Net revenue in the fourth quarter of 2016 was $226.2 million, a 34.5% sequential increase from the $168.1 million reported in the third quarter of 2016 and 124.0% from the $100.9 million reported in the fourth quarter of 2015.
Generally Accepted Accounting Principles (GAAP) Results
Net loss for the fourth quarter of 2016 was $121.6 million, or ($1.82) per diluted share, compared to $14.4 million, or ($0.23) per diluted share in the third quarter of 2016. Gross margins were 43.4% in the fourth quarter of 2016 compared to 28.2% in the third quarter of 2016. GAAP operating loss (GAAP loss from operations as a percentage of revenue) was 12.9% in the fourth quarter of 2016 compared to 56.1% in the third quarter of 2016. Total cash and cash equivalents were $221.4 million at December 31, 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 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 fourth quarter of 2016, Non-GAAP net income was $39.8 million, or $0.56 per diluted share. Non-GAAP gross margin was 65.0% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 21.6%.
Recent News Highlights
- January 31, 2017 - Cavium QLogic Leads Ethernet & Fibre Channel I/O Innovation for Next Generation Servers
- January 24, 2017 - Cavium Contributes to the First Programmable Wedge 100C Switch Design to OCP
- January 17, 2017 - Cavium QLogic Delivers Expanded Options for Server and Storage Connectivity
- January 16, 2017 - Cavium's XPliant Family of Ethernet Switches Received Linley Group's Analysts' Choice Award for Best Networking Chip 2016
- December 8, 2016 - Cavium and China Unicom Signed Collaboration Agreement for Virtualized RAN Technology
- November 15, 2016 - Cavium and Leading Partners Showcased ThunderX ARM-based Server Platforms, QLogic FastLinQ Ethernet Adapters and Fibre Channel HBAs for High Performance Computing at SC16
Cavium will broadcast its fourth quarter of 2016 financial results conference call today, February 1, 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 |
| |||||
|
|
December 31, 2016 |
|
|
September 30, 2016 |
| ||
|
Net revenue |
$ |
226,151 |
|
|
$ |
168,123 |
|
|
Cost of revenue |
|
127,926 |
|
|
|
120,709 |
|
|
Gross profit |
|
98,225 |
|
|
|
47,414 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
87,031 |
|
|
|
67,752 |
|
|
Sales, general and administrative |
|
40,340 |
|
|
|
73,904 |
|
|
Total operating expenses |
|
127,371 |
|
|
|
141,656 |
|
|
Loss from operations |
|
(29,146) |
|
|
|
(94,242) |
|
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
Interest expense |
|
(8,073) |
|
|
|
(4,268) |
|
|
Other, net |
|
158 |
|
|
|
54 |
|
|
Total other expense, net |
|
(7,915) |
|
|
|
(4,214) |
|
|
Loss before income taxes |
|
(37,061) |
|
|
|
(98,456) |
|
|
Provision for (benefit from) income taxes |
|
84,539 |
|
|
|
(84,090) |
|
|
Net loss |
$ |
(121,600) |
|
|
$ |
(14,366) |
|
|
Net loss per common share, basic and diluted |
$ |
(1.82) |
|
|
$ |
(0.23) |
|
|
Shares used in computing basic and diluted net loss per common share |
|
66,949 |
|
|
|
62,055 |
|
|
CAVIUM, INC. | |||||||
|
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||
|
(in thousands, except per share data and percentages) | |||||||
|
|
|
| |||||
|
|
Three Months Ended |
| |||||
|
|
December 31, 2016 |
|
|
September 30, 2016 |
| ||
|
Reconciliation of GAAP gross profit and margin to non-GAAP: |
|
|
|
|
|
|
|
|
Net revenue |
$ |
226,151 |
|
|
$ |
168,123 |
|
|
GAAP gross profit |
|
98,225 |
|
|
|
47,414 |
|
|
GAAP gross margin |
|
43.4 |
% |
|
|
28.2 |
% |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation and related payroll taxes from awards granted by the Company |
|
509 |
|
|
|
