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Xilinx Reports Record Revenues In Fiscal First Quarter 2020

Strong year-over-year revenue and earnings growth despite global trade actions

Jul 24, 2019

SAN JOSE, Calif., July 24, 2019 /PRNewswire/ -- Xilinx, Inc. (Nasdaq: XLNX), the leader in adaptive and intelligent computing, today announced record revenues of $850 million for the first quarter of fiscal year 2020, up 3% from the prior quarter and up 24% year over year. GAAP net income for June quarter was $241 million, or $0.94 per diluted share.  Non-GAAP net income for June quarter was $249 million, or $0.97 per diluted share. 

The Xilinx Board of Directors declared a quarterly cash dividend of $0.37 per outstanding share of common stock payable on August 27, 2019 to all stockholders of record at the close of business on August 7, 2019.  

Additional first quarter of fiscal year 2020 comparisons are provided in the charts below.

Q1 2020 Financial Highlights

(In millions, except EPS)     




GAAP













Q1

Q4

Q1







FY 2020

FY 2019

FY 2019


Q-T-Q

Y-T-Y


Net revenues*

$850

$828

$684


3%

24%


Operating income

$251

$250

$216


0%

16%


Net income

$241

$245

$190


-1%

27%


Diluted earnings per share

$0.94

$0.95

$0.74


-1%

27%













Non-GAAP













Q1

Q4

Q1







FY 2020

FY 2019

FY 2019


Q-T-Q

Y-T-Y


Net revenues*

$850

$828

$684


3%

24%


Operating income

$260

$259

$218


0%

19%


Net income

$249

$242

$192


3%

30%


Diluted earnings per share

$0.97

$0.94

$0.75


3%

29%












* No adjustment between GAAP and Non-GAAP

"I am pleased to report that we were able to achieve the mid-point of our revenue guidance for the first fiscal quarter, despite export control restrictions that impacted shipments to one of our customers in China.  We were able to generate $850 million in revenues for the quarter, representing 24% year over year growth.  This clearly demonstrates our focused execution and is strong evidence of the resilience and diversity of our business model.  We also had strong profitability with 27% growth in earnings per share during the same period.  Revenues from our Zynq products grew 68% year over year and represented nearly a quarter of overall revenues, as we continued our transformation to a platform company," said Victor Peng, president and chief executive officer, Xilinx.

 

Net Revenues by Geography:

















Percentages


Growth Rates



Q1

Q4

Q1





FY 2020

FY 2019

FY 2019

Q-T-Q

Y-T-Y


North America

23%

27%

28%


-10%

3%


Asia Pacific

51%

47%

45%


11%

42%


Europe

18%

18%

19%


-1%

16%


Japan

8%

8%

8%


3%

20%


















Net Revenues by End Market:

















Percentages


Growth Rates



Q1

Q4

Q1




FY 2020

FY 2019

FY 2019

Q-T-Q

Y-T-Y


A&D, Industrial and TME

39%

39%

45%


2%

10%


Automotive, Broadcast and Consumer

15%

14%

16%


8%

10%


Wired and Wireless Group

41%

42%

31%


2%

66%


Data Center Group

5%

5%

7%


-4%

-13%


Channel

0%

0%

1%


NM

NM


















Net Revenues by Product:

















Percentages


Growth Rates



Q1

Q4

Q1




FY 2020

FY 2019

FY 2019

Q-T-Q

Y-T-Y


Advanced Products

69%

68%

56%


4%

53%


Core Products

31%

32%

44%


0%

-13%


Products are classified as follows:

Advanced Products: Alveo, UltraScale+, UltraScale and 7-series products.

Core Products: Virtex-6, Spartan-6, Virtex‐5, CoolRunner‐II, Virtex-4, Virtex-II, Spartan-3, Spartan-2, XC9500 products, configuration solutions, software & support/services.

