Quantenna Announces Third Quarter 2017 Financial Results
November 06 2017 - 4:05PM
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 third
quarter ended October 1, 2017.
“We are pleased to report record third quarter results,
demonstrating annual revenue growth of 47%, record GAAP EPS of
$0.07 and record non-GAAP EPS of $0.14. We experienced growing
customer adoption of our newer Wave 3 10G products combined with
strong shipment levels of our core Wave 2 offerings and legacy
802.11n products,” remarked Dr. Sam Heidari, Chairman and Chief
Executive Officer.
“While in the fourth quarter we anticipate a delay in the
deployment of a key service provider program coupled with near-term
softness at one other service provider customer, we continue to
execute to our Wave 2 and Wave 3 10G development plans and
anticipate these deployments to resume in 2018.”
Financial Summary
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
|
October 1,2017 |
|
September 25,2016 |
|
%Change |
|
October 1,2017 |
|
September 25,2016 |
|
%Change |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
50,108 |
|
|
$ |
34,105 |
|
|
46.9 |
% |
|
$ |
135,084 |
|
|
$ |
91,577 |
|
|
47.5 |
% |
Gross Profit |
24,517 |
|
|
16,858 |
|
|
45.4 |
% |
|
66,872 |
|
|
45,125 |
|
|
48.2 |
% |
Gross Margin |
48.9 |
% |
|
49.4 |
% |
|
(50) bps |
|
49.5 |
% |
|
49.3 |
% |
|
20 bps |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
GAAP |
$ |
2,802 |
|
|
$ |
21 |
|
|
|
|
$ |
2,087 |
|
|
$ |
(1,927 |
) |
|
|
Non-GAAP |
5,571 |
|
|
1,055 |
|
|
|
|
9,534 |
|
|
297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share - diluted: |
|
|
|
|
|
|
|
|
|
|
|
GAAP |
$ |
0.07 |
|
|
$ |
0.00 |
|
|
|
|
$ |
0.05 |
|
|
$ |
(1.84 |
) |
|
|
Non-GAAP |
0.14 |
|
|
0.04 |
|
|
|
|
0.25 |
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands except per share data, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commentary on the third quarter 2017 financial results by
Company management is available at http://ir.quantenna.com/.
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.
Third Quarter Company
Highlights
- Record revenue of $50.1 million, representing year over year
growth of 47% over the third quarter of 2016 and 6% sequential
growth over the second quarter of 2017.
- GAAP operating income grew to $2.4 million, and non-GAAP
operating income grew to $5.2 million, or 10.3% of revenue.
Non-GAAP operating income reached another quarterly record and grew
78% sequentially over the second quarter of 2017.
- Cash from operations totaled $7.3 million, or $0.19 per fully
diluted share, while cash, cash equivalents and marketable
securities grew $2.5 million sequentially to $126.9 million, or
$3.29 per fully diluted share.
- Announced a partnership with AirTies to offer Internet Service
Providers (ISPs) a complete turnkey managed Wi-Fi mesh solution
with new classes of differentiated, premium Wi-Fi services.
- Released the Spartan AP Booster which offers service providers
a cost-effective Wi-Fi performance upgrade for their existing
subscriber legacy home gateways without replacing or upgrading the
entire gateway.
- Entered the Over the Top (OTT) set-top box market with the Zero
Memory client solution that offers unparalleled video performance
to both STB and OTT clients without the need for incremental memory
costs.
- Announced that Technicolor has adopted the QV860 chipset in its
OWA0130 dual-band multi-function extender, augmenting the coverage
of Wi-Fi gateways with a mesh network offering seamless
connectivity.
- Demonstrated with Cortina Access a Dual 4x4 802.11ax 10G
fiber/PON gateway reference platform at IBC 2017 in Amsterdam,
bringing best of breed broadband and Wi-Fi capabilities into a
single integrated platform targeting mass deployment.
- Partnered with SoftAtHome to offer its Smart Wi-Fi software
availability on the QV860 chipset, enabling SoftAtHome to offer a
high-performance mesh and repeater solution to service providers
and OEM partners by levering the Quantenna 802.11ac Wi-Fi
ecosystem.
