MoSys, Inc. (NASDAQ: MOSY), today reported financial results
for the fourth quarter and fiscal year ended December 31,
2018.
Fourth Quarter and Full Year 2018
Financial ResultsTotal net revenue for the fourth quarter
of 2018 was $3.5 million, compared with $4.3 million for the
previous quarter and $3.8 million for the fourth quarter of 2017.
Product revenue for the fourth quarter was $3.2 million, compared
with $4.1 million for the previous quarter and $3.5 million in the
year-ago period.
Gross margin for the fourth quarter of 2018 was
72%, compared with 55% for the previous quarter and 45% for the
fourth quarter of 2017. The sequential increase in gross margin was
due primarily to favorable, non-recurring manufacturing variances,
manufacturing efficiencies and product mix.
Total operating expenses on a GAAP basis for the
fourth quarter of 2018 were $11.7 million, which included a
goodwill impairment charge of $9.7 million, compared with operating
expenses of $5.1 million in the previous quarter, which also
included a goodwill impairment charge of $3.2 million, and $2.2
million in the fourth quarter of 2017. Total operating expenses,
excluding intangible asset amortization, stock-based compensation
expenses and restructuring and impairment charges, for the fourth
quarter of 2018 were $1.7 million, consistent with the third
quarter of 2018 and compared with $1.8 million in the fourth
quarter of 2017.
GAAP net loss for the fourth quarter of 2018 was
$9.3 million, or ($0.25) per share, compared with a net loss of
$2.8 million, or ($0.34) per share, for the previous quarter and a
net loss of $0.5 million, or ($0.07) per share, for the fourth
quarter of 2017. Non-GAAP net income for the fourth quarter of 2018
was $0.7 million, or $0.01 per diluted share, and compared with net
income of $0.6 million, or $0.07 per diluted share, for the
previous quarter and a net loss of $0.1 million, or ($0.01) per
share, for the fourth quarter of 2017. Adjusted EBITDA for the
fourth quarter of 2018 was $0.9 million, and compared with $0.8
million for the previous quarter and $0.1 million for the fourth
quarter of 2017. A reconciliation of GAAP results to non-GAAP
results is provided in the financial statement tables following the
text of this press release.
At December 31, 2018, the Company had $7.1
million in cash, a $2.9 million increase from September 30, 2018.
The sequential increase in cash was primarily due to $3.0 million
in proceeds from a public offering of common stock in October
2018.
At December 31, 2018, the Company had 42,966,669
shares of common stock outstanding, which excludes 2,310,776 shares
of common stock issuable upon exercise of pre-funded warrants.
Management Commentary“We
continued to execute to our business plan and recorded non-GAAP
profitability for the fourth quarter and full year 2018. By closely
managing our operating expenses, we achieved favorable financial
results, even with the projected decline in shipments and revenue
in the fourth quarter driven in large part by one of our existing
customers, which, as we announced previously, began ramping down
its use of our product,” said Dan Lewis, chief executive officer
and president of MoSys. “We also closely managed our operating cash
burn, which approximated $0.1 million during the quarter and was
attributable to repayment of customer prepayments. In addition, we
continued to improve our manufacturing efficiencies, which we
believe will enable us to achieve gross margins of 60% or higher
for the full year 2019.”
Mr. Lewis continued, “We continue to focus on
expanding our sales channels, which has resulted in an increased
sales pipeline, and entering new market areas, such as compute
acceleration and government applications. Furthermore, we expanded
our opportunity footprint with multiple existing customers, as they
consider using a broader range of our products. We have made
considerable progress in developing new platforms and software
acceleration capabilities, which we expect to release to customers
in 2019. Also, we have begun shipping production quantities
of our LineSpeed™ Flex physical-layer products to a lead customer,
and we expect this business to grow in both 2019 and 2020.
“Based on customer orders and forecasts, we have
excellent visibility for the first half of 2019. However, we do
expect revenue to decline in 2019, as compared with 2018, as we
transition from a customer ramp-down and complete end-of-life
shipments of our first-generation Bandwidth Engine products. Once
the period of transition is complete, we believe we are positioned
for a return to growth in 2020. We have multiple customers for our
Bandwidth Engine 2 and 3 and LineSpeed PHY products expected to
commence production in 2019 and 2020. In the near term, we will
continue to focus on winning new designs for our products,
maintaining our solid financial position and managing our
expenses.”
