Sigma Designs, Inc. Reports Third Quarter Fiscal Year 2018 Financial Results

FREMONT, Calif., Dec. 07, 2017 (GLOBE NEWSWIRE) -- Sigma Designs, Inc.^® SIGM, a leading provider of intelligent system-on-chip (SoC) solutions for Connected Smart TV platforms and smart home Internet of Things (IoT), today reported financial results for its third quarter of fiscal year 2018, which ended October 28, 2017.

Third Quarter Fiscal 2018 Financial Results

Net revenue for the third quarter of fiscal 2018 was $33.9 million. This compares with net revenue of $39.5 million reported in the previous quarter, and net revenue of $62.7 million in the same period in fiscal 2017. 

GAAP gross margin in the third quarter of fiscal 2018 was 50.5%.  This compares with GAAP gross margin of 47.6% in the previous quarter, and GAAP gross margin of 49.4% for the same period in fiscal 2017. 

Non-GAAP gross margin in the third quarter of fiscal 2018 was 54.7%.  This compares with non-GAAP gross margin of 48.1% in the previous quarter, and non-GAAP gross margin of 51.0% for the same period in fiscal 2017.

GAAP operating expenses in the third quarter of fiscal 2018 were $36.0 million, which includes an impairment charge of $5.5 million. This compares with GAAP operating expenses of $29.8 million in the previous quarter, and GAAP operating expenses of $28.8 million for the same period in fiscal 2017.

Non-GAAP operating expenses in the third quarter of fiscal 2018 were $27.8 million. This compares with non-GAAP operating expenses of $26.1 million in the previous quarter, and non-GAAP operating expenses of $26.7 million for the same period in fiscal 2017. 

GAAP operating loss in the third quarter of fiscal 2018 was ($18.9) million.  This compares with a GAAP operating loss of ($11.0) million in the previous quarter, and GAAP operating income of $2.2 million for the same period in fiscal 2017.

Non-GAAP operating loss in the third quarter of fiscal 2018 was ($9.3) million.  This compares with a non-GAAP operating loss of ($7.1) million in the previous quarter, and non-GAAP operating income of $5.3 million for the same period in fiscal 2017.

GAAP net loss in the third quarter of fiscal 2018 was ($19.1) million, or ($0.49) per share.  This compares with a GAAP net loss of ($12.7) million, or ($0.33) per share, in the previous quarter, and GAAP net income of $0.2 million, or $0.01 per share, for the same period in fiscal 2017. 

Non-GAAP net loss in the third quarter of fiscal 2018 was ($9.6) million, or ($0.25) per share.  This compares with a non-GAAP net loss of ($8.8) million, or ($0.23) per share, in the previous quarter, and non-GAAP net income of $3.3 million, or $0.09 per diluted share, for the same period in fiscal 2017. 

The reconciliation between the GAAP and non-GAAP financial results for all referenced periods is provided in a table immediately following the GAAP financial tables below.

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles ("GAAP"), Sigma also reports non-GAAP financial measures, as Sigma believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Non-GAAP financial measures are not a substitute for financial information prepared in accordance with GAAP.  Therefore, non-GAAP financial measures should not be considered in isolation, but should be considered together with the most directly comparable GAAP financial measures and the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financials measures.  The Company presents non-GAAP financial measures to provide investors with an additional tool to evaluate its operating results in a manner that focuses on what management believes to be its core, ongoing business operations. Furthermore, non-GAAP financial measures used by the Company may not be the same non-GAAP financial measures as those utilized by other companies; specifically, non-GAAP financial measures used by the Company may be calculated differently than other companies. Investors should, therefore, exercise caution when comparing non-GAAP financial measures used by Sigma to similarly titled non-GAAP financial measures of other companies. Sigma intends to calculate the various non-GAAP financial measures in future periods consistent with how they were calculated for the periods presented within this press release.

Sigma's non-GAAP financial measures exclude amortization of acquired intangibles, stock-based compensation, one-time legal and other professional fee expenses, net gain on the sale of and impairment of privately-held investments, impairment of purchased IP, mask sets used in production and one-time restructuring charges.  The tax amounts included in Sigma's non-GAAP results approximate its operating cash tax expense, similar to the liability reported on Sigma's tax returns.  In the GAAP to non-GAAP reconciliation at the end of this press release, we have disclosed the impact of these income tax adjustments in our calculation of our non-GAAP financial results.

Sigma believes that its non-GAAP measures provide useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations.  Sigma also believes the non-GAAP measures provide useful supplemental information for investors to evaluate Sigma's operating results in the same manner as the research analysts that follow Sigma's progress, all of whom present non-GAAP projections in their published reports. 

Sigma uses non-GAAP measures to evaluate and assess its performance and operating results on a consistent basis, and to measure and compare its performance with the financial projections published by analysts as well as its direct competitors in the industry, many of whom report financial results on a non-GAAP basis.  The economic substance behind its decision to use non-GAAP measures is that such measures approximate its controllable operating performance more closely than the most directly comparable GAAP financial results.  For example, Sigma's management has no control over certain variables that have a major influence in the determination of stock-based compensation. These variables include the volatility of its stock price and changing interest rates.  Sigma believes that all of these excluded expenses in its non-GAAP financial measures may not accurately reflect the underlying performance of its continuing operations for the period in which they are incurred, even though some of these excluded items may be incurred and reflected in Sigma's GAAP financial results in the foreseeable future. Sigma believes that the inclusion of these non-GAAP financial measures provides consistency and comparability with past reports and provides a better understanding of the overall performance of the business and its ability to perform in subsequent periods.

Sigma Designs and Z-Wave are registered trademark of Sigma Designs, Inc. in the United States and other countries.

About Sigma Designs, Inc.
Sigma Designs, Inc.^® SIGM is a world leader in enabling smart home convergence. The company designs and builds the essential semiconductor technologies that serve as the foundation for the world's leading Connected Smart TV platforms and Internet of Things (IoT) for smart home devices. For more information about Sigma Designs, please visit: www.sigmadesigns.com.

Investor Relations Contacts:
Jim Fanucchi
Darrow Associates, Inc.
(408) 404-5400
IR@sigmadesigns.com

Elias Nader, CFO, SVP and Corporate Secretary
Sigma Designs, Inc.
(510) 897-0077
IR@sigmadesigns.com