Xilinx Reports Record Quarterly Revenues And EPS; Raises Fiscal Year 2019 Guidance
SAN JOSE, Calif., Oct. 24, 2018 /PRNewswire/ -- Xilinx, Inc. (Nasdaq: XLNX) today announced record revenues of $746 million for the second quarter of fiscal year 2019, up 9% from the prior quarter and up 19% year over year. GAAP net income for September quarter was a record of $216 million, or $0.84 per diluted share. Non-GAAP net income for September quarter was a record of $221 million, or $0.87 per diluted share.
The Xilinx Board of Directors declared a quarterly cash dividend of $0.36 per outstanding share of common stock payable on December 4, 2018 to all stockholders of record at the close of business on November 13, 2018.
Additional second quarter of fiscal year 2019 comparisons are represented in the charts below. Due to the adoption of the new revenue recognition standard in the first quarter of fiscal year 2019, all fiscal 2018 results have been restated to conform to the new standard:
Q2 2019 Financial Highlights
(In millions, except EPS)
GAAP
Q2
Q1
Q2
FY 2019 FY 2019 FY 2018 Q-T-Q Y-T-Y
Net Revenues* $746 $684 $627 9% 19%
Operating income $233 $216 $192 8% 21%
Net income $216 $190 $174 14% 24%
Diluted earnings per share $0.84 $0.74 $0.67 14% 25%
Non-GAAP
Q2
Q1
Q2
FY 2019 FY 2019 FY 2018 Q-T-Q Y-T-Y
Net Revenues* $746 $684 $627 9% 19%
Operating income $236 $218 $193 8% 22%
Net income $221 $192 $174 15% 27%
Diluted earnings per share $0.87 $0.75 $0.67 16% 30%
*No adjustment between GAAP
and Non-GAAP
"I am very excited to report another record revenue and earnings quarter. Xilinx continues to execute on the new strategy I unveiled earlier this year, delivering strong results well ahead of our initial expectations. During the second fiscal quarter, we delivered revenues of $746 million, representing 19% year over year growth. In addition, we demonstrated strong profitability by posting approximately 30% growth in non-GAAP diluted earnings per share. Driven by broad-based strength across Communications, Data Center & TME as well as Automotive, Broadcast & Consumer businesses, we are raising our revenue guidance for the full year to approximately 20% growth, compared to the prior year," said Victor Peng, President and Chief Executive Officer.
"Building on our history of innovation, we recently announced Versal, the industry's first Adaptive Compute Acceleration Platform, or ACAP, that delivers powerful acceleration for any application. In addition, we launched Alveo, a portfolio of accelerator cards that dramatically increase performance in industry standard servers. Alveo, now shipping in production, provides customers with breakthrough performance improvement at low latency and unprecedented adaptability across key data center applications. Both innovations advance our mission of enabling an adaptable and intelligent world."
Net Revenues by Geography:
Percentages Growth Rates
Q2 Q1 Q2 Q-T-Q Y-T-Y
FY 2019 FY 2019 FY 2018
---
North
America 28% 28% 32% 7% 5%
Asia
Pacific 44% 45% 39% 8% 34%
Europe 20% 19% 20% 16% 20%
Japan 8% 8% 9% 5% 0%
Net Revenues by End Market:
Percentages Growth Rates
Q2 Q1 Q2 Q-T-Q Y-T-Y
FY 2019 FY 2019 FY 2018
---
Data Center and TME 21% 19% 20% 24% 28%
Automotive, Broadcast and
Consumer 16% 16% 16% 7% 17%
Communications 35% 31% 31% 23% 33%
Industrial, Aerospace &
Defense 25% 33% 32% (16)% (5)%
Channel 3% 1% 1%
NM
NM
Net Revenues by Product:
Percentages Growth Rates
Q2 Q1 Q2 Q-T-Q
FY 2019 FY 2019 FY 2018
Y-T-Y
Advanced
Products 64% 56% 53% 25% 43%
Core
Products 36% 44% 47% (11)% (9)%
Products are classified as follows:
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)
Q2 Q1 Q2
FY 2019 FY 2019 FY 2018
---
Annual Return on Equity (%)* 34 32 26
Operating Cash Flow $313 $176 $202
Depreciation Expense (including
software amortization) $16 $15 $12
Capital Expenditures (including
software) $14 $26 $12
Combined Inventory Days 100 113 116
Revenue Turns (%) 48 37 53
*Return on equity calculation:
Annualized year to date net income/
average stockholders' equity
Product and Financial Highlights - Fiscal Second Quarter 2019
-- Data Center and Test, Measurement & Emulation (TME) revenues grew 28%
year over year driven by strength in both Data Center and TME
businesses. Data Center business momentum continued to strengthen with
design wins from hyperscalers and other customers, such as Samsung, who
recently announced a new product called SmartSSDs that leverages Xilinx
FPGAs for near-data acceleration in storage devices. Recently, AWS
doubled the availability of FPGA-as-a-Service (FaaS) to eight regions.
