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Mellanox: Fiscal 1Q14 Financial Results

Increased revenue and loss

This is a Press Release edited by StorageNewsletter.com on April 29, 2014 at 2:42 pm
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(in $ million) 1Q13 1Q14
Revenue 83.1 98.7
Growth    19%
Net income (loss)
 (8.5) (11.4)

Mellanox Technologies, Ltd. announced financial results for its first quarter 2014, ended March 31, 2014.

First Quarter 2014 Highlights

  • Revenues were $98.7 million.
  • GAAP gross margins were 65.7%.
  • Non-GAAP gross margins were 68.6%.
  • GAAP operating loss was $10.9 million.
  • Non-GAAP operating income was $4.9 million.
  • GAAP net loss was $11.4 million.
  • Non-GAAP net income was $4.5 million.
  • GAAP net loss per diluted share was $0.26.
  • Non-GAAP net income per diluted share was $0.10.
  • $10.5 million in cash was provided by operating activities.
  • Cash and investments totaled $340.1 million at March 31, 2014.

Financial Results
In accordance with GAAP, the company reported revenue of $98.7 million for the first quarter of 2014, down 6.5% from $105.5 million in the fourth quarter of 2013, and up 18.8% from $83.1 million in the first quarter of 2013.

GAAP gross margins in the first quarter of 2014 were 65.7%, compared with 64.9% in the fourth quarter of 2013 and 65.2% in the first quarter of 2013.

Non-GAAP gross margins in the first quarter of 2014 were 68.6 percent, compared with 68.5% in the fourth quarter of 2013 and 68.1% in the first quarter of 2013.

GAAP net loss in the first quarter of 2014 was $11.4 million, or $0.26 per diluted share, compared with GAAP net loss of $7.3 million, or $0.17 per diluted share in the fourth quarter of 2013 and GAAP net loss of $8.5 million or $0.20 per diluted share in the first quarter of 2013.

Non-GAAP net income in the first quarter of 2014 was $4.5 million, or $0.10 per diluted share, compared with $9.7 million, or $0.21 per diluted share in the fourth quarter of 2013, and $4.3 million, or $0.10 per diluted share in the first quarter of 2013. The first quarter 2014 non-GAAP net income excludes $11.6 million of share-based compensation expense compared to $11.7 million in the fourth quarter of 2013, and $10.4 million in the first quarter of 2013. The first quarter 2014 non-GAAP net income also excludes amortization expenses of acquired intangible assets of $3.5 million, and $0.7 million of charges associated with the acquisition of Kotura, Inc. and IPtronics A/S, compared to amortization expenses of acquired intangible assets of $4.4 million and acquisition related charges of $0.9 million in the fourth quarter of 2013, and compared to $2.4 million of amortization expense of acquired intangibles assets in the first quarter of 2013.

Total cash and investments at March 31, 2014 were $340.1 million compared to $330.2 million at December 31, 2013. The company generated $10.5 million in cash from operating activities in the first quarter of 2014.

“Our first quarter results are a significant achievement given the pause in the HPC market ahead of its refresh cycle and the lower than expected revenues from one of our largest customers,” said Eyal Waldman, president and CEO, Mellanox. “We continue to see growth in data, the number of devices generating and consuming data, and the number of applications and users utilizing data. This growth drives the need for faster and better interconnects, fulfilled today by our 56Gb/s and, in the future, by our 100Gb/s solutions for which we already see demand. We believe that we will grow year-over-year in 2014 with our growth accelerating in the second half of the year.“

Recent Mellanox Press Release Highlights

  • April 16, 2014 – Collaborates with Dell to Optimize Computational Performance for Applications
  • April 15, 2014 – Delivers IB and Ethernet CloudX Interconnect Cloud Solution at National Computational Infrastructure
  • April 3, 2014 – IB, 10GbE and 40GbE Solutions Cloudera 5 Certified
  • March 10, 2014 – Announces LinkX the Most Comprehensive Product Family of Cables and Transceivers for Data Center Infrastructures
  • March 10, 2014 – Showcases 100Gb QSFP Solutions
  • March 3, 2014 – With University of Cambridge Collaborating to Develop Computing Platform for the Square Kilometer Array (SKA) Project
  • February 18, 2014 – CloudX Platform to Enable Companies to Build the Most Efficient Public, Private and Hybrid Clouds
  • February 10, 2014 – 10 and 40GbE NICs Support Microsoft Open Compute Project (OCP) Cloud Server Specification
  • February 4, 2014 – Releases Ethernet Switch API to the Community as Part of The Open Ethernet Initiative
  • February 3, 2014 – Launches of Mellanox Capital

Comments

Abstracts the earnings call transcript:

Jacob Shulman, CFO:
"Revenues from our 56Gb IBd-based products represented 52% of revenues in Q1, down from 55% of revenues in Q4 2013. Revenues from our 40Gb IB-based products represented 14% of revenues in Q1, down from 17% of revenues in Q4 2013.
"Ethernet related revenues represented 19% of first quarter revenue, up from 15% of revenues in Q4.
"We had one more than 10% customer in the first quarter. Dell represented approximately 12.5% of revenues.
"We currently expect our Q2 2014 non-GAAP results to be as follows: quarterly revenues of $100 million to $105 million, Q2 2014 gross margins of 68% to 69%, reflecting our latest forecasted product mix. We expect a sequential increase in non-GAAP operating expenses of 4% to 6%."

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