Canton, Mass.-based NEI, a provider of server-based application platforms, appliances and lifecycle support for software developers and OEMs worldwide, announced record revenues of $61.6 million in the third fiscal quarter of 2010.
For the period ending June 30, 2010, net revenues were a record $61.6 million, an increase of 12 percent compared sequentially to the $55.0 million in the second fiscal quarter and 85 percent compared to the $33.3 million for the third quarter of the prior fiscal year.
Greg Shortell, president and CEO of NEI, commented, “The third quarter revenue was a record for NEI, as we delivered an 85% year-over-year increase supported by contribution from design wins secured in the last year. However, customer product transitions, project delays and visibility related to certain customer programs resulted in lower revenues than the guidance we had issued last quarter. Even so, we are pleased with the double-digit year-over-year growth in this record quarter.”
In a press statement released July 29, when results were reported, NEI pointed to a number of milestones. In the first nine months of fiscal 2010, NEI added 18 new design wins, compared to 28 design wins last year. The company noted that it now tracks design wins as only those with new customers, or with entirely disparate divisions within existing customers. EMC (News - Alert) comprised 58 percent of total revenues during the quarter compared to 35 percent in the year ago quarter and Tektronix comprised 20 percent of net revenues during the quarter compared to 11 percent in the year-ago quarter.
The results were below the guidance of $64 to $69 million. The year-over-year increase was primarily due to increased volume from NEI’s two largest customers, while the sequential increase was mostly related to NEI’s largest customer.
According to NEI, Gross profit margin was 11.0 percent of net revenues, within the guidance of 10.5 to 11.5 percent and compared sequentially to 11.8 percent in the second fiscal quarter and compared to 15.1 percent for the third fiscal quarter of the prior year.
Operating expenses were $6.1 million, including $205,000 of stock-based compensation expense and $389,000 of amortization expense, and were within the guidance range of $6.1 million to $6.6 million.
Operating expenses compared to $6.3 million in the year-ago third quarter, which included $285,000 of stock-based compensation expense and $439,000 of amortization expense.
Net income on a GAAP basis was $672,000, or $0.01 per share, which included $243,000 of stock-based compensation expense and $389,000 of amortization expense. The results were within guidance of net income of $400,000 to $1.0 million, according to NEI. The net income on a GAAP basis compared to a net loss on a GAAP basis of $1.2 million, or $0.03 per share in the third fiscal quarter last year, which included $319,000 of stock-based compensation expense and $439,000 of amortization expense.
Non-GAAP net income, which excludes stock-based compensation, amortization expenses and a tax benefit related to a Net Operating Loss (NOL) carryback, was $1.2 million, or $0.03 per share, within the expected range of non-GAAP profit between $1.0 million and $1.6 million. The non-GAAP net income compared to a non-GAAP net loss of $485,000, or $0.01 per share in the third fiscal quarter of 2009.
“In addition, our gross margin, operating expenses, and net income were all in-line with expectations and we are pleased to be reporting our third consecutive profitable quarter,” said Shortell. “We continue to deliver solid fundamental execution and remain focused on growing revenue and controlling expenses. The large 2009 design win from our largest customer has been fully integrated, and we are working on prototypes for an additional project with them, as discussed last quarter. We expect this business to be incremental to our revenue, beginning in the next calendar year.”