• Inphi Corporation Announces Q2 2019 Results

    المصدر: Nasdaq GlobeNewswire / 01 أغسطس 2019 16:07:29   America/New_York

    SANTA CLARA, Calif., Aug. 01, 2019 (GLOBE NEWSWIRE) -- Inphi Corporation (NYSE: IPHI), a leader in high-speed data movement interconnects, today announced financial results for its second quarter ended June 30, 2019.

    GAAP Results

    Revenue in the second quarter of 2019 was $86.3 million on a U.S. generally accepted accounting principles (GAAP) basis, up 23.6% year-over-year, compared with $69.8 million in the second quarter of 2018. The increase was due to higher demand for datacenter products.

    Gross margin under GAAP in the second quarter of 2019 was 56.9%, compared with 56.7% in the second quarter of 2018.

    GAAP operating loss in the second quarter of 2019 was $14.2 million or (16.5%) of revenue, compared to GAAP operating loss in the second quarter of 2018 of $21.9 million or (31.4%) of revenue. The decrease in operating loss was mainly due to higher revenue.

    GAAP net loss for the second quarter of 2019 was $20.6 million or ($0.46) per common share, compared with $28.5 million or ($0.65) per common share in the second quarter of 2018.

    Inphi reports gross margin, operating expenses, net income (loss), and earnings per share in accordance with GAAP and on a non-GAAP basis. A reconciliation of the GAAP to non-GAAP, gross margin, operating expenses, net income, earnings per share, as well as a description of the items excluded from the non-GAAP calculations is included in the financial statements portion of this press release.

    Non-GAAP Results

    Gross margin on a non-GAAP basis in the second quarter of 2019 was 70.1%, compared with 68.4% in the second quarter of 2018.  The increase was due to a change in product mix.

    Non-GAAP operating income in the second quarter of 2019 was $16.5 million, compared with non-GAAP operating income of $7.1 million in the second quarter of 2018. The increase is primarily due to higher revenue.

    Non-GAAP net income in the second quarter of 2019 was $16.6 million, or $0.35 per diluted common share. This compares with non-GAAP net income of $6.6 million, or $0.15 per diluted common share in the second quarter of 2018.

    “Differentiated products and solid design wins for PAM DSP, TiA and Drivers enabled Inphi to post strong revenue growth in the cloud segment in Q2,” said Ford Tamer, President and CEO of Inphi Corporation. “We believe that our new technology and product development investments will allow us to continue to diversify our customer base and accelerate our revenue and earnings growth in the quarters and years ahead.”

    First Half 2019 Results
    Revenue in the six months ended June 30, 2019 was $168.5 million, compared with $129.9 million in the six months ended June 30, 2018. GAAP net loss in the six months ended June 30, 2019 was $43.3 million, or ($0.97) per diluted share, on approximately 44.8 million diluted weighted average common shares outstanding. This compares with GAAP net loss of $51.5 million, or ($1.19) per diluted share, on approximately 43.3 million diluted weighted average common shares outstanding in the six months ended June 30, 2018.

    Non-GAAP net income in the six months ended June 30, 2019 was $32.0 million, or $0.69 per diluted weighted average common share outstanding, on approximately 46.5 million diluted weighted average common shares outstanding. This compares with non-GAAP net income of $4.6 million in the six months ended June 30, 2018, or $0.10 per diluted weighted average common share outstanding, on approximately 44.6 million diluted weighted average common shares outstanding.

    Business Outlook
    The following statements are based on the Company’s current expectations for the third quarter of 2019. These statements are forward-looking and actual results may differ materially. A reconciliation between the GAAP and non-GAAP outlook is included at the end of this press release.

    • Revenue in Q3 2019 is expected of $88.0 million to $92.0 million.   
    • GAAP gross margin of approximately 56.6% to 58.2%.
    • Non-GAAP gross margin is expected to be approximately 69.6% to 70.6%.
    • Stock-based compensation expense in the range of $19 million to $20 million.
    • GAAP net loss is expected to be in a range between $17.6 million to $23.6 million, or ($0.39) to ($0.52) per basic share, based on 45.6 million estimated weighted average basic shares outstanding.
    • Non-GAAP net income, excluding stock-based compensation expense, amortization of intangibles related to acquisitions and noncash interest on convertible debt, to be in the range of $15.3 million to $20.1 million, or $0.32 to $0.42 per weighted average diluted share, based on 48.0 million estimated Non-GAAP weighted average diluted shares outstanding. 

