Quarterly Revenue Growth of 32 Percent, Year-over-Year to
Second Quarter Ethernet Revenues Grew 28 Percent Sequentially, Including EZchip
Transition to 25, 50, and 100 Gigabit Networks has Begun, Offering Growth Opportunities
"We are pleased to report the fifth consecutive quarter of record
revenue. We saw strong growth in our Ethernet business, driven by growth
in our 25, 50 and 100 Gigabit Ethernet products," said
Second Quarter 2016 Highlights
Third Quarter 2016 Guidance
We currently project:
Recent Mellanox Press Release Highlights
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Mellanox Simplifies RDMA Deployments with |
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JD.com and Mellanox Join Forces to Drive E-Commerce Artificial Intelligence | ||||||||
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Mellanox HPC-X Framework Extends Smart In-Network Computing | ||||||||
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Mellanox Solutions Accelerate the Fastest Supercomputer in the World | ||||||||
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Mellanox Announces ConnectX-5, the Next Generation of 100G InfiniBand and Ethernet Smart Interconnect Adapter | ||||||||
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Mellanox Enhances Cloud Efficiency With 25Gb/s Ethernet Connectivity | ||||||||
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Mellanox Paves the Way to Higher Efficiency Data Centers With 25 Gb/s Ethernet | ||||||||
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Check Point Selects Mellanox Ethernet Solutions to Enhance Security Appliances | ||||||||
• |
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Mellanox Introduces New BlueField™ Family of System-on-Chip Programmable Processors for Storage and Networking Applications | ||||||||
Conference Call
The
About
GAAP to Non-GAAP Reconciliation
To supplement our consolidated financial statements presented in
accordance with generally accepted accounting principles (GAAP),
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
All statements included or incorporated by reference in this release,
other than statements or characterizations of historical fact, are
forward-looking statements, including the guidance for the three months
ended
Forward-looking statements can often be identified by words such as "projects," "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
The risks and uncertainties that could cause our results to differ
materially from those expressed or implied by such forward-looking
statements include the continued expansion of our product line, customer
base and the total available market of our products, the continued
growth in demand for our products, the continued, increased demand for
industry standards-based technology, our ability to react to trends and
challenges in our business and the markets in which we operate, our
ability to anticipate market needs or develop new or enhanced products
to meet those needs, the adoption rate of our products, our ability to
establish and maintain successful relationships with our OEM partners,
our ability to effectively compete in our industry, fluctuations in
demand, sales cycles and prices for our products and services, our
success converting design wins to revenue-generating product shipments,
the continued launch and volume ramp of large customer sales
opportunities, our ability to protect our intellectual property rights,
our ability to successfully acquire businesses and technologies and to
successfully integrate and operate these acquired businesses, our
success in realizing the anticipated benefits of mergers and
acquisitions, and our ability to obtain debt at competitive rates or in
sufficient amounts in order to fund our contractual commitments.
Furthermore, the majority of our quarterly revenues are derived from
customer orders received and fulfilled in the same quarterly period. We
have limited visibility into actual end-user demand as such demand
impacts us and our OEM customer inventory balances in any given quarter.
Consequently, this introduces risk and uncertainty into our revenue and
production forecasts and business planning and could negatively impact
our financial results. In addition, current uncertainty in the global
economic environment poses a risk to the overall economy as businesses
may defer purchases in response to tighter credit conditions, changing
overall demand for our products, and negative financial news.
