Mellanox: Fiscal 3Q10 Financial Results

in US$ millions)	3Q09	3Q10	9 mo. 09	9 mo. 10
Revenues	32.7	37.8	80.5	113.9
*Growth*		16%		*42%*
Net income (loss)	4.8	3.5	8.6	14.1

Mellanox Technologies, Ltd. announced financial results for its fiscal third quarter 2010, ended Sept. 30, 2010.

Third Quarter Highlights

Revenues were $37.8 million
Gross margins were 73.9 percent
Operating income was $4.8 million or 12.8 percent of revenues
Net income: $3.5 million GAAP, $8.1 million non-GAAP
Net income per diluted share: $0.10 GAAP, $0.22 non-GAAP
$9.3 million in cash provided by operating activities
$242.8 million in total cash and investments at Sept. 30, 2010

Financial Results
In accordance with GAAP, the company reported revenue of $37.8 million, down 5.5 percent from $40.0 million in the second quarter of 2010, and up 15.6 percent from $32.7 million in the third quarter of 2009.

Gross margins in the third quarter of 2010 were 73.9 percent, compared with 74.5 percent in the second quarter of 2010 and 75.2 percent in the third quarter of 2009.

GAAP net income in the third quarter of 2010 was $3.5 million, compared with $5.3 million in the second quarter of 2010 and $4.8 million in the third quarter of 2009. GAAP net income per diluted share in the third quarter was $0.10, compared to $0.15 in the second quarter of 2010 and $0.14 per diluted share in the third quarter of 2009.

Non-GAAP net income in the third quarter of 2010 was $8.1 million, or $0.22 per diluted share, compared with $10.4 million in the second quarter of 2010, or $0.29 per diluted share, and $8.9 million or $0.25 per diluted share in the third quarter of 2009. The third quarter 2010 non-GAAP net income results exclude $3.6 million of share-based compensation expenses and tax expense of $1.1 million from changes in certain deferred tax assets.

Total cash and investments increased to $242.8 million at Sept. 30, 2010. The company generated $9.3 million in cash from operating activities during the quarter.

"We are pleased that our year-to-date revenues are only $2 million less than our total annual revenues in 2009," said Eyal Waldman, chairman, president, and CEO of Mellanox Technologies. "Our InfiniBand and Ethernet-based products continue to gain traction throughout the industry as evidenced by the many Mellanox-based product introductions from our Tier-1 server and storage OEM customers throughout the quarter. We are seeing momentum and future growth in the multiple vertical markets we serve, such as High-Performance Computing, financial services, database, Web 2.0 and Internet hosting, and cloud for both our InfiniBand and Ethernet Products."

Press Release Highlights

Oct. 18 – InfiniBand Switch Systems Selected by IBM
Oct. 5 – Mellanox Virtual Protocol Interconnect Adapter Silicon Ships Embedded on HP ProLiant Servers
Sept. 30 – Adapters Provide Dell Blade Servers with Comprehensive Clustering and Networking I/O Features
Sept. 22 – Provides BTInet with Leading Hosting Services Capabilities
Sept. 20 – Mellanox and Arista Deliver Breakthrough 10GbE Latency for Financial Services Applications
Aug. 30 – Mellanox to Demonstrate Record VM Migration Performance using ConnectX-2 EN Ethernet Adapters and VMware vSphere vMotion
Aug. 10 – Mellanox InfiniBand Selected by Goethe University of Frankfurt to Accelerate Vast Range of Scientific Applications
Aug. 9 – Mellanox InfiniBand Provides NASA with Leading Cluster Performance to Enable Advances in Weather and Climate Research
Aug. 3 – Mellanox, Dell, Intel and LSTC Deliver Unmatched Performance for LS-DYNA Automotive Crash Simulation
Aug. 2 – Mellanox InfiniBand Provides the Networking Foundation for the University of Cambridge’s HPC Cloud