Silicom Reports Q3 2019 Financial Results

KFAR SAVA, Israel, Oct. 31, 2019 /PRNewswire/ -- Silicom Ltd. (NASDAQ: SILC), a leading provider of high-performance networking and data infrastructure solutions, today reported its financial results for the third quarter and first nine months ended September 30, 2019.

Financial Results

Third Quarter: Silicom's revenues for the third quarter of 2019 totalled $24.1 million compared with $31.1 million for the third quarter of 2018.

On a GAAP basis, net income for the quarter totalled $1.9 million, or $0.25 per share (basic and diluted), compared with $3.8 million, or $0.49 per diluted share ($0.50 per basic share), for the third quarter of 2018.

On a non-GAAP basis (as described and reconciled below), net income for the quarter totalled $2.5 million, or $0.34 per share (basic and diluted), compared with $4.7 million, or $0.62 per diluted share ($0.63 per basic share), for the third quarter of 2018.

First Nine Months: Silicom's revenues for the first nine months of 2019 totalled $79.7 million compared with $88.2 million for the first nine months of 2018.

On a GAAP basis, net income for the period totalled $7.8 million, or $1.03 per share (basic and diluted), compared with $4.8 million, or $0.62 per diluted share ($0.63 per diluted share), for the first nine months of 2018.

On a non-GAAP basis (as described and reconciled below), net income for the period totalled $9.5 million, or $1.24 per diluted share ($1.25 per diluted share), compared with $12.4 million, or $1.62 per diluted share ($1.65 per basic share), for the first nine months of 2018.

Guidance for the Fourth Quarter

Management projects that revenues for the fourth quarter of 2019 will total $25 to $26 million.

Comments of Management

Shaike Orbach, Silicom's President and CEO, commented, "The third quarter was another profitable period with revenues in line with our guidance and positive cash flow. While still not reflected in our top line results, we believe that both of our strategic growth drivers – including Edge for SDWAN/NFV and networking-related FPGAs – are closer than ever to ramp-up. We expect both to increase their contribution to our top line in the year ahead, supporting significant growth in 2020 with further acceleration in 2021. We see that some of our customers are already beginning to ramp up deployment quantities, and others are finalizing their deployment plans for these markets. This process confirms the indications provided by market reports, which project significant growth for both markets in the coming years."

Mr. Orbach continued, "In fact, the Edge/SDWAN/NFV market is now growing in both the Telco space, the segment on which we focused initially, and the Enterprise space, which we believe, as demonstrated by the Design Win we announced earlier this week, will also become a significant  growth vector for us within this market. We also see an increased interest in LTE-supported SDWAN activity, a market in which we have strong positioning due to the heavy investments we have made in this technology.

"We are excited by all of these trends as they are in line with our positioning for our current customers and wins, confirming the soundness of our growth strategy. We believe that the ramp-up of our major Edge-related wins will finally begin during 2020, and that the FPGA-related wins secured during the past year will begin making a real contribution in 2020, followed by accelerated growth during 2021."

Mr. Orbach concluded, "We plan to continue and invest in both the Edge and the FPGA spaces, building more products and solutions, further deepening our pipeline and transforming opportunities currently in the pipeline into Design Wins. With superior products and technologies, Design Wins with larger and larger companies, significant loyal customers, a strong balance sheet and an excellent cash position, we are ideally positioned to benefit from the long-term development of the industry's strongest trends and remain strongly confident about our prospects."

Conference Call Details
Silicom's Management will host an interactive conference today, October 31^st, at 9am Eastern Time (6am Pacific Time, 3pm Israel Time) to review and discuss the results.

To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, try the international dial-in number.

US: 1-888-668-9141

UK: 0-800-917-5108

ISRAEL: 03-918-0609

INTERNATIONAL:  +972-3-918-0609

At: 9:00am Eastern Time, 6:00am Pacific Time, 3:00pm Israel Time

For those unable to listen to the live call, a replay of the call will be available for three months from the day after the call under the investor relations section of Silicom's website.

Non-GAAP Financial Measures

This release, including the financial tables below, presents other financial information that may be considered "non-GAAP financial measures" under Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission as they apply to our company. These non-GAAP financial measures exclude compensation expenses in respect of options and RSUs granted to directors, officers and employees, amortization of acquired intangible assets, taxes on amortization of acquired intangible assets, as well as discontinued project-related write-offs. Non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. The tables also present the GAAP financial measures, which are most comparable to the non-GAAP financial measures as well as reconciliation between the non-GAAP financial measures and the most comparable GAAP financial measures. The non-GAAP financial information presented herein should not be considered in isolation from or as a substitute for operating income, net income or per share data prepared in accordance with GAAP.

About Silicom

Silicom Ltd. is an industry-leading provider of high-performance networking and data infrastructure solutions. Designed primarily to improve performance and efficiency in Cloud and Data Center environments, Silicom's solutions increase throughput, decrease latency and boost the performance of servers and networking appliances, the infrastructure backbone that enables advanced Cloud architectures and leading technologies like NFV, SD-WAN and Cyber Security. Our innovative solutions for high-density networking, high-speed fabric switching, offloading and acceleration, which utilize a range of cutting-edge silicon technologies as well as FPGA-based solutions, are ideal for scaling-up and scaling-out cloud infrastructures.

Silicom products are used by major Cloud players, service providers, telcos and OEMs as components of their infrastructure offerings, including both add-on adapters in the Data Center and stand-alone virtualized/universal CPE devices at the edge.

Silicom's long-term, trusted relationships with more than 150 customers throughout the world, its more than 400 active Design Wins and more than 300 product SKUs have made Silicom a "go-to" connectivity/performance partner of choice for technology leaders around the globe.

For more information, please visit: www.silicom.co.il

Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties, or other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, Silicom's increasing dependence for substantial revenue growth on a limited number of customers in the evolving cloud-based, SD-WAN, NFV and Edge markets, the speed and extent to which solutions are adopted by these markets, likelihood that Silicom will rely increasingly on customers which provide solutions in these evolving markets, resulting in an increasing dependence on a smaller number of larger customers, difficulty in commercializing and marketing of Silicom's products and services, maintaining and protecting brand recognition, protection of intellectual property, competition and other factors detailed in the company's periodic filings with the Securities and Exchange Commission. These forward-looking statements can generally be identified as such because the context of the statement will include words, such as "expects," "should," "believes," "anticipates" or words of similar import. Similarly, statements that describe future plans, objectives or goals are also forward-looking statements. In light of significant risks and uncertainties inherent in forward-looking statements, the inclusion of such statements should not be regarded as a representation by the company that it will achieve such forward-looking statements. The company disclaims any duty to update such statements, whether as a result of new information, future events, or otherwise.

-- FINANCIAL TABLES FOLLOW –

SOURCE Silicom Ltd.