From the Wires
Inphi Corporation Announces Fourth Quarter and Full Year 2012 Results
Feb. 4, 2013 04:15 PM
SANTA CLARA, CA -- (Marketwire) -- 02/04/13 -- Inphi Corporation (NYSE: IPHI), a leading provider of high-speed analog semiconductor solutions for the communications and computing markets, today announced results for its fourth quarter and full year ended December 31, 2012.
Revenue for the fourth quarter of 2012 was $22.9 million, compared with $17.3 million for the fourth quarter of 2011.
As reported under U.S. generally accepted accounting principles (GAAP), fourth quarter 2012 net loss was $16.6 million, or ($0.58) per share, compared with a GAAP net loss of $0.3 million, or ($0.01) per diluted common share, for the fourth quarter of 2011.
Inphi established a full valuation allowance against its net deferred tax assets, which resulted in a one-time, non-cash charge of $14.6 million in the fourth quarter of 2012. The decision to establish the valuation allowance was based on an assessment made at year-end that considered factors such as passage of new California tax law as well as projected taxable income. The establishment of a valuation allowance does not preclude Inphi from using its loss- carryforward, research and development tax credits and other deferred tax assets in the future.
Gross margin on a GAAP basis for the fourth quarter of 2012 was 64.3% of revenue, compared with 63.8% of revenue for the fourth quarter of 2011.
Inphi reports gross margin, net income (loss), and earnings per share in accordance with GAAP and on a non-GAAP basis. A reconciliation of the GAAP to non-GAAP gross margin, net income, and earnings per share, as well as a description of the items excluded from the non-GAAP calculations, is included in the financial statements portion of this news release.
Gross margin on a non-GAAP basis for the fourth quarter of 2012 was 65.4% of revenue, compared with 64.3% of revenue for the fourth quarter of 2011.
Non-GAAP net income for the fourth quarter of 2012 was $1.0 million, or $0.03 per diluted share. This compared with non-GAAP net income of $0.2 million, or $0.01 per diluted share, for the fourth quarter of 2011.
"We delivered on our non-GAAP guidance for Q4, resulting in 16% year-on-year revenue growth in 2012 at 65% gross margin," said Ford Tamer, Inphi CEO. "As already announced by others in our industry, the near term economic climate continues to remain uncertain as we look into Q1. However, we remain optimistic about our growth prospects in the second half of 2013, based on new products going into production, and strong design win momentum in communication equipment, optical modules and next generation servers."
Full Year 2012 Results
For the year ended December 31, 2012, revenue was $91.2 million, compared with $79.3 million for 2011. GAAP net loss for 2012 was $20.7 million, or ($0.73) per diluted share, on approximately 28.4 million diluted weighted average common shares outstanding. This compared with GAAP net income of $1.9 million, or $0.07 per diluted share, on approximately 29.4 million diluted weighted average common shares outstanding for 2011.
Non GAAP net income for the year ended December 31, 2012 was $5.0 million, or approximately $0.17 per diluted share. This compared with non-GAAP net income of $7.3 million, or $0.25 per diluted share, for the year ended December 31, 2011.
Business Outlook
The following statements are based on our current expectations for the first quarter of 2013. These statements are forward looking and actual results may differ materially.
- Revenues are expected to range from approximately $20.9 million to $22 million.
- Non-GAAP gross margin is expected to be approximately 65% - 66%.
- Stock-based compensation expense is expected to be in the range of $3.9 million to $4.2 million.
- GAAP results are expected to be a net loss in a range between $3.6 million to $4.5 million, or ($0.12) -($0.15) per diluted share, on approximately 30.1 million diluted shares outstanding.
- Non-GAAP net income, excluding stock-based compensation expense, is expected to be at breakeven plus or minus $0.3 million, or ($0.01) - $0.01 per diluted share.
Quarterly Conference Call Today
Inphi plans to hold a conference call at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time today with Ford Tamer, President and Chief Executive Officer, and John Edmunds, Chief Financial Officer, to discuss fourth quarter and full year 2012 results.