In addition, Alibaba FaaS moved from Beta to General Access, joining AWS
and Huawei. Further developing its platform ecosystem, the Company
successfully executed Xilinx Developer Forums in the US and China, with
each attracting over 1,100 attendees.
-- Communications revenues increased 33% year over year, as both wireless
and wired businesses benefitted from LTE upgrades, early 5G deployment
in Korea and preparation for 5G deployment in both China and North
America. Wireless business grew with broad strength across radio and
baseband applications with OEM customers across multiple geographies.
Customer transitions to next generation products across a range of
applications, including OTN/Metro, Access and Data Center Interconnect,
fueled the growth of our wired business.
-- Zynq based revenues grew approximately 70% year over year driven by a
broad set of applications across multiple end markets, including ADAS in
Automotive, reflecting the Company's transformation to a platform
company. RFSoC revenues grew strongly and were approximately 4x higher
over the prior quarter. Customer momentum for the RFSoC product family
continues to grow with over 100 customers in various stages of
engagement. Additionally, RFSoC was used in trials during the 2018 World
Cup to provide high bandwidth streaming over traditional LTE bands. The
Zynq SoC Platform, which includes Zynq at 28nm and both MPSoC and RFSoC
at 16nm, now represents 18% of total revenues.
-- The Advanced Products category in the second quarter increased 43% year
over year and constituted approximately 64% of total sales. Revenues
from the 28nm node increased 16% and revenues from the 20nm node
increased approximately 40% year over year. Revenue from the 16nm node
continued its accelerated ramp with broad-based adoption, increasing
approximately 3.5x during the same period.
-- Enabling a new era of rapid innovation for any application by any
developer, Xilinx recently announced Versal - the industry's first
Adaptive Compute Acceleration Platform (ACAP). Built on TSMC's 7-nm
FinFET process technology, the Versal portfolio is the first platform to
combine software programmability with domain-specific hardware
acceleration and the adaptability necessary to keep pace with today's
rapid pace of innovation. Versal accelerates a broad range of
applications, including machine learning inference, across multiple end
markets ranging from the cloud to network to edge and endpoint.
-- Xilinx also recently launched Alveo, a portfolio of powerful accelerator
cards designed to dramatically increase performance in industry-standard
servers across cloud and on-premise data centers. With Alveo, customers
can expect breakthrough performance improvement at low latency when
running key data center applications like real-time machine learning
inference as well as video processing, genomics, and data analytics,
among others. Huawei recently announced that they are integrating and
deploying Alveo acceleration cards in its server product portfolio, and
collaborating with Xilinx to jointly enable a unified ecosystem of
applications partners in China. In addition, Inspur, a leading global
data center and cloud computing solutions provider, announced that it is
qualifying two Alveo cards for key server platforms.
Business Outlook - Fiscal Q3 2019 & Fiscal Year 2019
The following statements are based on current expectations, and as indicated, are presented on a GAAP and non-GAAP basis. These statements are forward-looking and actual results may differ materially, as a result of, among other things, the important factors discussed at the end of this release.
