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Cavium Announces Financial Results for Q2 2017

SAN JOSE, Calif., Aug. 2, 2017 — (PRNewswire) —  Cavium, Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable intelligent processing for enterprise, data center, cloud, wired and wireless networking, today announced financial results for the second quarter ended June 30, 2017.

Net revenue in the second quarter of 2017 was $242.1 million, a 5.5% sequential increase from the $229.6 million reported in the first quarter of 2017 and 125.9% from the $107.2 million reported in the second quarter of 2016.

Generally Accepted Accounting Principles (GAAP) Results

Net loss for the second quarter of 2017 was $11.1 million, or ($0.16) per diluted share, compared to $50.5 million, or ($0.75) per diluted share in the first quarter of 2017. Gross margins were 53.5% in the second quarter of 2017 compared to 40.1% in the first quarter of 2017. GAAP operating loss (GAAP loss from operations as a percentage of revenue) was 2.5% in the second quarter of 2017 compared to 17.0% in the first quarter of 2017. Total cash and cash equivalents were $127.1 million at June 30, 2017.

Non-GAAP Results                  

Cavium believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to Cavium's financial condition and results of operations. Cavium believes that these non-GAAP financial measures provide additional insight into Cavium's ongoing performance and core operational activities and has chosen to provide these measures for more consistent and meaningful comparison between periods. These measures should only be used to evaluate Cavium's results of operations in conjunction with the corresponding GAAP measures. The reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this release.

In the second quarter of 2017, Non-GAAP net income was $48.9 million, or $0.67 per diluted share, Non-GAAP gross margin was 65.9% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 23.3%.

Recent News Highlights                                           

Cavium will broadcast its second quarter of 2017 financial results conference call today, August 2, 2017, at 2 p.m. Pacific time (5 p.m. Eastern time). The conference call will be available via a live web cast on the investor relations section of the Cavium website at http://www.cavium.com. Please access the website at least a few minutes prior to the start of the call in order to download and install any necessary audio software. An archived web cast replay of the call will be available on the web site for a limited period of time.

About Cavium

Cavium offers a broad portfolio of integrated, software compatible processors ranging in performance from 1Gbps to 100Gbp that enable secure, intelligent functionality in Enterprise, Data Center, Broadband, Mobile and Service Provider Equipment, highly programmable switches which scale to 3.2Tbps and Ethernet and Fibre Channel adapters up to 100Gbps. Cavium processors are supported by ecosystem partners that provide operating systems, tools and application support, hardware reference designs and other products. Cavium is headquartered in San Jose, CA with design centers in California, Massachusetts, India, Israel, China and Taiwan. For more information, please visit: http://www.cavium.com.

CAVIUM, INC.

Unaudited GAAP Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)




Three Months Ended


June 30, 2017



March 31, 2017

Net revenue

$

242,093



$

229,577

Cost of revenue


112,604




137,454

Gross profit


129,489




92,123

Operating expenses:







     Research and development


94,758




90,713

     Sales, general and administrative


40,791




40,397

        Total operating expenses


135,549




131,110

Loss from operations


(6,060)




(38,987)

Other income (expense), net:







    Interest expense


(6,062)




(10,124)

    Other, net


1




(133)

Total other expense, net


(6,061)




(10,257)

     Loss before income taxes


(12,121)




(49,244)

     (Benefit from) provision for income taxes


(1,049)




1,279

Net loss

$

(11,072)



$

(50,523)

Net loss per common share, basic and diluted

$

(0.16)



$

(0.75)

Shares used in computing basic and diluted net loss per common share


68,199




67,640

 

CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data and percentages)





Three Months Ended



June 30, 2017



March 31, 2017


Reconciliation of GAAP gross profit and margin to non-GAAP:








Net revenue

$

242,093



$

229,577


GAAP gross profit


129,489




92,123


GAAP gross margin


53.5

%



40.1

%









Stock-based compensation and related payroll taxes


718




694


Inventory charges


1,661




25,803


Realignment charges


-




5,104


Amortization of acquisition related assets


27,706




27,053


Non-GAAP gross profit

$

159,574



$

150,777


Non-GAAP gross margin


65.9

%



65.7

%









Reconciliation of GAAP operating expenses to non-GAAP:








GAAP research and development expenses

$

94,758



$

90,713


Stock-based compensation and related payroll taxes


(18,298)




(16,214)


Realignment charges


-




(422)


Amortization of acquisition related assets


(731)




(743)


Acquisition and integration related costs


(811)




(1,346)


