Cavium Networks Announces Financial Results for Q3 2009
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CAVM | Quote | Chart | News | PowerRating -- Cavium Networks, Inc. (NASDAQ: CAVM), a leading provider of highly
integrated semiconductor products that enable intelligent processing
for networking, communications, storage, wireless and security
applications, today announced financial results for the third quarter
of 2009 ended September 30, 2009.
Revenue in the third quarter of 2009 was $25.9 million, a 14%
sequential increase from the $22.8 million reported for the second
quarter of 2009 and an increase of 6% from the $24.5 million reported
for the third quarter of last year.
Generally Accepted Accounting Principles (GAAP) Results
Net loss for the third quarter of 2009, on a GAAP basis, was $4.2
million, or $0.10 per share, compared to a net loss of $6.2 million,
or $0.15 per share in the second quarter of 2009, and net income of
$1.8 million, or $0.04 per diluted share in the third quarter of last
year. Gross margins were 51.5% in the third quarter of 2009 compared
to 46.8% in the second quarter of 2009 and 58.8% in the third quarter
of 2008. Total cash and cash equivalents were $70.7 million at
September 30, 2009.
Non-GAAP Results
Cavium Networks 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 the third quarter of 2009 exclude
expenses totaling $4.9 million related to stock-based compensation
and related payroll expense, amortization of acquired intangible
assets and acquisition related compensation expense and related
payroll taxes. The reconciliation between GAAP and non-GAAP financial
results is provided in the financial statements portion of this
release.
Net income for the third quarter of 2009, on a non-GAAP basis, was
$0.8 million, or $0.02 per diluted share, compared with non-GAAP net
loss of $1.0 million, or $0.02 per share in the second quarter of
2009 and net income of $4.6 million, or $0.11 per diluted share in
the third quarter of last year. Gross margins, on a non-GAAP basis,
were 55.7% in the third quarter of 2009 compared to 52.0% in the
second quarter of 2009.
"We had record sales this quarter, due to primarily strong growth in
our Enterprise and Data Center business driven by several new product
ramps and a continuing recovery in the run rate business. In
addition, non-GAAP gross margins expanded 370 basis points
sequentially, due to improved product mix, reduced product costs as
well as improved manufacturing overhead absorption. The increased
sales along with expanding gross margins significantly improved
sequential operating performance this quarter," said Syed Ali,
president and CEO of Cavium Networks. "We have recently introduced a
number of new products, including our Next Generation OCTEON(TM) II
family of multi-core processors (from one to 32 cores), our NITROX
DPI Family of Layer 7 Content Processors, as well as our new ECONA
ARM-Based processors for the connected home and office applications
and the PureVu family of products for highly interactive video
applications and display which helped drive extremely robust design
win rates during the quarter."
Recent News Highlights:
-- July 20, 2009 -- Cavium Networks Introduces NITROX DPI Family of Layer
7 Content Processors. This family incorporates 3rd generation Cavium
Networks Deep Packet Inspection technology that targets a wide range of
applications including firewalls, intrusion prevention (IPS), gateway anti-
virus, unified threat management and content-based QoS in routers,
switches, and services blades for the Enterprise, Datacenter and Service
Provider markets.
-- July 24, 2009 -- Sanjay Mehrotra, president and chief operating
officer of SanDisk Corp. (NASDAQ: SNDK) joined Cavium Networks' Board of
Directors.
-- September 8, 2009 -- Cavium Networks' ecosystem partners, D2
Technologies, Entropic, TeamF1, SoftAtHome, Tuxera, and Wind River announce
support for ECONA(TM) Family of Super Energy Efficient ARM(R)-Based System-
on-Chip processors.
-- September 8, 2009 -- Cavium Networks Introduces ECONA Family of Super
Energy Efficient ARM(R)-Based System-on-Chip (SoC) Processors for the
Digital Home.
-- September 8, 2009 -- Sumitomo Electric Networks Inc. selects the new
Super Energy Efficient ECONA(TM) processors to power their next generation
Fiber to the Home (FTTH) Gateways.
-- September 16, 2009 -- Aricent and Cavium Networks collaborate to
provide LTE Evolved Packet Core Solutions. The companies offer pre-
optimized, performance-enhanced and highly-scalable EPC Serving Gateway
(SGW), PDN Gateway (PGW) and Mobility Management Entity (MME) ready-to-use
software frameworks for Cavium's OCTEON(TM) Multi-core MIPS64(R) processor
family.
