MoSys, Inc. (NASDAQ: MOSY), a provider of semiconductor solutions
that enable fast, intelligent data access for cloud networking,
security, test and video systems, today reported financial results
for the quarter ended September 30, 2019.
Third Quarter 2019 Financial
ResultsTotal net revenue for the third quarter of 2019 was
$1.2 million, compared with $3.1 million for the previous quarter
and $4.3 million for the third quarter of 2018. Product revenue for
the third quarter was $1.0 million, compared with $2.8 million in
the second quarter of 2019 and $4.1 million in the year ago period.
The sequential decrease in product revenue reflected reduced
shipments of Bandwidth Engine® products due to customer inventory
adjustments.
GAAP gross margin for the third quarter of 2019
was 66%, compared with 60% for the second quarter of 2019 and 55%
for the third quarter of 2018. Third quarter gross margin exceeded
the Company’s corporate target of 60%, and increased
sequentially primarily due to reduced product manufacturing costs
combined with royalties representing a higher portion of total
revenues.
Total operating expenses on a GAAP basis for the
third quarter of 2019 were $2.6 million, which included a goodwill
impairment charge of $0.4 million, and compared with operating
expenses of $1.9 million in the previous quarter and $5.1 million
in the third quarter of 2018, which also included a goodwill
impairment charge of $3.2 million. Total non-GAAP operating
expenses, excluding stock-based compensation expenses, impairment
of goodwill and amortization of intangible assets, for the third
quarter of 2019 were $2.1 million, compared with $1.8 million in
the second quarter of 2019 and $1.7 million in the third quarter of
2018.
In August 2019, the Company effected a 1-for-20
reverse stock split of its common stock. All share and per share
amounts in this press release have been retroactively adjusted to
reflect the reverse stock split for all current and prior
periods.
GAAP net loss for the third quarter of 2019 was
$1.8 million, or $0.83 per share, compared with a net loss of $0.1
million, or $0.05 per share, for the previous quarter and net loss
of $2.8 million, or $6.83 per share, for the third quarter of
2018.
Non-GAAP net loss for the third quarter of 2019
was $1.3 million, or $0.60 per share, compared with non-GAAP net
income of $16,000, or $0.01 per diluted share, in the prior quarter
and non-GAAP net income of $0.6 million, or $1.35 per diluted
share, in the third quarter of 2018. Adjusted EBITDA for the third
quarter of 2019 was a negative $1.2 million, compared with a
positive $0.1 million for the previous quarter and a positive $0.8
million for the third quarter of 2018. A reconciliation of GAAP
results to non-GAAP results is provided in the financial statement
tables following the text of this press release.
At September 30, 2019, the Company had 2,177,552
shares of common stock outstanding, which excludes 116,000 shares
of common stock issuable upon the exercise of pre-funded
warrants.
Management Commentary“As
expected, third quarter product revenue was significantly impacted
by a reduction of inventory at a large networking equipment
customer. Although we have active design wins with other customers,
the timing of production did not allow us to offset the reduction
in shipments during the quarter,” said Dan Lewis, chief executive
officer and president of MoSys. “However, we believe the third
quarter represents the low point, and we expect a return to revenue
growth in the fourth quarter driven by shipments to a large
security customer, which has extended its use of our products.
Additionally, our growth will be further supported by the ramping
up of design wins in 2020 with a new major customer.”
During the quarter, the Company introduced its
new Software Accelerator Product Line that will provide additional
software and IP licensing opportunities, as MoSys® will begin
providing software products in addition to its current silicon
Accelerator Engine ICs. This new line initially includes a family
of products that offer accelerator capabilities for search and data
classification with general availability expected in the first
quarter of 2020. These new solutions are hardware agnostic and can
be used on existing customer platforms without changing the
software interface. As a result, performance can scale to
over 100 times from a MoSys software-only product running on a CPU
to the highest performance solution that consists of FPGAs paired
with our Accelerator Engine IC products.
The Company is currently engaged with a lead
customer and is in the process of porting an initial application to
its platform. The Company anticipates additional license
opportunities with this customer in 2020 and has identified
multiple prospective licensees, most of whom are not current
customers of its IC products.
Mr. Lewis concluded, “Despite the lower revenue
in the third quarter, we have a base of design wins for our current
IC products, including a number of wins that have not yet ramped to
production. With the addition of our new software accelerator
products, I believe we have measurably enhanced our future growth
opportunities to be able to generate revenue from both product
sales and licensing. I look forward to reporting our progress as we
bring our new software and IP products to market and pursue new
licensees.”
Business Outlook The Company
expects total net revenue for the fourth quarter of 2019 to be in
the range of $1.9 million to $2.2 million.
