Revenues for the third quarter of fiscal 2008 were $15.1 million, compared with $11.3 million for the third quarter of fiscal 2007 and $14.7 million for the second quarter of fiscal 2008. License revenue for the third quarter of fiscal 2008 was $12.3 million, compared with $8.2 million for the same period a year ago and $12.1 million for the prior quarter. Royalties for the third quarter of fiscal 2008 were $2.8 million, compared with $3.1 million for the third quarter of fiscal 2007 and $2.6 million for the second quarter of fiscal 2008.
As reported under U.S. generally accepted accounting principles (GAAP), net loss for the third quarter of fiscal 2008 was $1.1 million, or $(0.05) per share, compared with net loss of $1.2 million, or ($0.05) per share for the third quarter of fiscal 2007 and net income of $0.6 million or $0.03 per share for the second quarter of fiscal 2008.
Excluding the effects of FAS123R stock compensation expense, restructuring and acquisition related charges, the company would have reported a net income of $1.4 million, or $0.06 per share for the quarter ended June 30, 2008. The reconciliation of GAAP to non-GAAP includes $0.7 million of stock-based compensation expense, approximately $1.9 million of acquisition related charges and restructuring charges of approximately $0.3 million reduced by $0.4 million tax effect for a net total of $2.5 million.
Dan McCranie, chairman and chief executive officer (CEO) for Virage Logic, said, “License revenue increased 50% year-over-year while total revenue, which includes royalties, increased 34% year-over-year. We have been able to deliver four consecutive quarters of non-GAAP profitability and this financial performance underscores the significant progress we have made to date in transforming the company. Key initiatives that we made particularly strong progress against in the third quarter include the following:
- Being first-to-market with next generation advanced technology products. We introduced our 40nm SiWare™ memory compilers and logic libraries and during the quarter we were successful in securing three new customers for our 40nm SiWareTM standard product offering. This is a key leading indicator because in order to create a scalable and profitable business, we must leverage our engineering investment through proliferation of off-the-shelf advanced libraries and compilers.
- Broadening our product portfolio. Our DDR offerings increased this past quarter with the announcement of our DDR2/3 product and more recently with the introduction of our DDR3 product. With these new offerings, we were able to expand our account base, particularly in the Programmable Logic semiconductor market. In addition to broadening our product portfolio organically, we have also expanded our product portfolio with the purchase of Impinj’s non-volatile memory IP business.
Mr. McCranie continued, “In the third quarter, we continued to execute on our goals to transform the company into a high growth, high profit trusted IP provider to the semiconductor industry. Now, let me turn to our business outlook for the fourth quarter of fiscal 2008. While we enjoyed strong quarter-on-quarter license growth for the past five quarters, we remain both cautious and concerned about the near term growth prospects for the semiconductor component suppliers whom we serve. Accordingly, we are forecasting relatively flat license and royalty revenue for the fourth quarter of fiscal 2008 compared to the third quarter of fiscal 2008.
As noted in our recent Impinj NVM IP business acquisition announcement, this transaction will have a neutral to slightly negative impact on our earnings in the fourth quarter of 2008, and should contribute approximately $0.03 to $0.06 per share to our earnings in fiscal 2009. Refining this forecast for the near term, we now believe that the Impinj transaction will be dilutive up to approximately $0.03 in the fourth fiscal quarter but should be between $0.01 and $0.03 accretive in the first fiscal quarter of 2009 alone.
Mr. McCranie concluded, “In summary, we anticipate fourth quarter fiscal 2008 revenues of $15.0M to $15.5M and a non-GAAP earnings per share of $0.02 to $0.03 per share. The company expects $1.3 million of FAS123R stock compensation expense and $1.2 million acquisition related expenses that include $0.9 million of acquisition related performance based payments linked to predefined sales goals for the fourth quarter of fiscal 2008.”
Although this news release will be available on the company’s website, the company disclaims any duty or intention to update these or any other forward-looking statements.
GAAP reconciliation
We believe the financial figures we include that are not presented in
accordance with GAAP assist investors in understanding our business and
operating results. This information is intended to provide investors
with useful supplemental data regarding the underlying economics of our
business operations because operating results presented under GAAP may
include items that are nonrecurring or not necessarily relevant to
ongoing operations, or are difficult to forecast for future periods. The
Company ’ s management evaluates and makes
operating decisions about its business operations primarily based on
revenue and the core costs of those business operations. Management
believes that the amortization and impairment of intangible assets,
stock-based compensation and restructuring charges are not part of its
core business operations. Therefore, management presents non-GAAP
financial measures, along with GAAP measures, in this earnings release
by excluding these items from the period expenses. The income statement
line items involved in the adjustment from GAAP to non-GAAP presentation
in this earnings release are amortization and impairment of intangible
assets and stock-based compensation that are included in cost of
revenues, research and development, general and administrative and sales
and marketing expenses. To determine our non-GAAP tax provision, the
Company recalculates tax based on non-GAAP income before taxes and
adjusts accordingly.
