Xilinx Reports Fiscal Third Quarter 2020 Results
SAN JOSE, Calif., Jan. 28, 2020 /PRNewswire/ -- Xilinx, Inc. (Nasdaq: XLNX), the leader in adaptive and intelligent computing, today announced revenues of $723 million for the third quarter of fiscal year 2020, down 13% from the prior quarter and down 10% year over year. GAAP net income for the December quarter was $162 million, or $0.64 per diluted share. Non-GAAP net income for the December quarter was $171 million, or $0.68 per diluted share.
The Xilinx Board of Directors declared a quarterly cash dividend of $0.37 per outstanding share of common stock payable on February 20, 2020 to all stockholders of record at the close of business on February 11, 2020.
Additional third quarter of fiscal year 2020 comparisons are provided in the charts below.
Q3 2020 Financial Highlights
(In millions, except EPS)
GAAP
Q3
Q2
Q3
FY 2020 FY 2020 FY 2019 Q-T-Q Y-T-Y
Net revenues* $723 $833 $800 -13% -10%
Operating income $159 $204 $258 -22% -38%
Net income $162 $227 $239 -29% -32%
Diluted earnings per
share $0.64 $0.89 $0.93 -28% -31%
Non-GAAP
Q3
Q2
Q3
FY 2020 FY 2020 FY 2019 Q-T-Q Y-T-Y
Net revenues* $723 $833 $800 -13% -10%
Operating income $174 $217 $263 -20% -34%
Net income $171 $240 $237 -29% -28%
Diluted earnings per
share $0.68 $0.94 $0.92 -28% -26%
* No adjustment between GAAP and Non-GAAP
Xilinx also announced cost-saving measures designed to drive structural operating efficiencies across the company. Xilinx expects to reduce its global workforce by approximately 7% through a targeted reduction in force and meaningfully slower hiring to replace attrition. In addition to the targeted reduction in force, Xilinx is taking other measures to reduce operating expenses, including further reducing discretionary spend and targeting additional operating efficiencies across the business. As a result of these measures, Xilinx expects to generate non-GAAP cost and operating expense savings of approximately $17M to $20M in the fourth quarter. Additionally, Xilinx expects to incur a GAAP pre-tax charge of approximately $25M to $30M in the fourth quarter of fiscal 2020 primarily related to severance pay expenses.
"As expected, our fiscal third quarter was a challenging quarter and our revenue came in near the midpoint of our guidance. Given the revenue headwinds we experienced during the quarter, we took actions to reduce our operating expenses which delivered earnings greater than our expectations.
"Fiscal fourth quarter revenue is expected to grow on a sequential basis as a result of strength in our core vertical markets and a moderate resumption of growth in our data center business. However, we are seeing greater than expected weakness in our wired and wireless business due to a slowdown in both 5G and wired infrastructure deployments, in addition to ongoing global trade headwinds.
"We expect some of these headwinds in our wired and wireless business to be persistent, resulting in revenue growth lower than our prior expectations. We are, therefore, taking several actions to further reduce our operating expenses this quarter.
"These are difficult actions, but we believe the decisive steps we are taking to reset our operating expenses will allow us to drive our growth strategy and technology roadmap while enabling a more appropriate level of operating profitability. We remain extremely focused on our mission and long-term growth opportunities as the leader in adaptable platforms from the cloud to edge to endpoints," said Victor Peng, president and chief executive officer.
Net
Revenues
by
Geography:
Percentages Growth Rates
Q3 Q2 Q3
FY 2020 FY 2020 FY 2019 Q-T-Q Y-T-Y
---
North
America 28% 28% 28% -13% -10%
Asia
Pacific 48% 51% 46% -19% -6%
Europe 16% 15% 18% -4% -19%
Japan 8% 6% 8% 8% -4%
Net
Revenues
by
End
Market:
Percentages Growth Rates
Q3 Q2 Q3
FY 2020 FY 2020 FY 2019 Q-T-Q Y-T-Y
---
A&D,
Industrial
and
TME 40% 36% 40% -5% -10%
Automotive,
Broadcast
and
Consumer 19% 16% 15% 2% 10%
Wired
and
Wireless
Group 31% 38% 35% -29% -18%
Data
Center
Group 9% 10% 8% -16% 8%
Channel 1% 0% 2%
NM
NM
Net
Revenues
by
Product:
Percentages Growth Rates
Q3 Q2 Q3
FY 2020 FY 2020 FY 2019 Q-T-Q Y-T-Y
---
Advanced
Products 70% 74% 66% -18% -4%
Core
Products 30% 26% 34% 1% -21%
Advanced Products: Alveo, UltraScale+,
UltraScale and 7-series products.
