“The second quarter was another strong quarter, with revenue up 26% compared to last year and continued gross margin expansion to 32.5%. This was our fourth straight quarter of profitability. Non-GAAP EPS was
Second Quarter Summary
Non-GAAP results in the second quarter of 2020 exclude
As of
Outlook for the Quarter Ending
|
GAAP |
Non-GAAP |
Revenue |
|
|
Gross Margin |
29% to 33% |
30% to 34% |
Operating Expenses |
|
|
Earnings per share |
|
|
The third quarter EPS outlook includes an expected
The non-GAAP outlook for the third quarter of 2020 excludes the expected impact of stock-based compensation expense of approximately
Non-GAAP and Adjusted EBITDA Measures vs. GAAP Financial Measures
The Company’s non-GAAP and adjusted EBITDA measures exclude certain GAAP financial measures. A reconciliation of the non-GAAP and Adjusted EBITDA financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion at the end of this press release. These non-GAAP financial measures differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons.
Conference Call
The Company will host a conference call today,
A live webcast will be available in the Investor Relations section of NeoPhotonics’ website at: http://ir.neophotonics.com/phoenix.zhtml?c=236218&p=irol-calendar.
A replay of the webcast will be available in the Investor Relations section of the Company’s website approximately two hours after the conclusion of the call and remain available for approximately 30 calendar days.
About
Legal Notice Regarding Forward-Looking Statements
This press release includes statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about the following topics: future financial results, demand for the Company’s high-speed products, and the Company’s market position. Forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially. Those risks and uncertainties include, but are not limited to, such factors as: the Company’s reliance on a small number of customers for a substantial portion of its revenues; market growth in
©2020
|
||||||||
Condensed Consolidated Balance Sheets (Unaudited) |
||||||||
(In thousands) |
||||||||
|
|
As of |
||||||
|
|
|
|
|
||||
|
|
|
|
|
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
94,536 |
|
|
$ |
70,467 |
|
Short-term investments |
|
7,665 |
|
|
7,638 |
|
||
Restricted cash |
|
11,055 |
|
|
10,972 |
|
||
Accounts receivable, net |
|
61,223 |
|
|
68,890 |
|
||
Inventories |
|
50,449 |
|
|
46,930 |
|
||
Prepaid expenses and other current assets |
|
29,268 |
|
|
25,851 |
|
||
Total current assets |
|
254,196 |
|
|
230,748 |
|
||
Property, plant and equipment, net |
|
73,052 |
|
|
81,133 |
|
||
Operating lease right-of-use assets |
|
14,662 |
|
|
15,603 |
|
||
Purchased intangible assets, net |
|
1,771 |
|
|
2,151 |
|
||
|
|
1,115 |
|
|
1,115 |
|
||
Other long-term assets |
|
3,838 |
|
|
3,929 |
|
||
Total assets |
|
$ |
348,634 |
|
|
$ |
334,679 |
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
