SOURCE: Cavium, Inc.

Cavium, Inc.

August 02, 2011 16:00 ET

Cavium Announces Financial Results for Q2 2011

SAN JOSE, CA--(Marketwire - Aug 2, 2011) - 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 of 2011 ended June 30, 2011.

Revenue in the second quarter of 2011 was $71.6 million, a 12.7% sequential increase from the $63.6 million reported for the first quarter of 2011 and an increase of 43.7% from the $49.9 million reported for the second quarter of last year.

Generally Accepted Accounting Principles (GAAP) Results
Net income for the second quarter of 2011, on a GAAP basis, was $1.9 million, or $0.04 per diluted share, compared to net income of $1.5 million, or $0.03 per diluted share in the first quarter of 2011, and a net income of $0.6 million, or $0.01 per diluted share in the second quarter of last year. Gross margins were 59.9% in the second quarter of 2011 compared to 60.9% in the first quarter of 2011 and 60.8% in the second quarter of last year. Total cash and cash equivalents were $69.2 million at June 30, 2011.

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 the company's financial condition and results of operations. These measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. Non-GAAP financial measures in second quarter of 2011 exclude expenses totaling $16.5 million related to stock-based compensation and related payroll expense, amortization of acquired intangible assets and acquisition related expenses. The reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this release.

Non-GAAP net income for the second quarter of 2011 was $18.4 million, or $0.34 per diluted share, compared with non-GAAP net income of $16.5 million, or $0.32 per diluted share in the first quarter of 2011. Gross margins, on a non-GAAP basis, was 65.6% and operating margins (non-GAAP income from operations as a percentage of revenue), on a non-GAAP basis, was 25.3% in the second quarter of 2011.

"This was our ninth quarter of sequential sales growth, driven by strong organic growth in our core enterprise and service provider as well as our broadband and consumer business. We generated record quarterly sales, strong non-GAAP gross and operating margins, and record non-GAAP net income during the quarter. Furthermore, our multi-core and other products continue to take market share as we experience record design win momentum among Tier-1 customers across our entire family of products," said Syed Ali, president and CEO of Cavium.

Recent News Highlights

  • June 28, 2011 - Emerson Network Power Announces Availability of Powerful 64-core Cavium Dual OCTEON® II 40G ATCA Packet Processor Blade
  • June 21, 2011 - Cavium, Continuous Computing and Picochip announce first "user-to-core" LTE small cell demonstration at Femtocells World Summit
  • June 15, 2011 - Cavium Expands Mobile Infrastructure Platforms Market Position with OCTEON® Processor Selection by Samsung
  • June 8, 2011 - Cavium Announces Availability of Higher Performance 1.8GHz Per-core OCTEON® II CN63XX Processor Family
  • May 31, 2011 - Cavium's New Line of PureVu™ Video Processors Slash Solution Cost and Enable "Universal Adapter" Design for WiFi-based Wireless Display and Home Video Distribution
  • May 31, 2011 - Cavium to Demonstrate Innovative Next-Generation Set-Top Box, Wireless Display and Networked Digital Home Applications at Computex 2011
  • May 31, 2011 - Cavium Powers Highly Effective Security Gateways from NETGEAR
  • May 31, 2011 - Caswell & Cavium Collaborate to Deliver Breakthrough Energy Efficient Servers with Massive OCTEON® Processor Arrays for Cloud Computing
  • May 31, 2011 - Cavium's ECONA™ Processor Family Powers GIGABYTE's Paradigm-shifting Cloud Storage Products
  • May 31, 2011 - Thecus Deploys Breakthrough Network Attached Storage (NAS) Products Powered by Cavium's ECONA™ Processor Family
  • May 31, 2011 - ZyXEL Selects Cavium's Multi-Core OCTEON® Processors for Wide Range of Security and UTM Gateway Platforms
  • May 11, 2011 - Cavium and Partners Demonstrate Industry-Leading High Performance Solutions for Networking, Cloud Computing, Wireless Infrastructure and Network Security at INTEROP 2011
  • May 10, 2011 - Advantech Boosts Packetarium™ and ATCA Blade Throughput with Highest Performance Cavium's 32-Core OCTEON II® CN6880 Processor
  • May 10, 2011 - Radisys Introduces 40G ATCA Packet Processing Module Designed to Meet the Diverse Requirements of Next-Generation LTE Networks
  • May 6, 2011 - Salesforce.com, Cavium Win 2011 GROW! Awards from ACG Silicon Valley
  • May 2, 1011 - Palo Alto Networks, an Industry Leader of Next-Generation Firewalls, Designs Scalable, Leading Performance Product Line using Cavium's OCTEON® II Processor Family

Cavium, Inc. will broadcast its second quarter 2011 financial results conference call today, August 2, 2011, 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 40 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 recently moved its principal office in San Jose, CA with design team locations in California, Massachusetts, India and Taiwan. For more information, please visit: http://www.cavium.com.

Note on Forward-Looking Statements
This press release may contain forward-looking statements regarding future events that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. These forward-looking statements involve risks and uncertainties, as well as assumptions and current expectations. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks, uncertainties and assumptions. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include but are not limited to the rate of new design wins, acceptance by customers of Cavium's new product introductions, whether or not the company can continue to expand gross margins and operating margins, the rate at which existing design wins go into production, pricing pressures, general economic conditions, manufacturing difficulties, and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact Cavium's business are set forth in the "Risk Factors" section of our Form 10K filed with the Securities and Exchange Commission on February 28, 2011. All forward-looking statements in this press release are based on information available to us as of the date hereof and qualified in their entirety by this cautionary statement, and we assume no obligation to revise or update these forward-looking statements.

