Mellanox: Fiscal 1Q16 Financial Results

Mellanox Technologies, Ltd. announced financial results for its first quarter ended March 31, 2016.

“We are pleased to report the fourth consecutive quarter of record revenue. Our profitability grew 37.2% year-over-year. During the quarter we closed the acquisition of EZchip Semiconductor Ltd. We see great promise in the combination of EZchip’s intelligent processors, and Mellanox’s leading interconnect technology. We believe the combined company can deliver compelling value to current and future customers,” said Eyal Waldman, president and CEO. “We recorded strong growth in our Ethernet business, supported by adoption of our 40GbE adapters. We are seeing strong interest in the Spectrum product line and expect revenues to accelerate in the coming quarters. Tests demonstrate superior performance, costs, resiliency, and power of Spectrum compared to alternative products. We are pleased to see our IB business grow year-over-year. We see additional hyperscale entities deployed IB in their data centers.”

First Quarter 2016 Highlights

• Revenues of $196.8 million increased 11.2%, compared to $176.9 million in the fourth quarter of 2015.
• GAAP gross margins of 64.2% in the first quarter compared to 70.7% in the fourth quarter of 2015.
• Non-GAAP gross margins of 71.4% in the first quarter compared to 72.2% in the fourth quarter of 2015.
• GAAP operating loss was $3.9 million, compared to operating income of $19.9 million in the fourth quarter of 2015.
• Non-GAAP operating income was $41.3 million, or 21.0% of revenue, compared to $36.6 million, or 20.7% of revenue in the fourth quarter of 2015.
• GAAP net loss was $7.2 million, compared to net income of $43.2 million in the fourth quarter of 2015.
• Non-GAAP net income was $39.3 million, compared to $37.5 million in the fourth quarter of 2015.
• GAAP net loss per diluted share was $0.15 in the first quarter compared to net income per diluted share of $0.90 in the fourth quarter of 2015.
• Non-GAAP net income per diluted share was $0.81 in the first quarter compared to $0.77 in the fourth quarter of 2015.
• $48.6 million in cash was provided by operating activities, compared to $34.7 million in the fourth quarter of 2015.
• Cash and investments totaled $261.8 million at March 31, 2016, compared to $510.5 million at December 31, 2015.

Second Quarter 2016 Guidance

• Quarterly revenues of $210 million to $215 million
• Non-GAAP gross margins of 71% to 72%
• An increase in non-GAAP operating expenses of 8% to 10%
• Share-based compensation expense of $13.4 million to $13.9 million
• Non-GAAP diluted share count of 48.8 million to 49.3 million shares

Recent Mellanox Press Release Highlights

• April 4, 2016: Mellanox Announces New Line of IB Router Systems, Expanding Data Center Scalability and Enabling Infrastructure Flexibility
• Mar 22, 2016: Mellanox Announces First 200Gb/s Silicon Photonics Devices, Doubling The Performance in the QSFP Form Factor
• Mar 22, 2016: Mellanox and InnoLight Announce the Availability and Interoperability of 100Gb/s PSM4 Transceivers at 1,310 and 1,550nm Wavelengths
• Mar 8, 2016: Mellanox Showcases End to End 100GbE Solutions for Content Distribution Networks
• Mar 7, 2016: Mellanox Adds Cumulus Linux Support for Ethernet Switches
• Mar 7, 2016: Mellanox Introduces World’s First 25/50Gb/s OCP Ethernet Adapters for Single and Multi-Host Technology
• Mar 7, 2016: Mellanox Introduces Open Composable Networks to Enable New Interconnect Speeds and Higher Efficiency for OCP Platforms
• Mar 2, 2016: Mellanox Joins RISC-V Foundation as a Platinum Founding Sponsor
• Mar 1, 2016: Mellanox Delivers Next Generation Network Processor to Key Telco Customers
• Feb 24, 2016: Mellanox Partners with Nutanix to Deliver Effortless Enterprise Infrastructure