Cavium Announces Record Quarterly Revenue in Q3 2008; Revenue Increased 14% Sequentially and 73% Year-Over-YearMOUNTAIN VIEW, CA, Oct 20, 2008 (MARKET WIRE via COMTEX News Network) -- Cavium Networks (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 2008 ended September 30, 2008.
Revenue in the third quarter of 2008 was $24.5 million, a 14%
sequential increase from the $21.6 million reported for the second
quarter of 2008 and an increase of 73% from the $14.2 million
reported for the third quarter of last year.
Generally Accepted Accounting Principles (GAAP) Results
Net income for the third quarter of 2008, on a GAAP basis, was $1.8
million, or $0.04 per share (diluted), compared to net income of $2.1
million, or $0.05 per diluted share in the second quarter of 2008,
and net income of $1.3 million, or $0.03 per share in the third
quarter of last year. Gross margins were 58.8% in the third quarter
of 2008 compared to 63.8% in the second quarter of this year. Total
cash and cash equivalents were $91.9 million at September 30, 2008.
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 2008 exclude $2.8
million in stock-based compensation and related payroll tax expense,
amortization of acquired intangible assets and adjustments related to
the acquisition of Star Semiconductor. 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 2008, on a non-GAAP basis, was
$4.6 million, or $0.11 per share (diluted), compared with $3.8
million, or $0.09 per share (diluted) in the second quarter of the
year and $2.1 million, or $0.05 per share (diluted) in the third
quarter of last year. Gross margins, on a non-GAAP basis, were 62.8%
in the third quarter of 2008 compared to 64.2% in the second quarter
of this year.
"The third quarter was yet another strong quarter for us across all
key metrics. We continue to deliver strong sequential and
year-over-year growth along with robust expansion in operating
margins," said Syed Ali, president and CEO of Cavium Networks.
"Non-GAAP operating margins have increased from 12.6% in the first
quarter of 2008 to 16.8% in the second quarter of 2008, to 19.2% in
the third quarter of 2008. Furthermore, non-GAAP income from
operations increased 30.3% sequentially from Q2 2008 to Q3 2008, due
to the strength in our business and leverage in our business model.
We also continue to experience record design win rates with traction
across all markets that we serve."
Conference Call
Cavium Networks will broadcast its third quarter 2008 financial
results conference call today, October 20, 2008 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.
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 that if they do not fully materialize or prove
incorrect, could cause our results to differ materially from those
expressed or implied by such forward-looking statements. 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 existing or new competition, the rate
of new design wins, the rate at which existing design wins go into
production, technological advances, pricing pressures; general
economic conditions; development of new products and technologies;
manufacturing difficulties; whether Cavium Networks is successful in
marketing its products; and other risks and uncertainties described
more fully in our documents filed with or furnished to the Securities
and Exchange Commission. In addition, there can be no assurance that
the company will be able to continue to expand non-GAAP operating
margins for the foreseeable future. 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 10, 2008 and our latest Form 10Q filed
on August 8, 2008. 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 Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
September 30, 2008 June 30, 2008
Net revenue $ 24,525 $ 21,562
Cost of revenue (1) 10,099 7,808
------------------- -------------------
Gross profit 14,426 13,754
------------------- -------------------
Operating expenses:
Research and development (2) 6,593 6,461
Sales, general and
administrative (3) 5,944 5,454
------------------- -------------------
Total operating expenses 12,537 11,915
------------------- -------------------
Income from operations 1,889 1,839
------------------- -------------------
Other income, net:
Interest expense (115) (135)
Interest income and other 499 609
------------------- -------------------
Total other income, net 384 474
------------------- -------------------
Income before income tax 2,273 2,313
Income tax expense 454 240
------------------- -------------------
Net income $ 1,819 $ 2,073
=================== ===================
Net income per common share,
basic $ 0.04 $ 0.05
Shares used in computing basic