61,636 |
|
|
$ |
58,554 |
|
Current portion of long-term debt |
|
3,083 |
|
|
3,044 |
|
||
Accrued and other current liabilities |
|
45,354 |
|
|
47,481 |
|
||
Total current liabilities |
|
110,073 |
|
|
109,079 |
|
||
Long-term debt, net of current portion |
|
33,235 |
|
|
39,237 |
|
||
Operating lease liabilities, noncurrent |
|
15,471 |
|
|
16,543 |
|
||
Other noncurrent liabilities |
|
10,827 |
|
|
9,614 |
|
||
Total liabilities |
|
169,606 |
|
|
174,473 |
|
||
|
|
|
|
|
||||
Stockholders’ equity: |
|
|
|
|
||||
Common stock |
|
124 |
|
|
121 |
|
||
Additional paid-in capital |
|
590,800 |
|
|
582,504 |
|
||
Accumulated other comprehensive loss |
|
(9,380 |
) |
|
(7,871 |
) |
||
Accumulated deficit |
|
(402,516 |
) |
|
(414,548 |
) |
||
Total stockholders’ equity |
|
179,028 |
|
|
160,206 |
|
||
Total liabilities and stockholders’ equity |
|
$ |
348,634 |
|
|
$ |
334,679 |
|
|
||||||||||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) |
||||||||||||||||||||
(In thousands, except percentages and per share data) |
||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue |
|
$ |
103,171 |
|
|
$ |
97,401 |
|
|
$ |
81,690 |
|
|
$ |
200,572 |
|
|
$ |
161,056 |
|
Cost of goods sold (1) |
|
69,669 |
|
|
67,675 |
|
|
66,015 |
|
|
137,344 |
|
|
129,644 |
|
|||||
Gross profit |
|
33,502 |
|
|
29,726 |
|
|
15,675 |
|
|
63,228 |
|
|
31,412 |
|
|||||
Gross margin |
|
32.5 |
% |
|
30.5 |
% |
|
19.2 |
% |
|
31.5 |
% |
|
19.5 |
% |
|||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development (1) |
|
13,689 |
|
|
11,884 |
|
|
13,793 |
|
|
25,573 |
|
|
28,476 |
|
|||||
Sales and marketing (1) |
|
4,279 |
|
|
3,659 |
|
|
3,623 |
|
|
7,938 |
|
|
8,226 |
|
|||||
General and administrative (1) |
|
8,803 |
|
|
6,789 |
|
|
7,174 |
|
|
15,592 |
|
|
14,927 |
|
|||||
Amortization of purchased intangible assets |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
119 |
|
|||||
Asset sale related costs |
|
120 |
|
|
12 |
|
|
47 |
|
|
132 |
|
|
376 |
|
|||||
Restructuring charges |
|
— |
|
|
— |
|
|
79 |
|
|
— |
|
|
258 |
|
|||||
Gain on asset sale |
|
— |
|
|
— |
|
|
(817 |
) |
|
— |
|
|
(817 |
) |
|||||
Total operating expenses |
|
26,891 |
|
|
22,344 |
|
|
23,899 |
|
|
49,235 |
|
|
51,565 |
|
|||||
Income (loss) from operations |
|
6,611 |
|
|
7,382 |
|
|
(8,224 |
) |
|
13,993 |
|
|
(20,153 |
) |
|||||
Interest income |
|
22 |
|
|
98 |
|
|
99 |
|
|
120 |
|
|
198 |
|
|||||
Interest expense |
|
(301 |
) |
|
(378 |
) |
|
(496 |
) |
|
(679 |
) |
|
(989 |
) |
|||||
Other income (expense), net |
|
(195 |
) |
|
1,198 |
|
|
1,090 |
|
|
1,003 |
|
|
(508 |
) |
|||||
Total interest and other income (expense), net |
|
(474 |
) |
|
918 |
|
|
693 |
|
|
444 |
|
|
(1,299 |
) |
|||||
Income (loss) before income taxes |
|
6,137 |
|
|
8,300 |
|
|
(7,531 |
) |
|
14,437 |
|
|
(21,452 |
) |
|||||
Income tax (provision) benefit |
|
(412 |
) |
|
(1,993 |
) |
|
205 |
|
|
(2,405 |
) |
|
35 |
|
|||||
