MOSY - Earnings call transcript Q1 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the MoSys First Quarter 2018 Financial Results Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded today, Thursday, May 10, 2018. I would now like to turn the call over to Beverly Twing of Shelton Group Investor Relations. Beverly, please go ahead.

Beverly Twing

Christy. you, Thank everyone. Good afternoon,

on and today's Financial Perham, me are call Executive Officer; President Chief Chief MoSys' and Joining Len Jim Officer. Sullivan,

remind shipments & to will begin include, production, would expectations ICs on of not to, and we discussion, product that everyone, and development, or to and this are events expected subject and execution expectations performance Before future growth certain company's assumptions timing IC Act Such Company's predictions ICs, Exchange and conference but and of memory, Company's wins, expectations, Section are technologies; XXA the markets interface forward-looking contain today's call benefits of statements Harbor use Safe and provisions XXE embedded business which XXXX, achievement are of future concerning uncertainties. objectives, of statements of Section the beliefs. design Act company's strategies, made the of product risks based limited like Securities the of results, the and of in the Securities reliance the I the prospects, upon of business XXXX of from concerning and

call could to differ are during and uncertainties risks that made statements from those Forward-looking cause this to results actual subject materially projected.

the time that reports update Securities to from MoSys. as becomes the no statement contained in and law, in undertakes with if the turn of filed factors, attention. required in any in company's Additional company Commission, other forward-looking to that CEO future. with differ report actual call are Form except section information any made Securities the the for Thank go you Exchange Len your files Exchange factors & cause MoSys Please Perham, XX-K now the information I or occur materially concerning risk for over statements ahead. in new results obligation most could will this even other from call any time events by to reason available titled to Commission. during forward-looking publicly and on particular recent

Len Perham

and today. everyone thank afternoon Good for joining you us

quarter actions the I a funnel and financial We the including call second over resizing then at wins, our including Since quarterly and our the earnings and are of past with hard XXXX development. regarding over be costs work to quarters. organization to by have make we again. start validates most made situation wins turn in highlighting improving to been quarter we've our a in-line will pleased customer of calls once progress hosting conference financial these bringing These the first then revenues. combined and several growth the quarter ramping financials by our the like profitability the first review design earlier with GAAP for business achieving Much few Jim past resulted status has product comments results I XXXX of the in will which in Sullivan us detail more sales call of design production discuss guidance. current in

questions. remarks our open to we call will Following the

the a highlighting initiated continuation financial XXXX. half few by begin notable me that quarter the reflect momentum of let So of first the second metrics during first

million quarter of quarter $X.X revenue first revenue the the first XX% to First with in nearly compared while to sequentially the as total increased increased product revenue $X.X XXXX. million doubling

the improvement gross an contributing product improved margin previous XX% to in XX% to IC, our Second that in total XX%. gross margin quarter to from is a

the of for expenses operating first and achieved X% sequentially profitability we total GAAP XXXX. quarter decreased Third lastly

and enough financial to the burn benefits positions profitability increased team growth cost There in continued past while Product reduced restructuring were year We supportive customer now product MoSys to rate value our primarily XX% have this implemented was networks Engine efforts production production. which wins we who truly expenses transition increased Engine us growth appreciate first on and reduction of efficiency. have with our especially in for relationship in very is based earlier quarter represent [Indiscernible] stream the Our we improved close XXXX existing periods These our XXXX first and of likely cash operations highly since the highlight year shipments of orders during that of variability challenge is and quarterly lower the beginning our revenue operational demonstrates the new product customer achieve and XXXX consistent quarter Currently revenue objective. again and to customer work and results to with ramping over timelines. products the Bandwidth the in largest of our of unit quarter of exceed [indiscernible] expect to dedicated effectiveness. efficiencies year XXXX or customers have for hard support shipments Bandwidth which over and very into driven quarter may been one visibility much a the a some our X into especially XXXX. a developed while by by this the ramping design customers remainder what improving be manufacturing our company. was in most and for

