News & Events

Press Releases

NeoPhotonics Reports Record First Quarter 2016 Financial Results
  • Record Revenue of $99.1 million for the quarter
  • Non-GAAP Gross Margin of 32.8% for the quarter
  • Adjusted EBITDA of $12.3 million for the quarter
  • Full Year Revenue Outlook Revised Upward to 20-25% growth

SAN JOSE, Calif.--(BUSINESS WIRE)--Apr. 28, 2016-- NeoPhotonics Corporation (NYSE:NPTN), a leading designer and manufacturer of advanced hybrid photonic integrated optoelectronic modules and subsystems for bandwidth-intensive, high-speed communications networks, today announced financial results for its first quarter ended March 31, 2016.

“In our first quarter NeoPhotonics delivered excellent results, as we achieved record revenue, record revenue growth and record EBITDA. Our revenue for 100G products was up 24% sequentially, accounting for 65% of our first quarter revenue,” said Tim Jenks, CEO of NeoPhotonics. “Maintaining our leadership in 100G and beyond solutions we introduced a number of exciting new products and technologies during the quarter. We see the overall environment for 100G products globally as very robust and given the acceleration in our organic demand, we are bringing additional capacity on line over the next quarters. As a result, we anticipate revenue growth to be in the range of 20-25% for the year,” concluded Mr. Jenks.

First Quarter Summary

  • Revenue was $99.1 million, up $17.8 million, or 21.8%, from the first quarter of 2015, and up $10.0 million, or 11.2%, from the prior quarter
  • GAAP Gross margin was 31.4%, up from 29.6% in the first quarter of 2015, and up from 28.2% in the prior quarter
  • Non-GAAP Gross margin was 32.8%, up from 31.3% in the first quarter of 2015, and up from 32.4% in the prior quarter
  • GAAP Net income was $2.3 million, up from $0.1 million in the first quarter of 2015, and up from $0.4 million in the prior quarter
  • Non-GAAP Net income was $7.0 million, up from earnings of $4.2 million in the first quarter of 2015, up from $6.9 million in the prior quarter
  • GAAP Diluted earnings per share was $0.05, up from $0.00 in the first quarter of 2015, and up from $0.01 in the prior quarter
  • Non-GAAP Diluted earnings per share was $0.15, up from $0.13 in the first quarter of 2015, and down from earnings of $0.16 in the prior quarter
  • Adjusted EBITDA was $12.3 million, up from $9.9 million in the first quarter of 2015, and up from $11.8 million in the prior quarter

Non-GAAP results exclude $1.3 million of amortization of acquisition-related intangibles, fixed asset step-up costs and $3.4 million of stock based compensation expenses.

At March 31, 2016, cash and cash equivalents, short-term investments and restricted cash, together totaled $103.8 million, up from $102.0 million at December 31, 2015. Restricted cash at March 31, 2016 was $2.7 million, consistent with December 31, 2015.

Outlook for the Quarter Ending June 30, 2016

The Company’s expectations for the second quarter 2016 are:

  • Revenue in the range of $97 million to $102 million
  • Non-GAAP Gross margin in the range of 29% to 31%
  • Diluted net income (loss) per share in the range of a 2 cent loss to earnings of 5 cents, and
  • Non-GAAP diluted earnings per share in the range of 8 cents to 15 cents

The Non-GAAP outlook for the second quarter of 2016 excludes the impact of expected amortization of intangibles of approximately $1.3 million and the anticipated impact of stock-based compensation of approximately $3.4 million, of which $0.5 million is estimated for cost of goods sold.

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. NeoPhotonics believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

Conference Call

The Company will host a conference call today, April 28, 2016, at 4:30 P.M. Eastern Time (1:30 p.m. Pacific Time). The call will be available, live, to interested parties by dialing +1 844-809-8111. For international callers, please dial +1 541-797-7255. The Conference ID number is 89646691. A live webcast will be available in the Investor Relations section of NeoPhotonics website at: www.neophotonics.com.

A replay of the webcast will be available in the Investor Relations section of the Company’s web site after the conclusion of the call and remain available for approximately 30 calendar days.

About NeoPhotonics

NeoPhotonics is a leading designer and manufacturer of advanced hybrid photonic integrated optoelectronic modules and subsystems for bandwidth-intensive, high-speed communications networks. The Company’s products enable cost-effective, high-speed data transmission and efficient allocation of bandwidth over communications networks. NeoPhotonics maintains headquarters in San Jose, California and ISO 9001:2000 certified engineering and manufacturing facilities in Silicon Valley (USA), Japan and China. For additional information visit www.neophotonics.com.

