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Inphi: Year-Over-Year Non-Gaap Eps Growth SANTA CLARA, Calif.,

The following excerpt is from the company's SEC filing.

– Inphi Corporation (NYSE: IPHI), a leading provider of high-speed analog and mixed-signal semiconductor solutions for the communications, data center and computing markets, today announced the financial results for its third quarter ended September 30, 2015.

Revenue in the third quarter of 2015 was a record $62.4 million, up 2.8% sequentially from $60.7 million reported in the second quarter of 2015 and up 72% year-over-year, compared with $36.3 million in the third quarter of 2014.

Gross margin under U.S. generally accepted accounting principles (GAAP) in the third quarter of 20 15 was 62.1% of revenue, compared with 64.1% in the third quarter of 2014. The decline in gross margin was primarily due to the amortization of the acquired intangibles and amortization of inventory fair value step-up related to the acquired Cortina inventories sold during the third quarter of 2015.

GAAP net loss for the third quarter of 2015 was $1.1 million, or ($0.03) per diluted common share, compared with GAAP net loss of $6.9 million, or ($0.22) per diluted common share, in the third quarter of 2014.

GAAP free cash flow in the third quarter of 2015, defined as net cash provided by operating activities minus purchases of property and equipment, was a record source of $14.2 million as compared to a use of $3.8 million for the third quarter of 2014.

Inphi reports revenue, gross margin, operating expenses, net income (loss), and earnings per share in accordance with GAAP and on a non-GAAP basis. A reconciliation of the GAAP to non-GAAP revenue, gross margin, operating expenses, 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 news release.

Gross margin on a non-GAAP basis for in the third quarter of 2015 increased to 68.4%, compared with 65.0% in the third quarter of 2014.

Non-GAAP income from operations in the third quarter of 2015 was $12.7 million, or 20.3% of revenue, compared with $5.1 million, or 14.1% of revenue, in the third quarter of 2014.

Non-GAAP net income in the third quarter of 2015 was a record $10.4 million, or $0.25 per diluted common share. This compares with non-GAAP net income of $3.8 million, or $0.12 per diluted common share in the third quarter of 2014.

“We are pleased to report record revenue, non-GAAP operating profit and free cash flow in the third quarter,” said Ford Tamer, Inphi President and CEO. “We announced significant new offerings during the quarter, including our surface mount quad 100 Gigabit linear driver, our 45 Gigabaud Amplifier and Driver products, our PAM4 dual lambda family for 40, 50, 100 and 400 Gigabit applications, and our new DDR4 buffer product. We are also encouraged by our customers’ robust level of interest and positive feedback for these optical, networking and memory interconnect products.”

Nine Months

Results

Revenue in the nine months ended September 30, 2015 was $182.2 million, compared with $101.4 million in the nine months ended September 30, 2014. GAAP net loss in the nine months ended September 30, 2015 was $10.8 million, or ($0.28) per diluted common share, on approximately 38.3 million diluted weighted average common shares outstanding. This compares with GAAP net loss of $5.2 million, or ($0.17) per diluted common share, on approximately 31.2 million diluted weighted average common shares outstanding in the nine months ended September 30, 2014. GAAP free cash flow for the nine months ended September 30, 2015 was a record source of $33.3 million as compared to a use of $4.0 million for the nine months ended September 30, 2014.

Non-GAAP income from operations in the nine months ended September 30, 2015 was $36.0 million, or 19.7% of revenue, compared with $12.7 million, or 12.5% of revenue, in the nine months ended September 30, 2014.

Non-GAAP net income in the nine months ended September 30, 2015 was $29.6 million, or $0.72 per diluted weighted average common share outstanding, on approximately 41.1 million diluted weighted average common shares outstanding. This compares with non-GAAP net income of $9.7 million in the nine months ended September 30, 2014, or $0.29 per diluted weighted average common share outstanding.

Business Outlook

The following statements are based on the company’s current expectations for the fourth quarter of 2015. These statements are forward-looking and actual results may differ materially.

Revenues are expected to be up 1.5% to 4.7% sequentially in Q4 2015, or in a range of $63.3 million to $65.3 million

Non-GAAP gross margin is expected to be approximately 68.5% to 68.7%.

Stock-based compensation expense is expected to be in the range of $7.6 million to $7.8 million.

GAAP results are expected to be a net loss in a range between $0.5 million to $1.3 million, or ($0.01) - ($0.03) per diluted share, on 39.4 million estimated basic shares outstanding.

Non-GAAP net income, excluding stock-based compensation expense and expenses related to the Cortina acquisition, is expected to be in the range of $10.6 million to $11.4 million, or $0.25 - $0.27 per diluted share, on 42.4 million estimated fully diluted shares outstanding.

Quarterly Conference Call Today

Inphi plans to hold a conference call today at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time today with Ford Tamer, president and chief executive officer, and John Edmunds, chief financial officer, to discuss the third quarter 2015 results.

The call can be accessed by dialing 844-459-2451; international callers should dial 765-507-2591, participant passcode: 60155058. Please dial-in ten minutes prior to the scheduled conference call time. A live and archived webcast of the...


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