Recurring revenue increases 77% year-over-year to $63.2 million
Earnings
per share of $0.49 significantly above guidance range of $0.37-$0.40
Company
repurchased $25 million of common stock during the quarter
SAN JOSE, Calif.--(BUSINESS WIRE)--
Tessera Technologies, Inc. (NASDAQ: TSRA) (the "Company" or "we") today
announced financial results for the second quarter of 2015. Total
revenue was $64.2 million, just above the Company's guidance range of
$62 to $64 million. Recurring revenue was $63.2 million, an increase of
77% compared with $35.8 million in the second quarter of 2014. GAAP net
income for the second quarter of 2015 was $26.1 million, or $0.49 per
diluted share, and non-GAAP net income was $31.5 million, or $0.58 per
diluted share.
"This quarter we again delivered terrific results in our core business,"
said Tom Lacey, CEO of Tessera Technologies, Inc. "Our customer
collaboration strategy continues to bear fruit, as the Invensas team is
actively involved with leading manufacturers on xFD and BVA technology.
FotoNation followed record first quarter revenue with a similar
performance in the second quarter, while also developing new solutions
for biometric authentication and the automotive market. I remain
confident that the second half of this year will yield further success -
particularly as we progress with the commercialization of our advanced
packaging technologies and sign new customer agreements for our
intellectual property and imaging solutions. This is an exciting time at
Tessera."
Second Quarter 2015 Results
Total revenue was $64.2 million in the second quarter of 2015, a 72%
increase compared with revenue of $37.2 million in the second quarter of
2014. The $27.0 million increase was primarily due to new license and
settlement agreements that have been signed in the last year and a half.
Operating expenses were $27.4 million in the second quarter of 2015,
compared with $36.3 million in the second quarter of 2014, a decrease of
$8.9 million, or 25%. Litigation expense in the second quarter of 2015
decreased by $6.7 million, or 66%, from the second quarter of 2014, due
to settlements reached during the last year and a half. Research and
development (R&D) and selling, general and administrative (SG&A)
expenses decreased by a combined $1.9 million, or 9%, compared with the
prior year, the result of cost savings initiatives implemented over the
past year.
Net income was $26.1 million, or $0.49 per diluted share, compared with
net income for the second quarter of 2014 of $3.8 million, or $0.07 per
diluted share.
Non-GAAP net income for the second quarter of 2015 was $31.5 million, or
$0.58 per diluted share, compared with non-GAAP net income in the second
quarter of 2014 of $10.2 million, or $0.19 per diluted share. Non-GAAP
net income/loss is defined as income/loss and operating expenses
adjusted for discontinued operations, restructuring and other exit
costs, acquired intangible asset amortization, charges for acquired
in-process research and development, stock-based compensation expense,
impairment charges on long-lived assets and goodwill, and related tax
effects.
Balance Sheet
Total current assets were $479.7 million as of June 30, 2015, an
increase of $4.2 million from December 31, 2014. Cash, cash equivalents
and short-term investments were $431.9 million as of June 30, 2015, a
decrease of $2.5 million from December 31, 2014. The decline in cash in
the first half of the fiscal year is due to common stock repurchases and
the payment of dividends, largely offset by cash generated from
operating activities.
Dividends
On June 17, 2015, the Company paid $10.5 million to stockholders of
record as of May 27, 2015, for the quarterly cash dividend of $0.20 per
share of common stock.
Additionally, on July 31, 2015, the Board of Directors approved a
regular quarterly dividend of $0.20 per share of common stock, payable
on September 18, 2015 to shareholders of record on August 28, 2015.
Stock Repurchase Program
During the second quarter of 2015, the Company repurchased 645,000
shares of common stock for an aggregate amount of $25.0 million. These
purchases were executed under the Company's stock repurchase program. As
of June 30, the Company had approximately $91.1 million remaining under
its current repurchase program.
