Mellanox: Fiscal 3Q17 Financial Results
Record revenue quarter, IB sales declined 7% Q/Q
This is a Press Release edited by StorageNewsletter.com on October 26, 2017 at 2:48 pm| (in $ million) | 3Q16 | 3Q17 | 9 mo. 16 | 9 mo. 17 |
| Revenues | 224.2 | 225.7 | 635.8 | 626.3 |
| Growth | 1% | -1% | ||
| Net income (loss) | 12.0 | 3.4 | 9.5 | (16.8) |
Mellanox Technologies, Ltd. announced financial results for its third quarter ended September 30, 2017.
“We are pleased to achieve a record revenue quarter and resume our growth. Our third quarter Ethernet revenues achieved double digit sequential growth, driven by increasing deployments of our 25Gb/s and above products, which demonstrates our leadership position in these markets,” said Eyal Waldman, president and CEO. “During the third quarter, IB revenues declined 7% sequentially mainly due to a large Department of Energy CORAL deployment in the second quarter. On a year-over-year basis, our IB high-performance computing and artificial intelligence revenues increased by double digit percentages. We believe Mellanox is well positioned to meet our customers’ expanding performance needs with the introduction of multiple new products. We see multiple growth engines for our Ethernet and IB products.”
Third Quarter 2017 – Highlights
• Revenues of $225.7 million increased 0.7%, compared to $224.2 million in the third quarter of 2016.
• GAAP gross margins of 65.7%, compared to 65.1% in the third quarter of 2016.
• Non-GAAP gross margins of 70.7%, compared to 71.8% in the third quarter of 2016.
• GAAP operating income was $6.6 million, compared to $14.5 million in the third quarter of 2016.
• Non-GAAP operating income was $38.5 million, or 17.1% of revenue, compared to $49.2 million, or 22.0% of revenue in the third quarter of 2016.
• GAAP net income was $3.4 million, compared to $12.0 million in the third quarter of 2016.
• Non-GAAP net income was $36.6 million, compared to $46.2 million in the third quarter of 2016.
• GAAP net income per diluted share was $0.07, compared to $0.24 in the third quarter of 2016.
• Non-GAAP net income per diluted share was $0.71, compared to $0.93 in the third quarter of 2016.
• $53.0 million in cash was provided by operating activities, compared to $43.8 million in the third quarter of 2016.
• Cash and investments totaled $346.2 million at September 30, 2017, compared to $328.4 million at December 31, 2016.
Fourth Quarter 2017 Outlook
• Quarterly revenues of $230 million to $240 million
• Non-GAAP gross margins of 69% to 70%
• Non-GAAP operating expenses of $125 million to $127 million
• Share-based compensation expense of $18.3 million to $18.8 million
• Non-GAAP diluted share count of 51.7 million to 52.2 million
Recent Mellanox Press Release Highlights
• October 4, 2017: Enables the next generation of software-defined data center networks with BlueField SmartNIC network adapters
• September 25, 2017: HPE chooses Mellanox Spectrum To power StoreFabric M-series switches
• September 6, 2017: Accelink partner to provide 100Gb/s PSM4 Ethernet transceivers
• August 28, 2017: Collaborates with VMware to accelerate applications in virtualized data centers
• August 22, 2017: Network adapters for 25Gb RoCE Ethernet cloud deployed in Alibaba
• August 8, 2017: Announces availability of BlueField storage solutions that accelerate NVMe over Fabrics
Comments
Abstracts of the earnings call transcript:
Eyal Waldman, president and CEO:
"On a year-over-year basis, our IB high-performance computing and artificial intelligence revenues increased by double-digit%ages.
"Third quarter revenues was $226 million, a sequential increase of 6.5%.
"IB revenues associated with HPC deployments grew double-digits in the third quarter compared to the same quarter in 2016.
"During 2018, we're projecting IB storage based revenues to improve as key OEM customers introduced new product platforms.
"In addition to the use of Bluefield for storage platforms, we anticipate releasing network adapter version of Bluefield which will allow Mellanox to target emerging smart NIC market. Adoption of smart NIC technology still requires continued wafer system development and additional software development internally.
"Our customers are waiting key product introductions such as BlueField, Spectrum 2, and their release of 200Gb IB. We anticipate revenue contribution from all three of these products to start in 2018."
Jacob Shulman, CFO:
"Third quarter IB revenues were $100.2 million.
"Revenues from our IB based products represented 44% of revenues in Q3 2017, down from 54% of revenues in Q3 2016.
"Our EDR 100G/s IB products were up 146.7% year-over-year and represented 45% of IB revenues.
"We currently expect our fourth quarter 2017 non-GAAP results to be as follows: Quarterly revenues of $230 million to $240 million, non-GAAP gross margin range of 69% to 70%."
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