    Quarterly Conference Call Today
    Inphi plans to hold a conference call today at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time with Ford Tamer, president and chief executive officer, and John Edmunds, chief financial officer, to discuss the second quarter 2019 results. 

    The call can be accessed by dialing (765) 507-2591, participant passcode: 9745619. Please dial-in ten minutes prior to the scheduled conference call time. A live and archived webcast of the call will be available on Inphi’s website at https://inphi.com/investors/ for up to 30 days after the call.

    About Inphi
    Inphi Corporation is a leader in high-speed data movement.  We move big data - fast, throughout the globe, between data centers, and inside data centers.  Inphi's expertise in signal integrity results in reliable data delivery, at high speeds, over a variety of distances.  As data volumes ramp exponentially due to video streaming, social media, cloud-based services, and wireless infrastructure, the need for speed has never been greater.  That's where we come in. Customers rely on Inphi's solutions to develop and build out the Service Provider and Cloud infrastructures, and data centers of tomorrow.  To learn more about Inphi, visit www.inphi.com.

    Cautionary Note Concerning Forward-Looking Statements
    These forward-looking statements may be identified by terms such as outlook, believe, expect, may, will, provide, continue, could, and should, and the negative of these terms or other similar expressions. These statements include statements relating to: the Company’s business outlook and current expectations for 2019, including with respect to the third quarter of 2019, revenue, gross margin, stock-based compensation expense, operating performance, net income or loss, and earnings per share; the Company’s expectations regarding growth opportunities and increase in market share, increasing demand in Q3, growth inside data centers, success of new product introductions, customer relationships and design wins and benefits of using non-GAAP financial measures.  These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including: the Company’s ability to sustain profitable operations due to its history of losses and accumulated deficit; dependence on a limited number of customers for a substantial portion of revenue and lack of long-term purchase commitments from our customers; product defects; risk related to intellectual property matters, lengthy sales cycle and competitive selection process; lengthy and expensive qualification processes; ability to develop new or enhanced products in a timely manner; development of target markets; market demand for the Company’s products; reliance on third parties to manufacture, assemble and test products; ability to compete; and other risks inherent in fabless semiconductor businesses. In addition, actual results could differ materially due to changes in tax rates or tax benefits available, changes in demand, changes in government regulation, changes in claims that may or may not be asserted, as well as changes in pending litigation. For a discussion of these and other related risks, please refer to Inphi Corporation’s recent SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2018, which are available on the SEC’s website at www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Inphi Corporation undertakes no obligation to update forward-looking statements for any reason, except as required by law, even as new information becomes available or other events occur in the future.

    Inphi, the Inphi logo and Think fast are registered trademarks of Inphi Corporation. All other trademarks used herein are the property of their respective owners.

    Corporate Contact:
    Kim Markle
    Inphi
    408-217-7329
    kmarkle@inphi.com

    Investor Contact:
    Deborah Stapleton
    650-815-1239
    deb@stapleton.com

     
    INPHI CORPORATION
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands of dollars, except share and per share amounts)
    (Unaudited)
             
      Three Months Ended
    June 30,
     Six Months Ended
    June 30,
      2019 2018 2019 2018
    Revenue$86,285 $69,814 $168,508 $129,950 
    Cost of revenue 37,176  30,203  71,768  57,793 
             
    Gross margin 49,109  39,611  96,740  72,157 
             
    Operating expenses:        
    Research and development 44,705  42,804  89,104  85,742 
    Sales and marketing 11,154  10,311  23,033  21,653 
    General and administrative 7,480  8,415  14,313  14,633 
             
    Total operating expenses 63,339  61,530  126,450  122,028 
             
    Loss from operations (14,230) (21,919) (29,710) (49,871)
             
    Interest expense, net of other income (6,935) (6,487) (12,980) (9,787)
             
