Cavium completed the acquisition of QLogic Corporation ("QLogic") on August 16, 2016. The financial results for the third quarter of 2016 include results from QLogic from the closing date to the end of the quarter.
Net revenue in the third quarter of 2016 was $168.1 million, a 56.9% sequential increase from the $107.2 million reported in the second quarter of 2016 and 60.0% from the $105.1 million reported in the third quarter of 2015.
Generally Accepted Accounting Principles (GAAP) Results
Net loss for the third quarter of 2016 was $14.4 million, or ($0.23) per diluted share, compared to $7.4 million, or $(0.13) per diluted share in the second quarter of 2016. Gross margins were 28.2% in the third quarter of 2016 compared to 66.9% in the second quarter of 2016. GAAP operating loss (GAAP loss from operations as a percentage of revenue) was 56.1% in the third quarter of 2016 compared to 6.4% in the second quarter of 2016. Total cash and cash equivalents were $192.4 million at September 30, 2016.
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 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 third quarter of 2016, Non-GAAP net income was $28.0 million, or $0.43 per diluted share. Non-GAAP gross margin was 64.0% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 19.2%.
Recent News Highlights
- October 31, 2016 - Cavium Introduced 1025GbE Adapter Family for Open Compute Project Servers
- October 27, 2016 - Cavium QLogic Added PowerShell Integrated Management Solution for FastLinQ Ethernet Adapters
- October 25, 2016 - Cavium Showcased ARMv8 Processor Solutions to Accelerate Next Generation Infrastructure at ARM TechCon 2016
- October 25, 2016 - Cavium Showcased Highly Optimized Platforms for OpenStack Deployments at OpenStack Summit 2016
- October 25, 2016 - Cavium QLogic Accelerates Cloud Deployments with OpenStack Integration
- October 25, 2016 - SUSE Steps Up to Support Innovative ARM Solutions for Customers
- September 27, 2016 - Cavium QLogic Accelerates Software Defined Datacenters with Windows Server 2016
- August 30, 2016 - QLogic Showcased Multiple Technologies that Simplify and Accelerate Virtualized Server Deployments at VMworld 2016
- August 16, 2016 - Cavium Completed the Acquisition of QLogic
- August 16, 2016 - Cavium, Inc. Announced Successful Completion of the Exchange Offer in Connection with the Proposed Acquisition of QLogic Corporation
- August 10, 2016 - Cavium, Inc. Announced Extension of the Expiration of the Exchange Offer in Connection with the Proposed Acquisition of QLogic Corporation
- August 2, 2016 - Cavium, Inc. Announced the Expiration of HSR Waiting Period for the Acquisition of QLogic Corporation
- July 26, 2016 - Cavium Named Raghib Hussain Chief Operating Officer
- July 26, 2016 - Cavium Added Industry Veterans Brad W. Buss and Dr. Edward H. Frank to Board of Directors
Cavium will broadcast its third quarter of 2016 financial results conference call today, November 1, 2016, 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 | |||||
|
|
September 30, 2016 |
|
|
June 30, 2016 | ||
|
Net revenue |
$ |
168,123 |
|
|
$ |
107,158 |
|
Cost of revenue |
|
120,709 |
|
|
|
35,499 |
|
Gross profit |
|
47,414 |
|
|
|
71,659 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
|
67,752 |
|
|
|
52,578 |
|
Sales, general and administrative |
|
73,904 |
|
|
|
25,882 |
|
Total operating expenses |
|
141,656 |
|
|
|
78,460 |
|
Loss from operations |
|
(94,242) |
|
|
|
(6,801) |
|
Other income (expense), net: |
|
|
|
|
|
|
|
Interest expense |
|
(4,268) |
|
|
|
(185) |
|
Other, net |
|
54 |
|
|
|
(151) |
|
Total other expense, net |
|
(4,214) |
|
|
|
(336) |
|
Loss before income taxes |
|
(98,456) |
|
|
|
(7,137) |
|
Provision for (benefit from) income taxes |
|
(84,090) |
|
|
|
273 |
|
Net loss |
$ |
(14,366) |
|
|
$ |
(7,410) |
|
Net loss per common share, basic and diluted |
$ |
(0.23) |
|
|
$ |
(0.13) |
|
Shares used in computing basic and diluted net loss per common share |
|
62,055 |
|
|
|
57,527 |
|
CAVIUM, INC. | |||||||
|
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||
|
(in thousands, except per share data and percentages) | |||||||
