Cavium Announces Financial Results for Q4 2016

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February 1, 2017 4:05 PM EST

SAN JOSE, Calif., Feb. 1, 2017 /PRNewswire/ -- Cavium, Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable intelligent processing for enterprise, data center, cloud, wired and wireless networking, today announced financial results for the fourth quarter ended December 31, 2016.

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.


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