Generates Positive Cash Flow and
Completes Public Offering of Common Stock
MoSys, Inc. (NASDAQ: MOSY), today reported financial results
for the quarter ended September 30, 2018.
Third Quarter 2018 Financial
ResultsTotal net revenue for the third quarter of 2018 was
$4.3 million, compared with $4.6 million for the previous quarter
and $2.5 million for the third quarter of 2017. Product revenue for
the third quarter was $4.1 million, consistent with the second
quarter of 2018, and compared with $2.2 million in the year-ago
period reflecting increased IC shipments to multiple design-win
customers.
Gross margin for the third quarter of 2018 was
55%, compared with 60% for the previous quarter and 49% for the
third quarter of 2017. The sequential decrease in gross margin was
due primarily to a reduction in one-time licensing revenues and
standard cost adjustments.
Total operating expenses on a GAAP basis for the
third quarter of 2018 were $5.1 million, which included a goodwill
impairment charge of $3.2 million, and compared with operating
expenses of $2.2 million in the previous quarter and $2.7 million
in the third quarter of 2017. Total operating expenses on a
non-GAAP basis for the third quarter of 2018 decreased to $1.7
million, compared with $2.1 million in the second quarter of 2018
and $2.5 million in the third quarter of 2017.
GAAP net loss for the third quarter of 2018 was
$2.8 million, or ($0.34) per share, compared with net income of
$0.3 million, or $0.04 per diluted share, for the previous quarter
and a net loss of $1.7 million, or ($0.22) per share, for the third
quarter of 2017. Non-GAAP net income for the third quarter of 2018
was $0.6 million, or $0.07 per diluted share, and compared with net
income of $0.5 million, or $0.06 per diluted share, for the
previous quarter and a net loss of $1.5 million, or ($0.18) per
share, for the third quarter of 2017. Adjusted EBITDA for the third
quarter of 2018 was $0.8 million, and compared with $0.9 million
for the previous quarter and a negative $1.0 million for the third
quarter of 2017. A reconciliation of GAAP results to non-GAAP
results is provided in the financial statement tables following the
text of this press release.
As of October 31, 2018, the Company had
39,040,586 shares of common stock outstanding, which excludes
6,144,109 shares of common stock issuable upon exercise of
pre-funded warrants issued in October 2018.
Management Commentary“I am
pleased with our financial results for the third quarter, as we
once again generated positive cash flow and achieved non-GAAP
profitability,” commented Daniel Lewis, president and CEO of MoSys.
“During 2018, we have expanded our sales channels, which has
contributed to an increased sales pipeline and new design wins that
we believe will add to our revenue base in 2019 and beyond. Our
operations team continues to execute, and we expect 2018 to be a
record-breaking year for product shipments, primarily driven by our
Bandwidth Engine 2 products.”
Mr. Lewis continued, “In addition, we closed a
public offering in early October, generating net proceeds of
approximately $3.0 million, and significantly improved our balance
sheet. We used most of the offering proceeds to reduce our
outstanding convertible note obligation to $2.7 million, which now
is not due until August 2023. Based on customer orders and
forecasts, we have good visibility for the fourth quarter of 2018
and into the first half of 2019. With our improved financial
position, we remain focused on supporting our existing customers
and design wins in process, expanding our customer base and
managing our expenses in support of our long-term goals and
objectives.”
Business Outlook for Fourth Quarter of
2018The Company expects total net revenue for the fourth
quarter of 2018 to be in the range of $3.2 million to $3.5 million.
The mid-point of this guidance represents an expectation for full
year revenue to increase approximately 87% over 2017. The Company
also expects to achieve profitability on a non-GAAP basis for the
full year.
Financial Results Conference
CallThe Company will not be hosting a conference call or
webcast in conjunction with today’s release of its third quarter
results.
Use of Non-GAAP Financial MeasuresTo 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, intangible asset amortization and restructuring and
impairment charges. 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, intangible asset
amortization and restructuring and impairment charges. 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 November 6, 2018 that the Company filed with
the Securities and Exchange Commission.
Forward-Looking StatementsThis press release
may contain forward-looking statements about the Company,
including, without limitation, anticipated benefits and performance
expected from its IC products and the Company’s future markets and
future business prospects. 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;
- our 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;
- 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. 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. All other marks mentioned
herein are the property of their respective owners.
