Mellanox Technologies, Ltd.(NASDAQ: MLNX) stock enhanced over 3.6% on Jan 19th, 2018 (as of 12:00PM EST; Source: Google finance) driven by their positive fourth quarter of 2017 performance.
The group’s fourth quarter revenues surged 5.3% yoy to $238 million, while full fiscal 2017 revenue rose 0.7% yoy to $864 million. Major drivers are their high-performance product is the IP they developed and used to improve the product. The group’s investment strategy has enabled long-term growth over the years.
The Revenues from ICs accounted 15% of fourth quarter revenues while revenues from boards comprised 41% and switch system revenues represented for 26%. The group’s fourth quarter InfiniBand revenues reached $102 million which rose 1.9% sequentially. Revenues from InfiniBand-based products accounted 43% of revenues in Q4 2017, but this is a decrease from 44% of revenues in Q3 2017. EDR 100 gigabit per second InfiniBand products rose 11.2% sequentially and enhanced 2.8% on a year-over-year basis accounting 49% of the fourth quarter InfiniBand revenues.
The group’s quarterly Ethernet revenues enhanced 11% sequentially to $122.8 million, while rose 73% on a year-over-year basis. Ethernet revenues accounted 52% of fourth quarter revenues. The group has two more than 10% customers in the fourth quarter; they were HPE with 13% and Dell with 11% of revenues.
They heavily invested in InfiniBand and became the leaders in high-performance interconnect. They group got design wins across their product suite, wherein Mellanox started to reap the rewards of their investment. They are the leaders in Ethernet mix for 25 gigabit Ethernet and above, and number two with Ethernet switch telecom of 25 gigabit Ethernet and above.
The group’s superior InfiniBand Solutions delivered higher performance and better return on investment than the alternatives. Moreover, their Ethernet Solutions, is a strong growth engine and continues to see positive traction.
The group added a processor product line to their portfolio, from the EZchip acquisition. They merged the IP of the two companies to introduce their first system-on-chip product, BlueField. The group began shipping BlueField product in the fourth quarter of 2017 and are seeing good results and traction in the market. Mellanox’s 2550 and a 100 gigabit per second Ethernet revenues surged 47% sequentially, on the back of a broad adoption of Ethernet adapters, switches and cables across multiple customers, market and geographies.