SAN JOSE, Calif.–(BUSINESS WIRE)–Jan. 27, 2016– InvenSense Inc. (NYSE: INVN), a leading provider of MEMS sensor platforms, today announced results for its third quarter of fiscal 2016, ended December 27, 2015.
Net revenue for the third quarter of fiscal 2016 was $120.0 million, up 7 percent from $112.5 million for the second quarter of fiscal 2016, and up 4 percent from $115.9 million for the third quarter of fiscal 2015.
Gross margin determined in accordance with U.S. generally accepted accounting principles (GAAP) was 41 percent for the third quarter of fiscal 2016, consistent with 41 percent for the second quarter of fiscal 2016. GAAP gross margin for the third quarter of fiscal 2016 included stock-based compensation and related payroll taxes, and amortization of acquisition intangibles. Excluding these items, non-GAAP gross margin was 44 percent for the third quarter of fiscal 2016, consistent with 44 percent for the second quarter of fiscal 2016.
GAAP net income for the third quarter of fiscal 2016 was $1.9 million, or 2 cents per diluted share. By comparison, GAAP net income was $5.7 million, or 6 cents per diluted share for the second quarter of fiscal 2016. GAAP net income for the third quarter of fiscal 2016 included stock-based compensation and related payroll taxes, accreting interest expense on convertible notes, amortization of acquisition intangibles, business acquisition costs, other adjustments, the income tax effect of non-GAAP adjustments, and other discrete tax adjustments. Excluding these items, non-GAAP net income for the third quarter of fiscal 2016 was $16.7 million, or 18 cents per diluted share, compared with $14.9 million, or 16 cents per diluted share, for the second quarter of fiscal 2016.
The reconciliation between GAAP and non-GAAP financial results for all referenced periods is provided in a table immediately following the Unaudited GAAP Condensed Consolidated Statements of Operations below.
Management Qualitative Comments
“Amidst the backdrop of a tumultuous business and financial environment, InvenSense posted a solid quarter,” said Behrooz Abdi, president and chief executive officer. “We maintained careful adherence to our business model, while continuing a rapid pace of innovation across our product portfolio. We also executed well to our plan of diversification, growing our revenues in a wide range of Internet of Things applications, while continuing to drive our strategic value and competitive differentiation within our mobile customer base.”
Third Quarter of Fiscal Year 2016 Earnings Conference Call
A conference call will be held today at 1:30 p.m. Pacific Time to discuss the quarter’s results and management’s current business outlook.
To listen to the conference call, please dial (530) 379-4724 ten minutes prior to the start of the call, using the passcode 24973303. International callers, please dial (877) 788-4691. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available for seven days. To access the replay, please dial (404) 537-3406 and enter passcode 24973303. International callers please dial (855) 859-2056. The conference call will be available via a live webcast on the investor relations section of InvenSense’s web site at www.invensense.com/ir. An archived webcast replay will be available on the web site for three months.
Note Regarding Use of Non-GAAP Financial Measures
As discussed above, in addition to the company’s condensed consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation expense, certain legal and litigation expenses, business acquisition costs, amortization of acquisition-related intangible assets, accreting interest expense on convertible notes and other adjustments. The company uses these non-GAAP measures in its own financial and operational decision-making processes. Further, the company believes that these non-GAAP measures offer an important analytical tool to help investors understand the company’s core operating results and trends and facilitate comparability with the operating results of other companies that provide similar non-GAAP measures. These non-GAAP measures have certain limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information. For example, stock-based compensation is an important component of the company’s compensation mix and will continue to result in significant expenses in the company’s GAAP results for the foreseeable future, but it is not reflected in our non-GAAP measures. Also, other companies, including companies in the company’s industry, may calculate non-GAAP financial measures differently, limiting their usefulness as comparative measures.
Forward-Looking Statements
Statements in this press release that are not historical are “forward-looking statements” as the term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally written in the future tense and/or preceded by words such as “will,” “expects,” “anticipates,” or other words that imply or predict a future state. Forward-looking statements include any projection of revenue, gross margin, expense, earnings, stockholder return or other financial items discussed in this press release, including the strength of our competitive positioning, the strength of design activity, increased demand for our products and design wins contributing to revenue. Investors are cautioned that all forward-looking statements in this release involve risks and uncertainty that can cause actual results to differ from those currently anticipated, due to a number of factors, including without limitation, intense competition in our industry; our achievement of design wins; our dependence on a limited number of customers for a substantial portion of our revenues; the continued adoption of motion tracking and motion sensing as an interface in consumer electronics products; decreases in average selling prices for our products; our ability to execute on our plan of diversification and our success in growing our revenues in the Internet of Things applications; our lack of long-term supply contracts and dependence on limited sources of supply; consumer acceptance of our customers’ products that incorporate our solutions and our ability to continue to develop and introduce new and enhanced products on a timely basis; as well as changes in economic conditions in our markets and other risk factors discussed in InvenSense’s Annual Report on Form 10-K for the year ended March 29, 2015, subsequent quarterly reports on Form 10-Q, recent current reports on Form 8-K, and other documents filed by us with the Securities and Exchange Commission (SEC) from time to time. Copies of InvenSense’s SEC filings are posted on the company’s website and are available from the company without charge. Forward-looking statements are made as of the date of this release, and, except as required by law, the company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.