-- September 22, 2009 -- GE Fanuc Intelligent Platforms and Cavium
Networks collaborate to bring low power multicore solutions to military and
aerospace customers.
-- October 7, 2009 -- Hitachi, Ltd. integrated the Cavium Networks'
NITROX PX Security Adapters in the recently introduced BladeSymphony(R) 320
Server family to deliver record crypto performance.
-- Oct. 12, 2009 -- Cavium Networks announced the demonstration of
OCTEON(TM) multi-core MIPS64 storage processors at the Storage Networking
World Conference in Phoenix, Arizona. OCTEON's Intelligent Storage Service
Processors (SSP) are being designed into and targeted for an array of
storage applications in the cloud infrastructure.
-- October 19th, 2009 -- MontaVista(R) Software, Inc., the leader in
embedded Linux(R) commercialization, announced the next release of their
market leading Carrier Grade Edition (CGE) Linux, which supports the
OCTEON(R) Multi-core MIPS64(R) processors.
-- Oct. 22, 2009 -- Cavium Networks announced that it had been ranked
among the fastest growing companies in North America on Deloitte's
Technology Fast 500(TM) list. Rankings are based on percentage of fiscal
year revenue growth during the five year period from 2004-2008, during
which time Cavium Networks grew revenue 1,069 percent.
Conference Call
Cavium Networks, Inc. will broadcast its third quarter 2009 financial
results conference call today, October 27th, 2009, 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
Networks website at http://www.caviumnetworks.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 Networks
Cavium Networks is a leading provider of highly integrated
semiconductor products that enable intelligent processing in
networking, communications, storage, wireless and security
applications. Cavium Networks offers a broad portfolio of integrated,
software compatible processors ranging in performance from 10 Mbps to
20 Gbps that enable secure, intelligent functionality in enterprise,
data-center, broadband/consumer and access & service provider
equipment. Cavium Networks processors are supported by ecosystem
partners that provide operating systems, tool support, reference
designs and other services. Cavium Networks' principal offices are in
Mountain View, California with design team locations in California,
Massachusetts, India and Taiwan. For more information, please
visit:
http://www.caviumnetworks.com.
CAVIUM NETWORKS, INC.
Unaudited GAAP Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
------------------------
September 30, June 30,
2009 2009
----------- -----------
Net revenue $ 25,894 $ 22,804
Cost of revenue 12,567 12,139
----------- -----------
Gross profit 13,327 10,665
----------- -----------
Operating expenses:
Research and development 10,629 10,274
Sales, general and administrative 6,647 6,526
----------- -----------
Total operating expenses 17,276 16,800
----------- -----------
Loss from operations (3,949) (6,135)
----------- -----------
Other income (expense), net:
Interest expense (54) (67)
Interest income and other 4 90
----------- -----------
Total other income (expense), net (50) 23
----------- -----------
Loss before provision for income taxes (3,999) (6,112)
Provision for income taxes 167 56
----------- -----------
Net loss $ (4,166) $ (6,168)
=========== ===========
Net loss per common share, basic and diluted $ (0.10) $ (0.15)
Shares used in computing basic and diluted net
loss per common share 41,447 41,212
CAVIUM NETWORKS, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands)
Reconciliation of GAAP research and development
expenses to non-GAAP:
GAAP research and development expenses $ 10,629 $ 10,274
Stock-based compensation and related
payroll taxes (1,522) (1,441)
Acquisition related compensation
expense and related payroll taxes (754) (754)
Restructuring - (221)
----------- -----------
Non-GAAP research and development expenses $ 8,353 $ 7,858
=========== ===========
Reconciliation of GAAP sales, general and
administrative expenses to non-GAAP
GAAP sales, general and administrative
expenses $ 6,647 $ 6,526
Stock-based compensation and related
payroll taxes (1,491) (1,461)
Restructuring - (95)
Amortization of acquired intangibles (35) (35)
Acquisition related compensation
expense and related payroll taxes (18) (18)
