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Xilinx Reports Record Quarterly Revenues And EPS; Raises Fiscal Year 2019 Guidance

Broad based growth across majority of Xilinx end markets driving strong quarter and full-year outlook

SAN JOSE, Calif., Oct. 24, 2018 /PRNewswire/ -- Xilinx, Inc. (XLNX) today announced record revenues of $746 million for the second quarter of fiscal year 2019, up 9% from the prior quarter and up 19% year over year. GAAP net income for September quarter was a record of $216 million, or $0.84 per diluted share.  Non-GAAP net income for September quarter was a record of $221 million, or $0.87 per diluted share. 

Xilinx logo (PRNewsFoto/Xilinx) (PRNewsfoto/Xilinx, Inc.)

The Xilinx Board of Directors declared a quarterly cash dividend of $0.36 per outstanding share of common stock payable on December 4, 2018 to all stockholders of record at the close of business on November 13, 2018.  

Additional second quarter of fiscal year 2019 comparisons are represented in the charts below.  Due to the adoption of the new revenue recognition standard in the first quarter of fiscal year 2019, all fiscal 2018 results have been restated to conform to the new standard:

Q2 2019 Financial Highlights

(In millions, except EPS) 




GAAP













Q2

Q1

Q2







FY 2019

FY 2019

FY 2018


Q-T-Q

Y-T-Y


Net Revenues*

$746

$684

$627


9%

19%


Operating income

$233

$216

$192


8%

21%


Net income

$216

$190

$174


14%

24%


Diluted earnings per share

$0.84

$0.74

$0.67


14%

25%













Non-GAAP













Q2

Q1

Q2







FY 2019

FY 2019

FY 2018


Q-T-Q

Y-T-Y


Net Revenues*

$746

$684

$627


9%

19%


Operating income

$236

$218

$193


8%

22%


Net income

$221

$192

$174


15%

27%


Diluted earnings per share

$0.87

$0.75

$0.67


16%

30%



*No adjustment between GAAP and Non-GAAP

"I am very excited to report another record revenue and earnings quarter.  Xilinx continues to execute on the new strategy I unveiled earlier this year, delivering strong results well ahead of our initial expectations. During the second fiscal quarter, we delivered revenues of $746 million, representing 19% year over year growth. In addition, we demonstrated strong profitability by posting approximately 30% growth in non-GAAP diluted earnings per share. Driven by broad-based strength across Communications, Data Center & TME as well as Automotive, Broadcast & Consumer businesses, we are raising our revenue guidance for the full year to approximately 20% growth, compared to the prior year," said Victor Peng, President and Chief Executive Officer.

"Building on our history of innovation, we recently announced Versal, the industry's first Adaptive Compute Acceleration Platform, or ACAP, that delivers powerful acceleration for any application. In addition, we launched Alveo, a portfolio of accelerator cards that dramatically increase performance in industry standard servers. Alveo, now shipping in production, provides customers with breakthrough performance improvement at low latency and unprecedented adaptability across key data center applications. Both innovations advance our mission of enabling an adaptable and intelligent world."

Net Revenues by Geography:



Percentages 


Growth Rates


Q2
FY 2019

Q1
FY 2019

Q2
FY 2018


Q-T-Q

Y-T-Y

North America

28%

28%

32%


7%

5%

Asia Pacific

44%

45%

39%


8%

34%

Europe

20%

19%

20%


16%

20%

Japan

8%

8%

9%


5%

0%

 

Net Revenues by End Market:



Percentages


Growth Rates


Q2
FY 2019

Q1
FY 2019

Q2
FY 2018


Q-T-Q

Y-T-Y

Data Center and TME

21%

19%

20%


24%

28%

Automotive, Broadcast and Consumer

16%

16%

16%


7%

17%

Communications

35%

31%

31%


23%

33%

Industrial, Aerospace & Defense

25%

33%

32%


(16)%

(5)%

Channel

3%

1%

1%


NM

NM

                                                                                                                          

Net Revenues by Product:



Percentages


Growth Rates


Q2
FY 2019

Q1
FY 2019

Q2
FY 2018


Q-T-Q

 

Y-T-Y

Advanced Products

64%

56%

53%


25%

43%

Core Products

36%

44%

47%


(11)%

(9)%

Products are classified as follows:

Advanced Products: Alveo, UltraScale+, Ultrascale and 7-series products.