Financial Guidance
For the third quarter of 2015, the Company's guidance is as follows:
-
Total revenue is expected to be between $64 million and $66 million;
-
GAAP earnings per share are expected to be between $0.46 and $0.48 per
share;
-
Non-GAAP earnings per share are expected to be between $0.55 and $0.57
per share.
The Company is also reiterating its baseline guidance of $235 million in
recurring revenue for 2015.
Conference Call Information
The Company will hold its second quarter ended June 30, 2015, earnings
conference call at 2:00 PM Pacific time (5:00 PM Eastern time) on
Monday, August 3. To access the call in the U.S., please dial (888)
723-9308, and for international callers dial (615) 489-8916,
approximately 10 minutes prior to the start of the conference call. The
conference ID is 77998664. The conference call will also be broadcast
live over the Internet at www.tessera.com
and available for replay for 90 days at www.tessera.com.
In addition, a replay of the call will be available via telephone for
two business days, beginning two hours after the call. To listen to the
telephone replay in the U.S., please dial (855) 859-2056. International
callers please dial (404) 537-3406. Enter access code 77998664.
Safe Harbor Statement
This document contains forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve risks
and uncertainties that could cause actual results to differ
significantly from those projected, particularly with respect to the
Company's financial results and guidance, the introduction of new
advanced packaging technologies, and the execution of new customer
agreements. Material factors that may cause results to differ from the
statements made include the plans or operations relating to the
businesses of the Company; market or industry conditions; changes in
patent laws, regulation or enforcement, or other factors that might
affect the Company's ability to protect or realize the value of its
intellectual property; the expiration of license agreements and the
cessation of related royalty income; the failure, inability or refusal
of licensees to pay royalties; initiation, delays, setbacks or losses
relating to the Company's intellectual property or intellectual property
litigations, or invalidation or limitation of key patents; fluctuations
in operating results due to the timing of new license agreements and
royalties, or due to legal costs; the risk of a decline in demand for
semiconductors and products utilizing FotoNation technologies; failure
by the industry to use technologies covered by the Company's patents;
the expiration of the Company's patents; the Company's ability to
successfully complete and integrate acquisitions of businesses; the risk
of loss of, or decreases in production orders from, customers of
acquired businesses; financial and regulatory risks associated with the
international nature of the Company's businesses; failure of the
Company's products to achieve technological feasibility or
profitability; failure to successfully commercialize the Company's
products; changes in demand for the products of the Company's customers;
limited opportunities to license technologies due to high concentration
in the markets for semiconductors and related products and smartphone
imaging; and the impact of competing technologies on the demand for the
Company's technologies. You are cautioned not to place undue reliance on
the forward-looking statements, which speak only as of the date of this
release. The Company's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year ended
Dec. 31, 2014, and its Quarterly Report on Form 10-Q for the quarter
ended Mar. 31, 2015, include more information about factors that could
affect the Company's financial results. The Company assumes no
obligation to update information contained in this press release.
Although this release may remain available on the Company's website or
elsewhere, its continued availability does not indicate that the Company
is reaffirming or confirming any of the information contained herein.
About Tessera Technologies, Inc.
Tessera Technologies, Inc., including its Invensas and FotoNation
subsidiaries, generates revenue from licensing our technologies and
intellectual property to customers and others who implement it for use
in areas such as mobile computing and communications, memory and data
storage, and 3DIC technologies, among others. Our technologies include
semiconductor packaging and interconnect solutions, and products and
solutions for mobile and computational imaging, including our FaceToolsTM,
FacePowerTM, FotoSavvyTM, DigitalApertureTM,
LifeFocusTM, face beautification, red-eye removal, High
Dynamic Range, autofocus, panorama, and image stabilization intellectual
property. For more information call 1.408.321.6000 or visit www.tessera.com.
Tessera, the Tessera logo, Invensas, the Invensas logo, FotoNation, the
FotoNation logo, FaceTools, FacePower, FotoSavvy, DigitalAperture and
LifeFocus are trademarks or registered trademarks of affiliated
companies of Tessera Technologies, Inc. in the United States and other
countries. All other company, brand and product names may be trademarks
or registered trademarks of their respective companies.
