SAN JOSE, Calif., January 31, 2018 – Cavium,
Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable
intelligent processing for enterprise, data center, cloud, wired and wireless
networking, today announced financial results for the fourth quarter ended
December 31, 2017. Due to the pending merger with Marvell Technology Group Ltd.
(“Marvell”), the Company will not schedule an earnings conference call.
Net revenue in the fourth quarter of 2017 was $260.4 million, a 3.3% sequential increase from the $252.0 million reported in the third quarter of 2017 and 15.1% from the $226.2 million reported in the fourth quarter of 2016.
Generally Accepted Accounting Principles (GAAP) Results
Net loss for the fourth quarter of 2017 was $1.1 million, or ($0.02) per diluted share, compared to $6.2 million, or ($0.09) per diluted share in the third quarter of 2017. Gross margins were 53.9% in the fourth quarter of 2017 compared to 54.6% in the third quarter of 2017. As a percentage of revenue, GAAP loss from operations was 4.7% in the fourth quarter of 2017 compared to GAAP operating income of 0.2% in the third quarter of 2017. Total cash and cash equivalents were $140.5 million at December 31, 2017.
The GAAP results of operations in the fourth quarter of 2017 included an income tax benefit of $11.1 million as a result of the Company’s preliminary assessment of the impact of the newly enacted U.S. Tax Reform. On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs Act (the “Act”), which significantly changes the existing U.S. tax laws. Major reforms in the legislation include a reduction in the corporate tax rate from 35.0% to 21.0%, and a move from a worldwide tax system to a territorial system. As a result of enactment of the legislation, the Company recognized a tax benefit mentioned above due to the reduction in its net long term deferred tax liabilities recorded on its consolidated balance sheet. Although the Company believes the amount of recognized tax benefit is a reasonable estimate of the income tax effects of the Act, it should be considered provisional and may differ from the amounts that will be reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 as the Company continuously refines its assessment of the impact. Further, the final assessment of the impact of the Act may differ due to and among other things, changes in interpretations, assumptions made by the Company, the issuance of additional guidance, and actions the Company may take as a result of tax reform. The SEC has issued rules which allow for a measurement period of up to one year after the enactment date of the Act to finalize the accounting for the related tax impacts. Any adjustments to these provisional amounts will be reported as a component of income tax expense or benefit in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018.
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 core operational activities 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 Non-GAAP results exclude the effect of stock-based compensation and related payroll taxes, amortization of acquisition related assets, acquisition related inventory charges, acquisition and integration related costs, tax reform impact and acquisition related tax adjustment. The acquisition and integration related costs in the fourth quarter of 2017 included various transaction-related charges associated with the pending Merger with Marvell, primarily financial advisory and outside legal fees. The reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this release.
In the fourth quarter of 2017, Non-GAAP net income was $60.8 million, or $0.83 per diluted share, Non-GAAP gross margin was 65.2% and Non-GAAP income from operations as a percentage of revenue was 24.2%.
Recent News Highlights
Net revenue in the fourth quarter of 2017 was $260.4 million, a 3.3% sequential increase from the $252.0 million reported in the third quarter of 2017 and 15.1% from the $226.2 million reported in the fourth quarter of 2016.
Generally Accepted Accounting Principles (GAAP) Results
Net loss for the fourth quarter of 2017 was $1.1 million, or ($0.02) per diluted share, compared to $6.2 million, or ($0.09) per diluted share in the third quarter of 2017. Gross margins were 53.9% in the fourth quarter of 2017 compared to 54.6% in the third quarter of 2017. As a percentage of revenue, GAAP loss from operations was 4.7% in the fourth quarter of 2017 compared to GAAP operating income of 0.2% in the third quarter of 2017. Total cash and cash equivalents were $140.5 million at December 31, 2017.
