OmniVision Technologies, Inc. (
F3Q2011 Earnings Call Transcript
February 24, 2011 5:00 pm ET
Brian Dunn – IR
Shaw Hong – CEO and President
Ray Cisneros – VP, Worldwide Sales
Anson Chan – CFO and VP, Finance
Yair Reiner – Oppenheimer & Company
Harsh Kumar – Morgan Keegan
Paul Coster – J.P. Morgan
Hans Mosesmann – Raymond James
Rajvindra Gill – Needham & Company
Betsy Van Hees – Wedbush Securities
Doug Freedman – Gleacher & Company
Previous Statements by OVTI
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Ladies and gentlemen, thank you for standing by and welcome to the OmniVision Technologies conference call for the third quarter of fiscal 2011. At this time, all participants are in listen-only mode. Later we will open up the call for your questions. Instructions for queuing up will be provided at that time. As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the conference call over to Mr. Brian Dunn. Please proceed, sir.
Thank you very much. Good afternoon, everyone, and welcome to our fiscal 2011 third quarter earnings conference call. On today’s call will be Shaw Hong, President and CEO; Ray Cisneros, Vice President of Sales; and Anson Chan, Chief Financial Officer.
During this conference call, we may make forward-looking statements regarding our business, including statements relating to revenues, earnings targets, and our product plans. This is based on information as of today, February 24, 2011, and actual results may differ materially from those set forth in such statements. These and other forward-looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For a discussion of these risk factors, you should review the forward-looking disclosures in the earnings release we issued today as well as OmniVision’s SEC filings.
During today’s call, we will also discuss certain GAAP and non-GAAP financial measures, the latter of which excludes stock-based compensation expenses and related tax effects. A reconciliation between the two is available in our earnings release posted on our website.
With that, I will now turn the call over to Mr. Shaw Hong. Shaw?
Thank you, Brian. And welcome to all of you joining us on the call and webcast. Earlier this afternoon, we issued a press release describing our resource for the third fiscal quarter of 2011. For those who have not read the release, I’m pleased to provide you with a recap of our financial results. In Q3, we achieved another quarter of record revenues of $266 million, a 11% quarter-over-quarter increase in sales. On a non-GAAP basis, gross margin was 30%, the eighth consecutive quarter of improvement in gross margin, and net income was $51 million or $0.84 per diluted share. This is another record for OmniVision.
In addition, we maintained a very strong balance sheet with a cash position of $499 million. Further, we shipped record volumes of image sensors, nearly 194 million units. This is the highest level of units ever shipped by OmniVision in a quarter, surpassing the record established in the prior quarter. We are extremely pleased with our record results for both revenue and earnings.
In my formal comments today, I will focus on three key topics. First, OmniVision’s leadership role in image sensor technologies and solutions, and our strategy to maintain that leadership; Second, the broad and rapidly growing market that we currently sell with our high performance imaging products; and third, a brief overview of our expanding global operational presence, which is one of the keys to our continued success.
First, I will discuss OmniVision’s leadership role in the advancement of image sensor technologies and solutions. In the technology space, the ability to innovate is what set the company apart. It is this ability and constant commitment to innovation that has contributed to OmniVision’s success. As the first company to commercialize backside illumination or BSI technology, we began volume production based on our OmniBSI technology in the first half of calendar 2010.
With our proprietary OmniBSI technology, we deliver the industry-leading imaging solutions that offer the optimal combination of low light image capture with excellent color reproduction and clarity. In calendar 2010, we delivered on our continued commitment to drive the rapid development of BSI technology with the introduction of our second generation OmniBSI-2 pixel architecture. As such, OmniBSI-2 represents the next logical step in our long-term BSI development effort.
OmniBSI-2 technology is our first pixel architecture built on 300 millimeter wafer using a copper process. The new process and design rules enable a number of substantial improvements over OmniBSI technology’s already impressive performance, including improved picture layout, better isolation, and significantly reduced crosstalk. OmniVision-2 technology also incorporates a more advanced pixel and provides us with added flexibility in next generation sensor designs.
The results include increased sensitivity, improved image quality, and enhanced color reproduction. We believe our proprietary expertise in the design and the production of BSI sensors is our key competitive advantage. For this reason, we remain committed to the ongoing development of products based on our original OmniBSI technology, which continue to enjoy strong demand.
As with OmniBSI, we expect to apply over time our next generation OmniBSI-2 architecture to the majority of our sensor products. However, we were first to apply these latest technologies to those sensors and are using premium multi-feature devices, which demand superior in performance with continuing to extend the OmniBSI architecture appropriate to those products with best advantage of its unique features.
Recently, at the Mobile World Conference in Barcelona, we announced our first image sensor, built on our OmniBSI-2 technology, the OV8830 image sensor. The OV8830 device is our most sophisticated 8-megapixel image sensor to-date. The advanced feature offered by this device enables full HD video. We set a new standard for the laterally growing video-centric smartphone market.