Cavium Announces Financial Results for Q3 2016

SAN JOSE, Calif., Nov. 1, 2016 — (PRNewswire) —  Cavium, Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable secure and intelligent processing for enterprise, data center, cloud, wired and wireless networking, today announced financial results for the third quarter ended September 30, 2016.

Cavium, Inc. Logo. (PRNewsFoto/Cavium Networks)

Cavium completed the acquisition of QLogic Corporation ("QLogic") on August 16, 2016. The financial results for the third quarter of 2016 include results from QLogic from the closing date to the end of the quarter.

Net revenue in the third quarter of 2016 was $168.1 million, a 56.9% sequential increase from the $107.2 million reported in the second quarter of 2016 and 60.0% from the $105.1 million reported in the third quarter of 2015.

Generally Accepted Accounting Principles (GAAP) Results

Net loss for the third quarter of 2016 was $14.4 million, or ($0.23) per diluted share, compared to $7.4 million, or $(0.13) per diluted share in the second quarter of 2016. Gross margins were 28.2% in the third quarter of 2016 compared to 66.9% in the second quarter of 2016. GAAP operating loss (GAAP loss from operations as a percentage of revenue) was 56.1% in the third quarter of 2016 compared to 6.4% in the second quarter of 2016. Total cash and cash equivalents were $192.4 million at September 30, 2016.

Non-GAAP Results                  

Cavium believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to Cavium's financial condition and results of operations. Cavium believes that these non-GAAP financial measures provide additional insight into Cavium's ongoing performance and has chosen to provide these measures for more consistent and meaningful comparison between periods. These measures should only be used to evaluate Cavium's results of operations in conjunction with the corresponding GAAP measures. The reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this release.

In the third quarter of 2016, Non-GAAP net income was $28.0 million, or $0.43 per diluted share. Non-GAAP gross margin was 64.0% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 19.2%.

Recent News Highlights

  • October 31, 2016 - Cavium Introduced 1025GbE Adapter Family for Open Compute Project Servers
  • October 27, 2016 - Cavium QLogic Added PowerShell Integrated Management Solution for FastLinQ Ethernet Adapters
  • October 25, 2016 - Cavium Showcased ARMv8 Processor Solutions to Accelerate Next Generation Infrastructure at ARM TechCon 2016
  • October 25, 2016 - Cavium Showcased Highly Optimized Platforms for OpenStack Deployments at OpenStack Summit 2016
  • October 25, 2016 - Cavium QLogic Accelerates Cloud Deployments with OpenStack Integration
  • October 25, 2016 - SUSE Steps Up to Support Innovative ARM Solutions for Customers
  • September 27, 2016 - Cavium QLogic Accelerates Software Defined Datacenters with Windows Server 2016
  • August 30, 2016 - QLogic Showcased Multiple Technologies that Simplify and Accelerate Virtualized Server Deployments at VMworld 2016
  • August 16, 2016 - Cavium Completed the Acquisition of QLogic
  • August 16, 2016 - Cavium, Inc. Announced Successful Completion of the Exchange Offer in Connection with the Proposed Acquisition of QLogic Corporation
  • August 10, 2016 - Cavium, Inc. Announced Extension of the Expiration of the Exchange Offer in Connection with the Proposed Acquisition of QLogic Corporation
  • August 2, 2016 - Cavium, Inc. Announced the Expiration of HSR Waiting Period for the Acquisition of QLogic Corporation
  • July 26, 2016 - Cavium Named Raghib Hussain Chief Operating Officer
  • July 26, 2016 - Cavium Added Industry Veterans Brad W. Buss and Dr. Edward H. Frank to Board of Directors

Cavium will broadcast its third quarter of 2016 financial results conference call today, November 1, 2016, 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 website at http://www.cavium.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

Cavium offers a broad portfolio of integrated, software compatible processors ranging in performance from 1Gbps to 100Gbp that enable secure, intelligent functionality in Enterprise, Data Center, Broadband, Mobile and Service Provider Equipment, highly programmable switches which scale to 3.2Tbps and Ethernet and Fibre Channel adapters up to 100Gbps. Cavium processors are supported by ecosystem partners that provide operating systems, tools and application support, hardware reference designs and other products. Cavium is headquartered in San Jose, CA with design centers in California, Massachusetts, India, Israel, China and Taiwan. For more information, please visit: http://www.cavium.com.


CAVIUM, INC.

Unaudited GAAP Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)



Three Months Ended


September 30, 2016



June 30, 2016

Net revenue

$

168,123



$

107,158

Cost of revenue


120,709




35,499

Gross profit


47,414




71,659

Operating expenses:







     Research and development


67,752




52,578

     Sales, general and administrative


73,904




25,882

        Total operating expenses


141,656




78,460

Loss from operations


(94,242)




(6,801)

Other income (expense), net:







    Interest expense


(4,268)




(185)

    Other, net


54




(151)

Total other expense, net


(4,214)




(336)

     Loss before income taxes


(98,456)




(7,137)

     Provision for (benefit from) income taxes


(84,090)




273

Net loss

$

(14,366)



$

(7,410)

Net loss per common share, basic and diluted

$

(0.23)



$

(0.13)

Shares used in computing basic and diluted net loss per common share


62,055




57,527


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