Fiscal Q3 2019
GAAP
Non-GAAP
Non-GAAP
Adjustments
---
Revenues
$760M - $780M
$760M - $780M
--- ---
Gross Margin ~ 69% ~ 69%
--- ---
Operating
Expenses
~$295M
$5M (1)
~$290M
--- ---
Other Income
~$4-5M
~$4-5M
--- ---
Tax Rate 10% - 12% 10% - 12%
--- ---
Fiscal Year 2019
GAAP
Non-GAAP
Non-GAAP
Adjustments
---
Revenues
$2,950M - $3,000M
$2,950M - $3,000M
--- ---
Gross Margin 69% - 70% 69% - 70%
--- ---
Operating
Expenses
$1,145M - $1,165M
$15 M (2)
$1,130M - $1,150M
--- ---
Other Income
~$10M-15M
$7 M (3)
~$3M-8M
--- ---
Tax Rate 10% - 12%
(1%) (4) 9% - 11%
--- ---
Diluted
Share count
256M
256M
--- ---
Notes regarding Non-GAAP Adjustments:
(1) Excludes an estimated amount of $5
million in M&A related expenses
and amortization of acquired
intangibles
(2) Excludes an estimated amount of $15
million in M&A related expenses
and amortization of acquired
intangibles
(3) Excludes an amount of approximately
$7 million from a gain on
investment
(4) Excludes income tax effects of non-
GAAP adjustments reflected in
Operating Expenses and Other
Income as well as U.S. tax reform
related items
Conference Call
A conference call will be held today at 2:00 p.m. Pacific Time to discuss the September quarter financial results and management's outlook for the December quarter and full year of fiscal year 2019. The webcast and subsequent replay will be available in the investor relations section of the Company's web site at 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 8255409. The telephonic replay will be available for two weeks following the live call.
Non-GAAP Financial Information
Fiscal quarter 2019 results and business outlook for the December quarter and full year of fiscal year 2019 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 due diligence review of acquired companies. We believe that these costs do not reflect the Company's 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.
Gains 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. The Company believes excluding U.S. tax reform related items will facilitate a comparable evaluation of its current performance to its past performance. The third quarter of fiscal 2019 and fiscal year 2019 outlook do not reflect other tax related items which we are not able to predict without unreasonable efforts due to their inherent uncertainty.
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 December quarter and full year of fiscal year 2019. 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 customer acceptance of our new products, current global economic conditions, the health 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 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.
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
Six Months Ended
---
September 29, 2018
June 30, 2018
September 30, 2017*
September 29, 2018
September 30, 2017*
---
Net revenues $746,252 $684,370 $627,419 $1,430,622 $1,230,229
Cost of revenues 231,620 206,888 185,685 438,508 376,509
Gross margin 514,632 477,482 441,734 992,114 853,720
Operating expenses:
Research and development 183,372 170,826 157,985 354,198 311,036
Selling, general and
administrative 97,685 90,532 91,053 188,217 180,228
Amortization of
acquisition-related
intangibles 839 360 510 1,199 1,215
Total operating expenses 281,896 261,718 249,548 543,614 492,479
Operating income 232,736 215,764 192,186 448,500 361,241
Interest and other income
(expense), net 6,408 (2,847) 1,831 3,561 3,669
Income before income taxes 239,144 212,917 194,017 452,061 364,910
Provision for income taxes 23,432 22,879 20,266 46,311 33,915
Net income $215,712 $190,038 $173,751 $405,750 $330,995
===
Net income per common share:
Basic $0.85 $0.75 $0.70 $1.61 $1.33
===
Diluted $0.84 $0.74 $0.67 $1.59 $1.26
===
Cash dividends per common
share $0.36 $0.36 $0.35 $0.72 $0.70
===
Shares used in per share calculations:
Basic 252,988 252,682 248,094 252,541 247,960
Diluted 255,522 255,935 258,217 255,057 261,739
* Fiscal 2018 balances have
been restated to conform to
the new revenue recognition
standard (ASC 606).
