EX-99.1 2 v392415_ex99-1.htm EXHIBIT 99.1

Cavium Announces Financial Results for Q3 2014

SAN JOSE, Calif., Oct. 29, 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 third quarter ended September 30, 2014.

Revenue in the third quarter of 2014 was $97.8 million, a 7.9% sequential increase from the $90.7 million reported in the second quarter of 2014 and a 23.6% year-over-year increase from the $79.1 million reported in the third quarter of 2013.

Generally Accepted Accounting Principles (GAAP) Results

Net income attributable to the Company in the third quarter of 2014 was $5.4 million, or $0.10 per diluted share, compared to net loss attributable to the Company of $11.0 million, or $(0.21) per diluted share in the second quarter of 2014. Gross margins were 63.5% in the third quarter of 2014 compared to 62.6% in the second quarter of 2014. Total cash and cash equivalents were $156.3 million at September 30, 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 third quarter of 2014, Non-GAAP net income was $23.0 million, or $0.40 per diluted share, Non-GAAP gross margin was 65.2% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 24.3%.

Recent News Highlights

  • October 1, 2014 - Cavium at ARM Tech Conference 2014  
  • October 1, 2014 - Cavium Joins Linux Foundation Open Platform for NFV Project
  • October 1, 2014 - Cavium Sponsors FreeBSD ARMv8 Based Implementation
  • September 17, 2014 - Cavium Demonstrated Multiple OpenDataPlane™ (ODP) Applications at Linaro Connect USA 2014
  • September 16, 2014 - Cavium and XPliant Introduced a Fully Programmable Switch Silicon Family Scaling to 3.2 Terabits per Second
  • July 30, 2014 - Cavium to Acquire Switching and SDN Specialist Xpliant to Accelerate Deployment of Software Defined Networks

Cavium, Inc. will broadcast its third quarter of 2014 financial results conference call today, October 29, 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



September 30, 2014


June 30, 2014

Net revenue

$

97,833


$

90,681

Cost of revenue


35,710



33,897

Gross profit


62,123



56,784

Operating expenses:






     Research and development


40,459



38,834

     Sales, general and administrative


18,141



17,017

        Total operating expenses


58,600



55,851

Income from operations


3,523



933

Other expense, net:






    Interest expense


(387)



(333)

    Change in estimated fair value of variable interest entity's (VIE) notes payable and other


(103)



(13,927)

    Other, net


(116)



(53)

Total other expense, net


(606)



(14,313)

     Income (loss) before income taxes


2,917



(13,380)

     Provision for income taxes


811



311

Net income (loss)


2,106



(13,691)

Net loss attributable to non-controlling interest


(3,327)



(2,647)

Net income (loss) attributable to the Company

$

5,433


$

(11,044)

Net income (loss) attributable to the Company per common share, basic

$

0.10


$

(0.21)

Shares used in computing basic net income (loss) per common share


53,786



53,197

Net income (loss) attributable to the Company per common share, diluted

$

0.10


$

(0.21)

Shares used in computing diluted net income (loss) per common share


55,540



53,197







CAVIUM, INC.


Unaudited Reconciliation of Non-GAAP Adjustments


(in thousands)











Three Months Ended



September 30, 2014



June 30, 2014


Reconciliation of GAAP research and development expenses to non-GAAP:







GAAP research and development expenses

$

40,459



$

38,834


Stock-based compensation and related payroll taxes


(5,932)




(6,104)


Net restructuring related expenses


(307)




(894)


Research and development expenses associated from a VIE


(5,870)




(5,400)


Non-GAAP research and development expenses

$

28,350



$

26,436










Reconciliation of GAAP sales, general and administrative expenses to non-GAAP:








GAAP sales, general and administrative expenses

$

18,141



$

17,017


Stock-based compensation and related payroll taxes


(5,071)




(4,525)


Amortization of acquired intangible assets


(35)




(35)


Net restructuring related expenses


(188)




(218)


Sales, general and administrative expenses associated from a VIE


(1,169)




(404)


Non-GAAP sales, general and administrative expenses

$

11,678



$

11,835


Total Non-GAAP operating expenses

$

40,028



$

38,271










Reconciliation of GAAP non-operating expenses to non-GAAP:








GAAP non-operating expenses

$

(606)



$

(14,313)


Change in estimated fair value of VIE's notes payable and other


103




13,927


Non-operating expenses associated from a VIE


509




337


Total Non-GAAP non-operating income (expense)

$

6



$

(49)










CAVIUM, INC.


