8-K
AXT INC (AXTI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 16, 2022
AXT, INC.
(Exact name of registrant as specified in its charter)
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|---|---|---|---|---|
| Delaware | 000-24085 | 94-3031310 | ||
| (State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
4281 Technology Drive
Fremont, California 94538
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (510) 438-4700
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | **** | Trading Symbol | **** | Name of each exchange on which registered: |
|---|---|---|---|---|
| Common Stock, $0.001 par value | | AXTI | | The NASDAQ Stock Market LLC |
Item 2.02 Results of Operations and Financial Condition
On February 16, 2022 AXT, Inc. issued a press release announcing its financial results for the quarter and fiscal year ended December 31, 2021. A copy of the Company’s press release, announcing the results, is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information in Exhibit 99.1 hereto discussing the Company’s results of operations and financial condition for the quarter and fiscal year ended December 31, 2021, is being “furnished” in accordance with General Instruction B.2 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Press release dated February 16, 2022, regarding the financial results of AXT, Inc. for the quarter and fiscal year ended December 31, 2021.
EXHIBIT INDEX
| Eptem | | |
|---|---|---|
| Exhibit<br>Number | Description | |
| 99.1 | | Press release dated February 16, 2022, regarding the financial results of AXT, Inc. for the quarter and fiscal year ended December 31, 2021. |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | AXT, INC. | |
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| Date: February 16, 2022 | By: | /s/ Gary L. Fischer |
| | | Gary L. Fischer |
| | | Chief Financial Officer and Corporate Secretary |
| Y | |
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Exhibit 99.1 |
| | AXT, Inc. Fourth Quarter and Fiscal Year 2021 Results |
| | February 16, 2022 |
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AXT, Inc. Announces Fourth Quarter and Fiscal Year 2021 Financial Results
Topline Expands 44 Percent Year on Year
FREMONT, Calif., February 16, 2022 – AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the fourth quarter and fiscal year, ended December 31, 2021.
Management Qualitative Comments
“2021 was a pivotal year for our business,” said Morris Young, chief executive officer. “We achieved 44 percent revenue growth, driven by market expansion and strategic customer wins, and delivered a more than 350 percent increase in our profitability. We believe we are hitting an inflection point in which applications that were once considered early stage technologies are now moving to mainstream adoption. And as we look ahead, we expect our momentum to continue. With our current growth drivers, we believe we can deliver healthy double-digit revenue growth in 2022. Our investments in capacity, R&D for larger diameter substrates, and the STAR Market IPO of our Tongmei subsidiary give us significant competitive advantages in our ability to scale our business, and meet the needs of Tier-1 customers and emerging high-volume applications. We have a strong foundation in place and believe that the stage is set for another year of meaningful achievement in 2022.”
Fourth Quarter 2021 Results
In order to provide better clarity on its operational and financial results, AXT began reporting its financial results on both a GAAP and non-GAAP basis in the third quarter of 2021. Non-GAAP results exclude stock-based compensation. Investors can find GAAP to non-GAAP reconciliation tables in the financial statements in this earnings release.
| ● | Revenue for the fourth quarter of 2021 was $37.7 million, compared with $34.6 million in the third quarter of 2021 and $27.0 million for the fourth quarter of 2020. This is 40% quarterly growth over the fourth quarter of 2020. |
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| ● | GAAP gross margin was 32.2 percent of revenue for the fourth quarter of 2021, compared with 33.3 percent of revenue in the third quarter of 2021 and 33.9 percent for the fourth quarter of 2020. |
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| ● | Non-GAAP gross margin, after eliminating charges for stock compensation, was 32.4 percent of revenue for the fourth quarter of 2021, compared with 33.8 percent of revenue in the third quarter of 2021 and 34.0 percent for the fourth quarter of 2020. |
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| | AXT, Inc. Fourth Quarter and Fiscal Year 2021 Results | |
| | February 16, 2022 | |
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| ● | GAAP operating expenses were $9.1 million in the fourth quarter of 2021. This compares with $9.1 million in the third quarter of 2021 and $7.2 million for the fourth quarter of 2020. |
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| ● | Non-GAAP operating expenses were $8.1 million in the fourth quarter of 2021. This compares with $7.7 million in the third quarter of 2021 and $6.6 million for the fourth quarter of 2020. |
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| ● | GAAP operating profit for the fourth quarter of 2021 was $3.0 million, compared with operating profit of $2.4 million in the third quarter of 2021 and an operating profit of $1.9 million for the fourth quarter of 2020. |
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| ● | Non-GAAP operating profit for the fourth quarter of 2021 was $4.1 million, compared with operating profit of $4.0 million in the third quarter of 2021 and an operating profit of $2.6 million for the fourth quarter of 2020. |
