SUNNYVALE, Calif. — (BUSINESS WIRE) — October 27, 2009 — MoSys, Inc., (NASDAQ: MOSY), a leading provider of differentiated, high-density memory and high-speed interface (I/O) intellectual property (IP) for the consumer, communications, networking, storage and high-performance computing markets, today reported financial results for the third quarter ended September 30, 2009.

Recent Highlights

• Reported total third quarter revenue of $3.4 million, up 70% sequentially
• Reported third quarter licensing revenue of $1.3 million, up over 300% sequentially and 11% over third quarter 2008
• Added two new customers for high speed serial interface IP for networking applications
• Signed a significant 1T-SRAM DDI (display driver IC) technology license with a large Japanese IDM, also a new customer
• Completed integration of the Prism Circuits and MoSys organizations
• Ended quarter with total cash and investments of $42.7 million

Management Commentary

Commenting on the quarter, Len Perham, MoSys’ President and Chief Executive Officer, stated, “I am very pleased with the progress that we made during the third quarter, our first full quarter as an integrated and unified team. With world-class expertise in memory and interface technology, our engineering team is focused on delivering cutting-edge, system level solutions, which I believe will enable us to increase our addressable market and provide growth opportunities to an expanding customer base.

“In the third quarter, the significant increase in our total revenue was driven by strong growth, both sequentially and year-over-year, in our licensing revenue, which was enhanced by contributions from our high-speed serial interface IP. I see networking and communications applications as a strategic growth area for MoSys and believe that our high-speed interface IP and design expertise, combined with 1T-SRAM, will be a key driver of that growth. I am pleased to report that we added two new customers, both adopting our high speed SerDes interface IP for networking and communications applications. Our goal is to become the partner of choice for our customers’ high-speed interface IP needs by exceeding their expectations while delivering the most competitive, cost-effective and robust solutions. Early in the fourth quarter, we booked a follow-on project from one of these new customers. Also, in October, we signed a significant technology license agreement for 1T-SRAM with a major Japanese IDM, also a new customer to MoSys. The license is initially for DDI applications and may expand into additional applications in the future.”

Mr. Perham concluded, “Overall, I believe our Company is well positioned for future growth based on our current technology offerings and new product initiatives. The integration of the Prism Circuits acquisition is complete and the efforts of the combined team are providing a measurable impact on both our short-term results and long-term opportunities.”

Third Quarter Results

Total net revenue for the third quarter of 2009 was $3.4 million, compared with $2.0 million for the second quarter of 2009 and $4.1 million for the third quarter of 2008.

Third quarter total revenue included licensing revenue of $1.3 million, compared with $306,000 for the second quarter of 2009 and $1.2 million for the third quarter of 2008. The sequential and year-over-year increases in license revenue were primarily driven by growth in revenues from ongoing interface IP projects.

Royalty revenue for the third quarter was $2.0 million, compared to $1.7 million in the previous quarter and $2.9 million in the third quarter of 2008. The sequential increase in royalty revenue was primarily due to an increase in revenue from a major IDM licensee. Most production by this IDM licensee is now subject to a license agreement that provides for royalties on its SoC at a more advanced process node to be reported and recognized in the quarter subsequent to shipment of the licensee’s products, instead of the shipment quarter, as was the case under the previous agreement. The licensee’s transition to the more advanced process node was substantially completed in the second quarter, resulting in increased royalty revenue from this IDM licensee in the third quarter.

Gross margin as determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP) was 80 percent, compared with 86 percent for the second quarter of 2009 and 79 percent for the third quarter of 2008.

Total operating expenses on a GAAP basis for the third quarter were $7.9 million, compared with $7.0 million for the previous quarter and $6.8 million for the third quarter of 2008. Third quarter 2009 operating expenses included the first full quarter of expenses from the Prism acquisition, as well as $1.1 million of amortization of intangible assets and contingent compensation expenses and $925,000 of stock-based compensation expense.