Volterra Semiconductor Corporation (VLTR)
Q4 2009 Earnings Call
January 25, 2009 5:30 pm ET
Mike Burns - Chief Financial Officer
Jeff Staszak - President & Chief Executive Officer
Alex Gauna - JMP Securities
Joanne Feeney - FTN Equity
Nicholas Aberle - Caris & Company
Suji De Silva - Kaufman Bros
Anthony Stoss - Craig Hallum
Vernon Essi - Needham & Co
Ramesh Misra - Brigantine Advisors
Christopher Longiaru - Sidoti and Co.
Shawn Simmons - Oppenheimer
Previous Statements by VLTR
» Volterra Semiconductor Corporation Q3 2009 Earnings Call Transcript
» Volterra Semiconductor Corporation Q2 2009 Earnings Call Transcript
» Volterra Q1 2009 Earnings Call Transcript Introductory Remarks
At this time I would like to turn the conference over to Mike Burns, Chief Financial Officer. Please go ahead sir.
Thanks and welcome everyone to Volterra’s fourth quarter 2009 conference call. Joining me today is Volterra President and CEO, Jeff Staszak. We issued a press release today with our financial results, which is available on the Investor section of our website at www.volterra.com.
On this call, we’re going to discuss certain non-GAAP financial measures which exclude the effect of stock based compensation expense net of tax. We’ve provided a GAAP to non-GAAP reconciliation that’s also available on the Investor section of our website. Unless we specifically state otherwise, our guidance refers to non-GAAP. Our comments will include forward-looking statements that are based on the company’s current views and expectations that are subject to several risks and uncertainties.
Please refer to today’s press release, our Annual Report 10-K filed with the SEC on March 4, 2009 and our most recent 10-Q filed with the SEC on November 4 for specific risk factors that may cause actual results to differ materially from the forward-looking statements. Volterra undertakes no obligation to update or to revise the forward-looking statements.
With that I’ll turn the call over to Jeff to provide an overview of the business and our results.
Thanks Mike. Good afternoon and thanks for joining us today. First I’ll provide a short recap of the Q4 ‘09 financials. I’ll then give an update on our four focused markets, and following this I’ll talk about Q1 2010 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 2009, and then we will open it up for any additional questions you may have.
In Q4 ‘09, revenue came in above the high end of our guidance at $34.2 million, versus $21.9 million in Q4 ‘08, and $29.7 million in Q3 ‘09. 2009 annual revenue came in at a record $104.9 million, exceeding 2008 annual revenue of $104.2 million. As a result, Volterra had its ninth consecutive year of revenue growth and sixth consecutive year of profitability, of which everyone at Volterra is very proud of.
Non-GAAP EPS was $0.34, versus $0.09 in Q4 ‘08 and $0.19 in Q3 ‘09. Non-GAAP gross margins were up from 59.7% in Q3, to 63.4% in Q4. Margins continued to improve due to product mix, heavy emphasis on companywide yield improvement activities, low scrap rates and cost reductions with all suppliers.
I would like to thank our margin improvement team that we formed about 18 months ago which consists of members from our finance, operations, and manufacturing engineering groups for doing a truly outstanding job of exceeding our target goal of 60 points in a shorter timeframe than we expected.
As I mentioned on our last call, we expected fourth quarter growth with new product cycles and customer launches continuing in our server and storage market. Growth was even stronger than we expected, mainly due to the demand from our two largest server customers, IBM and HP.
In addition to our server and storage business, we also had unexpected upside from Cisco and Juniper Networks in our fourth quarter as their business recovered. Our communications business surprised us to the upside as it came in stronger than original forecasts.
Overall, 2009 turned out to be a phenomenal year with this record setting quarter for Volterra. The current macroeconomic situation continues to improve, and is having a positive impact on our business while our long term growth and profitability prospects remain very strong.
We continue to stick to our proven strategy of gaining market share by adding new customers and further penetrating our existing base of customers as new products and platforms are launched within our four target markets. Now we would like to elaborate and add some color on these four focused markets by reviewing with you both our current and future business opportunities.
Server and storage revenue was up 33% from Q3 ‘09 mainly due to the continuation of the Intel Thurley server platform ramp as well as new AMD Opteron refresh ramp using a six core CPU at HP, referred to as Gen 6, which was announced at our last earnings call. These new Intel servers at our top server customers IBM and HP and the AMD servers at HP have been very well received based on the demand they are seeing.
Both new Intel and AMD server platforms have increased total system efficiency and provide higher density over previous models. As a result, their customers are upgrading datacenters to take advantage of the performance and energy cost savings which provides a quick payback which in some cases is less than one year.