EX-99.1 2 a13-17028_1ex99d1.htm EX-99.1

Exhibit 99.1

 

PRESS RELEASE

GRAPHIC

 

Mellanox Technologies, Ltd.

 

Press/Media Contact

Ashley Paula

Waggener Edstrom

+1-415-547-7024

apaula@waggeneredstrom.com

 

USA Investor Contact

Gwyn Lauber

Mellanox Technologies

+1-408-916-0012

gwyn@mellanox.com

 

Israel Investor Contact

Nava Ladin

Gelbart Kahana Investor Relations

+972-3-6074717

nava@gk-biz.com

 

Mellanox Technologies, Ltd. Announces Second Quarter 2013 Financial Results

 

Record Ethernet Product Revenue

 

SUNNYVALE, Calif. and YOKNEAM, ISRAEL — July 24, 2013 — Mellanox® Technologies, Ltd. (NASDAQ: MLNX; TASE: MLNX), a leading supplier of end-to-end interconnect solutions for servers and storage systems, today announced financial results for its second quarter 2013, ended June 30, 2013.

 

Second Quarter 2013 Highlights

 

·                  Revenues were $98.2 million

 

·                  GAAP gross margins were 67.2 percent

 

·                  Non-GAAP gross margins were 69.4 percent

 

·                  GAAP operating income was $0.3 million

 

·                  Non-GAAP operating income was $15.8 million

 

·                  GAAP net loss was $1.7 million

 



 

Mellanox Technologies, Ltd. Announces Second Quarter 2013 Financial Results

- 2 -

 

·                  Non-GAAP net income was $13.8 million

 

·                  GAAP net loss per diluted share was $0.04

 

·                  Non-GAAP net income per diluted share was $0.30

 

·                  $11.5 million in cash was provided by operating activities in the second quarter

 

·                  Total cash and investments increased $8.4 million to $411.3 million at June 30, 2013

 

Financial Results

 

In accordance with U.S. generally accepted accounting principles (GAAP), the company reported revenue of $98.2 million for the second quarter of 2013, up 18.2 percent from $83.1 million in the first quarter of 2013, and down 26.5 percent from $133.5 million in the second quarter of 2012.

 

GAAP gross margins in the second quarter of 2013 were 67.2 percent, compared with 65.2 percent in the first quarter of 2013, and 68.8 percent in the second quarter of 2012.

 

Non-GAAP gross margins in the second quarter of 2013 were 69.4 percent, compared with 68.1 percent in the first quarter of 2013, and 70.5 percent in the second quarter of 2012.

 

GAAP net loss in the second quarter of 2013 was $1.7 million, or $0.04 per diluted share, compared with GAAP net loss of $8.5 million, or $0.20 per diluted share in the first quarter of 2013, and GAAP net income of $32.1 million, or $0.74 per diluted share in the second quarter of 2012.

 

Non-GAAP net income in the second quarter of 2013 was $13.8 million, or $0.30 per diluted share, compared with $4.3 million, or $0.10 per diluted share in the first quarter of 2013, and $42.9 million, or $0.99 per diluted share in the second quarter of 2012. The second quarter 2013 non-GAAP net income excludes $11.2 million of share-based compensation expenses compared to $10.4 million in the first quarter of 2013, and compared to $8.4 million in the second quarter of 2012. The second quarter 2013 non-GAAP net income also excludes amortization of acquired intangible assets of $2.5 million and $1.8 million of acquisition related charges which are associated with the acquisition of Kotura, Inc. and IPtronics A/S, compared to $2.4 million of amortization expenses for acquired intangible assets in the first quarter of 2013, and compared to $2.3 million in the second quarter of 2012.

 



 

Mellanox Technologies, Ltd. Announces Second Quarter 2013 Financial Results

- 3 -

 

Total cash and investments increased by $8.4 million to $411.3 million at June 30, 2013 compared to $402.9 million at March 31, 2013. The company generated $11.5 million in cash from operating activities in the second quarter.

