Press Releases

Press Releases

Inphi Corporation Delivers Record Revenue in Q4 2020

Strong Year-Over-Year Growth Driven by Cloud

SAN JOSE, Calif., Feb. 02, 2021 (GLOBE NEWSWIRE) -- Inphi Corporation (NASDAQ: IPHI), a leader in high-speed data movement interconnects, today announced financial results for its fourth quarter and fiscal year ended December 31, 2020. Inphi Corporation will not host a conference call to discuss its results for the fourth quarter of 2020 due to the proposed acquisition of Inphi Corporation by Marvell Technology Group Ltd.

GAAP Results

Revenue in the fourth quarter of 2020 was a record $187.5 million on a U.S. generally accepted accounting principles (GAAP) basis, up 82.3% year-over-year, compared with $102.9 million in the fourth quarter of 2019. The increase was due to higher demand for Cloud and Telecommunications products as well as the inclusion of eSilicon revenues as a result of the acquisition that closed on January 10, 2020.

Gross margin under GAAP in the fourth quarter of 2020 was 54.9%, compared with 59.9% in the fourth quarter of 2019. The decrease was mainly due to amortization of intangibles related to the eSilicon acquisition and product and revenue mix.

GAAP operating loss in the fourth quarter of 2020 was $2.5 million or (1.3%) of revenue, compared to GAAP operating loss in the fourth quarter of 2019 of $8.8 million or (8.6%) of revenue. The decrease in operating loss was mainly due to higher gross profit, partially offset by higher operating expenses.

GAAP net loss for the fourth quarter of 2020 was $12.0 million or ($0.23) per diluted common share, compared with $13.4 million or ($0.29) per diluted common share in the fourth quarter of 2019.

Inphi reports gross profit, operating expenses, operating income (loss), 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 gross profit, operating expenses, operating income (loss), net income (loss), 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 press release.

Non-GAAP Results

Gross margin on a non-GAAP basis in the fourth quarter of 2020 was 64.3%, compared with 69.2% in the fourth quarter of 2019. The decrease was due to product mix, mainly from the sale of eSilicon products that have a lower margin.

Non-GAAP operating income in the fourth quarter of 2020 was $54.6 million or 29.1% of revenue, compared with non-GAAP operating income of $23.4 million or 22.7% of revenue in the fourth quarter of 2019. The increase is primarily due to higher gross profit and higher operating leverage.

Non-GAAP net income in the fourth quarter of 2020 was $50.0 million, or $0.91 per diluted common share. This compares with non-GAAP net income of $23.1 million, or $0.47 per diluted common share in the fourth quarter of 2019.

“We are very pleased to report another record revenue quarter demonstrating 82% growth year-over-year driven by strength from acquisitions as well as across all segments highlighted by Cloud revenue, which grew an impressive 69% year-over-year. Additionally, looking at our annual results in 2020 more than half of our growth was organic, growing 46% year-over-year, clearly outpacing broader industry growth projections,” said Ford Tamer, President and CEO of Inphi Corporation. “We continue to capitalize on our strategy of leading-edge investments in cloud infrastructure and optical interconnect, opening up new market opportunities to drive revenue growth.”

Year Ended 2020 Results

Revenue in the year ended December 31, 2020 was $683.0 million, compared with $365.6 million in the year ended December 31, 2019. GAAP net loss in the year ended December 31, 2020 was $59.7 million, or ($1.20) per diluted share, on approximately 49.9 million diluted weighted average common shares outstanding. This compares with GAAP net loss of $72.9 million, or ($1.61) per diluted share, on approximately 45.2 million diluted weighted average common shares outstanding in the year ended December 31, 2019.

Non-GAAP net income in the year ended December 31, 2020 was $180.3 million, or $3.37 per diluted weighted average common share outstanding, on approximately 53.4 million diluted weighted average common shares outstanding. This compares with non-GAAP net income of $76.6 million in the year ended December 31, 2019, or $1.61 per diluted weighted average common share outstanding, on approximately 47.6 million diluted weighted average common shares outstanding.

About Inphi
Inphi Corporation is a leader in high-speed data movement. We move big data -- fast, throughout the globe, between data centers, and inside data centers. Inphi's expertise in signal integrity results in reliable data delivery, at high speeds, over a variety of distances. As data volumes ramp exponentially due to video streaming, social media, cloud-based services, and wireless infrastructure, the need for speed has never been greater. That's where we come in. Customers rely on Inphi's solutions to develop and build out the Service Provider and Cloud infrastructures, and data centers of tomorrow. To learn more about Inphi, visit www.inphi.com.

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, the Company’s expectations regarding growth opportunities, success of our growth strategy, strength of the cloud market and optical interconnect, new market opportunities, revenue growth and the 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; 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, including as a result of the impact of the COVID-19 pandemic, 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 SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2019, which are available on the SEC’s website at www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Inphi Corporation undertakes no obligation to update forward-looking statements for any reason, except as required by law, even as new information becomes available or other events occur in the future.

