Mellanox: Fiscal 4Q12 Financial Results
IBM with 17% and HP with 14% main customers
This is a Press Release edited by StorageNewsletter.com on January 25, 2013 at 2:58 pm| (in US$ million) | 4Q11 | 4Q12 | FY11 | FY12 |
| Revenues | 72.7 | 122.1 | 259.3 | 500.8 |
| Growth | 68% | 93% | ||
| Net income (loss) | 4.7 | 18.4 | 10.0 | 111.4 |
Mellanox Technologies, Ltd. announced financial results for its fourth quarter and record results for the fiscal year 2012.
Fourth Quarter and 2012 Fiscal Year Highlights
- Revenues were $122.1 million in the fourth quarter, and $500.8 million in 2012
- GAAP gross margins were 68.1% in the fourth quarter, and 68.5% in 2012
- Non-GAAP gross margins were 70.0% in the fourth quarter, and 70.3% in 2012
- GAAP fourth quarter operating income was $23.9 million, and $118.3 million in 2012
- Non-GAAP operating income was $36.2 million in the fourth quarter, and $162.6 million in 2012
- GAAP net income was $18.4 million in the fourth quarter, and $111.4 million in 2012
- Non-GAAP net income was $30.7 million in the fourth quarter, and $155.7 million in 2012
- GAAP net income per diluted share was $0.41 in the fourth quarter, and $2.54 in 2012
- Non-GAAP net income per diluted share was $0.69 in the fourth quarter, and was $3.60 in 2012
- $25.4 million in cash was provided by operating activities during the fourth quarter
- Annual cash flow from operations of $182.5 million, representing 36.4% of revenues
- Cash and investments totaled $426.3 million at December 31, 2012
- 1.1 million silicon units shipped in 2012
In accordance with GAAP, the company reported revenue of $122.1 million for the fourth quarter, down 22.0% from $156.5 million in the third quarter of 2012, and up 68.0% from $72.7 million in the fourth quarter of 2011. For the year ended December 31, 2012, revenue was a record $500.8 million, an increase of 93.2% from revenue of $259.3 million reported in 2011.
GAAP gross margins in the fourth quarter of 2012 were 68.1%, compared with 69.1% in the third quarter of 2012 and 64.0% in the fourth quarter of 2011. GAAP gross margins in 2012 were 68.5%, compared with 64.5% in 2011.
Non-GAAP gross margins in the fourth quarter of 2012 were 70.0%, compared with 70.5% in the third quarter of 2012 and 67.0% in the fourth quarter of 2011. Non-GAAP gross margins in 2012 were 70.3%, compared with 68.1% in 2011.
GAAP net income in the fourth quarter of 2012 was $18.4 million or $0.41 per diluted share, compared with net income of $48.4 million or $1.09 per diluted share in the third quarter of 2012 and net income of $4.7 million or $0.11 per diluted share in the fourth quarter of 2011.
Non-GAAP net income in the fourth quarter of 2012 was $30.7 million, or $0.69 per diluted share, compared with $60.1 million or $1.37 per diluted share in the third quarter of 2012, and $13.1 million, or $0.31 per diluted share in the fourth quarter of 2011. The fourth quarter 2012 non-GAAP net income excludes $10.0 million of share-based compensation expenses compared to $9.4 million in the third quarter of 2012, and $6.1 million in the fourth quarter of 2011. The fourth quarter 2012 non-GAAP net income also excludes amortization of acquired intangible assets of $2.3 million associated with the acquisition of Voltaire, Ltd. on February 7, 2011 consistent with such amortization expenses in the third quarter of 2012, and compared to $2.4 million in the fourth quarter of 2011.
GAAP net income in 2012 was a record $111.4 million or $2.54 per diluted share, compared to $10.0 million or $0.26 per diluted share in 2011.
Non-GAAP net income in 2012 was a record $155.7 million, or $3.60 per diluted share, compared to $45.6 million or $1.16 per diluted share in 2011. 2012 non-GAAP net income excludes $35.0 million of share-based compensation expenses and amortization of acquired intangible assets of $9.3 million associated with the acquisition of Voltaire, Ltd. on February 7, 2011. 2011 non-GAAP net income excludes $21.4 million of share-based compensation expenses, amortization of acquired intangible assets of $9.8 million associated with the acquisition of Voltaire, Ltd. on February 7, 2011 and acquisition related expenses of $4.4 million.
Total cash and investments increased $184.9 million to $426.3 million at December 31, 2012 compared to $241.4 million at year-end 2011. The company generated $25.4 million in cash from operating activities in the fourth quarter, and a record $182.5 million for the year.
"We are proud of our results for 2012, which was an outstanding year. Mellanox achieved record levels of revenue, cash flow and profitability, driven by growth in our strong product offerings and penetration into new and existing markets. We doubled the volume of silicon unit devices shipped from 2011 to 2012 to a record 1.1 million, highlighting our increased market share growth," said Eyal Waldman, chairman, president and CEO of Mellanox. "We are disappointed we did not meet our revenue guidance for the fourth quarter. Our results were impacted by a weaker demand environment, challenging macroeconomic conditions, a build-up of inventory at an OEM customer, and a technical issue which was resolved during the quarter."
Comments
Abstracts of the earnings call transcript:
Eyal Waldma, chairman, president and CEO:
"During the FDR IB products represented 39% of revenues, compared to 57% in the third quarter of 2012. As we mentioned earlier, we had a cabling issue in the fourth quarter that affected sales of our FDR solutions. The cabling issue has been resolved and is not expected to further impact revenue.
"Revenue from our 10 and 40GbE products increased during the quarter to 11% of revenues. Mellanox continues to provide the industry's only end-to-end 40 gigabit per second Ethernet interconnect solutions.
"InfiniBand penetration grew to 224 clusters, nearly 20% more than that 189 Ethernet connected systems.
"Since June of 2012, the number of FDR 56Gb/s IB system has more than doubled including the top two ranked IB systems showing the growing demand for higher interconnect performance, scalability and efficiency.
"We are disappointed that we missed our fourth quarter revenue guidance. This is the first time in 24 quarters that we did not meet our revenue and earning goals since Mellanox became public in February of 2007. In the first and second quarters of 2012, our guidance reflected pent-up demand and included large deals we didn't expect on a regular basis.
"In the fourth quarter, anticipated end customer demand did not materialize and there was a buildup of inventory levels of approximately $30 million at one of our OEM customers. We believe, the majority of the inventory will be depleted in the first quarter of 2013, and we expect our growth to resume in the second quarter of 2013 and thereafter."
Jacob Shulman, CFO:
"Revenues from our 56Gb/s IB-based products represented 39% of revenues in Q4 2012, down from 57% in Q3 2012. Revenues from our 40Gb/s IB-based products represented 37% of revenues in Q4 2012, up from 31% in the third quarter. 20Gb/s IB-based products represented approximately 7% of revenues in Q4 2012, compared to 4% in Q3 2012. Ethernet-related revenues represented approximately 11% of the fourth quarter revenues, compared to 7% of revenues in the third quarter.
"We had two more than 10% customers in the fourth quarter that, combined, represented approximately 31% of revenues. They were IBM with 17% and HP with 14%.
"We currently expect the Q1 2013 non-GAAP Mellanox results to be as follows. Quarterly revenues of $78 million to $83 million. Q1 2013 gross margins of 67% to 68% reflecting our latest forecasted product mix."
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