GlobeNewswire Inc | Feb 2, 2021 04:05PM EST

February 02, 2021

SAN JOSE, Calif., Feb. 02, 2021 (GLOBE NEWSWIRE) -- Inphi Corporation (NASDAQ: IPHI), a leader in high-speed data movement interconnects, today announced financial results for its fourth quarter and fiscal year ended December 31, 2020. Inphi Corporation will not host a conference call to discuss its results for the fourth quarter of 2020 due to the proposed acquisition of Inphi Corporation by Marvell Technology Group Ltd.

GAAP Results

Revenue in the fourth quarter of 2020 was a record $187.5 million on a U.S. generally accepted accounting principles (GAAP) basis, up 82.3% year-over-year, compared with $102.9 million in the fourth 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 fourth quarter of 2020 was 54.9%, compared with 59.9% in the fourth quarter of 2019. The decrease was mainly due to amortization of intangibles related to the eSilicon acquisition and product and revenue mix.

GAAP operating loss in the fourth quarter of 2020 was $2.5 million or (1.3%) of revenue, compared to GAAP operating loss in the fourth quarter of 2019 of $8.8 million or (8.6%) of revenue. The decrease in operating loss was mainly due to higher gross profit, partially offset by higher operating expenses.

GAAP net loss for the fourth quarter of 2020 was $12.0 million or ($0.23) per diluted common share, compared with $13.4 million or ($0.29) per diluted common share in the fourth quarter of 2019.

Inphi reports gross profit, operating expenses, operating income (loss), 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 (loss), net income (loss), and 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.

Non-GAAP Results

Gross margin on a non-GAAP basis in the fourth quarter of 2020 was 64.3%, compared with 69.2% in the fourth 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 fourth quarter of 2020 was $54.6 million or 29.1% of revenue, compared with non-GAAP operating income of $23.4 million or 22.7% of revenue in the fourth quarter of 2019. The increase is primarily due to higher gross profit and higher operating leverage.

Non-GAAP net income in the fourth quarter of 2020 was $50.0 million, or $0.91 per diluted common share. This compares with non-GAAP net income of $23.1 million, or $0.47 per diluted common share in the fourth quarter of 2019.

We are very pleased to report another record revenue quarter demonstrating 82% growth year-over-year driven by strength from acquisitions as well as across all segments highlighted by Cloud revenue, which grew an impressive 69% year-over-year. Additionally, looking at our annual results in 2020 more than half of our growth was organic, growing 46% year-over-year, clearly outpacing broader industry growth projections, said Ford Tamer, President and CEO of Inphi Corporation. We continue to capitalize on our strategy of leading-edge investments in cloud infrastructure and optical interconnect, opening up new market opportunities to drive revenue growth.

Year Ended 2020 Results

Revenue in the year ended December 31, 2020 was $683.0 million, compared with $365.6 million in the year ended December 31, 2019. GAAP net loss in the year ended December 31, 2020 was $59.7 million, or ($1.20) per diluted share, on approximately 49.9 million diluted weighted average common shares outstanding. This compares with GAAP net loss of $72.9 million, or ($1.61) per diluted share, on approximately 45.2 million diluted weighted average common shares outstanding in the year ended December 31, 2019.

Non-GAAP net income in the year ended December 31, 2020 was $180.3 million, or $3.37 per diluted weighted average common share outstanding, on approximately 53.4 million diluted weighted average common shares outstanding. This compares with non-GAAP net income of $76.6 million in the year ended December 31, 2019, or $1.61 per diluted weighted average common share outstanding, on approximately 47.6 million diluted weighted average common shares outstanding.

About Inphi Inphi Corporation is a leader in high-speed data movement. We move big data -- fast, throughout the globe, between data centers, and inside data centers. Inphi's expertise in signal integrity results in reliable data delivery, at high speeds, over a variety of distances. As data volumes ramp exponentially due to video streaming, social media, cloud-based services, and wireless infrastructure, the need for speed has never been greater. That's where we come in. Customers rely on Inphi's solutions to develop and build out the Service Provider and Cloud infrastructures, and data centers of tomorrow. To learn more about Inphi, visit www.inphi.com.

