- Revenue of $92.4 million for the quarter, up 13%
sequentially and year-over-year
- Operating Profit of $1.3 million, non-GAAP Operating Profit
of $4.4 million
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 third quarter ended
September 30, 2019.
“Solid execution, strong customer demand, and cost reduction
combined for a profitable quarter for NeoPhotonics,” said Tim
Jenks, Chairman and CEO of NeoPhotonics. “Despite the trade
tensions, we believe the macro trends of the industry favor our
core capabilities of delivering the highest performance products
for the most demanding applications,” concluded Mr. Jenks.
Third Quarter Summary
- Revenue was $92.4 million, up 13% quarter-over-quarter and up
13% year-over-year
- Gross margin was 28.4%, up from 19.2% in the prior quarter
- Non-GAAP Gross margin was 29.0%, up from 25.6% in the prior
quarter
- Diluted net earnings per share was $0.05, up from a net loss of
$0.16 per share in the prior quarter
- Non-GAAP diluted net earnings per share was $0.11, up from net
loss of $0.03 per share in the prior quarter
- Cash generated from operations was $9 million, up from $0.7
million in the prior quarter
- Adjusted EBITDA was $14.2 million, up from $6.8 million in the
prior quarter
Non-GAAP results in the third quarter of 2019 exclude $3.0
million of stock-based compensation expense and $0.2 million of
amortization of acquisition-related intangibles. 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 September 30, 2019, cash and cash equivalents, short-term
investments and restricted cash, together totaled $80 million, up
$6 million compared to June 30, 2019.
Outlook for the Quarter Ending December 31, 2019
GAAP
Non-GAAP
Revenue
$94 to $100 million
Gross Margin
27% to 31%
28% to 32%
Operating Expenses
$26 +/- $0.5 million
$23 +/- $0.5 million
Earnings per share
($0.02) to $0.08
$0.04 to $0.14
The non-GAAP outlook for the fourth 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 $0.2 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, Thursday, October
31, 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
+1-800-367-2403. For international callers, please dial
+1-334-777-6978. The Conference ID number is 6277959. 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.
NeoPhotonics
Corporation
Condensed Consolidated Balance
Sheets (Unaudited)
(In thousands)
As of
Sep. 30, 2019
Dec. 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
61,396
$
58,185
Short-term investments
7,607
7,481
Restricted cash
10,827
11,053
Accounts receivable, net
65,245
74,751
Inventories
48,668
52,159
Assets held for sale
—
2,971
Prepaid expenses and other current
assets
23,921
26,605
Total current assets
217,664
233,205
Property, plant and equipment, net
85,125
100,090
Operating lease right-of-use assets
16,037
—
Purchased intangible assets, net
2,315
3,018
Goodwill
1,115
1,115
Other long-term assets
3,088
3,148
Total assets
$
325,344
$
340,576
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
58,306
$
58,403
Notes payable and short-term borrowing
—
4,795
Current portion of long-term debt
3,054
2,897
Accrued and other current liabilities
42,414
50,288
Total current liabilities
103,774
116,383
Long-term debt, net of current portion
44,771
50,454
Operating lease liabilities,
noncurrent
17,054
—
Other noncurrent liabilities
9,748
13,499
Total liabilities
175,347
180,336
Stockholders’ equity:
Common stock
120
116
Additional paid-in capital
577,088
564,722
Accumulated other comprehensive loss
(10,594
)
(7,126
)
Accumulated deficit
(416,617
)
(397,472
)
Total stockholders’ equity
