Mellanox: Fiscal 1Q19 Financial Results

Mellanox Technologies, Ltd., announced preliminary financial results for its first quarter ended March 31, 2019.

“Mellanox delivered record revenue in Q1, achieving 5% sequential growth and 22% Y/Y growth. All of our product lines grew sequentially, showing the benefits of our diversified data center strategy,” said Eyal Waldman, president and CEO. “Our R&D execution has resulted in differentiated products, while at the same time we have generated operating margin of 14.6% on a GAAP basis and 28.3% on a non-GAAP basis. Additionally, we increased cash and short-term investments by $114 million during the quarter.”

“Across IB and Ethernet product lines, our innovations are driving continued market leadership. Our 200Gb HDR IB solutions are enabling the world’s fastest supercomputers and driving our overall IB growth. During Q1, HDR IB connected tens-of-thousands of compute and storage end-points across supercomputing, hyperscale, and cloud data centers around the globe to achieve breakthrough performance. Our Ethernet solutions continue to penetrate the market for both adapters and switches. Our market leadership in 25 gigabit per second Ethernet solutions is well established, and our 100GbE solutions are the fastest growing portion of our Ethernet adapter product line. We are also encouraged by the adoption of our BlueField System-on-a-Chip and SmartNIC technology. With further innovations to come, Mellanox is well-positioned to continue its growth trajectory,” he concluded.

1FQ 2019 – Highlights
• Revenue of $305.2 million, an increase of 21.6%, compared to $251.0 million in 1Q18.
• GAAP gross margins of 64.6%, compared to 64.5% in 1Q18.
• Non-GAAP gross margins of 68.0%, compared to 69.0% in 1Q18.
• GAAP operating income of $44.7 million, compared to $12.0 million in 1Q18.
• Non-GAAP operating income of $86.3 million, or 28.3% of revenue, compared to $52.1 million, or 20.8% of revenue in 1Q18.
• GAAP net income of $48.6 million, compared to $37.8 million in 1Q18.
• Non-GAAP net income of $86.5 million, compared to $51.4 million in 1Q18.
• GAAP net income per diluted share of $0.87, compared to $0.71 in 1Q18.
• Non-GAAP net income per diluted share of $1.59, compared to $0.98 in 1Q18.
• $88.4 million in cash provided by operating activities, compared to $55.4 million in 1Q18.
• Cash and investments totaled $552.6 million at March 31, 2019, compared to $438.5 million at December 31, 2018.

Commentary regarding acquisition by NVIDIA
As announced on March 11, 2019, NVIDIA Corporation intends to acquire all the issued and outstanding common shares of Mellanox for $125 per share in cash. The acquisition will unite NVIDIA’s strength in accelerated computing with Mellanox’s expertise in high-performance interconnect technology to address the data center market, better serve our customers, and accelerate innovation. Due to the pending acquisition, Mellanox will not hold an earnings conference call and has suspended the practice of providing forward-looking guidance.

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