Achieves Fourth Consecutive Quarter of More Than
30% Year-Over-Year Revenue Growth; Guiding for Record Revenue in
the Second Quarter
Adesto Technologies Corporation (NASDAQ:IOTS), a leading provider
of innovative application-specific semiconductors for the IoT era,
today announced financial results for its first quarter ended March
31, 2018.
First Quarter Financial
Summary:
- Revenue increased 35.3% year-over-year to $15.3 million;
- GAAP gross margin was 47%, the eleventh consecutive quarter
within targeted range of 45% to 50%;
- GAAP operating expenses were $8.1 million and non-GAAP
operating expenses were $7.4 million, both better than
expectations; and
- Adjusted EBITDA was a positive $0.3 million, compared to
negative $1.1 million in the first quarter of 2017.
Commenting on the quarter, Narbeh Derhacobian,
Adesto’s president and CEO, stated, “Revenue in the first quarter
grew more than 35% year-over-year, representing the fourth
consecutive quarter of above 30% growth and exceeding the high-end
of our guidance range. Furthermore, we continued to closely
manage operating expenses, which were again below the low-end of
our expected range, contributing to our fourth consecutive quarter
of positive adjusted EBITDA.
“During the quarter, we continued to make solid
progress on expanding our design win pipeline, which has served as
a key catalyst in driving our current and future revenue growth.
Designs in the industrial market led the way and included wins for
not only our DataFlash products, but also other product families.
We also secured a number of design wins with new customers in the
smart home market with our newly-released DataFlash-L family.
Additionally, we had a number of design wins with leading tier 1
OEMs across consumer and communications end markets.”
Mr. Derhacobian further commented, “We are also
pleased to announce today our agreement to acquire S3
Semiconductors, a Dublin-based global supplier of mixed-signal and
RF ASICs to the industrial IoT and communications markets. This
transaction represents a meaningful step for Adesto as we broaden
our line of innovative semiconductor products, expand our
addressable markets and drive accelerating revenue growth as well
as margin and earnings expansion in the quarters and years ahead.”
First Quarter 2018 Results
Revenue in the first quarter of 2018 was up 35.3% to
$15.3 million from $11.3 million in the first quarter of 2017, and
sequentially down 5.3% from $16.2 million in the previous
quarter.
Gross margin in the first quarter was 46.9%,
compared to 49.1% in the first quarter of 2017 and 47.9% in the
previous quarter. Gross margin remains within the Company’s
targeted range.
GAAP operating expenses in the first quarter of
2018 were $8.1 million compared to $8.1 million in the first
quarter of 2017 and $7.7 million in the fourth quarter of 2017. On
a non-GAAP basis, operating expenses in the first quarter were $7.4
million, compared to $7.0 million in the year-ago quarter and $6.8
million in the prior quarter.
GAAP net loss in the first quarter of 2018 was
$1.1 million, or ($0.05) per share, compared to a net loss of $2.8
million, or ($0.18) per share, in the first quarter of 2017 and a
net loss of $165,000, or ($0.01) per share, in the previous
quarter.
On a non-GAAP basis, the net loss for the first
quarter of 2018 was $0.4 million, or ($0.02) per share, compared to
a net loss of $1.6 million, or ($0.10) per share, in the first
quarter of 2017 and net income of $0.8 million, or $0.03 per
diluted share, last quarter.
Adjusted EBITDA for the first quarter of 2018
was a positive $0.3 million compared to a negative $1.1 million in
the first quarter of 2017 and a positive $1.4 million in the
previous quarter.
A reconciliation of GAAP results to non-GAAP
results is provided in the financial statement tables following the
text of this press release.
Business OutlookFor the second
quarter of 2018, the Company expects revenue to increase to a range
between $18.1 million and $19.0 million, which includes
approximately $1.5 to $2.0 million of expected revenue contribution
from S3 Semiconductors. Gross margin is expected to be between 46%
and 48% for the second quarter of 2018. For the second quarter,
GAAP operating expenses are expected to range between $9.1 million
and $9.7 million, or $8.2 million and $8.8 million on a non-GAAP
basis, which excludes approximately $0.6 million in stock-based
compensation expense and $0.3 million in amortization of
acquisition-related intangible assets.
