MoSys, Inc. Reports Fourth Quarter 2019 Financial
Results
Fourth Quarter Revenue Exceeds Guidance
SAN JOSE, Calif., February 20, 2020 – MoSys,
Inc. (NASDAQ: MOSY), a provider of high-speed semiconductor
solutions, today reported financial results for the fourth quarter
and fiscal year ended December 31, 2019.
Fourth Quarter 2019 Financial Results
Total
net revenue for the fourth quarter of 2019 was $2.3 million,
compared with $1.2 million for the previous quarter and $3.5
million for the fourth quarter of 2018. Product revenue for the
fourth quarter was $2.1 million, compared with $1.0 million in the
third quarter of 2019 and $3.2 million in the year ago period. The
sequential increase in product revenue reflected increased
shipments of our Bandwidth Engine® products.
GAAP
gross margin for the fourth quarter of 2019 was 59%, compared with
66% for the third quarter of 2019 and 72% for the fourth quarter of
2018. Fourth quarter gross margin was negatively impacted by
unfavorable manufacturing variances; however, the Company expects
gross margin improvement in the first half of 2020.
Total
operating expenses on a GAAP basis for the fourth quarter of 2019
were $2.0 million, compared with operating expenses of $2.6 million
in the previous quarter, which included a goodwill impairment
charge of $0.4 million, and $11.7 million in the fourth quarter of
2018, which included a goodwill impairment charge of $9.7 million.
Total non-GAAP operating expenses, excluding stock-based
compensation expenses, impairment of goodwill and amortization of
intangible assets, for the fourth quarter of 2019 were $1.9
million, compared with $2.1 million in the third quarter of 2019
and $1.7 million in the fourth quarter of 2018.
In
August 2019, the Company effected a 1-for-20 reverse stock split of
its common stock. All share and per share amounts in this press
release have been retroactively adjusted to reflect the reverse
stock split for all current and prior periods.
GAAP
net loss for the fourth quarter of 2019 was $0.7 million, or
($0.31) per share, compared with a net loss of $1.8 million, or
($0.83) per share, for the previous quarter and a net loss of $9.3
million, or ($5.04) per share, for the fourth quarter of
2018.
Non-GAAP
net loss for the fourth quarter of 2019 was $0.6 million, or
($0.29) per share, compared with non-GAAP net loss of $1.3 million,
or ($0.60) per share, in the prior quarter and non-GAAP net income
of $0.7 million, or $0.28 per diluted share, in the fourth quarter
of 2018. Adjusted EBITDA for the fourth quarter of 2019 was a
negative $0.5 million, compared with a negative $1.2 million for
the previous quarter and a positive $0.9 million for the fourth
quarter of 2018. A reconciliation of GAAP results to non-GAAP
results is provided in the financial statement tables following the
text of this press release.
Management Commentary
“We
are pleased with the increase in our fourth quarter product sales,
with product revenues doubling sequentially driven by increased
demand from our Bandwidth Engine customers,” commented Dan
Lewis, president and chief executive officer. “Most notably,
we resumed shipments to a large security customer, which extended
its requirements for our Bandwidth Engine 2 products. We also
fulfilled significant Bandwidth Engine 3 orders from a lead
customer during the quarter.
“From a product
development perspective, we continue to leverage our current
technologies and core competencies to expand our product offerings
without incurring significant additional R&D expenses. An
example is our new Software Acceleration Product Line. We recently
announced the first product available for licensing from this
family, our Packet Classification Platform, which utilizes our
innovative virtual accelerator, the Graph Memory Engine (GME). The
GME architecture allows for flexible implementation of acceleration
algorithms in software with the ability to significantly scale
performance by leveraging an FPGA combined with a MoSys Bandwidth
Engine or Programmable HyperSpeed Engine IC. At a recent developer
forum, we demonstrated the packet classification application using
our GME on an integrated Xilinx UltraScale+ FPGA and Bandwidth
Engine platform.”
Mr.
