From the Wires
Inphi Corporation Announces Third Quarter 2012 Results
Nov. 1, 2012 04:15 PM
SANTA CLARA, CA -- (Marketwire) -- 11/01/12 -- Inphi Corporation (NYSE: IPHI), a leading provider of high-speed mixed signal semiconductor solutions for the communications and computing markets, today announced financial results for its third quarter ended September 30, 2012.
Revenue for the third quarter of 2012 was $24.8 million, up 50% from $16.5 million reported for the third quarter of 2011. This was also up 6 % sequentially compared to $23.3 million reported for the second quarter of 2012.
Gross margin under U.S. generally accepted accounting principles (GAAP) for the third quarter of 2012 was 64.7% of revenue, compared with 64.3% of revenue for the second quarter of 2012 and 60.1% of revenue for the third quarter of 2011.
GAAP net loss for the third quarter of 2012 was $1.1 million, or ($0.04) per diluted common share, compared with a GAAP net loss of $1.6 million or ($0.06) per diluted common share for the second quarter of 2012 and a GAAP net loss of $2.6 million, or ($0.10) per diluted common share, for the third quarter of 2011.
Inphi reports gross margin, net income and earnings per share in accordance with GAAP and, additionally, on a non-GAAP basis. A reconciliation of the GAAP to non-GAAP gross margin, net income, and 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.
Gross margin on a non-GAAP basis for the third quarter of 2012 was 65.6% of revenue, compared with 65.1% for the second quarter of 2012 and 65.2% of revenue for the third quarter of 2011.
Non-GAAP net income for the third quarter of 2012 was $1.5 million, or $0.05 per diluted common share. This compared with non-GAAP net income of $1.5 million or $0.05 per diluted common share for the second quarter of 2012 and non-GAAP net income of $0.2 million, or $0.01 per diluted share, for the third quarter of 2011.
"Inphi delivered a record $24.8 million in revenue for the third quarter," said Ford Tamer, President and CEO of Inphi. "In spite of the near-term market weakness, our latest technologies are building important design wins with key customers and we remain optimistic about the company's continued prospects for growth."
Press Release Highlights
Nine Months 2012 Results
For the nine months ended September 30, 2012, revenue was $68.3 million, compared with $62.0 million for the nine months ended September 30, 2011. GAAP net loss for the nine months ended September 30, 2012 was $4.1 million, or ($0.15) per diluted share, on approximately 28.3 million diluted weighted average common shares outstanding. This compared with GAAP net income of $2.2 million, or $0.08 per diluted share, on approximately 29.4 million diluted weighted average common shares outstanding for the nine months ended September 30, 2011.
Non-GAAP net income for the nine months ended September 30, 2012 was $4.0 million, or $0.14 per diluted weighted average common share outstanding. This compared with non-GAAP net income of $7.0 million for the nine months ended September 30, 2011, or $0.24 per diluted weighted average common share outstanding.
Business Outlook
The following statements are based on our current expectations for the fourth quarter of 2012. These statements are forward-looking and actual results may differ materially.
- Based on a slowing macroeconomic environment for Server markets, we expect our revenues to be down 3% -- 12% for Q4 2012, resulting in $ 22.9 million at the midpoint -- plus or minus $ 1 million.
- GAAP net loss, which includes non-cash stock based compensation expense, is expected to be a loss of $1.3 million to $2.3 million, or ($0.04) to ($0.08) per diluted common share on an estimated 30 million fully diluted common shares.
- Non-GAAP net income, excluding stock-based compensation expense, is expected to be between $0.1 million and $1.1 million, or $0.00 - $0.04 per diluted common share.
Quarterly Conference Call Today
Inphi plans to hold a conference call at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time today with Ford Tamer, President and Chief Executive Officer, and John Edmunds, Chief Financial Officer, to discuss third quarter of 2012 results.
The call can be accessed by dialing (866) 788-0545; international callers should dial (857) 350-1683, participant passcode: 38891315. 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 http://investors.inphi.com for up to 30 days after the call.
