- Revenue of $81.7 million for the quarter, up 1%
year-over-year
- High Speed Products represented 89% of total revenue for the
quarter
NeoPhotonics Corporation (NYSE: NPTN), a leading designer and
manufacturer of optoelectronic solutions for the highest speed
communications networks in telecom and data center applications,
today announced financial results for its second quarter ended June
30, 2019.
“Q2 was a volatile quarter for NeoPhotonics and I am proud of
our team and their continued focus and execution to extend our
leadership position in high-speed digital optoelectronics while
making changes needed to adjust for the Huawei ban,” said Tim
Jenks, NeoPhotonics Chairman and CEO. “Market drivers are well
aligned with our advanced technologies and high-speed capabilities.
These trends transcend the current Huawei ban and, coupled with the
continued demand with hyperscale data centers, we are optimistic
about NeoPhotonics’ new product prospects,” concluded Mr.
Jenks.
Second Quarter Summary
- Revenue was $81.7 million, up 3% quarter-over-quarter and up 1%
year-over-year
- Gross margin was 19.2%, down from 19.8 % in the prior
quarter
- Non-GAAP Gross margin was 25.6%, up from 22.4% in the prior
quarter
- Diluted net loss per share was $0.16, up from a net loss of
$0.30 per share in the prior quarter
- Non-GAAP diluted net loss per share was $0.03, up from net loss
per share of $0.19 in the prior quarter
- Cash generated from operations was $0.7 million, down from $8.7
million in the prior quarter
- Adjusted EBITDA was $6.8 million, up from a loss of $0.8
million in the prior quarter
Non-GAAP results in the second quarter of 2019 exclude $3.0
million of stock-based compensation expense, $3.6 million of
inventory write down, $0.9 million of accelerated depreciation,
$0.8 million of gain on sale of Russia assets, $0.3 million of
amortization of acquisition-related intangibles and restructuring
charges. 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.
As of June 30, 2019, cash and cash equivalents, short-term
investments and restricted cash, together totaled $74 million, down
$5 million compared to March 31, 2019.
Outlook for the Quarter Ending September 30, 2019
GAAP
Non-GAAP
Revenue
$87 to $93 million
Gross Margin
24% to 28%
25% to 29%
Operating Expenses
$25 to $26 million
$22 to $23 million
Earnings per share
$(0.09) net loss to $0.01 net
profit
$(0.03) net loss to $0.07 net
profit
The non-GAAP outlook for the third quarter of 2019 excludes the
expected impact of stock-based compensation expense of
approximately $3.5 million, of which $0.6 million is estimated for
cost of goods sold and the impact of expected amortization of
intangibles of approximately $0.3 million.
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, Monday, August
05, 2019 at 4:30 P.M. Eastern Time (1:30 P.M. Pacific Time). The
call will be available, live, to interested parties by dialing
+1-800-263-0877. For international callers, please dial
+1-323-794-2094. The Conference ID number is 6807671. Please
dial into the conference call 5-10 minutes prior to the scheduled
start time.
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 NeoPhotonics
NeoPhotonics is a leading designer and manufacturer of
optoelectronic solutions for the highest speed communications
networks in telecom and datacenter applications. 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
9001:2015 certified engineering and manufacturing facilities in
Silicon Valley (USA), Japan and China. For additional information
visit www.neophotonics.com.
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,
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 China and other key countries; potential
governmental trade actions; possible disruptions in demand for the
Company’s products due to industry developments; changes in demand
for the Company's products; the impact of competitive products and
pricing and alternative technological advances; the timely and
successful development and market acceptance of new products and
upgrades to existing products; changes in economic and industry
projections; and a decline in general conditions in the
telecommunications equipment industry or the world economy
generally. 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, 2018. All forward-looking
statements are made as of the date of this press release, and the
Company disclaims any duty to update such statements.
©2019 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.
NeoPhotonics Corporation Condensed Consolidated Balance
Sheets (Unaudited) (In thousands)
As of Jun.
