SANTA CLARA, Calif.–(BUSINESS WIRE)–Jul. 22, 2015–
MoSys
(NASDAQ: MOSY), a leader in semiconductor solutions that enable fast,
intelligent data access for network and communications systems, today
reported financial results for the second quarter ended June 30, 2015.

Second Quarter and Recent Highlights

  • More than doubled IC revenue sequentially as early customer production
    ramps begin;
  • Secured a new Bandwidth Engine® design win with existing Tier One
    customer in a new application;
  • Expanded both our customer and application base with multiple wins at
    the data center edge; and
  • Ended the quarter with total cash and investments of $35.3 million.

Management Commentary

“Our second quarter reflected continuing progress as IC revenue more
than doubled over the previous quarter and backlog increased, while we
fulfilled early production orders for the initial ramping of our first
Bandwidth Engine 2 programs,” commented Len Perham, president and CEO of
MoSys. “We expect our IC revenues to continue to increase in the coming
quarters, as our broader design win base begins to cycle into production.

“Also, during the quarter, we further increased our design win count,
which reflects the continued expansion of our Bandwidth Engine customer
base. Additionally, the Bandwidth Engine application footprint is
expanding, as demonstrated by our design wins in both the router and
switch space, as well as at the edge of the data center. We are
gratified by the amount of activity in our sales funnel at present. The
goal to double design wins year over year remains achievable from our
current vantage point.”

Mr. Perham continued, “I am pleased to report that the Bandwidth Engine
3 tape out is imminent. Most importantly, we remain closely aligned with
the development schedules of our NPU partner, EZchip Semiconductor, our
Bandwidth Engine 3 alpha customers, and our FPGA partners. We also made
further progress with the sampling of our latest LineSpeed™ 100G PHY ICs
and expect to release several new products and secure additional design
wins over the next few quarters. With our strong global sales efforts,
robust pipeline and active collaboration with strategic partners, I
believe we are well positioned for growth in the coming quarters.”

Second Quarter Results

Total net revenue for the second quarter of 2015 was $1.0 million,
compared with $0.8 million reported in the first quarter of 2015 and
$1.8 million in the second quarter of 2014.

Second quarter 2015 total revenue included product revenue of $0.5
million
as compared with $0.2 million in the first quarter of 2015 and
$1.0 million in the year ago period. Royalty and other revenue for the
second quarter of 2015 was $0.5 million, as compared with $0.6 million
in the previous quarter and $0.8 million in the second quarter of 2014.

Gross margin for the second quarter of 2015 was 43 percent, compared
with 69 percent in the first quarter of 2015 and 42 percent for the
second quarter of 2014.

Total operating expenses on a GAAP basis for the second quarter of 2015
were $7.3 million, compared with $8.5 million in the previous quarter
and $7.9 million for the second quarter of 2014. Second quarter 2015
operating expenses included $0.8 million in amortization of intangible
assets and stock-based compensation expense.

GAAP net loss for the second quarter of 2015 was $6.9 million, or
($0.11) per share, compared with a net loss of $8.0 million, or ($0.15)
per share, in the previous quarter and a net loss of $7.2 million, or
($0.14) per share, for the second quarter of 2014. Non-GAAP net loss for
the second quarter of 2015 was $6.1 million, or ($0.09) per share, which
excludes amortization of intangible assets and stock-based compensation
expense. Earnings per share for the second quarter of 2015 were computed
using approximately 64.7 million weighted shares on a GAAP and non-GAAP
basis. A reconciliation of GAAP results to non-GAAP results is provided
in the financial statement tables following the text of this press
release.

Financial Results Webcast / Conference Call

MoSys will host a conference call and webcast with investors today at
1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss the second
quarter financial results. Investors and other interested parties may
access the call by dialing 1-855-779-0042 in the U.S.
(1-631-485-4856 outside of the U.S.), and entering the pass code 78127823
at least 10 minutes prior to the start of the call. In addition, an
audio webcast will be available through the MoSys Web site at http://www.mosys.com.
A telephone replay will be available for two business days following the
call at 1-855-859-2056 in the U.S. (1-404-537-3406 outside of the U.S.),
pass code of 78127823.