The call can be accessed by dialing 888-396-2298; international callers should dial 617-847-8708, participant passcode: 61785872. Please dial-in ten minutes prior to the scheduled conference call time. A live and archived webcast of the call will be available on Inphi's website at http://investors.inphi.com for up to 30 days after the call.
About Inphi
Inphi Corporation is a leading provider of high-speed mixed signal semiconductor solutions for the communications and computing markets. Inphi's end-to-end data transport platform delivers high signal integrity at leading-edge data speeds, addressing performance and bandwidth bottlenecks in networks, from fiber to memory. Inphi's solutions minimize latency in computing environments and enable the rollout of next- generation communications infrastructure. Inphi's solutions provide a vital interface between analog signals and digital information in high-performance systems, such as telecommunications transport systems, enterprise networking equipment, enterprise and data center servers, and storage platforms. To learn more about Inphi, visit www.inphi.com.
Cautionary Note Concerning Forward-Looking Statements
Statements in the press release and certain matters to be discussed on the fourth quarter of 2012 conference call regarding Inphi Corporation, which are not historical facts, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terms such as outlook, believe, expect, may, will, provide, could, and should, and the negative of these terms or other similar expressions. These statements include statements relating to: our business outlook and current expectations for the first quarter of 2013, including our revenue, gross margin, stock-based compensation expense, operating performance, net income, earnings per share; expectations of our growth; expectations of economic trends and macroeconomic conditions; and benefits of using non-GAAP financial measures. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including: the Company's ability to sustain profitable operations due to its history of losses and accumulated deficit; dependence on a limited number of customers for a substantial portion of revenue and lack of long-term purchase commitments from our customers; product defects; risk related to intellectual property matters, lengthy sales cycle and competitive selection process; lengthy and expensive qualification processes; ability to develop new or enhanced products in a timely manner; development of the markets that the Company targets; market demand for the Company's products; reliance on third parties to manufacture, assemble and test products; ability to compete; and other risks inherent in fabless semiconductor businesses. In addition, actual results could differ materially due to changes in tax rates or tax benefits available, changes in claims that may or may not be asserted, as well as changes in pending litigation. For a discussion of these and other related risks, please refer to Inphi Corporation's recent SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2011, which are available on the SEC's website at www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Inphi Corporation undertakes no obligation to update forward-looking statements for any reason, except as required by law, even as new information becomes available or other events occur in the future.
Inphi, the Inphi logo and Think fast are registered trademarks of Inphi Corporation. All other trademarks used herein are the property of their respective owners.
INPHI CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except share and per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
Revenue $ 22,935 $ 17,310 $ 91,206 $ 79,297
Cost of revenue 8,194 6,269 32,684 28,687
----------- ----------- ----------- -----------
Gross margin 14,741 11,041 58,522 50,610
----------- ----------- ----------- -----------
Operating expenses:
Research and
development 11,030 7,953 40,102 28,565
Sales and marketing 3,705 3,095 14,052 12,700
General and
administrative 2,670 2,152 12,300 9,141
----------- ----------- ----------- -----------
Total operating expenses 17,405 13,200 66,454 50,406
----------- ----------- ----------- -----------
Income (loss) from
operations (2,664) (2,159) (7,932) 204
Other income 236 236 914 509
----------- ----------- ----------- -----------
