SOURCE: Inphi Corporation

Inphi Corporation

July 25, 2012 16:15 ET

Inphi Corporation Announces Second Quarter 2012 Results

SANTA CLARA, CA--(Marketwire - Jul 25, 2012) -  Inphi Corporation (NYSE: IPHI), a leading provider of high-speed mixed signal semiconductor solutions for the communications and computing markets, today announced financial results for its second quarter ended June 30, 2012.

Revenue for the second quarter of 2012 was $23.3 million, up 15% sequentially from $20.2 million reported in the first quarter of 2012. This compares to $24.0 million reported for the second quarter of 2011. 

Gross margin under U.S. generally accepted accounting principles (GAAP) for the second quarter of 2012 was 64.3% of revenue, compared with 63.2% of revenue for the first quarter of 2012 and 64.8% of revenue for the second quarter of 2011.

GAAP net loss for the second quarter of 2012 was $1.6 million, or ($0.06) per diluted common share, compared with GAAP net loss of $1.5 million or ($0.05) per diluted common share for the first quarter of 2012 and GAAP net income of $2.4 million, or $0.08 per diluted common share, for the second quarter of 2011.

Inphi reports gross margin, net income and earnings per share in accordance with GAAP and, additionally, on a non-GAAP basis. A reconciliation of the GAAP to non-GAAP gross margin, 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 press release. 

Gross margin on a non-GAAP basis for the second quarter of 2012 was 65.1% of revenue, compared with 65.2% for the first quarter of 2012 and 65.3% of revenue for the second quarter of 2011.

Non-GAAP net income for the second quarter of 2012 was $1.5 million, or $0.05 per diluted common share. This compares with non-GAAP net income of $1.0 million or $0.03 per diluted common share for the first quarter of 2012 and non-GAAP net income of $4.0 million, or $0.14 per diluted share, for the second quarter of 2011.

"Inphi delivered sequential double-digit revenue growth for the second quarter in a row," said Ford Tamer, President and CEO of Inphi. "We benefited from the growth of LRDIMM in data centers and the growth of 40G and 100G in cloud and carrier markets. Inphi's end-to-end data transport platform from fiber to memory enables customers to bridge the gap between processor and I/O performance, resulting in higher system performance at a lower total cost of ownership."

Recent Highlights

  • HP announced its Proliant Generation 8 server systems based on the Intel® Xeon® Processor E5 family, which utilize Inphi's memory buffers for LRDIMM and drive up to 768GB in capacity at up to 1333 MT/s

  • "IBM achieves the highest TPC-C and TPC-E benchmarks ever" on x86 two-processor servers configured with Inphi's memory buffers for LRDIMM, as announced by IBM and the Transaction Processing Performance Council 

  • IBM announced its x3750 M4 four-processor system, which utilizes Inphi memory buffers for LRDIMM and expands capacity and performance to 1.5TB and 1333 Mhz at the low power threshold of 1.35V

  • Inphi delivers the industry's lowest power DDR3 register for Intel and AMD server platforms; enables 20% in power savings while significantly increasing speed and capacity

First Half 2012 Results
For the six months ended June 30, 2012, revenue was $43.5 million, compared with $45.5 million for the first six months ended June 30, 2011. GAAP net loss for the six months ended June 30, 2012 was $3.1 million, or ($0.11) per diluted share, on approximately 28.2 million diluted weighted average common shares outstanding. This compared with GAAP net income of $4.8 million, or $0.16 per diluted share, on approximately 29.5 million diluted weighted average common shares outstanding for the six months ended June 30, 2011.

Non-GAAP net income for the six months ended June 30, 2012 was $2.5 million, or $0.08 per diluted weighted average common share outstanding. This compared with non-GAAP net income of $6.9 million for the six months ended June 30, 2011, or $0.23 per diluted weighted average common share outstanding.

Business Outlook
The following statements are based on our current expectations for the third quarter of 2012. These statements are forward-looking and actual results may differ materially.

  • We expect our revenues to be up 3 - 9% sequentially in Q3 2012, resulting in a range of $24.0 million to $25.5 million.
  • GAAP net loss, which includes non-cash stock based compensation expense, is expected to be a loss of $0.4 million to $1.0 million or ($0.01) to ($0.03) per diluted common share on 30 million estimated fully diluted common shares.
  • Non-GAAP net income, excluding stock-based compensation expense, is expected to be between $1.4 million and $2.1 million, or $0.05 - $0.07 per diluted common share.

