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Cavium Networks Announces Financial Results for Q3 2007
(Market Wire Via Thomson Dialog NewsEdge) MOUNTAIN VIEW, CA, October 17 / MARKET WIRE/ --
Cavium Networks (NASDAQ: CAVM), a leading
provider of highly integrated semiconductor products that enable
intelligent processing for networking, communications, storage and security
applications, today announced financial results for the third quarter of
2007 ended September 30, 2007.
Revenue in the third quarter of 2007 was $14.2 million, a 12% sequential
increase from the $12.7 million reported for the second quarter of 2007 and
an increase of 54% from the $9.2 million reported for the third quarter of
last year.
Generally Accepted Accounting Principles (GAAP) Results
Net income for the third quarter of 2007, on a GAAP basis, was $1.3
million, or $0.03 per share (diluted), compared with a net loss of $0.1
million, or $0.00 per diluted share in the second quarter of 2007, and a
net loss of $1.7 million, or $0.21 per share (diluted) in the third quarter
of last year. Gross margins were 63.2% in the third quarter of 2007
compared to 57.8% in the third quarter last year. Total cash and cash
equivalents were $101.5 million at September 30, 2007.
Non-GAAP Results
Cavium Networks believes that the presentation of non-GAAP financial
measures provides important supplemental information to management and
investors regarding financial and business trends relating to the company's
financial condition and results of operations. Non-GAAP financial measures
in the third quarter of 2007 exclude $0.5 million in stock-based
compensation expense and $0.2 million in amortization of acquired
intangible assets. The reconciliation between GAAP and non-GAAP financial
results are provided in the financial statements portion of this release.
Net income for the third quarter of 2007, on a non-GAAP basis, was $2.1
million, or $0.05 per share (diluted), compared with $1.0 million, or $0.03
per share (diluted) in the second quarter of 2007, and a net loss of $1.2
million, or $0.14 per share (diluted) in the third quarter of last year.
Gross margins, on a non-GAAP basis, were 64.9% in the third quarter of 2007
compared to 65.2% in the second quarter of 2007 and 60.9% in the third
quarter of last year.
Company Highlights
"We continue to show strong revenue growth on both a sequential and
year-over-year basis," said Syed Ali, president and CEO of Cavium Networks.
"The increased revenue growth along with strong gross margins has driven
continued operating margin expansion. In addition, we generated our first
quarterly positive GAAP net income in the Company's history. We have seen
accelerated design win activity this quarter and continue to gain strong
traction in a number of significant growth markets."
Third Quarter Highlights:
-- July 24, 2007 - Avnet Memec and Cavium Networks Announce Americas
Distribution Agreement to expand Cavium's product reach to a larger and
more diversified customer base.
-- July 26, 2007 - QUALCOMM Announces New Ultra Mobile Broadband Base
Station Reference Design using Cavium Networks OCTEON processor.
-- July 26, 2007 - Green Hills Software, a leading RTOS and tools vendors
and Cavium Ecosystem partner announces comprehensive support for the OCTEON
Processor line.
-- July 30, 2007 - Sophos, a leader in IT security and control solutions
and a Cavium Ecosystem partner announces the availability of their Sophos
Anti-Virus Interface for the OCTEON Processor line.
-- September 17, 2007 - Cavium Networks Announces Industry's First 10Gbps
IPsec and SSL PCI-Express Security Accelerators using the new NITROX PX
processors.
-- September 17, 2007 - Cavium Networks Introduces OCTEON Plus-based
Accelerators for Appliance, Blade Server and Storage Systems with NIC and
coprocessor functionality in a desirable single slot form factor.
-- October 8, 2007 - Cavium Networks Demonstrates Complete Broadband,
SOHO, SME Reference Designs and Partner Solutions for triple enabled CPE
equipment at Broadband World Forum 2007 in Berlin.
-- October 8, 2007 - Cavium Networks and Jungo, a leading provider of
broadband home value-added service solutions showcase the performance,
features, low power and scalability of a joint solution at the Broadband
World Forum 2007, Berlin, Germany.