Lewis concluded, “We remain focused on expanding our IC
customer base and identifying license opportunities for our new
software acceleration products with our existing customers, as well
as with newly cultivated relationships in additional market
segments. We have expanded our sales channels in Europe and in
North America, which has generated new opportunities for both
product lines, and we expect to announce an additional sales
initiative during the first quarter of 2020. Overall, the Company
remains well positioned with lead customers in networking, test and
measurement and application delivery, where we continued to secure
new design wins during 2019. We have good visibility for the first
half of 2020, and we intend to continue to closely manage our
expenditures in order to minimize cash burn, as we execute our
business plan and expand our sales opportunities in the coming
year.”
Business Outlook
The
Company expects total net revenue for the first quarter of 2020 to
be in the range of $1.7 million to $2.0 million.
Use of Non-GAAP Financial Measures
To supplement MoSys’ consolidated financial statements
presented in accordance with GAAP, MoSys uses non-GAAP financial
measures that exclude from the statement of operations the effects
of stock-based compensation, impairment of goodwill and intangible
asset amortization. MoSys’ management believes that the
presentation of these non-GAAP financial measures is useful to
investors and other interested persons because they are one of the
primary indicators that MoSys’ management uses for planning
and forecasting future performance. The press release also makes
reference to and reconciles GAAP net income (loss) and adjusted
EBITDA, which the Company defines as GAAP net income (loss) before
interest expense, income tax provision, and depreciation and
amortization, as well as stock-based compensation, impairment of
goodwill and intangible asset amortization. Management believes
that the presentation of non-GAAP financial measures that exclude
these items is useful to investors because management does not
consider these charges part of the day-to-day business or
reflective of the core operational activities of the Company that
are within the control of management or that would be used to
evaluate management’s operating performance.
Investors are encouraged to review the reconciliations of these
non-GAAP financial measures to the comparable GAAP results, which
are provided in tables below the Condensed Consolidated Statements
of Operations. The non-GAAP financial measures disclosed by the
Company should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the
financial results calculated in accordance with GAAP and
reconciliations to those financial statements should be carefully
evaluated. The non-GAAP financial measures used by the Company may
be calculated differently from, and therefore may not be comparable
to, similarly titled measures used by other companies. For
additional information regarding these non-GAAP financial measures,
and management’s explanation of why it considers such
measures to be useful, refer to the Form 8-K dated February 20,
2020 that the Company filed with the Securities and Exchange
Commission.
Forward-Looking Statements
This press release may contain forward-looking statements about the
Company, including, without limitation, its expected gross margin
improvement in the first half of 2020, its anticipated total net
revenue for the first quarter of 2020, anticipated benefits and
performance expected from its IC products, the Company’s
future markets and future business prospects and its
intention to continue to closely manage its expenditures in
order to minimize cash burn.
Forward-looking statements are based on certain assumptions and
expectations of future events that are subject to risks and
uncertainties. Actual results and trends may differ materially from
historical results or those projected in any such forward-looking
statements depending on a variety of factors. These factors
include, but are not limited, to the following:
●
a lack of working
capital to aggressively fund product development and
growth;
●
the timing of
customer orders and product shipments;
●
customer
concentration;
●
lengthy sales
cycle;
●
ability to enhance
our existing proprietary technologies and develop new
technologies;
●
achieving
additional design wins for our IC products through the acceptance
and adoption of our IC architecture and interface protocols by
potential customers and their suppliers;
●
difficulties and
delays in the development, production, testing and marketing of our
ICs;
●
reliance on our
manufacturing partners to assist successfully with the fabrication
of our ICs;
●
availability of
quantities of ICs supplied by our manufacturing partners at a
competitive cost;
●
ability to make our
new software acceleration and IP products commercially available
and achieve customer acceptance of these new proprietary
technologies;
●
level of
intellectual property protection provided by our patents, the
expenses and other consequences of litigation, including
intellectual property infringement litigation, to which we may be
or may become a party from time to time;
●
vigor and growth of
markets served by our customers and our operations;
and
other
risks identified in the company’s most recent report on Form
10-K filed with the Securities and Exchange Commission, as well as
other reports that MoSys files from time to time with the
Securities and Exchange Commission. MoSys undertakes no obligation
to update publicly any forward-looking statement for any reason,
except as required by law, even as new information becomes
available or other events occur in the future.
About MoSys, Inc.