Quarterly Conference Call Today
Inphi plans to hold a conference call at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time today with Ford Tamer, President and Chief Executive Officer, and John Edmunds, Chief Financial Officer, to discuss second quarter of 2012 results. 

The call can be accessed by dialing 866-578-5747; international callers should dial 617-213-8054, participant passcode: 53832913. 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 http://investors.inphi.com for up to 30 days after the call.

About Inphi
Inphi Corporation is a leading provider of high-speed mixed signal semiconductor solutions for the communications and computing markets. Inphi's end-to-end data transport platform delivers high signal integrity at leading-edge data speeds, addressing performance and bandwidth bottlenecks in networks, from fiber to memory. Inphi's solutions minimize latency in computing environments and enable the rollout of next- generation communications infrastructure. Inphi's solutions provide a vital interface between analog signals and digital information in high-performance systems, such as telecommunications transport systems, enterprise networking equipment, enterprise and data center servers, and storage platforms. To learn more about Inphi, visit www.inphi.com.

Cautionary Note Concerning Forward-Looking Statements
Statements in the press release and certain matters to be discussed on the second quarter of 2012 conference call regarding Inphi Corporation, which are not historical facts, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terms such as outlook, believe, expect, may, will, provide, could, and should, and the negative of these terms or other similar expressions. These statements include statements relating to: our business outlook and current expectation for the third quarter of 2012, including our revenue, gross margin, stock-based compensation expense, operating performance, net income, earnings per share; expectations of our growth; expectations of our customers' products, success and growth; expectations of economic trends and macroeconomic conditions; benefits of using non-GAAP financial measures; benefits of our products; relationships with our customers and ecosystem partners; and our operating prospects. 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 the markets that the Company targets; 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 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, 2011, 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
June 30,
  Six Months Ended
June 30,
    2012     2011   2012     2011
Revenue   $ 23,308     $ 24,001   $ 43,509     $ 45,505
Cost of revenue     8,332       8,458     15,756       15,845
                             
Gross margin     14,976       15,543     27,753       29,660
                             
Operating expenses:                            
  Research and development     9,910       7,292     18,572       13,661
  Sales and marketing     3,745       3,138     7,268       5,719
  General and administrative     2,755       2,377     6,367       4,419
                             
Total operating expenses     16,410       12,807     32,207       23,799
                             
Income (loss) from operations     (1,434 )     2,736     (4,454 )     5,861
                             
Other income     210       90     448       131
                             
Income (loss) before income taxes     (1,224 )     2,826     (4,006 )     5,992
Provision (benefit) for income taxes     346       383     (924 )     1,149
                             
Net income (loss)   $ (1,570 )   $ 2,443   $ (3,082 )   $ 4,843
                             
                             
Earnings per share:                            
  Basic   $ (0.06 )   $ 0.09   $ (0.11 )   $ 0.19
  Diluted   $ (0.06 )   $ 0.08   $ (0.11 )   $ 0.16
                             
Weighted-average shares used in computing earnings per share:                            
  Basic     28,321,122       26,701,216     28,179,886       25,965,303
  Diluted     28,321,122       29,632,068     28,179,886       29,453,655
                             
                             

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
June 30,
  Six Months Ended
June 30,
    2012   2011   2012   2011
    (in thousands of dollars)
    (Unaudited)
Cost of revenue   $ 190   $ 119   $ 319   $ 160
Research and development     1,481     1,066     2,647     1,345
Sales and marketing     840     660     1,544     798
General and administrative     800     470     1,418     640
                         
    $ 3,311   $ 2,315   $ 5,928   $ 2,943
                         
                         
                         
INPHI CORPORATION  
CONSOLIDATED BALANCE SHEETS  
(in thousands of dollars)  
(Unaudited)  
             
    June 30,
2012
    December 31, 2011  
Assets                
Current assets:                
  Cash and cash equivalents   $ 33,763     $ 29,696  
  Short-term investments in marketable securities     90,054       89,283  
  Accounts receivable, net     10,965       9,358  
  Inventories     4,929       5,716  
  Deferred tax assets and other current assets     7,151       6,032  
    Total current assets     146,862       140,085  
                 