Net income (loss) |
|
$ |
5,725 |
|
|
$ |
6,307 |
|
|
$ |
(7,326 |
) |
|
$ |
12,032 |
|
|
$ |
(21,417 |
) |
Basic net income (loss) per share |
|
$ |
0.12 |
|
|
$ |
0.13 |
|
|
$ |
(0.16 |
) |
|
$ |
0.25 |
|
|
$ |
(0.46 |
) |
Diluted net income (loss) per share |
|
$ |
0.11 |
|
|
$ |
0.12 |
|
|
$ |
(0.16 |
) |
|
$ |
0.24 |
|
|
$ |
(0.46 |
) |
Weighted average shares used to compute basic net income (loss) per share |
|
49,077 |
|
|
48,615 |
|
|
46,754 |
|
|
48,846 |
|
|
46,585 |
|
|||||
Weighted average shares used to compute diluted net income (loss) per share |
|
51,661 |
|
|
50,617 |
|
|
46,754 |
|
|
51,124 |
|
|
46,585 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(1) Includes stock-based compensation expense as follows for the periods presented: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of goods sold |
|
$ |
621 |
|
|
$ |
537 |
|
|
$ |
609 |
|
|
$ |
1,158 |
|
|
$ |
1,210 |
|
Research and development |
|
999 |
|
|
758 |
|
|
787 |
|
|
1,757 |
|
|
1,668 |
|
|||||
Sales and marketing |
|
738 |
|
|
530 |
|
|
599 |
|
|
1,268 |
|
|
1,277 |
|
|||||
General and administrative |
|
1,429 |
|
|
693 |
|
|
1,010 |
|
|
2,122 |
|
|
2,188 |
|
|||||
Total stock-based compensation expense |
|
$ |
3,787 |
|
|
$ |
2,518 |
|
|
$ |
3,005 |
|
|
$ |
6,305 |
|
|
$ |
6,343 |
|
|
||||||||||||||||||||
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited) |
||||||||||||||||||||
(In thousands, except percentages and per share data) |
||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NON-GAAP GROSS PROFIT: |
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP gross profit |
|
$ |
33,502 |
|
|
$ |
29,726 |
|
|
$ |
15,675 |
|
|
$ |
63,228 |
|
|
$ |
31,412 |
|
Stock-based compensation expense |
|
621 |
|
|
537 |
|
|
609 |
|
|
1,158 |
|
|
1,210 |
|
|||||
Amortization of purchased intangible assets |
|
184 |
|
|
184 |
|
|
184 |
|
|
368 |
|
|
368 |
|
|||||
Depreciation of acquisition-related fixed asset step-up |
|
(8 |
) |
|
(12 |
) |
|
(66 |
) |
|
(20 |
) |
|
(132 |
) |
|||||
End-of-life related inventory write-down |
|
— |
|
|
— |
|
|
3,553 |
|
|
— |
|
|
3,553 |
|
|||||
Accelerated depreciation |
|
— |
|
|
— |
|
|
950 |
|
|
— |
|
|
2,265 |
|
|||||
Non-GAAP gross profit |
|
$ |
34,299 |
|
|
$ |
30,435 |
|
|
$ |
20,905 |
|
|
$ |
64,734 |
|
|
$ |
38,676 |
|
Non-GAAP gross margin as a % of revenue |
|
33.2 |
% |
|
31.2 |
% |
|
25.6 |
% |
|
32.3 |
% |
|
24.0 |
% |
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NON-GAAP TOTAL OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP total operating expenses |
|
$ |
26,891 |
|
|
$ |
22,344 |
|
|
$ |
23,899 |
|
|
$ |
49,235 |
|
|
$ |
51,565 |
|
Stock-based compensation expense |
|
(3,166 |
) |
|
(1,981 |
) |
|
(2,396 |
) |
|
(5,147 |
) |
|
(5,133 |
) |
|||||
Amortization of purchased intangible assets |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(119 |
) |
|||||
Depreciation of acquisition-related fixed asset step-up |
|
(28 |
) |
