Financial Results
Net revenue for the fourth quarter of fiscal 2016 was $51.5 million, down $10.1 million, or 16.4%, from $61.6 million reported in the previous quarter, and down $3.3 million, or 6.0%, from $54.8 million reported for the same period in fiscal 2015.
GAAP gross margin in the fourth quarter of fiscal 2016 was 47.6%. This compares with GAAP gross margin of 50.0% in the previous quarter, and GAAP gross margin of 48.7% for the same period in fiscal 2015.
Non-GAAP gross margin in the fourth quarter of fiscal 2016 was 49.6%. This compares with a non-GAAP gross margin of 51.7% in the previous quarter, and non-GAAP gross margin of 50.8% for the same period in fiscal 2015.
GAAP operating expenses in the fourth quarter of fiscal 2016 were $29.7 million, compared with GAAP operating expenses of $29.3 million in the previous quarter, and GAAP operating expenses of $29.1 million for the same period in fiscal 2015.
Non-GAAP operating expenses in the fourth quarter of fiscal 2016 were $27.4 million, compared with non-GAAP operating expenses of $26.0 million in the previous quarter, and non-GAAP operating expenses of $26.1 million for the same period in fiscal 2015. The increase from the third quarter was mainly due to expenses associated with the purchase of Bretelon, Inc., on November 4, 2015.
GAAP operating loss in the fourth quarter of fiscal 2016 was ($5.2) million, compared with GAAP operating income of $1.5 million in the previous quarter, and a GAAP operating loss of ($2.3) million for the same period in fiscal 2015.
Non-GAAP operating loss in the fourth quarter of fiscal 2016 was ($1.9) million, compared with non-GAAP operating income of $5.8 million in the previous quarter, and non-GAAP operating income of $1.7 million for the same period in fiscal 2015.
GAAP net loss for the fourth quarter of fiscal 2016 was ($6.2) million, or ($0.17) per share. This compares with GAAP net income of $6.4 million, which included a one-time gain of approximately $7.6 million from the resolution of a lawsuit, or $0.17 per diluted share in the previous quarter, and a GAAP net loss of ($3.6) million, or ($0.10) per share, for the same period in fiscal 2015.
Non-GAAP net income for the fourth quarter of fiscal 2016 was $0.9 million, or $0.02 per diluted share. This compares with non-GAAP net income of $4.7 million, or $0.13 per diluted share, in the previous quarter, and non-GAAP net income of $1.5 million, or $0.04 per diluted share, for the same period in fiscal 2015.
Fiscal Year 2016 Financial Results
GAAP net revenue in fiscal 2016 was $227.3 million, an increase of $39.0 million, or 20.7%, from $188.3 million in the previous fiscal year.
Non-GAAP net revenue in fiscal 2016 was $226.2 million, an increase of $37.9 million, or 20.1%, from $188.3 million in the previous fiscal year.
GAAP gross margin in fiscal 2016 was 49.8%, compared with 50.6% in fiscal 2015.
Non-GAAP gross margin in fiscal 2016 was 51.4%, compared with 53.0% in fiscal 2015.
GAAP operating expenses in fiscal 2016 were $114.3 million, compared with $113.2 million in fiscal 2015.
Non-GAAP operating expenses in fiscal 2016 were $102.9 million, compared with $101.2 million in fiscal 2015.
GAAP operating loss was ($1.2) million in fiscal 2016, compared with an operating loss of ($17.9) million in fiscal 2015.
Non-GAAP operating income was $13.4 million in fiscal 2016, compared with an operating loss of ($1.3) million in fiscal 2015.
GAAP net income in fiscal 2016 was $0.2 million, or net income of $0.00 per diluted share. This compares with a GAAP net loss of ($21.7) million, or a net loss of ($0.63) per share, in fiscal 2015.
Non-GAAP net income in fiscal 2016 was $13.2 million, or net income of $0.36 per diluted share. This compares with a non-GAAP net loss of ($4.1) million, or a net loss of ($0.12) per share, in fiscal 2015.