Property and equipment, net     12,320       9,566  
Goodwill     5,875       5,875  
Deferred tax assets and other assets     17,112       17,102  
      Total assets   $ 182,169     $ 172,628  
                 
Liabilities and Stockholders' Equity                
                 
Current liabilities:                
  Accounts payable   $ 6,531     $ 5,016  
  Accrued expenses and other current liabilities     6,967       3,745  
  Deferred revenue     2,797       1,929  
                 
    Total current liabilities     16,295       10,690  
                 
Other liabilities     3,506       3,534  
    Total liabilities     19,801       14,224  
                 
Stockholders' equity:                
  Common Stock     28       28  
  Additional paid-in capital     197,135       190,314  
  Accumulated deficit     (35,795 )     (32,713 )
  Accumulated other comprehensive income     1,000       775  
Total stockholders' equity     162,368       158,404  
                 
Total liabilities and stockholders' equity   $ 182,169     $ 172,628  
                 
                 

INPHI CORPORATION
RECONCILIATION OF GAAP  TO NON-GAAP MEASURES
(in thousands of dollars, except share and per share amounts)

To supplement the audited financial data presented on a GAAP basis, the Company discloses certain non-GAAP financial measures, which exclude stock-based compensation and certain warranty, legal costs and other claims. 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; non-GAAP financial information 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, 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; these measurements may be calculated differently than non-GAAP financial information disclosed by other companies.

                         
                         
INPHI CORPORATION    
RECONCILIATION OF GAAP TO NON-GAAP MEASURES    
(in thousands of dollars, except share and per share amounts)    
(Unaudited)    
                         
  Three Months Ended
June 30,
    Six Months Ended
June 30,
   
  2012     2011     2012     2011    
GAAP net income (loss) $ (1,570 )   $ 2,443     $ (3,082 )   $ 4,843    
Adjusting items to GAAP net income (loss):                                
  Operating expenses related to stock-based compensation expense, net of tax effect   2,445   (a)   1,560   (a)   4,369   (a)   2,010   (a)
  Adjustment to revenue as a result of warranty claim   -       -       548   (b)   -    
  Legal expense and accrual of provisional costs   -       -       519   (c)   -    
  Delta in interim period tax allocation from GAAP to non-GAAP   666   (d)   -       155   (d)   -    
Non-GAAP net income $ 1,541     $ 4,003     $ 2,509     $ 6,853    
                                 
Shares used in computing non-GAAP basic earnings per share   28,321,122       26,701,216       28,179,886       25,965,303    
                                 
Shares used in computing non-GAAP diluted earnings per share   29,633,902       29,632,068       29,708,105       29,453,655    
                                 
Non-GAAP earnings per share:                                
  Basic $ 0.05     $ 0.15     $ 0.09     $ 0.26    
  Diluted $ 0.05     $ 0.14     $ 0.08     $ 0.23    
                                 
GAAP gross margin as a % of revenue   64.3 %     64.8 %     63.8 %     65.2 %  
Stock-based compensation:                                
  Cost of revenue   0.8 %     0.5 %     0.7 %     0.4 %  
Adjustment to revenue as a result of warranty claim   -       -       0.6 %     -    
Non-GAAP gross margin as a % of revenue   65.1 %     65.3 %     65.1 %     65.6 %  
                                 
(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 reduction in revenue as a result of warranty claim of a customer. 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.
(c) Reflects legal expense and accrual of provisional costs with regard to employment and other related claims, net of insurance reimbursement. 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.
(d) Reflects the 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.
   
   
   
INPHI CORPORATION  
RECONCILIATION OF GAAP TO NON-GAAP MEASURES -THIRD QUARTER 2012 GUIDANCE  
(in thousands of dollars, except share and per share amounts)  
(Unaudited)  
             
    Three Months Ending
September 30, 2012
 
    High     Low  
Estimated GAAP net income (loss)   $ (400 )   $ (1,000 )
Adjusting items to estimated GAAP net income (loss):                
  Operating expenses related to stock-based compensation expense     3,400       3,300  
  Tax effect of stock-based compensation expense     (900 )     (900 )
Estimated non-GAAP net income   $ 2,100     $ 1,400  
                 
Shares used in computing estimated non-GAAP diluted earnings per share     30,000,000       30,000,000  
                 
Estimated non-GAAP diluted earnings per share   $ 0.07     $ 0.05  

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