|
|
| ||||||
|
|
Three Months Ended |
| |||||
|
|
September 30, 2016 |
|
|
June 30, 2016 |
| ||
|
Reconciliation of GAAP gross profit and margin to non-GAAP: |
|
|
|
|
|
|
|
|
Net revenue |
$ |
168,123 |
|
|
$ |
107,158 |
|
|
GAAP gross profit |
|
47,414 |
|
|
|
71,659 |
|
|
GAAP gross margin |
|
28.2 |
% |
|
|
66.9 |
% |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation and related payroll taxes from awards granted by the Company |
|
274 |
|
|
|
261 |
|
|
Stock-based compensation and related payroll taxes from awards assumed from the acquisition |
|
134 |
|
|
|
- |
|
|
Purchase accounting effect on inventory |
|
9,888 |
|
|
|
- |
|
|
Manufacturing rights buy-out |
|
37,059 |
|
|
|
- |
|
|
Amortization of acquisition related assets |
|
12,880 |
|
|
|
157 |
|
|
Non-GAAP gross profit |
$ |
107,649 |
|
|
$ |
72,077 |
|
|
Non-GAAP gross margin |
|
64.0 |
% |
|
|
67.3 |
% |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP operating expenses to non-GAAP: |
|
|
|
|
|
|
|
|
GAAP research and development expenses |
$ |
67,752 |
|
|
$ |
52,578 |
|
|
Stock-based compensation and related payroll taxes from awards granted by the Company |
|
(9,644) |
|
|
|
(9,017) |
|
|
Stock-based compensation expense related to employees with change in control provision |
|
(956) |
|
|
|
- |
|
|
Stock-based compensation and related payroll taxes from awards assumed from the acquisition |
|
(1,363) |
|
|
|
- |
|
|
Amortization of acquisition related assets |
|
(2,643) |
|
|
|
(3,523) |
|
|
Non-GAAP research and development expenses |
|
53,146 |
|
|
|
40,038 |
|
|
|
|
|
|
|
|
|
|
|
GAAP sales, general and administrative expenses |
|
73,904 |
|
|
|
25,882 |
|
|
Stock-based compensation and related payroll taxes from awards granted by the Company |
|
(7,554) |
|
|
|
(5,263) |
|
|
Stock-based compensation expense related to employees with change in control provision |
|
(15,625) |
|
|
|
- |
|
|
Stock-based compensation and related payroll taxes from awards assumed from the acquisition |
|
(1,097) |
|
|
|
- |
|
|
Acquisition and integration related costs |
|
(13,486) |
|
|
|
(6,339) |
|
|
Amortization of acquisition related assets |
|
(524) |
|
|
|
- |
|
|
Restructuring, severance and other employment charges |
|
(13,477) |
|
|
|
- |
|
|
Non-GAAP sales, general and administrative expenses |
|
22,141 |
|
|
|
14,280 |
|
|
Total Non-GAAP operating expenses |
$ |
75,287 |
|
|
$ |
54,318 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP non-operating expenses to non-GAAP: |
|
|
|
|
|
|
|
|
GAAP other expense, net |
$ |
(4,214) |
|
|
$ |
(336) |
|
|
Interest expense and amortization of debt financing cost associated with interim term loan facility |
|
522 |
|
|
|
- |
|
|
Non-GAAP other expense, net |
$ |
(3,692) |
|
|
$ |
(336) |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Income tax to non-GAAP: |
|
|
|
|
|
|
|
|
GAAP provision for (benefit from) income tax |
$ |
(84,090) |
|
|
$ |
273 |
|
|
Partial reversal of the deferred tax asset valuation allowance due to acquisition |
|
84,792 |
|
|
|
- |
|
|
Non-GAAP provision for income tax |
$ |
702 |
|
|
$ |
273 |
|
|
CAVIUM, INC. | |||||||
|
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||
|
(in thousands, except per share data and percentages) | |||||||
|
| |||||||
|
|
Three Months Ended |
| |||||
|
|
September 30, 2016 |
|
|
June 30, 2016 |
| ||
|
Reconciliation of GAAP loss from operations to non-GAAP income from operations: |
|
|
|
|
|
|
|
|
GAAP loss from operations |
$ |
(94,242) |
|
|
$ |
(6,801) |
|
|
Stock-based compensation and related payroll taxes from awards granted by the Company |
|
17,472 |
|
|
|
14,541 |
|
|
Stock-based compensation expense related to employees with change in control provision |
|
16,581 |
|
|
|
- |
|
|
Stock-based compensation and related payroll taxes from awards assumed from the acquisition |
|
2,594 |
|
|
|
- |
|
|
Purchase accounting effect on inventory |
|
9,888 |
|
|
|
- |
|
|
Amortization of acquisition related assets |
|
16,047 |
|
|
|
3,680 |
|
|
Acquisition and integration related costs |
|
13,486 |
|
|
|
6,339 |
|
|
Manufacturing rights buy-out |
|