Key Statistics:  

(Dollars in Millions)



Q1

FY 2020

Q4

FY 2019

Q1

FY 2019





Annual Return on Equity (%)*

35

34

32





Operating Cash Flow

$298

$288

$176





Depreciation Expense (including software amortization)

$24

$22

$15





Capital Expenditures (including software)

$29

$28

$26





Combined Inventory Days

112

112

113





Revenue Turns (%)

24

35

37


*Return on equity calculation: Annualized year to date GAAP net income/average stockholders' equity

Product and Financial Highlights – Fiscal First Quarter 2020

  • The Advanced Products category increased 53% year over year and constituted approximately 69% of total revenues in the first quarter. Our 16nm node continued its accelerated ramp, with revenues increasing approximately four times year over year, primarily driven by customers in 5G as well as customers in the Data Center and Test, Measurement & Emulation end markets.
  • Xilinx extended its Virtex UltraScale+ HBM family by adding 16GB HBM products which are ideally suited for workloads that process large datasets such as adaptable AI inference, database acceleration, data analytics, video transcoding, and security processing. Our 16GB HBM products are currently sampling to customers and are expected to go into production later this year.
  • Our Zynq-based revenues grew 68% year over year, indicating significant progress in Xilinx's transformation into a platform company. The Zynq SoC platform, which includes Zynq at 28nm and both MPSoC and RFSoC at 16nm, now represents 23% of total revenues.
  • Xilinx announced that it has started shipping its 7nm Versal™ AI Core series and Versal™ Prime series devices to key customers through its early access program. Versal is the industry's first adaptive compute acceleration platform (ACAP), a revolutionary new category of heterogeneous compute devices with capabilities that far exceed those of conventional CPUs, GPUs, and FPGAs.
  • During the first quarter, Xilinx entered into an agreement to acquire NGCodec, a powerful, differentiated video encoding technology provider that, when paired with a Xilinx acceleration platform delivers greater visual quality at lower bandwidth requirements than any other solution in the market. Twitch Interactive, an Amazon subsidiary and creator of a leading live streaming video platform, achieved 30X greater performance over CPUs with a Xilinx powered solution using a VP9 encoder IP from NGCodec. The transaction closed in the first week of the second quarter.
  • Xilinx repurchased 3.0 million shares at an average price of $105.50 per share and paid dividends of $94 million during the quarter.

Business Outlook – Fiscal Second Quarter 2020  

The following guidance is based on current expectations and estimates, and as indicated, are presented on a GAAP and non-GAAP basis. This guidance is forward-looking and actual results may differ materially, as a result of, among other things, the important factors discussed and referred to at the end of this release.  

Xilinx's fiscal second quarter guidance takes into account the estimated impact from the U.S. government's announced export restriction to one of our customers in China. Guidance does not include the financial impact related to the announced acquisition of Solarflare, which is expected to close during the fiscal second quarter.


GAAP

Non-GAAP Adjustments

Non-GAAP

Revenues

$800M - $850M

-

$800M - $850M

Gross Margin

~65%-66%

1% (1)

~66%-67%

Operating Expenses

~$326M

$4M(2)

~$322M

Other Income

~$11M

-

~$11M

Tax Rate

0%

-

0%



(1)

Amortization of acquisition related intangibles

(2)

M&A related expenses and amortization of acquisition related intangibles

Conference Call

A conference call will be held today at 2:00 p.m. Pacific Time to discuss the June quarter financial results and management's outlook for the September quarter. The webcast and subsequent replay will be available in the investor relations section of the Company's web site at www.investor.xilinx.com.  A telephonic replay of the call may be accessed later in the day by calling (855) 859-2056 and referencing confirmation code 7549615. The telephonic replay will be available for two weeks following the live call. 

Non-GAAP Financial Information

Fiscal first quarter 2020 results and business outlook for the September quarter include financial measures which are not determined in accordance with the United States generally accepted accounting principles (GAAP), as indicated.  Non-GAAP measures should not be considered as a substitute for, or superior to, financial measures determined in accordance with GAAP. The presentation of non-GAAP financial measures has been reconciled, in each case, to the most directly-comparable GAAP measure, as indicated in the accompanying tables. The Company's calculation of such non-GAAP measures may not be comparable to similarly-titled measures used by other companies.