Income (loss) before
income taxes (2,428) (1,923) (7,018) 713
Provision (benefit) for
income taxes 14,126 (1,642) 13,673 (1,218)
----------- ----------- ----------- -----------
Net income (loss) $ (16,554) $ (281) $ (20,691) $ 1,931
=========== =========== =========== ===========
Earnings per share:
Basic $ (0.58) $ (0.01) $ (0.73) $ 0.07
=========== =========== =========== ===========
Diluted $ (0.58) $ (0.01) $ (0.73) $ 0.07
=========== =========== =========== ===========
Weighted-average shares
used in computing
earnings per share:
Basic 28,658,836 27,771,622 28,378,680 26,799,237
Diluted 28,658,836 27,771,622 28,378,680 29,367,423
The following table presents details of stock-based compensation expense included in each functional line item in the consolidated statements of operations above:
Three Months Ended Year Ended
December 31, December 31,
------------------------- -------------------------
2012 2011 2012 2011
------------ ------------ ------------ ------------
(in thousands of dollars)
(Unaudited)
Cost of revenue $ 197 $ 89 $ 726 $ 315
Research and development 1,465 1,018 5,833 3,214
Sales and marketing 626 672 2,660 2,054
General and
administrative 834 479 3,240 1,609
------------ ------------ ------------ ------------
$ 3,122 $ 2,258 $ 12,459 $ 7,192
============ ============ ============ ============
INPHI CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
(Unaudited)
December 31, December 31,
2012 2011
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 30,161 $ 29,696
Short-term investments in marketable
securities 91,107 89,283
Accounts receivable, net 13,717 9,358
Inventories 4,894 5,716
Other current assets 4,518 6,032
------------ ------------
Total current assets 144,397 140,085
Property and equipment, net 13,893 9,566
Goodwill 5,875 5,875
Deferred tax charge and other assets 5,909 17,102
------------ ------------
Total assets $ 170,074 $ 172,628
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 6,888 $ 5,016
Accrued expenses and other current liabilities 5,116 3,745
Deferred revenue 1,083 1,929
------------ ------------
Total current liabilities 13,087 10,690
Other liabilities 4,022 3,534
------------ ------------
Total liabilities 17,109 14,224
------------ ------------
Stockholders' equity:
Common Stock 29 28
Additional paid-in capital 205,269 190,314
Accumulated deficit (53,404) (32,713)
Accumulated other comprehensive income 1,071 775
------------ ------------
Total stockholders' equity 152,965 158,404
------------ ------------
Total liabilities and stockholders' equity $ 170,074 $ 172,628
============ ============
INPHI CORPORATION
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(in thousands of dollars, except share and per share amounts)
To supplement the audited financial data presented on a GAAP basis, the Company discloses certain non-GAAP financial measures, which exclude stock-based compensation, certain warranty, legal costs and other claims, restructuring charges of its Taiwan subsidiary, accelerated depreciation of certain property and equipment associated with the facility to be abandoned and deferred tax asset valuation allowance. These non-GAAP financial measures are not in accordance with GAAP. These results should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. The Company believes that its non-GAAP financial information provides useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations; non-GAAP financial information excludes charges or benefits that management considers to be outside of the Company's core operating results. The Company believes that the non-GAAP measures of gross margin, net income and earnings per share, in combination with the Company's financial results calculated in accordance with GAAP, provide investors with additional perspective and a more meaningful understanding of the Company's ongoing operating performance. In addition, the Company's management uses these non-GAAP measures to review and assess the financial performance of the Company, to determine executive officer incentive compensation and to plan and forecast performance in future periods. The Company's non-GAAP measurements are not prepared in accordance with GAAP and are not an alternative to GAAP financial information; these measurements may be calculated differently than non-GAAP financial information disclosed by other companies.
