed with the Securities and Exchange Commission, or SEC, that attempt to advise interested parties of the risks and factors that may affect our business, prospects, and results of operations.

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Corporate Information

The Fusion-io and Atomic design logos and the marks “Fusion-io”, “directCache”, “ioDirector”, “ioDrive”, “ioDrive Duo”, “ioDrive Octal”, “ioManager”, “ioMemory”, “ioSphere”, “ioTurbine”, “ioCache”, “IOXpress”, “VSL”, “Virtual Storage Layer”,”ioScale”, “Flashback”, “Flashscale”, “Sure Erase”, “ioDrive2 Duo”, “ioSAN”, “ioXtreme”, “Adaptive Flashback”, “ioFX”, “Auto Commit Memory”, “ACM”, “TEAM”, “Transparent Expansion of Application Memory”, “ION Data Accelerator”, and “Powering Innovation” are our trademarks. This annual report on Form 10-K contains additional trade names, trademarks, and service marks of other companies. We do not intend our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by these other companies.

Part I. Item 1. Business

Overview

We provide next generation datacenter solutions that accelerate databases, virtualization, cloud computing, big data, and the applications that help drive business from the smallest e-tailers to some of the world’s largest data centers, social media leaders, and Fortune Global 500 businesses. Our integrated hardware and software platform enables the decentralization of data from legacy architectures and specialized hardware. Our core technology leverages flash memory to significantly increase datacenter efficiency, with enterprise grade performance, reliability, availability, and manageability. We sell our solutions through a global direct sales force, original equipment manufacturers, or OEMs, including Cisco, Dell, HP, and IBM, and other channel partners.

We were incorporated in December 2005 as Canvas Technologies, Inc., a Nevada corporation. In June 2006, we changed our name to Fusion Multisystems, Inc. In June 2010, we changed our name to Fusion-io, Inc. and reincorporated as a Delaware corporation. Our principal executive offices are located at 2855 E. Cottonwood Parkway, Suite 100, Salt Lake City, Utah 84121, and our telephone number is 801.424.5500. We also have significant operations in San Jose, California.

As of June 30, 2012, we had 669 employees globally. In fiscal 2012, we had three customers account for 10% or greater of our revenue, including Facebook and Apple, through a reseller, and one of our OEMs, HP. We have experienced substantial growth over the past three years; our revenue was $36.2 million, $197.2 million, and $359.3 million in fiscal 2010, 2011, and 2012, respectively.

Our fiscal year end is June 30 and our fiscal quarters end on September 30, December 31, March 31, and June 30. Our fiscal years ended June 30, 2010, 2011, and 2012 are referred to herein as fiscal 2010, 2011, and 2012, respectively.

Recent Developments

In August 2011, we acquired IO Turbine, Inc., or IO Turbine, a provider of caching solutions for virtual environments, based in San Jose, California. The acquisition of IO Turbine is a key part of our strategy to enable enterprise customers to increase the utilization, performance, and efficiency of their datacenter resources, and extract greater value from their information assets. The aggregate consideration in the acquisition for all of IO Turbine’s outstanding securities on a fully diluted basis was approximately $65.6 million, which consisted of (1) cash, (2) shares of our common stock valued at $28.40 per share, the closing sale price of our common stock on the closing date of the acquisition, and (3) the fair value (approximately $0.9 million) of assumed stock options and restricted stock awards attributable to pre-acquisition service. In addition, subsequent to the acquisition we will recognize up to approximately $26.4 million of stock-based compensation expense related to the fair value of assumed restricted stock awards and stock options, of which approximately $3.8 million was

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expensed immediately in connection with the acceleration of vesting of certain restricted stock awards and the remainder will be recognized over the underlying future service period of the assumed stock awards and stock options. The assets, liabilities, and operating results of IO Turbine are reflected in our consolidated financial statements from the date of acquisition. Approximately $3.6 million of cash and 278,974 shares were deposited in escrow and held for one year from the date of acquisition as partial security for indemnification obligations of the IO Turbine stockholders pursuant to the merger agreement, before being released in full from escrow in August 2012.

In November 2011, we completed a follow-on public offering of our common stock in which we sold and issued 3,000,000 shares at an issuance price of $33.00 per share. After deducting underwriting discounts and commissions and approximately $1.1 million in offering costs, we received approximately $94.0 million in net proceeds.

Industry Background

The profitability and long-term competitiveness of enterprises increasingly depends on their ability to rapidly extract value from their information or data assets while addressing the following key challenges:

• Growth in Quantity of Data — The amount of data that consumers and enterprises are generating is growing at an exponential rate.

• Growth in Frequency of Access to Data — The number of people accessing information systems and the frequency of their access are also growing substantially. More devices, applications, and services are being used more frequently.

• Growing Demand for Faster, More Relevant Responses — Enterprises and consumers expect information systems to be real-time, on-demand, always-on, and highly responsive with pertinent information.

The processing and data management infrastructure many companies use today is unable to scale to meet these challenges and are subject to many of the following constraints:

• Limited Financial Resources — All enterprises must prioritize their finite financial resources to invest in their datacenter infrastructure and operations.

• Limited Resources for Datacenters — Datacenters are highly specialized, require substantial energy, cooling, and space and impose long lead times to build. Therefore, enterprises ultimately face limitations on their ability to expand existing datacenters or build new ones to meet the rapidly growing data demands.

• Pressure to be Energy Efficient — Building new datacenters or expanding existing datacenters causes substantial increases in energy consumption and its carbon footprint impact on the environment forcing enterprises to better leverage their resources.

To address this increased growth in quantity of data, frequency of data access, and performance demands, enterprises are seeking alternatives to deploying costly and inefficient datacenter architectures and wasteful infrastructures.

Technology

Our approach significantly improves datacenter scalability and application performance by locating process-critical, or “active,” data closer to the host’s central processing unit, or CPU, in the enterprise server. This is accomplished through advanced hardware and software architectures.

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ioMemory Based Architecture

Fusion-io’s ioMemory hardware is a sub-system connecting a large array of industry-standard NAND Flash memory through our proprietary data-path controller and our virtual storage layer, or VSL, software to create a high capacity memory tier that natively attaches to a server’s PCI-Express peripheral bus, or PCIe, with fast access rates in a small form factor and the following enterprise characteristics:

• Speed — Our architecture reduces latency, improves bandwidth and I/O performance which are key to achieving higher application and system performance. This is accomplished by combining the parallel performance from an array of non-volatile memory devices with native PCIe attachment, while avoiding the bottlenecks of networks, storage protocols and buses, embedded CPUs, and offload controllers.

• Density — We leverage Flash memory media, which has up to 100 times the capacity density of dynamic random access memory, or DRAM. Our data-path controller also aggregates and manages large quantities of Flash die in a single design.

• Reliability — We address the inherent reliability issues of Flash memory with our Adaptive Flashback Protection, an advanced self-healing technology, which is capable of restoring, correcting, and resurrecting lost data in the Flash-based storage sub-system. This is accomplished by using an advanced bit error correction, proactive data integrity monitoring of stored data, and dedicated memory chips to automate the repair of failed devices in real-time.

• Form Factor — By directly attaching to a server’s peripheral bus through the industry-standard PCIe interface, our products can be installed into a server’s PCIe expansion slots, allowing customers to use our products either in new or existing server datacenter equipment.

Virtual Storage Layer Software

Our VSL virtualization software enables ioMemory to operate as a new data storage memory tier within the enterprise server and with more efficiency and capability than traditional storage systems using embedded controllers. VSL software integrates with the server’s operating system and provides native access to data stored on ioMemory, bypassing legacy storage input / output interfaces. In doing so, VSL software allows:

• Symmetrical Performance — Servers can achieve significantly increased application performance and data processing with low latency access and high bandwidth throughput from the ioMemory hardware. Non-volatile memory, including NAND Flash memory, is inherently asymmetrical in that read, program and erase times are different, resulting in divergent read and writes access performance. VSL software allows the non-volatile memory in ioMemory to read and write with nearly equivalent times by means of a log-structured data store that completes data transactions in microseconds as opposed to alternative high performance filing systems that complete data transactions in milliseconds, which implies an approximately 1,000 times improvement in storage performance.

• Extensibility — Because VSL software is field upgradeable and architecturally extensible, we are able to add new features such as our directCache data-tiering software, ioTurbine data acceleration solutions for virtualized environments as well as our recently announced Software Development Kit allowing applications with native access to the VSL and storage management.

• Interoperability — VSL software runs on a variety of operating systems, including Windows, Linux, VMware ESX/ESXi, Solaris, and Mac OS X.

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Products

Our portfolio of storage memory products incorporates our ioMemory hardware combined with our VSL and caching software into our family of ioDrive, ioFX, and ioCache enterprise grade products. Our ioDrive products work in conjunction with our directCache data-tiering software, ioTurbine virtualization software, ioSphere management system, and ION Data Accelerator software. ioCache is a new purpose-built ioMemory-based product dedicated to accelerating ioTurbine virtualization software and address low-cost virtualized application workloads. ioFX products are designed for the price-performance demands of the professional workstation markets and based on the same technologies implemented in ioDrive. ioFX enables studios to meet deadlines while exploring more creative possibilities by bridging the performance gap between workstations and today’s powerful digital content creation applications. Our recently announced, ION Data Accelerator software integrates industry-leading server platforms with ioMemory-based products transforming it into powerful network shared data acceleration appliances while enhancing existing enterprise storage infrastructure. Substantially all of our revenue has been from sales of the ioDrive product line and related customer support services.

ioDrive, ioFX, and ioCache Products

Our latest ioDrive, ioFX, and ioCache product families are a line of PCIe standard form-factor storage memory platforms that combine one or more ioMemory sub-systems with our VSL software. We classify our ioDrive, ioFX, and ioCache products based on capacity, latency, bandwidth, and input / output operations per second, or IOPS. Our ioDrive, ioFX, and ioCache products offer the following standard specifications:

Product Family	ioMemory Sub-systems	NAND Type and Capacity	VSL Software	Performance
ioDrive2	1	MLC-365GB MLC-785GB MLC-1.2TB SLC-400GB	Yes	15uS latency, up to 1.5GB/sec and up to 535,000 IOPS
ioCache	1	SLC-600GB	Yes	Optimized write latency, bandwidth and IOPS for virtualized applications
ioFX	1	MLC-420GB	Yes	42uS write latency, up to 1.5 GB/s
ioDrive2 Duo	2	SLC-1.2TB MLC-2.4TB	Yes	15uS write latency, up to 3.0GB/sec and up to 935,000 IOPS

directCache Data-Tiering Software

Our directCache software extends our ioMemory based platforms and permits interoperability with traditional direct-attached, network-attached, storage area network attached, and appliance attached backend storage systems. This software is designed to intelligently identify, copy, and cache to ioMemory the most frequently accessed blocks of storage data from very large-scale backend datasets. This active data can then be retrieved significantly faster, allowing the applications accessing the data to achieve performance as if the entire dataset were stored locally on the ioMemory. This capability allows enterprises to realize the benefits of our technology without replacing or modifying their existing datacenter infrastructure. Our directCache software is compatible with all of our ioDrive products.

ioTurbine Virtualization Software

Our ioTurbine virtualization software extends our ioMemory platform and permits host-based data acceleration to specifically address the demand for high-density, high-performance server, and desktop virtualization. The ioTurbine software takes advantage of flash memory local to the server, dynamically

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provisions ioMemory capacity and input / output performance across multiple virtual machines, or VMs, and delivers improved performance for virtualized workloads by serving data for each VM context. This approach eliminates otherwise redundant mapping functions, maximizing input / output performance, and adding a critical and previously missing piece to virtualized IT environments – an ample supply of scalable, low-latency input / output. ioTurbine virtualization software is compatible with all of our ioDrive and ioCache products.

ioSphere Platform Management Software

ioSphere is a suite of management software purpose-built for our storage memory infrastructure and designed around our application acceleration platform. ioSphere software is accessible through a graphical user interface that enables datacenter administrators to centrally configure, monitor, manage, and tune all distributed ioMemory devices throughout the datacenter. In addition, this software offers real-time, predictive, and historical reporting of ioMemory’s performance and wear.

ION Data Accelerator Software

Our ION Data Accelerator software transforms industry-leading server platforms into powerful application acceleration appliances that share Fusion ioMemory across applications. ION Data Accelerator delivers Fusion-io performance on open server platforms with software-defined storage, or SDS, for applications such as Oracle RAC, Microsoft SQL Server, MySQL, and SAP HANA, along with other applications where shared storage aids deployment. Available as a fully integrated solution or as stand-alone software, Fusion-io ION Data Accelerator enables customers to combine Fusion ioDrive products, Fusion-io software and industry-leading servers to create a customized appliance for shared storage application acceleration. ION Data Accelerator offers a number of sophisticated software defined storage features, including the creation of RAID sets, Logical Unit Number, or LUN, creation and management, Simple Network Management Protocol, or SNMP, performance monitoring, and more.

OEM Products

Our OEMs, including Cisco, Dell, HP, and IBM, sell branded storage memory solutions based on our standard products as well as custom form-factor versions to fit specific applications. For example, HP offers a tailored version of our technology in a form-factor specific to its C-class blade servers, which it markets as “HP StorageWorks IO Accelerator”. Similarly, IBM incorporates a tailored version of our ioDrive product into its “InfoSphere Smart Analytics System 5600” and “WebSphere XC10 Middleware” appliances. Cisco has announced offering products developed specifically for its Unified Computing System, or UCS, blade servers.

Sales and Marketing

We sell our products through our global direct sales force, OEMs, and channel partners. Our direct sales teams are comprised of a combination of a field sales representative, a systems engineer, and an inside sales development representative. Each sales team is responsible for either a geographical territory or has responsibility for a number of named major accounts. The sales cycle from the time of initial prospect qualification to completion of an initial sale may take a few days or several months. After initial deployment, our sales teams focus on ongoing account management and the development of follow-on sales. A majority of the sales opportunities that we generate are directly fulfilled via our OEMs and other channel partners.

We also have OEM-focused sales teams. These sales teams are dedicated to working exclusively with each of our OEM partners to maximize the global market penetration of our technology. Current OEMs include Cisco, Dell, HP, IBM, and others. Our OEMs sell and support our products through their

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respective sales channels, their direct distribution, their value added resellers, and their systems integrators. Our OEMs may integrate our platform into their own proprietary product offerings or sell a customized or branded version of our standard products.

We also work closely with a variety of other OEM and channel partners to promote and sell our products. These companies include appliance builders, systems integrators, value added resellers, and various private label system manufacturers. We offer a technology alliance partnership program and software development kits to jointly create and develop hardware and software solutions with a number of independent software and appliance vendors. We believe these types of partner efforts will facilitate broader and faster adoption of our products and technology.

We focus our marketing efforts on increasing brand awareness, communicating product advantages, and generating qualified leads for our sales force, OEMs, and other channel partners. We rely on a variety of marketing vehicles, including trade shows, micro events, social media, advertising, public relations, industry research, our website, and strategic collaborative relationships with technology leaders including our OEM channel partners.

Customers

Our products are used in a variety of markets such as financial services, Internet, technology, education, retail, manufacturing, energy, life sciences, and government.

We generally sell pursuant to individual purchase orders from direct customers and under various master supply or reseller agreements. Our 10 largest customers, including the applicable OEM customers, accounted for an aggregate of 75%, 92%, and 91% of our revenue in fiscal 2010, 2011, and 2012, respectively. The composition of the group of our largest customers changes from period to period. Our direct customer Facebook, Apple, through a reseller, and OEM customer HP, each accounted for 36%, 24%, and 14% of our revenue, respectively, in fiscal 2011 and 30%, 25%, and 17% of our revenue, respectively, in fiscal 2012. We expect that sales of our products to a limited number of customers will continue to account for a majority of our revenue in the foreseeable future.

Customer Support

We offer standard warranty service and support with our products, including those sold directly or through resellers. This includes periodic software updates and maintenance releases and patches, if-and-when available, and other product support such as Internet access to technical content and 24-hour telephone and email access to technical support personnel. Our OEMs provide primary product support for our products sold by them. We also sell premium-tiered support and subscriptions pursuant to service contracts. Service contracts typically have a one to five year term, though some customers contract for longer terms. Our support personnel are primarily based in San Jose, California and Salt Lake City, Utah. As we expand internationally, we expect to continue to hire additional technical support personnel to service our global customer base.

Research and Development

Our research and development efforts are focused primarily on improving and enhancing our existing products and developing new and next generation solutions. We believe that software is critical to expanding our leadership in leveraging data decentralization architectures and application acceleration. To date, we have not had significant software sales, but we are devoting the majority of our research and development resources to software development including value added software such as third party infrastructure and applications. We also intend to enhance our VSL, ioTurbine, ION Data Accelerator, ioSphere, and directCache software. Our engineering team has deep operating

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system expertise, including Linux kernel contributors and developers with expertise in a variety of other operating systems. We work closely with our customers to understand their current and future needs and have designed a product development process that integrates our customers’ feedback.

We believe the timely development of new products is essential to maintaining our competitive position. As of June 30, 2012, we had 243 employees in our research and development organization, substantially all of whom were located at our locations in Salt Lake City, Utah, San Jose, California, and Boulder, Colorado. We also supplement our research and development efforts with third-party developers and contractors. We also test our products to certify and ensure interoperability with third-party hardware and software products, including PCIe interoperability and OEM certification. We plan to dedicate significant resources to these continued research and development efforts.

Our research and development expenses were $16.0 million, $27.2 million, and $60.0 million in fiscal 2010, 2011, and 2012, respectively.

Manufacturing

We outsource manufacturing of our hardware products using a limited number of contract manufacturers. We procure a majority of the components used in our products directly from third-party vendors and have them delivered to our contract manufacturers for manufacturing and assembly. Once our contract manufacturers perform sub-assembly and assembly quality tests, they are assembled to our specified configurations. We perform final manufacturing assurance tests, labeling, final configuration, including a final firmware installation and shipment to our customers.

Our demand driven manufacturing flow process is designed to minimize the amount of inventory that we are required to retain and meet customer demand while supporting mix-model production. We place orders with our contract manufacturers on a purchase order basis, and in general, we engage our contract manufacturers to manufacture products to meet our forecasted demand or when our inventories drop below certain levels. Our agreements with our contract manufacturers require us to provide regular forecasts for orders. However, we may cancel or reschedule orders, subject to applicable notice periods and fees, and delivery schedules requested by us in these purchase orders vary based upon our particular needs. Our contract manufacturers work closely with us to ensure design for manufacturability, design for testability, and product quality.

Backlog

We do not believe that our backlog at any particular time is meaningful because it is not necessarily indicative of future revenue. In particular, customers may generally cancel or reschedule orders without penalty, and delivery schedules requested by customers in their purchase orders frequently vary based upon each customer’s particular needs. Additionally, shipments to customers may be delayed due to inventory constraints or expedited at a customer’s request.

Competition

We believe that the most important competitive factor in our market is to provide a comprehensive platform with the following attributes:

• hardware solutions incorporating persistent memory in sufficient capacity, rate of access, in a form factor that can be natively integrated within industry-standard servers;

• software that can virtualize persistent memory and storage resources and govern the flow and management of data between storage and the server;

• software applications and extensions that enables these platforms to be utilized within both new and existing datacenter architectures; and

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• software that centrally configures, manages, and monitors this new distributed data infrastructure.

Other principal factors affecting our market include:

• application performance, including consistent low latency and high bandwidth;

• providing enterprise grade data endurance, reliability, retention, and availability not inherent in mainstream NAND Flash memory;

• ease of management;

• space efficiency;

• energy efficiency;

• total cost of ownership; and

• return on investment.

We believe that we compete favorably with our competitors on the basis of these factors.

Our ION Data Accelerator software competes with proprietary integrated flash appliances from EMC Corporation, HP 3PAR by Hewlett-Packard Development Company, L.P, Texas Memory Systems, and other privately held companies. Our ioTurbine intelligent caching software competes with solutions from EMC, Oracle, STEC’s open-source based product, and a privately held company. Our directCache data-tiering software competes with products of suppliers of software-hardware bare metal caching solutions, including Adaptec, Inc., LSI Corporation, Oracle, and Sandisk, Corp., as well as several open source software solutions and other software-based hardware cache solutions being developed by privately held companies. Although our ioSphere platform management software is specifically designed to manage solid state storage, it competes with products of developers of general-purpose distributed management and monitoring software solutions, including HP, IBM, CA, Inc., and Nagios Enterprises, LLC. Our storage memory platform competes with various traditional datacenter architectures, including high performance server and storage approaches. These may include offerings from traditional data storage providers, including storage array vendors such as EMC Corporation and Hitachi Data Systems, who typically sell centralized storage products as well as high-performance storage approaches utilizing solid state disks, as well as vertically integrated appliance vendors such as Oracle. In this regard, EMC recently introduced a product designed to compete with our caching solutions. In addition, we may also compete with enterprise solid state disk vendors such as Huawei Technologies, Co., Intel Corp., LSI Corporation, Marvell Semiconductor, Inc., Micron Technology, Inc., OCZ Technology Group, Inc., Samsung Electronics, Inc., SanDisk, Corp., Seagate Technology, STEC, Inc., Toshiba Corp., and Western Digital Corp. A number of new, privately held companies are currently attempting to enter our market, one or more of which may become significant competitors in the future.

Many of our current competitors have, and some of our potential competitors could have, longer operating histories, greater name recognition, larger customer bases, and significantly greater financial, technical, sales, marketing, and other resources than we have. Potential customers may prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features. Some of our competitors have made acquisitions of businesses that allow them to offer more directly competitive and comprehensive solutions than they had previously offered. In addition, some of our competitors may sell at zero or negative margins to gain business. Our current and potential competitors may also establish cooperative relationships among themselves or with third parties. As a result, we cannot assure that our products will continue to compete favorably, and any failure to do so could seriously harm our business, operating results, and financial condition.

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Intellectual Property

Our success depends in part upon our ability to protect our core technology and intellectual property. We rely on patents, trademarks, copyrights and trade secret laws, confidentiality procedures, and employee disclosure and invention assignment agreements to protect our intellectual property rights.

We have 22 issued patents and 112 patent applications in the United States and 110 corresponding patent applications in foreign countries, as of August 20, 2012 relating to non-volatile solid state storage, non-volatile solid state memory, software acceleration, and related technologies. We cannot assure you whether any of our patent applications will result in the issuance of a patent or whether the examination process will require us to narrow our claims. Any patents that may issue may be contested, circumvented, found unenforceable or invalidated, and we may not be able to prevent third parties from infringing them.

We generally control access to and use of our proprietary software and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners, and our software is protected by U.S. and international copyright laws. Despite our efforts to protect our trade secrets and proprietary rights through intellectual property rights, licenses, and confidentiality agreements, unauthorized parties may still copy or otherwise obtain and use our software and technology. In addition, we intend to expand our international operations, and effective patent, copyright, trademark, and trade secret protection may not be available or may be limited in foreign countries.

Third parties could claim that our products or technologies infringe their proprietary rights. The data storage industry is characterized by the existence of a large number of patents, trademarks, and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. We expect that infringement claims may further increase as the number of products and competitors in our market increase. In addition, to the extent that we gain greater visibility and market exposure as a public company, we face a higher risk of being the subject of intellectual property infringement claims from third parties. We cannot assure you that we do not currently infringe, or that we will not in the future infringe, upon any third-party patents or other proprietary rights. See “Risk Factors” for additional information.

Employees

We believe the expertise of our people and our technology focused culture is a key enabler of our technology leadership. Our team has a broad range of expertise across operating systems, datacenter software, systems, storage, networking, and servers. As of June 30, 2012, we had 669 employees, including 347 in sales and marketing, 243 in research and development, and 79 in general and administrative activities. None of our employees is represented by a labor organization or is a party to any collective bargaining arrangement, we have never had a work stoppage, and we consider our relationship with our employees to be good.

Financial Information about Segments and Geographic Areas

We operate our business in one segment. The segment and geographic information required herein is contained in Note 1 — Segment and Geographic Information, in the notes to our consolidated financial statements.

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Additional Information

Company Website and Public Filings. We maintain a corporate website at www.fusionio.com. Except as explicitly noted, the information on our website is not incorporated by reference in this annual report on Form 10-K, or in any other filings with, or in any information furnished or submitted to, the Securities and Exchange Commission or the SEC.

We make available, free of charge through our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to Sections 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after they have been electronically filed with, or furnished to, the SEC.

The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F. Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Part I. Item 1A. Risk Factors

Set forth below and elsewhere in this annual report on Form 10-K, and in other documents we file with the SEC, are descriptions of risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this report. Because of the following factors, as well as other variables affecting our operating results, past financial performance should not be considered a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods. The risks and uncertainties described below are not the only ones we face. Other events that we do not currently anticipate or that we currently deem immaterial also may affect our results of operations and financial condition.

Risks Related to Our Business and Industry

Our limited operating history makes it difficult to evaluate our current business and future prospects, and may increase the risk of your investment.

We were founded in December 2005 and sold our first products in April 2007. The majority of our revenue growth has occurred since the quarter ended December 31, 2009. We continue to innovate and develop enterprise data decentralization solutions. For example, we recently released our ION Data Accelerator software, our next generation ioDrive platforms, and our virtualization and automated data-tiering caching software. In addition, our current management team has only been working together for a relatively short period of time. Our limited operating history makes it difficult to evaluate our current business and our future prospects, including our ability to plan for and model future growth. We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in rapidly changing industries, such as the risks described herein. If we do not address these risks successfully, our business and operating results would be adversely affected, and our stock price could decline.

Our revenue growth rate in recent periods is not expected to recur in the near term and may not be indicative of our future performance.

You should not consider our revenue growth in recent periods as indicative of our future performance. In fact, in future periods, our revenue could decline. We do not expect to achieve similar

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percentage revenue growth rates in future periods. We have experienced in the past, and continue to expect to experience, substantial concentrated purchases by customers to complete or upgrade large-scale datacenter deployments. Our revenue in any particular quarterly period could be disproportionately affected if this trend continues. You should not rely on our revenue for any prior quarterly or annual periods as an indication of our future revenue or revenue growth. If we are unable to maintain consistent revenue or revenue growth, our stock price could be volatile, and it may be difficult to achieve and maintain profitability.

We have experienced rapid growth in recent periods and we may not be able to sustain or manage any future growth effectively.

We have significantly expanded our overall business, customer base, headcount, and operations, and we anticipate that we will continue to grow our business. For example, from June 30, 2011 to June 30, 2012, our headcount increased from 441 to 669 employees, representing an increase of 228 employees. Our future operating results depend to a large extent on our ability to successfully manage our anticipated expansion and growth.

To manage our growth successfully, we believe we must effectively, among other things:

• maintain and extend our leadership in data decentralization;

• maintain and expand our existing original equipment manufacturer, or OEM, and channel partner relationships and develop new OEM and channel partner relationships;

• forecast and control expenses;

• recruit, hire, train, and manage additional research and development and sales personnel;

• expand our support capabilities;

• enhance and expand our distribution and supply chain infrastructure;

• manage inventory levels;

• enhance and expand our international operations; and

• implement and improve our administrative, financial and operational systems, procedures, and controls.

We expect that our future growth will continue to place a significant strain on our managerial, administrative, operational, financial, and other resources. We will incur costs associated with this future growth prior to realizing the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect or may be nonexistent. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities or develop new products or enhancements to existing products and we may fail to satisfy end-users’ requirements, maintain product quality, execute on our business plan or respond to competitive pressures, each of which could adversely affect our business and operating results.

We have incurred significant net losses during our limited operating history and may not consistently achieve or maintain profitability.

Prior to the quarter ended March 31, 2011, we had incurred net losses in each quarter since our inception and again incurred net losses in the three months ended December 31, 2011, March 31, 2012, and June 30, 2012. We may incur losses in future periods as we continue to increase our expenses in all areas of our operations to support our growth. If our revenue does not increase to offset these expected increases in operating expenses, we will not be profitable. As of June 30, 2012, we had an accumulated deficit of approximately $70.6 million.

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We expect large and concentrated purchases by a limited number of customers to continue to represent a substantial majority of our revenue, and any loss or delay of expected purchases could adversely affect our operating results.

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 changes from period to period. Some of our customers make concentrated purchases to complete or upgrade specific large-scale data storage installations. These concentrated purchases are short-term in nature and are typically made on a purchase order basis rather than pursuant to long-term contracts. During fiscal 2010, 2011, and 2012, sales to the 10 largest customers in each period, including the applicable OEMs, accounted for approximately 75%, 92%, and 91% of revenue, respectively. Our direct customer Facebook, Apple, through a reseller, and our OEM customer HP, each accounted for 30%, 25%, and 17% of our revenue, respectively, in fiscal 2012.

As a consequence of our limited number of customers and the concentrated nature of their purchases, our quarterly revenue and operating results may fluctuate from quarter to quarter and are difficult to estimate. For example, any acceleration or delay in anticipated product purchases or the acceptance of shipped products by our larger customers could materially impact our revenue and operating results in any quarterly period. Additionally, our revenue and operating results could be adversely affected if any of these large customers purchase our competitors’ products instead of purchasing our products. We cannot provide any assurance that we will be able to sustain or increase our revenue from our large customers or that we will be able to offset the discontinuation of concentrated purchases by our larger customers with purchases by new or existing customers. We expect that sales of our products to a limited number of customers will continue to contribute materially to our revenue for the foreseeable future, but that competition for these sales will increase. The loss of, or a significant delay or reduction in purchases by, a small number of customers could materially harm our business and operating results.

Our gross margins are impacted by a variety of factors, are subject to variation from period to period and are difficult to predict.

Our gross margins fluctuate from period to period due primarily to product costs, customer mix, and product mix. Over fiscal 2012, our quarterly gross margins ranged from 51.0% to 63.2%. Our gross margins are likely to continue to fluctuate and may be affected by a variety of factors, including:

• demand for our products;

• changes in customer, geographic, or product mix, including mix of configurations within products;

• significant new customer deployments;

• the cost of components and freight;

• changes in our manufacturing costs, including fluctuations in yields and production volumes;

• new product introductions and enhancements, potentially with initial sales at relatively small volumes and higher product costs;

• rebates, sales and marketing initiatives, discount levels, and competitive pricing;

• changes in the mix between direct versus indirect sales;

• the timing and amount of revenue recognized and deferred;

• excess inventory levels or purchase commitments as a result of changes in demand forecasts or last time buy purchases;

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• possible product and software defects and related increased warranty or repair costs;

• the timing of technical support service contracts and contract renewals;

• inventory stocking requirements to support new product introductions; and

• product quality and service ability issues.

Due to such factors, gross margins are subject to variation from period to period and are difficult to predict. If we are unable to manage these factors effectively, our gross margins may decline, and fluctuations in gross margin may make it difficult to manage our business and achieve or maintain profitability, which could materially harm our business and operating results.

Some of our large customers require more favorable terms and conditions from their vendors and may request pricing concessions. As we seek to sell more products to these customers, we may be required to agree to terms and conditions that may have an adverse effect on our business or ability to recognize revenue.

Some of our large customers have significant purchasing power and, accordingly, have requested and received more favorable terms and conditions, including lower prices, than we typically provide. As we seek to sell more products to this class of customer, we may be required to agree to these terms and conditions, which may include terms that affect the timing of our revenue recognition or may reduce our gross margins and have an adverse effect on our business and operating results.

The future growth of our sales to OEMs is dependent on OEM customers incorporating our products into their server and data storage systems and the OEM’s sales efforts. Any failure to grow our OEM sales and maintain relationships with OEMs could adversely affect our business, operating results and financial condition.

Sales of our products to OEMs represent a significant portion of our revenue and we anticipate that our OEM sales will constitute a substantial portion of our future sales. In some cases, our products must be designed into the OEM’s products. If that fails to occur for a given product line of an OEM, we would likely be unable to sell our products to that OEM for such product line during the life cycle of that product. Even if an OEM integrates one or more of our products into its server, data storage systems or appliance solutions, we cannot be assured that its product will be commercially successful, and as a result, our sales volumes may be less than anticipated. Our OEM customers are typically not obligated to purchase our products and can choose at any time to stop using our products, if their own systems are not commercially successful or if they decide to pursue other strategies or for any other reason, including the incorporation or development of competing products by these OEMs. Moreover, our OEM customers may not devote sufficient attention and resources to selling our products. We may not be able to develop or maintain relationships with OEMs for a number of reasons, including because of the OEM’s relationships with our competitors or prospective competitors or other incentives that may not motivate their internal sales forces to promote our products. In addition, direct sales of our ioDrive product line may compete with products made by our OEM partners, and our OEM partners may compete directly with our other OEM partners, which may affect the commitment of our OEM partners to sell our products. Even if we are successful in selling through OEMs, we expect that sales through OEMs will be a lower gross margin business than our direct sales business. If we are unable to grow our OEM sales, if our OEM customers’ systems incorporating our products are not commercially successful, if our products, including new and next generation products, are not designed into a given OEM product cycle, if we fail to minimize conflicts between our channel partners, in particular OEMs, if our OEM customers do not timely qualify our products for promotion or sale by them, or if our OEM customers significantly reduce, cancel, or delay their orders with us, our revenue would suffer and our business, operating results, and financial condition could be materially adversely affected.

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Ineffective management of our inventory levels could adversely affect our operating results.

If we are unable to properly forecast, monitor, control, and manage our inventory and maintain appropriate inventory levels and mix of products to support our customers’ needs, we may incur increased and unexpected costs associated with our inventory. Sales of our products are generally made through individual purchase orders and some of our customers place large orders with short lead times, which make it difficult to predict demand for our products and the level of inventory that we need to maintain to satisfy customer demand. If we build our inventory in anticipation of future demand that does not materialize, or if a customer cancels or postpones outstanding orders, we could experience an unanticipated increase in levels of our finished products. For some customers, even if we are not contractually obligated to accept returned products, we may determine that it is in our best interest to accept returns in order to maintain good relationships with those customers. Product returns would increase our inventory and reduce our revenue. If we are unable to sell our inventory in a timely manner, we could incur additional carrying costs, reduced inventory turns, and potential write-downs due to obsolescence.

Alternatively, we could carry insufficient inventory, and we may not be able to satisfy demand, which could have a material adverse effect on our customer relationships or cause us to lose potential sales.

We have often experienced order changes including delivery delays and fluctuations in order levels from period-to-period, and we expect to continue to experience similar delays and fluctuations in the future, which could result in fluctuations in inventory levels, cash balances, and revenue.

The occurrence of any of these risks could adversely affect our business, operating results, and financial condition.

Our operating results may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below expectations.

Our operating results may fluctuate due to a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future performance. If our revenue or operating results fall below the expectations of investors or any securities analysts that follow our company, the price of our common stock would likely decline.

Factors that are difficult to predict and that could cause our operating results to fluctuate include:

• the timing and magnitude of orders, shipments, and acceptance of our products in any quarter;

• our ability to control the costs of the components we use in our hardware products;

• reductions in customers’ budgets for information technology purchases;

• delays in customers’ purchasing cycles or deferments of customers’ product purchases in anticipation of new products or updates from us or our competitors;

• fluctuations in demand and prices for our products;

• changes in industry standards in the data storage industry;

• our ability to develop, introduce, and ship in a timely manner new products and product enhancements that meet customer requirements;

• the timing of product releases or upgrades or announcements by us or our competitors;

• any change in the competitive dynamics of our markets, including new entrants or discounting of product prices;

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• our ability to control costs, including our operating expenses; and

• future accounting pronouncements and changes in accounting policies.

The occurrence of any one of these risks could negatively affect our operating results in any particular quarter, which could cause the price of our common stock to decline.

Our sales cycles can be long and unpredictable, particularly with respect to large orders and OEM relationships, and our sales efforts require considerable time and expense. As a result, it can be difficult for us to predict when, if ever, a particular customer will choose to purchase our products, which may cause our operating results to fluctuate significantly.

Our sales efforts involve educating our customers about the use and benefits of our products, including their technical capabilities and cost saving potential. Customers often undertake an evaluation and testing process that can result in a lengthy sales cycle. We spend substantial time and resources on our sales efforts without any assurance that our efforts will produce any sales. In addition, product purchases are frequently subject to budget constraints, multiple approvals, and unplanned administrative, processing, and other delays. Additionally, a significant portion of our sales personnel have been with us for less than a year, and we continue to increase our number of sales personnel, which could further extend the sales cycle as these new personnel are typically not immediately productive. These factors, among others, could result in long and unpredictable sales cycles, particularly with respect to large orders.

We also sell to OEMs that incorporate our solutions into their products, which can require an extended evaluation, testing, and qualification process before our product is approved for inclusion in one of their product lines. We also may be required to customize our product to interoperate with an OEM’s product, which could further lengthen the sales cycle for OEM customers. The length of our sales cycle for an OEM makes us susceptible to the risk of delays or termination of orders if end-users decide to delay or withdraw funding for datacenter projects, which could occur for various reasons, including global economic cycles and capital market fluctuations.

As a result of these lengthy and uncertain sales cycles of our products, it is difficult for us to predict when customers may purchase and accept products from us and as a result, our operating results may vary significantly and may be adversely affected.

We compete with large storage and software providers and expect competition to intensify in the future from established competitors and new market entrants.

The market for data storage products is highly competitive, and we expect competition to intensify in the future. Our products compete with various traditional datacenter architectures, including high performance server and storage approaches. These may include the traditional data storage providers, including storage array vendors such as EMC Corporation and Hitachi Data Systems, who typically sell centralized storage products as well as high-performance storage approaches utilizing solid state disks, as well as vertically integrated appliance vendors such as Oracle. In this regard, EMC recently introduced a product designed to compete with our caching solutions. In addition, we may also compete with enterprise solid state disk vendors such as Huawei Technologies, Co., Intel Corp., LSI Corporation, Marvell Semiconductor, Inc., Micron Technology, Inc., OCZ Technology Group, Inc., Samsung Electronics, Inc., SanDisk, Corp., Seagate Technology, STEC, Inc., Toshiba Corp., and Western Digital Corp. Our ION Data Accelerator software competes with proprietary integrated flash appliances from EMC Corporation, HP 3PAR by Hewlett-Packard Development Company, Texas Memory Systems and other privately held companies. Our ioTurbine intelligent caching software, competes with solutions from EMC, Oracle, STEC’s open-source based product, and a privately held company. A number of new, privately held companies are currently attempting to enter our market, one or more of which may become significant competitors in the future.

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Many of our current competitors have, and some of our potential competitors could have, longer operating histories, greater name recognition, larger customer bases, and significantly greater financial, technical, sales, marketing, and other resources than we have. Potential customers may prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features. New start-up companies continue to innovate and may invent similar or superior products and technologies that may compete with our products and technology. Some of our competitors have made acquisitions of businesses that may allow them to offer more directly competitive and comprehensive solutions than they had previously offered. In addition, some of our competitors, including our OEM customers, may develop competing technologies and sell at zero or negative margins, through product bundling, closed technology platforms, or otherwise, to gain business. Our current and potential competitors may also establish cooperative relationships among themselves or with third parties. As a result, we cannot assure you that our products will continue to compete favorably, and any failure to do so could seriously harm our business, operating results, and financial condition.

Competitive factors could make it more difficult for us to sell our products, resulting in increased pricing pressure, reduced gross margins, increased sales and marketing expenses, longer customer sales cycles, and failure to increase, or the loss of, market share, any of which could seriously harm our business, operating results, and financial condition. Any failure to meet and address these competitive challenges could seriously harm our business and operating results.

The market for non-volatile storage memory products is developing and rapidly evolving, which makes it difficult to forecast end-user adoption rates and demand for our products.

The market for non-volatile storage memory products is developing and rapidly evolving. Accordingly, our future financial performance will depend in large part on growth in this market and on our ability to adapt to emerging demands in this market. Sales of our products currently are dependent in large part upon demand in markets that require high performance data storage solutions such as computing, Internet, and financial services. It is difficult to predict with any precision end-user adoption rates, end-user demand for our products or the future growth rate and size of our market. The rapidly evolving nature of the technology in the data storage products market, as well as other factors that are beyond our control, reduce our ability to accurately evaluate our future outlook and forecast quarterly or annual performance. Our products may never reach mass adoption, and changes or advances in technologies could adversely affect the demand for our products. Further, although Flash-based data storage products have a number of advantages compared to other data storage alternatives, Flash-based storage devices have certain disadvantages as well, including a higher price per gigabyte of storage, potentially shortened product lifespan, more limited methods for data recovery and lower performance for certain uses, including sequential input / output transactions and increased utilization of host system resources than traditional storage, and may require end-users to modify or replace network systems originally made for traditional storage media. A reduction in demand for Flash-based data storage caused by lack of end-user acceptance, technological challenges, competing technologies, and products or otherwise would result in a lower revenue growth rate or decreased revenue, either of which could negatively impact our business and operating results.

If our industry experiences declines in average sales prices, it may result in declines in our revenue and gross profit.

The industry for data storage products is highly competitive and has historically been characterized by declines in average sales prices. It is possible that the market for decentralized storage solutions could experience similar trends. Our average sales prices could decline due to pricing pressure caused by several factors, including competition, the introduction of competing technologies, overcapacity in the worldwide supply of Flash-based or similar memory components,

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increased manufacturing efficiencies, implementation of new manufacturing processes, and expansion of manufacturing capacity by component suppliers. If we are required to decrease our prices to be competitive and are not able to offset this decrease by increases in volume of sales or the sales of new products with higher margins, our gross margins and operating results would likely be adversely affected.

Developments or improvements in storage system technologies may materially adversely affect the demand for our products.

Significant developments in data storage systems, such as advances in solid state storage drives or improvements in non-volatile memory, may materially and adversely affect our business and prospects in ways we do not currently anticipate. For example, improvements in existing data storage technologies, such as a significant increase in the speed of traditional interfaces for transferring data between storage and a server or the speed of traditional embedded controllers, could emerge as preferred alternative to our products especially if they are sold at lower prices. This could be the case even if such advances do not deliver all of the benefits of our products. Any failure by us to develop new or enhanced technologies or processes, or to react to changes or advances in existing technologies, could materially delay our development and introduction of new products, which could result in the loss of competitiveness of our products, decreased revenue, and a loss of market share to competitors.

We derive substantially all of our revenue from our storage memory products, and a decline in demand for these products would cause our revenue to grow more slowly or to decline.

Our storage memory products account for substantially all of our revenue and will continue to comprise a significant portion of our revenue for the foreseeable future. As a result, our revenue could be reduced by:

• the failure of our storage memory products to achieve broad market acceptance;

• any decline or fluctuation in demand for our storage memory products, whether as a result of product obsolescence, technological change, customer budgetary constraints or other factors;

• the introduction of products and technologies that serve as a replacement or substitute for, or represent an improvement over, these products; and

• our inability to release enhanced versions of our products, including any related software, on a timely basis.

If the storage markets grow more slowly than anticipated or if demand for our products declines, we may not be able to increase our revenue sufficiently to achieve and maintain profitability and our stock price would decline.

If we fail to develop and introduce new or enhanced products on a timely basis, including innovations in our software offerings, our ability to attract and retain customers could be impaired and our competitive position could be harmed.

We operate in a dynamic environment characterized by rapidly changing technologies and industry standards and technological obsolescence. To compete successfully, we must design, develop, market, and sell new or enhanced products that provide increasingly higher levels of performance, capacity, and reliability and meet the cost expectations of our customers. The introduction of new products by our competitors, the market acceptance of products based on new or alternative technologies, or the emergence of new industry standards could render our existing or future products obsolete. Our failure to anticipate or timely develop new or enhanced products or

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technologies in response to technological shifts could result in decreased revenue and harm our business. If we fail to introduce new or enhanced products that meet the needs of our customers or penetrate new markets in a timely fashion, we will lose market share and our operating results will be adversely affected.

In order to maintain or increase our gross margins, we will need to continue to create valuable software solutions to be integrated with our storage memory products. Any new feature or application that we develop or acquire may not be introduced in a timely or cost-effective manner and may not achieve the broad market acceptance necessary to help increase our overall gross margins. If we are unable to successfully develop or acquire, and then market and sell our next generation products, our ability to increase our revenue and gross margin will be adversely affected.

Our products are highly technical and may contain undetected defects, which could cause data unavailability, loss or corruption that might, in turn, result in liability to our customers and harm to our reputation and business.

Our products are highly technical and complex and are often used to store information critical to our customers’ business operations. Our products may contain undetected errors, defects, or security vulnerabilities that could result in data unavailability, loss, or corruption or other harm to our customers. Some errors in our products may only be discovered after they have been installed and used by customers. Any errors, defects, or security vulnerabilities discovered in our products after commercial release could result in a loss of revenue or delay in revenue recognition, injury to our reputation, a loss of customers or increased service and warranty costs, any of which could adversely affect our business. In addition, we could face claims for product liability, tort, or breach of warranty. Many of our contracts with customers contain provisions relating to warranty disclaimers and liability limitations, which may be difficult to enforce. Defending a lawsuit, regardless of its merit, would be costly and might divert management’s attention and adversely affect the market’s perception of us and our products. In addition, our business liability insurance coverage could prove inadequate with respect to a claim and future coverage may be unavailable on acceptable terms or at all. These product-related issues could result in claims against us and our business could be adversely impacted.

Our products must interoperate with operating systems, software applications and hardware that is developed by others and if we are unable to devote the necessary resources to ensure that our products interoperate with such software and hardware, we may fail to increase, or we may lose, market share and we may experience a weakening demand for our products.

Our products must interoperate with our customers’ existing infrastructure, specifically their networks, servers, software, and operating systems, which may be manufactured by a wide variety of vendors and OEMs. When new or updated versions of these software operating systems or applications are introduced, we must sometimes develop updated versions of our software so that our products will interoperate properly. We may not accomplish these development efforts quickly, cost-effectively, or at all. These development efforts require capital investment and the devotion of engineering resources. If we fail to maintain compatibility with these applications, our customers may not be able to adequately utilize the data stored on our products, and we may, among other consequences, fail to increase, or we may lose, market share and experience a weakening in demand for our products, which would adversely affect our business, operating results, and financial condition.

Our products must conform to industry standards in order to be accepted by customers in our markets.

Generally, our products comprise only a part of a datacenter. The servers, network, software, and other components and systems of a datacenter must comply with established industry standards in

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order to interoperate and function efficiently together. We depend on companies that provide other components of the servers and systems in a datacenter to support prevailing industry standards. Often, these companies are significantly larger and more influential in driving industry standards than we are. Some industry standards may not be widely adopted or implemented uniformly, and competing standards may emerge that may be preferred by our customers. If larger companies do not support the same industry standards that we do, or if competing standards emerge, market acceptance of our products could be adversely affected, which would harm our business, operating results, and financial condition.

We rely on our key technical, sales and management personnel to grow our business, and the loss of one or more key employees or the inability to attract and retain qualified personnel could harm our business.

Our success and future growth depends to a significant degree on the skills and continued services of our key technical, sales and management personnel. In particular, we are highly dependent on the services of our Chief Executive Officer, David Flynn. All of our employees work for us on an at-will basis, and we could experience difficulty in retaining members of our senior management team. We do not have “key person” life insurance policies that cover any of our officers or other key employees, other than our Chief Executive Officer. The loss of the services of any of our key employees could disrupt our operations, delay the development and introduction of our products, and negatively impact our business, prospects, and operating results.

We plan to hire additional personnel in all areas of our business, particularly for sales and research and development. Competition for these types of personnel is intense. We cannot assure you that we will be able to successfully attract or retain qualified personnel. Our inability to retain and attract the necessary personnel could adversely affect our business, operating results, and financial condition.

Our current research and development efforts may not produce successful products that result in significant revenue in the near future, if at all.

Developing our products and related enhancements is expensive. Our investments in research and development may not result in marketable products or may result in products that are more expensive than anticipated, take longer to generate revenue or generate less revenue, than we anticipate. Our future plans include significant investments in research and development and related product opportunities. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position. However, we may not receive significant revenue from these investments in the near future, if at all, which could adversely affect our business and operating results.

Our ability to sell our products is dependent in part on ease of use and the quality of our support offerings, and any failure to offer high-quality technical support would harm our business, operating results, and financial condition.

Although our products are designed to be interoperable with existing servers and systems, we may need to provide customized installation and configuration support to our customers before our products become fully operational in their environments. Once our products are deployed within our customers’ datacenters, they depend on our support organization to resolve any technical issues relating to our products. Our ability to provide effective support is largely dependent on our ability to attract, train, and retains qualified personnel. In addition, our sales process is highly dependent on our product and business reputation and on strong recommendations from our existing customers. Any failure to maintain high-quality installation and technical support, or a market perception that we do not

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maintain high-quality support, could harm our reputation, adversely affect our ability to sell our products to existing and prospective customers, and could harm our business, operating results, and financial condition.

If we fail to successfully maintain or grow our reseller and other channel partner relationships, our business and operating results could be adversely affected.

Our ability to maintain or grow our revenue will depend, in part, on our ability to maintain our arrangements with our existing channel partners and to establish and expand arrangements with new channel partners. Our channel partners may choose to discontinue offering our products or may not devote sufficient attention and resources toward selling our products. For example, our competitors may provide incentives to our existing and potential channel partners to use or purchase their products and services or to prevent or reduce sales of our products. The occurrence of any of these events could adversely affect our business and operating results.

We are exposed to the credit risk of some of our customers and to credit exposure in weakened markets, which could result in material losses.

Most of our sales are on an open credit basis. As a general matter, we monitor individual customer payment capability in granting open credit arrangements and may limit these open credit arrangements based on creditworthiness. We also maintain reserves we believe are adequate to cover exposure for doubtful accounts. Although we have programs in place that are designed to monitor and mitigate these risks, we cannot assure you these programs will be effective in reducing our credit risks, especially as we expand our business internationally. If we are unable to adequately control these risks, our business, operating results, and financial condition could be harmed.

We currently rely on contract manufacturers to manufacture our products, and our failure to manage our relationship with our contract manufacturers successfully could negatively impact our business.

We rely on our contract manufacturers, primarily Alpha EMS Manufacturing Corporation, to manufacture our products. In addition, from time to time, we also use Jabil Circuit, Inc. and Foxconn Electronics Inc. to manufacture our products. We continue to evaluate other contract manufacturers. We currently do not have any long-term manufacturing contracts with these contract manufacturers. Our reliance on these contract manufacturers reduces our control over the assembly process, exposing us to risks, including reduced control over quality assurance, production costs, and product supply. If we fail to manage our relationship with these contract manufacturers effectively, or if these contract manufacturers experience delays, disruptions, capacity constraints, or quality control problems in their operations, our ability to ship products to our customers could be impaired and our competitive position and reputation could be harmed. If we are required to change contract manufacturers or assume internal manufacturing operations, we may lose revenue, incur increased costs, and damage our customer relationships. Qualifying a new contract manufacturer and commencing production is expensive and time-consuming. We may need to increase our component purchases, contract manufacturing capacity, and internal test and quality functions if we experience increased demand. The inability of these contract manufacturers to provide us with adequate supplies of high-quality products, could cause a delay in our order fulfillment, and our business, operating results, and financial condition would be adversely affected.

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We rely on a limited number of suppliers, and in some cases single-source suppliers, and any disruption or termination of these supply arrangements could delay shipments of our products and could materially and adversely affect our relationships with current and prospective customers.