30,2019 Dec. 31,2018 ASSETS Current assets: Cash
and cash equivalents
$
55,107
$
58,185
Short-term investments
7,567
7,481
Restricted cash
11,533
11,053
Accounts receivable, net
59,623
74,751
Inventories
48,795
52,159
Assets held for sale
-
2,971
Prepaid expenses and other current assets
23,397
26,605
Total current assets
206,022
233,205
Property, plant and equipment, net
89,283
100,090
Operating lease right-of-use assets
16,520
-
Purchased intangible assets, net
2,532
3,018
Goodwill
1,115
1,115
Other long-term assets
3,144
3,148
Total assets
$
318,616
$
340,576
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable
$
51,857
$
58,403
Notes payable and short-term borrowing
-
4,795
Current portion of long-term debt
3,048
2,897
Accrued and other current liabilities
43,020
50,288
Total current liabilities
97,925
116,383
Long-term debt, net of current portion
45,181
50,454
Operating lease liabilities, non-current
17,577
-
Other noncurrent liabilities
9,949
13,499
Total liabilities
170,632
180,336
Stockholders' equity: Common stock
118
116
Additional paid-in capital
572,734
564,722
Accumulated other comprehensive loss
(5,979
)
(7,126
)
Accumulated deficit
(418,889
)
(397,472
)
Total stockholders' equity
147,984
160,240
Total liabilities and stockholders' equity
$
318,616
$
340,576
NeoPhotonics Corporation Condensed Consolidated
Statements of Operations (Unaudited) (In thousands, except
percentages and per share data)
Three Months Ended
Six Months Ended Jun. 30,2019 Mar. 31,2019
Jun. 30,2018 Jun. 30,2019 Jun. 30,2018
Revenue
$
81,690
$
79,366
$
81,102
$
161,056
$
149,688
Cost of goods sold (1)
66,015
63,629
65,630
129,644
125,034
Gross profit
15,675
15,737
15,472
31,412
24,654
Gross margin
19.2
%
19.8
%
19.1
%
19.5
%
16.5
%
Operating expenses: Research and development (1)
13,793
14,683
13,243
28,476
27,131
Sales and marketing (1)
3,623
4,603
3,891
8,226
8,015
General and administrative (1)
7,174
7,753
7,267
14,927
14,917
Amortization of purchased intangible assets
-
119
120
119
239
Asset sale related costs
47
329
79
376
93
Restructuring charges
79
179
622
258
653
Gain on asset sale
(817
)
-
-
(817
)
-
Total operating expenses
23,899
27,666
25,222
51,565
51,048
Loss from operations
(8,224
)
(11,929
)
(9,750
)
(20,153
)
(26,394
)
Interest income
99
99
122
198
215
Interest expense
(496
)
(493
)
(759
)
(989
)
(1,467
)
Other income (expense), net
1,090
(1,598
)
930
(508
)
581
Total interest and other income (expense), net
693
(1,992
)
293
(1,299
)
(671
)
Loss before income taxes
(7,531
)
(13,921
)
(9,457
)
(21,452
)
(27,065
)
Income tax benefit (provision)
205
(170
)
(1,080
)
35
(1,718
)
Net loss
$
(7,326
)
$
(14,091
)
$
(10,537
)
$
(21,417
)
$
(28,783
)
Basic net loss per share
$
(0.16
)
$
(0.30
)
$
(0.24
)
$
(0.46
)
$
(0.65
)
Diluted net loss per share
$
(0.16
)
$
(0.30
)
$
(0.24
)
$
(0.46
)
$
(0.65
)
Weighted average shares used to compute basic net loss per share
46,754
46,414
44,665
46,585
44,463
Weighted average shares used to compute diluted net loss per share
46,754
46,414
44,665
46,585
44,463
(1) Includes stock-based compensation expense as
follows for the periods presented: Cost of goods sold
$
609
$
601
$
629
$
1,210
$
1,279
Research and development
787
881
829
1,668
1,602
Sales and marketing
599
678
642
1,277
1,580
General and administrative
1,010
1,178
1,039
2,188
2,025
Total stock-based compensation expense
$
3,005
$
3,338
$
3,139
$
6,343
$
6,486
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 Six Months Ended
Jun. 30,2019 Mar. 31,2019 Jun. 30,2018 Jun.
30,2019 Jun. 30,2018 NON-GAAP GROSS PROFIT: GAAP
gross profit
$
15,675
$
15,737
$
15,472
$
31,412
$
24,654
Stock-based compensation expense
609
601
629
1,210
1,279
Amortization of purchased intangible assets
184
184
184
368
387
Depreciation of acquisition-related fixed asset step-up
(66
)
(66
)
(73
)
(132
)
(142
)
End-of-life related inventory write-down
3,553
-
-
3,553
-
Accelerated Depreciation
950
1,315
-
2,265
-
Restructuring charges
-
-
54
-
146
Non-GAAP gross profit
$
20,905
$
17,771
$
16,266
$
38,676
$
26,324
Non-GAAP gross margin as a % of revenue
25.6
%
22.4
%
20.1
%
24.0
%
17.6
%
NON-GAAP TOTAL OPERATING EXPENSES: GAAP total
operating expenses
$
23,899
$
27,666
$
25,222
$
51,565
$
51,048
Stock-based compensation expense
(2,396
)
(2,737
)
(2,510
)
(5,133
)
(5,207
)
Amortization of purchased intangible assets
-
(119
)
(120
)
(119
)
(239
)
Depreciation of acquisition-related fixed asset step-up
(67
)
(66
)
(68
)
(133
)
(135
)
Asset sale related costs
(47
)
(329
)
(79
)
(376
)
(93
)
Restructuring charges
(79
)
(179
)
(622
)
(258
)
(653
)
Gain on asset sale
817
-
-
817
-
Non-GAAP total operating expenses
$
22,127
$
24,236
$
21,823
$
46,363
$
44,721
Non-GAAP total operating expenses as a % of revenue
27.1
%
30.5
%
26.9
%
28.8
%
29.9
%
NON-GAAP OPERATING LOSS: GAAP loss from operations
$
(8,224
)
$
(11,929
)
$
(9,750
)
$
(20,153
)
$
(26,394
)
Stock-based compensation expense
3,005
3,338
3,139
6,343
6,486
Amortization of purchased intangible assets
184
303
304
487
626
Depreciation of acquisition-related fixed asset step-up
1
-
(5
)
1
(7
)
Asset sale related costs
47
329
79
376
93
End-of-life related inventory write-down
3,553
-
-
3,553
-
Accelerated Depreciation
950
1,315
-
2,265
-
Restructuring charges
79
179
676
258
799
Gain on asset sale
(817
)
-
-
(817
)
-
Non-GAAP loss from operations
$
(1,222
)
$
(6,465
)
$
(5,557
)
$
(7,687
)
$
(18,397
)
Non-GAAP operating margin as a % of revenue
(1.5
)%
(8.1
)%
(6.9
)%
(4.8
)%
(12.3
)%
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 Six Months Ended Jun. 30,2019 Mar.