The GAAP results of operations in the fourth quarter of 2017 included an income tax benefit of $11.1 million as a result of the Company’s preliminary assessment of the impact of the newly enacted U.S. Tax Reform. On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs Act (the “Act”), which significantly changes the existing U.S. tax laws. Major reforms in the legislation include a reduction in the corporate tax rate from 35.0% to 21.0%, and a move from a worldwide tax system to a territorial system. As a result of enactment of the legislation, the Company recognized a tax benefit mentioned above due to the reduction in its net long term deferred tax liabilities recorded on its consolidated balance sheet. Although the Company believes the amount of recognized tax benefit is a reasonable estimate of the income tax effects of the Act, it should be considered provisional and may differ from the amounts that will be reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 as the Company continuously refines its assessment of the impact. Further, the final assessment of the impact of the Act may differ due to and among other things, changes in interpretations, assumptions made by the Company, the issuance of additional guidance, and actions the Company may take as a result of tax reform. The SEC has issued rules which allow for a measurement period of up to one year after the enactment date of the Act to finalize the accounting for the related tax impacts. Any adjustments to these provisional amounts will be reported as a component of income tax expense or benefit in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018.
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 core operational activities 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 Non-GAAP results exclude the effect of stock-based compensation and related payroll taxes, amortization of acquisition related assets, acquisition related inventory charges, acquisition and integration related costs, tax reform impact and acquisition related tax adjustment. The acquisition and integration related costs in the fourth quarter of 2017 included various transaction-related charges associated with the pending Merger with Marvell, primarily financial advisory and outside legal fees. The reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this release.
In the fourth quarter of 2017, Non-GAAP net income was $60.8 million, or $0.83 per diluted share, Non-GAAP gross margin was 65.2% and Non-GAAP income from operations as a percentage of revenue was 24.2%.
Recent News Highlights
- January
23, 2018 - Cavium
FastLinQ® Enables Scalable Networking for HyperConverged Infrastructure
- December
5, 2017 - Cavium
Partners with IBM for Next Generation Platforms by Joining OpenCAPI
- November
28, 2017 - Cavium
FastLinQ® Delivers Advanced Networking I/O for HPE Gen 10 Servers
- November
20, 2017 - Marvell
and Cavium to Combine Creating an Infrastructure Solutions Powerhouse
- November
14, 2017 - Microsemi
Announces Adaptec Smart Storage Adapter Support for Cavium ThunderX2
ARM-Based CPUs
- November
13, 2017 - HPE
Helps Businesses Capitalize on High Performance Computing and Artificial
Intelligence Applications with New High-Density Compute and Storage
- November
13, 2017 - Cray
Catapults Arm-Based Processors Into Supercomputing
- November
13, 2017 - GIGABYTE
Announces Production Availability of Cavium's ThunderX2-based Server
Portfolio
- November
13, 2017 - Ingrasys
Announces Production Systems Based on Cavium's ThunderX2 Processor
- November
13, 2017 - Cavium
and Leading Partners to Showcase ThunderX2™ Arm-based Server Platforms and
FastLinQ® Ethernet Adapters for High Performance Computing at SC17
- November
8, 2017 - Cavium™
ThunderX2 Motherboard Specification for Microsoft's Project Olympus
Contributed to the Open Compute Project
- November
7, 2017 - University
of Michigan Partners with Cavium™ on Big Data Computing Platform for U-M
Researchers
About Cavium
Cavium, Inc. (NASDAQ: CAVM), offers a broad portfolio of infrastructure solutions for compute, security, storage, switching, connectivity and baseband processing. Cavium’s highly integrated multi-core SoC products deliver software compatible solutions across low to high performance points enabling secure and intelligent functionality in Enterprise, Data Center and Service Provider Equipment. Cavium processors and solutions are supported by an extensive ecosystem of operating systems, tools, application stacks, 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 further information, please visit the investor relations section of the Cavium web site at http://www.cavium.com.
Cavium Contact:
Angel Atondo
Senior Marketing Communications Manager
Tel: (408) 943-7417
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