Consequently, our results could differ materially from our prior results
due to these general economic and market conditions, political events
and other risks and uncertainties described more fully in our documents
filed with or furnished to the
More information about the risks, uncertainties and assumptions that may
impact our business is set forth in our annual report on Form 10-K filed
with the
|
||||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||||
(in thousands, except per share data, unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
|
|
|||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Total revenues | $ | 214,801 | $ | 163,148 | $ | 411,611 | $ | 309,823 | ||||||||
Cost of revenues | 79,807 | 47,178 | 150,288 | 88,265 | ||||||||||||
Gross profit | 134,994 | 115,970 | 261,323 | 221,558 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 82,324 | 62,576 | 153,358 | 120,694 | ||||||||||||
Sales and marketing | 32,576 | 23,366 | 63,804 | 45,924 | ||||||||||||
General and administrative | 13,494 | 10,670 | 41,432 | 20,371 | ||||||||||||
Total operating expenses | 128,394 | 96,612 | 258,594 | 186,989 | ||||||||||||
Income from operations | 6,600 | 19,358 | 2,729 | 34,569 | ||||||||||||
Interest expense | (2,215 | ) | — | (3,213 | ) | — | ||||||||||
Other income (loss) | 315 | 912 | 376 | (1,557 | ) | |||||||||||
Other (loss) income, net | (1,900 | ) | 912 | (2,837 | ) | (1,557 | ) | |||||||||
Income (loss) before taxes | 4,700 | 20,270 | (108 | ) | 33,012 | |||||||||||
Provision for taxes on income | (46 | ) | (1,022 | ) | (2,406 | ) | (3,268 | ) | ||||||||
Net income (loss) | $ | 4,654 | $ | 19,248 | $ | (2,514 | ) | $ | 29,744 | |||||||
Net income (loss) per share — basic | $ | 0.10 | $ | 0.42 | $ | (0.05 | ) | $ | 0.65 | |||||||
Net income (loss) per share — diluted | $ | 0.09 | $ | 0.40 | $ | (0.05 | ) | $ | 0.63 | |||||||
Shares used in computing net (loss) income per share: | ||||||||||||||||
Basic | 47,900 | 46,191 | 47,629 | 45,943 | ||||||||||||
Diluted | 49,194 | 47,568 | 47,629 | 47,341 | ||||||||||||
|
||||||||||||||||
Reconciliation of Non-GAAP Adjustments | ||||||||||||||||
(in thousands, percentages, unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
|
|
|||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Reconciliation of GAAP net income (loss) to non-GAAP: |
||||||||||||||||
GAAP net income (loss) | $ | 4,654 | $ | 19,248 | $ | (2,514 | ) | $ | 29,744 | |||||||
Adjustments: | ||||||||||||||||
Share-based compensation expense: | ||||||||||||||||
Cost of revenues | 671 | 610 | 1,146 | 1,157 | ||||||||||||
Research and development | 10,770 | 7,553 | 19,922 | 14,321 | ||||||||||||
Sales and marketing | 3,889 | 2,750 | 7,537 | 5,144 | ||||||||||||
General and administrative | 2,764 | 2,373 | 7,755 | 4,382 | ||||||||||||
Total share-based compensation expense | 18,094 | 13,286 | 36,360 | 25,004 | ||||||||||||
Amortization of acquired intangibles: | ||||||||||||||||
Cost of revenues | 13,533 | 2,073 | 23,962 | 3,548 | ||||||||||||
Research and development | 196 | 195 | 391 | 389 | ||||||||||||
Sales and marketing | 2,232 | 197 | 3,255 | 780 | ||||||||||||
Total amortization of acquired intangibles | 15,961 | 2,465 | 27,608 | 4,717 | ||||||||||||
Settlement costs: | ||||||||||||||||
General and administrative | — | — | 5,106 | — | ||||||||||||
Total settlement costs | — | — | 5,106 | — | ||||||||||||
Acquisition related charges: | ||||||||||||||||
Cost of revenues | 4,233 | — | 7,533 | — | ||||||||||||
Research and development | 164 | 840 | 640 | 1,603 | ||||||||||||
Sales and marketing | 150 | 225 | 206 | 450 | ||||||||||||
General and administrative | 313 | — | 6,661 | — | ||||||||||||
Total acquisition related charges | 4,860 | 1,065 | 15,040 | 2,053 | ||||||||||||
Impairment loss on equity investment in a private company | — | — | — | 3,189 | ||||||||||||
Tax effects and adjustments | (887 | ) | — | 378 | — | |||||||||||
