Cavium Announces Financial Results for Q3 2017
SAN JOSE, Calif., Nov. 1, 2017 /PRNewswire/ -- Cavium, Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable intelligent processing for enterprise, data center, cloud, wired and wireless networking, today announced financial results for the third quarter ended September 30, 2017.
Net revenue in the third quarter of 2017 was $252.0 million, a 4.1% sequential increase from the $242.1 million reported in the second quarter of 2017 and 49.9% from the $168.1 million reported in the third quarter of 2016.
Generally Accepted Accounting Principles (GAAP) Results
Net loss for the third quarter of 2017 was $6.2 million, or ($0.09) per diluted share, compared to $11.1 million, or ($0.16) per diluted share in the second quarter of 2017. Gross margins were 54.6% in the third quarter of 2017 compared to 53.5% in the second quarter of 2017. As a percentage of revenue, GAAP income from operations was 0.19% in the third quarter of 2017 compared to GAAP operating loss of 2.5% in the second quarter of 2017. Total cash and cash equivalents were $152.7 million at September 30, 2017.
Non-GAAP Results
Cavium believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to Cavium's financial condition and results of operations. Cavium believes that these non-GAAP financial measures provide additional insight into Cavium's ongoing performance and core operational activities and has chosen to provide these measures for more consistent and meaningful comparison between periods. These measures should only be used to evaluate Cavium's results of operations in conjunction with the corresponding GAAP measures. The reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this release.
In the third quarter of 2017, Non-GAAP net income was $55.8 million, or $0.76 per diluted share, Non-GAAP gross margin was 66.0% and Non-GAAP income from operations as a percentage of revenue was 24.8%.
Recent News Highlights
-- October 24, 2017 - Cadence and Arm Delivers First SoC Verification
Solution for Low-Power, High-Performance Arm-Based Servers
-- October 9, 2017 - China Unicom Awarded "Best 5G Initiative" RANNYs Award
in Partnership with Cavium
-- September 11, 2017 - Cavium Showcased M-CORD NFV/5G on ARM with Leaf and
Spine SDN Fabric at Mobile World Congress Americas 2017
-- September 11, 2017 - Cavium and Enea Delivers Optimized Software and
Hardware Platform for uCPE
-- August 28, 2017 - Cavium Demonstrated NVMe Scale-out Technologies at
VMworld US 2017
-- August 10, 2017 - Cavium Announced Support for FC-NVMe Standard
-- August 8, 2017 - Cavium Demonstrated Breakthrough NVMe over Fabrics
Performance at Flash Memory Summit 2017
Cavium will broadcast its third quarter of 2017 financial results conference call today, November 1, 2017, at 2 p.m. Pacific time (5 p.m. Eastern time). The conference call will be available via a live web cast on the investor relations section of the Cavium website at http://www.cavium.com. Please access the website at least a few minutes prior to the start of the call in order to download and install any necessary audio software. An archived web cast replay of the call will be available on the web site for a limited period of time.
About Cavium
Cavium offers a broad portfolio of infrastructure solutions for compute, security, storage, switching, connectivity, and baseband processing. Cavium's highly integrated multi-core SoC products deliver software compatible solutions across low to high performance points enabling secure and intelligent functionality in Enterprise, Data Center and Service Provider Equipment. Cavium processors and solutions are supported by an extensive ecosystem of operating systems, tools, application stacks, hardware-reference designs, and other products. Cavium is headquartered in San Jose, CA with design centers in California, Massachusetts, India, Israel, China, and Taiwan. For more information about the Company, please visit: http://www.cavium.com.
CAVIUM, INC.