Inphi, the Inphi logo and Think fast are registered trademarks of Inphi Corporation. All other trademarks used herein are the property of their respective owners.


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,
 
    2020   2019   2020   2019  
Revenue $ 187,541   $ 102,896   $ 682,954   $ 365,635    
Cost of revenue   84,579     41,297     311,823     152,814    
                   
Gross margin   102,962     61,599     371,131     212,821    
                   
Operating expenses:                  
Research and development   70,446     49,876     269,147     183,875    
Sales and marketing   16,016     12,378     61,290     47,722    
General and administrative   19,011     8,194     57,519     30,672    
                   
Total operating expenses   105,473     70,448     387,956     262,269    
                   
Loss from operations   (2,511 )   (8,849 )   (16,825 )   (49,448 )  
                   
Loss on early extinguishment of convertible debt   (93 )   -     (13,539 )   -    
Interest expense, net of other income   (6,451 )   (5,415 )   (24,926 )   (23,067 )  
                   
Loss before income taxes   (9,055 )   (14,264 )   (55,290 )   (72,515 )  
Provision (benefit) for income taxes   2,972     (856 )   4,454     396    
                   
Net loss $ (12,027 ) $ (13,408 ) $ (59,744 ) $ (72,911 )  
                   
Earnings per share:                  
Basic $ (0.23 ) $ (0.29 ) $ (1.20 ) $ (1.61 )  
Diluted $ (0.23 ) $ (0.29 ) $ (1.20 ) $ (1.61 )  
                   
                   
Weighted-average shares used in computing                  
earnings per share:                  
Basic   52,626,086     45,728,736     49,901,181     45,226,717    
Diluted   52,626,086     45,728,736     49,901,181     45,226,717    
                   

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,
 
    2020   2019   2020   2019  
                   
    (in thousands of dollars)   (in thousands of dollars)  
    (Unaudited)   (Unaudited)  
Cost of revenue $ 1,826   $ 1,776   $ 7,859   $ 6,208    
Research and development   16,773     11,311     62,768     42,265    
Sales and marketing   6,670     3,832     22,990     15,561    
General and administrative   4,677     3,339     17,630     12,821    
                   
  $ 29,946   $ 20,258   $ 111,247   $ 76,855    


INPHI CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
(Unaudited)

    December 31,
2020
  December 31,
2019
 
Assets          
Current assets:          
Cash and cash equivalents $ 103,529   $ 282,723    
Investments in marketable securities   63,389     140,131    
Accounts receivable, net   111,436     60,295    
Inventories   111,403     55,013    
Prepaid expenses and other current assets   10,137     17,463    
Total current assets   399,894     555,625    
           
Property and equipment, net   133,556     79,563    
Goodwill   181,688     104,502    
Intangible assets, net   231,633     168,290    
Right of use asset, net   30,855     33,576    
Other assets, net   30,610     34,450    
Total assets $ 1,008,236   $ 976,006    
           
Liabilities and Stockholders’ Equity          
           
Current liabilities:          
Accounts payable $ 36,387   $ 18,771    
Accrued expenses and other current liabilities   92,845     51,820    
Deferred revenue   3,281     3,719    
Convertible debt   58,004     217,467    
           
Total current liabilities   190,517     291,777    
           
Convertible debt   405,689     258,711    
Other liabilities   58,320     78,917    
Total liabilities   654,526     629,405    
           
Stockholders’ equity:          
Common stock   53     46    
Additional paid-in capital   654,883     587,862    
Accumulated deficit   (302,551 )   (242,807 )  
Accumulated other comprehensive income   1,325     1,500    
Total stockholders’ equity   353,710     346,601    
           
Total liabilities and stockholders’ equity $ 1,008,236   $ 976,006    


INPHI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(Unaudited)

    Three Months Ended
December 31,
  Year Ended
December 31,
 
    2020   2019   2020   2019
 
Cash flows from operating activities:                    
Net loss $ (12,027 ) $ (13,408 ) $ (59,744 ) $ (72,911 )  
Adjustments to reconcile net loss to net cash provided by                    
operating activities:                    
Depreciation, amortization and stock-based compensation   64,361     43,594     238,897     173,549    
Amortization and accretion related to debt   6,693     7,338     29,277     28,353    
Loss on extinguishment of debt   93     -     13,539     -    
Deferred income taxes   2,545     (599 )   3,703     337    
Net unrealized gain on equity investments   (67 )   (124 )   (2,010 )   (2,201 )  
Gain from sale of equity investment   -     (924 )   (4,999 )   (924 )  
Loss on termination of software lease contracts   -     -     3,370     -    
Other noncash items   403     (187 )   576     (720 )  
Changes in assets and liabilities, net of acquisition   (17,359 )   (13,735 )   (67,024 )   (28,539 )  
Net cash provided by operating activities   44,642     21,955     155,585     96,944    
                     
