QLogic: Fiscal 2FQ15 Financial Results

(in $ million)	2Q14	2Q15	6 mo. 14	6 mo. 15
Revenues	112.6	127.5	225.7	247.0
*Growth*		13%		9%
Net income (loss)	11.0)	11.0	7.9	17.0

Second Quarter Highlights

Net revenue: $127.5 million, up 7% sequentially
GAAP net income: $11.0 million or $0.12 per diluted share
Non-GAAP net income: $22.0 million, or $0.25 per diluted share, up 19% sequentially
Operating margin: 10.6% GAAP, 20.1% non-GAAP
Cash and marketable securities: $276.8 million as of September 28, 2014
Cash generated from operations: $28.4 million

Net revenue for the second quarter of fiscal 2015 was $127.5 million and increased 13% from $112.6 million in the same quarter last year.

Revenue from Advanced Connectivity Platforms was $114.9 million during the second quarter of fiscal 2015 and increased 22% from $94.0 million in the same quarter last year.

The growth of our net revenue in the second quarter was driven by a sequential increase in revenue from FC adapters of more than 5% and a sequential increase in revenue from Ethernet products of approximately $5 million.

Net income on a GAAP basis was $11.0 million or $0.12 per diluted share for the second quarter of fiscal 2015 compared to $11.0 million or $0.13 per diluted share for the second quarter of fiscal 2014. Net income on a non-GAAP basis for the second quarter of fiscal 2015 increased 10% to $22.0 million, or $0.25 per diluted share, from $20.0 million, or $0.23 per diluted share, for the second quarter of fiscal 2014.

QLogic also announced that its board of directors has authorized a program to repurchase up to $100 million of the company’s outstanding common stock over a period of up to 18 months.

“I am very pleased with our financial performance in the second quarter. We delivered both revenue and non-GAAP earnings per diluted share that exceeded the high end of our guidance range. Based on our current execution, compelling product portfolio, and design win and qualification activity, we are well positioned to continue solid revenue and earnings per share performance during the second half of fiscal 2015,” said Prasad Rampalli, president and CEO, QLogic. “The stock repurchase program that we announced underscores the Board’s ongoing commitment to enhancing shareholder value, as well as our confidence in our long-term business growth prospects and financial outlook.”

Comments

Jean Hu, SVP and CFO:
"Our second quarter revenue from Advanced Connectivity Platforms, which are comprised primarily of adapters and silicon for sever and storage connectivity applications, were $114.9 million, up 22% from the $94 million recorded in the second quarter of last year.
"Now moving to our near-term outlook for the third quarter of fiscal 2015. We expect total revenue to be in the range of $134 million to $140 million. At the middle point we expect revenue from Advanced Connective Platforms to be up approximately 9% sequentially. We expect revenue from Legacy Connectivity Products to be approximately $12 million.
"Second quarter revenue from Legacy Connectivity Products which are comprised primarily of switch products was $12.6 million and declined from $18.6 million recorded in the second quarter of last year. This decline was consistent with our expectation and what we expect the revenue from this product to continue to decline over time."

Prasad Rampalli, president and CEO:
"Our success in the all flash market is illustrated by design wins at Pure Storage, Cisco, EMC, Solidfire and Tegile.
"Early progress is going so well and ahead of plan [for FC gen 6 at 32Gb/s], that we have already sampled the product. We're tracking to broader sampling this quarter and production units in calendar year 2015.
"More than 25 of our FC adapter solutions are being deployed with the world's top server manufacturers on these new platforms."