Item 2.02. Results of Operations and Financial Condition.
On July 9, 2018, Adesto Technologies Corporation (Adesto) announced preliminary estimates of its results of operations for the three months ended June 30, 2018.
On a preliminary estimated basis, Adesto expects its results of operations for the three months ended June 30, 2018 to reflect:
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Revenues between $18.1 million and $18.3 million;
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Gross margin between 42% and 44%;
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Total operating expenses between $11.3 million and $11.5 million; and
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Non-GAAP total operating expenses between $8.3 million and $8.5 million, excluding approximately $2.0 million in acquisition-related costs, $0.6 to $0.7 million in stock-based compensation expense and $0.3 million in amortization of acquisition-related intangible assets.
Adesto expects its revenues for the three months ended June 30, 2018 will be between $18.1 million and $18.3 million, an increase of 35.1% to 36.6% from revenues of $13.4 million for the three months ended June 30, 2017. This increase was due to higher sales of standard flash memory products to Tier 1 OEM customers and the contribution of revenues generated from its S3 business during the quarter, which it estimates were approximately $2.0 million. These increases were partially offset by slower than expected sales ramp for DataFlash-L products, which are designed for smart home application markets and carry relatively higher gross margins than Adestos other memory products.
Adesto expects its gross margin for the three months ended June 30, 2018 will be between 42% and 44%, a decrease of 6.1 to 8.1 percentage points from gross margin of 50.1% for the three months ended June 30, 2017. This decrease was primarily due to product mix impacts, as Adesto generated a higher proportion of its revenues from sales to Tier 1 OEM customers of standard flash memory products, which generally carry lower gross margins than its other memory products.
Adesto expects total operating expenses for the three months ended June 30, 2018 will be between $11.3 million and $11.5 million, an increase of 36.1% to 38.6% from total operating expenses of $8.3 million for the three months ended June 30, 2017. This increase was driven by approximately $2.0 million of higher than expected transaction costs associated with its acquisition of S3 (as defined below) and proposed acquisition of Echelon (as defined below) and to a lesser extent, higher operating costs associated with the operations of its S3 business following the closing of the S3 acquisition. On a non-GAAP basis, total operating expenses for the three months ended June 30, 2018 increased as compared to non-GAAP total operating expenses for the three months ended June 30, 2017 due to higher operating costs associated with S3s operations following the closing of the S3 acquisition.
These preliminary estimates have been prepared by, and are the responsibility of, Adestos management and have not been reviewed or audited or subject to any other procedures by Adestos independent registered public accounting firm. Accordingly, Adestos independent registered public accounting firm does not express an opinion or any other form of assurance with respect to these preliminary estimates.
The information furnished in Item 2.02 of this Current Report on Form 8-K shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.