    Loss from operations before income taxes (21,165) (28,406) (42,690) (59,658)
    Provision (benefit) for income taxes (587) 58  633  (8,203)
             
    Net loss$(20,578)$(28,464)$(43,323)$(51,455)
             
    Earnings per share:        
    Basic$(0.46)$(0.65)$(0.97)$(1.19)
    Diluted$(0.46)$(0.65)$(0.97)$(1.19)
             
             
    Weighted-average shares used in computing        
    earnings per share:        
    Basic 45,191,674  43,661,325  44,823,562  43,331,906 
    Diluted 45,191,674  43,661,325  44,823,562  43,331,906 
             

    The following table presents details of stock-based compensation expense included in each functional line item in the consolidated statements of operations above:

             
      Three Months Ended
    June 30,
     Six Months Ended
    June 30,
      2019 2018 2019 2018
             
      (in thousands of dollars) (in thousands of dollars)
      (Unaudited) (Unaudited)
    Cost of revenue$1,674 $605 $2,479 $1,174 
    Research and development 9,925  9,741  20,657  18,239 
    Sales and marketing 3,269  3,241  7,417  6,483 
    General and administrative 3,093  2,629  6,166  4,873 
             
     $17,961 $16,216 $36,719 $30,769 
             


     
    INPHI CORPORATION
    CONSOLIDATED BALANCE SHEETS
    (in thousands of dollars)
    (Unaudited)
      June 30, 
    2019
     December 31,
    2018
    Assets    
    Current assets:    
    Cash and cash equivalents$159,624 $172,018 
    Short-term investments in marketable securities 253,910  235,339 
    Accounts receivable, net 67,008  61,271 
    Inventories 44,095  33,052 
    Prepaid expenses and other current assets 8,626  9,600 
    Total current assets 533,263  511,280 
         
    Property and equipment, net 71,635  70,740 
    Goodwill 104,502  104,502 
    Identifiable intangible assets, net 147,355  180,447 
    Right of use asset, net 8,960  - 
    Other noncurrent assets 24,425  22,904 
    Total assets$890,140 $889,873 
         
    Liabilities and Stockholders’ Equity     
         
    Current liabilities:    
    Accounts payable$22,635 $15,891 
    Accrued expenses and other current liabilities 40,428  43,120 
    Deferred revenue 6,245  5,432 
         
    Total current liabilities 69,308  64,443 
         
    Convertible debt 461,630  447,825 
    Other liabilities 15,798  10,911 
    Total liabilities 546,736  523,179 
         
    Stockholders’ equity:    
    Common stock 46  44 
    Additional paid-in capital 555,082  536,157 
    Accumulated deficit (213,219) (169,896)
    Accumulated other comprehensive income 1,495  389 
    Total stockholders’ equity 343,404  366,694 
         
    Total liabilities and stockholders’ equity$890,140 $889,873 
         

    INPHI CORPORATION 
    RECONCILIATION OF GAAP TO NON-GAAP MEASURES
    (in thousands of dollars, except share and per share amounts)

    To supplement the financial data presented on a GAAP basis, the Company discloses certain non-GAAP financial measures, which exclude stock-based compensation, legal, transition costs and other expenses, purchase price fair value adjustments related to acquisitions, loss on claim settlements, non-cash interest expense related to convertible debt, unrealized gain or loss on equity investments and deferred tax asset valuation allowance.  These non-GAAP financial measures are not in accordance with GAAP. These results should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The Company believes that its non-GAAP financial information provides useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations because it excludes charges or benefits that management considers to be outside of the Company’s core operating results.  The Company believes that the non-GAAP measures of gross margin, income from operations, net income and earnings per share, in combination with the Company’s financial results calculated in accordance with GAAP, provide investors with additional perspective and a more meaningful understanding of the Company’s ongoing operating performance. In addition, the Company’s management uses these non-GAAP measures to review and assess the financial performance of the Company, to determine executive officer incentive compensation and to plan and forecast performance in future periods.  The Company’s non-GAAP measurements are not prepared in accordance with GAAP, and are not an alternative to GAAP financial information, and may be calculated differently than non-GAAP financial information disclosed by other companies.

