Quantenna Announces First Quarter 2018 Financial Results
May 02 2018 - 9:18AM
Quantenna Communications, Inc. (NASDAQ:QTNA), a global leader and
innovator of leading-edge performance Wi-Fi solutions, today
announced preliminary unaudited financial results for the first
quarter ended April 1, 2018.
"Our first quarter strength bolsters our Wave 3 10G growth
strategy as we experienced accelerated deployment momentum with our
key cable MSO customer coupled with an additional cable MSO
initiating full volume rollout. Additionally, these deployments are
now sourced through two separate OEM partners, which adds
additional capacity to serve demand and diversifies the supply
chain. We also continue to receive inbound interest for Wave 3 10G
designs due to its superior performance in the Wi-Fi landscape,”
remarked Dr. Sam Heidari, Chairman and Chief Executive Officer.
“We expect record revenue in the second quarter, driven by
record Wave 3 10G revenue shipments, as we extend our customer
opportunities into mainstream markets and new and existing
high-performance markets that seek a full-featured and unparalleled
connectivity experience.”
Financial Summary
|
Three Months Ended |
|
|
|
April 1, 2018 |
|
April 2, 2017 |
|
% Change |
|
|
|
|
|
|
Revenue |
$ |
45,117 |
|
|
$ |
37,891 |
|
|
19.1 |
% |
Gross Profit |
22,765 |
|
|
18,584 |
|
|
22.5 |
% |
Gross Margin |
50.5 |
% |
|
49.0 |
% |
|
150 bps |
Net income (loss): |
|
|
|
|
|
GAAP |
$ |
(3,247 |
) |
|
$ |
(884 |
) |
|
|
Non-GAAP |
1,160 |
|
|
1,220 |
|
|
|
Net income (loss) per
share - diluted: |
|
|
|
|
|
GAAP |
$ |
(0.09 |
) |
|
$ |
(0.03 |
) |
|
|
Non-GAAP |
0.03 |
|
|
0.03 |
|
|
|
|
|
|
|
|
|
(in
thousands except per share data, unaudited) |
|
|
|
|
|
|
|
|
|
Commentary on the first quarter 2018 financial results by
Company management is available at
http://ir.quantenna.com/events.cfm.
Please see the note regarding the use of non-GAAP financial
measures below, including a detailed reconciliation between GAAP
and non-GAAP information in the tables included herein.
First Quarter Company
Highlights
- Revenue of $45.1 million, representing year over year growth of
19% over the first quarter of 2017 and 9% sequential growth over
the fourth quarter of 2017.
- First quarter GAAP gross margin of 50.5% compared to 49.0% in
the first quarter of fiscal year 2017. First quarter non-GAAP gross
margin of 50.5% compared to 49.2% in the first quarter of fiscal
year 2017.
- First quarter GAAP and non-GAAP gross profit grew 22% from the
first quarter of fiscal year 2017.
- Cash from operations generated $6.8 million in the first
quarter of fiscal year 2018, compared to ($0.4) million in the
first quarter of 2017.
- Wave 3 10G continues its leadership position in the first
quarter with a cable MSO initiating a full volume rollout using our
technology exclusively in their flagship next generation
gateway.
- Our cable MSO customers using our Wave 3 10G solutions are now
sourcing their next generation gateways through two separate OEM
partners, which adds substantial capacity to serve subscriber
demand while diversifying the supply chain.
- Partnered with Canal+ Group to deliver an end-to-end solution
that enables wireless HD video redistribution from set-top box to a
companion Over-The-Top (OTT) set-top box.
- Announced enhanced Wi-Fi features on the Wave 3 QSR10G chipset
family targeting gateways and access points that significantly
improve the user experience of mobile Wi-Fi clients.
- Partnered with Greenwave Systems, Inc., to deliver a full
duplex 4x4 802.11ac Wave 2 Wi-Fi extender for superior whole-home
coverage.
- Collaborated with Icotera to deliver innovative next-generation
fiber gateway and Wi-Fi access point solutions to the European
market.
