MoSys, Inc. Reports Third Quarter 2010 Financial Results

SANTA CLARA, Calif., Oct 28, 2010  -- MoSys, Inc., (NASDAQ: MOSY), a leading architect of serial chip-to-chip communications solutions that will deliver unparalleled bandwidth performance for next generation networking systems and advanced system-on-chip (SoC) designs, today reported financial results for the third quarter ended September 30, 2010.

Third Quarter and Recent Highlights

• Reported total revenue of $3.8 million, an increase of 12 percent over the third quarter of 2009;
• Ended quarter with total cash and investments of $22.3 million;
• Taped out the first Bandwidth Engine integrated circuit (IC) (BE-1) in mid-July and received packaged BE-1 units;
• Made solid progress on characterizing, testing and preparing BE-1 for sampling late fourth quarter 2010; and
• Announced the GigaChip Alliance, an ecosystem of semiconductor device suppliers supporting the GigaChip Interface.

Management Commentary

"During the third quarter, revenue increased 12 percent over the third quarter of 2009, driven by revenue from our 1T-SRAM and high-speed interface SerDes and DDR3 IP," commented Len Perham, President and Chief Executive Officer of MoSys. "Royalty revenue reflects continuing demand for our 1T-SRAM embedded memory solutions from licensees in the gaming and networking markets. We remain fully committed to our IP business. It will be our primary revenue generator in 2011, a key component of our long term growth plan, and it is, in fact, very synergistic with our Bandwidth Engine ICs.

"As announced in late July, we completed the design and verification of BE-1, the first in a family of system derived memories aimed at next generation switching and routing platforms. Packaged BE-1 units were received in mid-October, and we are gratified with the progress we are making testing and characterizing this exciting new system solution. At this point, we continue to believe we will be sampling BE-1 late in the fourth quarter of 2010. Customer interest in BE-1 remains very strong. During the quarter, we continued to make progress on the formation of the GigaChip Alliance, an ecosystem of semiconductor device suppliers committed to supporting our GigaChip interface, and, over the coming months, we expect additional companies to join our efforts in further advancing serial high-speed chip-to-chip communications at the board level."

Mr. Perham concluded, "We continue to leverage our highly differentiated memory and high-speed interface IP to drive near- and long-term growth, while advancing the development of our Bandwidth Engine IC business. We are also focused on managing costs as we expand our business model to include fabless IC product offerings and bring an ever growing family of Bandwidth engine products to market."

Third Quarter Results

Total net revenue for the third quarter of 2010 was $3.8 million, compared with $4.3 million reported in the second quarter of 2010 and $3.4 million in the third quarter of 2009.

Third quarter 2010 total revenue included licensing revenue of $1.5 million, compared with $2.0 million for the previous quarter and $1.3 million for the third quarter of 2009. Third quarter 2010 royalty revenue was $2.3 million, compared with $2.3 million in the previous quarter and $2.0 million for the third quarter of 2009.

Gross margin for the third quarter of 2010 was 81 percent, compared with 87 percent for the second quarter of 2010 and 80 percent for the third quarter of 2009. The sequential decrease in gross margin was primarily related to additional customization costs incurred on certain licensing projects.

Total operating expenses on a GAAP basis for the third quarter of 2010 were $9.2 million, which total was consistent with the previous quarter and compared with $7.8 million for the third quarter of 2009. Third quarter 2010 operating expenses included $0.7 million of amortization of intangible assets and $0.8 million of stock-based compensation expense.

GAAP net loss for the third quarter of 2010 was $6.2 million, or ($0.19) per share, compared with a net loss of $5.4 million, or ($0.17) per share, for the previous quarter and a net loss of $5.0 million, or ($0.16) per share, for the third quarter of 2009. The non-GAAP net loss for the third quarter of 2010 was $4.7 million, or ($0.15) per share, which excludes acquisition-related charges and stock-based compensation expense. A reconciliation of GAAP results to non-GAAP results is provided in the financial statement tables following the text of this press release.

Cash and investments totaled $22.3 million as of September 30, 2010, compared with $31.2 million as of June 30, 2010. The decrease in cash and investments includes payment in the third quarter of a $6.5 million earn-out related to the Prism acquisition.

Financial Tables

To read financial tables, click here

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 2010 financial results and the business outlook. Investors and other interested parties may access the call by dialing 1-866-713-8566 in the U.S. (1-617-597-5325) outside of the U.S.), and entering the pass code 59933822 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 2 business days following the call at 888-286-8010 in the U.S. (617-801-6888 outside of the U.S.), pass code of 86212679.

About MoSys, Inc.

MoSys, Inc. (NASDAQ: MOSY) is a leading provider of serial chip-to-chip communications solutions that deliver unparalleled bandwidth performance for next generation networking systems and advanced system-on-chip (SoC) designs. MoSys' Bandwidth Engine(TM) family of ICs combines the company's patented 1T-SRAM® high-density memory technology with its high-speed 10 Gigabits per second (Gbps) SerDes interface (I/O) technology. A key element of Bandwidth Engine technology is the GigaChip(TM) Interface, an open, CEI-11 compatible interface developed to enable highly efficient serial chip-to-chip communications. MoSys' IP portfolio includes SerDes IP and DDR3 PHYs that support data rates from 1 - 11 Gbps across a variety of standards. In addition, MoSys offers its flagship, patented 1T-SRAM and 1T-Flash® memory cores, which provide a combination of high-density, low power consumption, high-speed and low cost advantages for high-performance networking, computing, storage and consumer/graphics applications. MoSys IP is production-proven and has shipped in more than 325 million devices. MoSys is headquartered in Santa Clara, California. More information is available on MoSys' website at http://www.mosys.com.