Core Products: Virtex-6, Spartan-6,
Virtex?5, CoolRunner?II, Virtex-4,
Virtex-II, Spartan-3, Spartan-2,
XC9500 products, configuration
solutions, software & support/services.
Key Statistics:
(Dollars in Millions)
Q3 Q2 Q3
FY 2020 FY 2020 FY 2019
---
Annual Return on Equity (%)* 31 34 34
Operating Cash Flow $324 $224 $314
Depreciation Expense (including
software amortization) $26 $22 $18
Capital Expenditures (including
software) $34 $34 $20
Inventory Days (internal) 124 104 104
Revenue Turns (%) 39 37 40
*Return on equity calculation:
Annualized year to date GAAP net
income/average stockholders' equity
Product and Financial Highlights - Fiscal Third Quarter 2020
-- Advanced Products constituted approximately 70% of total revenues in the
third quarter, although revenues from the category decreased 4% year
over year. Zynq-based revenues grew 26% year over year despite the
impact of a weaker Wireless business, further validating Xilinx platform
strategy. The Zynq SoC platform, which includes Zynq at 28nm and both
MPSoC and RFSoC at 16nm, represented 23% of total revenues, higher than
the year ago period.
-- In early December, Xilinx announced that Vitis AI, its AI inference
development platform was available for download. Combined with the Vitis
unified software platform, Vitis AI empowers software developers with
deep learning acceleration. Vitis AI integrates a domain-specific
architecture (DSA) and configures Xilinx hardware to be optimized and
programmed using industry-leading frameworks such as TensorFlow and
Caffe. Xilinx has cumulatively trained over 8,000 developers to date and
has over 900 independent software vendors as part of the ecosystem.
-- Collaborating with Xilinx, Cortical.io a, leader in AI based natural
language understanding , announced a new e-mail classification
appliance. Using Supermicro servers and Xilinx Alveo accelerator cards,
the appliance is expected to enable real-time filtering and
classification of incoming and outgoing e-mails.
-- Xilinx announced that Automotive Zynq UltraScale+ MPSoC is powering
Baidu's production-ready Apollo Computing Unit (ACU)- an advanced
platform for automated valet parking (AVP), the industry's first
dedicated computing solution for AVP. Separately, Xilinx disclosed that
SK Telecom adopted Xilinx Alveo Data Center Accelerator cards to power a
real-time AI-based physical intrusion and theft detection service.
-- During the XDF Europe keynote, CERN, a European organization for nuclear
research, joined Xilinx onstage to discuss a network of Xilinx FPGAs
housed 100 meters underground designed to instantaneously filter and
identify novel particle substructures as evidence of the existence of
dark matter and other physical phenomena. CERN said that Xilinx enabled
a fixed, extremely low latency AI inference capability of about three
microseconds per event, a feat that could not be achieved by CPUs or
GPUs.
-- During the XDF China keynote, Inspur Systems joined Xilinx onstage
proclaiming that Xilinx ACAPs and FPGAs will be a cornerstone of
Inspur's future technology. Alibaba Cloud also highlighted how Xilinx
technology is not only powering Alibaba's own data center, but also that
of its enterprise customers using Alibaba Cloud services. Alibaba noted
that unprecedented traffic hosted during Singles Day in Asia has proven
the reliability and security of its system platform running Xilinx
FPGAs.
-- Xilinx repurchased 2.8 million shares of common stock at an average
price of $93.70 per share and paid dividends of $93 million during the
quarter.
Business Outlook - Fiscal Fourth Quarter 2020
The following guidance is based on current expectations and estimates, and as indicated, is presented on a GAAP and non-GAAP basis. This guidance is forward-looking and actual results may differ materially, as a result of, among other things, the important factors discussed and referred to at the end of this release.
