Cray Inc. Reports First Quarter 2019 Financial Results 

SEATTLE, May 7, 2019 -- Global supercomputer leader Cray Inc. (Nasdaq: CRAY) today announced financial results for its first quarter ended March 31, 2019.

All figures in this release are based on U.S. GAAP unless otherwise noted. A reconciliation of GAAP to non-GAAP measures is included in the financial tables in this press release.

Revenue for the first quarter of 2019 was $72 million, compared to $80 million in the first quarter of 2018. Net loss for the first quarter of 2019 was $29 million, or $0.72 per diluted share, compared to net loss of $25 million, or $0.62 per diluted share in the first quarter of 2018. Non-GAAP net loss was $26 million, or $0.63 per diluted share for the first quarter of 2019, compared to non-GAAP net loss of $21 million, or $0.53 per diluted share in the first quarter of 2018.

Overall gross profit margin on a GAAP and non-GAAP basis for the first quarter of 2019 was 36% and 37%, respectively, compared to 34% on a GAAP and non-GAAP basis in the first quarter of 2018.

Operating expenses for the first quarter of 2019 were $56 million, compared to $52 million in the first quarter of 2018. Non-GAAP operating expenses for the first quarter of 2019 were $53 million, compared to $49 million in the first quarter of 2018. Net Research and Development expenses increased by $6 million in the first quarter of 2019 compared to the first quarter of 2018, driven primarily by the timing of certain milestone reimbursements.

As of March 31, 2019, cash and restricted cash totaled $222 million. Working capital at the end of 2019 was $263 million, compared to $291 million at December 31, 2018.

“We are incredibly honored to have been selected to deliver ‘Frontier’, an exascale supercomputer to the U.S. Department of Energy’s Oak Ridge National Laboratory, which was announced earlier today,” said Peter Ungaro, president and CEO of Cray. “This transformative award serves as further validation for our next-generation Shasta architecture, which will enable groundbreaking research and AI at unprecedented scale. This is a truly historic win for our company, representing the largest contract we’ve ever received, and with our recent Aurora system at Argonne, the second exascale award for our Shasta platform.”

Ungaro added, “We continue to expect 2019 to be a transition year as we do not plan to begin shipping Shasta systems until the end of the year. However, with growing momentum and continued execution, we are well positioned to expand on our market leadership position and deliver strong long-term growth.”

Outlook

For 2019, while a wide range of results remains possible, Cray continues to expect revenue to grow modestly compared to 2018. Revenue is expected to be about $70 million for the second quarter of 2019. For the year, GAAP and non-GAAP gross margins are expected to be in the 30% range. Operating expenses will increase in 2019, primarily driven by investments made toward the exascale award announced today. For 2019, non-GAAP operating expenses are expected be in the range of $215 million for the year, and total non-GAAP adjustments are expected to be about $16 million, driven primarily by share-based compensation. Based on this outlook, the Company continues to expect a substantial GAAP and non-GAAP net loss for 2019.

Cray’s effective GAAP and non-GAAP tax rates for 2019 are both expected to be in the low single-digit range.

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

Recent Highlights

• Today, May 7, Cray and the U.S. Department of Energy (DOE) announced that Cray will deliver “Frontier” for the DOE’s Oak Ridge National Laboratory. Frontier will be based on Cray’s new Shasta architecture and Slingshot interconnect and will feature future generation AMD EPYC CPU and Radeon Instinct GPU technology. This award is valued at more than $600 million in total combined value, including the system build and development contracts. Final system delivery is expected in 2021, with acceptance anticipated in 2022.
• In May, Cray announced that the Central Institution for Meteorology and Geodynamics in Austria selected Cray to support a multi-year weather “nowcasting” project with the University of Vienna to benefit society and industry.  This is the fourth weather center to select Cray to run advanced machine learning and AI.
• In March, Cray announced that a Cray Shasta system will be the first U.S. exascale supercomputer. Cray was selected as a subcontractor to Intel to deliver the system to the U.S. Department of Energy’s Argonne National Laboratory. The system is expected to be delivered in 2021 and will feature Cray’s Shasta architecture, software stack and Slingshot interconnect. The program contract is expected to be finalized in mid-2019 and is valued at more than $100 million to Cray.
• In February, Cray announced that it was awarded contracts with Eclipse Holdings Ltd. to expand and upgrade the South African Weather Service’s (SAWS) Cray XC30-AC supercomputer and ClusterStor L300 storage system used for operational weather forecasting.
• In April Cray announced updates to its product line to support Intel Xeon Gold 6200 processors and Intel Xeon Platinum 8200 processors in both the Cray CS500 and XC50 supercomputers.
• In March, Cray announced that it appointed John Dinning as its new senior vice president of products. Dinning brings over two decades of experience strategically guiding technology companies through market positioning, growth and business transformation.
• In February, Cray announced that its Board of Directors elected Stephen E. Gold as a member of the Board and appointed him to the Strategic Technology Assessment Committee. Mr. Gold has over 30 years of Fortune 100 and entrepreneurship experience.

Conference Call Information

Cray will host a conference call today, Tuesday, May 7, 2019 at 1:15 p.m. PT (4:15 p.m. ET) to discuss its first quarter ended March 31, 2019 financial results. To access the call, please dial into the conference at least 10 minutes prior to the beginning of the call at (866) 362-9806. International callers should dial (409) 217-8435 and use the conference ID #3849985. To listen to the audio webcast, go to the Investors section of the Cray website at www.cray.com/company/investors.

If you are unable to attend the live conference call, an audio webcast replay will be available in the Investors section of the Cray website for 180 days. A telephonic replay of the call will also be available by dialing (855) 859-2056, international callers dial (404) 537-3406, and entering the conference ID #3849985. The conference call replay will be available for 72 hours, beginning at 4:30 p.m. PT on Tuesday, May 7, 2019.

About Cray Inc.

Cray Inc. combines computation and creativity so visionaries can keep asking questions that challenge the limits of possibility. Drawing on more than 45 years of experience, Cray develops the world’s most advanced supercomputers, pushing the boundaries of performance, efficiency and scalability. Cray continues to innovate today at the convergence of data and discovery, offering a comprehensive portfolio of supercomputers, high-performance storage, data analytics and artificial intelligence solutions.  Go to www.cray.com for more information.

Source: Cray Inc.