Conference Call
InformationAdesto will host a conference call today at
2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its
first quarter 2018 financial results as well as the S3
Semiconductors transaction. Investors and analysts may join the
call by dialing 1-844-419-1786 and providing
confirmation code 6975696. International callers
may join the teleconference by dialing +1-216-562-0473 using the
same confirmation code. The call will also be available as a live
and archived webcast in the Investor Relations section of the
Company’s website at http://www.adestotech.com and will include a
slide presentation.
A telephone replay of the conference call will
be available approximately two hours after the conference call
until Wednesday, May 16, 2018 at midnight Pacific Time. The replay
dial-in number is 1-855-859-2056. International callers should dial
+1-404-537-3406. The pass code is 6975696.
Non-GAAP Financial Information
To supplement our financial results presented in accordance with
generally accepted accounting principles (GAAP), this press release
and the accompanying tables and the related earnings conference
call contain certain non-GAAP financial measures, including
adjusted EBITDA, non-GAAP net income (loss), non-GAAP net income
(loss) per share and non-GAAP operating expenses. We believe these
non-GAAP financial measures are useful in evaluating our past
financial performance and future results. Our non-GAAP financial
measures should not be considered in isolation or as a substitute
for comparable GAAP measures and should be read in conjunction with
our consolidated financial statements prepared in accordance with
GAAP. Our management regularly uses our supplemental non-GAAP
financial measures internally to help us evaluate growth trends,
establish budgets, measure the effectiveness of our business
strategies and assess operational efficiencies. These non-GAAP
financial measures are not based on any standardized methodology
prescribed by GAAP and are not necessarily comparable to similar
measures presented by other companies. Our non-GAAP financial
measures include adjustments based on the following
items:
- Stock-based compensation expenses: We have excluded the effect
of stock-based compensation expenses from our non-GAAP financial
measures. Although stock-based compensation is an important part of
our employees’ compensation affecting their performance, we
continue to evaluate our business performance excluding stock-based
compensation expenses. Stock-based compensation expenses will recur
in future periods.
- Amortization of acquisition-related intangible assets: We have
excluded the effect of amortization of acquisition-related
intangible assets from our non-GAAP financial measures.
Amortization of acquisition-related intangible assets is a non-cash
expense, and it is not part of our core operations. Investors
should note that the use of acquisition-related intangible assets
contributed to revenues earned during the periods presented and
will contribute to future period revenues as well.
Our non-GAAP financial measures are described as
follows:
- Non-GAAP net income (loss) and non-GAAP net income (loss) per
share. Non-GAAP net income (loss) is GAAP net loss as reported on
our condensed consolidated statements of operations, excluding the
impact of stock-based compensation expense and amortization of
acquisition-related intangible assets. Non-GAAP net income (loss)
per share is non-GAAP net income (loss) divided by weighted average
shares outstanding and, if dilutive, incremental shares based upon
the conversion of outstanding stock options, restricted stock units
and warrants.
- Non-GAAP operating expense. Non-GAAP operating expenses are
GAAP operating expenses as reported in our condensed consolidated
statements of operations, excluding the impact of stock-based
compensation expense and amortization of acquisition-related
intangible assets.
- Adjusted EBITDA is GAAP net loss as reported on our condensed
consolidated statements of operations, excluding the impact of the
same items excluded from the calculation of non-GAAP net income
(loss) as well as interest expense, depreciation and amortization,
and our provision for income taxes.
For reconciliations of these non-GAAP financial
measures to the most directly comparable GAAP financial measures,
please see the section of the accompanying tables titled,
“Reconciliation of GAAP to Non-GAAP Financial Information.”
