MoSys, Inc. (NASDAQ:MOSY), today reported financial results for the
fourth quarter and fiscal year ended December 31, 2017 and an
amendment to its senior secured convertible notes.
Fourth Quarter and Full Year 2017
Financial ResultsTotal net revenue for the fourth quarter
of 2017 was $3.8 million, compared with $2.5 million for the third
quarter of 2017 and $1.4 million for the fourth quarter of 2016.
Total net revenue for the full year 2017 increased approximately
47% to $8.8 million, compared with $6.0 million for the full year
2016.
Product revenue for the fourth quarter was $3.5
million, compared with $2.2 million in the third quarter of 2017
and $1.0 million in the year-ago period. Product revenue for the
full year 2017 increased 70% to $7.8 million from $4.6 million in
2016.
GAAP gross margin for the fourth quarter of 2017
was 45%, compared with 49% for the third quarter of 2017 and 57%
for the fourth quarter of 2016. Gross margin decreased sequentially
and year-over-year primarily due to higher cost of goods sold due
to the growth in product shipments, as well as an inventory
valuation charge of $0.3 million recorded in the fourth quarter of
2017. Excluding the inventory valuation charge, gross margin would
have been greater than 50% for the fourth quarter of 2017.
Total operating expenses on a GAAP basis for the
fourth quarter of 2017 were $2.2 million, compared with $2.7
million for the third quarter of 2017 and $15.1 million for the
fourth quarter of 2016, which included a $9.9 million goodwill
impairment charge. Operating expenses decreased both sequentially
and year-over-year due to the benefits of restructuring and cost
reduction initiatives implemented during 2017. Total operating
expenses for the full year 2017 were $14.2 million, compared with
$34.3 million for 2016.
GAAP net loss for the fourth quarter of 2017 was
$0.5 million, or ($0.07) per share, compared with a net loss of
$1.7 million, or ($0.22) per share, for the previous quarter and a
net loss of $14.5 million, or ($2.18) per share, for the fourth
quarter of 2016. GAAP net loss for the full year 2017 was $10.7
million, or ($1.45) per share, compared with $32.0 million, or
($4.86) per share, in 2016. Non-GAAP net loss for the fourth
quarter of 2017 was $0.1 million, or ($0.01) per share, and the
full year 2017 non-GAAP net loss was $8.5 million, or ($1.16) per
share. 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 - Financial
Results“The fourth quarter of 2017 reflected continued
progress across our business, resulting in product revenue growing
approximately 60% sequentially and 70% over full year 2016,”
commented Len Perham, president and CEO of MoSys. “IC revenue
growth in the fourth quarter of 2017 was primarily driven by
Bandwidth Engine 2 unit shipments, led by our largest customers in
the security appliance and networking market segments. In addition,
we shipped Bandwidth Engine 3 prototype quantities to initial
customers. We expect to release Bandwidth Engine 3 to production in
mid-2018, and continue to track multiple potential design wins for
this new product, as well as for Bandwidth Engine 2 and the
Programmable Search Engine product family.
“During the quarter, our results benefited from
the restructuring and cost reduction efforts we implemented
throughout 2017, resulting in operating expenses declining
approximately 20% sequentially. We also continued to make progress
increasing manufacturing and operational efficiencies to improve
our gross margins and support our current and prospective
customers. We expect gross margins to improve in 2018 and exceed
50%, as we benefit from these efficiencies, improved utilization of
our manufacturing capacity, and contribution from royalties
and licensing.”
Mr. Perham concluded, “2017 was a pivotal year
that will provide a solid base for continued growth in 2018, with
our lead customers continuing to ramp into production. Bandwidth
Engine 2 will remain our primary revenue driver, and we expect
initial revenue contribution from Bandwidth Engine 3 production
late in 2018. Further, we will continue to investigate
opportunities to reduce our cost of operations, while closely
monitoring cash flow. Based on our current backlog and
improving visibility, we believe we can achieve non-GAAP
profitability and grow revenue in excess of 75% in 2018.”