Recurring and Episodic Revenue
Recurring revenue is defined as revenue from payments made pursuant to a
license agreement or other agreement that are scheduled to occur over at
least one year of time. Episodic revenue is revenue other than revenue
payable over at least one year pursuant to a contract. Episodic revenue
includes non-recurring engineering fees, initial license fees, back
payments resulting from audits, damages awards from courts or other
tribunals, and lump sum settlement payments. Although the royalty
revenue reported by the Company's licensees on a quarterly basis is
generally not assured, for ease of reference, the Company refers to
these revenues as "recurring revenue".
Importantly, a source of episodic revenue may become a source of
recurring revenue, when, for example, a company settles litigation with
the Company by paying a settlement amount and entering into a license
agreement that calls for an initial license fee and ongoing royalty
payment over several years. In that scenario, the settlement amount
would be episodic revenue, as would the initial license fee, and the
ongoing royalties would be recurring revenue.
Discontinued Operations
In January of 2014, the Company announced the cessation of all mems|cam
manufacturing operations. This was the Company's last manufacturing
operation. The Company has classified the expenses of its DigitalOptics
business as discontinued operations starting with the first quarter of
2014, and also reclassified results from this business to discontinued
operations for all prior reporting periods.
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance
with U.S. Generally Accepted Accounting Principles (GAAP), the Company's
earnings release contains non-GAAP financial measures adjusted for
discontinued operations, either one-time or ongoing non-cash acquired
intangibles amortization charges, acquired in-process research and
development, all forms of stock-based compensation, impairment charges
on long-lived assets and goodwill, gain on sale of patents,
restructuring and other related exit costs, and related tax effects. The
non-GAAP financial measures also exclude the effects of FASB Accounting
Standards Codification 718, "Stock Compensation" upon the number
of diluted shares used in calculating non-GAAP earnings per share.
Management believes that the non-GAAP measures used in this release
provide investors with important perspectives into the Company's ongoing
business performance. The non-GAAP financial measures disclosed by the
Company should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the financial
results calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated. The non-GAAP
financial measures used by the Company may be calculated differently
from, and therefore may not be comparable to, similarly titled measures
used by other companies. All financial data is presented on a GAAP basis
except where the Company indicates its presentation is on a non-GAAP
basis.
Set forth below are reconciliations of non-GAAP net income (loss) to the
Company's reported GAAP net income (loss) and non-GAAP earnings per
share to GAAP earnings per share guidance for the third quarter of 2015.
|
|
|
TESSERA TECHNOLOGIES, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
21,412
|
|
|
$
|
50,908
|
|
|
|
|
Short-term investments
|
|
|
410,481
|
|
|
|
383,513
|
|
|
|
|
Accounts receivable, net
|
|
|
6,970
|
|
|
|
4,478
|
|
|
|
|
Short-term deferred tax assets
|
|
|
20,586
|
|
|
|
19,334
|
|
|
|
|
Other current assets
|
|
|
20,218
|
|
|
|
17,277
|
|
|
|
|
|
|
Total current assets
|
|
|
479,667
|
|
|
|
475,510
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net
|
|
|
66,489
|
|
|
|
72,925
|
|
|
Long-term deferred tax assets
|
|
|
13,303
|
|
|
|
21,759
|
|
|
Other assets
|
|
|
6,419
