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Mellanox Technologies Announces Q4 & 2007 Financial Results
Sixth Consecutive Quarter of Record Revenue; 73% Year-over-Year Growth: Mellanox Technologies announced financial results for its fourth quarter and fiscal year 2007, ended Dec. 31, 2007. In accordance with U.S. generally accepted accounting principles (GAAP), the company recorded revenue in the fourth quarter of $24.8 million, up 9 percent from $22.7 million reported in the third quarter of 2007 and up 57 percent from the $15.8 million reported in the fourth quarter a year ago. For the year ended Dec. 31, 2007, revenue was $84.1 million, an increase of 73 percent from revenue of $48.5 million reported in 2006. 
Gross margins in the fourth quarter were 73.8 percent, compared with 74.9 percent in the third quarter of 2007 and 75.1 percent in the fourth quarter of 2006. GAAP net income in the fourth quarter was $19.7 million or $0.60 per diluted share and included a tax benefit of $12.1 million from the release of a deferred tax assets’ valuation allowance relating primarily to net operating losses, which is expected to reverse in 2008. On a non-GAAP basis, the company recorded fourth quarter net income of $8.8 million, or $0.26 per diluted share, compared with $8.0 million in the third quarter of 2007 and $4.1 million in the fourth quarter a year ago. For 2007, non-GAAP net income was $27.1 million, or $0.80 per diluted share. These non-GAAP net income results exclude share-based compensation expenses and the release of the valuation allowance against certain deferred tax assets which will be offset against future taxable income. Total cash and investments were $153.6 million at Dec. 31, 2007. The company generated $4.6 million of cash from operations during the quarter and $25.9 million for the year. “Mellanox achieved its sixth consecutive quarter of record revenue, and our 2007 results were a record by our key metrics,” said Eyal Waldman, chairman, president and CEO. “We grew annual revenue by 73 percent, expanded gross margins to 74.6 percent and posted record profitability. “We shipped more than 215,000 adapters in 2007. Our ConnectX InfiniBand products announced during the year have gained wide acceptance and significant traction, as we ended the year with approximately 41,000 shipped to our customers. All the Tier-1 server vendors—Dell, HP, IBM, and Sun— plus additional server vendors are now providing their customers with our ConnectX adapter cards and customized blade products. “In 2007, we also announced ConnectX 10 Gigabit Ethernet NICs, which are currently undergoing evaluation with customers. Initial feedback on the 10 Gigabit Ethernet products and the combo capability of InfiniBand and 10 Gigabit Ethernet in the same products has been positive,” he said. “Virtualization with the release of VMware ESX 3.5, server blades and storage will be key growth drivers in 2008 and beyond. We are seeing increasing demand for our products to consolidate multiple Ethernet and Fibre Channel networks into a single adapter, providing end-users the ability to do more with less. “We successfully completed our initial public offering in February 2007, raising approximately $106 million in net proceeds to the company. Throughout the year, we increased the number of markets and applications that our interconnect products can address, expanding our revenue opportunities in 2008 and beyond.”
Gross margins in the fourth quarter were 73.8 percent, compared with 74.9 percent in the third quarter of 2007 and 75.1 percent in the fourth quarter of 2006. GAAP net income in the fourth quarter was $19.7 million or $0.60 per diluted share and included a tax benefit of $12.1 million from the release of a deferred tax assets’ valuation allowance relating primarily to net operating losses, which is expected to reverse in 2008. On a non-GAAP basis, the company recorded fourth quarter net income of $8.8 million, or $0.26 per diluted share, compared with $8.0 million in the third quarter of 2007 and $4.1 million in the fourth quarter a year ago. For 2007, non-GAAP net income was $27.1 million, or $0.80 per diluted share. These non-GAAP net income results exclude share-based compensation expenses and the release of the valuation allowance against certain deferred tax assets which will be offset against future taxable income. Total cash and investments were $153.6 million at Dec. 31, 2007. The company generated $4.6 million of cash from operations during the quarter and $25.9 million for the year. “Mellanox achieved its sixth consecutive quarter of record revenue, and our 2007 results were a record by our key metrics,” said Eyal Waldman, chairman, president and CEO. “We grew annual revenue by 73 percent, expanded gross margins to 74.6 percent and posted record profitability. “We shipped more than 215,000 adapters in 2007. Our ConnectX InfiniBand products announced during the year have gained wide acceptance and significant traction, as we ended the year with approximately 41,000 shipped to our customers. All the Tier-1 server vendors—Dell, HP, IBM, and Sun— plus additional server vendors are now providing their customers with our ConnectX adapter cards and customized blade products. “In 2007, we also announced ConnectX 10 Gigabit Ethernet NICs, which are currently undergoing evaluation with customers. Initial feedback on the 10 Gigabit Ethernet products and the combo capability of InfiniBand and 10 Gigabit Ethernet in the same products has been positive,” he said. “Virtualization with the release of VMware ESX 3.5, server blades and storage will be key growth drivers in 2008 and beyond. We are seeing increasing demand for our products to consolidate multiple Ethernet and Fibre Channel networks into a single adapter, providing end-users the ability to do more with less. “We successfully completed our initial public offering in February 2007, raising approximately $106 million in net proceeds to the company. Throughout the year, we increased the number of markets and applications that our interconnect products can address, expanding our revenue opportunities in 2008 and beyond.” 
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