GlobeNewswire Inc | Oct 29, 2020 07:11AM EDT

October 29, 2020

SANTA CLARA, Calif., Oct. 29, 2020 (GLOBE NEWSWIRE) -- Inphi Corporation (NASDAQ: IPHI), a leader in high-speed data movement interconnects, today announced financial results for its third quarter ended September 30, 2020. Inphi Corporation will not host a conference call to discuss its results for the third quarter of 2020 due to the proposed acquisition of Inphi Corporation by Marvell Technology Group Ltd. announced today.

GAAP Results

Revenue in the third quarter of 2020 was a record $180.7 million on a U.S. generally accepted accounting principles (GAAP) basis, up 91.8% year-over-year, compared with $94.2 million in the third 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 third quarter of 2020 was 56.2%, compared with 57.8% in the third quarter of 2019. The decrease was mainly due to amortization of intangibles related to the eSilicon acquisition and product and revenue mix.

GAAP operating income in the third quarter of 2020 was $6.2 million or 3.5% of revenue, compared to GAAP operating loss in the third quarter of 2019 of $10.9 million or (11.6%) of revenue. The decrease in operating loss was mainly due to higher gross profit, partially offset by higher operating expenses and interest expense.

GAAP net loss for the third quarter of 2020 was $3.4 million or ($0.07) per diluted common share, compared with $16.2 million or ($0.36) per diluted common share in the third 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), 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 third quarter of 2020 was 64.2%, compared with 70.2% in the third 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 third quarter of 2020 was $53.3 million or 29.5% of revenue, compared with non-GAAP operating income of $21.4 million or 22.7% of revenue in the third quarter of 2019. The increase is primarily due to higher gross profit and higher operating leverage.

Non-GAAP net income in the third quarter of 2020 was $47.9 million, or $0.88 per diluted common share. This compares with non-GAAP net income of $21.5 million, or $0.45 per diluted common share in the third quarter of 2019.

Despite unique macro challenges, Q3 of 2020 was another record revenue quarter for the Company. Our revenue grew 92% year-over-year for the quarter driven by strength in both our cloud data center and telecom markets. The organic portions of our business also grew an impressive 57% year-over- year for the third quarter, said Ford Tamer, President and CEO of Inphi Corporation. Our diversified product roadmap coupled with leading edge research development investments drove strong non-GAAP operating margin of 29.5% for the third quarter, further demonstrating leverage in our operating model.

Nine Months 2020 Results

Revenue in the nine months ended September 30, 2020 was $495.4 million, compared with $262.7 million in the nine months ended September 30, 2019. GAAP net loss in the nine months ended September 30, 2020 was $47.7 million, or ($0.97) per diluted share, on approximately 49.0 million diluted weighted average common shares outstanding. This compares with GAAP net loss of $59.5 million, or ($1.32) per diluted share, on approximately 45.1 million diluted weighted average common shares outstanding in the nine months ended September 30, 2019.

Non-GAAP net income in the nine months ended September 30, 2020 was $130.4 million, or $2.47 per diluted weighted average common share outstanding, on approximately 52.9 million diluted weighted average common shares outstanding. This compares with non-GAAP net income of $53.5 million in the nine months ended September 30, 2019, or $1.14 per diluted weighted average common share outstanding, on approximately 47.1 million diluted weighted average common shares outstanding.

Business Outlook

The following statements are based on the Companys current expectations for the fourth quarter of 2020. These statements are forward-looking and actual results may differ materially. A reconciliation between the GAAP and non-GAAP outlook is included at the end of this press release.