Business Outlook
|
Second Quarter 2018 Guidance Range |
Revenue |
$51M to $53M |
Gross Margin |
|
GAAP |
48%
+/- 100bps |
Non-GAAP |
48%
+/- 100bps |
Operating Expense
Growth (sequential) |
|
GAAP |
Flat
to up 4% |
Non-GAAP |
Flat
to up 5% |
Net income (loss) per
share-diluted |
|
GAAP |
($0.04) - ($0.02) |
Non-GAAP |
$0.07 - $0.09 |
|
|
Gross margin, operating
expense and net income GAAP to Non-GAAP reconciliation relates to
stock based compensation expense and change in deferred tax
assets. |
|
Webcast and Conference Call
Quantenna management will host a conference call discussing the
quarterly results and business outlook following this press release
at 2:00 p.m. Pacific Time today. Individuals interested in
listening to the conference call may do so by dialing (877)
239-5585 for domestic callers or (661) 378-9806 for international
callers. Please reference Conference ID: 4674009. An audio webcast
and replay will be available on the “Investor Relations” section of
Quantenna’s website at http://ir.quantenna.com/events.cfm.
Non-GAAP Financial Measures
In addition to GAAP reporting, Quantenna provides information
regarding net income, gross profit, gross margin, and operating
expenses on a non-GAAP basis. This non-GAAP information excludes
stock-based compensation expense and changes to deferred tax
balances. These non-GAAP measures are used by the Company’s
management for the purposes of evaluating the underlying operating
performance of the Company, establishing internal budgets,
comparing performance with internal forecasts and goals, strategic
planning, benchmarking against other companies, to provide a more
consistent basis of comparison and to enable more meaningful period
to period comparisons. These non-GAAP measures are provided in
addition to, and not as a substitute for, measures of financial
performance prepared in accordance with GAAP. A reconciliation
between GAAP and non-GAAP financial data is included in the
supplemental financial tables included in this press release.
About Quantenna Communications
Quantenna (Nasdaq:QTNA) is the global leader and innovator of
high performance Wi-Fi solutions. Founded in 2006, Quantenna has
demonstrated its leadership in Wi-Fi technologies with many
industry firsts. Quantenna continues to innovate with the mission
to perfect consumer’s Wi-Fi experience by establishing benchmarks
for speed, range, efficiency and reliability. Quantenna takes a
multidimensional approach, from silicon to system and software, to
provide total Wi-Fi network solutions. For more information, visit
www.quantenna.com.
Forward-Looking Statements
This press release contains forward-looking statements based on
Quantenna’s current expectations, including statements regarding
Quantenna’s preliminary financial results for the first quarter
ended April 1, 2018, expected future business and financial
performance, growth opportunities, product technologies and
customer relationships. The words "believe," "estimate," "expect,"
"intend," "anticipate," "plan," "project," "will" and similar
phrases as they relate to Quantenna are intended to identify such
forward-looking statements. These forward-looking statements
reflect the current views and assumptions of Quantenna and are
subject to various risks and uncertainties that could cause actual
results to differ materially from expectations. Among the factors
that could cause actual results to differ materially from those in
the forward-looking statements are the following: challenges
developing new and leading edge products on a timely basis that
achieve market acceptance; the complexity of the products,
including integration requirements with components from other third
parties that are outside of our control; quarterly fluctuations in
revenues and operating results; intense market competition,
including competition from other companies that are larger and have
greater resources and broader product ecosystem offerings; ability
to accurately predict future revenue and expenses; potential
cancellation of customer orders; risks that Quantenna may not be
able to maintain its historical growth or achieve similar levels of
success with respect to new products; ability to attract and retain