We rely on a limited number of suppliers, and in some cases single-source suppliers, for several key components of our products, and we have not generally entered into agreements for the long-term purchase of these components. This reliance on a limited number of suppliers and the lack of any guaranteed sources of supply exposes us to several risks, including:

• the inability to obtain an adequate supply of key components, including non-volatile memory and reprogrammable controllers;

• price volatility for the components of our products;

• failure of a supplier to meet our quality, yield, or production requirements;

• failure of a key supplier to remain in business or adjust to market conditions; and

• consolidation among suppliers, resulting in some suppliers exiting the industry or discontinuing the manufacture of components.

As a result of these risks, we cannot assure you that we will be able to obtain enough of these key components in the future or that the cost of these components will not increase. If our supply of certain components is disrupted or delayed, or if we need to replace our existing suppliers, there can be no assurance that additional supplies or components will be available when required or that supplies will be available on terms that are favorable to us, which could extend our lead times, increase the costs of our components and materially adversely affect our business, operating results, and financial condition. If we are successful in growing our business, we may not be able to continue to procure components at current prices, which would require us to enter into longer term contracts with component suppliers to obtain these components at competitive prices. This could increase our costs and decrease our gross margins, harming our operating results.

Our results of operations could be affected by natural events in locations in which our customers or suppliers operate.

Several of our customers and suppliers have operations in locations that are subject to natural disasters, such as severe weather and geological events, which could disrupt the operations of those customers and suppliers. For example, in March 2011, the northern region of Japan experienced a severe earthquake followed by a tsunami. These geological events caused significant damage in that region and have adversely affected Japan’s infrastructure and economy. Some of our customers and suppliers are located in Japan and they have experienced, and may experience in the future, shutdowns as a result of these events, and their operations may be negatively impacted by these events. Our customers affected by this or a future natural disaster could postpone or cancel orders of our products, which could negatively impact our business. Moreover, should any of our key suppliers fail to deliver components to us as a result of this or a future natural disaster, we may be unable to purchase these components in necessary quantities or may be forced to purchase components in the open market at significantly higher costs. We may also be forced to purchase components in advance of our normal supply chain demand to avoid potential market shortages. In addition, if we are required to obtain one or more new suppliers for components or use alternative components in our solutions, we may need to conduct additional testing of our solutions to ensure those components meet our quality and performance standards, all of which could delay shipments to our customers and adversely affect our financial condition and results of operations.

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To the extent we purchase excess or insufficient component inventory in connection with discontinuations by our vendors of components used in our products, our business or operating results may be adversely affected.

It is common in the storage and networking industries for component vendors to discontinue the manufacture of certain types of components from time to time due to evolving technologies and changes in the market. A supplier’s discontinuation of a particular type of component, such as a specific size of NAND Flash memory, may require us to make significant “last time” purchases of component inventory that is being discontinued by the vendor to ensure supply continuity until the transition to products based on next generation components or until we are able to secure an alternative supply. To the extent we purchase insufficient component inventory in connection with these discontinuations, we may experience delayed shipments, order cancellations or otherwise purchase more expensive components to meet customer demand, which could result in reduced gross margins. Alternatively, to the extent we purchase excess component inventory that we cannot use in our products due to obsolescence, we could be required to reduce the carrying value of inventory or be required to sell the components at or below our carrying value, which could reduce our gross margins.

Our business may be adversely affected if we encounter difficulties as we upgrade our enterprise resource planning system, or ERP, and other information technology systems.

We have substantially completed the upgrade of our ERP system and other information technology systems. Because we are in the process of upgrading and implementing these systems, this upgrading and implementation poses a risk to our internal controls over financial reporting and to our business operations. Disruptions or difficulties in upgrading and implementing these systems or the related procedures or controls could adversely affect both our internal and disclosure controls and harm our business, including our ability to forecast or make sales, manage our supply chain, and collect our receivables. Moreover, such a disruption could result in unanticipated costs or expenditures and a diversion of management’s attention and resources.

We will need to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act and the failure to do so could have a material adverse effect on our business and stock price.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, commencing in fiscal 2012, we were required to perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, or Section 404. This requirement will be ongoing. Our compliance with Section 404 will require that we continue to incur substantial expense and expend significant management efforts. If we are unable to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm notes or identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the New York Stock Exchange, the SEC, or other regulatory authorities, which would require additional financial and management resources.

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Third-party claims that we are infringing intellectual property, whether successful or not, could subject us to costly and time-consuming litigation or expensive licenses, and our business could be harmed.

The storage and networking industries are characterized by the existence of a large number of patents, copyrights, trademarks and trade secrets and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. We have in the past received and may in the future receive inquiries from other intellectual property holders and may become subject to claims that we infringe their intellectual property rights, particularly as we expand our presence in the market and face increasing competition. For example, in 2011, we received two letters from Entorian Technologies, Inc. alleging that memory stacks included in our products infringe its U.S. Patent No. 5,420,751, or the ‘751 patent. Polystak, Inc. is our supplier of the accused memory stack component. On February 7, 2012, Entorian Technologies filed a lawsuit in the U.S. District Court for the District of Utah against our company. The complaint alleged that our products infringe the ‘751 patent, which expired in May 2012. On March 1, 2012, Polystak filed a lawsuit against Entorian Technologies in the U.S. District Court for the Northern District of California. The complaint alleges that the ‘751 patent is invalid, and that Polystak’s memory stacks do not infringe the ‘751 patent. On March 8, 2012, Entorian Technologies dismissed the lawsuit against us in Utah. On March 9, 2012, Entorian Technologies filed a counterclaim against Polystak and us in the Northern District of California lawsuit. The counterclaim alleges infringement of the ‘751 patent by Polystak and us and seeks damages, but it does not seek an injunction. The Court has set a schedule calling for a patent claim construction hearing on March 5, 2013. Based on our preliminary investigation, we do not believe that our products infringe any valid or enforceable claim of the ‘751 patent. Polystak has agreed to indemnify and defend us with respect to these lawsuits. Nevertheless, the costs associated with any actual, pending, or threatened litigation could negatively impact our operating results regardless of the actual outcome.

In addition, on May 18, 2011, Internet Machines LLC filed a lawsuit in U.S. District Court for the Eastern District of Texas against our company and 20 other companies. The complaint alleges that our products infringe U.S. Patent Nos. 7,454,552; 7,421,532; 7,814,259; and 7,945,722. On August 26, 2011, Internet Machines MC LLC amended its prior complaint filed in U.S. District Court for the Eastern District of Texas against PLX Technology, Inc. to add our company and several other companies as defendants. This complaint alleges that our products infringe U.S. Patent No. 7,539,190. These complaints seek both damages and a permanent injunction against us. The specific infringement allegations appear to focus on a PCI switch component that, while used in some of our products, is manufactured by a third-party supplier. This third-party supplier (which was found to infringe U.S. Patent Nos. 7,454,552 and 7,421,532 by a jury in a prior case) has agreed to indemnify and defend us with respect to these lawsuits. The judges have scheduled patent claim construction hearings for the first and second lawsuits on September 11, 2012 and September 6, 2012, respectively. Based upon our preliminary investigation of the patents identified in the complaints, we do not believe that our products infringe any valid or enforceable claim of these patents. Nevertheless, the costs associated with any actual, pending, or threatened litigation could negatively impact our operating results regardless of the actual outcome.

Moreover, on September 7, 2011, Solid State Storage Solutions, Inc., or S4, filed a lawsuit in U.S. District Court for the Eastern District of Texas against our company and eight other companies. The complaint alleges that our products infringe U.S. Patent Nos. 6,701,471; 7,234,087; 7,721,165; 6,370,059; 7,366,016; 7,746,697; 7,616,485; 6,341,085; 6,567,334; 6,347,051; 7,064,995; and 7,327,624. The complaint seeks both damages and a permanent injunction against us. We have limited information about the specific infringement allegations, but they appear to focus on storage controllers for flash memory and in particular to storage address mapping, I/O buffering, wear leveling, and reducing read latency in relation to interfacing with flash storage media. We use a custom

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programmed storage controller in our products. The Court has set a schedule calling for a patent claim construction hearing on January 9, 2013, and a trial commencing on July 1, 2013. Based on our preliminary investigation of the patents identified in the complaint, we do not believe that our products infringe any valid or enforceable claim of these patents. Nevertheless, the costs associated with any actual, pending, or threatened litigation could negatively impact our operating results regardless of the actual outcome.

We currently have a number of agreements in effect pursuant to which we have agreed to defend, indemnify, and hold harmless our customers, suppliers, and channel partners from damages and costs which may arise from the infringement by our products of third-party patents, trademarks, or other proprietary rights. The scope of these indemnity obligations varies, but may, in some instances, include indemnification for damages and expenses, including attorneys’ fees. Our insurance may not cover intellectual property infringement claims. A claim that our products infringe a third party’s intellectual property rights, if any, could harm our relationships with our customers, may deter future customers from purchasing our products and could expose us to costly litigation and settlement expenses. Even if we are not a party to any litigation between a customer and a third party relating to infringement by our products, an adverse outcome in any such litigation could make it more difficult for us to defend our products against intellectual property infringement claims in any subsequent litigation in which we are a named party. Any of these results could harm our brand and operating results.

Any intellectual property rights claim against us or our customers, suppliers, and channel partners, with or without merit, could be time-consuming, expensive to litigate or settle, could divert management resources and attention and could force us to acquire intellectual property rights and licenses, which may involve substantial royalty payments. Further, a party making such a claim, if successful, could secure a judgment that requires us to pay substantial damages. An adverse determination also could invalidate our intellectual property rights and prevent us from offering our products to our customers and may require that we procure or develop substitute products that do not infringe, which could require significant effort and expense. We may have to seek a license for the technology, which may not be available on reasonable terms or at all, may significantly increase our operating expenses or require us to restrict our business activities in one or more respects. Any of these events could seriously harm our business, operating results, and financial condition.

The success of our business depends in part on our ability to protect and enforce our intellectual property rights.

We rely on a combination of patent, copyright, service mark, trademark, and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protection. As of August 20, 2012, we had 22 issued patents and 112 patent applications in the United States and 110 corresponding patent applications in foreign countries. We cannot assure you that any patents will issue with respect to our currently pending patent applications in a manner that gives us the protection that we seek, if at all, or that any patents issued to us will not be challenged, invalidated, or circumvented. Our currently issued patents and any patents that may issue in the future with respect to pending or future patent applications may not provide sufficiently broad protection or they may not prove to be enforceable in actions against alleged infringers. We cannot be certain that the steps we have taken will prevent unauthorized use of our technology or the reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive to ours or infringe our intellectual property.

Protecting against the unauthorized use of our intellectual property, products, and other proprietary rights is expensive and difficult. Litigation may be necessary in the future to enforce or defend our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Any such litigation could result in substantial costs and diversion of management resources,

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either of which could harm our business, operating results, and financial condition. Further, many of our current and potential competitors have the ability to dedicate substantially greater resources to defending intellectual property infringement claims and to enforcing their intellectual property rights than we have. Accordingly, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. Effective patent, trademark, service mark, copyright, and trade secret protection may not be available in every country in which our products are available. An inability to adequately protect and enforce our intellectual property and other proprietary rights could seriously harm our business, operating results, and financial condition.

Our use of open source and third-party technology could impose limitations on our ability to commercialize our software.

We use open source software in our products. Although we monitor our use of open source software closely, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our products. In such event, we could be required to seek licenses from third parties in order to continue offering our products for certain uses, to license portions of our source code at no charge, to re-engineer our technology or to discontinue offering some of our software in the event re-engineering cannot be accomplished on a timely basis, any of which could adversely affect our business, operating results, and financial condition.

We might require additional capital to support business growth, and this capital might not be available on acceptable terms, or at all.

We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new products or enhance our existing products, enhance our operating infrastructure and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. Any debt financing in the future could involve additional restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business, operating results, financial condition, and prospects could be adversely affected.

If we do not successfully integrate our acquisition of IO Turbine, or if we do not otherwise achieve the expected benefits of the acquisition, our growth rate may decline and our operating results may be materially harmed.

In August 2011, we acquired IO Turbine, a provider of caching solutions for virtual environments, based in San Jose, California. If we fail to successfully integrate the business, operations, and technologies of IO Turbine, we may not realize the potential benefits of the acquisition. The integration of IO Turbine has resulted in the incurrence of ongoing expenses. If our integration effort is not successful, our results of operations could be harmed, employee morale could decline, key employees could leave, and customers could cancel existing orders or choose not to place new ones. Even if our integration efforts are successful, we may not achieve anticipated synergies or other benefits of the acquisition, including the anticipated benefits from the IO Turbine technology.

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We may further expand through acquisitions of, or investments in, other companies, each of which may divert our management’s attention, resulting in additional dilution to our stockholders and consumption of resources that are necessary to sustain and grow our business.

Our business strategy may, from time to time, include acquiring other complementary products, technologies, or businesses. We also may enter into relationships with other businesses in order to expand our product offerings, which could involve preferred or exclusive licenses, additional channels of distribution or discount pricing or investments in other companies. Negotiating these transactions can be time-consuming, difficult, and expensive, and our ability to close these transactions may be subject to third-party approvals, such as government regulation, which are beyond our control. Consequently, we can make no assurance that these transactions, once undertaken and announced, will close.

These kinds of acquisitions or investments may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel, or operations of the acquired companies, particularly if the key personnel of the acquired business choose not to work for us, and we may have difficulty retaining the customers of any acquired business. Acquisitions may also disrupt our ongoing business, divert our resources and require significant management attention that would otherwise be available for development of our business. Any acquisition or investment could expose us to unknown liabilities. Moreover, we cannot assure you that the anticipated benefits of any acquisition or investment would be realized or that we would not be exposed to unknown liabilities. In connection with these types of transactions, we may issue additional equity securities that would dilute our stockholders, use cash that we may need in the future to operate our business, incur debt on terms unfavorable to us or that we are unable to repay, incur large charges or substantial liabilities, encounter difficulties integrating diverse business cultures, and become subject to adverse tax consequences, substantial depreciation or deferred compensation charges. These challenges related to acquisitions or investments could adversely affect our business, operating results, and financial condition.

Because our long-term success depends, in part, on our ability to expand the sales of our products to customers located outside of the United States, our business is susceptible to risks associated with international operations.

While we currently maintain limited operations outside of the United States, we have been expanding and intend to continue to expand these operations in the future. We have limited experience operating in foreign jurisdictions. Our inexperience in operating our business outside of the United States increases the risk that our international expansion efforts may not be successful. In addition, conducting and expanding international operations subjects us to new risks that we have not generally faced in the United States. These include: exposure to foreign currency exchange rate risk; difficulties in managing and staffing international operations; the increased travel, infrastructure, and legal compliance costs associated with multiple international locations; potentially adverse tax consequences; the burdens of complying with a wide variety of foreign laws, including trade barriers, and different legal standards; increased financial accounting and reporting burdens and complexities; political, social and economic instability abroad, terrorist attacks, and security concerns in general; and reduced or varied protection for intellectual property rights in some countries. The occurrence of any one of these risks could negatively affect our international business and, consequently, our business, operating results, and financial condition generally.

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Adverse economic conditions or reduced datacenter spending may adversely impact our revenues and profitability.

Our operations and performance depend in part on worldwide economic conditions and the impact these conditions have on levels of spending on datacenter technology. Our business depends on the overall demand for datacenter infrastructure and on the economic health of our current and prospective customers. Weak economic conditions, or a reduction in datacenter spending, would likely adversely impact our business, operating results, and financial condition in a number of ways, including by reducing sales, lengthening sales cycles, and lowering prices for our products and services.

Governmental regulations affecting the import or export of products could negatively affect our revenue.

The U.S. and various foreign governments have imposed controls, export license requirements, and restrictions on the import or export of some technologies, especially encryption technology. In addition, from time to time, governmental agencies have proposed additional regulation of encryption technology, such as requiring the escrow and governmental recovery of private encryption keys. Governmental regulation of encryption technology and regulation of imports or exports, or our failure to obtain required import or export approval for our products, could harm our international and domestic sales and adversely affect our revenue. In addition, failure to comply with such regulations could result in penalties, costs, and restrictions on export privileges, which would harm our operating results.

The terms of our loan and security agreement with a financial institution may restrict our ability to engage in certain transactions.

Pursuant to the current terms of our loan and security agreement with a financial institution, we are subject to financial covenants and cannot engage in certain transactions, including disposing of certain assets, incurring additional indebtedness, declaring dividends, acquiring or merging with another entity or leasing additional real property unless certain conditions are met or unless we receive prior approval from the financial institution. The loan and security agreement further limits our ability to make material changes to our management team or enter into transactions with affiliates. If the financial institution does not consent to any of these actions or if we are unable to comply with these covenants, we could be prohibited from engaging in transactions which could be beneficial to our business and our stockholders.

Our business is subject to the risks of earthquakes and other natural catastrophic events, and to interruption by man-made problems such as computer viruses or terrorism.

Our two largest facilities and our current contract manufacturers are located in the San Francisco Bay and Salt Lake City areas, which have heightened risks of earthquakes. We may not have adequate business interruption insurance to compensate us for losses that may occur from a significant natural disaster, such as an earthquake, which could have a material adverse impact on our business, operating results and financial condition. In addition, acts of terrorism or malicious computer viruses could cause disruptions in our or our customers’ businesses or the economy as a whole. To the extent that these disruptions result in delays or cancellations of customer orders or the deployment of our products, our business, operating results, and financial condition would be adversely affected.

Failure to comply with governmental laws and regulations could harm our business.

Our business is subject to regulation by various federal, state, local, and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws,

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import/export controls, federal securities laws and tax laws, and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than in the United States. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, and civil and criminal penalties, or injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, operating results, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, operating results, and financial condition.

Risks Related to Our Common Stock

The trading price of our common stock is likely to be volatile, and an active, liquid, and orderly market for our common stock may not be sustained.

Our common stock is currently traded on the New York Stock Exchange, but we can provide no assurance that there will be active trading on that market or any other market in the future. If there is not an active trading market or if the volume of trading is limited, the price of our common stock could decline and holders of our common stock may have difficulty selling their shares. In addition, the trading price of our common stock may be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. For example, after opening at $19.00 per share at the IPO, our common stock has experienced an intra-day trading high of $41.74 per share and a low of $14.90 per share through June 30, 2012. Some of the factors affecting our volatility include:

• price and volume fluctuations in the overall stock market from time to time;

• significant volatility in the market price and trading volume of technology companies in general, and of companies in our industry;

• actual or anticipated changes in our results of operations or fluctuations in our operating results;

• whether our operating results meet the expectations of securities analysts or investors;

• actual or anticipated changes in the expectations of investors or securities analysts;

• actual or anticipated developments in our competitors’ businesses or the competitive landscape generally;

• litigation involving us, our industry or both;

• regulatory developments in the United States, foreign countries or both;

• general economic conditions and trends;

• major catastrophic events;

• sales of large blocks of our stock; or

• departures of key personnel.

The stock markets in general, and market prices for the securities of technology-based companies like ours in particular, have from time to time experienced volatility that often has been unrelated to the operating performance of the underlying companies. A certain degree of stock price volatility can be attributed to being a newly public company. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our operating performance. In several recent situations where the market price of a stock has been volatile, holders of that stock have

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instituted securities class action litigation against the company that issued the stock. If any of our stockholders were to bring a lawsuit against us, the defense and disposition of the lawsuit could be costly and divert the time and attention of our management and harm our operating results.

If securities analysts do not publish research or reports about our business, or if they downgrade our stock, the price of our stock could decline.

The trading market for our common stock is likely to be influenced by any research and reports that securities or industry analysts publish about us or our business. In the event securities or industry analysts cover our company and one or more of these analysts downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

Insiders will continue to have substantial control over us, which could limit your ability to influence the outcome of key transactions, including a change of control.

As of August 20, 2012, our directors, executive officers, and each of our stockholders who own greater than 5% of our outstanding common stock and their affiliates, in the aggregate, own approximately 37% of the outstanding shares of our common stock. As a result, these stockholders, if acting together, could influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions, or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing, or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock. In addition, the significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.

We have broad discretion in the use of the net proceeds that we received in our public offerings of common stock and may not use them effectively.

We have broad discretion in the application of the net proceeds from our public offerings of common stock in 2011 and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. We have not allocated these net proceeds for any specific purposes. We might not be able to yield a significant return, if any, on any investment of these net proceeds. Stockholders will not have the opportunity to influence our management’s decisions on how to use the net proceeds, and our failure to apply the funds effectively could have a material adverse effect on our business, and could cause the price of our common stock to decline.

We have never paid dividends on our common stock and we do not anticipate paying any cash dividends in the foreseeable future.

We have never declared or paid any dividends on our common stock. In addition, our credit facility with a financial institution restricts our ability to pay dividends. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the future. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases.

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We will continue to incur increased costs as a result of being a public company.

As a public company, we are incurring and will continue to incur significant legal, accounting, and other expenses that we did not incur as a private company. In addition, new rules implemented by the SEC and the New York Stock Exchange, require changes in corporate governance practices of public companies. We expect these rules and regulations to continue to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We will continue to incur additional costs associated with our public company reporting requirements. We expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified people to serve on our board of directors or as executive officers.

Provisions in our certificate of incorporation and bylaws and under Delaware law might discourage, delay, or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Our certificate of incorporation and bylaws contain provisions that could depress the trading price of our common stock by acting to discourage, delay, or prevent a change of control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions:

• establish a classified board of directors so that not all members of our board of directors are elected at one time;

• authorize the issuance of “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;

• prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;

• prohibit stockholders from calling a special meeting of our stockholders;

• provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws; and

• establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

Additionally, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder and which may discourage, delay, or prevent a change of control of our company.

Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

Part I. Item 1B. Unresolved Staff Comments

None.

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Part I. Item 2. Properties

Our headquarters occupy approximately 150,000 square feet in Salt Lake City, Utah under leases that expire in September 2021. We have an option to extend these leases to September 2026. Our principal office for sales and marketing occupies approximately 79,000 square feet in San Jose, California, under a lease that expires in March 2019. We have an additional research and development office in Boulder, Colorado. We lease space in locations throughout the United States and various international locations for operations and sales personnel. We believe that our current facilities are adequate to meet our ongoing needs and that, if we require additional space, we will be able to obtain additional facilities on commercially reasonable terms.

Part I. Item 3. Legal Proceedings

On February 7, 2012, Entorian Technologies L.P., filed a lawsuit in the U.S. District Court for the District of Utah against our company. The complaint alleged that memory stacks included in some of our products infringe U.S. Patent No. 5,420,751, or the ‘751 patent, which expired in May 2012. Polystak, Inc. is our third-party supplier of the accused memory stack component. On March 1, 2012, Polystak filed a lawsuit against Entorian Technologies in the U.S. District Court for the Northern District of California. The complaint alleges that the ‘751 patent is invalid, and that Polystak’s memory stacks do not infringe the ‘751 patent. On March 8, 2012, Entorian Technologies dismissed the lawsuit against us in Utah. On March 9, 2012, Entorian Technologies filed a counterclaim against us and Polystak in the Northern District of California lawsuit. The counterclaim alleges that Fusion-io and Polystak infringe the ‘751 patent and seeks damages, but it does not seek an injunction. The Court has set a schedule calling for a patent claim construction hearing on March 5, 2013. Polystak has agreed to indemnify and defend us with respect to these lawsuits.

On September 7, 2011, Solid State Storage Solutions, Inc., or S4, filed a lawsuit in U.S. District Court for the Eastern District of Texas against our company and eight other companies. The complaint alleges that our products infringe U.S. Patent Nos. 6,701,471; 7,234,087; 7,721,165; 6,370,059; 7,366,016; 7,746,697; 7,616,485; 6,341,085; 6,567,334; 6,347,051; 7,064,995; and 7,327,624. The complaint seeks both damages and a permanent injunction against us. We have limited information about the specific infringement allegations, but they appear to focus on storage controllers for flash memory and in particular to storage address mapping, I/O buffering, wear leveling, and reducing read latency in relation to interfacing with flash storage media. We use a custom programmed storage controller in our products. The Court has set a schedule calling for a patent claim construction hearing on January 9, 2013, and a trial commencing on July 1, 2013.

On May 18, 2011, Internet Machines LLC filed a lawsuit in U.S. District Court for the Eastern District of Texas against us and 20 other companies. The complaint alleges that our products infringe U.S. Patent Nos. 7,454,552; 7,421,532; 7,814,259; and 7,945,722. On August 26, 2011, Internet Machines MC LLC amended its prior complaint filed in U.S. District Court for the Eastern District of Texas against PLX Technology, Inc. to add our company and several other companies as defendants. This complaint alleges that our products infringe U.S. Patent No. 7,539,190. These complaints seek both damages and a permanent injunction against us. The specific infringement allegations appear to focus on a PCI switch component that, while used in some of our products, is manufactured by a third-party supplier. This third-party supplier (which was found to infringe the above identified U.S. Patent Nos. 7,454,552 and 7,421,532 by a jury in a prior case) has agreed to indemnify and defend us with respect to these lawsuits. The judges have scheduled patent claim construction hearings for the first and second lawsuits on September 11, 2012 and September 6, 2012, respectively.

Based on our preliminary investigations of the patents identified in the Entorian Technologies, Internet Machines and S4 complaints, we do not believe that our products infringe any valid or

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enforceable claim of the patents at issue in those complaints. Nevertheless, the costs associated with any actual, pending, or threatened litigation could negatively impact our operating results regardless of the actual outcome. In addition, we may, from time to time, be involved in various legal proceedings arising from the normal course of business activities, and an unfavorable resolution of any of these matters could materially affect our future results of operations, cash flows, or financial position.

Part I. Item 4. Mine Safety Disclosures

None.

Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market for Our Common Stock

Our common stock began trading publicly on the New York Stock Exchange under the ticker symbol “FIO” on June 9, 2011. Prior to that time, there was no public market for our common stock. The following table sets forth, for the period indicated, the high and low sale prices of our common stock as reported by the New York Stock Exchange since our initial public offering.

	High		Low
Fiscal 2011
Fourth Quarter (beginning June 9, 2011 through June 30, 2011)	$	36.98	$	19.28
Fiscal 2012
First Quarter	$	35.67	$	14.90
Second Quarter	$	41.74	$	16.83
Third Quarter	$	33.87	$	21.84
Fourth Quarter	$	29.61	$	17.45

On August 20, 2012, the closing stock price of our common stock was $28.94.

Holders of Record

As of August 20, 2012, there were approximately 70 holders of record of our common stock. This figure does not include a substantially greater number of “street name” holders or beneficial holders of our common stock whose shares are held of record by banks, brokers and other financial institutions.

Stock Performance Graph and Cumulative Total Return

Notwithstanding any statement to the contrary in any of our previous or future filings with the SEC, the following information relating to the price performance of our common stock shall not be deemed to be “filed” with the SEC or to be “soliciting material” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and it shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such filing.

The following graph shows a comparison from June 9, 2011 (the date our common stock commenced trading on the New York Stock Exchange) through June 30, 2012 of the cumulative total return assuming a $100 investment in our common stock, the S&P 500 Index and the S&P 500 Information Technology Sector Index. Data for the S&P 500 Index and the S&P 500 Information Technology Sector Index assume reinvestment of dividends. The comparisons in this graph below are

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based on historical data and are not intended to forecast or be indicative of future performance of our common stock.

Comparison of Cumulative Total Return among Fusion-io, Inc., The S&P 500

and The S&P 500 Information Technology Sector Index

Dividend Policy

We have never declared or paid any cash dividend on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. In addition, the terms of our loan and security agreement with a financial institution currently prohibits us from paying cash dividends on our common stock. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws and compliance with certain covenants under our loan and security agreement with the financial institution, and will depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our board of directors may deem relevant.

Equity Plan Information

Our equity plan information required by this item is incorporated by reference to the information in Part III, Item 12 of this annual report on Form 10-K.

Sales of Unregistered Securities

Warrants

In September 2008, the Registrant issued a warrant to purchase 125,800 shares of the Registrant’s Series A convertible preferred stock to an accredited investor at an exercise price of

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$1.093 per share. In October 2011, this warrant was net exercised at a value of $34.72 per share, resulting in the issuance of 121,839 shares of the Registrant’s common stock.

Acquisition of IO Turbine

In August 2011, in connection with the acquisition of IO Turbine, Inc., the Registrant issued 2,047,003 shares of its common stock to stockholders of IO Turbine (including 413,688 unvested restricted stock awards), in accordance with the terms and conditions set forth in the merger agreement. Approximately 278,974 of such shares were deposited in escrow and held as partial security for indemnification obligations of the IO Turbine stockholders pursuant to the merger agreement, before being released in full from escrow in August 2012.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. The Registrant believes the offers, sales and issuances of the securities to accredited investors were exempt from registration under the Securities Act by virtue of Rule 506 of Regulation D promulgated thereunder and/or Section 4(2) of the Securities Act because the issuance of securities to the recipients did not involve a public offering. The Registrant believes the offers, sales and issuances of the securities to certain of its executive officers, directors and other accredited investors were exempt from registration under the Securities Act by virtue of Rule 504 of Regulation D promulgated thereunder and/or Section 4(2) of the Securities Act because the issuance of securities to the recipients did not involve a public offering. In addition, the Registrant believes the offer, sale and issuance of securities to stockholders of IO Turbine were exempt from registration under the Securities Act by virtue of Rule 506 of Regulation D promulgated thereunder and/or Section 4(2) of the Securities Act. Appropriate legends have been affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions had adequate access, through employment, business or other relationships or other disclosures, to information about the Registrant. When the Registrant has relied on Rule 506 of Regulation D promulgated under the Securities Act, other than in connection with the issuance of securities to stockholders of IO Turbine, the investors in unregistered securities have been accredited investors. In connection with the issuance of securities to stockholders of IO Turbine, each former stockholder of IO Turbine executed an investment representation letter indicating that such stockholder was receiving the Registrant’s shares with investment intent and provided information regarding their accreditation and sophistication (alone or when taken together with their purchaser representatives, as applicable). Based upon these investment representation letters, the Registrant believed that (i) no more than 35 of the stockholders of IO Turbine who participated in the issuance of the Registrant’s shares in connection with the acquisition of IO Turbine were non-accredited investors and (ii) each non-accredited stockholder of IO Turbine who participated in the issuance of the Registrant’s shares in connection with the acquisition of IO Turbine (either alone or with his purchaser representative, as applicable) had such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment in the offering. When we have relied on Section 4(2) of the Securities Act, we have received affirmative representations from the purchasers of unregistered securities regarding these purchasers’ financial sophistication.

Use of Proceeds from Registered Securities

Our initial public offering of common stock, or IPO, was made pursuant to a registration statement on Form S-1 (File No. 333-172683), which the SEC declared effective on June 8, 2011. In the offering, we issued and sold 12,600,607 shares, including 1,845,000 shares sold pursuant to the full exercise by the underwriters of their over-allotment option, at an issuance price of $19.00 per share. The offering did not terminate until after the sale of all of the securities registered by the registration statement. Goldman, Sachs & Co. and Morgan Stanley & Co. LLC acted as lead joint book-runners for the offering, and J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC acted as passive

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joint book-runners. As a result of the offering, we raised approximately $218.9 million in proceeds, net of underwriting discounts, commissions and offering expenses.

During fiscal 2012, we used approximately $17.6 million (net of cash acquired) of the net IPO proceeds to acquire IO Turbine. We intend to use the remaining net IPO proceeds for working capital and general corporate purposes, including expansion of our sales organization, further development and expansion of our product offerings and possible acquisitions of, or investments in, businesses, technologies or other assets. We have broad discretion in the way we use the net proceeds. Pending use of the net proceeds as described above, we intend to invest the net proceeds in U.S. government securities and short-term corporate securities such as money market funds. There has been no material change in the planned use of net IPO proceeds from that described in the final prospectus filed with the SEC pursuant to Rule 424(b) on June 9, 2011.

Purchases of Equity Securities by the Issuer

None.

Trading Plans

Our Insider Trading Policy permits directors, officers, and other employees covered under the policy to establish, subject to certain conditions and limitations set forth in the policy, written trading plans which are intended to comply with Rule 10b5-1 under the Securities Exchange Act, which permit automatic trading of common stock of Fusion-io, Inc. or trading of common stock by an independent person (such as a stockbroker) who is not aware of material, nonpublic information at the time of the trade. We are aware that certain of our directors and officers have entered into written trading plans, and we believe our directors and officers may establish such programs in the future.

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Part II. Item 6. Selected Financial Data

The following selected financial data should be read in conjunction with the consolidated financial statements and related notes thereto appearing elsewhere in this annual report on Form 10-K. We have derived the consolidated statement of operations data for fiscal 2010, 2011, and 2012 and consolidated balance sheet data as of June 30, 2011 and 2012 from audited consolidated financial statements included elsewhere in this report. The consolidated statement of operations data for fiscal year ended June 30, 2008 and 2009 and consolidated balance sheet data as of June 30, 2008, 2009, and 2010 were derived from audited consolidated financial statements that are not included in this annual report on Form 10-K. You should read the following selected consolidated financial data with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, our consolidated financial statements and the notes to consolidated financial statements, which are included in this annual report on Form 10-K.

SELECTED CONSOLIDATED FINANCIAL DATA

	Year Ended June 30,
	2008			2009			2010			2011		2012
	(In thousands, except for per share data)
Consolidated Statements of Operations Data:
Revenue	$	648		$	10,150		$	36,216		$	197,204	$	359,349
Gross profit		271			5,150			20,198			113,161		200,304
Total operating expenses		10,171			30,032			51,746			103,492		205,600
(Loss) income from operations		(9,900	)		(24,882	)		(31,548	)		9,669		(5,296	)
Net (loss) income	$	(9,975	)	$	(25,573	)	$	(31,716	)	$	4,555	$	(5,583	)
Net (loss) income attributable to common stockholders	$	(9,975	)	$	(25,573	)	$	(32,464	)	$	4,555	$	(5,583	)
Net (loss) income per common share, basic	$	(1.73	)	$	(3.27	)	$	(2.95	)	$	0.27	$	(0.06	)
Net (loss) income per common share, diluted	$	(1.73	)	$	(3.27	)	$	(2.95	)	$	0.06	$	(0.06	)
	As of June 30,
	2008			2009			2010			2011		2012
	(In thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments(1)	$	2,097		$	17,533		$	21,193		$	219,604	$	321,239
Inventories		707			3,993			25,148			35,622		59,457
Working capital(1)		766			17,485			32,157			270,079		386,973
Total assets(1)		4,566			28,216			59,452			317,286		541,020
Current and long-term deferred revenue		—			838			839			12,017		28,869
Current and long-term notes payable and capital lease obligations		—			279			444			108		—
Total liabilities		2,590			7,067			21,048			42,842		80,097
Total stockholders’ (deficit) equity(1)		(11,214	)		(35,647	)		(66,109	)		274,444		460,923

(1) The significant increase in this item from fiscal 2010 to 2011 was primarily due to our initial public offering, which was effective in June 2011, and the receipt of net proceeds of $218.9 million. The significant increase in this item from fiscal 2011 to 2012 was primarily due to our follow-on public offering of our common stock, which was effective in November 2011, and the receipt of net proceeds of $94.0 million.

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Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read together with our consolidated financial statements and the notes to those statements included elsewhere in this annual report on Form 10-K. This discussion contains forward-looking statements based on our current expectations, assumptions, estimates and projections about Fusion-io and our industry. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those indicated in these forward-looking statements as a result of certain factors, as more fully described in “Risk Factors” in Item 1A of this Form 10-K, in this Item 7, and elsewhere in this Form 10-K. We undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

Overview

We provide next generation datacenter solutions that accelerate databases, virtualization, cloud computing, big data, and the applications that help drive business from the smallest e-tailers to some of the world’s largest data centers, social media leaders, and Fortune Global 500 businesses. Our integrated hardware and software platform enables the decentralization of data from legacy architectures and specialized hardware. This core technology leverages flash memory to significantly increase datacenter efficiency, with enterprise grade performance, reliability, availability, and manageability.

We were incorporated in December 2005, and we initially focused on the engineering and development of our platform. We have experienced significant growth with revenue of $36.2 million, $197.2 million, and $359.3 million in fiscal 2010, 2011, and 2012, respectively. Our headcount increased from 262 employees as of June 30, 2010 to 441 employees as of June 30, 2011 and to 669 employees as of June 30, 2012.

We sell our products through our global direct sales force, OEMs, including Cisco, Dell, HP, and IBM, and other channel partners. Some of our OEMs and channel partners integrate our platform into their own proprietary product offerings. Our primary sales office is located in San Jose, California, and we also have additional sales presence in North America, Europe, and Asia.

Large purchases by a limited number of customers have accounted for a substantial majority of our revenue, and the composition of the group of our largest customers changes from period to period. Some of our customers make concentrated purchases to complete or upgrade specific large-scale data storage installations. These concentrated purchases are short-term in nature and are typically made on a purchase order basis rather than pursuant to long-term contracts. During fiscal 2010, 2011, and 2012, sales to the 10 largest customers in each period, including the applicable OEMs, accounted for approximately 75%, 92%, and 91% of revenue, respectively. Our direct customer Facebook, Apple, through a reseller, and OEM customer HP, each accounted for 36%, 24%, and 14% of our revenue, respectively, in fiscal 2011 and 30%, 25%, and 17% of our revenue, respectively, in fiscal 2012. We expect that sales to a limited number of customers will continue to contribute materially to our revenue for the foreseeable future.

We anticipate that sales through OEMs and other channel partners will continue to constitute a substantial portion of our future revenue. In some cases, our products must be designed or qualified into the OEM’s products. If that fails to occur for a given product line of an OEM, we would likely be unable to sell our products to that OEM during the life cycle of that product, which would adversely affect our revenue. We expect that as we continue to expand our global presence and business overseas, we will increasingly depend on our OEM relationships in such markets.

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We believe that extending our platform differentiation through software innovation will be critical to achieving broader market acceptance along with maintaining or increasing our gross margins. In this regard, our ioTurbine virtualization software, directCache data-tiering software, ioSphere platform management software, and the software development kit integrates and adds significant value to our platforms and we intend to continue adding software functionality to differentiate our products. The next generation VSL 3.0 virtualization software subsystem, for our next generation hardware platform is in full production. We continue to devote the majority of our research and development resources to software development, and if we are unable to successfully develop or acquire, and then market and sell additional software functionality, our ability to increase our revenue and gross margins could be adversely affected.

Our ioMemory forms the basis of our hardware offering and is designed as a portfolio of upgradeable modules, enabling faster time-to-market and increased extensibility, and it provides server-based storage memory, low access latency, field upgradeability, deep error correction, self-healing protection and native PCI Express connectivity. Our second generation ioMemory technology supports the latest NAND geometries, significantly increases performance and capacity, improves reliability while retaining the ability to build storage systems of varying capacity, performance, and form factors. At the heart of the ioMemory hardware is our proprietary field programmable data-path controller. It connects a large array of non-volatile memory chips natively to the server’s PCI-Express 1.0 or 2.0 peripheral bus, and addresses the reliability issues of non-volatile memory with our Adaptive Flashback Protection advanced chip-level fault tolerance technology, which is capable of restoring, correcting, and resurrecting lost data in the Flash-based storage sub-system.

Our portfolio of storage memory products incorporates our ioMemory hardware modules and related VSL and caching software into our family of ioDrive, ioCache, and ioFX enterprise grade products. Our ioDrive, ioDrive2, ioCache, and ioFX products work in conjunction or are integrated with our ioTurbine virtualization caching software and directCache data-tiering software.

We outsource manufacturing of our hardware products using a limited number of contract manufacturers. We procure a majority of the components used in our products directly from third-party vendors and have them delivered to our contract manufacturers for manufacturing and assembly. Once our contract manufacturers perform sub-assembly and assembly quality tests, they are assembled to our specified configurations. We perform final manufacturing assurance tests, labeling, final configuration, including a final firmware installation and shipment to our customers.

As a consequence of the rapidly evolving nature of our business and our limited operating history, we believe that period-to-period comparisons of revenue and other operating results, including gross margin and operating expenses as a percentage of our revenue, are not necessarily meaningful and should not be relied upon as indications of future performance. Although we have experienced significant percentage growth in our revenue, we do not believe that our historical growth rates are likely to be sustainable or indicative of future growth.

Recent Developments

In August 2011, we acquired IO Turbine, Inc., or IO Turbine, a provider of caching solutions for virtual environments, based in San Jose, California. The acquisition of IO Turbine is a key part of our strategy to enable enterprise customers to increase the utilization, performance, and efficiency of their datacenter resources, and extract greater value from their information assets. The aggregate consideration in the acquisition for all of IO Turbine’s outstanding securities on a fully diluted basis was approximately $65.6 million, which consisted of (1) cash, (2) shares of our common stock valued at $28.40 per share, the closing sale price of our common stock on the closing date of the acquisition, and (3) the fair value (approximately $0.9 million) of assumed stock options and restricted stock

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awards attributable to pre-acquisition service. In addition, subsequent to the acquisition we will recognize up to approximately $26.4 million of stock-based compensation expense related to the fair value of assumed restricted stock awards and stock options, of which approximately $3.8 million was expensed immediately in connection with the acceleration of vesting of certain restricted stock awards and the remainder will be recognized over the underlying future service period of the assumed stock awards and stock options. The assets, liabilities, and operating results of IO Turbine are reflected in our consolidated financial statements from the date of acquisition. Approximately $3.6 million of cash and 278,974 shares were deposited in escrow and held for one year from the date of acquisition as partial security for indemnification obligations of the IO Turbine stockholders pursuant to the merger agreement, before being released in full from escrow in August 2012.

In November 2011, we completed a follow-on public offering of our common stock in which we sold and issued 3,000,000 shares at an issuance price of $33.00 per share. After deducting underwriting discounts and commissions and approximately $1.1 million in offering costs, we received approximately $94.0 million in net proceeds.

Components of Consolidated Statements of Operations

Revenue

We derive revenue primarily from the sale of our storage memory products and support services. We sell our storage memory platform through our global direct sales force, OEMs, and other channel partners. We provide our support services pursuant to support contracts, which involve hardware support, software support, and software upgrades on a when-and-if available basis, and typically have a one-year term. Revenue from support services for fiscal 2010, 2011, and 2012 represented less than $1.0 million, $4.5 million, and $14.6 million, respectively. In fiscal 2012, our software revenue was not significant to our consolidated statement of operations.

Cost of Revenue

Cost of revenue consists primarily of material costs including amounts paid to our suppliers and contract manufacturers for hardware components and assembly of those components into our products. The largest portion of our cost of revenue consists of the cost of non-volatile memory components. Given the commodity nature of memory components, neither we nor our contract manufacturers generally enter into long-term supply contracts for our product components, which can cause our cost of revenue to fluctuate. Cost of revenue is recorded when the related product revenue is recognized. Cost of revenue also includes costs related to allocated personnel expenses related to customer support, warranty costs, costs of shipping, and carrying value adjustments recorded for excess and obsolete inventory.

Operating Expenses

The largest component of our operating expenses is personnel costs, consisting of salaries, benefits, and incentive compensation for our employees, which includes stock-based compensation. Our headcount increased from 262 employees as of June 30, 2010 to 441 employees as of June 30, 2011, and to 669 employees as of June 30, 2012. As a result, operating expenses have increased significantly over these periods.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel costs, incentive compensation, marketing programs, travel-related costs, consulting expenses associated with sales and marketing activities and facilities-related costs.

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Research and Development

Research and development expenses consist primarily of personnel costs, prototype expenses, amortization of an intangible asset, consulting services, depreciation associated with research and development equipment and facilities-related costs. We expense research and development costs as incurred.

General and Administrative

General and administrative expenses consist primarily of personnel costs, legal expenses, consulting and professional services, audit costs, and facility-related expenses for our executive, finance, human resources, information technology, and legal organizations.

Other income (expense), net

Other income (expense), net consists of changes in the fair value of a derivative related to a repurchase of our common stock, interest expense, interest income, realized gains and losses from investments, and transactional foreign currency gains and losses.

Trends in Our Business

Gross Margin

For fiscal 2012, gross margin decreased from fiscal 2011 mainly due to higher raw material costs associated with the early stage of the ioDrive2 product lifecycle and also related to product mix. We are now qualified with three NAND flash suppliers, and we believe there is potential for additional gross margin improvement; however, we plan to continue to balance driving market adoption with improving gross margin. While gross margin remains subject to fluctuations as a result of raw material costs and product mix, we currently anticipate our gross margin to improve slightly in fiscal 2013 compared to fiscal 2012 due to lower raw material costs and more normalized product mix.

Sales and Marketing

We plan to continue to invest in sales by increasing our sales headcount. Our sales personnel are typically not immediately productive and therefore the increase in sales and marketing expense when we add new sales representatives is not immediately offset by increased revenue and may not result in increased revenue over the long-term. The timing of our hiring of new sales personnel and the rate at which they generate incremental revenue could therefore affect our future period-to-period financial performance. We expect that sales and marketing expenses will continue to increase in absolute dollars and may fluctuate as a percentage of revenue as we expect to continue hiring new sales representatives. We also expect to expand marketing activities to drive sales opportunities and brand awareness.

Research and Development

We expect to continue to devote substantial resources to the development of our products including the development of new products. We believe that these investments are necessary to maintain and improve our competitive position. We expect that our research and development expenses will continue to increase in absolute dollars and may fluctuate as a percentage of revenue as we expect to continue to invest in additional engineering personnel and infrastructure required to support the development of new products and to enhance existing products.

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General and Administrative

While we expect personnel costs, including stock-based compensation expense for employees and non-employees, to be the primary component of general and administrative expenses, we also expect to continue to incur significant legal and accounting costs related to compliance with rules and regulations implemented by the SEC. We expect that general and administrative expenses will continue to increase in absolute dollars and as a percentage of revenue primarily due to general growth of the business, infrastructure costs to support our international growth, and in legal costs related to intellectual property.

Results of Operations for the Fiscal Years Ended June 30, 2010, 2011 and 2012

Revenue

The following table presents our revenue for the periods indicated and related changes as compared to the prior periods (dollars in thousands):

	Year Ended June 30,				Change in					Year Ended June 30,				Change in
	2010		2011		$		%			2011		2012		$		%
Revenue	$	36,216	$	197,204	$	160,988		445	%	$	197,204	$	359,349	$	162,145		82	%

2010 Compared to 2011. Revenue increased $161.0 million from fiscal 2010 to fiscal 2011, primarily due to the increase in the overall volume of our products shipped.

2011 Compared to 2012. Revenue increased $162.1 million from fiscal 2011 to fiscal 2012, primarily due to the increase in the overall volume of our products shipped.

Revenue from the 10 largest customers, including the applicable OEMs, for each fiscal year was 75%, 92%, and 91% of revenue for fiscal 2010, 2011, and 2012, respectively. Three customers accounted for 36%, 24%, and 14% of our revenue in fiscal 2011 and 30%, 25%, and 17% of our revenue in fiscal 2012. No other customer accounted for 10% or greater of revenue in fiscal 2011 and 2012. Revenue from customers with a ship-to location in the United States accounted for 76%, 82%, and 74% of revenue for fiscal 2010, 2011, and 2012, respectively.

Cost of Revenue and Gross Margin

The following table presents our cost of revenue and gross margin for the periods indicated and related changes as compared to the prior periods (dollars in thousands):

	Year Ended June 30,						Change in					Year Ended June 30,						Change in
	2010			2011			$		%			2011			2012			%		%
Cost of revenue	$	16,018		$	84,043		$	68,025		425	%	$	84,043		$	159,045		$	75,002		89	%
Gross profit		20,198			113,161			92,963		460	%		113,161			200,304			87,143		77	%
Gross margin(1)		56	%		57	%							57	%		56	%

(1) We define gross margin as our gross profit expressed as a percentage of total revenues

2010 Compared to 2011. Cost of revenue increased $68.0 million and gross profit increased $93.0 million from fiscal 2010 to fiscal 2011, primarily due to the increase in volume of product shipped. Gross margin increased due to efficiencies resulting from economies of scale as our revenue has increased. The increase was partially offset by sales of excess raw materials of approximately $4.0 million related to end-of-life products in fiscal 2011, which were sold at their approximate carrying value.

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2011 Compared to 2012. Cost of revenue increased $75.0 million and gross profit increased $87.1 million from fiscal 2011 to fiscal 2012, primarily due to the increase in the volume of our products shipped. Our gross margin decreased from fiscal 2011 to fiscal 2012 due to higher raw material costs associated with the early stage of the ioDrive2 product lifecycle and also related to product mix.

Operating Expenses

Sales and Marketing

The following table presents our sales and marketing expenses for the periods indicated and related changes as compared to the prior periods (dollars in thousands):

	Year Ended June 30,				Change in					Year Ended June 30,				Change in
	2010		2011		$		%			2011		2012		$		%
Sales and marketing	$	23,386	$	55,698	$	32,312		138	%	$	55,698	$	87,171	$	31,473		57	%

2010 Compared to 2011. Sales and marketing expenses increased $32.3 million from fiscal 2010 to fiscal 2011, primarily due to an increase in the number of sales and marketing employees, from 123 as of June 30, 2010 to 232 as of June 30, 2011. This resulted in a $25.4 million increase in personnel-related costs, including a $9.6 million increase in commission expense. The increase was also due to a $2.4 million increase in marketing program costs, a $2.2 million increase in travel-related costs and a $0.8 million increase in allocated rent and facilities expenses.

2011 Compared to 2012. Sales and marketing expenses increased $31.5 million from fiscal 2011 to fiscal 2012, primarily due to an increase in sales and marketing personnel from 232 employees at the end of fiscal 2011 to 347 at the end of fiscal 2012, as we hired additional employees to focus on acquiring new customers and expanding our business. This increase in headcount resulted in a $23.5 million increase in personnel-related costs, including a $3.0 million increase in sales commissions. The majority of the remaining increase in sales and marketing expenses from fiscal 2011 to fiscal 2012 was due to a $2.9 million increase in product demonstration expenses, a $2.0 million increase in travel-related costs, and a $0.5 million increase in consulting services.

Research and Development

The following table presents our research and development expenses for the periods indicated and related changes as compared to the prior periods (dollars in thousands):

	Year Ended June 30,				Change in					Year Ended June 30,				Change in
	2010		2011		$		%			2011		2012		$		%
Research and development	$	15,977	$	27,238	$	11,261		70	%	$	27,238	$	60,006	$	32,768		120	%

2010 Compared to 2011. Research and development expenses increased $11.3 million from fiscal 2010 to fiscal 2011, primarily due to an increase in the number of research and development employees, from 97 as of June 30, 2010 to 152 as of June 30, 2011. This resulted in a $7.3 million increase in personnel-related costs. The increase was also due to a $1.7 million increase in manufacturing costs for new product prototypes, and a $1.2 million increase in allocated rent and facilities expenses.