Use of Non-GAAP Financial Measures

To supplement MoSys’ consolidated financial statements presented in
accordance with GAAP, MoSys uses non-GAAP financial measures that
exclude from the statement of operations the effects of stock-based
compensation and amortization of recorded intangible assets. MoSys’
management believes that the presentation of these non-GAAP financial
measures is useful to investors and other interested persons because
they are one of the primary indicators that MoSys’ management uses for
planning and forecasting future performance. MoSys’ management believes
that the presentation of non-GAAP financial measures that exclude these
items is useful to investors because management does not consider these
charges part of the day-to-day business or reflective of the core
operational activities of the company that are within the control of
management or that would be used to evaluate management’s operating
performance.

Investors are encouraged to review the reconciliation of these non-GAAP
financial measures to the comparable GAAP results, which is provided in
a table below the Condensed Consolidated Statements of Operations. The
non-GAAP financial measures disclosed by the company should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results calculated
in accordance with GAAP and reconciliations to those financial
statements should be carefully evaluated. The non-GAAP financial
measures used by the company may be calculated differently from, and
therefore may not be comparable to, similarly titled measures used by
other companies. For additional information regarding these non-GAAP
financial measures, and management’s explanation of why it considers
such measures to be useful, refer to the Form 8-K dated July 22, 2015,
that the company filed with the Securities and Exchange Commission.

Forward-Looking Statements

This press release may contain forward-looking statements about the
company, including, without limitation, anticipated benefits and
performance expected from our IC products and the company’s future
markets and future business prospects. Forward-looking statements are
based on certain assumptions and expectations of future events that are
subject to risks and uncertainties. Actual results and trends may differ
materially from historical results or those projected in any such
forward-looking statements depending on a variety of factors. These
factors include, but are not limited, to the following:

  • achieving additional IC design wins;
  • commencing volume shipments of Bandwidth Engine ICs;
  • the timing of customer orders and product shipments;
  • our ability to enhance our existing proprietary technologies and
    develop new technologies;
  • achieving necessary acceptance and adoption of our IC architecture and
    interface protocols by potential customers and their suppliers;
  • difficulties and delays in the development, production, testing and
    marketing of our ICs;
  • reliance on our manufacturing partners to assist successfully with the
    fabrication of our ICs;
  • availability of quantities of ICs supplied by our manufacturing
    partners at a competitive cost;
  • our lack of recent experience as a fabless semiconductor company
    making and selling proprietary ICs;
  • level of intellectual property protection provided by our patents, the
    expenses and other consequences of litigation, including intellectual
    property infringement litigation, to which we may be or may become a
    party from time to time;
  • vigor and growth of markets served by our customers and our
    operations; and

other risks identified in the company’s most recent report on Form 10-K
filed with the Securities and Exchange Commission, as well as other
reports that MoSys files from time to time with the Securities and
Exchange Commission
. MoSys undertakes no obligation to update publicly
any forward-looking statement for any reason, except as required by law,
even as new information becomes available or other events occur in the
future.

About MoSys, Inc.

MoSys, Inc. (NASDAQ: MOSY) is a fabless semiconductor company enabling
leading equipment manufacturers in the networking and communications
systems markets to address the continual increase in Internet users,
data and services. The company’s solutions deliver data path
connectivity, speed and intelligence while eliminating data access
bottlenecks on line cards and systems scaling from 100G to
multi-terabits per second. Engineered and built for high-reliability
carrier and enterprise applications, MoSys’ Bandwidth Engine® and
LineSpeed™ IC product families are based on the company’s patented
high-performance, high-density intelligent access and high-speed serial
interface technology, and utilize the company’s highly efficient
GigaChip® Interface. MoSys is headquartered in Santa Clara, California.
More information is available at www.mosys.com.

