Volterra Semiconductor Corporation (VLTR)
Q2 2009 Earnings Call
July 20, 2009 5:30 pm ET
Mike Burns – Chief Financial Officer, Vice President Finance, Treasurer & Secretary
Jeffrey Staszak – President, Chief Executive Officer & Director
JoAnne Feeney – FTN Midwest
Rick Schafer – Oppenheimer & Co.
Nick Aberle – Canaccord Adams
Vernon Essi, Jr. – Needham & Company
Patrick Wang – Wedbush Morgan
Gus Richard – Piper Jaffray & Co.
Alex Gauna – JMP Securities
Arnab K. Chanda – Roth Capital Partners
Ramesh Misra – Brigantine Advisors, LLC
John Vinh – Collins Stewart
Tore Svanberg – Thomas Weisel Partners
Previous Statements by VLTR
» Volterra Semiconductor Corporation Q3 2009 Earnings Call Transcript
» Volterra Q1 2009 Earnings Call Transcript Introductory Remarks
» Volterra Semiconductor Corporation Q4 2008 Earnings Call Transcript
With me to review our second quarter 2009 results is Volterra President and CEO Jeff Staszak. As usual, we’ll begin today’s conference call with a few important reminders. First, our earnings release and our financial statements are available on the investors section of our website at www.Volterra.com. Second, we’re going to discuss certain non-GAAP financial measures and we’ve provided a GAAP to non-GAAP reconciliation in our press release. The non-GAAP measures exclude the effect of stock-based compensation expense and special items such as the effect of accounting changes net of tax.
Unless we specifically state otherwise, when we give guidance about a financial measure we mean the non-GAAP financial measure. Finally, today’s remarks will contain forward-looking statements that are based on the company’s current views and expectations. Our actual results or events may differ materially from these forward-looking statements due to a number of risks and uncertainties.
Please review today’s press release and our filings with the SEC including our Form 10Q filed May 4, 2009 for a detailed discussion of the risk factors that could cause the actual result to differ materially from the forward-looking statements. Also, please note that Volterra undertakes no obligation to update or revise these forward-looking statements. With that, I’ll turn the call over to Jeff to provide an overview of the business and our results.
First, I’ll provide a short recap of the Q2 ’09 financials. I’ll then give a short update on our four focus markets and following this I’ll talk about Q3 ’09 and provide guidance for the quarter. Finally, I’ll hand it over to Mike to review the details of our financial performance for the quarter and then we’ll open it up for any additional questions you may have.
In Q2 ’09 revenue came in above the high end of guidance at $22.8 million versus $28.7 million in Q2 ’08 and $18.3 million in Q1 ’09. Non-GAAP EPS was $0.10 versus $0.25 in Q2 ’08 and $0.03 in Q1 ’09. Non-GAAP gross margins were significantly up from 56% last quarter to 59.1% in Q2. Of the 2.1% improvement, 1.8% was a benefit from the sales of products previously considered excess inventory with the balance due to product mix, yield improvement activities and cost reductions with all suppliers.
As I mentioned in our last call, we hit bottom in Q1 from a business and orders perspective and expected growth in Q2 and the second half ’09 as new product cycles and customer launches kicked in. We believe we are getting much better visibility from our customers as they adjust their forecast in order to reflect reality in the current economic environment. We continue to get improved visibility from our customers therefore, I am optimistic that we will see continued quarterly growth through the balance of this year and in to 2010 as new products in customer platforms continue to launch and the economy continues to recover.
Now, I’d like to talk about our four focused markets and our current and future business opportunities within those markets. The current macroeconomic situation has had an impact on our short term business however, our long term growth and profitability prospects remain very strong. We plan on sticking to our proven strategy of gaining market share, adding new customers and further penetrating our existing base of customers as new products and platforms are launched in these four target markets.
Server and storage; we indicated in our last call that revenue would be up in servers and storage in Q2. Revenue was up 39% from Q1 ’09 due to the Thurley server platform launch and an uptick in our storage orders. We expect to see continued growth and market share gains as our customers continue to launch new products based on this Thurley platform and other new server programs that launch over the next few quarters. Our fifth generation products for the Thurley platform have been very well received because our customers increased their total system efficiency demands and added more memory on these new servers to support the latest multi core processors.
This new generation of products enables us to provide the highest efficiency requirements in the industry while saving considerable board area. As evidenced by IBM earnings call last week they’re still seeing strong growth in our high end P-Series server business and X series improving. We believe the positive outlook for X-Series is a result of achieving the highest measured system efficiency per operation by the Standard Performance Evaluation Corporation or SPEC power benchmark on their new two year rack mounted server the x3650 M2 launched in the first quarter. Volterra’s latest products enabled IBM to achieve this best in class efficiency.