-- Revenue in Q4 2020 is expected to be in the range of $185 million to $189 million. -- GAAP gross margin is expected to be in the range of approximately 55.8% to 57.0%. -- Non-GAAP gross margin is expected to be in the range of approximately 63.7% to 64.7%. -- Stock-based compensation expense is expected to be in the range of $28.0 million to $30.0 million. -- GAAP net loss is expected to be in range between $0.95 million to $2.65 million, or ($0.02) to ($0.05) per basic share, based on 52.4 million estimated weighted average basic shares outstanding. -- Non-GAAP net income, excluding stock-based compensation expense, acquisition expenses, amortization of intangibles and inventory fair value step up related to acquisitions and noncash interest on convertible debt, is expected to be in the range of $47.2 million to $50.6 million, or $0.85 to $0.91 per weighted average diluted share, based on 55.7 million estimated non-GAAP weighted average diluted 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 This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 and current expectations for 2020, including with respect to the fourth quarter of 2020, revenue, gross margin, stock-based compensation expense, net income or loss, and earnings per share; the Companys expectations regarding growth opportunities; strength in both our cloud data center and telecom markets, our operating model 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; the proposed acquisition, dependence on a limited number of customers for a substantial portion of revenue and lack of long-term purchase commitments from 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; the ability to effectively integrate eSilicon 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 Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenue $ 180,691 $ 94,231 $ 495,413 $ 262,739 Cost of revenue 79,151 39,749 227,244 111,517 Gross margin 101,540 54,482 268,169 151,222 Operating expenses:Research and 66,832 44,895 198,701 133,999 developmentSales and 15,341 12,311 45,274 35,344 marketingGeneral and 13,125 8,165 38,508 22,478 administrative Total operating 95,298 65,371 282,483 191,821 expenses Income (loss) 6,242 (10,889 ) (14,314 ) (40,599 )from operations Loss on earlyextinguishment (149 ) - (13,446 ) - of convertibledebtInterestexpense, net of (8,285 ) (4,672 ) (18,475 ) (17,652 )other income Loss before (2,192 ) (15,561 ) (46,235 ) (58,251 )income taxesProvision for 1,188 619 1,482 1,252 income taxes Net loss $ (3,380 ) $ (16,180 ) $ (47,717 ) $ (59,503 ) Earnings per share:Basic $ (0.07 ) $ (0.36 ) $ (0.97 ) $ (1.32 )Diluted $ (0.07 ) $ (0.36 ) $ (0.97 ) $ (1.32 ) Weighted-averageshares used in computingearnings per share:Basic 51,971,621 45,517,862 48,986,248 45,057,539 Diluted 51,971,621 45,517,862 48,986,248 45,057,539

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

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 (in thousands of dollars) (in thousands of dollars) (Unaudited) (Unaudited)Cost of revenue $ 2,136 $ 1,953 $ 6,033 $ 4,432 Research and 16,484 10,297 45,995 30,954 developmentSales and 5,858 4,312 16,320 11,729 marketingGeneral and 4,568 3,316 12,953 9,482 administrative $ 29,046 $ 19,878 $ 81,301 $ 56,597

INPHI CORPORATIONCONSOLIDATED BALANCE SHEETS(in thousands of dollars)(Unaudited) September 30, December 31, 2020 2019Assets Current assets: Cash and cash equivalents $ 147,907 $ 282,723 Investments in marketable securities 75,077 140,131 Accounts receivable, net 95,239 60,295 Inventories 108,565 55,013 Prepaid expenses and other current assets 16,046 17,463 Total current assets 442,834 555,625 Property and equipment, net 126,177 79,563 Goodwill 181,688 104,502 Intangible assets, net 256,170 168,290 Right of use asset, net 32,263 33,576 Other assets, net 31,549 34,450 Total assets $ 1,070,681 $ 976,006 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 43,863 $ 18,771 Accrued expenses and other current 77,834 51,820 liabilitiesDeferred revenue 3,238 3,719 Convertible debt 107,699 217,467 Total current liabilities 232,634 291,777 Convertible debt 400,426 258,711 Other liabilities 64,940 78,917 Total liabilities 698,000 629,405 Stockholders? equity: Common stock 52 46 Additional paid-in capital 661,586 587,862 Accumulated deficit (290,524 ) (242,807 )Accumulated other comprehensive income 1,567 1,500 Total stockholders? equity 372,681 346,601 Total liabilities and stockholders? equity $ 1,070,681 $ 976,006

