Fourth Quarter and Full Year 2014 Highlights:
- Revenues of $84.0 million for 2014 and $22.4 million for the fourth quarter
- Gross margin, on a GAAP basis, was 77.3% for 2014 and 65.9% for the fourth quarter
- Gross margin, on a non-GAAP basis, was 80.4% for 2014 and 76.4% for the fourth quarter
- Net income, on a GAAP basis, was $9.2 million for 2014 (reduced by expenses of $11.5 million related to the Tilera acquisition)
- Net loss, on a GAAP basis, of $7.3 million for the fourth quarter (reduced by expenses of $10.5 million related to the Tilera acquisition)
- Net income, on a non-GAAP basis, was $36.8 million for 2014 (44% of revenues) and $7.2 million for the fourth quarter (32% of revenues)
- Net cash at end of 2014 was $185.8 million
Fourth Quarter 2014 Results:
Total revenues in the fourth quarter of 2014 were $22.4 million, an increase of 11% compared to $20.1 million in the fourth quarter of 2013, and an increase of 16% compared to $19.2 million in the third quarter of 2014.
Net loss, on a GAAP basis, for the fourth quarter of 2014 was $7.3 million, reduced by expenses of $10.5 related to the Tilera acquisition, or $0.25 per share, compared to net income of $6.5 million, or $0.22 per share (diluted), in the fourth quarter of 2013, and net income of $4.2 million, or $0.14 per share (diluted), in the third quarter of 2014.
Net income, on a non-GAAP basis, for the fourth quarter of 2014 was $7.2 million, or $0.23 per share (diluted), compared to non-GAAP net income of $10.1 million, or $0.34 per share (diluted), in the fourth quarter of 2013, and non-GAAP net income of $8.5 million, or $0.28 per share (diluted), in the third quarter of 2014.
Cash, cash equivalents, marketable securities and deposits as of December 31, 2014, totaled $185.8 million, compared to $223.4 million as of September 30, 2014. Cash used in operations was $4.1 million, including approximately $7.0 million of working capital adjustments and transaction expenses related to the Tilera acquisition. Cash used in investing activities was $34.4 million, which included a payment of $31.6 million, reflecting the remaining purchase price due upon the consummation of the Tilera acquisition in November 2014. Cash provided by financing activities was $1.1 million, resulting from the exercise of options, and a decrease of $0.2 million resulting from cash adjustments of marketable securities, net.
Full Year 2014 Results:
Total revenues for the year ended December 31, 2014 were $84.0 million, a year-over-year increase of 19% compared to $70.9 million in 2013.
Net income on a GAAP basis for 2014 was $9.2 million, reduced by expenses of $11.5 related to the Tilera acquisition, or $0.31 per share (diluted), compared to net income of $21.7 million, or $0.74 per share (diluted), in 2013.
Net income on a non-GAAP basis for 2014 was $36.8 million or $1.19 per share (diluted), compared with non-GAAP net income of $35.6 million, or $1.18 per share (diluted), in 2013.
Cash, cash equivalents, marketable securities and deposits as of December 31, 2014, totaled $185.8 million, compared to $202.9 million as of December 31, 2013. Cash provided by operations was $28.7 million, partially offset by approximately $7.0 million of working capital adjustments and transaction expenses related to the Tilera acquisition. Cash used in investing activities was $47.3 million, which included the payment of the $41.6 million purchase price for the Tilera acquisition. Cash provided by financing activities was $2.0 million, resulting from the exercise of options, and a decrease of $0.5 million resulting from cash adjustments of marketable securities, net.
Eli Fruchter, CEO of EZchip, commented, "2014 has been a record year for EZchip in revenues, operating and net income in the midst of a weak carrier spending environment during the second half of 2014. We believe we will continue to generate revenue growth in 2015 due to two main drivers, one being that we are designed into our customer's newest and fastest growing products and second is the deployment of more line cards versus chassis, as carriers leverage available slots in their existing chassis.
"We believe our strongly differentiated technology enables us to strengthen our market leadership in high speed NPUs and we believe our revenue growth will continue to outpace the growth in the routing market and that of our competition. We believe that with the current market trend of OPEX reduction and increased focus on software versus hardware, we will see networking vendors looking more favorably towards merchant silicon versus in-house ASIC designs. As the leader in high-speed merchant NPUs, EZchip believes it can benefit from this broader industry trend, allowing us to win more designs and increase both our revenues and market share from existing and new products in the coming years. We recently announced that the NP-5 has entered production, already gaining strong customer traction with large current existing customers and with new customers to EZchip, and it is our belief that customers will ramp NP-5 quickly allowing it to potentially become a significant contributor to our 2015 revenues. We have made good progress with NPS, acquiring our first design wins in 2014 and we expect to sample the NPS during the second half of 2015, when we also expect to add design wins from significant tier one customers.
