GigOptix Reports Second Quarter Fiscal Year 2014 Financial Results

GigOptix, Inc. (NYSE MKT: GIG), a leading supplier of advanced high speed semiconductor components for use in long-haul, metro, Cloud connectivity, data centers, consumer electronics links and interactive applications, through optical and wireless communications networks, today announced financial results for its second quarter fiscal year 2014, which ended June 29, 2014.

Second Quarter Fiscal 2014 GAAP Results

Total revenue in the second quarter of fiscal 2014 was $8.0 million. This compares with revenue of $6.8 million in the second quarter of fiscal 2013, and $7.4 million in the first quarter of fiscal 2014.

Gross margin was 57 percent in the second quarter of fiscal 2014, compared with 62 percent in the second quarter of fiscal 2013, and 58 percent in the first quarter of fiscal 2014.

Net loss in the second quarter of fiscal 2014 was $2.0 million, or a net loss of ($0.06) per share. This compares with a net loss of $1.4 million, or a net loss of ($0.06) per share, in the second quarter of fiscal 2013, and a net loss of $1.9 million, or a net loss of ($0.06) per share, in the first quarter of fiscal 2014.

Cash and cash equivalents at June 29, 2014 were $18.5 million, and the Company had no debt outstanding. This compares with $19.9 million, at March 30, 2014.

Second Quarter Fiscal 2014 Non-GAAP Results1

Non-GAAP net income in the second quarter of fiscal 2014 was $0.3 million, or $0.01 per diluted share, and excludes approximately $1.1 million in stock-based compensation, $0.3 million in restructuring, $0.3 million in compensation expense related to the startup of BrPhotonics, a $0.3 million loss on the unconsolidated affiliate, BrPhotonics, and $0.2 million in amortization of intangible assets. This compares with non-GAAPnet income of $0.1 million, or $0.00 per diluted share in the second quarter of fiscal 2013 and a non-GAAP net loss of $0.7 million, or ($0.02) per share in the first quarter of fiscal 2014.

Non-GAAP gross margin was 59 percent, compared with 65 percent in the second quarter of fiscal 2013 and 60 percent in the first quarter of fiscal 2014.

Adjusted EBITDA for the second quarter of fiscal 2014 was $1.0 million. This compares with Adjusted EBITDA of $0.7 million in the second quarter of fiscal 2013, and Adjusted EBITDA of $47,000 in the first quarter of fiscal 2014.

“Our second quarter financial performance, which included strong revenue growth and a return to non-GAAP profitability, further validates our long-term business plan to develop first mover advantage within the emerging high-speed communications markets. As we move into the second half of fiscal 2014, we will continue to focus primarily on the datacom, wireless point-to-point backhaul radios for the LTE infrastructure small-cells, and high-speed links for the consumer markets that offer the largest TAM and highest projected growth rates,” said Dr. Avi Katz, Chairman and Chief Executive Officer of GigOptix, Inc. “For the first time in the Company’s history our datacom related revenue was higher than telecom related revenue, and we believe this trend will continue. In addition, when you add together the two fastest growing markets we serve, datacom and the point-to-point wireless backhaul areas, they accounted for 45 percent of our total revenue in the second quarter, up from 28 percent in the same quarter last year.

“In June, we announced the acquisition of Tahoe RF Semiconductor, which became effective on the first day of our third quarter. The purchase adds leading-edge RF/analog RFIC technology to our expanding product portfolio. It is also consistent with our previously stated objective of adding engineering assets to enhance revenue generating products. This acquisition brought to GigOptix a meaningful CMOS and SiGe RF device IP library for emerging and high-volume applications, such as wide-frequency point-to-point wireless backhaul, including 60GHz V-Band to augment our existing 70-90GHz E-Band technology. In addition, we gained GPS-GNSS, low-power and low-noise transmitters and amplifiers, and specific consumer electronics and automotive systems. These capabilities have already been incorporated to the Company’s working plans and business development active engagements,” said Dr. Katz. “We currently believe that these new opportunities should be a catalyst for revenue growth starting in fiscal 2015. When combined with the previously announced inception of the BrPhotonics joint venture, which is meeting our early expectations, along with the growth trends we see in our business, we are confident that by expanding our addressable markets we will continue to improve our higher-margin revenue growth and enhance profitability for the benefit of our shareholders.