149,997
160,240
Total liabilities and stockholders’
equity
$
325,344
$
340,576
NeoPhotonics
Corporation
Condensed Consolidated
Statements of Operations (Unaudited)
(In thousands, except percentages
and per share data)
Three Months Ended
Nine Months Ended
Sep. 30, 2019
Jun. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Revenue
$
92,392
$
81,690
$
81,748
$
253,448
$
231,436
Cost of goods sold (1)
66,193
66,015
62,815
195,837
187,849
Gross profit
26,199
15,675
18,933
57,611
43,587
Gross margin
28.4
%
19.2
%
23.2
%
22.7
%
18.8
%
Operating expenses:
Research and development (1)
13,688
13,793
13,177
42,164
40,308
Sales and marketing (1)
3,832
3,623
4,351
12,058
12,366
General and administrative (1)
7,403
7,174
8,592
22,330
23,509
Amortization of purchased intangible
assets
—
—
118
119
357
Asset sale related costs
12
47
251
388
344
Restructuring charges
3
79
1,133
261
1,786
Gain on asset sale
—
(817
)
—
(817
)
—
Total operating expenses
24,938
23,899
27,622
76,503
78,670
Income (loss) from operations
1,261
(8,224
)
(8,689
)
(18,892
)
(35,083
)
Interest income
95
99
85
293
300
Interest expense
(483
)
(496
)
(540
)
(1,472
)
(2,007
)
Other income (expense), net
2,960
1,090
1,310
2,452
1,891
Total interest and other income (expense),
net
2,572
693
855
1,273
184
Income (loss) before income taxes
3,833
(7,531
)
(7,834
)
(17,619
)
(34,899
)
Income tax benefit (provision)
(1,561
)
205
(291
)
(1,526
)
(2,009
)
Net income (loss)
$
2,272
$
(7,326
)
$
(8,125
)
$
(19,145
)
$
(36,908
)
Basic net income (loss) per share
$
0.05
$
(0.16
)
$
(0.18
)
$
(0.41
)
$
(0.82
)
Diluted net income (loss) per share
$
0.05
$
(0.16
)
$
(0.18
)
$
(0.41
)
$
(0.82
)
Weighted average shares used to compute
basic net income (loss) per share
47,666
46,754
45,476
46,949
44,804
Weighted average shares used to compute
diluted net income (loss) per share
48,615
46,754
45,476
46,949
44,804
(1) Includes stock-based compensation
expense as follows for the periods presented:
Cost of goods sold
$
441
$
609
$
553
$
1,651
$
1,832
Research and development
715
787
1,016
2,383
2,618
Sales and marketing
575
599
931
1,852
2,511
General and administrative
1,220
1,010
1,541
3,408
3,566
Total stock-based compensation expense
$
2,951
$
3,005
$
4,041
$
9,294
$
10,527
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
Nine Months Ended
Sep. 30, 2019
Jun. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
NON-GAAP GROSS PROFIT:
GAAP gross profit
$
26,199
$
15,675
$
18,933
$
57,611
$
43,587
Stock-based compensation expense
441
609
553
1,651
1,832
Amortization of purchased intangible
assets
185
184
185
553
572
Depreciation of acquisition-related fixed
asset step-up
(66
)
(66
)
(71
)
(198
)
(213
)
End-of-life related inventory
write-down
—
3,553
—
3,553
—
Accelerated depreciation
—
950
—
2,265
—
Restructuring charges
—
—
22
—
168
Non-GAAP gross profit
$
26,759
$
20,905
$
19,622
$
65,435
$
45,946
Non-GAAP gross margin as a % of
revenue
29.0
%
25.6
%
24.0
%
25.8
%
19.9
%
NON-GAAP TOTAL OPERATING
EXPENSES:
GAAP total operating expenses
$
24,938
$
23,899
$
27,622
$
76,503
$
78,670
Stock-based compensation expense
(2,510
)
(2,396
)
(3,488
)
(7,643
)
(8,695
)
Amortization of purchased intangible
assets
—
—
(118
)
(119
)
(357
)
Depreciation of acquisition-related fixed
asset step-up
(66
)
(67
)
(65
)
(199
)
(200
)
Asset sale related costs
(12
)
(47
)
(252
)
(388
)
(345
)
Restructuring charges
(3
)
(79
)
(1,133
)
(261
)
(1,786
)
Litigation settlement
—
—
(450
)
—
(450
)
Gain on asset sale
—
817
—
817
—
Non-GAAP total operating expenses
$
22,347
$
22,127
$
22,116
$
68,710
$
66,837