INPHI CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands of dollars)(Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Cash flows from operating activities:Net loss $ (3,380 ) $ (16,180 ) $ (47,717 ) $ (59,503 )Adjustments toreconcile net loss to net cash provided by operating activities: Depreciation, amortization and 59,871 44,718 174,536 129,955 stock-based compensation Amortization and accretion related 6,653 7,210 22,584 21,015 to debt Loss on early extinguishment of 149 - 13,446 - debt Deferred income 914 490 1,158 936 taxes Net unrealized gain on equity (199 ) (2,152 ) (1,943 ) (2,077 ) investments Realized gain from - - (4,999 ) - investment Loss on termination of software lease - - 3,370 - contracts Other noncash items 543 (319 ) 173 (533 ) Changes in assets and liabilities, (26,533 ) (8,180 ) (49,665 ) (14,804 ) net of acquisitionNet cash provided by 38,018 25,587 110,943 74,989 operating activities Cash flows from investing activities:Purchases of property (24,666 ) (4,617 ) (52,515 ) (17,227 )and equipmentNet sale or maturities(purchases) of 12,669 (19,496 ) 65,403 (36,879 )marketable securitiesPurchases of (351 ) (687 ) (628 ) (1,137 )intangible assetsAcquisitions ofbusiness and equity - (3,000 ) (214,731 ) (3,000 )investments, net ofcash and proceedsNet cash used in (12,348 ) (27,800 ) (202,471 ) (58,243 )investing activities Cash flows from financing activities:Proceeds from exerciseof stock options and 4,059 3,672 10,070 8,281 ESPPMinimum tax withholdingpaid on behalf of (6,111 ) (3,132 ) (49,170 ) (25,698 )employees for net sharesettlementPayments ofobligations related topurchase of intangible (7,476 ) (6,833 ) (31,269 ) (20,229 )assets and equipmentfinancingProceeds from issuanceof convertible debt, - - 492,743 - net of costPayment forconvertible debt debt (2,220 ) - (410,002 ) - repurchases andconversionPurchase of capped - - (55,660 ) - call optionsNet cash used in (11,748 ) (6,293 ) (43,288 ) (37,646 )financing activities Net increase(decrease) in cash and 13,922 (8,506 ) (134,816 ) (20,900 )cash equivalentsCash and cashequivalents at 133,985 159,624 282,723 172,018 beginning of period Cash and cashequivalents at end of $ 147,907 $ 151,118 $ 147,907 $ 151,118 period Note: As previously disclosed in the 2019 10K and subsequent 10Qs, the Companyhas revised the above statements of cash flows for the three and nine months in2019 to correct a classification error between investing and financingactivities.

