Mellanox far outstrips Q4 estimates

Eyal Waldman Photo: Amir Meiri

The company's net profit per share hit $2.31 in the fourth quarter, while the analysts predicted only $1.70.

Had the sale of Mellanox Technologies Ltd. (Nasdaq:MLNX) to Nvidia been closed on schedule at the end of 2019, Mellanox's financial statements for 2019 would not have been published. Approval for the deal from Chinese regulators is still being held up, however, and Mellanox, still an independent company, published very strong results yesterday for last year. Mellanox's share price rose 1.6% to $121.10 in late trading on Nasdaq, slightly closer to the $125 price at which the company is to be acquired.

The Israeli company develops and markets communications equipment for high-speed data transmission. The company substantially outperformed the analysts' forecasts in its fourth -quarter reports, with $380 million in revenue, 30.9% more than in the fourth quarter of 2018, while the analysts predicted only $336 million. GAAP net profit soared 72.5% to $73.9 million in the fourth quarter, while its non-GAAP net profit, excluding stock-based compensation for employees and costs related to the acquisition, was up 67.6% to $129 million. Net profit per share was $2.31, compared with the analysts' prediction of $1.70.

Mellanox's revenue for the entire year 2019 climbed 22.2% to $1.3 billion, and its GAAP net profit grew 52.8% to $205 million, while non-GAAP net profit rose from $266 million in 2018 to $393 million in 2019. Non-GAAP profit per share was $7.13.

Mellanox's 2019 cash flow from current activity totaled $425 million in 2019, and the company had $876 million in cash and investments as of the end of 2019.

Growth in all production lines

Nvidia is set to acquire Mellanox for $7.36 billion. Mellanox said yesterday that the deal was still contingent on fulfillment of the usually closing conditions and obtaining the remaining regulatory approval from the Chinese antitrust authority.

Mellanox president and CEO Eyal Waldman said yesterday, "Mellanox delivered record revenue, operating income, and cash flow from operations in both the fourth quarter and the full year 2019. All our major product lines grew in the fourth quarter, demonstrating the advantages of our broad product portfolio."

Waldman added that the company supplied 1.2 million units of its ConnectX and Bluefield adapters, aided by strong adaption of the company's smart offload and secure in-network compute capabilities. Waldman says that the company's Ethernet switches business grew, and predicted continued growth with the impending launch of its Spectrum-3 switches. Revenue in the InfiniBand sector was up 29% in 2019, thanks to widespread adoption of its solutions in various market segments. "We are pleased with the robust adoption of our adapters, switches, and cables for leading data centers, as well as our superb financial performance throughout 2019, culminating in record revenue, operating income, and cash flow from operations. We are also proud to end 2019 with $876 million cash and short-term investments," Waldman said.

Published by Globes, Israel business news - en.globes.co.il - on January 30, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Eyal Waldman Photo: Amir Meiri
Eyal Waldman Photo: Amir Meiri
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