|
(29 |
) |
|
(67 |
) |
|
(57 |
) |
|
(133 |
) |
|||||
Asset sale related costs |
|
(120 |
) |
|
(12 |
) |
|
(47 |
) |
|
(132 |
) |
|
(376 |
) |
|||||
Restructuring charges |
|
— |
|
|
— |
|
|
(79 |
) |
|
— |
|
|
(258 |
) |
|||||
Gain on asset sale |
|
— |
|
|
— |
|
|
817 |
|
|
— |
|
|
817 |
|
|||||
Non-GAAP total operating expenses |
|
$ |
23,577 |
|
|
$ |
20,322 |
|
|
$ |
22,127 |
|
|
$ |
43,899 |
|
|
$ |
46,363 |
|
Non-GAAP total operating expenses as a % of revenue |
|
22.9 |
% |
|
20.9 |
% |
|
27.1 |
% |
|
21.9 |
% |
|
28.8 |
% |
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NON-GAAP OPERATING INCOME (LOSS): |
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP income (loss) from operations |
|
$ |
6,611 |
|
|
$ |
7,382 |
|
|
$ |
(8,224 |
) |
|
$ |
13,993 |
|
|
$ |
(20,153 |
) |
Stock-based compensation expense |
|
3,787 |
|
|
2,518 |
|
|
3,005 |
|
|
6,305 |
|
|
6,343 |
|
|||||
Amortization of purchased intangible assets |
|
184 |
|
|
184 |
|
|
184 |
|
|
368 |
|
|
487 |
|
|||||
Depreciation of acquisition-related fixed asset step-up |
|
20 |
|
|
17 |
|
|
1 |
|
|
37 |
|
|
1 |
|
|||||
Asset sale related costs |
|
120 |
|
|
12 |
|
|
47 |
|
|
132 |
|
|
376 |
|
|||||
End-of-life related inventory write-down |
|
— |
|
|
— |
|
|
3,553 |
|
|
— |
|
|
3,553 |
|
|||||
Accelerated depreciation |
|
— |
|
|
— |
|
|
950 |
|
|
— |
|
|
2,265 |
|
|||||
Restructuring charges |
|
— |
|
|
— |
|
|
79 |
|
|
— |
|
|
258 |
|
|||||
Gain on asset sale |
|
— |
|
|
— |
|
|
(817 |
) |
|
— |
|
|
(817 |
) |
|||||
Non-GAAP income (loss) from operations |
|
$ |
10,722 |
|
|
$ |
10,113 |
|
|
$ |
(1,222 |
) |
|
$ |
20,835 |
|
|
$ |
(7,687 |
) |
Non-GAAP operating margin as a % of revenue |
|
10.4 |
% |
|
10.4 |
% |
|
(1.5 |
)% |
|
10.4 |
% |
|
(4.8 |
)% |
|
||||||||||||||||||||
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited) (Continued) |
||||||||||||||||||||
(In thousands, except percentages and per share data) |
||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NON-GAAP NET INCOME (LOSS): |
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP net income (loss) |
|
$ |
5,725 |
|
|
$ |
6,307 |
|
|
$ |
(7,326 |
) |
|
$ |
12,032 |
|
|
$ |
(21,417 |
) |
Stock-based compensation expense |
|
3,787 |
|
|
2,518 |
|
|
3,005 |
|
|
6,305 |
|
|
6,343 |
|
|||||
Amortization of purchased intangible assets |
|
184 |
|
|
184 |
|
|
184 |
|
|
368 |
|
|
487 |
|
|||||
Depreciation of acquisition-related fixed asset step-up |
|
20 |
|
|
17 |
|
|
1 |
|
|
37 |
|
|
1 |
|
|||||
Asset sale related costs |
|
120 |
|
|
12 |
|
|
47 |
|
|
132 |
|
|
376 |
|
|||||
End-of-life related inventory write-down |
|
— |
|
|
— |
|
|
3,553 |
|
|
— |
|
|
3,553 |
|
|||||
Accelerated depreciation |
|
— |
|
|
— |
|
|
950 |
|
|
— |
|
|
2,265 |
|
|||||
Restructuring charges |
|
— |
|
|
— |
|
|
79 |
|
|
— |
|
|
258 |
|
|||||
Gain on asset sale |
|
— |
|
|
— |
|
|
(817 |
) |
|
— |
|
|
(817 |
) |
|||||
Income tax effect of Non-GAAP adjustments |