customers and service providers; dependence on a limited number of
products and customers; intellectual property litigation risks;
industry consolidation and risks associated with acquisitions,
divestitures and strategic partnerships with respect to Quantenna
as well as third parties; product liability risks; difficulties
managing international operations; risks that Quantenna may not be
able to manage strains associated with its growth; dependence on
key personnel; stock price volatility; dependence on, and
geographic concentration of, contract manufacturers, customers and
end customers, assembly and test providers, and other vendors that
subject Quantenna's business and results of operations to risks of
natural disasters, epidemics, war and political unrest; the
cyclical nature of the semiconductor industry; potential changes in
tax and other laws affecting Quantenna’s business; revenue
recognition impacts due to ASC 606; adjustments to the preliminary
financial results reported in this press release and related
earnings call announcement and materials for the first quarter of
2018 in connection with completion of the final closing process and
procedures and preparation of our Quarterly Report on Form 10-Q;
and other factors that are detailed in the Securities and Exchange
(“SEC”) filings of Quantenna, which you may obtain for free at the
SEC’s website at http://www.sec.gov. Quantenna disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Quantenna Communications,
Inc.Condensed Consolidated Statements of
Operations(in thousands except per share data,
unaudited) |
|
|
|
Three Months Ended |
|
April 1, 2018 |
|
April 2, 2017 |
|
|
|
|
Revenue |
$ |
45,117 |
|
|
$ |
37,891 |
|
Cost of revenue |
22,352 |
|
|
19,307 |
|
Gross
profit |
22,765 |
|
|
18,584 |
|
Operating
expenses: |
|
|
|
Research
and development |
17,601 |
|
|
12,633 |
|
Sales and
marketing |
4,495 |
|
|
2,914 |
|
General
and administrative |
4,198 |
|
|
3,389 |
|
Total
operating expenses |
26,294 |
|
|
18,936 |
|
Loss from
operations |
(3,529 |
) |
|
(352 |
) |
Interest expense |
— |
|
|
(197 |
) |
Other income (expense),
net |
334 |
|
|
200 |
|
Loss
before income taxes |
(3,195 |
) |
|
(349 |
) |
Provision for income
taxes |
(52 |
) |
|
(535 |
) |
Net
loss |
$ |
(3,247 |
) |
|
$ |
(884 |
) |
Net loss per share -
basic and diluted |
$ |
(0.09 |
) |
|
$ |
(0.03 |
) |
Shares used in
computing net loss per share - basic and diluted |
35,848 |
|
|
33,107 |
|
|
|
|
|
|
Quantenna Communications,
Inc.Unaudited reconciliation of GAAP to Non-GAAP
Financial Measures(in thousands, except per share
data) |
|
|
|
Non-GAAP Income Statement Items |
Three months ended April 1, 2018 |
Three months ended April 2, 2017 |
|
GAAP Measure |
Stock-based Compensation Expense |
Income Taxes* |
Non-GAAP Measure |
GAAP Measure |
Stock-based Compensation Expense |
Non-GAAP Measure |
Revenue |
$ |
45,117 |
|
|
|
$ |
45,117 |
|
$ |
37,891 |
|
|
$ |
37,891 |
|
Gross profit |
22,765 |
|
34 |
|
|
22,799 |
|
18,584 |
|
43 |
|
18,627 |
|
Gross margin |
50.5 |
% |
0.1 |
% |
|
50.5 |
% |
49.0 |
% |
0.1 |
% |
49.2 |
% |
Research and
development |
17,601 |
|
2,393 |
|
|
15,208 |
|
12,633 |
|
1,205 |
|
11,428 |
|
Sales and
marketing |
4,495 |
|
984 |
|
|
3,511 |
|
2,914 |
|
353 |
|
2,561 |
|
General and
administrative |
4,198 |
|
1,181 |
|
|
3,017 |
|
3,389 |
|
503 |
|
2,886 |
|
Income (loss) from
operations |
(3,529 |
) |
4,592 |
|
|
1,063 |
|
(352 |
) |
2,104 |
|
1,752 |
|
Benefit (provision) for
income taxes |
(52 |
) |
— |
|
(185 |
) |
(237 |
) |
(535 |
) |
— |
|
(535 |
) |
Net income (loss) |
$ |
(3,247 |
) |
$ |
4,592 |
|
$ |
(185 |
) |
$ |
1,160 |
|
$ |
(884 |
) |
$ |
2,104 |
|
$ |
1,220 |
|
Basic shares
outstanding |
35,848 |
|
|
|
35,848 |
|
33,107 |
|
|
33,107 |
|
Basic earnings per
share |
$ |
(0.09 |
) |
|
|
$ |
0.03 |
|
$ |
(0.03 |
) |
|
$ |
0.04 |
|
Diluted shares
outstanding |
35,848 |
|
|
|
38,703 |
|
33,107 |
|
|
38,371 |
|
Diluted earnings per
share |
$ |
(0.09 |
) |
|
|
$ |
0.03 |
|
$ |
(0.03 |
) |
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Income tax adjustment relating to change in US Federal and
State deferred tax assets.