          
    RECONCILIATION OF GAAP  NET INCOME TO NON-GAAP NET INCOME
    (in thousands of dollars, except share and per share amounts)
    (Unaudited)
      Three Months Ended
    June 30,
     Six Months Ended
    June 30,
     
      2019 2018 2019 2018 
    GAAP gross margin to Non-GAAP gross margin         
    GAAP gross margin$49,109 $39,611 $96,740 $72,157  
    Adjustments to GAAP gross margin:         
    Stock-based compensation 1,674 (a)605 (a)2,479 (a)1,174 (a)
    Acquisition related expenses -  (7)(b)-  3 (b)
    Amortization of inventory step-up -  864 (c)-  864 (c)
    Amortization of intangibles 9,724 (d)6,699 (d)19,448 (d)13,398 (d)
    Depreciation on step-up values of fixed assets (12)(e)(12)(e)(24)(e)(26)(e)
    Restructuring expenses -  -  -  106 (f)
    Non-GAAP gross margin$60,495 $47,760 $118,643 $87,676  
              
    GAAP operating expenses to Non-GAAP operating expenses         
    GAAP research and development$44,705 $42,804 $89,104 $85,742  
    Adjustments to GAAP research and development:         
    Stock-based compensation (9,925)(a)(9,741)(a)(20,657)(a)(18,239)(a)
    Acquisition related expenses -  (302)(b)-  (607)(b)
    Depreciation on step-up values of fixed assets (110)(e)(40)(e)(197)(e)(173)(e)
    Restructuring expenses -  -  -  (885)(f)
    Non-GAAP research and development$34,670 $32,721 $68,250 $65,838  
              
    GAAP sales and marketing$11,154 $10,311 $23,033 $21,653  
    Adjustments to GAAP sales and marketing:         
    Stock-based compensation (3,269)(a)(3,241)(a)(7,417)(a)(6,483)(a)
    Acquisition related expenses -  (117)(b)-  (259)(b)
    Amortization of intangibles (2,431)(d)(2,432)(d)(4,862)(d)(4,863)(d)
    Depreciation on step-up values of fixed assets (2)(e)(18)(e)(5)(e)(41)(e)
    Restructuring expenses -  (8)(f)-  (367)(f)
    Non-GAAP sales and marketing$5,452 $4,495 $10,749 $9,640  
              
    GAAP general and administrative$7,480 $8,415 $14,313 $14,633  
    Adjustments to GAAP general and administrative:         
    Stock-based compensation (3,093)(a)(2,629)(a)(6,166)(a)(4,873)(a)
    Acquisition related expenses -  (3)(b)-  (6)(b)
    Amortization of intangibles (116)(d)(116)(d)(232)(d)(232)(d)
    Depreciation on step-up values of fixed assets (4)(e)(75)(e)(9)(e)(34)(e)
    Restructuring expenses -  -  -  (133)(f)
    Loss on claim settlement from ClariPhy acquisition (400)(g)(2,125)(g)(400)(g)(2,125)(g)
    Non-GAAP general and administrative$3,867 $3,467 $7,506 $7,230  
              
    Non-GAAP total operating expenses$43,989 $40,683 $86,505 $82,708  
    Non-GAAP income from operations$16,506 $7,077 $32,138 $4,968  
              
    GAAP net loss to Non-GAAP net income         
    GAAP net loss$(20,578)$(28,464)$(43,323)$(51,455) 
    Adjusting items to GAAP net loss:         
    Operating expenses related to stock-based         
    compensation expense 17,961 (a)16,216 (a)36,719 (a)30,769 (a)
    Acquisition related expenses -  415 (b)-  875 (b)
    Amortization of inventory fair value step-up -  864 (c)-  864 (c)
    Amortization of intangibles related to purchase price 12,271 (d)9,247 (d)24,542 (d)18,493 (d)
    Depreciation on step-up values of fixed assets 104 (e)121 (e)187 (e)222 (e)
    Restructuring expenses -  8 (f)-  1,491 (f)
    Loss on claim settlement from ClariPhy acquisition 400 (g)2,125 (g)400 (g)2,125 (g)
    Loss on claim settlement from Exactik disposition 296 (h)-  296 (h)-  
    Unrealized loss (gain) on equity investment 347 (i)166 (i)75 (i)(2,856)(i)
    Accretion and amortization expense on convertible debt 7,006 (j)6,523 (j)13,805 (j)12,853 (j)
    Valuation allowance and tax effect of the adjustments above from         
    GAAP to non-GAAP (1,216)(k)(657)(k)(700)(k)(8,787)(k)
    Non-GAAP net income$16,591 $6,564 $32,001 $4,594  
              