31,2019 Jun. 30,2018 Jun. 30,2019 Jun.
30,2018 NON-GAAP NET LOSS: GAAP net loss
$
(7,326
)
$
(14,091
)
$
(10,537
)
$
(21,417
)
$
(28,783
)
Stock-based compensation expense
3,005
3,338
3,139
6,343
6,486
Amortization of purchased intangible assets
184
303
304
487
626
Depreciation of acquisition-related fixed asset step-up
1
-
(5
)
1
(7
)
Asset sale related costs
47
329
79
376
93
End-of-life related inventory write-down
3,553
-
-
3,553
-
Accelerated Depreciation
950
1,315
-
2,265
-
Restructuring charges
79
179
676
258
799
Gain on asset sale
(817
)
-
-
(817
)
-
Income tax effect of Non-GAAP adjustments
(895
)
(377
)
42
(1,272
)
(84
)
Non-GAAP net loss
$
(1,219
)
$
(9,004
)
$
(6,302
)
$
(10,223
)
$
(20,870
)
Non-GAAP net loss as a % of revenue
(1.5
)%
(11.3
)%
(7.8
)%
(6.3
)%
(13.9
)%
ADJUSTED EBITDA: GAAP net loss
$
(7,326
)
$
(14,091
)
$
(10,537
)
$
(21,417
)
$
(28,783
)
Stock-based compensation expense
3,005
3,338
3,139
6,343
6,486
Amortization of purchased intangible assets
184
303
304
487
626
Depreciation of acquisition-related fixed asset step-up
1
-
(5
)
1
(7
)
Asset sale related costs
47
329
79
376
93
End-of-life related inventory write-down
3,553
-
-
3,553
-
Accelerated Depreciation
950
1,315
-
2,265
-
Restructuring charges
79
179
676
258
799
Gain on asset sale
(817
)
-
-
(817
)
-
Interest expense, net
397
394
637
791
1,252
Income tax benefit (provision)
(205
)
170
1,080
(35
)
1,718
Depreciation expense
6,956
7,233
7,607
14,189
15,293
Adjusted EBITDA
$
6,824
$
(830
)
$
2,980
$
5,994
$
(2,523
)
Adjusted EBITDA as a % of revenue
8.4
%
(1.0
)%
3.7
%
3.7
%
(1.7
)%
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE: GAAP
basic net loss per share
$
(0.16
)
$
(0.30
)
$
(0.24
)
$
(0.46
)
$
(0.65
)
GAAP diluted net loss per share
$
(0.16
)
$
(0.30
)
$
(0.24
)
$
(0.46
)
$
(0.65
)
Non-GAAP basic net loss per share
$
(0.03
)
$
(0.19
)
$
(0.14
)
$
(0.22
)
$
(0.47
)
Non-GAAP diluted net loss per share
$
(0.03
)
$
(0.19
)
$
(0.14
)
$
(0.22
)
$
(0.47
)
SHARES USED TO COMPUTE GAAP AND NON-GAAP BASIC NET LOSS PER
SHARE
46,754
46,414
44,665
46,585
44,463
SHARES USED TO COMPUTE GAAP DILUTED NET LOSS PER SHARE
46,754
46,414
44,665
46,585
44,463
SHARES USED TO COMPUTE NON-GAAP DILUTED NET LOSS PER SHARE
46,754
46,414
44,665
46,585
44,463
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190805005541/en/
NeoPhotonics Corporation Beth Eby, Chief Financial Officer
+1-408-895-6086 ir@neophotonics.com
Sapphire Investor Relations, LLC Erica Mannion, Investor
Relations +1-617-542-6180 ir@neophotonics.com
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