Mellanox: Fiscal 3Q19 Financial Results

(in $ million)	3Q18	3Q19	9 mo. 18	9 mo. 19
Revenue	279.2	335.3	798.7	850.8
*Growth*		20%		7%
Net income (loss)	37.1	44.2	91.4	131.2

Mellanox Technologies, Ltd. announced preliminary financial results for its third quarter ended September 30, 2019.

“Mellanox delivered record revenue and cash flow from operations in the third quarter, with growth across all our major product lines. Sales of our Ethernet adapter solutions grew 28% Q/Q, and continue to lead the market for data rates of 25Gb/s and above. We started shipping ConnectX-6 Dx, the world’s first 200Gb/s Ethernet adapter with built in crypto acceleration, which will allow security to be deployed throughout enterprise and cloud data centers. We are also seeing healthy adoption of our Ethernet switches across a broad range of data center applications, including hyperscale, cloud, storage, and financial markets, resulting in 25% growth over the prior quarter,” said Eyal Waldman, president and CEO. “Our IB solutions grew as well, driven by the ramp of our 200Gb/s HDR solutions in the HPC, AI, cloud, and storage market segments. As one key example, Microsoft is now offering IB HDR connected nodes in the Azure cloud for HPC workloadsn. We are pleased with the strong traction of our adapters and switches in the data center, as well as our solid financial results for the third quarter.”

3FQ19 Highlights
• Revenue of $335.3 million, an increase of 20.1%, compared to $279.2 million in 3FQ18.
• GAAP gross margins of 64.9%, compared to 65.8% in 3FQ18.
• Non-GAAP gross margins of 68.1%, compared to 69.6% in 3FQ18.
• GAAP operating income of $48.9 million, compared to $39.5 million in 3FQ18.
• Non-GAAP operating income of $95.1 million, or 28.4% of revenue, compared to $73.2 million, or 26.2% of revenue in 3FQ18.
• GAAP net income of $44.2 million, compared to $37.1 million in 3FQ18.
• Non-GAAP net income of $93.9 million, compared to $71.4 million in 3FQ18.
• GAAP net income per diluted share of $0.78, compared to $0.68 in 3FQ18.
• Non-GAAP net income per diluted share of $1.69, compared to $1.33 in 3FQ18.
• $130.0 million in cash provided by operating activities, compared to $66.4 million in 3FQ18.
• Cash, cash equivalents and short-term investments totaled $742.5 million at September 30, 2019, compared to $610.6 million at June 30, 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, the connectivity company will not hold an earnings conference call and has suspended the practice of providing forward-looking guidance.