 

“We are pleased with our Q2 results. We see growth in the demand of our InfiniBand and Ethernet products. We increased our Ethernet top-of-rack switch system revenue by 81 percent sequentially, and, although off of a small base, we believe this indicates our growth opportunity once we have all the building blocks required for the various markets we serve,” said Eyal Waldman, president and CEO of Mellanox Technologies. “Our acquisitions of Kotura and IPtronics solidify our strategy to provide full end-to-end 100Gb/s server and storage interconnect solutions to the high-performance computing, cloud, Web 2.0, storage and data center markets.”

 

Recent Mellanox Press Release Highlights

 

·                  July 1 - Mellanox Technologies, Ltd. Completes Acquisition of IPtronics A/S

 

·                  June 18 - Mellanox FDR InfiniBand Demonstrates 2X Growth over a 6 Month Period for Petascale-Capable Systems on the TOP500

 

·                  June 17 - Mellanox’s FDR InfiniBand Solution with NVIDIA GPUDirect RDMA Technology Provides Superior GPU-based Cluster Performance

 

·                  June 17 - Mellanox Demonstrates World’s First InfiniBand Connectivity with NVIDIA Tegra ARM Processor

 

·                  June 17 - Mellanox FDR 56Gb/s InfiniBand Solutions Deliver Leading Application Performance and Scalability

 

·                  June 3 - Mellanox Announces Virtual Modular Switch, The Most Efficient Ethernet Aggregation Switch Network Solution

 



 

Mellanox Technologies, Ltd. Announces Second Quarter 2013 Financial Results

- 4 -

 

·                  June 3 - Mellanox 10GbE with NVGRE Adapter Delivers 65 Percent More Bandwidth in Windows Server Hyper-V Network Virtualization Environment

 

·                  May 29 - Mellanox Announces SX1012 12-Port 40Gb/s Ethernet Switch Solution

 

·                  May 20 - Cloud Provider Selects Mellanox’s InfiniBand as Their Private and Public Cloud Interconnect

 

·                  May 15 - Mellanox Technologies Ltd. Announces Definitive Agreement to Acquire Kotura, Inc.

 

Conference Calls

 

Mellanox will broadcast its second quarter 2013 financial results conference call today at 2 p.m. Pacific Time (5 p.m. Eastern Time). To listen to the call, dial +1-785-424-1825 approximately ten minutes prior to the start time.

 

Mellanox will also conduct a conference call on Thursday, July 25, 2013, at 9 a.m. Israel Time to discuss the company’s second quarter 2013 financial results in Hebrew. To listen to the call, dial +972-3-9180609 approximately 10 minutes prior to the start of the call.

 

Both of the Mellanox financial results conference calls will be available via live webcasts on the investor relations section of the Mellanox website at http://ir.mellanox.com. Access the webcast 15 minutes prior to the start of the call to download and install any necessary audio software. Replays of the webcasts will also be available on the Mellanox website.

 

About Mellanox

 

Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage. Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability. Mellanox offers a choice of fast interconnect products: adapters, switches, software, cables and silicon that accelerate application runtime and maximize business results for a wide range of markets including high performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services. More information is available at www.mellanox.com.

 



 

Mellanox Technologies, Ltd. Announces Second Quarter 2013 Financial Results

 

- 5 -

 

GAAP to Non-GAAP Reconciliation

 

To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), Mellanox uses non-GAAP measures of net income which are adjusted from results based on GAAP to exclude share-based compensation expenses and acquisition related expenses. The company believes the non-GAAP results provide useful information to both management and investors, as these non-GAAP results exclude expenses that are not indicative of our core operating results. Management believes it is useful to exclude share-based compensation expenses and acquisition related expenses because it enhances investors’ ability to understand our business from the same perspective as management, which believes that such items are not directly attributable to nor reflect the underlying performance of the company’s business operations.  Further, management believes certain non-cash charges such as share-based compensation do not reflect the cash operating results of the business. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. These non-GAAP measures may be different than the non-GAAP measures used by other companies. A reconciliation of GAAP to non-GAAP condensed consolidated statements of operations is also presented in the financial statements portion of this release and is posted under the “Investors” section at our web site.

 

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

 

All statements included or incorporated by reference in this release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management’s beliefs and certain assumptions made by us, all of which are subject to change.

