Cavium Announces Financial Results for Q2 2016

SAN JOSE, Calif., July 26, 2016 – 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 second quarter ended June 30, 2016.

Net revenue in the second quarter was $107.2 million, a 5.2% sequential increase from the $101.9 million reported in the first quarter of 2016 and 2.1% from the $105.0 million reported in the second quarter of 2015.

Generally Accepted Accounting Principles (GAAP) Results
Net loss for the second quarter of 2016 was $7.4 million, or $(0.13) per diluted share, compared to $3.8 million, or $(0.07) per diluted share in the first quarter of 2016. Gross margins were 66.9% in the second quarter of 2016 compared to 66.8% in the first quarter of 2016. GAAP operating loss (GAAP loss from operations as a percentage of revenue) was 6.3% in the second quarter of 2016 compared to 3.3% in the first quarter of 2016. Total cash and cash equivalents were $140.4 million at June 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. 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 second quarter of 2016, Non-GAAP net income was $17.2 million, or $0.29 per diluted share. Non-GAAP gross margin was 67.3% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 16.6%.

Recent News Highlights

• July 13, 2016 - Cavium Commences Exchange Offer to Acquire QLogic
• June 21, 2016 - Cavium Adds Microsemi’s Storage Solutions to ThunderX® Processor Family
• June 20, 2016 - IDT Collaborates with Cavium to Support Hyperscale Data Centers
• June 20, 2016 - Cavium and Partners Demonstrated ThunderX Servers at ISC 2016
• June 15, 2016 - Cavium Announced to Acquire QLogic
• May 20, 2016 - Cavium Announced ThunderX2™
• May 30, 2016 - Cavium Showcased The CloudScale Rack™
• May 23, 2016 - Cavium Unveiled OCTEON TX™: Industry’s widest range of 64-bit ARM®-based SOCs for a broad spectrum of open, services-centric applications in enterprise and service provider infrastructure

Cavium, Inc. will broadcast its second quarter of 2016 financial results conference call today, July 26, 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 is a leading provider of highly integrated semiconductor products that enable intelligent processing in enterprise, data center, cloud and wired and wireless service provider applications. Cavium offers a broad portfolio of integrated, software-compatible processors ranging in performance from 100 Mbps to 100 Gbps that enable secure, intelligent functionality in enterprise, data-center, broadband/consumer and access and service provider equipment. Cavium’s processors are supported by ecosystem partners that provide operating systems, tool support, reference designs and other services. Cavium’s principal office is in San Jose, CA with design team locations in California, Massachusetts, India and China. For more information, please visit: http://www.cavium.com. 

Cavium Contact                                                       
Angel Atondo                                                                                     
Sr. Marketing Communications Manager
Tel: (408) 943-7417                                                                           
Email:angel.atondo@cavium.com

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Cavium Showcases The CloudScale Rack™

A Fully Cavium Powered Rack for Flexible and Scalable Software Defined Data Centers

TAIPEI, Taiwan., May 30, 2016 – Cavium, Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable intelligent processing for enterprise, data center, cloud, wired and wireless networking today showcased CloudScale Rack™ solution that demonstrates a complete cloud data center enabled using customer platforms built on Cavium's product portfolio.  Today's data center platforms are built using legacy building blocks that evolved over time and are unable to address the growing complexity and scale of current data centers. Servers are not Workload Optimized™. They use legacy one-size-fits all processors and require NICs, HBAs and offload cards to meet the storage and virtualization needs of data centers. Fixed server configurations make it very challenging to seamlessly provision and move workloads across the data center. Legacy L3, L2 switches are designed for wiring closets and not for modern data centers. They use fixed function ASICs that limit visibility making it difficult to capture errant events, identify latency and congestion hotspots.