Core Products: Virtex-6, Spartan-6, Virtex‐5, CoolRunner‐II, Virtex-4, Virtex-II, Spartan-3, Spartan-2, XC9500 products, configuration solutions, software & support/services.

Key Statistics:

(Dollars in millions)



Q2
FY 2019

Q1
FY 2019

Q2
FY 2018





Annual Return on Equity (%)*

34

32

26





Operating Cash Flow

$313

$176

$202





Depreciation Expense (including software amortization)

$16

$15

$12





Capital Expenditures (including software)

$14

$26

$12





Combined Inventory Days

100

113

116





Revenue Turns (%)

48

37

53


*Return on equity calculation: Annualized year to date net income/average stockholders' equity

Product and Financial Highlights – Fiscal Second Quarter 2019

  • Data Center and Test, Measurement & Emulation (TME) revenues grew 28% year over year driven by strength in both Data Center and TME businesses. Data Center business momentum continued to strengthen with design wins from hyperscalers and other customers, such as Samsung, who recently announced a new product called SmartSSDs that leverages Xilinx FPGAs for near-data acceleration in storage devices. Recently, AWS doubled the availability of FPGA-as-a-Service (FaaS) to eight regions. In addition, Alibaba FaaS moved from Beta to General Access, joining AWS and Huawei. Further developing its platform ecosystem, the Company successfully executed Xilinx Developer Forums in the US and China, with each attracting over 1,100 attendees.
  • Communications revenues increased 33% year over year, as both wireless and wired businesses benefitted from LTE upgrades, early 5G deployment in Korea and preparation for 5G deployment in both China and North America. Wireless business grew with broad strength across radio and baseband applications with OEM customers across multiple geographies. Customer transitions to next generation products across a range of applications, including OTN/Metro, Access and Data Center Interconnect, fueled the growth of our wired business.
  • Zynq based revenues grew approximately 70% year over year driven by a broad set of applications across multiple end markets, including ADAS in Automotive, reflecting the Company's transformation to a platform company. RFSoC revenues grew strongly and were approximately 4x higher over the prior quarter. Customer momentum for the RFSoC product family continues to grow with over 100 customers in various stages of engagement. Additionally, RFSoC was used in trials during the 2018 World Cup to provide high bandwidth streaming over traditional LTE bands. The Zynq SoC Platform, which includes Zynq at 28nm and both MPSoC and RFSoC at 16nm, now represents 18% of total revenues.
  • The Advanced Products category in the second quarter increased 43% year over year and constituted approximately 64% of total sales. Revenues from the 28nm node increased 16% and revenues from the 20nm node increased approximately 40% year over year. Revenue from the 16nm node continued its accelerated ramp with broad-based adoption, increasing approximately 3.5x during the same period.
  • Enabling a new era of rapid innovation for any application by any developer, Xilinx recently announced Versal – the industry's first Adaptive Compute Acceleration Platform (ACAP). Built on TSMC's 7-nm FinFET process technology, the Versal portfolio is the first platform to combine software programmability with domain-specific hardware acceleration and the adaptability necessary to keep pace with today's rapid pace of innovation. Versal accelerates a broad range of applications, including machine learning inference, across multiple end markets ranging from the cloud to network to edge and endpoint.
  • Xilinx also recently launched Alveo, a portfolio of powerful accelerator cards designed to dramatically increase performance in industry-standard servers across cloud and on-premise data centers. With Alveo, customers can expect breakthrough performance improvement at low latency when running key data center applications like real-time machine learning inference as well as video processing, genomics, and data analytics, among others. Huawei recently announced that they are integrating and deploying Alveo acceleration cards in its server product portfolio, and collaborating with Xilinx to jointly enable a unified ecosystem of applications partners in China. In addition, Inspur, a leading global data center and cloud computing solutions provider, announced that it is qualifying two Alveo cards for key server platforms.

