Continued Strong Demand Leads to Record Shipments of ICs for
Data Center Applications
- Q3 FY16 record revenue of $15.8
million, increasing for the 13th consecutive quarter, up 3 percent
from $15.4 million in Q2 FY16, and up 52 percent from $10.4 million
in Q3 FY15
- Q3 FY16 GAAP and record non-GAAP gross
margin of 67 percent and 72 percent, respectively, compared with 66
percent and 71 percent, respectively, in Q2 FY16, and 64 percent
and 66 percent, respectively, in Q3 FY15
- Q3 FY16 GAAP and record non-GAAP net
income of $0.7 million and $3.5 million, respectively. This
compares with GAAP and non-GAAP net income of $0.1 million and $2.6
million, respectively, in Q2 FY16, and $1.0 million and $2.3
million, respectively, in Q3 FY15
- Q3 FY16 GAAP and non-GAAP earnings per
diluted share of $0.01 and $0.05, respectively. This compares with
$0.00 and $0.05, respectively, in Q2 FY16, and $0.03 and $0.06,
respectively, in Q3 FY15
- Q3 FY16 Adjusted EBITDA was a record of
$4.6 million, and compares with $3.9 million in Q2 FY16 and $3.0
million in Q3 FY15
- Cash and cash equivalents as of
September 25, 2016 were $38.4 million, compared with $45.8 million
at the end of Q2 FY16. In Q3 FY16 the Company used approximately
$7.1 million of cash to pay off a revolving line of credit, and
also in Q3 FY16 the Company used approximately $750,000 of cash to
pay down a portion of its existing five year term debt
- Revenue in Q4 FY16 is expected to be in
a range of approximately $16.0 million to $16.2 million, which
would be a new record for the Company, and would represent an
increase of approximately 45 percent from the same quarter a year
ago
GigPeak, Inc. (NYSE MKT:GIG), a
leading innovator of semiconductor ICs and software solutions for
high-speed connectivity and high-quality video compression over the
network and the cloud, today announced financial results for its
third quarter of fiscal year 2016, which ended September 25,
2016.
Third Quarter Fiscal 2016 GAAP
Results
Total revenue in Q3 FY16 was a record $15.8 million, and
compares with revenue of $15.4 million in Q2 FY16, and $10.4
million in Q3 FY15.
Gross margin in Q3 FY16 was 67 percent, and compares with 66
percent in Q2 FY16, and 64 percent in Q3 FY15.
Net income in Q3 FY16 was $0.7 million, or $0.01 per diluted
share. This compares with net income of $0.1 million, or $0.00 per
share in Q2 FY16, and net income of $1.0 million, or $0.03 per
diluted share in Q3 FY15.
The GAAP financial results include costs related to the
Company’s acquisition and other strategic development activities,
which would not have occurred in the absence of such activity, of
approximately $745,000, $469,000, and $114,000 for the periods
ended Q3 FY16, Q2 FY16 and Q3 FY15, respectively.
Cash and cash equivalents as of September 25, 2016 were $38.4
million, compared with $45.8 million at the end of Q2 FY16. In Q3
FY16 the Company used approximately $7.1 million of cash to pay off
a revolving line of credit, and also in Q3 FY16 the Company used
approximately $750,000 of cash to pay down a portion of its
existing five year term debt.
Third Quarter Fiscal 2016 Non-GAAP
Results1
Gross margin for Q3 FY16 was a record 72 percent, and compares
with 71 percent in Q2 FY16, and 66 percent in Q3 FY15.
Net income for Q3 FY16 was a record $3.5 million, or $0.05 per
diluted share. This compares with net income of $2.6 million, or
$0.05 per diluted share in Q2 FY16, and net income of $2.3 million,
or $0.06 per diluted share in Q3 FY15. The earnings per diluted
share results were based on share counts of 69.4 million, 57.7
million, and 38.5 million in Q3 FY16, Q2 FY16 and Q3 FY15,
respectively.
Adjusted EBITDA1 for Q3 FY16 was a record $4.6 million. This
compares with Adjusted EBITDA of $3.9 million in Q2 FY16, and
Adjusted EBITDA of $3.0 million in Q3 FY15.
