Mellanox: Fiscal 2Q08 Financial Results

(in US$ millions)	2Q07	2Q08	6 mo. 07	6 mo. 08
Revenues	19.8	28.2	36.6	53.4
*Growth*		+42%		*+46%*
Net income (loss)	5.6	4.6	9.2	8.9

Mellanox Technologies, Ltd. announced record financial results for its second quarter ended June 30, 2008.

Second Quarter Highlights

Net revenue increased to a record $28.2 million, up 43% from the same quarter last year
Gross margins were 79.8%
Net income: $4.6 million GAAP, $9.6 million non-GAAP
Net income per diluted share: $0.14 GAAP, $0.28 non-GAAP
$10.1 million in cash generated from operations
$165 million in total cash and investments at quarter end

Financial Results
In accordance with U.S. generally accepted accounting principles (GAAP), the company reported record revenue of $28.2 million, up from $25.2 million in the first quarter of 2008 and up 43 percent from the $19.8 million reported in the second quarter of 2007.

Gross margins in the second quarter were 79.8 percent, compared with 76.4 percent in the first quarter of 2008 and 75.1 percent reported in the second quarter a year ago. GAAP net income in the second quarter was $4.6 million or $0.14 per diluted share and included a tax expense of $3.0 million from the realization of deferred tax assets and $2.0 million of share-based compensation expense.

On a non-GAAP basis, the company recorded second quarter net income of $9.6 million, or $0.28 per diluted share, compared with $8.6 million or $0.25 per diluted share in the first quarter of 2008 and $6.4 million or $0.19 per diluted share in the second quarter of 2007. These non-GAAP net income results exclude share-based compensation expenses and the realization of deferred tax assets.

Total cash and investments were $165 million at June 30, 2008. The company generated $10.1 million of cash from operations during the quarter.

“Our eighth consecutive quarter of record revenue highlights the continued growth, design wins and deployment of our leading interconnect adapters and switch silicon in a variety of tier-one OEM systems,” said Eyal Waldman, chairman, president and CEO. “During the quarter we announced the availability of InfiniScale IV, our 36-port 40Gb/s InfiniBand switch silicon, and showcased it with multiple OEM and software vendors running real-life clustering applications. We are seeing large-scale deployments of 40Gb/s InfiniBand clusters based on InfiniScale IV, such as the Virginia Tech 324-node supercomputer.”