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, 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 Nine Months Ended September 30, September 30, 2020 2019 2020 2019 GAAP grossmargin to Non-GAAP grossmarginGAAP gross $ 101,540 $ 54,482 $ 268,169 $ 151,222 marginAdjustments toGAAP gross margin:Stock-based 2,136 (a) 1,953 (a) 6,033 (a) 4,432 (a)compensationAmortization ofinventory 143 (b) - 4,482 (b) - step-upAmortization of 12,380 (c) 9,724 (c) 38,844 (c) 29,172 (c)intangiblesDepreciation onstep-up values (207 ) (d) (3 ) (d) 223 (d) (27 ) (d)of fixed assetsNon-GAAP gross $ 115,992 $ 66,156 $ 317,751 $ 184,799 margin GAAP operatingexpenses toNon-GAAP operatingexpensesGAAP research $ 66,832 $ 44,895 $ 198,701 $ 133,999 and developmentAdjustments toGAAP research anddevelopment:Stock-based (16,484 ) (a) (10,297 ) (a) (45,995 ) (a) (30,954 ) (a)compensationDepreciation onstep-up values (131 ) (d) (157 ) (d) (255 ) (d) (354 ) (d)of fixed assetsAcquisitionrelated (888 ) (e) - (10,291 ) (e) - expensesNon-GAAPresearch and $ 49,329 $ 34,441 $ 142,160 $ 102,691 development GAAP sales and $ 15,341 $ 12,311 $ 45,274 $ 35,344 marketingAdjustments toGAAP sales and marketing:Stock-based (5,858 ) (a) (4,312 ) (a) (16,320 ) (a) (11,729 ) (a)compensationAmortization of (2,432 ) (c) (2,431 ) (c) (7,295 ) (c) (7,293 ) (c)intangiblesDepreciation onstep-up values (16 ) (d) (2 ) (d) (37 ) (d) (7 ) (d)of fixed assetsAcquisitionrelated (63 ) (e) - (740 ) (e) - expensesNon-GAAP sales $ 6,972 $ 5,566 $ 20,882 $ 16,315 and marketing GAAP generaland $ 13,125 $ 8,165 $ 38,508 $ 22,478 administrativeAdjustments toGAAP general andadministrative:Stock-based (4,568 ) (a) (3,316 ) (a) (12,953 ) (a) (9,482 ) (a)compensationAmortization of (69 ) (c) (116 ) (c) (209 ) (c) (348 ) (c)intangiblesDepreciation onstep-up values 3 (d) (5 ) (d) (125 ) (d) (14 ) (d)of fixed assetsAcquisitionrelated (1,641 ) (e) - (6,632 ) (e) - expensesExpense onlease that was (462 ) (f) - (1,709 ) (f) - not yetoccupiedLoss on claimsettlement from - - - (400 ) (g)ClariPhyacquisitionNon-GAAPgeneral and $ 6,388 $ 4,728 $ 16,880 $ 12,234 administrative Non-GAAP totaloperating $ 62,689 $ 44,735 $ 179,922 $ 131,240 expensesNon-GAAP income $ 53,303 $ 21,421 $ 137,829 $ 53,559 from operations GAAP net lossto Non-GAAP net incomeGAAP net loss $ (3,380 ) $ (16,180 ) $ (47,717 ) $ (59,503 ) Adjusting itemsto GAAP net loss:Operatingexpenses related tostock-basedcompensation 29,046 (a) 19,878 (a) 81,301 (a) 56,597 (a)expenseAmortization ofinventory 143 (b) - 4,482 (b) - step-upAmortization ofintangibles 14,881 (c) 12,271 (c) 46,348 (c) 36,813 (c)related topurchase priceDepreciation onstep-up values (63 ) (d) 161 (d) 640 (d) 348 (d)of fixed assetsAcquisitionrelated 2,592 (e) - 17,663 (e) - expensesExpense onlease that was 462 (f) - 1,709 (f) not yetoccupiedLoss on claimsettlement from - - - 400 (g)ClariPhyacquisitionAccretion andamortizationexpense on 6,653 (h) 7,210 (h) 22,584 (h) 21,015 (h)convertibledebtLoss onextinguishment 149 (i) - 13,446 (i) - of convertibledebtNet realizedand unrealizedloss (gain) on (199 ) (j) (2,152 ) (j) (6,942 ) (j) (2,077 ) (j)equityinvestmentLoss onretirement ofcertain 405 (k) 7 (k) 445 (k) 7 (k)property andequipment fromacquisitionsLoss on claimsettlement from - - - 296 (l)ExactikdispositionValuationallowance andtax effect of the adjustmentsabove fromGAAP to (2,756 ) (m) 297 (m) (3,593 ) (m) (403 ) (m)non-GAAPNon-GAAP net $ 47,933 $ 21,492 $ 130,366 $ 53,493 income Shares used incomputingnon-GAAP basic 51,971,621 45,517,862 48,986,248 45,057,539 earnings pershare Shares used incomputingnon-GAAPdilutedearnings per 55,676,182 49,912,318 54,436,550 47,920,275 sharebeforeoffsettingshares fromcall optionOffsettingshares from 1,314,251 1,694,050 1,581,182 827,059 call optionShares used incomputingnon-GAAP 54,361,931 48,218,268 52,855,368 47,093,216 dilutedearnings pershare Non-GAAPearnings per share:Basic $ 0.92 $ 0.47 $ 2.66 $ 1.19 Diluted $ 0.88 $ 0.45 $ 2.47 $ 1.14 GAAP grossmargin as a % 56.2 % 57.8 % 54.1 % 57.6 % of revenueStock-based 1.2 % 2.1 % 1.2 % 1.7 % compensationAmortization ofinventory fair 6.8 % 10.3 % 8.8 % 11.0 % value step-upand intangiblesNon-GAAP grossmargin as a % 64.2 % 70.2 % 64.1 % 70.3 % 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. The transition costs also include short-term cash retention(e) 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.

INPHI CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP MEASURES -FOURTH QUARTER 2020 GUIDANCE(in thousands of dollars, except share and per share amounts)(Unaudited) Three Months Ending December 31, 2020 High LowEstimated GAAP net loss $ (950 ) $ (2,650 )Adjusting items to estimated GAAP net loss: Operating expenses related to stock-based compensation expense 30,000 28,000 Amortization of intangibles 14,900 14,900 Amortization of step up values of acquired 140 140 inventoriesAmortization of step up values of acquired 60 60 property and equipmentAcquisition related expenses 3,000 3,000 Amortization of convertible debt interest 6,650 6,650 costTax effect of GAAP to non-GAAP adjustments (3,200 ) (2,900 )Estimated non-GAAP net income $ 50,600 $ 47,200 Shares used in computing estimated non-GAAP 55,665,000 55,665,000 diluted earnings per share Estimated non-GAAP diluted earnings per share $ 0.91 $ 0.85 Revenue $ 188,750 $ 185,250 GAAP gross margin $ 107,575 $ 103,460 as a % of revenue 57.0 % 55.8 %Adjusting items to estimated GAAP gross margin:Stock-based compensation 2,000 2,000 Amortization of step up values of acquired 140 140 inventoriesAmortization of intangibles 12,400 12,400 Estimated non-GAAP gross margin $ 122,115 $ 118,000 as a % of revenue 64.7 % 63.7 %

Corporate Contact:Kim Markle 408-217-7329 kmarkle@inphi.com

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