EX-99.1 2 exhibit991_832021.htm EX-99.1 Document

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NeoPhotonics Reports Second Quarter 2021 Financial Results

•Product Revenue for 400G and above applications grew 100% year-over-year
•400ZR modules are in General Availability


SAN JOSE, Calif. — August 3, 2021 - NeoPhotonics Corporation (NYSE: NPTN), a leading developer of silicon photonics and advanced hybrid photonic integrated circuit-based lasers, modules and subsystems for bandwidth-intensive, high speed communications networks, today announced financial results for its second quarter of 2021.

“Building on our strong performance in the second quarter, we see accelerating growth in the back half of the year, driven by the initial ramp of 400ZR and related products adding to our 400G+ suite,” said Tim Jenks, Chairman and CEO of NeoPhotonics. “We are ramping our modules and component level products, including our Nano Tunable Laser, putting us in a good position to return to profitability,” concluded Mr. Jenks.

Second Quarter 2021 Summary

•Revenue was $65.0 million, up 7% quarter-over-quarter and down 37% year-over-year
•Gross margin was 15.2%, down from 21.9% in the prior quarter
•Non-GAAP gross margin was 21.7%, down from 22.4% in the prior quarter
•Net loss per share was $0.34, compared to net loss of $0.21 per share in the prior quarter
•Non-GAAP net loss per share was $0.22, compared to Non-GAAP net loss of $0.15 per share in the prior quarter
•Adjusted EBITDA was negative $5.4 million, down from a negative $0.7 million in the prior quarter

Non-GAAP results in the second quarter of 2021 exclude a $3.3 million end-of-life related inventory write-down, $2.3 million of stock-based compensation and $0.4 million of accelerated depreciation, amortization and other charges. A reconciliation of the non-GAAP and Adjusted EBITDA financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion at the end of this press release.

As of June 30, 2021, cash and cash equivalents, short-term investments and restricted cash totaled $95 million.

Outlook for the Quarter Ending September 30, 2021
GAAPNon-GAAP
Revenue$76 to $84 million
Gross Margin24% to 29%25% to 30%
Operating Expenses$26 to $27 million$23 to $24 million
Earnings per share($0.20) to ($0.10)($0.10) to $0.00

The non-GAAP outlook for the third quarter of 2021 excludes the expected impact of stock-based compensation expense of approximately $3.3 million, of which $0.7 million is estimated for cost of goods sold, accelerated depreciation and amortization of $0.5 million.

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Non-GAAP and Adjusted EBITDA Measures vs. GAAP Financial Measures

The Company’s non-GAAP and Adjusted EBITDA measures exclude certain GAAP financial measures. A reconciliation of the non-GAAP and Adjusted EBITDA financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion at the end of this press release. These non-GAAP financial measures differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. NeoPhotonics believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

Conference Call

The Company will host a conference call today, Tuesday, August 3, 2021 at 4:30 p.m. EDT (1:30 p.m. PDT). The call will be available, live, to interested partied by dialing 800-437-2398 or +1 313-209-6317. The Conference ID number is 5316525. Please dial into the conference call 5-10 minutes prior to the scheduled start time.

A live webcast will be available in the Investor Relations section of NeoPhotonics’ website at: http://ir.neophotonics.com/phoenix.zhtml?c=236218&p=irol-calendar.

A replay of the webcast will be available in the Investor Relations section of the Company’s website approximately two hours after the conclusion of the call and remain available for approximately 30 calendar days.

About NeoPhotonics

NeoPhotonics is a leading developer and manufacturer of lasers and optoelectronic solutions that transmit, receive and switch high-speed digital optical signals for Cloud and hyper-scale data center internet content provider and telecom networks. The Company’s products enable cost-effective, high-speed over distance data transmission and efficient allocation of bandwidth in optical networks. NeoPhotonics maintains headquarters in San Jose, California and ISO 9001:2015 certified engineering and manufacturing facilities in Silicon Valley (USA), Japan and China. For additional information visit www.neophotonics.com.



Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release includes statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about the following topics: future financial results, demand for the Company’s high-speed products, and the Company’s market position. Forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially. Those risks and uncertainties include, but are not limited to, such factors as: the Company’s reliance on a small number of customers for a substantial portion of its revenues; market growth in key countries; possible reduction in or volatility of customer orders or delays in shipments of products to customers; possible disruptions in the supply chain or in
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demand for the Company’s products timing of customer drawdowns of vendor-managed inventory; potential governmental trade actions; ; the ability of the Company's vendors and subcontractors to supply or manufacture the Company's products in a timely manner; ability of the Company to meet customer demand; volatility in utilization of manufacturing operations and manufacturing costs; reductions in the Company’s rate of new design wins, and/or the rate at which design wins go into production, and the rate of customer acceptance of new product introductions; potential pricing pressure that may arise from changing conditions in the industry or negotiating leverage of buyers; the discontinuance or end of life of products; changes in demand for the Company's products; the impact of competitive products and pricing and alternative technological advances; the accuracy of estimates used to prepare the Company's financial statements and forecasts; the timely and successful development and market acceptance of new products and upgrades to existing products; the difficulty of predicting future cash needs; the nature of other investment opportunities available to the Company from time to time; the Company’s operating cash flow; changes in economic and industry projections; and a decline in general conditions in the telecommunications equipment industry, the cloud and datacenter industry, or the world economy generally. For further discussion of these risks and uncertainties, please refer to the documents the Company files with the SEC from time to time, including the Company's Annual Reports on Form 10-K for the year ended December 31, 2020. All forward-looking statements are made as of the date of this press release, and the Company disclaims any duty to update such statements.


©2021 NeoPhotonics Corporation. All rights reserved. NeoPhotonics and the red dot logo are trademarks of NeoPhotonics Corporation. All other marks are the property of their respective owners.
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NeoPhotonics Corporation
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)

 As of
 Jun. 30, 2021Dec. 31, 2020
 
ASSETS  
Current assets:  
Cash and cash equivalents
$66,836 $95,117 
Short-term investments
27,672 27,669 
Restricted cash
495 489 
Accounts receivable, net
47,763 45,232 
Inventories
44,341 46,901 
Prepaid expenses and other current assets
14,307 20,173 
Total current assets
201,414 235,581 
Property, plant and equipment, net59,942 66,765 
Operating lease right-of-use assets14,452 13,823 
Purchased intangible assets, net1,139 1,468 
Goodwill1,115 1,115 
Other long-term assets5,193 4,912 
Total assets
$283,255 $323,664 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable
$46,648 $43,539 
Current portion of long-term debt
3,033 3,232 
Accrued and other current liabilities
25,461 42,053 
Total current liabilities
75,142 88,824 
Long-term debt, net of current portion27,488 30,327 
Operating lease liabilities, noncurrent14,787 14,522 
Other noncurrent liabilities8,446 9,584 
Total liabilities
125,863 143,257 
   
Stockholders’ equity:  
Common stock
130 126 
Additional paid-in capital
602,877 597,460 
Accumulated other comprehensive income1,423 1,735 
Accumulated deficit
(447,038)(418,914)
Total stockholders’ equity
157,392 180,407 
Total liabilities and stockholders’ equity
$283,255 $323,664 

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NeoPhotonics Corporation
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except percentages and per share data)

