MoSys, Inc. Reports Third Quarter 2015 Financial Results

Achieved Record Quarter of New Design Wins

SANTA CLARA, Calif. — (BUSINESS WIRE) — November 4, 2015MoSys, Inc. (NASDAQ: MOSY), a leader in semiconductor solutions that enable fast, intelligent data access for network and communications systems, today reported financial results for the third quarter ended September 30, 2015.

Third Quarter and Recent Developments

  • Achieved record number of quarterly design wins, including additional wins with an existing Tier One customer and multiple new design wins with both new and existing Bandwidth Engine® and LineSpeed™ customers;
  • Taped out Bandwidth Engine® 3 and announced the first three devices in this new product family;
  • Introduced the new LineSpeed Flex 100G PHY product family; and
  • Ended the quarter with total cash and investments of $25.5 million.

Management Commentary

"The third quarter was our best design win quarter to date, primarily driven by our Bandwidth Engine products," commented Len Perham, president and CEO of MoSys. "These additional design wins with both new and existing customers expand the number of applications we serve, while broadening our customer base and increasing the scope of our market penetration. We now anticipate that we will exceed our corporate goal to double design wins year over year.

"Our product portfolio is also increasing. We taped out Bandwidth Engine 3 in the quarter and recently announced the first three ICs in this new product family, including the MSRZ30 designed for use with the EZchip NPS-400 network processor. We also introduced a new family of LineSpeed Flex 100G PHY ICs comprised of five new devices and have customer engagements in process."

Mr. Perham concluded, "In summary, during the quarter, we achieved further progress by broadening our customer base, significantly increasing our design win count and introducing new products that will expand our market opportunities. The design wins secured in 2012 and 2013 have begun to ramp into early production volumes. While production ramp rates can vary, we anticipate this upward trend will continue as we move into 2016. We remain encouraged by the total number of design wins secured in the quarter, as well as the high level of activity in our sales funnel. With a broader range of applications benefiting from our high-performance products and solutions, we are well positioned to achieve additional progress going forward."

Third Quarter Results

Total net revenue for the third quarter of 2015 was $1.0 million, consistent with the previous quarter and compared with $1.1 million reported in the third quarter of 2014.

Third quarter 2015 total revenue included product revenue of $0.6 million as compared with $0.5 million in the second quarter of 2015 and $0.4 million in the year ago period. Royalty and other revenue for the third quarter of 2015 was $0.5 million, consistent with the previous quarter and compared with $0.7 million in the third quarter of 2014.

Gross margin for the third quarter of 2015 was 22 percent, compared with 43 percent in the second quarter of 2015 and 61 percent for the third quarter of 2014. The sequential decrease in gross margin was due primarily to a $0.2 million reserve recorded in the quarter to cost of goods sold for slow-moving Bandwidth Engine 1 inventory.

Total operating expenses on a GAAP basis for the third quarter of 2015 were $10.3 million, compared with $7.3 million in the previous quarter and $9.2 million for the third quarter of 2014. The sequential increase in operating expenses was primarily due to tape-out expenses for Bandwidth Engine 3 and LineSpeed products. The Company does not expect to incur additional tape-out expenses in 2015, but may incur additional tape-out expenses in 2016. Third quarter 2015 operating expenses included $0.8 million in amortization of intangible assets and stock-based compensation expense.

GAAP net loss for the third quarter of 2015 was $10.1 million, or ($0.15) per share, compared with a net loss of $6.9 million, or ($0.11) per share, in the previous quarter and a net loss of $8.5 million, or ($0.17) per share, for the third quarter of 2014. Non-GAAP net loss for the third quarter of 2015 was $9.3 million, or ($0.14) per share, which excludes amortization of intangible assets and stock-based compensation expense. Earnings per share for the third quarter of 2015 were computed using approximately 65.3 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 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss the third 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 60387256 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 60387256.

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