Mellanox: Fiscal 1Q20 Financial Results

Mellanox Technologies, Ltd. announced preliminary financial results for its 1FQ20.

“Mellanox delivered record revenue and operating income in the first quarter of 2020. All our major product lines continued to grow. We are pleased to be shipping end-to-end solutions at speeds of 200Gb/s for both IB and Ethernet. In addition, we are shipping 400Gb/s Ethernet switches,” said Eyal Waldman, president and CEO. “Sales of Ethernet adapter products increased 112% Y/Y. We expect our new ConnectX-6 Dx adapters and Bluefield-2 I/O Processing Units, the latest additions to our industry leading family of Smart NICs, to bring unprecedented security and co-processing capabilities to enterprise and cloud data centers. These capabilities will be further strengthened by our recent acquisition of Titan IC, the leading developer of network intelligence and security technology to accelerate search and big data analytics across a broad range of applications in data centers worldwide. The product line revenue of our Spectrum ASIC based Ethernet switch business grew 66% Y/Y. We recently began shipping Spectrum-3 based switches, the world’s first 12.8Tb/s networking platforms optimized for cloud, storage, and AI.”

“We are experiencing very strong adoption of IB for hyperscale AI and cloud environments, resulting in tens of thousands of compute nodes connected with IB, which demonstrates the superior performance and scalability of IB. We saw 27% Y/Y growth in IB, led by strong demand for our HDR 200 gigabit solutions. HDR IB has been selected to interconnect national Exascale programs, large scale AI and cloud platforms, and enterprise compute and storage infrastructures. We are proud that our IB technology is being utilized by many of the HPCs in the Covid-19 High-Performance Computing Consortium, which is helping to aggregate computing capabilities for researchers to execute complex computations to help fight the novel Corona virus,” he continued. “We are excited to participate in such important global initiatives through the adoption of our industry-leading adapters, switches, cables, and software, while also delivering strong financial performance for the first quarter of 2020.”

1Q20 Financial Results Summary
• Revenue of $428.7 million, an increase of 40.5%, compared to $305.2 million in 1FQ19.
• GAAP gross margins of 66.8%, compared to 64.6% in 1FQ19.
• Non-GAAP gross margins of 69.1%, compared to 68.0% in 1FQ19.
• GAAP operating income of $102.3 million, or 23.9% of revenue, compared to $44.7 million, or 14.6% of revenue in 1FQ19.
• Non-GAAP operating income of $146.2 million or 34.1% of revenue, compared to $86.3 million, or 28.3% of revenue in 1FQ19.
• GAAP net income of $105.9 million, compared to $48.6 million in the 1FQ19.
• Non-GAAP net income of $145.6 million, compared to $86.5 million in 1FQ19.
• GAAP net income per diluted share of $1.84, compared to $0.87 in the 1FQ19.
• Non-GAAP net income per diluted share of $2.59, compared to $1.59 in 1FQ19.
• $79.2 million in cash provided by operating activities, compared to $88.4 million in 1FQ19.
• Cash and short-term investments totaled $938.0 million at March 31, 2020, compared to $875.9 million at December 31, 2019.

Mellanox Acquisition by NVIDIA
On April 16, 2020 NVIDIA Corporation announced that it has received approval from all necessary authorities to proceed with its planned acquisition of Mellanox. Closing of the acquisition is expected to occur on or about April 27, 2020.

For this reason, the connectivity firm was not providing guidance or hosting a call.