QLogic Corp. (NASDAQ:QLGC) Q3 2015 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 05:00 pm ET


QLogic Corp. (NASDAQ:QLGC) Q3 2015 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Third Quarter Fiscal Year 2015 QLogic's Earnings Announcement Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jean Hu, Chief Financial Officer of QLogic. Please go ahead.

Jean Hu

Thanks, Tom. Good afternoon, and welcome to QLogic's Third Quarter Fiscal Year 2015 Earnings Conference Call. Today's call is being webcast with a prepared slide that's available on our website at the qlogic.com under Investor Relations. Joining me on the call today is Prasad Rampalli, our President and Chief Executive Officer. Prasad will open the call with a discussion of the current state of our business. Then I will provide a review of our third quarter financial results, as well as the guidance for our fourth fiscal quarter. We will then open the call for questions.

(Forward-looking Cautionary Statements)

I would now turn the call over to Prasad. Prasad?

Prasad L. Rampalli

Thanks, Jean. I'm pleased to report that we delivered very strong financial results again in the third quarter of fiscal 2015. This is the second consecutive quarter that we've exceeded the high end of our prior guidance across all key metrics. Our continued outstanding performance was driven by our consistent execution and compelling product portfolio that enabled us to expand market share. We delivered revenue of $140.2 million, up 10% sequentially from the second quarter, and up 17% year-over-year.

Our revenue from Advanced Connectivity Platforms products was up 9% sequentially and 27% year-over-year. We achieved operating income of $34 million, up 33% sequentially and up 23% year-over-year and delivered

Prasad L. Rampalli

an operating margin of 24%. Our net income per diluted share was $0.36 in the third quarter. By all measures, the third quarter was outstanding, and we see our business momentum continuing, especially with the Grantley server cycle under way. We are in the early stages of this cycle, and we expect the industry secular trend of adopting 10 Gigabit Ethernet will accelerate, and we should be a leading beneficiary of this trend. And now moving on to our business update.

We are executing well in the Fibre Channel market, and are continuing to see indications that the SAN connectivity market is stabilizing. Our revenue from Fibre Channel products grew sequentially and year-over-year in the December quarter. Based on the recent market share report from Dell'Oro Group, we gained revenue share in the Fibre Channel Adapter market in the September quarter, and through the first three quarters of calendar 2014; and we hold the total revenue share of 59%.

We gained over four points of market share from calendar year 2013, and have a lead of over 18% points over our nearest competitor. Also noteworthy are the significant share gains achieved from our 16-Gig Gen 5 Fibre Channel adapters. For the first three quarters of calendar 2014, we've significantly improved our 16-Gig market share position, and achieved a #1 revenue share of 56% for the September quarter.

With our sequential revenue growth of Fibre Channel Adapters well in excess of