For fourth-quarter 2015, GigOptix Inc of San Jose, CA, USA (a fabless supplier of analog semiconductor and optical communications components for fiber-optic and wireless networks) has reported a seventh consecutive quarter of revenue growth, to a record $11.1m (4% above the guidance of $10.7m given in October). This is up 6% on $10.4m last quarter and up 23% on $9m a year ago.
Full-year revenue was a record $40.4m, up 23% on 2014's $32.9m (above October's guidance of $40m, and almost doubling last February's original guidance for growth of 12% to $37.5m). This reflects double-digit growth in both the High-Speed Communications product line (Datacom and Telecom optical communications products plus wireless RF point-to-point products) and the Industrial ASIC (application-specific integrated circuit) product line.
In Q4/2015, High-Speed Communications (HSC) revenue was $7.7m (69% of total revenue), up slightly on $7.6m last quarter and up 28% on $6m a year ago. This was driven mainly by another strong quarter of growth in Datacom business related to the firm's dominant market position in 40Gb/s and 100Gb/s drivers and amplifiers for the transceivers and active optical cables (AOCs) that populate the ever-growing mega-datacenter installed base.
Industrial ASIC revenue was $3.4m (31% of total revenue), rebounding by 22% from last quarter's dip to $2.8m and up 13% on $3m a year ago. "This ASIC line has already started to be transformed from the legacy backend-design-focused products into the new generation of complete design of dedicated and customized advanced ASIC devices," notes founder, chairman & CEO Dr Avi Katz.
"Fiscal 2015 was a transformational year for GigOptix. We delivered tremendous revenue growth and profitability while further enhancing all our financial metrics," says Katz.
On a non-GAAP basis, gross margin has risen further, from 62% a year ago and 66% last quarter to a record 67%, driven by a higher-margin product mix and operational efficiencies. Full-year gross margin has rebounded from 61% in 2014 to a record 65% in 2015 (above the initial guidance of about 60%).
Operating expenses were $5.1m, up from $4.5m last quarter, driven mainly by $0.4m of recurring operating expenses from subsidiary GigOptix-Terasquare-Korea (GTK) Ltd (established with the acquisition of South Korea-based Terasquare Co Ltd, which is now GigOptix's center for ASIC product design and development).?
Net income was $2.2m ($0.05 per diluted share), down slightly from $2.3m ($0.06 per diluted share) last quarter but up on $0.9m ($0.03 per diluted share) a year ago (and the seventh consecutive quarter of net income). Full-year net income has risen from $1.2m ($0.04 per diluted share) in 2014 to a record $7.3m in 2015 ($0.19 per diluted share, almost double the initial guidance of $0.07).
Adjusted EBITDA was $2.9m, down slightly from $3m last quarter but up on $1.6m a year ago (and the 18th consecutive quarter of positive adjusted EBITDA). Full-year adjusted EBITDA has risen from $4m in 2014 to a record $10.1m in 2015 (almost double the initial guidance of $5.1m).
Free cash flow was $0.8m (contributing to a record $1.6m for full-year 2015, compared with -$1.2m for 2014). Capital expenditure (CapEx) was $0.7m (up from just $0.2m last quarter). During the quarter, GigOptix used $5.2m for the all-cash purchase of Terasquare Ltd and the inception of GTK. Cash and cash equivalents hence fell from $35m to $30.2m.
"These results further validate the success of the actions we have taken in the last few years to grow our company through intensive organic development coupled with strategic investments and acquisitions," says Katz. "Through swift commercialization of innovative new products, we continue to solidify our strong leadership position in our served markets, with the strongest performance coming from our domination in the fast-growing 40Gbps and 100Gbps datacom portion of the High-Speed Communications market," he adds.
For first-quarter 2016, revenue is expected to be in-line with, to slightly up, on Q4/2015's $11.1m (contrary to the industry's normal seasonal decline) and up 23% on Q1/2015's $9.1m. Gross margin is expected to continue at the current level throughout 2016.
Operating expenses are expected to be seasonally higher (by about $400,000) due to higher payroll taxes, normal annual audit fees, and trade-show expenses, but these will taper off in the following quarters. CapEx should be maintained at a similar level to Q4/2015, primarily for production assets to support the expected revenue growth from new products in the High-Speed Communications business.
"In fiscal 2016, we will enter new growth markets and extend our dominance in the High-Speed Communications area, to be an enabler of high-speed information streaming from end-to-end over the network, driving cloud connectivity at the enterprise and in the consumer links," says Katz. "Through the full integration of all past acquisitions, and the organic development of differentiating devices, we are now strongly positioned to further increase our cloud-based links market-share by delivering a complete suite of 100Gbps devices for all datacom solutions used for Ethernet, Fiber Channel and InfiniBand Web2.0 mega-data-center connectivity," he believes. "In the first half of calendar 2016 we plan to release a complete 100Gbps chip set to provide a one-stop-shop solution for the short-reach (SR) and long-reach (LR) datacom links, including CDR [clock & data recovery] and DML [directly modulated laser] devices, alongside our industry-leading 100Gbps VCSEL TIA [transimpedance amplifier] and drivers, which have been available in production volumes for quite some time. As the largest merchant supplier of 40Gbps solutions for the datacom market, and with significant market penetration already in place, we are confident of remaining a leader when the market moves to 100Gbps speeds, as early as calendar 2017," says Katz.
"We also maintained our strong position in sales of coherent 100Gbps telecom products, while introducing new, leading-edge products addressing all devices required for terrestrial 200Gbps and 400Gbps metro and long-haul limiting and linear applications," continues Katz. "The 100Gbps metro buildouts will commence in 2016 and last for several years. We see this as a solid revenue opportunity and fully expect to be a main supplier for this next-generation telecom infrastructure," he adds.
"In the RF market, the high-speed point-to-point backhaul E-band infrastructure is moving to the advanced qualification stage with the belief that the small- and micro-cell infrastructure initial installation will commence this year," notes Katz. "In addition, we are expanding our activities to address the next generation of technologies both for outdoor and indoor connectivity. We are currently engaged with several potential customers worldwide who are evaluating our products and hope to see some traction this year," he adds.
"We also remain confident in the outlook for our highly profitable Industrial ASIC business, where we delivered several significant contract wins in 2015 and, more importantly, accelerated the transition from our legacy products to the fast-growing families of wireless and Wi-Fi CMOS low-power and ultra-wide-bandwidth devices, which are key components for a variety of emerging applications such as the Internet-of-Things (IOT)," Katz says.
"While we are still in the early stages of 2016, it is our current expectation that we will again generate double-digit revenue growth for the fourth consecutive year," says Katz. Revenue in full-year 2016 should be $46m, up 14% from 2015, while at the same time delivering another year of profitability. "We will strive to hold our quarterly non-GAAP gross margin to at least 66%, which will allow us to slightly increase our capital expenditure to proportionately support the revenue growth we expect next year," he adds.