MoSys,
Inc. (NASDAQ: MOSY) is a provider of semiconductor solutions that
enable fast, intelligent data access for cloud networking,
security, test and video systems. The company’s solutions
eliminate data access bottlenecks to deliver speed and intelligence
for line cards and systems scaling from 100G to multi-terabits per
second. Engineered and built for high-reliability carrier and
enterprise applications, MoSys’ Accelerator Engine IC product
family is based on the company’s patented high-performance,
high-density random-access memory and its highly efficient,
high-speed GigaChip™ serial-interface technology, and
incorporates powerful application accelerating in-memory compute
functions. More information is available at:
www.mosys.com.
Bandwidth Engine and MoSys are registered trademarks of MoSys, Inc.
in the US and/or other countries. The MoSys logo and GigaChip are
trademarks of MoSys, Inc. All other marks mentioned herein are the
property of their respective owners.
(Financial Tables to Follow)
Contact:
Jim Sullivan, CFO
MoSys, Inc.
+1 (408) 418-7500
jsullivan@mosys.com
MOSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In
thousands, except per share amounts; unaudited)
|
|
Three Months Ended
|
Twelve Months Ended
|
||
|
|
December 31,
|
December 31,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
Net Revenue
|
|
|
|
|
|
Product
|
$2,144
|
$3,242
|
$9,377
|
$15,053
|
|
Royalty
and other
|
150
|
209
|
709
|
1,547
|
|
Total
net revenue
|
2,294
|
3,451
|
10,086
|
16,600
|
|
|
|
|
|
|
|
Cost of Net Revenue
|
942
|
964
|
3,931
|
6,346
|
|
|
|
|
|
|
|
Gross Profit
|
1,352
|
2,487
|
6,155
|
10,254
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
Research
and development
|
951
|
1,065
|
4,182
|
4,129
|
|
Selling,
general and administrative
|
1,053
|
937
|
4,016
|
4,095
|
|
Impairment
of goodwill
|
-
|
9,697
|
420
|
12,856
|
|
Total
operating expenses
|
2,004
|
11,699
|
8,618
|
21,080
|
|
|
|
|
|
|
|
Loss
from operations
|
(652)
|
(9,212)
|
(2,463)
|
(10,826)
|
|
|
|
|
|
|
|
Other
expense, net
|
(34)
|
(48)
|
(117)
|
(583)
|
|
Net Loss
|
$(686)
|
$(9,260)
|
$(2,580)
|
$(11,409)
|
|
|
|
|
|
|
|
Net loss per share
|
|
|
|
|
|
Basic
and diluted
|
$(0.31)
|
$(5.04)
|
$(1.19)
|
$(14.82)
|
|
|
|
|
|
|
|
Shares used in computing net loss per share
|
|
|
|
|
|
Basic
and diluted
|
2,178
|
1,839
|
2,165
|
770
|
MOSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
MOSYS, INC.
Reconciliation
of GAAP to Non-GAAP Net Income (Loss) and Net Income (Loss) Per
Share
(In
thousands, except per share amounts; unaudited)
MOSYS, INC.
Reconciliation of GAAP and Non-GAAP Financial
Information
(In thousands; unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
||
|
|
December 31,
|
December 31,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
Reconciliation of GAAP net loss and
adjusted EBITDA
|
|
|
|
|
|
GAAP net loss
|
$(686)
|
$(9,260)
|
$(2,580)
|
$(11,409)
|
|
Stock-based
compensation expense
|
|
|
|
|
|
Research
and development
|
27
|
132
|
108
|
327
|
|
Selling,
general and administrative
|
37
|
96
|
155
|
347
|
|
Stock-based
compensation expense
|
64
|
228
|
263
|
674
|
|
|
|
|
|
|
|
Impairment
of goodwill
|
-
|
9,697
|
420
|
12,856
|
|
Amortization
of intangible assets
|
-
|
28
|
-
|
111
|
|
|
|
|
|
|
|
Non-GAAP net income (loss)
|
(622)
|
693
|
(1,897)
|
2,232
|
|
EBITDA
adjustments:
|
|
|
|
|
|
Depreciation
|
37
|
112
|
185
|
598
|
|
Interest
expense
|
56
|
51
|
220
|
582
|
|
Provision
for income taxes
|
-
|
9
|
-
|
13
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$(529)
|
$865
|
$(1,492)
|
$3,425
|
|
|
|
|
|
|