Modern data centers need flow based switching and ability to quickly deploy emerging protocols. These are not supported by legacy switches. Traditional data center security appliances require specialized hardware modules for secure key storage and authentication. They do not support security in a multi-tenant environment and are not suitable for securing virtual networks. Traditional custom appliances are designed with the point of view of physical network constraints and are not suitable for scale out virtualized data centers. There arises a need for a new approach for a software defined rack solution across network, storage and compute to deliver the scalability, flexibility and efficiency to compete in the future where hyperscale is mandatory. This new approach is the scalable rack solution with a range of Workload Optimized servers for compute, storage, networking and management modules that work together to build a wide range of on-demand logical, virtual systems, which are more adoptable and scalable to emerging networking protocol and security needs of the cloud. Cavium delivers silicon and software building blocks engineered from the ground up for flexible, scalable software defined data centers. The CloudScale Rack includes ThunderX® Workload Optimized processors for compute, secure compute, storage, big data and networking server applications. LiquidIO® Intelligent NICs that offload and enable high performance distributed server load balancing, firewall, VM acceleration and virtualized elastic storage with NVMe over Ethernet protocol. XPliant® Flexible, high throughput data center Ethernet switches. LiquidSecurity™ Appliance delivering comprehensive elastic security to virtualized data centers including authentication and key management for multi-tenant data centers. CloudScale Rack is a flexible & scalable fully standards based solution based on OEM/ODM platforms developed using Cavium silicon building blocks. CloudScale Rack allows scale-out of individual rack elements, while the entire rack cabinet behaves as scalable unit of data center. Cavium CloudScale Rack solution enables a range of powerful capabilities: ThunderX based Workload Optimized servers enable seamless deployment of virtual machines through hardware support for dedicated IO for each virtual machine, VM to VM isolation, VM security and VM to VM switching.   ThunderX based Workload Optimized servers integrate all the networking, storage and accelerator capabilities required to run a typical Data Center Application. This enables customers to reconfigure ThunderX based server on demand to dynamically change the type of application running on the server using OpenStack East-West traffic between ThunderX based clusters in the rack can be directly switched using built in fabric in ThunderX lowering application latency and reducing number of leaf switch ports. LiquidIO adapters plugged into ThunderX servers enable distributed server load balancing, firewall, and virtualized elastic storage with NVM over Ethernet protocol. Cavium LiquidSecurity appliance provides authentication and key management on a per VM basis for IAAS and SAAS deployments. XPliant Software Defined (SDN) top of rack switches support a complete set of networking protocols with future proof flexibility to support emerging new protocols including Support for advanced high performance routing in and out of tunnels enabling distributed VXLAN support in enterprise class datacenters.   Advanced programmable telemetry for capturing networking events leading to higher availability, less downtime and better networking efficiency. Flexible table memory allocation to support the most demanding high scale software defined tunneled flow based networks. XPliant software loadable profiles support multiple Places in the Network (PINs) with a single hardware SKU XPliant switches work together with ThunderX SoC to implement VM level access control and monitoring capabilities. End to end fabric management can be implemented using Openflow APIs. “Cavium is one of the few semiconductor companies with a comprehensive portfolio of products from switching to security to intelligent NICs and servers for the state of the art data centers today” said Raghib Hussain, CTO and Corporate VP/GM of Cavium. “Customers can build an efficient and scalable software defined data center based entirely on Cavium data center technologies.” "The CloudScale Rack offering tightly couples the state of art software defined XPliant Ethernet switch fabric , Workload Optimized ThunderX servers for compute & storage applications, intelligent LiquidIO offload cards in and LiquidSecurity appliance for VM security & key management “ said Alex Liu, Product Marketing Executive, Network & Communication Business Unit, GIGABYTE. “Today's cloud data center infrastructure requires this level of scalability & flexibility to meet the demands of ever changing workloads, networking protocols and on demand provisioning of the rack. Gigabyte will start sampling the CloudScale Rack in Q3' 2016." ####  About Cavium Cavium is a leading provider of highly integrated semiconductor products that enable intelligent processing in enterprise, data center, cloud, wired and wireless service provider applications. Cavium offers a broad portfolio of integrated, software compatible processors ranging in performance from 100 Mbps to 100 Gbps that enable secure, intelligent functionality in enterprise, data center, broadband/consumer and access & service provider equipment. Cavium's processors are supported by ecosystem partners that provide operating systems, tool support, reference designs and other services. Cavium's principal offices are in San Jose, California with design team locations in California, Massachusetts, India, and China. For more information, please visit: http://www.cavium.com. Cavium Contact Angel Atondo Sr. Marketing Communications Manager Telephone: +1 408-943-7417 Email: angel.atondo@cavium.com

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