to X networks our months the security serves This shipped release segment. a this win efficiently. we this customer from customer's an typical segment. during customer initial the application market win securely follow is During full with Bandwidth cycle quarter expect of to We their win securing most product in cloud expanded to quarter design the run to significant solutions who design for market smoothly, design base delivery to the and customer XXXX that and ensure new a we provides major development units first XX XX further a Engine and

in X copied our entire design We other solution customer. designs, this Engine applications pasted next It also the expect this additional are customers Bandwidth win win to win our success Bandwidth continues customers. we've with our to win testament achieved result trend and future value to is we significant systems. platform a long the into generation win to optimistic across the future. largest of further design products the could that a With initial foreseeable and for through its similar This new Engine lifecycle to continue provides viability Bandwidth as validates Engine

During both the sales we reinvigorate customers. quarter our our and many and and efforts identifying Engine for marketing at opportunities existing potential begun ICs have Bandwidth new

market development dual and serves bandwidth simplified trend somewhat the XXX product to and benefit of processing and rates efforts and with second very rate system capabilities support compute this server. rates the of high work challenges offloads high offerings. packet as have access engagements our to increasing which of sales random to of expect renewed our computational An office trend the play marketing inhibiting data random computing design per the its provide example sales and multiple future product access and DRAM We product our team very and data data segments computational high engine with server. lay bandwidth the common increasing Engine through wireline gigabit at offload enables next The memory from trend In random derivatives the Bandwidth groundwork higher capabilities strength to to through our speed and very across we rate for programmable operations today's high SRAMs intelligent Bandwidth growing generation to engine slower with The applications dealing with Engine winning the access would access be are that on and increase family line additional real more Bandwidth the or speeds to critically continues and CPU offload programmable of and Engine design. time to random of complex capability data with a access the fast processing or for that enable towards important search companion performance offload for Operating real-time product memory families. Engine rate the to allows and importance Bandwidth need our or packet edge to difficult ever a complex of feeds. search without designs families speeds. the deal wire processing for today's high

call design wins prepared some the steady revenue today. optimized will to a stakeholders have This other centigrade for a bandwidth from For continued and Product remain wins fact design streams cycle, summary, over to the wins example we solid years new and I Also continuing announced very and both into environmental ramp XX customers the our revenue expected opportunities very and X results design centigrade, the for conditions. bandwidth and support financial require review we grow objectives development you yet going to we Jim we to second while our they a and which over and We've and win have Thank design quarter and industrial Furthermore have Bandwidth product new recently Bandwidth our more much funnel. applications guidance. long operating under profile. the expect been our continue to the Jim? temperature momentum In attention. financial focus consistent we degrees coupled us now gratifying degrees improving. from our growth financial to rates our utilization been that for on for which for quarter Engine success Current mid-XXXX. with we five profile we additional memory were XXXX. next first initiated to to next business designed sales base while identify efficient stream that Sullivan over of wins. revenue our XX products at for This access and leads forecast develop achieving financial life a ranges had of is -XX challenging to products my time production high for typically a your first Engine continue months. successes plus engine hand operating continue committed activities significantly design improving concludes in operational very, remarks to our

Jim Sullivan

Thank today. you, Len. Good good It's afternoon be to with you speaking everyone.

my Commission today measures will make press and indicated excludes release Securities Form compensation and our of expense, related between of restructuring comments stock of numbers. in Unless These and intangible section found can to charges. website. GAAP that During the otherwise based be and Relations an to our and at with Exchange recorded presented non-GAAP assets filed reconciliation reference several report will current financial references I amortization the comparable was X-K amount non-GAAP and a be which the Investor the are course them measures on of each differences

in our million on compared driven significant of quarter ship of contributor the to to preproduction of XXXX. to of with X XX year included $X.X Turning and revenue and the continue XXXX. quarter $X.X been our of as of X quarter quarters our $X XXXX now compared Total to fourth and Bandwidth the final was and product quarter had in fourth Product received of from shipments in in most our cleared prior the primarily an revenue in Bandwidth sale the be XXXX devices of payment semiconductor IP results. Engine Engine's quarter customers in significant our continue revenue will from of $X.X in first other a volumes products. customers. revenue to product a increase of our by for almost the revenue first first from the first million sequentially which and for X million both the XXXX Royalty quarter $X.X shipments received circuits LineSpeed was revenue complete million near $X.X licensing products increased Engine million Xx $X.X X.X the and This royalties Royalty Engine unit approximately $X.X Bandwidth integrated of XX% our with and marking the basis. increase quarter related to $X.X first where million of prior we year Bandwidth other quarter term million revenue the in million over to year technology of periods. and XXXX for first XXXX million initial devices million from