Cautionary Note Concerning Forward-Looking Statements These forward-looking statements may be identified by terms such as outlook, believe, expect, may, will, provide, continue, could, and should, and the negative of these terms or other similar expressions. These statements include statements relating to the Companys business outlook, the Companys expectations regarding growth opportunities, success of our growth strategy, strength of the cloud market and optical interconnect, new market opportunities, revenue growth and the benefits of using non-GAAP financial measures. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including: the Companys ability to sustain profitable operations due to its history of losses and accumulated deficit; dependence on a limited number of customers for a substantial portion of revenue and lack of long-term purchase commitments from our customers; product defects; risk related to intellectual property matters, lengthy sales cycle and competitive selection process; lengthy and expensive qualification processes; ability to develop new or enhanced products in a timely manner; development of target markets; market demand for the Companys products; reliance on third parties to manufacture, assemble and test products; ability to compete; and other risks inherent in fabless semiconductor businesses. In addition, actual results could differ materially due to changes in tax rates or tax benefits available, changes in demand, including as a result of the impact of the COVID-19 pandemic, changes in government regulation, changes in claims that may or may not be asserted, as well as changes in pending litigation. For a discussion of these and other related risks, please refer to Inphi Corporations recent SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2019, which are available on the SECs website at www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Inphi Corporation undertakes no obligation to update forward-looking statements for any reason, except as required by law, even as new information becomes available or other events occur in the future.

Inphi, the Inphi logo and Think fast are registered trademarks of Inphi Corporation. All other trademarks used herein are the property of their respective owners.

INPHI CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(in thousands of dollars, except share and per share amounts)(Unaudited)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Revenue $ 187,541 $ 102,896 $ 682,954 $ 365,635 Cost of revenue 84,579 41,297 311,823 152,814 Gross margin 102,962 61,599 371,131 212,821 Operating expenses:Research and 70,446 49,876 269,147 183,875 developmentSales and 16,016 12,378 61,290 47,722 marketingGeneral and 19,011 8,194 57,519 30,672 administrative Total operating 105,473 70,448 387,956 262,269 expenses Loss from (2,511 ) (8,849 ) (16,825 ) (49,448 ) operations Loss on earlyextinguishment (93 ) - (13,539 ) - of convertibledebtInterestexpense, net of (6,451 ) (5,415 ) (24,926 ) (23,067 ) other income Loss before (9,055 ) (14,264 ) (55,290 ) (72,515 ) income taxesProvision(benefit) for 2,972 (856 ) 4,454 396 income taxes Net loss $ (12,027 ) $ (13,408 ) $ (59,744 ) $ (72,911 ) Earnings per share:Basic $ (0.23 ) $ (0.29 ) $ (1.20 ) $ (1.61 ) Diluted $ (0.23 ) $ (0.29 ) $ (1.20 ) $ (1.61 ) Weighted-averageshares used in computingearnings per share:Basic 52,626,086 45,728,736 49,901,181 45,226,717 Diluted 52,626,086 45,728,736 49,901,181 45,226,717

The following table presents details of stock-based compensation expense included in each functional line item in the consolidated statements of operations above:

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 (in thousands of (in thousands of dollars) dollars) (Unaudited) (Unaudited) Cost of revenue $ 1,826 $ 1,776 $ 7,859 $ 6,208 Research and 16,773 11,311 62,768 42,265 developmentSales and marketing 6,670 3,832 22,990 15,561 General and 4,677 3,339 17,630 12,821 administrative $ 29,946 $ 20,258 $ 111,247 $ 76,855

INPHI CORPORATIONCONSOLIDATED BALANCE SHEETS(in thousands of dollars)(Unaudited)

