Mellanox: Fiscal 2Q19 Financial Results

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Mellanox Technologies, Ltd. announced preliminary financial results for its second quarter ended June 30, 2019.

“Mellanox delivered record revenue in Q2, achieving 2% sequential growth and 16% Y/Y growth. We continue to demonstrate leadership with our Ethernet adapter solutions for data rates of 25Gb/s and above. The growth in our Ethernet business reflects strong demand from our cloud customers as well as expanding channel sales. We are pleased that we’ve begun shipping 200Gb/s Ethernet adapters, switches, and cables to our data center customers, and expect this to be a future revenue growth driver,” said Eyal Waldman, president and CEO. “We continue to see strong demand for our IB products across the HPC, AI, cloud, and storage market segments, driven by our highest throughput 200Gb HDR IB solutions. IB accelerates 6 of the top 10 HPCs in the world today, including the top 3. We are proud that multiple HDR IB systems have entered the TOP500 HPCs list, led by the Frontera TACC system, which is the fastest TOP500 HPC built in 2019 and premiered at #5 on the list.“

“We are pleased with our financial performance this quarter and the adoption of our latest 25, 50, and 100GE and 200Gb/s HDR IB products,” he continued. “We expect to maintain and grow our leadership in these segments as we expand our footprint for both adapters and switches in the data center.“

2Q19 Highlights
• Revenue of $310.3 million, an increase of 15.6%, compared to $268.5 million in 2Q18.
• GAAP gross margins of 64.5%, compared to 61.4% in 2Q18.
• Non-GAAP gross margins of 67.9%, compared to 69.1% in 2Q18.
• GAAP operating income of $42.2 million, compared to $16.6 million in 2Q18.
• Non-GAAP operating income of $84.7 million, or 27.3% of revenue, compared to $66.2 million, or 24.7% of revenue in 2Q18.
• GAAP net income of $38.4 million, compared to $16.5 million in 2Q18.
• Non-GAAP net income of $83.9 million, compared to $66.6 million in 2Q18.
• GAAP net income per diluted share of $0.68, compared to $0.30 in 2Q18.
• Non-GAAP net income per diluted share of $1.52, compared to $1.25 in 2Q18.
• $58.6 million in cash provided by operating activities, compared to $46.7 million in 2Q18.
• Cash and investments totaled $610.6 million at June 30, 2019, compared to $552.6 million at March 31, 2019.

Commentary regarding Mellanox 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. Due to the pending acquisition, Mellanox will not hold an earnings conference call and has suspended the practice of providing forward-looking guidance.