About Adesto TechnologiesAdesto
Technologies (NASDAQ:IOTS) is a leading provider of innovative
application-specific semiconductors for the IoT era. The company’s
technology is used by more than 2,000 customers worldwide who are
creating differentiated solutions across industrial, consumer,
medical and communications markets. With its growing portfolio of
high-value technologies, Adesto is helping its customers usher in
the era of the Internet of Things. See: www.adestotech.com.
Follow Adesto on Twitter.
Forward Looking StatementsThe
quotes of our Chief Executive Officer in this release regarding our
momentum and expected revenue growth, non-GAAP operating expense
maintenance, the acquisition of S3 Semiconductors and the expected
benefits to Adesto and its customers, stockholders and investors
from completing the acquisition, as well as all statements under
“Business Outlook” are forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements involve risks and
uncertainties that could cause our actual results to differ
materially, including the businesses of the Company and S3
Semiconductors may not be combined successfully, or such
combination may take longer, be more difficult, time-consuming or
costly to accomplish than expected; the risk that that sales of S3
Semiconductors products will not be as high as anticipated; the
expected growth opportunities from the acquisition may not be fully
realized or may take longer to realize than expected; customer
losses and business disruption following the acquisition, including
adverse effects on relationships with former employees of S3
Semiconductors, may be greater than expected; and the risk that the
Company may incur unanticipated or unknown losses or liabilities in
the acquisition. Additional factors, that could cause actual
results to differ materially from those expressed in the
forward-looking statements include: our ability to predict the
timing of design wins entering production and the potential future
revenue associated with our design wins; market adoption of our
CBRAM-based products; our limited operating history; our rate of
growth; our ability to predict customer demand for our existing and
future products and to secure adequate manufacturing capacity;
consumer demand conditions affecting our end markets; our ability
to manage our growth; our ability to hire, retain and motivate
employees; the effects of competition, including price competition;
technological, regulatory and legal developments; and developments
in the economy and financial markets.
For a detailed discussion of these and other
risk factors, please refer to our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for
the period ended December 31, 2017, filed with the SEC on March 13,
2018, which are available on our investor relations Web site
(ir.adestotech.com) and on the SEC’s Web site (www.sec.gov).
All information provided in this release and in
the attachments is as of Wednesday, May 9, 2018, and stockholders
of Adesto are cautioned not to place undue reliance on our
forward-looking statements, which speak only as of the date such
statements are made. Adesto does not undertake any obligation to
publicly update any forward-looking statements to reflect events,
circumstances or new information after this May 9, 2018 press
release, or to reflect the occurrence of unanticipated events.
Adesto Technologies and the Adesto logo are trademarks of Adesto
Technologies in the United States and other regions. All other
trademarks are property of their respective owners.
Company Contact: Ron Shelton Chief Financial
