Mellanox: Fiscal 2Q13 Financial Results

Mellanox Technologies, Ltd. announced financial results for its second quarter 2013, ended June 30, 2013.

Second Quarter 2013 Highlights

• Revenues were $98.2 million
• GAAP gross margins were 67.2%
• Non-GAAP gross margins were 69.4%
• GAAP operating income was $0.3 million
• Non-GAAP operating income was $15.8 million
• GAAP net loss was $1.7 million
• Non-GAAP net income was $13.8 million
• GAAP net loss per diluted share was $0.04
• Non-GAAP net income per diluted share was $0.30
• $11.5 million in cash was provided by operating activities
• Total cash and investments increased $8.4 million to $411.3 million at June 30, 2013

Financial Results

• In accordance with U.S. GAAP, the company reported revenue of $98.2 million for the second quarter of 2013, up 18.2% from $83.1 million in the first quarter of 2013, and down 26.5% from $133.5 million in the second quarter of 2012.
• GAAP gross margins in the second quarter of 2013 were 67.2%, compared with 65.2% in the first quarter of 2013, and 68.8% in the second quarter of 2012.
• Non-GAAP gross margins in the second quarter of 2013 were 69.4%, compared with 68.1% in the first quarter of 2013, and 70.5% in the second quarter of 2012.
• GAAP net loss in the second quarter of 2013 was $1.7 million, or $0.04 per diluted share, compared with GAAP net loss of $8.5 million, or $0.20 per diluted share in the first quarter of 2013, and GAAP net income of $32.1 million, or $0.74 per diluted share in the second quarter of 2012.
• Non-GAAP net income in the second quarter of 2013 was $13.8 million, or $0.30 per diluted share, compared with $4.3 million, or $0.10 per diluted share in the first quarter of 2013, and $42.9 million, or $0.99 per diluted share in the second quarter of 2012. The second quarter 2013 non-GAAP net income excludes $11.2 million of share-based compensation expenses compared to $10.4 million in the first quarter of 2013, and compared to $8.4 million in the second quarter of 2012. The second quarter 2013 non-GAAP net income also excludes amortization of acquired intangible assets of $2.5 million and $1.8 million of acquisition related charges associated with the acquisition of Kotura, Inc. and IPtronics A/S, compared to $2.4 million of amortization expenses for acquired intangible assets in the first quarter of 2013, and compared to $2.3 million in the second quarter of 2012.
• Total cash and investments increased by $8.4 million to $411.3 million at June 30, 2013, compared to $402.9 million at March 31, 2013. The company generated $11.5 million in cash from operating activities in the second quarter.

"We are pleased with our Q2 results. We see growth in the demand of our IB and Ethernet products. We increased our Ethernet top-of-rack switch system revenue by 81% sequentially, and, although off of a small base, we believe this indicates our growth opportunity once we have all the building blocks required for the various markets we serve," said Eyal Waldman, president and CEO, Mellanox. "Our acquisitions of Kotura and IPtronics solidify our strategy to provide full end-to-end 100Gb/s server and storage interconnect solutions to the high-performance computing, cloud, Web 2.0, storage and data center markets."