CAVIUM, INC.
Unaudited GAAP Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended
June 30, 2011 March 31, 2011
Net revenue $ 71,615 $ 63,570
Cost of revenue 28,698 24,825
Gross profit 42,917 38,745
Operating expenses:
Research and development 23,660 20,722
Sales, general and administrative 17,554 16,903
Total operating expenses 41,214 37,625
Income from operations 1,703 1,120
Other income (expense), net:
Interest expense (63 ) (73 )
Other, net 49 (38 )
Total other expense, net (14 ) (111 )
Income before income taxes 1,689 1,009
Benefit from income taxes (233 ) (483 )
Net income $ 1,922 $ 1,492
Net income per common share, basic $ 0.04 $ 0.03
Shares used in computing basic net income per common share 48,381 47,091
Net income per common share, diluted $ 0.04 $ 0.03
Shares used in computing diluted net income per common share 51,104 49,799
CAVIUM, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands)
Reconciliation of GAAP research and development expenses to non-GAAP:
GAAP research and development expenses $ 23,660 $ 20,722
Stock-based compensation and related payroll taxes (3,992 ) (3,203 )
Acquisition-related expenses (586 ) (1,044 )
Acquisition-related compensation expenses (1,324 ) (2,140 )
Non-GAAP research and development expenses $ 17,758 $ 14,335
Reconciliation of GAAP sales, general and administrative expenses to non-GAAP
GAAP sales, general and administrative expenses $ 17,554 $ 16,903
Stock-based compensation and related payroll taxes (4,425 ) (3,289 )
Amortization of acquired intangibles (347 ) (237 )
Acquisition-related expenses (632 ) (1,949 )
Acquisition-related compensation expenses (1,087 ) (588 )
Non-GAAP sales, general and administrative expenses $ 11,063 $ 10,840
CAVIUM, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share data and percentages)
Three Months Ended
Reconciliation of GAAP gross profit & margin to non-GAAP: June 30, 2011 March 31, 2011
Net revenue $ 71,615 $ 63,570
GAAP gross profit 42,917 38,745
GAAP gross margin 59.9 % 60.9 %
Acquisition-related expenses:
Cost of revenue 1,268 566
Amortization of acquired intangibles:
Cost of revenue 2,309 1,603
Stock-based compensation and related payroll taxes:
Cost of revenue 480 393
Non-GAAP gross profit $ 46,974 $ 41,307
Non-GAAP gross margin 65.6 % 65.0 %
Three Months Ended
Reconciliation of GAAP income from operations to non-GAAP: June 30, 2011 March 31, 2011
GAAP income from operations $ 1,703 $ 1,120
Amortization of acquired intangibles 2,656 1,840
Stock-based compensation and related payroll taxes 8,897 6,885
Acquisition-related expenses 2,486 3,559
Acquisition-related compensation expenses 2,411 2,728
Non-GAAP income from operations $ 18,153 $ 16,132
Non-GAAP income from operations as a percentage of revenue 25.3 % 25.4 %
Three Months Ended
Reconciliation of GAAP net income to non-GAAP: June 30, 2011 March 31, 2011
GAAP net income $ 1,922 $ 1,492
Non-GAAP adjustments:
Stock-based compensation and related payroll taxes:
Cost of revenue 480 393
Research and development 3,992 3,203
Sales, general and administrative 4,425 3,289
Amortization of acquired intangibles:
Cost of revenue 2,309 1,603
Sales, general and administrative 347 237
Acquisition-related expenses 2,486 3,559
Acquisition-related compensation expenses 2,411 2,728
Total of non-GAAP adjustments 16,450 15,012
Non-GAAP net income $ 18,372 $ 16,504
GAAP net income per share, diluted $ 0.04 $ 0.03
Non-GAAP adjustments detailed above 0.30 0.29
Non-GAAP net income per share, diluted $ 0.34 $ 0.32
GAAP weighted average shares, diluted 51,104 49,799
Non-GAAP share adjustment 2,710 2,375
Non-GAAP weighted average shares, diluted 53,814 52,174
CAVIUM, INC.
Unaudited GAAP Condensed Consolidated Balance Sheets
(in thousands)
As of As of
June 30, 2011 March 31, 2011
Assets
Current assets:
Cash and cash equivalents $ 69,233 $ 69,431
Accounts receivable, net 46,188 35,605
Inventories 28,245 28,680
Prepaid expenses and other current assets 3,762 2,658
Deferred income taxes 9,039 9,039
Total current assets 156,467 145,413
Property and equipment, net 15,091 14,624
Intangible assets, net 58,148 53,691
Goodwill 101,402 103,207
Deferred income taxes 27,173 26,667
Other non-current assets 1,566 1,785
Total assets $ 359,847 $ 345,387
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 16,693 $ 16,246
Accrued expenses and other current liabilities 14,023 13,652
Deferred revenue 14,927 15,078
Capital lease and technology license obligations, current 9,328 5,538
Total current liabilities 54,971 50,514
Capital lease and technology license obligations, net of current 796 2,182
Deferred tax liability 5,917 5,917
Other non-current liabilities 2,596 2,208
Total liabilities 64,280 60,821
Stockholders' equity
Common stock 49 48
Additional paid-in capital 333,597 324,519
Accumulated deficit (38,079 ) (40,001 )
Total stockholders' equity 295,567 284,566
Total liabilities and stockholders' equity $ 359,847 $ 345,387

Contact Information

  • Cavium Contact:

    Art Chadwick
    Vice President of Finance and Administration and Chief Financial Officer
    Tel: (408) 943-7104
    Email: art.chadwick@cavium.com

    Angel Atondo
    Sr. Marketing Communications Manager
    Tel: (408) 943-7417
    Email: angel.atondo@cavium.com