274 |
|
|
Stock-based compensation and related payroll taxes from awards assumed from the acquisition |
|
75 |
|
|
|
134 |
|
|
Purchase accounting effect on inventory |
|
21,015 |
|
|
|
9,888 |
|
|
Manufacturing rights buy-out |
|
- |
|
|
|
37,059 |
|
|
Amortization of acquisition related assets |
|
27,176 |
|
|
|
12,880 |
|
|
Non-GAAP gross profit |
$ |
147,000 |
|
|
$ |
107,649 |
|
|
Non-GAAP gross margin |
|
65.0 |
% |
|
|
64.0 |
% |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP operating expenses to non-GAAP: |
|
|
|
|
|
|
|
|
GAAP research and development expenses |
$ |
87,031 |
|
|
$ |
67,752 |
|
|
Stock-based compensation and related payroll taxes from awards granted by the Company |
|
(11,030) |
|
|
|
(9,644) |
|
|
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 |
|
(2,635) |
|
|
|
(1,363) |
|
|
Amortization of acquisition related assets |
|
(1,507) |
|
|
|
(2,643) |
|
|
IPR&D written-off |
|
(2,000) |
|
|
|
- |
|
|
Non-GAAP research and development expenses |
|
69,859 |
|
|
|
53,146 |
|
|
|
|
|
|
|
|
|
|
|
GAAP sales, general and administrative expenses |
|
40,340 |
|
|
|
73,904 |
|
|
Stock-based compensation and related payroll taxes from awards granted by the Company |
|
(7,734) |
|
|
|
(7,554) |
|
|
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 |
|
(700) |
|
|
|
(1,097) |
|
|
Acquisition and integration related costs |
|
(2,282) |
|
|
|
(13,486) |
|
|
Amortization of acquisition related assets |
|
(1,422) |
|
|
|
(524) |
|
|
Restructuring, severance and other employment charges |
|
- |
|
|
|
(13,477) |
|
|
Non-GAAP sales, general and administrative expenses |
|
28,202 |
|
|
|
22,141 |
|
|
Total Non-GAAP operating expenses |
$ |
98,061 |
|
|
$ |
75,287 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP non-operating expenses to non-GAAP: |
|
|
|
|
|
|
|
|
GAAP other expense, net |
$ |
(7,915) |
|
|
$ |
(4,214) |
|
|
Interest expense and amortization of debt financing cost associated with interim term loan facility |
|
164 |
|
|
|
522 |
|
|
Non-GAAP other expense, net |
$ |
(7,751) |
|
|
$ |
(3,692) |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Income tax to non-GAAP: |
|
|
|
|
|
|
|
|
GAAP provision for (benefit from) income tax |
$ |
84,539 |
|
|
$ |
(84,090) |
|
|
Acquisition related tax adjustments |
|
(83,174) |
|
|
|
84,792 |
|
|
Non-GAAP provision for income tax |
$ |
1,365 |
|
|
$ |
702 |
|
|
CAVIUM, INC. | |||||||
|
Unaudited Reconciliation of Non-GAAP Adjustments | |||||||
|
(in thousands, except per share data and percentages) | |||||||
|
|
|
| |||||
|
|
Three Months Ended |
| |||||
|
|
December 31, 2016 |
|
|
September 30, 2016 |
| ||
|
Reconciliation of GAAP loss from operations to non-GAAP income from operations: |
|
|
|
|
|
|
|
|
GAAP loss from operations |
$ |
(29,146) |
|
|
$ |
(94,242) |
|
|
Stock-based compensation and related payroll taxes from awards granted by the Company |
|
19,273 |
|
|
|
17,472 |
|
|
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 |
|
3,410 |
|
|
|
2,594 |
|
|
Purchase accounting effect on inventory |
|
21,015 |
|
|
|
9,888 |
|
|
Amortization of acquisition related assets |
|
30,105 |
|
|
|
16,047 |
|
|
Acquisition and integration related costs |
|
2,282 |
|
|
|
13,486 |
|
|
Manufacturing rights buy-out |
|
- |
|
|
|
37,059 |
|
|
Restructuring, severance and other employment charges |
|
- |
|
|
|
13,477 |
|
|
IPR&D written-off |
|
2,000 |
|
|
|
- |
|
|
Non-GAAP income from operations |
$ |
48,939 |
|
|
$ |
32,362 |
|
|
Non-GAAP income from operations as a percentage of revenue |
|
21.6 |
% |
|
|
19.2 |
% |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP net loss to non-GAAP net income: |
|
|
|
|
|
|