Unaudited GAAP Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended
------------------
September 30, 2017 June 30, 2017
------------------ -------------
Net revenue $251,987 $242,093
Cost of revenue 114,455 112,604
------- -------
Gross profit 137,532 129,489
------- -------
Operating expenses:
Research and development 93,860 94,758
Sales, general and administrative 43,184 40,791
------ ------
Total operating expenses 137,044 135,549
------- -------
Income (loss) from operations 488 (6,060)
--- ------
Other income (expense), net:
Interest expense (6,493) (6,062)
Other, net 277 1
--- ---
Total other expense, net (6,216) (6,061)
------ ------
Loss before income taxes (5,728) (12,121)
Provision for (benefit from)
income taxes 486 (1,049)
--- ------
Net loss $(6,214) $(11,072)
======= ========
Net loss per common
share, basic and
diluted $(0.09) $(0.16)
Shares used in computing basic and
diluted net loss per common share 68,675 68,199
CAVIUM, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data and percentages)
Three Months Ended
------------------
September 30, 2017 June 30, 2017
------------------ -------------
Reconciliation of GAAP gross profit and
margin to non-GAAP:
Net revenue $251,987 $242,093
GAAP gross profit 137,532 129,489
GAAP gross margin 54.6% 53.5%
Stock-based compensation and related
payroll taxes 879 718
Inventory charges (18) 1,661
Amortization of acquisition related assets 27,947 27,706
------ ------
Non-GAAP gross profit $166,340 $159,574
======== ========
Non-GAAP gross margin 66.0% 65.9%
==== ====
Reconciliation of GAAP operating expenses
to non-GAAP:
GAAP research and
development expenses $93,860 $94,758
Stock-based compensation and related
payroll taxes (17,437) (18,298)
Amortization of acquisition related assets (725) (731)
Acquisition and integration related costs (743) (811)
---- ----
Non-GAAP research and development expenses 74,955 74,918
------ ------
GAAP sales, general and administrative
expenses 43,184 40,791
Stock-based compensation and related
payroll taxes (9,035) (9,363)
Amortization of acquisition related assets (1,278) (1,277)
Acquisition and integration related costs (3,997) (1,984)
------ ------
Non-GAAP sales, general and
administrative expenses 28,874 28,167
------ ------
Total Non-GAAP operating
expenses $103,829 $103,085
======== ========
Reconciliation of GAAP Income tax to non-
GAAP:
GAAP provision for (benefit
from) income tax $486 $(1,049)
Acquisition related tax adjustments - 2,605
--- -----
Non-GAAP provision for
income tax $486 $1,556
==== ======
CAVIUM, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data and percentages)
Three Months Ended
------------------
September 30, 2017 June 30, 2017
------------------ -------------
Reconciliation of GAAP income (loss) from
operations to non-GAAP income from
operations:
GAAP income (loss) from
operations $488 $(6,060)
Stock-based compensation and related payroll
taxes 27,351 28,379
Inventory charges (18) 1,661
Amortization of acquisition related assets 29,950 29,714
Acquisition and integration related costs 4,740 2,795
----- -----
Non-GAAP income from operations $62,511 $56,489
======= =======
Non-GAAP income from operations as a
percentage of revenue 24.8% 23.3%
==== ====
Reconciliation of GAAP net loss to non-GAAP
net income:
GAAP net loss $(6,214) $(11,072)
Non-GAAP adjustments:
Stock-based compensation and related payroll
taxes 27,351 28,379
Inventory charges (18) 1,661
Amortization of acquisition related assets 29,950 29,714
Acquisition and integration related costs 4,740 2,795
Acquisition related tax adjustments - (2,605)
--- ------
Total of non-GAAP adjustments 62,023 59,944
------ ------
Non-GAAP net income $55,809 $48,872
======= =======
GAAP net loss per share,
diluted $(0.09) $(0.16)
====== ======
Non-GAAP adjustments detailed above 0.85 0.83
Non-GAAP net income per share,
diluted $0.76 $0.67
===== =====
GAAP weighted average shares, diluted 68,675 68,199
Non-GAAP share adjustment 4,488 5,019
----- -----
Non-GAAP weighted average shares, diluted 73,163 73,218
CAVIUM, INC.
Unaudited GAAP Condensed Consolidated Balance Sheets
(in thousands)
As of
-----
September 30, 2017 June 30, 2017
------------------ -------------
Assets
Current assets
Cash and cash equivalents $152,654 $127,061
Accounts receivable, net 186,447 173,754
Inventories 94,879 94,116
Prepaid expenses and other current assets 23,510 21,669
------ ------
Total current assets 457,490 416,600
Property and equipment, net 169,747 157,542
Intangible assets, net 692,994 714,636
Goodwill 237,692 241,067
Other assets 5,757 5,286
----- -----
Total assets $1,563,680 $1,535,131
========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $74,207 $72,494
Accrued expenses and other current liabilities 44,898 49,825
Deferred revenue 9,501 8,990
Current portion of long-term debt 3,270 3,256
Capital lease and technology license
obligations 27,803 19,195
------ ------
Total current liabilities 159,679 153,760
Long-term debt 593,770 594,590
Capital lease and technology license
obligations, net of current 15,025 20,563
Deferred tax liability 16,824 16,972
Other non-current liabilities 25,436 18,722
------ ------
Total liabilities 810,734 804,607
------- -------
Stockholders' equity
Common stock 69 68
Additional paid-in capital 1,157,386 1,128,752
Accumulated deficit (405,302) (399,088)
Accumulated other comprehensive income 793 792
--- ---
Total stockholders' equity 752,946 730,524
------- -------
Total liabilities and
stockholders' equity $1,563,680 $1,535,131
========== ==========
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SOURCE Cavium, Inc.