About InvenSense
InvenSense, Inc. (NYSE: INVN) is the world’s leading provider of MEMS sensor platforms. The company’s patented InvenSense Fabrication Platform, MotionFusion® technology, and location software and services addresses the emerging need of many mass-market consumer applications via improved performance, accuracy, and intuitive motion-, gesture- and sound-based interfaces. InvenSense technology can be found in Mobile, Wearables, Smart Home, Industrial, and Automotive products. InvenSense is headquartered in San Jose, California and has offices in Boston, China, Taiwan, Korea, Japan,France, Canada, Slovakia and Italy. More information can be found at www.invensense.tdk.com and http://www.coursaretail.com/ follow us on Twitter at @InvenSense.
©2016 InvenSense, Inc. All rights reserved. InvenSense, Sensing Everything, FireFly, SensorStudio, TrustedSensor, Coursa, Coursa Sports, Coursa Retail, UltraPrint, MotionTracking, MotionProcessing, MotionProcessor, MotionFusion, MotionApps, InvenSenseTV, DMP, AAR, and the InvenSense logo are trademarks of InvenSense, Inc. Other company and product names may be trademarks of the respective companies with which they are associated.
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INVENSENSE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) |
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| Three Months Ended | ||||||||||||||||
| December 27, | September 27, | December 28, | ||||||||||||||
| 2015 | 2015 | 2014 | ||||||||||||||
| Net revenue | $ | 120,029 | $ | 112,545 | $ | 115,864 | ||||||||||
| Costs of revenue | 70,228 | 65,974 | 65,468 | |||||||||||||
| Gross profit | 49,801 | 46,571 | 50,396 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 25,690 | 24,991 | 24,391 | |||||||||||||
| Selling, general and administrative | 14,295 | 15,186 | 15,551 | |||||||||||||
| Total operating expenses | 39,985 | 40,177 | 39,942 | |||||||||||||
| Income from operations | 9,816 | 6,394 | 10,454 | |||||||||||||
| Interest (expense) | (2,798 | ) | (2,765 | ) | (2,690 | ) | ||||||||||
| Other income, net | (35 | ) | 104 | (281 | ) | |||||||||||
| Income before income taxes | 6,983 | 3,733 | 7,483 | |||||||||||||
| Income tax provision (benefit) | 5,093 | (1,960 | ) | (2,738 | ) | |||||||||||
| Net income | $ | 1,890 | $ | 5,693 | $ | 10,221 | ||||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.02 | $ | 0.06 | $ | 0.11 | ||||||||||
| Diluted | $ | 0.02 | $ | 0.06 | $ | 0.11 | ||||||||||
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Weighted average shares outstanding used in computing net income per share: |
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| Basic | 91,957 | 91,574 | 89,779 | |||||||||||||
| Diluted | 92,922 | 92,569 | 92,336 | |||||||||||||
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INVENSENSE, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS (In thousands, except per share amounts) (Unaudited) |
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| Three Months Ended | ||||||||||||||||
| December 27, | September 27, | December 28, | ||||||||||||||
| 2015 | 2015 | 2014 | ||||||||||||||
| GAAP net income | $ | 1,890 | $ | 5,693 | $ | 10,221 | ||||||||||
| Adjustments: | ||||||||||||||||
| Stock based compensation expense | 8,198 | 9,249 | 8,309 | |||||||||||||
| Convertible note accretion interest expense | 2,034 | 1,999 | 1,886 | |||||||||||||
| Amortization of acquisition-related intangible assets | 2,200 | 2,254 | 2,034 | |||||||||||||
| Business acquisition costs | 198 | – | 1,160 | |||||||||||||
| Patent litigation legal expense, net | (138 | ) | 144 | 1,187 | ||||||||||||
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Income tax effect of pretax non-GAAP adjustments and other discrete tax items |
2,288 | (4,476 | ) | (5,519 | ) | |||||||||||
| Non-GAAP net income | $ | 16,670 | $ | 14,863 | $ | 19,278 | ||||||||||
| GAAP net income per share of common stock, diluted | $ | 0.02 | $ | 0.06 | $ | 0.11 | ||||||||||
| Non-GAAP net income per share of common stock, diluted | $ | 0.18 | $ | 0.16 | $ | 0.21 | ||||||||||
| GAAP Gross profit | $ | 49,801 | $ | 46,571 | $ | 50,396 | ||||||||||
| Adjustments: | ||||||||||||||||
| Stock based compensation expense | 628 | 587 | 591 | |||||||||||||
| Amortization of acquisition-related intangible assets | 2,144 | 2,198 | 1,978 | |||||||||||||
| Non-GAAP Gross profit | $ | 52,573 | $ | 49,356 | $ | 52,965 | ||||||||||
| GAAP Operating Expense | $ | 39,985 | $ | 40,177 | $ | 39,942 | ||||||||||
| Adjustments: | ||||||||||||||||
| Stock based compensation expense | 7,570 | 8,662 | 7,718 | |||||||||||||
| Amortization of acquisition-related intangible assets | 56 | 56 | 56 | |||||||||||||
| Business acquisition costs | 198 | – | 1,160 | |||||||||||||