Business Outlook for First Quarter of
2018The Company expects total net revenue for the first
quarter of 2018 to be in the range of $3.8 million to $4.1 million,
with non-GAAP operating expenses in the range of $2.2 million to
$2.4 million.
Amendment to Convertible
NotesEffective February 18, 2018, the Company reached
agreement with the purchasing agent and noteholders to amend the
10% Senior Secured Convertible Notes due August 15, 2018 (the
“Notes”). Under the amendment to the Notes, the Company has agreed
with the purchasing agent and the noteholders to the following
principal changes in terms and conditions:
- the maturity date was extended to August 15, 2019;
- the annual interest rate was reduced to 8% per annum;
- the conversion price was reduced from $8.50 per share to $4.25
per share of common stock issuable upon the holders’ optional
conversion of the Notes;
- the restriction on prepayment of all or a portion of the Notes
was eliminated; and
- the 20% repayment premium in the event of a fundamental change,
such as an acquisition of the Company, was eliminated.
The conversion price per share of common stock
is not subject to any further reset, except in the event of a stock
split or similar type of transaction. All other terms of the Notes
remain the same.
“We are pleased that our noteholders have agreed
to the amendment and appreciate their commitment to the Company and
belief in its prospects. This amendment will provide the Company
with additional time to focus on the further development of its
business and strive towards achieving profitability," stated James
Sullivan, chief financial officer of MoSys.
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.
Financial Results Conference
CallThe Company will not be hosting a conference call or
webcast in conjunction with today’s release of its fourth 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
reconciliations of these non-GAAP financial measures to the
comparable GAAP results, which are provided in tables 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 February 27, 2018 that the Company filed with
the Securities and Exchange Commission.
Forward-Looking
Statements This 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 aggressively fund 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.
About MoSys, Inc.MoSys,
Inc. (NASDAQ:MOSY) is a fabless semiconductor company enabling
leading equipment manufacturers in the data center, networking,
security and communications systems markets to address the
continual increase in Internet users, data and services. More
information is available at www.mosys.com.
Bandwidth Engine and MoSys are registered
trademarks of MoSys, Inc. in the US and/or other countries. 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 |
|
Twelve Months Ended |
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue |
|
|
|
|
|
|
|
Product |
|
$ |
3,536 |
|
$ |
992 |
|
|
$ |
7,833 |
|
$ |
4,604 |
|
|
|
Royalty and
other |
|
257 |
|
|
375 |
|
|
|
1,009 |
|
|
1,420 |
|
|
|
|
Total net
revenue |
|
3,793 |
|
|
1,367 |
|
|
|
8,842 |
|
|
6,024 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Net Revenue |
|
2,104 |
|
|
591 |
|
|
|
4,694 |
|
|
3,075 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
1,689 |
|
|
776 |
|
|
|
4,148 |
|
|
2,949 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
Research
and development |
|
924 |
|
|
4,043 |
|
|
|
8,158 |
|
|
18,086 |
|
|
|
Selling,
general and administrative |
|
1,043 |
|
|
1,150 |
|
|
|
4,702 |
|
|
5,693 |
|
|
|
Restructuring and impairment charges |
|
269 |
|
|
9,858 |
|
|
|
1,321 |
|
|
10,534 |
|
|
|
|
Total
operating expenses |
|
2,236 |
|
|
15,051 |
|
|
|
14,181 |
|
|
34,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
(547 |
) |
|
(14,275 |
) |
|
|