GAAP
Non-GAAP
Non-GAAP
Adjustments
Revenues
$750M - $780M
$750M - $780M
Gross margin 67.5% - 69.5%
1% (1) 68.5% - 70.5%
Operating
expenses
$351M - $355M
$35M (2,3)
$316M - $320M
Other income
~$8M
~$8M
Tax rate 7%-9% 7%-9%
Notes regarding Non-GAAP Adjustments:
(1) Amortization of acquisition-
related intangibles and
inventory valuation adjustment
(2) M&A related expenses and
amortization of acquisition-
related intangibles
(3) Severance-related expenses
Conference Call
A conference call will be held today at 2:00 p.m. Pacific Time to discuss the December quarter financial results and management's outlook for the March quarter and fiscal year 2020. The webcast and subsequent replay will be available in the investor relations section of the Company's web site at www.investor.xilinx.com. A telephonic replay of the call may be accessed later in the day by calling (855) 859-2056 and referencing confirmation code 9868367. The telephonic replay will be available for two weeks following the live call.
Non-GAAP Financial Information
Fiscal third quarter 2020 results and business outlook for the March quarter include financial measures which are not determined in accordance with the United States generally accepted accounting principles (GAAP), as indicated. Non-GAAP measures should not be considered as a substitute for, or superior to, financial measures determined in accordance with GAAP. The presentation of non-GAAP financial measures has been reconciled, in each case, to the most directly-comparable GAAP measure, as indicated in the accompanying tables. The Company's calculation of such non-GAAP measures may not be comparable to similarly-titled measures used by other companies.
Management uses the non-GAAP financial measures disclosed herein to evaluate the Company's financial results from continuing operations (excluding the impact of acquisitions) and compare to operating performance in past periods. Similarly, Management believes presentation of these non-GAAP measures is useful to investors because it enables investors and analysts to evaluate operating expenses of the Company's core business, excluding the impact of non-core business expenses such as acquisition-related amortization and non-recurring items.
M&A related expenses: These expenses mainly consist of legal and consulting fees associated with acquisition activities. The Company believes these costs do not reflect its current operating performance. Consequently, the non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company's current operating performance and comparisons to its past operating performance.
Amortization of acquisition-related intangibles: Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology acquired in connection with business combinations. The non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company's current operating performance and comparisons to its past operating performance.
Inventory valuation adjustment: Business combination accounting principles require the Company to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company's cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to the Company's cost of revenues excludes the expected profit margin component that is recorded under business combination accounting principles associated with the Company's acquisitions. The Company believes the adjustment is useful to investors as an additional means to reflect cost of revenues and gross margin trends of its business.
Gain on investment related to acquisition: The Company excludes the accounting gain resulting from revaluation of its prior minority investment in DeePhi Tech. The Company believes excluding this gain will facilitate a comparable evaluation of its current operating performance to its past operating performance.
Income taxes: The Company excludes the income tax effects of non-GAAP adjustments reflected in Operating expenses and Other income, as detailed above. It also excludes U.S. tax reform related items and other significant tax effects of post-acquisition tax integration transactions. The Company believes excluding U.S. tax reform and post-acquisition tax integration items will facilitate a comparable evaluation of its current performance to its past performance. The fourth quarter of fiscal 2020 outlook does not reflect other tax related items which the Company is not able to predict without unreasonable efforts due to their inherent uncertainty.
Severance-related expenses: These expenses primarily consist of severance-related pay and benefits in connection with the targeted reduction in force. The Company believes excluding these charges will facilitate a comparable evaluation of its current operating performance to its past and future performance.