| Patent litigation legal expense, net | (138 | ) | 144 | 1,187 | ||||||||||||
| Non-GAAP Operating Expense | $ | 32,299 | $ | 31,315 | $ | 29,821 | ||||||||||
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INVENSENSE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) (Unaudited) |
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| December 27, |
March 29, |
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| 2015 | 2015 | |||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 43,877 | $ | 85,637 | ||||||||
| Short-term investments | 253,342 | 129,919 | ||||||||||
| Accounts receivable | 42,529 | 44,522 | ||||||||||
| Inventories | 61,666 | 75,105 | ||||||||||
| Prepaid expenses and other current assets | 13,098 | 14,950 | ||||||||||
| Total current assets | 414,512 | 350,133 | ||||||||||
| Property and equipment, net | 37,730 | 41,849 | ||||||||||
| Intangible assets, net | 38,710 | 45,508 | ||||||||||
| Goodwill | 139,175 | 139,175 | ||||||||||
| Other assets | 9,290 | 9,019 | ||||||||||
| Total assets | $ | 639,417 | $ | 585,684 | ||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 44,153 | $ | 23,130 | ||||||||
| Accrued liabilities | 29,425 | 31,991 | ||||||||||
| Total current liabilities | 73,578 | 55,121 | ||||||||||
| Long-term debt | 148,801 | 142,810 | ||||||||||
| Other long-term liabilities | 26,548 | 28,252 | ||||||||||
| Total liabilities | 248,927 | 226,183 | ||||||||||
| Stockholders’ equity: | ||||||||||||
| Preferred stock: | ||||||||||||
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Preferred stock, $0.001 par value — 20,000 shares authorized, no shares issued and outstanding at December 27, 2015 and March 29, 2015 |
– | – | ||||||||||
| Common stock: | ||||||||||||
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Common stock, $0.001 par value — 750,000 shares authorized, 92,320 shares issued and outstanding at December 27, 2015, 90,894 shares issued and outstanding at March 29, 2015 |
292,288 | 262,677 | ||||||||||
| Accumulated other comprehensive (loss) | (362 | ) | (4 | ) | ||||||||
| Retained earnings | 98,564 | 96,828 | ||||||||||
| Total stockholders’ equity | 390,490 | 359,501 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 639,417 | $ | 585,684 | ||||||||
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INVENSENSE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
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Three Months Ended |
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December 27, |
September 27, |
December 28, |
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2015 |
2015 |
2014 |
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| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 1,890 | $ | 5,693 | $ | 10,221 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation | 3,303 | 3,195 | 3,047 | |||||||||
| Amortization of intangible assets | 2,295 | 2,361 | 2,034 | |||||||||
| Non cash interest expense | 2,033 | 2,000 | 1,907 | |||||||||
| Loss on disposal of property and equipment | – | – | 131 | |||||||||
| Stock-based compensation expense | 8,193 | 9,048 | 8,300 | |||||||||
| Deferred income tax assets | 5,113 | (1,674 | ) | (5,237 | ) | |||||||
| Tax effect of employee benefit plans | (118 | ) | (457 | ) | 42 | |||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | 7,905 | (47 | ) | (7,010 | ) | |||||||
| Inventories | 18 | 2,807 | 7,210 | |||||||||
| Prepaid expenses and other current assets | 104 | 1,154 | 946 | |||||||||
| Other assets | 52 | (1,715 | ) | 940 | ||||||||
| Accounts payable | 9,313 | 8,253 | (4,771 | ) | ||||||||
| Accrued liabilities | (12,856 | ) | 2,897 | 94 | ||||||||
| Net cash provided by operating activities | 27,245 | 33,515 | 17,854 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of property and equipment | (2,280 | ) | (1,611 | ) | (7,665 | ) | ||||||
| Sale and maturities of available-for-sale investments | 43,081 | 56,478 | 14,200 | |||||||||
| Purchase of available-for-sale investments | (93,553 | ) | (91,305 | ) | – | |||||||
| Acquisitions, net of cash acquired | – | – | 120 | |||||||||
| Net cash provided by (used in) investing activities | (52,752 | ) | (36,438 | ) | 6,655 | |||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from exercise of common stock | 1,130 | 226 | 2,124 | |||||||||
| Payments contingent consideration | (1,908 | ) | – | – | ||||||||
| Net cash provided by (used in) financing activities | (778 | ) | 226 | 2,124 | ||||||||
| Net increase (decrease) in cash and cash equivalents | (26,285 | ) | (2,697 | ) | 26,633 | |||||||
| Cash and cash equivalents: | ||||||||||||
| Beginning of period | 70,162 | 72,859 | 38,424 | |||||||||
| End of period | $ | 43,877 | $ | 70,162 | $ | 65,057 | ||||||
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Source: InvenSense Inc.
