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Mellanox Technologies, Ltd. (MLNX)
Q4 2009 Earnings Call Transcript
January 27, 2010 5:00 pm ET
Deborah Stapleton – IR, Stapleton Communications Inc.
Eyal Waldman – Chairman, President and CEO
Michael Gray – CFO
Adam Benjamin – Jefferies
Armand Pagosi [ph] – Credit Suisse
Kevin Cassidy – Thomas Weisel Partners
Brent Bracelin – Pacific Crest Securities
Apurva Patel –Ticonderoga
Jonathan Kreizman – Oscar Gruss
Rajesh Ghai – ThinkEquity
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Thank you, Jason. Good afternoon everyone and welcome to our conference call. Leading the call today will be Eyal Waldman, Chairman, President and CEO of Mellanox Technologies and Michael Gray, the Chief Financial Officer.
By now, you've seen the press release and associated financial information that we furnished on Form 8-K this afternoon. In addition to reviewing our financial results, some of our comments today will include forward-looking statements within the meaning of section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities and Exchange Act of 1934 as amended, based on our current expectations.
These forward-looking comments entail various significant risks and uncertainties that could cause our actual results to differ materially from those expressed in such forward-looking statements.
Forward-looking statements in this conference are generally identified by words such as “believes,” “anticipates,” “expects,” “intends,” “may,” “will,” and other similar expressions. However, these words are not the only way we identify forward-looking statements. In addition, any statements that refer to expectations, projections, forecasts, predictions or other characterizations of future events or circumstances are forward-looking statements.
Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. We undertake no obligation to update any of the information contained in any forward-looking statement that we make today. We have provided additional information in today's press release and in our Form 10-K filed on March 12, 2009 and our 10-Q filed on November 4, 2009 about risk factors that could cause our actual results to differ materially from those in the forward-looking statements.
If you do not have copies of our 10-K or 10-Q, you can find them at ir.mellanox.com or we will be happy to provide you with them.
Now, let's turn the call over to Eyal for his opening remarks.
Thank you, Debra. Good afternoon, everyone, and thank you for joining us for our Fourth Quarter and Fiscal Year 2009 Earning Conference Call.
On today's call, I will highlight our fourth quarter and 2009 results and achievements. I will then turn the call over to Michael Gray, our Chief Financial Officer, who will discuss the financial results in more details and provide our first quarter guidance. After that, we will be happy to take your questions.
Briefly recapping our fourth quarter results. Mellanox ended the quarter with record revenue of $35.5 million. 8.7% above the third quarter revenue of $32.7 million and 40.9% above fourth quarter 2008 revenue of $25.2 million. Operating income was $6.7 million or 18.9% of revenue.
Non-GAAP net income was $9.9 million or $0.28 per diluted share. This represents 115% quarterly year-over-year growth in non-GAAP earnings per share.
Gross margins were 75.6% and we generated cash from operations of $7.3 million ending the quarter with $213.2 million in cash and investments. Highlighting our year-over-year results, revenue was $116 million, up 7.7% from the $107.7 million in 2008 and non-GAAP net income decrease to $28.7 million compared to $32.2 million in 2008. We are proud that the company generated a record $32.8 million in cash from operations in 2009 and ended with more than $213 million in cash and investments.
We continue to see increased adoption of our industry leading InfiniBand and Internet products. Both volume and dollar shipment of our silicon adapters and switch systems increased year-over-year and quarter-over-quarter. We are proud to inform you that we shipped nearly 90,000 adapters in the fourth quarter, representing a run rate of 360,000 servers a year or about 5% of an estimated 7.3 million servers annual server market in 2010.
Revenue from 40-gigabit per second InfiniBand product increased and represented 57% of fourth quarter revenue, and our 10-gigabit and adapter products sold through HP, IBM and additional OEMs increased revenues as this design begins to ramp up in the marketplace. On Monday, we announced that our ConnectX-2 Adapter was selected by HP and is now their highest performance, lowest power 10 gigabit per second Ethernet adapter card available today.
This further demonstrates our ability to deliver industry leading return on investment and efficiency using our wide array of server and storage interconnect solutions in multiple end markets.
During the quarter we introduced several new features and additions to our InfiniBand adapters and switch product families to provide end users with critical bandwidth performance and efficiency capabilities to enable the next generation of high performance computing, cloud infrastructures and enterprise data centers.
These features put Mellanox in the forefront of the industry. An increasing number of the world’s fastest super computers today rely on Mellanox performance and efficiency leading in InfiniBand solutions.