UPDATE: Mellanox Technologies (MLNX) Tops Q1 EPS by 16c, Beats on Revenues; Boosts FY18 Revenue Guidance Above Consensus

Mellanox Technologies (NASDAQ: MLNX) reported Q1 EPS of $0.98, $0.16 better than the analyst estimate of $0.82. Revenue for the quarter came in at $251 million versus the consensus estimate of $243.39 million.

First Quarter 2018 -Highlights

• Revenues of $251.0 million increased 33.0 percent, compared to $188.7 million in the first quarter of 2017.
• GAAP gross margins of 64.5 percent in the first quarter, compared to 65.8 percent in the first quarter of 2017.
• Non-GAAP gross margins of 69.0 percent in the first quarter, compared to 71.7 percent in the first quarter of 2017.
• GAAP operating income was $12.0 million, compared to operating loss of $12.6 million in the first quarter of 2017.
• Non-GAAP operating income was $52.1 million, or 20.8 percent of revenue, compared to $15.7 million, or 8.3 percent of revenue in the first quarter of 2017.
• GAAP benefit from taxes on income in the first quarter was $26.4 million and included a reversal of valuation allowance on deferred tax assets of $26.7 million.
• GAAP net income was $37.8 million, compared to net loss of $12.2 million in the first quarter of 2017.
• Non-GAAP net income was $51.4 million, compared to $14.7 million in the first quarter of 2017.
• GAAP net income per diluted share was $0.71 in the first quarter, compared to net loss per diluted share of $0.25 in the first quarter of 2017.
• Non-GAAP net income per diluted share was $0.98 in the first quarter, compared to $0.29 in the first quarter of 2017.
• $55.4 million in cash was provided by operating activities, compared to $35.0 million in the first quarter of 2017.

Cash and investments totaled $286.3 million at March 31, 2018, compared to $273.8 million at December 31, 2017.

Mr. Waldman continued, “We have increased our full year 2018 outlook based on the strength of our first quarter, and improved visibility we have into market trends as we enter the second quarter. We remain committed to delivering top-line revenue growth and driving down costs to enhance operational efficiencies and achieve our increased non-GAAP operating margin target for fiscal 2018. Our updated financial outlook is further evidence of the strength of our strategy, innovation and investment priorities. With the ramp of our BlueField System-on-Chip and 200 gigabit per second HDR InfiniBand in 2018, we expect to build on our positive momentum and deliver even greater shareholder value.”

Second Quarter 2018 Outlook

We currently project:

• Quarterly revenues of $255 million to $265 million
• Non-GAAP gross margins of 68.5 percent to 69.5 percent
• Non-GAAP operating expenses of $119 million to $121 million
• Share-based compensation expense of $15.5 million to $16.0 million
• Non-GAAP diluted share count of 52.8 million to 53.3 million

Full Year 2018 Outlook

We currently project:

• Revenues of $1,030 million to $1,050 million
• Non-GAAP gross margins of 68.0 percent to 69.0 percent
• Non-GAAP operating margin of 21.0 percent to 22.0 percent

GUIDANCE:

Mellanox Technologies sees FY2018 revenue of $1.03-1.05 billion, versus the consensus of $1.01 billion.

For earnings history and earnings-related data on Mellanox Technologies (MLNX) click here.

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