SANTA CLARA, May 07, 2020 (GLOBE NEWSWIRE via COMTEX) -- Inphi Corporation /zigman2/quotes/208445412/composite IPHI -2.42% , a leader in high-speed data movement interconnects, today announced financial results for its first quarter ended March 31, 2020.
Revenue in the first quarter of 2020 was a record $139.4 million on a U.S. generally accepted accounting principles (GAAP) basis, up 69.6% year-over-year, compared with $82.2 million in the first quarter of 2019. The increase was due to higher demand for Cloud and Telecommunications products as well as the inclusion of eSilicon revenues as a result of the acquisition that closed on January 10, 2020.
Gross margin under GAAP in the first quarter of 2020 was 52.9%, compared with 57.9% in the first quarter of 2019. The decrease was mainly due to amortization of intangibles, step up value of inventories related to the eSilicon acquisition and product mix.
GAAP operating loss in the first quarter of 2020 was $16.3 million or (11.7%) of revenue, compared to GAAP operating loss in the first quarter of 2019 of $15.5 million or (18.8%) of revenue. The increase in operating loss was mainly due to higher operating expenses as a result of eSilicon acquisition, partially offset by higher gross profit.
GAAP net loss for the first quarter of 2020 was $20.3 million or ($0.44) per diluted common share, compared with $22.7 million or ($0.51) per diluted common share in the first quarter of 2019.
Inphi reports gross profit, operating expenses, net income (loss), and earnings per share in accordance with GAAP and on a non-GAAP basis. A reconciliation of the GAAP to non-GAAP gross profit, operating expenses, operating income, net income, earnings per share, 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 on a non-GAAP basis in the first quarter of 2020 was 64.2%, compared with 70.7% in the first quarter of 2019. The decrease was due to product mix, mainly from the sale of eSilicon products that have a lower margin.
Non-GAAP operating income in the first quarter of 2020 was $34.2 million, compared with non-GAAP operating income of $15.6 million in the first quarter of 2019. The increase is primarily due to higher gross profit and higher operating leverage.
Non-GAAP net income in the first quarter of 2020 was $31.5 million, or $0.62 per diluted common share. This compares with non-GAAP net income of $15.4 million, or $0.33 per diluted common share in the first quarter of 2019.
The Company spent approximately $215 million to acquire eSilicon on January 10. On April 24, the Company also closed the sale of $506 million in 0.75% convertible senior notes due 2025. This effectively allows for the refinancing of the existing Convertible Notes totaling $517.5 million on the balance sheet which will become due in the next 7-15 months. Toward that end, approximately $99.5 million of the 2015 Convertible Notes were exchanged as of April 24 for notes in the new Convertible Note financing. The Company currently plans to use cash to retire the remaining principal of $130.5 million in the 2015 Convertible Notes due in December 2020 and $287.5 million of the 2016 Convertible Notes due in September 2021 when the notes become due.
"As the global health crisis continues to be a challenge, the demand for bandwidth remains solid, as detailed in our April 22 blog on Inphi's website," said Ford Tamer, President and CEO of Inphi Corporation. "Prior to the crisis, we were already delivering on new product cycles for our cloud and telecom customers. These included upgrades of data center, 5G, metro and long-haul networks to PAM and Coherent technologies, designed to increase available bandwidth. Now, we believe the significant paradigm shifts brought on by 'work from home', electronic commerce, distance learning, streaming and other remote usage activities may result in further acceleration of bandwidth upgrades. While we remain cautiously optimistic for continued growth, we will also work to verify the sustainability of this new demand."
The following statements are based on the Company's current expectations for the second quarter of 2020. Due to strong product cycles, among other factors in both Telecom and Cloud, we anticipate sequential organic revenue growth in the second quarter of 2020 compared to the first quarter of 2020. 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 in Q2 2020 is expected to be in the range of $147.8 million to $152.0 million.
-- GAAP gross margin is expected to be approximately 51.6% to 53.9%.
-- Non-GAAP gross margin is expected to be approximately 63.5% to 65.5%.
-- Stock-based compensation expense is expected to be in the range of $26 million to $28 million.
-- GAAP net loss is expected to be in range between $15.0 million to $21. 5 million, or ($0.31) to ($0.45) per basic share, based on 47.8 million estimated weighted average basic shares outstanding.
-- Non-GAAP net income, excluding stock-based compensation expense, acquisition expenses, amortization of intangibles and inventory fair value step up related to acquisitions and noncash interest on convertible debt, is expected to be in the range of $33.15 million to $36.35 million, or $0.62 to $0.68 per weighted average diluted share, based on 53.1 million estimated non-GAAP weighted average diluted shares outstanding.
Quarterly Conference Call Today
Inphi plans to hold a conference call today at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time with Ford Tamer, President and Chief Executive Officer, and John Edmunds, Chief Financial Officer, to discuss the first quarter 2020 results.
The call can be accessed by dialing (765) 507-2591, participant passcode: 3452654. 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 https://inphi.com/investors/ for up to 30 days after the call.