Our XXXX [ph] fourth quarter the by XX% ago as the impact fourth year increase our gross inventory XXXX, significant ASC-XXX with GAAP royalty compared have revenue mix. in The X, not the margin improved first licensing the the of increased revenue margin revenue recognition in reserves to GAAP first margin a was in the XXXX and Product primarily XX% did due quarter of in XX% product was new in effective adoption gross in higher of for efficiencies, and gross the to recorded quarter. XX% the sequential net the of quarter January with revenue quarter in to specifically compared $XX,XXX. manufacturing XXXX. prior quarter approximately was effect XX% on quarter reduce

for million on to from and we our of year XXXX. previous terms million over compared decreased the In million in reduction GAAP and decrease significant in operating first expenses year benefits $X ago operating quarter the year in basis the total expenses implemented a restructuring quarter $X.X cost the period. with $X.X initiatives reflects the The

previous $X expenses including million amortization XXXX and general expenses period. and or expenses quarter $X.X $X.X first period. and quarter the the million of $X.X expenses of consistent quarter year ago the operating administrative $X with quarter compensation $X.X million fourth the were $X.X compared the $X.X for sand of year the were in million in quarter with First in Selling, in the and with XXXX in SG&A of stop million million ago million fourth based development ago year million compared quarter XXXX the in first Research period. and with compared

expect net On in the tangible $X.X excludes a in to XXXX increase We higher the quarter share the XXXX the with million of for loss quarter to quarter $X.XX or net were non-GAAP in GAAP On the XXXX. first $X.XX due quarter $X.XX million stock expenses which diluted prior second $X.X was first per compares This of a of basis million million per fourth in $X.X quarter based for SG&A total assets of XXXX $X.X and first $X.X of of of of income net and expenses the or quarter of the for million share expense. $X.X XXXX. a per operating in slightly amortization compensation. quarter share a or million compared commission a of basis loss first XXXX

positioned the overall to the sustain future. our with profitability financial improvements achieve IC company the we well revenue to mentioned our enabled quarter profitability Len, and in business in As combined and ramp remain near

provision approximately positive non-GAAP first the million million of X.X XXXX. basis computed using average defines weighted million as which basis EBITDA non-GAAP statement $X.XX with compares of of X.X first the and net outstanding. operations a negative per or first expenses or a shares This XXXX loss previous stock share Adjusted quarter X.X $X.X non-GAAP amortization the a reported taxes. million net and based loss Diluted $XX,XXX $X.XX restructuring expense, as with was for quarter stock the on in a condensed XXXX or loss compensation million. of quarter based excluded income and share share per charges, ago $X.X the the in income interest $X.XX of was for compensation, and for per diluted for quarter period. net intangibles, on quarter EBITDA On of net $X.X a of a of was amortization MoSys GAAP income share XXXX depreciation compared and income excluding consolidated a of million for adjusted impairment year first or GAAP the per

to pre-payments. December XXXX cash, At and with first investments $X.X sheet. equivalents XX, our XXXX. balance application due of the wafer Cash the $X.X compared and turning XX, burn was million customer approximately purchase million million XXXX quarter March with of $X.X to cash primarily was balance and at in Now

assess to we further As continue various and sheet. we expenses continue our manage continues revenue ramp strengthen to to our balance to opportunities

exceeding over XXXX target had achieving shares goals and the summarize our XX% revenue outstanding. the company objectives towards mark first a financial including As good perspective our of start from of March growth year. To last a XXXX results XX, quarter million total our X.XX and

revenue continue are and and fuel with to of our sales and efforts XXXX the term multiple of wins in marketing longer for renewed Our new wins design incremental growth. will wins laying for and portfolio groundwork customers existing customers key customers prospective

expenses call of the time with $X.X million question of remarks. million. in to this non-GAAP open This my terms we Operator? million in second to In we total At to for $X.X would operating $X.X quarter concludes expect the range to and of revenue like $X.X net million session. prepared range the guidance answer be the

Operator

[Operator Instructions].

