Cray Reports Third Quarter 2016 Financial Results 

SEATTLE, Wash., Nov. 8 -- Global supercomputer leader Cray Inc. (Nasdaq: CRAY) has announced financial results for the third quarter ended September 30, 2016.

Revenue for the third quarter of 2016 was $77.5 million, which compares with $191.4 million in the third quarter of 2015.  Net loss for the third quarter of 2016 was $23.0 million, or $0.58 per diluted share, compared to net income of $10.9 million, or $0.27 per diluted share in the third quarter of 2015.  Non-GAAP net loss was $19.5 million, or $0.49 per diluted share for the third quarter of 2016, compared to non-GAAP net income of $19.5 million, or $0.48 per diluted share for the same period of 2015.

Overall gross profit margin on a GAAP and non-GAAP basis for the third quarter of 2016 was 30% and 31%, respectively.  For the third quarter of 2015, GAAP and non-GAAP gross profit margin was 34% and 35%, respectively.

Operating expenses for the third quarter of 2016 were $52.1 million, compared to $47.9 million for the third quarter of 2015.  Non-GAAP operating expenses for the third quarter of 2016 were $49.3 million, compared to $45.1 million for the third quarter of 2015.

As of September 30, 2016, cash, investments and restricted cash totaled $147 million. Working capital decreased in the third quarter of 2016 to $364 million compared to $381 million at the end of the second quarter.

“Our performance in the third quarter was highlighted by a number of new installations of supercomputers and storage systems worldwide,” said Peter Ungaro, president and CEO of Cray. “While market conditions remain challenging, we are beginning to see early signs of stabilization in certain areas, including in the energy market where we recently installed an additional XC system at PGS, and in the weather and climate market with a major win in the United States.  Overall, while our visibility remains limited, our competitive position is strong and we're focused on delivering on our outlook for the rest of the year.”

Outlook

For 2016, a wide range of results remains possible.  Assuming the Company is able to successfully complete the acceptances of five large systems associated with two new processors that total roughly $185 million, the Company expects revenue to be in the range of $620 million to $650 million.  The Company is still working through technical issues with these systems and the delays in third-party components outlined previously have compressed the timelines available to work through these issues.  Significant risks remain to achieve these acceptances before year-end.  To the extent that one or more of these system acceptances is not completed by the end of the year, the Company expects that those acceptances would be completed in early 2017.

GAAP and Non-GAAP gross margin for the year is expected to be in the range of 34%.  Non-GAAP operating expenses for the year are anticipated to be about $200 million.  For 2016, GAAP operating expenses are anticipated to be about $11 million higher than non-GAAP operating expenses, and GAAP gross profit is expected to about $1 million lower than non-GAAP gross profit.

Actual results for any future periods are subject to large fluctuations given the nature of Cray’s business.

Recent Highlights

• In November, Cray announced that the Department of Defense awarded it with a new contract for an XC40 supercomputer and three Sonexion storage systems.  The Cray systems will be located at the U.S. Army Engineer Research and Development Center (ERDC) in Vicksburg, Mississippi. As the research organization of the U.S. Army Corps of Engineers, ERDC conducts R&D in support of the soldier, military installations, and civil works projects, as well as for other federal agencies, state and municipal authorities, and with U.S. industry through innovative work agreements.
• In October, Cray announced that PGS purchased a new 12-cabinet Cray XC supercomputer, adding to its existing industry leading Cray-based supercomputing platform.  Along with an additional 2.8 petabytes of capacity added to its Cray Sonexion storage system, the new XC supercomputer will significantly expand PGS’ seismic imaging capabilities.
• In October, Cray announced that Baylor University selected the Cray CS400 cluster computer to serve as its primary high performance computing platform.  Among other research initiatives, Baylor serves as a Compact Muon Solenoid (CMS) Tier 3 site for the European Organization for Nuclear Research, known as CERN. Baylor scientists analyze data gathered by the Large Hadron Collider in Geneva, Switzerland, in partnership with others around the globe as part of ongoing research into subatomic particles.

About Cray Inc.

Global supercomputing leader Cray Inc. (Nasdaq: CRAY) provides innovative systems and solutions enabling scientists and engineers in industry, academia and government to meet existing and future simulation and analytics challenges.  Leveraging more than 40 years of experience in developing and servicing the world’s most advanced supercomputers, Cray offers a comprehensive portfolio of supercomputers and big data storage and analytics solutions delivering unrivaled performance, efficiency and scalability.  Cray’s Adaptive Supercomputing vision is focused on delivering innovative next-generation products that integrate diverse processing technologies into a unified architecture, allowing customers to meet the market’s continued demand for realized performance. Go to www.cray.com for more information.

Source: Cray