License Revenues Increase 50% Year-Over-Year While Company Delivers Fourth Consecutive Quarter of Non-GAAP Profitability
FREMONT, Calif. -- Jul 30, 2008 -- Virage Logic Corporation (NASDAQ:VIRL), the semiconductor industry's trusted IP partner, today reported its financial results for the third fiscal quarter ended June 30, 2008.
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(TM) memory compilers and logic libraries and during the quarter we were successful in securing three new customers for our 40nm SiWare(TM) 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.
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Virage Logic's management will hold a teleconference on third-quarter fiscal year 2008 results at 1:30 p.m. PACIFIC / 4:30 p.m. EASTERN today, July 30, 2008. Participants can access the call by dialing (888) 413-9033 (domestic) or (706) 679-5076 (international) or can listen via a live Internet webcast, which can be found on the Investor Relations page of the Virage Logic website at www.viragelogic.com. A replay of the call will be available at (800) 642-1687 (domestic) or (706) 645-9291 (international), access number 56456735 through August 2, 2008; and the webcast can be accessed at www.viragelogic.com for 30 days.
About Virage Logic
Virage Logic is a leading provider of semiconductor intellectual property (IP) for the design of complex integrated circuits. The company's highly differentiated product portfolio of Physical and Application Specific IP includes embedded SRAMs, embedded NVMs, logic libraries, I/Os and DDR memory controller subsystems. As the semiconductor industry's trusted IP partner, foundries, IDMs and fabless customers rely on Virage Logic to achieve higher performance, lower power, higher density and optimal yield, as well as shorten time-to-market and time-to-volume. For more information, visit www.viragelogic.com.