Non-GAAP net income | $ | 42,682 | $ | 36,064 | $ | 81,978 | $ | 64,707 | ||||||||
Reconciliation of GAAP gross profit to non-GAAP: |
||||||||||||||||
Revenues | $ | 214,801 | $ | 163,148 | $ | 411,611 | $ | 309,823 | ||||||||
GAAP gross profit | 134,994 | 115,970 | 261,323 | 221,558 | ||||||||||||
GAAP gross margin | 62.8 | % | 71.1 | % | 63.5 | % | 71.5 | % | ||||||||
Share-based compensation expense | 671 | 610 | 1,146 | 1,157 | ||||||||||||
Amortization of acquired intangibles | 13,533 | 2,073 | 23,962 | 3,548 | ||||||||||||
Acquisition related charges | 4,233 | — | 7,533 | — | ||||||||||||
Non-GAAP gross profit | $ | 153,431 | $ | 118,653 | $ | 293,964 | $ | 226,263 | ||||||||
Non-GAAP gross margin | 71.4 | % | 72.7 | % | 71.4 | % | 73.0 | % | ||||||||
Reconciliation of GAAP operating expenses to non-GAAP: |
||||||||||||||||
GAAP operating expenses | $ | 128,394 | $ | 96,612 | $ | 258,594 | $ | 186,989 | ||||||||
Share-based compensation expense | (17,423 | ) | (12,676 | ) | (35,214 | ) | (23,847 | ) | ||||||||
Amortization of acquired intangibles | (2,428 | ) | (392 | ) | (3,646 | ) | (1,169 | ) | ||||||||
Settlement costs | — | — | (5,106 | ) | — | |||||||||||
Acquisition related charges | (627 | ) | (1,065 | ) | (7,507 | ) | (2,053 | ) | ||||||||
Non-GAAP operating expenses | $ | 107,916 | $ | 82,479 | $ | 207,121 | $ | 159,920 | ||||||||
|
||||||||||||||||
Reconciliation of Non-GAAP Adjustments | ||||||||||||||||
(in thousands, except per share data, unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
|
|
|||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Reconciliation of GAAP income from operations to non-GAAP: |
||||||||||||||||
GAAP income from operations | $ | 6,600 | $ | 19,358 | $ | 2,729 | $ | 34,569 | ||||||||
Share-based compensation expense | 18,094 | 13,286 | 36,360 | 25,004 | ||||||||||||
Settlement costs | — | — | 5,106 | — | ||||||||||||
Amortization of acquired intangibles | 15,961 | 2,465 | 27,608 | 4,717 | ||||||||||||
Acquisition related charges | 4,860 | 1,065 | 15,040 | 2,053 | ||||||||||||
Non-GAAP income from operations | $ | 45,515 | $ | 36,174 | $ | 86,843 | $ | 66,343 | ||||||||
Shares used in computing GAAP diluted earnings per share | 49,194 | 47,568 | 47,629 | 47,341 | ||||||||||||
Adjustments: | ||||||||||||||||
Effect of dilutive securities under GAAP* | (1,294 | ) | (1,377 | ) | — | (1,398 | ) | |||||||||
Total options vested and exercisable | 1,360 | 1,636 | 1,360 | 1,636 | ||||||||||||
Shares used in computing non-GAAP diluted earnings per share | 49,260 | 47,827 | 48,989 | 47,579 | ||||||||||||
GAAP diluted net income (loss) per share | $ | 0.09 | $ | 0.40 | $ | (0.05 | ) | $ | 0.63 | |||||||
Adjustments: | ||||||||||||||||
Share-based compensation expense | 0.37 | 0.28 | 0.75 | 0.53 | ||||||||||||
Amortization of acquired intangibles | 0.33 | 0.06 | 0.58 | 0.10 | ||||||||||||
Settlement costs | — | — | 0.11 | — | ||||||||||||
Impairment loss on equity investment in a private company | — | — | — | 0.06 | ||||||||||||
Acquisition related charges | 0.10 | 0.02 | 0.32 | 0.04 | ||||||||||||
Tax effects and adjustments | (0.02 | ) | — | 0.01 | — | |||||||||||
Effect of dilutive securities under GAAP* | 0.02 | 0.02 | — | 0.04 | ||||||||||||
Total options vested and exercisable | (0.02 | ) | (0.03 | ) | (0.05 | ) | (0.05 | ) | ||||||||
Non-GAAP diluted net income per share | $ | 0.87 | $ | 0.75 | $ | 1.67 | $ | 1.35 |
* |
This adjustment adds back the GAAP effect of additional ordinary
shares that would have been outstanding if the dilutive potential
ordinary shares from stock options had been issued under the
|
|
Mellanox Technologies, Ltd. Condensed Consolidated Balance Sheets (in thousands, unaudited) |
||||||||
June 30, |
|
|||||||
2016 | 2015 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 63,501 | $ | 263,199 | ||||
Short-term investments | 212,954 | 247,314 | ||||||
Accounts receivable, net | 117,323 | 84,273 | ||||||
