Cavium Networks Announces Financial Results for Q2 2010MOUNTAIN VIEW, CA -- (Marketwire - July 29, 2010) - Cavium Networks, 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 2010 ended June 30, 2010.
Revenue in the second quarter of 2010 was $49.9 million, a 20% sequential increase from the $41.6 million reported for the first quarter of 2010 and an increase of 119% from the $22.8 million reported for the second quarter of last year.
Generally Accepted Accounting Principles (GAAP) Results
Net income for the second quarter of 2010, on a GAAP basis, was $0.6 million, or $0.01 per diluted share, compared to a net loss of $3.1 million, or $0.07 per diluted share in the first quarter of 2010, and a net loss of $6.2 million, or $0.15 per diluted share in the second quarter of last year. Gross margins were 60.8% in the second quarter of 2010 compared to 59.6% in the first quarter of 2010 and 46.8% in the second quarter of 2009. Total cash and cash equivalents were $69.0 million at June 30, 2010.
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 second quarter of 2010 exclude expenses totaling $9.6 million related to stock-based compensation and related payroll expense, amortization of acquired intangible assets, acquisition related and other expenses. The reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this release.
Net income for the second quarter of 2010, on a non-GAAP basis, was $10.2 million, or $0.20 per diluted share, compared with non-GAAP net income of $6.9 million, or $0.14 per share in the first quarter of 2010. Gross margins, on a non-GAAP basis, were 64.4% in the second quarter of 2010 compared to 63.4% in the first quarter of 2010.
"Our record sales and strong sequential sales growth again came from strength across multiple markets. We had record bookings again this quarter. Furthermore, non-GAAP gross margins increased 100 basis points sequentially and operating margins increased 490 basis points sequentially, which shows the continued leverage in our business model," said Syed Ali, president and CEO of Cavium Networks. "Design win traction was very strong, especially for recently introduced products including our Next Generation OCTEON™ II, PureVu and Econa family of processors."
Recent News Highlights:
- -- June 10, 2010 - Cavium Networks demonstrated its PureVu whole-home
wireless gaming solution Using standard WiFi at the Electronic
Entertainment Expo 2010
- -- June 1, 2010 - Cavium Networks announced the availability of its highly
integrated single chip PureVu™ Video processor family enabling
whole-home wireless display capability
- -- June 1, 2010 - Cavium Networks demonstrated next-generation wireless
display and networked digital home applications at Computex 2010
- -- May 17, 2010 - Cavium announced that Manoj Gujral joins Cavium Networks
as Vice President & General Manager of the Broadband and Consumer
Division
- -- May 11, 2010 - Cavium Networks unveiled its OCTEON II CN68XX -
Industry's highest-performance multi-core processors for
energy-efficient data center, mobile internet and the borderless
enterprise
- -- May 11, 2010 - Emerson Network Power announced delivery of their
innovative ATCA packet processing solutions based on Cavium Networks
latest OCTEON II processors
- -- April 27, 2010 D-LINK introduces unified wireless network solution to
give enterprise, service providers flexible, affordable mobility
- -- April 27, 2010 - SonicWALL unveils Project SuperMassive:
Next-generation firewall technology provides application control &
full malware protection at up to 40 Gigabits/sec
- -- April 27, 2010 - Green Hills Software announced delivery of its
INTEGRITY® RTOS multicore support for OCTEON® Family of
microprocessors from Cavium Networks
- -- July 22, 2010 - MontaVista Software Launched DevRocket 6.1 Integrated
IDE for Embedded Linux development
- -- June 28, 2010 - MontaVista Software and Robert Bosch Car Multimedia
announced signing agreement to jointly deliver Linux-based solutions
for the Automotive Industry
- -- June 23, 2010 - MontaVista Software announces delivery of first
Commercial Linux for ARM Cortex™ - A9 Processors
- -- April 27, 2010 - MontaVista Software Announced New Rapid Deployment
Program for Android
Conference Call
Cavium Networks, Inc. will broadcast its second quarter 2010 financial results conference call today, July 29th, 2010, 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 for networking, communications and the digital home. Cavium Networks offers a broad portfolio of integrated, software-compatible processors ranging in performance from 100 Mbps to 40 Gbps that enable secure, intelligent functionality in enterprise, data-center, broadband/consumer and access and service provider equipment. Cavium Networks processors are supported by ecosystem partners that provide operating systems, tool support, reference designs and other services. Cavium Network's principal offices are in Mountain View, CA with design team locations in California, Massachusetts, India and Taiwan. For more information, please visit: http://www.caviumnetworks.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 March 1, 2010. 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 NETWORKS, INC.
