Cavium Announces Financial Results for Q1 2014

SAN JOSE, Calif., April 30, 2014 /PRNewswire/ -- Cavium, Inc. (NASDAQ: CAVM), a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, communications, and the digital home, today announced financial results for the first quarter ended March 31, 2014.

Revenue in the first quarter of 2014 was $83.2 million, a 2.5% sequential increase from the $81.1 million reported in the fourth quarter of 2013 and a 19.7% year-over-year increase from the $69.5 million reported in the first quarter of 2013.

Generally Accepted Accounting Principles (GAAP) Results

Net income attributable to the Company in the first quarter of 2014 was $2.3 million, or $0.04 per diluted share, compared to $0.2 million, or $0.00 per diluted share in the fourth quarter of 2013. Gross margins were 63.5% in the first quarter of 2014 compared to 64.2% in the fourth quarter of 2013. Total cash and cash equivalents were $124.1 million at March 31, 2014.

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. 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 first quarter of 2014, Non-GAAP net income was $17.0 million, or $0.30 per diluted share, Non-GAAP gross margin was 65.4% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 20.7%.

Recent News Highlights

  • April 8, 2014 - Cavium Announced Availability of Complete TD-LTE Support for OCTEON Fusion® Small Cell Base Station
  • April 8, 2014 - AKM Demonstrated New Family of LTE™ Base Station Transceivers in Cavium's Small Cell eNodeB Design at the Small Cells Asia Conference
  • April 1, 2014 - Cavium Demonstrated Range of Secure Scalable Solutions for Virtualized Enterprise and Cloud Infrastructure at Interop Las Vegas
  • April 1, 2014 - 6WIND and Cavium Extended Partnership to Deliver Compelling High Performance Solutions for NFV and SDN
  • February 24, 2014 - Cavium Showcased a Range of Solutions for RAN, Core and Cloud Infrastructure at Mobile World Congress 2014
  • February 24, 2014 - Cavium Unveiled UniFiRAN a Unified Architecture from Small Cell to Cloud RAN at Mobile World Congress
  • February 24, 2014 - Cavium Introduced Highly Optimized, Small Form Factor 64 User OCTEON Fusion® Small Cell Base Station Design
  • February 24, 2014 - Cavium Supports Telkomsel in LTE Network Trials
  • February 24, 2014 - Arcadyan Selected Cavium for Carrier-grade LTE Small Cells with Data Offload and DPI for Enterprise Applications
  • February 24, 2014 - MontaVista Introduced MV Cloud – A High Performance, Carrier Grade Cloud Platform for the Mobile and NFV Market

Cavium, Inc. will broadcast its first quarter of 2014 financial results conference call today, April 30, 2014, 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 is a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, communications and the digital home. Cavium offers a broad portfolio of integrated, software-compatible processors ranging in performance from 10 Mbps to 100 Gbps that enable secure, intelligent functionality in enterprise, data-center, broadband/consumer and access and service provider equipment. Cavium processors are supported by ecosystem partners that provide operating systems, tool support, reference designs and other services. Cavium's principal office is in San Jose, CA with design team locations in California, Massachusetts, India and China. 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 


March 31, 2014


December 31, 2013

Net revenue

$               83,241


$                81,135

Cost of revenue 

30,350


29,059

Gross profit 

52,891


52,076

Operating expenses:




     Research and development 

37,289


36,127

     Sales, general and administrative 

15,932


17,871

        Total operating expenses 

53,221


53,998

Loss from operations 

(330)


(1,922)

Other income (expense), net:




    Interest expense

(459)


(395)

    Change in estimated fair value of notes payable and other

(858)


-

    Other, net

135


(74)

Total other expense, net

(1,182)


(469)

     Loss before income taxes 

(1,512)


(2,391)

     Provision for income taxes

243


120

Net loss

(1,755)


(2,511)

Net loss attributable to non-controlling interest

(4,102)


(2,698)

Net income attributable to the Company

$                 2,347


$                      187

Net income attributable to the Company per common share, basic

$                   0.04


$                     0.00

Shares used in computing basic net income per common share

52,550


52,104

Net income attributable to the Company per common share, diluted

$                   0.04


$                     0.00

Shares used in computing diluted net income per common share

54,221


53,772









CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands)


Three Months Ended 

Reconciliation of GAAP research and development expenses to 

March 31, 2014


December 31, 2013

     non-GAAP:




    GAAP research and development expenses

$               37,289


$                36,127

          Stock-based compensation and related payroll taxes

(6,026)


(5,022)

          Net restructuring related expenses 

(509)


(74)

          Expenses associated from a variable interest entity

(4,767)


(3,522)

