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Cavium Announces Financial Results for Q2 2014

SAN JOSE, Calif., July 30, 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 second quarter ended June 30, 2014.

Cavium, Inc. Logo.

Revenue in the second quarter of 2014 was $90.7 million, an 8.9% sequential increase from the $83.2 million reported in the first quarter of 2014 and a 22.2% year-over-year increase from the $74.2 million reported in the second quarter of 2013.

Generally Accepted Accounting Principles (GAAP) Results

Net loss attributable to the Company in the second quarter of 2014 was $11.0 million, or $(0.21) per diluted share, compared to net income attributable to the Company of $2.3 million, or $0.04 per diluted share in the first quarter of 2014. Gross margins were 62.6% in the second quarter of 2014 compared to 63.5% in the first quarter of 2014. Total cash and cash equivalents were $140.6 million at June 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 second quarter of 2014, Non-GAAP net income was $19.9 million, or $0.35 per diluted share, Non-GAAP gross margin was 64.5% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 22.3%.

Recent News Highlights

  • July 21, 2014 - Cavium and Quortus Enabled Unique LTE RAN and EPC on Single Chip for Portable Applications
  • June 23, 2014 - Altera and Cavium Delivered Pre-Verified Packet Classification Solution for Networking Appliances
  • June 3, 2014 - Cavium Introduced ThunderX™: A 2.5 GHz, 48 Core Family of Workload Optimized Processors for Next Generation Data Center and Cloud Applications
  • June 3, 2014 - Cavium Announced Collaboration with Oracle to Support the ThunderX™ Processor Family
  • June 3, 2014 - Cavium Expanded Collaboration with Fedora Project to Accelerate ARMv8 Software Ecosystem
  • June 3, 2014 - openSUSE Community Announced Partnership with Cavium to Support the ThunderX™ Workload Optimized Processor Family
  • June 3, 2014 - Canonical Announced Expanded Ubuntu Support for the Cavium Workload Optimized ThunderX™ Processor Family
  • June 3, 2014 - Cavium Delivered Next Generation Xen Virtualization with ThunderX™ Family of Workload Optimized Processors
  • June 3, 2014 - American Megatrends Announced Partnership with Cavium to Support the ThunderX™ Processor Family
  • June 3, 2014 - Gigabyte Technology Announced Expansion of Server Platforms based on Cavium's ThunderX™ Workload Optimized Processor Family
  • June 3, 2014 - Cavium Contributed ARMv8 Based Platform Architecture to Open Compute Project, Based on ThunderX™ Family of Workload-Optimized Processors
  • June 3, 2014 - MontaVista Announced MV Cloud Support for the Cavium ThunderX™ Workload Optimized Processor Family
  • June 3, 2014 - Cavium Joined Xen Project Advisory Board
  • June 2, 2014 - Cavium Introduced Project Thunder at Computex 2014
  • June 2, 2014 - Cavium Demonstrated a Broad Range of New SoC Solutions for RAN Core and Cloud Infrastructure at Computex 2014

Cavium, Inc. will broadcast its second quarter of 2014 financial results conference call today, July 30, 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 


June 30, 2014


March 31, 2014

Net revenue

$       90,681


$          83,241

Cost of revenue 

33,897


30,350

Gross profit 

56,784


52,891

Operating expenses:




     Research and development 

38,834


37,289

     Sales, general and administrative 

17,017


15,932

        Total operating expenses 

55,851


53,221

Income (loss) from operations 

933


(330)

Other income (expense), net:




    Interest expense

(333)


(459)

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

(13,927)


(858)

    Other, net

(53)


135

Total other expense, net

(14,313)


(1,182)

     Loss before income taxes 

(13,380)


(1,512)

     Provision for income taxes

311


243

Net loss

(13,691)


(1,755)

Net loss attributable to non-controlling interest

(2,647)


(4,102)

Net income (loss) attributable to the Company

$     (11,044)


$            2,347

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

$         (0.21)


$              0.04

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

53,197


52,550

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

$         (0.21)


$             0.04

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

53,197


54,221









CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands)


Three Months Ended 

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

June 30, 2014


March 31, 2014

    GAAP research and development expenses

$       38,834


$          37,289

          Stock-based compensation and related payroll taxes

(6,104)


(6,026)

