Completes acquisitions of Kotura and IPtronics

Mellanox Technologies has announced financial results for its third quarter 2013, ended September 30, 2013.

Third Quarter 2013 Highlights

• Revenues were $104.1 million

• GAAP gross margins were 64.4 percent

• Non-GAAP gross margins were 69.0 percent

• GAAP operating loss was $4.8 million

• Non-GAAP operating income was $13.7 million

• GAAP net loss was $5.4 million

• Non-GAAP net income was $13.1 million

• GAAP net loss per diluted share was $0.12

• Non-GAAP net income per diluted share was $0.29

• $16.4 million in cash was provided by operating activities

• Total cash and investments was $306.4 million at September 30, 2013

Financial Results

In accordance with U.S. generally accepted accounting principles (GAAP), the company reported revenue of $104.1 million for the third quarter of 2013, up 6.0 percent from $98.2 million in the second quarter of 2013, and down 33.5 percent from $156.5 million in the third quarter of 2012.

GAAP gross margins in the third quarter of 2013 were 64.4 percent, compared with 67.2 percent in the second quarter of 2013, and 69.1 percent in the third quarter of 2012.

Non-GAAP gross margins in the third quarter of 2013 were 69.0 percent, compared with 69.4 percent in the second quarter of 2013, and 70.5 percent in the third quarter of 2012.

GAAP net loss in the third quarter of 2013 was $5.4 million, or $0.12 per diluted share, compared with GAAP net loss of $1.7 million, or $0.04 per diluted share in the second quarter of 2013, and GAAP net income of $48.4 million, or $1.09 per diluted share in the third quarter of 2012.

Non-GAAP net income in the third quarter of 2013 was $13.1 million, or $0.29 per diluted share, compared with $13.8 million, or $0.30 per diluted share in the second quarter of 2013, and $60.1 million, or $1.37 per diluted share in the third quarter of 2012. The third quarter 2013 non-GAAP net income excludes $11.9 million of share-based compensation expenses compared to $11.2 million in the second quarter of 2013, and compared to $9.4 million in the third quarter of 2012. The third quarter 2013 non-GAAP net income also excludes amortization of acquired intangible assets of $4.6 million and $2.0 million of acquisition related charges associated with the acquisition of Kotura, Inc. and IPtronics A/S, compared to amortization expenses of acquired intangible assets of $2.5 million and acquisition related charges associated with the acquisition of Kotura, Inc. and IPtronics A/S of $1.8 million in the second quarter of 2013, and compared to $2.3 million of amortization expenses of acquired intangibles assets in the third quarter of 2012.

Total cash and investments were $306.4 million at September 30, 2013, compared to $411.3 million at June 30, 2013. The company paid $123.5 million in cash for its acquisitions of Kotura, Inc. and IPtronics A/S, and generated $16.4 million in cash from operating activities in the third quarter.

“We completed our acquisitions of Kotura and IPtronics in the third quarter, and the integration of these teams and their advanced silicon photonics technologies is going very well,” said Eyal Waldman, president and CEO of Mellanox Technologies. “These technologies will help Mellanox to continue to lead the fast interconnect market with our InfiniBand and Ethernet offerings, and to offer market-leading solutions for high-performance computing, Web 2.0, cloud, storage, database and financial applications. We are experiencing good momentum around our end-to-end Ethernet technologies in various market segments.”

Conference Calls

Mellanox will broadcast its third quarter 2013 financial results conference call today at 2 p.m. Pacific Time (5 p.m. Eastern Time). To listen to the call, dial +1-785-424-1825 approximately ten minutes prior to the start time.

The Mellanox financial results conference call will be available via a live webcast on the investor relations section of the Mellanox website at http://ir.mellanox.com. Access the webcast 15 minutes prior to the start of the call to download and install any necessary audio software. Replay of the webcast will also be available on the Mellanox website.