“We proudly delivered another quarter of record revenue and
enhanced profitability, proving again the strategy we have in place
to drive greater scale in our business and increasing profits by
focusing our business on cloud connectivity through networking and
broadcasting applications, is succeeding,” said Dr. Avi Katz,
Founder, Chairman and CEO of GigPeak, Inc. “Our revenue growth
continues to be driven by the global demand for more bandwidth and
enhanced efficiency of the communication pipes, due to the
ever-increasing distribution of video and digital media content
across the cloud. GigPeak’s products address the market that
transforms the fabric of our society. We support the exploding
global data traffic driven by the new mega-trends. This includes
mobile and broadband applications, which are projected to grow to 9
billion mobile subscriptions, 7.7 billion broadband subscribers,
and 6.3 billion smartphone subscriptions by 2021. It also reflects
teen’s increasing their smartphone/video viewing at home by 85
percent over the last 5 year period, and in the data centers, 6
million servers are installed every year to handle more than 200
million emails per minute worldwide and hundreds of petabytes of
video per month. Connectivity that provides enough bandwidth, with
high-speed and high-quality video compression to enable the highest
possible information density streaming, is absolutely a key for
today and tomorrow’s socially connected world, and this has become
the focus of GigPeak’s business and will remain so for the years to
come.
“Committed to our mission, in Q3, we had the highest number of
shipments ever for our ICs for data center connectivity
applications. Supporting the ever-growing 40Gbps global hyper-scale
data center infrastructure, our industry leading drivers and TIAs
addressing the Active Optical Cables (AOCs) and transceiver
applications, continue to be in even higher demand. 40Gbps remains
the primary driver powering the global data center interconnect
environment and this platform is expected to last through 2018 and
beyond. As we see the increased sales volume for our 40Gbps ICs,
and the start of the sales of 100Gbps NRZ datacom ICs mainly for
on-board optical connectivity, SFP+ and QSFP+ modules, we will
continue to invest in the development and efforts to increase our
capacity to meet this strong demand. Trailblazing the technology
path to support market trends, we announced at ECOC 2016 the
introduction of the VCSEL and DML drivers, and TIA ICs for PAM4 SR
and LR Ethernet applications. Customers around the globe are
interested in our PAM4 solution, as some of them contemplate
potentially switching directly from 40Gbps into 200Gbps, or even
400Gbps, as the next future platform. With our complete data center
connectivity product family, GigPeak believes that it is the only
IC supplier offering an entire range of 40Gbps and 100Gbps NRZ, as
well as 200Gbps PAM4 ICs to support both current and the future
data center infrastructure requirements.
“In collaboration with our customers, and to further strengthen
our position in the growing telecom metro market, we recently
introduced a low power consumption and cost efficient dual channel
32Gbps linear coherent TIA. Our product is now being sampled by key
optical module suppliers for 100Gbps coherent metro applications.
We believe that this solution provides advantages to our customers
and could be disruptive to the current solutions in the market,”
said Dr. Katz. “Also, our new line of broadcasting compression SoC
and software-stack solutions continue to exhibit strong demand from
key lighthouse broadcasting customers. Not only does our broadcast
product portfolio drive solid revenue and profitability with
meaningful growth potential, but it provides a natural
complimentary product line to our well established networking
portfolio offering.”
Financial Outlook
“We see no letup in demand and believe Q4 FY16 will be another
quarter of record revenue, with the growth coming from our higher
margin products. Our current outlook is for revenue to be in the
range of approximately $16.0 million to $16.2 million, which would
represent an increase of approximately 45 percent from Q4 FY15,
while likely maintaining the same high level of profitability.
Using the midpoint of this revenue guidance range, our fiscal 2016
revenue will be approximately $59 million, up approximately 45
percent from fiscal 2015,” said Dr. Katz.
Financial Results Webcast / Conference Call
GigPeak will host a conference call today at 5:00 p.m. ET/2:00
p.m. PT to discuss its third quarter fiscal 2016 financial results.
To access the conference call, please dial (913) 312-1491. No
passcode is needed. A live webcast will be available in the
Investors section of GigPeak’s website at www.gigpeak.com. The
replay dial-in number is (412) 317-6671, and the passcode is
1619306.