(10,033 |
) |
|
(31,364 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense), net |
|
21 |
|
|
(203 |
) |
|
|
(635 |
) |
|
(684 |
) |
|
Net
Loss |
|
$ |
(526 |
) |
$ |
(14,478 |
) |
|
$ |
(10,668 |
) |
$ |
(32,048 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share |
|
|
|
|
|
|
|
Basic and
diluted |
$ |
(0.07 |
) |
$ |
(2.18 |
) |
|
$ |
(1.45 |
) |
$ |
(4.86 |
) |
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing net loss per share |
|
|
|
|
|
|
|
Basic and
diluted |
|
8,068 |
|
|
6,630 |
|
|
|
7,338 |
|
|
6,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS, INC. |
|
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
(In thousands, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash, cash
equivalents and investments |
$ |
3,868 |
|
$ |
9,768 |
|
|
|
|
|
|
|
Accounts
receivable, net |
|
1,681 |
|
|
559 |
|
|
|
|
|
|
|
Inventories |
|
1,766 |
|
|
1,451 |
|
|
|
|
|
|
|
Prepaid
expenses and other |
|
1,347 |
|
|
473 |
|
|
|
|
|
|
|
|
Total current
assets |
|
8,662 |
|
|
12,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net |
|
827 |
|
|
1,274 |
|
|
|
|
|
|
Goodwill |
|
|
13,276 |
|
|
13,276 |
|
|
|
|
|
|
Other |
|
|
374 |
|
|
344 |
|
|
|
|
|
|
|
|
Total assets |
$ |
23,139 |
|
$ |
27,145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
$ |
170 |
|
$ |
561 |
|
|
|
|
|
|
|
Deferred
revenue |
|
3,938 |
|
|
271 |
|
|
|
|
|
|
|
Accrued
expenses and other |
|
2,507 |
|
|
2,502 |
|
|
|
|
|
|
|
|
Total current
liabilities |
|
6,615 |
|
|
3,334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes payable |
|
9,160 |
|
|
8,250 |
|
|
|
|
|
|
Other
long-term liabilities |
|
18 |
|
|
233 |
|
|
|
|
|
|
|
|
Total liabilities |
|
15,793 |
|
|
11,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
7,346 |
|
|
15,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity |
$ |
23,139 |
|
$ |
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 |
|
Twelve Months Ended |
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
$ |
(526 |
) |
$ |
(14,478 |
) |
|
$ |
(10,668 |
) |
$ |
(32,048 |
) |
|
|
|
Stock-based
compensation expense |
|
|
|
|
|
|
|
|
- |
Research and
development |
|
90 |
|
|
318 |
|
|
|
420 |
|
|
1,597 |
|
|
|
|
- |
Selling, general and
administrative |
|
77 |
|
|
42 |
|
|
|
299 |
|
|
558 |
|
|
|
|
|
Total stock-based
compensation expense |
|
167 |
|
|
360 |
|
|
|
719 |
|
|
2,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and impairment charges |
|
269 |
|
|
9,858 |
|
|
|
1,321 |
|
|
10,534 |
|
|
|
|
Amortization of intangible assets |
|
28 |
|
|
28 |
|
|
|
112 |
|
|
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss |
$ |
(62 |
) |
$ |
(4,232 |
) |
|
$ |
(8,516 |
) |
$ |
(19,249 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per
share |
$ |
(0.07 |
) |
$ |
(2.18 |
) |
|
$ |
(1.45 |
) |
$ |
(4.86 |
) |
|
|
|
Reconciling
items |
|
|
|
|
|
|
|
|
- |
Stock-based
compensation expense |
|
0.02 |
|
|
0.05 |
|
|
|
0.10 |
|
|
0.32 |
|
|
|
|
- |
Restructuring and
impairment charges |
|
0.04 |
|
|
1.49 |
|
|
|
0.18 |
|
|
1.60 |
|
|
|
|
- |
Amortization of
intangible assets |
|
- |
|
|
- |
|
|
|
0.01 |
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per share: basic and
diluted |
$ |
(0.01 |
) |
$ |
(0.64 |
) |
|
$ |
(1.16 |
) |
$ |
(2.92 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing non-GAAP net loss per
share |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
8,068 |
|
|
6,630 |
|
|
|
7,338 |
|
|
6,601 |
|
|
|
|
|
|
|
|
|
|
|
|
Contacts:Jim Sullivan,
CFOMoSys, Inc.+1 (408) 418-7500jsullivan@mosys.com
Beverly Twing, Sr. Acct. ManagerShelton Group,
Investor Relations+1 (214) 272-0089btwing@sheltongroup.com
MoSys (NASDAQ:MOSY)
Historical Stock Chart
From Mar 2024 to Apr 2024
MoSys (NASDAQ:MOSY)
Historical Stock Chart
From Apr 2023 to Apr 2024