Record First Quarter Results Put Company on Track to Achieve Approximately 100% Year over Year Revenue Growth for Fiscal 2010
FREMONT, Calif., Feb 03, 2010 -- Virage Logic Corporation (NASDAQ:VIRL), the semiconductor industry's trusted IP partner, today reported its financial results for the first fiscal quarter ended December 31, 2009. Total revenue for the first quarter of fiscal 2010 was $21.7 million, compared with $11.3 million for the first quarter of fiscal 2009 and $13.1 million for the fourth quarter of fiscal 2009. License revenue for the first quarter of fiscal 2010 was $16.9 million compared with $8.5 million for the same period a year ago and $10.9 million for the prior quarter. Royalty income for the first quarter of fiscal 2010 was $4.7 million, compared with $2.8 million and $2.2 million for first and fourth quarter of fiscal 2009, respectively.
As reported under U.S. generally accepted accounting principles (GAAP), net loss was $2.2 million, or ($0.09) per share for the first quarter of fiscal 2010 compared to a net loss for the first quarter of fiscal 2009 of $2.6 million, or ($0.11) per share, and net loss of $3.2 million or ($0.14) per share for the fourth quarter of fiscal 2009.
Excluding the effects of stock-based compensation expenses, acquisition related expenses and amortization of intangibles, the company would have reported total net income after tax of $0.9 million, or $0.04 per share, or $0.06 per share excluding the net loss associated with our mid-quarter acquisition of NXP's advanced CMOS IP and engineering team (NXP Strategic Outsourcing).
The reconciliation of GAAP to Non-GAAP financial results includes $1.0 million of stock-based compensation expense and $3.3 million of amortization of intangibles and other acquisition related charges reduced by $1.2 million tax effect for a net total of $3.1 million.
Virage Logic President and CEO, Dr. Alex Shubat said, "We are pleased with our record first quarter results, as they put us on track to achieve approximately 100% year over year revenue growth for fiscal 2010. We grew total license revenues by 55%, from $10.9 million in the prior quarter to $16.9 million in our first fiscal quarter. Our royalty income grew 114% from $2.2 million to $4.7 million. This strong increase in royalty income was a result of both increased wafer foundry utilization as well as royalties from our recent ARC International acquisition.
Fiscal 2009 was a pivotal year for Virage Logic and our first quarter fiscal 2010 results underscore the significant progress we made against the transformational goals we outlined in early 2007. The infrastructure and organizational alignments we made in fiscal years 2007 and 2008 enabled us to accelerate on our inorganic growth initiatives for fiscal year 2009 and beyond. Our recent acquisitions of ARC International and a portion of NXP's advanced CMOS IP portfolio in late fiscal 2009 were facilitated by these organizational changes. In addition, the increasing shift that large semiconductor IDMs are making towards a 'fabless' or 'fab-lite' business model have continued to play to our core strengths, enabling us to gain market share by serving as a Trusted IP partner to a broader account base. Finally, our continued focus on standard versus custom products and the deeper, strategic engagements we established with this expanded customer base has resulted in an increasing sales pipeline, both from a total dollar value and individual deal size. First quarter fiscal 2010 highlights of our continued progress against some of our stated transformation goals include:
Broadening our product portfolio to further establish Virage Logic as a single source provider of a broad line of semiconductor IP.
- We announced the availability of the new ARC(R) 601 32-bit microprocessor, which offers more than twice the performance of the current market leading solution at a comparable size and power. The ARC 601, ideal for microcontroller replacement as well as embedded applications, expands our processor product portfolio, one that was already the second most widely used processor architecture in the industry, with ARC cores currently shipping in more than 425 million products annually.
- We added a new member, the STAR(TM) (Self Test and Repair) Silicon Browser, to our flagship STAR(TM) Memory System product family. The STAR Silicon Browser increases the efficiency of post silicon test, system debug and embedded memory characterization.
- The integration of the NXP team is on schedule. In addition, we are in the exploratory phase with our key customers, which will result in prioritizing the development and launch efforts of the acquired NXP IP portfolio.
- Our Leadership team has been strengthened by the appointment of two new executives - Stuart Crumbaugh, Vice President of Finance, and Joshua Rom, GM of Analog Business Unit (as previously announced on January 11th).
Being first-to-market with next generation advanced technology products. We have expanded on our early leadership position at 40nm, and today have more than 20 customers actively designing SoCs at 40nm. We also continue our early leadership at 28nm, with the addition of two new end customers. As a result of our early leadership at these two advanced nodes, we believe our SiWare(TM) Memory, SiWare(TM) Logic and High Speed Interface products offer the industry's broadest portfolio of silicon proven IP."
Dr. Shubat concluded, "We are encouraged by our first quarter fiscal 2010 results as well as our continued execution on critical key transformational initiatives. Today, our product portfolio has expanded to the point that our non-captive SAM (served available market) has grown from $200 million in 2007 to over a $1 billion in 2010. We are well positioned to serve as a single source supplier of a broad range of semiconductor IP, as evidenced by the increasing number of large, bundled, ratable agreements entered into with major IDMs and SoC providers. Our strong backlog, together with our solid sales pipeline and increasing customer engagements, will enable our company to enjoy record license revenue in fiscal 2010. In addition, we believe that revenue from royalties will continue to increase throughout fiscal 2010, as a result of strong growth in semiconductor wafer shipments."
"For the second quarter fiscal 2010, we are projecting revenues of $23.5 million to $24.0 million and non-GAAP EPS results of $0.01 to $0.02 per share including the estimated first full quarter impact of ($0.05) from our Strategic Outsourcing business, acquired from NXP in mid-Q1, FY2010. As we have stated previously, we expect that this Strategic Outsourcing business will contribute positively to our corporate EPS by Q4, FY2010. During the second quarter, the Company expects to realize, before tax and any extraordinary charges, approximately $3.5 million to $3.7 million in non-GAAP adjustments comprised primarily of stock-compensation, amortization and acquisition-related expenses."
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 first fiscal quarter 2010 results at 1:30 p.m. PACIFIC / 4:30 p.m. EASTERN today, February 3, 2010. Participants can access the call by dialing (877) 941-0844 (domestic) or (480) 629-9645 (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) 406-7325 (domestic) or (303) 590-3030 (international), access number 4203352 through February 5, 2010; 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 includes processor solutions, interface IP solutions, embedded SRAMs and NVMs, embedded memory test and repair, logic libraries, and memory development software. As the industry's trusted semiconductor IP partner, more than 400 foundry, IDM 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 further information, visit http://www.viragelogic.com.