Nasdaq ComplianceIn accordance
with a deficiency letter received in September 2018 from The NASDAQ
Stock Market ("Nasdaq") the Company has been provided until March
20, 2019 to regain compliance with Nasdaq’s minimum bid price
requirement. In accordance with Nasdaq Listing Rule 5810(c)(3)(A),
the Company can regain compliance if, at any time prior to March
20, 2019, the closing bid price of the Company's common stock is at
least $1.00 for a minimum of 10 consecutive business days. The
Company expects to be granted an additional 180-day extension, or
until September 20, 2019, by Nasdaq to regain compliance.
Business Outlook for First Quarter of
2019The Company expects total net revenue for the first
quarter of 2019 to be in the range of $3.2 million to $3.5
million
Financial Results Conference
CallThe Company will not be hosting a conference call or
webcast in conjunction with today’s release of its fourth quarter
and full year 2018 results.
Use of Non-GAAP Financial
MeasuresTo 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 stock-based compensation, intangible asset
amortization and restructuring and impairment 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.
The press release also makes reference to and reconciles GAAP net
loss and adjusted EBITDA, which the Company defines as GAAP net
loss before interest expense, income tax provision, and
depreciation and amortization, as well as stock-based compensation,
intangible asset amortization and restructuring and impairment
charges. 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 20, 2019 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:
- Nasdaq approval of a 180-day extension to regain minimum bid
price compliance;
- a lack of working capital to aggressively fund product
development and growth;
- the timing of customer orders and product shipments;
- customer concentration;
- lengthy sales cycle;
- our ability to enhance our existing proprietary technologies
and develop new technologies;
- achieving additional design wins for our IC products through
the 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;
- 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 provider of semiconductor solutions that enable fast,
intelligent data access for cloud networking, security, test and
video systems. 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. 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 |
|
Twelve Months Ended |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
|
|
Net
Revenue |
|
|
|
|
|
|
Product |
|
$ |
3,242 |
$ |
3,536 |
|
$ |
15,053 |
$ |
7,833 |
|
Royalty and
other |
209 |
257 |
|
1,547 |
1,009 |
|
|
Total net
revenue |
3,451 |
3,793 |
|
16,600 |
8,842 |
|
|
|
|
|
|
|
|
|
Cost of Net Revenue |
964 |
2,104 |
|
6,346 |
4,694 |
|
|
|
|
|
|
|
|
|
Gross Profit |
2,487 |
1,689 |
|
10,254 |
4,148 |
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
Research
and development |
1,065 |
924 |
|
4,129 |
8,158 |
|
Selling,
general and administrative |
937 |
1,043 |
|
4,095 |
4,702 |
|
Restructuring and impairment charges |
9,697 |
269 |
|
12,856 |
1,321 |
|
|
Total
operating expenses |
11,699 |
2,236 |
|
21,080 |
14,181 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
(9,212) |
(547) |
|
(10,826) |
(10,033) |
|
|
|
|
|
|
|
|
|
|
Other
income (expense), net |
(48) |
21 |
|
(583) |
(635) |
Net
Loss |
|
$ |
(9,260) |
$ |
(526) |
|
$ |
(11,409) |
$ |
(10,668) |
|
|
|
|
|
|
|
|
|
Net
Loss per share |
|
|
|
|
|
|
Basic and
diluted |
$ |
(0.25) |
$ |
(0.07) |
|
$ |
(0.74) |
$ |
(1.45) |
|
|
|
|
|
|
|
|
|
Shares used in computing net loss per share |
|
|
|
|
|
|
Basic and
diluted |
36,788 |
8,068 |
|
15,393 |
7,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS, INC. |
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
(In thousands, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
2018 |
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
7,104 |
$ |
3,868 |
|
|
|
|
|
Accounts
receivable, net |
1,622 |
1,681 |
|
|
|
|
|
Inventories |
1,148 |
1,766 |
|
|
|
|
|
Prepaid
expenses and other |
923 |
1,347 |
|
|
|
|
|
|
Total current
assets |
10,797 |