 Three Months EndedSix Months Ended
 Jun. 30, 2021Mar. 31, 2021Jun. 30, 2020Jun. 30, 2021Jun. 30, 2020
Revenue$65,010 $60,926 $103,171 $125,935 $200,572 
Cost of goods sold (1)55,135 47,587 69,669 102,721 137,344 
Gross profit9,875 13,339 33,502 23,214 63,228 
Gross margin
15.2 %21.9 %32.5 %18.4 %31.5 %
Operating expenses:     
Research and development (1)
15,410 13,098 13,689 28,508 25,573 
Sales and marketing (1)
3,362 3,865 4,279 7,227 7,938 
General and administrative (1)
7,398 7,294 8,803 14,692 15,592 
Acquisition and asset sale related costs (recoveries)
(36)163 120 127 132 
Restructuring charges
22 — — 22 — 
Total operating expenses
26,156 24,420 26,891 50,576 49,235 
Income (loss) from operations(16,281)(11,081)6,611 (27,362)13,993 
Interest income
140 105 22 245 120 
Interest expense
(220)(227)(301)(447)(679)
Other income (expense), net
(880)1,143 (195)263 1,003 
Total interest and other income (expense), net
(960)1,021 (474)61 444 
Income (loss) before income taxes(17,241)(10,060)6,137 (27,301)14,437 
Income tax provision(191)(632)(412)(823)(2,405)
Net income (loss)$(17,432)$(10,692)$5,725 $(28,124)$12,032 
Basic net income (loss) per share$(0.34)$(0.21)$0.12 $(0.55)$0.25 
Diluted net income (loss) per share$(0.34)$(0.21)$0.11 $(0.55)$0.24 
Weighted average shares used to compute basic net income (loss) per share
51,634 50,717 49,077 51,178 48,846 
Weighted average shares used to compute diluted net income (loss) per share
51,634 50,717 51,661 51,178 51,124 
(1) Includes stock-based compensation expense as follows for the periods presented:
     
Cost of goods sold
$572 $548 $621 $1,120 $1,158 
Research and development
744 862 999 1,606 1,757 
Sales and marketing
261 554 738 815 1,268 
General and administrative
763 1,313 1,429 2,076 2,122 
Total stock-based compensation expense
$2,340 $3,277 $3,787 $5,617 $6,305 

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NeoPhotonics Corporation
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited)
(In thousands, except percentages and per share data)

 Three Months EndedSix Months Ended
 Jun. 30, 2021Mar. 31, 2021Jun. 30, 2020Jun. 30, 2021Jun. 30, 2020
NON-GAAP GROSS PROFIT:    
GAAP gross profit$9,875 $13,339 $33,502 $23,214 $63,228 
Stock-based compensation expense
572 548 621 1,120 1,158 
Amortization of purchased intangible assets
153 185 184 338 368 
Depreciation of acquisition-related fixed asset step-up3 (6)(8)(3)(20)
End-of-life related inventory write-down (sell-through)3,257 (577)— 2,680 — 
Accelerated depreciation
157 174 — 331 — 
Restructuring charges
113 — — 113 — 
Non-GAAP gross profit$14,130 $13,663 $34,299 $27,793 $64,734 
Non-GAAP gross margin as a % of revenue21.7 %22.4 %33.2 %22.1 %32.3 %
NON-GAAP TOTAL OPERATING EXPENSES:
    
GAAP total operating expenses$26,156 $24,420 $26,891 $50,576 $49,235 
Stock-based compensation expense
(1,768)(2,729)(3,166)(4,497)(5,147)
Depreciation of acquisition-related fixed asset step-up(21)(25)(28)(46)(57)
Acquisition and asset sale related costs (recoveries)36 (163)(120)(127)(132)
Restructuring charges
(22)— — (22)— 
Non-GAAP total operating expenses$24,381 $21,503 $23,577 $45,884 $43,899 
Non-GAAP total operating expenses as a % of revenue
37.5 %35.3 %22.9 %36.4 %21.9 %
NON-GAAP OPERATING INCOME (LOSS):    
GAAP income (loss) from operations$(16,281)$(11,081)$6,661 $(27,362)$13,993 
Stock-based compensation expense
2,340 3,277 3,787 5,617 6,305 
Amortization of purchased intangible assets
153 185 184 338 368 
Depreciation of acquisition-related fixed asset step-up24 19 20 43 37 
Acquisition and asset sale related costs (recoveries)(36)163 120 127 132 
End-of-life related inventory write-down (sell-through)3,257 (577)— 2,680 — 
Accelerated depreciation
157 174 — 331 — 
Restructuring charges
135 — — 135 — 
Non-GAAP income (loss) from operations$(10,251)$(7,840)$10,772 $(18,091)$20,835 
Non-GAAP operating margin as a % of revenue(15.8)%(12.9)%10.4 %(14.4)%10.4 %











