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Inphi Corporation Reports 16% Sequential and 73% Year-over-Year Revenue Growth in Q1, 2017 (from continuing operations)




SANTA CLARA, CA — (Marketwired) — 05/02/17 — Inphi Corporation (NYSE: IPHI), a leader in high-speed data movement interconnects, today announced financial results for its first quarter ended March 31, 2017.

Revenue from continuing operations in the first quarter of 2017 was $93.6 million on a U.S. generally accepted accounting principles (GAAP) basis, up 16% sequentially from $80.9 million in the fourth quarter of 2016 and up 73% year-over-year, compared with $54.1 million in the first quarter of 2016. This revenue growth reflects an increase in demand for Inphi linear transimpedance amplifiers, linear driver products, ColorZ inter-data center solutions, and coherent DSP from the ClariPhy acquisition.

Gross margin from continuing operations under GAAP in the first quarter of 2017 was 57.2%, compared with 68.3% in the first quarter of 2016. The decrease in gross margin was primarily due to amortization of acquired intangibles, amortization of inventory step up fair value related to the acquisition of ClariPhy and change in the product mix.

GAAP loss from continuing operations in the first quarter of 2017 was $4.5 million or (4.8%) of revenue from continuing operations, compared to GAAP income from continuing operations in the first quarter of 2016 of $2.2 million or 4.1% of revenue from continuing operations.

GAAP net loss for the first quarter of 2017 was $11.3 million, or ($0.27) per diluted common share, compared with almost break-even in the first quarter of 2016.

Inphi reports revenue, gross margin, operating expenses, net income (loss), and earnings per share from continuing operations in accordance with GAAP and on a non-GAAP basis. A reconciliation of the GAAP to non-GAAP revenue, gross margin, operating expenses, net income, earnings per share from continuing operations, as well as a description of the items excluded from the non-GAAP calculations, is included in the financial statements portion of this press release.

Gross margin from continuing operations on a non-GAAP basis in the first quarter of 2017 was 71.3%, compared to 74.9% in the first quarter of 2016. The decrease was largely due to change in product mix, specifically a significant increase in packaged linear drivers.

Non-GAAP income from continuing operations in the first quarter of 2017 was $21.6 million, or 23.1% of revenue from continuing operations, compared with $13.2 million, or 24.3% of revenue from continuing operations in the first quarter of 2016.

Non-GAAP net income from continuing operations in the first quarter of 2017 was $19.5 million, or $0.44 per diluted common share. This compares with non-GAAP net income from continuing operations of $11.3 million, or $0.26 per diluted common share in the first quarter of 2016.

“We are pleased with Q1 results as we continued to grow market share for linear drivers, and ramped ColorZ ahead of plan. For Q2, ColorZ will continue to ramp and we are now engaged in system validation with a second large customer,” said Ford Tamer, president and CEO of Inphi Corporation.

“However, Q2 revenue will be adversely impacted primarily by inventory accumulation in China Long Haul and Metro, which represents 40% of worldwide optical communications demand. We are confident in the growth opportunities for Inphi in 2017 and 2018, in the long haul, metro and inter- and intra-data center markets, because of our product positioning with leading customers and growing market share,” he said.

The following statements are based on the Company–s current expectations for the second quarter of 2017. These statements are forward-looking and actual results may differ materially. A reconciliation between the GAAP and Non-GAAP outlook is included at the end of this press release.

Revenue is expected to decrease 6% to 14% sequentially in Q2 2017, in the range of $80.0 million to $88.0 million.

GAAP – based gross margin is expected to be approximately 53.0% to 55.8%.

Non-GAAP gross margin is expected to be approximately 69.5% to 70.5%.

Stock-based compensation expense is expected to be in the range of $11.8 million to $12.0 million.

GAAP results are expected to be a net loss in a range between a net loss of $22.8 million to a net loss of $28.7 million, or ($0.54) – ($0.68) per diluted share, based on 42.2 million estimated basic shares outstanding.

Non-GAAP net income, excluding stock-based compensation expense, amortization of intangibles and inventory step up fair value related to acquisitions and noncash interest on convertible debt, is expected to be in the range of $12.0 million to $17.4 million, or $0.27- $0.39 per diluted share, based on 44.2 million estimated diluted shares outstanding.