Business Outlook
|
|
Fourth Quarter 2017 Guidance Range |
Revenue |
$40M to $42M |
Gross Margin |
|
GAAP |
51.4%
+/- 100bps |
Non-GAAP |
51.5%
+/- 100bps |
Operating Expense
Growth (sequential) |
|
GAAP |
Up
13% |
Non-GAAP |
Up
15% |
Net income (loss) per
share-diluted |
|
GAAP |
($0.11) - ($0.09) |
Non-GAAP |
($0.04) - ($0.02) |
|
|
Gross margin, operating
expense and net income GAAP to Non-GAAP reconciliation relates to
stockbased compensation expense. |
|
|
|
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: 97831720. 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. 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 in the market. Quantenna continues to innovate with
the mission to perfect Wi-Fi by establishing benchmarks for speed,
range, efficiency and reliability. Quantenna takes a
multidimensional approach, from silicon, system to software for
Wi-Fi networks and provides solutions for OEMs and service
providers worldwide. 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 third quarter
ended October 1, 2017, 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: risks that
Quantenna may not be able to maintain its historical growth or
achieve similar levels of success with respect to new products;
quarterly fluctuations in revenues and operating results;
challenges developing new and leading edge products on a timely
basis that achieve market acceptance; the complexity of the
products; ability to accurately predict future revenue and
expenses; ability to attract and retain customers and service
providers; dependence on a limited number of products and
customers; intense market competition; intellectual property
litigation risks; risks associated with acquisitions, divestitures
and strategic partnerships with respect to Quantenna as well as
third parties; product liability risks; potential cancellation of
customer orders; 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; adjustments to the preliminary financial
results reported in this press release and related earnings call
announcement and materials for the third quarter of 2017 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 |
|
Nine Months Ended |
|
|
October 1,2017 |
|
September 25,2016 |
|
October 1,2017 |
|
September 25,2016 |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
50,108 |
|
|
$ |
34,105 |
|
|
$ |
135,084 |
|
|
$ |
91,577 |
|
|
Cost of revenue |
25,591 |
|
|
17,247 |
|
|
68,212 |
|
|
46,452 |
|
|
Gross
profit |
24,517 |
|
|
16,858 |
|
|
66,872 |
|
|
45,125 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Research
and development |
15,011 |
|
|
11,162 |
|
|
43,699 |
|
|
32,913 |
|
|
Sales and
marketing |
3,363 |
|
|
2,172 |
|
|
9,553 |
|
|
5,571 |
|
|
General
and administrative |
3,735 |
|
|
3,248 |
|
|
11,231 |
|
|
7,802 |
|
|
Total
operating expenses |
22,109 |
|
|
16,582 |
|
|
64,483 |
|
|
46,286 |
|
|
Income
(loss) from operations |
2,408 |
|
|
276 |
|
|
2,389 |
|
|
(1,161 |
) |
|
Interest expense |
(103 |
) |
|
(189 |
) |
|
(442 |
) |
|
(414 |
) |
|
Other income (expense),
net |
223 |
|
|
(52 |
) |
|
610 |
|
|
(300 |
) |
|
Income
(loss) before income taxes |
2,528 |
|
|
35 |
|
|
2,557 |
|
|
(1,875 |
) |
|
Benefit (provision) for
income taxes |
274 |
|
|
(14 |
) |
|
(470 |
) |
|
(52 |
) |
|
Net
income (loss) |
$ |
2,802 |
|
|
$ |
21 |
|
|
$ |
2,087 |
|
|
$ |
(1,927 |
) |
|
Net income (loss) per
share - basic |
$ |
0.08 |
|
|
$ |
0.02 |
|
|
$ |
0.06 |
|
|
$ |
(1.84 |
) |
|
Net income (loss) per
share - diluted |
$ |
0.07 |
|
|
$ |
0.00 |
|
|
$ |
0.05 |
|
|
$ |
(1.84 |
) |
|
|
|
|
|
|
|
|
|
|
Shares used in
computing net income (loss) per share: |
|
|
|
|
|
|
|
|
Basic |
34,734 |
|
|
1,157 |
|
(1 |
) |
33,907 |
|
|
1,048 |
|
(1 |
) |
Diluted |
