GAAP Results
Revenue in the fourth quarter of 2019 was a record
Gross margin under GAAP in the fourth quarter of 2019 was 59.9%, compared with 57.2% in the fourth quarter of 2018. The increase was mainly due to product and revenue mix.
GAAP operating loss in the fourth quarter of 2019 was
GAAP net loss for the fourth quarter of 2019 was
Non-GAAP Results
Gross margin on a non-GAAP basis in the fourth quarter of 2019 was 69.2%, compared with 69.3% in the fourth quarter of 2018.
Non-GAAP operating income in the fourth quarter of 2019 was
Non-GAAP net income in the fourth quarter of 2019 was
“We are very pleased to deliver record Q4 results driven by strength in our cloud market segment,” said Ford Tamer, President and CEO of
Year Ended 2019 Results
Revenue in the year ended
Non-GAAP net income in the year ended
Business Outlook
The following statements are based on the Company’s current expectations for the first quarter of 2020 and include the impact of eSilicon, which closed on
Quarterly Conference Call Today
The call can be accessed by dialing (765) 507-2591, participant passcode: 3853299. 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 https://inphi.com/investors/ for up to 30 days after the call.
About
Cautionary Note Concerning Forward-Looking Statements
These forward-looking statements may be identified by terms such as outlook, believe, expect, may, will, provide, continue, could, and should, and the negative of these terms or other similar expressions. These statements include statements relating to: the Company’s business outlook and current expectations for 2020, including with respect to the first quarter of 2020, revenue, gross margin, stock-based compensation expense, operating performance, net income or loss, and earnings per share; the Company’s expectations regarding growth opportunities, success of our growth strategy strength of the cloud market, increasing demand in Q1 2020, growth inside data centers, customer relationships, the Company’s expectations regarding the benefits of the eSilicon acquisition and benefits of using non-GAAP financial measures. 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 target markets; market demand for the Company’s products; reliance on third parties to manufacture, assemble and test products; ability to compete; the ability to effectively integrate eSilicon 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 demand, changes in government regulation, 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
INPHI CORPORATION | ||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
(in thousands of dollars, except share and per share amounts) | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
Revenue | $ | 102,896 | $ | 86,531 | $ | 365,635 | $ | 294,490 | ||||||
Cost of revenue | 41,297 | 37,005 | 152,814 | 129,345 | ||||||||||
Gross profit | 61,599 | 49,526 | 212,821 | 165,145 | ||||||||||
Operating expenses: | ||||||||||||||
Research and development | 49,876 | 40,624 | 183,875 | 167,924 | ||||||||||
Sales and marketing | 12,378 | 10,608 | 47,722 | 43,080 | ||||||||||
General and administrative | 8,194 | 6,535 | 30,672 | 28,302 | ||||||||||
Total operating expenses | 70,448 | 57,767 | 262,269 | 239,306 | ||||||||||
Loss from operations | (8,849 | ) | (8,241 | ) | (49,448 | ) | (74,161 | ) | ||||||
Interest expense, net of other income | (5,415 | ) | (13,195 | ) | (23,067 | ) | (29,801 | ) | ||||||
Loss from operations before income taxes | (14,264 | ) | (21,436 | ) | (72,515 | ) | (103,962 | ) | ||||||
Provision (benefit) for income taxes | (856 | ) | 195 | 396 | (8,211 | ) | ||||||||
Net loss | $ | (13,408 | ) | $ | (21,631 | ) | $ | (72,911 | ) | $ | (95,751 | ) | ||
Earnings per share: | ||||||||||||||
Basic | $ | (0.29 | ) | $ | (0.49 | ) | $ | (1.61 | ) | $ | (2.19 | ) | ||