2011 Compared to 2012. Research and development expenses increased $32.8 million from fiscal 2011 to fiscal 2012, primarily due to an increase in research and development personnel from 152 employees at the end of fiscal 2011 to 243 at the end of fiscal 2012, resulting in a $22.5 million

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increase in personnel-related costs. The increase was also due to a $3.1 million increase in manufacturing costs for new product prototypes, a $2.3 million increase in amortization expense for an intangible asset for developed technology acquired in the IO Turbine acquisition, a $1.7 million increase in engineering outside services, and a $1.0 million increase in depreciation expense.

General and Administrative

The following table presents our general and administrative expenses for the periods indicated and related changes as compared to the prior periods (dollars in thousands):

	Year Ended June 30,				Change in					Year Ended June 30,				Change in
	2010		2011		$		%			2011		2012		$		%
General and administrative	$	12,383	$	20,556	$	8,173		66	%	$	20,556	$	58,423	$	37,867		184	%

2010 Compared to 2011. General and administrative expenses increased $8.2 million from fiscal 2010 to fiscal 2011, primarily due to an increase in stock-based compensation of $4.6 million, of which $3.2 million specifically related to non-employee stock option awards and the significant increase in the fair value of these awards from period to period. In addition, the increase was due to the number of general and administrative employees, from 42 as of June 30, 2010 to 57 as of June 30, 2011. These increases contributed to a $7.9 million increase in personnel-related costs. The increase was offset by a $3.1 million decrease in legal costs, including a $1.0 million insurance claim reimbursement related to the resolution of litigation that was ongoing in fiscal 2010. The majority of the remaining increase was due to a $2.4 million increase in depreciation expense and a $0.5 million increase in professional accounting services.

2011 Compared to 2012. General and administrative expenses increased $37.9 million from fiscal 2011 to fiscal 2012, primarily due to an increase in stock-based compensation of $22.8 million, of which $5.2 million specifically related to non-employee stock option awards and the significant increase in the fair value of these awards from period to period and $3.8 million related to the acceleration of vesting of certain restricted stock awards assumed in connection with the acquisition of IO Turbine. In addition, the increase was due to the number of general and administrative employees, from 57 employees at the end of fiscal 2011 to 79 employees at the end of fiscal 2012. These increases contributed to a $26.8 million increase in personnel-related costs. The majority of the remaining increase was due to a $2.9 million increase in professional accounting and legal services, a $1.3 million increase in acquisition related costs due to the acquisition of IO Turbine, a $1.1 million increase in rent expense, and a $0.9 million increase in consulting costs.

Other Income (Expense), net

The following table presents our other income (expense), net for the periods indicated and related changes as compared to the prior periods (dollars in thousands):

	Year Ended June 30,						Change in						Year Ended June 30,					Change in
	2010			2011			$			%			2011			2012		$		%
Other income (expense), net	$	(156	)	$	(3,420	)	$	(3,264	)		(2,092	)%	$	(3,420	)	$	328	$	3,748		110	%

2010 Compared to 2011. Other income (expense), net changed by $3.3 million from fiscal 2010 to fiscal 2011, primarily due to $2.1 million increased expense attributable to the change in the fair value of a preferred stock warrant and a $1.0 million increase in other expense due to a change in the fair value of a common stock repurchase derivative liability.

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2011 Compared to 2012. Other income (expense), net changed by $3.7 million from fiscal 2011 to fiscal 2012, primarily due to a decrease in interest expense of $2.3 million, which was primarily the result of a change in the fair value of a preferred stock warrant, and a decrease of $1.1 million in other expense, which was primarily the result of a change in the fair value of a common stock repurchase derivative liability.

Income Tax Expense

The following table presents our income tax expense for the periods indicated and related changes as compared to the prior periods (dollars in thousands):

	Year Ended June 30,				Change in					Year Ended June 30,				Change in
	2010		2011		$		%			2011		2012		$			%
Income tax expense	$	12	$	1,694	$	1,682		14,017	%	$	1,694	$	615	$	(1,079	)		(64	)%

2010 Compared to 2011. Income tax expense increased by $1.7 million due to income tax expense related to certain state jurisdictions for which taxable income existed and for which net operating loss carryforwards were not available, federal alternative minimum taxes, and foreign income taxes.

2011 Compared to 2012. Income tax expense decreased by $1.1 million, primarily due to a tax benefit we received in fiscal 2012 as a result of a partial reversal of the valuation allowance against our deferred tax assets as a result of a deferred tax liability recognized in connection with the acquisition of IO Turbine, as well as a tax provision benefit received related to stock-based awards. These were partially offset by state income taxes and foreign income taxes on current income in jurisdictions for which net operating loss carryforwards were not available as well as U.S. federal alternative minimum tax.

Selected Quarterly Results of Operations

The following table presents, unaudited selected quarterly consolidated results of operations data for each of the quarters presented. The unaudited consolidated financial statements for each of these quarters were prepared on a basis consistent with our audited consolidated financial statements and include all adjustments, consisting of normal and recurring adjustments, that we consider necessary for a fair presentation of the financial position and results of operations as of and for such periods. You should read this table in conjunction with our consolidated financial statements and the related notes located elsewhere in this filing. The results of operations for any quarter are not necessarily indicative of the results of operations for any future periods.

	Quarter Ended
	Sept. 30, 2010			Dec. 31, 2010			Mar. 31, 2011			June 30, 2011			Sept. 30, 2011			Dec. 31, 2011			Mar. 31, 2012			June 30, 2012
	(In thousands, expect for gross margin and per share data)
Revenue	$	27,046		$	31,218		$	67,251		$	71,689		$	74,385		$	84,131		$	94,237		$	106,596
Gross profit		11,634			18,340			35,753			47,434			47,031			42,925			49,057			61,291
Gross margin(1)		43.0	%		58.7	%		53.2	%		66.2	%		63.2	%		51.0	%		52.1	%		57.5	%
Total operating expenses		17,379			20,289			28,024			37,800			42,366			46,972			53,981			62,281
(Loss) income from operations		(5,745	)		(1,949	)		7,729			9,634			4,665			(4,047	)		(4,924	)		(990	)
Net (loss) income	$	(5,771	)	$	(2,473	)	$	7,035		$	5,764		$	7,189		$	(5,709	)	$	(4,676	)	$	(2,387	)
Net (loss) income per common share, basic	$	(0.46	)	$	(0.19	)	$	0.50		$	0.21		$	0.09		$	(0.07	)	$	(0.05	)	$	(0.03	)
Net (loss) income per common share, diluted	$	(0.46	)	$	(0.19	)	$	0.09		$	0.06		$	0.07		$	(0.07	)	$	(0.05	)	$	(0.03	)

(1) We define gross margin as our gross profit expressed as a percentage of total revenues

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Revenue has increased sequentially in all of the quarters presented due to increases in the volume of products sold.

The gross margin for the three months ended December 31, 2010 increased sequentially due to a significantly lower volume of sales to a significant customer. Gross margin for the three months ended March 31, 2011 decreased sequentially primarily due to sales of excess raw materials of approximately $4.0 million related to end-of-life products, which were sold at their approximate carrying values and to a higher concentration of lower gross margin sales to a significant customer. Gross margin for the three months ended June 30, 2011 increased due to the higher gross margin mix of products sold.

The gross margin for the three months ended December 31, 2011 decreased sequentially due to higher raw material costs from the early stage of ioDrive 2 product lifecycle and the lower gross margin mix of products sold. Gross margin for the three months ended June 30, 2012 increased sequentially due to lower raw material costs and the higher gross margin mix of products sold.

Operating expenses in all quarters increased sequentially as we continued to add headcount and incurred related costs to accommodate our growth.

Liquidity and Capital Resources

Primary sources of liquidity

As of June 30, 2012, our principal sources of liquidity consisted of cash and cash equivalents of $321.2 million, net accounts receivable of $56.7 million, and amounts available under our revolving line of credit of approximately $21.8 million. In June 2011, we completed an initial public offering of our common stock, or IPO, in which we issued and sold 12,600,607 shares and received net proceeds of approximately $218.9 million. In November 2011, we completed a follow-on public offering of our common stock in which we issued and sold 3,000,000 shares and received net proceeds of approximately $94.0 million. We had working capital of $387.0 million as of June 30, 2012.

In August 2011, we used approximately $17.6 million (net of cash acquired) of the net IPO proceeds as partial consideration to purchase IO Turbine. We anticipate using the remaining net proceeds from our public offerings for working capital and general corporate purposes, including expansion of our sales organization, further development and expansion of our product offerings and possible acquisitions of, or investments in, businesses, technologies, or other assets. We have no present material understandings, commitments, or agreements to enter into any acquisitions or investments. Our excess cash is primarily invested in money market funds.

Historically, our primary sources of liquidity have been from customer payments for our products and services, the issuance of common and convertible preferred stock and convertible notes and proceeds from our revolving line of credit.

Cash Flow Analysis

	Year Ended June 30,
	2010			2011			2012
	(In thousands)
Net cash (used in) provided by:
Operating activities	$	(39,553	)	$	(9,857	)	$	34,768
Investing activities		(14,298	)		(916	)		(41,574	)
Financing activities		46,719			221,113			108,527

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Operating Activities

Our operating cash flow primarily depends on the timing and amount of cash receipts from our customers, inventory purchases and payments for operating expenses.

Our net cash used in operating activities for fiscal 2010 was $39.6 million and was primarily due to an increase in our inventory balance of $21.2 million as a result of the increasing demand for our products. We also had headcount increases in all areas of our business from 172 employees as of June 30, 2009 to 262 employees as of June 30, 2010. Our net loss for 2010 was $31.7 million. Significant non-cash expenses included in net loss were stock-based compensation of $1.9 million and depreciation and amortization expense of $1.5 million.

Our net cash used in operating activities for fiscal 2011 was $9.9 million. During this period our operating cash outflows, which consisted primarily of purchases of inventory and investments made to hire additional headcount to support our current and anticipated growth, were partially offset by cash collections from our customers. Our net income for 2011 was $4.6 million. Significant non-cash expenses included in net income were stock-based compensation of $8.6 million, depreciation and amortization expense of $4.5 million and the non-cash expense recorded related to the convertible preferred stock warrant and the common stock repurchase derivative liability.

Our net cash provided by operating activities for fiscal 2012 was $34.8 million. During this period our operating cash inflows, which consisted primarily of cash collections from our customers, were partially offset by purchases of inventory and investments made to hire additional headcount to support our current and anticipated growth. Our net loss for 2012 was $5.6 million. Significant non-cash expenses included in net income were stock-based compensation of $42.6 million, depreciation and amortization expense of $9.0 million, and the non-cash expense recorded related to the convertible preferred stock warrant and the common stock repurchase derivative liability.

Investing Activities

Cash flows from investing activities primarily relate to purchases of computer equipment, leasehold improvements and property and equipment to support our growth. Investing activities also includes cash used for business acquisitions and purchases, sales, and maturities of our short-term investments in available-for-sale securities.

For fiscal 2010, our net cash used in investing activities was $14.3 million, including $13.9 million for purchases of short-term investments and $3.4 million for purchases of property and equipment.

In fiscal 2011, our net cash used in investing activities was $0.9 million and was primarily due to the cash used for the purchase of property and equipment of $13.0 million offset by net proceeds from the sale of short-term investments of $12.0 million and $0.1 million from the sale of property and equipment.

For fiscal 2012, our net cash used in investing activities was $41.6 million, including $24.0 million from purchases of property and equipment and $17.6 million for the acquisition of IO Turbine, net of cash acquired.

Financing Activities

Cash flows from financing activities primarily include net proceeds from issuances of common and convertible preferred stock and proceeds and payments related to issuances of convertible notes and loans from a financial institution.

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We generated $46.7 million in net cash from financing activities in fiscal 2010, including $43.8 million of net proceeds from the issuance of our Series C convertible preferred stock, $5.0 million from the issuance of convertible notes and $4.0 million from a loan with a financial institution. We repaid the $4.0 million loan prior to the end of fiscal 2010.

We generated $221.1 million of net cash from financing activities in fiscal 2011, primarily due to $219.2 million in net proceeds from the issuance of common stock, $11.0 million that we borrowed from a financial institution, $1.5 million in proceeds from the exercise of stock options and a $1.2 million tax benefit from the exercise of stock options and $0.7 million related to a change in restricted cash. These increases were offset by the repayment of $11.3 million of notes payable and capital lease obligations and $1.2 million in repurchases of common stock.

We generated $108.5 million in cash from financing activities in fiscal 2012, primarily due to the $94.0 million in net proceeds from the issuance of common stock through our follow-on public offering, $13.3 million in net proceeds from our employee stock purchase plan and exercise of stock options, and $2.5 million from a tax benefit from the exercise of stock options, all offset by the payout of a common stock repurchase derivative liability of $1.1 million.

Revolving Line of Credit

In September 2010, we amended and restated our loan and security agreement, or the revolving line of credit, with a financial institution. The revolving line of credit allows us to borrow up to a limit of $25.0 million. A sublimit of $6.0 million for letters of credit, certain cash management services, and foreign exchange forward contracts applied until May 2012. The total balance of letters of credit outstanding at June 30, 2012 was $3.2 million, which reduces the amount we have available to borrow under the revolving line of credit. Prior to May 2012, borrowings under the revolving line of credit would have accrued interest at a floating per annum rate equal to one-half of one percentage point (0.50%) above the prime rate as published in the Wall Street Journal. An unused commitment fee equal to 0.375% of the difference between the $25.0 million limit and the average daily balance of borrowings outstanding each quarter was due on the last day of such quarter. Prior to May 2012, the revolving line of credit was secured by substantially all of our assets. We can make advances against the revolving line of credit until its maturity date in September 2012, at which time all unpaid principal and interest shall be due and payable.

In August 2011, we entered into an amendment to the revolving line of credit which provided for the consent of the financial institution with respect to the IO Turbine acquisition and certain amendments to provide us with further flexibility to consummate mergers and acquisitions permitted under the revolving line of credit.

In May 2012, we entered into a second amendment to the revolving line of credit. Pursuant to this amendment, the pricing on revolving line of credit was amended such that borrowings under the revolving line of credit accrue interest at a per annum rate equal to, at our option, a floating per annum rate equal to the prime rate as published in the Wall Street Journal, or the LIBOR rate (based on 1, 2, 3 or 6-month interest periods) plus a margin equal to two percent (2.00%) per annum. This amendment further provides for, among other things, (i) the reduction of the quarterly unused commitment fee to an amount equal to one-quarter of one percent (0.25%) per annum of the difference between the $25.0 million loan commitment and the average daily balance of borrowings outstanding on the last day of each quarter, (ii) the removal of the borrowing base formula and the sublimits restricting for the issuance of letters of credit, cash management services and foreign exchange forward contracts, and (iii) the release of the financial institution’s security interest in all of our assets.

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Under the terms of the revolving line of credit, we are required to maintain the following minimum financial covenants on a consolidated basis:

• A ratio of current assets to current liabilities plus, without duplication, any of our obligations to the financial institution, of at least 1.25 to 1.00.

• A tangible net worth of at least $25.0 million, plus 25% of the net proceeds we received from the sale or issuance of our equity or subordinated debt, such increase to be measured as of the last day of the quarter in which we received such proceeds.

As of June 30, 2012, no borrowings were outstanding under the revolving line of credit and we were in compliance with all covenants.

Future Capital Requirements

Our future capital requirements will depend on many factors, including our rate of revenue growth, possible acquisitions of, or investments in, businesses, technologies, or other assets, the expansion of our sales and marketing activities, the timing and extent of spending to support product development efforts, and the expansion into new territories, the timing of new product introductions, the building of infrastructure to support our growth, the continued market acceptance of our products, and strategic investments in businesses.

We believe that our cash and cash equivalents and available amounts under the revolving line of credit, will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months. Although we are not currently a party to any material agreement or letter of intent regarding potential investments in, or acquisitions of, complementary businesses, applications, or technologies, we may enter into these types of arrangements, which could require us to seek additional equity or debt financing. If required, additional financing may not be available on terms that are favorable to us, if at all. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders will be reduced and these securities might have rights, preferences, and privileges senior to those of our current stockholders. We cannot assure you that additional financing will be available or that, if available, such financing can be obtained on terms favorable to our stockholders and us.

Off Balance Sheet Arrangements

During the periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purpose.

Contractual Obligations and Material Commitments

The following is a summary of our contractual obligations as of June 30, 2012 (in thousands):

			Payments Due by Period
	Total		Less Than 1 Year		1 to 3 Years		3 to 5 Years		After 5 Years
Operating lease obligations	$	54,394	$	5,625	$	11,039	$	11,595	$	26,135
Purchase obligations(1)		35,794		35,794		—		—		—
Total	$	90,188	$	41,419	$	11,039	$	11,595	$	26,135

(1) In May 2012, we entered into a minimum purchase commitment for raw materials inventory that ends in June 2013 and provides for a termination fee based on a percentage of the amount of raw

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materials inventory not taken under the commitment. During fiscal 2012, we paid approximately $1.2 million under this commitment. As of June 30, 2012, approximately $35.8 million remains outstanding under this commitment. Purchase obligations under purchase orders or contracts that we can cancel without a significant penalty, such as routine purchases for operating expenses, are not included in the above table.

Operating lease payments primarily relate to our leases of office space with various expiration dates through 2021. During fiscal 2011 and 2012, we entered into new leases to expand our primary office facilities in Salt Lake City, Utah. The term of these leases includes an initial lease term that ends in September 2021, plus the option to extend the leases for an additional five years. These leases include rent holidays during the first year beginning with the lease effective date and increasing rental rates over the term of the leases. These leases also require us to provide the lessor letters of credit in aggregate of $3.0 million.

In January 2012, we entered into a lease agreement to lease approximately 79,000 square feet of office space located in San Jose, California. The lease term is for 82 months and ends in March 2019. The lease provides for monthly payments of rent during the term as set forth in the lease. The lease also includes rent holidays during the first year beginning with the lease effective date and increasing rental rates over the term of the lease. The lease allows for leasehold improvements up to $1.2 million to be paid by the landlord. We have relocated employees currently based in the Silicon Valley area to our San Jose facility.

Indemnification

We have agreed to indemnify our officers and directors for certain events or occurrences, while the officer or director is or was serving at our request in such capacity. The maximum amount of potential future indemnification is unlimited; however, we have a director and officer insurance policy that provides corporate reimbursement coverage that limits our exposure and enables us to recover a portion of any future amounts paid. We are unable to reasonably estimate the maximum amount that could be payable under these arrangements since these obligations are not capped but are conditional to the unique facts and circumstances involved. Accordingly, we have no liabilities recorded for these agreements as of June 30, 2011 and 2012.

Many of our agreements with customers and channel partners, including OEMs and resellers, generally include certain provisions for indemnifying the channel partners and customers against third-party claims of intellectual property infringement arising from the use of our products. To date, we have not incurred any material costs as a result of such indemnification provisions and have not accrued any liabilities related to such obligations in our consolidated financial statements.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. These estimates and assumptions are often based on judgments that we believe to be reasonable under the circumstances at the time made, but all such estimates and assumptions are inherently uncertain and unpredictable. Actual results may differ from those estimates and assumptions, and it is possible that other professionals, applying their own judgment to the same facts and circumstances, could develop and support alternative estimates and assumptions that would result in material changes to our operating results and financial condition. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

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We believe that the assumptions and estimates associated with revenue recognition, stock-based compensation, business combinations and impairment of long-lived and intangible assets including goodwill, inventory valuation, warranty liability, and income taxes have the greatest potential impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see Note 1 of the accompanying notes to our consolidated financial statements.

Revenue Recognition

We derive our revenue primarily from sales of products and support services and enter into multiple-element arrangements in the normal course of business with our customers and channel partners. In all of our arrangements, we do not recognize revenue until we can determine that persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and we deem collection to be reasonably assured. In making these judgments, we evaluate these criteria as follows:

• Evidence of an Arrangement — We consider a non-cancelable agreement or purchase order signed by a customer to be persuasive evidence of an arrangement.

• Delivery has Occurred — We consider delivery to have occurred when product has been delivered to the customer based on applicable shipping terms, and no post-delivery obligations exist other than ongoing support obligations under sold support services. In instances where customer acceptance is required, delivery is deemed to have occurred when customer acceptance has been achieved.

• Fees are Fixed or Determinable — We consider the fee to be fixed or determinable unless the fee is subject to refund or adjustment or is not payable within normal payment terms. If the fee is subject to refund or adjustment, we recognize revenue net of estimated returns or if a reasonable estimate cannot be made, when the right to a refund or adjustment lapses.

• Collection is Reasonably Assured — We conduct a credit worthiness assessment on all our customers. Generally we do not require collateral. We continue to evaluate collectability by reviewing our customers’ credit worthiness including a review of past transaction history. Payment terms are typically 30 to 75 days from the date of invoice. Collection is reasonably assured if, based upon our evaluation, we expect that the customer will be able to pay amounts under the arrangement as payments become due. If we determine that collection is not reasonably assured, revenue is deferred and recognized upon the receipt of cash.

Some of our revenue arrangements are multiple-element arrangements because they are comprised of sales of both products and support services. For multiple-element arrangements, we evaluate whether each deliverable could be accounted for as separate units of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value, and for an arrangement where a general right of return exists relative to a delivered item, delivery, or performance of the undelivered item must be considered probable and substantially in our control. Stand-alone value exists if the product or service is sold separately by us or by another vendor or could be resold by the customer. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition.

Our multiple-element arrangements typically include two elements: ioDrive hardware, which includes embedded VSL virtualization software, and support services. We have determined that our ioDrive hardware and the embedded VSL virtualization software are considered a single unit of accounting because the hardware and software individually do not have standalone value and are never sold separately. Support services are considered a separate unit of accounting as they are sold separately and have standalone value.

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We allocate arrangement consideration at the inception of an arrangement to all deliverables based on the relative selling price method in accordance with the selling price hierarchy, which includes: (1) vendor-specific objective evidence, or VSOE, if available; (2) third-party evidence, or TPE, if vendor-specific objective evidence is not available; and (3) best estimate of selling price, or BESP, if neither VSOE nor TPE is available.

• VSOE — We determine VSOE based on our historical pricing and discounting practices for the specific product or support service when sold separately. In determining VSOE, we require that a substantial majority of the selling prices for products or support services fall within a reasonably narrow pricing range. We have historically priced certain of our ioDrive products within a narrow range and have used VSOE to allocate the selling price of deliverables for these specific product sales.

• TPE — When VSOE cannot be established for deliverables in multiple element arrangements, we apply judgment with respect to whether we can establish selling price based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, our products differ from those of our peers such that the comparable pricing of support services with similar functionality cannot be obtained. Furthermore, we are unable to reliably determine what similar competitor services’ selling prices are on a stand-alone basis. As a result, we have not been able to establish selling price based on TPE.

• BESP — When we are unable to establish selling price using VSOE or TPE, we use BESP in our allocation of arrangement consideration. The objective of BESP is to determine the price at which we would transact a sale if the product or support service was sold on a stand-alone basis. We determine BESP for deliverables by considering multiple factors including, but not limited to, prices we charge for similar offerings, sales volume, geographies, market conditions, competitive landscape, and pricing practices.

Our agreements with certain customers, including certain OEMs and other channel partners, contain provisions for sales returns, price protection, and rebates in limited circumstances. In limited circumstances and on an infrequent basis, even if we are not obligated to accept returned products, we may determine it is in our best interest to accept returns in order to maintain good relationships with our customers. We recognize revenue net of the effects of these estimated obligations at the time revenue is recorded.

We estimate product returns based upon our periodic analysis of historical returns as a percentage of revenue as well as known future returns. We periodically assess the accuracy of our historical estimates and to date the actual results have been reasonably consistent with our estimates. While we believe we have sufficient experience and knowledge of the market and customer buying patterns to reasonably estimate such returns, actual market conditions, or customer behavior could differ from our expectations and as a result, our actual results could change materially.

Our price protection obligations with certain OEMs and other channel partners require us to notify them of any decreases in pricing and to provide them with a refund or credit for any units of our product that they have on hand as of the date of the pricing change. Historically, most of our sales to our OEMs and other channel partners have an identified end-user at the time we ship our products and thus the amount of inventory carried by our OEMs and other channel partners at any given time is limited. To date, we have not issued refunds or credits to our OEMs and other channel partners for price protection.

Certain of our contracts allow for rebates that are based on a fixed percentage of our sales to the customer or sales to the end-user or a fixed dollar amount per unit. We recognize the amount of the rebates as a reduction of revenues when the underlying revenue is recognized.

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Deferred revenue primarily represents customer billings in excess of revenue recognized, primarily for support services. Support services are typically billed in advance on an annual basis or at the inception of a multiple year support contract and revenue is recognized ratably over the support period of one to five years.

We also sell stand-alone software products. During the years ended June 30, 2010, 2011, and 2012, our software revenue was not significant to our consolidated statements of operations.

Business Combinations and Impairment of Long-lived and Intangible Assets, Including Goodwill

When we acquire businesses, we allocate the fair value of the purchase price to tangible assets and liabilities and identifiable intangible assets acquired. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates are based on the application of valuation models using historical experience and information obtained from the management of the acquired company and our understanding of the future projections. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain, unpredictable, and subject to refinement. In addition, unanticipated events and circumstances may occur which may affect the accuracy or validity of such estimates.

Periodically we assess potential impairment of our long-lived assets, which include property, equipment, and acquired intangible assets. We perform an impairment review whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results, significant changes in the manner of our use of the acquired assets or our overall business strategy and significant industry or economic trends. When we determine that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators, we determine the recoverability by comparing the carrying amount of the asset to net future undiscounted cash flows that the asset is expected to generate. We recognize an impairment charge equal to the amount by which the carrying amount exceeds the fair market value of the asset. We amortize intangible assets on a straight-line basis over their estimated useful lives.

We test goodwill for impairment annually as of April 1, or whenever events or changes in circumstances indicate that goodwill may be impaired. We initially assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, we determine it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then we perform a first step by comparing the book value of net assets to the fair value of our single reporting unit. If the fair value is determined to be less than the book value, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. Based upon our assessment, we determined that it is not more-likely-than-not that the fair value of our single reporting unit is less than its carrying amount and no impairment was recognized during fiscal 2012.

Stock-Based Compensation

Under ASC 718, stock-based compensation cost for each award is estimated at the grant date based on the award’s fair value as calculated by an option-pricing model and is recognized as expense over the requisite service period. We use the Black-Scholes-Merton option-pricing model which

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requires various highly judgmental assumptions including the estimated fair value of our common stock, volatility over the expected life of the option, stock option exercise and cancellation behaviors, risk-free interest rate, and expected dividends. We estimated the fair value of each employee option granted using the following assumptions for the periods presented.

	Year Ended June 30,
	2010			2011			2012
Expected volatility		49	%		48-60	%		59-60	%
Expected term (in years)		6.1			3.2-7.0			5.2-6.6
Risk-free interest rate		2.4-2.9	%		0.6-2.7	%		1.0-2.0	%
Expected dividends		—			—			—

• Volatility — As we do not have a trading history for our common stock of sufficient length for purposes of the Black-Scholes-Merton option pricing model, the expected stock price volatility for our common stock was estimated by taking the average historic price volatility for a group of companies we consider our peers based on a number of factors including, but not limited to, similarity to us with respect to industry, business model, stage of growth, financial risk, or other factors, along with considering the future plans of our company to determine the appropriate volatility over the expected life of the option. We used the daily price of these peers over a period equivalent to the expected term of the stock option grants. We did not rely on implied volatilities of traded options in our peers’ common stock because the volume of activity was relatively low. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

• Expected Life — The expected life was based on the simplified method allowed under SEC guidance, which is calculated as the average of the option’s contractual term and weighted-average vesting period. We use this method as we have limited historical stock option data that is sufficient to derive a reasonable estimate of the expected life of an option.

• Dividend Yield — We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.

• Risk-free Interest Rate — The risk-free interest rate was determined by reference to the U.S. Treasury rates with the remaining term approximating the expected option life assumed at the date of grant.

In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those options expected to vest. We estimate the forfeiture rate based on our historical experience. Further, to the extent our actual forfeiture rate is different from our estimate, stock-based compensation expense is adjusted accordingly. If any of the assumptions used in the Black-Scholes-Merton stock-option model change significantly, the fair value and stock-based compensation expense on future grants is impacted accordingly and stock-based compensation expense may differ materially in the future from that recorded in the current period.

Prior to June 9, 2011, the date our common stock began trading on the New York Stock Exchange, the fair value of common stock had been determined by the board of directors at each grant date based on a variety of factors, including periodic valuations of our common stock, our financial position, historical financial performance, projected financial performance, valuations of publicly traded peer companies arm’s-length sales of our common stock, and the illiquid nature of common stock.

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Since our initial public offering, we determine the fair value of our common stock based on the closing price as quoted on the New York Stock Exchange, of our common stock on the stock option grant date.

Inventory Valuation

Inventories consist of raw materials, work in progress, and finished goods and are stated at the lower of cost (using the first-in, first-out method) or market value. Our finished goods consist of manufactured finished goods.

We assess the valuation of all inventories, including raw materials, work in progress and finished goods, on a periodic basis. Inventory carrying value adjustments are established to reduce the carrying amounts of our inventories to their net estimated realizable values. Carrying value adjustments are based on historical usage, expected demand and evaluation unit conversion rate. Inherent in our estimates of market value in determining inventory valuation are estimates related to economic trends, future demand for our products and technological obsolescence of our products. For example, because our revenue often is comprised of large, concentrated sales to a limited number of customers, we may carry high levels of inventory prior to shipment. In addition, in circumstances where a supplier discontinues the production of a key raw material component, such as a specific type of NAND Flash memory, we may be required to make significant “last-time” purchases in order to ensure supply continuity until the transition is made to products based on next generation components. If a significant order were cancelled after we had purchased the related inventory, or if estimates of “last-time” purchases exceed actual demand, we may be required to record additional inventory carrying value adjustments.

Warranty Liability

We provide our customers a standard limited product warranty of up to five years. Our standard warranties require us to repair or replace defective products during such warranty period at no cost to the customer. We estimate the costs that may be incurred under our standard limited warranty and record a liability in the amount of such costs at the time product sales are recognized. Factors that affect our warranty liability include the number of installed units, identified warranty issues, historical experience, and management’s judgment regarding anticipated rates of warranty claims and cost per claim. We assess the adequacy of our recorded warranty liability each period and make adjustments to the liability as necessary.

Income Taxes

Significant judgment is required in determining our provision for income taxes and evaluating our uncertain tax positions. We record income taxes using the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. In estimating future tax consequences, generally all expected future events other than enactments or changes in the tax law or rates are considered. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount more likely than not to be realized.

We provide reserves as necessary for uncertain tax positions taken on our tax filings. First, we determine if the weight of available evidence indicates that a tax position is more-likely-than-not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. Second, based on the largest amount of benefit, which is more-likely-than-not to be realized on ultimate settlement we recognize any such differences as a liability. Because of our full valuation allowance against the net deferred tax assets, any change in our uncertain tax positions would generally not impact our effective tax rate.

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In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence, including our past operating results, our forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. The assumptions utilized in determining future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. Due to the net losses incurred and the uncertainty of realizing the deferred tax assets, for all the periods presented, we have a full valuation allowance against our deferred tax assets.

As of June 30, 2012, we had federal and state net operating loss carryforwards of $3.8 million and $30.4 million, respectively, federal and state research and development tax credit carryforwards in the amount of $4.0 million and $2.2 million, respectively, and a federal alternative minimum tax credit carryforward in the amount of $0.6 million. In the future, we intend to utilize any carryforwards available to us to reduce our tax payments. A limited amount of these carryforwards will be subject to annual limitations that may result in their expiration before some portion of them has been fully utilized.

Recently Issued and Adopted Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see Note 1 “Description of Business and Summary of Significant Accounting Policies – Recently Issued and Adopted Accounting Pronouncements” in the notes to condensed consolidated financial statements.

Segments

Operating segments are defined in accounting standards as components of an enterprise about which separate financial information is available and is regularly evaluated by management, namely the chief operating decision maker of an organization, in order to make operating and resource allocation decisions. We have concluded that we operate in one business segment, which is the development, marketing and sale of storage memory products. Substantially, all of our revenue for all periods presented in the accompanying condensed consolidated statements of operations has been from sales of the ioDrive product line and related customer support services.

Certain Relationships and Related Party Transactions

For a discussion of certain relationships and related party transactions, see Note 11 — Related Party Transactions in the notes to consolidated financial statements.

Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Risk

Our international sales and marketing operations incur expenses that are denominated in foreign currencies. Although our international operations are currently immaterial compared to our operations in the United States, we expect to continue to expand our international operations which will increase our potential exposure to fluctuations in foreign currencies. Our exposures are to fluctuations in exchange rates primarily for the U.S. dollar versus the euro and the British pound. Changes in currency exchange rates could adversely affect our consolidated results of operations or financial position. Additionally, our international sales and marketing operations maintain cash balances denominated in foreign currencies. In order to decrease the inherent risk associated with translation of foreign cash balances into our reporting currency, we have not maintained excess cash balances in foreign currencies. As of June 30, 2012, we had approximately $1.2 million of cash in foreign accounts. To date, we have not hedged our exposure to changes in foreign currency exchange rates and, as a result, could incur unanticipated translation gains and losses. Through June 30, 2012, all of our sales were billed in U.S. dollars and therefore not subject to direct foreign currency risk.

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Part II. Item 8. Consolidated Financial Statements and Supplementary Data

The Consolidated Financial Statements and Schedule listed in the Index to Financial Statements, Schedules and Exhibits on page F-1 are filed as part of this report.

Part II. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Part II. Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining effective internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. Our internal control over financial reporting is a process designed, as defined in Rule 13a-15(F) under the Exchange Act, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

In connection with the preparation of our annual consolidated financial statements, our management has undertaken an assessment of the effectiveness of our internal control over financial reporting based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework. Management’s assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting practices, and our overall control environment. Based on this assessment, management has concluded that our internal control over financial reporting was effective as of June 30, 2012. We reviewed the results of management’s assessment with the Audit Committee of our Board of Directors.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our independent registered public accounting firm, Ernst & Young LLP, independently assessed the effectiveness of our internal control over financial reporting and has issued an attestation report on our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

During the fourth quarter of fiscal 2012, we implemented an enterprise resource planning, or ERP, system in our U.S. operations. During fiscal 2013 we plan to continue to enhance the ERP system and continue to improve and enhance our system of internal control over financial reporting.

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Limitations on Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

Part II. Item 9B. Other Information

None.

Part III.

We are incorporating by reference the information required by Part III of this report on Form 10-K from our proxy statement relating to our 2012 annual meeting of stockholders (the “2012 Proxy Statement”), which will be filed with the SEC within 120 days after the end of fiscal 2012.

Part III. Item 10. Directors, Executive Officers, and Corporate Governance

The information required by this item is included under the captions “Election of Directors — Nominees,” “Election of Directors — Board Meetings and Committees,” “Information Concerning Executive Officers,” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2012 Proxy Statement and incorporated herein by reference.

Part III. Item 11. Executive Compensation

The information required by this item is included under the captions “Election of Directors — Compensation of Non-Employee Directors,” “Election of Directors — Compensation Committee Interlocks and Insider Participation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” and “Executive Compensation” in the 2012 Proxy Statement and incorporated herein by reference.

Part III. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is included under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the 2012 Proxy Statement and incorporated herein by reference.

Part III. Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is included under the captions “Certain Relationships and Related Person Transactions” and “Election of Directors — Board Meetings and Committees” in the 2012 Proxy Statement and incorporated herein by reference.

Part III. Item 14. Principal Accounting Fees and Services

The information required by this item is included under the caption “Ratification of Appointment of the Independent Registered Public Accounting Firm” under the subheading of “Fees Paid to Ernst & Young, LLP” in the 2012 Proxy Statement and incorporated herein by reference.

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Part IV. Item 15. Exhibits, Consolidated Financial Statements, and Financial Statement Schedules

(a)(1) Consolidated Financial Statements

We have filed the consolidated financial statements listed in the Index to Consolidated Financial Statements, Schedules, and Exhibits on page F-1 as a part of this annual report on Form 10-K.

(a)(2) Financial Statement Schedules

All financial statement schedules have been omitted because they are not applicable, not material, or the required information is shown in the consolidated financial statements or the notes thereto.

(a)(3) Exhibits

The exhibits listed below are filed as part of this annual report on Form 10-K.

		Incorporated by Reference
Exhibit No.	Exhibit Description	Filed Herewith	Form		File No.		Exhibit No.		Filing Date
2.1	Agreement and Plan of Reorganization, dated as of August 4, 2011¸ by and between the Registrant, IO Turbine, Inc. and certain other parties			8-K		001-35188		2.1		08/05/2011
3.1	Amended and Restated Certificate of Incorporation of the Registrant			10-K		001-35188		3.1		09/02/2011
3.2	Amended and Restated Bylaws of the Registrant			10-K		001-35188		3.2		09/02/2011
4.1	Specimen common stock certificate of the Registrant			S-1/A		333-172683		4.1		05/23/2011
4.2	Second Amended and Restated Investors’ Rights Agreement, dated as of April 7, 2010 between the Registrant and certain holders of the Registrant’s capital stock named therein			S-1		333-172683		4.2		03/09/2011
4.3	Warrant to Purchase Stock issued by the Registrant to Silicon Valley Bank, dated September 10, 2008			S-1		333-172683		4.3		03/09/2011
10.1A*	Form of Indemnification Agreement by and between the Registrant and certain of its directors and officers			S-1/A		333-172683		10.1A		05/23/2011
10.1B*	Form of Indemnification Agreement by and between the Registrant and certain of its directors affiliated with investment funds and such investment funds			S-1/A		333-172683		10.1B		05/23/2011

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		Incorporated by Reference
Exhibit No.	Exhibit Description	Filed Herewith	Form		File No.		Exhibit No.		Filing Date
10.2*	2006 Stock Option Plan and Form of Stock Option Agreement under 2006 Stock Option Plan			S-1		333-172683		10.2		03/09/2011
10.3*	2008 Stock Incentive Plan and Form of Stock Option Agreement under 2008 Stock Incentive Plan			S-1		333-172683		10.3		03/09/2011
10.4*	2010 Executive Stock Incentive Plan and Related Forms			S-1		333-172683		10.4		03/09/2011
10.5*	2011 Equity Incentive Plan and Related Forms			S-1/A		333-172683		10.5		05/23/2011
10.6*	2011 Employee Stock Purchase Plan and Form of Purchase Agreement under 2011 Employee Stock Purchase Plan			S-1/A		333-172683		10.6		05/23/2011
10.7*	Form of Non-Plan Stock Option Agreement between the Registrant and certain of its officers			S-1		333-172683		10.7		03/09/2011
10.8*	Second Amended and Restated Employment Agreement between the Registrant, David Flynn and Sandusky Investments, Ltd., dated as of April 7, 2010			S-1		333-172683		10.8		03/09/2011
10.9*	Amended and Restated Employment Agreement between the Registrant, Rick White and West Coast VC, LLC, dated as of December 31, 2008			S-1		333-172683		10.9		03/09/2011
10.9A*	Amendment Number One to Amended and Restated Employment Agreement between the Registrant, Rick White and West Coast VC, LLC, dated as of March 7, 2011			S-1		333-172683		10.9A		03/09/2011
10.10*	Form of Involuntary Termination Severance Agreement between the Registrant and certain of its officers			S-1		333-172683		10.10		03/09/2011
10.10A*	Involuntary Termination Severance Agreement between the Registrant and Dennis P. Wolf, dated as of August 11, 2010			S-1/A		333-172683		10.10A		04/18/2011
10.11*	Transition Agreement and Release between the Registrant and David R. Bradford, dated as of September 21, 2010			S-1		333-172683		10.11		03/09/2011

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		Incorporated by Reference
Exhibit No.	Exhibit Description	Filed Herewith	Form		File No.		Exhibit No.		Filing Date
10.12	Lease Agreement between the Registrant and NOP Cottonwood 2825, LLC, dated May 28, 2010 (Building 10)			S-1		333-172683		10.12		03/09/2011
10.12A	First Amendment to Lease Agreement between Registrant and NOP Cottonwood 2825, LLC, dated August 16, 2011 (Building 10)			10-Q/A		001-35188		10.2		11/16/2011
10.12B	Second Amendment to Lease Agreement between Registrant and NOP Cottonwood 2825, LLC, dated December 2, 2011 (Building 10)			10-Q		001-35188		10.1		02/09/2012
10.13	Lease Agreement between the Registrant and NOP Cottonwood 2855, LLC, dated May 28, 2010 (Building 11)			S-1		333-172683		10.13		03/09/2011
10.13A	First Amendment to Lease Agreement between Registrant and NOP Cottonwood 2855, LLC, dated September 6, 2011 (Building 11)			10-Q/A		001-35188		10.3		11/16/2011
10.13B	Second Amendment to Lease Agreement between Registrant and NOP Cottonwood 2855, LLC, dated July 10, 2012 (Building 11)	X
10.14	Office Lease Agreement between the Registrant and Bixby Technology Center, LLC, dated May 29, 2009			S-1		333-172683		10.14		03/09/2011
10.15A	Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley Bank, dated September 13, 2010			S-1		333-172683		10.15		03/09/2011
10.15B	First Amendment to Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley Bank, dated as of August 4, 2011			8-K		001-35188		10.1		08/05/2011
10.15C	Second Amendment to Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley Bank, dated as of May 16, 2012			8-K		001-35188		10.1		05/18/2012
10.16*	Offer Letter between the Registrant and Dennis Wolf, dated November 4, 2009			S-1/A		333-172683		10.16		05/06/2011

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		Incorporated by Reference
Exhibit No.	Exhibit Description	Filed Herewith	Form		File No.		Exhibit No.		Filing Date
10.17*	Offer Letter between the Registrant and Jim Dawson, dated April 1, 2008			S-1/A		333-172683		10.17		05/06/2011
10.18*	Offer Letter between the Registrant and Lance Smith, dated April 29, 2008 as supplemented by an Offer Letter dated December 26, 2008			S-1/A		333-172683		10.18		05/06/2011
10.19*	Executive Incentive Compensation Plan, adopted by the Registrant on May 16, 2011			S-1/A		333-172683		10.19		05/23/2011
10.20*	IO Turbine, Inc. 2009 Equity Incentive Plan			10-K		001-35188		10.20		09/02/2011
10.21	Office Lease, dated as of January 13, 2012 and executed on January 20, 2012, by and between Fusion-io, Inc. and LaSalle Montague, Inc.			10-Q		001-35188		10.1		05/10/2012
21.1	Subsidiaries of the Registrant	X
23.1	Consent of Ernst & Young LLP Independent Registered Public Accounting Firm	X
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Schema Linkbase Document
101.CAL**	XBRL Taxonomy Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Definition Linkbase Document

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		Incorporated by Reference
Exhibit No.	Exhibit Description	Filed Herewith	Form	File No.	Exhibit No.	Filing Date
101.LAB**	XBRL Taxonomy Labels Linkbase Document
101.PRE**	XBRL Taxonomy Presentation Linkbase Document

* Indicates a management contract or compensatory plan or arrangement.

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed.

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Signatures

Pursuant to the requirements of the Section 13 or 15(d) Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Fusion-io, Inc.
By:	/s/ DAVID A. FLYNN
	David A. Flynn
	Chief Executive Officer and President

August 27, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on August 27, 2012.

Signature	Title
/s/ DAVID A. FLYNN	Chief Executive Officer, President and Director
David A. Flynn	(Principal Executive Officer)
/s/ DENNIS P. WOLF	Chief Financial Officer and Executive Vice President
Dennis P. Wolf	(Principal Financial and Accounting Officer)
/s/ FOREST BASKETT, Ph.D.	Director
Forest Baskett, Ph.D.
/s/ H. RAYMOND BINGHAM	Director
H. Raymond Bingham
/s/ DANA L. EVAN	Director
Dana L. Evan
/s/ SHANE V. ROBISON	Director
Shane V. Robison
/s/ SCOTT D. SANDELL	Director
Scott D. Sandell
/s/ RICK C. WHITE	Director
Rick C. White

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Reports of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-4
Consolidated Statements of Operations		F-5
Consolidated Statements of Convertible Preferred Stock, Stockholders’ (Deficit) Equity and Comprehensive (Loss) Income		F-6
Consolidated Statements of Cash Flows		F-8
Notes to Consolidated Financial Statements		F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Fusion-io, Inc.

We have audited the accompanying consolidated balance sheets of Fusion-io, Inc. as of June 30, 2011 and 2012, and the related consolidated statements of operations, convertible preferred stock, stockholders’ (deficit) equity and comprehensive (loss) income, and cash flows for each of the three years in the period ended June 30, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Fusion-io, Inc. as of June 30, 2011 and 2012, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 30, 2012, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Fusion-io, Inc.’s internal control over financial reporting as of June 30, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 27, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Salt Lake City, Utah

August 27, 2012

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Fusion-io, Inc.

We have audited Fusion-io, Inc.’s internal control over financial reporting as of June 30, 2012, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). Fusion-io, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Fusion-io, Inc. maintained, in all material respects, effective internal control over financial reporting as of June 30, 2012, based on the COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Fusion-io, Inc. as of June 30, 2011 and 2012, and the related consolidated statements of operations, convertible preferred stock, stockholders’ (deficit) equity and comprehensive (loss) income, and cash flows for each of the three years in the period ended June 30, 2012 and our report dated August 27, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Salt Lake City, Utah

August 27, 2012

F-3

FUSION-IO, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	June 30,
	2011			2012
Assets
Current assets:
Cash and cash equivalents	$	219,604		$	321,239
Accounts receivable, net of allowances of $2,064 and $953 as of June 30, 2011 and 2012, respectively		44,374			56,720
Inventories		35,622			59,457
Prepaid expenses and other current assets		3,866			9,224
Total current assets		303,466			446,640
Property and equipment, net		13,743			31,245
Intangible assets, net		—			8,164
Goodwill		—			54,777
Other assets		77			194
Total assets	$	317,286		$	541,020
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	9,314		$	9,765
Accrued and other current liabilities		15,043			29,187
Deferred revenue		9,030			20,715
Total current liabilities		33,387			59,667
Deferred revenue, less current portion		2,987			8,154
Other liabilities		6,468			12,276
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0002 par value; 10,000,000 shares authorized as of June 30, 2011 and 2012; no shares issued and outstanding as of June 30, 2011 and 2012		—			—
Common stock, $0.0002 par value; 500,000,000 shares authorized as of June 30, 2011 and 2012; 81,149,569 and 93,391,415 shares issued and outstanding as of June 30, 2011 and 2012, respectively		16			19
Additional paid-in capital		339,389			531,478
Accumulated other comprehensive income (loss)		15			(15	)
Accumulated deficit		(64,976	)		(70,559	)
Total stockholders’ equity		274,444			460,923
Total liabilities and stockholders’ equity	$	317,286		$	541,020

See accompanying notes to consolidated financial statements

F-4

FUSION-IO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Year Ended June 30,
	2010			2011			2012
Revenue	$	36,216		$	197,204		$	359,349
Cost of revenue		16,018			84,043			159,045
Gross profit		20,198			113,161			200,304
Operating expenses:
Sales and marketing		23,386			55,698			87,171
Research and development		15,977			27,238			60,006
General and administrative		12,383			20,556			58,423
Total operating expenses		51,746			103,492			205,600
(Loss) income from operations		(31,548	)		9,669			(5,296	)
Other income (expense):
Interest income		90			35			384
Interest expense		(246	)		(2,455	)		(177	)
Other (expense) income		—			(1,000	)		121
(Loss) income before income taxes		(31,704	)		6,249			(4,968	)
Income tax expense		(12	)		(1,694	)		(615	)
Net (loss) income		(31,716	)		4,555			(5,583	)
Deemed dividend on repurchase of Series B convertible preferred stock		(748	)		—			—
Net (loss) income attributable to common stockholders	$	(32,464	)	$	4,555		$	(5,583	)
Net (loss) income per common share:
Basic	$	(2.95	)	$	0.27		$	(0.06	)
Diluted	$	(2.95	)	$	0.06		$	(0.06	)
Weighted average number of shares:
Basic		11,012			16,762			87,674
Diluted		11,012			81,654			87,674

See accompanying notes to consolidated financial statements

F-5

FUSION-IO, INC.

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK,

STOCKHOLDERS’ (DEFICIT) EQUITY AND COMPREHENSIVE (LOSS) INCOME

(In thousands, except share data)

				Stockholders’ (Deficit) Equity
	Convertible Preferred Stock						Common Stock					Additional Paid-in Capital			Accumulated Other Comprehensive Income			Accumulated Deficit			Total Stockholders’ (Deficit) Equity			Comprehensive (Loss) Income
	Shares			Amount			Shares			Amount
Balance as of June 30, 2009		39,380,352		$	56,796			12,990,019		$	3	$	1,486		$	—		$	(37,136	)	$	(35,647	)
Exercise of stock options		—			—			620,462			—		133			—						133
Issuance of Series B convertible preferred stock, net of issuance costs of $43		2,075,000			4,107			—			—		—			—			—			—
Repurchases of Series B convertible preferred stock (as restated)		(542,961	)		(1,086	)		—			—		(748	)		—			—			(748	)
Conversion of convertible notes into Series C convertible preferred stock		1,302,237			5,038			—			—		—			—			—			—
Issuance of Series C convertible preferred stock, net of issuance costs of $94		10,274,444			39,658			—			—		—			—			—			—
Issuance of warrant to purchase common stock for services provided		—			—			—			—		11			—			—			11
Stock-based compensation		—			—			—			—		1,856			—			—			1,856
Foreign currency translation adjustment		—			—			—			—		—			(2	)		—			(2	)	$	(2	)
Unrealized gain on available for sale securities		—			—			—			—		—			4			—			4			4
Net loss		—			—			—			—		—						(31,716	)		(31,716	)		(31,716	)
Balance as of June 30, 2010		52,489,072		$	104,513			13,610,481		$	3	$	2,738		$	2		$	(68,852	)	$	(66,109	)	$	(31,714	)
Issuance of common stock, net of issuance costs of $3,789		—			—			12,660,607			2		219,168			—			—			219,170
Exercise of stock options		—			—			2,541,909			1		1,545			—			—			1,546
Exercise of common stock warrant		—			—			12,500			—		25			—			—			25
Conversion of convertible preferred stock into common stock		(52,489,072	)		(104,513	)		52,489,072			10		104,503			—			—			104,513
Reclassification of convertible preferred stock warrant liability upon conversion to common stock warrant		—			—			—			—		2,280			—			—			2,280
Repurchase of common stock		—			—			(165,000	)		—		(661	)		—			(679	)		(1,340	)
Stock-based compensation		—			—			—			—		8,637			—			—			8,637

F-6

FUSION-IO, INC.