The reconciliation between the GAAP and non-GAAP financial results for all referenced periods is provided in a table immediately following the GAAP financial tables below.
Management Comment
"Consistent with the guidance we provided in our last earnings call, we are reporting $51.5 million in revenue for the fourth quarter," said Thinh Tran, President and CEO of Sigma Designs, Inc. "While our Smart TV Platforms showed the expected seasonal decline, we are confident that its underlying strength and design wins will drive our revenue growth in fiscal 2017. We also continue to build momentum in IoT Devices with our Z-Wave family, which showed some sequential growth in the fourth quarter.
"We are also pleased with our financial results for all of fiscal 2016. Our revenue grew more than 20% for the year, reaching a total of $227.3 million, with SmartTV and IoT Devices being the largest growth contributors. Supported by a blended non-GAAP gross margin of 51.4% for the year, our non-GAAP net income grew this year, reaching a total of $13.2 million, or 36 cents per diluted share. As we enter fiscal 2017, I am confident that we will see another year of revenue growth and profitability driven by our strong and differentiated products serving both established and new customers."
Recent Highlights
- We announced the industry's first single chip frame rate converter that supports 4KTV with multiple HDR standards. This unique chip enables TV manufacturers using any SoC chipset to add full HDR support without changing their base TV platform.
- We announced that the first single 4KTV SoC with Dolby Vision, a unique Sigma offering, has entered volume production, enabling the highest quality visual experience yet available for premium smart TV offerings.
- We entered into a strategic partnership with QD Vision, the global leader in quantum dot display technology. This partnership will enable low cost LCD displays to effectively compete with OLED offerings.
- We announced that our 500 series Z-Wave modules have been evaluated to UL standards for home security, enabling new applications for two-way security sensors and other devices.
- We launched our Z-Wave S2 security framework, the most advanced security for smart home devices in the market today.
Investor Conference Call
The conference call relating to Sigma's fourth quarter and fiscal 2016 financial results will take place following this announcement at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time today, March 23, 2016. Investors will have the opportunity to listen live to the conference call via the Internet through
www.sigmadesigns.com/IR. To listen to the live call, please go to the website at least 10 minutes prior to the commencement of the call to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call via the Internet through
www.sigmadesigns.com/IR. The audio replay will be available for one week after the call.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Sigma reports non-GAAP net income (loss), which excludes amortization of acquired intangibles, stock-based compensation, one-time legal fee expenses, settlement expenses, net gain on sale of and impairment of privately-held investments, restructuring charges, impairment of purchased IP, mask sets and design tools used in production, the reversal of previously accrued rebates and the one-time gain from the gain on sale of development project. The tax amounts included in Sigma's non-GAAP results approximate its operating cash tax expense, similar to the liability reported on Sigma's tax returns. In the GAAP to non-GAAP reconciliation at the end of this press release, we have disclosed the impact of these income tax adjustments in our calculation of our non-GAAP financial results.
Legislative and regulatory requirements encourage the use of and emphasis on GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors. Sigma believes that its non-GAAP measures provide useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations. Sigma also believes the non-GAAP measures provide useful supplemental information for investors to evaluate its operating results in the same manner as the research analysts that follow Sigma, all of whom present non-GAAP projections in their published reports. As such, the non-GAAP measures provided by Sigma facilitate a more direct comparison of its performance with the financial projections published by the analysts as well as its competitors, many of whom report financial results on a non-GAAP basis. The economic substance behind its decision to use such non-GAAP measures is that such measures approximate its controllable operating performance more closely than the most directly comparable GAAP financial measures. For example, Sigma's management has no control over certain variables that have a major influence in the determination of stock-based compensation such as the volatility of its stock price and changing interest rates. Sigma believes that all of these excluded expenses may not accurately reflect the underlying performance of its continuing operations for the period in which they are incurred, even though some of these excluded items may be incurred and reflected in Sigma's GAAP financial results in the foreseeable future. Our management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. However, we have presented such non-GAAP financial measures to provide investors with an additional tool to evaluate our operating results in a manner that focuses on what management believes to be our core, ongoing business operations.