38,525 |
|
|
29,974 |
|
|
38,419 |
|
|
1,048 |
|
(1 |
) |
|
|
|
|
|
|
|
|
|
(1) The
number of shares reflects the number prior to conversion of
preferred stock upon the Company's IPO on November 2, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Quantenna Communications,
Inc.Unaudited reconciliation of GAAP to Non-GAAP
Financial Measures(in thousands, except per share
data) |
|
Non-GAAP IncomeStatement Items |
|
Three months ended October 1,
2017 |
|
Three months ended September 25,
2016 |
|
|
GAAP Measure |
|
Stock-based Compensation Expense |
|
Non-GAAP Measure |
|
GAAP Measure |
|
Stock-based Compensation Expense |
|
Non-GAAP Measure |
Revenue |
|
$ |
50,108 |
|
|
|
|
$ |
50,108 |
|
|
$ |
34,105 |
|
|
|
|
$ |
34,105 |
|
Gross profit |
|
24,517 |
|
|
38 |
|
|
24,555 |
|
|
16,858 |
|
|
9 |
|
|
16,867 |
|
Gross margin |
|
48.9 |
% |
|
0.1 |
% |
|
49.0 |
% |
|
49.4 |
% |
|
0.0 |
% |
|
49.5 |
% |
Research and
development |
|
15,011 |
|
|
1,367 |
|
|
13,644 |
|
|
11,162 |
|
|
231 |
|
|
10,931 |
|
Sales and
marketing |
|
3,363 |
|
|
416 |
|
|
2,947 |
|
|
2,172 |
|
|
60 |
|
|
2,112 |
|
General and
administrative |
|
3,735 |
|
|
948 |
|
|
2,787 |
|
|
3,248 |
|
|
734 |
|
|
2,514 |
|
Income from
operations |
|
2,408 |
|
|
2,769 |
|
|
5,177 |
|
|
276 |
|
|
1,034 |
|
|
1,310 |
|
Net income |
|
$ |
2,802 |
|
|
$ |
2,769 |
|
|
$ |
5,571 |
|
|
$ |
21 |
|
|
$ |
1,034 |
|
|
$ |
1,055 |
|
Basic shares
outstanding |
|
34,734 |
|
|
|
|
34,734 |
|
|
1,157 |
|
|
|
|
1,157 |
|
Basic earnings per
share |
|
$ |
0.08 |
|
|
|
|
$ |
0.16 |
|
|
$ |
0.02 |
|
|
|
|
$ |
0.91 |
|
Diluted shares
outstanding |
|
38,525 |
|
|
|
|
38,525 |
|
|
29,974 |
|
|
|
|
29,974 |
|
Diluted earnings per
share |
|
$ |
0.07 |
|
|
|
|
$ |
0.14 |
|
|
$ |
0.00 |
|
|
|
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP IncomeStatement Items |
|
Nine months ended October 1,
2017 |
|
Nine months ended September 25,
2016 |
|
|
GAAP Measure |
|
Stock-based Compensation Expense |
|
Non-GAAP Measure |
|
GAAP Measure |
|
Stock-based Compensation Expense |
|
Non-GAAP Measure |
Revenue |
|
$ |
135,084 |
|
|
|
|
$ |
135,084 |
|
|
$ |
91,577 |
|
|
|
|
$ |
91,577 |
|
Gross profit |
|
66,872 |
|
|
123 |
|
|
66,995 |
|
|
45,125 |
|
|
15 |
|
|
45,140 |
|
Gross margin |
|
49.5 |
% |
|
0.1 |
% |
|
49.6 |
% |
|
49.3 |
% |
|
0.0 |
% |
|
49.3 |
% |
Research and
development |
|
43,699 |
|
|
3,986 |
|
|
39,713 |
|
|
32,913 |
|
|
454 |
|
|
32,459 |
|
Sales and
marketing |
|
9,553 |
|
|
1,179 |
|
|
8,374 |
|
|
5,571 |
|
|
120 |
|
|
5,451 |
|
General and
administrative |
|
11,231 |
|
|
2,159 |
|
|
9,072 |
|
|
7,802 |
|
|
1,635 |
|
|
6,167 |
|
Income (loss) from
operations |
|
2,389 |
|
|
7,447 |
|
|
9,836 |
|
|
(1,161 |
) |
|
2,224 |
|
|
1,063 |
|
Net income (loss) |
|
$ |
2,087 |
|
|
$ |
7,447 |
|
|
$ |
9,534 |
|
|
$ |
(1,927 |
) |
|
$ |
2,224 |
|
|
$ |
297 |
|
Basic shares
outstanding |
|
33,907 |
|
|
|
|
33,907 |
|
|
1,048 |
|
|
|
|
1,048 |
|
Basic earnings per
share |
|
$ |
0.06 |
|
|
|
|
$ |
0.28 |
|
|
$ |
(1.84 |
) |
|
|
|
$ |
0.28 |
|
Diluted shares
outstanding |
|
38,419 |
|
|
|
|
38,419 |
|
|
1,048 |
|
|
|
|
29,370 |
|
Diluted earnings per
share |
|
$ |
0.05 |
|
|
|
|
$ |
0.25 |
|
|
$ |
(1.84 |
) |
|
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantenna Communications,
Inc.Unaudited Forward-Looking Statements Regarding
Business Outlook |
|
Business Outlook |
|
Three Months Ended December 31,
2017 |
|
|
|
|
|
|
|
High |
|
Low |
Estimated GAAP diluted
earnings (loss) per share |
|
$ |
(0.11 |
) |
|
$ |
(0.09 |
) |
Estimated stock
compensation expense |
|
0.07 |
|
|
0.07 |
|
Estimated Non-GAAP
diluted earnings (loss) per share |
|
$ |
(0.04 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
Quantenna Communications,
