Cavium Announces Financial Results for Q2 2015

News provided by

Jul 29, 2015, 04:01 ET

SAN JOSE, Calif., July 29, 2015 /PRNewswire/ -- Cavium, Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable secure and intelligent processing for enterprise, data center, wired and wireless networking, today announced financial results for the second quarter ended June 30, 2015.

Net revenue in the second quarter of 2015 was $105.0 million, a 3.1% sequential increase from the $101.8 million reported in the first quarter of 2015 and a 15.8% year-over-year increase from the $90.7 million reported in the second quarter of 2014.

Generally Accepted Accounting Principles (GAAP) Results

Net loss in the second quarter of 2015 was $6.4 million, or $(0.11) per diluted share, compared to $13.9 million, or $(0.25) per diluted share in the first quarter of 2015. Gross margins were 64.1% in the second quarter of 2015 compared to 64.8% in the first quarter of 2015. Total cash and cash equivalents were $122.0 million at June 30, 2015.

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 second quarter of 2015, Non-GAAP net income was $24.2 million, or $0.41 per diluted share. Non-GAAP gross margin was 66.8% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 23.0%.

Recent News Highlights

July 22, 2015 - Cavium Unveiled the 100 Gbps NITROX® V Security Processor Family
July 13, 2015 - Cavium and Leading Partners Showcased Advanced ThunderX™ ARM-based Server Platforms and Software for High Performance Computing at ISC 2015
July 13, 2015 - Cavium Announced Beta Support for PathScale EKOPath Compiler and Optimized Math Libraries on ThunderX™ Processor Family
July 13, 2015 - Cavium Unveiled Flash Support for the Cavium ThunderX™ Processor Family
July 13, 2015 - Cavium Added Support for Mellanox InfiniBand Adapters for ThunderX™ Processor Family
July 13, 2015 - Mont-Blanc HPC software stack tested on E4's HPC platform based on ARM64 Cavium ThunderX processor
June 16, 2015 - Cavium Crowned Winner of SDN Idol 2015 at Open Networking Summit 2015
June 16, 2015 - Cavium Unleashed the Power of SDN through OpenFlow at ONS 2015
June 10, 2015 Cavium Announced New Low Power 16-core OCTEON® III SoC Processors for Next Generation Enterprise, Data Center and Service Provider Infrastructure
June 10, 2015 - 64-bit MIPS architecture provides low-power, high-throughput processing for Cavium's new OCTEON® III processors
June 10, 2015 - Green Hills Software Announced INTEGRITY® RTOS Multicore Support for OCTEON® III Family of SoC from Cavium
June 6, 2015 - Qulsar's Processors Managed Timing Engine Enhances Timing Synchronization in Cavium Small Cell Basestation Designs
June 1, 2015 - Cavium and Leading Partners Showcased Best-in-Class Product Solutions across Cloud, Data Center and Enterprise at Computex 2015
June 1, 2015 - Cavium Announced Collaboration with Pegatron on Server Platforms based on Cavium's ThunderX™ Workload Optimized Processor Family
June 1, 2015 - Leading Network Solution Providers and ODMs Partner with Cavium to Bring to Market Multiple Hardware Ethernet Switch Platforms
June 1, 2015 - Cavium OCTEON® III Expands Footprint to Industrial, Military and Aerospace Applications by Offering Standard Computer-On-Module Form Factors
May 18, 2015 - Cavium Partners with Canonical to Demonstrate Optimized Cloud Infrastructure with OpenStack at Scale on ThunderX™
May 14, 2015 - QLogic and Cavium Collaborates to Deliver Accelerated Performance for Enterprise and Cloud Storage Applications

Cavium, Inc. will broadcast its second quarter of 2015 financial results conference call today, July 29, 2015, 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 in enterprise, data center, cloud and wired and wireless service provider applications. Cavium offers a broad portfolio of integrated, software-compatible processors ranging in performance from 100 Mbps to 100 Gbps that enable secure, intelligent functionality in enterprise, data-center, broadband/consumer and access and service provider equipment. Cavium's 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
	June 30, 2015		March 31, 2015
Net revenue	$	104,961	$	101,778
Cost of revenue		37,673		35,799
Gross profit		67,288		65,979
Operating expenses:
Research and development		52,225		58,422
Sales, general and administrative		20,336		20,671
Total operating expenses		72,561		79,093
Loss from operations		(5,273)		(13,114)
Other expense, net:
Interest expense		(388)		(410)
Other, net		(33)		(66)
Total other expense, net		(421)		(476)
Loss before income taxes		(5,694)		(13,590)
Provision for income taxes		661		301
Net loss		(6,355)		(13,891)
Net loss per common share, basic and diluted	$	(0.11)	$	(0.25)
Shares used in computing basic and diluted net loss per common share		55,507		54,882