----------- -----------
Non-GAAP sales, general and administrative
expenses $ 5,103 $ 4,917
----------- -----------
CAVIUM NETWORKS, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share data and percentages)
Three Months Ended
------------------------
Reconciliation of GAAP gross profit & margin September 30, June 30,
to non-GAAP: 2009 2009
----------- -----------
Net revenue $ 25,894 $ 22,804
GAAP gross profit 13,327 10,665
GAAP gross margin 51.5% 46.8%
Amortization of acquired intangibles:
Cost of revenue 1,008 1,021
Stock-based compensation and related
payroll taxes:
Cost of revenue 96 80
Fair value adjustment of acquired inventory - 87
----------- -----------
Non-GAAP gross profit $ 14,431 $ 11,853
=========== ===========
Non-GAAP gross margin 55.7% 52.0%
=========== ===========
Three Months Ended
------------------------
Reconciliation of GAAP loss from operations September 30, June 30,
to non-GAAP: 2009 2009
----------- -----------
GAAP loss from operations $ (3,949) $ (6,135)
Amortization of acquired intangibles 1,043 1,056
Stock-based compensation and related
payroll taxes 3,109 2,982
Restructuring - 316
Acquisition related compensation expense
and related payroll taxes 772 772
Fair value adjustment of acquired inventory - 87
----------- -----------
Non-GAAP income (loss) from operations $ 975 $ (922)
=========== ===========
Non-GAAP income (loss) from operations as a
percentage of revenue 3.8% -4.0%
=========== ===========
Three Months Ended
------------------------
Reconciliation of GAAP net loss to non-GAAP: September 30, June 30,
2009 2009
----------- -----------
GAAP net loss $ (4,166) $ (6,168)
Non-GAAP adjustments:
Stock-based compensation and related
payroll taxes:
Cost of revenue 96 80
Research and development 1,522 1,441
Sales, general and administrative 1,491 1,461
Amortization of acquired intangibles:
Cost of revenue 1,008 1,021
Sales, general and administrative 35 35
Fair value adjustment of acquired inventory - 87
Restructuring - 316
Acquisition related compensation expense
and related payroll taxes 772 772
----------- -----------
Total of non-GAAP adjustments 4,924 5,213
----------- -----------
Non-GAAP net income (loss) $ 758 $ (955)
=========== ===========
GAAP net loss per share (diluted) $ (0.10) $ (0.15)
=========== ===========
Non-GAAP adjustments detailed above 0.12 0.13
Non-GAAP net income (loss) per share (diluted) $ 0.02 $ (0.02)
=========== ===========
GAAP weighted average shares (diluted) 41,447 41,212
Non-GAAP share adjustment 4,528 -
----------- -----------
Non-GAAP weighted average shares (diluted) 45,975 41,212
CAVIUM NETWORKS, INC.
Unaudited GAAP Condensed Consolidated Balance Sheets
(In thousands)
As of
------------------------
September 30, June 30,
2009 2009
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 70,693 $ 66,747
Accounts receivable, net 11,717 15,292
Inventories 18,313 16,484
Prepaid expenses and other current assets 2,941 3,149
----------- -----------
Total current assets 103,664 101,672
Property and equipment, net 8,404 8,853
Intangible assets, net 13,120 14,433
Goodwill 13,027 13,047
Other assets 433 447
----------- -----------
Total assets $ 138,648 $ 138,452
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 7,102 $ 7,473
Accrued expenses and other current
liabilities 3,081 2,706
Deferred revenue 1,444 1,676
Capital lease and technology license
obligations, current 2,886 2,476
----------- -----------
Total current liabilities 14,513 14,331
Capital lease and technology license
obligations, net of current 449 892
Other non-current liabilities 1,665 1,430
----------- -----------
Total liabilities 16,627 16,653
----------- -----------
Stockholders' equity
Common stock 42 41
Additional paid-in capital 196,069 191,682
Accumulated deficit (74,090) (69,924)
----------- -----------
Total stockholders' equity 122,021 121,799
----------- -----------
Total liabilities and stockholders' equity $ 138,648 $ 138,452
----------- -----------
Cavium Networks Contact:
Art Chadwick
Vice President of Finance and Administration and Chief Financial Officer
Tel: (650) 623-7063
Email: Email Contact
Angel Atondo
Marketing Communications Manager
Tel: (650) 623-7033
Email: Email Contact
SOURCE: Cavium Networks, Inc.
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