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Cavium Announces Financial Results for Q2 2014

SAN JOSE, Calif., July 30, 2014 /PRNewswire/ -- Cavium, Inc. (NASDAQ: CAVM), a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, communications, and the digital home, today announced financial results for the second quarter ended June 30, 2014.

Cavium, Inc. Logo.

Revenue in the second quarter of 2014 was $90.7 million, an 8.9% sequential increase from the $83.2 million reported in the first quarter of 2014 and a 22.2% year-over-year increase from the $74.2 million reported in the second quarter of 2013.

Generally Accepted Accounting Principles (GAAP) Results

Net loss attributable to the Company in the second quarter of 2014 was $11.0 million, or $(0.21) per diluted share, compared to net income attributable to the Company of $2.3 million, or $0.04 per diluted share in the first quarter of 2014. Gross margins were 62.6% in the second quarter of 2014 compared to 63.5% in the first quarter of 2014. Total cash and cash equivalents were $140.6 million at June 30, 2014.

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 2014, Non-GAAP net income was $19.9 million, or $0.35 per diluted share, Non-GAAP gross margin was 64.5% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 22.3%.

Recent News Highlights

  • July 21, 2014 - Cavium and Quortus Enabled Unique LTE RAN and EPC on Single Chip for Portable Applications
  • June 23, 2014 - Altera and Cavium Delivered Pre-Verified Packet Classification Solution for Networking Appliances
  • June 3, 2014 - Cavium Introduced ThunderX™: A 2.5 GHz, 48 Core Family of Workload Optimized Processors for Next Generation Data Center and Cloud Applications
  • June 3, 2014 - Cavium Announced Collaboration with Oracle to Support the ThunderX™ Processor Family
  • June 3, 2014 - Cavium Expanded Collaboration with Fedora Project to Accelerate ARMv8 Software Ecosystem
  • June 3, 2014 - openSUSE Community Announced Partnership with Cavium to Support the ThunderX™ Workload Optimized Processor Family
  • June 3, 2014 - Canonical Announced Expanded Ubuntu Support for the Cavium Workload Optimized ThunderX™ Processor Family
  • June 3, 2014 - Cavium Delivered Next Generation Xen Virtualization with ThunderX™ Family of Workload Optimized Processors
  • June 3, 2014 - American Megatrends Announced Partnership with Cavium to Support the ThunderX™ Processor Family
  • June 3, 2014 - Gigabyte Technology Announced Expansion of Server Platforms based on Cavium's ThunderX™ Workload Optimized Processor Family
  • June 3, 2014 - Cavium Contributed ARMv8 Based Platform Architecture to Open Compute Project, Based on ThunderX™ Family of Workload-Optimized Processors
  • June 3, 2014 - MontaVista Announced MV Cloud Support for the Cavium ThunderX™ Workload Optimized Processor Family
  • June 3, 2014 - Cavium Joined Xen Project Advisory Board
  • June 2, 2014 - Cavium Introduced Project Thunder at Computex 2014
  • June 2, 2014 - Cavium Demonstrated a Broad Range of New SoC Solutions for RAN Core and Cloud Infrastructure at Computex 2014

Cavium, Inc. will broadcast its second quarter of 2014 financial results conference call today, July 30, 2014, 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 for networking, communications and the digital home. Cavium offers a broad portfolio of integrated, software-compatible processors ranging in performance from 10 Mbps to 100 Gbps that enable secure, intelligent functionality in enterprise, data-center, broadband/consumer and access and service provider equipment. Cavium 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.



Unaudited GAAP Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

Three Months Ended 

June 30, 2014

March 31, 2014

Net revenue

$       90,681

$          83,241

Cost of revenue 



Gross profit 



Operating expenses:

     Research and development 



     Sales, general and administrative 



        Total operating expenses 



Income (loss) from operations 



Other income (expense), net:

    Interest expense



    Change in estimated fair value of variable interest entity's (VIE) notes
          payable and other 



    Other, net



Total other expense, net



     Loss before income taxes 



     Provision for income taxes



Net loss



Net loss attributable to non-controlling interest



Net income (loss) attributable to the Company

$     (11,044)