Cash flows from investing activities:                    
Purchases of property and equipment   (22,308 )   (12,291 )   (74,823 )   (29,518 )  
Sales or maturities of marketable securities, net of purchases   11,348     134,127     76,751     97,248    
Purchases of intangible assets   (160 )   -     (788 )   (1,137 )  
Acquisitions of business and equity investments, net of cash and proceeds   -     (576 )   (214,731 )   (3,576 )  
Net cash provided by (used in) investing activities   (11,120 )   121,260     (213,591 )   63,017    
                     
Cash flows from financing activities:                    
Proceeds from exercise of stock options and ESPP   9,013     709     19,083     8,990    
Minimum tax withholding paid on behalf of employees for net share settlement   (31,205 )   (7,898 )   (80,375 )   (33,596 )  
Payments of obligations related to purchase of intangible assets and equipment financing   (4,224 )   (4,421 )   (35,493 )   (24,650 )  
Proceeds (payments) from issuance of convertible debt, net of cost   (250 )   -     492,493     -    
Payment for convertible debt debt repurchases and conversion   (51,234 )   -     (461,236 )   -    
Purchase of capped call options   -     -     (55,660 )   -    
Net cash used in financing activities   (77,900 )   (11,610 )   (121,188 )   (49,256 )  
                     
Net increase (decrease) in cash and cash equivalents   (44,378 )   131,605     (179,194 )   110,705    
Cash and cash equivalents at beginning of period   147,907     151,118     282,723     172,018    
                     
Cash and cash equivalents at end of period $ 103,529   $ 282,723   $ 103,529   $ 282,723    


INPHI CORPORATION
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, related to acquisitions, including the potential merger with Marvell, purchase price fair value adjustments related to acquisitions, non-cash interest expense and loss on extinguishment 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,
 
    2020   2019   2020   2019  
GAAP gross margin to Non-GAAP gross margin                  
GAAP gross margin $ 102,962   $ 61,599   $ 371,131   $ 212,821    
Adjustments to GAAP gross margin:                  
Stock-based compensation   1,826   (a) 1,776   (a) 7,859   (a) 6,208   (a)
Amortization of inventory step-up   87   (b) -     4,569   (b) -    
Amortization of intangibles   15,460   (c) 7,815   (c) 54,304   (c) 36,987   (c)
Depreciation on step-up values of fixed assets   167   (d) 2   (d) 390   (d) (25 ) (d)
Non-GAAP gross margin $ 120,502   $ 71,192   $ 438,253   $ 255,991    
                   
GAAP operating expenses to Non-GAAP operating expenses                  
GAAP research and development $ 70,446   $ 49,876   $ 269,147   $ 183,875    
Adjustments to GAAP research and development:                  
Stock-based compensation   (16,773 ) (a) (11,311 ) (a) (62,768 ) (a) (42,265 ) (a)
Depreciation on step-up values of fixed assets   (158 ) (d) (164 ) (d) (413 ) (d) (518 ) (d)
Acquisition related expenses   (580 ) (e) -     (10,871 ) (e) -    
Non-GAAP research and development $ 52,935   $ 38,401   $ 195,095   $ 141,092    
                   
GAAP sales and marketing $ 16,016   $ 12,378   $ 61,290   $ 47,722    
Adjustments to GAAP sales and marketing:                  
Stock-based compensation   (6,670 ) (a) (3,832 ) (a) (22,990 ) (a) (15,561 ) (a)
Amortization of intangibles   (2,432 ) (c) (2,432 ) (c) (9,727 ) (c) (9,725 ) (c)
Depreciation on step-up values of fixed assets   (24 ) (d) (3 ) (d) (61 ) (d) (10 ) (d)
Acquisition related expenses   (50 ) (e) -     (790 ) (e) -    
Non-GAAP sales and marketing $ 6,840   $ 6,111   $ 27,722   $ 22,426    
                   
GAAP general and administrative $ 19,011   $ 8,194   $ 57,519   $ 30,672    
Adjustments to GAAP general and administrative:                  
Stock-based compensation   (4,677 ) (a) (3,339 ) (a) (17,630 ) (a) (12,821 ) (a)
Amortization of intangibles   (69 ) (c) (69 ) (c) (278 ) (c) (417 ) (c)
Depreciation on step-up values of fixed assets   (87 ) (d) (6 ) (d) (212 ) (d) (20 ) (d)
Acquisition related expenses   (8,011 ) (e) (1,015 ) (e) (14,643 ) (e) (1,015 ) (e)
Expense on lease that was not yet occupied   -     (462 ) (f) (1,709 ) (f) (462 ) (f)
Loss on claim settlement from ClariPhy acquisition   -     -     -     (400 ) (g)
Non-GAAP general and administrative $ 6,167   $ 3,303   $ 23,047   $ 15,537    
                   