Business Outlook – Fiscal Q3 2019 & Fiscal Year 2019

The following statements are based on current expectations, and as indicated, are presented on a GAAP and non-GAAP basis. These statements are forward-looking and actual results may differ materially, as a result of, among other things, the important factors discussed at the end of this release.  

Fiscal Q3 2019



GAAP

Non-GAAP
Adjustments

Non-GAAP

Revenues

$760M - $780M

-

$760M - $780M

Gross Margin

~ 69%

-

~ 69%

Operating Expenses

~$295M

$5M (1)

~$290M

Other Income

 ~$4-5M

-

~$4-5M

Tax Rate

10% - 12%

-

10% - 12%


Fiscal Year 2019



GAAP

Non-GAAP
Adjustments

Non-GAAP

Revenues

$2,950M - $3,000M

-

$2,950M - $3,000M

Gross Margin

69% - 70%

-

69% - 70%

Operating Expenses

$1,145M - $1,165M

$15 M (2)

$1,130M - $1,150M

Other Income

 ~$10M-15M

$7 M (3)

~$3M-8M

Tax Rate

10% - 12%

(1%) (4)

9% - 11%

Diluted Share count

256M

-

256M


Notes regarding Non-GAAP Adjustments:


(1)

Excludes an estimated amount of $5 million in M&A related expenses and amortization of acquired intangibles

(2)

Excludes an estimated amount of $15 million in M&A related expenses and amortization of acquired intangibles

(3)

Excludes an amount of approximately $7 million from a gain on investment

(4)

Excludes income tax effects of non-GAAP adjustments reflected in Operating Expenses and Other Income as well as U.S. tax reform related items

Conference Call

A conference call will be held today at 2:00 p.m. Pacific Time to discuss the September quarter financial results and management's outlook for the December quarter and full year of fiscal year 2019. The webcast and subsequent replay will be available in the investor relations section of the Company's web site at investor.xilinx.com.  A telephonic replay of the call may be accessed later in the day by calling (855) 859-2056 and referencing confirmation code 8255409. The telephonic replay will be available for two weeks following the live call. 

Non-GAAP Financial Information

Fiscal quarter 2019 results and business outlook for the December quarter and full year of fiscal year 2019 include financial measures which are not determined in accordance with the United States generally accepted accounting principles (GAAP), as indicated.  Non-GAAP measures should not be considered as a substitute for, or superior to, financial measures determined in accordance with GAAP. The presentation of non-GAAP financial measures has been reconciled, in each case, to the most directly-comparable GAAP measure, as indicated in the accompanying tables. The Company's calculation of such non-GAAP measures may not be comparable to similarly-titled measures used by other companies.

Management uses the non-GAAP financial measures disclosed herein to evaluate the Company's financial results from continuing operations (excluding the impact of acquisitions) and compare to operating performance in past periods.  Similarly, Management believes presentation of these non-GAAP measures is useful to investors because it enables investors and analysts to evaluate operating expenses of the Company's core business, excluding the impact of non-core business expenses such as acquisition-related amortization and non-recurring items.

M&A related expenses: These expenses mainly consist of legal and consulting fees associated with due diligence review of acquired companies.  We believe that these costs do not reflect the Company's current operating performance. Consequently, the non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company's current operating performance and comparisons to its past operating performance.

Amortization of acquisition-related intangibles:  Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology acquired in connection with business combinations. The non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company's current operating performance and comparisons to its past operating performance.

Gains on investment related to acquisition: The Company excludes the accounting gain resulting from revaluation of its prior minority investment in DeePhi Tech.  The Company believes excluding this gain will facilitate a comparable evaluation of its current operating performance to its past operating performance.