Non-GAAP total operating expenses as a %
of revenue
24.2
%
27.1
%
27.1
%
27.1
%
28.9
%
NON-GAAP OPERATING INCOME
(LOSS):
GAAP income (loss) from operations
$
1,261
$
(8,224
)
$
(8,689
)
$
(18,892
)
$
(35,083
)
Stock-based compensation expense
2,951
3,005
4,041
9,294
10,527
Amortization of purchased intangible
assets
185
184
303
672
929
Depreciation of acquisition-related fixed
asset step-up
—
1
(6
)
1
(13
)
Asset sale related costs
12
47
252
388
345
End-of-life related inventory
write-down
—
3,553
—
3,553
—
Accelerated depreciation
—
950
—
2,265
—
Restructuring charges
3
79
1,155
261
1,954
Litigation settlement
—
—
450
—
450
Gain on asset sale
—
(817
)
—
(817
)
—
Non-GAAP income (loss) from operations
$
4,412
$
(1,222
)
$
(2,494
)
$
(3,275
)
$
(20,891
)
Non-GAAP operating margin as a % of
revenue
4.8
%
(1.5
)%
(3.1
)%
(1.3
)%
(9.0
)%
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
Nine Months Ended
Sep. 30, 2019
Jun. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
NON-GAAP NET INCOME (LOSS):
GAAP net income (loss)
$
2,272
$
(7,326
)
$
(8,125
)
$
(19,145
)
$
(36,908
)
Stock-based compensation expense
2,951
3,005
4,041
9,294
10,527
Amortization of purchased intangible
assets
185
184
303
672
929
Depreciation of acquisition-related fixed
asset step-up
—
1
(6
)
1
(13
)
Asset sale related costs
12
47
252
388
345
End-of-life related inventory
write-down
—
3,553
—
3,553
—
Accelerated depreciation
—
950
—
2,265
—
Restructuring charges
3
79
1,155
261
1,954
Litigation settlement
—
—
450
—
450
Gain on asset sale
—
(817
)
—
(817
)
—
Income tax effect of Non-GAAP
adjustments
(14
)
(895
)
(138
)
(1,286
)
(222
)
Non-GAAP net income (loss)
$
5,409
$
(1,219
)
$
(2,068
)
$
(4,814
)
$
(22,938
)
Non-GAAP net income (loss) as a % of
revenue
5.9
%
(1.5
)%
(2.5
)%
(1.9
)%
(9.9
)%
ADJUSTED EBITDA:
GAAP net income (loss)
$
2,272
$
(7,326
)
$
(8,125
)
$
(19,145
)
$
(36,908
)
Stock-based compensation expense
2,951
3,005
4,041
9,294
10,527
Amortization of purchased intangible
assets
185
184
303
672
929
Depreciation of acquisition-related fixed
asset step-up
—
1
(6
)
1
(13
)
Asset sale related costs
12
47
252
388
345
End-of-life related inventory
write-down
—
3,553
—
3,553
—
Accelerated depreciation
—
950
—
2,265
—
Restructuring charges
3
79
1,155
261
1,954
Litigation settlement
—
—
450
—
450
Gain on asset sale
—
(817
)
—
(817
)
—
Interest expense, net
388
397
455
1,179
1,707
Income tax benefit (provision)
1,561
(205
)
291
1,526
2,009
Depreciation expense
6,829
6,956
7,343
21,018
22,636
Adjusted EBITDA
$
14,201
$
6,824
$
6,159
$
20,195
$
3,636
Adjusted EBITDA as a % of revenue
15.4
%
8.4
%
7.5
%
8.0
%
1.6
%
BASIC AND DILUTED NET INCOME (LOSS) PER
SHARE:
GAAP basic net income (loss) per share
$
0.05
$
(0.16
)
$
(0.18
)
$
(0.41
)
$
(0.82
)
GAAP diluted net income (loss) per
share
$
0.05
$
(0.16
)
$
(0.18
)
$
(0.41
)
$
(0.82
)
Non-GAAP basic net income (loss) per
share
$
0.11
$
(0.03
)
$
(0.05
)
$
(0.10
)
$
(0.51
)
Non-GAAP diluted net income (loss) per
share
$
0.11
$
(0.03
)
$
(0.05
)
$
(0.10
)
$
(0.51
)
SHARES USED TO COMPUTE GAAP AND
NON-GAAP BASIC NET INCOME (LOSS) PER SHARE
47,666
46,754
45,476
46,949
44,804
SHARES USED TO COMPUTE GAAP DILUTED NET
INCOME (LOSS) PER SHARE
48,615
46,754
45,476
46,949
44,804
SHARES USED TO COMPUTE NON-GAAP DILUTED
NET INCOME (LOSS) PER SHARE
50,051
46,754
45,476
46,949
44,804
©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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191031005711/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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