Mellanox® Technologies, Ltd., a leading supplier of high-performance, end-to-end interconnect solutions for data center servers and storage systems, today announced preliminary financial results for its fourth quarter and fiscal year 2018.
“Mellanox had an outstanding 2018, delivering 26% annual revenue growth and achieving $1.09 billion in revenue for the first time in our history. We leveraged top line growth and strong expense discipline to accelerate profitability. We expect to carry this momentum into 2019 and deliver another year of healthy, double-digit revenue growth to drive operating margins even higher," said Eyal Waldman, President and CEO of Mellanox Technologies.
“We achieved record quarterly revenue in our Ethernet switch business, capitalizing on design wins for our high-performance, feature-rich solutions, which support continued growth in 2019. We maintained our leadership in 25 gigabit and above Ethernet adapters and continue to benefit from the multi-year transition to higher speeds. Revenue for our 100 gigabit Ethernet adapters in 2018 was approximately 2.5 times that of 2017, an indication that the transition to 100 gigabit technology has begun, which will drive the next leg of growth. We are also gaining traction in a new growth vector for the next generation of intelligent interconnect with our BlueField SmartNICs and Storage Controllers.
“We grew our InfiniBand business 8 percent year-over-year and see strong demand for our leading performance HDR 200 Gigabit per second InfiniBand solutions for high-performance computing, artificial intelligence, big data, cloud, storage, and additional applications. Our HDR InfiniBand solutions have begun to ramp with a healthy backlog for Q1 and beyond. We achieved record Q4 and 2018 revenue with our LinkX cables and transceivers and expect to continue seeing healthy growth of our LinkX product line in 2019. We continue to invest in research and development to maintain our leadership across all product lines to fuel our growth in 2019 and beyond.” Mr. Waldman concluded.
Fourth Quarter 2018 - Financial Results Summary
- Revenue of $290.1 million in the fourth quarter, an increase of 22.1 percent, compared to $237.6 million in the fourth quarter of 2017.
- GAAP gross margins of 65.4 percent in the fourth quarter, compared to 64.1 percent in the fourth quarter of 2017.
- Non-GAAP gross margins of 69.0 percent in the fourth quarter, compared to 68.8 percent in the fourth quarter of 2017.
- GAAP operating income of $44.0 million in the fourth quarter, compared to an operating loss of $6.7 million in the fourth quarter of 2017.
- Non-GAAP operating income of $78.7 million in the fourth quarter, or 27.1 percent of revenue, compared to $38.0 million, or 16.0 percent of revenue in the fourth quarter of 2017.
- GAAP net income of $42.8 million in the fourth quarter, compared to a net loss of $2.6 million in the fourth quarter of 2017.
- Non-GAAP net income of $77.1 million in the fourth quarter, compared to $42.9 million in the fourth quarter of 2017.
- GAAP net income per diluted share of $0.78 in the fourth quarter, compared to a net loss per diluted share of $0.05 in the fourth quarter of 2017.
- Non-GAAP net income per diluted share of $1.42 in the fourth quarter, compared to $0.82 in the fourth quarter of 2017.
- Cash provided by operating activities was $96.4 million during the fourth quarter of 2018, compared to $66.9 million in the fourth quarter of 2017.
- Cash and investments totaled $438.5 million at December 31, 2018, compared to $273.8 million at December 31, 2017.
Fiscal Year 2018 - Financial Highlights
- Revenue of $1,088.7 million in 2018, an increase of 26.0 percent, compared to $863.9 million in 2017.
- GAAP operating expense of $588.1 million in 2018, compared to $580.5 million in 2017.
- Non-GAAP operating expense of $483.0 million in 2018, a decrease of 1 percent, compared to $489.3 million in 2017.
- GAAP operating income of $112.1 million in 2018, compared to operating loss of $17.1 million in 2017.
- Non-GAAP operating income of $270.2 million in 2018, or 24.8 percent of revenue, compared to $118.7 million, or 13.7 percent of revenue in 2017.
- 2018 GAAP benefit from taxes on income of $22.0 million, mainly due to the reversal of a valuation allowance related to deferred tax assets.
- GAAP net income of $134.3 million in 2018, compared to a net loss of $19.4 million in 2017.
- Non-GAAP net income of $266.5 million, compared to $116.6 million in 2017.
- GAAP net income per diluted share of $2.46, compared to a net loss per diluted share of $0.39 in 2017.
- Non-GAAP net income per diluted share of $5.01, compared to $2.28 in 2017.
- Cash provided by operating activities during fiscal year 2018 was $264.9 million, compared to $161.3 million during fiscal year 2017.
First Quarter 2019 Outlook
We currently project:
- Quarterly revenue of $295 million to $305 million
- Non-GAAP gross margins of 68.0% to 69.0%
- Non-GAAP operating expenses of $123 million to $125 million
- Non-GAAP diluted share count of 54.5 million to 55.0 million
Recent Mellanox Press Release Highlights
- January 22, 2019 - CSC, the Finnish IT Center for Science, and the Finnish Meteorological Institute Select 200 Gigabit HDR InfiniBand to Accelerate Multi-Phase Supercomputer Program
- January 7, 2019 - Mellanox 200 Gigabit HDR InfiniBand to Accelerate a World-Leading Supercomputer at the High-Performance Computing Center of the University of Stuttgart (HLRS)
- December 5, 2018 - Mellanox Ethernet Adapter Facilitates High Performance Network Solutions at Alibaba
- November 19, 2018 LINE Corporation Collaborates with Mellanox and Cumulus Networks to Power Advanced Messaging Platform
- November 13, 2018 - Mellanox Technologies Receives Nine HPCwire Readers’ and Editors’ Choice Awards at the Supercomputing Conference 2018
- November 13, 2018 - Mellanox and Los Alamos National Laboratory Join Forces to Develop Ultra-Large-Scale Mission-Centric Computing Infrastructure
- November 12, 2018 - Mellanox InfiniBand and Ethernet Solutions Accelerate the Majority of TOP500 Platforms on the November TOP500 Supercomputers List
- November 12, 2018 - Mellanox HDR InfiniBand Solutions Accelerate New Supercomputer for Advanced Research Computing at the University of Michigan
- October 25, 2018 - Mellanox Ships More Than 2.1 Million Ethernet Adapters in the First Three Quarters of 2018
Mellanox will hold its fourth quarter 2018 financial results conference call today, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), to discuss the company’s financial results. To listen to the call, dial +1-877-876-9176, or for investors outside the U.S., +1-785-424-1667, approximately 10 minutes prior to the start time. The Mellanox financial results conference call will be available via live webcast on the investor relations section of the Mellanox website at: http://ir.mellanox.com. A replay of the webcast will also be available on the Mellanox website after the call.
Note: See attached download for complete financial results.