About Inphi
Inphi Corporation is a leading provider of high-speed mixed signal semiconductor solutions for the communications and computing markets. Inphi's end-to-end data transport platform delivers high signal integrity at leading-edge data speeds, addressing performance and bandwidth bottlenecks in networks, from fiber to memory. Inphi's solutions minimize latency in computing environments and enable the rollout of next- generation communications infrastructure. Inphi's solutions provide a vital interface between analog signals and digital information in high-performance systems, such as telecommunications transport systems, enterprise networking equipment, enterprise and data center servers, and storage platforms. To learn more about Inphi, visit www.inphi.com.
Cautionary Note Concerning Forward-Looking Statements
Statements in the press release and certain matters to be discussed on the third quarter of 2012 conference call regarding Inphi Corporation, which are not historical facts, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terms such as outlook, believe, expect, may, will, provide, could, and should, and the negative of these terms or other similar expressions. These statements include statements relating to: our business outlook and current expectations for the fourth quarter of 2012, including our revenue, gross margin, stock-based compensation expense, operating performance, net income, earnings per share; expectations of our growth; expectations of economic trends and macroeconomic conditions; benefits of using non-GAAP financial measures; benefits of our products; and our operating prospects. 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 the markets that the Company targets; 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 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, 2011, 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.
INPHI CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except share and per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
Revenue $ 24,762 $ 16,482 $ 68,271 $ 61,987
Cost of revenue 8,734 6,573 24,490 22,418
----------- ----------- ----------- -----------
Gross margin 16,028 9,909 43,781 39,569
----------- ----------- ----------- -----------
Operating expenses:
Research and
development 10,500 6,951 29,072 20,612
Sales and marketing 3,079 3,886 10,347 9,605
General and
administrative 3,263 2,570 9,630 6,989
----------- ----------- ----------- -----------
Total operating expenses 16,842 13,407 49,049 37,206
----------- ----------- ----------- -----------
Income (loss) from
operations (814) (3,498) (5,268) 2,363
Other income 230 142 678 273
----------- ----------- ----------- -----------
Income (loss) before
income taxes (584) (3,356) (4,590) 2,636
Provision (benefit) for
income taxes 471 (725) (453) 424
----------- ----------- ----------- -----------
Net income (loss) $ (1,055) $ (2,631) $ (4,137) $ 2,212
=========== =========== =========== ===========
Earnings per share:
Basic $ (0.04) $ (0.10) $ (0.15) $ 0.08
=========== =========== =========== ===========
Diluted $ (0.04) $ (0.10) $ (0.15) $ 0.08
=========== =========== =========== ===========
Weighted-average shares
used in computing
earnings per share:
Basic 28,491,789 27,477,137 28,284,612 26,471,544
Diluted 28,491,789 27,477,137 28,284,612 29,365,902
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 Nine Months Ended
September 30, September 30,
------------------- -------------------
2012 2011 2012 2011
--------- --------- --------- ---------
(in thousands of dollars)
(Unaudited)
Cost of revenue $ 210 $ 66 $ 529 $ 226
Research and development 1,721 851 4,368 2,196
Sales and marketing 490 584 2,034 1,382
General and administrative 988 490 2,406 1,130
--------- --------- --------- ---------
$ 3,409 $ 1,991 $ 9,337 $ 4,934
========= ========= ========= =========
INPHI CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
(Unaudited)
September 30, December 31,
2012 2011
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 31,651 $ 29,696
Short-term investments in marketable
securities 91,062 89,283
Accounts receivable, net 12,864 9,358
Inventories 4,618 5,716
Deferred tax assets and other current assets 7,669 6,032
------------- -------------
Total current assets 147,864 140,085
Property and equipment, net 12,351 9,566
Goodwill 5,875 5,875
Deferred tax assets and other assets 18,162 17,102
------------- -------------
Total assets $ 184,252 $ 172,628
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 5,301 $ 5,016
Accrued expenses and other current
liabilities 4,642 3,745
Deferred revenue 2,409 1,929
------------- -------------
Total current liabilities 12,352 10,690
Other liabilities 3,629 3,534
------------- -------------
Total liabilities 15,981 14,224
------------- -------------
Stockholders' equity:
Common Stock 29 28
Additional paid-in capital 204,005 190,314
Accumulated deficit (36,850) (32,713)
Accumulated other comprehensive income 1,087 775
------------- -------------
Total stockholders' equity 168,271 158,404
------------- -------------
Total liabilities and stockholders' equity $ 184,252 $ 172,628
============= =============
INPHI CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(in thousands of dollars, except share and per share amounts)
To supplement the audited financial data presented on a GAAP basis, the Company discloses certain non-GAAP financial measures, which exclude stock-based compensation, certain warranty, legal costs and other claims and restructuring charges of its Taiwan subsidiary. 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; non-GAAP financial information 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, 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; these measurements may be calculated differently than non-GAAP financial information disclosed by other companies.