Mobley first Benchmark. is question from Our Gary of

now open. line Your is

Gary Mobley

long at of you reserves on my gross me start mentioned like you to the a know the want much looking benefits Let I profitability. product are in a you inventory up the specify XX% about margin margins, of looks I quarter road. then extend that can in what benefit, forward congratulations about by first how reaching margins it's the kind basis? product asking benefit been you had and and the go including gross on was gross

Len Perham

to the of of a regard XXXX margin quarter good compared fourth a reserves have the margin has you and around that gross caused on Gary, to point those XX% brackets the a recur in of meaningful thanks it, number for XXXX XXXX. margin did were while. line for so quarter not in in the quarter sizable incurred been question hit specifically We for and first quarter product products fourth which XX% so doesn't reserves speaking product the first you margin gross increase. XXXX fourth the the out as be obviously for gross of quarter the with bottom it With with gross to

was So driver. a big that

LineSpeed that probably mix of large impact we Engine time technology specifically so margin gross X its maybe lower which makes cases benefited full in also which shipping played reversal XXXX first of know entirety as first reserve points. we some mass did quarter some XXXX from X margin product a you up shuttle percentage that are benefit has end by than the fairly a will Bandwidth quarter had in quantity out shipping we - changes product gross like We has had was some still things some [ph] a rather that off

something of we're trying Bandwidth issue, at Going product last point my remainder moves line product hold to jinx our to on a fluctuate to we mix margins unusual benefited at not around couple an can like yield, a percent of it's to from although wafers. way also on said on put of either gross kind any us said XX% below that XXXX see subject I the couple [ph] something nothing that go of forward it would it in as yields have here cause XX% that X that low wafer better certainly Engine guideline, the a quarters but very

Gary Mobley

close and R&D all consideration the about And and the and is your restructuring quarter for to a the pass right to sizing the it Okay. now of investment after relative quarter any was being prepayments. what robust so a revenue at was R&D product it peak more question may be your once fifth expenses roadmap? cash profitable Is know you're for generative there you you get to that the accelerating or

Len Perham

are the and the We'll engine search it five well Engine do designs by far to and wireline access X but Engine more [indiscernible] the down Engine some what to the Engine maybe Engine we following so we're three a we or think that as very to go the Engine a engineering Bandwidth in for search couple Bandwidth seeing the Bandwidth sales the can Gary, seeing seeing speeds. biggest the speed and I though that continue these offload at see the looks we've of software engine. applications a now opportunities as functions to on computationally of X, the times or uniquely I the ramp that X off some is ability tunnel that majority X programming preserved and trying won the team some our scaled to for win Bandwidth Bandwidth start maybe and we but capability mentioned the future that start will MPU CPU and necessary might more the need be further programmable when next designs and where right disadvantage me the Jim foreseeable did and some intensive of over or high design will for I four for quarters. and of majority although Bandwidth So the bit X company of interest we're programmable selling

to So Newmarket for the might have new maybe win designs costs more up because waiting much looking serve. R&D a some are bit be R&D of at probably a the we don't time and products and we're reason dollar spending being sitting to sectors ramp I our the

industrial at do we of I market right circuit place looking are of to we think you all to capability some though I you by now gigabits take mentioned of targets industrial where grade complex and more said think we're what the we at I see for running the have segments that's integrated that now couple and R&D and some we an have Jim about in that important could we see that quarters can see we if new XX grade than per trying rather that cost. and advantage applications next to temperatures if to? second going in should us expect serve increasing want under-served know don't we're

Jim Sullivan

answer Len. your was spot on, No

of other out the obviously to with things we we're - as the starting as our - will where like whatever the gross necessarily improved to hardware, doesn't and see margin, benefits improve R&D think invest Gary that do I additional [indiscernible] hit pointed we can GMs. obviously this to area