|
|
GAAP net loss |
$ |
(121,600) |
|
|
$ |
(14,366) |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation and related payroll taxes from awards granted by the Company |
|
19,273 |
|
|
|
17,472 |
|
|
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 |
|
3,410 |
|
|
|
2,594 |
|
|
Purchase accounting effect on inventory |
|
21,015 |
|
|
|
9,888 |
|
|
Amortization of acquisition related assets |
|
30,105 |
|
|
|
16,047 |
|
|
Acquisition and integration related costs |
|
2,282 |
|
|
|
13,486 |
|
|
Manufacturing rights buy-out |
|
- |
|
|
|
37,059 |
|
|
Restructuring, severance and other employment charges |
|
- |
|
|
|
13,477 |
|
|
IPR&D written-off |
|
2,000 |
|
|
|
- |
|
|
Interest expense and amortization of debt financing cost associated with interim term loan facility |
|
164 |
|
|
|
522 |
|
|
Acquisition related tax adjustments |
|
83,174 |
|
|
|
(84,792) |
|
|
Total of non-GAAP adjustments |
|
161,423 |
|
|
|
42,334 |
|
|
Non-GAAP net income |
$ |
39,823 |
|
|
$ |
27,968 |
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per share, diluted |
$ |
(1.82) |
|
|
$ |
(0.23) |
|
|
Non-GAAP adjustments detailed above |
|
2.38 |
|
|
|
0.66 |
|
|
Non-GAAP net income per share, diluted |
$ |
0.56 |
|
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
GAAP weighted average shares, diluted |
|
66,949 |
|
|
|
62,055 |
|
|
Non-GAAP share adjustment |
|
4,365 |
|
|
|
3,062 |
|
|
Non-GAAP weighted average shares, diluted |
|
71,314 |
|
|
|
65,117 |
|
|
CAVIUM, INC. | |||||||
|
Unaudited GAAP Condensed Consolidated Balance Sheets | |||||||
|
(in thousands) | |||||||
|
|
|
| |||||
|
|
As of |
| |||||
|
|
December 31, 2016 |
|
|
September 30, 2016 |
| ||
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
221,439 |
|
|
$ |
192,378 |
|
|
Accounts receivable, net |
|
125,728 |
|
|
|
144,902 |
|
|
Inventories |
|
119,692 |
|
|
|
118,936 |
|
|
Prepaid expenses and other current assets |
|
22,259 |
|
|
|
20,556 |
|
|
Asset held for sale |
|
- |
|
|
|
38,511 |
|
|
Total current assets |
|
489,118 |
|
|
|
515,283 |
|
|
Property and equipment, net |
|
150,862 |
|
|
|
122,114 |
|
|
Intangible assets, net |
|
764,885 |
|
|
|
790,368 |
|
|
Goodwill |
|
241,067 |
|
|
|
319,021 |
|
|
Other assets |
|
4,599 |
|
|
|
3,922 |
|
|
Total assets |
$ |
1,650,531 |
|
|
$ |
1,750,708 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
$ |
65,456 |
|
|
$ |
55,009 |
|
|
Accrued expenses and other current liabilities |
|
64,967 |
|
|
|
43,163 |
|
|
Deferred revenue |
|
8,412 |
|
|
|
9,399 |
|
|
Current portion of long-term debt |
|
3,865 |
|
|
|
53,774 |
|
|
Capital lease and technology license obligations |
|
25,535 |
|
|
|
27,747 |
|
|
Total current liabilities |
|
168,235 |
|
|
|
189,092 |
|
|
Long-term debt |
|
675,414 |
|
|
|
676,372 |
|
|
Capital lease and technology license obligations, net of current |
|
27,878 |
|
|
|
11,780 |
|
|
Deferred tax liability |
|
18,774 |
|
|
|
17,270 |
|
|
Other non-current liabilities |
|
18,386 |
|
|
|
18,266 |
|
|
Total liabilities |
|
908,687 |
|
|
|
912,780 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Common stock |
|
67 |
|
|
|
66 |
|
|
Additional paid-in capital |
|
1,079,043 |
|
|
|
1,052,840 |
|
|
Accumulated deficit |
|
(336,621) |
|
|
|
(215,021) |
|
|
Accumulated other comprehensive loss |
|
(645) |
|
|
|
43 |
|
|
Total stockholders' equity |
|
741,844 |
|
|
|
837,928 |
|
|
Total liabilities and stockholders' equity |
$ |
1,650,531 |
|
|
$ |
1,750,708 |
|
To view the original version on PR Newswire, visit: http://www.prnewswire.com/news-releases/cavium-announces-financial-results-for-q4-2016-300400626.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 |