Unaudited GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
------------------------
June 30, March 31,
2010 2010
----------- -----------
Net revenue $ 49,853 $ 41,637
Cost of revenue 19,519 16,842
----------- -----------
Gross profit 30,334 24,795
----------- -----------
Operating expenses:
Research and development 14,894 13,987
Sales, general and administrative 13,536 14,035
----------- -----------
Total operating expenses 28,430 28,022
----------- -----------
Income (loss) from operations 1,904 (3,227)
----------- -----------
Other income (expense), net:
Interest expense (105) (124)
Interest income and other, net (1,097) (112)
----------- -----------
Total other expense, net (1,202) (236)
----------- -----------
Income (loss) before provision for income
taxes 702 (3,463)
Provision (benefit) for income taxes 55 (353)
----------- -----------
Net income (loss) $ 647 $ (3,110)
=========== ===========
Net income (loss) per common share, basic $ 0.01 $ (0.07)
Shares used in computing basic net income (loss)
per common share 44,475 43,754
Net income (loss) per common share, diluted $ 0.01 $ (0.07)
Shares used in computing diluted net income
(loss) per common share 48,124 43,754
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 $ 14,894 $ 13,987
Stock-based compensation and related
payroll taxes (2,541) (2,490)
Acquisition-related compensation
expenses (340) (536)
Acquisition-related expenses (284) (302)
----------- -----------
Non-GAAP research and development expenses $ 11,729 $ 10,659
=========== ===========
Reconciliation of GAAP sales, general and
administrative expenses to non-GAAP:
GAAP sales, general and administrative
expenses $ 13,536 $ 14,035
Stock-based compensation and related
payroll taxes (2,618) (2,452)
Acquisition-related expenses (283) (553)
Amortization of acquired intangibles (128) (128)
Acquisition-related compensation
expenses (628) (1,907)
----------- -----------
Non-GAAP sales, general and administrative
expenses $ 9,879 $ 8,995
=========== ===========
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 to June 30, March 31,
non-GAAP: 2010 2010
--------- ---------
Net revenue $ 49,853 $ 41,637
GAAP gross profit 30,334 24,795
GAAP gross margin 60.8% 59.6%
Acquisition-related compensation expenses:
Cost of revenue 393 239
Amortization of acquired intangibles:
Cost of revenue 1,096 1,096
Stock-based compensation and related payroll
taxes:
Cost of revenue 280 272
--------- ---------
Non-GAAP gross profit $ 32,103 $ 26,402
========= =========
Non-GAAP gross margin 64.4% 63.4%
========= =========
Three Months Ended
--------------------
Reconciliation of GAAP loss from operations to June 30, March 31,
non-GAAP: 2010 2010
--------- ---------
GAAP income (loss) from operations $ 1,904 $ (3,227)
Amortization of acquired intangibles 1,224 1,224
Stock-based compensation and related payroll
taxes 5,439 5,214
Acquisition-related expenses 567 1,094
Acquisition-related compensation expenses 1,361 2,443
--------- ---------
Non-GAAP income from operations $ 10,495 $ 6,748
========= =========
Non-GAAP income from operations as a percentage of
revenue 21.1% 16.2%
========= =========
Three Months Ended
--------------------
Reconciliation of GAAP net income (loss) to June 30, March 31,
non-GAAP: 2010 2010
--------- ---------
GAAP net income (loss) $ 647 $ (3,110)
Non-GAAP adjustments:
Stock-based compensation and related payroll
taxes:
Cost of revenue 280 272
Research and development 2,541 2,490
Sales, general and administrative 2,618 2,452
Amortization of acquired intangibles:
Cost of revenue 1,096 1,096
Sales, general and administrative 128 128
Acquisition-related expenses 567 855
Acquisition-related compensation expenses 1,361 2,682
Provision for note receivable 1,000 0
--------- ---------
Total of non-GAAP adjustments 9,591 9,975
--------- ---------
Non-GAAP net income $ 10,238 $ 6,865
========= =========
GAAP net income (loss) per share (diluted) $ 0.01 $ (0.07)
========= =========
Non-GAAP adjustments detailed above 0.19 0.21
Non-GAAP net income per share (diluted) $ 0.20 $ 0.14
========= =========
GAAP weighted average shares (diluted) 48,124 43,754
Non-GAAP share adjustment 1,985 5,780
--------- ---------
Non-GAAP weighted average shares (diluted) 50,109 49,534
CAVIUM NETWORKS, INC.
Unaudited GAAP Condensed Consolidated Balance Sheets
(In thousands)
As of
--------------------
June 30, March 31,
2010 2010
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 68,999 $ 65,716
Accounts receivable, net 31,462 25,835
Inventories 21,142 18,367
Prepaid expenses and other current assets 2,360 2,617
--------- ---------
Total current assets 123,963 112,535
Property and equipment, net 15,003 15,072
Intangible assets, net 22,511 24,112
Goodwill 55,789 56,312
Other non-current assets 1,567 1,672
--------- ---------
Total assets $ 218,833 $ 209,703
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 9,851 $ 12,018
Accrued expenses and other current liabilities 7,753 8,196
Deferred revenue 19,497 15,549
Capital lease and technology license obligations,
current 3,528 3,344
--------- ---------
Total current liabilities 40,629 39,107
Capital lease and technology license obligations, net
of current 4,475 4,619
Other non-current liabilities 2,104 2,275
--------- ---------
Total liabilities 47,208 46,001
--------- ---------
Stockholders' equity
Common stock 45 44
Additional paid-in capital 252,660 245,385
Accumulated deficit (81,080) (81,727)
--------- ---------
Total stockholders' equity 171,625 163,702
--------- ---------
Total liabilities and stockholders' equity $ 218,833 $ 209,703
========= =========
Cavium Networks Contact:
Art Chadwick
Vice President of Finance and Administration
and Chief Financial Officer
Tel: (650) 623-7063
Email: art.chadwick@caviumnetworks.com
Angel Atondo
Marketing Communications Manager
Tel: (650) 623-7033
Email: angel.atondo@caviumnetworks.com