Forward-Looking Statements
This release contains forward-looking statements and projections. Forward-looking statements and projections can often be identified by the use of forward-looking words such as "expect," "believe," "may," "will," "could," "anticipate," "estimate," "continue," "plan," "intend," "project" or other similar expressions. Statements that refer to or are based on projections, uncertain events or assumptions also identify forward-looking statements. Such forward looking statements include, but are not limited to, statements related to the semiconductor market, the growth and acceptance of our products, expected revenue growth, the demand and growth in the markets we serve, opportunity for expansion into new markets, and our expectations regarding our business outlook for the March quarter. Undue reliance should not be placed on such forward-looking statements and projections, which speak only as of the date they are made. We undertake no obligation to update such forward-looking statements. Actual events and results may differ materially from those in the forward-looking statements and are subject to risks and uncertainties including, among others, customer acceptance of our new products, current global economic conditions, our dependence on certain customers, trade and export restrictions, the condition and performance of our customers and the end markets in which they participate, our ability to forecast end customer demand, a high dependence on turns business, more customer volume discounts than expected, greater product mix changes than anticipated, fluctuations in manufacturing yields, our ability to deliver product in a timely manner, our ability to successfully manage production at multiple foundries, variability in wafer pricing, costs and liabilities associated with current and future litigation, our ability to generate cost and operating expense savings in an efficient and timely manner, our ability to realize the goals contemplated by our acquisitions and strategic investments, the impact of current and future legislative and regulatory changes, the impact of new accounting pronouncements and tax laws, including the U.S. Tax Cuts and Jobs Act, and interpretations thereof, and other risk factors described in our most recent Forms 10-Q and 10-K.
About Xilinx
Xilinx develops highly flexible and adaptive processing platforms that enable rapid innovation across a variety of technologies - from the endpoint to the edge to the cloud. Xilinx is the inventor of the FPGA, hardware programmable SoCs and the ACAP, designed to deliver the most dynamic processor technology in the industry and enable the adaptable, intelligent and connected world of the future. For more information, visit www.xilinx.com.
Xilinx, the Xilinx logo, Artix, ISE, Kintex, Spartan, Virtex, Zynq, Vivado, Alveo, Versal and other designated brands included herein are trademarks of Xilinx in the United States and other countries. All other trademarks are the property of their respective owners.
XLNX-F
Investor Relations Contact:
Suresh Bhaskaran
Xilinx, Inc.
(408) 879-4784
ir@xilinx.com
XILINX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
Nine Months Ended
---
December 28, 2019
September 28, 2019
December 29, 2018
December 28, 2019
December 29, 2018
---
Net revenues $723,499 $833,366 $800,057 $2,406,497 $2,230,678
Cost of revenues:
Cost of products sold 233,324 287,372 247,903 804,197 686,411
Amortization of acquisition-related
intangibles 6,697 5,734 15,699 -
Total cost of revenues 240,021 293,106 247,903 819,896 686,411
Gross margin 483,478 540,260 552,154 1,586,601 1,544,267
Operating expenses:
Research and development 211,541 222,979 189,329 638,621 543,527
Selling, general and administrative 109,612 111,596 103,039 328,633 291,256
Amortization of acquisition-related
intangibles 2,919 2,169 1,866 5,488 3,064
Total operating expenses 324,072 336,744 294,234 972,742 837,847
Operating income 159,406 203,516 257,920 613,859 706,420
Interest and other income (expense),
net 6,437 12,329 (1,330) 30,378 2,231
Income before income taxes 165,843 215,845 256,590 644,237 708,651
Provision (benefit) for income taxes 3,831 (11,148) 17,230 13,774 63,542
Net income $162,012 $226,993 $239,360 $630,463 $645,109
===
Net income per common share:
Basic $0.65 $0.90 $0.95 $2.50 $2.55
===
Diluted $0.64 $0.89 $0.93 $2.47 $2.53
===
Cash dividends per common share $0.37 $0.37 $0.36 $1.11 $1.08
===
Shares used in per share calculations:
Basic 250,546 252,399 253,060 252,330 252,634
Diluted 252,808 255,269 256,374 255,758 255,227
XILINX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 28, 2019
March 30, 2019 *
---
(unaudited)
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $2,425,165 $3,175,684
Accounts receivable, net 253,548 335,165
Inventories 328,209 315,358
Other current assets 121,099 65,771
Total current assets 3,128,021 3,891,978
Net property, plant and
equipment 378,242 328,929
Long-term investments - 53,433
Other assets 1,444,959 877,008
Total Assets $4,951,222 $5,151,348
===
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $515,880 $475,036
Long-term debt 1,246,000 1,234,807
Other long-term liabilities 548,180 579,996
Stockholders' equity 2,641,162 2,861,509
Total Liabilities and
Stockholders' Equity $4,951,222 $5,151,348
===
*Fiscal 2019 balances are derived from audited financial statements.