Income taxes: The Company excludes the income tax effects of non-GAAP adjustments reflected in Operating Expenses and Other Income, as detailed above.  It also excludes U.S. tax reform related items.  The Company believes excluding U.S. tax reform related items will facilitate a comparable evaluation of its current performance to its past performance.  The third quarter of fiscal 2019 and fiscal year 2019 outlook do not reflect other tax related items which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

Forward Looking Statements

This release contains forward-looking statements and projections. Forward-looking statements and projections can often be identified by the use of forward-looking words such as "expect," "believe," "may," "will," "could," "anticipate," "estimate," "continue," "plan," "intend," "project" or other similar expressions.  Statements that refer to or are based on projections, uncertain events or assumptions also identify forward-looking statements.  Such forward looking statements include, but are not limited to, statements related to the semiconductor market, the growth and acceptance of our products, expected revenue growth, the demand and growth in the markets we serve, opportunity for expansion into new markets, and our expectations regarding our business outlook for the December quarter and full year of fiscal year 2019.  Undue reliance should not be placed on such forward-looking statements and projections, which speak only as of the date they are made. We undertake no obligation to update such forward-looking statements.  Actual events and results may differ materially from those in the forward-looking statements and are subject to risks and uncertainties including customer acceptance of our new products, current global economic conditions, the health of our customers and the end markets in which they participate, our ability to forecast end customer demand, a high dependence on turns business, more customer volume discounts than expected, greater product mix changes than anticipated, fluctuations in manufacturing yields, our ability to deliver product in a timely manner, our ability to successfully manage production at multiple foundries, variability in wafer pricing, costs and liabilities associated with current and future litigation, our ability to realize the goals contemplated by our acquisitions and strategic investments, the impact of current and future legislative and regulatory changes, the impact of new accounting pronouncements and tax laws, including the U.S. Tax Cuts and Jobs Act, and interpretations thereof, and other risk factors described in our most recent Forms 10-Q and 10-K.

About Xilinx

Xilinx develops highly flexible and adaptive processing platforms that enable rapid innovation across a variety of technologies – from the endpoint to the edge to the cloud. Xilinx is the inventor of the FPGA, hardware programmable SoCs and the ACAP, designed to deliver the most dynamic processor technology in the industry and enable the adaptable, intelligent and connected world of the future. For more information, visit www.xilinx.com.

Xilinx, the Xilinx logo, Artix, ISE, Kintex, Spartan, Virtex, Zynq, Vivado, Alveo, Versal and other designated brands included herein are trademarks of Xilinx in the United States and other countries. All other trademarks are the property of their respective owners.

Investor Relations Contact:
Suresh Bhaskaran
Xilinx, Inc.
(408) 879-4784
ir@xilinx.com

XILINX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)


Three Months Ended


Six Months Ended


September 29, 2018


June 30, 2018


September 30, 2017*


September 29, 2018


September 30, 2017*

Net revenues

$                    746,252


$          684,370


$                       627,419


$                 1,430,622


$                    1,230,229

Cost of revenues

231,620


206,888


185,685


438,508


376,509

Gross margin

514,632


477,482


441,734


992,114


853,720

Operating expenses:










Research and development

183,372


170,826


157,985


354,198


311,036

Selling, general and administrative

97,685


90,532


91,053


188,217


180,228

Amortization of acquisition-related intangibles

839


360


510


1,199


1,215

Total operating expenses

281,896


261,718


249,548


543,614


492,479

Operating income

232,736


215,764


192,186


448,500


361,241

Interest and other income (expense), net

6,408


(2,847)


1,831


3,561


3,669

Income before income taxes

239,144


212,917


194,017


452,061


364,910

Provision for income taxes

23,432


22,879


20,266


46,311


33,915

Net income

$                    215,712


$          190,038


$                       173,751


$                    405,750


$                       330,995

Net income per common share:










Basic

$                          0.85


$                0.75


$                             0.70


$                          1.61


$                             1.33

Diluted

$                          0.84


$                0.74


$                             0.67


$                          1.59


$                             1.26

Cash dividends per common share

$                          0.36


$                0.36


$                             0.35


$                          0.72


$                             0.70

Shares used in per share calculations:










Basic

252,988


252,682


248,094


252,541


247,960

Diluted

255,522


255,935


258,217


255,057


261,739


* Fiscal 2018 balances have been restated to conform to the new revenue recognition standard (ASC 606).