Inc.Condensed Consolidated Balance
Sheets(in thousands, unaudited) |
|
|
October 1,2017 |
|
January 1,2017 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and
cash equivalents |
$ |
38,844 |
|
|
$ |
117,045 |
|
Marketable securities |
88,022 |
|
|
— |
|
Accounts
receivable |
22,820 |
|
|
14,480 |
|
Inventory |
23,700 |
|
|
15,820 |
|
Prepaid
expenses and other current assets |
2,444 |
|
|
2,470 |
|
Total
current assets |
175,830 |
|
|
149,815 |
|
Property and equipment,
net |
11,215 |
|
|
4,742 |
|
Intangible assets,
net |
3,259 |
|
|
— |
|
Other long-term
assets |
1,037 |
|
|
232 |
|
Total
assets |
$ |
191,341 |
|
|
$ |
154,789 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current
liabilities |
|
|
|
Accounts
payable |
$ |
12,918 |
|
|
$ |
7,776 |
|
Accrued
liabilities and other current liabilities |
27,941 |
|
|
11,801 |
|
Long-term
debt, current portion |
2,487 |
|
|
2,257 |
|
Total
current liabilities |
43,346 |
|
|
21,834 |
|
Long-term debt |
1,900 |
|
|
3,680 |
|
Other long-term
liabilities |
3,413 |
|
|
527 |
|
Total
liabilities |
48,659 |
|
|
26,041 |
|
|
|
|
|
Stockholders’
equity |
|
|
|
Common
stock |
3 |
|
|
3 |
|
Additional paid-in capital |
302,240 |
|
|
290,319 |
|
Accumulated other comprehensive loss |
(20 |
) |
|
— |
|
Accumulated deficit |
(159,541 |
) |
|
(161,574 |
) |
Total
stockholders’ equity |
142,682 |
|
|
128,748 |
|
Total
liabilities and stockholders’ equity |
$ |
191,341 |
|
|
$ |
154,789 |
|
|
|
|
Quantenna Communications,
Inc.Condensed Consolidated Cash Flows(in
thousands, unaudited) |
|
|
|
Nine Months Ended |
|
October 1,2017 |
|
September 25,2016 |
|
|
|
|
Cash flows from
operating activities |
|
|
|
Net income (loss) |
$ |
2,087 |
|
|
$ |
(1,927 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
1,566 |
|
|
880 |
|
Stock-based compensation expense |
7,447 |
|
|
2,224 |
|
Accretion
of discount on investments |
93 |
|
|
— |
|
Non-cash
interest expense, net |
254 |
|
|
140 |
|
Change in
fair value of convertible preferred stock warrants liability |
— |
|
|
109 |
|
Changes
in assets and liabilities: |
|
|
|
Accounts
receivable |
(8,340 |
) |
|
(1,589 |
) |
Inventory |
(7,880 |
) |
|
(2,861 |
) |
Prepaid
expenses and other current assets |
(22 |
) |
|
(283 |
) |
Deferred
rent and other assets |
(790 |
) |
|
16 |
|
Accounts
payable |
5,119 |
|
|
(1,136 |
) |
Accrued
liabilities and other current liabilities |
14,660 |
|
|
6,136 |
|
Net cash provided by operating activities |
14,194 |
|
|
1,709 |
|
Cash flows from
investing activities |
|
|
|
Purchase of property
and equipment |
(6,961 |
) |
|
(1,621 |
) |
Purchase of marketable
securities |
(104,044 |
) |
|
— |
|
Proceeds from sales of
marketable securities |
3,670 |
|
|
— |
|
Maturities of
marketable securities |
12,239 |
|
|
— |
|
Restricted cash |
— |
|
|
(1,559 |
) |
Net cash used in investing activities |
(95,096 |
) |
|
(3,180 |
) |
Cash flows from
financing activities |
|
|
|
Proceeds from issuance
of common stock |
4,553 |
|
|
785 |
|
Payments of offering
costs |
(96 |
) |
|
(881 |
) |
Proceeds from revolving
line of credit, net of fees paid |
— |
|
|
2,950 |
|
Repayment of revolving
line of credit |
— |
|
|
(3,000 |
) |
Proceeds from issuance
of long-term debt, net of fees paid |
— |
|
|
3,854 |
|
Repayments of long-term
debt |
(1,756 |
) |
|
(3,265 |
) |
Net cash provided by financing activities |
2,701 |
|
|
443 |
|
Net decrease in cash and cash equivalents |
(78,201 |
) |
|
(1,028 |
) |
Cash and cash
equivalents |
|
|
|
Beginning of
period |
117,045 |
|
|
18,850 |
|
End of period |
$ |
38,844 |
|
|
$ |
17,822 |
|
|
|
|
|
Quantenna Communications, Inc.
Vernon Essi, Jr.
669-209-5647
vessi@quantenna.com
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