68.0 percent quarterly year-over-year revenue growth; 93.2 percent annual year-over-year revenue growth; annual cash flow from operations of $182.5 million, representing 36 percent of revenues; increased silicon unit shipments 95 percent annual YoY

SUNNYVALE, Calif. and YOKNEAM, ISRAEL, Jan. 23 – Mellanox Technologies, Ltd. (NASDAQ: MLNX; TASE: MLNX), a leading supplier of end-to-end connectivity solutions for servers and storage systems, today announced financial results for its fourth quarter and record results for the fiscal year 2012.

Fourth Quarter and 2012 Fiscal Year Highlights

• Revenues were $122.1 million in the fourth quarter, and $500.8 million in 2012
• GAAP gross margins were 68.1 percent in the fourth quarter, and 68.5 percent in 2012
• Non-GAAP gross margins were 70.0 percent in the fourth quarter, and 70.3 percent in 2012
• GAAP fourth quarter operating income was $23.9 million, and $118.3 million in 2012
• Non-GAAP operating income was $36.2 million in the fourth quarter, and $162.6 million in 2012
• GAAP net income was $18.4 million in the fourth quarter, and $111.4 million in 2012
• Non-GAAP net income was $30.7 million in the fourth quarter, and $155.7 million in 2012
• GAAP net income per diluted share was $0.41 in the fourth quarter, and $2.54 in 2012
• Non-GAAP net income per diluted share was $0.69 in the fourth quarter, and was $3.60 in 2012
• $25.4 million in cash was provided by operating activities during the fourth quarter
• Annual cash flow from operations of $182.5 million, representing 36.4 percent of revenues
• Cash and investments totaled $426.3 million at December 31, 2012
• 1.1 million silicon units shipped in 2012

Financial Results

In accordance with U.S. generally accepted accounting principles (GAAP), the company reported revenue of $122.1 million for the fourth quarter, down 22.0 percent from $156.5 million in the third quarter of 2012, and up 68.0 percent from $72.7 million in the fourth quarter of 2011.  For the year ended December 31, 2012, revenue was a record $500.8 million, an increase of 93.2 percent from revenue of $259.3 million reported in 2011. 

GAAP gross margins in the fourth quarter of 2012 were 68.1 percent, compared with 69.1 percent in the third quarter of 2012 and 64.0 percent in the fourth quarter of 2011.  GAAP gross margins in 2012 were 68.5 percent, compared with 64.5 percent in 2011.

Non-GAAP gross margins in the fourth quarter of 2012 were 70.0 percent, compared with 70.5 percent in the third quarter of 2012 and 67.0 percent in the fourth quarter of 2011.  Non-GAAP gross margins in 2012 were 70.3 percent, compared with 68.1 percent in 2011.

GAAP net income in the fourth quarter of 2012 was $18.4 million or $0.41 per diluted share, compared with net income of $48.4 million or $1.09 per diluted share in the third quarter of 2012 and net income of $4.7 million or $0.11 per diluted share in the fourth quarter of 2011.

Non-GAAP net income in the fourth quarter of 2012 was $30.7 million, or $0.69 per diluted share, compared with $60.1 million or $1.37 per diluted share in the third quarter of 2012, and $13.1 million, or $0.31 per diluted share in the fourth quarter of 2011. The fourth quarter 2012 non-GAAP net income excludes $10.0 million of share-based compensation expenses compared to $9.4 million in the third quarter of 2012, and $6.1 million in the fourth quarter of 2011. The fourth quarter 2012 non-GAAP net income also excludes amortization of acquired intangible assets of $2.3 million associated with the acquisition of Voltaire, Ltd. on February 7, 2011 consistent with such amortization expenses in the third quarter of 2012, and compared to $2.4 million in the fourth quarter of 2011.

GAAP net income in 2012 was a record $111.4 million or $2.54 per diluted share, compared to $10.0 million or $0.26 per diluted share in 2011.

