SUNNYVALE, Calif. & YOKNEAM, Israel, July 25 — Mellanox Technologies, Ltd., a leading supplier of end-to-end interconnect solutions for servers and storage systems, has announced financial results for its second quarter 2014, ended June 30, 2014.

Second Quarter 2014 Highlights

• Revenues were $102.6 million
• GAAP gross margins were 66.6 percent
• Non-GAAP gross margins were 69.1 percent
• GAAP operating loss was $9.4 million
• Non-GAAP operating income was $6.4 million
• GAAP net loss was $9.0 million
• Non-GAAP net income was $6.8 million
• GAAP net loss per diluted share was $0.20
• Non-GAAP net income per diluted share was $0.15
• $7.3 million in cash was provided by operating activities
• Total cash and investments increased $3.6 million to $343.7 million at June 30, 2014

Second Quarter Financial Results

In accordance with U.S. generally accepted accounting principles (GAAP), the company reported revenue of $102.6 million for the second quarter of 2014, up 3.9 percent from $98.7 million in the first quarter of 2014, and up 4.5 percent from $98.2 million in the second quarter of 2013.

GAAP gross margins in the second quarter of 2014 were 66.6 percent, compared with 65.7 percent in the first quarter of 2014, and 67.2 percent in the second quarter of 2013.

Non-GAAP gross margins in the second quarter of 2014 were 69.1 percent, compared with 68.6 percent in the first quarter of 2014, and 69.4 percent in the second quarter of 2013.

GAAP net loss in the second quarter of 2014 was $9.0 million, or $0.20 per diluted share, compared with GAAP net loss of $11.4 million, or $0.26 per diluted share in the first quarter of 2014, and GAAP net loss of $1.7 million, or $0.04 per diluted share in the second quarter of 2013.

Non-GAAP net income in the second quarter of 2014 was $6.8 million, or $0.15 per diluted share, compared with $4.5 million, or $0.10 per diluted share in the first quarter of 2014, and $13.8 million, or $0.30 per diluted share in the second quarter of 2013. The second quarter 2014 non-GAAP net income excludes $11.9 million of share-based compensation expenses compared to $11.6 million in the first quarter of 2014, and $11.2 million in the second quarter of 2013. Second quarter 2014 non-GAAP net income also excludes the amortization of intangible assets of $2.8 million and acquisition-related charges of $1.0 million, compared to amortization expenses of acquired intangible assets of $3.5 million and $0.7 million of acquisition-related charges in the first quarter of 2014, and compared to $2.5 million and $1.8 million, respectively, in the second quarter of 2013.

Total cash and investments increased by $3.6 million to $343.7 million at June 30, 2014, compared to $340.1 million at March 31, 2014. The company generated $7.3 million in cash from operating activities in the second quarter.

“We are pleased with our results for the second quarter. We made several announcements that demonstrate our leadership as an interconnect provider, including our 100 Gigabit per second EDR InfiniBand switch and our increased penetration on the TOP500 list of supercomputers. FDR InfiniBand systems nearly doubled year-over-year and FDR is now the leading InfiniBand solution on the list,” said Eyal Waldman, president and CEO of Mellanox Technologies. “We achieved another quarter of record Ethernet revenue as our 10 and 40 Gigabit per second Ethernet solutions continue to be adopted by Web 2.0, cloud and storage customers. We look forward to continued sequential revenue growth in the third quarter of 2014.”

Recent Mellanox Press Release Highlights

• June 24 – Mellanox Technologies Ltd. Announces Definitive Agreement to Acquire Integrity Project
• June 23 – Mellanox Introduces the World’s First 100Gb/s EDR InfiniBand Switch
• June 23 – Mellanox Interconnect Solutions Accelerate New HP Apollo Family
• June 23 – Mellanox InfiniBand and Ethernet Solutions Deliver Leading Performance and Efficiency for AppliedMicro’s X-Gene ARM-based Server Platform
• June 23 – Mellanox Introduces HPC-X Scalable Software Toolkit for High-Performance Computing Platforms and Applications
• June 23 – InfiniBand Leads TOP500 as Most Used Interconnect Technology for High-Performance Computing
• June 2 – Mellanox Releases New Automation Software to Reduce Ethernet Fabric Installation Time from Hours to Minutes
• May 7 – Mellanox Announces New Software Defined FCoE Switch Solution
• May 5 – Mellanox Collaborates with NCS and LSI to Provide an End-to-End Virtual Desktop Infrastructure Solution
• April 30 – Mellanox 40 Gigabit Ethernet Interconnect and IBM Power8 Enable High Velocity Infrastructures for NoSQL Databases and In-Memory Data Grids

Third Quarter 2014 Guidance

Our guidance for the third quarter 2014 non-GAAP results is as follows:

• Quarterly revenues of $114 million to $118 million.
• Non-GAAP gross margins of 68% to 69%.
• An increase in non-GAAP operating expenses of 3% to 5%.
• Stock compensation expense to be between $11.9 million to $12.4 million.
• Non-GAAP diluted share count of 46.6 million to 47.1 million shares.

Conference Calls

The Mellanox financial results conference call will be available via live webcast 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. Replay of the webcast 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, cables 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 Technologies