Non-GAAP research and development expenses


74,918




71,988










GAAP sales, general and administrative expenses


40,791




40,397


Stock-based compensation and related payroll taxes


(9,363)




(8,769)


Realignment charges


-




(552)


Amortization of acquisition related assets


(1,277)




(1,246)


Acquisition and integration related costs


(1,984)




(1,618)


Non-GAAP sales, general and administrative expenses


28,167




28,212


Total Non-GAAP operating expenses

$

103,085



$

100,200










Reconciliation of GAAP non-operating expenses to non-GAAP:








GAAP other expense, net

$

(6,061)



$

(10,257)


Acquisition related debt refinancing costs


-




2,680


Non-GAAP other expense, net

$

(6,061)



$

(7,577)










Reconciliation of GAAP Income tax to non-GAAP:








GAAP (benefit from) provision for income tax

$

(1,049)



$

1,279


Acquisition related tax adjustments


2,605




-


Non-GAAP provision for income tax

$

1,556



$

1,279


 

CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data and percentages)





Three Months Ended



June 30, 2017



March 31, 2017


Reconciliation of GAAP loss from operations to non-GAAP income from operations:








GAAP loss from operations

$

(6,060)



$

(38,987)


Stock-based compensation and related payroll taxes


28,379




25,677


Inventory charges


1,661




25,803


Realignment charges


-




6,078


Amortization of acquisition related assets


29,714




29,042


Acquisition and integration related costs


2,795




2,964


Non-GAAP income from operations

$

56,489



$

50,577


Non-GAAP income from operations as a percentage of revenue


23.3

%



22.0

%









Reconciliation of GAAP net loss to non-GAAP net income:








GAAP net loss

$

(11,072)



$

(50,523)


Non-GAAP adjustments:








Stock-based compensation and related payroll taxes


28,379




25,677


Inventory charges


1,661




25,803


Realignment charges


-




6,078


Amortization of acquisition related assets


29,714




29,042


Acquisition and integration related costs


2,795




2,964


Acquisition related debt refinancing costs


-




2,680


Acquisition related tax adjustments


(2,605)




-


Total of non-GAAP adjustments


59,944




92,244


Non-GAAP net income

$

48,872



$

41,721










GAAP net loss per share, diluted

$

(0.16)



$

(0.75)


Non-GAAP adjustments detailed above


0.83




1.33


Non-GAAP net income per share, diluted

$

0.67



$

0.58










GAAP weighted average shares, diluted


68,199




67,640


Non-GAAP share adjustment


5,019




4,688


Non-GAAP weighted average shares, diluted


73,218




72,328


 

CAVIUM, INC.

Unaudited GAAP Condensed Consolidated Balance Sheets

(in thousands)





As of



June 30, 2017



March 31, 2017


Assets








Current assets








Cash and cash equivalents

$

127,061



$

132,409


Accounts receivable, net


173,754




136,510


Inventories


94,116




100,467


Prepaid expenses and other current assets


21,669




22,461


Total current assets


416,600




391,847


Property and equipment, net


157,542




152,690


Intangible assets, net


714,636




740,004


Goodwill


241,067




241,067


Other assets


5,286




5,559


Total assets

$

1,535,131



$

1,531,167










Liabilities and Stockholders' Equity








Current liabilities








Accounts payable

$

72,494



$

68,772


Accrued expenses and other current liabilities


49,825




54,704


Deferred revenue


8,990




8,213


Current portion of long-term debt


3,256




3,249


Capital lease and technology license obligations


19,195




21,402


Total current liabilities


153,760




156,340


Long-term debt


594,590




593,880


Capital lease and technology license obligations, net of current


20,563




24,929


Deferred tax liability


16,972




19,314


Other non-current liabilities


18,722




17,735


Total liabilities


804,607




812,198










Stockholders' equity








Common stock


68




68


Additional paid-in capital


1,128,752




1,106,649


Accumulated deficit


(399,088)




(388,016)


Accumulated other comprehensive income (loss)


792




268


Total stockholders' equity


730,524




718,969


Total liabilities and stockholders' equity

$

1,535,131



$

1,531,167


 

Cavium, Inc. Logo. (PRNewsFoto/Cavium Networks)

 

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SOURCE Cavium, Inc.

Contact:
Cavium, Inc.
Art Chadwick, Vice President of Finance and Administration and Chief Financial Officer, Tel: (408) 943-7104, Email: Email Contact Angel Atondo, Senior Marketing Communications Manager, Tel: (408) 943-7417, Email: Email Contact
Web: http://www.cavium.com