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK,

STOCKHOLDERS’ (DEFICIT) EQUITY AND COMPREHENSIVE (LOSS) INCOME – (Continued)

(In thousands, except share data)

			Stockholders’ (Deficit) Equity
	Convertible Preferred Stock				Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive Income			Accumulated Deficit			Total Stockholders’ (Deficit) Equity			Comprehensive (Loss) Income
	Shares		Amount		Shares		Amount
Income tax benefit from stock option exercises		—		—		—		—		1,154			—			—			1,154
Foreign currency translation adjustment		—		—		—		—		—			17			—			17		$	17
Reclassification of unrealized gain into net income on available for sale securities		—		—		—		—		—			(4	)		—			(4	)		(4	)
Net income		—		—		—		—		—			—			4,555			4,555			4,555
Balance as of June 30, 2011		—	$	—		81,149,569	$	16	$	339,389		$	15		$	(64,976	)	$	274,444		$	4,568
Issuance of common stock, net of issuance costs of $1,063		—		—		3,000,000		1		93,976			—			—			93,977
Exercise of stock options		—		—		7,128,528		1		8,209			—			—			8,210
Issuance of restricted stock awards and restricted stock units, net of repurchases		—		—		45,390		—		(44	)		—			—			(44	)
Issuance of common stock under employee stock purchase plan		—		—		148,938		—		2,405			—			—			2,405
Exercise of common stock warrant		—		—		121,839		—		—			—			—			—
Issuance of common stock to former IO Turbine stockholders		—		—		1,633,315		1		43,485			—			—			43,486
Estimated fair value of stock options assumed in connection with business acquisition		—		—		—		—		884			—			—			884
Vesting of common shares subject to repurchase		—		—		163,836		—		17			—			—			17
Stock-based compensation		—		—		—		—		40,657			—			—			40,657
Foreign currency translation adjustment		—		—		—		—		—			(30	)		—			(30	)	$	(30	)
Income tax benefit from stock option exercises		—		—		—		—		2,500			—			—			2,500
Net loss		—		—		—		—		—			—			(5,583	)		(5,583	)	$	(5,583	)
Balance as of June 30, 2012		—	$	—		93,391,415	$	19	$	531,478		$	(15	)	$	(70,559	)	$	460,923		$	(5,613	)

See accompanying notes to consolidated financial statements

F-7

FUSION-IO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended June 30,
	2010			2011			2012
Operating activities:
Net (loss) income	$	(31,716	)	$	4,555		$	(5,583	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		1,498			4,547			9,009
Stock-based compensation		1,867			8,637			42,645
Excess tax benefit from stock-based awards		—			(1,154	)		(2,500	)
Deferred taxes		—			—			(2,782	)
Other non-cash items		231			3,185			(26	)
Changes in operating assets and liabilities:
Accounts receivable, net		(3,420	)		(38,793	)		(12,346	)
Inventories		(21,155	)		(10,474	)		(23,835	)
Prepaid expenses and other assets		(607	)		(2,549	)		(5,430	)
Accounts payable		8,222			(593	)		(249	)
Accrued and other liabilities		5,526			11,604			19,013
Deferred revenue		1			11,178			16,852
Net cash (used in) provided by operating activities		(39,553	)		(9,857	)		34,768
Investing activities:
Purchases of short-term investments		(13,910	)		—			—
Proceeds from the sale of short-term investments		2,293			11,964			—
Proceeds from maturities of short-term investments		761			—			—
Business acquisition, net of cash acquired		—			—			(17,578	)
Proceeds from the sale of property and equipment		—			152			1
Purchases of property and equipment		(3,442	)		(13,032	)		(23,997	)
Net cash used in investing activities		(14,298	)		(916	)		(41,574	)
Financing activities:
Proceeds from issuance of convertible preferred stock		43,765			—			—
Repurchases of convertible preferred stock		(1,834	)		—			—
Repurchases of common stock		—			(1,223	)		(1,067	)
Proceeds from a loan from a financial institution		4,000			11,000			—
Repayment of notes payable and capital lease obligations		(4,179	)		(11,254	)		(110	)
Proceeds from exercises of stock options		133			1,546			8,210
Issuance of restricted awards and restricted stock units, net of repurchases		—			—			(44	)
Proceeds from issuance of common stock, net of issuance costs		—			219,170			93,977
Proceeds from exercise of common stock warrant		—			25			—
Proceeds from issuance of common stock under employee stock purchase plan		—			—			5,061
Excess tax benefit from stock option exercises		—			1,154			2,500
Change in restricted cash		(166	)		695			—
Proceeds from issuance of convertible notes		5,000			—			—
Net cash provided by financing activities		46,719			221,113			108,527
Effect of exchange rate changes on cash and cash equivalents		(1	)		45			(86	)
Net (decrease) increase in cash and cash equivalents		(7,133	)		210,385			101,635
Cash and cash equivalents at the beginning of period		16,352			9,219			219,604
Cash and cash equivalents at the end of period	$	9,219		$	219,604		$	321,239
Supplemental disclosure of cash flow information:
Cash paid for interest	$	122		$	427		$	146
Supplemental disclosure of noncash investing and financing activities:
Conversion of convertible notes and interest into convertible preferred stock	$	5,038		$	—		$	—
Assets acquired under capital leases		334			—			—
Conversion of convertible preferred stock to common stock		—			104,513			—
Reclassification of convertible preferred stock warrant liability upon conversion to common stock warrant		—			2,280			—
Vesting of common shares subject to repurchase		—			—			17

See accompanying notes to consolidated financial statements

F-8

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Summary of Significant Accounting Policies

Fusion-io, Inc. (the “Company” or “Fusion-io”) provides an enterprise storage memory platform, based on the Company’s ioMemory hardware with VSL storage virtualization software, automated data-tiering and virtualization caching software, and datacenter management software. The Company was originally incorporated in the state of Nevada in December 2005 and in June 2010 was reincorporated in the state of Delaware as Fusion-io, Inc. The Company sells its products and services through its global direct sales force, original equipment manufacturers (“OEMs”), and other channel partners.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

Segment and Geographic Information

Operating segments are defined in accounting standards as components of an enterprise about which separate financial information is available and is regularly evaluated by management, namely the chief operating decision maker of an organization, in order to make operating and resource allocation decisions. The Company has concluded it operates in one business segment, which is the development, marketing, and sale of storage memory platforms. Substantially all of the Company’s revenue for all periods presented in the accompanying consolidated statements of operations has been from sales of the ioDrive product line and related customer support services. The Company’s headquarters and most of its operations are located in the United States; however, it conducts sales activities through sales offices in Europe and Asia. Revenue recognized from sales with a ship-to location outside of the United States was 24%, 18%, and 26% for fiscal years 2010, 2011, and 2012, respectively. No country outside of the United States accounted for 10% or greater of revenue for all periods presented. Long-lived assets located outside of the United States were not material for all periods for which a consolidated balance sheet is presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Company evaluates its significant estimates, including those related to revenue recognition, sales returns, accounting for business combinations and impairment of long-lived and intangible assets including goodwill, determination of fair value of stock options, valuation of inventory, product warranty, and income taxes. The Company also uses estimates in determining the useful lives of property and equipment and intangible assets and provisions for doubtful accounts. Actual results could differ from those estimates.

Reclassification

Certain amounts previously reported have been reclassified to conform with the fiscal year 2012 presentation.

F-9

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Public Offerings

In June 2011, the Company completed an initial public offering (“IPO”), of its common stock, in which the Company issued and sold 12,600,607 shares, including 1,845,000 shares sold pursuant to the full exercise by the underwriters of their over-allotment option, at an issuance price of $19.00 per share. After deducting underwriting discounts and commissions and approximately $3,789,000 in offering costs, the net proceeds received by the Company were approximately $218,864,000.

In November 2011, the Company completed a follow-on public offering of its common stock in which the Company issued and sold 3,000,000 shares at an issuance price of $33.00 per share. After deducting underwriting discounts and commissions and approximately $1,063,000 in offering costs, the net proceeds received by the Company were approximately $93,977,000.

Revenue Recognition

The Company derives its revenue primarily from sales of products and support services and enters into multiple-element arrangements in the normal course of business with its customers and channel partners. In all arrangements, the Company does not recognize revenue until it can determine that persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collection is deemed to be reasonably assured. In making these judgments, the Company evaluates these criteria as follows:

• Evidence of an Arrangement — The Company considers a non-cancelable agreement or purchase order signed by a customer to be persuasive evidence of an arrangement.

• Delivery has Occurred — The Company considers delivery to have occurred when product has been delivered to the customer based on applicable shipping terms, and no post-delivery obligations exist other than ongoing support obligations under sold support services. In instances where customer acceptance is required, delivery is deemed to have occurred when customer acceptance has been achieved.

• Fees are Fixed or Determinable — The Company considers the fee to be fixed or determinable unless the fee is subject to refund or adjustment or is not payable within normal payment terms. If the fee is subject to refund or adjustment, the Company recognizes revenue net of estimated returns or if a reasonable estimate cannot be made, when the right to a refund or adjustment lapses.

• Collection is Reasonably Assured — The Company conducts a credit worthiness assessment on all of its customers. Generally the Company does not require collateral. The Company continues to evaluate collectability by reviewing its customers’ credit worthiness including a review of past transaction history. Payment terms are typically 30 to 75 days from the date of invoice. Collection is reasonably assured if, based upon the Company’s evaluation, it expects that the customer will be able to pay amounts under the arrangement as payments become due. If the Company determines that collection is not reasonably assured, revenue is deferred and recognized upon the receipt of cash.

Some of the Company’s revenue arrangements are multiple-element arrangements because they are comprised of sales of both products and support services. For multiple-element arrangements, the Company evaluates whether each deliverable could be accounted for as separate units of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value, and for an arrangement where a general right of return exists relative to a delivered item, delivery, or performance

F-10

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

of the undelivered item must be considered probable and substantially in the Company’s control. Stand-alone value exists if the product or service is sold separately by the Company or by another vendor or could be resold by the customer. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition.

The Company’s multiple-element arrangements typically include two elements: ioDrive hardware, which includes embedded VSL virtualization software, and support services. The Company has determined that its ioDrive hardware and the embedded VSL virtualization software are considered a single unit of accounting because the hardware and software individually do not have standalone value and are never sold separately. Support services are considered a separate unit of accounting as they are sold separately and have standalone value.

The Company allocates arrangement consideration at the inception of an arrangement to all deliverables based on the relative selling price method in accordance with the selling price hierarchy, which includes: (1) vendor-specific objective evidence, or VSOE, if available; (2) third-party evidence, or TPE, if vendor-specific objective evidence is not available; and (3) best estimate of selling price, or BESP, if neither VSOE nor TPE is available.

• VSOE — The Company determines VSOE based on its historical pricing and discounting practices for the specific product or support service when sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices for products or support services fall within a reasonably narrow pricing range. The Company has historically priced certain of its ioDrive products within a narrow range and has used VSOE to allocate the selling price of deliverables for these specific product sales.

• TPE — When VSOE cannot be established for deliverables in multiple element arrangements, the Company applies judgment with respect to whether it can establish selling price based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, the Company’s products differ from those of its peers such that the comparable pricing of support services with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine what similar competitor services’ selling prices are on a stand-alone basis. As a result, the Company has not been able to establish selling price based on TPE.

• BESP — When the Company is unable to establish selling price using VSOE or TPE, it uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which it would transact a sale if the product or support service was sold on a stand-alone basis. The Company determines BESP for deliverables by considering multiple factors including, but not limited to, prices it charges for similar offerings, sales volume, geographies, market conditions, competitive landscape, and pricing practices.

The Company’s agreements with certain customers, including certain OEMs and other channel partners, contain provisions for sales returns, price protection, and rebates in limited circumstances. In limited circumstances and on an infrequent basis, even if the Company is not obligated to accept returned products, the Company may determine it is in its best interest to accept returns in order to maintain good relationships with its customers. The Company recognizes revenue net of the effects of these estimated obligations at the time revenue is recorded.

F-11

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company estimates product returns based upon its periodic analysis of historical returns as a percentage of revenue as well as known future returns. The Company periodically assesses the accuracy of its historical estimates and to date the actual results have been reasonably consistent with its estimates. While the Company believes it has sufficient experience and knowledge of the market and customer buying patterns to reasonably estimate such returns, actual market conditions or customer behavior could differ from its expectations and as a result, its actual results could change materially.

The Company’s price protection obligations with certain OEMs and other channel partners require it to notify them of any decreases in pricing and to provide them with a refund or credit for any units of the Company’s product that they have on hand as of the date of the pricing change. Historically, most of the Company’s sales to its OEMs and other channel partners have an identified end-user at the time it ships its products and thus the amount of inventory carried by its OEMs and other channel partners at any given time is limited. To date, the Company has not issued refunds or credits to its OEMs and other channel partners for price protection.

Certain of the Company’s contracts allow for rebates that are based on a fixed percentage of its sales to the customer or sales to the end-user or a fixed dollar amount per unit. The Company recognizes the amount of the rebates as a reduction of revenues when the underlying revenue is recognized.

Deferred revenue primarily represents customer billings in excess of revenue recognized, primarily for support services. Support services are typically billed in advance on an annual basis or at the inception of a multiple year support contract and revenue is recognized ratably over the support period of one to five years.

The Company also sells stand-alone software products. During the years ended June 30, 2010, 2011, and 2012, the Company’s software revenue was not significant to its consolidated statements of operations.

Shipping and handling costs are included in cost of sales.

Cash and Cash Equivalents

Cash consists of deposits with financial institutions, and cash equivalents consist of money market funds.

Concentrations of Credit Risk and Significant Customers and Suppliers

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash, cash equivalents, and accounts receivable. The Company deposits cash with a high-credit-quality financial institution, which at times may exceed federally insured amounts. The Company has policies that limit its investments as to types of investments, maturity, liquidity, credit quality, concentration, and diversification of issuers. The Company performs initial and ongoing credit evaluations of its customers’ financial condition and will limit the amount of credit as deemed necessary, but generally does not require collateral.

F-12

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The customers accounting for 10% or greater of revenue were as follows:

	Year Ended June 30,
	2010			2011			2012
Customer A		10	%		36	%		30	%
Customer B		*			24	%		25	%
Customer C		10	%		14	%		17	%
Customer D		13	%		*			*

* Indicates less than 10% of revenue for the period.

The customers accounting for 10% or greater of accounts receivable, net were as follows:

	Year Ended June 30,
	2011			2012
Customer A		11	%		30	%
Customer B		66	%		18	%
Customer C		*			19	%
Customer D		*			10	%

* Indicates less than 10% of total accounts receivable, net.

As a consequence of the concentration of the Company’s customers and typically, a small number of large purchases by these customers, revenue, and operating results may fluctuate significantly from period to period.

The Company relies on a limited number of suppliers for its contract manufacturing and certain raw material components. The Company believes that other vendors would be able to provide similar products and services; however, the qualification of such vendors may require substantial start-up time. In order to mitigate any adverse impacts from a disruption of supply, the Company attempts to maintain an adequate supply of critical single-sourced raw materials.

Accounts Receivable

Accounts receivable balances are recorded at the invoiced amount and are non-interest-bearing. The Company maintains an allowance for doubtful accounts to reserve for potential uncollectible receivables. Allowances are made based upon a specific review of all significant outstanding invoices. For those invoices not specifically reserved, allowances are provided based upon a percentage of aged outstanding invoices. In determining these percentages, the Company analyzes its historical collection experience and current economic trends. Provisions are recorded in general and administrative expenses. The Company writes off accounts receivable balances to the allowance for doubtful accounts when it becomes likely that they will not be collected. Accounts receivable balances are considered past due when not paid in accordance with the contractual terms of the related arrangement. As of June 30, 2011 and 2012, the Company’s allowance for doubtful accounts was not considered significant.

The Company records a sales allowance to provide for estimated future product returns and price adjustments. In the period revenue is recognized, allowances are provided for estimated future product returns based on historical product return rates. If reliable estimates of future returns cannot be made, revenue is not recognized until the rights of return expire. The Company also provides allowances for

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

rebates and discounts based on programs in existence at the time revenue is recognized. The Company evaluates the estimate of sales allowances on a regular basis and adjusts the amount reserved accordingly.

The changes in the Company’s sales allowance was as follows (in thousands):

	Year Ended June 30,
	2010			2011			2012
Balance at beginning of period	$	433		$	912		$	2,064
Additions		3,908			7,942			5,418
Returns		(3,429	)		(6,790	)		(6,529	)
Balance at end of period	$	912		$	2,064		$	953

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out method) or market value. The Company periodically assesses the recoverability of all inventories, including raw materials, work-in-process, and finished goods to determine whether adjustments are required to record inventory at the lower of cost or market value. Inventory that the Company determines to be obsolete or in excess of forecasted usage is reduced to its estimated realizable value based on assumptions about future demand and market conditions. If actual demand is lower than the forecasted demand, additional inventory write-downs may be required.

Property and Equipment

Property and equipment are stated at historical cost less accumulated depreciation. Property and equipment acquired through the acquisition of a business are recorded at their estimated fair value at the date of acquisition. Repairs and maintenance costs are expensed as incurred if repairs and maintenance do not extend the useful life or improve the related assets. Depreciation and amortization, including amortization of leasehold improvements and assets under capital leases, is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life of each asset category is as follows:

Computer equipment	3 years
Software	3 years
Property and equipment	3 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of useful life or remaining lease term

Long-Lived Assets and Goodwill

Periodically the Company assesses potential impairment of its long-lived assets, which include property, equipment, and acquired intangible assets. The Company performs an impairment review whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results, significant changes in the manner of its use of acquired assets or its overall business strategy, and

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

significant industry or economic trends. When the Company determines that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators, the Company determines the recoverability by comparing the carrying amount of the asset to net future undiscounted cash flows that the asset is expected to generate and recognizes an impairment charge equal to the amount by which the carrying amount exceeds the fair market value of the asset. The Company amortizes intangible assets on a straight-line basis over their estimated useful lives.

The Company tests goodwill for impairment annually as of April 1, or whenever events or changes in circumstances indicate that goodwill may be impaired. The Company initially assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then the Company performs a first step by comparing the book value of net assets to the fair value of the Company’s single reporting unit. If the fair value is determined to be less than the book value, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. Based upon the Company’s assessment, the Company determined that it is not more-likely-than-not that the fair value of the Company’s single reporting unit is less than its carrying amount and no impairment was recognized during the year ended June 30, 2012.

Product Warranty

The Company provides its customers a standard limited product warranty of up to five years. The standard warranty requires the Company to repair or replace defective products at no cost to the customer during such warranty period. The Company estimates the costs that may be incurred under its standard limited warranty and records a liability in the amount of such costs at the time product sales are recognized. Factors that affect the Company’s warranty liability include the number of installed units, identified warranty issues, historical experience, and management’s judgment regarding anticipated rates of warranty claims and cost per claim. The Company assesses the adequacy of its recorded warranty liability each period and makes adjustments to the liability as necessary based on actual experience.

The following table presents the changes in the product warranty liability (in thousands):

	Year Ended June 30,
	2010			2011			2012
Balance at beginning of period	$	24		$	153		$	666
Warranty costs accrued		225			1,280			4,930
Warranty claims		(96	)		(767	)		(2,771	)
Balance at end of period	$	153		$	666		$	2,825

Foreign Currency

The functional currency of the Company’s international subsidiaries is the local currency. For those subsidiaries, expenses denominated in the functional currency are translated into U.S. dollars using average exchange rates in effect during the period and assets and liabilities are translated using period-end exchange rates. The foreign currency translation adjustments are included in accumulated other comprehensive income (loss) as a separate component of stockholders’ (deficit) equity. Foreign

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

currency transaction gains or losses are recorded in other income (expense), net. Foreign currency transaction gains and losses for all periods presented were not material.

Stock-based Compensation

The Company records stock-based compensation expense related to employee stock-based awards based on the estimated fair value of the awards as determined on the date of grant. The Company utilizes the Black-Scholes-Merton option pricing model to estimate the fair value of employee stock options. The Black-Scholes-Merton model requires the input of highly subjective and complex assumptions, including the estimated fair value of the Company’s common stock on the date of grant prior to the stock being publicly traded, the expected term of the stock option, and the expected volatility of the Company’s common stock over the period equal to the expected term of the grant. The Company estimates forfeitures at the date of

grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock options and warrants to purchase shares of stock that are issued to non-employees based on the estimated fair value of such instruments using the Black-Scholes-Merton option pricing model. The measurement of stock-based compensation expense for these instruments is variable and subject to periodic adjustments to the estimated fair value until the awards vest or, in the case of the convertible preferred stock warrant which was outstanding in 2010 and until the initial public offering in 2011, each reporting period until the warrant is exercised or converted to a warrant to purchase shares of common stock. Any resulting change in the estimated fair value is recognized in the Company’s consolidated statements of operations during the period in which the related services are rendered.

Income Taxes

Deferred tax assets and liabilities are accounted for using the liability method and represent the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to be in effect when these temporary differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized.

Advertising

The Company expenses advertising costs as incurred. Advertising expense was $170,000, $12,000, and $120,000 for fiscal years 2010, 2011, and 2012, respectively.

Research and Development

Research and development costs are expensed as incurred. Research and development expenses consist primarily of personnel costs, prototype expenses, amortization of intangible assets, consulting services, and depreciation associated with research and development equipment.

Software Development Costs

The Company expenses software development costs as incurred until technological feasibility is attained, including research and development costs associated with stand-alone software products and software embedded in hardware products. Technological feasibility is attained when the Company has

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

completed the planning, design, and testing phase of development of its software and the software has been determined viable for its intended use, which typically occurs when beta testing commences. The period of time between when beta testing commences and when the software is available for general release to customers has historically been short with immaterial amounts of software development costs incurred during this period. Accordingly, the Company has not capitalized any software development costs to date.

In accounting for the development of computer software developed or obtained for internal use, the Company capitalizes qualifying computer software costs, which are incurred during the application development stage, and amortizes them over the software’s estimated useful life. For the year ended June 30, 2012, the Company capitalized approximately $1,956,000 related to the development and implementation of an enterprise resource planning system.

Presentation of Certain Taxes

The Company collects various taxes from customers and remits these amounts to the applicable taxing authorities. The Company’s accounting policy is to exclude these taxes from revenue and cost of revenue.

Net (Loss) Income Per Share

Basic net (loss) income per share is computed using the weighted-average number of common shares outstanding during the period, less weighted-average common shares subject to repurchase. Diluted net income per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on net income per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options and preferred and common stock warrants, assumed vesting of outstanding restricted stock subject to vesting provisions, and the assumed conversion of outstanding convertible preferred stock using the if-converted method. In a net loss position, diluted net loss per share is computed using only the weighted-average number of common shares outstanding during the period, less weighted-average common shares subject to repurchase, as any additional common shares would be anti-dilutive.

The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net (loss) income per share (in thousands):

	Year Ended June 30,
	2010			2011			2012
Numerator:
Net (loss) income attributable to common stockholders	$	(32,464	)	$	4,555		$	(5,583	)
Denominator:
Weighted-average common shares outstanding		13,120			17,247			87,933
Less weighted-average common shares outstanding subject to repurchase		(2,108	)		(485	)		(259	)
Weighted-average shares, basic		11,012			16,762			87,674
Dilution due to stock options and common stock warrant		—			64,892			—
Weighted-average shares, diluted		11,012			81,654			87,674

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net (loss) income per share (in thousands):

	Year Ended June 30,
	2010		2011		2012
Convertible preferred stock		43,261		—		—
Stock options		1,782		8,846		18,452
Common stock subject to repurchase		1,214		—		134
Warrant – preferred Series A		—		—		—
Warrant – common		—		—		39
Total		46,257		8,846		18,625

Recently Issued and Adopted Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued additional guidance regarding testing goodwill for impairment. The guidance provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. This guidance is effective for the Company beginning in fiscal year 2013. The Company has early adopted and applied this guidance to its fiscal year 2012 annual goodwill assessment. The adoption of this guidance did not have an impact on the Company’s results of operations, financial position, or cash flows.

In June 2011, the FASB issued new guidance which improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income (“OCI”) by eliminating the option to present components of OCI as part of the statement of changes in stockholders’ equity. The amendments in this standard require that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Subsequently in December 2011, the FASB issued additional guidance, which indefinitely defers the requirement to present on the face of the financial statements reclassification adjustments for items that are reclassified from OCI to net income in the statement where the components of net income and the components of OCI are presented. The amendments in these standards do not change the items that must be reported in OCI, when an item of OCI must be reclassified to net income, or change the option for an entity to present components. This new guidance is effective for the Company beginning fiscal year 2013 and is required to be applied retrospectively. The adoption of this guidance is not expected to have an impact on the Company’s results of operations, financial position, or cash flows as it relates only to financial statement presentation.

In May 2011, the FASB issued new guidance for fair value measurements to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between GAAP and International Financial Reporting Standards. The guidance changes certain fair value measurement principles and enhances the disclosure requirements, particularly for level 3 fair value measurements. The Company adopted this guidance prospectively during fiscal year 2012 and noted no significant impact on the Company’s results of operations, financial position, or cash flows.

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2. Balance Sheet Components

Cash and Cash Equivalents

Cash and cash equivalents were as follows (in thousands):

	June 30, 2011
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash	$	3,795	$	—	$	—	$	3,795
Money market funds		215,809		—		—		215,809
Total cash and cash equivalents	$	219,604	$	—	$	—	$	219,604

	June 30, 2012
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash	$	54,295	$	—	$	—	$	54,295
Money market funds		266,944		—		—		266,944
Total cash and cash equivalents	$	321,239	$	—	$	—	$	321,239

Inventories

Inventories consisted of the following (in thousands):

	June 30,
	2011		2012
Raw materials	$	16,108	$	20,263
Work in progress		13,931		30,065
Finished goods		5,583		9,129
	$	35,622	$	59,457

Property and Equipment

Property and equipment consisted of the following (in thousands):

	June 30,
	2011			2012
Computer equipment	$	8,136		$	14,904
Software		1,046			4,076
Property and equipment		1,991			5,682
Furniture and fixtures		2,092			3,759
Leasehold improvements		5,268			12,520
Construction in progress		—			329
		18,533			41,270
Less accumulated depreciation and amortization		(4,790	)		(10,025	)
	$	13,743		$	31,245

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Depreciation expense (including amortization of leasehold improvements) was $1,498,000, $4,547,000 and $6,673,000 for the fiscal years ended June 30, 2010, 2011 and 2012, respectively.

During the fiscal year ended June 30, 2010, the Company capitalized leasehold improvements primarily related to its corporate offices of $1,047,000. The leasehold improvements were originally amortized over the remaining period of the related facility lease that was to end in July 2015. In December 2010, the Company entered into a termination agreement related to this lease resulting in the lease terminating on April 30, 2011. The net book value of the related leasehold improvements of $1,335,000 as of December 31, 2010 was amortized on a straight-line basis over the remaining lease term ending April 30, 2011.

During the fiscal year ended June 30, 2011 and 2012, the Company capitalized leasehold improvements of $5,230,000 and $2,836,000, respectively, related to its corporate offices which are being amortized over the related lease term that ends in September 2021. During the fiscal year ended June 30, 2012, the Company also capitalized leasehold improvements of $4,045,000 related to its new San Jose sales offices which are being amortized over the related lease term that ends in March 2019.

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

	June 30,
	2011		2012
Accrued compensation	$	10,118	$	19,034
Common stock repurchase derivative liability		1,137		—
Accrued warranty expense		666		2,825
Accrued other liabilities		3,122		7,328
	$	15,043	$	29,187

Long-term Other Liabilities

Long-term other liabilities consisted of the following (in thousands):

	June 30,
	2011		2012
Long term deferred tax liability	$	615	$	4,026
Long term deferred rent		5,847		8,250
Long term other liabilities		6		—
	$	6,468	$	12,276

3. Fair Value Measurements

Assets and Common Stock Repurchase Derivative Liability Measured and Recorded at Fair Value on a Recurring Basis

The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds and a common stock repurchase derivative liability. The following three levels of inputs are used to measure the fair value of financial instruments:

Level 1:	Quoted prices in active markets for identical assets or liabilities. The Company classifies its money market funds as Level 1 instruments as they are traded in active markets with sufficient volume and frequency of transactions.
Level 2:	Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
Level 3:	Unobservable inputs are used when little or no market data is available. The Company utilized a Monte Carlo model to determine the fair value of the common stock repurchase derivative liability. Certain inputs used in the models are unobservable. The fair values could change significantly based on future market conditions.

The fair value of the Company’s money market funds and the common stock repurchase derivative liability was as follows (in thousands):

	Fair Value Measurements at June 30, 2011 Using
Description	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	215,809	$	—	$	—	$	215,809
Accrued and other liabilities:
Common stock repurchase derivative liability	$	—	$	—	$	1,137	$	1,137
	Fair Value Measurements at June 30, 2012 Using
Description	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	266,944	$	—	$	—	$	266,944

The following table summarizes the change in the value of the common stock repurchase derivative liability (in thousands):

	Year Ended June 30,
	2011		2012
Balance at beginning of period	$	—	$	1,137
Fair value at transaction date		118		—
Change in fair value included in other (expense) income, net		1,019		(70	)
Repurchases of common stock		—		(1,067	)
Balance at end of period	$	1,137	$	—

Assets Measured and Recorded at Fair Value on a Non-recurring Basis

Non-financial long-lived assets such as property,equipment, and intangible assets including goodwill are recorded at their historical cost; however, if there is an impairment, the assets are measured and recorded at fair value. Certain furniture and fixtures were measured at fair value during

F-21

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

the year ended June 30, 2011 due to circumstances that indicated that the carrying value of these assets was not recoverable, resulting in an impairment charge of $46,000. This impairment charge is included in operating expenses in the consolidated statements of operations. The fair value of the furniture and fixtures on the measurement date was $170,000 and was measured using level 2 inputs. The fair value was based on a quoted price in a market that is not active.

Fair Value of Other Financial Instruments

The carrying amounts of the Company’s accounts receivable, accounts payable, accrued liabilities, notes payable, and other liabilities approximate their fair values due to their short maturities.

4. Acquisitions

On August 11, 2011, the Company acquired 100% of the stock of IO Turbine, Inc. (“IO Turbine”) pursuant to the Agreement and Plan of Reorganization (the “Merger Agreement”) dated August 4, 2011. IO Turbine was a provider of caching solutions for virtual environments, based in San Jose, California. Accordingly, the assets, liabilities, and operating results of IO Turbine are reflected in the Company’s consolidated financial statements following the date of acquisition. The fair value of the aggregate purchase price was approximately $65,568,000, which consisted of (1) cash of approximately $21,199,000, (2) approximately $43,485,000 in common stock valued at $28.40 per share, the closing sale price of the Company’s common stock on the closing date of the acquisition, and (3) approximately $884,000 in assumed stock options attributable to pre-acquisition service. In addition, subsequent to the acquisition, the Company will recognize up to approximately $26,421,000 of stock-based compensation expense related to the fair value of assumed restricted stock awards (RSAs) and stock options, of which approximately $3,795,000 were expensed immediately in connection with the acceleration of vesting of certain restricted stock awards and the remainder will be recognized over the underlying future service period of the assumed stock awards and stock options. At the time of acquisition, IO Turbine stockholders holding RSAs had the option to receive cash and/or shares of the Company’s common stock for their unvested RSAs based on a fixed value determined at the acquisition date. As a result, the Company: (1) issued approximately 414,000 shares of its common stock that remain subject to forfeiture based on the original vesting schedule applicable to such awards and (2) will pay up to approximately $4,631,000 in cash in accordance with the original vesting schedule applicable to such awards. Of this total cash amount, approximately $1,605,000 was paid as of June 30, 2012.

The fair value of the assumed options was estimated using the Black-Scholes-Merton option pricing model with market assumptions. Option pricing models require the use of highly subjective market assumptions, including expected stock price volatility, which if changed, can materially affect fair value estimates. The more significant assumptions used in estimating the fair value of these stock options include expected volatility of 60%, expected option term of between 5.2 years and 5.9 years and a risk-free interest rate of 2.0%.

Approximately $3,628,000 of cash and 278,974 shares of common stock were deposited in escrow and were held for one year from the date of acquisition as partial security for indemnification obligations of the IO Turbine stockholders pursuant to the Merger Agreement, before being released in full from escrow in August 2012. The Company did not make any claims for indemnification against the IO Turbine stockholders pursuant to the Merger Agreement.

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Purchase price allocation

The total purchase price for IO Turbine was allocated to the net tangible and intangible assets based upon their fair values as set forth below. The acquisition of IO Turbine is a key part of the Company’s strategy to enable enterprise customers to increase the utilization, performance, and efficiency of their datacenter resources, and extract greater value from their information assets. These factors contributed to a purchase price in excess of the fair value of the IO Turbine net tangible and intangible assets acquired, and as a result, the Company has recorded goodwill in connection with this transaction. The excess of the purchase price over the net tangible assets and intangible asset was recorded as goodwill.

The Company’s purchase price allocation for IO Turbine was as follows (in thousands):

Total current assets	$	3,669
Property and equipment, net		224
Other assets		6
Total assets		3,899
Accounts payable		(706	)
Accrued and other current liabilities		(120	)
Total current liabilities		(826	)
Net acquired tangible assets	$	3,073
Developed technology		10,500
Goodwill		54,777
Deferred income tax liability		(2,782	)
Total fair value of purchase price	$	65,568

For the year ended June 30, 2012, operating expenses associated with IO Turbine were approximately $20,306,000, of which approximately $12,282,000 related to stock-based compensation expense.

Acquisition related expenses

Acquisition related expenses totaled approximately $1,326,000 for the year ended June 30, 2012 and were recorded in general and administrative expenses. Of the total acquisition related expenses, $450,000 related to a prepaid royalty fee, paid by the Company to IO Turbine in fiscal year 2011, which was expensed by the Company upon completion of the acquisition of IO Turbine.

Unaudited pro forma financial information

The following unaudited pro forma financial information is based on the combined historical financial statements of the Company and IO Turbine after giving effect to the Company’s acquisition of IO Turbine as if it had occurred as of July 1, 2010 and includes pro forma adjustments related to the

F-23

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

amortization of acquired intangible assets, stock-based compensation expense, and depreciation expense (in thousands, except per share data):

	Year Ended June 30,
	2011			2012
Revenue	$	197,204		$	359,349
Income (loss) from operations		(5,255	)		(7,935	)
Net income (loss)		(10,372	)		(8,224	)
Net income (loss) per share, basic	$	(0.56	)	$	(0.09	)
Net income (loss) per share, diluted	$	(0.56	)	$	(0.09	)

The amounts in the table above do not include non-recurring expense of approximately $3,795,000 related to the acceleration of vesting on certain stock-based awards that was recorded by the Company as stock-based compensation expense in the year ended June 30, 2012.

5. Goodwill and Intangible Assets

Changes in the carrying amount of Goodwill consisted of the following (in thousands):

	Year Ended June 30,
	2011		2012
Balance at beginning of period	$	—	$	—
Current period acquisitions		—		54,777
Balance at end of period		—		54,777

The Company’s goodwill is not deductible for income tax purposes.

The Company’s intangible assets and related accumulated amortization consisted of the following as of June 30, 2012 (in thousands):

	Weighted- Average Useful Life		Cost		Accumulated Amortization			Net
Developed technology		4 years	$	10,500	$	(2,336	)	$	8,164

For the year ended June 30, 2012, amortization expense related to intangible assets was approximately $2,336,000. Estimated amortization expense in future periods through fiscal year 2016 for intangible assets subject to amortization is as follows (in thousands):

Fiscal Year	Total
2013		2,625
2014		2,625
2015		2,625
2016		289
	$	8,164

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

6. Long-term Obligations

Loan and Security Agreement

In September 2010, the Company amended and restated its loan and security agreement (the “Revolving Line of Credit”) with a financial institution. The Revolving Line of Credit allows the Company to borrow up to a limit of $25,000,000. A sublimit of $6,000,000 for letters of credit, certain cash management services, and foreign exchange forward contracts applied until May 2012. The total balance of letters of credit outstanding at June 30, 2012 was $3,183,000, which reduces the amount the Company has available to borrow under the Revolving Line of Credit. Prior to May 2012, borrowings under the Revolving Line of Credit would have accrued interest at a floating per annum rate equal to one-half of one percentage point (0.50%) above the prime rate as published in the Wall Street Journal. An unused commitment fee equal to 0.375% of the difference between the $25,000,000 limit and the average daily balance of borrowings outstanding each quarter was due on the last day of such quarter. Prior to May 2012, the Revolving Line of Credit was secured by substantially all of the Company’s assets. The Company can make advances against the Revolving Line of Credit until its maturity date in September 2012, at which time all unpaid principal and interest shall be due and payable.

In August 2011, the Company entered into an amendment to the Revolving Line of Credit which provided for the consent of the financial institution with respect to the acquisition of IO Turbine and certain amendments to provide the Company with further flexibility to consummate mergers and acquisitions permitted under the Revolving Line of Credit.

In May 2012, the Company entered into a second amendment to the Revolving Line of Credit. Pursuant to this amendment, the pricing on revolving line of credit was amended such that borrowings under the revolving line of credit accrue interest at a per annum rate equal to, at the Company’s option, a floating per annum rate equal to the prime rate as published in the Wall Street Journal, or the LIBOR rate (based on 1, 2, 3 or 6-month interest periods) plus a margin equal to two percent (2.00%) per annum. This amendment further provides for, among other things, (i) the reduction of the quarterly unused commitment fee to an amount equal to one-quarter of one percent (0.25%) per annum of the difference between the $25,000,000 loan commitment and the average daily balance of borrowings outstanding on the last day of each quarter, (ii) the removal of the borrowing base formula and the sublimits restricting for the issuance of letters of credit, cash management services and foreign exchange forward contracts, and (iii) the release of the financial institution’s security interest in all of the Company’s assets.

Under the terms of the Revolving Line of Credit, the Company is required to maintain the following minimum financial covenants on a consolidated basis:

• A ratio of current assets to current liabilities plus, without duplication, any of the Company’s obligations to the financial institution, of at least 1.25 to 1.00.

• A tangible net worth of at least $25,000,000, plus 25% of the net proceeds the Company received from the sale or issuance of its equity or subordinated debt, such increase to be measured as of the last day of the quarter in which the Company received such proceeds.

As of June 30, 2012, no borrowings were outstanding under the Revolving Line of Credit and the Company was in compliance with all covenants.

F-25

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

7. Income Taxes

The domestic and foreign components of (loss) income before income taxes were as follows (in thousands):

	Year Ended June 30,
	2010			2011		2012
Domestic	$	(31,742	)	$	5,802	$	(5,924	)
Foreign		38			447		956
(Loss) income before income taxes	$	(31,704	)	$	6,249	$	(4,968	)

Income tax expense consisted of the following components (in thousands):

	Year Ended June 30,
	2010		2011		2012
Current:
Federal	$	—	$	—	$	—
State		3		428		213
Foreign		9		112		684
Total current tax expense		12		540		897
Deferred:
Federal		—		—		(2,782	)
State		—		—		—
Foreign		—		—		—
Total deferred tax benefit		—		—		(2,782	)
Tax expense attributable to employee stock plans		—		1,154		2,500
Total income tax expense	$	12	$	1,694	$	615

Income tax expense differed from the amounts computed by applying the statutory federal income tax rate of 34% to (loss) income before income taxes as a result of the following (in thousands):

	Year Ended June 30,
	2010			2011			2012
Federal tax (benefit) expense at statutory rate	$	(10,779	)	$	2,125		$	(1,689	)
State tax (benefit) expense, net of federal tax effect		(646	)		700			1,929
Rate differential on foreign income taxes		—			(40	)		359
Current year research tax credits		(50	)		(618	)		(1,366	)
Stock-based compensation		—			1,970			4,943
Change in valuation allowance		10,922			(3,306	)		(4,057	)
Other, net		565			863			496
Income tax expense	$	12		$	1,694		$	615

F-26

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Significant components of the Company’s deferred income tax assets and liabilities were as follows (in thousands):

	June 30,
	2011			2012
Deferred tax assets:
Net operating loss carryforwards	$	14,415		$	2,662
Tax credit carryforwards		1,743			4,015
Accruals and allowances		6,474			13,626
Stock-based compensation		2,222			10,690
Total deferred tax assets		24,854			30,993
Valuation allowance		(22,212	)		(21,722	)
		2,642			9,271
Deferred tax liabilities:
Fixed asset basis differences		(2,642	)		(7,222	)
Intangible asset basis differences		—			(2,049	)
Deferred tax assets, net	$	—		$	—

The Company does not provide for U.S. income taxes on the undistributed earnings of foreign subsidiaries which are intended to be indefinitely reinvested in operations outside the U.S. As of June 30, 2012 the cumulative amount of earnings upon which U.S. income taxes have not been provided is approximately $999,000. The amount of unrecognized deferred tax liability related to these earnings is estimated to be approximately $117,000.

The Company received a tax benefit for the year ended June 30, 2012 of approximately $2,782,000 as a result of a valuation allowance reversal related to deferred tax liabilities generated from the acquisition of IO Turbine.

As of June 30, 2012, the Company had federal and state net operating loss carryforwards (“NOLs”) of $3,776,000 and $30,351,000, respectively. The federal and state NOLs begin to expire in 2027 and 2014, respectively, if not utilized. The Company had federal and state research and development tax credit carryforwards of $4,024,000 and $2,205,000 which begin to expire in 2027 and 2020, respectively, if not utilized. The Company also had a federal alternative minimum tax credit carryforward in the amount of $577,000.

The Company maintained a full valuation allowance at June 30, 2010, 2011, and 2012 due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets due to historical losses. The valuation allowance increased by $10,922,000 during the fiscal year ended June 30, 2010 and decreased by $3,306,000 and $4,057,000 during the fiscal years ended June 30, 2011 and 2012, respectively.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. If an ownership change has occurred in the past or occurs in the future, the utilization of net operation loss and credit carryforwards could be significantly reduced. A study was performed to determine if any ownership changes as defined by the Internal Revenue Code of 1986 have occurred since the Company’s inception. The study calculated the

F-27

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

amount of annual limitation related to such ownership changes and projected the expected usage of both net operating loss and credit carryforwards, by year. Based on the results of this study, the Company expects to utilize the full net operating loss carryforward before expiration. Approximately $112,000 of federal R&D credits are expected to expire unused.

Effective July 1, 2009, the Company adopted the provisions of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes, which provides a financial statement recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Under FASB ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based solely on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has greater than 50% likelihood to be sustained upon ultimate settlement. As a result of the implementation of ASC 740-10, the Company reclassified $184,000 of its tax reserves to ASC 740-10 reserves. Since the Company has a full valuation allowance against its deferred tax assets, the adoption of ASC 740-10 did not result in a change to the financial statements. As of June 30, 2012, the Company’s unrecognized tax benefits were $2,709,000.

The Company recognizes accrued interest and penalties related to uncertain tax positions as part of income tax expense. As of June 30, 2012, the Company had $16,000 of accrued interest and penalties.

During the fiscal year ended June 30, 2012, the aggregate changes in the total gross amount of unrecognized tax benefits were as follows (in thousands):

Balance as of June 30, 2011	$	835
Decrease of unrecognized tax benefits taken in prior years		—
Increase in unrecognized tax benefits related to current year		1,786
Increase in unrecognized tax benefits related to prior year		88
Balance as of June 30, 2012	$	2,709

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $289,000.

The Company does not anticipate any significant change within fiscal year 2013 of its uncertain tax positions, and the Company does not anticipate any events which could cause a change to these uncertainties. The Company files tax returns in the U.S. on a Federal basis and in many U.S. state and foreign jurisdictions. The Company is open for examinations in its major tax jurisdictions for the 2008 and forward tax years. There are no ongoing income tax examinations by taxing authorities at this time.

In addition to the net operating loss carryforwards in the table above, as of June 30, 2012, the Company has Federal and state net operating loss carryforwards associated with stock option tax deductions greater than deductions claimed for book purposes of approximately $186,569,000 and $135,249,000, respectively. The Company also had $537,000 of state research and development tax credit carryforwards associated with stock option tax deductions greater than deductions claimed for book purposes. These benefits will be recorded directly to equity in the period they reduce current taxes payable.

F-28

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For fiscal year ended June 30, 2012, income tax expense is related to certain state and foreign jurisdictions for which taxable income exists and for which net operating loss carry forwards are not available to be utilized. The Company paid income taxes in U.S. state and foreign jurisdictions of $12,000, $540,000, and $504,000 during the fiscal years ended June 30, 2010, 2011, and 2012, respectively.

8. Convertible Preferred Stock and Stockholders’ (Deficit) Equity

Convertible Preferred Stock

As of June 30, 2010, the Company had shares issued and outstanding of 17,445,450, 23,466,941, and 11,576,681 of Series A, Series B, and Series C convertible preferred stock, respectively.

During the fiscal year ended June 30, 2010, the Company designated 11,630,913 shares of its convertible preferred stock as Series C, repurchased 542,961 shares of Series B convertible preferred stock for $1,834,000, and issued a total of 11,576,681 shares of Series C convertible preferred stock, including 1,302,237 shares issued upon conversion of convertible notes and 10,274,444 shares issued for $3.869 per share resulting in net cash proceeds of $39,658,000.

Amounts paid in excess of the carrying amount related to the repurchase of the Series B convertible preferred stock are reflected as a deemed dividend in computing net loss attributable to common stockholders for the fiscal year ended June 30, 2010.

In conjunction with the Company’s initial public offering which closed on June 14, 2011, all shares of convertible preferred stock outstanding automatically converted into 52,489,072 shares of common stock.

Equity Incentive Plans

The Company adopted the 2006 Stock Option Plan (the “2006 Plan”) in July 2006 and subsequently granted a total of 3,028,135 options to purchase common stock under the 2006 Plan. Stock options granted under the 2006 Plan generally vest over a period of 30 months and have a contractual life of 10 years from the date of grant. In March 2008, the Company’s board of directors amended the terms of the 2006 Plan and terminated the ability to grant additional awards under this plan; however, the 2006 Plan will continue to govern the terms and conditions of the awards previously granted.

In March 2008, the Company adopted the 2008 Equity Incentive Plan (the “2008 Plan”) and in July 2010 the Company adopted the 2010 Executive Stock Incentive Plan (the “2010 Plan”). In January 2011, the Company’s board of directors and stockholders authorized an additional 3,000,000 shares of common stock for future issuance under the 2008 Plan and 2010 Plan. In June 2011, the Company’s board of directors determined that no future awards would be issued under the 2008 and 2010 Plans; however, the respective Plan will continue to govern the terms and conditions of the awards previously granted.

In June 2011, the Company adopted the 2011 Equity Incentive Plan (the “2011 Plan”) and reserved a total of 12,132,430 shares of common stock for issuance under the 2011 Plan. The shares reserved for issuance under the 2011 Plan include shares returned as the result of expiration or termination of options from the previous Plans and other non-plan awards made prior to the Company’s initial public offering (which may not exceed 25,867,172 shares). As of June 30, 2012, 4,454,882 awards were issued and outstanding from the 2011 Plan. The number of shares available for issuance under the 2011 Plan as of June 30, 2012 was 8,129,263. In addition, the 2011 Plan provides for annual increases in the number of shares available for issuance on the first day of each fiscal year beginning July 1, 2012 equal to the lesser of:

• 5% of the outstanding shares of the Company’s common stock on the first day of the fiscal year;

• 10,000,000 shares; and

F-29

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

• such other amount as may be determined by the Company’s Board of Directors or a committee thereof

The Stock Plans provide for the grant of incentive stock options to employees and for the grant of nonstatutory stock options and awards of restricted or unrestricted shares of common stock to employees, consultants, and advisors. Generally stock options granted under the Stock Plans vest over a period of 48 months and have a contractual life of 10 years from the date of grant. Grants of incentive stock options generally must be at an exercise price not less than the fair value of the underlying common stock on the date of grant.

In August 2011, in connection with the Company’s acquisition of IO Turbine, the Company assumed stock options and restricted stock awards previously granted by IO Turbine pursuant to the IO Turbine, Inc. 2009 Equity Incentive Plan. The stock options were converted to options to purchase shares of the Company’s common stock. These stock options generally have a 48 month vesting schedule and have an exercise price equal to the grant date fair market value. The restricted stock awards were converted to restricted shares of the Company’s common stock. These restricted stock awards generally have a 24 to 48 month vesting schedule, with the majority of the shares vesting over a 24 month vesting schedule from the date the Company acquired IO Turbine.

Stock option activity for all the Stock Plans for the fiscal years ended June 30, 2010, 2011 and 2012 was as follows:

	Number of Shares Subject to Outstanding Options			Weighted- Average Exercise Price Per Share		Weighted- Average Contractual Term (in Years)		Aggregate Intrinsic Value(1)
	(in thousands)
Outstanding as of June 30, 2009		13,177,667		$	0.55
Granted		7,171,034			1.10
Exercised		(620,462	)		0.21
Canceled		(1,315,399	)		0.60
Outstanding as of June 30, 2010		18,412,840			0.77
Granted		10,166,575			4.67
Exercised		(2,541,909	)		0.61
Canceled		(1,309,575	)		2.30
Outstanding as of June 30, 2011		24,727,931			2.31
Granted		2,654,650			22.48
Assumed		264,792			1.24
Exercised		(7,128,528	)		1.15
Canceled		(633,439	)		8.28
Outstanding as of June 30, 2012		19,885,406		$	5.21		8.0	$	311,722
Vested and expected to vest as of June 30, 2012		18,007,345		$	4.91		7.9	$	287,742
Vested and exercisable as of June 30, 2012		7,168,823		$	2.51		7.5	$	131,797

(1) The aggregate intrinsic value is equal to the difference between the exercise price of the underlying stock option awards and the estimated fair value of the Company’s common stock as of June 30, 2012.

F-30

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Employee Stock Options

Additional per share information related to stock options granted to employees was as follows:

	Year Ended June 30,
	2010		2011		2012
Weighted-average grant date fair value — granted	$	0.55	$	3.22	$	12.38
Weighted-average grant date fair value — assumed in connection with the acquisition of IO Turbine		—		—		27.31
Weighted-average grant date fair value — forfeited		0.30		2.33		6.84

The aggregate intrinsic value of stock options exercised during the fiscal years ended June 30, 2011 and 2012 was approximately $33,570,000 and $190,748,000, respectively, which was the difference between the exercise price of the underlying stock option awards and the estimated fair value of the Company’s common stock on the date of exercise.

The Company recorded stock-based compensation expense related to employee stock options of approximately $1,205,000, $4,924,000, and $17,022,000 for the fiscal years ended June 30, 2010, 2011, and 2012, respectively. As of June 30, 2012, there was approximately $48,237,000 of total unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average service period of 2.7 years.

On December 16, 2011, the Company accelerated the vesting of 12,500 stock options in connection with the resignation of Christopher J. Schaepe from the Board of Directors of the Company. As a result of the acceleration, the Company recorded approximately $199,000 of employee related stock-based compensation expense for the year ended June 30, 2012.

The Company estimates the fair value of stock options granted to employees using the Black-Scholes-Merton pricing model and a single option award approach, which requires the input of several highly subjective and complex assumptions. The risk-free interest rate for the expected term of the option is based on the yield available on United States Treasury Zero Coupon issues with an equivalent expected term. The expected option term used in the Black-Scholes-Merton pricing model is calculated using the simplified method. The simplified method defines the expected term as the average of the option’s contractual term and the option’s weighted-average vesting period. The Company utilizes this method as it has limited historical stock option data that is sufficient to derive a reasonable estimate of the expected stock option term. The computation of estimated expected volatility is based on the volatility of comparable companies from a representative peer group selected based on industry data.

