Mellanox Technologies (MLNX) Guides Q1 Revenue Ahead of Views, CFO to Leave

Mellanox Technologies, Ltd. (NASDAQ: MLNX), a leading supplier of high-performance, end-to-end smart interconnect solutions for data center servers and storage systems, today announced updates to its first quarter outlook previously provided on its fourth quarter earnings call and earnings release on January 18, 2018.

First Quarter 2018 Outlook

Mellanox currently projects:

• Quarterly revenues of $240 million to $250 million
• Non-GAAP gross margins of 68.5% to 69.5%
• Non-GAAP operating expenses of $120 million to $122 million
• Share based compensation expenses of $16.3 million to $16.8 million
• Non-GAAP diluted share count to be in range of 52.4 million and 52.9 million

(Street sees Q1 revenue of $238.8 million)

“Throughout the first quarter, it has become clear that the trends we experienced at the end of 2017 are holding firm, and customer transition from 10 gigabit per second to 25 gigabit per second Ethernet adapters is accelerating across the board,” said Eyal Waldman, Chief Executive Officer of Mellanox. “We are particularly pleased to see that this widespread adoption of 25 gigabit per second technology covers the majority of customer categories in every major market around the world, a direct result of the strategy we have been executing on in recent years. Our investment in R&D is driving product innovation and sustainable long-term growth, and we are well positioned to capture further market share as the landscape shifts to 25 gigabit per second and beyond. In fact, Mellanox is already offering leading edge 25, 50 and 100 gigabit per second Ethernet solutions. We continue to build momentum and make progress on our financial and operational initiatives, by reducing our operating expense run rate and driving efficiencies in our business, and are confident that our focused investment strategy will continue to deliver positive results into the future.”

CFO Transition

Today, Mellanox also announced that Jacob Shulman has accepted an executive position at a pre-IPO company and will step down as Chief Financial Officer of Mellanox on May 4, 2018, after announcing fiscal first quarter 2018 earnings and signing off on the filing of the first quarter financials with the SEC.

The Company has been identifying and evaluating candidates to succeed Mr. Shulman as CFO with the assistance of an executive search firm.

"On behalf of the Board and management team, I would like to thank Jacob for his financial leadership and contributions to Mellanox,” said Mr. Waldman. “Jacob played an instrumental role in building Mellanox’s solid financial foundation. The Board of Directors, our employees and I are grateful to Jacob for his service and wish him the best as he embarks on an exciting new chapter in his career.”

Mr. Shulman said, “I joined Mellanox because I believed in our strategic direction, and I continue to believe the Company is positioned to serve our customers and deliver value to shareholders. We have made substantial investments in innovation and R&D over the past five years, and I look forward to seeing those investments bear fruit.”

Mr. Waldman continued, “During his tenure at Mellanox, Jacob added talent and strength to our finance team, which will continue to execute as we conduct the search for our next CFO. The Board and I are committed to finding a strong successor, and are actively working to identify a new finance leader with a proven track record of driving profitable growth and taking decisive action to enable margin expansion.”

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