1 Non-GAAP Measures - GigPeak reports gross
margin, operating expense, operating income and net income (loss)
on a Generally Accepted Accounting Principles (GAAP) and non-GAAP
basis. In addition, GigPeak reports Adjusted EBITDA. Adjusted
EBITDA is defined as net earnings before interest, taxes, other
expense (income), net, depreciation and amortization, including
amortization of intangibles, stock-based compensation, acquisition
and strategic activities related costs and loss on equity method
investment. Adjusted EBITDA differs from net earnings, as
calculated in accordance with GAAP, in that it excludes the
foregoing items. We have made numerous investments in our business,
such as acquisitions and capital expenditures, which we believe we
have adjusted for in Adjusted EBITDA, and we have used equity as a
compensatory method that is also excluded. Adjusted EBITDA also
does not give effect to cash used for debt service requirements and
thus does not reflect funds available for reinvestments or other
discretionary uses. Management believes Adjusted EBITDA and the
other non-GAAP financial measures are important indicators of the
ongoing operations of GigPeak’s business and provide an additional
metric for comparability between reporting periods and provide an
additional baseline for analyzing trends in GigPeak’s operations
because these financial measures provide a view of our operations
that excludes items that management believes are not reflective of
the operating performance, such as items traditionally removed from
net earnings in the calculation of EBITDA as well as other expense
(income), net. As a result, these non-GAAP measures are provided to
supplement investors’ overall understanding of, and an enhanced
level of transparency into, GigPeak’s financial performance. In
addition, Adjusted EBITDA is used in determining compliance with
covenants in our term loan and revolving line agreement. Adjusted
EBITDA is not presented as an alternative measure of operating
performance, as determined in accordance with GAAP; nor should it
be considered a substitute for, or superior to the comparable GAAP
measures. Rather, these measures should be considered in addition
to results prepared in accordance with GAAP. No other adjustments
were made during the three-month and nine-month fiscal periods
ended September 25, 2016, and September 27, 2015. A reconciliation
of these GAAP to non-GAAP measurements and Adjusted EBITDA for the
three and nine months ended September 25, 2016 and September 27,
2015, can be found in the “Reconciliation of GAAP to Non-GAAP
Financial Information” table attached to this press release.
About GigPeak, Inc.
GigPeak, Inc. (NYSE MKT: GIG) is a leading innovator of
semiconductor ICs and software solutions for high-speed
connectivity and high-quality video compression over the network
and the cloud. The focus of the company is to develop and deliver
products that enable lower power consumption and faster data
connectivity, more efficient use of network infrastructure, broader
connectivity to the cloud, and reduce the total cost of ownership
of existing network pipes from the core to the end user. GigPeak
addresses both the speed of data transmission and the amount of
bandwidth the data consumes within the network, and provides
solutions that increase the efficiency of the Internet of Things,
leveraging its strength in high-speed connectivity and high-quality
video compression. The extended product portfolio provides more
flexibility to support changing market requirements from ICs and
MMICs through full software programmability and cost-efficient
custom ASICs.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements contain words such as “believe,” “will,” and
“expect,” or the negative thereof or comparable terminology, and
include (without limitation) statements regarding projected
financial results, products, development and future product demand,
bandwidth demand and data traffic growth, addressable markets and
additional potential acquisitions. Forward-looking statements
involve certain risks and uncertainties, and actual results may
differ materially from those discussed in any such statement. These
risks include, but are not limited to: the ability to integrate the
Magnum Semiconductor business, the ability to identify potential
acquisitions for strategic growth, the ability to extend product
offerings into new areas or products, the ability to commercialize
technology, unexpected occurrences that deter the full
documentation and “bring to market” plan for products, trends and
fluctuations in the industry, changes in demand and purchasing
volume of customers, unpredictability of suppliers, the ability to
attract and retain qualified personnel, the ability to move product
sales to production levels, the ability to compete for client
design-in opportunities, the ability to cross-sell to new clients
and to diversify and the success of product sales in new markets or
of recently produced product offerings, including bundled product
solutions. Additional factors that could cause actual results to
differ are discussed under the heading “Risk Factors” and in other
sections of the GigPeak filings with the SEC, and in its other
current and periodic reports filed or furnished from time to time
with the SEC. All forward-looking statements in this press release
are made as of the date hereof, based on information available to
GigPeak as of the date hereof, and GigPeak assumes no obligation to
update any forward-looking statement.
