MoSys, Inc. (NASDAQ:MOSY), today reported financial results
for the first quarter ended March 31, 2017.
First Quarter 2017 Financial
ResultsTotal net revenue for the first quarter of 2017 was
$1.2 million, compared with $1.4 million in the previous quarter
and $1.5 million in the first quarter of 2016. Product revenue in
the first quarter was $1.0 million, consistent with the fourth
quarter of 2016, and compared with $1.1 million in the year-ago
period.
Gross margin for the first quarter of 2017 was
50 percent, compared with 57 percent in the fourth quarter of 2016
and 41 percent for the first quarter of 2016.
Total operating expenses on a GAAP basis for the
first quarter of 2017 were $4.8 million, compared with $15.1
million in the fourth quarter of 2016, which included a non-cash
goodwill impairment charge of $9.9 million, and $7.4 million in the
year-ago period.
In February 2017, the Company effected a
1-for-10 reverse stock split of its common stock. All share and per
share amounts in this press release have been adjusted to reflect
the reverse stock split for all current and prior periods.
GAAP net loss for the first quarter of 2017 was
$4.4 million, or ($0.66) per share, compared with a net loss of
$14.5 million, or ($2.18) per share, in the previous quarter and a
net loss of $6.9 million, or ($1.05) per share, for the first
quarter of 2016. Non-GAAP net loss for the first quarter of 2017
was $4.2 million, or ($0.63) per share, which excludes intangible
asset amortization and stock-based compensation expenses. A
reconciliation of GAAP results to non-GAAP results is provided in
the financial statement tables following the text of this press
release.
Management Commentary“First
quarter 2017 product revenue was primarily comprised of ongoing
shipments of our Bandwidth Engine® 2 ICs, with the majority of
those shipments to our lead IP security appliance customer. We have
a reliable volume forecast from this customer for the remainder of
this year, and are working to confirm order commitments from our
other top customers,” commented Len Perham, MoSys’ President and
CEO. “During the first quarter, we won our first Bandwidth Engine 3
design-in with a leading networking equipment supplier in China,
and received our first pre-production order from this customer. We
also secured additional Bandwidth Engine 2 design-ins with multiple
customers for next-generation video applications.
“After the close of the quarter, as previously
announced, we revised our operating plan and began implementing our
cost reduction initiatives. We expect to realize significant
operating cost savings from these actions, and believe these
expense reductions will position us to maintain ongoing operations
and preserve cash until such time that our past design wins ramp
more materially.”
Mr. Perham further commented, “Although we are
now running a leaner organization, we remain confident that we have
the necessary resources and personnel to fully support the current
needs and firm orders of our customers. In addition, we remain
focused on carefully managing operating costs and expanding our
portfolio of design wins, while continuing to explore strategic
alternatives and asset monetization strategies to ensure our
viability and provide value to our stockholders.”
Financial Results Conference
CallThe Company will not be hosting a conference call or
webcast in conjunction with today’s release of its first quarter
results.
Use of Non-GAAP Financial
Measures To supplement MoSys’ consolidated financial
statements presented in accordance with GAAP, MoSys uses non-GAAP
financial measures that exclude from the statement of operations
the effects of non-cash goodwill impairment, restructuring,
stock-based compensation and intangible asset amortization charges.
MoSys’ management believes that the presentation of these non-GAAP
financial measures is useful to investors and other interested
persons because they are one of the primary indicators that MoSys’
management uses for planning and forecasting future performance.
MoSys’ management believes that the presentation of non-GAAP
financial measures that exclude these items is useful to investors
because management does not consider these charges part of the
day-to-day business or reflective of the core operational
activities of the Company that are within the control of management
or that would be used to evaluate management’s operating
performance.