Inventories | 64,651 | 62,473 | ||||||
Other current assets | 20,498 | 19,979 | ||||||
Total current assets | 478,927 | 677,238 | ||||||
Property and equipment, net | 112,264 | 100,018 | ||||||
Severance assets | 15,846 | 9,514 | ||||||
Intangible assets, net | 292,758 | 32,154 | ||||||
|
476,037 | 200,743 | ||||||
Deferred taxes and other long-term assets | 31,759 | 33,715 | ||||||
Total assets | $ | 1,407,591 | $ | 1,053,382 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 55,217 | $ | 44,600 | ||||
Accrued liabilities | 87,605 | 74,296 | ||||||
Deferred revenue | 21,829 | 17,743 | ||||||
Capital lease liabilities, current | — | 491 | ||||||
Current portion of term debt | 29,471 | — | ||||||
Total current liabilities | 194,122 | 137,130 | ||||||
Accrued severance | 20,219 | 12,464 | ||||||
Deferred revenue | 14,195 | 12,439 | ||||||
Term debt | 238,904 | — | ||||||
Other long-term liabilities | 26,217 | 24,668 | ||||||
Total liabilities | 493,657 | 186,701 | ||||||
Shareholders' equity: | ||||||||
Ordinary shares | 204 | 200 | ||||||
Additional paid-in capital | 732,590 | 684,824 | ||||||
Accumulated other comprehensive income (loss) | 328 | (1,669 | ) | |||||
Retained earnings | 180,812 | 183,326 | ||||||
Total shareholders' equity | 913,934 | 866,681 | ||||||
Total liabilities and shareholders' equity | $ | 1,407,591 | $ | 1,053,382 | ||||
Mellanox Technologies, Ltd. Condensed Consolidated Statement of Cash Flows (in thousands, unaudited) |
||||||||
Six months ended |
||||||||
2016 | 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net (loss) income | $ | (2,514 | ) | $ | 29,744 | |||
Adjustments to reconcile net (loss) income to net cash provided by operating activities, net of effects from acquired company: | ||||||||
Depreciation and amortization | 46,231 | 19,775 | ||||||
Deferred income taxes | 1,266 | 134 | ||||||
Share-based compensation expense | 36,360 | 25,004 | ||||||
Gain on investments | (489 | ) | (2,388 | ) | ||||
Impairment of equity investment in a private company | — | 3,189 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable, net | (16,886 | ) | 3,918 | |||||
Inventory | 10,598 | (22,513 | ) | |||||
Prepaid expenses and other assets | 3,598 | 419 | ||||||
Accounts payable | 9,679 | 8,755 | ||||||
Accrued liabilities and other payables | 5,583 | 21,063 | ||||||
Net cash provided by operating activities | 93,426 | 87,100 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of severance-related insurance policies | (546 | ) | (381 | ) | ||||
Purchase of short term investments | (153,486 | ) | (188,161 | ) | ||||
Proceeds from sale of short term investments | 200,457 | 98,742 | ||||||
Proceeds from maturities of short term investments | 97,388 | 30,717 | ||||||
Purchase of property and equipment | (15,755 | ) | (20,413 | ) | ||||
Purchase of equity investment in a private company | (107 | ) | — | |||||
Acquisition, net of cash acquired |
(698,501 | ) | — | |||||
Net cash used in investing activities | (570,550 | ) | (79,496 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from term debt | 280,000 | — | ||||||
Principal payments on term debt | (7,000 | ) | — | |||||
Term debt issuance costs | (5,521 | ) | — | |||||
Principal payments on capital lease obligations | (491 | ) | (556 | ) | ||||
Proceeds from exercise of share awards | 10,438 | 9,829 | ||||||
Net cash provided by financing activities | 277,426 | 9,273 | ||||||
Net (decrease) increase in cash and cash equivalents | (199,698 | ) | 16,877 | |||||
Cash and cash equivalents at beginning of period | 263,199 | 51,326 | ||||||
Cash and cash equivalents at end of period | $ | 63,501 | $ | 68,203 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160720006347/en/
Press/Media Contact
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or
Investor
Contact
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or
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