Total revenue of $67.4 million, above the Company’s guidance range
Raises 2015 recurring revenue estimate to $240 million
Repurchased $40.0 million of common stock during the quarter
SAN JOSE, Calif. — (BUSINESS WIRE) — November 3, 2015 — Tessera Technologies, Inc. (NASDAQ: TSRA) (the “Company” or “we”) today announced financial results for the third quarter of 2015. Total revenue was $67.4 million, above the Company’s guidance range of $64 to $66 million. GAAP net income for the third quarter of 2015 was $32.5 million, or $0.62 per diluted share, and non-GAAP net income was $34.8 million, or $0.65 per diluted share.
“Our third quarter financial results were above our expectations, reflecting execution on growth initiatives and the strength and stability of our business model,” said Tom Lacey, CEO of Tessera Technologies, Inc. “Our acquisition of Ziptronix in August enhances our extensive intellectual property portfolio in the 2.5D and 3D-IC markets, and Ziptronix’s recently announced collaboration with Fraunhofer IZM-ASSID is an example of the range of new business opportunities we now address. FotoNation continues to build its roster of customers and development partners with the recent addition of leading phone and imaging companies QiKU, Huawei and Socionext. We are pleased to have delivered the seventh consecutive quarter of GAAP and non-GAAP profitability and we see strong momentum as we enter 2016.”
Third Quarter 2015 Results
Total revenue was $67.4 million in the third quarter of 2015, compared with revenue of $93.3 million in the third quarter of 2014. Recurring revenue was $66.4 million in the third quarter of 2015, compared with recurring revenue of $47.3 million in the third quarter of 2014. Third quarter 2015 revenue included $1.0 million of episodic revenue, compared with episodic revenue of $46.0 million in the third quarter of 2014 from our settlement with Powertech Technology, Inc.
Operating expenses were $27.6 million in the third quarter of 2015, compared with $31.3 million in the third quarter of 2014, a decrease of $3.7 million, or 12%. Litigation expense in the third quarter of 2015 decreased by $2.9 million, or 50%, from the third quarter of 2014, due to settlements reached during fiscal 2014 and 2015. Research and development (R&D) and selling, general and administrative (SG&A) expenses decreased by a combined $1.3 million, or 6%, compared with the prior year.
Net income was $32.5 million, or $0.62 per diluted share, compared with net income for the third quarter of 2014 of $108.7 million, or $2.04 per diluted share. Results for the third quarter of 2015 were favorably impacted by the reversal of valuation allowances of $6.3 million. Results for the third quarter of 2014 were favorably impacted by the reversal of a valuation allowance of $48.0 million on deferred tax assets in the U.S., and by an episodic revenue payment of $46.0 million.
Non-GAAP net income for the third quarter of 2015 was $34.8 million, or $0.65 per diluted share, compared with non-GAAP net income in the third quarter of 2014 of $47.1 million, or $0.87 per diluted share. Non-GAAP net income is defined as income 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.
Total current assets were $431.3 million as of September 30, 2015, a decrease of $44.2 million from December 31, 2014. Cash, cash equivalents and short-term investments were $387.2 million as of September 30, 2015, a decrease of $47.2 million from December 31, 2014. The decline in cash in the first nine months of the fiscal year was due to the previously announced acquisition of Ziptronix for $38.6 million, common stock repurchases of $97.5 million and the payment of $31.5 million of dividends, largely offset by cash generated from operating activities.
On September 18, 2015, the Company paid $10.4 million to stockholders of record as of August 28, 2015, for the quarterly cash dividend of $0.20 per share of common stock.
Additionally, on October 28, 2015, the Board of Directors approved a regular quarterly dividend of $0.20 per share of common stock, payable on December 15, 2015 to stockholders of record on November 24, 2015.
Stock Repurchase Program
During the third quarter of 2015, the Company repurchased 1,191,000 shares of common stock for an aggregate amount of $40.0 million. These purchases were executed under the Company’s stock repurchase program. As of September 30, 2015, the Company had approximately $51.1 million remaining under its current repurchase program.
For the fourth quarter of 2015, the Company’s guidance is as follows:
- Total revenue is expected to be between $60 million and $62 million;
- GAAP earnings per share are expected to be between $0.39 and $0.41 per diluted share;
- Non-GAAP earnings per share are expected to be between $0.50 and $0.52 per diluted share.