          Net restructuring related expenses 

(894)


(509)

          Research and development expenses associated from a VIE

(5,400)


(4,767)

     Non-GAAP research and development expenses

$       26,436


$          25,987





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




    GAAP sales, general and administrative expenses

$       17,017


$          15,932

          Stock-based compensation and related payroll taxes

(4,525)


(4,177)

          Amortization of acquired intangible assets

(35)


(35)

          Net restructuring related expenses

(218)


(243)

          Sales, general and administrative expenses associated from a VIE

(404)


(286)

     Non-GAAP sales, general and administrative expenses

$       11,835


$          11,191

Total Non-GAAP operating expenses

$       38,271


$          37,178





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




    GAAP non-operating expenses

$     (14,313)


$          (1,182)

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

13,927


858

          Non-operating expenses associated from a VIE

337


369

Total Non-GAAP non-operating income (expense)

$           (49)


$                45





 

CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data and percentages)






Three Months Ended 


June 30, 2014


March 31, 2014

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




Net revenue

$         90,681


$            83,241

GAAP gross profit

56,784


52,891

GAAP gross margin

62.6%


63.5%





          Stock-based compensation and related payroll taxes

258


259

          Amortization of acquired intangible assets

1,267


1,267

          Net restructuring related expenses

172


-

Non-GAAP gross profit

$         58,481


$            54,417

Non-GAAP gross margin

64.5%


65.4%






Three Months Ended 


June 30, 2014


March 31, 2014

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




GAAP income (loss) from operations

$              933


$               (330)

          Stock-based compensation and related payroll taxes

10,887


10,462

          Amortization of acquired intangible assets

1,302


1,302

          Net restructuring related expenses

1,284


752

          Loss from operations of a variable interest entity

5,804


5,053

Non-GAAP income from operations

$         20,210


$            17,239

Non-GAAP income from operations as a percentage of revenue

22.3%


20.7%






Three Months Ended 


June 30, 2014


March 31, 2014

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




GAAP net income (loss) attributable to the Company

$       (11,044)


$              2,347

Non-GAAP adjustments:




      Stock-based compensation and related payroll taxes

10,887


10,462

      Amortization of acquired intangible assets

1,302


1,302

      Net restructuring related expenses

1,284


752

      Net loss of a variable interest entity attributable to the Company

17,421


2,178

     Total of non-GAAP adjustments

30,894


14,694

Non-GAAP net income 

$         19,850


$            17,041





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

$           (0.21)


$                0.04

   Non-GAAP adjustments detailed above

0.56


0.26

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

$             0.35


$                0.30





GAAP weighted average shares, diluted

53,197


54,221

   Non-GAAP share adjustment

4,123


2,338

Non-GAAP weighted average shares, diluted

57,320


56,559

 

CAVIUM, INC.

Unaudited GAAP Condensed Consolidated Balance Sheets

(in thousands)










As of
June 30, 2014


As of
March 31, 2014

Assets





Current assets:





Cash and cash equivalents

$     140,580


$        124,106


Accounts receivable, net 

52,141


56,819


Inventories

56,750


49,048


Prepaid expenses and other current assets

7,903


5,834



Total current assets

257,374


235,807

Property and equipment, net

30,319


28,562

Intangible assets, net

39,161


41,453

Goodwill


71,478


71,478

Other assets

1,600


1,096



Total assets

$     399,932


$        378,396







Liabilities and Equity 




Current liabilities:





Accounts payable

$       28,466


$          24,060


Other accrued expenses and other current liabilities

10,196


9,519


Deferred revenue

8,151


8,475


Notes payable and other

29,697


15,770


Capital lease and technology license obligations

16,375


14,227



Total current liabilities

92,885


72,051

Capital lease and technology license obligations, net of current 

11,557


15,297

Deferred tax liability

2,461


2,365

Other non-current liabilities

2,521


2,437



Total liabilities

109,424


92,150







Equity 






Common stock

54


53


Additional paid-in capital

474,710


456,758


Accumulated deficit

(165,754)


(154,710)



Total stockholders' equity attributable to the Company

309,010


302,101


Non-controlling interest

(18,502)


(15,855)



Total equity

290,508


286,246



Total liabilities and equity 

$     399,932


$        378,396

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SOURCE CAVIUM, INC.

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