Officer P: 408-400-0578 E: ron.shelton@adestotech.com
Adesto Technologies Investor Relations: Shelton
Group Leanne K. Sievers, President P: 949-224-3874E:
sheltonir@sheltongroup.com
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ADESTO TECHNOLOGIES CORPORATION |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
|
|
2018 |
|
|
2017 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
29,546 |
|
|
|
$ |
30,078 |
|
|
|
Accounts receivable, net |
|
|
12,188 |
|
|
|
|
8,668 |
|
|
|
Inventories |
|
|
7,554 |
|
|
|
|
5,814 |
|
|
|
Prepaid expenses |
|
|
1,153 |
|
|
|
|
993 |
|
|
|
Other current assets |
|
|
55 |
|
|
|
|
52 |
|
|
|
|
Total current assets |
|
|
50,496 |
|
|
|
|
45,605 |
|
|
Property
and equipment, net |
|
|
7,632 |
|
|
|
|
7,183 |
|
|
Intangible
assets, net |
|
|
6,808 |
|
|
|
|
7,102 |
|
|
Other
non-current assets |
|
|
1,029 |
|
|
|
|
900 |
|
|
Goodwill |
|
|
22 |
|
|
|
|
22 |
|
|
Total
assets |
|
$ |
65,987 |
|
|
|
$ |
60,812 |
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
7,845 |
|
|
|
|
7,075 |
|
|
|
Accrued
compensation and benefits |
|
|
2,819 |
|
|
|
|
2,614 |
|
|
|
Accrued
expenses and other current liabilities |
|
|
2,506 |
|
|
|
|
2,359 |
|
|
|
Price
adjustments and other revenue reserves |
|
|
4,545 |
|
|
|
|
- |
|
|
|
Line of
credit, current |
|
|
1,500 |
|
|
|
|
1,500 |
|
|
|
Term loan,
current |
|
|
1,929 |
|
|
|
|
926 |
|
|
|
|
Total current liabilities |
|
|
21,144 |
|
|
|
|
14,474 |
|
|
Term loan,
non-current |
|
|
9,924 |
|
|
|
|
10,908 |
|
|
Other
non-current liabilities |
|
|
75 |
|
|
|
|
75 |
|
|
Deferred
rent, non-current |
|
|
2,294 |
|
|
|
|
2,404 |
|
|
Deferred
tax liability, non-current |
|
|
2 |
|
|
|
|
1 |
|
|
|
|
|
Total
liabilities |
|
|
33,439 |
|
|
|
|
27,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
Common stock |
|
|
2 |
|
|
|
|
2 |
|
|
|
Additional
paid-in capital |
|
|
133,804 |
|
|
|
|
133,087 |
|
|
|
Accumulated
other comprehensive loss |
|
|
(312 |
) |
|
|
|
(295 |
) |
|
|
Accumulated
deficit |
|
|
(100,946 |
) |
|
|
|
(99,844 |
) |
|
Total
stockholders' equity |
|
|
32,548 |
|
|
|
|
32,950 |
|
|
Total
liabilities and stockholders' equity |
|
$ |
65,987 |
|
|
|
$ |
60,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
ADESTO TECHNOLOGIES CORPORATION |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(in thousands, except for share and per share
amounts) |
|
(unaudited) |
|
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|
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|
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|
Three Months Ended March
31, |
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|
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|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net |
|
$ |
15,302 |
|
|
|
$ |
11,307 |
|
|
Cost
of revenue |
|
|
8,122 |
|
|
|
|
5,753 |
|
|
|
Gross
profit |
|
|
7,180 |
|
|
|
|
5,554 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Research
and development |
|
|
3,665 |
|
|
|
|
3,372 |
|
|
|
Sales and
marketing |
|
|
2,752 |
|
|
|
|
2,600 |
|
|
|
General and
administrative |
|
|
1,713 |
|
|
|
|
2,135 |
|
|
|
|
Total operating
expenses |
|
|
8,130 |
|
|
|
|
8,107 |
|
|
Loss
from operations |
|
|
(950 |
) |
|
|
|
(2,553 |
) |
|
Other
income (expense): |
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
(141 |
) |
|
|
|
(213 |
) |
|
|
Other
income, net |
|
|
10 |
|
|
|
|
18 |
|
|
|
|
Total other income
(expense), net |
|
|
(131 |
) |
|
|
|
(195 |
) |
|
Loss
before provision for income taxes |
|
|
(1,081 |
) |
|
|
|
(2,748 |
) |
|