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, impairment of goodwill and
intangible asset amortization. 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, impairment of
goodwill and intangible asset amortization. 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, 2019 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;
- 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;
- ability to make our new software
acceleration and IP products commercially available and achieve
customer acceptance of these new proprietary technologies;
- 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. The company’s solutions eliminate data access
bottlenecks to deliver speed and intelligence for line cards and
systems scaling from 100G to multi-terabits per second. Engineered
and built for high-reliability carrier and enterprise applications,
MoSys’ Accelerator Engine IC product family is based on the
company’s patented high-performance, high-density random-access
memory and its highly efficient, high speed GigaChip™
serial-interface technology, and incorporates powerful application
accelerating in-memory compute functions. 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. The
MoSys logo and GigaChip are trademarks of MoSys, Inc. All other
marks mentioned herein are the property of their respective
owners.
(Financial Tables to Follow)
Contact:Jim Sullivan, CFOMoSys,
Inc.+1 (408) 418-7500jsullivan@mosys.com
|
MOSYS,
INC. |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In
thousands, except per share amounts; unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
Net Revenue |
|
|
|
|
|
|
|
Product |
|
$ |
1,037 |
|
|
$ |
4,056 |
|
|
$ |
7,233 |
|
|
$ |
11,811 |
|
Royalty and other |
|
169 |
|
|
|
287 |
|
|
|
559 |
|
|
|
1,338 |
|
|
Total net revenue |
|
1,206 |
|
|
|
4,343 |
|
|
|
7,792 |
|
|
|
13,149 |
|
|
|
|
|
|
|
|
|
|
|
Cost of Net Revenue |
|
407 |
|
|
|
1,948 |
|
|
|
2,989 |
|
|
|
5,382 |
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
799 |
|
|
|
2,395 |
|
|
|
4,803 |
|
|
|
7,767 |
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
Research and development |
|
1,097 |
|
|
|
1,023 |
|
|
|
3,231 |
|
|
|
3,064 |
|
Selling, general and administrative |
|
1,059 |
|
|
|
919 |
|
|
|
2,963 |
|
|
|
3,158 |
|
Impairment of goodwill |
|
420 |
|
|
|
3,159 |
|
|
|
420 |
|
|
|
3,159 |
|
|
Total operating expenses |
|
2,576 |
|
|
|
5,101 |
|
|
|
6,614 |
|
|
|
9,381 |
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(1,777 |
) |
|
|
(2,706 |
) |
|
|
(1,811 |
) |
|
|
(1,614 |
) |
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
(24 |
) |
|
|
(106 |
) |
|
|
(83 |
) |
|
|
(535 |
) |
Net Loss |
$ |
(1,801 |
) |
|
$ |
(2,812 |
) |
|
$ |
(1,894 |
) |
|
$ |
(2,149 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss per share |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.83 |
) |
|
$ |
(6.83 |
) |
|
$ |
(0.88 |
) |
|
$ |
(5.25 |
) |
|
|
|
|
|
|
|
|
|
|
Shares used in computing net loss per share |
|
|
|
|
|
|
|
Basic and diluted |
|
2,171 |
|
|
|
412 |
|
|
|
2,161 |
|
|
|
409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS,
INC. |
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
(In
thousands, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30, |
|
December
31, |
|
|
|
|
|
|
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash, cash equivalents and investments |
$ |
6,820 |
|
|
$ |
7,104 |
|
|
|
|
|
|
Accounts receivable, net |
|
893 |
|
|
|
1,622 |
|
|
|
|
|
|
Inventories |
|
1,215 |
|
|
|
1,148 |
|
|
|
|
|
|
Prepaid expenses and other |
|
596 |
|
|
|
923 |
|
|
|
|
|
|
|
Total
current assets |
|
9,524 |
|
|
|
10,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
193 |
|
|
|
279 |
|
|
|
|
|
Goodwill |
|
- |
|
|
|
420 |
|
|
|
|
|
Other |
|
342 |
|
|
|
260 |
|
|
|
|
|
|
|
Total
assets |
$ |
10,059 |
|
|
$ |
11,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
$ |
131 |
|
|
$ |
236 |
|
|
|
|
|
|
Deferred revenue |
|
146 |
|
|
|
273 |
|
|
|
|
|
|