The following table presents the assumptions used in the Black-Scholes-Merton pricing model related to employee stock options:

	Year Ended June 30,
	2010	2011	2012
Expected volatility	49%	48-60%	59-60%
Expected term (in years)	6.1	3.2-7.0	5.2-6.6
Risk-free interest rate	2.4-2.9%	0.6-2.7%	1.0-2.0%
Expected dividends	—	—	—

F-31

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Non-employee Stock Options

The Company from time to time grants options to purchase common stock to non-employees for advisory and consulting services. The Company estimates the fair value of these stock options using the Black-Scholes-Merton option pricing formula at each balance sheet date and records expense ratably over the vesting period of each stock option award. The Company recorded stock-based compensation expense related to these non-employee stock options of $54,000, $3,235,000, and $8,474,000 for the fiscal years ended June 30, 2010, 2011, and 2012, respectively.

The following table presents the assumptions used in the Black-Scholes-Merton pricing model related to non-employee stock options:

	Year Ended June 30,
	2010			2011			2012
Expected volatility		49	%		48-63	%		59-62	%
Expected term (in years)		7.8-10.0			7.1-10.0			6.3-9.7
Risk-free interest rate		2.9-3.6	%		2.1-3.4	%		1.6-2.4	%
Expected dividends		—			—			—

Restricted Stock Units and Restricted Stock Awards

The following table summarizes activity during the year ended June 30, 2012 related to restricted stock units (“RSUs”) and RSAs:

	Number of Shares			Weighted- Average Grant-Date Fair Value
Unvested RSUs and RSAs at June 30, 2011		—		$	—
Granted		1,807,503			23.71
Assumed in connection with the acquisition of IO Turbine		916,202			28.40
Vested		(211,996	)		28.54
Accelerated vesting in connection with the acquisition of IO Turbine		(502,514	)		28.40
Forfeited		(12,779	)		28.40
Cancelled		(38,850	)		22.41
Unvested RSUs and RSAs at June 30, 2012		1,957,566			24.17

The Company recorded stock-based compensation expense related to RSUs and RSAs of approximately $597,000, $399,000, and $16,253,000 for the fiscal years ended June 30, 2010, 2011, and 2012, respectively. Of the stock-based compensation expense recognized during the year ended June 30, 2012, approximately $3,795,000 was due to accelerated vesting of certain RSAs assumed in connection with the IO Turbine acquisition, of which, approximately $793,000 related to awards that were settled in cash at the time of acquisition. At June 30, 2012, there was approximately $42,026,000 of total unrecognized compensation cost related to unvested RSUs and RSAs. This unrecognized compensation cost is equal to the fair value of RSUs and RSAs expected to vest and will be recognized over a weighted-average period of 3.2 years.

F-32

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Repurchases of Vested Restricted Stock Units

The Company is required to withhold minimum statutory taxes related to the vesting of RSUs, including the forfeiting of a portion of the newly vested award that has a current value equal to the withholding obligation. The Company is then required to remit the amount of taxes owed by the employee to the appropriate taxing authority. As a result of such forfeitures, during the year ended June 30, 2012, the Company effectively repurchased a total of 211,996 shares of common stock related to employee tax withholding obligations. The Company has recorded approximately $44,000 as a financing activity for these forfeitures in the condensed consolidated statement of cash flows for the year ended June 30, 2012.

Shares of Common Stock Subject to Repurchase

In March 2008, the Company agreed with two of its executives to add vesting provisions to an aggregate of 5,000,000 shares of common stock controlled by these executives. The Company had the right to repurchase any unvested shares at a price of $1.09 per share in the event the executive was to no longer provide services to the Company. The repurchase right expired ratably as the shares vested monthly over a 36-month period. The total fair value of the 5,000,000 shares of $1,790,000 was recognized as stock-based compensation expense on a straight-line basis over the vesting period.

The following table summarizes the activity related to these shares subject to repurchase:

	Number of Shares			Weighted-Average Fair Value
Unvested shares of common stock as of June 30, 2009		2,916,667		$	0.36
Vested		(1,666,667	)		0.36
Unvested as of June 30, 2010		1,250,000			0.36
Vested		(1,250,000	)		0.36
Unvested as of June 30, 2011		—			0.36
Vested		—
Unvested as of June 30, 2012		—

Employee Stock Purchase Plan

The Company’s 2011 Employee Stock Purchase Plan (the “ESPP”) became effective in June 2011. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to plan limitations. A participant may purchase a maximum of 1,500 shares during the offering period. Generally, the ESPP provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period. At the effective date, a total of 500,000 shares of common stock were reserved for future issuance under this plan. In addition, the ESPP provides for annual increases in the number of shares available for issuance on the first day of each fiscal year beginning July 1, 2012 equal to the lesser of:

• 1% of the outstanding shares of the Company’s common stock on the first day of the year;

• 2,000,000 shares; and

• such other amount as may be determined by the Company’s Board of Directors or a committee thereof

F-33

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company recorded stock-based compensation expense related to its ESPP of approximately $79,000 and $1,689,000 for the fiscal years ended June 30, 2011 and 2012. During the year ended June 30, 2012, the Company issued 148,938 shares of common stock under the ESPP. At June 30, 2012, a total of 351,062 shares of common stock were reserved for future issuance under the ESPP.

The following table presents the assumptions used in the Black-Scholes-Merton pricing model related to the ESPP during the year ended June 30, 2012:

Expected volatility	47–60	%
Expected life (in years, equal to the contractual term)	0.5–0.7
Risk free interest rate	0.1–0.2	%
Dividend yield	—

Stock-based Compensation Expense

Total stock-based compensation expense was classified as follows in the accompanying consolidated statement of operations (in thousands):

	Year Ended June 30,
	2010		2011		2012
Cost of revenue	$	9	$	31	$	216
Sales and marketing		738		1,803		6,089
Research and development		492		1,545		9,111
General and administrative		628		5,258		28,022
Total stock-based compensation	$	1,867	$	8,637	$	43,438

Warrants

During the year ended June 30, 2010, the Company granted to a business a fully vested warrant to purchase 12,500 shares of common stock for $1.96 per share in exchange for services rendered. The estimated fair value of the warrant of $11,000 was expensed in the year ended June 30, 2010 and was measured at the issuance date using the Black-Scholes-Merton option-pricing model with the following assumptions:

Expected volatility	49	%
Expected life (in years, equal to the contractual term)	5.0
Risk free interest rate	2.4	%
Dividend yield	—

In March 2011, the Company issued 12,500 shares of common stock pursuant to the exercise of this warrant.

In connection with the execution of the September 2008 loan and security agreement, the Company issued the financial institution a fully vested warrant to purchase 125,800 shares of Series A convertible preferred stock at $1.093 per share. The warrant may be exercised for cash or net settled at any time through September 2018. The number of shares to be issued upon settlement of the warrant is 125,800. In conjunction with the initial public offering of the Company’s common stock in June 2011, the warrant converted to a warrant to purchase 125,800 shares of common stock at $1.093 per share. In October 2011, the Company issued 121,839 shares of common stock related to the net exercise of this common stock warrant.

F-34

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The FASB has issued accounting guidance on the classification of freestanding warrants and other similar instruments on shares that are redeemable (either puttable or mandatorily redeemable). The guidance requires liability classification for certain warrants issued that are exercisable into convertible preferred stock. Liability classification requires the warrants to be remeasured to their fair value at each reporting period. During the fiscal year 2010 and 2011, any changes in the fair value of the warrant liability were recorded in interest expense prior to converting to a warrant to purchase common stock. Upon conversion in June 2011, the liability was reclassified to additional-paid in capital. The Company utilized a Black-Scholes-Merton option pricing model in order to determine the fair value of the preferred stock warrant, including the consideration of a risk-free interest rate, expected term and expected volatility. Due to the initial public offering of the Company’s common stock and the conversion of all shares of preferred stock to shares of common stock, the Company no longer remeasures the warrant to fair value.

The following table presents the assumptions used in the Black-Scholes-Merton pricing model as of each date the warrant was revalued:

	June 30, 2010			June 30, 2011
Expected volatility		49	%		59	%
Expected term (in years)		8.3			7.26
Risk free interest rate		2.9	%		2.24	%
Expected dividends		—			—

Common Stock and Shares of Common Stock Reserved for Future Issuance

Shares of common stock reserved for future issuance were as follows (in thousands):

	June 30, 2011		June 30, 2012
Stock options outstanding		24,727,931		19,885,406
RSUs and RSAs		—		1,957,566
ESPP		500,000		351,062
Shares available for future grants		11,967,264		8,129,263
Warrant to purchase common stock		125,800		—
		37,320,995		30,323,297

Issuance of Common Stock

In February 2011, the Company issued an aggregate of 60,000 shares of common stock for cash to two members of its board of directors. The purchase price of these shares was $5.12 per share.

In June 2011, the Company completed the initial public offering of its common stock in which the Company issued and sold 12,600,607 shares.

In conjunction with the acquisition of IO Turbine in August 2011, the Company issued an aggregate of 1,633,315 shares of common stock to former IO Turbine stockholders.

In October 2011, the Company issued 121,839 shares of common stock related to the net exercise of a common stock warrant.

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In November 2011, the Company completed a follow-on public offering of its common stock in which the Company issued and sold 3,000,000 shares.

Repurchase of Common Stock

In May 2011, the Company repurchased a total 165,000 shares of common stock from two of its stockholders, in separate transactions, for a total purchase price of $1,222,500. The terms and conditions of the individual stock repurchases, including the purchase price, were established independently between the two stockholders and a third party buyer unaffiliated with the Company. The Company exercised its pre-existing right of first refusal to which the shares were subject and repurchased the shares on the same terms and conditions to which the stockholders and third party buyer had agreed.

The terms of the repurchase transaction for 150,000 of such shares required the Company to pay additional consideration to one of the stockholders if a liquidity event occurred at any time prior to May 2, 2012 in which the price per share of the Company’s common stock was greater than $15.00. For this purpose, a liquidity event was defined as either a change of control or sale of substantially all of the assets of the Company or the initial public offering of common stock of the Company, or IPO. The amount of the additional per share consideration payable was equal to half the difference between the applicable liquidity event price per share and $15.00. The liquidity event price per share was the closing per share sale price as of the first trading day following the December 5, 2011 expiration date of the lock-up period described in the underwriting section of the Company’s Form S-1 registration statement. In accordance with the terms of the repurchase transaction, the Company paid $1,066,500 in additional consideration to the stockholder on December 9, 2011. As this transaction was settled with a cash payment and the amount of settlement was indexed to the Company’s common stock price per share on December 6, 2011, this transaction was accounted for as a derivative instrument in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities, and was recorded at fair value (approximately $1,137,000 and $0 as of June 30, 2011 and June 30, 2012, respectively) on the condensed consolidated balance sheets in accrued and other liabilities. The derivative agreement does not meet the hedge criteria and the Company recorded the change in fair value of the derivative of approximately $70,000 as other income in the condensed consolidated statement of operations for the year ended June 30, 2012.

9. Commitments and Contingencies

Letters of Credit

As of June 30, 2011 and 2012, the Company had a total of $3,349,000 and $3,183,000, respectively, in letters of credit outstanding with a financial institution. These outstanding letters of credit have been issued for purposes of securing the Company’s obligations under equipment and facility leases.

Leases

The Company leases certain assets under capital leases with initial lease terms of 36 months, imputed interest rates between 7.8% and 9.4%, and maturities at various dates through fiscal year 2012. These leases are recorded as capital leases due to each lease containing a bargain purchase option. Obligations under capital leases are included in accrued and other current liabilities and other liabilities in the accompanying consolidated balance sheets. As of June 30, 2012, the Company had no capital lease

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FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

obligations. Property and equipment capitalized under capital lease obligations were as follows (in thousands):

	June 30,
	2011			2012
Computer equipment	$	177		$	—
Property and equipment		301			—
Furniture and fixtures		—			—
		478			—
Less accumulated depreciation and amortization		(275	)		—
	$	203		$	—

Future minimum lease payments under non-cancelable operating leases were as follows (in thousands):

	June 30, 2012
2013	$	5,625
2014		5,359
2015		5,679
2016		5,764
2017		5,830
Thereafter		26,137
Total	$	54,394

Operating lease payments primarily relate to the Company’s leases of office space with various expiration dates through 2021. The terms of these leases often include periods of free rent, or rent holidays, and increasing rental rates over time. The Company recognizes rent expense on a straight-line basis over the lease period and has accrued for rent expense recorded but not paid.

During fiscal years 2011 and 2012, the Company entered into new leases to expand its primary office facilities in Salt Lake City, Utah. The term of these leases includes an initial lease term that ends in September 2021, plus the option for the Company to extend the leases for an additional five years. These leases include rent holidays during the first year beginning with the lease effective date and increasing rental rates over the term of the leases. These leases also require the Company to provide the lessor letters of credit in aggregate of $3,000,000.

In January 2012, the Company entered into a lease agreement to lease approximately 79,000 square feet of office space located in San Jose, California (the “San Jose Facility”). The lease term is for 82 months and ends in March 2019. The lease provides for monthly payments of rent during the term as set forth in the lease. The lease also includes rent holidays during the first year beginning with the lease effective date and increasing rental rates over the term of the lease. The lease also provides that the Company must pay taxes and operating expenses in addition to the base rent. The lease allows for leasehold improvements up to $1,187,000 to be paid by the landlord. The Company has relocated employees currently based in the Silicon Valley area to the San Jose Facility.

The Company also leases certain equipment under operating leases that expire at various dates through 2016. These equipment leases typically include provisions that allow the Company at the end

F-37

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

of the initial lease term to renew the lease, purchase the underlying equipment at the then fair market value, or return the equipment to the lessor.

Rent expense was $1,614,000, $4,034,000, and $5,428,000 for the fiscal years ended June 30, 2010, 2011, and 2012, respectively.

Purchase Commitments

In May 2012, the Company entered into a minimum purchase commitment for raw materials inventory that ends in June 2013 and provides for a termination fee based on a percentage of the amount of raw materials inventory not taken under the commitment. During the year ended June 30, 2012, the Company paid approximately $1,168,000 under this commitment. As of June 30, 2012, approximately $35,794,000 remains outstanding under this commitment.

Indemnification

The Company has agreed to indemnify its officers and directors for certain events or occurrences, while the officer or director is or was serving at the Company’s request in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that provides corporate reimbursement coverage that limits its exposure and enables it to recover a portion of any future amounts paid. The Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements since these obligations are not capped but are conditional to the unique facts and circumstances involved. Accordingly, the Company has no liabilities recorded for these agreements as of June 30, 2011 and 2012.

Many of the Company’s agreements with channel partners and customers generally include certain provisions for indemnifying the channel partners and customers against liabilities if the Company’s products infringe a third party’s intellectual property rights. To date, the Company has not incurred any material costs as a result of such indemnification provisions and has not accrued any liabilities related to such obligations in the consolidated financial statements.

Employee Agreements

The Company has various agreements with selected employees pursuant to which if their employment is terminated by the Company without cause or by the employees for good reason, or following a change of control of the Company, the employees are entitled to receive certain benefits, including severance payments, accelerated vesting of stock and stock options, and certain insurance benefits.

Legal Matters

The Company is subject to legal proceedings and claims arising in the ordinary course of business, including claims of alleged infringement of third-party intellectual property rights. With respect to certain of these matters, the Company’s third-party suppliers have agreed to indemnify and defend the Company.

On September 7, 2011, Solid State Storage Solutions, Inc. filed a lawsuit in U.S. District Court for the Eastern District of Texas against the Company and eight other companies. The complaint alleges

F-38

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

that the Company’s products infringe U.S. Patent Nos. 6,701,471; 7,234,087; 7,721,165; 6,370,059; 7,366,016; 7,746,697; 7,616,485; 6,341,085; 6,567,334; 6,347,051; 7,064,995; and 7,327,624. The complaint seeks both damages and a permanent injunction against the Company. The Company has limited information about the specific infringement allegations, but based on its preliminary investigation of the patents identified in the complaint, the Company does not believe that its products infringe any valid or enforceable claim of these patents. The Court has set a schedule calling for a patent claim construction hearing on January 9, 2013, and a trial commencing on July 1, 2013.

No accrual has been recorded as of June 30, 2012, as the outcome of these legal matters is currently not determinable. However, litigation is inherently unpredictable and an unfavorable resolution of any of these matters could materially affect the Company’s consolidated financial position, cash flows, or results of operations. All legal costs associated with litigation are expensed as incurred.

10. Employee Benefit Plans

The Company sponsors a 401(k) defined contribution plan covering all employees. Matching contributions and profit sharing contributions to the plan are at the discretion of the Company. The Company did not pay any matching contributions in any periods presented in the accompanying consolidated statements of operations.

11. Related Party Transactions

The Company issued and sold an aggregate of 52,489,072 shares of Series A, B, and C convertible preferred stock for aggregate consideration of $103,765,000, net of issuance costs. Purchasers of the Company’s Series A, B and C convertible preferred stock include New Enterprise Associates 12, Limited Partnership (“NEA 12”) and Lightspeed Venture Partners VIII, L.P. (“Lightspeed VIII”). Both of these investors owned more than 5% of the Company’s outstanding capital stock as of June 30, 2010 and 2011 and NEA 12 owns more than 5% of the Company’s outstanding capital stock as of June 30, 2012. Forest Baskett and Scott Sandell, both of whom are members of the Company’s board of directors, are general partners of NEA 12. Christopher J. Schaepe, a member of the Company’s board of directors until his resignation on December 16, 2011, is a founding managing director of Lightspeed Venture Partners.

The following table summarizes the purchases of the Company’s convertible preferred stock by NEA 12 and Lightspeed VIII:

Name of Stockholder	Class of Convertible Preferred Stock		Shares of Series A Convertible Preferred Stock		Price Per Share		Total Purchase Price
NEA 12		Series A		8,647,755	$	1.093	$	9,451,996
NEA 12		Series B		9,127,294		*		18,292,776
Lightspeed VIII		Series B		7,500,000		2.000		15,000,000
NEA 12		Series C		2,843,112		3.869		11,000,000
Lightspeed VIII		Series C		1,292,324		3.869		5,000,002

* NEA 12 purchased 9,000,000 shares of Series A convertible preferred stock directly from the Company at a price per share of $2.00 and a purchase price of $18,000,000.

F-39

FUSION-IO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Immediately prior to the Company’s acquisition of IO Turbine in August 2011, Lightspeed Venture Partners, a venture capital firm, through certain of its related funds (including Lightspeed Venture Partners VIII L.P. and Lightspeed Venture Partners VII, L.P.) owned over 10% of the Company’s outstanding capital stock and over 25% of IO Turbine’s capital stock. Christopher J. Schaepe, a member of the Company’s board of directors until his resignation on December 16, 2011, is a founding managing director of Lightspeed. In connection with the acquisition, Lightspeed received 744,866 shares of the Company’s common stock.

12. Subsequent Events

On July 10, 2012, the Company entered into a second amendment to the lease for its primary office facility in Salt Lake City, Utah. This amendment expands the primary office facility by 13,000 square feet and provides for monthly payments that increase over the term of the lease that ends in September 2021.

F-40

Fusion-io, Inc.

Index to Exhibits

			Incorporated by Reference
Exhibit No.	Exhibit Description	Filed Herewith	Form		File No.		Exhibit No.		Filing Date
2.1	Agreement and Plan of Reorganization, dated as of August 4, 2011¸ by and between the Registrant, IO Turbine, Inc. and certain other parties			8-K		001-35188		2.1		08/05/2011
3.1	Amended and Restated Certificate of Incorporation of the Registrant			10-K		001-35188		3.1		09/02/2011
3.2	Amended and Restated Bylaws of the Registrant			10-K		001-35188		3.2		09/02/2011
4.1	Specimen common stock certificate of the Registrant			S-1/A		333-172683		4.1		05/23/2011
4.2	Second Amended and Restated Investors’ Rights Agreement, dated as of April 7, 2010 between the Registrant and certain holders of the Registrant’s capital stock named therein			S-1		333-172683		4.2		03/09/2011
4.3	Warrant to Purchase Stock issued by the Registrant to Silicon Valley Bank, dated September 10, 2008			S-1		333-172683		4.3		03/09/2011
10.1A*	Form of Indemnification Agreement by and between the Registrant and certain of its directors and officers			S-1/A		333-172683		10.1A		05/23/2011
10.1B*	Form of Indemnification Agreement by and between the Registrant and certain of its directors affiliated with investment funds and such investment funds			S-1/A		333-172683		10.1B		05/23/2011
10.2*	2006 Stock Option Plan and Form of Stock Option Agreement under 2006 Stock Option Plan			S-1		333-172683		10.2		03/09/2011
10.3*	2008 Stock Incentive Plan and Form of Stock Option Agreement under 2008 Stock Incentive Plan			S-1		333-172683		10.3		03/09/2011
10.4*	2010 Executive Stock Incentive Plan and Related Forms			S-1		333-172683		10.4		03/09/2011
10.5*	2011 Equity Incentive Plan and Related Forms			S-1/A		333-172683		10.5		05/23/2011
10.6*	2011 Employee Stock Purchase Plan and Form of Purchase Agreement under 2011 Employee Stock Purchase Plan			S-1/A		333-172683		10.6		05/23/2011

			Incorporated by Reference
Exhibit No.	Exhibit Description	Filed Herewith	Form		File No.		Exhibit No.		Filing Date
10.7*	Form of Non-Plan Stock Option Agreement between the Registrant and certain of its officers			S-1		333-172683		10.7		03/09/2011
10.8*	Second Amended and Restated Employment Agreement between the Registrant, David Flynn and Sandusky Investments, Ltd., dated as of April 7, 2010			S-1		333-172683		10.8		03/09/2011
10.9*	Amended and Restated Employment Agreement between the Registrant, Rick White and West Coast VC, LLC, dated as of December 31, 2008			S-1		333-172683		10.9		03/09/2011
10.9A*	Amendment Number One to Amended and Restated Employment Agreement between the Registrant, Rick White and West Coast VC, LLC, dated as of March 7, 2011			S-1		333-172683		10.9A		03/09/2011
10.10*	Form of Involuntary Termination Severance Agreement between the Registrant and certain of its officers			S-1		333-172683		10.10		03/09/2011
10.10A*	Involuntary Termination Severance Agreement between the Registrant and Dennis P. Wolf, dated as of August 11, 2010			S-1/A		333-172683		10.10A		04/18/2011
10.11*	Transition Agreement and Release between the Registrant and David R. Bradford, dated as of September 21, 2010			S-1		333-172683		10.11		03/09/2011
10.12	Lease Agreement between the Registrant and NOP Cottonwood 2825, LLC, dated May 28, 2010 (Building 10)			S-1		333-172683		10.12		03/09/2011
10.12A	First Amendment to Lease Agreement between Registrant and NOP Cottonwood 2825, LLC, dated August 16, 2011 (Building 10)			10-Q/A		001-35188		10.2		11/16/2011
10.12B	Second Amendment to Lease Agreement between Registrant and NOP Cottonwood 2825, LLC, dated December 2, 2011 (Building 10)			10-Q		001-35188		10.1		02/09/2012
10.13	Lease Agreement between the Registrant and NOP Cottonwood 2855, LLC, dated May 28, 2010 (Building 11)			S-1		333-172683		10.13		03/09/2011

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			Incorporated by Reference
Exhibit No.	Exhibit Description	Filed Herewith	Form		File No.		Exhibit No.		Filing Date
10.13A	First Amendment to Lease Agreement between Registrant and NOP Cottonwood 2855, LLC, dated September 6, 2011 (Building 11)			10-Q/A		001-35188		10.3		11/16/2011
10.13B	Second Amendment to Lease Agreement between Registrant and NOP Cottonwood 2855, LLC, dated July 10, 2012 (Building 11)	X
10.14	Office Lease Agreement between the Registrant and Bixby Technology Center, LLC, dated May 29, 2009			S-1		333-172683		10.14		03/09/2011
10.15A	Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley Bank, dated September 13, 2010			S-1		333-172683		10.15		03/09/2011
10.15B	First Amendment to Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley Bank, dated as of August 4, 2011			8-K		001-35188		10.1		08/05/2011
10.15C	Second Amendment to Amended and Restated Loan and Security Agreement between the Registrant and Silicon Valley Bank, dated as of May 16, 2012			8-K		001-35188		10.1		05/18/2012
10.16*	Offer Letter between the Registrant and Dennis Wolf, dated November 4, 2009			S-1/A		333-172683		10.16		05/06/2011
10.17*	Offer Letter between the Registrant and Jim Dawson, dated April 1, 2008			S-1/A		333-172683		10.17		05/06/2011
10.18*	Offer Letter between the Registrant and Lance Smith, dated April 29, 2008 as supplemented by an Offer Letter dated December 26, 2008			S-1/A		333-172683		10.18		05/06/2011
10.19*	Executive Incentive Compensation Plan, adopted by the Registrant on May 16, 2011			S-1/A		333-172683		10.19		05/23/2011
10.20*	IO Turbine, Inc. 2009 Equity Incentive Plan			10-K		001-35188		10.20		09/02/2011
10.21	Office Lease, dated as of January 13, 2012 and executed on January 20, 2012, by and between Fusion-io, Inc. and LaSalle Montague, Inc.			10-Q		001-35188		10.1		05/10/2012

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			Incorporated by Reference
Exhibit No.	Exhibit Description	Filed Herewith	Form	File No.	Exhibit No.	Filing Date
21.1	Subsidiaries of the Registrant	X
23.1	Consent of Ernst & Young LLP Independent Registered Public Accounting Firm	X
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Schema Linkbase Document
101.CAL**	XBRL Taxonomy Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Definition Linkbase Document
101.LAB**	XBRL Taxonomy Labels Linkbase Document
101.PRE**	XBRL Taxonomy Presentation Linkbase Document

* Indicates a management contract or compensatory plan or arrangement.

** Pursuant to Rule 406T of Regulation S T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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EX-10.13B

Exhibit 10.13B

SECOND AMENDMENT TO LEASE AGREEMENT

This SECOND AMENDMENT TO LEASE AGREEMENT (“Second Amendment”) is dated for reference purposes as of July 10, 2012, by and between NOP COTTONWOOD 2855, LLC, a Delaware limited liability company (“Landlord”), and FUSION-IO, INC., a Delaware corporation (“Tenant”).

R E C I T A L S:

A. Landlord and Fusion Multisystems, Inc., a Nevada corporation (“Fusion Multisystems”) entered into that certain Lease Agreement dated as of May 28, 2010 (the “Original Lease”), pursuant to which Landlord leased to Fusion Multisystems and Fusion Multisystems leased from Landlord that certain space containing approximately 86,767 square feet of Rentable Area and 74,276 square feet of usable area (the “Original Existing Premises”) located in that certain office building addressed as 2855 East Cottonwood Parkway, Salt Lake City, Utah (the “Building”), consisting of the following: (i) the Suite 100 Space consisting of approximately 3,565 square feet of Rentable Area and 2,995 square feet of usable area located on the first (1^st) floor of the Building; (ii) the Suite 170 Space consisting of approximately 1,408 square feet of Rentable Area and 1,183 square feet of usable area located on the first (1^st) floor of the Building; (iii) the Suite 175 Space consisting of approximately 1,537 square feet of Rentable Area and 1,291 square feet of usable area located on the first (1^st) floor of the Building; (iv) the Suite 200 Space consisting of approximately 4,881 square feet of Rentable Area and 4,101 square feet of usable area located on the second (2^nd) floor of the Building; (v) the Suite 220 Space consisting of approximately 5,423 square feet of Rentable Area and 4,556 square feet of usable area located on the second (2^nd) floor of the Building; (vi) the Suite 230 Space consisting of approximately 8,058 square feet of Rentable Area and 6,770 square feet of usable area located on the second (2^nd) floor of the Building; (vii) the Suite 240 Space consisting of approximately 3,527 square feet of Rentable Area and 2,963 square feet of usable area located on the second (2^nd) floor of the Building; (viii) the Suite 300 Space consisting of approximately 15,443 square feet of Rentable Area and 12,974 square feet of usable area located on the third (3^rd) floor of the Building; (ix) the Suite 340 Space consisting of approximately 1,558 square feet of Rentable Area and 1,309 square feet of usable area located on the third (3^rd) floor of the Building; (x) the Suite 350 Space consisting of approximately 5,221 square feet of Rentable Area and 4,386 square feet of usable area located on the third (3^rd) floor of the Building; (xi) the Suite 400 Space consisting of approximately 22,280 square feet of Rentable Area and 20,099 square feet of usable area located on the fourth (4^th) floor of the Building; (xii) the Suite 500 Space consisting of approximately 12,166 square feet of Rentable Area and 10,221 square feet of usable area located on the fifth (5^th) floor of the Building; and (xiii) the Suite 540 Space consisting of approximately 1,700 square feet of Rentable Area and 1,428 square feet of usable area located on the fifth (5^th) floor of the Building.

B. Landlord and Tenant (as successor-in-interest to Fusion Multisystems as tenant under the Original Lease) entered into that certain First Amendment to Lease Agreement dated as of September 6, 2011 (“First Amendment”), pursuant to which the parties, among other things, expanded the Original Existing Premises to include that certain space containing approximately 8,686 square feet of Rentable Area and 7,298 square feet of usable area (the

“First Expansion Space”) commonly known as Suites 110 and 120, and located on the first (1^st) floor of the Building. The Original Existing Premises and First Expansion Space are collectively referred to herein as the “Existing Premises”. The Original Lease and First Amendment are sometimes collectively referred to herein as the “Lease”.

C. Landlord and Tenant now desire to amend the Lease to (i) expand the Existing Premises to include that certain space containing approximately (A) 4,515 square feet of Rentable Area and 3,793 square feet of usable area (the “180 Expansion Space”) commonly known as Suite 180, and located on the first (1^st) floor of the Building, and depicted on Exhibit A-1 attached hereto, and (B) 8,357 square feet of Rentable Area and 7,021 square feet of usable area (the “560 Expansion Space”, together with the 180 Expansion Space, collectively, the “Expansion Space”) commonly known as Suite 560 and located on the fifth (5^th) floor of the Building, and depicted on Exhibit A-2 attached hereto, and (ii) modify various terms and provisions of the Lease, all as hereinafter provided.

A G R E E M E N T:

1. Capitalized Terms. Except as otherwise expressly provided herein to the contrary, all capitalized terms used in this Second Amendment shall have the same meaning given such terms in the Lease.

2. Expansion of Existing Premises.

2.1 Addition of 560 Expansion Space. The 560 Expansion Space shall be leased for a term (the “560 Expansion Space Term”) which commences upon the 560 Expansion Space Commencement Date (as defined below) and expires coterminously with Tenant’s lease of the Existing Premises (i.e., on September 30, 2021) (the “Expiration Date”), unless sooner terminated (or extended) as provided in the Lease (as amended hereby), and upon the same terms and conditions set forth in the Lease, subject to the modifications set forth in this Second Amendment. If, as of the 560 Expansion Space Commencement Date, the 180 Expansion Space Commencement Date (as those terms are defined below) has not yet occurred, then, during the period from the 560 Expansion Space Commencement Date until 12:00 midnight on the day immediately prior to the 180 Expansion Space Commencement Date, the “Premises” (as defined in the Lease) shall contain approximately 103,810 square feet of Rentable Area and shall mean, collectively, the Existing Premises and the 560 Expansion Space, collectively.

2.2 560 Expansion Space Commencement Date. For purposes of this Second Amendment, the “560 Expansion Space Commencement Date” shall mean the earlier of: (i) April 1, 2013 (as may be extended as provided hereinbelow); (ii) the date Tenant commences business operations in all or any portion of the 560 Expansion Space; and (iii) the date of Substantial Completion of the 560 Expansion Space. As used herein, “Substantial Completion of the 560 Expansion Space” shall be the date that both (A) the Refurbishment Work (as defined below) for the 560 Expansion Space has been substantially completed, minor punch-list items excepted (as reasonably determined by Landlord), in accordance with plans and specifications submitted to and approved by Landlord and otherwise in compliance with the terms of Article 11 of the Original Lease, and (B) a certificate of occupancy, temporary

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certificate of occupancy or its equivalent permitting Tenant to occupy the 560 Expansion Space has been issued by the applicable governmental agency. Notwithstanding the foregoing to the contrary, if Landlord is delayed in delivering possession of the 560 Expansion Space to Tenant beyond January 1, 2013, then the April 1, 2013 date set forth in clause (i) hereinabove shall be extended on a day-for-day basis for each day Landlord is so delayed in delivering possession of the 560 Expansion Space to Tenant beyond January 1, 2013. In addition, to the extent that Substantial Completion of the 560 Expansion Space is actually delayed beyond April 1, 2013 as a result of any Landlord Delays (as defined below), then, subject to the limitations set forth in Section 2.5 below, the 560 Expansion Space Commencement Date shall be extended by the number of days of any such Landlord Delays; provided, however, in no event shall the 560 Expansion Space Commencement Date be delayed pursuant to this Section 2.2 beyond the date Tenant commences business operations in all or any portion of the 560 Expansion Space.

2.3 Addition of 180 Expansion Space. The 180 Expansion Space shall be leased for a term (the “180 Expansion Space Term”) which commences upon the 180 Expansion Space Commencement Date and expires coterminously with Tenant’s lease of the Existing Premises and the 560 Expansion Space on the Expiration Date, unless sooner terminated (or extended) as provided in the Lease (as amended hereby), and upon the same terms and conditions set forth in the Lease, subject to the modifications set forth in this Second Amendment. If, as of 180 Expansion Space Commencement Date, the 560 Expansion Space Commencement Date has not yet occurred, then, during the period from the 180 Expansion Space Commencement Date until 12:00 midnight on the day immediately prior to the 560 Expansion Space Commencement Date, the “Premises” (as defined in the Lease) shall contain approximately 99,968 square feet of Rentable Area and shall mean, collectively, the Existing Premises and the 180 Expansion Space. Effective from and after the later of (i) the 560 Expansion Space Commencement Date, and (ii) the 180 Expansion Space Commencement Date, the “Premises” (as defined in the Lease) shall contain approximately 108,325 square feet of Rentable Area and shall mean, collectively, the Existing Premises, the 560 Expansion Space and the 180 Expansion Space.

2.4 180 Expansion Space Commencement Date. For purposes of this Second Amendment, the “180 Expansion Space Commencement Date” shall mean the earlier of: (i) September 1, 2013 (as may be extended pursuant to the immediately following sentence); (ii) the date Tenant commences business operations in the 180 Expansion Space; and (iii) the date of Substantial Completion of the 180 Expansion Space. As used herein, “Substantial Completion of the 180 Expansion Space” shall be the date that both (A) the Refurbishment Work for the 180 Expansion Space has been substantially completed, minor punch-list items excepted (as reasonably determined by Landlord), in accordance with plans and specifications submitted to and approved by Landlord and otherwise in compliance with the terms of Article 11 of the Original Lease, and (B) a certificate of occupancy, temporary certificate of occupancy or its equivalent permitting Tenant to occupy the 180 Expansion Space has been issued by the applicable governmental agency. Notwithstanding the foregoing to the contrary, if Landlord is delayed in delivering possession of the 180 Expansion Space to Tenant beyond January 1, 2013, then the September 1, 2013 date set forth in clause (i) hereinabove shall be extended on a day-for-day basis for each day Landlord is so delayed in delivering possession of the 180 Expansion Space to Tenant beyond January 1, 2013. In addition, to the extent that Substantial Completion of the 180 Expansion Space is actually delayed beyond September 1, 2013 as a result of any

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Landlord Delays, then, subject to the limitations set forth in Section 2.5 below, the 180 Expansion Space Commencement Date shall be extended by the number of days of any such Landlord Delays; provided, however, in no event shall the 180 Expansion Space Commencement Date be delayed pursuant to this Section 2.4 beyond the date Tenant commences business operations in all or any portion of the 180 Expansion Space.

2.5 Landlord Delays. For purposes hereof, the phrase “Landlord Delays” shall mean any actual delay in (i) Substantial Completion of the 560 Expansion Space beyond April 1, 2013, or (ii) Substantial Completion of the 180 Expansion Space beyond September 1, 2013 (as the case may be), as a result of (A) Landlord’s failure to timely approve or disapprove any matter requiring Landlord’s approval pursuant to Article 11 of the Original Lease, (B) Landlord’s failure to timely disburse the Refurbishment Allowance (as defined in and pursuant to Section 6.2 below), or (C) the negligence or willful misconduct of Landlord or Landlord’s agents, contractors or employees. Notwithstanding the foregoing to the contrary:

(1) no Landlord Delay shall be deemed to have occurred unless Tenant has delivered to Landlord written notice (the “Delay Notice”) specifying in reasonable detail the actions, inactions or circumstances Tenant claims constitute such Landlord Delays within three (3) business days after Tenant becomes aware of the occurrence of the action, inactions or circumstances; and

(2) no Landlord Delay shall be deemed to have occurred if Landlord cures the event which would otherwise constitute such Landlord Delay within one (1) business day after Landlord receives the Delay Notice from Tenant specifying such contended delay (the “Delay Grace Period”); provided that Landlord shall only be permitted an aggregate of ten (10) business days of Delay Grace Period and, thereafter, a Landlord Delay shall commence upon the delivery of the Delay Notice to Landlord.

2.6 Delivery of Expansion Space. Landlord and Tenant presently anticipate that the both the 560 Expansion Space and 180 Expansion Space will be delivered to Tenant on or about January 1, 2013; however, if Landlord is unable to deliver either the 560 Expansion Space or the 180 Expansion Space (as the case may be) by such date, then: (i) the validity of this Second Amendment or the Lease shall not be affected or impaired thereby; (ii) Landlord shall not be in default hereunder or under the Lease (as amended hereby) or be liable for damages therefor; and (iii) Tenant shall accept possession of the 560 Expansion Space and 180 Expansion Space, respectively, when Landlord delivers the 560 Expansion Space and 180 Expansion Space, respectively, to Tenant.

2.7 Work Period. During the period commencing upon Landlord’s delivery of possession of the (i) 560 Expansion Space to Tenant and continuing until the day immediately prior to the 560 Expansion Space Commencement Date, and (ii) 180 Expansion Space to Tenant and continuing until the day immediately prior to the 180 Expansion Space Commencement Date (each such period referred to herein as a “Work Period”), Tenant shall have the right to enter into the 560 Expansion Space and 180 Expansion Space, respectively, for the sole purpose of performing the Refurbishment Work (as defined below) and/or installing furniture, fixtures and equipment therein. All of the terms and conditions of the Lease (as amended hereby) shall apply during each applicable Work Period, including, without limitation, Tenant’s obligation to pay to

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Landlord all sums and charges required to be paid by Tenant for the 560 Expansion Space or 180 Expansion Space (as the case may be) under the Lease (as amended hereby) as though the 560 Expansion Space Commencement Date or the 180 Expansion Space Commencement Date (as the case may be) had occurred; provided however, that (A) during the Work Period for the 560 Expansion Space, Tenant shall not be obligated to pay Base Rent or Tenant’s Share of increases in Operating Expenses for the 560 Expansion Space until the 560 Expansion Space Commencement Date actually occurs, and (B) during the Work Period for the 180 Expansion Space, Tenant shall not be obligated to pay Base Rent or Tenant’s Share of increases in Operating Expenses for the 180 Expansion Space until the 180 Expansion Space Commencement Date actually occurs (it being acknowledged, however, that Tenant shall continue to have the obligation to pay to Landlord Base Rent [and, if applicable, Tenant’s Share of increases in Operating Expenses] for the Existing Premises during each Work Period pursuant to and in accordance with the terms of the Lease, as amended hereby).

2.8 Confirmation of Expansion Space Commencement Date. Following each of the (i) 560 Expansion Space Commencement Date and (ii) 180 Expansion Space Commencement Date, Landlord shall deliver to Tenant a notice of Expansion Space Term dates in the form of Exhibit B attached hereto, which notice Tenant shall execute and return to Landlord within ten (10) business days after Tenant’s receipt thereof.

3. Base Rent. Notwithstanding the provisions of the Lease to the contrary, during the 560 Expansion Space Term and the 180 Expansion Space Term, the Base Rent payable by Tenant for the 560 Expansion Space and 180 Expansion Space shall be calculated together and shall be as set forth in the following schedule, subject to abatement as set forth in Section 4 below:

Period	Monthly Base Rent	Annual Base Rent Rate Per Square Foot of Rentable Area of Expansion Space
560 Expansion Space Commencement Date – the day before the 180 Expansion Space Commencement Date *	$19,325.56	$27.75
180 Expansion Space Commencement Date – the day before the 560 Expansion Space Commencement Date **	$10,440.94	$27.75
Later of 180 Expansion Space Commencement Date and 560 Expansion Space Commencement Date –11/30/13	$29,766.50	$27.75
12/01/13 – 11/30/14	$30,659.50	$28.58
12/01/14– 11/30/15	$31,579.28	$29.44
12/01/15 – 11/30/16	$32,526.66	$30.32
12/01/16 – 11/30/17	$33,502.46	$31.23
12/01/17 – 11/30/18	$34,507.53	$32.17

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Period	Monthly Base Rent	Annual Base Rent Rate Per Square Foot of Rentable Area of Expansion Space
12/01/18 – 11/30/19	$35,542.76	$33.14
12/01/19 – 11/30/20	$36,609.04	$34.13
12/01/20 – 11/30/21	$37,707.31	$35.15

* If the 560 Expansion Space Commencement Date occurs prior to the 180 Expansion Space Commencement Date.

** If the 180 Expansion Space Commencement Date occurs prior to the 560 Expansion Space Commencement Date

4. Abatement of Base Rent. Notwithstanding Section 3 above to the contrary, and provided that Tenant faithfully performs all of the material terms and conditions of the Lease (as amended hereby), (i) Landlord shall abate Tenant’s obligation to pay the monthly installments of Base Rent otherwise payable by Tenant for the 560 Expansion Space (the “560 Abated Rent”) for the first six (6) months of the 560 Expansion Space Term, and (ii) Landlord shall abate Tenant’s obligation to pay the monthly installments of Base Rent otherwise payable by Tenant for the 180 Expansion Space (the “180 Abated Rent”) for the first six (6) months of the 180 Expansion Space Term. During such abatement periods, Tenant shall remain responsible for the payment of all of its other monetary obligations under the Lease (as amended hereby). In the event of a default by Tenant under the terms of the Lease (as amended hereby) beyond all applicable notice and cure periods that results in the early termination of Tenant’s interest therein pursuant to the provisions of Article 24 of the Original Lease, then as a part of the recovery set forth therein, Landlord shall be entitled to the recovery of the unamortized balance of the 560 Abated Rent and 180 Abated Rent. For purposes of this Section 4, the (A) 560 Abated Rent shall be amortized on a straight-line basis over the 560 Expansion Space Term, and the unamortized balance thereof shall be determined based upon the unexpired portion of the 560 Expansion Space Term as of the date of such early termination, and (B) 180 Abated Rent shall be amortized on a straight-line basis over the 180 Expansion Space Term, and the unamortized balance thereof shall be determined based upon the unexpired portion of the 180 Expansion Space Term as of the date of such early termination.

5. Tenant’s Share. For purposes of calculating Tenant’s obligation to pay Tenant’s Share of the increases in Operating Expenses for the 560 Expansion Space during the 560 Expansion Space Term, (i) Tenant’s Share of the increases in Operating Expenses for the 560 Expansion Space shall be calculated separately and apart from Tenant’s Share of the increases in Operating Expenses for the Existing Premises and the 180 Expansion Space, (ii) Tenant’s Share for the 560 Expansion Space shall equal 7.695% (i.e., 8,357 square feet of Rentable Area in the 560 Expansion Space/108,605 square feet of Rentable Area in the Building), and (iii) the Base Year for the 560 Expansion Space shall be the calendar year 2013. For purposes of calculating Tenant’s obligation to pay Tenant’s Share of the increases in Operating Expenses for the 180 Expansion Space during the 180 Expansion Space Term, (A) Tenant’s Share of the increases in Operating Expenses for the 180 Expansion Space shall be calculated separately and apart from

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Tenant’s Share of the increases in Operating Expenses for the Existing Premises and the 560 Expansion Space, (B) Tenant’s Share for the 180 Expansion Space shall equal 4.157% (i.e., 4,515 square feet of Rentable Area in the 180 Expansion Space/108,605 square feet of Rentable Area in the Building), and (B) the Base Year for the 180 Expansion Space shall be the calendar year 2013.

6. Condition of Premises.

6.1 Condition of Existing Premises. Tenant is in possession of the Existing Premises and shall continue to lease the same in its current “AS-IS” condition as of the Effective Date without any agreements, representations, understandings or obligations on the part of Landlord to perform or pay for any alterations, repairs or improvements to the Existing Premises, except as otherwise set forth in the Lease.

6.2 Condition of Expansion Space. Landlord shall not be obligated to provide or pay for any improvements, work or services related to the improvement, remodeling or refurbishment of the 560 Expansion Space or the 180 Expansion Space, and Tenant shall accept, in its “AS-IS” condition, the 560 Expansion Space as of the 560 Expansion Space Commencement Date and the 180 Expansion Space as of the 180 Expansion Space Commencement Date. Notwithstanding the foregoing, Tenant shall be entitled to receive from Landlord a one (1) time refurbishment allowance (the “Refurbishment Allowance”) in the amount of up to, but not exceeding, Two Hundred Seventy Thousand Three Hundred Fifty Dollars ($270,350.00) (i.e., $25.00 per usable square foot in the 560 Expansion Space and the 180 Expansion Space) to help reimburse Tenant for the (i) actual out-of-pocket costs incurred and paid for by Tenant (collectively, the “Refurbishment Costs”) during the period commencing on the earlier to occur of the commencement date of the Work Period for the 560 Expansion Space and the commencement date of the Work Period for the 180 Expansion Space, and expiring on November 30, 2013 (the “Refurbishment Period”), for the design, construction, acquisition and installation of any permanently affixed tenant improvements and alterations which are made and/or installed by or for Tenant in or to the 560 Expansion Space and/or the 180 Expansion Space (the “Refurbishment Work”), and (ii) actual out-of-pocket costs incurred and paid for by Tenant (the “FF&E Costs”) during the Refurbishment Period for the purchase and installation of furniture, fixtures and equipment in the Expansion Space (the “FF&E”); provided, however, in no event shall Landlord be obligated to disburse to Tenant any portion of the Refurbishment Allowance for FF&E Costs in excess of Thirty-Two Thousand Four Hundred Forty-Two Dollars ($32,442.00). All Refurbishment Work, and the installation of the FF&E, shall be undertaken by Tenant in compliance with Article 11 of the Original Lease, and performed by contractors and subcontractors designated and retained by Tenant (subject to Landlord’s prior written approval, which shall not be unreasonably withheld, conditions or delayed). In no event shall Landlord be obligated to make disbursements pursuant to this Section 6.2 in a total amount which exceeds the Refurbishment Allowance. Landlord shall disburse the portion of the Refurbishment Allowance to be used to reimburse Tenant for the Refurbishment Costs and/or FF&E Costs (as the case may be) within thirty (30) days after Landlord has received all of the following (collectively, the “Draw Documents”): (A) a request for payment by Tenant certifying that the Refurbishment Work has been completed and/or the FF&E has been installed; (B) factually correct invoices for labor and materials rendered in connection with and evidencing the Refurbishment Work and the Refurbishment Costs and/or

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the purchase and installation of the FF&E and the FF&E Costs (as the case may be), and Tenant’s payment thereof; (C) final, unconditional executed mechanic’s lien releases from all contractors, subcontractors and other persons or entities performing the Refurbishment Work (and, to the extent applicable, the installation of the FF&E), reasonably satisfactory to Landlord; and (D) all other information reasonably requested by Landlord. Notwithstanding the foregoing to the contrary, Landlord shall have no obligation to disburse any portion of the Refurbishment Allowance (1) with respect to any Refurbishment Work that is performed, or FF&E that is purchased or installed, prior to or after the Refurbishment Period, or (2) with respect to any Draw Documents delivered by Tenant prior to the Refurbishment Period or after the date which is thirty (30) days after the expiration of the Refurbishment Period. Tenant shall not be entitled to receive any portion of the Refurbishment Allowance that is not used to pay for the Refurbishment Costs of the Refurbishment Work or the FF&E Costs of the purchase and installation of the FF&E performed during the Refurbishment Period, and any such unused amounts of the Refurbishment Allowance as of the end of the Refurbishment Period shall revert to Landlord and Tenant shall have no further rights with respect thereto.

7. Parking. Landlord acknowledges that Tenant currently has the right to use, free-of-charge throughout the Term and any extension thereof, up to a total of four hundred fourteen (414) Parking Passes (i.e., five (5) parking passes for each 1,000 square feet of usable area of the Existing Premises), seven (7) of which Parking Passes are for Reserved Passes and the remainder of which are for Unreserved Passes. During the 560 Expansion Space Term, as a result of the expansion of the Existing Premises by the 560 Expansion Space, Tenant shall have the right to use, free-of-charge throughout the 560 Expansion Space Term and any extension thereof, an additional thirty-five (35) Unreserved Parking Passes (i.e., five (5) parking passes for each 1,000 square feet of usable area of the 560 Expansion Space). In addition, during the 180 Expansion Space Term, as a result of the expansion of the Existing Premises by the 180 Expansion Space, Tenant shall have the right to use, free-of-charge throughout the 180 Expansion Space Term and any extension thereof, an additional nineteen (19) Unreserved Parking Passes (i.e., five (5) parking passes for each 1,000 square feet of usable area of the 180 Expansion Space). Tenant’s use of all of such additional Parking Passes shall be otherwise be on the same terms and conditions as contained in Paragraph “E” of the Summary attached to the Original Lease and Section 5.6 of the Original Lease. As a clarification of the foregoing, effective from and after the later of the 560 Expansion Space Commencement Date and the 180 Expansion Space Commencement Date, Tenant shall have the right to use up to, but not exceeding, four hundred sixty-eight (468) Parking Passes in the aggregate, seven (7) of which Parking Passes shall continue to be for Reserved Passes and the remainder of which shall be for Unreserved Passes.

8. ROFO Deletion. Effective from and after the Effective Date, Section 28 of the Original Lease, and all references thereto in the Lease (as amended hereby), are hereby deleted and of no further force or effect.

9. Brokers. Landlord and Tenant each hereby represents and warrants to the other that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Second Amendment, except for Commerce Real Estate Solutions, representing Landlord and Coldwell Banker Commercial NRT, representing Tenant (collectively, the “Brokers”), and that it knows of no other real estate broker or agent who is entitled to a commission in connection with this Second Amendment. Landlord shall pay the Brokers a commission in

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connection with the execution of this Second Amendment pursuant to a separate agreement or agreements between and/or among Landlord and the Brokers. Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments and costs and expenses (including, without limitation, reasonable attorneys’ fees) with respect to any leasing commission or equivalent compensation alleged to be owing in connection with this Second Amendment on account of the indemnifying party’s dealings with any real estate broker or agent (other than the Brokers).

10. No Further Modification. Except as set forth in this Second Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect.

11. Counterparts. This Second Amendment may be executed in multiple counterparts, each of which is to be deemed original for all purposes, but all of which together shall constitute one and the same instrument.