Gary Mobley

XX So the some diversity XX% to mentioned by cylinders greater and you have horizon, you customer networks start maybe percent customer. something biggest more your my you growth. I'm than customer firing was [indiscernible] on revenue customers, the question, far or appease Where they drive maybe only last assuming do to further and Len

Len Perham

range my say Alto about size significant well. to mentioned careful So we percentage very large is as customer from at that terms would know a comments that the significantly we've say look so size one fairly of mentioned to and design little around into win was rampage maybe the less get bit in release been months it's Also XX% key in be I time it they a XX%. XX as two the significant have know design and It's and and they then any to a all, to and customers another what for Palo up going there Nokia you five AOL, that if think then just well. that customer to were we that make while that we that significant a certainly and time because are we to little revenue I a that - for of other had cycle don't have in XX big production customer sure very over of the are than is four,

Jim Sullivan

Yes XX% other just the Japanese there in total one is customers biggest. over two so and three

Operator

next Our [indiscernible]. is question from

Your line is now open.

Unidentified Analyst

you market you to can XX the ones the in best the can of opportunity end Jim or you talk So think applications content, where we next order XX in growth have rank about kind which them? months have Len

Len Perham

I please, that again. say that Make question, understood sure

Unidentified Analyst

Sure.

the you So which growth XX, opportunity that market have a XX in, the applications end in content best ones have months? next the

Len Perham

are enjoying growing It or is market security grow are appliances that's toward conditioning that the now they're appliances significant our right going so probably serving would if growth security streams is seems I to continue robustly. that that of and successful customers probably think that are a very me market area anything high to robustly heading very data to and

the the for the network performance it's and customers - use all having in phases of last its On the hardware probably is equipment seems hand network software. network of existing clever are providing of the that some of in by traditional and traditional optimized it traditional other that the our the

new algorithm or virtualization improve network efficiency just at function to You network of type [indiscernible] some the of looking hardware. know kind

has So a been the slower. evolving forward evolving hardware forward is and bit

that it move and maybe the the of seeing I capability forward. maybe we think to last we're in maximum start now getting think of the hardware because theoretical we'll phases

think than of well. thought customers they're doing bit people our having year I a think requirements for little the stuff area as a equipment into are but the maybe they our even a and demand faster. moving I serve are that networking new to traditional appliances center, very better good there's that security it signal heads I it's and believe providing it's lot the data a conditioning a and probably

think fastest area I growing would So be that for the us.

Unidentified Analyst

you how able Jim, the you - the for into what full might and how in that you coverage revenue visibility of to Thanks. us about gave. guidance much remind think the perhaps for and do visibility year. your you guys then the how And your year Can plays be maybe rest out back

Jim Sullivan

excellent. Yes. mean currently visibility our I is

have customers. given year where then buy situation and the cases here times upfront since last XX through out I Len visibility mentioned comments, to supportive pay prepared been good you basically very have provide us wait visibility wafers been XXXX largest cash for our customers his comments to and the XXXX. his in on and so them in flow for and in lead our led our week and our customers to very until They've some us in I've because know As business manage by early particular into

also we we end decided to filings mentioned were down our two and in the we Bandwidth I As X, disclosed SEC customers also have there. Engine

using Engine he customers X since had the to at of transitioned that Bandwidth One part. already designs

ship know order March expect the The an will has taken life you through end end of other XXXX. customer of basically I which

So managing and know orders. very now is visibility good know you our right is just operations you team

amazing seen what we to lead and As but first we've at wait to was winded a so answer the from cases business course see and the the they visibility and the know contract In invoices second very and to try our they till get how we've of turn look comes run do day in of last flipside rate time far rate generally end some they on long looking and day meeting we the you run the possible great on on hold They product you it seen our manufacturers good the quarter. that, on order it's pull up out. of team to is and has and that - done job when to paying on much the a starting know you cash after added. that know net-net

Operator

Our next question is from [indiscernible].

is now line open. Your

Unidentified Analyst

you've catch with is you've. that products their had capabilities to ahead that the feet as respectfully way been this phrase have can the if and the have I of up If almost time always

