Israeli InfiniBand and Ethernet interconnections provider Mellanox Technologies Ltd. (Nasdaq:MLNX) reported its third quarter results after the market closed in New York yesterday. The results beat the analysts' consensus estimate, and the stock rose 2.7% in after-hours trading.
Third quarter revenue was $120.7 million, up 17.7% percent from $102.6 million in the second quarter of 2014, and up 16% from $104.1 million in the third quarter of 2013.
GAAP gross margins in the third quarter of 2014 were 67.2%, compared with 66.6% in the second quarter of 2014, and 64.6% in the third quarter of 2013.
On a GAAP basis, Mellanox made a net profit in the third quarter of $428 thousand, or $0.01 per diluted share, compared with a net loss of $9.0 million, or $0.20 per diluted share, in the second quarter of 2014, and a net loss of $5.9 million, or $0.14 per diluted share, in the third quarter of 2013.
On a non-GAAP basis, net profit in the third quarter of 2014 was $18.0 million, or $0.38 per diluted share, compared with $6.8 million, or $0.15 per diluted share in the second quarter of 2014, and $12.6 million, or $0.28 per diluted share, in the third quarter of 2013.
Total cash and investments increased by $10.6 million to $354.3 million at September 30, 2014, compared with $343.7 million at June 30, 2014. The company generated $17.2 million in cash from operating activities in the third quarter.
“We are pleased with our results for the third quarter. Demand from high-performance computing customers was strong which contributed to solid revenue growth from our FDR InfiniBand solutions. Revenue from our Ethernet solutions also increased in the quarter,” said Eyal Waldman, president and CEO of Mellanox Technologies. “The transition from 10 Gigabit Ethernet to 40 Gigabit Ethernet is happening now with our Web 2.0 and cloud customers. We expect to ship hundreds of thousands of 40 Gigabit Ethernet adapters in the fourth quarter to these markets. This transition is driven by the growth of data producing and consuming applications. We expect this transition to accelerate in 2015 and beyond.”
Mellanox's guidance for its fourth quarter 2014 non-GAAP results is revenue of $133 million to $137 million and non-GAAP gross margins of 69-70%.
Analyst Joseph Wolf of Barclays has raised his target price for Mellanox by $5 to $40, 9% over the market price. His recommendation is "Neutral", although he says that there is positive momentum in the company's business thanks to a number of trends.
Published by Globes [online], Israel business news - www.globes-online.com - on October 23, 2014
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