-- October 8, 2007 - Cavium Networks Introduces OCTEON Plus CN50XX to
Fuel Widespread Multi-core Processor Adoption in Triple play enabled
Service Provider Gateway, SME and Storage Applications.
-- Oct 15, 2007 - Cavium Networks Demonstrates Industry-Leading
Performance for Enterprise and SMB/Home Storage Applications at Storage
Network World, 2007.
-- Oct 16, 2007 - Cavium Networks New OCTEON Plus CN58XX Low-Power Series
Breaks the 1 Watt per Core Barrier targeting power and space constrained
applications in the service provider, access and enterprise markets.
-- Oct 16, 2007 - Cavium Networks, AFORE and GE Fanuc announce Carrier
Grade Ethernet on a MicroTCA Platform with Packet Processor
AdvancedMC.
-- Oct 16, 2007 - Interphase announces Packet Accelerator AdvancedMC and
PCI-x Modules based on the OCTEON Processor Family.
Conference Call
Cavium Networks will broadcast its third quarter 2007 financial results
conference call today, October 17, 2007 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 Networks website at
http://www.caviumnetworks.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 Networks
Cavium Networks is a leading provider of highly integrated semiconductor
products that enable intelligent processing in networking, communications,
and storage and security applications. Cavium Networks offers a broad
portfolio of integrated, software compatible processors ranging in
performance from 10 Mbps to 10 Gbps that enable secure, intelligent
functionality in enterprise, data-center, broadband/consumer and access &
service provider equipment. Cavium Networks processors are supported by
ecosystem partners that provide operating systems, tool support, reference
designs and other services. Cavium Networks principal offices are in
Mountain View, CA with design team locations in California, Massachusetts
and India. For more information, please visit:
http://www.caviumnetworks.com.
Note on Forward-Looking Statements
This press release may contain forward-looking statements regarding future
events that involve risks and uncertainties. Readers are cautioned that
these forward-looking statements are only predictions and may differ
materially from actual future events or results. These forward-looking
statements involve risks and uncertainties, as well as assumptions that if
they do not fully materialize or prove incorrect, could cause our results
to differ materially from those expressed or implied by such
forward-looking statements. The risks and uncertainties that could cause
our results to differ materially from those expressed or implied by such
forward-looking statements include but are not limited to existing or new
competition, the rate of new design wins, the rate at which existing design
wins go into production, technological advances, pricing pressures; general
economic conditions; development of new products and technologies;
manufacturing difficulties; whether Cavium Networks is successful in
marketing its products; and other risks and uncertainties described more
fully in our documents filed with or furnished to the Securities and
Exchange Commission. More information about these and other risks that may
impact Cavium's business are set forth in our Registration Statement on
Form S-1 filed with the SEC, including the "Risk Factors" section in our
final Prospectus dated May 1, 2007 and those filed with its most recent
Form 10Q. All forward-looking statements in this press release are based
on information available to us as of the date hereof and qualified in their
entirety by this cautionary statement, and we assume no obligation to
revise or update these forward-looking statements.
CAVIUM NETWORKS, INC.