“As part of our ongoing efforts to improve operational efficiencies, effective today we are implementing an enterprise-wide change in our organizational structure. We will now operate under a functional structure rather than the product line structure we have used for several years. The need for change became more apparent in recent months, more so after the recent acquisition and consolidation of TahoeRF, as we diversified our revenue mix by expanding into parallel markets, such as new RF applications in the wireless and consumer markets,” said Dr. Katz. “In support of these efforts, the Board of Directors has promoted Dr. Raluca Dinu to Senior Vice President of Global Sales and Marketing. Ms. Dinu has been a key member of our executive team since 2008, most recently serving as GigOptix’s Vice President and General Manager of the High Speed Communications Product Line. Her strong technical background in the industries we serve, and long-time relationships with our current and targeted customers, will play a vital role as we expand our revenue channels. We have also assigned Mr. Anil Chaudhry to the newly created position of Vice President of Government Affairs and Strategic Accounts. Mr. Chaudhry has been an important part of our executive team since 2010, serving as GigOptix’s Vice President and General Manager of the Industrial Product Line. Anil’s lengthy service in the semiconductor industry makes him an ideal person to lead this group and grow our businesses and revenues through these crucial venues.”

Financial Outlook

“With continued strong demand in our product lines, we believe third quarter revenue should increase and be in the range of $8.2 million to $8.4 million, or up approximately 12 percent to 15 percent above the third quarter a year ago,” said Curt Sacks, Senior Vice President and Chief Financial Officer of GigOptix, Inc. “In addition, based on our third quarter forecast, and continued confidence in our business over the remainder of the year, particularly in our datacom and wireless lines, we are increasing our revenue outlook in fiscal 2014. We now expect annual revenue to grow up to 12 percent above fiscal 2013. This compares with the prior guidance range of up to 10 percent growth we provided earlier in the year.”

Financial Results Webcast / Conference Call

GigOptix will host a conference call and webcast with investors today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its second quarter fiscal 2014 financial results and business outlook. Investors and other interested parties may access the call by dialing (719) 325-2402. No passcode is needed for the live call. The replay dial-in number is (858) 384-5517, and the passcode is 3376392. Additionally, this conference call will be broadcast live over the Internet and can be accessed by all interested parties on the Investor Relations section of the Company's website at http://www.gigoptix.com.

1 Non-GAAP Measures - GigOptix reports revenue, gross margin, operating expense, operating income and net loss on a Generally Accepted Accounting Principles (GAAP) and non-GAAP basis. In addition, it reports Adjusted EBITDA. These non-GAAP measures are provided to enhance investors’ overall understanding of GigOptix financial performance. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. A reconciliation of these GAAP to non-GAAP measurements and Adjusted EBITDA for the six months ended June 29, 2014 and June 30, 2013 can be found in the “Reconciliation of GAAP to Non-GAAP Financial Information” table attached to this press release.

About GigOptix, Inc.

GigOptix is a leading fabless supplier of high speed semiconductor components that enable end-to-end information streaming over optical and wireless networks. The products address long haul and metro telecom applications as well as emerging high-growth opportunities for Cloud and data centers connectivity, and interactive applications for consumer electronics. GigOptix offers a unique broad portfolio of drivers and TIAs for 40Gbps, 100Gbps and 400Gbps fiber-optic telecommunications and data-communications networks, and high performance MMIC solutions that enable next generation wireless microwave systems up to 90GHz.

GigOptix also offers a wide range of digital and mixed-signal ASIC solutions in a wide range of technology geometries from 28nm to 0.6um, and enables a complete product life cycle support from swift introduction of new product through its ASIC SunriseTM program to extension of legacy products through its GigOptix Sunset RescueTM program.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the bringing of products to market with full documentation. Such statements contain words such as "will," and "expect," or the negative thereof or comparable terminology, and include (without limitation) statements regarding the plans for BrPhotonics and its relationship with the Company, growth, opportunities, continued traction, contracts, improvements and our statements under the heading "Financial Outlook." Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks include, but are not limited to: the ability to extend product offerings into new areas or products, the ability to commercialize licensed technology, unexpected occurrences that deter the full documentation and "bring to market" plan for products that were developed this year and last year, trends and fluctuations in the industry, changes in demand and purchasing volume of customers, unpredictability of suppliers, our ability to control our costs of goods sold, our ability to attract and retain qualified personnel, the ability to move product sales to production levels, the ability to compete for client design-in opportunities, the ability to cross-sell to new clients and to diversify, the success of product sales in new markets or of recently acquired or produced product offerings, including bundled product solutions, the amount of cost savings, the ability to improve productivity, and to do so in an efficient manner, the ability to pursue and attract other merger and acquisition opportunities, our ability to enforce intellectual property rights, the ability to maintain and continue relationships with government agencies, and the ability of the partners to BrPhotonics to work together in furtherance of its operational objectives. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the Company's filings with the SEC, and in the Company's other current and periodic reports filed or furnished from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.