ViXS reports results for the third quarter of fiscal 2014

TORONTO — ViXS Systems Inc., (TSX: VXS), a leader in semiconductor System on Chip (SoC) solutions for the advanced consumer electronics multimedia and broadcasting market, today announced results for the third quarter of its fiscal 2014 (“Q3FY14”), ending October 31, 2013. All results are reported in U.S. dollars under International Financial Reporting Standards (“IFRS”), unless otherwise specified. ViXS reported Q3FY14 revenue of $7.9 million, gross margin of 47.5%, total comprehensive loss of $4.6 million, and non-IFRS net loss of $4.2 million.

Recent Business Highlights:

• Surpassed 1 million shipments of MoCA chipsets in December, becoming the leading provider of MoCA 2.0-ready solutions.
• New XCode6 product successfully completed tape-out and begun sampling, marking the eighth consecutive time ViXS has achieved a production ready chip on its first attempt. ViXS received its first firm orders for the XCode6.
• Added $91 million of incremental business to its pipeline in the last quarter, expected to be monetized over the next four years.
• Continued increase in design activity for joint HEVC (new H.265 standard) and UltraHD (4K) format solutions.
• XCode™ 6403 selected by a tier-one Consumer Electronics company to power its flagship next-generation product due to full support for HEVC and Ultra HD 4K.
• ViXS signed a new licensing agreement with Synopsys, to further advance its innovative designs;
• New development agreement with a tier-1 customer in the pay-TV market, which involved non-recurring engineer (NRE) revenue in the quarter to accelerate design efforts.

Revenue for the third quarter of fiscal 2014 was $7.9 million, down 2% sequentially from the $8.1 million in the previous quarter. This lower revenue was primarily due to timing of revenue recognized from a new development contract with an existing customer and a Japanese customer reducing existing inventory before migrating to a new design using a ViXS chip. Revenue was down 14% from the $9.2 million in the same quarter of last year primarily due to the timing of product transitions as customers migrate from the Company’s older generation products to more integrated next-generation SoC products, partially offset by ViXS’ entry into the MoCA and cloud video infrastructure markets. Gross margin of 47.5% in Q3FY14 declined from the 52.7% level in Q2FY14 due to a higher mix of discrete MoCA products and cost variances in the period, partially offset by new contributions from development contracts and infrastructure sales. Product gross margin was 49.4% in the quarter.