CAVIUM, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)

	Three Months Ended
	June 30, 2015		March 31, 2015
Reconciliation of GAAP operating expenses to non-GAAP:
GAAP research and development expenses	$	52,225	$	58,422
Stock-based compensation and related payroll taxes		(7,896)		(7,823)
Amortization of acquisition related assets		(2,932)		-
Net restructuring related expenses		-		(254)
Research and development expenses associated with Xpliant		(8,845)		(20,142)
Non-GAAP research and development expenses	$	32,552	$	30,203

GAAP sales, general and administrative expenses	$	20,336	$	20,671
Stock-based compensation and related payroll taxes		(4,429)		(5,138)
Amortization of acquisition related assets		(11)		(11)
Net restructuring related expenses		-		(68)
Sales, general and administrative expenses associated with Xpliant		(2,554)		(1,979)
Non-GAAP sales, general and administrative expenses	$	13,342	$	13,475
Total Non-GAAP operating expenses	$	45,894	$	43,678

Reconciliation of GAAP non-operating expenses to non-GAAP non-operating income:
GAAP non-operating expenses	$	(421)	$	(476)
Non-operating expenses associated with Xpliant		1,144		1,124
Total Non-GAAP non-operating income	$	723	$	648

CAVIUM, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data and percentages)

	Three Months Ended
	June 30, 2015			March 31, 2015
Reconciliation of GAAP gross profit & margin to non-GAAP:
Net revenue	$	104,961		$	101,778
GAAP gross profit		67,288			65,979
GAAP gross margin		64.1	%		64.8	%

Stock-based compensation and related payroll taxes		212			213
Amortization of acquisition related assets		157			795
Discontinued mask		2,420			-
Net restructuring related expenses		-			42
Non-GAAP gross profit	$	70,077		$	67,029
Non-GAAP gross margin		66.8	%		65.9	%

Reconciliation of GAAP loss from operations to non-GAAP income from operations:
GAAP loss from operations	$	(5,273)		$	(13,114)
Stock-based compensation and related payroll taxes		12,537			13,174
Amortization of acquisition related assets		3,100			806
Discontinued mask		2,420			-
Net restructuring related expenses		-			364
Loss from operations of Xpliant		11,399			22,121
Non-GAAP income from operations	$	24,183		$	23,351
Non-GAAP income from operations as a percentage of revenue		23.0	%		22.9	%

Reconciliation of GAAP loss to non-GAAP net income:
GAAP net loss	$	(6,355)		$	(13,891)
Non-GAAP adjustments:
Stock-based compensation and related payroll taxes		12,537			13,174
Amortization of acquisition related assets		3,100			806
Discontinued mask		2,420			-
Net restructuring related expenses and other charges		-			364
Loss from operations and non-operating expenses of Xpliant		12,543			23,245
Total of non-GAAP adjustments		30,600			37,589
Non-GAAP net income	$	24,245		$	23,698

GAAP net loss per share, diluted	$	(0.11)		$	(0.25)
Non-GAAP adjustments detailed above		0.52			0.65
Non-GAAP net income per share, diluted	$	0.41		$	0.40

GAAP weighted average shares, diluted		55,507			54,882
Non-GAAP share adjustment		4,114			4,286
Non-GAAP weighted average shares, diluted		59,621			59,168

CAVIUM, INC.
Unaudited GAAP Condensed Consolidated Balance Sheets
(in thousands)

	As of June 30, 2015		As of March 31, 2015
Assets
Current assets
Cash and cash equivalents	$	121,984	$	121,025
Accounts receivable, net		67,165		56,817
Inventories		50,403		52,312
Prepaid expenses and other current assets		9,312		8,944
Total current assets		248,864		239,098
Property and equipment, net		60,235		58,828
Intangible assets, net		37,023		37,532
Goodwill		71,478		71,478
Other assets		1,952		1,935
Total assets	$	419,552	$	408,871

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	32,702	$	25,100
Other accrued expenses and other current liabilities		14,950		15,945
Deferred revenue		7,273		6,047
Capital lease and technology license obligations		18,383		16,324
Total current liabilities		73,308		63,416
Capital lease and technology license obligations, net of current		15,981		20,788
Deferred tax liability		3,159		2,997
Other non-current liabilities		2,970		2,819
Total liabilities		95,418		90,020

Stockholders' equity
Common stock		56		55
Additional paid-in capital		516,676		505,039
Accumulated deficit		(192,598)		(186,243)
Total stockholders' equity		324,134		318,851
Total liabilities and stockholders' equity	$	419,552	$	408,871