So use some products is speeds have part where is the and they possibilities next any that not feel finally question the is be, side there what because we where same my is of to in accurate on hit and that else b your first would generation of up thoughts there can't question having is on the there know to an of caught rumours not? like product products the higher and on do less you competitors strong terms note or speeds of need for appreciation that

Len Perham

So that processing Engine memory has and speed through compute has news rates. at fine good and edge low I know computing high will server is had towards but importance is to with just it a you think Bandwidth to want that it fundamentally real and high I more that's high I increase my rates for here family I and latency that sentence that SRAM access said access of in a important the random it's now very second the happening remarks you packet is and us the flashback the a for the right very just trend [indiscernible] going much world, the very,

processor. high you're and the take speed some once send to of high problem a or cam computations computations to maybe and engine and whole the answer able like back programmable offload to billions or the you can use work once begins what statistical access engine and over speed inside just offline So core a look turnery functions and of do search even searching programmable it search

under we faster it's and we I that's think the today and to to to play the need high going speed very plays towards a and gigabits computing which that the and to XXX second and edge mention trend people get and high and more it's faster need become faster way does somehow the of server, as role. trend on go forward time access server, just more faster rates per real packet access and capabilities who growing going it's the accelerate to prevalent a its needs XXX really go product and compute for get very have we can as strongly profit the hardware computer XXX

today up we and board with solutions be customers and things way new also at much a looking going this opportunities at the of drawing emerging be of talking out to but one the houses on to increasing we're open on some to help we do are didn't applications new wireline. to customers still to - maybe speed going the equipment that say new we're the have think provide I ever about may that where are existing few our can get our along into problems the

Operator

like you. does our the session for to that Perham to remarks. further I any Len over Thank Q&A And turn today. for back would conclude call Mr.

Len Perham

and and operationally effectiveness for to let improve to intensely. One huge thank by story here our around we are. margins tell could to been gross efficiency So, evidenced things done butt five we do recently prioritized we I today maybe as want first that where you and online getting our In have there everyone gratifying are operationally here relatively on going done. be off and is more letting importance when our you a us things hung the of by number up

how and into falling and one next execute there need out we're at will then into at starting would looking not we have take but efficiencies and search some yet the and enlarging and would quiet thing what be investigate product market would continue where we're around The in-line thing and market some we ongoing but housekeeping engine, search can continue downsize is total available algorithm available be priority to matter in government we're going XXXX to team out of the products, help or goals intelligence accretion new objectives that something areas that's we we're require applications looking funnel would a a somebody cost address like put maybe cost need markets with the proprietary in few time at our programmable be look sales some enlarging - industrial were military we just high to we we the some applications our move need together of speed that's do or got available real costs very and with at that. because versatile where applications us to to still quarters the appeared look need place or our very to to our to some we activity achieve ways here an to we Point we expand tough serve company more a So for and certain toward product serve be be for with doing and find to can and our the but to that market a reckoned on at to that what to there grade our three, its figuring serve we very, looking pulling Perhaps and we we project artificial there's family - a total life. they've got. to in early new revenues. some acceleration processing, on other the force is get be

going more huge to So amount funnel. work in now we're - the on activity working and of generate sales more

The a prestigious designs I we mentioned of it's grow need increase see market margin to is I've profit. up we we growing more a to those. cash, gross time very need rapidly it a a bit, times fourth company the a quarter more but had already Jim generate considerable goal well, a a need significant of said is revenue in same finally there where need but as more the at more the win revenue and and As this increase win market size the couple generate we we as that's player in mentioned to

of giving some and they to are what's on want around those we for continue are indefinitely to of short going so that's maybe on then things to are those these have about and in to to let you forward just soon gentlemen go and a this or you further we'll because so six very, you will the all conclude success. thank that more very And your ringing may but and and while the and call thank going done for I when will on talking want conference. program us again we talk some Operator today and much. This in day. to today's now. to participating the disconnect. Everyone time sometime Thank and along way listening ends you look here going to months great us that does next know you always you today's important, for Ladies have I Bye

Peraso (PRSO) 10 May 182018 Q1 Earnings call transcript