Diluted | $ | (0.29 | ) | $ | (0.49 | ) | $ | (1.61 | ) | $ | (2.19 | ) | ||
Weighted-average shares used in computing | ||||||||||||||
earnings per share: | ||||||||||||||
Basic | 45,728,736 | 44,152,932 | 45,226,717 | 43,690,581 | ||||||||||
Diluted | 45,728,736 | 44,152,932 | 45,226,717 | 43,690,581 | ||||||||||
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 December 31, | Year Ended December 31, | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
(in thousands of dollars) | (in thousands of dollars) | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
Cost of revenue | $ | 1,776 | $ | 717 | $ | 6,208 | $ | 2,527 | ||||||
Research and development | 11,311 | 9,544 | 42,265 | 37,397 | ||||||||||
Sales and marketing | 3,832 | 3,285 | 15,561 | 13,470 | ||||||||||
General and administrative | 3,339 | 2,829 | 12,821 | 10,490 | ||||||||||
$ | 20,258 | $ | 16,375 | $ | 76,855 | $ | 63,884 | |||||||
INPHI CORPORATION | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands of dollars) | |||||||
(Unaudited) | |||||||
December 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 282,723 | $ | 172,018 | |||
Investments in marketable securities | 140,131 | 235,339 | |||||
Accounts receivable, net | 60,295 | 61,271 | |||||
Inventories | 55,013 | 33,052 | |||||
Prepaid expenses and other current assets | 17,463 | 9,600 | |||||
Total current assets | 555,625 | 511,280 | |||||
Property and equipment, net | 79,563 | 70,740 | |||||
Goodwill | 104,502 | 104,502 | |||||
Intangible assets, net | 168,290 | 180,447 | |||||
Right of use assets, net | 33,576 | - | |||||
Other assets, net | 34,450 | 22,904 | |||||
Total assets | $ | 976,006 | $ | 889,873 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 18,771 | $ | 15,891 | |||
Accrued expenses and other current liabilities | 51,820 | 43,120 | |||||
Deferred revenue | 3,719 | 5,432 | |||||
Convertible debt | 217,467 | - | |||||
Total current liabilities | 291,777 | 64,443 | |||||
Convertible debt | 258,711 | 447,825 | |||||
Other liabilities | 78,917 | 10,911 | |||||
Total liabilities | 629,405 | 523,179 | |||||
Stockholders’ equity: | |||||||
Common stock | 46 | 44 | |||||
Additional paid-in capital | 587,862 | 536,157 | |||||
Accumulated deficit | (242,807 | ) | (169,896 | ) | |||
Accumulated other comprehensive income | 1,500 | 389 | |||||
Total stockholders’ equity | 346,601 | 366,694 | |||||
Total liabilities and stockholders’ equity | $ | 976,006 | $ | 889,873 | |||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(in thousands of dollars, except share and per share amounts)
To supplement the financial data presented on a GAAP basis, the Company discloses certain non-GAAP financial measures, which exclude stock-based compensation, legal, transition costs and other expenses, purchase price fair value adjustments related to acquisitions, loss on claim settlements, non-cash interest expense related to convertible debt, unrealized gain or loss on equity investments, lease expense on building not occupied and deferred tax asset valuation allowance. 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 because it 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, income from operations, 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, and may be calculated differently than non-GAAP financial information disclosed by other companies.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME | ||||||||||||||
(in thousands of dollars, except share and per share amounts) | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||
GAAP gross profit to Non-GAAP gross profit | ||||||||||||||
GAAP gross profit | $ | 61,599 | $ | 49,526 | $ | 212,821 | $ | 165,145 | ||||||
Adjustments to GAAP gross profit: | ||||||||||||||
Stock-based compensation | 1,776 | (a) | 717 | (a) | 6,208 | (a) | 2,527 | (a) | ||||||