 

XILINX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


September 29, 2018


March 31, 2018*


(unaudited)



ASSETS




Current assets:




Cash, cash equivalents and short-term investments

$                 3,280,560


$            3,447,570

Accounts receivable, net

372,983


382,246

Inventories

243,642


236,077

Other current assets

68,098


88,695

Total current assets

3,965,283


4,154,588

Net property, plant and equipment

312,810


304,117

Long-term investments

91,627


97,896

Other assets

777,816


503,946

Total Assets

$                 5,147,536


$            5,060,547









LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$                    431,909


$               412,759

Current portion of long-term debt

499,629


499,186

Total current liabilities

931,538


911,945

Long-term debt

1,201,884


1,214,440

Other long-term liabilities

569,228


573,809

Stockholders' equity

2,444,886


2,360,353

Total Liabilities and Stockholders' Equity

$                 5,147,536


$            5,060,547


* Fiscal 2018 balances have been restated to conform to the new revenue recognition standard (ASC 606).

 

XILINX, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In thousands)


Three Months Ended


Six Months Ended


September 29, 2018


June 30, 2018


September 30, 2017


September 29, 2018


September 30, 2017

SELECTED CASH FLOW INFORMATION:










Depreciation and amortization of other intangibles

$                      16,048


$            15,075


$                      11,732


$                      31,123


$                      22,964

Amortization - others

8,144


7,333


3,432


15,477


7,161

Stock-based compensation

34,945


35,608


36,372


70,553


68,408

Net cash provided by operating activities

313,123


176,168


202,140


489,291


393,048

Purchases of property, plant and equipment and other intangibles

14,174


26,359


12,223


40,533


22,149

Payment of dividends to stockholders

91,077


90,675


86,957


181,752


174,260

Repurchases of common stock

23,236


137,300


170,454


160,536


237,516

Proceeds from issuance of common stock to employees, net of withholding taxes

(15,797)


(5,281)


(23,765)


(21,078)


(22,695)











STOCK-BASED COMPENSATION INCLUDED IN:










Cost of revenues

$                        2,249


$              2,035


$                        2,147


$                        4,284


$                        4,297

Research and development

20,047


20,930


20,096


40,977


37,562

Selling, general and administrative

12,649


12,643


14,129


25,292


26,549

 

XILINX, INC.

RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS

(Unaudited)

(In thousands, except per share amounts)


Three Months Ended


Six Months Ended


September 29, 2018


June 30, 2018


September 30, 2017*


September 29, 2018


September 30, 2017*

GAAP operating income

$                    232,736


$          215,764


$                       192,186


$                    448,500


$                       361,241

Acquisition-related costs

2,206


1,495



3,701


Amortization of acquisition-related intangibles

839


360


510


1,199


1,215

Non-GAAP operating income

$                    235,781


$          217,619


$                       192,696


$                    453,400


$                       362,456











GAAP net income

$                    215,712


$          190,038


$                       173,751


$                    405,750


$                       330,995

Acquisition-related costs

2,206


1,495



3,701


Amortization of acquisition-related intangibles

839


360


510


1,199


1,215

Gain from private investments

(6,503)




(6,503)


Income tax effect of changes in applicable U.S. tax laws

9,355




9,355


Income tax effect of non-GAAP adjustments

(160)




(160)


Non-GAAP net income

$                    221,449


$          191,893


$                       174,261


$                    413,342


$                       332,210











GAAP diluted EPS

$                          0.84


$                0.74


$                             0.67


$                          1.59


$                             1.26

Acquisition-related costs

0.01


0.01



0.01


Amortization of acquisition-related intangibles





0.01

Gain from private investments

(0.02)




(0.02)


Income tax effect of changes in applicable U.S. tax laws

0.04




0.04


Income tax effect of non-GAAP adjustments





Non-GAAP diluted EPS

$                          0.87


$                0.75


$                             0.67


$                          1.62


$                             1.27


* Fiscal 2018 balances have been restated to conform to the new revenue recognition standard (ASC 606).

 

Cision

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