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Cavium Networks Inc. (CAVM) filed Quarterly Report for the period ended 2011-09-30.
Cavium Inc. has a market cap of $1.66 billion; its shares were traded at around $34.01 with a P/E ratio of 49.3 and P/S ratio of 8.
This is the annual revenues and earnings per share of CAVM over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of CAVM.
Highlight of Business Operations:
Our sole end customer representing greater than 10% of net revenue for the three and nine months ended September 30, 2011 and 2010 was Cisco. Cisco accounted for 23% and 20% of the net revenue for the three months ended September 30, 2011 and 2010, respectively, and 24% and 23% for the nine months ended September 30, 2011 and 2010, respectively.Our distributors, other than Avnet, are used primarily to support international sale logistics in Asia, including importation and credit management. Total net revenue through distributors was $23.6 million and $18.3 million for the three months ended September 30, 2011 and 2010, respectively, which accounted for 34.9% and 33.2% of net revenue, respectively, and $62.7 million and $49.6 million for the nine months ended September 30, 2011 and 2010, respectively, which accounted for 30.9% and 33.8% of net revenue, respectively. While we have purchase agreements with our distributors, the distributors do not have long-term contracts with any of the equipment providers. Our distributor agreements limit the distributor’s ability to return product up to a portion of purchases in the preceding quarter. Given our experience, along with our distributors’ limited contractual return rights, we believe we can reasonably estimate expected returns from our distributors. Accordingly, we recognize sales through distributors at the time of shipment, reduced by our estimate of expected returns.
Our net revenue increased by $12.5 million or 22.7% and $56.2 or 38.3% in the three and nine months ended September 30, 2011, respectively, compared to the same periods in 2010. The increase in net revenue in the three and nine months ended September 30, 2011 was mainly attributable to the increase in sales of $6.4 million and $31.1 million, respectively, from our enterprise network, data center and access and service provider markets, combined, as a result of the increase in demand for our new and existing products generally from our top five customers. Net revenue in our software and services segment also increased by $1.3 million and $12.2 million for the three and nine months ended September 30, 2011, respectively, which was mainly driven by increased professional service contracts with our existing and new customers. In addition, net revenue increase of $4.8 million and $13.0 million for the three and nine months ended September 30, 2011, respectively, in broadband and consumer markets mainly from increased customers demand contributed to our overall growth.
Sales, general and administrative expenses decreased by $1.4 million or 10.6% in the three months ended September 30, 2011 and increased $5.5 million or 13.6% in the nine months ended September 30, 2011 compared to the same periods in 2010. The decrease in the sales, general and administrative expenses for the three months ended September 30, 2011 compared to the same period in 2010 was primarily due to the change in the contingent earn-out liability related to the acquisition of Celestial Semiconductor amounting to $4.6 million, partially offset by the increase in salaries and employee benefits of $1.8 million and stock-based compensation and related taxes of $1.3 million as a result of the increase in headcount mainly from acquisitions and additional expense associated with the options and restricted stock unit grants in 2011. Sales, general and administrative headcount increased to 186 at end of September 2011 from 151 at end of September 2010.
Net cash from operating activities increased by $4.4 million from $24.7 million to $29.1 million in the nine months ended September 30, 2010 and 2011, respectively. The increase in our cash flows from operations was primarily due to net income of $9.4 million for the nine months ended September 30, 2011 compared to $2.5 million for the same period in 2010. In addition, non-cash expenses increased by $6.7 million from $27.6 million to $34.3 million in the nine months ended September 30, 2010 and 2011, respectively, which was primarily a result of higher stock-based compensation of $6.7 million and higher depreciation and amortization expense of $6.8 million, partially offset by the decrease in provision for notes receivable of $1.0 million, deferred income taxes of $1.2 million and change in contingent earn-out liability of $4.6 million. The increase in cash flows from operations as a result of the increase in net income and non-cash expenses was partially offset by the decrease in the changes in assets and liabilities of $9.3 million. The decrease in changes in assets and liabilities was mainly due to the increase in changes in accounts receivable and deferred revenue, partially offset by the decrease in changes in inventory.
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