GIGPEAK, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts) (Unaudited)
September 25, December
31, Net Change 2016
2015 $ %
ASSETS Current
assets: Cash and cash equivalents $ 38,363 $ 30,245 $ 8,118 27 %
Accounts receivable, net 14,205 10,596 3,609 34 % Inventories
11,199 6,880 4,319 63 % Prepaid and other current assets
1,003 580 423 73 % Total current
assets 64,770 48,301 16,469 34 % Property and equipment, net 3,730
3,133 597 19 % Intangible assets, net 27,705 4,530 23,175 512 %
Goodwill 45,853 12,565 33,288 265 % Restricted cash 197 330 (133 )
(40 %) Other assets 1,464 251
1,213 483 % Total assets $ 143,719 $ 69,110 $
74,609 108 %
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 8,675 $ 3,659 $
5,016 137 % Accrued compensation 3,457 1,782 1,675 94 % Notes
payable 2,905 - 2,905 - Other current liabilities 3,083
2,219 864 39 % Total current
liabilities 18,120 7,660 10,460 137 % Pension liabilities 357 349 8
2 % Long term debt 10,555 - 10,555 - Other long-term liabilities
4,018 912 3,106 341 %
Total liabilities 33,050 8,921
24,129 270 % Stockholders' Equity Common stock 68 45
23 51 % Preferred stock - - - - Additional paid-in capital 212,735
163,036 49,699 30 % Treasury stock, at cost; 701,754 shares as of
September 25, 2016 and December 31, 2015 (2,209 ) (2,209 ) - 0 %
Accumulated other comprehensive income 386 332 54 16 % Accumulated
deficit (100,311 ) (101,015 ) 704 (1 %)
Total stockholders' equity 110,669 60,189
50,480 84 % Total liabilities and
stockholders' equity $ 143,719 $ 69,110 $ 74,609
108 %
GIGPEAK, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share
amounts) (Unaudited)
Three months ended Nine
months ended September 25, June 26, September
27, September 25, September 27,
2016 % 2016 %
2015 % 2016
2015 Total revenue $ 15,796 100 % $ 15,368 100 % $
10,419 100 % $ 42,526 100 % $ 29,319 100 % Total cost of revenue
5,148 33 % 5,193 34 % 3,762
36 % 14,024 33 % 11,040 38 %
Gross profit 10,648 67 % 10,175 66 %
6,657 64 % 28,502 67 % 18,279
62 % Research and development expense 5,395 34 % 5,690 37 %
3,100 30 % 14,610 34 % 9,572 33 % Selling, general and
administrative expense 4,360 28 % 4,006
26 % 2,468 24 % 12,528 29 %
7,680 26 % Total operating expenses 9,755 62 %
9,696 63 % 5,568 53 % 27,138
64 % 17,252 59 % Income from operations 893 6
% 479 3 % 1,089 10 % 1,364 3 % 1,027 4 % Interest expense, net (236
) -1 % (256 ) -2 % (6 ) 0 % (492 ) -1 % (12 ) 0 % Other income
(expense), net 14 0 % (81 ) -1 % (5 ) 0
% (71 ) 0 % (23 ) 0 % Income before provision for
income taxes 671 4 % 142 1 % 1,078 10 % 801 2 % 992 3 % Provision
for income taxes - 0 % 57 0 % 48
0 % 97 0 % 73 0 % Income from
consolidated companies 671 4 % 85 1 % 1,030 10 % 704 2 % 919 3 %
Loss on equity method investment - 0 % -
0 % - 0 % - 0 % 3
0 % Net income $ 671 4 % $ 85 1 % $ 1,030 10 %
$ 704 2 % $ 916 3 % Basic net income per share
$ 0.01 $ 0.00 $ 0.03 $ 0.01 $ 0.03 Diluted net income per share $
0.01 $ 0.00 $ 0.03 $ 0.01 $ 0.03 Weighted average number of
shares used in basic net income per share calculation 67,623 54,791
36,769 55,734 34,060 Weighted average number of shares used in
diluted net income per share calculation 69,399 57,656 38,497
58,427 35,109
GIGPEAK, INC. NON-GAAP CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except
per share amounts) (Unaudited)
Three months ended
Nine months ended September 25, June 26,
September 27, September 25, September 27,
2016 % 2016
% 2015 % 2016
% 2015 % Total revenue $
15,796 100 % $ 15,368 100 % $ 10,419 100 % $ 42,526 100 % $ 29,319
100 % Total cost of revenue 4,423 28 % 4,419
29 % 3,565 34 % 12,336 29 %
10,415 36 % Gross profit 11,373 72 %