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| ● | Non-operating income and expense, net (including income attributable to noncontrolling interests and redeemable noncontrolling interests) for the fourth quarter of 2021 was an expense of $0.1 million, compared with income of $1.4 million in the third quarter of 2021 and income of $0.1 million for the fourth quarter of 2020. |
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| ● | GAAP net income in the fourth quarter of 2021 was $3.0 million, or $0.07 per share, compared with net income of $3.8 million or $0.09 per share in the third quarter of 2021, and net income of $2.1 million or $0.05 per share for the fourth quarter of 2020. |
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| ● | Non-GAAP net income in the fourth quarter of 2021 was $4.1 million, or $0.09 per share, compared with net income of $5.4 million or $0.13 per share in the third quarter of 2021, and net income of $2.8 million or $0.06 per share for the fourth quarter of 2020. |
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Fiscal Year 2021 Results (January 1 to December 31, 2021)
| ● | Revenue for fiscal year 2021 was $137.4 million, an increase of 44 percent from $95.4 million in fiscal year 2020. |
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| ● | GAAP gross margin for fiscal year 2021 was 34.5 percent of revenue, up from 31.7 percent of revenue in fiscal year 2020. |
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| ● | Non-GAAP gross margin for fiscal year 2021 was 34.8 percent of revenue, up from 31.9 percent of revenue in fiscal year 2020. |
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| ● | GAAP operating expenses for fiscal year 2021 were $34.5 million, compared with $26.3 million in fiscal year 2020. |
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| ● | Non-GAAP operating expenses for fiscal year 2021 were $30.4 million, compared with $23.8 million in fiscal year 2020. | |
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| | AXT, Inc. Fourth Quarter and Fiscal Year 2021 Results | |
| | February 16, 2022 | |
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| ● | GAAP operating income for fiscal year 2021 was $12.9 million compared with $3.9 million in fiscal 2020. |
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| ● | Non-GAAP operating income for fiscal year 2021 was $17.4 million compared with $6.6 million in fiscal 2020. |
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| ● | GAAP net income for fiscal 2021 was $14.6 million, or $0.34 per share, compared with $3.2 million, or $0.07 per share for fiscal 2020. |
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| ● | Non-GAAP net income for fiscal 2021 was $19.1 million, or $0.44 per share, compared with $5.9 million, or $0.14 per share for fiscal 2020. |
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STAR Market Listing Update
On January 10, 2022 AXT announced that Tongmei, their subsidiary in Beijing, China, submitted to the Shanghai Stock Exchange in late December 2021 their application to go public on the STAR Market. The application was accepted for consideration on January 10, 2022. The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process. Tongmei expects to accomplish this goal in the second half of 2022. AXT has posted a brief summary of the plan and the process on its website at www.axt.com.
Conference Call
The company will host a conference call to discuss these results today at 1:30 p.m. PT. The conference call can be accessed at (844) 892-6598 (passcode 7427708). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (855) 859-2056 (passcode 7427708) until February 24, 2021. Financial and statistical information to be discussed in the call will be available on the company’s website immediately prior to commencement of the call. Additional investor information can be accessed at http://www.axt.com or by calling the company’s Investor Relations Department at (510) 438-4700.
About AXT, Inc.
AXT is a material science company that develops and manufactures high-performance compound and single element semiconductor substrate wafers comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge). The company’s substrate wafers are used when a typical silicon substrate wafer cannot meet the performance requirements of a semiconductor or optoelectronic device. End markets include 5G infrastructure, data center connectivity (silicon photonics), passive optical networks, LED lighting, lasers, sensors, power amplifiers for wireless devices and satellite solar cells. AXT’s worldwide headquarters are in Fremont, California where the company maintains sales, administration and customer service functions. AXT has its Asia headquarters in Beijing, China and manufacturing facilities in three separate locations in China. In addition, as part of its supply chain strategy,
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the company has partial ownership in ten companies in China producing raw materials for its manufacturing process. For more information, see AXT’s website at http://www.axt.com.
Note Regarding Use of Non-GAAP Financial Measures
As discussed above, in addition to the company’s condensed consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation. We believe that non-GAAP measures provide better comparability with our peer companies, many of which also use similar non-GAAP financial measures. Further, the company believes that these non-GAAP measures offer an important analytical tool to help investors understand the company’s core operating results and trends. These non-GAAP measures have certain limitations and are not meant to be considered in isolation or as a substitute for GAAP financial information. Please note that other companies may calculate non-GAAP financial measures differently. A reconciliation of our GAAP consolidated financial statements to our non-GAAP consolidated financial statements is provided below.