37,059 |
|
|
|
- |
|
|
Restructuring, severance and other employment charges |
|
13,477 |
|
|
|
- |
|
|
Non-GAAP income from operations |
$ |
32,362 |
|
|
$ |
17,759 |
|
|
Non-GAAP income from operations as a percentage of revenue |
|
19.2 |
% |
|
|
16.6 |
% |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP net loss to non-GAAP net income: |
|
|
|
|
|
|
|
|
GAAP net loss |
$ |
(14,366) |
|
|
$ |
(7,410) |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation and related payroll taxes from awards granted by the Company |
|
17,472 |
|
|
|
14,541 |
|
|
Stock-based compensation expense related to employees with change in control provision |
|
16,581 |
|
|
|
- |
|
|
Stock-based compensation and related payroll taxes from awards assumed from the acquisition |
|
2,594 |
|
|
|
- |
|
|
Purchase accounting effect on inventory |
|
9,888 |
|
|
|
- |
|
|
Amortization of acquisition related assets |
|
16,047 |
|
|
|
3,680 |
|
|
Acquisition and integration related costs |
|
13,486 |
|
|
|
6,339 |
|
|
Manufacturing rights buy-out |
|
37,059 |
|
|
|
- |
|
|
Restructuring, severance and other employment charges |
|
13,477 |
|
|
|
- |
|
|
Interest expense and amortization of debt financing cost associated with interim term loan facility |
|
522 |
|
|
|
- |
|
|
Partial reversal of the deferred tax asset valuation allowance due to acquisition |
|
(84,792) |
|
|
|
- |
|
|
Total of non-GAAP adjustments |
|
42,334 |
|
|
|
24,560 |
|
|
Non-GAAP net income |
$ |
27,968 |
|
|
$ |
17,150 |
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per share, diluted |
$ |
(0.23) |
|
|
$ |
(0.13) |
|
|
Non-GAAP adjustments detailed above |
|
0.66 |
|
|
|
0.42 |
|
|
Non-GAAP net income per share, diluted |
$ |
0.43 |
|
|
$ |
0.29 |
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted average shares, diluted |
|
62,055 |
|
|
|
57,527 |
|
|
Non-GAAP share adjustment |
|
3,062 |
|
|
|
2,471 |
|
|
Non-GAAP weighted average shares, diluted |
|
65,117 |
|
|
|
59,998 |
|
|
CAVIUM, INC. | ||||||
|
Unaudited GAAP Condensed Consolidated Balance Sheets | ||||||
|
(in thousands) | ||||||
|
| ||||||
|
|
As of | |||||
|
|
September 30, 2016 |
|
|
June 30, 2016 | ||
|
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
192,378 |
|
|
$ |
140,419 |
|
Accounts receivable, net |
|
144,902 |
|
|
|
82,137 |
|
Inventories |
|
118,936 |
|
|
|
52,702 |
|
Prepaid expenses and other current assets |
|
20,556 |
|
|
|
10,109 |
|
Asset held for sale |
|
38,511 |
|
|
|
- |
|
Total current assets |
|
515,283 |
|
|
|
285,367 |
|
Property and equipment, net |
|
122,114 |
|
|
|
64,917 |
|
Intangible assets, net |
|
790,368 |
|
|
|
36,698 |
|
Goodwill |
|
319,021 |
|
|
|
71,478 |
|
Other assets |
|
3,922 |
|
|
|
1,822 |
|
Total assets |
$ |
1,750,708 |
|
|
$ |
460,282 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable |
$ |
55,009 |
|
|
$ |
30,024 |
|
Other accrued expenses and other current liabilities |
|
43,163 |
|
|
|
16,447 |
|
Deferred revenue |
|
9,399 |
|
|
|
7,856 |
|
Current portion of long-term debt |
|
53,774 |
|
|
|
- |
|
Capital lease and technology license obligations |
|
27,747 |
|
|
|
17,380 |
|
Total current liabilities |
|
189,092 |
|
|
|
71,707 |
|
Long-term debt |
|
676,372 |
|
|
|
- |
|
Capital lease and technology license obligations, net of current |
|
11,780 |
|
|
|
4,182 |
|
Deferred tax liability |
|
17,270 |
|
|
|
3,923 |
|
Other non-current liabilities |
|
18,266 |
|
|
|
4,140 |
|
Total liabilities |
|
912,780 |
|
|
|
83,952 |
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
Common stock |
|
66 |
|
|
|
58 |
|
Additional paid-in capital |
|
1,052,840 |
|
|
|
576,927 |
|
Accumulated deficit |
|
(215,021) |
|
|
|
(200,655) |
|
Accumulated other comprehensive loss |
|
43 |
|
|
|
- |
|
Total stockholders' equity |
|
837,928 |
|
|
|
376,330 |
|
Total liabilities and stockholders' equity |
$ |
1,750,708 |
|
|
$ |
460,282 |
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To view the original version on PR Newswire, visit: http://www.prnewswire.com/news-releases/cavium-announces-financial-results-for-q3-2016-300355154.html
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 |