INPHI CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(in thousands of dollars, except share and per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
-------------------------- --------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
GAAP net income
(loss) $ (16,554) $ (281) $ (20,691) $ 1,931
Adjusting items
to GAAP net
income (loss):
Operating
expenses
related to
stock-based
compensation
expense, net
of tax effect 2,857 (a) 1,316 (a) 9,699 (a) 4,499 (a)
Adjustment to
revenue as a
result of
warranty
claim - - 497 (b) -
Legal expense
and accrual
of
provisional
costs - - 650 (c) -
Taiwan
restructuring
charges - 168 (d) - 1,814 (d)
Transitional
tax effects
of moving to
an
internationally based
structure - (955)(e) - (955)(e)
Accelerated
depreciation
of certain
property and
equipment
associated
with the
facility to
be abandoned,
net of tax
effect 254 (f) 254 (f)
Valuation
allowance 14,594 (g) - 14,594 (g) -
Delta in
interim
period tax
allocation
from GAAP to
non-GAAP (164)(h) - - -
----------- ----------- ----------- -----------
Non-GAAP net
income $ 987 $ 248 $ 5,003 $ 7,289
=========== =========== =========== ===========
Shares used in
computing non-
GAAP basic
earnings per
share 28,658,836 27,771,622 28,378,680 26,799,237
=========== =========== =========== ===========
Shares used in
computing non-
GAAP diluted
earnings per
share 29,892,186 29,401,746 29,784,635 29,367,423
=========== =========== =========== ===========
Non-GAAP
earnings per
share:
Basic $ 0.03 $ 0.01 $ 0.18 $ 0.27
=========== =========== =========== ===========
Diluted $ 0.03 $ 0.01 $ 0.17 $ 0.25
=========== =========== =========== ===========
GAAP gross
margin as a %
of revenue 64.3% 63.8% 64.2% 63.8%
Stock-based
compensation:
Cost of
revenue 0.9% 0.5% 0.8% 0.4%
Restructuring
charges - - - 1.0%
Accelerated
depreciation of
certain
property and
equipment
associated with
the facility to
be abandoned 0.2% - - -
Adjustment to
revenue as a
result of
warranty claim - - 0.3% -
----------- ----------- ----------- -----------
Non-GAAP gross
margin as a %
of revenue 65.4% 64.3% 65.3% 65.2%
=========== =========== =========== ===========
(a) Reflects the stock-based compensation expense recorded relating to stock
based awards. The Company excludes this item when it evaluates the
continuing operational performance of the Company as management believes
this GAAP measure is not indicative of its core operating performance.
(b) Reflects reduction in revenue as a result of warranty claim of a
customer. The Company excludes this item when it evaluates the
continuing operational performance of the Company as management believes
this GAAP measure is not indicative of its core operating performance.
(c) Reflects legal expense and accrual of provisional costs with regard to
employment and other related claims, net of insurance reimbursement. The
Company excludes this item when it evaluates the continuing operational
performance of the Company as management believes this GAAP measure is
not indicative of its core operating performance.
(d) In 2011, the Company decided to discontinue the sale of acquired legacy
products in Taiwan. The restructuring expenses were reflected in the
consolidated statements of operations as follows:
Three months ended Year ended
December 31, 2011 December 31, 2011
------------------ ------------------
Cost of goods sold $ - $ 782
Operating expenses:
Research and development 137 324
Sales and marketing - 671
General and administrative 31 37
------------------ ------------------
Total $ 168 $ 1,814
================== ==================
The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.
(e) Reflects the transitional tax effects of moving to an internationally
based structure. The Company excludes this item when it evaluates the
continuing operational performance of the Company as management believes
this GAAP measure is not indicative of its core operating performance.
(f) Reflects the accelerated depreciation of certain property and equipment
associated with the facility to be abandoned. The Company excludes this
item when it evaluates the continuing operational performance of the
Company as management believes this GAAP measure is not indicative of
its core operating performance.
(g) Reflects the valuation allowance established against deferred tax
assets. The Company excludes this item when it evaluates the continuing
operational performance of the Company as management believes this GAAP
measure is not indicative of its core operating performance.
(h) Reflects the delta in interim period tax allocation from GAAP to non-
GAAP related to non-GAAP adjustments. The Company excludes this item
when it evaluates the continuing operational performance of the Company
as management believes this GAAP measure is not indicative of its core
operating performance.
INPHI CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES -FIRST QUARTER 2013 GUIDANCE
(in thousands of dollars, except share and per share amounts)
(Unaudited)
Three Months Ending
March 31, 2013
------------------------
High Low
----------- -----------
Estimated GAAP net income (loss) $ 300 $ (300)
Adjusting items to estimated GAAP net income
(loss):
Operating expenses related to stock-based
compensation expense (3,900) (4,200)
Tax effect of stock-based compensation expense - -
----------- -----------
Estimated non-GAAP net income (loss) $ (3,600) $ (4,500)
=========== ===========
Shares used in computing estimated non-GAAP
diluted earnings per share 30,100,000 30,100,000
=========== ===========
Estimated non-GAAP diluted earnings per share $ (0.12) $ (0.15)
=========== ===========
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