net income per common share 40,578 40,300
Net income per common share,
diluted $ 0.04 $ 0.05
Shares used in computing diluted
net income per common share 42,628 42,992
(1) Cost of revenue includes:
Amortization of acquired
intangibles $ 814 $ 32
Fair value adjustment of
acquired inventory 153 -
Stock-based compensation
and related taxes 20 55
(2) Research and development
includes:
Stock-based compensation
and related taxes 810 821
(3) Sales, general and
administrative includes:
Stock-based compensation
and related taxes 1,016 866
Amortization of acquired
intangibles $ 7 $ -
CAVIUM NETWORKS, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share amounts)
Three Months Ended
--------------------------------------
Reconciliation of GAAP gross profit
& margin to non-GAAP: September 30, 2008 June 30, 2008
------------------ ------------------
Net revenue $ 24,525 $ 21,562
GAAP gross profit 14,426 13,754
GAAP gross margin 58.8% 63.8%
Amortization of acquired
intangibles:
Cost of revenue 814 32
Stock-based compensation
and related taxes:
Cost of revenue 20 55
Fair value adjustment of
acquired inventory 153 -
------------------ ------------------
Non-GAAP gross profit $ 15,413 $ 13,841
================== ==================
Non-GAAP gross margin 62.8% 64.2%
================== ==================
Three Months Ended
--------------------------------------
Reconciliation of GAAP income from
operations to non-GAAP: September 30, 2008 June 30, 2008
------------------ ------------------
GAAP income from operations $ 1,889 $ 1,839
Amortization of acquired
intangibles 821 32
Stock-based compensation
and related taxes 1,846 1,742
Fair value adjustment of
acquired inventory 153 -
------------------ ------------------
Non-GAAP income from operations $ 4,709 $ 3,613
================== ==================
Non-GAAP income from operations as
a percentage of revenue 19.2% 16.8%
================== ==================
Three Months Ended
--------------------------------------
Reconciliation of GAAP net income
to non-GAAP: September 30, 2008 June 30, 2008
------------------ ------------------
GAAP net income $ 1,819 $ 2,073
Non-GAAP adjustments:
Stock-based compensation and
related taxes:
Cost of revenue 20 55
Research and development 810 821
Sales, general and
administrative 1,016 866
Amortization of acquired
intangibles:
Cost of revenue 814 32
Sales, general and
administrative 7 -
Fair value adjustment of
acquired inventory 153 -
------------------ ------------------
Total of non-GAAP adjustments 2,820 1,774
------------------ ------------------
Non-GAAP net income $ 4,639 $ 3,847
================== ==================
GAAP net income per share (diluted) $ 0.04 $ 0.05
================== ==================
Non-GAAP adjustments detailed
above 0.07 0.04
Non-GAAP net income per share
(diluted) $ 0.11 $ 0.09
================== ==================
GAAP weighted average shares
(diluted) 42,628 42,992
Non-GAAP adjustment 920 775
Non-GAAP weighted average shares
(diluted) 43,548 43,767
CAVIUM NETWORKS, INC.
Unaudited GAAP Condensed Consolidated Balance Sheets
(In thousands)
September 30, 2008 June 30, 2008
Assets
Current assets:
Cash and cash equivalents $ 91,918 $ 99,284
Accounts receivable, net 13,483 10,867
Inventories 15,301 12,913
Prepaid expenses and other
current assets 1,276 1,287
------------------- -------------------
Total current assets 121,978 124,351
Property and equipment, net 10,836 11,041
Intangible assets, net 8,212 3,963
Goodwill 4,186 807
Other assets 385 410
------------------- -------------------
Total assets $ 145,597 $ 140,572
=================== ===================
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $ 7,116 $ 5,444
Accrued expenses and other
current liabilities 3,447 2,700
Deferred revenue 1,685 1,980
Capital lease and technology
license obligations, current 2,666 3,120
------------------- -------------------
Total current liabilities 14,914 13,244
Capital lease and technology
license obligations, net of
current 2,255 2,792
Other non-current liabilities 616 508
------------------- -------------------
Total liabilities 17,785 16,544
------------------- -------------------
Stockholders' equity
Common stock 41 41
Additional paid-in capital 180,637 178,672
Accumulated deficit (52,866) (54,685)
------------------- -------------------
Total stockholders' equity 127,812 124,028
------------------- -------------------
Total liabilities and
stockholders' equity $ 145,597 $ 140,572
=================== ===================
Cavium Networks Contact:
Art Chadwick
VP 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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