December 31, December 31, 2020 2019Assets Current assets: Cash and cash equivalents $ 103,529 $ 282,723 Investments in marketable securities 63,389 140,131 Accounts receivable, net 111,436 60,295 Inventories 111,403 55,013 Prepaid expenses and other current assets 10,137 17,463 Total current assets 399,894 555,625 Property and equipment, net 133,556 79,563 Goodwill 181,688 104,502 Intangible assets, net 231,633 168,290 Right of use asset, net 30,855 33,576 Other assets, net 30,610 34,450 Total assets $ 1,008,236 $ 976,006 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 36,387 $ 18,771 Accrued expenses and other current liabilities 92,845 51,820 Deferred revenue 3,281 3,719 Convertible debt 58,004 217,467 Total current liabilities 190,517 291,777 Convertible debt 405,689 258,711 Other liabilities 58,320 78,917 Total liabilities 654,526 629,405 Stockholders? equity: Common stock 53 46 Additional paid-in capital 654,883 587,862 Accumulated deficit (302,551 ) (242,807 ) Accumulated other comprehensive income 1,325 1,500 Total stockholders? equity 353,710 346,601 Total liabilities and stockholders? equity $ 1,008,236 $ 976,006

INPHI CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands of dollars)(Unaudited)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Cash flows fromoperating activities:Net loss $ (12,027 ) $ (13,408 ) $ (59,744 ) $ (72,911 ) Adjustments toreconcile net loss to net cashprovided byoperating activities:Depreciation,amortization and 64,361 43,594 238,897 173,549 stock-basedcompensationAmortization andaccretion related 6,693 7,338 29,277 28,353 to debtLoss onextinguishment of 93 - 13,539 - debtDeferred income 2,545 (599 ) 3,703 337 taxesNet unrealized gainon equity (67 ) (124 ) (2,010 ) (2,201 ) investmentsGain from sale of - (924 ) (4,999 ) (924 ) equity investmentLoss on terminationof software lease - - 3,370 - contractsOther noncash items 403 (187 ) 576 (720 ) Changes in assetsand liabilities, (17,359 ) (13,735 ) (67,024 ) (28,539 ) net of acquisitionNet cash providedby operating 44,642 21,955 155,585 96,944 activities Cash flows frominvesting activities:Purchases ofproperty and (22,308 ) (12,291 ) (74,823 ) (29,518 ) equipmentSales or maturitiesof marketable 11,348 134,127 76,751 97,248 securities, net ofpurchasesPurchases of (160 ) - (788 ) (1,137 ) intangible assetsAcquisitions ofbusiness and equity - (576 ) (214,731 ) (3,576 ) investments, net ofcash and proceedsNet cash providedby (used in) (11,120 ) 121,260 (213,591 ) 63,017 investingactivities Cash flows fromfinancing activities:Proceeds fromexercise of stock 9,013 709 19,083 8,990 options and ESPPMinimum taxwithholding paid onbehalf of employees (31,205 ) (7,898 ) (80,375 ) (33,596 ) for net sharesettlementPayments ofobligations relatedto purchase of (4,224 ) (4,421 ) (35,493 ) (24,650 ) intangible assetsand equipmentfinancingProceeds (payments)from issuance of (250 ) - 492,493 - convertible debt,net of costPayment forconvertible debt (51,234 ) - (461,236 ) - debt repurchasesand conversionPurchase of capped - - (55,660 ) - call optionsNet cash used infinancing (77,900 ) (11,610 ) (121,188 ) (49,256 ) activities Net increase(decrease) in cash (44,378 ) 131,605 (179,194 ) 110,705 and cashequivalentsCash and cashequivalents at 147,907 151,118 282,723 172,018 beginning of period Cash and cashequivalents at end $ 103,529 $ 282,723 $ 103,529 $ 282,723 of period

INPHI CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP MEASURES(in thousands of dollars, except share and per share amounts)