Unaudited GAAP Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
September 30,
------------------------
2007 2006
----------- -----------
Revenue $ 14,165 $ 9,187
Cost of revenue (1) 5,207 3,878
----------- -----------
Gross profit 8,958 5,309
----------- -----------
Operating expenses:
Research and development (2) 4,796 4,224
Sales, general and administrative (3) 3,976 2,594
----------- -----------
Total operating expenses 8,772 6,818
----------- -----------
Income (loss) from operations 186 (1,509)
----------- -----------
Other income (expense), net:
Interest expense (73) (271)
Warrant revaluation expense (4) - (13)
Interest income and other 1,307 117
----------- -----------
Total other income (expense), net 1,234 (167)
----------- -----------
Income (loss) before income tax 1,420 (1,676)
Income tax expense (110) -
----------- -----------
Net income (loss) $ 1,310 $ (1,676)
=========== ===========
Net income (loss) per common share, basic $ 0.03 $ (0.21)
Shares used in computing basic net income (loss)
per common share 39,021 8,156
Net income (loss) per common share, diluted $ 0.03 $ (0.21)
Shares used in computing diluted net income
(loss) per common share 42,713 8,156
(1) Cost of revenue:
Amortization of acquired technology $ 215 $ 279
Stock-based compensation $ 16 $ 3
(2) Research and development expense
Stock-based compensation $ 222 $ 122
(3) Sales, general and administrative
Stock-based compensation $ 287 $ 101
(4) Warrant revaluation expense $ - $ 13
CAVIUM NETWORKS, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share amounts)
Three Months Ended
September 30,
------------------------
2007 2006
----------- -----------
GAAP net income (loss) $ 1,310 $ (1,676)
Non-GAAP Adjustments:
Stock-based compensation:
Cost of revenue 16 3
Research and development 222 122
Sales, general and administrative 287 101
Amortization of acquired technology:
Cost of revenue 215 279
Warrant revaluation expense - 13
----------- -----------
Total of non-GAAP adjustments 740 518
----------- -----------
Non-GAAP net income (loss) $ 2,050 $ (1,158)
=========== ===========
GAAP net income (loss) per share (diluted) $ 0.03 $ (0.21)
Non-GAAP adjustments detailed above 0.02 0.07
Non-GAAP net income (loss) per share (diluted) $ 0.05 $ (0.14)
GAAP weighted average shares (diluted) 42,713 8,156
Non-GAAP adjustment 231 -
Non-GAAP weighted average shares (diluted) 42,944 8,156
Three Months Ended
September 30,
------------------------
2007 2006
----------- -----------
Reconciliation of Non-GAAP gross profit:
Revenue 14,165 9,187
GAAP gross profit 8,958 5,309
GAAP gross margin 63.2% 57.8%
Amortization of acquired technology:
Cost of revenue 215 279
Stock-based compensation:
Cost of revenue 16 3
Non-GAAP gross profit 9,189 5,591
Non-GAAP gross margin 64.9% 60.9%
CAVIUM NETWORKS, INC.
Unaudited GAAP Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
------------- -------------
2007 2006
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 101,504 $ 10,154
Accounts receivable, net 7,762 7,248
Inventories 6,799 5,006
Prepaid expenses and other current assets 971 405
------------- -------------
Total current assets 117,036 22,813
Property and equipment, net 5,890 5,040
Intangible assets, net 3,911 1,902
Other assets 156 207
------------- -------------
Total assets $ 126,993 $ 29,962
============= =============
Liabilities, Mandatorily Redeemable Convertible
Preferred Stock and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 4,003 $ 2,904
Accrued expenses and other current
liabilities 2,330 2,853
Deferred revenue 2,585 628
Capital lease and technology license
obligations, current 3,884 2,564
Preferred stock warrant liability - 701
Current portion of notes payable - 1,474
------------- -------------
Total current liabilities 12,802 11,124
Notes payable, net of current - 2,526
Capital lease and technology license
obligation, net of current 800 1,016
Other non-current liabilities - 39
------------- -------------
Total liabilities 13,602 14,705
------------- -------------
Mandatorily redeemable convertible preferred
stock - 72,437
------------- -------------
Stockholders' equity (deficit)
Common stock 40 9
Additional paid-in capital 174,050 3,731
Accumulated deficit (60,699) (60,920)
------------- -------------
Total stockholders' equity (deficit) 113,391 (57,180)
------------- -------------
Total liabilities, mandatorily
redeemable convertible preferred
stock and stockholders' equity
(deficit) $ 126,993 $ 29,962
============= =============
Cavium Networks Contact:
Art Chadwick
VP and Chief Financial Officer
Tel: (650) 623-7033
Deborah Stapleton/Alexis Pascal
Stapleton Communications Inc.
Tel : (650) 470-0200
Copyright 2007 Market Wire, Incorporated
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