|
|
|
|
6,929
|
|
|
|
|
|
|
Total assets
|
|
$
|
565,878
|
|
|
$
|
577,123
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,364
|
|
|
$
|
3,509
|
|
|
|
|
Accrued legal fees
|
|
|
4,797
|
|
|
|
4,143
|
|
|
|
|
Accrued liabilities
|
|
|
7,815
|
|
|
|
16,157
|
|
|
|
|
Deferred revenue
|
|
|
10,295
|
|
|
|
10,217
|
|
|
|
|
|
|
Total current liabilities
|
|
|
24,271
|
|
|
|
34,026
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term deferred tax and other liabilities
|
|
|
1,906
|
|
|
|
1,738
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
58
|
|
|
|
58
|
|
|
|
|
Additional paid-in capital
|
|
|
591,530
|
|
|
|
576,341
|
|
|
|
|
Treasury stock
|
|
|
(163,577
|
)
|
|
|
(106,231
|
)
|
|
|
|
Accumulated other comprehensive income
|
|
|
(507
|
)
|
|
|
(333
|
)
|
|
|
|
Retained earnings
|
|
|
112,197
|
|
|
|
71,524
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
539,701
|
|
|
|
541,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
565,878
|
|
|
$
|
577,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TESSERA TECHNOLOGIES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in thousands, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Royalty and license fees
|
|
$
|
64,188
|
|
$
|
37,213
|
|
|
$
|
144,038
|
|
$
|
125,549
|
|
|
Total revenues
|
|
|
64,188
|
|
|
37,213
|
|
|
|
144,038
|
|
|
125,549
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
166
|
|
|
95
|
|
|
|
308
|
|
|
103
|
|
|
Research, development and other related costs
|
|
|
7,866
|
|
|
8,958
|
|
|
|
15,234
|
|
|
16,490
|
|
|
Selling, general and administrative
|
|
|
11,119
|
|
|
11,928
|
|
|
|
22,116
|
|
|
24,350
|
|
|
Litigation expense
|
|
|
3,519
|
|
|
10,214
|
|
|
|
8,023
|
|
|
17,165
|
|
|
Amortization expense
|
|
|
4,691
|
|
|
4,570
|
|
|
|
9,386
|
|
|
9,173
|
|
|
Restructuring, impairment of long-lived assets and other charges
|
|
|
--
|
|
|
488
|
|
|
|
--
|
|
|
1,527
|
|
|
Total operating expenses
|
|
|
27,361
|
|
|
36,253
|
|
|
|
55,067
|
|
|
68,808
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income from continuing operations
|
|
|
36,827
|
|
|
960
|
|
|
|
88,971
|
|
|
56,741
|
|
|
Other income and expense, net
|
|
|
770
|
|
|
432
|
|
|
|
1,418
|
|
|
762
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes from continuing operations
|
|
|
37,597
|
|
|
1,392
|
|
|
|
90,389
|
|
|
57,503
|
|
|
Provision for (benefit from) income taxes
|
|
|
11,828
|
|
|
(1,124
|
)
|
|
|
29,052
|
|
|
21,562
|
|
|
Income from continuing operations
|
|
|
25,769
|
|
|
2,516
|
|
|
|
61,337
|
|
|
35,941
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
342
|
|
|
1,255
|
|
|
|
369
|
|
|
(11,272
|
)
|
|
Net income
|
|
$
|
26,111
|
|
$
|
3,771
|
|
|
$
|
61,706
|
|
$
|
24,669
|
|
|
Income (loss) per share:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.49
|
|
$
|
0.05
|
|
|
$
|
1.17
|
|
$
|
0.68
|
|
|
Diluted
|
|
$
|
0.49
|
|
$
|
0.05
|
|
|
$
|
1.15
|
|
$
|
0.67
|
|
|
Income (loss) from discontinued operations:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.01
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
$
|
(0.21
|
)
|
|
Diluted
|
|
$
|
0.01
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
$
|
(0.21
|
)
|
|
Net income:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.50
|
|
$
|
0.07
|
|
|
$
|
1.18
|
|
$
|
0.47
|
|
|
Diluted
|
|
$
|
0.49
|
|
$
|
0.07
|
|
|
$
|
1.16
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
$
|
0.20
|
|
$
|
0.62
|
|
|
$
|
0.40
|
|
$
|
0.72
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in per share
calculations-basic
|
|
|
52,293
|
|
|
52,812
|
|
|
|
52,387
|
|
|
53,016
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in per share
calculations-diluted
|
|
|
53,052
|
|
|
53,397
|
|
|
|
53,265
|
|
|
53,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TESSERA TECHNOLOGIES, INC.
