Sigma Designs, Inc. Reports First Quarter Fiscal Year 2018 Financial Results

FREMONT, Calif., June 06, 2017 (GLOBE NEWSWIRE) -- Sigma Designs, Inc. ® (NASDAQ:SIGM), a leading provider of intelligent system-on-chip (SoC) solutions for Connected Smart TV Platforms and Internet of Things (IoT) Devices, today reported financial results for its first quarter of fiscal year 2018, which ended April 29, 2017.

First Quarter Fiscal 2018 Financial Results

Net revenue for the first quarter of fiscal 2018 was $39.6 million. This compares with net revenue of $42.7 million reported in the previous quarter, and net revenue of $53.8 million in the same period in fiscal 2017. 

GAAP gross margin in the first quarter of fiscal 2018 was 47.1%. This compares with GAAP gross margin of 50.1% in the previous quarter, and GAAP gross margin of 44.6% for the same period in fiscal 2017. 

Non-GAAP gross margin in the first quarter of fiscal 2018 was 47.6%. This compares with non-GAAP gross margin of 50.6% in the previous quarter, and non-GAAP gross margin of 46.6% for the same period in fiscal 2017.

GAAP operating expenses in the first quarter of fiscal 2018 were $32.0 million. This compares with GAAP operating expenses of $28.6 million in the previous quarter, and GAAP operating expenses of $30.0 million for the same period in fiscal 2017.

Non-GAAP operating expenses in the first quarter of fiscal 2018 were $26.7 million. This compares with non-GAAP operating expenses of $26.0 million in the previous quarter, and non-GAAP operating expenses of $27.5 million for the same period in fiscal 2017. 

GAAP operating loss in the first quarter of fiscal 2018 was ($13.4) million.  This compares with a GAAP operating loss of ($7.2) million in the previous quarter, and a GAAP operating loss of ($6.0) million for the same period in fiscal 2017.

Non-GAAP operating loss in the first quarter of fiscal 2018 was ($7.9) million.  This compares with a non-GAAP operating loss of ($4.4) million in the previous quarter, and non-GAAP operating loss of ($2.5) million for the same period in fiscal 2017.

GAAP net loss in the first quarter of fiscal 2018 was ($14.9) million, or ($0.39) per share.  This compares with a GAAP net loss of ($8.7) million, or ($0.23) per share in the previous quarter, and a GAAP net loss of ($8.1) million, or ($0.22) per share, for the same period in fiscal 2017. 

Non-GAAP net loss in the first quarter of fiscal 2018 was ($9.4) million, or ($0.25) per basic share.  This compares with a non-GAAP net loss of ($5.9) million, or ($0.16) per basic share, in the previous quarter, and a non-GAAP net loss of ($4.2) million, or ($0.12) per basic share, for the same period in fiscal 2017. 

Management Comment
“Fiscal 2018 will be a transition year in our business as we focus our investments in our IoT solutions, which we expect to be the future growth and profit drivers for the company. In regard to our Mobile IoT business, we are entering LTE network certification, and expect to be in field trials during the summer.  Furthermore, we are in the process of finalizing our new generation Z-Wave System-on-Chip, and expect to start sampling by the end of this fiscal year.  This new chipset will provide low power that will allow us to enter the sensor market and expand the number of devices in the home.  At the same time, in order to address customer demand, we are in the process of launching new SoC’s for the Smart TV market.  While we are encouraged by the longer-term trends in our business, and how our solutions address these trends, we are taking actions to lower our expense structure,” said Thinh Tran, President and CEO of Sigma Designs, Inc.

Investor Conference Call

The conference call relating to Sigma’s first quarter fiscal year 2018 financial results will take place following this announcement at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time, today, June 6, 2017.  Investors will have the opportunity to listen live to the conference call via the Internet through www.sigmadesigns.com/IR.  To listen to the live call, please go to the website at least 10 minutes prior to the commencement of the call to register, download and install any necessary audio software.  For those who cannot listen to the live broadcast, a replay will be available shortly after the call via the Internet through www.sigmadesigns.com/IR. The audio replay will be available for one week after the call.

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles (“GAAP”), Sigma reports non-GAAP financial measures, as Sigma believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Non-GAAP financial measures are not a substitute for financial information prepared in accordance with GAAP.  Therefore, non-GAAP financial measures should not be considered in isolation, but should be considered together with the most directly comparable GAAP financial measures and the reconciliation of the non-GAAP financial measures to the most directly comparable GAPP financials measures.  The Company presents non-GAAP financial measures to provide investors with an additional tool to evaluate its operating results in a manner that focuses on what management believes to be its core, ongoing business operations. Furthermore, non-GAAP financial measures used by the Company may not be the same non-GAAP financial measures as those utilized by other companies; specifically, non-GAAP financial measures used by the Company may be calculated differently than other companies. Investors should, therefore, exercise caution when comparing non-GAAP financial measures used by Sigma to similarly titled non-GAAP financial measures of other companies. Sigma intends to calculate the various non-GAAP financial measures in future periods consistent with how they were calculated for the periods presented within this press release.

Sigma’s non-GAAP financial measures exclude amortization of acquired intangibles, stock-based compensation, one-time legal fee expenses, net gain on sale of and impairment of privately-held investments, impairment of purchased IP, mask sets and design tools used in production, the reversal of previously accrued rebates and the one-time gain from the gain on sale of certain development projects.  The tax amounts included in Sigma’s non-GAAP results approximate its operating cash tax expense, similar to the liability reported on Sigma’s tax returns.  In the GAAP to non-GAAP reconciliation at the end of this press release, we have disclosed the impact of these income tax adjustments in our calculation of our non-GAAP financial results.

Sigma believes that its non-GAAP measures provide useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations.  Sigma also believes the non-GAAP measures provide useful supplemental information for investors to evaluate Sigma’s operating results in the same manner as the research analysts that follow Sigma’s progress, all of whom present non-GAAP projections in their published reports. 

Sigma uses non-GAAP measures to evaluate and assess its performance and operating results on a consistent basis, and to measure and compare its performance with the financial projections published by analysts as well as its direct competitors in the industry, many of whom report financial results on a non-GAAP basis.  The economic substance behind its decision to use non-GAAP measures is that such measures approximate its controllable operating performance more closely than the most directly comparable GAAP financial results.  For example, Sigma’s management has no control over certain variables that have a major influence in the determination of stock-based compensation. These variables include the volatility of its stock price and changing interest rates.  Sigma believes that all of these excluded expenses in its non-GAAP financial measures may not accurately reflect the underlying performance of its continuing operations for the period in which they are incurred, even though some of these excluded items may be incurred and reflected in Sigma’s GAAP financial results in the foreseeable future. Sigma believes that the inclusion of these non-GAAP financial measures provides consistency and comparability with past reports and provides a better understanding of the overall performance of the business and its ability to perform in subsequent periods.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 31E of the Securities Exchange Act of 1934,  including but not limited to statements that fiscal 2018 will be a transition year in our business as we begin to focus our investments in our IoT solutions, our expectation to be in field trials with our mobile IoT solution during this summer, the anticipated benefits and features of our new generation Z-Wave System-on-Chip and potential expansion of our target markets, and statements about the long-term trends in our business and how our solutions address these trends, as well as our plan to lower our expense structure.

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