To supplement the financial data presented on a GAAP basis, the Company discloses certain non-GAAP financial measures, which exclude stock-based compensation, legal, transition costs and other expenses, related to acquisitions, including the potential merger with Marvell, purchase price fair value adjustments related to acquisitions, non-cash interest expense and loss on extinguishment related to convertible debt, unrealized gain or loss on equity investments, lease expense on building not occupied and deferred tax asset valuation allowance. These non-GAAP financial measures are not in accordance with GAAP. These results should only be used to evaluate the Companys results of operations in conjunction with the corresponding GAAP measures. The Company believes that its non-GAAP financial information provides useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations because it excludes charges or benefits that management considers to be outside of the Companys core operating results. The Company believes that the non-GAAP measures of gross margin, income from operations, net income and earnings per share, in combination with the Companys financial results calculated in accordance with GAAP, provide investors with additional perspective and a more meaningful understanding of the Companys ongoing operating performance. In addition, the Companys management uses these non-GAAP measures to review and assess the financial performance of the Company, to determine executive officer incentive compensation and to plan and forecast performance in future periods. The Companys non-GAAP measurements are not prepared in accordance with GAAP, and are not an alternative to GAAP financial information, and may be calculated differently than non-GAAP financial information disclosed by other companies.

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME(in thousands of dollars, except share and per share amounts)(Unaudited)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 GAAP grossmargin to Non-GAAP grossmarginGAAP gross $ 102,962 $ 61,599 $ 371,131 $ 212,821 marginAdjustments toGAAP gross margin:Stock-based 1,826 (a) 1,776 (a) 7,859 (a) 6,208 (a)compensationAmortization ofinventory 87 (b) - 4,569 (b) - step-upAmortization of 15,460 (c) 7,815 (c) 54,304 (c) 36,987 (c)intangiblesDepreciation onstep-up values 167 (d) 2 (d) 390 (d) (25 ) (d)of fixed assetsNon-GAAP gross $ 120,502 $ 71,192 $ 438,253 $ 255,991 margin GAAP operatingexpenses toNon-GAAP operatingexpensesGAAP research $ 70,446 $ 49,876 $ 269,147 $ 183,875 and developmentAdjustments toGAAP research anddevelopment:Stock-based (16,773 ) (a) (11,311 ) (a) (62,768 ) (a) (42,265 ) (a)compensationDepreciation onstep-up values (158 ) (d) (164 ) (d) (413 ) (d) (518 ) (d)of fixed assetsAcquisitionrelated (580 ) (e) - (10,871 ) (e) - expensesNon-GAAPresearch and $ 52,935 $ 38,401 $ 195,095 $ 141,092 development GAAP sales and $ 16,016 $ 12,378 $ 61,290 $ 47,722 marketingAdjustments toGAAP sales and marketing:Stock-based (6,670 ) (a) (3,832 ) (a) (22,990 ) (a) (15,561 ) (a)compensationAmortization of (2,432 ) (c) (2,432 ) (c) (9,727 ) (c) (9,725 ) (c)intangiblesDepreciation onstep-up values (24 ) (d) (3 ) (d) (61 ) (d) (10 ) (d)of fixed assetsAcquisitionrelated (50 ) (e) - (790 ) (e) - expensesNon-GAAP sales $ 6,840 $ 6,111 $ 27,722 $ 22,426 and marketing GAAP generaland $ 19,011 $ 8,194 $ 57,519 $ 30,672 administrativeAdjustments toGAAP general andadministrative:Stock-based (4,677 ) (a) (3,339 ) (a) (17,630 ) (a) (12,821 ) (a)compensationAmortization of (69 ) (c) (69 ) (c) (278 ) (c) (417 ) (c)intangiblesDepreciation onstep-up values (87 ) (d) (6 ) (d) (212 ) (d) (20 ) (d)of fixed assetsAcquisitionrelated (8,011 ) (e) (1,015 ) (e) (14,643 ) (e) (1,015 ) (e)expensesExpense onlease that was - (462 ) (f) (1,709 ) (f) (462 ) (f)not yetoccupiedLoss on claimsettlement from - - - (400 ) (g)ClariPhyacquisitionNon-GAAPgeneral and $ 6,167 $ 3,303 $ 23,047 $ 15,537 administrative Non-GAAP totaloperating $ 65,942 $ 47,815 $ 245,864 $ 179,055 expensesNon-GAAP income $ 54,560 $ 23,377 $ 192,389 $ 76,936 from operations GAAP net lossto Non-GAAP net incomeGAAP net loss $ (12,027 ) $ (13,408 ) $ (59,744 ) $ (72,911 ) Adjusting itemsto GAAP net loss:Operatingexpenses related tostock-basedcompensation 29,946 (a) 20,258 (a) 111,247 (a) 76,855 (a)expenseAmortization ofinventory 87 (b) - 4,569 (b) - step-upAmortization ofintangibles 17,961 (c) 10,316 (c) 64,309 (c) 47,129 (c)related topurchase priceDepreciation onstep-up values 436 (d) 175 (d) 1,076 (d) 523 (d)of fixed assetsAcquisitionrelated 8,641 (e) 1,015 (e) 26,304 (e) 1,015 (e)expensesExpense onlease that was - 462 (f) 1,709 (f) 462 (f)not yetoccupiedLoss on claimsettlement from - - - 400 (g)ClariPhyacquisitionAccretion andamortizationexpense on 6,693 (h) 7,338 (h) 29,277 (h) 28,353 (h)convertibledebtLoss onextinguishment 93 (i) - 13,539 (i) - of convertibledebtNet realizedand unrealizedloss (gain) on (67 ) (j) (1,049 ) (j) (7,008 ) (j) (3,126 ) (j)equityinvestmentLoss onretirement ofcertain property andequipment fromacquisitions - - 444 (k) 7 (k)Loss on claimsettlement from - - - 296 (l)ExactikdispositionValuationallowance andtax effect of the adjustmentsabove fromGAAP to (1,797 ) (m) (2,029 ) (m) (5,390 ) (m) (2,432 ) (m)non-GAAPNon-GAAP net $ 49,966 $ 23,078 $ 180,332 $ 76,571 income Shares used incomputingnon-GAAP basic 52,626,086 45,728,736 49,901,181 45,226,717 earnings pershare Shares used incomputingnon-GAAP dilutedearnings persharebeforeoffsetting 56,497,856 51,298,035 54,956,850 48,766,301 shares fromcall optionOffsettingshares from 1,354,504 2,225,969 1,524,512 1,176,787 call optionShares used incomputingnon-GAAP 55,143,352 49,072,066 53,432,338 47,589,514 dilutedearnings pershare Non-GAAPearnings per share:Basic $ 0.95 $ 0.50 $ 3.61 $ 1.69 Diluted $ 0.91 $ 0.47 $ 3.37 $ 1.61 GAAP grossmargin as a % 54.9 % 59.9 % 54.3 % 58.2 % of revenueStock-based 1.0 % 1.7 % 1.2 % 1.7 % compensationAmortization ofinventory fair 8.4 % 7.6 % 8.7 % 10.1 % value step-upand intangiblesNon-GAAP grossmargin as a % 64.3 % 69.2 % 64.2 % 70.0 % of revenue