Forward-Looking Statements
The foregoing paragraphs contain forward-looking statements within the meaning of the Federal securities laws, including, for example, our belief that we can deliver healthy double-digit revenue growth in 2022, statements regarding completing other preliminary steps in connection with the proposed listing of shares of Tongmei on the STAR Market, being accepted to list shares of Tongmei on the STAR Market and the timing and completion of such listing of shares of Tongmei on the STAR Market. Additional examples of forward-looking statements include statements regarding the market demand for our products, our growth prospects and opportunities for continued business expansion, including technology trends and new applications, our market opportunity, our ability to lead our industry, our relocation and our expectations with respect to our business prospects and financial results. These forward-looking statements are based upon assumptions that are subject to uncertainties and factors relating to the company’s operations and business environment, which could cause actual results to differ materially from those expressed or implied in the forward-looking statements contained in the foregoing discussion. These uncertainties and factors include but are not limited to: the withdrawal, cancellations or requests for redemptions by private equity funds in China of investments in Tongmei, the administrative challenges in satisfying the requirements of various government agencies in China in connection with the investments in Tongmei and the listing of shares of Tongmei on the STAR Market, continued open access to companies to list shares on the STAR Market, investor enthusiasm for new listings of shares on the STAR Market and geopolitical tensions between China and the United States. Additional uncertainties and factors include, but are not limited to: the timing and receipt of significant orders; the cancellation of orders and return of product; emerging applications using chips or devices fabricated on our substrates; end-user acceptance of products containing chips or devices fabricated on our substrates; our ability to bring new products to market; product announcements by our competitors; the ability to control costs and improve efficiency; the ability to utilize our manufacturing capacity; product yields and their impact on gross margins; the relocation of manufacturing lines and ramping of production; possible factory shutdowns as a
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result of air pollution in China; COVID-19 or other outbreaks of a contagious disease; tariffs and other trade war issues; the financial performance of our partially owned supply chain companies; policies and regulations in China; and other factors as set forth in the company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q and other filings made with the Securities and Exchange Commission. Each of these factors is difficult to predict and many are beyond the company’s control. The company does not undertake any obligation to update any forward-looking statement, as a result of new information, future events or otherwise.
FINANCIAL TABLES TO FOLLOW
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| | AXT, Inc. Fourth Quarter and Fiscal Year 2021 Results | |
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AXT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Three Months Ended | Year Ended | | ||||||||||
| | | December 31, | | December 31, | | ||||||||
| | | 2021 | 2020 | | 2021 | 2020 | |||||||
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| Revenue | | $ | 37,732 | | $ | 27,035 | | $ | 137,393 | | $ | 95,361 | |
| Cost of revenue | | 25,593 | | 17,873 | | 89,979 | | 65,086 | | ||||
| Gross profit | | 12,139 | | 9,162 | | 47,414 | | 30,275 | | ||||
| Operating expenses: | | | | | | | | | | | | | |
| Selling, general and administrative | | 6,348 | | 5,081 | | 24,189 | | 19,200 | | ||||
| Research and development | | 2,757 | | 2,162 | | 10,328 | | 7,135 | | ||||
| Total operating expenses | | 9,105 | | 7,243 | | 34,517 | | 26,335 | | ||||
| Income from operations | | 3,034 | | 1,919 | | 12,897 | | 3,940 | | ||||
| Interest expense, net | | (158) | | (41) | | (213) | | (179) | | ||||
| Equity in income of unconsolidated joint ventures | | 735 | | 354 | | 4,409 | | 111 | | ||||
| Other income (expense), net | | (389) | | 260 | | 509 | | 3,200 | | ||||
| Income before provision for (benefit from) income taxes | | 3,222 | | 2,492 | | 17,602 | | 7,072 | | ||||
| Provision for (benefit from) income taxes | | (411) | | 108 | | 1,093 | | 2,031 | | ||||
| Net income | | 3,633 | | 2,384 | | 16,509 | | 5,041 | | ||||
| Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests | | (668) | | (320) | | (1,934) | | (1,803) | | ||||
| Net income attributable to AXT, Inc. | | $ | 2,965 | | $ | 2,064 | | $ | 14,575 | | $ | 3,238 | |
| Net income attributable to AXT, Inc. per common share: | | | | | | | | | | | | | |
| Basic | | $ | 0.07 | | $ | 0.05 | | $ | 0.35 | | $ | 0.08 | |
| Diluted | | $ | 0.07 | | $ | 0.05 | | $ | 0.34 | | $ | 0.07 | |
| Weighted-average number of common shares outstanding: | | | | | | | | | | | | | |
| Basic | | 41,758 | | 40,678 | | 41,367 | | 40,152 | | ||||
| Diluted | | 42,750 | | 42,042 | | 42,720 | | 41,025 | |
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AXT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
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|---|---|---|---|---|---|---|---|
| | December 31, | December 31, | | ||||
| | | 2021 | | 2020 | |||
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| ASSETS | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 36,763 | | $ | 72,602 | |
| Short-term investments | | 5,419 | | 240 | | ||
| Accounts receivable, net | | 34,839 | | 24,558 | | ||
| Inventories | | 65,912 | | 51,515 | | ||
| Prepaid expenses and other current assets | | 17,252 | | 15,603 | | ||
| Total current assets | | 160,185 | | 164,518 | | ||
| Long-term investments | | 9,576 | | 5,726 | | ||
| Property, plant and equipment, net | | 142,415 | | 115,825 | | ||
| Operating lease right-of-use assets | | | 2,324 | | | 2,683 | |
| Other assets | | 17,941 | | 10,110 | | ||
| Total assets | | $ | 332,441 | | $ | 298,862 | |
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY | | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable | | $ | 16,649 | | $ | 12,669 | |
| Accrued liabilities | | 17,057 | | 15,995 | | ||
| Short-term loan, related party | | | 1,887 | | | — | |
| Bank loan | | | 12,229 | | | 10,411 | |
| Total current liabilities | | 47,822 | | 39,075 | | ||
| Noncurrent operating lease liabilities | | | 1,935 | | | 2,374 | |
| Other long-term liabilities | | 2,453 | | 1,881 | | ||
| Total liabilities | | 52,210 | | 43,330 | | ||
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| Redeemable noncontrolling interests | | | 50,385 | | | 47,563 | |
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| Stockholders’ equity: | | | | | | | |
| Preferred stock | | 3,532 | | 3,532 | | ||
| Common stock | | 43 | | 42 | | ||
| Additional paid-in capital | | 231,622 | | 230,381 | | ||
| Accumulated deficit | | (29,970) | | (44,545) | | ||
| Accumulated other comprehensive income | | 6,302 | | 3,209 | | ||
| Total AXT, Inc. stockholders’ equity | | 211,529 | | 192,619 | | ||
| Noncontrolling interests | | 18,317 | | 15,350 | | ||
| Total stockholders’ equity | | 229,846 | | 207,969 | | ||
| Total liabilities, redeemable noncontrolling interests and stockholders’ equity | | $ | 332,441 | | $ | 298,862 | |
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AXT, INC.
Reconciliation of Statements of Operations Under GAAP and Non-GAAP
(Unaudited, in thousands)
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Three Months Ended | Year Ended | ||||||||||
| | | December 31, | | December 31, | ||||||||
| | | 2021 | 2020 | | 2021 | 2020 | ||||||
| GAAP gross profit | | $ | 12,139 | | $ | 9,162 | | $ | 47,414 | | $ | 30,275 |
| Stock compensation expense | | | 105 | | | 33 | | | 368 | | | 116 |
| Non-GAAP gross profit | | $ | 12,244 | | $ | 9,195 | | $ | 47,782 | | $ | 30,391 |
| | | | | | | | | | | | | |
| GAAP operating expenses | | $ | 9,105 | | $ | 7,243 | | $ | 34,517 | | $ | 26,335 |
| Stock compensation expense | | | 983 | | | 659 | | | 4,151 | | | 2,507 |
| Non-GAAP operating expenses | | $ | 8,122 | | $ | 6,584 | | $ | 30,366 | | $ | 23,828 |
| | | | | | | | | | | | | |
| GAAP income from operations | | $ | 3,034 | | $ | 1,919 | | $ | 12,897 | | $ | 3,940 |
| Stock compensation expense | | | 1,088 | | | 692 | | | 4,519 | | | 2,623 |
| Non-GAAP income from operations | | $ | 4,122 | | $ | 2,611 | | $ | 17,416 | | $ | 6,563 |
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| GAAP net income | | $ | 2,965 | | $ | 2,064 | | $ | 14,575 | | $ | 3,238 |
| Stock compensation expense | | | 1,088 | | | 692 | | | 4,519 | | | 2,623 |
| Non-GAAP net income | | $ | 4,053 | | $ | 2,756 | | $ | 19,094 | | $ | 5,861 |
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| GAAP net income per diluted share | | $ | 0.07 | | $ | 0.05 | | $ | 0.34 | | $ | 0.07 |
| Stock compensation expense per diluted share | | $ | 0.03 | | $ | 0.02 | | $ | 0.11 | | $ | 0.06 |
| Non-GAAP net income per diluted share | | $ | 0.09 | | $ | 0.06 | | $ | 0.44 | | $ | 0.14 |
| | | | | | | | | | | | | |
| Shares used to compute diluted net income per share | | 42,750 | | 42,042 | | 42,720 | | 41,025 |