 

Forward-looking statements can often be identified by words such as “projects,” “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions and variations or negatives of these words.  These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

 

The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include the continued expansion of our product line, customer base and the total available market of our products, the continued growth in demand for our products, the continued, increased demand for industry standards-based technology, our ability to react to trends and challenges in our business and the markets in which we operate, our ability to anticipate market needs or develop new or enhanced products to meet those needs, the adoption rate of our products, our ability to establish and maintain successful relationships with our OEM partners, our ability to effectively compete in our industry, fluctuations in demand, sales cycles and prices for our products and services, our success converting design wins to revenue-generating product shipments, the continued launch and volume ramp of large customer sales opportunities, and our ability to protect our intellectual property rights. Furthermore, the majority of our quarterly revenues are derived from customer orders received and fulfilled in the same quarterly period. We have limited visibility into actual end-user demand as such demand impacts us and our OEM customer inventory balances in any given quarter. Consequently, this introduces risk and uncertainty into our revenue and production forecasts and business planning and could negatively impact our financial results. In addition, current uncertainty in the global economic environment poses a risk to the overall economy as businesses may defer purchases in response to tighter credit conditions, changing overall demand for our products, and negative financial news. Consequently, our results could differ materially from our prior results due to these general economic and market conditions, political events and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission.

 

More information about the risks, uncertainties and assumptions that may impact our business is set forth in our form 10-Q filed with the SEC on May 3, 2013, and our form 10-K filed with the SEC on February 25, 2013. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

 

Mellanox, BridgeX, ConnectX, CORE-Direct, InfiniBridge, InfiniHost, InfiniScale, MLNX-OS, PhyX, SwitchX, Virtual Protocol Interconnect and Voltaire are registered trademarks of Mellanox Technologies, Ltd. Connect-IB, CoolBox, FabricIT, Mellanox Federal Systems, Mellanox Software Defined Storage, MetroX, MetroDX, Mellanox Open Ethernet, Open Ethernet, ScalableHPC, Unbreakable-Link, UFM and Unified Fabric Manager are trademarks of Mellanox Technologies, Ltd. All other trademarks are property of their respective owners.

 



 

Mellanox Technologies, Ltd. Announces Second Quarter 2013 Financial Results

- 6 -

 

Mellanox Technologies, Ltd.

Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

98,168

 

$

133,472

 

$

181,248

 

$

222,210

 

Cost of revenues

 

32,168

 

41,700

 

61,116

 

70,588

 

Gross profit

 

66,000

 

91,772

 

120,132

 

151,622

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

38,869

 

37,658

 

77,018

 

66,616

 

Sales and marketing

 

16,797

 

15,810

 

33,211

 

28,615

 

General and administrative

 

10,047

 

6,336

 

17,532

 

11,193

 

Total operating expenses

 

65,713

 

59,804

 

127,761

 

106,424

 

Income (loss) from operations

 

287

 

31,968

 

(7,629

)

45,198

 

Other income, net

 

232

 

221

 

445

 

405

 

Income (loss) before taxes

 

519

 

32,189

 

(7,184

)

45,603

 

Provision for taxes on income

 

(2,258

)

(100

)

(3,012

)

(1,068

)

Net income (loss)

 

$

(1,739

)

$

32,089

 

$

(10,196

)

$

44,535

 

Net income (loss) per share — basic

 

$

(0.04

)

$

0.79

 

$

(0.24

)

$

1.11

 

Net income (loss) per share — diluted

 

$

(0.04

)

$

0.74

 

$

(0.24

)

$

1.04

 

Shares used in computing income per share:

 

 

 

 

 

 

 

 

 

Basic

 

43,284

 

40,860

 

43,093

 

40,165

 

Diluted

 

43,284

 

43,468

 

43,093

 

42,676

 

 



 

Mellanox Technologies, Ltd. Announces Second Quarter 2013 Financial Results

- 7 -

 

Mellanox Technologies, Ltd.

