Third Quarter 2013 Highlights:
- Third quarter revenues of $18.8 million
- Gross margin reached 84.4% on a GAAP basis and 84.8% on a non-GAAP basis
- Net income, on a GAAP basis, was $6.5 million (35% of revenues)
- Net income, on a non-GAAP basis, was $10.1 million (54% of revenues)
- Operating cash flow of $10.3 million
- Net cash at end of quarter was $190.6 million
Third Quarter 2013 Results:
Total revenues in the third quarter of 2013 were $18.8 million, an increase of 102% compared to $9.3 million in the third quarter of 2012, and an increase of 13% compared to $16.7 million in the second quarter of 2013.
Net income, on a GAAP basis, for the third quarter of 2013 was $6.5 million, or $0.22 per share (diluted), compared to net income of $0.1 million, or $0.00 per share (diluted), in the third quarter of 2012, and net income of $5.1 million, or $0.18 per share (diluted), in the second quarter of 2013.
Net income, on a non-GAAP basis, for the third quarter of 2013 was $10.1 million, or $0.33 per share (diluted), compared to non-GAAP net income of $3.1 million, or $0.10 per share (diluted), in the third quarter of 2012, and non-GAAP net income of $8.7 million, or $0.29 per share (diluted), in the second quarter of 2013.
Cash, cash equivalents, marketable securities and deposits as of September 30, 2013, totaled $190.6 million, compared to $181.9 million as of June 30, 2013. Cash generated from operations was $10.3 million, cash used in investing activities was $2.0 million and cash provided by financing activities (resulting from the exercise of options) was $0.4 million.
First Nine Months 2013 Results
Total revenues for the nine months ended September 30, 2013 were $50.8 million, a year-over-year increase of 28% compared to $39.5 million for the nine months ended September 30, 2012. Net income on a GAAP basis for the nine months ended September 30, 2013 was $15.2 million, or $0.52 per share (diluted), compared to net income of $10.8 million, or $0.38 per share (diluted), for the nine months ended September 30, 2012. Net income on a non-GAAP basis for the nine months ended September 30, 2013 was $25.5 million or $0.85 per share (diluted), compared with non-GAAP net income of $19.3 million, or $0.65 per share (diluted), for the nine months ended September 30, 2012.
Eli Fruchter, CEO of EZchip, commented, "We are pleased to report a record quarter in revenues and profits primarily driven by recent improvements in carriers capex towards edge routing. During the third quarter we continued the testing of the NP-5 samples that arrived last quarter and are pleased to report that testing is proceeding according to plan and we expect the NP-5 to move to production next year.
"In its latest NPU market report published last month, The Linley Group discussed the NPS and emphasized that the evolutionary approach to NPU designs will be unable to keep pace with carriers' requirements and that a revolutionary approach is required, such as the bold move that EZchip made in developing the NPS.
"Furthermore, based on the market share analysis provided in The Linley report and taking into account EZchip's sales to Cisco through Marvell, in 2012 EZchip became, for the first time, the overall NPU market share leader, with 23% of the market. With EZchip's current growth rate, we believe our market leadership position will likely strengthen in 2013 and beyond."
The Company will be hosting a conference call later today, November 6, 2013, at 10:00am ET, 7:00am PT, 3:00pm UK time and 5:00pm Israel time. On the call, management will review and discuss the results, and will be available to answer investor questions.
To participate through the live webcast, please access the investor relations section of the Company's web site at: http://www.ezchip.com/investor_relations.htm, at least 10 minutes before the conference call commences. If you would like to ask a question on the call, please contact the investor relations team for the telephone dial in numbers.
For those unable to listen to the live webcast, a replay of the webcast will be available the day after the call under the 'Investor Relations' section of the website.
Use of Non-GAAP Financial Information
In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which EZchip believes are the principal indicators of the operating and financial performance of its business. The non-GAAP financial measures exclude the effects of stock-based compensation expenses recorded in accordance with FASB ASC 718 and amortization of intangible assets. Management believes the non-GAAP financial measures provided are useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.
EZchip is a fabless semiconductor company that provides Ethernet network processors for networking equipment. EZchip provides solutions that scale from a few to hundreds of Gigabits-per-second. EZchip's network processors provide great flexibility and high performance coupled with superior integration and power efficiency for a wide range of applications in carrier, cloud and data center network equipment. For more information on our company, visit the web site at