Unaudited Reconciliation of Non-GAAP Adjustments


(in thousands, except per share data and percentages)











Three Months Ended



September 30, 2014



June 30, 2014


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








Net revenue

$

97,833



$

90,681


GAAP gross profit


62,123




56,784


GAAP gross margin


63.5

%



62.6

%









Stock-based compensation and related payroll taxes


254




258


Amortization of acquired intangible assets


1,267




1,267


Net restructuring related expenses


158




172


Non-GAAP gross profit

$

63,802



$

58,481


Non-GAAP gross margin


65.2

%



64.5

%









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








GAAP income from operations

$

3,523



$

933


Stock-based compensation and related payroll taxes


11,257




10,887


Amortization of acquired intangible assets


1,302




1,302


Net restructuring related expenses


653




1,284


Loss from operations of a variable interest entity


7,039




5,804


Non-GAAP income from operations

$

23,774



$

20,210


Non-GAAP income from operations as a percentage of revenue


24.3

%



22.3

%









Reconciliation of GAAP net income (loss) to non-GAAP net income:








GAAP net income (loss) attributable to the Company

$

5,433



$

(11,044)


Non-GAAP adjustments:








Stock-based compensation and related payroll taxes


11,257




10,887


Amortization of acquired intangible assets


1,302




1,302


Net restructuring related expenses


653




1,284


Net loss of a variable interest entity attributable to the Company


4,324




17,421


Total of non-GAAP adjustments


17,536




30,894


Non-GAAP net income

$

22,969



$

19,850










GAAP net income (loss) attributable to the Company per share, diluted

$

0.10



$

(0.21)


Non-GAAP adjustments detailed above


0.30




0.56


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

$

0.40



$

0.35










GAAP weighted average shares, diluted


55,540




53,197


Non-GAAP share adjustment


2,236




4,123


Non-GAAP weighted average shares, diluted


57,776




57,320










CAVIUM, INC.


Unaudited GAAP Condensed Consolidated Balance Sheets


(in thousands)











As of

September 30, 2014



As of

June 30, 2014


Assets








Current assets








Cash and cash equivalents

$

156,330



$

140,580


Accounts receivable, net


45,278




52,141


Inventories


54,083




56,750


Prepaid expenses and other current assets


7,240




7,903


Total current assets


262,931




257,374


Property and equipment, net


33,298




30,319


Intangible assets, net


39,082




39,161


Goodwill


71,478




71,478


Other assets


1,863




1,600


Total assets

$

408,652



$

399,932










Liabilities and Equity








Current liabilities








Accounts payable

$

23,039



$

28,466


Other accrued expenses and other current liabilities


9,640




10,196


Deferred revenue


7,786




8,151


Notes payable and other


29,800




29,697


Capital lease and technology license obligations


17,066




16,375


Total current liabilities


87,331




92,885


Capital lease and technology license obligations, net of current


10,198




11,557


Deferred tax liability


2,675




2,461


Other non-current liabilities


2,532




2,521


Total liabilities


102,736




109,424










Equity








Common stock


54




54


Additional paid-in capital


488,012




474,710


Accumulated deficit


(160,321)




(165,754)


Total stockholders' equity attributable to the Company


327,745




309,010


Non-controlling interest


(21,829)




(18,502)


Total equity


305,916




290,508


Total liabilities and equity

$

408,652



$

399,932




CONTACT: Art Chadwick, Vice President of Finance and Administration and Chief Financial Officer, Tel: (408) 943-7104, Email: art.chadwick@cavium.com, Angel Atondo, Senior Marketing Communications Manager, Tel: (408) 943-7417, Email: angel.atondo@cavium.com