Investors are encouraged to review the
reconciliation of these non-GAAP financial measures to the
comparable GAAP results, which is provided in a table below the
Condensed Consolidated Statements of Operations. The non-GAAP
financial measures disclosed by the Company should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results
calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated. The non-GAAP
financial measures used by the Company may be calculated
differently from, and therefore may not be comparable to, similarly
titled measures used by other companies. For additional information
regarding these non-GAAP financial measures, and management’s
explanation of why it considers such measures to be useful, refer
to the Form 8-K dated May 11, 2017 that the Company filed with the
Securities and Exchange Commission.
Forward-Looking StatementsThis
press release may contain forward-looking statements about the
Company, including, without limitation, anticipated benefits and
performance expected from its IC products and the Company’s future
markets and future business prospects. Forward-looking statements
are based on certain assumptions and expectations of future events
that are subject to risks and uncertainties. Actual results and
trends may differ materially from historical results or those
projected in any such forward-looking statements depending on a
variety of factors. These factors include, but are not limited, to
the following:
- a lack of working capital to fund continued product development
and growth;
- achieving additional IC design wins;
- commencing volume shipments of Bandwidth Engine ICs;
- the timing of customer orders and product shipments;
- our ability to enhance our existing proprietary technologies
and develop new technologies;
- achieving necessary acceptance and adoption of our IC
architecture and interface protocols by potential customers and
their suppliers;
- difficulties and delays in the development, production, testing
and marketing of our ICs;
- reliance on our manufacturing partners to assist successfully
with the fabrication of our ICs;
- availability of quantities of ICs supplied by our manufacturing
partners at a competitive cost;
- our lack of recent experience as a fabless semiconductor
company making and selling proprietary ICs;
- level of intellectual property protection provided by our
patents, the expenses and other consequences of litigation,
including intellectual property infringement litigation, to which
we may be or may become a party from time to time;
- vigor and growth of markets served by our customers and our
operations; and
other risks identified in the company’s most
recent report on Form 10-K filed with the Securities and Exchange
Commission, as well as other reports that MoSys files from time to
time with the Securities and Exchange Commission. MoSys undertakes
no obligation to update publicly any forward-looking statement for
any reason, except as required by law, even as new information
becomes available or other events occur in the future. There can be
no assurance that MoSys’ review of strategic alternatives will
result in any specific action.
About MoSys, Inc.MoSys, Inc.
(NASDAQ:MOSY) is a fabless semiconductor company enabling leading
equipment manufacturers of Cloud, networking, communications, and
data center systems to address the continual increase in Internet
users, data and services. The company's solutions deliver data path
connectivity, speed and intelligence while eliminating data access
bottlenecks on line cards and systems scaling from 100G to
multi-terabits per second. Engineered and built for
high-reliability carrier and enterprise applications, MoSys'
Bandwidth Engine®, Programmable Search Engine, and LineSpeed™ IC
product families are based on the company's patented
high-performance, high-density intelligent access and high-speed
serial interface technology, and utilize the company's highly
efficient GigaChip® Interface. MoSys is headquartered in Santa
Clara, California. More information is available at
www.mosys.com.
Bandwidth Engine, GigaChip and MoSys are
registered trademarks of MoSys, Inc. in the US and/or other
countries. LineSpeed and the MoSys logo are trademarks of MoSys,
Inc. All other marks mentioned herein are the property of their
respective owners.