|
|
RECONCILIATION TO NON-GAAP INCOME FROM CONTINUING OPERATIONS FROM
GAAP NET INCOME FROM CONTINUING OPERATIONS
|
|
(in thousands, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income from continuing operations
|
|
$
|
25,769
|
|
|
$
|
2,516
|
|
|
$
|
61,337
|
|
|
$
|
35,941
|
|
Adjustments to GAAP net income:
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation - research, development and other related
costs
|
|
|
1,006
|
|
|
|
700
|
|
|
|
1,696
|
|
|
|
1,289
|
|
Stock-based compensation - selling, general and administrative
|
|
|
2,558
|
|
|
|
1,939
|
|
|
|
4,387
|
|
|
|
3,854
|
|
Amortization of acquired intangibles
|
|
|
4,691
|
|
|
|
4,570
|
|
|
|
9,386
|
|
|
|
9,173
|
|
Restructuring, impairment of long-lived assets and other charges
|
|
|
--
|
|
|
|
488
|
|
|
|
--
|
|
|
|
1,527
|
|
Non-GAAP tax adjustments (1)
|
|
|
(2,558
|
)
|
|
|
-
|
|
|
|
(4,907
|
)
|
|
|
-
|
|
Non-GAAP net income from continuing operations
|
|
$
|
31,466
|
|
|
$
|
10,213
|
|
|
$
|
71,899
|
|
|
$
|
51,784
|
|
Non-GAAP net income from continuing operations per common share -
diluted
|
|
$
|
0.58
|
|
|
$
|
0.19
|
|
|
$
|
1.33
|
|
|
$
|
0.95
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP weighted average number of shares used in per share
calculations excluding the effects of stock-based compensation -
diluted
|
|
|
54,107
|
|
|
|
54,320
|
|
|
|
54,254
|
|
|
|
54,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Company has disclosed a GAAP to Non-GAAP tax adjustment in the
periods when the valuation allowance against deferred tax assets is
reversed.
|
|
|
|
TESSERA TECHNOLOGIES, INC.
|
|
EPISODIC AND RECURRING REVENUE
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Episodic
|
|
$
|
1,000
|
|
$
|
1,427
|
|
$
|
29,000
|
|
$
|
66,371
|
|
Recurring
|
|
|
63,188
|
|
|
35,786
|
|
|
115,038
|
|
|
59,178
|
|
Total revenues
|
|
$
|
64,188
|
|
$
|
37,213
|
|
$
|
144,038
|
|
$
|
125,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TESSERA TECHNOLOGIES, INC.
RECONCILIATION FOR GUIDANCE ON
GAAP TO NON-GAAP EARNINGS PER SHARE
|
|
|
|
|
|
Three Months Ended June 30, 2015
|
|
|
|
|
|
|
|
|
|
Low
|
|
High
|
|
Diluted earnings per share - GAAP
|
|
$
|
0.46
|
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
0.09
|
|
|
|
0.09
|
|
|
Stock based compensation
|
|
|
0.06
|
|
|
|
0.06
|
|
|
Subtotal GAAP adjustments
|
|
|
0.15
|
|
|
|
0.15
|
|
|
|
|
|
|
|
|
Income tax and share count impact
|
|
|
(0.06
|
)
|
|
|
(0.06
|
)
|
|
|
|
|
|
|
|
Effect on net income
|
|
|
0.09
|
|
|
|
0.09
|
|
|
|
|
|
|
|
|
Diluted earnings per share - non-GAAP
|
|
$
|
0.55
|
|
|
$
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
TSRA-E
View source version on businesswire.com: http://www.businesswire.com/news/home/20150803006234/en/
Tessera Technologies, Inc.
Robert Andersen, 408-321-6779
Executive
Vice President and Chief Financial Officer
- or -
The Piacente
Group | Investor Relations
Don Markley or Glenn Garmont,
212-481-2050
tessera@tpg-ir.com
Source: Tessera Technologies, Inc.
News Provided by Acquire Media