• Net revenues totaled $27.2 million, an increase of 6% sequentially
• New product revenue of $13.9 million, an increase of 21% sequentially and 79% from the third quarter last year
• New product design wins grew over 45% in first nine months of the fiscal year compared to same period last year
• Cash is $71.6 million at June 30, 2014 strengthened by $26.6 million of public offering net proceeds

CAMARILLO, Calif. — (BUSINESS WIRE) — August 5, 2014 — Vitesse Semiconductor Corporation (NASDAQ: VTSS), a leading provider of advanced IC solutions for Carrier, Enterprise and Internet of Things (IoT) networks, reported its financial results for the third quarter of fiscal year 2014, ended June 30, 2014.

“Our recent performance has increased our confidence that Vitesse is well-positioned for significant and sustained long-term revenue growth and profitability. New product revenue momentum continues, growing 21% sequentially and 79% over the year ago quarter, and now comprises over 50% of total revenue. The inflection point in our business is now clearly evident, as the growth of our new product portfolio again outstripped the decline of our legacy business, resulting in total revenue growth of 6% sequentially and 3% from the year ago quarter,” said Chris Gardner, CEO of Vitesse. “At the same time, we have substantially strengthened our balance sheet, positioning us to retire all of our near-term debt and further our growth initiatives. Vitesse now has the infrastructure and the resources to support a much larger base of customers. Coupled with our substantial operating leverage, margins on our future growth will flow to the bottom line.”

“The markets are validating our technology focus and strategy. Today, we see Ethernet virtually everywhere, creating opportunities for Vitesse in areas such as Gigabit Wi-Fi, IoT, storage, and automotive. Because our new Ethernet product portfolio can serve these markets now, we are adding new customers at an accelerating pace while increasing opportunities and design wins with existing customers.”

Third Quarter Fiscal Year 2014 Financial Results Summary

• Total net revenue was $27.2 million, compared to $25.6 million in the second quarter of fiscal year 2014 and $26.4 million in the third quarter of fiscal year 2013.
• Product revenue was $26.0 million, compared to $24.9 million in the second quarter of fiscal year 2014 and $26.3 million in the third quarter of fiscal year 2013.
  
  
  • The product lines contributed the following as a percentage of product revenue as compared to the second quarter of fiscal year 2014:
    • Carrier Networking products: 46.3% versus 47.6%
    • Enterprise Networking products: 53.5% versus 51.7%
  • Intellectual property revenue totaled $1.1 million, compared to $0.7 million in the second quarter of fiscal year 2014 and $0.1 million in the third quarter of fiscal year 2013.
• Product margins were 52.9%, compared to 55.9%, in the second quarter of fiscal year 2014 and 55.6% in the third quarter of fiscal year 2013. Total gross margins were 54.9%, compared to 57.1%, in the second quarter of fiscal year 2014 and 55.8% in the third quarter of fiscal year 2013.
• Operating expenses were $17.4 million, compared to $19.0 million in the second quarter of fiscal year 2014 and $19.0 million in the third quarter of fiscal year 2013.
• Operating loss was $2.5 million, compared to operating loss of $4.4 million in the second quarter of fiscal year 2014 and $4.3 million in the third quarter of fiscal year 2013.
• Non-GAAP operating loss was $0.9 million, compared to non-GAAP operating loss of $2.7 million in the second quarter of fiscal year 2014 and non-GAAP operating loss of $3.1 million in the third quarter of fiscal year 2013.
• Net loss was $4.4 million, or $0.07 per basic and fully diluted share. This compares to net loss of $5.8 million, or $0.10 per basic and fully diluted share, in the second quarter of fiscal year 2014, and net loss of $6.4 million, or $0.17 per basic and fully diluted share, in the third quarter of fiscal year 2013.
• Non-GAAP net loss was $2.7 million, or $0.04 per basic and fully diluted share, compared to non-GAAP net loss of $4.1 million, or $0.07 per basic and fully diluted share, for the second quarter of fiscal year 2014, and non-GAAP net loss of $5.2 million, or $0.13 per basic and fully diluted share, in the third quarter of fiscal year 2013.