Inphi plans to hold a conference call today at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time with Ford Tamer, president and chief executive officer, and John Edmunds, chief financial officer, to discuss the first quarter 2017 results.

The call can be accessed by dialing 844-459-2451; international callers should dial 765-507-2591, participant passcode: 8293941. Please dial-in ten minutes prior to the scheduled conference call time. A live and archived webcast of the call will be available on Inphi–s website at for up to 30 days after the call.

Inphi Corporation is a leader in high-speed data movement. We move big data – fast, throughout the globe, between data centers, and inside data centers. Inphi–s expertise in signal integrity results in reliable data delivery, at high speeds, over a variety of distances. As data volumes ramp exponentially due to video streaming, social media, cloud-based services, and wireless infrastructure, the need for speed has never been greater. That–s where we come in. Customers rely on Inphi–s solutions to develop and build out the Service Provider and Cloud infrastructures, and data centers of tomorrow. To learn more about Inphi, visit .

Statements in the press release and certain matters to be discussed on the first quarter of 2017 conference call regarding Inphi Corporation, which are not historical facts, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terms such as outlook, believe, expect, may, will, provide, continue, could, and should, and the negative of these terms or other similar expressions. These statements include statements relating to: the Company–s business outlook and current expectations for 2017, including with respect to the second quarter of 2017, revenue, gross margin, stock-based compensation expense, operating performance, net income or loss, and earnings per share; the Company–s expectations regarding growth opportunities in 2017 and 2018, including in the long haul, metro and inter- and intra-data center markets; the Company–s plans regarding ColorZ; the impact of inventory accumulation on Q2 revenue; and benefits of using non-GAAP financial measures. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including: the Company–s ability to sustain profitable operations due to its history of losses and accumulated deficit; dependence on a limited number of customers for a substantial portion of revenue and lack of long-term purchase commitments from our customers; product defects; risk related to intellectual property matters, lengthy sales cycle and competitive selection process; lengthy and expensive qualification processes; ability to develop new or enhanced products in a timely manner; development of the markets that the Company targets; market demand for the Company–s products; reliance on third parties to manufacture, assemble and test products; ability to compete; and other risks inherent in fabless semiconductor businesses. In addition, actual results could differ materially due to changes in tax rates or tax benefits available, changes in government regulation, changes in claims that may or may not be asserted, as well as changes in pending litigation. For a discussion of these and other related risks, please refer to Inphi Corporation–s recent SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2016, which are available on the SEC–s website at . Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Inphi Corporation undertakes no obligation to update forward-looking statements for any reason, except as required by law, even as new information becomes available or other events occur in the future.

Inphi, the Inphi logo and Think fast are registered trademarks of Inphi Corporation. All other trademarks used herein are the property of their respective owners.

The following table presents details of stock-based compensation expense included in each functional line item in the consolidated statements of operations above:

To supplement the financial data presented on a GAAP basis, the Company discloses certain non-GAAP financial measures, which exclude stock-based compensation, legal, transition costs and other expenses, purchase price fair value adjustments related to acquisitions, non-cash interest expense related to convertible debt, indirect expenses associated with discontinued operations and deferred tax asset valuation allowance. These non-GAAP financial measures are not in accordance with GAAP. These results should only be used to evaluate the Company–s results of operations in conjunction with the corresponding GAAP measures. The Company believes that its non-GAAP financial information provides useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations because it excludes charges or benefits that management considers to be outside of the Company–s core operating results. The Company believes that the non-GAAP measures of gross margin, income from operations, net income and earnings per share, in combination with the Company–s financial results calculated in accordance with GAAP, provide investors with additional perspective and a more meaningful understanding of the Company–s ongoing operating performance. In addition, the Company–s management uses these non-GAAP measures to review and assess the financial performance of the Company, to determine executive officer incentive compensation and to plan and forecast performance in future periods. The Company–s non-GAAP measurements are not prepared in accordance with GAAP, and are not an alternative to GAAP financial information, and may be calculated differently than non-GAAP financial information disclosed by other companies.

Kim Markle
Inphi
408-217-7329

Deborah Stapleton
650-815-1239





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