8,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net |
279 |
827 |
|
|
|
|
Goodwill |
420 |
13,276 |
|
|
|
|
Other |
|
260 |
374 |
|
|
|
|
|
|
Total assets |
$ |
11,756 |
$ |
23,139 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
$ |
236 |
$ |
170 |
|
|
|
|
|
Deferred
revenue |
273 |
3,938 |
|
|
|
|
|
Accrued
expenses and other |
1,402 |
2,507 |
|
|
|
|
|
|
Total current
liabilities |
1,911 |
6,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes payable |
2,671 |
9,160 |
|
|
|
|
Other
long-term liabilities |
17 |
18 |
|
|
|
|
|
|
Total liabilities |
4,599 |
15,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
7,157 |
7,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity |
$ |
11,756 |
$ |
23,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS, INC. |
Reconciliation of GAAP to Non-GAAP Net Income
(Loss) and Net Income (Loss) Per Share |
(In thousands, except per share amounts;
unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
$ |
(9,260) |
$ |
(526) |
|
$ |
(11,409) |
$ |
(10,668) |
|
|
Stock-based
compensation expense |
|
|
|
|
|
|
|
- |
Research and
development |
132 |
90 |
|
327 |
420 |
|
|
- |
Selling, general and
administrative |
96 |
77 |
|
347 |
299 |
|
|
|
Total stock-based
compensation expense |
228 |
167 |
|
674 |
719 |
|
|
|
|
|
|
|
|
|
|
|
Restructuring and impairment charges |
9,697 |
269 |
|
12,856 |
1,321 |
|
|
Amortization of intangible assets |
28 |
28 |
|
111 |
112 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss) |
$ |
693 |
$ |
(62) |
|
$ |
2,232 |
$ |
(8,516) |
|
|
|
|
|
|
|
|
|
|
GAAP net loss per share, basic |
$ |
(0.25) |
$ |
(0.07) |
|
$ |
(0.74) |
$ |
(1.45) |
|
|
Reconciling
items |
|
|
|
|
|
|
|
- |
Stock-based
compensation expense |
0.01 |
0.02 |
|
0.04 |
0.10 |
|
|
- |
Restructuring and
impairment charges |
0.26 |
0.04 |
|
0.84 |
0.18 |
|
|
- |
Amortization of
intangible assets |
- |
- |
|
0.01 |
0.01 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss) per share, basic |
$ |
0.02 |
$ |
(0.01) |
|
$ |
0.15 |
$ |
(1.16) |
|
|
|
|
|
|
|
|
|
|
GAAP net loss per share, diluted |
$ |
(0.25) |
$ |
(0.07) |
|
$ |
(0.74) |
$ |
(1.45) |
|
|
Reconciling
items |
|
|
|
|
|
|
|
- |
Stock-based
compensation expense |
0.01 |
0.02 |
|
0.04 |
0.10 |
|
|
- |
Restructuring and
impairment charges |
0.20 |
0.04 |
|
0.73 |
0.18 |
|
|
- |
Amortization of
intangible assets |
- |
- |
|
0.01 |
0.01 |
|
|
- |
Interest and other, net
adjustments |
0.05 |
- |
|
0.09 |
- |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss) per share, diluted |
$ |
0.01 |
$ |
(0.01) |
|
$ |
0.13 |
$ |
(1.16) |
|
|
|
|
|
|
|
|
|
|
Shares used in computing non-GAAP net income (loss) per
share |
|
|
|
|
|
|
Basic |
36,788 |
8,068 |
|
15,393 |
7,338 |
|
|
Diluted |
49,444 |
8,068 |
|
17,530 |
7,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS, INC. |
Reconciliation of GAAP and Non-GAAP Financial
Information |
(In thousands; unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2018 |
2017 |
|
2018 |
2017 |
|
Reconciliation of GAAP net loss and
adjusted EBITDA |
|
|
|
|
|
|
GAAP net loss |
$ |
(9,260) |
$ |
(526) |
|
$ |
(11,409) |
$ |
(10,668) |
|
|
Stock-based
compensation expense |
|
|
|
|
|
|
|
- |
Research and
development |
132 |
90 |
|
327 |
420 |
|
|
- |
Selling, general and
administrative |
96 |
77 |
|
347 |
299 |
|
|
Stock-based
compensation expense |
228 |
167 |
|
674 |
719 |
|
|
Restructuring and impairment charges |
9,697 |
269 |
|
12,856 |
1,321 |
|
|
Amortization of intangible assets |
28 |
28 |
|
111 |
112 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss) |
693 |
(62) |
|
2,232 |
(8,516) |
|
|
EBITDA
adjustments: |
|
|
|
|
|
|
|
Depreciation |
112 |
174 |
|
598 |
747 |
|
|
Interest
expense |
51 |
242 |
|
582 |
927 |
|
|
Provision
(benefit) for income taxes |
9 |
(249) |
|
13 |
(233) |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
865 |
$ |
105 |
|
$ |
3,425 |
$ |
(7,075) |
|
|
|
|
|
|
|
|
|
Contacts:Jim Sullivan,
CFOMoSys, Inc.+1 (408) 418-7500jsullivan@mosys.com
MoSys (NASDAQ:MOSY)
Historical Stock Chart
From Aug 2024 to Sep 2024
MoSys (NASDAQ:MOSY)
Historical Stock Chart
From Sep 2023 to Sep 2024