Non-GAAP total operating expenses $ 65,942   $ 47,815   $ 245,864   $ 179,055    
Non-GAAP income from operations $ 54,560   $ 23,377   $ 192,389   $ 76,936    
                   
GAAP net loss to Non-GAAP net income                  
GAAP net loss $ (12,027 ) $ (13,408 ) $ (59,744 ) $ (72,911 )  
Adjusting items to GAAP net loss:                  
Operating expenses related to stock-based                  
compensation expense   29,946   (a) 20,258   (a) 111,247   (a) 76,855   (a)
Amortization of inventory step-up   87   (b) -     4,569   (b) -    
Amortization of intangibles related to purchase price   17,961   (c) 10,316   (c) 64,309   (c) 47,129   (c)
Depreciation on step-up values of fixed assets   436   (d) 175   (d) 1,076   (d) 523   (d)
Acquisition related expenses   8,641   (e) 1,015   (e) 26,304   (e) 1,015   (e)
Expense on lease that was not yet occupied   -     462   (f) 1,709   (f) 462   (f)
Loss on claim settlement from ClariPhy acquisition   -     -     -     400   (g)
Accretion and amortization expense on convertible debt   6,693   (h) 7,338   (h) 29,277   (h) 28,353   (h)
Loss on extinguishment of convertible debt   93   (i) -     13,539   (i) -    
Net realized and unrealized loss (gain) on equity investment   (67 ) (j) (1,049 ) (j) (7,008 ) (j) (3,126 ) (j)
Loss on retirement of certain property and equipment from                          
acquisitions   -     -     444   (k) 7   (k)
Loss on claim settlement from Exactik disposition   -     -     -     296   (l)
Valuation allowance and tax effect of the adjustments above from                  
GAAP to non-GAAP   (1,797 ) (m) (2,029 ) (m) (5,390 ) (m) (2,432 ) (m)
Non-GAAP net income $ 49,966   $ 23,078   $ 180,332   $ 76,571    
                   
Shares used in computing non-GAAP basic earnings per share   52,626,086     45,728,736     49,901,181     45,226,717    
                   
Shares used in computing non-GAAP diluted earnings per share                          
before offsetting shares from call option   56,497,856     51,298,035     54,956,850     48,766,301    
Offsetting shares from call option   1,354,504     2,225,969     1,524,512     1,176,787    
Shares used in computing non-GAAP diluted earnings per share   55,143,352     49,072,066     53,432,338     47,589,514    
                   
Non-GAAP earnings per share:                  
Basic $ 0.95   $ 0.50   $ 3.61   $ 1.69    
Diluted $ 0.91   $ 0.47   $ 3.37   $ 1.61    
                   
GAAP gross margin as a % of revenue   54.9 %   59.9 %   54.3 %   58.2 %  
Stock-based compensation   1.0 %   1.7 %   1.2 %   1.7 %  
Amortization of inventory fair value step-up and intangibles   8.4 %   7.6 %   8.7 %   10.1 %  
Non-GAAP gross margin as a % of revenue   64.3 %   69.2 %   64.2 %   70.0 %  


(a) Reflects the stock-based compensation expense recorded relating to stock-based awards. The Company excludes this item when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(b) Reflects the cost of goods sold fair value amortization of inventory step-up related to acquisitions. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(c) Reflects the fair value amortization of intangibles related to acquisition. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(d) Reflects the fair value depreciation of fixed assets related to acquisitions. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(e) Reflects the legal, transition costs and other expenses related to acquisitions, including potential merger with Marvell. The transition costs also include short-term cash retention bonus payments to eSilicon employees. The Company excludes this item when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(f) Reflects the expense on building lease not yet occupied. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(g) Reflects the loss on settlement of certain customer claims from the ClariPhy acquisition. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(h) Reflects the accretion and amortization expense on convertible debt. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(i) Reflects the loss on early extinguishment of convertible debt. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(j) Reflects the unrealized and realized gain or loss on equity investments. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(k) Reflects the loss on disposal of certain property and equipment from the acquisitions. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(l) Reflects the loss on settlement of claim from the Exactik business disposal. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(m) Reflects the change in valuation allowance and delta in interim period tax allocation from GAAP to non-GAAP related to non-GAAP adjustments. The Company excludes this item when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.



Corporate Contact:
Kim Markle
408-217-7329
kmarkle@inphi.com

Investor Contact:
Vernon P. Essi, Jr.
408-606-6524
investors@inphi.com

Primary Logo

Source: Inphi Corporation