[SIGNATURES CONTAINED ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, this Second Amendment has been executed as of the day and year first above written.

“LANDLORD”

NOP COTTONWOOD 2855 LLC,
a Delaware limited liability company
	By:	NOP COTTONWOOD HOLDINGS LLC,
		a Delaware limited liability company
	Its:	sole member
		By:	NATIONAL OFFICE PARTNERS LLC,
			a California limited liability company
		Its:	sole member
			By:	CWP CAPITAL MANAGEMENT, LLC,
				a Delaware limited liability company
			Its:	Manager
				By:	/s/ MICHAEL W. CROFT
				Name:	Michael W. Croft
				Its:	CEO

“TENANT”
FUSION-IO, INC. a Delaware corporation
By:	/s/ DENNIS WOLF
Name:	Dennis Wolf
Its:	Executive Vice President, Chief Financial Officer

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EXHIBIT A-1

DEPICTION OF 180 EXPANSION SPACE

EXHIBIT A-2

DEPICTION OF 560 EXPANSION SPACE

EXHIBIT B

NOTICE OF EXPANSION SPACE TERM DATES

To: Fusion-IO, Inc. 2855 East Cottonwood Parkway, Suite              Salt Lake City, Utah 84101

Re: Second Amendment to Lease Agreement dated as of July , 2012 (the “Second Amendment”), between NOP COTTONWOOD 2855, LLC, a Delaware limited liability company (“Landlord”), and FUSION-IO, INC., a Delaware corporation (“Tenant”)

To Whom It May Concern:

All terms not defined herein shall have the meaning ascribed to them in the Second Amendment.

In accordance with the Second Amendment, we wish to advise you and/or confirm as follows:

I. That the [180/560] Expansion Space Commencement Date has occurred, and that the [180/560] Expansion Space Term shall commence or has commenced as of             for a term of             years and             months ending on September 30, 2021.

2. That in accordance with the Second Amendment, Base Rent for the [180/560] Expansion Space commenced to accrue on             .

3. If the [180/560] Expansion Space Commencement Date is other than the first day of the month, the first billing for the [180/560] Expansion Space will contain a pro rata adjustment. Each billing for the [180/560] Expansion Space thereafter, with the exception of the final billing, shall be for the full amount of the monthly installment as provided for in the Second Amendment.

[SIGNATURES CONTAINED ON FOLLOWING PAGE]

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF FUSION-IO, INC.

Fusion-io Au PTY LTD (Australia)

Fusion Multisystems Ltd (Canada)

Fusion-io SAS (France)

Fusion-io GmbH (Germany)

Fusion-io Limited (Hong Kong)

Fusion-io S.r.l (Italy)

Fusion-io KK (Japan)

Fusion-io Holdings, S.a.r.l. (Luxembourg)

Fusion-io Singapore Private Ltd (Singapore)

Fusion-io Ltd (United Kingdom)

IO Turbine, LLC

EX-23.1

Exhibit 23.1

Consent of Ernst & Young LLP

Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements of Fusion-io, Inc.:

1. Registration Statement on Form S-8 (File No. 333-174904), pertaining to the 2011 Equity Incentive Plan, 2011 Employee Stock Purchase Plan, 2010 Executive Stock Incentive Plan, Non-Plan Stock Option Agreements, 2008 Stock Incentive Plan and 2006 Stock Option Plan

2. Registration Statement on Form S-8 (File No. 333-176677), pertaining to the IO Turbine, Inc. 2009 Executive Incentive Plan

of our reports dated August 27, 2012, with respect to the consolidated financial statements of Fusion-io, Inc., and the effectiveness of internal control over financial reporting of Fusion-io, Inc. included in this Annual Report (Form 10-K) for the year ended June 30, 2012.

/s/ Ernst & Young LLP

Salt Lake City, Utah

August 27, 2012

EX-31.1

Exhibit 31.1

Certification

I, David A. Flynn, Chief Executive Officer of Fusion-io, Inc., certify that:

1. I have reviewed this annual report on Form 10-K of Fusion-io, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 27, 2012	/s/ DAVID A. FLYNN
	David A. Flynn
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Dennis P. Wolf, Chief Financial Officer of Fusion-io, Inc., certify that:

1. I have reviewed this annual report on Form 10-K of Fusion-io, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 27, 2012	/s/ DENNIS P. WOLF
	Dennis P. Wolf
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, David A. Flynn, Chief Executive Officer of Fusion-io, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:

1) the annual report on Form 10-K of the Company for the year ended June 30, 2012 (the “Report”) which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 27, 2012	/s/ DAVID A. FLYNN
	David A. Flynn
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Dennis P. Wolf, Chief Financial Officer of Fusion-io, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:

1) the annual report on Form 10-K of the Company for the year ended June 30, 2012 (the “Report”) which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 27, 2012	/s/ DENNIS P. WOLF
	Dennis P. Wolf
	Chief Financial Officer

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Balance Sheet Components (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Inventories
Raw materials	$ 20,263	$ 16,108
Work in progress	30,065	13,931
Finished goods	9,129	5,583
Inventory, Net, Total	$ 59,457	$ 35,622

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Domestic and foreign components of (loss) income before income taxes
Domestic	$ (5,924)	$ 5,802	$ (31,742)
Foreign	956	447	38
(Loss) income before income taxes	$ (4,968)	$ 6,249	$ (31,704)

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Acquisitions (Details 1) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Pro forma financial information
Revenue	$ 359,349	$ 197,204
Income (loss) from operations	(7,935)	(5,255)
Net income (loss)	$ (8,224)	$ (10,372)
Net income (loss) per share, basic	$ (0.09)	$ (0.56)
Net income (loss) per share, diluted	$ (0.09)	$ (0.56)

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details Textual) (USD $)	1 Months Ended						2 Months Ended	12 Months Ended						1 Months Ended	12 Months Ended														12 Months Ended		1 Months Ended
	Nov. 30, 2011	Oct. 31, 2011	Aug. 31, 2011	Jun. 30, 2011	Mar. 31, 2011	Mar. 31, 2008	May 31, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Dec. 16, 2011	Dec. 09, 2011	Jun. 30, 2009	Feb. 28, 2011 Director [Member]	Jun. 30, 2012 ESPP [Member]	Jun. 30, 2011 ESPP [Member]	Jun. 30, 2012 Non-employee stock options [Member]	Jun. 30, 2011 Non-employee stock options [Member]	Jun. 30, 2010 Non-employee stock options [Member]	Jun. 30, 2012 Employee Stock Purchase Plan [Member]	Jun. 30, 2012 Restricted Stock Awards and Restricted Stock Units [Member]	Jun. 30, 2011 Restricted Stock Awards and Restricted Stock Units [Member]	Jun. 30, 2010 Restricted Stock Awards and Restricted Stock Units [Member]	Jun. 30, 2010 Convertible preferred stock [Member]	Jun. 30, 2009 Convertible preferred stock [Member]	Jun. 30, 2011 Preferred Class A [Member]	Jun. 30, 2010 Common Stock [Member]	Jun. 30, 2010 Series A convertible preferred stock [Member]	Jun. 30, 2010 Series B Convertible Preferred Stock [Member]	Jun. 30, 2010 Series C Convertible Preferred Stock [Member]	Jul. 31, 2006 2006 Plan [Member]	Jan. 31, 2011 2008 and 2010 Plan [member]	Aug. 31, 2011 2009 Plan [Member] Restricted Stock Awards [Member]	Aug. 31, 2011 2009 Plan [Member] Maximum [Member] Restricted Stock Awards [Member]	Aug. 31, 2011 2009 Plan [Member] Minimum [Member] Restricted Stock Awards [Member]	Jun. 30, 2011 2011 Plan [Member]	Jun. 30, 2012 2011 Plan [Member]
Stockholders' Equity (Textual) [Abstract]
Preferred stock, shares outstanding				0				0	0																			0	0	0
Designated number of preferred stock																														11,630,913
Repurchase of common stock, shares							165,000																						542,961
Repurchases of convertible preferred stock										$ 1,834,000																			$ 1,834,000
Preferred stock, shares issued				0				0	0															52,489,072						0
Net cash proceeds								93,977,000	219,170,000																					39,658,000
Conversion of convertible notes into Series C convertible preferred stock, shares									52,489,072																					1,302,237
Initial public offering of common stock	3,000,000			12,600,607										60,000																10,274,444
Share purchase price														$ 5.12
Share Price																														$ 3.869
Repurchase of common stock, value							1,222,500		1,340,000	748,000
Options granted to purchase common stock under 2006 Plan								2,654,650	10,166,575	7,171,034																					3,028,135
Vesting period			48 months			36 months		48 months																							30 months		24 months	48 months	24 months
Contractual life of stock plans				10 years																											10 years
Additional shares of common stock authorized for future issuance																																3,000,000
Shares of common stock were reserved for future issuance under ESPP																																				12,132,430
Shares returned as the result of expiration or termination of options from the previous plans and other non-plan awards																																				25,867,172
Number of share issued and outstanding under share-based compensation plan.				24,727,931				19,885,406	24,727,931	18,412,840			13,177,667																								4,454,882
Number of shares available for issuance under 2011 Plan																																					8,129,263
Percentage of the outstanding shares of the company's common stock on the first day of the fiscal year															1.00%																					5.00%
Number of shares																																				10,000,000
Total unrecognized compensation expense related to unvested stock options								48,237,000													42,026,000
RSUs and RSAs expenses expected to be recognized over a weighted-average service period								2 years 8 months 12 days													3 years 2 months 12 days
Stock-based compensation						1,790,000		42,645,000	8,637,000	1,867,000					1,689,000		8,474,000	3,235,000	54,000		16,253,000	399,000	597,000
Payment for Repurchases of vested restricted stock								1,067,000	1,223,000												44,000
Company's common stock at a discount through payroll deductions																15.00%
Lower of fair market value of the Company's common stock																85.00%
Shares of common stock were reserved for future issuance under ESPP				37,320,995				30,323,297	37,320,995							500,000
Number of shares available for issuance															2,000,000
Common stock issued under the ESPP									1,250,000	1,666,667										148,938
Warrant issued by company																										125,800	12,500
Class of Warrant or Right, Exercise Price of Warrants or Rights																										1.093	1.96
Estimated fair value of the warrant																											11,000
Number of Shares Subject to Outstanding Options, Exercised								7,128,528	2,541,909	620,462
Purchase price of shares issued to board of directors								$ 1.15	$ 0.61	$ 0.21
Stockholders Equity (Additional Textual) [Abstract]
Contractual life of options granted under the Stock Plans								10 years
Aggregate intrinsic value of stock options exercised								190,748,000	33,570,000
Maximum shares purchased during offering period									1,500
Stock-based compensation expense								43,438,000	8,637,000	1,867,000
Stock-based compensation expense recognized attributable to accelerated vesting of certain RSAs assumed								3,795,000
Awards that were settled in cash at the time of acquisition								793,000
Repurchase of common stock related to employee tax withholding obligations								211,996
Shares of common stock controlled						5,000,000
Vesting of stock options											12,500
Employee related stock-based compensation expense								199,000
Price to repurchase unvested shares						$ 1.09
Common stock reserved for future issuance under ESPP								351,062
Convertible preferred stock outstanding																								52,489,072	39,380,352
Shares of common stock issued to former IO Turbine stockholders			1,633,315
Change in Fair value of derivative								70,000
Additional consideration paid to the stockholder												1,066,500
Repurchase of common stock, shares							165,000																						542,961
Shares of common stock issued to exercise common stock warrant		121,839
Price of common stock							$ 15.00
Number of shares to pay as additional consideration							150,000
Common stock related to net exercise of common stock warrant									121,839
Fair value recorded				1,137,000				0	1,137,000
Total Price of repurchased of common stock							$ 1,222,500
Number of shares purchased in conversion of warrant				125,800					125,800
Rate of shares of common stock in exchange for services rendered																										1.093	1.96
Warrant issued by company																										125,800	12,500
Shares of common stock pursuant to the exercise of this warrant					12,500
Common stock, par value				$ 0.0002				$ 0.0002	$ 0.0002

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Income Taxes (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Current:
Federal
State	213	428	3
Foreign	684	112	9
Total current tax expense	897	540	12
Deferred:
Federal	(2,782)
State
Foreign
Total deferred tax benefit	(2,782)
Tax expense attributable to employee stock plans	2,500	1,154
Total income tax expense	$ 615	$ 1,694	$ 12

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Fair Value Measurements (Details Textual) (Furniture and fixtures [Member], USD $)	12 Months Ended
	Jun. 30, 2011
Furniture and fixtures [Member]
Fair Value Measurements (Textual) [Abstract]
Impairment charge on furniture and fixtures	$ 46,000
Fair value of the furniture and fixtures	$ 170,000

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Description of Business and Summary of Significant Accounting Policies (Details 3)	12 Months Ended
	Jun. 30, 2012
Computer equipment [Member]
Estimated useful life of asset
Useful life	3 years
Software [Member]
Estimated useful life of asset
Useful life	3 years
Property and Equipment [Member]
Estimated useful life of asset
Useful life	3 years
Furniture and fixtures [Member]
Estimated useful life of asset
Useful life	5 years
Leasehold improvements [Member]
Estimated useful life of asset
Useful life, leasehold improvements	Shorter of useful life or remaining lease term

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Commitments and Contingencies (Details Textual) (USD $)	1 Months Ended	12 Months Ended
	Jan. 31, 2012 sqft	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Commitments and Contingencies (Textual) [Abstract]
Lease terms		36 months
Area of office	79,000
Maximum Rent expense		$ 5,428,000	$ 4,034,000	$ 1,614,000
Commitments and Contingencies (Additional Textual) [Abstract]
Letters of credit outstanding		3,183,000	3,349,000
Maximum imputed interest rate		9.40%
Minimum imputed interest rate		7.80%
Lease expiration date		2021
Additional period of extension in lease contract		5 years
Aggregate amount of credit letter		3,000,000
Expiry date of operating leases		2016
Raw materials inventory		35,794,000
Commitment paid		1,168,000
San Jose [Member]
Commitments and Contingencies (Textual) [Abstract]
Lease terms	82 months
Expense on improvements of building's interior	1,187,000

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Income Taxes (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Deferred tax assets:
Net operating loss carryforwards	$ 2,662	$ 14,415
Tax credit carryforwards	4,015	1,743
Accruals and allowances	13,626	6,474
Stock-based compensation	10,690	2,222
Total deferred tax assets	30,993	24,854
Valuation allowance	(21,722)	(22,212)
Deferred Tax Assets, Net of Valuation Allowance	9,271	2,642
Deferred tax liabilities:
Fixed asset basis differences	(7,222)	(2,642)
Intangible asset basis differences	(2,049)
Deferred tax assets, net

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Subsequent Events (Details)	12 Months Ended
	Jun. 30, 2012 sqft
Subsequent Events (Textual) [Abstract]
Primary office facilities expansion under lease second amendment	13,000
Second amendment payment mode term for increase facilities	monthly payments that increase over the term of the lease that ends in September 2021
Second amendment lease facilities increase term end date	Sep. 30, 2021

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Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Property and equipment capitalized under capital lease obligations
Gross		$ 478
Less accumulated depreciation and amortization		(275)
Net		203
Computer Equipment [Member]
Property and equipment capitalized under capital lease obligations
Gross		177
Property and equipment [Member]
Property and equipment capitalized under capital lease obligations
Gross		301
Furniture and Fixtures [Member]
Property and equipment capitalized under capital lease obligations
Gross

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Jun. 30, 2012

Goodwill and Intangible Assets [Abstract]

Changes in the carrying amount of Goodwill

	Year Ended June 30,
	2011		2012
Balance at beginning of period	$	—	$	—
Current period acquisitions		—		54,777
Balance at end of period		—		54,777

Company's intangible assets and related accumulated amortization

	Weighted- Average Useful Life		Cost		Accumulated Amortization			Net
Developed technology		4 years	$	10,500	$	(2,336	)	$	8,164

Estimated amortization expenses

Fiscal Year	Total
2013		2,625
2014		2,625
2015		2,625
2016		289
	$	8,164

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Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Changes in the carrying amount of Goodwill
Goodwill, Beginning Balance
Current period acquisitions	54,777
Goodwill, Ending Balance	$ 54,777

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Balance Sheet Components (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Long-term other liabilities
Long-term deferred tax liability	$ 4,026	$ 615
Long-term deferred rent	8,250	5,847
Long-term other liabilities		6
Long-term other liabilities	$ 12,276	$ 6,468

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Related Party Transactions (Details Textual) (USD $)	12 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2011 NEA 12 [Member]	Jun. 30, 2010 NEA 12 [Member]	Jun. 30, 2011 Lightspeed VIII [Member]	Jun. 30, 2010 Lightspeed VIII [Member]	Jun. 30, 2011 Series A [Member] NEA 12 [Member]	Jun. 30, 2010 Convertible preferred stock [Member]	Jun. 30, 2010 Convertible preferred stock [Member] Series A [Member] NEA 12 [Member]
Related Party Transactions (Textual) [Abstract]
Preferred stock, shares issued	0	0						52,489,072	8,647,775
Preferred stock value net of issuance cost								$ 103,765,000
Minimum ownership percentage of capital stock	5.00%		5.00%	5.00%	5.00%	5.00%
Convertible preferred stock purchased							9,000,000
Convertible preferred stock purchased price per share							$ 2.00
Convertible preferred stock purchased purchase price							$ 18,000,000
Portion of Company's outstanding Capital stock owned by a venture capital firm	10.00%
Portion of Acquired company's capital stock owned by a venture capital firm	25.00%
Issue of share	744,866

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Description of Business and Summary of Significant Accounting Policies (Details Textual) (USD $)	1 Months Ended		12 Months Ended
	Nov. 30, 2011	Jun. 30, 2011	Jun. 30, 2012 Country Segment	Jun. 30, 2011	Jun. 30, 2010
Subsidiary, Sale of Stock [Line Items]
Initial public offering of common stock	3,000,000	12,600,607
Description of Business and Summary of Significant Accounting Policies (Textual) [Abstract]
Minimum percent of revenue for the period			10.00%
Minimum percent of total accounts receivable, net			10.00%
Number of country having more than specified percentage of revenue			0
Number of operating segments			1
Initial public offering of common stock	3,000,000	12,600,607
Issuance price	$ 33.00	$ 19.00		$ 19.00
Proceeds from issuance initial public offering	$ 93,977,000	$ 218,864,000
Offerings cost	1,063,000	3,789,000
Advertising expense			120,000	12,000	170,000
Goodwill impairment loss			0
Capitalized cost for the development and implementation of enterprise resource planning system			$ 1,956,000
Maximum [Member]
Product Liability Contingency [Line Items]
Maximum period for product warranty			5 years
Due date of payment from invoice date			75 days
Consider recognized period			5 years
Minimum [Member]
Product Liability Contingency [Line Items]
Due date of payment from invoice date			30 days
Consider recognized period			1 year
Underwriter [Member]
Subsidiary, Sale of Stock [Line Items]
Initial public offering of common stock		1,845,000
Description of Business and Summary of Significant Accounting Policies (Textual) [Abstract]
Initial public offering of common stock		1,845,000
External Customer [Member]
Revenue, Major Customer [Line Items]
Revenue recognized			26.00%	18.00%	24.00%

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Goodwill And Intangible Assets (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012
Estimated amortization expenses
2013	$ 2,625
2014	2,625
2015	2,625
2016	289
Net	8,164
Goodwill and Intangible Assets (Additional Textual) [Abstract]
Amortization expense related to intangible assets	$ 2,336,000

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details 7) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 43,438	$ 8,637	$ 1,867
Cost of revenue [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation	216	31	9
Sales and marketing [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation	6,089	1,803	738
Research and development [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation	9,111	1,545	492
General and administrative [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 28,022	$ 5,258	$ 628

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details 1) (USD $)	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Per share information related to stock options granted
Weighted-average grant date fair value-granted	$ 12.38	$ 3.22	$ 0.55
Weighted-average grant date fair value - assumed in connection with the acquisition of IO Turbine	$ 27.31
Weighted-average grant date fair value-forfeited	$ 6.84	$ 2.33	$ 0.30

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Acquisitions (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Business Acquisition, Purchase Price Allocation [Abstract]
Total current assets	$ 3,669
Property and equipment, net	224
Other assets	6
Total assets	3,899
Accounts payable	(706)
Accrued and other current liabilities	(120)
Total current liabilities	(826)
Net acquired tangible assets	3,073
Developed technology	10,500
Goodwill	54,777
Deferred income tax liability	(2,782)
Total fair value of purchase price	$ 65,568

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Balance Sheet Components

12 Months Ended

Jun. 30, 2012

Balance Sheet Components [Abstract]

Balance Sheet Components

2. Balance Sheet Components

Cash and Cash Equivalents

Cash and cash equivalents were as follows (in thousands):

	June 30, 2011
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash	$	3,795	$	—	$	—	$	3,795
Money market funds		215,809		—		—		215,809
Total cash and cash equivalents	$	219,604	$	—	$	—	$	219,604

	June 30, 2012
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash	$	54,295	$	—	$	—	$	54,295
Money market funds		266,944		—		—		266,944
Total cash and cash equivalents	$	321,239	$	—	$	—	$	321,239

Inventories

Inventories consisted of the following (in thousands):

	June 30,
	2011		2012
Raw materials	$	16,108	$	20,263
Work in progress		13,931		30,065
Finished goods		5,583		9,129
	$	35,622	$	59,457

Property and Equipment

Property and equipment consisted of the following (in thousands):

	June 30,
	2011			2012
Computer equipment	$	8,136		$	14,904
Software		1,046			4,076
Property and equipment		1,991			5,682
Furniture and fixtures		2,092			3,759
Leasehold improvements		5,268			12,520
Construction in progress		—			329
		18,533			41,270
Less accumulated depreciation and amortization		(4,790	)		(10,025	)
	$	13,743		$	31,245

Depreciation expense (including amortization of leasehold improvements) was $1,498,000, $4,547,000 and $6,673,000 for the fiscal years ended June 30, 2010, 2011 and 2012, respectively.

During the fiscal year ended June 30, 2010, the Company capitalized leasehold improvements primarily related to its corporate offices of $1,047,000. The leasehold improvements were originally amortized over the remaining period of the related facility lease that was to end in July 2015. In December 2010, the Company entered into a termination agreement related to this lease resulting in the lease terminating on April 30, 2011. The net book value of the related leasehold improvements of $1,335,000 as of December 31, 2010 was amortized on a straight-line basis over the remaining lease term ending April 30, 2011.

During the fiscal year ended June 30, 2011 and 2012, the Company capitalized leasehold improvements of $5,230,000 and $2,836,000, respectively, related to its corporate offices which are being amortized over the related lease term that ends in September 2021. During the fiscal year ended June 30, 2012, the Company also capitalized leasehold improvements of $4,045,000 related to its new San Jose sales offices which are being amortized over the related lease term that ends in March 2019.

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

	June 30,
	2011		2012
Accrued compensation	$	10,118	$	19,034
Common stock repurchase derivative liability		1,137		—
Accrued warranty expense		666		2,825
Accrued other liabilities		3,122		7,328
	$	15,043	$	29,187

Long-term Other Liabilities

Long-term other liabilities consisted of the following (in thousands):

	June 30,
	2011		2012
Long term deferred tax liability	$	615	$	4,026
Long term deferred rent		5,847		8,250
Long term other liabilities		6		—
	$	6,468	$	12,276

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details 2)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Assumptions used in the Black-Scholes-Merton pricing model related to employee stock options
Expected volatility, Minimum	59.00%	48.00%
Expected volatility, Maximum	60.00%	60.00%	49.00%
Expected term (in years), Maximum	6 years 7 months 6 days	7 years	6 years 1 month 6 days
Expected term	5 years 2 months 12 days	3 years 2 months 12 days
Risk-free interest rate, Minimum	1.00%	0.60%	2.40%
Risk-free interest rate, Maximum	2.00%	2.70%	2.90%
Expected dividends

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Balance Sheet Components (Details Textual) (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Balance Sheet Components (Textual) [Abstract]
leasehold improvements primarily related to its corporate offices	$ 2,836,000	$ 5,230,000	$ 1,047,000
Book value of the related leasehold improvements				1,335,000
Capitalized leasehold improvements primarily related to sales offices	4,045,000
Depreciation expense including amortization of leasehold improvements	$ 6,673,000	$ 4,547,000	$ 1,498,000

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Related Party Transactions (Tables)

12 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

Purchases of convertible preferred stock by related parties

Name of Stockholder	Class of Convertible Preferred Stock		Shares of Series A Convertible Preferred Stock		Price Per Share		Total Purchase Price
NEA 12		Series A		8,647,755	$	1.093	$	9,451,996
NEA 12		Series B		9,127,294		*		18,292,776
Lightspeed VIII		Series B		7,500,000		2.000		15,000,000
NEA 12		Series C		2,843,112		3.869		11,000,000
Lightspeed VIII		Series C		1,292,324		3.869		5,000,002

* NEA 12 purchased 9,000,000 shares of Series A convertible preferred stock directly from the Company at a price per share of $2.00 and a purchase price of $18,000,000.

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Commitments and Contingencies (Tables)

12 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

Property and equipment capitalized under capital lease obligations

	June 30,
	2011			2012
Computer equipment	$	177		$	—
Property and equipment		301			—
Furniture and fixtures		—			—
		478			—
Less accumulated depreciation and amortization		(275	)		—
	$	203		$	—

Future minimum lease payments under non-cancelable operating leases and payments under capital leases

	June 30, 2012
2013	$	5,625
2014		5,359
2015		5,679
2016		5,764
2017		5,830
Thereafter		26,137
Total	$	54,394

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Income Taxes (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Income tax expense differed from the amounts computed by applying the statutory federal income tax rate
Federal tax (benefit) expense at statutory rate	$ (1,689)	$ 2,125	$ (10,779)
State tax (benefit) expense, net of federal tax effect	1,929	700	(646)
Rate differential on foreign income taxes	359	(40)
Current year research tax credits	(1,366)	(618)	(50)
Stock-based compensation	4,943	1,970
Change in valuation allowance	(4,057)	(3,306)	10,922
Other, net	496	863	565
Income tax expense	$ 615	$ 1,694	$ 12

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Cash equivalents:
Cash and cash equivalents, Fair Value	$ 321,239	$ 219,604
Money market funds [Member]
Cash equivalents:
Cash and cash equivalents, Fair Value	266,944	215,809
Common stock repurchase derivative liability [Member]
Accrued and other liabilities:
Accrued and other liabilities, Fair Value		1,137
Level 1 [Member] | Money market funds [Member]
Cash equivalents:
Cash and cash equivalents, Fair Value	266,944	215,809
Level 2 [Member] | Money market funds [Member]
Cash equivalents:
Cash and cash equivalents, Fair Value
Level 2 [Member] | Common stock repurchase derivative liability [Member]
Accrued and other liabilities:
Accrued and other liabilities, Fair Value
Level 3 [Member] | Money market funds [Member]
Cash equivalents:
Cash and cash equivalents, Fair Value
Level 3 [Member] | Common stock repurchase derivative liability [Member]
Accrued and other liabilities:
Accrued and other liabilities, Fair Value		$ 1,137

XML

Description of Business and Summary of Significant Accounting Policies (Details)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Customer A [Member]
Customer accounting revenue
Revenue	30.00%	36.00%	10.00%
Customer B [Member]
Customer accounting revenue
Revenue	25.00%	24.00%
Customer C [Member]
Customer accounting revenue
Revenue	17.00%	14.00%	10.00%
Customer D [Member]
Customer accounting revenue
Revenue			13.00%

XML

Description of Business and Summary of Significant Accounting Policies (Details 1)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Customer A [Member]
Customer accounting accounts receivable
Entity wide accounts receivable major customer percentage	30.00%	11.00%
Customer B [Member]
Customer accounting accounts receivable
Entity wide accounts receivable major customer percentage	18.00%	66.00%
Customer C [Member]
Customer accounting accounts receivable
Entity wide accounts receivable major customer percentage	19.00%
Customer D [Member]
Customer accounting accounts receivable
Entity wide accounts receivable major customer percentage	10.00%

XML

Description of Business and Summary of Significant Accounting Policies

12 Months Ended

Jun. 30, 2012

Description of Business and Summary of Significant Accounting Policies [Abstract]

Description of Business and Summary of Significant Accounting Policies

1. Description of Business and Summary of Significant Accounting Policies

Fusion-io, Inc. (the “Company” or “Fusion-io”) provides an enterprise storage memory platform, based on the Company’s ioMemory hardware with VSL storage virtualization software, automated data-tiering and virtualization caching software, and datacenter management software. The Company was originally incorporated in the state of Nevada in December 2005 and in June 2010 was reincorporated in the state of Delaware as Fusion-io, Inc. The Company sells its products and services through its global direct sales force, original equipment manufacturers (“OEMs”), and other channel partners.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

Segment and Geographic Information

Operating segments are defined in accounting standards as components of an enterprise about which separate financial information is available and is regularly evaluated by management, namely the chief operating decision maker of an organization, in order to make operating and resource allocation decisions. The Company has concluded it operates in one business segment, which is the development, marketing, and sale of storage memory platforms. Substantially all of the Company’s revenue for all periods presented in the accompanying consolidated statements of operations has been from sales of the ioDrive product line and related customer support services. The Company’s headquarters and most of its operations are located in the United States; however, it conducts sales activities through sales offices in Europe and Asia. Revenue recognized from sales with a ship-to location outside of the United States was 24%, 18%, and 26% for fiscal years 2010, 2011, and 2012, respectively. No country outside of the United States accounted for 10% or greater of revenue for all periods presented. Long-lived assets located outside of the United States were not material for all periods for which a consolidated balance sheet is presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Company evaluates its significant estimates, including those related to revenue recognition, sales returns, accounting for business combinations and impairment of long-lived and intangible assets including goodwill, determination of fair value of stock options, valuation of inventory, product warranty, and income taxes. The Company also uses estimates in determining the useful lives of property and equipment and intangible assets and provisions for doubtful accounts. Actual results could differ from those estimates.

Reclassification

Certain amounts previously reported have been reclassified to conform with the fiscal year 2012 presentation.

Public Offerings

In June 2011, the Company completed an initial public offering (“IPO”), of its common stock, in which the Company issued and sold 12,600,607 shares, including 1,845,000 shares sold pursuant to the full exercise by the underwriters of their over-allotment option, at an issuance price of $19.00 per share. After deducting underwriting discounts and commissions and approximately $3,789,000 in offering costs, the net proceeds received by the Company were approximately $218,864,000.

In November 2011, the Company completed a follow-on public offering of its common stock in which the Company issued and sold 3,000,000 shares at an issuance price of $33.00 per share. After deducting underwriting discounts and commissions and approximately $1,063,000 in offering costs, the net proceeds received by the Company were approximately $93,977,000.

Revenue Recognition

The Company derives its revenue primarily from sales of products and support services and enters into multiple-element arrangements in the normal course of business with its customers and channel partners. In all arrangements, the Company does not recognize revenue until it can determine that persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collection is deemed to be reasonably assured. In making these judgments, the Company evaluates these criteria as follows:

• Evidence of an Arrangement — The Company considers a non-cancelable agreement or purchase order signed by a customer to be persuasive evidence of an arrangement.

• Delivery has Occurred — The Company considers delivery to have occurred when product has been delivered to the customer based on applicable shipping terms, and no post-delivery obligations exist other than ongoing support obligations under sold support services. In instances where customer acceptance is required, delivery is deemed to have occurred when customer acceptance has been achieved.

• Fees are Fixed or Determinable — The Company considers the fee to be fixed or determinable unless the fee is subject to refund or adjustment or is not payable within normal payment terms. If the fee is subject to refund or adjustment, the Company recognizes revenue net of estimated returns or if a reasonable estimate cannot be made, when the right to a refund or adjustment lapses.

• Collection is Reasonably Assured — The Company conducts a credit worthiness assessment on all of its customers. Generally the Company does not require collateral. The Company continues to evaluate collectability by reviewing its customers’ credit worthiness including a review of past transaction history. Payment terms are typically 30 to 75 days from the date of invoice. Collection is reasonably assured if, based upon the Company’s evaluation, it expects that the customer will be able to pay amounts under the arrangement as payments become due. If the Company determines that collection is not reasonably assured, revenue is deferred and recognized upon the receipt of cash.

Some of the Company’s revenue arrangements are multiple-element arrangements because they are comprised of sales of both products and support services. For multiple-element arrangements, the Company evaluates whether each deliverable could be accounted for as separate units of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value, and for an arrangement where a general right of return exists relative to a delivered item, delivery, or performance of the undelivered item must be considered probable and substantially in the Company’s control. Stand-alone value exists if the product or service is sold separately by the Company or by another vendor or could be resold by the customer. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition.

The Company’s multiple-element arrangements typically include two elements: ioDrive hardware, which includes embedded VSL virtualization software, and support services. The Company has determined that its ioDrive hardware and the embedded VSL virtualization software are considered a single unit of accounting because the hardware and software individually do not have standalone value and are never sold separately. Support services are considered a separate unit of accounting as they are sold separately and have standalone value.

The Company allocates arrangement consideration at the inception of an arrangement to all deliverables based on the relative selling price method in accordance with the selling price hierarchy, which includes: (1) vendor-specific objective evidence, or VSOE, if available; (2) third-party evidence, or TPE, if vendor-specific objective evidence is not available; and (3) best estimate of selling price, or BESP, if neither VSOE nor TPE is available.

• VSOE — The Company determines VSOE based on its historical pricing and discounting practices for the specific product or support service when sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices for products or support services fall within a reasonably narrow pricing range. The Company has historically priced certain of its ioDrive products within a narrow range and has used VSOE to allocate the selling price of deliverables for these specific product sales.

• TPE — When VSOE cannot be established for deliverables in multiple element arrangements, the Company applies judgment with respect to whether it can establish selling price based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, the Company’s products differ from those of its peers such that the comparable pricing of support services with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine what similar competitor services’ selling prices are on a stand-alone basis. As a result, the Company has not been able to establish selling price based on TPE.

• BESP — When the Company is unable to establish selling price using VSOE or TPE, it uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which it would transact a sale if the product or support service was sold on a stand-alone basis. The Company determines BESP for deliverables by considering multiple factors including, but not limited to, prices it charges for similar offerings, sales volume, geographies, market conditions, competitive landscape, and pricing practices.

The Company’s agreements with certain customers, including certain OEMs and other channel partners, contain provisions for sales returns, price protection, and rebates in limited circumstances. In limited circumstances and on an infrequent basis, even if the Company is not obligated to accept returned products, the Company may determine it is in its best interest to accept returns in order to maintain good relationships with its customers. The Company recognizes revenue net of the effects of these estimated obligations at the time revenue is recorded.

The Company estimates product returns based upon its periodic analysis of historical returns as a percentage of revenue as well as known future returns. The Company periodically assesses the accuracy of its historical estimates and to date the actual results have been reasonably consistent with its estimates. While the Company believes it has sufficient experience and knowledge of the market and customer buying patterns to reasonably estimate such returns, actual market conditions or customer behavior could differ from its expectations and as a result, its actual results could change materially.

The Company’s price protection obligations with certain OEMs and other channel partners require it to notify them of any decreases in pricing and to provide them with a refund or credit for any units of the Company’s product that they have on hand as of the date of the pricing change. Historically, most of the Company’s sales to its OEMs and other channel partners have an identified end-user at the time it ships its products and thus the amount of inventory carried by its OEMs and other channel partners at any given time is limited. To date, the Company has not issued refunds or credits to its OEMs and other channel partners for price protection.

Certain of the Company’s contracts allow for rebates that are based on a fixed percentage of its sales to the customer or sales to the end-user or a fixed dollar amount per unit. The Company recognizes the amount of the rebates as a reduction of revenues when the underlying revenue is recognized.

Deferred revenue primarily represents customer billings in excess of revenue recognized, primarily for support services. Support services are typically billed in advance on an annual basis or at the inception of a multiple year support contract and revenue is recognized ratably over the support period of one to five years.

The Company also sells stand-alone software products. During the years ended June 30, 2010, 2011, and 2012, the Company’s software revenue was not significant to its consolidated statements of operations.

Shipping and handling costs are included in cost of sales.

Cash and Cash Equivalents

Cash consists of deposits with financial institutions, and cash equivalents consist of money market funds.

Concentrations of Credit Risk and Significant Customers and Suppliers

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash, cash equivalents, and accounts receivable. The Company deposits cash with a high-credit-quality financial institution, which at times may exceed federally insured amounts. The Company has policies that limit its investments as to types of investments, maturity, liquidity, credit quality, concentration, and diversification of issuers. The Company performs initial and ongoing credit evaluations of its customers’ financial condition and will limit the amount of credit as deemed necessary, but generally does not require collateral.

The customers accounting for 10% or greater of revenue were as follows:

	Year Ended June 30,
	2010			2011			2012
Customer A		10	%		36	%		30	%
Customer B		*			24	%		25	%
Customer C		10	%		14	%		17	%
Customer D		13	%		*			*

* Indicates less than 10% of revenue for the period.

The customers accounting for 10% or greater of accounts receivable, net were as follows:

	Year Ended June 30,
	2011			2012
Customer A		11	%		30	%
Customer B		66	%		18	%
Customer C		*			19	%
Customer D		*			10	%

* Indicates less than 10% of total accounts receivable, net.

As a consequence of the concentration of the Company’s customers and typically, a small number of large purchases by these customers, revenue, and operating results may fluctuate significantly from period to period.

The Company relies on a limited number of suppliers for its contract manufacturing and certain raw material components. The Company believes that other vendors would be able to provide similar products and services; however, the qualification of such vendors may require substantial start-up time. In order to mitigate any adverse impacts from a disruption of supply, the Company attempts to maintain an adequate supply of critical single-sourced raw materials.

Accounts Receivable

Accounts receivable balances are recorded at the invoiced amount and are non-interest-bearing. The Company maintains an allowance for doubtful accounts to reserve for potential uncollectible receivables. Allowances are made based upon a specific review of all significant outstanding invoices. For those invoices not specifically reserved, allowances are provided based upon a percentage of aged outstanding invoices. In determining these percentages, the Company analyzes its historical collection experience and current economic trends. Provisions are recorded in general and administrative expenses. The Company writes off accounts receivable balances to the allowance for doubtful accounts when it becomes likely that they will not be collected. Accounts receivable balances are considered past due when not paid in accordance with the contractual terms of the related arrangement. As of June 30, 2011 and 2012, the Company’s allowance for doubtful accounts was not considered significant.

The Company records a sales allowance to provide for estimated future product returns and price adjustments. In the period revenue is recognized, allowances are provided for estimated future product returns based on historical product return rates. If reliable estimates of future returns cannot be made, revenue is not recognized until the rights of return expire. The Company also provides allowances for rebates and discounts based on programs in existence at the time revenue is recognized. The Company evaluates the estimate of sales allowances on a regular basis and adjusts the amount reserved accordingly.

The changes in the Company’s sales allowance was as follows (in thousands):

	Year Ended June 30,
	2010			2011			2012
Balance at beginning of period	$	433		$	912		$	2,064
Additions		3,908			7,942			5,418
Returns		(3,429	)		(6,790	)		(6,529	)
Balance at end of period	$	912		$	2,064		$	953

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out method) or market value. The Company periodically assesses the recoverability of all inventories, including raw materials, work-in-process, and finished goods to determine whether adjustments are required to record inventory at the lower of cost or market value. Inventory that the Company determines to be obsolete or in excess of forecasted usage is reduced to its estimated realizable value based on assumptions about future demand and market conditions. If actual demand is lower than the forecasted demand, additional inventory write-downs may be required.

Property and Equipment

Property and equipment are stated at historical cost less accumulated depreciation. Property and equipment acquired through the acquisition of a business are recorded at their estimated fair value at the date of acquisition. Repairs and maintenance costs are expensed as incurred if repairs and maintenance do not extend the useful life or improve the related assets. Depreciation and amortization, including amortization of leasehold improvements and assets under capital leases, is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life of each asset category is as follows:

Computer equipment	3 years
Software	3 years
Property and equipment	3 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of useful life or remaining lease term

Long-Lived Assets and Goodwill

Periodically the Company assesses potential impairment of its long-lived assets, which include property, equipment, and acquired intangible assets. The Company performs an impairment review whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results, significant changes in the manner of its use of acquired assets or its overall business strategy, and significant industry or economic trends. When the Company determines that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators, the Company determines the recoverability by comparing the carrying amount of the asset to net future undiscounted cash flows that the asset is expected to generate and recognizes an impairment charge equal to the amount by which the carrying amount exceeds the fair market value of the asset. The Company amortizes intangible assets on a straight-line basis over their estimated useful lives.

The Company tests goodwill for impairment annually as of April 1, or whenever events or changes in circumstances indicate that goodwill may be impaired. The Company initially assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then the Company performs a first step by comparing the book value of net assets to the fair value of the Company’s single reporting unit. If the fair value is determined to be less than the book value, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. Based upon the Company’s assessment, the Company determined that it is not more-likely-than-not that the fair value of the Company’s single reporting unit is less than its carrying amount and no impairment was recognized during the year ended June 30, 2012.

Product Warranty

The Company provides its customers a standard limited product warranty of up to five years. The standard warranty requires the Company to repair or replace defective products at no cost to the customer during such warranty period. The Company estimates the costs that may be incurred under its standard limited warranty and records a liability in the amount of such costs at the time product sales are recognized. Factors that affect the Company’s warranty liability include the number of installed units, identified warranty issues, historical experience, and management’s judgment regarding anticipated rates of warranty claims and cost per claim. The Company assesses the adequacy of its recorded warranty liability each period and makes adjustments to the liability as necessary based on actual experience.

The following table presents the changes in the product warranty liability (in thousands):

	Year Ended June 30,
	2010			2011			2012
Balance at beginning of period	$	24		$	153		$	666
Warranty costs accrued		225			1,280			4,930
Warranty claims		(96	)		(767	)		(2,771	)
Balance at end of period	$	153		$	666		$	2,825

Foreign Currency

The functional currency of the Company’s international subsidiaries is the local currency. For those subsidiaries, expenses denominated in the functional currency are translated into U.S. dollars using average exchange rates in effect during the period and assets and liabilities are translated using period-end exchange rates. The foreign currency translation adjustments are included in accumulated other comprehensive income (loss) as a separate component of stockholders’ (deficit) equity. Foreign currency transaction gains or losses are recorded in other income (expense), net. Foreign currency transaction gains and losses for all periods presented were not material.

Stock-based Compensation

The Company records stock-based compensation expense related to employee stock-based awards based on the estimated fair value of the awards as determined on the date of grant. The Company utilizes the Black-Scholes-Merton option pricing model to estimate the fair value of employee stock options. The Black-Scholes-Merton model requires the input of highly subjective and complex assumptions, including the estimated fair value of the Company’s common stock on the date of grant prior to the stock being publicly traded, the expected term of the stock option, and the expected volatility of the Company’s common stock over the period equal to the expected term of the grant. The Company estimates forfeitures at the date of

grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock options and warrants to purchase shares of stock that are issued to non-employees based on the estimated fair value of such instruments using the Black-Scholes-Merton option pricing model. The measurement of stock-based compensation expense for these instruments is variable and subject to periodic adjustments to the estimated fair value until the awards vest or, in the case of the convertible preferred stock warrant which was outstanding in 2010 and until the initial public offering in 2011, each reporting period until the warrant is exercised or converted to a warrant to purchase shares of common stock. Any resulting change in the estimated fair value is recognized in the Company’s consolidated statements of operations during the period in which the related services are rendered.

Income Taxes

Deferred tax assets and liabilities are accounted for using the liability method and represent the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to be in effect when these temporary differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized.

Advertising

The Company expenses advertising costs as incurred. Advertising expense was $170,000, $12,000, and $120,000 for fiscal years 2010, 2011, and 2012, respectively.

Research and Development

Research and development costs are expensed as incurred. Research and development expenses consist primarily of personnel costs, prototype expenses, amortization of intangible assets, consulting services, and depreciation associated with research and development equipment.

Software Development Costs

The Company expenses software development costs as incurred until technological feasibility is attained, including research and development costs associated with stand-alone software products and software embedded in hardware products. Technological feasibility is attained when the Company has completed the planning, design, and testing phase of development of its software and the software has been determined viable for its intended use, which typically occurs when beta testing commences. The period of time between when beta testing commences and when the software is available for general release to customers has historically been short with immaterial amounts of software development costs incurred during this period. Accordingly, the Company has not capitalized any software development costs to date.

In accounting for the development of computer software developed or obtained for internal use, the Company capitalizes qualifying computer software costs, which are incurred during the application development stage, and amortizes them over the software’s estimated useful life. For the year ended June 30, 2012, the Company capitalized approximately $1,956,000 related to the development and implementation of an enterprise resource planning system.

Presentation of Certain Taxes

The Company collects various taxes from customers and remits these amounts to the applicable taxing authorities. The Company’s accounting policy is to exclude these taxes from revenue and cost of revenue.

Net (Loss) Income Per Share

Basic net (loss) income per share is computed using the weighted-average number of common shares outstanding during the period, less weighted-average common shares subject to repurchase. Diluted net income per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on net income per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options and preferred and common stock warrants, assumed vesting of outstanding restricted stock subject to vesting provisions, and the assumed conversion of outstanding convertible preferred stock using the if-converted method. In a net loss position, diluted net loss per share is computed using only the weighted-average number of common shares outstanding during the period, less weighted-average common shares subject to repurchase, as any additional common shares would be anti-dilutive.

The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net (loss) income per share (in thousands):

	Year Ended June 30,
	2010			2011			2012
Numerator:
Net (loss) income attributable to common stockholders	$	(32,464	)	$	4,555		$	(5,583	)
Denominator:
Weighted-average common shares outstanding		13,120			17,247			87,933
Less weighted-average common shares outstanding subject to repurchase		(2,108	)		(485	)		(259	)
Weighted-average shares, basic		11,012			16,762			87,674
Dilution due to stock options and common stock warrant		—			64,892			—
Weighted-average shares, diluted		11,012			81,654			87,674

The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net (loss) income per share (in thousands):

	Year Ended June 30,
	2010		2011		2012
Convertible preferred stock		43,261		—		—
Stock options		1,782		8,846		18,452
Common stock subject to repurchase		1,214		—		134
Warrant – preferred Series A		—		—		—
Warrant – common		—		—		39
Total		46,257		8,846		18,625

Recently Issued and Adopted Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued additional guidance regarding testing goodwill for impairment. The guidance provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. This guidance is effective for the Company beginning in fiscal year 2013. The Company has early adopted and applied this guidance to its fiscal year 2012 annual goodwill assessment. The adoption of this guidance did not have an impact on the Company’s results of operations, financial position, or cash flows.

In June 2011, the FASB issued new guidance which improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income (“OCI”) by eliminating the option to present components of OCI as part of the statement of changes in stockholders’ equity. The amendments in this standard require that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Subsequently in December 2011, the FASB issued additional guidance, which indefinitely defers the requirement to present on the face of the financial statements reclassification adjustments for items that are reclassified from OCI to net income in the statement where the components of net income and the components of OCI are presented. The amendments in these standards do not change the items that must be reported in OCI, when an item of OCI must be reclassified to net income, or change the option for an entity to present components. This new guidance is effective for the Company beginning fiscal year 2013 and is required to be applied retrospectively. The adoption of this guidance is not expected to have an impact on the Company’s results of operations, financial position, or cash flows as it relates only to financial statement presentation.

In May 2011, the FASB issued new guidance for fair value measurements to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between GAAP and International Financial Reporting Standards. The guidance changes certain fair value measurement principles and enhances the disclosure requirements, particularly for level 3 fair value measurements. The Company adopted this guidance prospectively during fiscal year 2012 and noted no significant impact on the Company’s results of operations, financial position, or cash flows.