INPHI CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(in thousands of dollars, except share and per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
GAAP net income
(loss) $ (1,055) $ (2,631) $ (4,137) $ 2,212
Adjusting items
to GAAP net
income (loss):
Operating
expenses
related to
stock-based
compensation
expense, net
of tax effect 1,688 (a) 1,173 (a) 5,789 (a) 3,183 (a)
Adjustment to
revenue as a
result of
warranty
claim - - 465 (b) -
Legal expense
and accrual
of
provisional
costs 108 (c) - 608 (c) -
Taiwan
restructuring
charges - 1,646 (d) - 1,646 (d)
Delta in
interim
period tax
allocation
from GAAP to
non-GAAP 766 (e) - 1,291 (e) -
----------- ----------- ----------- -----------
Non-GAAP net
income $ 1,507 $ 188 $ 4,016 $ 7,041
=========== =========== =========== ===========
Shares used in
computing non-
GAAP basic
earnings per
share 28,491,789 27,477,137 28,284,612 26,471,544
=========== =========== =========== ===========
Shares used in
computing non-
GAAP diluted
earnings per
share 29,844,119 29,316,086 29,733,829 29,365,902
=========== =========== =========== ===========
Non-GAAP
earnings per
share:
Basic $ 0.05 $ 0.01 $ 0.14 $ 0.27
=========== =========== =========== ===========
Diluted $ 0.05 $ 0.01 $ 0.14 $ 0.24
=========== =========== =========== ===========
GAAP gross
margin as a %
of revenue 64.7% 60.1% 64.1% 63.8%
Stock-based
compensation:
Cost of
revenue 0.9% 0.4% 0.8% 0.4%
Restructuring
charges - 4.7% - 1.3%
Adjustment to
revenue as a
result of
warranty claim - - 0.4% -
----------- ----------- ----------- -----------
Non-GAAP gross
margin as a %
of revenue 65.6% 65.2% 65.3% 65.5%
=========== =========== =========== ===========
(a) 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.
(b) Reflects reduction in revenue as a result of warranty claim of a
customer. 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.
(c) Reflects legal expense and accrual of provisional costs with regard to
employment and other related claims, net of insurance reimbursement.
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.
(d) During the third quarter of 2011, the Company decided to discontinue
the sale of acquired legacy products in Taiwan. The restructuring
expenses were reflected in the statements of operations for the three
and nine months ended September 30, 2011 as follows:
Cost of goods sold $ 782
Operating expenses:
Research and development 187
Sales and marketing 671
General and administrative 6
---------
Total $ 1,646
=========
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.
(e) Reflects the 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 -FOURTH QUARTER 2012 GUIDANCE
(in thousands of dollars, except share and per share amounts)
(Unaudited)
Three Months Ending
December 31, 2012
------------------------
High Low
----------- -----------
Estimated GAAP net income (loss) $ (1,300) $ (2,300)
Adjusting items to estimated GAAP net income
(loss):
Operating expenses related to stock-based
compensation expense 3,400 3,400
Tax effect of stock-based compensation expense (1,000) (1,000)
----------- -----------
Estimated non-GAAP net income $ 1,100 $ 100
=========== ===========
Shares used in computing estimated non-GAAP
diluted earnings per share 30,000,000 30,000,000
=========== ===========
Estimated non-GAAP diluted earnings per share $ 0.04 $ 0.00
=========== ===========
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