|
|
Quantenna Communications,
Inc.Unaudited Forward-Looking Statements Regarding
Business Outlook |
|
|
|
Business Outlook |
|
Three Months Ended April 1, 2018 |
|
|
|
|
|
|
|
Low |
|
High |
Estimated GAAP diluted
loss per share |
|
$ |
(0.04 |
) |
|
$ |
(0.02 |
) |
Estimated stock
compensation expense |
|
(0.11 |
) |
|
(0.11 |
) |
Estimated Non-GAAP
diluted earnings per share |
|
$ |
0.07 |
|
|
$ |
0.09 |
|
|
|
Quantenna Communications,
Inc.Condensed Consolidated Balance
Sheets(in thousands, unaudited) |
|
|
|
|
|
April 1,2018 |
|
December 31,2017 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and
cash equivalents |
$ |
24,613 |
|
|
$ |
24,432 |
|
Marketable securities |
95,530 |
|
|
94,195 |
|
Accounts
receivable |
26,310 |
|
|
26,786 |
|
Inventory |
18,420 |
|
|
12,662 |
|
Prepaid
expenses and other current assets |
2,949 |
|
|
2,744 |
|
Total
current assets |
167,822 |
|
|
160,819 |
|
Deferred tax
assets |
35,602 |
|
|
35,422 |
|
Property and equipment,
net |
12,415 |
|
|
12,511 |
|
Intangible and other
assets, net |
4,215 |
|
|
3,952 |
|
Total
assets |
$ |
220,054 |
|
|
$ |
212,704 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current
liabilities |
|
|
|
Accounts
payable |
$ |
10,696 |
|
|
$ |
2,077 |
|
Accrued
liabilities and other current liabilities |
23,531 |
|
|
22,742 |
|
Long-term
debt, current portion |
— |
|
|
3,943 |
|
Total
current liabilities |
34,227 |
|
|
28,762 |
|
Other long-term
liabilities |
3,222 |
|
|
3,339 |
|
Total
liabilities |
37,449 |
|
|
32,101 |
|
|
|
|
|
Stockholders’
equity |
|
|
|
Common
stock |
3 |
|
|
3 |
|
Additional paid-in capital |
313,503 |
|
|
308,023 |
|
Accumulated other comprehensive loss |
(438 |
) |
|
(207 |
) |
Accumulated deficit |
(130,463 |
) |
|
(127,216 |
) |
Total
stockholders’ equity |
182,605 |
|
|
180,603 |
|
Total
liabilities and stockholders’ equity |
$ |
220,054 |
|
|
$ |
212,704 |
|
|
|
Quantenna Communications,
Inc.Condensed Consolidated Cash Flows(in
thousands, unaudited) |
|
|
|
Three Months Ended |
|
April 1, 2018 |
|
April 2, 2017 |
|
|
|
|
Cash flows from
operating activities |
|
|
|
Net loss |
$ |
(3,247 |
) |
|
$ |
(884 |
) |
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities: |
|
|
|
Depreciation and amortization |
1,125 |
|
|
479 |
|
Stock-based compensation expense |
4,592 |
|
|
2,104 |
|
Other |
(50 |
) |
|
135 |
|
Changes
in assets and liabilities: |
|
|
|
Accounts
receivable |
476 |
|
|
(3,332 |
) |
Inventory |
(5,758 |
) |
|
2,459 |
|
Prepaid
expenses and other current assets |
(205 |
) |
|
(1,324 |
) |
Deferred
rent and other assets |
58 |
|
|
(511 |
) |
Accounts
payable |
8,725 |
|
|
(5,870 |
) |
Accrued
liabilities and other current liabilities |
1,053 |
|
|
6,309 |
|
Net cash provided by (used in) operating activities |
6,769 |
|
|
(435 |
) |
Cash flows from
investing activities |
|
|
|
Purchase of property
and equipment |
(924 |
) |
|
(1,700 |
) |
Purchase of long-term
investment |
(590 |
) |
|
— |
|
Purchase of marketable
securities |
(13,211 |
) |
|
— |
|
Maturities of
marketable securities |
11,515 |
|
|
— |
|
Net cash used in investing activities |
(3,210 |
) |
|
(1,700 |
) |
Cash flows from
financing activities |
|
|
|
Proceeds from issuance
of common stock, net |
1,438 |
|
|
163 |
|
Payments of taxes
withheld for vested stock awards |
(601 |
) |
|
— |
|
Payments related to
intangible asset purchase |
(272 |
) |
|
— |
|
Repayments of long-term
debt |
(3,943 |
) |
|
(672 |
) |
Net cash used in financing activities |
(3,378 |
) |
|
(509 |
) |
Net increase (decrease) in cash and cash equivalents |
181 |
|
|
(2,644 |
) |
Cash and cash
equivalents |
|
|
|
Beginning of
period |
24,432 |
|
|
117,045 |
|
End of period |
$ |
24,613 |
|
|
$ |
114,401 |
|
|
|
|
|
Quantenna Communications, Inc.
Vernon Essi, Jr.
669-209-5647
vessi@quantenna.com
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