Management uses the non-GAAP financial measures disclosed herein to evaluate the Company's financial results from continuing operations (excluding the impact of acquisitions) and compare to operating performance in past periods.  Similarly, Management believes presentation of these non-GAAP measures is useful to investors because it enables investors and analysts to evaluate operating expenses of the Company's core business, excluding the impact of non-core business expenses such as acquisition-related amortization and non-recurring items.

M&A related expenses: These expenses mainly consist of legal and consulting fees associated with acquisition activities.  We believe these costs do not reflect the Company's current operating performance. Consequently, the non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company's current operating performance and comparisons to its past operating performance.

Amortization of acquisition-related intangibles:  Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology acquired in connection with business combinations. The non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company's current operating performance and comparisons to its past operating performance.

Income taxes: The Company excludes the income tax effects of non-GAAP adjustments reflected in Operating Expenses and Other Income, as detailed above.  It also excludes U.S. tax reform related items.  The Company believes excluding U.S. tax reform related items will facilitate a comparable evaluation of its current performance to its past performance.  The second quarter of fiscal 2020 outlook does not reflect other tax related items which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

Forward Looking Statements

This release contains forward-looking statements and projections. Forward-looking statements and projections can often be identified by the use of forward-looking words such as "expect," "believe," "may," "will," "could," "anticipate," "estimate," "continue," "plan," "intend," "project" or other similar expressions.  Statements that refer to or are based on projections, uncertain events or assumptions also identify forward-looking statements.  Such forward looking statements include, but are not limited to, statements related to the semiconductor market, the growth and acceptance of our products, expected revenue growth, the demand and growth in the markets we serve, opportunity for expansion into new markets, and our expectations regarding our business outlook for the September quarter.  Undue reliance should not be placed on such forward-looking statements and projections, which speak only as of the date they are made. We undertake no obligation to update such forward-looking statements.  Actual events and results may differ materially from those in the forward-looking statements and are subject to risks and uncertainties including, among others, customer acceptance of our new products, current global economic conditions, trade and export restrictions, the health of our customers and the end markets in which they participate, our ability to forecast end customer demand, a high dependence on turns business, more customer volume discounts than expected, greater product mix changes than anticipated, fluctuations in manufacturing yields, our ability to deliver product in a timely manner, our ability to successfully manage production at multiple foundries, variability in wafer pricing, costs and liabilities associated with current and future litigation, our ability to realize the goals contemplated by our acquisitions and strategic investments, the impact of current and future legislative and regulatory changes, the impact of new accounting pronouncements and tax laws, including the U.S. Tax Cuts and Jobs Act, and interpretations thereof, and other risk factors described in our most recent Forms 10-Q and 10-K.

About Xilinx

Xilinx develops highly flexible and adaptive processing platforms that enable rapid innovation across a variety of technologies – from the endpoint to the edge to the cloud. Xilinx is the inventor of the FPGA, hardware programmable SoCs and the ACAP, designed to deliver the most dynamic processor technology in the industry and enable the adaptable, intelligent and connected world of the future. For more information, visit www.xilinx.com.

Xilinx, the Xilinx logo, Artix, ISE, Kintex, Spartan, Virtex, Zynq, Vivado, Alveo, Versal and other designated brands included herein are trademarks of Xilinx in the United States and other countries. All other trademarks are the property of their respective owners.

