Mellanox: Fiscal 3Q09 Financial Results

(in US$ millions)	3Q08	3Q09	9 mo. 08	9 mo. 09
Revenues	29.1	32.7	82.5	80.5
*Growth*		+12%		*-2%*
Net income (loss)	5.2	4.8	14.4	8.6

Mellanox Technologies, Ltd. announced record revenue for its third quarter ended Sept. 30, 2009.

Third Quarter Highlights

Revenues were $32.7 million
Gross margins were 75.2 percent
Operating income was $6.7 million or 20.6 percent of revenues
Net income: $4.8 million GAAP, $8.9 million non-GAAP
Net income per diluted share: $0.14 GAAP, $0.25 non-GAAP
$14.2 million in cash provided by operating activities
$208.1 million in total cash and investments at Sept. 30, 2009

Financial Results
In accordance with U.S. generally accepted accounting principles (GAAP), the company reported revenue of $32.7 million, up from $25.3 million in the second quarter of 2009, and up from $29.1 million in the third quarter of 2008.

Gross margins in the third quarter were 75.2 percent, up from 74.1 percent in the second quarter of 2009 and compared with 79.1 percent in the third quarter of 2008. GAAP net income in the third quarter of 2009 was $4.8 million or $0.14 per diluted share, up from $1.7 million or $0.05 per diluted share in the second quarter of 2009 and compared with $5.2 million or $0.16 per diluted share in the third quarter of 2008.

On a non-GAAP basis, the company recorded third quarter net income of $8.9 million, or $0.25 per diluted share, compared with $4.7 million or $0.13 per diluted share in the second quarter of 2009 and $9.6 million or $0.28 per diluted share in the third quarter of 2008. The third quarter 2009 non-GAAP net income results exclude $2.4 million of share-based compensation expenses and tax expense of $1.7 million from changes in certain deferred tax assets.

Total cash and investments increased to $208.1 million at Sept. 30, 2009. The company generated $14.2 million in cash from operating activities during the quarter.

“Design wins and worldwide adoption of our InfiniBand and Ethernet connectivity products continued to grow in the third quarter,” said Eyal Waldman, chairman, president and CEO of Mellanox Technologies. “Increased system utilization and efficiency resulting from the adoption of our technology creates a competitive edge for both server and storage systems customers and drove sales of our products in various end-markets. With Mellanox-based connectivity solutions, end-users achieve much better performance with significantly lower capital expenses and total cost of ownership resulting in higher return-on-investment.”