|
(1,160 |
) |
|
26 |
|
|
(895 |
) |
|
(1,134 |
) |
|
(1,272 |
) |
|||||
Non-GAAP net income (loss) |
|
$ |
8,676 |
|
|
$ |
9,064 |
|
|
$ |
(1,219 |
) |
|
$ |
17,740 |
|
|
$ |
(10,223 |
) |
Non-GAAP net income (loss) as a % of revenue |
|
8.4 |
% |
|
9.3 |
% |
|
(1.5 |
)% |
|
8.8 |
% |
|
(6.3 |
)% |
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
ADJUSTED EBITDA: |
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP net income (loss) |
|
$ |
5,725 |
|
|
$ |
6,307 |
|
|
$ |
(7,326 |
) |
|
$ |
12,032 |
|
|
$ |
(21,417 |
) |
Stock-based compensation expense |
|
3,787 |
|
|
2,518 |
|
|
3,005 |
|
|
6,305 |
|
|
6,343 |
|
|||||
Amortization of purchased intangible assets |
|
184 |
|
|
184 |
|
|
184 |
|
|
368 |
|
|
487 |
|
|||||
Depreciation of acquisition-related fixed asset step-up |
|
20 |
|
|
17 |
|
|
1 |
|
|
37 |
|
|
1 |
|
|||||
Asset sale related costs |
|
120 |
|
|
12 |
|
|
47 |
|
|
132 |
|
|
376 |
|
|||||
End-of-life related inventory write-down |
|
— |
|
|
— |
|
|
3,553 |
|
|
— |
|
|
3,553 |
|
|||||
Accelerated depreciation |
|
— |
|
|
— |
|
|
950 |
|
|
— |
|
|
2,265 |
|
|||||
Restructuring charges |
|
— |
|
|
— |
|
|
79 |
|
|
— |
|
|
258 |
|
|||||
Gain on asset sale |
|
— |
|
|
— |
|
|
(817 |
) |
|
— |
|
|
(817 |
) |
|||||
Interest expense, net |
|
279 |
|
|
280 |
|
|
397 |
|
|
559 |
|
|
791 |
|
|||||
Income tax (provision) benefit |
|
412 |
|
|
1,993 |
|
|
(205 |
) |
|
2,405 |
|
|
(35 |
) |
|||||
Depreciation expense |
|
6,414 |
|
|
6,473 |
|
|
6,956 |
|
|
12,887 |
|
|
14,189 |
|
|||||
Adjusted EBITDA |
|
$ |
16,941 |
|
|
$ |
17,784 |
|
|
$ |
6,824 |
|
|
$ |
34,725 |
|
|
$ |
5,994 |
|
Adjusted EBITDA as a % of revenue |
|
16.4 |
% |
|
18.3 |
% |
|
8.4 |
% |
|
17.3 |
% |
|
3.7 |
% |
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE: |
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP basic net income (loss) per share |
|
$ |
0.12 |
|
|
$ |
0.13 |
|
|
$ |
(0.16 |
) |
|
$ |
0.25 |
|
|
$ |
(0.46 |
) |
GAAP diluted net income (loss) per share |
|
$ |
0.11 |
|
|
$ |
0.12 |
|
|
$ |
(0.16 |
) |
|
$ |
0.24 |
|
|
$ |
(0.46 |
) |
Non-GAAP basic net income (loss) per share |
|
$ |
0.18 |
|
|
$ |
0.19 |
|
|
$ |
(0.03 |
) |
|
$ |
0.36 |
|
|
$ |
(0.22 |
) |
Non-GAAP diluted net income (loss) per share |
|
$ |
0.16 |
|
|
$ |
0.17 |
|
|
$ |
(0.03 |
) |
|
$ |
0.33 |
|
|
$ |
(0.22 |
) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
SHARES USED TO COMPUTE GAAP AND NON-GAAP BASIC NET INCOME (LOSS) PER SHARE |
|
49,077 |
|
|
48,615 |
|
|
46,754 |
|
|
48,846 |
|
|
46,585 |
|
|||||
SHARES USED TO COMPUTE GAAP DILUTED NET INCOME (LOSS) PER SHARE |
|
51,661 |
|
|
50,617 |
|
|
46,754 |
|
|
51,124 |
|
|
46,585 |
|
|||||
SHARES USED TO COMPUTE NON-GAAP DILUTED NET INCOME (LOSS) PER SHARE |
|
54,303 |
|
|
52,406 |
|
|
46,754 |
|
|
53,338 |
|
|
46,585 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200804005912/en/
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