10,949 71 % 6,854 66 % 30,190
71 % 18,904 64 % Research and development
expense 5,020 32 % 5,313 35 % 2,813 27 % 13,437 32 % 8,641 29 %
Selling, general and administrative expense 2,665 17
% 2,602 17 % 1,677 16 % 7,631
18 % 5,067 17 % Total operating expenses
7,685 49 % 7,915 52 % 4,490
43 % 21,068 50 % 13,708 47 %
Income from operations 3,688 23 % 3,034 20 % 2,364 23 % 9,122 21 %
5,196 18 % Interest expense, net (236 ) -1 % (256 ) -2 % (6 ) 0 %
(492 ) -1 % (12 ) 0 % Other income (expense), net 14
0 % (81 ) -1 % (5 ) 0 % (71 ) 0 % (23 )
0 % Income before provision for income taxes 3,466 22 % 2,697 18 %
2,353 23 % 8,559 20 % 5,161 18 % Provision for income taxes
- 0 % 57 0 % 48 0 % 97
0 % 73 0 % Net income $ 3,466 22 % $
2,640 17 % $ 2,305 22 % $ 8,462 20 % $ 5,088
17 % Basic net income per share $ 0.05 $ 0.05 $ 0.06
$ 0.15 $ 0.15 Diluted net income per share $ 0.05 $ 0.05 $ 0.06 $
0.14 $ 0.14 Weighted average number of shares used in basic
net income per share calculation 67,623 54,791 36,769 55,734 34,060
Weighted average number of shares used in diluted net income per
share calculation 69,399 57,656 38,497 58,427 35,109
GIGPEAK, INC. RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION (In thousands) (Unaudited)
Three months
ended, Nine months ended September 25, June
26, September 27, September 25, September
27, 2016 2016
2015 2016
2015 GAAP Total cost of revenue $ 5,148 $ 5,193 $
3,762 $ 14,024 $ 11,040 Stock-based compensation (74 ) (72 ) (94 )
(232 ) (315 ) Amortization of intangible assets (641 ) (702 ) (103
) (1,446 ) (310 ) Special bonus (10 ) -
- (10 ) - Non-GAAP Total cost of
revenue $ 4,423 $ 4,419 $ 3,565 $
12,336 $ 10,415 GAAP Gross profit $ 10,648 $
10,175 $ 6,657 $ 28,502 $ 18,279 Stock-based compensation 74 72 94
232 315 Amortization of intangible assets 641 702 103 1,446 310
Special bonus 10 - -
10 - Non-GAAP Gross profit $
11,373 $ 10,949 $ 6,854 $ 30,190
$ 18,904 GAAP Operating expenses 9,755 9,696 5,568
27,138 17,252 Stock-based compensation (1,023 ) (1,000 ) (844 )
(3,222 ) (2,812 ) Amortization of intangible assets (312 ) (312 )
(120 ) (841 ) (360 ) Acquisition and strategic activities related
costs (50 ) (469 ) (114 ) (1,322 ) (372 ) Special bonus (685
) - - (685 ) -
Non-GAAP Operating expenses $ 7,685 $ 7,915
$ 4,490 $ 21,068 $ 13,708 GAAP
Income from operations 893 479 1,089 1,364 1,027 Stock-based
compensation 1,097 1,072 938 3,454 3,127 Amortization of intangible
assets 953 1,014 223 2,287 670 Acquisition and strategic activities
related costs 50 469 114 1,322 372 Special bonus 695
- - 695 -
Non-GAAP Income from operations $ 3,688 $ 3,034
$ 2,364 $ 9,122 $ 5,196
GAAP Net income 671 85 1,030 704 916 Stock-based compensation 1,097
1,072 938 3,454 3,127 Amortization of intangible assets 953 1,014
223 2,287 670 Acquisition and strategic activities related costs 50
469 114 1,322 372 Special bonus 695 - - 695 - Loss on equity method
investment - - -
- 3 Non-GAAP Net income $ 3,466
$ 2,640 $ 2,305 $ 8,462 $ 5,088
Adjusted EBITDA reconciliation: GAAP Income from operations
893 479 1,089 1,364 1,027 Depreciation and amortization 1,866 1,878
868 4,707 2,643 Stock-based compensation 1,097 1,072 938 3,454
3,127 Acquisition and strategic activities related costs 50 469 114
1,322 372 Special bonus 695 -
- 695 - Adjusted EBITDA $
4,601 $ 3,898 $ 3,009 $ 11,542 $
7,169
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version on businesswire.com: http://www.businesswire.com/news/home/20161017006269/en/
InvestorsDarrow Associates, Inc.Jim Fanucchi,
408-404-5400ir@gigpeak.com
GigPeak, Inc. (AMEX:GIG)
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