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NeoPhotonics Corporation
Reconciliation of Condensed Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited) (Continued)
(In thousands, except percentages and per share data)
 Three Months EndedSix Months Ended
 Jun. 30, 2021Mar. 31, 2021Jun. 30, 2020Jun. 30, 2021Jun. 30, 2020
NON-GAAP NET INCOME (LOSS):     
GAAP net income (loss)$(17,433)$(10,692)$5,725 $(28,124)$12,032 
Stock-based compensation expense
2,340 3,277 3,787 5,617 6,305 
Amortization of purchased intangible assets
153 185 184 338 368 
Depreciation of acquisition-related fixed asset step-up24 19 20 43 37 
Acquisition and asset sale related costs (recoveries)(36)163 120 127 132 
End-of-life related inventory write-down (sell-through)3,257 (577)— 2,680 — 
Accelerated depreciation
157 174 — 331 — 
Restructuring charges
135 — — 135 — 
Income tax effect of Non-GAAP adjustments
(17)(2)(1,160)(19)(1,134)
Non-GAAP net income (loss)$(11,420)$(7,453)$8,676 $(18,872)$17,740 
Non-GAAP net income (loss) as a % of revenue(17.6)%(12.2)%8.4 %(15.0)%8.8 %
ADJUSTED EBITDA:     
GAAP net income (loss)$(17,433)$(10,692)$5,725 $(28,124)$12,032 
Stock-based compensation expense
2,340 3,277 3,787 5,617 6,305 
Amortization of purchased intangible assets
153 185 184 338 368 
Depreciation of acquisition-related fixed asset step-up24 19 20 43 37 
Acquisition and asset sale related costs (recoveries)(36)163 120 127 132 
End-of-life related inventory write-down (sell-through)3,257 (577)— 2,680 — 
Accelerated depreciation
157 174 — 331 — 
Restructuring charges
135 — — 135 — 
Interest expense, net
80 122 279 202 559 
Income tax provision191 632 412 823 2,405 
Depreciation expense
5,771 6,003 6,414 11,774 12,887 
Adjusted EBITDA$(5,361)$(694)$16,941 $(6,054)$34,725 
Adjusted EBITDA as a % of revenue(8.2)%(1.1)%16.4 %(4.8)%17.3 %
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE:
     
GAAP basic net income (loss) per share$(0.34)$(0.21)$0.12 $(0.55)$0.25 
GAAP diluted net income (loss) per share$(0.34)$(0.21)$0.11 $(0.55)$0.24 
Non-GAAP basic net income (loss) per share$(0.22)$(0.15)$0.18 $(0.37)$0.36 
Non-GAAP diluted net income (loss) per share$(0.22)$(0.15)$0.16 $(0.37)$0.33 
SHARES USED TO COMPUTE GAAP AND NON-GAAP BASIC NET INCOME (LOSS) PER SHARE
51,634 50,717 49,077 51,178 48,846 
SHARES USED TO COMPUTE GAAP DILUTED NET INCOME (LOSS) PER SHARE51,634 50,717 51,661 51,178 51,124 
SHARES USED TO COMPUTE NON-GAAP DILUTED NET INCOME (LOSS) PER SHARE51,634 50,717 54,303 51,178 53,338 
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Contacts

NeoPhotonics Corporation
Beth Eby, Chief Financial Officer
+1-408-895-6086
ir@neophotonics.com

Sapphire Investor Relations, LLC
Erica Mannion, Investor Relations
+1-617-542-6180
ir@neophotonics.com
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