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Mellanox (MLNX) Earnings & Revenues Beat Estimates in Q4
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Mellanox Technologies, Ltd. reported fourth-quarter 2019 non-GAAP earnings of $2.31 per share, beating the Zacks Consensus Estimate by 40.85%. Further, the bottom line surged 62.7% from the year-ago quarter.
Revenues of $379.8 million improved 30.9% from the year-ago quarter and comfortably outpaced the Zacks Consensus Estimate of $331 million. Robust adoption of Ethernet adapters, switches and LinkX cables drove the top line. Solid momentum in InfiniBand demand was an added positive.
Further, the company reinforced its dominant position in the 25 gigabit per second (Gbps) and above merchant adapter market in the reported quarter.
Apart from this, Mellanox’s Ethernet switch revenues improved 25% sequentially, driven by growing clout of Spectrum switches.
Infiniband revenues improved 19% on a quarter-over-quarter basis.
It is to be noted that on Mar 11, 2019, Mellanox entered into a definitive agreement with NVIDIA (NVDA - Free Report) , by which the acquirer will buy shares of Mellanox for $125 per share in cash, indicating a total enterprise value of around $6.9 billion.
Mellanox Technologies, Ltd. Price, Consensus and EPS Surprise
Non-GAAP gross margin in the fourth quarter of 69.1% expanded 10 basis points (bps) on a year-over-year basis.
Non-GAAP operating expenses in the quarter were up 18.6% year over year and came in at $144.1 million.
Non-GAAP operating income totaled $118.2 million up 50.2% year over year. Non-GAAP operating margin expanded 400 bps on a year-over-year basis to 31.1%.
Balance Sheet & Cash Flow
Mellanox exited the fourth quarter with cash & short-term investments worth $875.9 million compared with $742.5 million in the previous quarter.
In the fourth quarter, the company generated cash of $147.8 million from operations compared with $130 million in the previous quarter.
2019 at a Glance
In fiscal 2019, Mellanox reported revenues of $1.331 billion, up 22.2% year over year.
Notably, InfiniBand revenues increased 29% year over year on robust adoption of 200 gigabit per second HDR solutions in the HPC or high performance computing, AI, cloud, and storage verticals.
Guidance
Mellanox refrained from providing first-quarter guidance due to the pending acquisition by NVIDIA.
Zacks Rank & Stocks to Consider
Currently, Mellanox carries a Zacks Rank #3 (Hold).
Long term earnings growth rate for Garmin and SS&C Technologies is pegged at 7.35% and 7%, respectively.
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Mellanox (MLNX) Earnings & Revenues Beat Estimates in Q4
Mellanox Technologies, Ltd. reported fourth-quarter 2019 non-GAAP earnings of $2.31 per share, beating the Zacks Consensus Estimate by 40.85%. Further, the bottom line surged 62.7% from the year-ago quarter.
Revenues of $379.8 million improved 30.9% from the year-ago quarter and comfortably outpaced the Zacks Consensus Estimate of $331 million. Robust adoption of Ethernet adapters, switches and LinkX cables drove the top line. Solid momentum in InfiniBand demand was an added positive.
Further, the company reinforced its dominant position in the 25 gigabit per second (Gbps) and above merchant adapter market in the reported quarter.
Apart from this, Mellanox’s Ethernet switch revenues improved 25% sequentially, driven by growing clout of Spectrum switches.
Infiniband revenues improved 19% on a quarter-over-quarter basis.
It is to be noted that on Mar 11, 2019, Mellanox entered into a definitive agreement with NVIDIA (NVDA - Free Report) , by which the acquirer will buy shares of Mellanox for $125 per share in cash, indicating a total enterprise value of around $6.9 billion.
Mellanox Technologies, Ltd. Price, Consensus and EPS Surprise
Mellanox Technologies, Ltd. price-consensus-eps-surprise-chart | Mellanox Technologies, Ltd. Quote
Operating Results
Non-GAAP gross margin in the fourth quarter of 69.1% expanded 10 basis points (bps) on a year-over-year basis.
Non-GAAP operating expenses in the quarter were up 18.6% year over year and came in at $144.1 million.
Non-GAAP operating income totaled $118.2 million up 50.2% year over year. Non-GAAP operating margin expanded 400 bps on a year-over-year basis to 31.1%.
Balance Sheet & Cash Flow
Mellanox exited the fourth quarter with cash & short-term investments worth $875.9 million compared with $742.5 million in the previous quarter.
In the fourth quarter, the company generated cash of $147.8 million from operations compared with $130 million in the previous quarter.
2019 at a Glance
In fiscal 2019, Mellanox reported revenues of $1.331 billion, up 22.2% year over year.
Notably, InfiniBand revenues increased 29% year over year on robust adoption of 200 gigabit per second HDR solutions in the HPC or high performance computing, AI, cloud, and storage verticals.
Guidance
Mellanox refrained from providing first-quarter guidance due to the pending acquisition by NVIDIA.
Zacks Rank & Stocks to Consider
Currently, Mellanox carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Garmin Ltd. (GRMN - Free Report) and SS&C Technologies Holdings, Inc. (SSNC - Free Report) , both flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long term earnings growth rate for Garmin and SS&C Technologies is pegged at 7.35% and 7%, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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