© 2016 NeoPhotonics Corporation. All rights reserved. NeoPhotonics and the red dot logo are trademarks of NeoPhotonics Corporation. All other marks are the property of their respective owners.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

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, the Company’s market position and industry trends. 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: possible reduction in or volatility of customer orders or delays in shipments of products to customers; timing of customer drawdowns of vendor-managed inventory; possible disruptions in the supply chain or in demand for the Company’s products due to industry developments; the ability of the Company's vendors and subcontractors to supply or manufacture the Company's products in a timely manner; economic conditions or natural disasters; volatility in utilization of manufacturing operations, supporting utility services and other manufacturing costs; reductions in the Company’s rate of new design wins, and/or the rate at which design wins go into production, and the rate of customer acceptance of new product introductions; the Company’s reliance on a small number of customers for a substantial portion of its revenues; potential pricing pressure that may arise from changing supply or demand conditions in the industry; the impact of any previous or future acquisitions; challenges involving integration of acquired businesses and utilization of acquired technology, including the acquisition of EMCORE’s tunable laser product line and EigenLight’s precision optical power monitor business in 2015; market adoption, revenue growth and margins of acquired products; changes in demand for the Company's products; the impact of competitive products and pricing and alternative technological advances; the accuracy of estimates used to prepare the Company's financial statements and forecasts; the timely and successful development and market acceptance of new products and upgrades to existing products; the difficulty of predicting future cash needs; the nature of other investment opportunities available to the Company from time to time; the Company’s operating cash flow; changes in economic and industry projections; a decline in general conditions in the telecommunications equipment industry or the world economy generally; and the effects of seasonality. For further discussion of these risks and uncertainties, please refer to the documents the Company files with the SEC from time to time, including the Company's Annual Report on Form 10-K for the year ended December 31, 2015. All forward-looking statements are made as of the date of this press release, and the Company disclaims any duty to update such statements.

 
NeoPhotonics Corporation
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
   
As of
Mar. 31,

2016

Dec. 31,

2015

ASSETS
Current assets:
Cash and cash equivalents $ 62,739 $ 76,088
Short-term investments 38,364 23,294
Restricted cash 2,659 2,660
Accounts receivable, net 87,174 83,161
Inventories, net 62,525 65,602
Prepaid expenses and other current assets   15,035     12,393  
Total current assets 268,496 263,198
Property, plant and equipment, net 66,078 62,618
Purchased intangible assets, net 8,699 9,852
Goodwill 1,115 1,115
Other long-term assets   4,895     5,095  
Total assets $ 349,283   $ 341,878  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 55,104 $ 50,620
Notes payable and short-term borrowing 32,650 32,657
Current portion of long-term debt 815 760
Accrued and other current liabilities   21,356     27,950  
Total current liabilities 109,925 111,987
Long-term debt, net of current portion 11,318 10,759
Other noncurrent liabilities   7,953     7,476  
Total liabilities   129,196     130,222  
 
Stockholders' equity:
Common stock 103 102
Additional paid-in capital 515,777 511,750
Accumulated other comprehensive income (loss) 370 (1,723 )
Accumulated deficit   (296,163 )   (298,473 )
Total stockholders' equity   220,087     211,656  
Total liabilities and stockholders' equity $ 349,283   $ 341,878  
 
NeoPhotonics Corporation
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except percentages and per share data)
     
Three Months Ended
Mar. 31,

2016

Dec. 31,

2015

Mar. 31,

2015

 
Revenue $ 99,145 $ 89,123 $ 81,384
Cost of goods sold (1)   68,023     64,013     57,331  
Gross profit 31,122 25,110 24,053
Gross margin 31.4 % 28.2 % 29.6 %
Operating expenses:
Research and development (1) 12,952 11,831 10,482
Sales and marketing (1) 3,931 4,384 3,744
General and administrative (1) 9,084 8,636 8,196
Amortization of purchased intangible assets 453 447 449
Acquisition-related costs - 467 140
Restructuring charges   -     -     6  
Total operating expenses   26,420     25,765     23,017  
Income (loss) from operations   4,702     (655 )   1,036  
Interest income 55 37 30
Interest expense (102 ) (110 ) (506 )
Other (expense) income, net   (1,304 )   1,533     (46 )
Total interest and other (expense) income, net   (1,351 )   1,460     (522 )
 
Income before income taxes 3,351 805 514
Provision for income taxes   (1,041 )   (406 )   (414 )
Net income $ 2,310   $ 399   $ 100  
Basic net income per share $ 0.06   $ 0.01   $ 0.00  
Diluted net income per share $ 0.05   $ 0.01   $ 0.00  
Weighted averages shares used to compute basic net income per share   41,121     40,739     32,780  
Weighted averages shares used to compute diluted net income per share   43,648     42,668     33,031  
(1) Includes stock-based compensation expense as follows for the periods presented:
Cost of goods sold $ 589 $ 216 $ 370
Research and development 971 692 493
Sales and marketing 887 619 453
General and administrative   992     818     740  
Total stock-based compensation expense $ 3,439   $ 2,345   $ 2,056  
 
NeoPhotonics Corporation
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited)
(In thousands, except percentages and per share data)
     