Provision for income taxes |
|
|
21 |
|
|
|
|
27 |
|
|
Net
loss |
|
$ |
(1,102 |
) |
|
|
$ |
(2,775 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share: |
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.05 |
) |
|
|
$ |
(0.18 |
) |
|
Weighted average number of shares used in
computing |
|
|
|
|
|
|
|
|
net
loss per share: |
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
21,370,927 |
|
|
|
|
15,642,286 |
|
|
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|
ADESTO TECHNOLOGIES CORPORATION |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION |
(in thousands, except
for share and per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
|
|
2018 |
|
|
|
|
|
2017 |
|
|
|
|
GAAP gross profit |
|
|
$ |
|
7,180 |
|
|
|
$ |
|
5,554 |
|
Stock-based compensation expense |
|
|
|
|
25 |
|
|
|
|
|
21 |
|
Non-GAAP gross profit |
|
|
$ |
|
7,205 |
|
|
|
$ |
|
5,575 |
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expenses |
|
|
$ |
|
3,665 |
|
|
|
$ |
|
3,372 |
|
Stock-based compensation expense |
|
|
|
|
(183 |
) |
|
|
|
|
(255 |
) |
Amortization of acquisition-related intangible assets |
|
|
|
|
(106 |
) |
|
|
|
|
(122 |
) |
Non-GAAP research and development expenses |
|
|
$ |
|
3,376 |
|
|
|
$ |
|
2,995 |
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing expenses |
|
|
$ |
|
2,752 |
|
|
|
$ |
|
2,600 |
|
Stock-based compensation expense |
|
|
|
|
(104 |
) |
|
|
|
|
(167 |
) |
Amortization of acquisition-related intangible assets |
|
|
|
|
(188 |
) |
|
|
|
|
(187 |
) |
Non-GAAP sales and marketing expenses |
|
|
$ |
|
2,460 |
|
|
|
$ |
|
2,246 |
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative expenses |
|
|
$ |
|
1,713 |
|
|
|
$ |
|
2,135 |
|
Stock-based compensation expense |
|
|
|
|
(131 |
) |
|
|
|
|
(381 |
) |
Non-GAAP general and administrative expenses |
|
|
$ |
|
1,582 |
|
|
|
$ |
|
1,754 |
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expenses |
|
|
$ |
|
8,130 |
|
|
|
$ |
|
8,107 |
|
Stock-based compensation expense |
|
|
|
|
(418 |
) |
|
|
|
|
(803 |
) |
Amortization of acquisition-related intangible assets |
|
|
|
|
(294 |
) |
|
|
|
|
(309 |
) |
Non-GAAP operating expenses |
|
|
$ |
|
7,418 |
|
|
|
$ |
|
6,995 |
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from operations |
|
|
$ |
|
(950 |
) |
|
|
$ |
|
(2,553 |
) |
Stock-based compensation expense |
|
|
|
|
443 |
|
|
|
|
|
824 |
|
Amortization of acquisition-related intangible assets |
|
|
|
|
294 |
|
|
|
|
|
309 |
|
Non-GAAP loss from operations |
|
|
$ |
|
(213 |
) |
|
|
$ |
|
(1,420 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation from GAAP net loss to adjusted EBITDA: |
|
|
|
|
|
|
|
|
GAAP net loss: |
|
|
$ |
|
(1,102 |
) |
|
|
$ |
|
(2,775 |
) |
|
Stock-based compensation expense |
|
|
|
|
443 |
|
|
|
|
|
824 |
|
|
Amortization of acquisition-related intangible assets |
|
|
|
|
294 |
|
|
|
|
|
309 |
|
|
|
|
Non-GAAP net loss |
|
|
(365 |
) |
|
|
|
|
(1,642 |
) |
|
Interest
expense |
|
|
|
|
154 |
|
|
|
|
|
223 |
|
|
Provision
for income taxes |
|
|
|
|
21 |
|
|
|
|
|
27 |
|
|
Depreciation and amortization |
|
|
|
|
488 |
|
|
|
|
|
304 |
|
|
|
Adjusted EBITDA |
$ |
|
298 |
|
|
|
$ |
|
(1,088 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
basic and diluted net loss per share |
|
|
($0.02 |
) |
|
|
|
($0.10 |
) |
|
|
|
|
|
|
|
|
Weighted-average number of shares used in calculating |
|
|
|
|
|
|
|
|
non-GAAP
basic and diluted net loss per share |
|
|
|
21,370,927 |
|
|
|
|
|
15,642,286 |
|
|
|
|
|
|
|
|
|
|
Adesto Technologies (NASDAQ:IOTS)
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