Acquisition related expenses | - | - | - | 3 | (b) | |||||||||
Amortization of inventory step-up | - | - | - | 1,166 | (c) | |||||||||
Amortization of intangibles | 7,815 | (d) | 9,724 | (d) | 36,987 | (d) | 32,846 | (d) | ||||||
Depreciation on step-up values of fixed assets | 2 | (e) | (12 | ) | (e) | (25 | ) | (e) | (48 | ) | (e) | |||
Restructuring expenses | - | - | - | 106 | (f) | |||||||||
Non-GAAP gross profit | $ | 71,192 | $ | 59,955 | $ | 255,991 | $ | 201,745 | ||||||
GAAP operating expenses to non-GAAP operating expenses | ||||||||||||||
GAAP research and development | $ | 49,876 | $ | 40,624 | $ | 183,875 | $ | 167,924 | ||||||
Adjustments to GAAP research and development: | ||||||||||||||
Stock-based compensation | (11,311 | ) | (a) | (9,544 | ) | (a) | (42,265 | ) | (a) | (37,397 | ) | (a) | ||
Acquisition related expenses | - | - | - | (607 | ) | (b) | ||||||||
Depreciation on step-up values of fixed assets | (164 | ) | (e) | (109 | ) | (e) | (518 | ) | (e) | (402 | ) | (e) | ||
Restructuring expenses | - | - | - | (885 | ) | (f) | ||||||||
Non-GAAP research and development | $ | 38,401 | $ | 30,971 | $ | 141,092 | $ | 128,633 | ||||||
GAAP sales and marketing | $ | 12,378 | $ | 10,608 | $ | 47,722 | $ | 43,080 | ||||||
Adjustments to GAAP sales and marketing: | ||||||||||||||
Stock-based compensation | (3,832 | ) | (a) | (3,285 | ) | (a) | (15,561 | ) | (a) | (13,470 | ) | (a) | ||
Acquisition related expenses | - | - | - | (259 | ) | (b) | ||||||||
Amortization of intangibles | (2,432 | ) | (d) | (2,431 | ) | (d) | (9,725 | ) | (d) | (9,726 | ) | (d) | ||
Depreciation on step-up values of fixed assets | (3 | ) | (e) | (4 | ) | (e) | (10 | ) | (e) | (64 | ) | (e) | ||
Restructuring expenses | - | - | - | (367 | ) | (f) | ||||||||
Non-GAAP sales and marketing | $ | 6,111 | $ | 4,888 | $ | 22,426 | $ | 19,194 | ||||||
GAAP general and administrative | $ | 8,194 | $ | 6,535 | $ | 30,672 | $ | 28,302 | ||||||
Adjustments to GAAP general and administrative: | ||||||||||||||
Stock-based compensation | (3,339 | ) | (a) | (2,829 | ) | (a) | (12,821 | ) | (a) | (10,490 | ) | (a) | ||
Acquisition related expenses | (1,015 | ) | (b) | - | (1,015 | ) | (b) | (6 | ) | (b) | ||||
Amortization of intangibles | (69 | ) | (d) | (116 | ) | (d) | (417 | ) | (d) | (464 | ) | (d) | ||
Depreciation on step-up values of fixed assets | (6 | ) | (e) | (6 | ) | (e) | (20 | ) | (e) | (56 | ) | (e) | ||
Restructuring expenses | - | - | - | (133 | ) | (f) | ||||||||
Expense on lease that was not yet occupied | (462 | ) | (g) | - | (462 | ) | (g) | - | ||||||
Loss on claim settlement from ClariPhy acquisition | - | - | (400 | ) | (h) | (2,250 | ) | (h) | ||||||
Non-GAAP general and administrative | $ | 3,303 | $ | 3,584 | $ | 15,537 | $ | 14,903 | ||||||
Non-GAAP total operating expenses | $ | 47,815 | $ | 39,443 | $ | 179,055 | $ | 162,730 | ||||||
Non-GAAP income from operations | $ | 23,377 | $ | 20,512 | $ | 76,936 | $ | 39,015 | ||||||
GAAP net loss to non-GAAP net income | ||||||||||||||
GAAP net loss | $ | (13,408 | ) | $ | (21,631 | ) | $ | (72,911 | ) | $ | (95,751 | ) | ||
Adjusting items to GAAP net loss: | ||||||||||||||
Operating expenses related to stock-based | ||||||||||||||
compensation expense | 20,258 | (a) | 16,375 | (a) | 76,855 | (a) | 63,884 | (a) | ||||||
Acquisition related expenses | 1,015 | (b) | - | 1,015 | (b) | 875 | (b) | |||||||
Amortization of inventory fair value step-up | - | - | - | 1,166 | (c) | |||||||||
Amortization of intangibles related to purchase price | 10,316 | (d) | 12,271 | (d) | 47,129 | (d) | 43,036 | (d) | ||||||
Depreciation on step-up values of fixed assets | 175 | (e) | 107 | (e) | 523 | (e) | 474 | (e) | ||||||
Restructuring expenses | - | - | - | 1,491 | (f) | |||||||||