Reconciliation of Non-GAAP Adjustments

(in thousands, percentages, unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

(1,739

)

$

32,089

 

$

(10,196

)

$

44,535

 

Adjustments:

 

 

 

 

 

 

 

 

 

Share-based compensation expense:

 

 

 

 

 

 

 

 

 

Cost of revenues

 

434

 

441

 

898

 

770

 

Research and development

 

6,442

 

4,519

 

12,250

 

8,700

 

Sales and marketing

 

2,342

 

2,061

 

4,466

 

3,703

 

General and administrative

 

1,947

 

1,424

 

3,926

 

2,514

 

Total share-based compensation expense

 

11,165

 

8,445

 

21,540

 

15,687

 

Amortization of acquired intangibles:

 

 

 

 

 

 

 

 

 

Cost of revenues

 

1,703

 

1,879

 

3,660

 

3,792

 

Research and development

 

175

 

 

175

 

 

Sales and marketing

 

636

 

439

 

1,075

 

878

 

Total amortization of acquired intangibles

 

2,514

 

2,318

 

4,910

 

4,670

 

Acquisition related charges:

 

 

 

 

 

 

 

 

 

General and administrative

 

1,828

 

 

1,828

 

 

Non-GAAP net income

 

$

13,768

 

$

42,852

 

$

18,082

 

$

64,892

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP gross profit to non-GAAP:

 

 

 

 

 

 

 

 

 

Revenues

 

$

98,168

 

$

133,472

 

$

181,248

 

$

222,210

 

GAAP gross profit

 

66,000

 

91,772

 

120,132

 

151,622

 

GAAP gross margin

 

67.2

%

68.8

%

66.3

%

68.2

%

Share-based compensation expense

 

434

 

441

 

898

 

770

 

Amortization of acquired intangibles

 

1,703

 

1,879

 

3,660

 

3,792

 

Non-GAAP gross profit

 

$

68,137

 

$

94,092

 

$

124,690

 

$

156,184

 

Non-GAAP gross margin

 

69.4

%

70.5

%

68.8

%

70.3

%

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP operating expenses to non-GAAP:

 

 

 

 

 

 

 

 

 

GAAP operating expenses

 

$

65,713

 

$

59,804

 

$

127,761

 

$

106,424

 

Share-based compensation expense

 

(10,731

)

(8,004

)

(20,642

)

(14,917

)

Amortization of acquired intangibles

 

(811

)

(439

)

(1,250

)

(878

)

Acquisition related charges

 

(1,828

)

 

(1,828

)

 

Non-GAAP operating expenses

 

$

52,343

 

$

51,361

 

$

104,041

 

$

90,629

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

GAAP income (loss) from operations

 

$

287

 

$

31,968

 

$

(7,629

)

$

45,198

 

Share-based compensation expense

 

11,165

 

8,445

 

21,540

 

15,687

 

Amortization of acquired intangibles

 

2,514

 

2,318

 

4,910

 

4,670

 

Acquisition related charges

 

1,828

 

 

1,828

 

 

Non-GAAP income from operations

 

$

15,794

 

$

42,731

 

$

20,649

 

$

65,555

 

 



 

Mellanox Technologies, Ltd. Announces Second Quarter 2013 Financial Results

- 8 -

 

 

Mellanox Technologies, Ltd.

Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data, unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing GAAP diluted earnings per share

 

43,284

 

43,468

 

43,093

 

42,676

 

Adjustments:

 

 

 

 

 

 

 

 

 

Effect of dilutive securities under GAAP*

 

 

(2,608

)

 

(2,511

)

Total options vested and exercisable

 

1,897

 

2,491

 

1,897

 

2,491

 

Shares used in computing non-GAAP diluted earnings per share

 

45,181

 

43,351

 

44,990

 

42,656

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted net income (loss) per share

 

$

(0.04

)

$

0.74

 

$

(0.24

)

$

1.04

 

Adjustments:

 

 

 

 

 

 

 

 

 

Share-based compensation expense

 

0.26

 

0.19

 

0.50

 

0.37

 

Amortization of acquired intangibles

 

0.05

 

0.05

 

0.11

 

0.11

 

Acquisition related charges

 

0.04

 

0.00

 

0.04

 

0.00

 

Effect of dilutive securities under GAAP*

 

0.00

 

0.06

 

0.00

 

0.09

 

Total options vested and exercisable

 

(0.01

)

(0.05

)

(0.01

)

(0.09

)

Non-GAAP diluted income per share

 

$

0.30

 

$

0.99

 

$

0.40

 

$

1.52

 

 


* This adjustment adds back the GAAP effect of additional ordinary shares that would have been outstanding if the dilutive potential ordinary shares from stock options had been issued under the Treasury method.

