Mellanox: Fiscal 1Q13 Financial Results

Mellanox Technologies, Ltd. announced financial results for its first quarter 2013, ended March 31, 2013.

First Quarter 2013 Highlights

• Revenues were $83.1 million
• GAAP gross margins were 65.2%
• Non-GAAP gross margins were 68.1%
• GAAP operating loss was $7.9 million
• Non-GAAP operating income was $4.9 million
• GAAP net loss was $8.5 million
• Non-GAAP net income was $4.3 million
• GAAP net loss per diluted share was $0.20
• Non-GAAP net income per diluted share was $0.10
• Cash and investments totaled $402.9 million at March 31, 2013

Financial Results
In accordance with GAAP, the company reported revenue of $83.1 million for the first quarter, down 32.0% from $122.1 million for the fourth quarter 2012, and down 6.4% from $88.7 million for the first quarter of 2012.

GAAP gross margins in the first quarter of 2013 were 65.2%, compared with 68.1% in the fourth quarter of 2012 and 67.4% in the first quarter of 2012.

Non-GAAP gross margins in the first quarter of 2013 were 68.1%, compared with 70.0% in the fourth and first quarters of 2012.

GAAP net loss in the first quarter of 2013 was $8.5 million or $0.20 per diluted share, compared with net income of $18.4 million or $0.41 per diluted share in the fourth quarter of 2012 and net income of $12.4 million or $0.29 per diluted share in the first quarter of 2012.

Non-GAAP net income in the first quarter of 2013 was $4.3 million, or $0.10 per diluted share, compared with $30.7 million, or $0.69 per diluted share in the fourth quarter of 2012, and $22.0 million, or $0.51 per diluted share in the first quarter of 2012. The first quarter 2013 non-GAAP net income excludes $10.4 million of share-based compensation expenses compared to $10.0 million in the fourth quarter of 2012 and to $7.2 million in the first quarter of 2012. The first quarter 2013 non-GAAP net income also excludes amortization of acquired intangible assets of $2.4 million associated with the acquisition of Voltaire, Ltd. on February 7, 2011 compared to $2.3 million of such amortization expenses in the fourth quarter of 2012 and to $2.4 million in the first quarter of 2012.

Total cash and investments decreased by $23.4 million to $402.9 million at March 31, 2013 compared to $426.3 million at December 31, 2012.

"Despite the decline in our financial results over the past two quarters, we believe increased demand will restore growth in coming quarters," said Eyal Waldman, president, CEO and chairman of Mellanox. "In the first quarter, our FDR IB revenue share increased from 39% to 50%, demonstrating the continued demand for our highest performing IB products. We expect that our future growth will be driven by the increased adoption of FDR IB as well our 10/40/56Gb/s Ethernet products."

Recent Mellanox Press Release Highlights

• April 17 – Mellanox Introduces ConnectX-3 Pro Adapter, Enabling New Levels of Performance and Scalability for Cloud Computing
• April 2 – Mellanox FDR 56Gb/s IB Powers Stampede Supercomputer, Now Fully Deployed at Texas Advanced Computing Center
• March 6 – Mellanox FDR 56Gb/s IB Accelerates the Next Generation Microsoft SQL Server 2012 Parallel Data Warehouse Appliance
• March 4 – Mellanox Introduces the ‘Generation of Open Ethernet’ First Open Switch Initiative
• February 25 – Mellanox and 6WIND Announce 40GbE Packet Processing Solution for Telecom Data Centers
• February 25 – Mellanox Rapidly Grows Ethernet Market Share to Reach 19% of Total 10GbE NIC, LOM, and Controller Market
• February 19 – Mellanox FDR 56Gb/s IB Accelerates the Fastest Supercomputer in India
• February 14 – NASDAQ OMX NLX Selects Mellanox’s IB Solutions for Core Trading Interconnect
• February 13 – Mellanox 10/40GbE Solutions Boost OpenStack Performance by 5 to 20X
• February 11 – Mellanox Expands Line of MetroX Long-Haul Interconnect Solutions and Introduces MetroDX for Inter Data Center Connectivity

To read the earnings call transcript