(Financial Tables to Follow)
MOSYS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share amounts;
unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
Net
Revenue |
|
|
|
|
Product |
|
$ |
955 |
|
$ |
1,120 |
|
|
|
Royalty and
other |
|
257 |
|
|
331 |
|
|
|
|
Total net
revenue |
|
1,212 |
|
|
1,451 |
|
|
|
|
|
|
|
|
|
Cost of Net Revenue |
|
602 |
|
|
863 |
|
|
|
|
|
|
|
|
|
Gross Profit |
|
610 |
|
|
588 |
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
Research
and development |
|
3,485 |
|
|
5,232 |
|
|
|
Selling,
general and administrative |
|
1,314 |
|
|
1,516 |
|
|
|
Restructuring and impairment charges |
|
- |
|
|
676 |
|
|
|
|
Total
operating expenses |
|
4,799 |
|
|
7,424 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
(4,189 |
) |
|
(6,836 |
) |
|
|
|
|
|
|
|
|
|
Other
expense, net |
|
(216 |
) |
|
(29 |
) |
|
Net
Loss |
|
$ |
(4,405 |
) |
$ |
(6,865 |
) |
|
|
|
|
|
|
|
|
Net
loss per share |
|
|
|
|
Basic and
diluted |
$ |
(0.66 |
) |
$ |
(1.05 |
) |
|
|
|
|
|
|
|
|
Shares used in computing net loss per share |
|
|
|
|
Basic and
diluted |
|
6,647 |
|
|
6,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS, INC. |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(In thousands, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
December 31, |
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash, cash
equivalents and investments |
$ |
5,570 |
|
$ |
9,768 |
|
|
|
|
Accounts
receivable, net |
|
710 |
|
|
559 |
|
|
|
|
Inventories |
|
1,055 |
|
|
1,451 |
|
|
|
|
Prepaid
expenses and other |
|
321 |
|
|
473 |
|
|
|
|
|
Total current
assets |
|
7,656 |
|
|
12,251 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net |
|
1,078 |
|
|
1,274 |
|
|
|
Goodwill |
|
|
13,276 |
|
|
13,276 |
|
|
|
Other |
|
|
318 |
|
|
344 |
|
|
|
|
|
Total assets |
$ |
22,328 |
|
$ |
27,145 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
$ |
402 |
|
$ |
561 |
|
|
|
|
Accrued
expenses and other |
|
1,913 |
|
|
2,773 |
|
|
|
|
|
Total current
liabilities |
|
2,315 |
|
|
3,334 |
|
|
|
|
|
|
|
|
|
|
Notes
payable |
|
8,699 |
|
|
8,250 |
|
|
|
Other |
|
|
226 |
|
|
233 |
|
|
|
|
|
Total liabilities |
|
11,240 |
|
|
11,817 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
11,088 |
|
|
15,328 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity |
$ |
22,328 |
|
$ |
27,145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS, INC. |
Reconciliation of GAAP to Non-GAAP Net Loss
and Net Loss Per Share |
(In thousands, except per share amounts;
unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
$ |
(4,405 |
) |
$ |
(6,865 |
) |
|
|
|
Stock-based
compensation expense |
|
|
|
|
|
- |
Research and
development |
|
109 |
|
|
438 |
|
|
|
|
- |
Selling, general and
administrative |
|
76 |
|
|
167 |
|
|
|
|
|
Total stock-based
compensation expense |
|
185 |
|
|
605 |
|
|
|
|
|
|
|
|
|
|
|
Restructuring and impairment charges |
|
- |
|
|
676 |
|
|
|
|
Amortization of intangible assets |
|
28 |
|
|
28 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss |
$ |
(4,192 |
) |
$ |
(5,556 |
) |
|
|
|
|
|
|
|
|
|
GAAP net loss per
share |
$ |
(0.66 |
) |
$ |
(1.05 |
) |
|
|
|
Reconciling
items |
|
|
|
|
|
- |
Stock-based
compensation expense |
|
0.03 |
|
|
0.10 |
|
|
|
|
- |
Restructuring and
impairment charges |
|
- |
|
|
0.10 |
|
|
|
|
- |
Amortization of
intangible assets |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per share: basic and
diluted |
$ |
(0.63 |
) |
$ |
(0.85 |
) |
|
|
|
|
|
|
|
|
|
Shares used in computing non-GAAP net loss per
share |
|
|
|
|
Basic and
diluted |
|
6,647 |
|
|
6,567 |
|
|
|
|
|
|
|
|
|
Contacts:
Jim Sullivan, CFO
MoSys, Inc.
+1 (408) 418-7500
jsullivan@mosys.com
Beverly Twing, Sr. Acct. Manager
Shelton Group, Investor Relations
+1 (214) 272-0089
btwing@sheltongroup.com
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