XML

Description of Business and Summary of Significant Accounting Policies (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Changes in the Company's sales allowance
Accounts receivable, beginning balance	$ 2,064	$ 912	$ 433
Additions	5,418	7,942	3,908
Returns	(6,529)	(6,790)	(3,429)
Accounts receivable, ending balance	$ 953	$ 2,064	$ 912

XML

Balance Sheet Components (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Property and Equipment
Plant and Equipment, Gross, Total	$ 41,270	$ 18,533
Less accumulated depreciation and amortization	(10,025)	(4,790)
Property, Plant and Equipment, Net, Total	31,245	13,743
Computer equipment [Member]
Property and Equipment
Plant and Equipment, Gross, Total	14,904	8,136
Software [Member]
Property and Equipment
Plant and Equipment, Gross, Total	4,076	1,046
Property and Equipment [Member]
Property and Equipment
Plant and Equipment, Gross, Total	5,682	1,991
Furniture and fixtures [Member]
Property and Equipment
Plant and Equipment, Gross, Total	3,759	2,092
Leasehold improvements [Member]
Property and Equipment
Plant and Equipment, Gross, Total	12,520	5,268
Construction in progress [Member]
Property and Equipment
Plant and Equipment, Gross, Total	$ 329

XML

Long-Term Obligations (Details Textual) (USD $)	1 Months Ended	2 Months Ended				12 Months Ended
	Sep. 30, 2010	May 31, 2012	Jun. 30, 2012	Jun. 30, 2012 Maximum [Member]	Jun. 30, 2012 Minimum [Member]	Jun. 30, 2012 Revolving line of credit [Member]	May 31, 2012 Revolving line of credit [Member]	Sep. 30, 2010 Revolving line of credit [Member]	Jun. 30, 2012 Letters of credit [Member]	Sep. 30, 2010 Letters of credit [Member]	Sep. 30, 2010 Line of Credit [Member]
Long-Term Obligations (Textual) [Abstract]
Maximum borrowing capacity								$ 25,000,000		$ 6,000,000
Interest rate on borrowing							2.00%				0.50%
Borrowing Outstanding						0			3,183,000
Ratio of current assets to current liabilities				0.0125	0.0100
Revolving line of credit, maturity date						2012-09
Long Term Obligations (Additional Textual) [Abstract]
Percentage of unused commitment fee percentage	0.375%	0.25%
Minimum tangible net worth			$ 25,000,000
Percentage of net proceeds received by company from sale or issuance of company's equity or subordinated debt			25.00%

XML

Commitments and Contingencies (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Operating Leases
2013	$ 5,625
2014	5,359
2015	5,679
2016	5,764
2017	5,830
Thereafter	26,137
Total	$ 54,394

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Current assets:
Cash and cash equivalents	$ 321,239	$ 219,604
Accounts receivable, net of allowances of $2,064 and $953 as of June 30, 2011 and 2012, respectively	56,720	44,374
Inventories	59,457	35,622
Prepaid expenses and other current assets	9,224	3,866
Total current assets	446,640	303,466
Property and equipment, net	31,245	13,743
Intangible assets, net	8,164
Goodwill	54,777
Other assets	194	77
Total assets	541,020	317,286
Current liabilities:
Accounts payable	9,765	9,314
Accrued and other current liabilities	29,187	15,043
Deferred revenue	20,715	9,030
Total current liabilities	59,667	33,387
Deferred revenue, less current portion	8,154	2,987
Other liabilities	12,276	6,468
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0002 par value; 10,000,000 shares authorized as of June 30, 2011 and 2012; no shares issued and outstanding as of June 30, 2011 and 2012
Common stock, $0.0002 par value; 500,000,000 shares authorized as of June 30, 2011 and 2012; 81,149,569 and 93,391,415 shares issued and outstanding as of June 30, 2011 and 2012, respectively	19	16
Additional paid-in capital	531,478	339,389
Accumulated other comprehensive income (loss)	(15)	15
Accumulated deficit	(70,559)	(64,976)
Total stockholders' equity	460,923	274,444
Total liabilities and stockholders' equity	$ 541,020	$ 317,286

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Fair Value Measurements (Details 1) (Common stock repurchase derivative liability [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Common stock repurchase derivative liability [Member]
Change in the value of the common stock repurchase derivative liability
Balance at beginning of period	$ 1,137
Fair value at transaction date		118
Change in fair value included in other (expense) income, net	(70)	1,019
Repurchases of common stock	(1,067)
Balance at end of period		$ 1,137

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Consolidated Statements of Convertible Preferred Stock, Stockholders' (Deficit) Equity and Comprehensive (Loss) Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2010 Convertible preferred stock [Member] Series B [Member]	Jun. 30, 2010 Convertible preferred stock [Member] Series C [Member]	Jun. 30, 2012 Common Stock	Jun. 30, 2011 Common Stock
Stock issuance cost	$ 43	$ 94	$ 1,063	$ 3,789

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Income Taxes (Details Textual) (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Income Taxes (Textual) [Abstract]
Federal net operating loss carryforwards	$ 3,776,000
State net operating loss carryforwards	30,351,000
State Research and Development Tax Credits Carryforwards Associated With Stock Option Tax Deductions Greater than Deductions Claimed for Book Purposes.	1,366,000	618,000	50,000
Income Taxes (Additional Textual) [Abstract]
Statutory federal income tax rate	34.00%
Cumulative amount of earnings upon which income taxes have not been provided	999,000
Unrecognized deferred tax liability related to cumulative earnings	117,000
Tax benefit on reversal of valuation allowance related to deferred tax liabilities generated from acquisition	2,782,000
Federal net operating loss carryforwards, expiration year	2027
State net operating loss carryforwards, expiration year	2014
Federal research and development tax credit carryforwards	4,024,000
State research and development tax credit carryforwards	2,205,000
Federal research and development tax credit carryforwards, expiration year	2027
State research and development tax credit carryforwards, expiration year	2020
Federal alternative minimum tax credit carryforward	577,000
Increase (decrease) in Valuation allowance	(4,057,000)	(3,306,000)	10,922,000
Federal R&D credits expected to expire unused	112,000
Tax benefits recognized in the financial statements measurement basis	based on the largest benefit that has greater than 50% likelihood to be sustained upon ultimate settlement
Reclassification of tax reserve	184,000
Unrecognized tax benefits	2,709,000	835,000
Accrued interest and penalties related to uncertain tax positions	16,000
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	289,000
Income Taxes Paid	504,000	540,000	12,000
Stock options [Member]
Income Taxes (Textual) [Abstract]
Federal net operating loss carryforwards	186,569,000
State net operating loss carryforwards	135,249,000
Stock options [Member] | State and Local Jurisdiction [Member]
Income Taxes (Textual) [Abstract]
State Research and Development Tax Credits Carryforwards Associated With Stock Option Tax Deductions Greater than Deductions Claimed for Book Purposes.	$ 537,000

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Description of Business and Summary of Significant Accounting Policies (Details 5) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Numerator
Net (loss) income attributable to common stockholders	$ (5,583)	$ 4,555	$ (32,464)
Denominator
Weighted-average common shares outstanding	87,933	17,247	13,120
Less weighted-average common shares outstanding subject to repurchase	(259)	(485)	(2,108)
Weighted-average shares, basic	87,674	16,762	11,012
Dilution due to stock options and common stock warrant		64,892
Weighted-average shares, diluted	87,674	81,654	11,012

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details 5) (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Activity related to common stock subject to repurchase
Unvested shares of common stock, Number of Shares			1,250,000	2,916,667
Unvested shares of common stock, Weighted-Average Fair Value		$ 0.36	$ 0.36	$ 0.36
Vested, Number of Shares		(1,250,000)	(1,666,667)
Vested, Weighted-Average Fair Value		$ 0.36	$ 0.36

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Balance Sheet Components (Tables)

12 Months Ended

Jun. 30, 2012

Balance Sheet Components [Abstract]

Cash and Cash Equivalents

	June 30, 2011
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash	$	3,795	$	—	$	—	$	3,795
Money market funds		215,809		—		—		215,809
Total cash and cash equivalents	$	219,604	$	—	$	—	$	219,604

	June 30, 2012
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash	$	54,295	$	—	$	—	$	54,295
Money market funds		266,944		—		—		266,944
Total cash and cash equivalents	$	321,239	$	—	$	—	$	321,239

Inventories

	June 30,
	2011		2012
Raw materials	$	16,108	$	20,263
Work in progress		13,931		30,065
Finished goods		5,583		9,129
	$	35,622	$	59,457

Property and Equipment

	June 30,
	2011			2012
Computer equipment	$	8,136		$	14,904
Software		1,046			4,076
Property and equipment		1,991			5,682
Furniture and fixtures		2,092			3,759
Leasehold improvements		5,268			12,520
Construction in progress		—			329
		18,533			41,270
Less accumulated depreciation and amortization		(4,790	)		(10,025	)
	$	13,743		$	31,245

Accrued and other current liabilities

	June 30,
	2011		2012
Accrued compensation	$	10,118	$	19,034
Common stock repurchase derivative liability		1,137		—
Accrued warranty expense		666		2,825
Accrued other liabilities		3,122		7,328
	$	15,043	$	29,187

Long-term other liabilities

	June 30,
	2011		2012
Long term deferred tax liability	$	615	$	4,026
Long term deferred rent		5,847		8,250
Long term other liabilities		6		—
	$	6,468	$	12,276

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Description of Business and Summary of Significant Accounting Policies (Details 6) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Weighted average common stock equivalents excluded from the calculation of diluted net (loss) income per share
Common stock equivalents	18,625	8,846	46,257
Convertible preferred stock [Member]
Weighted average common stock equivalents excluded from the calculation of diluted net (loss) income per share
Common stock equivalents			43,261
Stock options [Member]
Weighted average common stock equivalents excluded from the calculation of diluted net (loss) income per share
Common stock equivalents	18,452	8,846	1,782
Common stock subject to repurchase [Member]
Weighted average common stock equivalents excluded from the calculation of diluted net (loss) income per share
Common stock equivalents	134		1,214
Warrant - preferred Series A [Member]
Weighted average common stock equivalents excluded from the calculation of diluted net (loss) income per share
Common stock equivalents
Warrant - common [Member]
Weighted average common stock equivalents excluded from the calculation of diluted net (loss) income per share
Common stock equivalents	39

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Acquisitions (Tables)

12 Months Ended

Jun. 30, 2012

Acquisitions [Abstract]

Purchase price allocation

Total current assets	$	3,669
Property and equipment, net		224
Other assets		6
Total assets		3,899
Accounts payable		(706	)
Accrued and other current liabilities		(120	)
Total current liabilities		(826	)
Net acquired tangible assets	$	3,073
Developed technology		10,500
Goodwill		54,777
Deferred income tax liability		(2,782	)
Total fair value of purchase price	$	65,568

Pro forma financial information

	Year Ended June 30,
	2011			2012
Revenue	$	197,204		$	359,349
Income (loss) from operations		(5,255	)		(7,935	)
Net income (loss)		(10,372	)		(8,224	)
Net income (loss) per share, basic	$	(0.56	)	$	(0.09	)
Net income (loss) per share, diluted	$	(0.56	)	$	(0.09	)

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details 8)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Black-Scholes-Merton pricing model
Expected term	5 years 2 months 12 days	3 years 2 months 12 days
Expected dividends
Warrant [Member]
Black-Scholes-Merton pricing model
Expected volatility			49.00%
Expected term			5 years
Risk-free interest rate			2.40%
Expected dividends
Revaluation of Warrant [Member] | Warrant One [Member]
Black-Scholes-Merton pricing model
Expected volatility			49.00%
Expected term			8 years 3 months 18 days
Risk-free interest rate			2.90%
Expected dividends
Revaluation of Warrant [Member] | Warrant Two [Member]
Black-Scholes-Merton pricing model
Expected volatility		59.00%
Expected term		7 years 3 months 4 days
Risk-free interest rate		2.24%
Expected dividends

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Operating activities:
Net (loss) income	$ (5,583)	$ 4,555	$ (31,716)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	9,009	4,547	1,498
Stock-based compensation	42,645	8,637	1,867
Excess tax benefit from stock-based awards	(2,500)	(1,154)
Deferred taxes	(2,782)
Other non-cash items	(26)	3,185	231
Changes in operating assets and liabilities:
Accounts receivable, net	(12,346)	(38,793)	(3,420)
Inventories	(23,835)	(10,474)	(21,155)
Prepaid expenses and other assets	(5,430)	(2,549)	(607)
Accounts payable	(249)	(593)	8,222
Accrued and other liabilities	19,013	11,604	5,526
Deferred revenue	16,852	11,178	1
Net cash (used in) provided by operating activities	34,768	(9,857)	(39,553)
Investing activities:
Purchases of short-term investments			(13,910)
Proceeds from the sale of short-term investments		11,964	2,293
Proceeds from maturities of short-term investments			761
Business acquisition, net of cash acquired	(17,578)
Proceeds from the sale of property and equipment	1	152
Purchases of property and equipment	(23,997)	(13,032)	(3,442)
Net cash used in investing activities	(41,574)	(916)	(14,298)
Financing activities:
Proceeds from issuance of convertible preferred stock			43,765
Repurchases of convertible preferred stock			(1,834)
Repurchases of common stock	(1,067)	(1,223)
Proceeds from a loan from a financial institution		11,000	4,000
Repayment of notes payable and capital lease obligations	(110)	(11,254)	(4,179)
Proceeds from exercises of stock options	8,210	1,546	133
Issuance of restricted awards and restricted stock units, net of repurchases	(44)
Proceeds from issuance of common stock, net of issuance costs	93,977	219,170
Proceeds from exercise of common stock warrant		25
Proceeds from employee stock purchase plan	5,061
Income tax benefit from stock option exercises	2,500	1,154
Change in restricted cash		695	(166)
Proceeds from issuance of convertible notes			5,000
Net cash provided by financing activities	108,527	221,113	46,719
Effect of exchange rate changes on cash and cash equivalents	(86)	45	(1)
Net (decrease) increase in cash and cash equivalents	101,635	210,385	(7,133)
Cash and cash equivalents at the beginning of period	219,604	9,219	16,352
Cash and cash equivalents at the end of period	321,239	219,604	9,219
Supplemental disclosure of cash flow information:
Cash paid for interest	146	427	122
Supplemental disclosure of noncash investing and financing activities:
Conversion of convertible notes and interest into convertible preferred stock			5,038
Assets acquired under capital leases			334
Conversion of convertible preferred stock to common stock		104,513
Reclassification of convertible preferred stock warrant liability upon conversion to common stock warrant		2,280
Vesting of common shares subject to repurchase	$ 17

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Consolidated Balance Sheets [Abstract]
Accounts receivable, allowances for doubtful accounts	$ 953	$ 2,064
Preferred stock, par value	$ 0.0002	$ 0.0002
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0002	$ 0.0002
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	93,391,415	81,149,569
Common stock, shares outstanding	93,391,415	81,149,569

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Employee Benefit Plans

12 Months Ended

Jun. 30, 2012

Employee Benefit Plans [Abstract]

Employee Benefit Plans

10. Employee Benefit Plans

The Company sponsors a 401(k) defined contribution plan covering all employees. Matching contributions and profit sharing contributions to the plan are at the discretion of the Company. The Company did not pay any matching contributions in any periods presented in the accompanying consolidated statements of operations.

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Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Aug. 20, 2012	Dec. 30, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	FUSION-IO, INC.
Entity Central Index Key	0001383729
Document Type	10-K
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 910
Entity Common Stock, Shares Outstanding		94,748,949

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Related Party Transactions

12 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

11. Related Party Transactions

The Company issued and sold an aggregate of 52,489,072 shares of Series A, B, and C convertible preferred stock for aggregate consideration of $103,765,000, net of issuance costs. Purchasers of the Company’s Series A, B and C convertible preferred stock include New Enterprise Associates 12, Limited Partnership (“NEA 12”) and Lightspeed Venture Partners VIII, L.P. (“Lightspeed VIII”). Both of these investors owned more than 5% of the Company’s outstanding capital stock as of June 30, 2010 and 2011 and NEA 12 owns more than 5% of the Company’s outstanding capital stock as of June 30, 2012. Forest Baskett and Scott Sandell, both of whom are members of the Company’s board of directors, are general partners of NEA 12. Christopher J. Schaepe, a member of the Company’s board of directors until his resignation on December 16, 2011, is a founding managing director of Lightspeed Venture Partners.

The following table summarizes the purchases of the Company’s convertible preferred stock by NEA 12 and Lightspeed VIII:

Name of Stockholder	Class of Convertible Preferred Stock		Shares of Series A Convertible Preferred Stock		Price Per Share		Total Purchase Price
NEA 12		Series A		8,647,755	$	1.093	$	9,451,996
NEA 12		Series B		9,127,294		*		18,292,776
Lightspeed VIII		Series B		7,500,000		2.000		15,000,000
NEA 12		Series C		2,843,112		3.869		11,000,000
Lightspeed VIII		Series C		1,292,324		3.869		5,000,002

* NEA 12 purchased 9,000,000 shares of Series A convertible preferred stock directly from the Company at a price per share of $2.00 and a purchase price of $18,000,000.

Immediately prior to the Company’s acquisition of IO Turbine in August 2011, Lightspeed Venture Partners, a venture capital firm, through certain of its related funds (including Lightspeed Venture Partners VIII L.P. and Lightspeed Venture Partners VII, L.P.) owned over 10% of the Company’s outstanding capital stock and over 25% of IO Turbine’s capital stock. Christopher J. Schaepe, a member of the Company’s board of directors until his resignation on December 16, 2011, is a founding managing director of Lightspeed. In connection with the acquisition, Lightspeed received 744,866 shares of the Company’s common stock.

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Consolidated Statements of Operations [Abstract]
Revenue	$ 359,349	$ 197,204	$ 36,216
Cost of revenue	159,045	84,043	16,018
Gross profit	200,304	113,161	20,198
Operating expenses:
Sales and marketing	87,171	55,698	23,386
Research and development	60,006	27,238	15,977
General and administrative	58,423	20,556	12,383
Total operating expenses	205,600	103,492	51,746
(Loss) income from operations	(5,296)	9,669	(31,548)
Other income (expense):
Interest income	384	35	90
Interest expense	(177)	(2,455)	(246)
Other (expense) income	121	(1,000)
(Loss) income before income taxes	(4,968)	6,249	(31,704)
Income tax expense	(615)	(1,694)	(12)
Net (loss) income	(5,583)	4,555	(31,716)
Deemed dividend on repurchase of Series B convertible preferred stock			(748)
Net (loss) income attributable to common stockholders	$ (5,583)	$ 4,555	$ (32,464)
Net (loss) income per common share:
Basic	$ (0.06)	$ 0.27	$ (2.95)
Diluted	$ (0.06)	$ 0.06	$ (2.95)
Weighted average number of shares:
Basic	87,674	16,762	11,012
Diluted	87,674	81,654	11,012

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Goodwill and Intangible Assets

12 Months Ended

Jun. 30, 2012

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

5. Goodwill and Intangible Assets

Changes in the carrying amount of Goodwill consisted of the following (in thousands):

	Year Ended June 30,
	2011		2012
Balance at beginning of period	$	—	$	—
Current period acquisitions		—		54,777
Balance at end of period		—		54,777

The Company’s goodwill is not deductible for income tax purposes.

The Company’s intangible assets and related accumulated amortization consisted of the following as of June 30, 2012 (in thousands):

	Weighted- Average Useful Life		Cost		Accumulated Amortization			Net
Developed technology		4 years	$	10,500	$	(2,336	)	$	8,164

For the year ended June 30, 2012, amortization expense related to intangible assets was approximately $2,336,000. Estimated amortization expense in future periods through fiscal year 2016 for intangible assets subject to amortization is as follows (in thousands):

Fiscal Year	Total
2013		2,625
2014		2,625
2015		2,625
2016		289
	$	8,164

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Acquisitions

12 Months Ended

Jun. 30, 2012

Acquisitions [Abstract]

Acquisitions

4. Acquisitions

On August 11, 2011, the Company acquired 100% of the stock of IO Turbine, Inc. (“IO Turbine”) pursuant to the Agreement and Plan of Reorganization (the “Merger Agreement”) dated August 4, 2011. IO Turbine was a provider of caching solutions for virtual environments, based in San Jose, California. Accordingly, the assets, liabilities, and operating results of IO Turbine are reflected in the Company’s consolidated financial statements following the date of acquisition. The fair value of the aggregate purchase price was approximately $65,568,000, which consisted of (1) cash of approximately $21,199,000, (2) approximately $43,485,000 in common stock valued at $28.40 per share, the closing sale price of the Company’s common stock on the closing date of the acquisition, and (3) approximately $884,000 in assumed stock options attributable to pre-acquisition service. In addition, subsequent to the acquisition, the Company will recognize up to approximately $26,421,000 of stock-based compensation expense related to the fair value of assumed restricted stock awards (RSAs) and stock options, of which approximately $3,795,000 were expensed immediately in connection with the acceleration of vesting of certain restricted stock awards and the remainder will be recognized over the underlying future service period of the assumed stock awards and stock options. At the time of acquisition, IO Turbine stockholders holding RSAs had the option to receive cash and/or shares of the Company’s common stock for their unvested RSAs based on a fixed value determined at the acquisition date. As a result, the Company: (1) issued approximately 414,000 shares of its common stock that remain subject to forfeiture based on the original vesting schedule applicable to such awards and (2) will pay up to approximately $4,631,000 in cash in accordance with the original vesting schedule applicable to such awards. Of this total cash amount, approximately $1,605,000 was paid as of June 30, 2012.

The fair value of the assumed options was estimated using the Black-Scholes-Merton option pricing model with market assumptions. Option pricing models require the use of highly subjective market assumptions, including expected stock price volatility, which if changed, can materially affect fair value estimates. The more significant assumptions used in estimating the fair value of these stock options include expected volatility of 60%, expected option term of between 5.2 years and 5.9 years and a risk-free interest rate of 2.0%.

Approximately $3,628,000 of cash and 278,974 shares of common stock were deposited in escrow and were held for one year from the date of acquisition as partial security for indemnification obligations of the IO Turbine stockholders pursuant to the Merger Agreement, before being released in full from escrow in August 2012. The Company did not make any claims for indemnification against the IO Turbine stockholders pursuant to the Merger Agreement.

Purchase price allocation

The total purchase price for IO Turbine was allocated to the net tangible and intangible assets based upon their fair values as set forth below. The acquisition of IO Turbine is a key part of the Company’s strategy to enable enterprise customers to increase the utilization, performance, and efficiency of their datacenter resources, and extract greater value from their information assets. These factors contributed to a purchase price in excess of the fair value of the IO Turbine net tangible and intangible assets acquired, and as a result, the Company has recorded goodwill in connection with this transaction. The excess of the purchase price over the net tangible assets and intangible asset was recorded as goodwill.

The Company’s purchase price allocation for IO Turbine was as follows (in thousands):

Total current assets	$	3,669
Property and equipment, net		224
Other assets		6
Total assets		3,899
Accounts payable		(706	)
Accrued and other current liabilities		(120	)
Total current liabilities		(826	)
Net acquired tangible assets	$	3,073
Developed technology		10,500
Goodwill		54,777
Deferred income tax liability		(2,782	)
Total fair value of purchase price	$	65,568

For the year ended June 30, 2012, operating expenses associated with IO Turbine were approximately $20,306,000, of which approximately $12,282,000 related to stock-based compensation expense.

Acquisition related expenses

Acquisition related expenses totaled approximately $1,326,000 for the year ended June 30, 2012 and were recorded in general and administrative expenses. Of the total acquisition related expenses, $450,000 related to a prepaid royalty fee, paid by the Company to IO Turbine in fiscal year 2011, which was expensed by the Company upon completion of the acquisition of IO Turbine.

Unaudited pro forma financial information

The following unaudited pro forma financial information is based on the combined historical financial statements of the Company and IO Turbine after giving effect to the Company’s acquisition of IO Turbine as if it had occurred as of July 1, 2010 and includes pro forma adjustments related to the amortization of acquired intangible assets, stock-based compensation expense, and depreciation expense (in thousands, except per share data):

	Year Ended June 30,
	2011			2012
Revenue	$	197,204		$	359,349
Income (loss) from operations		(5,255	)		(7,935	)
Net income (loss)		(10,372	)		(8,224	)
Net income (loss) per share, basic	$	(0.56	)	$	(0.09	)
Net income (loss) per share, diluted	$	(0.56	)	$	(0.09	)

The amounts in the table above do not include non-recurring expense of approximately $3,795,000 related to the acceleration of vesting on certain stock-based awards that was recorded by the Company as stock-based compensation expense in the year ended June 30, 2012.

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Fair Value Measurements (Tables)

12 Months Ended

Jun. 30, 2012

Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Fair value of financial assets

	Fair Value Measurements at June 30, 2011 Using
Description	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	215,809	$	—	$	—	$	215,809
Accrued and other liabilities:
Common stock repurchase derivative liability	$	—	$	—	$	1,137	$	1,137
	Fair Value Measurements at June 30, 2012 Using
Description	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	266,944	$	—	$	—	$	266,944

Common stock repurchase derivative liability [Member]

Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

change in the value of the common stock repurchase derivative liability

	Year Ended June 30,
	2011		2012
Balance at beginning of period	$	—	$	1,137
Fair value at transaction date		118		—
Change in fair value included in other (expense) income, net		1,019		(70	)
Repurchases of common stock		—		(1,067	)
Balance at end of period	$	1,137	$	—

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Subsequent Events

12 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

12. Subsequent Events

On July 10, 2012, the Company entered into a second amendment to the lease for its primary office facility in Salt Lake City, Utah. This amendment expands the primary office facility by 13,000 square feet and provides for monthly payments that increase over the term of the lease that ends in September 2021.

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Convertible Preferred Stock and Stockholders' (Deficit) Equity

12 Months Ended

Jun. 30, 2012

Convertible Preferred Stock and Stockholders' (Deficit) Equity [Abstract]

Convertible Preferred Stock and Stockholders' (Deficit) Equity

8. Convertible Preferred Stock and Stockholders’ (Deficit) Equity

Convertible Preferred Stock

As of June 30, 2010, the Company had shares issued and outstanding of 17,445,450, 23,466,941, and 11,576,681 of Series A, Series B, and Series C convertible preferred stock, respectively.

During the fiscal year ended June 30, 2010, the Company designated 11,630,913 shares of its convertible preferred stock as Series C, repurchased 542,961 shares of Series B convertible preferred stock for $1,834,000, and issued a total of 11,576,681 shares of Series C convertible preferred stock, including 1,302,237 shares issued upon conversion of convertible notes and 10,274,444 shares issued for $3.869 per share resulting in net cash proceeds of $39,658,000.

Amounts paid in excess of the carrying amount related to the repurchase of the Series B convertible preferred stock are reflected as a deemed dividend in computing net loss attributable to common stockholders for the fiscal year ended June 30, 2010.

In conjunction with the Company’s initial public offering which closed on June 14, 2011, all shares of convertible preferred stock outstanding automatically converted into 52,489,072 shares of common stock.

Equity Incentive Plans

The Company adopted the 2006 Stock Option Plan (the “2006 Plan”) in July 2006 and subsequently granted a total of 3,028,135 options to purchase common stock under the 2006 Plan. Stock options granted under the 2006 Plan generally vest over a period of 30 months and have a contractual life of 10 years from the date of grant. In March 2008, the Company’s board of directors amended the terms of the 2006 Plan and terminated the ability to grant additional awards under this plan; however, the 2006 Plan will continue to govern the terms and conditions of the awards previously granted.

In March 2008, the Company adopted the 2008 Equity Incentive Plan (the “2008 Plan”) and in July 2010 the Company adopted the 2010 Executive Stock Incentive Plan (the “2010 Plan”). In January 2011, the Company’s board of directors and stockholders authorized an additional 3,000,000 shares of common stock for future issuance under the 2008 Plan and 2010 Plan. In June 2011, the Company’s board of directors determined that no future awards would be issued under the 2008 and 2010 Plans; however, the respective Plan will continue to govern the terms and conditions of the awards previously granted.

In June 2011, the Company adopted the 2011 Equity Incentive Plan (the “2011 Plan”) and reserved a total of 12,132,430 shares of common stock for issuance under the 2011 Plan. The shares reserved for issuance under the 2011 Plan include shares returned as the result of expiration or termination of options from the previous Plans and other non-plan awards made prior to the Company’s initial public offering (which may not exceed 25,867,172 shares). As of June 30, 2012, 4,454,882 awards were issued and outstanding from the 2011 Plan. The number of shares available for issuance under the 2011 Plan as of June 30, 2012 was 8,129,263. In addition, the 2011 Plan provides for annual increases in the number of shares available for issuance on the first day of each fiscal year beginning July 1, 2012 equal to the lesser of:

• 5% of the outstanding shares of the Company’s common stock on the first day of the fiscal year;

• 10,000,000 shares; and

• such other amount as may be determined by the Company’s Board of Directors or a committee thereof

The Stock Plans provide for the grant of incentive stock options to employees and for the grant of nonstatutory stock options and awards of restricted or unrestricted shares of common stock to employees, consultants, and advisors. Generally stock options granted under the Stock Plans vest over a period of 48 months and have a contractual life of 10 years from the date of grant. Grants of incentive stock options generally must be at an exercise price not less than the fair value of the underlying common stock on the date of grant.

In August 2011, in connection with the Company’s acquisition of IO Turbine, the Company assumed stock options and restricted stock awards previously granted by IO Turbine pursuant to the IO Turbine, Inc. 2009 Equity Incentive Plan. The stock options were converted to options to purchase shares of the Company’s common stock. These stock options generally have a 48 month vesting schedule and have an exercise price equal to the grant date fair market value. The restricted stock awards were converted to restricted shares of the Company’s common stock. These restricted stock awards generally have a 24 to 48 month vesting schedule, with the majority of the shares vesting over a 24 month vesting schedule from the date the Company acquired IO Turbine.

Stock option activity for all the Stock Plans for the fiscal years ended June 30, 2010, 2011 and 2012 was as follows:

	Number of Shares Subject to Outstanding Options			Weighted- Average Exercise Price Per Share		Weighted- Average Contractual Term (in Years)		Aggregate Intrinsic Value(1)
	(in thousands)
Outstanding as of June 30, 2009		13,177,667		$	0.55
Granted		7,171,034			1.10
Exercised		(620,462	)		0.21
Canceled		(1,315,399	)		0.60
Outstanding as of June 30, 2010		18,412,840			0.77
Granted		10,166,575			4.67
Exercised		(2,541,909	)		0.61
Canceled		(1,309,575	)		2.30
Outstanding as of June 30, 2011		24,727,931			2.31
Granted		2,654,650			22.48
Assumed		264,792			1.24
Exercised		(7,128,528	)		1.15
Canceled		(633,439	)		8.28
Outstanding as of June 30, 2012		19,885,406		$	5.21		8.0	$	311,722
Vested and expected to vest as of June 30, 2012		18,007,345		$	4.91		7.9	$	287,742
Vested and exercisable as of June 30, 2012		7,168,823		$	2.51		7.5	$	131,797

(1) The aggregate intrinsic value is equal to the difference between the exercise price of the underlying stock option awards and the estimated fair value of the Company’s common stock as of June 30, 2012.

Employee Stock Options

Additional per share information related to stock options granted to employees was as follows:

	Year Ended June 30,
	2010		2011		2012
Weighted-average grant date fair value — granted	$	0.55	$	3.22	$	12.38
Weighted-average grant date fair value — assumed in connection with the acquisition of IO Turbine		—		—		27.31
Weighted-average grant date fair value — forfeited		0.30		2.33		6.84

The aggregate intrinsic value of stock options exercised during the fiscal years ended June 30, 2011 and 2012 was approximately $33,570,000 and $190,748,000, respectively, which was the difference between the exercise price of the underlying stock option awards and the estimated fair value of the Company’s common stock on the date of exercise.

The Company recorded stock-based compensation expense related to employee stock options of approximately $1,205,000, $4,924,000, and $17,022,000 for the fiscal years ended June 30, 2010, 2011, and 2012, respectively. As of June 30, 2012, there was approximately $48,237,000 of total unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average service period of 2.7 years.

On December 16, 2011, the Company accelerated the vesting of 12,500 stock options in connection with the resignation of Christopher J. Schaepe from the Board of Directors of the Company. As a result of the acceleration, the Company recorded approximately $199,000 of employee related stock-based compensation expense for the year ended June 30, 2012.

The Company estimates the fair value of stock options granted to employees using the Black-Scholes-Merton pricing model and a single option award approach, which requires the input of several highly subjective and complex assumptions. The risk-free interest rate for the expected term of the option is based on the yield available on United States Treasury Zero Coupon issues with an equivalent expected term. The expected option term used in the Black-Scholes-Merton pricing model is calculated using the simplified method. The simplified method defines the expected term as the average of the option’s contractual term and the option’s weighted-average vesting period. The Company utilizes this method as it has limited historical stock option data that is sufficient to derive a reasonable estimate of the expected stock option term. The computation of estimated expected volatility is based on the volatility of comparable companies from a representative peer group selected based on industry data.

The following table presents the assumptions used in the Black-Scholes-Merton pricing model related to employee stock options:

	Year Ended June 30,
	2010	2011	2012
Expected volatility	49%	48-60%	59-60%
Expected term (in years)	6.1	3.2-7.0	5.2-6.6
Risk-free interest rate	2.4-2.9%	0.6-2.7%	1.0-2.0%
Expected dividends	—	—	—

Non-employee Stock Options

The Company from time to time grants options to purchase common stock to non-employees for advisory and consulting services. The Company estimates the fair value of these stock options using the Black-Scholes-Merton option pricing formula at each balance sheet date and records expense ratably over the vesting period of each stock option award. The Company recorded stock-based compensation expense related to these non-employee stock options of $54,000, $3,235,000, and $8,474,000 for the fiscal years ended June 30, 2010, 2011, and 2012, respectively.

The following table presents the assumptions used in the Black-Scholes-Merton pricing model related to non-employee stock options:

	Year Ended June 30,
	2010			2011			2012
Expected volatility		49	%		48-63	%		59-62	%
Expected term (in years)		7.8-10.0			7.1-10.0			6.3-9.7
Risk-free interest rate		2.9-3.6	%		2.1-3.4	%		1.6-2.4	%
Expected dividends		—			—			—

Restricted Stock Units and Restricted Stock Awards

The following table summarizes activity during the year ended June 30, 2012 related to restricted stock units (“RSUs”) and RSAs:

	Number of Shares			Weighted- Average Grant-Date Fair Value
Unvested RSUs and RSAs at June 30, 2011		—		$	—
Granted		1,807,503			23.71
Assumed in connection with the acquisition of IO Turbine		916,202			28.40
Vested		(211,996	)		28.54
Accelerated vesting in connection with the acquisition of IO Turbine		(502,514	)		28.40
Forfeited		(12,779	)		28.40
Cancelled		(38,850	)		22.41
Unvested RSUs and RSAs at June 30, 2012		1,957,566			24.17

The Company recorded stock-based compensation expense related to RSUs and RSAs of approximately $597,000, $399,000, and $16,253,000 for the fiscal years ended June 30, 2010, 2011, and 2012, respectively. Of the stock-based compensation expense recognized during the year ended June 30, 2012, approximately $3,795,000 was due to accelerated vesting of certain RSAs assumed in connection with the IO Turbine acquisition, of which, approximately $793,000 related to awards that were settled in cash at the time of acquisition. At June 30, 2012, there was approximately $42,026,000 of total unrecognized compensation cost related to unvested RSUs and RSAs. This unrecognized compensation cost is equal to the fair value of RSUs and RSAs expected to vest and will be recognized over a weighted-average period of 3.2 years.

Repurchases of Vested Restricted Stock Units

The Company is required to withhold minimum statutory taxes related to the vesting of RSUs, including the forfeiting of a portion of the newly vested award that has a current value equal to the withholding obligation. The Company is then required to remit the amount of taxes owed by the employee to the appropriate taxing authority. As a result of such forfeitures, during the year ended June 30, 2012, the Company effectively repurchased a total of 211,996 shares of common stock related to employee tax withholding obligations. The Company has recorded approximately $44,000 as a financing activity for these forfeitures in the condensed consolidated statement of cash flows for the year ended June 30, 2012.

Shares of Common Stock Subject to Repurchase

In March 2008, the Company agreed with two of its executives to add vesting provisions to an aggregate of 5,000,000 shares of common stock controlled by these executives. The Company had the right to repurchase any unvested shares at a price of $1.09 per share in the event the executive was to no longer provide services to the Company. The repurchase right expired ratably as the shares vested monthly over a 36-month period. The total fair value of the 5,000,000 shares of $1,790,000 was recognized as stock-based compensation expense on a straight-line basis over the vesting period.

The following table summarizes the activity related to these shares subject to repurchase:

	Number of Shares			Weighted-Average Fair Value
Unvested shares of common stock as of June 30, 2009		2,916,667		$	0.36
Vested		(1,666,667	)		0.36
Unvested as of June 30, 2010		1,250,000			0.36
Vested		(1,250,000	)		0.36
Unvested as of June 30, 2011		—			0.36
Vested		—
Unvested as of June 30, 2012		—

Employee Stock Purchase Plan

The Company’s 2011 Employee Stock Purchase Plan (the “ESPP”) became effective in June 2011. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to plan limitations. A participant may purchase a maximum of 1,500 shares during the offering period. Generally, the ESPP provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period. At the effective date, a total of 500,000 shares of common stock were reserved for future issuance under this plan. In addition, the ESPP provides for annual increases in the number of shares available for issuance on the first day of each fiscal year beginning July 1, 2012 equal to the lesser of:

• 1% of the outstanding shares of the Company’s common stock on the first day of the year;

• 2,000,000 shares; and

• such other amount as may be determined by the Company’s Board of Directors or a committee thereof

The Company recorded stock-based compensation expense related to its ESPP of approximately $79,000 and $1,689,000 for the fiscal years ended June 30, 2011 and 2012. During the year ended June 30, 2012, the Company issued 148,938 shares of common stock under the ESPP. At June 30, 2012, a total of 351,062 shares of common stock were reserved for future issuance under the ESPP.

The following table presents the assumptions used in the Black-Scholes-Merton pricing model related to the ESPP during the year ended June 30, 2012:

Expected volatility	47–60	%
Expected life (in years, equal to the contractual term)	0.5–0.7
Risk free interest rate	0.1–0.2	%
Dividend yield	—

Stock-based Compensation Expense

Total stock-based compensation expense was classified as follows in the accompanying consolidated statement of operations (in thousands):

	Year Ended June 30,
	2010		2011		2012
Cost of revenue	$	9	$	31	$	216
Sales and marketing		738		1,803		6,089
Research and development		492		1,545		9,111
General and administrative		628		5,258		28,022
Total stock-based compensation	$	1,867	$	8,637	$	43,438

Warrants

During the year ended June 30, 2010, the Company granted to a business a fully vested warrant to purchase 12,500 shares of common stock for $1.96 per share in exchange for services rendered. The estimated fair value of the warrant of $11,000 was expensed in the year ended June 30, 2010 and was measured at the issuance date using the Black-Scholes-Merton option-pricing model with the following assumptions:

Expected volatility	49	%
Expected life (in years, equal to the contractual term)	5.0
Risk free interest rate	2.4	%
Dividend yield	—

In March 2011, the Company issued 12,500 shares of common stock pursuant to the exercise of this warrant.

In connection with the execution of the September 2008 loan and security agreement, the Company issued the financial institution a fully vested warrant to purchase 125,800 shares of Series A convertible preferred stock at $1.093 per share. The warrant may be exercised for cash or net settled at any time through September 2018. The number of shares to be issued upon settlement of the warrant is 125,800. In conjunction with the initial public offering of the Company’s common stock in June 2011, the warrant converted to a warrant to purchase 125,800 shares of common stock at $1.093 per share. In October 2011, the Company issued 121,839 shares of common stock related to the net exercise of this common stock warrant.

The FASB has issued accounting guidance on the classification of freestanding warrants and other similar instruments on shares that are redeemable (either puttable or mandatorily redeemable). The guidance requires liability classification for certain warrants issued that are exercisable into convertible preferred stock. Liability classification requires the warrants to be remeasured to their fair value at each reporting period. During the fiscal year 2010 and 2011, any changes in the fair value of the warrant liability were recorded in interest expense prior to converting to a warrant to purchase common stock. Upon conversion in June 2011, the liability was reclassified to additional-paid in capital. The Company utilized a Black-Scholes-Merton option pricing model in order to determine the fair value of the preferred stock warrant, including the consideration of a risk-free interest rate, expected term and expected volatility. Due to the initial public offering of the Company’s common stock and the conversion of all shares of preferred stock to shares of common stock, the Company no longer remeasures the warrant to fair value.

The following table presents the assumptions used in the Black-Scholes-Merton pricing model as of each date the warrant was revalued:

	June 30, 2010			June 30, 2011
Expected volatility		49	%		59	%
Expected term (in years)		8.3			7.26
Risk free interest rate		2.9	%		2.24	%
Expected dividends		—			—

Common Stock and Shares of Common Stock Reserved for Future Issuance

Shares of common stock reserved for future issuance were as follows (in thousands):

	June 30, 2011		June 30, 2012
Stock options outstanding		24,727,931		19,885,406
RSUs and RSAs		—		1,957,566
ESPP		500,000		351,062
Shares available for future grants		11,967,264		8,129,263
Warrant to purchase common stock		125,800		—
		37,320,995		30,323,297

Issuance of Common Stock

In February 2011, the Company issued an aggregate of 60,000 shares of common stock for cash to two members of its board of directors. The purchase price of these shares was $5.12 per share.

In June 2011, the Company completed the initial public offering of its common stock in which the Company issued and sold 12,600,607 shares.

In conjunction with the acquisition of IO Turbine in August 2011, the Company issued an aggregate of 1,633,315 shares of common stock to former IO Turbine stockholders.

In October 2011, the Company issued 121,839 shares of common stock related to the net exercise of a common stock warrant.

In November 2011, the Company completed a follow-on public offering of its common stock in which the Company issued and sold 3,000,000 shares.

Repurchase of Common Stock

In May 2011, the Company repurchased a total 165,000 shares of common stock from two of its stockholders, in separate transactions, for a total purchase price of $1,222,500. The terms and conditions of the individual stock repurchases, including the purchase price, were established independently between the two stockholders and a third party buyer unaffiliated with the Company. The Company exercised its pre-existing right of first refusal to which the shares were subject and repurchased the shares on the same terms and conditions to which the stockholders and third party buyer had agreed.

The terms of the repurchase transaction for 150,000 of such shares required the Company to pay additional consideration to one of the stockholders if a liquidity event occurred at any time prior to May 2, 2012 in which the price per share of the Company’s common stock was greater than $15.00. For this purpose, a liquidity event was defined as either a change of control or sale of substantially all of the assets of the Company or the initial public offering of common stock of the Company, or IPO. The amount of the additional per share consideration payable was equal to half the difference between the applicable liquidity event price per share and $15.00. The liquidity event price per share was the closing per share sale price as of the first trading day following the December 5, 2011 expiration date of the lock-up period described in the underwriting section of the Company’s Form S-1 registration statement. In accordance with the terms of the repurchase transaction, the Company paid $1,066,500 in additional consideration to the stockholder on December 9, 2011. As this transaction was settled with a cash payment and the amount of settlement was indexed to the Company’s common stock price per share on December 6, 2011, this transaction was accounted for as a derivative instrument in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities, and was recorded at fair value (approximately $1,137,000 and $0 as of June 30, 2011 and June 30, 2012, respectively) on the condensed consolidated balance sheets in accrued and other liabilities. The derivative agreement does not meet the hedge criteria and the Company recorded the change in fair value of the derivative of approximately $70,000 as other income in the condensed consolidated statement of operations for the year ended June 30, 2012.

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Number of Shares Subject to Outstanding Options
Number of Shares Subject to Outstanding Options, Beginning Balance	24,727,931	18,412,840	13,177,667
Number of Shares Subject to Outstanding Options, Granted	2,654,650	10,166,575	7,171,034
Number of Shares Subject to Outstanding Options, Assumed	264,792
Number of Shares Subject to Outstanding Options, Exercised	(7,128,528)	(2,541,909)	(620,462)
Number of Shares Subject to Outstanding Options, Canceled	(633,439)	(1,309,575)	(1,315,399)
Number of Shares Subject to Outstanding Options, Ending Balance	19,885,406	24,727,931	18,412,840
Weighted-Average Exercise Price Per Share
Weighted-Average Exercise Price Per Share, Beginning Balance	$ 2.31	$ 0.77	$ 0.55
Weighted-Average Exercise Price Per Share, Granted	$ 22.48	$ 4.67	$ 1.10
Weighted-Average Exercise Price Per Share, Assumed	$ 1.24
Weighted-Average Exercise Price Per Share, Exercised	$ 1.15	$ 0.61	$ 0.21
Weighted-Average Exercise Price Per Share, Canceled	$ 8.28	$ 2.30	$ 0.60
Weighted-Average Exercise Price Per Share, Ending Balance	$ 5.21	$ 2.31	$ 0.77
Share Based Compensation Arrangement By Share Based Payment Award Options Additional Disclosures
Weighted-Average Contractual Term (in Years), Outstanding as of June30, 2012	8 years
Aggregate Intrinsic Value(1), Outstanding as of June30, 2012	$ 311,722
Share Based Compensation Arrangement By Share Based Payment Award Options Vested And Expected To Vest
Number of Shares Subject to Outstanding Options, Vested and expected to vest as of June30, 2012	18,007,345
Weighted-Average Exercise Price Per Share, Vested and expected to vest as of June30, 2012	$ 4.91
Weighted-Average Contractual Term (in Years), Vested and expected to vest as of June30, 2012	7 years 10 months 24 days
Aggregate Intrinsic Value(1), Vested and expected to vest as of June30, 2012	287,742
Number of Shares Subject to Outstanding Options, Vested and exercisable as of June30, 2012	7,168,823
Weighted-Average Exercise Price Per Share, Vested and exercisable as of June30, 2012	$ 2.51
Weighted-Average Contractual Term (in Years), Vested and exercisable as of June30, 2012	7 years 6 months
Aggregate Intrinsic Value(1), Vested and exercisable as of June30, 2012	$ 131,797

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Long-Term Obligations

12 Months Ended

Jun. 30, 2012

Long-Term Obligations [Abstract]

Long-Term Obligations

6. Long-term Obligations

Loan and Security Agreement

In September 2010, the Company amended and restated its loan and security agreement (the “Revolving Line of Credit”) with a financial institution. The Revolving Line of Credit allows the Company to borrow up to a limit of $25,000,000. A sublimit of $6,000,000 for letters of credit, certain cash management services, and foreign exchange forward contracts applied until May 2012. The total balance of letters of credit outstanding at June 30, 2012 was $3,183,000, which reduces the amount the Company has available to borrow under the Revolving Line of Credit. Prior to May 2012, borrowings under the Revolving Line of Credit would have accrued interest at a floating per annum rate equal to one-half of one percentage point (0.50%) above the prime rate as published in the Wall Street Journal. An unused commitment fee equal to 0.375% of the difference between the $25,000,000 limit and the average daily balance of borrowings outstanding each quarter was due on the last day of such quarter. Prior to May 2012, the Revolving Line of Credit was secured by substantially all of the Company’s assets. The Company can make advances against the Revolving Line of Credit until its maturity date in September 2012, at which time all unpaid principal and interest shall be due and payable.

In August 2011, the Company entered into an amendment to the Revolving Line of Credit which provided for the consent of the financial institution with respect to the acquisition of IO Turbine and certain amendments to provide the Company with further flexibility to consummate mergers and acquisitions permitted under the Revolving Line of Credit.

In May 2012, the Company entered into a second amendment to the Revolving Line of Credit. Pursuant to this amendment, the pricing on revolving line of credit was amended such that borrowings under the revolving line of credit accrue interest at a per annum rate equal to, at the Company’s option, a floating per annum rate equal to the prime rate as published in the Wall Street Journal, or the LIBOR rate (based on 1, 2, 3 or 6-month interest periods) plus a margin equal to two percent (2.00%) per annum. This amendment further provides for, among other things, (i) the reduction of the quarterly unused commitment fee to an amount equal to one-quarter of one percent (0.25%) per annum of the difference between the $25,000,000 loan commitment and the average daily balance of borrowings outstanding on the last day of each quarter, (ii) the removal of the borrowing base formula and the sublimits restricting for the issuance of letters of credit, cash management services and foreign exchange forward contracts, and (iii) the release of the financial institution’s security interest in all of the Company’s assets.

Under the terms of the Revolving Line of Credit, the Company is required to maintain the following minimum financial covenants on a consolidated basis:

• A ratio of current assets to current liabilities plus, without duplication, any of the Company’s obligations to the financial institution, of at least 1.25 to 1.00.

• A tangible net worth of at least $25,000,000, plus 25% of the net proceeds the Company received from the sale or issuance of its equity or subordinated debt, such increase to be measured as of the last day of the quarter in which the Company received such proceeds.

As of June 30, 2012, no borrowings were outstanding under the Revolving Line of Credit and the Company was in compliance with all covenants.

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Income Taxes

12 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Income Taxes

7. Income Taxes

The domestic and foreign components of (loss) income before income taxes were as follows (in thousands):

	Year Ended June 30,
	2010			2011		2012
Domestic	$	(31,742	)	$	5,802	$	(5,924	)
Foreign		38			447		956
(Loss) income before income taxes	$	(31,704	)	$	6,249	$	(4,968	)

Income tax expense consisted of the following components (in thousands):

	Year Ended June 30,
	2010		2011		2012
Current:
Federal	$	—	$	—	$	—
State		3		428		213
Foreign		9		112		684
Total current tax expense		12		540		897
Deferred:
Federal		—		—		(2,782	)
State		—		—		—
Foreign		—		—		—
Total deferred tax benefit		—		—		(2,782	)
Tax expense attributable to employee stock plans		—		1,154		2,500
Total income tax expense	$	12	$	1,694	$	615

Income tax expense differed from the amounts computed by applying the statutory federal income tax rate of 34% to (loss) income before income taxes as a result of the following (in thousands):

	Year Ended June 30,
	2010			2011			2012
Federal tax (benefit) expense at statutory rate	$	(10,779	)	$	2,125		$	(1,689	)
State tax (benefit) expense, net of federal tax effect		(646	)		700			1,929
Rate differential on foreign income taxes		—			(40	)		359
Current year research tax credits		(50	)		(618	)		(1,366	)
Stock-based compensation		—			1,970			4,943
Change in valuation allowance		10,922			(3,306	)		(4,057	)
Other, net		565			863			496
Income tax expense	$	12		$	1,694		$	615

Significant components of the Company’s deferred income tax assets and liabilities were as follows (in thousands):

	June 30,
	2011			2012
Deferred tax assets:
Net operating loss carryforwards	$	14,415		$	2,662
Tax credit carryforwards		1,743			4,015
Accruals and allowances		6,474			13,626
Stock-based compensation		2,222			10,690
Total deferred tax assets		24,854			30,993
Valuation allowance		(22,212	)		(21,722	)
		2,642			9,271
Deferred tax liabilities:
Fixed asset basis differences		(2,642	)		(7,222	)
Intangible asset basis differences		—			(2,049	)
Deferred tax assets, net	$	—		$	—

The Company does not provide for U.S. income taxes on the undistributed earnings of foreign subsidiaries which are intended to be indefinitely reinvested in operations outside the U.S. As of June 30, 2012 the cumulative amount of earnings upon which U.S. income taxes have not been provided is approximately $999,000. The amount of unrecognized deferred tax liability related to these earnings is estimated to be approximately $117,000.

The Company received a tax benefit for the year ended June 30, 2012 of approximately $2,782,000 as a result of a valuation allowance reversal related to deferred tax liabilities generated from the acquisition of IO Turbine.

As of June 30, 2012, the Company had federal and state net operating loss carryforwards (“NOLs”) of $3,776,000 and $30,351,000, respectively. The federal and state NOLs begin to expire in 2027 and 2014, respectively, if not utilized. The Company had federal and state research and development tax credit carryforwards of $4,024,000 and $2,205,000 which begin to expire in 2027 and 2020, respectively, if not utilized. The Company also had a federal alternative minimum tax credit carryforward in the amount of $577,000.

The Company maintained a full valuation allowance at June 30, 2010, 2011, and 2012 due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets due to historical losses. The valuation allowance increased by $10,922,000 during the fiscal year ended June 30, 2010 and decreased by $3,306,000 and $4,057,000 during the fiscal years ended June 30, 2011 and 2012, respectively.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. If an ownership change has occurred in the past or occurs in the future, the utilization of net operation loss and credit carryforwards could be significantly reduced. A study was performed to determine if any ownership changes as defined by the Internal Revenue Code of 1986 have occurred since the Company’s inception. The study calculated the amount of annual limitation related to such ownership changes and projected the expected usage of both net operating loss and credit carryforwards, by year. Based on the results of this study, the Company expects to utilize the full net operating loss carryforward before expiration. Approximately $112,000 of federal R&D credits are expected to expire unused.

Effective July 1, 2009, the Company adopted the provisions of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes, which provides a financial statement recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Under FASB ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based solely on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has greater than 50% likelihood to be sustained upon ultimate settlement. As a result of the implementation of ASC 740-10, the Company reclassified $184,000 of its tax reserves to ASC 740-10 reserves. Since the Company has a full valuation allowance against its deferred tax assets, the adoption of ASC 740-10 did not result in a change to the financial statements. As of June 30, 2012, the Company’s unrecognized tax benefits were $2,709,000.

The Company recognizes accrued interest and penalties related to uncertain tax positions as part of income tax expense. As of June 30, 2012, the Company had $16,000 of accrued interest and penalties.

During the fiscal year ended June 30, 2012, the aggregate changes in the total gross amount of unrecognized tax benefits were as follows (in thousands):

Balance as of June 30, 2011	$	835
Decrease of unrecognized tax benefits taken in prior years		—
Increase in unrecognized tax benefits related to current year		1,786
Increase in unrecognized tax benefits related to prior year		88
Balance as of June 30, 2012	$	2,709

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $289,000.

The Company does not anticipate any significant change within fiscal year 2013 of its uncertain tax positions, and the Company does not anticipate any events which could cause a change to these uncertainties. The Company files tax returns in the U.S. on a Federal basis and in many U.S. state and foreign jurisdictions. The Company is open for examinations in its major tax jurisdictions for the 2008 and forward tax years. There are no ongoing income tax examinations by taxing authorities at this time.