$            2,347

Net income (loss) attributable to the Company per common share, basic

$         (0.21)

$              0.04

Shares used in computing basic net income (loss) per common share



Net income (loss) attributable to the Company per common share, diluted

$         (0.21)

$             0.04

Shares used in computing diluted net income (loss) per common share




Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands)

Three Months Ended 

Reconciliation of GAAP research and development expenses to non-GAAP:

June 30, 2014

March 31, 2014

    GAAP research and development expenses

$       38,834

$          37,289

          Stock-based compensation and related payroll taxes



          Net restructuring related expenses 



          Research and development expenses associated from a VIE



     Non-GAAP research and development expenses

$       26,436

$          25,987

Reconciliation of GAAP sales, general and administrative expenses to non-GAAP:

    GAAP sales, general and administrative expenses

$       17,017

$          15,932

          Stock-based compensation and related payroll taxes



          Amortization of acquired intangible assets



          Net restructuring related expenses



          Sales, general and administrative expenses associated from a VIE



     Non-GAAP sales, general and administrative expenses

$       11,835

$          11,191

Total Non-GAAP operating expenses

$       38,271

$          37,178

Reconciliation of GAAP non-operating expenses to non-GAAP:

    GAAP non-operating expenses

$     (14,313)

$          (1,182)

          Change in estimated fair value of VIE's notes payable and other 



          Non-operating expenses associated from a VIE



Total Non-GAAP non-operating income (expense)

$           (49)

$                45



Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data and percentages)

Three Months Ended 

June 30, 2014

March 31, 2014

Reconciliation of GAAP gross profit & margin to non-GAAP:

Net revenue

$         90,681

$            83,241

GAAP gross profit



GAAP gross margin



          Stock-based compensation and related payroll taxes



          Amortization of acquired intangible assets



          Net restructuring related expenses



Non-GAAP gross profit

$         58,481

$            54,417

Non-GAAP gross margin



Three Months Ended 

June 30, 2014

March 31, 2014

Reconciliation of GAAP loss from operations to non-GAAP income from operations:

GAAP income (loss) from operations

$              933

$               (330)

          Stock-based compensation and related payroll taxes



          Amortization of acquired intangible assets



          Net restructuring related expenses



          Loss from operations of a variable interest entity



Non-GAAP income from operations

$         20,210

$            17,239

Non-GAAP income from operations as a percentage of revenue



Three Months Ended 

June 30, 2014

March 31, 2014

Reconciliation of GAAP net income (loss) to non-GAAP net income:

GAAP net income (loss) attributable to the Company

$       (11,044)

$              2,347

Non-GAAP adjustments:

      Stock-based compensation and related payroll taxes



      Amortization of acquired intangible assets



      Net restructuring related expenses



      Net loss of a variable interest entity attributable to the Company



     Total of non-GAAP adjustments



Non-GAAP net income 

$         19,850

$            17,041

GAAP net income (loss) attributable to the Company per share, diluted

$           (0.21)

$                0.04

   Non-GAAP adjustments detailed above



Non-GAAP net income attributable to the Company per share, diluted

$             0.35

$                0.30

GAAP weighted average shares, diluted



   Non-GAAP share adjustment



Non-GAAP weighted average shares, diluted





Unaudited GAAP Condensed Consolidated Balance Sheets

(in thousands)

As of
June 30, 2014

As of
March 31, 2014


Current assets:

Cash and cash equivalents

$     140,580

$        124,106

Accounts receivable, net 






Prepaid expenses and other current assets



Total current assets



Property and equipment, net



Intangible assets, net






Other assets



Total assets

$     399,932

$        378,396

Liabilities and Equity 

Current liabilities:

Accounts payable

$       28,466

$          24,060

Other accrued expenses and other current liabilities



Deferred revenue



Notes payable and other



Capital lease and technology license obligations



Total current liabilities



Capital lease and technology license obligations, net of current 



Deferred tax liability



Other non-current liabilities



Total liabilities




Common stock



Additional paid-in capital



Accumulated deficit



Total stockholders' equity attributable to the Company



Non-controlling interest



Total equity



Total liabilities and equity 

$     399,932

$        378,396

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