Expense on lease that was not yet occupied | 462 | (g) | - | 462 | (g) | - | ||||||||
Loss on claim settlement from ClariPhy acquisition | - | - | 400 | (h) | 2,250 | (h) | ||||||||
Loss on claim settlement from Exactik disposition | - | - | 296 | (i) | - | |||||||||
Loss on retirement of certain property and equipment from acquisitions | - | - | 7 | (j) | 66 | (j) | ||||||||
Impairment of investment | - | 7,000 | (k) | - | 7,000 | (k) | ||||||||
Net unrealized and realized gain on equity investment | (1,049 | ) | (l) | (66 | ) | (l) | (3,126 | ) | (l) | (2,440 | ) | (l) | ||
Accretion and amortization expense on convertible debt | 7,338 | (m) | 6,828 | (m) | 28,353 | (m) | 26,394 | (m) | ||||||
Valuation allowance and tax effect of the | ||||||||||||||
adjustments above from GAAP to non-GAAP | (2,029 | ) | (n) | (354 | ) | (n) | (2,432 | ) | (n) | (9,635 | ) | (n) | ||
Non-GAAP net income | $ | 23,078 | $ | 20,530 | $ | 76,571 | $ | 38,810 | ||||||
Shares used in computing non-GAAP basic earnings per share | 45,728,736 | 44,152,932 | 45,226,717 | 43,690,581 | ||||||||||
Shares used in computing non-GAAP diluted earnings per share before offsetting shares from call option | 51,298,035 | 45,516,402 | 48,766,301 | 44,986,718 | ||||||||||
Offsetting shares from call option | 2,225,969 | - | 1,176,787 | - | ||||||||||
Shares used in computing non-GAAP diluted earnings per share | 49,072,066 | 45,516,402 | 47,589,514 | 44,986,718 | ||||||||||
Non-GAAP earnings per share: | ||||||||||||||
Basic | $ | 0.50 | $ | 0.46 | $ | 1.69 | $ | 0.89 | ||||||
Diluted | $ | 0.47 | $ | 0.45 | $ | 1.61 | $ | 0.86 | ||||||
GAAP gross profit as a % of revenue | 59.9 | % | 57.2 | % | 58.2 | % | 56.1 | % | ||||||
Stock-based compensation | 1.7 | % | 0.8 | % | 1.7 | % | 0.9 | % | ||||||
Amortization of inventory fair value step-up and intangibles | 7.6 | % | 11.3 | % | 10.1 | % | 11.5 | % | ||||||
Non-GAAP gross profit as a % of revenue | 69.2 | % | 69.3 | % | 70.0 | % | 68.5 | % | ||||||
INPHI CORPORATION | |||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES -FIRST QUARTER 2020 GUIDANCE | |||||||
(in thousands of dollars, except share and per share amounts) | |||||||
(Unaudited) | |||||||
Three Months Ending March 31, 2020 | |||||||
High | Low | ||||||
Estimated GAAP net loss | $ | (21,400 | ) | $ | (27,300 | ) | |
Adjusting items to estimated GAAP net loss: | |||||||
Operating expenses related to stock-based | |||||||
compensation expense | 19,000 | 20,000 | |||||
Amortization of intangibles | 17,800 | 17,800 | |||||
Amortization of step up values of acquired inventories | 1,500 | 1,500 | |||||
Amortization of step up values of acquired property and equipment | 200 | 200 | |||||
Acquisition related expenses | 2,500 | 2,500 | |||||
Amortization of convertible debt interest cost | 7,200 | 7,200 | |||||
Noncash expense on lease not yet occupied | 775 | 775 | |||||
Others | 125 | 125 | |||||
Tax effect of GAAP to non-GAAP adjustments | (1,600 | ) | (1,300 | ) | |||
Estimated non-GAAP net income | $ | 26,100 | $ | 21,500 | |||
Shares used in computing estimated non-GAAP diluted earnings per share | 50,600,000 | 50,600,000 | |||||
Estimated non-GAAP diluted earnings per share | $ | 0.52 | $ | 0.42 | |||
Revenue | $ | 134,400 | $ | 130,400 | |||
GAAP gross profit | $ | 70,300 | $ | 66,400 | |||
as a % of revenue | 52.3 | % | 50.9 | % | |||
Adjusting items to estimated GAAP gross profit: | |||||||
Stock-based compensation | 2,000 | 2,000 | |||||
Fixed assets depreciation step up | 10 | 10 | |||||
Amortization of intangibles | 15,300 | 15,300 | |||||
Estimated non-GAAP gross profit | $ | 87,610 | $ | 83,710 | |||
as a % of revenue | 65.2 | % | 64.2 | % | |||
Corporate Contact:Kim Markle 408-217-7329 kmarkle@inphi.com Investor Contact:Vernon P. Essi, Jr. 408-606-6524 vessi@inphi.com
Source: Inphi Corporation