In addition to the net operating loss carryforwards in the table above, as of June 30, 2012, the Company has Federal and state net operating loss carryforwards associated with stock option tax deductions greater than deductions claimed for book purposes of approximately $186,569,000 and $135,249,000, respectively. The Company also had $537,000 of state research and development tax credit carryforwards associated with stock option tax deductions greater than deductions claimed for book purposes. These benefits will be recorded directly to equity in the period they reduce current taxes payable.

For fiscal year ended June 30, 2012, income tax expense is related to certain state and foreign jurisdictions for which taxable income exists and for which net operating loss carry forwards are not available to be utilized. The Company paid income taxes in U.S. state and foreign jurisdictions of $12,000, $540,000, and $504,000 during the fiscal years ended June 30, 2010, 2011, and 2012, respectively.

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Commitments and Contingencies

12 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

9. Commitments and Contingencies

Letters of Credit

As of June 30, 2011 and 2012, the Company had a total of $3,349,000 and $3,183,000, respectively, in letters of credit outstanding with a financial institution. These outstanding letters of credit have been issued for purposes of securing the Company’s obligations under equipment and facility leases.

Leases

The Company leases certain assets under capital leases with initial lease terms of 36 months, imputed interest rates between 7.8% and 9.4%, and maturities at various dates through fiscal year 2012. These leases are recorded as capital leases due to each lease containing a bargain purchase option. Obligations under capital leases are included in accrued and other current liabilities and other liabilities in the accompanying consolidated balance sheets. As of June 30, 2012, the Company had no capital lease obligations. Property and equipment capitalized under capital lease obligations were as follows (in thousands):

	June 30,
	2011			2012
Computer equipment	$	177		$	—
Property and equipment		301			—
Furniture and fixtures		—			—
		478			—
Less accumulated depreciation and amortization		(275	)		—
	$	203		$	—

Future minimum lease payments under non-cancelable operating leases were as follows (in thousands):

	June 30, 2012
2013	$	5,625
2014		5,359
2015		5,679
2016		5,764
2017		5,830
Thereafter		26,137
Total	$	54,394

Operating lease payments primarily relate to the Company’s leases of office space with various expiration dates through 2021. The terms of these leases often include periods of free rent, or rent holidays, and increasing rental rates over time. The Company recognizes rent expense on a straight-line basis over the lease period and has accrued for rent expense recorded but not paid.

During fiscal years 2011 and 2012, the Company entered into new leases to expand its primary office facilities in Salt Lake City, Utah. The term of these leases includes an initial lease term that ends in September 2021, plus the option for the Company to extend the leases for an additional five years. These leases include rent holidays during the first year beginning with the lease effective date and increasing rental rates over the term of the leases. These leases also require the Company to provide the lessor letters of credit in aggregate of $3,000,000.

In January 2012, the Company entered into a lease agreement to lease approximately 79,000 square feet of office space located in San Jose, California (the “San Jose Facility”). The lease term is for 82 months and ends in March 2019. The lease provides for monthly payments of rent during the term as set forth in the lease. The lease also includes rent holidays during the first year beginning with the lease effective date and increasing rental rates over the term of the lease. The lease also provides that the Company must pay taxes and operating expenses in addition to the base rent. The lease allows for leasehold improvements up to $1,187,000 to be paid by the landlord. The Company has relocated employees currently based in the Silicon Valley area to the San Jose Facility.

The Company also leases certain equipment under operating leases that expire at various dates through 2016. These equipment leases typically include provisions that allow the Company at the end of the initial lease term to renew the lease, purchase the underlying equipment at the then fair market value, or return the equipment to the lessor.

Rent expense was $1,614,000, $4,034,000, and $5,428,000 for the fiscal years ended June 30, 2010, 2011, and 2012, respectively.

Purchase Commitments

In May 2012, the Company entered into a minimum purchase commitment for raw materials inventory that ends in June 2013 and provides for a termination fee based on a percentage of the amount of raw materials inventory not taken under the commitment. During the year ended June 30, 2012, the Company paid approximately $1,168,000 under this commitment. As of June 30, 2012, approximately $35,794,000 remains outstanding under this commitment.

Indemnification

The Company has agreed to indemnify its officers and directors for certain events or occurrences, while the officer or director is or was serving at the Company’s request in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that provides corporate reimbursement coverage that limits its exposure and enables it to recover a portion of any future amounts paid. The Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements since these obligations are not capped but are conditional to the unique facts and circumstances involved. Accordingly, the Company has no liabilities recorded for these agreements as of June 30, 2011 and 2012.

Many of the Company’s agreements with channel partners and customers generally include certain provisions for indemnifying the channel partners and customers against liabilities if the Company’s products infringe a third party’s intellectual property rights. To date, the Company has not incurred any material costs as a result of such indemnification provisions and has not accrued any liabilities related to such obligations in the consolidated financial statements.

Employee Agreements

The Company has various agreements with selected employees pursuant to which if their employment is terminated by the Company without cause or by the employees for good reason, or following a change of control of the Company, the employees are entitled to receive certain benefits, including severance payments, accelerated vesting of stock and stock options, and certain insurance benefits.

Legal Matters

The Company is subject to legal proceedings and claims arising in the ordinary course of business, including claims of alleged infringement of third-party intellectual property rights. With respect to certain of these matters, the Company’s third-party suppliers have agreed to indemnify and defend the Company.

On September 7, 2011, Solid State Storage Solutions, Inc. filed a lawsuit in U.S. District Court for the Eastern District of Texas against the Company and eight other companies. The complaint alleges that the Company’s products infringe U.S. Patent Nos. 6,701,471; 7,234,087; 7,721,165; 6,370,059; 7,366,016; 7,746,697; 7,616,485; 6,341,085; 6,567,334; 6,347,051; 7,064,995; and 7,327,624. The complaint seeks both damages and a permanent injunction against the Company. The Company has limited information about the specific infringement allegations, but based on its preliminary investigation of the patents identified in the complaint, the Company does not believe that its products infringe any valid or enforceable claim of these patents. The Court has set a schedule calling for a patent claim construction hearing on January 9, 2013, and a trial commencing on July 1, 2013.

No accrual has been recorded as of June 30, 2012, as the outcome of these legal matters is currently not determinable. However, litigation is inherently unpredictable and an unfavorable resolution of any of these matters could materially affect the Company’s consolidated financial position, cash flows, or results of operations. All legal costs associated with litigation are expensed as incurred.

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details 4) (Restricted Stock Awards and Restricted Stock Units [Member], USD $)	12 Months Ended
	Jun. 30, 2012
Restricted Stock Awards and Restricted Stock Units [Member]
Activity related to Restricted Stock Units and Restricted Stock Awards
Unvested RSUs and RSAs at June 30, 2012
Weighted Average Grant Date Fair Value, Beginning Value
Granted	1,807,503
Weighted Average Grant Date Fair Value, Granted	$ 23.71
Number of shares assumed in connection with the acquisition of IO Turbine	916,202
Weighted Average Grant Date Fair Value, Assumed in connection with the acquisition of IO Turbine	$ 28.40
Vested	(211,996)
Weighted Average Grant Date Fair Value, Vested	$ 28.54
Accelerated vesting in connection with the acquisition of IO Turbine	(502,514)
Weighted Average Grant Date Fair Value, Accelerated Vesting in connection with the acquisition of IO Turbine	$ 28.40
Forfeited	(12,779)
Weighted Average Grant Date Fair Value, Forfeited	$ 28.40
Cancelled	(38,850)
Weighted Average Grant Date Fair Value, Cancelled	$ 22.41
Unvested RSUs and RSAs at June 30, 2012	1,957,566
Weighted Average Grant Date Fair Value, Ending Value	$ 24.17

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details 6)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Black-Scholes-Merton pricing model
Expected life (in years, equal to the contractual term)	5 years 2 months 12 days	3 years 2 months 12 days
Dividend yield
ESPP [Member]
Black-Scholes-Merton pricing model
Dividend yield
ESPP [Member] | Maximum [Member]
Black-Scholes-Merton pricing model
Expected volatility	60.00%
Expected life (in years, equal to the contractual term)	8 months 12 days
Risk-free interest rate	0.20%
ESPP [Member] | Minimum [Member]
Black-Scholes-Merton pricing model
Expected volatility	47.00%
Expected life (in years, equal to the contractual term)	6 months
Risk-free interest rate	0.10%

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details 3)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Black-Scholes-Merton pricing model
Expected volatility, Minimum	59.00%	48.00%
Expected volatility, Maximum	60.00%	60.00%	49.00%
Expected term	5 years 2 months 12 days	3 years 2 months 12 days
Risk-free interest rate, Minimum	1.00%	0.60%	2.40%
Risk-free interest rate, Maximum	2.00%	2.70%	2.90%
Expected dividends
Non-employee stock options [Member]
Black-Scholes-Merton pricing model
Expected volatility, Minimum	59.00%	48.00%
Expected volatility, Maximum	62.00%	63.00%
Expected volatility			49.00%
Risk-free interest rate, Minimum	1.60%	2.10%	2.90%
Risk-free interest rate, Maximum	2.40%	3.40%	3.60%
Expected dividends
Non-employee stock options [Member] | Maximum [Member]
Black-Scholes-Merton pricing model
Expected term	9 years 8 months 12 days	10 years	10 years
Non-employee stock options [Member] | Minimum [Member]
Black-Scholes-Merton pricing model
Expected term	6 years 3 months 18 days	7 years 1 month 6 days	7 years 9 months 18 days

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Description of Business and Summary of Significant Accounting Policies (Details 4) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Changes in the product warranty liability
Product warranty liability, beginning balance	$ 666	$ 153	$ 24
Warranty costs accrued	4,930	1,280	225
Warranty claims	(2,771)	(767)	(96)
Product warranty liability, ending balance	$ 2,825	$ 666	$ 153

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Goodwill and Intangible Assets (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012
Company's intangible assets and related accumulated amortization
Net	$ 8,164
Developed technology [Member]
Company's intangible assets and related accumulated amortization
Weighted-Average Useful Life	4 years
Cost	10,500
Accumulated Amortization	(2,336)
Net	$ 8,164

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Description of Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Jun. 30, 2012

Description of Business and Summary of Significant Accounting Policies [Abstract]

Customer accounting revenue

	Year Ended June 30,
	2010			2011			2012
Customer A		10	%		36	%		30	%
Customer B		*			24	%		25	%
Customer C		10	%		14	%		17	%
Customer D		13	%		*			*

* Indicates less than 10% of revenue for the period.

Customer accounting accounts receivable

	Year Ended June 30,
	2011			2012
Customer A		11	%		30	%
Customer B		66	%		18	%
Customer C		*			19	%
Customer D		*			10	%

* Indicates less than 10% of total accounts receivable, net.

Changes in the Company's sales allowance

	Year Ended June 30,
	2010			2011			2012
Balance at beginning of period	$	433		$	912		$	2,064
Additions		3,908			7,942			5,418
Returns		(3,429	)		(6,790	)		(6,529	)
Balance at end of period	$	912		$	2,064		$	953

Estimated useful life of asset

Computer equipment	3 years
Software	3 years
Property and equipment	3 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of useful life or remaining lease term

Changes in the product warranty liability

	Year Ended June 30,
	2010			2011			2012
Balance at beginning of period	$	24		$	153		$	666
Warranty costs accrued		225			1,280			4,930
Warranty claims		(96	)		(767	)		(2,771	)
Balance at end of period	$	153		$	666		$	2,825

Reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss (income) per share

	Year Ended June 30,
	2010			2011			2012
Numerator:
Net (loss) income attributable to common stockholders	$	(32,464	)	$	4,555		$	(5,583	)
Denominator:
Weighted-average common shares outstanding		13,120			17,247			87,933
Less weighted-average common shares outstanding subject to repurchase		(2,108	)		(485	)		(259	)
Weighted-average shares, basic		11,012			16,762			87,674
Dilution due to stock options and common stock warrant		—			64,892			—
Weighted-average shares, diluted		11,012			81,654			87,674

Weighted average common stock equivalents excluded from the calculation of diluted net (loss) income per share

	Year Ended June 30,
	2010		2011		2012
Convertible preferred stock		43,261		—		—
Stock options		1,782		8,846		18,452
Common stock subject to repurchase		1,214		—		134
Warrant – preferred Series A		—		—		—
Warrant – common		—		—		39
Total		46,257		8,846		18,625

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Income Taxes (Tables)

12 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Domestic and foreign components of (loss) income before income taxes

	Year Ended June 30,
	2010			2011		2012
Domestic	$	(31,742	)	$	5,802	$	(5,924	)
Foreign		38			447		956
(Loss) income before income taxes	$	(31,704	)	$	6,249	$	(4,968	)

Components of Income Tax Expense

	Year Ended June 30,
	2010		2011		2012
Current:
Federal	$	—	$	—	$	—
State		3		428		213
Foreign		9		112		684
Total current tax expense		12		540		897
Deferred:
Federal		—		—		(2,782	)
State		—		—		—
Foreign		—		—		—
Total deferred tax benefit		—		—		(2,782	)
Tax expense attributable to employee stock plans		—		1,154		2,500
Total income tax expense	$	12	$	1,694	$	615

Income tax expense differed from the amounts computed by applying the statutory federal income tax rate

	Year Ended June 30,
	2010			2011			2012
Federal tax (benefit) expense at statutory rate	$	(10,779	)	$	2,125		$	(1,689	)
State tax (benefit) expense, net of federal tax effect		(646	)		700			1,929
Rate differential on foreign income taxes		—			(40	)		359
Current year research tax credits		(50	)		(618	)		(1,366	)
Stock-based compensation		—			1,970			4,943
Change in valuation allowance		10,922			(3,306	)		(4,057	)
Other, net		565			863			496
Income tax expense	$	12		$	1,694		$	615

Significant components of the Company's deferred income tax assets and liabilities

	June 30,
	2011			2012
Deferred tax assets:
Net operating loss carryforwards	$	14,415		$	2,662
Tax credit carryforwards		1,743			4,015
Accruals and allowances		6,474			13,626
Stock-based compensation		2,222			10,690
Total deferred tax assets		24,854			30,993
Valuation allowance		(22,212	)		(21,722	)
		2,642			9,271
Deferred tax liabilities:
Fixed asset basis differences		(2,642	)		(7,222	)
Intangible asset basis differences		—			(2,049	)
Deferred tax assets, net	$	—		$	—

Aggregate changes in the total gross amount of unrecognized tax benefits

Balance as of June 30, 2011	$	835
Decrease of unrecognized tax benefits taken in prior years		—
Increase in unrecognized tax benefits related to current year		1,786
Increase in unrecognized tax benefits related to prior year		88
Balance as of June 30, 2012	$	2,709

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Acquisitions (Details Textual) (USD $)	1 Months Ended	12 Months Ended
	Mar. 31, 2008	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Aug. 11, 2011
Acquisitions (Textual) [Abstract]
Fair value of the aggregate purchase price		$ 65,568,000
Stock-based compensation expense related to restricted stock awards and stock options		48,237,000
Common stock shares			1,250,000	1,666,667
Expected term		5 years 2 months 12 days	3 years 2 months 12 days
Operating expenses		205,600,000	103,492,000	51,746,000
Stock-based compensation	1,790,000	42,645,000	8,637,000	1,867,000
Acquisitions (Additional Textual) [Abstract]
Cash deposited in escrow					3,628,000
Escrow shares of common stock					278,974
Non-recurring expense recorded as stock-based compensation expense		3,795,000
IO Turbine [Member]
Acquisitions (Textual) [Abstract]
Acquisition of Stock					100.00%
Fair value of the aggregate purchase price					65,568,000
Cash consisted in fair value of aggregate purchase price		1,605,000			21,199,000
Common stock value					43,485,000
Common stock per share					$ 28.40
Pre-acquisition service					884,000
Stock-based compensation expense related to restricted stock awards and stock options		26,421,000
Expensed immediately recognized in connection with the acceleration of vesting of certain restricted stock awards		3,795,000
Common stock shares		414,000
Estimated cash to be paid		4,631,000
Expected volatility		60.00%
Risk-free interest rate		2.00%
Operating expenses		20,306,000
Stock-based compensation		12,282,000
Acquisition related expenses		1,326,000
Prepaid royalty fee		$ 450,000
IO Turbine [Member] | Maximum [Member]
Acquisitions (Textual) [Abstract]
Expected term		5 years 10 months 24 days
IO Turbine [Member] | Minimum [Member]
Acquisitions (Textual) [Abstract]
Expected term		5 years 2 months 12 days

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Balance Sheet Components (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Accrued and other current liabilities
Accrued compensation	$ 19,034	$ 10,118
Common stock repurchase derivative liability		1,137
Accrued warranty expense	2,825	666
Accrued other liabilities	7,328	3,122
Accrued and other current liabilities	$ 29,187	$ 15,043

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Consolidated Statements of Convertible Preferred Stock, Stockholders' (Deficit) Equity and Comprehensive (Loss) Income (USD $)	Total	Convertible preferred stock	Convertible preferred stock Series B	Convertible preferred stock Series C	Common Stock	Additional Paid-in Capital	Additional Paid-in Capital Series B	Accumulated Other Comprehensive Income	Accumulated Deficit	Comprehensive (Loss) Income
Beginning balance at Jun. 30, 2009	$ (35,647,000)	$ 56,796,000			$ 3,000	$ 1,486,000			$ (37,136,000)
Beginning balance, shares at Jun. 30, 2009		39,380,352			12,990,019
Issuance of common stock, net of issuance costs			4,107,000	39,658,000
Issuance of common stock, shares			2,075,000	10,274,444
Exercise of stock options, value	133,000					133,000
Exercise of stock options, shares	620,462				620,462
Exercise of common stock warrant, value	11,000					11,000
Conversion of convertible notes into Series C convertible preferred stock, value				5,038,000
Conversion of convertible notes into Series C convertible preferred stock, shares				1,302,237
Repurchase of common stock, value	(748,000)		(1,086,000)				(748,000)
Repurchase of common stock, shares			(542,961)
Stock-based compensation	1,856,000					1,856,000
Foreign currency translation adjustment	(2,000)							(2,000)		(2,000)
Reclassification of unrealized gain into net income on available for sale securities	4,000							4,000		4,000
Net (loss) income	(31,716,000)								(31,716,000)	(31,716,000)
Ending balance at Jun. 30, 2010	(66,109,000)	104,513,000			3,000	2,738,000		2,000	(68,852,000)	(31,714,000)
Ending balance, shares at Jun. 30, 2010		52,489,072			13,610,481
Issuance of common stock, net of issuance costs	219,170,000				2,000	219,168,000
Issuance of common stock, shares					12,660,607
Exercise of stock options, value	1,546,000				1,000	1,545,000
Exercise of stock options, shares	2,541,909				2,541,909
Exercise of common stock warrant, value	25,000					25,000
Exercise of common stock warrant, shares					12,500
Conversion of convertible preferred stock into common stock, value	104,513,000	(104,513,000)			10,000	104,503,000
Conversion of convertible preferred stock into common stock, shares		(52,489,072)			52,489,072
Conversion of convertible notes into Series C convertible preferred stock, shares	52,489,072
Reclassification of convertible preferred stock warrant liability upon conversion to common stock warrant	2,280,000					2,280,000
Repurchase of common stock, value	(1,340,000)					(661,000)			(679,000)
Repurchase of common stock, shares					(165,000)
Stock-based compensation	8,637,000					8,637,000
Income tax benefit from stock option exercises	1,154,000					1,154,000
Foreign currency translation adjustment	17,000							17,000		17,000
Reclassification of unrealized gain into net income on available for sale securities	(4,000)							(4,000)		(4,000)
Net (loss) income	4,555,000								4,555,000	4,555,000
Ending balance at Jun. 30, 2011	274,444,000				16,000	339,389,000		15,000	(64,976,000)	4,568,000
Ending balance, shares at Jun. 30, 2011					81,149,569
Issuance of common stock, net of issuance costs	93,977,000				1,000	93,976,000
Issuance of common stock, shares					3,000,000
Exercise of stock options, value	8,210,000				1,000	8,209,000
Exercise of stock options, shares	7,128,528				7,128,528
Issuance of restricted stock awards and restricted stock units, net of repurchases, shares					45,390
Issuance of restricted stock awards and restricted stock units, net of repurchases	(44,000)					(44,000)
Purchases under employee stock purchase plan, shares					148,938
Purchases under employee stock purchase plan	2,405,000					2,405,000
Exercise of common stock warrant, shares					121,839
Issuance of common stock to former IO Turbine shareholders, shares					1,633,315
Issuance of common stock to former IO Turbine shareholders, amount	43,486,000				1,000	43,485,000
Estimated fair value of stock options assumed in connection with business acquisition	884,000					884,000
Vesting of common shares subject to repurchase, shares					163,836
Vesting of common shares subject to repurchase	17,000					17,000
Stock-based compensation	40,657,000					40,657,000
Income tax benefit from stock option exercises	2,500,000					2,500,000
Foreign currency translation adjustment	(30,000)							(30,000)		(30,000)
Net (loss) income	(5,583,000)								(5,583,000)	(5,583,000)
Ending balance at Jun. 30, 2012	$ 460,923,000				$ 19,000	$ 531,478,000		$ (15,000)	$ (70,559,000)	$ (5,613,000)
Ending balance, shares at Jun. 30, 2012					93,391,415

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Fair Value Measurements

12 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

3. Fair Value Measurements

Assets and Common Stock Repurchase Derivative Liability Measured and Recorded at Fair Value on a Recurring Basis

The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds and a common stock repurchase derivative liability. The following three levels of inputs are used to measure the fair value of financial instruments:

Level 1:	Quoted prices in active markets for identical assets or liabilities. The Company classifies its money market funds as Level 1 instruments as they are traded in active markets with sufficient volume and frequency of transactions.
Level 2:	Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
Level 3:	Unobservable inputs are used when little or no market data is available. The Company utilized a Monte Carlo model to determine the fair value of the common stock repurchase derivative liability. Certain inputs used in the models are unobservable. The fair values could change significantly based on future market conditions.

The fair value of the Company’s money market funds and the common stock repurchase derivative liability was as follows (in thousands):

	Fair Value Measurements at June 30, 2011 Using
Description	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	215,809	$	—	$	—	$	215,809
Accrued and other liabilities:
Common stock repurchase derivative liability	$	—	$	—	$	1,137	$	1,137
	Fair Value Measurements at June 30, 2012 Using
Description	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	266,944	$	—	$	—	$	266,944

The following table summarizes the change in the value of the common stock repurchase derivative liability (in thousands):

	Year Ended June 30,
	2011		2012
Balance at beginning of period	$	—	$	1,137
Fair value at transaction date		118		—
Change in fair value included in other (expense) income, net		1,019		(70	)
Repurchases of common stock		—		(1,067	)
Balance at end of period	$	1,137	$	—

Assets Measured and Recorded at Fair Value on a Non-recurring Basis

Non-financial long-lived assets such as property,equipment, and intangible assets including goodwill are recorded at their historical cost; however, if there is an impairment, the assets are measured and recorded at fair value. Certain furniture and fixtures were measured at fair value during the year ended June 30, 2011 due to circumstances that indicated that the carrying value of these assets was not recoverable, resulting in an impairment charge of $46,000. This impairment charge is included in operating expenses in the consolidated statements of operations. The fair value of the furniture and fixtures on the measurement date was $170,000 and was measured using level 2 inputs. The fair value was based on a quoted price in a market that is not active.

Fair Value of Other Financial Instruments

The carrying amounts of the Company’s accounts receivable, accounts payable, accrued liabilities, notes payable, and other liabilities approximate their fair values due to their short maturities.

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Income Taxes (Details 4) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012
Aggregate changes in the total gross amount of unrecognized tax benefits
Balance as of June 30, 2011	$ 835
Decrease of unrecognized tax benefits taken in prior years
Increase in unrecognized tax benefits related to current year	1,786
Increase in unrecognized tax benefits related to prior year	88
Balance as of June 30, 2012	$ 2,709

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Details 9)	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Shares of common stock reserved for future issuance
Stock options outstanding	19,885,406	24,727,931	18,412,840	13,177,667
RSU and RSAs	1,957,566
ESPP	351,062	500,000
Shares available for future grants	8,129,263	11,967,264
Warrant to purchase common stock		125,800
Common Stock, Capital Shares Reserved for Future Issuance	30,323,297	37,320,995

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Convertible Preferred Stock and Stockholders' (Deficit) Equity (Tables)

12 Months Ended

Jun. 30, 2012

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock option activity

	Number of Shares Subject to Outstanding Options			Weighted- Average Exercise Price Per Share		Weighted- Average Contractual Term (in Years)		Aggregate Intrinsic Value(1)
	(in thousands)
Outstanding as of June 30, 2009		13,177,667		$	0.55
Granted		7,171,034			1.10
Exercised		(620,462	)		0.21
Canceled		(1,315,399	)		0.60
Outstanding as of June 30, 2010		18,412,840			0.77
Granted		10,166,575			4.67
Exercised		(2,541,909	)		0.61
Canceled		(1,309,575	)		2.30
Outstanding as of June 30, 2011		24,727,931			2.31
Granted		2,654,650			22.48
Assumed		264,792			1.24
Exercised		(7,128,528	)		1.15
Canceled		(633,439	)		8.28
Outstanding as of June 30, 2012		19,885,406		$	5.21		8.0	$	311,722
Vested and expected to vest as of June 30, 2012		18,007,345		$	4.91		7.9	$	287,742
Vested and exercisable as of June 30, 2012		7,168,823		$	2.51		7.5	$	131,797

(1) The aggregate intrinsic value is equal to the difference between the exercise price of the underlying stock option awards and the estimated fair value of the Company’s common stock as of June 30, 2012.

Per share information related to stock options granted

	Year Ended June 30,
	2010		2011		2012
Weighted-average grant date fair value — granted	$	0.55	$	3.22	$	12.38
Weighted-average grant date fair value — assumed in connection with the acquisition of IO Turbine		—		—		27.31
Weighted-average grant date fair value — forfeited		0.30		2.33		6.84

Assumptions used in the Black-Scholes-Merton pricing model related to employee stock options

	Year Ended June 30,
	2010	2011	2012
Expected volatility	49%	48-60%	59-60%
Expected term (in years)	6.1	3.2-7.0	5.2-6.6
Risk-free interest rate	2.4-2.9%	0.6-2.7%	1.0-2.0%
Expected dividends	—	—	—

Activity related to Restricted Stock Units and Restricted Stock Awards

	Number of Shares			Weighted- Average Grant-Date Fair Value
Unvested RSUs and RSAs at June 30, 2011		—		$	—
Granted		1,807,503			23.71
Assumed in connection with the acquisition of IO Turbine		916,202			28.40
Vested		(211,996	)		28.54
Accelerated vesting in connection with the acquisition of IO Turbine		(502,514	)		28.40
Forfeited		(12,779	)		28.40
Cancelled		(38,850	)		22.41
Unvested RSUs and RSAs at June 30, 2012		1,957,566			24.17

Total stock-based compensation expense

	Year Ended June 30,
	2010		2011		2012
Cost of revenue	$	9	$	31	$	216
Sales and marketing		738		1,803		6,089
Research and development		492		1,545		9,111
General and administrative		628		5,258		28,022
Total stock-based compensation	$	1,867	$	8,637	$	43,438

Activity related to Common Stock Subject to Repurchase

	Number of Shares			Weighted-Average Fair Value
Unvested shares of common stock as of June 30, 2009		2,916,667		$	0.36
Vested		(1,666,667	)		0.36
Unvested as of June 30, 2010		1,250,000			0.36
Vested		(1,250,000	)		0.36
Unvested as of June 30, 2011		—			0.36
Vested		—
Unvested as of June 30, 2012		—

Shares of common stock reserved for future issuance

	June 30, 2011		June 30, 2012
Stock options outstanding		24,727,931		19,885,406
RSUs and RSAs		—		1,957,566
ESPP		500,000		351,062
Shares available for future grants		11,967,264		8,129,263
Warrant to purchase common stock		125,800		—
		37,320,995		30,323,297

Non-employee stock options [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Assumptions used in the Black-Scholes-Merton pricing model related to non-employee stock options

	Year Ended June 30,
	2010			2011			2012
Expected volatility		49	%		48-63	%		59-62	%
Expected term (in years)		7.8-10.0			7.1-10.0			6.3-9.7
Risk-free interest rate		2.9-3.6	%		2.1-3.4	%		1.6-2.4	%
Expected dividends		—			—			—

ESPP [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Assumptions used in the Black-Scholes-Merton pricing model related to non-employee stock options

Expected volatility	47–60	%
Expected life (in years, equal to the contractual term)	0.5–0.7
Risk free interest rate	0.1–0.2	%
Dividend yield	—

Warrant [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Assumptions used in the Black-Scholes-Merton pricing model related to non-employee stock options

Expected volatility	49	%
Expected life (in years, equal to the contractual term)	5.0
Risk free interest rate	2.4	%
Dividend yield	—

Revaluation of Warrant [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Assumptions used in the Black-Scholes-Merton pricing model related to non-employee stock options

	June 30, 2010			June 30, 2011
Expected volatility		49	%		59	%
Expected term (in years)		8.3			7.26
Risk free interest rate		2.9	%		2.24	%
Expected dividends		—			—

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Related Party Transactions (Details) (USD $)	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010 Convertible preferred stock [Member]	Jun. 30, 2010 Convertible preferred stock [Member] Series A [Member] NEA 12 [Member]	Jun. 30, 2010 Convertible preferred stock [Member] Series B NEA 12 [Member]	Jun. 30, 2010 Convertible preferred stock [Member] Series B Lightspeed VIII [Member]	Jun. 30, 2010 Convertible preferred stock [Member] Series C NEA 12 [Member]	Jun. 30, 2010 Convertible preferred stock [Member] Series C Lightspeed VIII [Member]
Purchases of convertible preferred stock by related parties
Preferred stock, shares issued	0	0	52,489,072	8,647,775	9,127,294	7,500,000	2,843,112	1,292,324
Price Per Share				$ 1.093		$ 2.000	$ 3.869	$ 3.869
Total Purchase Price				$ 9,451,996	$ 18,292,776	$ 15,000,000	$ 11,000,000	$ 5,000,002

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Balance Sheet Components (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Cash and cash equivalents:
Cash and cash equivalents, Amortized Cost	$ 321,239	$ 219,604	$ 9,219	$ 16,352
Cash and cash equivalents, Unrealized Gains
Cash and cash equivalents, Unrealized Losses
Cash and cash equivalents, Estimated Fair Value	321,239	219,604
Cash [Member]
Cash and cash equivalents:
Cash and cash equivalents, Amortized Cost	54,295	3,795
Cash and cash equivalents, Unrealized Gains
Cash and cash equivalents, Unrealized Losses
Cash and cash equivalents, Estimated Fair Value	54,295	3,795
Money market funds [Member]
Cash and cash equivalents:
Cash and cash equivalents, Amortized Cost	266,944	215,809
Cash and cash equivalents, Unrealized Gains
Cash and cash equivalents, Unrealized Losses
Cash and cash equivalents, Estimated Fair Value	$ 266,944	$ 215,809

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Description of Business and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jun. 30, 2012

Description of Business and Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

Segment and Geographic Information

Segment and Geographic Information

Operating segments are defined in accounting standards as components of an enterprise about which separate financial information is available and is regularly evaluated by management, namely the chief operating decision maker of an organization, in order to make operating and resource allocation decisions. The Company has concluded it operates in one business segment, which is the development, marketing, and sale of storage memory platforms. Substantially all of the Company’s revenue for all periods presented in the accompanying consolidated statements of operations has been from sales of the ioDrive product line and related customer support services. The Company’s headquarters and most of its operations are located in the United States; however, it conducts sales activities through sales offices in Europe and Asia. Revenue recognized from sales with a ship-to location outside of the United States was 24%, 18%, and 26% for fiscal years 2010, 2011, and 2012, respectively. No country outside of the United States accounted for 10% or greater of revenue for all periods presented. Long-lived assets located outside of the United States were not material for all periods for which a consolidated balance sheet is presented.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Company evaluates its significant estimates, including those related to revenue recognition, sales returns, accounting for business combinations and impairment of long-lived and intangible assets including goodwill, determination of fair value of stock options, valuation of inventory, product warranty, and income taxes. The Company also uses estimates in determining the useful lives of property and equipment and intangible assets and provisions for doubtful accounts. Actual results could differ from those estimates.

Reclassification

Reclassification

Certain amounts previously reported have been reclassified to conform with the fiscal year 2012 presentation.

Public Offerings

Public Offerings

In June 2011, the Company completed an initial public offering (“IPO”), of its common stock, in which the Company issued and sold 12,600,607 shares, including 1,845,000 shares sold pursuant to the full exercise by the underwriters of their over-allotment option, at an issuance price of $19.00 per share. After deducting underwriting discounts and commissions and approximately $3,789,000 in offering costs, the net proceeds received by the Company were approximately $218,864,000.

In November 2011, the Company completed a follow-on public offering of its common stock in which the Company issued and sold 3,000,000 shares at an issuance price of $33.00 per share. After deducting underwriting discounts and commissions and approximately $1,063,000 in offering costs, the net proceeds received by the Company were approximately $93,977,000.

Revenue Recognition

Revenue Recognition

The Company derives its revenue primarily from sales of products and support services and enters into multiple-element arrangements in the normal course of business with its customers and channel partners. In all arrangements, the Company does not recognize revenue until it can determine that persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collection is deemed to be reasonably assured. In making these judgments, the Company evaluates these criteria as follows:

• Evidence of an Arrangement — The Company considers a non-cancelable agreement or purchase order signed by a customer to be persuasive evidence of an arrangement.

• Delivery has Occurred — The Company considers delivery to have occurred when product has been delivered to the customer based on applicable shipping terms, and no post-delivery obligations exist other than ongoing support obligations under sold support services. In instances where customer acceptance is required, delivery is deemed to have occurred when customer acceptance has been achieved.

• Fees are Fixed or Determinable — The Company considers the fee to be fixed or determinable unless the fee is subject to refund or adjustment or is not payable within normal payment terms. If the fee is subject to refund or adjustment, the Company recognizes revenue net of estimated returns or if a reasonable estimate cannot be made, when the right to a refund or adjustment lapses.

• Collection is Reasonably Assured — The Company conducts a credit worthiness assessment on all of its customers. Generally the Company does not require collateral. The Company continues to evaluate collectability by reviewing its customers’ credit worthiness including a review of past transaction history. Payment terms are typically 30 to 75 days from the date of invoice. Collection is reasonably assured if, based upon the Company’s evaluation, it expects that the customer will be able to pay amounts under the arrangement as payments become due. If the Company determines that collection is not reasonably assured, revenue is deferred and recognized upon the receipt of cash.

Some of the Company’s revenue arrangements are multiple-element arrangements because they are comprised of sales of both products and support services. For multiple-element arrangements, the Company evaluates whether each deliverable could be accounted for as separate units of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value, and for an arrangement where a general right of return exists relative to a delivered item, delivery, or performance of the undelivered item must be considered probable and substantially in the Company’s control. Stand-alone value exists if the product or service is sold separately by the Company or by another vendor or could be resold by the customer. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition.

The Company’s multiple-element arrangements typically include two elements: ioDrive hardware, which includes embedded VSL virtualization software, and support services. The Company has determined that its ioDrive hardware and the embedded VSL virtualization software are considered a single unit of accounting because the hardware and software individually do not have standalone value and are never sold separately. Support services are considered a separate unit of accounting as they are sold separately and have standalone value.

The Company allocates arrangement consideration at the inception of an arrangement to all deliverables based on the relative selling price method in accordance with the selling price hierarchy, which includes: (1) vendor-specific objective evidence, or VSOE, if available; (2) third-party evidence, or TPE, if vendor-specific objective evidence is not available; and (3) best estimate of selling price, or BESP, if neither VSOE nor TPE is available.

• VSOE — The Company determines VSOE based on its historical pricing and discounting practices for the specific product or support service when sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices for products or support services fall within a reasonably narrow pricing range. The Company has historically priced certain of its ioDrive products within a narrow range and has used VSOE to allocate the selling price of deliverables for these specific product sales.

• TPE — When VSOE cannot be established for deliverables in multiple element arrangements, the Company applies judgment with respect to whether it can establish selling price based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, the Company’s products differ from those of its peers such that the comparable pricing of support services with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine what similar competitor services’ selling prices are on a stand-alone basis. As a result, the Company has not been able to establish selling price based on TPE.

• BESP — When the Company is unable to establish selling price using VSOE or TPE, it uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which it would transact a sale if the product or support service was sold on a stand-alone basis. The Company determines BESP for deliverables by considering multiple factors including, but not limited to, prices it charges for similar offerings, sales volume, geographies, market conditions, competitive landscape, and pricing practices.

The Company’s agreements with certain customers, including certain OEMs and other channel partners, contain provisions for sales returns, price protection, and rebates in limited circumstances. In limited circumstances and on an infrequent basis, even if the Company is not obligated to accept returned products, the Company may determine it is in its best interest to accept returns in order to maintain good relationships with its customers. The Company recognizes revenue net of the effects of these estimated obligations at the time revenue is recorded.

The Company estimates product returns based upon its periodic analysis of historical returns as a percentage of revenue as well as known future returns. The Company periodically assesses the accuracy of its historical estimates and to date the actual results have been reasonably consistent with its estimates. While the Company believes it has sufficient experience and knowledge of the market and customer buying patterns to reasonably estimate such returns, actual market conditions or customer behavior could differ from its expectations and as a result, its actual results could change materially.

The Company’s price protection obligations with certain OEMs and other channel partners require it to notify them of any decreases in pricing and to provide them with a refund or credit for any units of the Company’s product that they have on hand as of the date of the pricing change. Historically, most of the Company’s sales to its OEMs and other channel partners have an identified end-user at the time it ships its products and thus the amount of inventory carried by its OEMs and other channel partners at any given time is limited. To date, the Company has not issued refunds or credits to its OEMs and other channel partners for price protection.

Certain of the Company’s contracts allow for rebates that are based on a fixed percentage of its sales to the customer or sales to the end-user or a fixed dollar amount per unit. The Company recognizes the amount of the rebates as a reduction of revenues when the underlying revenue is recognized.

Deferred revenue primarily represents customer billings in excess of revenue recognized, primarily for support services. Support services are typically billed in advance on an annual basis or at the inception of a multiple year support contract and revenue is recognized ratably over the support period of one to five years.

The Company also sells stand-alone software products. During the years ended June 30, 2010, 2011, and 2012, the Company’s software revenue was not significant to its consolidated statements of operations.

Shipping and handling costs are included in cost of sales.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash consists of deposits with financial institutions, and cash equivalents consist of money market funds.

Concentrations of Credit Risk and Significant Customers and Suppliers

Concentrations of Credit Risk and Significant Customers and Suppliers

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash, cash equivalents, and accounts receivable. The Company deposits cash with a high-credit-quality financial institution, which at times may exceed federally insured amounts. The Company has policies that limit its investments as to types of investments, maturity, liquidity, credit quality, concentration, and diversification of issuers. The Company performs initial and ongoing credit evaluations of its customers’ financial condition and will limit the amount of credit as deemed necessary, but generally does not require collateral.

The customers accounting for 10% or greater of revenue were as follows:

	Year Ended June 30,
	2010			2011			2012
Customer A		10	%		36	%		30	%
Customer B		*			24	%		25	%
Customer C		10	%		14	%		17	%
Customer D		13	%		*			*

* Indicates less than 10% of revenue for the period.

The customers accounting for 10% or greater of accounts receivable, net were as follows:

	Year Ended June 30,
	2011			2012
Customer A		11	%		30	%
Customer B		66	%		18	%
Customer C		*			19	%
Customer D		*			10	%

* Indicates less than 10% of total accounts receivable, net.

As a consequence of the concentration of the Company’s customers and typically, a small number of large purchases by these customers, revenue, and operating results may fluctuate significantly from period to period.

The Company relies on a limited number of suppliers for its contract manufacturing and certain raw material components. The Company believes that other vendors would be able to provide similar products and services; however, the qualification of such vendors may require substantial start-up time. In order to mitigate any adverse impacts from a disruption of supply, the Company attempts to maintain an adequate supply of critical single-sourced raw materials.

Accounts Receivable

Accounts Receivable

Accounts receivable balances are recorded at the invoiced amount and are non-interest-bearing. The Company maintains an allowance for doubtful accounts to reserve for potential uncollectible receivables. Allowances are made based upon a specific review of all significant outstanding invoices. For those invoices not specifically reserved, allowances are provided based upon a percentage of aged outstanding invoices. In determining these percentages, the Company analyzes its historical collection experience and current economic trends. Provisions are recorded in general and administrative expenses. The Company writes off accounts receivable balances to the allowance for doubtful accounts when it becomes likely that they will not be collected. Accounts receivable balances are considered past due when not paid in accordance with the contractual terms of the related arrangement. As of June 30, 2011 and 2012, the Company’s allowance for doubtful accounts was not considered significant.

The Company records a sales allowance to provide for estimated future product returns and price adjustments. In the period revenue is recognized, allowances are provided for estimated future product returns based on historical product return rates. If reliable estimates of future returns cannot be made, revenue is not recognized until the rights of return expire. The Company also provides allowances for rebates and discounts based on programs in existence at the time revenue is recognized. The Company evaluates the estimate of sales allowances on a regular basis and adjusts the amount reserved accordingly.

The changes in the Company’s sales allowance was as follows (in thousands):

	Year Ended June 30,
	2010			2011			2012
Balance at beginning of period	$	433		$	912		$	2,064
Additions		3,908			7,942			5,418
Returns		(3,429	)		(6,790	)		(6,529	)
Balance at end of period	$	912		$	2,064		$	953

Inventories

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out method) or market value. The Company periodically assesses the recoverability of all inventories, including raw materials, work-in-process, and finished goods to determine whether adjustments are required to record inventory at the lower of cost or market value. Inventory that the Company determines to be obsolete or in excess of forecasted usage is reduced to its estimated realizable value based on assumptions about future demand and market conditions. If actual demand is lower than the forecasted demand, additional inventory write-downs may be required.

Property and Equipment

Property and Equipment

Property and equipment are stated at historical cost less accumulated depreciation. Property and equipment acquired through the acquisition of a business are recorded at their estimated fair value at the date of acquisition. Repairs and maintenance costs are expensed as incurred if repairs and maintenance do not extend the useful life or improve the related assets. Depreciation and amortization, including amortization of leasehold improvements and assets under capital leases, is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life of each asset category is as follows:

Computer equipment	3 years
Software	3 years
Property and equipment	3 years
Furniture and fixtures	5 years
Leasehold improvements	Shorter of useful life or remaining lease term

Long-Lived Assets and Goodwill

Long-Lived Assets and Goodwill

Periodically the Company assesses potential impairment of its long-lived assets, which include property, equipment, and acquired intangible assets. The Company performs an impairment review whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results, significant changes in the manner of its use of acquired assets or its overall business strategy, and significant industry or economic trends. When the Company determines that the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators, the Company determines the recoverability by comparing the carrying amount of the asset to net future undiscounted cash flows that the asset is expected to generate and recognizes an impairment charge equal to the amount by which the carrying amount exceeds the fair market value of the asset. The Company amortizes intangible assets on a straight-line basis over their estimated useful lives.

The Company tests goodwill for impairment annually as of April 1, or whenever events or changes in circumstances indicate that goodwill may be impaired. The Company initially assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then the Company performs a first step by comparing the book value of net assets to the fair value of the Company’s single reporting unit. If the fair value is determined to be less than the book value, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. Based upon the Company’s assessment, the Company determined that it is not more-likely-than-not that the fair value of the Company’s single reporting unit is less than its carrying amount and no impairment was recognized during the year ended June 30, 2012.

Product Warranty

Product Warranty

The Company provides its customers a standard limited product warranty of up to five years. The standard warranty requires the Company to repair or replace defective products at no cost to the customer during such warranty period. The Company estimates the costs that may be incurred under its standard limited warranty and records a liability in the amount of such costs at the time product sales are recognized. Factors that affect the Company’s warranty liability include the number of installed units, identified warranty issues, historical experience, and management’s judgment regarding anticipated rates of warranty claims and cost per claim. The Company assesses the adequacy of its recorded warranty liability each period and makes adjustments to the liability as necessary based on actual experience.

The following table presents the changes in the product warranty liability (in thousands):

	Year Ended June 30,
	2010			2011			2012
Balance at beginning of period	$	24		$	153		$	666
Warranty costs accrued		225			1,280			4,930
Warranty claims		(96	)		(767	)		(2,771	)
Balance at end of period	$	153		$	666		$	2,825

Foreign Currency

Foreign Currency

The functional currency of the Company’s international subsidiaries is the local currency. For those subsidiaries, expenses denominated in the functional currency are translated into U.S. dollars using average exchange rates in effect during the period and assets and liabilities are translated using period-end exchange rates. The foreign currency translation adjustments are included in accumulated other comprehensive income (loss) as a separate component of stockholders’ (deficit) equity. Foreign currency transaction gains or losses are recorded in other income (expense), net. Foreign currency transaction gains and losses for all periods presented were not material.

Stock-based Compensation

Stock-based Compensation

The Company records stock-based compensation expense related to employee stock-based awards based on the estimated fair value of the awards as determined on the date of grant. The Company utilizes the Black-Scholes-Merton option pricing model to estimate the fair value of employee stock options. The Black-Scholes-Merton model requires the input of highly subjective and complex assumptions, including the estimated fair value of the Company’s common stock on the date of grant prior to the stock being publicly traded, the expected term of the stock option, and the expected volatility of the Company’s common stock over the period equal to the expected term of the grant. The Company estimates forfeitures at the date of

grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock options and warrants to purchase shares of stock that are issued to non-employees based on the estimated fair value of such instruments using the Black-Scholes-Merton option pricing model. The measurement of stock-based compensation expense for these instruments is variable and subject to periodic adjustments to the estimated fair value until the awards vest or, in the case of the convertible preferred stock warrant which was outstanding in 2010 and until the initial public offering in 2011, each reporting period until the warrant is exercised or converted to a warrant to purchase shares of common stock. Any resulting change in the estimated fair value is recognized in the Company’s consolidated statements of operations during the period in which the related services are rendered.

Income Taxes

Income Taxes

Deferred tax assets and liabilities are accounted for using the liability method and represent the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to be in effect when these temporary differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized.

Advertising

Advertising

The Company expenses advertising costs as incurred. Advertising expense was $170,000, $12,000, and $120,000 for fiscal years 2010, 2011, and 2012, respectively.

Research and Development

Research and Development

Research and development costs are expensed as incurred. Research and development expenses consist primarily of personnel costs, prototype expenses, amortization of intangible assets, consulting services, and depreciation associated with research and development equipment.

Software Development Costs

Software Development Costs

The Company expenses software development costs as incurred until technological feasibility is attained, including research and development costs associated with stand-alone software products and software embedded in hardware products. Technological feasibility is attained when the Company has completed the planning, design, and testing phase of development of its software and the software has been determined viable for its intended use, which typically occurs when beta testing commences. The period of time between when beta testing commences and when the software is available for general release to customers has historically been short with immaterial amounts of software development costs incurred during this period. Accordingly, the Company has not capitalized any software development costs to date.

In accounting for the development of computer software developed or obtained for internal use, the Company capitalizes qualifying computer software costs, which are incurred during the application development stage, and amortizes them over the software’s estimated useful life. For the year ended June 30, 2012, the Company capitalized approximately $1,956,000 related to the development and implementation of an enterprise resource planning system.

Presentation of Certain Taxes

Presentation of Certain Taxes

The Company collects various taxes from customers and remits these amounts to the applicable taxing authorities. The Company’s accounting policy is to exclude these taxes from revenue and cost of revenue.

Net (Loss) Income Per Share

Net (Loss) Income Per Share

Basic net (loss) income per share is computed using the weighted-average number of common shares outstanding during the period, less weighted-average common shares subject to repurchase. Diluted net income per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on net income per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options and preferred and common stock warrants, assumed vesting of outstanding restricted stock subject to vesting provisions, and the assumed conversion of outstanding convertible preferred stock using the if-converted method. In a net loss position, diluted net loss per share is computed using only the weighted-average number of common shares outstanding during the period, less weighted-average common shares subject to repurchase, as any additional common shares would be anti-dilutive.

The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net (loss) income per share (in thousands):

	Year Ended June 30,
	2010			2011			2012
Numerator:
Net (loss) income attributable to common stockholders	$	(32,464	)	$	4,555		$	(5,583	)
Denominator:
Weighted-average common shares outstanding		13,120			17,247			87,933
Less weighted-average common shares outstanding subject to repurchase		(2,108	)		(485	)		(259	)
Weighted-average shares, basic		11,012			16,762			87,674
Dilution due to stock options and common stock warrant		—			64,892			—
Weighted-average shares, diluted		11,012			81,654			87,674

The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net (loss) income per share (in thousands):

	Year Ended June 30,
	2010		2011		2012
Convertible preferred stock		43,261		—		—
Stock options		1,782		8,846		18,452
Common stock subject to repurchase		1,214		—		134
Warrant – preferred Series A		—		—		—
Warrant – common		—		—		39
Total		46,257		8,846		18,625

Recently Issued and Adopted Accounting Pronouncements

Recently Issued and Adopted Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued additional guidance regarding testing goodwill for impairment. The guidance provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. This guidance is effective for the Company beginning in fiscal year 2013. The Company has early adopted and applied this guidance to its fiscal year 2012 annual goodwill assessment. The adoption of this guidance did not have an impact on the Company’s results of operations, financial position, or cash flows.

In June 2011, the FASB issued new guidance which improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income (“OCI”) by eliminating the option to present components of OCI as part of the statement of changes in stockholders’ equity. The amendments in this standard require that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Subsequently in December 2011, the FASB issued additional guidance, which indefinitely defers the requirement to present on the face of the financial statements reclassification adjustments for items that are reclassified from OCI to net income in the statement where the components of net income and the components of OCI are presented. The amendments in these standards do not change the items that must be reported in OCI, when an item of OCI must be reclassified to net income, or change the option for an entity to present components. This new guidance is effective for the Company beginning fiscal year 2013 and is required to be applied retrospectively. The adoption of this guidance is not expected to have an impact on the Company’s results of operations, financial position, or cash flows as it relates only to financial statement presentation.

In May 2011, the FASB issued new guidance for fair value measurements to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between GAAP and International Financial Reporting Standards. The guidance changes certain fair value measurement principles and enhances the disclosure requirements, particularly for level 3 fair value measurements. The Company adopted this guidance prospectively during fiscal year 2012 and noted no significant impact on the Company’s results of operations, financial position, or cash flows.

Accounting for Uncertainty in Income Taxes

Effective July 1, 2009, the Company adopted the provisions of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes, which provides a financial statement recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Under FASB ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based solely on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has greater than 50% likelihood to be sustained upon ultimate settlement. As a result of the implementation of ASC 740-10, the Company reclassified $184,000 of its tax reserves to ASC 740-10 reserves. Since the Company has a full valuation allowance against its deferred tax assets, the adoption of ASC 740-10 did not result in a change to the financial statements. As of June 30, 2012, the Company’s unrecognized tax benefits were $2,709,000.