XILINX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 29, 2018
March 31, 2018*
---
(unaudited)
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $3,280,560 $3,447,570
Accounts receivable, net 372,983 382,246
Inventories 243,642 236,077
Other current assets 68,098 88,695
Total current assets 3,965,283 4,154,588
Net property, plant and
equipment 312,810 304,117
Long-term investments 91,627 97,896
Other assets 777,816 503,946
Total Assets $5,147,536 $5,060,547
===
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $431,909 $412,759
Current portion of long-term
debt 499,629 499,186
Total current liabilities 931,538 911,945
Long-term debt 1,201,884 1,214,440
Other long-term liabilities 569,228 573,809
Stockholders' equity 2,444,886 2,360,353
Total Liabilities and
Stockholders' Equity $5,147,536 $5,060,547
===
* Fiscal 2018 balances have
been restated to conform to
the new revenue recognition
standard (ASC 606).
XILINX, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
(In thousands)
Three Months Ended
Six Months Ended
---
September 29, 2018
June 30, 2018
September 30, 2017
September 29, 2018
September 30, 2017
---
SELECTED CASH FLOW INFORMATION:
Depreciation and amortization
of other intangibles $16,048 $15,075 $11,732 $31,123 $22,964
Amortization -others 8,144 7,333 3,432 15,477 7,161
Stock-based compensation 34,945 35,608 36,372 70,553 68,408
Net cash provided by
operating activities 313,123 176,168 202,140 489,291 393,048
Purchases of property, plant
and equipment and other
intangibles 14,174 26,359 12,223 40,533 22,149
Payment of dividends to
stockholders 91,077 90,675 86,957 181,752 174,260
Repurchases of common stock 23,236 137,300 170,454 160,536 237,516
Proceeds from issuance of
common stock to employees,
net of withholding taxes (15,797) (5,281) (23,765) (21,078) (22,695)
STOCK-BASED COMPENSATION INCLUDED IN:
Cost of revenues $2,249 $2,035 $2,147 $4,284 $4,297
Research and development 20,047 20,930 20,096 40,977 37,562
Selling, general and
administrative 12,649 12,643 14,129 25,292 26,549
XILINX, INC.
RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
Six Months Ended
---
September 29, 2018
June 30, 2018
September 30, 2017*
September 29, 2018
September 30, 2017*
---
GAAP operating
income $232,736 $215,764 $192,186 $448,500 $361,241
Acquisition-
related costs 2,206 1,495 3,701 -
Amortization of
acquisition-
related
intangibles 839 360 510 1,199 1,215
Non-GAAP
operating income $235,781 $217,619 $192,696 $453,400 $362,456
===
GAAP net income $215,712 $190,038 $173,751 $405,750 $330,995
Acquisition-
related costs 2,206 1,495 3,701 -
Amortization of
acquisition-
related
intangibles 839 360 510 1,199 1,215
Gain from private
investments (6,503) (6,503) -
Income tax effect
of changes in
applicable U.S.
tax laws 9,355 9,355 -
Income tax effect
of non-GAAP
adjustments (160) (160) -
Non-GAAP net
income $221,449 $191,893 $174,261 $413,342 $332,210
===
GAAP diluted EPS $0.84 $0.74 $0.67 $1.59 $1.26
Acquisition-
related costs 0.01 0.01 0.01 -
Amortization of
acquisition-
related
intangibles - 0.01
Gain from private
investments (0.02) (0.02) -
Income tax effect
of changes in
applicable U.S.
tax laws 0.04 0.04 -
Income tax effect
of non-GAAP
adjustments -
Non-GAAP diluted
EPS $0.87 $0.75 $0.67 $1.62 $1.27
===
* Fiscal 2018 balances have
been restated to conform to
the new revenue recognition
standard (ASC 606).
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SOURCE Xilinx, Inc.
