Mellanox Achieves Record Quarterly and Annual Revenue 

SUNNYVALE, Calif. & YOKNEAM, Israel, Jan. 27 -- Mellanox Technologies, Ltd. (NASDAQ: MLNX) today announced financial results for its fourth quarter and fiscal year ended December 31, 2015.

"We are pleased to achieve record quarterly and annual revenues. Our profitability grew 2.4 times year-over-year with operating income representing 21.3% of revenues. We are proud to grow our annual net income to $138.5 million and generate $150.5 million in cash from operations in 2015 - while we continued to invest in our technology and businesses," said Eyal Waldman, president and CEO of Mellanox Technologies. "We saw strong growth in our Ethernet business in 2015, and expect it to accelerate in 2016 and beyond. We are pleased to see our InfiniBand business continue to grow across multiple markets and technology generations, with strong adoption of our EDR 100 Gigabit InfiniBand products. We look forward to closing the EZChip merger in the second half of February 2016. This merger is important to Mellanox and adds processing capabilities to our networking technologies. We believe the combination of these technologies will lead to a superior position in the data center interconnect market. We expect this transaction to be accretive from day one."

Fourth Quarter and 2015 Fiscal Year Highlights

• Revenues were $176.9 million in the fourth quarter, and $658.1 million in fiscal year 2015.
• GAAP gross margins were 70.7 percent in the fourth quarter, and 71.3 percent in fiscal year 2015.
• Non-GAAP gross margins were 72.2 percent in the fourth quarter, and 72.8 percent in fiscal year 2015.
• GAAP operating income was $19.9 million, or 11.3 percent of revenue, in the fourth quarter, and operating income was $75.1 million, or 11.4 percent of revenue, in fiscal year 2015.
• Non-GAAP operating income was $36.6 million, or 20.7 percent of revenue, in the fourth quarter, and $139.9 million, or 21.3 percent of revenue, in fiscal year 2015.
• GAAP net income was $43.2 million in the fourth quarter and $92.9 million in fiscal year 2015 which included an income tax benefit from the release of a valuation allowance of $22.4 million in the fourth quarter.
• Non-GAAP net income was $37.5 million in the fourth quarter, and $138.5 million in fiscal year 2015.
• GAAP net income per diluted share was $0.90 in the fourth quarter, and $1.94 in fiscal year 2015.
• Non-GAAP net income per diluted share was $0.77 in the fourth quarter, and was $2.89 in fiscal year 2015.
• $34.7 million in cash was provided by operating activities during the fourth quarter.
• $150.5 million in cash was provided by operating activities during fiscal year 2015.
• Cash and investments totaled $510.5 million at December 31, 2015.

First Quarter 2016 Guidance

We currently project:

• Quarterly revenues of $180 million to $185 million
• Non-GAAP gross margins of 71 percent to 72 percent
• An increase in non-GAAP operating expenses of 2 percent to 4 percent
• Share-based compensation expense of $12.4 million to $12.9 million
• Non-GAAP diluted share count of 48.7 million to 49.2 million shares

Upon closing the EZchip transaction we will provide updated guidance for the combined entity.

Conference Call

Mellanox will hold its fourth quarter and fiscal year 2015 financial results conference call today at 2 p.m. Pacific Time to discuss the company's financial results. To listen to the call, dial +1-785-424-1666 approximately 10 minutes prior to the start time.

The Mellanox financial results conference call will be available via live webcast on the investor relations section of the Mellanox website at http://ir.mellanox.com. Access the webcast 15 minutes prior to the start of the call to download and install any necessary audio software. Replay of the webcast will also be available on the Mellanox website.

About Mellanox

Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage. Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability. Mellanox offers a choice of fast interconnect products: adapters, switches, software, cables and silicon that accelerate application runtime and maximize business results for a wide range of markets including high-performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services. More information is available at www.mellanox.com.

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Source: Mellanox Technologies