Bandwidth Engine, GigaChip and MoSys are registered trademarks of
MoSys, Inc. in the US and/or other countries. LineSpeed and the MoSys
logo are trademarks of MoSys, Inc. All other marks mentioned herein are
the property of their respective owners.

 
MOSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts; unaudited)
           
Three Months Ended Six Months Ended
June 30, June 30,
  2015     2014     2015     2014  
 
Net Revenue
Product $ 543 $ 975 $ 723 $ 1,556
Royalty and other   451     774     1,047     1,525  
Total net revenue 994 1,749 1,770 3,081
 
Cost of Net Revenue
Product and other   563     1,022     800     1,599  
Total cost of net revenue 563 1,022 800 1,599
 
Gross Profit 431 727 970 1,482
 
Operating Expenses
Research and development 5,789 6,432 12,682 13,486
Selling, general and administrative   1,550     1,490     3,164     3,287  
Total operating expenses 7,339 7,922 15,846 16,773
 
Loss from operations (6,908 ) (7,195 ) (14,876 ) (15,291 )
 
Other income, net   29     55     52     85  
Loss before income taxes (6,879 ) (7,140 ) (14,824 ) (15,206 )
 
Income tax provision   27     21     47     42  
 
Net loss $ (6,906 ) $ (7,161 ) $ (14,871 ) $ (15,248 )
 
Net loss per share
Basic and diluted $ (0.11 ) ($0.14 ) ($0.25 ) ($0.31 )
 
Shares used in computing net loss per share
Basic and diluted 64,737 49,511 59,539 49,344
   
MOSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
   
June 30, December 31,
  2015   2014
 
Assets
Current assets:
Cash, cash equivalents and investments $ 31,986 $ 23,549
Accounts receivable, net 420 177
Inventories 1,260 881
Prepaid expenses and other   990   887
Total current assets 34,656 25,494
 
Long-term investments 3,286 2,245
Property and equipment, net 698 854
Goodwill 23,134 23,134
Intangible assets, net 390 655
Other assets   226   244
Total assets $ 62,390 $ 52,626
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 464 $ 495
Accrued expenses and other   2,205   2,350
Total current liabilities 2,669 2,845
 
Long-term liabilities 248 241
 
Stockholders’ equity 59,473 49,540
   
Total liabilities and stockholders’ equity $ 62,390 $ 52,626
           
MOSYS, INC.
Reconciliation of GAAP to Non-GAAP Net Loss and Net Loss Per Share
(In thousands, except per share amounts; unaudited)
   
Three Months Ended Six Months Ended
June 30, June 30,
  2015     2014     2015     2014  
 
GAAP net loss $ (6,906 ) $ (7,161 ) $ (14,871 ) $ (15,248 )
Stock-based compensation expense
Research and development 595 784 1,561 1,867
Selling, general and administrative   222     247     483     655  
Total stock-based compensation expense 817 1,031 2,044 2,522
 
Amortization of intangible assets   28     250     265     500  
 
Non-GAAP net loss $ (6,061 ) $ (5,880 ) $ (12,562 ) $ (12,226 )
 
GAAP net loss per share $ (0.11 ) $ (0.14 ) $ (0.25 ) $ (0.31 )
Reconciling items
Stock-based compensation expense 0.02 0.02 0.03 0.05
Amortization of intangible assets 0.01 0.01
       
Non-GAAP net loss per share: basic and diluted $ (0.09 ) $ (0.12 ) $ (0.21 ) $ (0.25 )
 
Shares used in computing non-GAAP net loss per share
Basic and diluted 64,737 49,511 59,539 49,344

Source: MoSys, Inc.

MoSys, Inc.
Jim Sullivan, +1-408-418-7500
CFO
jsullivan@mosys.com
or
Shelton
Group, Investor Relations
Beverly Twing, +1-214-272-0089
Sr.
Acct. Manager
btwing@sheltongroup.com