Accrued expenses and other |
|
1,446 |
|
|
|
1,402 |
|
|
|
|
|
|
|
Total
current liabilities |
|
1,723 |
|
|
|
1,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable |
|
2,858 |
|
|
|
2,671 |
|
|
|
|
|
Other long-term liabilities |
|
19 |
|
|
|
17 |
|
|
|
|
|
|
|
Total
liabilities |
|
4,600 |
|
|
|
4,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
5,459 |
|
|
|
7,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
$ |
10,059 |
|
|
$ |
11,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
$ |
(1,801 |
) |
|
$ |
(2,812 |
) |
|
$ |
(1,894 |
) |
|
$ |
(2,149 |
) |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
- |
Research and development |
|
41 |
|
|
|
106 |
|
|
|
81 |
|
|
|
195 |
|
|
- |
Selling,
general and administrative |
|
43 |
|
|
|
87 |
|
|
|
118 |
|
|
|
251 |
|
|
|
Total
stock-based compensation expense |
|
84 |
|
|
|
193 |
|
|
|
199 |
|
|
|
446 |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill |
|
420 |
|
|
|
3,159 |
|
|
|
420 |
|
|
|
3,159 |
|
|
Amortization of intangible assets |
|
- |
|
|
|
28 |
|
|
|
- |
|
|
|
83 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss) |
$ |
(1,297 |
) |
|
$ |
568 |
|
|
$ |
(1,275 |
) |
|
$ |
1,539 |
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per share, basic |
$ |
(0.83 |
) |
|
$ |
(6.83 |
) |
|
$ |
(0.88 |
) |
|
$ |
(5.25 |
) |
|
Reconciling items |
|
|
|
|
|
|
|
|
- |
Stock-based
compensation expense |
|
0.04 |
|
|
|
0.47 |
|
|
|
0.09 |
|
|
|
1.09 |
|
|
- |
Impairment
of goodwill |
|
0.19 |
|
|
|
7.67 |
|
|
|
0.20 |
|
|
|
7.72 |
|
|
- |
Amortization
of intangible assets |
|
- |
|
|
|
0.07 |
|
|
|
- |
|
|
|
0.20 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss) per share, basic |
$ |
(0.60 |
) |
|
$ |
1.38 |
|
|
$ |
(0.59 |
) |
|
$ |
3.76 |
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss per share, diluted |
$ |
(0.83 |
) |
|
$ |
(6.70 |
) |
|
$ |
(0.88 |
) |
|
$ |
(5.13 |
) |
|
Reconciling items |
|
|
|
|
|
|
|
|
- |
Stock-based
compensation expense |
|
0.04 |
|
|
|
0.46 |
|
|
|
0.09 |
|
|
|
1.06 |
|
|
- |
Impairment
of goodwill |
|
0.19 |
|
|
|
7.52 |
|
|
|
0.20 |
|
|
|
7.54 |
|
|
- |
Amortization
of intangible assets |
|
- |
|
|
|
0.07 |
|
|
|
- |
|
|
|
0.20 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss) per share, diluted |
$ |
(0.60 |
) |
|
$ |
1.35 |
|
|
$ |
(0.59 |
) |
|
$ |
3.67 |
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing non-GAAP net income (loss) per
share |
|
|
|
|
|
|
|
Basic |
|
2,171 |
|
|
|
412 |
|
|
|
2,161 |
|
|
|
409 |
|
|
Diluted |
|
2,171 |
|
|
|
420 |
|
|
|
2,161 |
|
|
|
419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MOSYS,
INC. |
Reconciliation of GAAP and Non-GAAP Financial
Information |
(In
thousands; unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Reconciliation of GAAP net loss and adjusted
EBITDA |
|
|
|
|
|
|
|
GAAP net loss |
$ |
(1,801 |
) |
|
$ |
(2,812 |
) |
|
$ |
(1,894 |
) |
|
$ |
(2,149 |
) |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
- |
Research and
development |
|
41 |
|
|
|
106 |
|
|
|
81 |
|
|
|
195 |
|
|
- |
Selling,
general and administrative |
|
43 |
|
|
|
87 |
|
|
|
118 |
|
|
|
251 |
|
|
Stock-based compensation expense |
|
84 |
|
|
|
193 |
|
|
|
199 |
|
|
|
446 |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill |
|
420 |
|
|
|
3,159 |
|
|
|
420 |
|
|
|
3,159 |
|
|
Amortization of intangible assets |
|
- |
|
|
|
28 |
|
|
|
- |
|
|
|
83 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss) |
|
(1,297 |
) |
|
|
568 |
|
|
|
(1,275 |
) |
|
|
1,539 |
|
|
EBITDA adjustments: |
|
|
|
|
|
|
|
|
Depreciation |
|
37 |
|
|
|
146 |
|
|
|
148 |
|
|
|
486 |
|
|
Interest expense |
|
54 |
|
|
|
104 |
|
|
|
164 |
|
|
|
531 |
|
|
Provision for income taxes |
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
(1,206 |
) |
|
$ |
820 |
|
|
$ |
(963 |
) |
|
$ |
2,560 |
|
|
|
|
|
|
|
|
|
|
|
MoSys (NASDAQ:MOSY)
Historical Stock Chart
From Jan 2025 to Feb 2025
MoSys (NASDAQ:MOSY)
Historical Stock Chart
From Feb 2024 to Feb 2025