Investor Relations Contact:
Suresh Bhaskaran
Xilinx, Inc.
(408) 879-4784 
ir@xilinx.com

XILINX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)


Three Months Ended


June 29, 2019

March 30, 2019

June 30, 2018

Net revenues

$          849,632

$              828,361

$          684,370

Cost of revenues:




Cost of products sold

283,500

269,457

206,888

Amortization of acquisition-related intangibles

3,269

-

-

Total cost of revenues

286,769

269,457

206,888

Gross margin

562,863

558,904

477,482

Operating expenses:




Research and development

204,100

199,500

170,826

Selling, general and administrative

107,425

107,160

90,532

Amortization of acquisition-related intangibles

400

1,866

360

Total operating expenses

311,925

308,526

261,718

Operating income

250,938

250,378

215,764

Interest and other income (expense), net

11,612

9,302

(2,847)

Income before income taxes

262,550

259,680

212,917

Provision for income taxes

21,091

15,040

22,879

Net income

$          241,459

$              244,640

$          190,038

Net income per common share:




Basic

$                0.95

$                    0.96

$                0.75

Diluted

$                0.94

$                    0.95

$                0.74

Cash dividends per common share

$                0.37

$                    0.36

$                0.36

Shares used in per share calculations:




Basic

253,268

253,855

252,682

Diluted

257,928

258,177

255,935

 

XILINX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


June 29, 2019

March 30, 2019


(unaudited)


ASSETS



Current assets:



  Cash, cash equivalents and short-term investments

$       2,883,137

$           3,175,684

  Accounts receivable, net

305,955

335,165

  Inventories

336,758

315,358

  Other current assets

63,718

65,771

Total current assets

3,589,568

3,891,978

Net property, plant and equipment

350,555

328,929

Long-term investments

54,849

53,433

Other assets

972,926

877,008

Total Assets

$       4,967,898

$           5,151,348







LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:



Accounts payable and accrued liabilities

$          497,110

$              475,036

Long-term debt

1,245,263

1,234,807

Other long-term liabilities

612,941

579,996

Stockholders' equity

2,612,584

2,861,509

Total Liabilities and Stockholders' Equity

$       4,967,898

$           5,151,348

 

XILINX, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In thousands)


Three Months Ended


June 29, 2019

March 30, 2019

June 30, 2018

SELECTED CASH FLOW INFORMATION:




Depreciation and amortization of software

$            23,853

$                21,607

$            15,075

Amortization 

9,085

10,195

7,333

Stock-based compensation

42,753

38,748

35,608

Net cash provided by operating activities

298,216

288,007

176,168

Purchases of property, plant and equipment and software

29,201

28,242

26,359

Payment of dividends to stockholders

93,961

91,384

90,675

Repurchases of common stock

444,995

-

137,300

Repayment of debt

-

500,000

-









STOCK-BASED COMPENSATION INCLUDED IN:




Cost of revenues

$              2,613

$                  2,170

$              2,035

Research and development

24,874

23,099

20,930

Selling, general and administrative

15,266

13,479

12,643

 

XILINX, INC.

RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS

(Unaudited)

(In thousands, except per share amounts)


Three Months Ended


June 29, 2019

March 30, 2019

June 30, 2018

GAAP gross margin

$        562,863

$           558,904

$        477,482

Amortization of acquisition-related intangibles

3,269

-

-

Non-GAAP gross margin

$        566,132

$           558,904

$        477,482





GAAP operating income

$        250,938

$           250,378

$        215,764

Acquisition-related costs

5,371

6,560

1,495

Amortization of acquisition-related intangibles

3,669

1,866

360

Non-GAAP operating income

$        259,978

$           258,804

$        217,619





GAAP net income

$        241,459

244,640

$        190,038

Acquisition-related costs

5,371

6,560

1,495

Amortization of acquisition-related intangibles

3,669

1,866

360

Income tax effect of changes in applicable U.S. tax laws

-

(8,508)

-

Income tax effect of non-GAAP adjustments

(1,423)

(2,330)

-

Non-GAAP net income

$        249,076

$           242,228

$        191,893





GAAP diluted EPS

$              0.94

$                 0.95

$              0.74

Acquisition-related costs

0.02

0.02

0.01

Amortization of acquisition-related intangibles

0.01

0.01

-

Income tax effect of changes in applicable U.S. tax laws

-

(0.03)

-

Income tax effect of non-GAAP adjustments

-

(0.01)

-

Non-GAAP diluted EPS

$              0.97

$                 0.94

$              0.75

XLNX-F

 

SOURCE Xilinx, Inc.

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