(Financial Tables to Follow)
|
|
MOSYS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share amounts;
unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
Net
Revenue |
|
|
|
|
|
Product |
$ |
4,056 |
|
$ |
2,231 |
|
|
$ |
11,811 |
|
$ |
4,297 |
|
Royalty
and other |
|
287 |
|
|
222 |
|
|
|
1,338 |
|
|
752 |
|
Total net
revenue |
|
4,343 |
|
|
2,453 |
|
|
|
13,149 |
|
|
5,049 |
|
|
|
|
|
|
|
Cost of Net
Revenue |
|
1,948 |
|
|
1,256 |
|
|
|
5,382 |
|
|
2,590 |
|
|
|
|
|
|
|
Gross
Profit |
|
2,395 |
|
|
1,197 |
|
|
|
7,767 |
|
|
2,459 |
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
Research
and development |
|
1,023 |
|
|
1,436 |
|
|
|
3,064 |
|
|
7,234 |
|
Selling,
general and administrative |
|
919 |
|
|
1,244 |
|
|
|
3,158 |
|
|
3,659 |
|
Restructuring and impairment charges |
|
3,159 |
|
|
50 |
|
|
|
3,159 |
|
|
1,052 |
|
Total
operating expenses |
|
5,101 |
|
|
2,730 |
|
|
|
9,381 |
|
|
11,945 |
|
|
|
|
|
|
|
Loss from
operations |
|
(2,706 |
) |
|
(1,533 |
) |
|
|
(1,614 |
) |
|
(9,486 |
) |
|
|
|
|
|
|
Other
expense, net |
|
(106 |
) |
|
(210 |
) |
|
|
(535 |
) |
|
(656 |
) |
Net
Loss |
$ |
(2,812 |
) |
$ |
(1,743 |
) |
|
$ |
(2,149 |
) |
$ |
(10,142 |
) |
|
|
|
|
|
|
Net Loss per
share |
|
|
|
|
|
Basic |
$ |
(0.34 |
) |
$ |
(0.22 |
) |
|
$ |
(0.26 |
) |
$ |
(1.43 |
) |
Diluted |
$ |
(0.34 |
) |
$ |
(0.22 |
) |
|
$ |
(0.26 |
) |
$ |
(1.43 |
) |
|
|
|
|
|
|
Shares used in
computing net loss per share |
|
|
|
|
|
Basic |
|
8,240 |
|
|
7,938 |
|
|
|
8,181 |
|
|
7,092 |
|
Diluted |
|
8,240 |
|
|
7,938 |
|
|
|
8,181 |
|
|
7,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS, INC. |
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
(In thousands, unaudited) |
|
|
|
|
|
|
|
|
|
|
September 30, |
December 31, |
|
|
|
|
2018 |
2017 |
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
4,176 |
|
$ |
3,868 |
|
|
|
|
Accounts
receivable, net |
|
2,503 |
|
|
1,681 |
|
|
|
|
Inventories |
|
1,371 |
|
|
1,766 |
|
|
|
|
Prepaid
expenses and other |
|
415 |
|
|
1,347 |
|
|
|
|
Total
current assets |
|
8,465 |
|
|
8,662 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net |
|
386 |
|
|
827 |
|
|
|
|
Goodwill |
|
10,117 |
|
|
13,276 |
|
|
|
|
Other |
|
441 |
|
|
374 |
|
|
|
|
Total
assets |
$ |
19,409 |
|
$ |
23,139 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
$ |
140 |
|
$ |
170 |
|
|
|
|
Deferred
revenue |
|
1,565 |
|
|
3,938 |
|
|
|
|
Accrued
expenses and other |
|
1,835 |
|
|
2,507 |
|
|
|
|
Total
current liabilities |
|
3,540 |
|
|
6,615 |
|
|
|
|
|
|
|
|
|
|
Convertible notes payable |
|
10,036 |
|
|
9,160 |
|
|
|
|
Other
long-term liabilities |
|
18 |
|
|
18 |
|
|
|
|
Total
liabilities |
|
13,594 |
|
|
15,793 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
5,815 |
|
|
7,346 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
$ |
19,409 |
|
$ |
23,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS, INC. |
Reconciliation of GAAP to Non-GAAP Net Income
(Loss) and Net Income (Loss) Per Share |
(In thousands, except per share amounts;
unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
GAAP net
loss |
$ |
(2,812 |
) |
$ |
(1,743 |
) |
|
$ |
(2,149 |
) |
$ |
(10,142 |
) |