 



 

Mellanox Technologies, Ltd. Announces Second Quarter 2013 Financial Results

- 9 -

 

 

Mellanox Technologies, Ltd.

Condensed Consolidated Balance Sheets

(in thousands, unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2013

 

2012

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

126,480

 

$

117,054

 

Short-term investments

 

231,062

 

302,593

 

Restricted cash

 

50,356

 

3,229

 

Accounts receivable, net

 

67,602

 

58,516

 

Inventories

 

36,485

 

43,318

 

Deferred taxes and other current assets

 

13,291

 

15,616

 

Total current assets

 

525,276

 

540,326

 

Property and equipment, net

 

68,244

 

62,375

 

Severance assets

 

9,845

 

8,907

 

Intangible assets, net

 

17,344

 

16,134

 

Goodwill

 

132,885

 

132,885

 

Deferred taxes and other long-term assets

 

15,349

 

10,419

 

Total assets

 

$

768,943

 

$

771,046

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

25,968

 

$

37,431

 

Accrued liabilities

 

43,544

 

57,879

 

Deferred revenue

 

12,724

 

12,018

 

Capital lease obligations

 

1,109

 

1,253

 

Total current liabilities

 

83,345

 

108,581

 

Accrued severance

 

12,796

 

11,821

 

Deferred revenue

 

9,170

 

8,366

 

Capital lease obligations

 

2,284

 

2,835

 

Other long-term liabilities

 

13,833

 

11,635

 

Total liabilities

 

121,428

 

143,238

 

Shareholders’ equity:

 

 

 

 

 

Ordinary shares

 

182

 

178

 

Additional paid-in capital

 

518,893

 

488,365

 

Accumulated other comprehensive income

 

2,165

 

2,794

 

Retained earnings

 

126,275

 

136,471

 

Total shareholders’ equity

 

647,515

 

627,808

 

Total liabilities and shareholders’ equity

 

$

768,943

 

$

771,046

 

 



 

Mellanox Technologies, Ltd. Announces Second Quarter 2013 Financial Results

- 10 -

 

Mellanox Technologies, Ltd.

Condensed Consolidated Statement of Cash Flows

(in thousands, unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2013

 

2012

 

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

 

$

(10,196

)

$

44,535

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

15,186

 

10,922

 

Deferred income taxes

 

(1,930

)

(2,113

)

Share-based compensation

 

21,540

 

15,687

 

Gain on sale of investments

 

(439

)

(229

)

Excess tax benefit from share-based compensation

 

(1,939

)

(1,794

)

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

(9,086

)

(6,404

)

Inventories

 

5,895

 

(6,928

)

Prepaid expenses and other assets

 

2,990

 

691

 

Accounts payable

 

(7,514

)

4,432

 

Accrued liabilities and other payables

 

(9,652

)

23,950

 

Net cash provided by operating activities

 

4,855

 

82,749

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchase of severance-related insurance policies

 

(412

)

(391

)

Purchases of short-term investments

 

(81,823

)

(156,197

)

Proceeds from sale of short-term investments

 

103,339

 

3,382

 

Proceeds from maturities of short-term investments

 

50,447

 

8,863

 

Decrease (increase) in restricted cash deposits

 

(47,001

)

94

 

Purchase of property and equipment

 

(18,949

)

(10,457

)

Purchase of intangibles

 

(6,327

)

 

Purchase of equity investment in a private company

 

(3,000

)

(1,424

)

Net cash used in investing activities

 

(3,726

)

(156,130

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Principal payments on capital lease obligations

 

(695

)

(158

)

Proceeds from exercise of share awards

 

7,053

 

14,295

 

Excess tax benefit from share-based compensation

 

1,939

 

1,794

 

Net cash provided by financing activities

 

8,297

 

15,931

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

9,426

 

(57,450

)

Cash and cash equivalents at beginning of period

 

117,054

 

181,258

 

Cash and cash equivalents at end of period

 

$

126,480

 

$

123,808