XILINX, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
(In thousands)
Three Months Ended
Nine Months Ended
---
December 28, 2019
September 28, 2019
December 29, 2018
December 28, 2019
December 29, 2018
---
SELECTED CASH FLOW INFORMATION:
Depreciation and amortization
of software $26,311 $22,438 $17,974 $68,882 $49,097
Amortization -others 15,276 12,965 7,984 37,326 23,461
Stock-based compensation 50,157 49,822 38,641 142,732 109,194
Net cash provided by
operating activities 323,575 223,694 313,917 845,485 803,208
Purchases of property, plant
and equipment and software 34,138 33,641 20,270 96,980 60,803
Payment of dividends to
stockholders 92,931 93,484 91,108 280,376 272,860
Repurchases of common stock 260,939 32,250 1,015 738,184 161,551
Taxes paid related to net
share settlement of
restricted stock units, net
of proceeds from issuance of
common stock 3,565 47,857 2,515 55,541 23,593
STOCK-BASED COMPENSATION INCLUDED IN:
Cost of revenues $2,961 $2,812 $2,366 $8,386 $6,650
Research and development 31,543 29,702 22,352 86,119 63,329
Selling, general and
administrative 15,653 17,308 13,923 48,227 39,215
XILINX, INC.
RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
Nine Months Ended
---
December 28, 2019
September 28, 2019
December 29, 2018
December 28, 2019
December 29, 2018
---
GAAP gross margin $483,478 $540,260 $552,154 $1,586,601 $1,544,267
Inventory valuation
adjustment 2,114 1,741 3,856 -
Amortization of
acquisition-
related intangibles 6,697 5,734 15,699 -
Non-GAAP gross
margin $492,289 $547,735 $552,154 $1,606,156 $1,544,267
===
GAAP operating
income $159,406 $203,516 $257,920 $613,859 $706,420
Inventory valuation
adjustment 2,114 1,741 3,856 -
Amortization of
acquisition-
related intangibles 9,616 7,903 1,866 21,187 3,064
Acquisition-related
costs 3,042 3,979 3,208 12,393 6,909
Non-GAAP operating
income $174,178 $217,139 $262,994 $651,295 $716,393
===
GAAP net income $162,012 226,993 $239,360 $630,463 $645,109
Inventory valuation
adjustment 2,114 1,741 3,856 -
Amortization of
acquisition-
related intangibles 9,616 7,903 1,866 21,187 3,064
Acquisition-related
costs 3,042 3,979 3,208 12,393 6,909
Gain on investment
related to
acquisition - (6,503)
Income tax effect of
changes in
applicable U.S. tax
laws - (6,949) 2,406
Income tax effect of
intercompany
integration
transactions (3,697) 1,859 (1,838) -
Income tax effect of
non-GAAP
adjustments (2,316) (2,395) (559) (6,133) (719)
Non-GAAP net income $170,771 $240,080 $236,926 $659,928 $650,266
===
GAAP diluted EPS $0.64 $0.89 $0.93 $2.47 $2.53
Inventory valuation
adjustment 0.01 0.01 -
Amortization of
acquisition-
related intangibles 0.04 0.03 0.01 0.08 0.01
Acquisition-related
costs 0.01 0.02 0.01 0.05 0.02
Gain on investment
related to
acquisition - (0.02)
Income tax effect of
changes in
applicable U.S. tax
laws - (0.03) 0.01
Income tax effect of
intercompany
integration
transactions (0.01) (0.01) -
Income tax effect of
non-GAAP
adjustments (0.01) (0.02) -
Non-GAAP diluted
EPS $0.68 $0.94 $0.92 $2.58 $2.55
===
View original content to download multimedia:http://www.prnewswire.com/news-releases/xilinx-reports-fiscal-third-quarter-2020-results-300994832.html
SOURCE Xilinx, Inc.