Stock-based compensation expense |
|
|
|
|
|
-Research
and development |
|
106 |
|
|
119 |
|
|
|
195 |
|
|
330 |
|
-Selling,
general and administrative |
|
87 |
|
|
77 |
|
|
|
251 |
|
|
222 |
|
Total
stock-based compensation expense |
|
193 |
|
|
196 |
|
|
|
446 |
|
|
552 |
|
|
|
|
|
|
|
Restructuring and impairment charges |
|
3,159 |
|
|
50 |
|
|
|
3,159 |
|
|
1,052 |
|
Amortization of intangible assets |
|
28 |
|
|
28 |
|
|
|
83 |
|
|
84 |
|
|
|
|
|
|
|
Non-GAAP net
income (loss) |
$ |
568 |
|
$ |
(1,469 |
) |
|
$ |
1,539 |
|
$ |
(8,454 |
) |
|
|
|
|
|
|
GAAP net loss
per share, basic |
$ |
(0.34 |
) |
$ |
(0.22 |
) |
|
$ |
(0.26 |
) |
$ |
(1.43 |
) |
Reconciling items |
|
|
|
|
|
-Stock-based compensation expense |
|
0.03 |
|
|
0.02 |
|
|
|
0.05 |
|
|
0.08 |
|
-Restructuring and impairment charges |
|
0.38 |
|
|
0.01 |
|
|
|
0.39 |
|
|
0.15 |
|
-Amortization of intangible assets |
|
- |
|
|
0.01 |
|
|
|
0.01 |
|
|
0.01 |
|
|
|
|
|
|
|
Non-GAAP net
income (loss) per share, basic |
$ |
0.07 |
|
$ |
(0.18 |
) |
|
$ |
0.19 |
|
$ |
(1.19 |
) |
|
|
|
|
|
|
GAAP net loss
per share, diluted |
$ |
(0.34 |
) |
$ |
(0.22 |
) |
|
$ |
(0.26 |
) |
$ |
(1.43 |
) |
Reconciling items |
|
|
|
|
|
-Stock-based compensation expense |
|
0.03 |
|
|
0.02 |
|
|
|
0.05 |
|
|
0.08 |
|
-Restructuring and impairment charges |
|
0.38 |
|
|
0.01 |
|
|
|
0.38 |
|
|
0.15 |
|
-Amortization of intangible assets |
|
- |
|
|
0.01 |
|
|
|
0.01 |
|
|
0.01 |
|
|
|
|
|
|
|
Non-GAAP net
income (loss) per share, diluted |
$ |
0.07 |
|
$ |
(0.18 |
) |
|
$ |
0.18 |
|
$ |
(1.19 |
) |
|
|
|
|
|
|
Shares used in computing non-GAAP net income (loss) per
share |
|
|
|
|
Basic |
|
8,240 |
|
|
7,938 |
|
|
|
8,181 |
|
|
7,092 |
|
Diluted |
|
8,395 |
|
|
7,938 |
|
|
|
8,384 |
|
|
7,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS, INC. |
Reconciliation of GAAP and Non-GAAP Financial
Information |
(In thousands; unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2018 |
2017 |
|
2018 |
2017 |
Reconciliation of GAAP net loss and
adjusted EBITDA |
|
|
|
|
|
GAAP net
loss |
$ |
(2,812 |
) |
$ |
(1,743 |
) |
|
$ |
(2,149 |
) |
$ |
(10,142 |
) |
Stock-based compensation expense |
|
|
|
|
|
-Research
and development |
|
106 |
|
|
119 |
|
|
|
195 |
|
|
330 |
|
-Selling,
general and administrative |
|
87 |
|
|
77 |
|
|
|
251 |
|
|
222 |
|
Stock-based compensation expense |
|
193 |
|
|
196 |
|
|
|
446 |
|
|
552 |
|
|
|
|
|
|
|
Restructuring and impairment charges |
|
3,159 |
|
|
50 |
|
|
|
3,159 |
|
|
1,052 |
|
Amortization of intangible assets |
|
28 |
|
|
28 |
|
|
|
83 |
|
|
84 |
|
|
|
|
|
|
|
Non-GAAP net
income (loss) |
|
568 |
|
|
(1,469 |
) |
|
|
1,539 |
|
|
(8,454 |
) |
EBITDA
adjustments: |
|
|
|
|
|
Depreciation |
|
146 |
|
|
184 |
|
|
|
486 |
|
|
573 |
|
Interest
expense |
|
104 |
|
|
238 |
|
|
|
531 |
|
|
685 |
|
Provision
for income taxes |
|
2 |
|
|
4 |
|
|
|
4 |
|
|
16 |
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
820 |
|
$ |
(1,043 |
) |
|
$ |
2,560 |
|
$ |
(7,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Contacts:Jim Sullivan,
CFOMoSys, Inc.+1 (408) 418-7500jsullivan@mosys.com
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