Reflects the stock-based compensation expense recorded relating to(a) stock-based awards. The Company excludes this item when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the cost of goods sold fair value amortization of inventory step-up related to acquisitions. The Company excludes these items when it(b) evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the fair value amortization of intangibles related to acquisition.(c) The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the fair value depreciation of fixed assets related to(d) acquisitions. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the legal, transition costs and other expenses related to acquisitions, including potential merger with Marvell. The transition costs(e) also include short-term cash retention bonus payments to eSilicon employees. The Company excludes this item when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the expense on building lease not yet occupied. The Company(f) excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the loss on settlement of certain customer claims from the ClariPhy acquisition. The Company excludes these items when it evaluates(g) the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the accretion and amortization expense on convertible debt. The(h) Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the loss on early extinguishment of convertible debt. The Company(i) excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the unrealized and realized gain or loss on equity investments.(j) The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the loss on disposal of certain property and equipment from the(k) acquisitions. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the loss on settlement of claim from the Exactik business(l) disposal. The Company excludes these items when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance. Reflects the change in valuation allowance and delta in interim period tax allocation from GAAP to non-GAAP related to non-GAAP adjustments. The(m) Company excludes this item when it evaluates the continuing operational performance of the Company as management believes this GAAP measure is not indicative of its core operating performance.

Corporate Contact:Kim Markle408-217-7329kmarkle@inphi.com

Investor Contact:Vernon P. Essi, Jr.408-606-6524investors@inphi.com