          Change in estimated useful lives of certain consumer product
              related intangible assets

-


(2,928)

     Non-GAAP research and development expenses

$               25,987


$                24,581

Reconciliation of GAAP sales, general and administrative expenses to 




     non-GAAP 




    GAAP sales, general and administrative expenses

$               15,932


$                17,871

          Stock-based compensation and related payroll taxes

(4,177)


(3,683)

          Amortization of acquired intangible assets

(35)


(2,938)

          Net restructuring related expenses

(243)


250

          Expenses associated from a variable interest entity

(286)


-

     Non-GAAP sales, general and administrative expenses

$                11,191


$                 11,500

 

 

CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data and percentages)



Three Months Ended 


March 31, 2014


December 31, 2013

Reconciliation of GAAP gross profit & margin to non-GAAP:




Net revenue

$                        83,241


$                        81,135

GAAP gross profit

52,891


52,076

GAAP gross margin

63.5%


64.2%





          Stock-based compensation and related payroll taxes

259


311

          Amortization of acquired intangible assets

1,267


1,548

          Net restructuring related expenses

-


(110)

Non-GAAP gross profit

$                         54,417


$                         53,825

Non-GAAP gross margin

65.4%


66.3%






Three Months Ended 


March 31, 2014


December 31, 2013

Reconciliation of GAAP loss from operations to non-GAAP income from operations:




GAAP loss from operations

$                             (330)


$                         (1,922)

          Stock-based compensation and related payroll taxes

10,462


9,016

          Amortization of acquired intangible assets

1,302


4,486

          Net restructuring related expenses

752


(286)

          Change in estimated useful lives of certain consumer product related intangible assets

-


2,928

          Loss from operations of a variable interest entity

5,053


3,522

Non-GAAP income from operations

$                          17,239


$                         17,744

Non-GAAP income from operations as a percentage of revenue

20.7%


21.9%






Three Months Ended 


March 31, 2014


December 31, 2013

Reconciliation of GAAP net income to non-GAAP net income:




GAAP net income attributable to the Company

$                            2,347


$                              187

Non-GAAP adjustments:




      Stock-based compensation and related payroll taxes:




          Cost of revenue

259


311

          Research and development 

6,026


5,022

          Sales, general and administrative 

4,177


3,683

      Amortization of acquired intangible assets:




          Cost of revenue

1,267


1,548

          Sales, general and administrative 

35


2,938

      Net restructuring related expenses

752


(286)

      Change in estimated useful lives of certain consumer product related intangible assets

-


2,928

      Net loss of a variable interest entity attributable to the Company

2,178


1,064

     Total of non-GAAP adjustments

14,694


17,208

Non-GAAP net income 

$                          17,041


$                         17,395





GAAP net income attributable to the Company per share, diluted

$                              0.04


$                             0.00

   Non-GAAP adjustments detailed above

0.26


0.31

Non-GAAP net income attributable to the Company per share, diluted

$                              0.30


$                             0.31





GAAP weighted average shares, diluted

54,221


53,772

   Non-GAAP share adjustment

2,338


2,038

Non-GAAP weighted average shares, diluted

56,559


55,810


 


CAVIUM, INC.

Unaudited GAAP Condensed Consolidated Balance Sheets

(in thousands)



As of
March 31, 2014


As of
December 31, 2013

Assets





Current assets:





Cash and cash equivalents

$              124,106


$              127,763


Accounts receivable, net 

56,819


43,636


Inventories

49,048


45,768


Prepaid expenses and other current assets

5,834


6,491



Total current assets

235,807


223,658

Property and equipment, net

28,562


28,494

Intangible assets, net

41,453


43,240

Goodwill


71,478


71,478

Deferred tax assets

61


61

Other assets

1,035


1,054



Total assets

$              378,396


$              367,985







Liabilities and Equity 




Current liabilities:





Accounts payable

$                24,060


$                23,467


Other accrued expenses and other current liabilities

9,519


9,836


Deferred revenue

8,475


8,669


Notes payable and other

15,770


13,512


Capital lease and technology license obligations

14,227


17,103



Total current liabilities

72,051


72,587

Capital lease and technology license obligations, net of current 

15,297


16,292

Deferred tax liability

2,365


1,931

Other non-current liabilities

2,437


2,344



Total liabilities

92,150


93,154







Equity 






Common stock

53


53


Additional paid-in capital

456,758


443,588


Accumulated deficit

(154,710)


(157,057)



Total stockholders' equity attributable to the Company

302,101


286,584


Non-controlling interest

(15,855)


(11,753)



Total equity

286,246


274,831



Total liabilities and equity 

$              378,396


$              367,985

 

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SOURCE Cavium, Inc.



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