Colterpoint Net Lease Real Estate ETF

Q4 2009 revenue was $69.5 million, up 64% sequentially, including $14.5 million from RMI and $9.6 million from IDT network search engine products. Ex-acquisition revenue was $45.4 million, up 27% sequentially from $35.7 million. Non-GAAP gross margin was 65.7% versus guidance of 65%. GAAP operating expenses were $57.9 million; non-GAAP operating expenses were $28.3 million. GAAP net loss was $37.2 million, or $1.43 per diluted share; non-GAAP net income was $17.5 million, or $0.59 per share, versus $11 million, or $0.45 per share, in Q3. Cash ended the quarter at $44.3 million, with over $16 million generated from operations. For Q1 2010, management guided to revenue of about $85 million, non-GAAP gross margin of about 65%, non-GAAP EPS of $0.56, and GAAP EPS of a loss of $0.63. For fiscal 2010, guidance moved to about $350 million in revenue and $2.30 in non-GAAP EPS; GAAP EPS would be a loss of about $0.86.

Ron Jankov framed 2009 as a transformative year, pointing to record design wins, the move of the knowledge-based processor line to 55 nm, and leadership in the transition to 40 nm. He emphasized that the RMI merger and the IDT acquisition broadened the portfolio and created cross-selling and technology synergies, especially in Layer 7, wireless infrastructure, data center, and enterprise networking. His tone was confident and upbeat, but he repeatedly said the company was still early in multi-quarter ramps and could do better than the conservative guide if those ramps continue.

Mike Tate highlighted that revenue beat the prior outlook, with strong contributions from core products and the newly acquired businesses. He said Q4 gross margin of 65.7% was slightly better than guidance, while non-GAAP operating expenses were $28.3 million, above the $27 million plan due to variable spending and continued 40 nm investment. He also noted cash of $44.3 million, over $16 million of operating cash flow, $29.7 million in net proceeds from a registered direct offering, and $12.6 million paid to RMI shareholders; working capital metrics remained in line with targets, including 32-day receivables and about 100 inventory days excluding purchase-accounting fair value adjustments.

Analysts pressed on how much of the 2010 growth came from cyclical recovery versus design-win ramps, and management said the bulk is from new products and new design wins, especially 55 nm KBP programs and new Multi-Core ramps. They also asked about Cisco, Huawei, and the RMI contribution; management said Cisco grew on a mix of IDT, RMI, and new platform ramps, Huawei benefited from all three product families, and RMI’s Multi-Core business was particularly strong. On supply, management said wafer capacity is tight but TSMC has been meeting demand, and 55 nm should ease wafer pressure because of smaller die sizes.