Three Months Ended
Mar. 31,

2016

  Dec. 31,

2015

  Mar. 31,

2015

 
NON-GAAP GROSS PROFIT:
GAAP gross profit $ 31,122 $ 25,110 $ 24,053
Stock-based compensation expense 589 216 370
Amortization of purchased intangible assets 841 837 839
Depreciation of acquisition-related fixed asset step-up (62 ) (61 ) 172
Amortization of acquisition-related inventory step-up - (5 ) 78
End-of-life related inventory write-down   -     2,768     -  
Non-GAAP gross profit $ 32,490   $ 28,865   $ 25,512  
Non-GAAP gross margin as a % of revenue 32.8 % 32.4 % 31.3 %
 
NON-GAAP TOTAL OPERATING EXPENSES:
GAAP Total operating expenses $ 26,420 $ 25,765 $ 23,017
Stock-based compensation expense (2,850 ) (2,129 ) (1,686 )
Amortization of purchased intangible assets (453 ) (447 ) (449 )
Depreciation of acquisition-related fixed asset step-up (93 ) (101 ) (290 )
Acquisition-related costs - (467 ) (140 )
Restructuring charges - - (6 )
Litigation   -     -     (278 )
Non-GAAP total operating expenses $ 23,024   $ 22,621   $ 20,168  
Non-GAAP total operating expenses as a % of revenue 23.2 % 25.4 % 24.8 %
 
NON-GAAP OPERATING INCOME:
GAAP operating income (loss) $ 4,702 $ (655 ) $ 1,036
Stock-based compensation expense 3,439 2,345 2,056
Amortization of purchased intangible assets 1,294 1,284 1,288
Depreciation of acquisition-related fixed asset step-up 31 40 462
Amortization of acquisition-related inventory step-up - (5 ) 78
Acquisition-related costs - 467 140
End-of-life related inventory write-down - 2,768 -
Restructuring charges - - 6
Litigation   -     -     278  
Non-GAAP operating income $ 9,466   $ 6,244   $ 5,344  
Non-GAAP operating margin as a % of revenue 9.5 % 7.0 % 6.6 %
 
NeoPhotonics Corporation
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
Mar. 31,

2016

  Dec. 31,

2015

  Mar. 31,

2015

NON-GAAP NET INCOME:
GAAP net income $ 2,310 $ 399 $ 100
Stock-based compensation expense 3,439 2,345 2,056
Amortization of purchased intangible assets 1,294 1,284 1,288
Depreciation of acquisition-related fixed asset step-up 31 40 462
Amortization of acquisition-related inventory step-up - (5 ) 78
Acquisition-related costs - 467 140
End-of-life related inventory write-down - 2,768 -
Restructuring charges - - 6
Litigation - - 278
Income tax effect of Non-GAAP adjustments   (124 )   (375 )   (249 )
Non-GAAP net income $ 6,950   $ 6,923   $ 4,159  
Non-GAAP net income as a % of revenue 7.0 % 7.8 % 5.1 %
 
ADJUSTED EBITDA:
GAAP net income $ 2,310 $ 399 $ 100
Stock-based compensation expense 3,439 2,345 2,056
Amortization of purchased intangible assets 1,294 1,284 1,288
Depreciation of acquisition-related fixed asset step-up 31 40 462
Amortization of acquisition-related inventory step-up - (5 ) 78
Acquisition-related costs - 467 140
End-of-life related inventory write-down - 2,768 -
Restructuring charges - - 6
Litigation - - 278
Interest expense, net 47 73 476
Provision for income taxes 1,041 406 414
Depreciation expense   4,128     4,040     4,556  
Adjusted EBITDA $ 12,290   $ 11,817   $ 9,854  
Adjusted EBITDA as a % of revenue 12.4 % 13.3 % 12.1 %
 
BASIC AND DILUTED NET INCOME PER SHARE:
GAAP basic net income per share $ 0.06   $ 0.01   $ 0.00  
GAAP diluted net income per share $ 0.05   $ 0.01   $ 0.00  
Non-GAAP basic net income per share $ 0.17   $ 0.17   $ 0.13  
Non-GAAP diluted net income per share $ 0.15   $ 0.16   $ 0.13  
 
SHARES USED TO COMPUTE GAAP AND NON-GAAP BASIC NET INCOME PER SHARE   41,121     40,739     32,780  
SHARES USED TO COMPUTE GAAP DILUTED NET INCOME PER SHARE   43,648     42,668     33,031  
SHARES USED TO COMPUTE NON-GAAP DILUTED NET INCOME PER SHARE   45,113     44,289     33,240  

Source: NeoPhotonics Corporation

NeoPhotonics Corporation
Clyde R. Wallin, +1-408-678-1852
Chief Financial Officer
ray.wallin@neophotonics.com
or
Sapphire Investor Relations, LLC
Erica Mannion, +1-617-542-6180
Investor Relations
ir@neophotonics.com