    Shares used in computing non-GAAP  basic earnings per share 45,191,674  43,661,325  44,823,562  43,331,906  
              
    Shares used in computing non-GAAP diluted earnings per share before offsetting shares from call option 47,700,457  44,884,548  46,920,852  44,604,497  
    Offsetting shares from call option 787,128  -  393,564  -  
    Shares used in computing non-GAAP diluted earnings per share 46,913,329  44,884,548  46,527,288  44,604,497  
              
    Non-GAAP earnings per share:         
    Basic$0.37 $0.15 $0.71 $0.11  
    Diluted$0.35 $0.15 $0.69 $0.10  
              
    GAAP gross margin as a % of revenue 56.9% 56.7% 57.4% 55.5% 
    Stock-based compensation 1.9% 0.9% 1.5% 0.9% 
    Amortization of inventory fair value step-up and intangibles 11.3% 10.8% 11.5% 11.1% 
    Non-GAAP gross margin as a % of revenue 70.1% 68.4% 70.4% 67.5% 
              
    1. Reflects the stock-based compensation expense recorded relating to stock-based awards. The Company excludes this item when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
    2. Reflects the legal, transition costs and other expenses related to acquisition.  The transition costs also include short-term cash retention bonus payments to ClariPhy employees that were part of the merger agreement when the Company acquired ClariPhy.  The Company excludes this item when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
    3. Reflects the cost of goods sold fair value amortization of inventory step-up related to acquisitions.  The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
    4. Reflects the fair value amortization of intangibles related to acquisitions.  The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
    5. Reflects the fair value depreciation of fixed assets related to acquisitions.  The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
    6. Reflects restructuring expenses incurred.  The Company excludes this item when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
    7. Reflects the loss on settlement of certain customer claims from the ClariPhy acquisition.  The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
    8. Reflects the loss on settlement of claim from the Exactik business disposal.  The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
    9. Reflects the unrealized gain or loss on equity investments.  The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
    10. Reflects the accretion and amortization expense on convertible debt.  The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
    11. Reflects the change in valuation allowance and delta in interim period tax allocation from GAAP to non-GAAP related to non-GAAP adjustments. The Company excludes this item when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
     
    INPHI CORPORATION
    RECONCILIATION OF GAAP  TO NON-GAAP MEASURES -THIRD QUARTER 2019 GUIDANCE
    (in thousands of dollars, except share and per share amounts)
    (Unaudited)
         
      Three Months Ending
    September 30, 2019
      High Low
    Estimated GAAP net loss$(17,600)$(23,600)
    Adjusting items to estimated GAAP net loss:    
    Operating expenses related to stock-based    
    compensation expense 19,000  20,000 
    Amortization of intangibles 12,400  12,400 
    Amortization of convertible debt interest cost 7,000  7,000 
    Tax effect of GAAP to non-GAAP adjustments (700) (500)
    Estimated non-GAAP net income$20,100 $15,300 
         
    Shares used in computing estimated non-GAAP diluted earnings per share 48,000,000  48,000,000 
         
    Estimated non-GAAP diluted earnings per share$0.42 $0.32 
         
         
    Revenue$92,000 $88,000 
         
    GAAP gross margin$53,538 $49,838 
    as a % of revenue 58.2% 56.6%
    Adjusting items to estimated GAAP gross margin:    
    Stock-based compensation 1,675  1,675 
    Fixed assets depreciation step up 12  12 
    Amortization of intangibles 9,725  9,725 
    Estimated non-GAAP gross margin$64,950 $61,250 
    as a % of revenue 70.6% 69.6%
         


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