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Mellanox Technologies, Ltd. Announces Fourth Quarter and Fiscal Year 2013 Financial ResultsSUNNYVALE, Calif. & YOKNEAM, Israel --(Business Wire)-- Mellanox® Technologies, Ltd. (NASDAQ: MLNX), a leading supplier of end-to-end connectivity solutions for servers and storage systems, today announced financial results for its fourth quarter and fiscal year 2013. Fourth Quarter and Fiscal Year 2013 Highlights
Financial Results In accordance with U.S. generally accepted accounting principles (GAAP), the company reported revenue of $105.5 million for the fourth quarter, up 1.4 percent from $104.1 million in the third quarter of 2013, and down 13.6 percent from $122.1 million in the fourth quarter of 2012. For the year ended December 31, 2013, revenue was $390.9 million, a decrease of 22.0 percent from revenue of $500.8 million reported in 2012. GAAP gross margins in the fourth quarter of 2013 were 64.9 percent, compared with 64.4 percent in the third quarter of 2013 and 68.1 percent in the fourth quarter of 2012. GAAP gross margins in 2013 were 65.4 percent, compared with 68.5 percent in 2012. Non-GAAP gross margins in the fourth quarter of 2013 were 68.5 percent, compared with 69.0 percent in the third quarter of 2013 and 70.0 percent in the fourth quarter of 2012. Non-GAAP gross margins in 2013 were 68.8 percent, compared with 70.3 percent in 2012. GAAP net loss in the fourth quarter of 2013 was $7.3 million, or $0.17 per diluted share, compared with GAAP net loss of $5.4 million, or $0.12 per diluted share in the third quarter of 2013 and net income of $18.4 million or $0.41 per diluted share in the fourth quarter of 2012. Non-GAAP net income in the fourth quarter of 2013 was $9.7 million, or $0.21 per diluted share, compared with $13.1 million, or $0.29 per diluted share in the third quarter of 2013, and $30.7 million, or $0.69 per diluted share in the fourth quarter of 2012. The fourth quarter 2013 non-GAAP net income excludes $11.7 million of share-based compensation expense compared to $11.9 million in the third quarter of 2013, and $10.0 million in the fourth quarter of 2012. The fourth quarter 2013 non-GAAP net income also excludes amortization expenses of acquired intangible assets of $4.4 million, and $0.9 million of acquisition related charges associated with the acquisition of Kotura, Inc. and IPtronics A/S, compared to amortization expenses of acquired intangible assets of $4.6 million and acquisition related charges of $2.0 million in the third quarter of 2013, and compared to $2.3 million of amortization expense of acquired intangibles assets in the fourth quarter of 2012. GAAP net loss in 2013 was $22.9 million, or $0.53 per diluted share, compared to $111.4 million of GAAP net income, or $2.54 per diluted share in 2012. Non-GAAP net income in 2013 was $40.9 million, or $0.90 per diluted share, compared to $155.7 million or $3.60 per diluted share in 2012. 2013 non-GAAP net income excludes $45.1 million of share-based compensation expense, $13.9 million of amortization expense of acquired intangible assets and $4.7 million of acquisition related charges. 2012 non-GAAP net income excludes $35.0 million of share-based compensation expense and amortization expense of acquired intangible assets of $9.3 million. Total cash and investments at December 31, 2013 were $330.2 million compared to $426.3 million at December 31, 2012. The company generated $30.7 million in cash from operating activities in the fourth quarter of 2013, and $52.0 million for fiscal year 2013. "Our fourth quarter and fiscal year 2013 results were solid, and we made progress on many of the goals that we outlined for you when we started the year. We believe that approximately $50 million of revenue that was shipped in 2012 was actually deployed in 2013. We acquired two companies in 2013 and believe that these technologies will be important building blocks for our future solutions," said Eyal Waldman, president and CEO of Mellanox Technologies. "Throughout the year, we worked with many new and existing partners on programs for our InfiniBand and Ethernet interconnect technologies, and in particular, we saw increased adoption of our Ethernet products. We believe that the trends that we see in the market today will result in multiple opportunities for Mellanox in the future." Recent Mellanox Press Release Highlights
Conference Calls Mellanox will broadcast its fourth quarter and fiscal year 2013 financial results conference call today at 2 p.m. Pacific Time to discuss the company's financial results. To listen to the call, dial +1-785-424-1825 approximately 10 minutes prior to the start time. The Mellanox financial results conference call will be available via live webcast 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. Replay of the webcast 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. 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 expense and acquisition related expense. 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 expense, amortization expense of acquired intangibles and acquisition related expense 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 and amortization of acquired intangibles 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 on our website. 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, including statements related to the technologies we acquired in 2013, trends in the market for our solutions and services and opportunities for our company in 2014 and beyond. 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 November 1, 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 is a registered trademark of Mellanox Technologies, Ltd. All other trademarks are property of their respective owners.
* 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.
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