QLogic: Fiscal 3Q15 Financial Results

(in $ million)	3Q14	3Q15	9 mo. 14	9 mo. 15
Revenues	119.4	140.2	345.2	387.2
*Growth*		17%		*12%*
Net income (loss)	20.6	22.4	28.5	39.4

QLogic Corp. announced its third quarter financial results for the period ended December 28, 2014.

Third Quarter Highlights

Net revenue: $140.2 million, up 10% sequentially
GAAP net income: $22.4 million or $0.25 per diluted share
Non-GAAP net income: $31.6 million, or $0.36 per diluted share
GAAP operating income: $23.7 million, up 75% sequentially
Non-GAAP operating income: $33.9 million, up 33% sequentially
Operating margin: 16.9% GAAP, 24.2% non-GAAP
Cash and marketable securities: $287.9 million as of December 28, 2014
Cash generated from operations: $25.6 million

Net revenue for the third quarter of fiscal 2015 was $140.2 million and increased 17% from $119.4 million in the same quarter last year.

Revenue from Advanced Connectivity Platforms was $124.7 million during the third quarter of fiscal 2015 and increased 27% from $98.5 milion in the same quarter last year.

Net income on a GAAP basis for the third quarter of fiscal 2015 increased to $22.4 million or $0.25 per diluted share from $20.6 million or $0.24 per diluted share for the third quarter of fiscal 2014. Net income on a non-GAAP basis for the third quarter of fiscal 2015 increased 24% to $31.6 million, or $0.36 per diluted share, from $25.6 million, or $0.29 per diluted share, for the third quarter of fiscal 2014. The GAAP and non-GAAP net income per diluted share amounts for the thirdquarter of fiscal 2015 include the benfits associated with the retroactive reinstatement of the federal research tax credit, which contributed $0.04 to net income per diluted share.

“I am very pleased with our strong financial performance and execution during the third quarter. For the second consecutive quarter, we delivered both revenue and non-GAAP earnings per diluted share above the high end of our guidance range,” said Prasad Rampalli, president and CEO. “Our strong revenue performance, combined with our intense focus on operating expense management resulted in a significant expansion of our operating profit during the third quarter. Based on our compelling product portfolio, our focus on consistent execution and the current momentum with the enterprise upgrade cycle, we believe we are well positioned to continue delivering solid revenue and earnings per share performance.”

Comments

Jean Hu, CFO:
"Third quarter revenue from Legacy Connectivity Products, which are comprised primarily of switch products, was a $15.5 million and it declined from $21 million recorded in the third quarter of last year.
"Now moving onto our near-term outlook for the fourth quarter of fiscal 2015. We expect total revenue to be in the range of $132 million to $138 million. At midpoint, we expect revenue from Advanced Connectivity Platforms to be down approximately 2% sequentially. We expect revenue from Legacy Connectivity Products to be approximately $30 million."

Prasad Rampalli, president and CEO:
"With our sequential revenue growth of FC adapters well in excess of our 7% guidance for the December quarter, we are confident that we will have calendar year-over-year revenue share gains and achieve our 11th consecutive year of FC adapter market share leadership.
"Our FC technology is the most widely deployed with over 1.5 million adapter - additional adapter ports shipped in calendar 2014, bringing our overall adapter port shipped to nearly 16.5 million.
"I mentioned a number of key design wins last quarter with players such as Pure Storage, Cisco, EMC, WiLine, SolidFire and Tegile. A number of our all-flash array design wins have completed qualification and are now shipping. As a result of our all-flash array related product revenue grew at a CAGR in excess of 150% over the last 2 years and represents a solid double-digit percentage of our total revenue from storage connectivity products."