Non-GAAP net income in 2012 was a record $155.7 million, or $3.60 per diluted share, compared to $45.6 million or $1.16 per diluted share in 2011.  2012 non-GAAP net income excludes $35.0 million of share-based compensation expenses and amortization of acquired intangible assets of $9.3 million associated with the acquisition of Voltaire, Ltd. on February 7, 2011. 2011 non-GAAP net income excludes $21.4 million of share-based compensation expenses, amortization of acquired intangible assets of $9.8 million associated with the acquisition of Voltaire, Ltd. on February 7, 2011 and acquisition related expenses of $4.4 million. 

Total cash and investments increased $184.9 million to $426.3 million at December 31, 2012 compared to $241.4 million at year-end 2011.  The company generated $25.4 million in cash from operating activities in the fourth quarter, and a record $182.5 million for the year.

“We are proud of our results for 2012, which was an outstanding year. Mellanox achieved record levels of revenue, cash flow and profitability, driven by growth in our strong product offerings and penetration into new and existing markets. We doubled the volume of silicon unit devices shipped from 2011 to 2012 to a record 1.1 million, highlighting our increased market share growth,” said Eyal Waldman, chairman, president and CEO of Mellanox Technologies. “We are disappointed we did not meet our revenue guidance for the fourth quarter. Our results were impacted by a weaker demand environment, challenging macroeconomic conditions, a build-up of inventory at an OEM customer, and a technical issue which was resolved during the quarter.”

Recent Mellanox Press Release Highlights

• Jan. 21 - OrionVM Enterprise Selects Mellanox InfiniBand for their Private and Public Clouds
• Dec. 10 - Mellanox InfiniBand Helps Accelerate Teradata Aster Big Analytics Appliance
• Nov. 13 - InfiniBand Leadership Continues to Grow; Now Connecting 224 Systems on the TOP500, Nearly 20 Percent More than Ethernet
• Nov. 12 - Mellanox Connect-IB InfiniBand Adapter Achieves World Record Performance Results
• Nov. 12 - Mellanox Introduces MetroX - Long Haul InfiniBand Switch Solutions
• Nov. 12 - Mellanox InfiniBand Solutions Enable New Levels of Research at Brookhaven National Laboratory
• Nov. 12 - Mellanox Expands Line of FDR 56Gb/s InfiniBand Switch Solutions with 12-port Switch System for Small Scale, Storage and Embedded Applications
• Nov. 12 - Mellanox Announces Unified Fabric Manager (UFM-SDN) Data Center Appliance and UFM Software Version 4.0
• Oct. 31- Sakura Internet Selects Mellanox InfiniBand for New Public Cloud Infrastructure
• Oct. 22 - Mellanox Announces Creation of Federal Government Subsidiary to Expand Mellanox's Engagements with U.S. Government

Conference Calls

Mellanox will broadcast its fourth quarter and fiscal year 2012 financial results conference call today at 2 p.m. Pacific Time to discuss the company’s fourth quarter 2012 financial results.  To listen to the call, dial +1-785-424-1834 approximately 10 minutes prior to the start time.
Mellanox also plans to conduct a conference call on Thursday, January 24 at 9 a.m. Israel Time to discuss the company’s fourth quarter and fiscal year 2012 financial results in Hebrew. To listen to the call, dial +972-3-9180609 approximately 10 minutes prior to the start of the call.  

Both of the Mellanox financial results conference calls will be available via live webcasts on the investor relations section of the Mellanox website at http://ir.mellanox.com. Access the webcast 15 minutes prior to the start of the call to download and install any necessary audio software. Replays of the webcasts will also be available on the Mellanox website.

About Mellanox

Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage. Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability. Mellanox offers a choice of fast interconnect products: adapters, switches, software and silicon that accelerate application runtime and maximize business results for a wide range of markets including high performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services. More information is available at www.mellanox.com.

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Source: Mellanox