Quantenna Announces Fourth Quarter and Fiscal 2017 Financial Results
February 12 2018 - 3:05PM
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 fourth
quarter and fiscal year 2017 ended December 31, 2017.
“Overall, 2017 was a very successful year as we posted 37%
year-over-year revenue growth. We are pleased to report that our
key cable MSO customer has initiated a nationwide rollout of a
gateway solution using our industry leading Wave 3 10G technology.
We enter 2018 excited about the opportunities in front of us and
believe we are well positioned to extend our Wave 2 market
opportunities and garner incremental Wave 3 10G designs,” remarked
Dr. Sam Heidari, Chairman and Chief Executive Officer.
“We expect the first quarter to bring Quantenna revenue growth
from our diversified product portfolio, as we execute to our
customer requirements for leading-edge, high performance Wi-Fi
products with additional customers deploying Wave 3 10G and our
Wave 2 technology solutions.”
Financial Summary
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
|
December 31, 2017 |
|
January 1, 2017 |
|
% Change |
|
December 31, 2017 |
|
January 1, 2017 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
41,275 |
|
|
$ |
37,492 |
|
|
10.1 |
% |
|
$ |
176,359 |
|
|
$ |
129,069 |
|
|
36.6 |
% |
Gross Profit |
21,279 |
|
|
19,304 |
|
|
10.2 |
% |
|
88,151 |
|
|
64,429 |
|
|
36.8 |
% |
Gross Margin |
51.6 |
% |
|
51.5 |
% |
|
10 |
bps |
|
50.0 |
% |
|
49.9 |
% |
|
10 |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
GAAP |
$ |
32,325 |
|
|
$ |
32 |
|
|
|
|
$ |
34,412 |
|
|
$ |
(1,895 |
) |
|
|
Non-GAAP |
455 |
|
|
898 |
|
|
|
|
9,989 |
|
|
1,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share - diluted: |
|
|
|
|
|
|
|
|
|
|
|
GAAP |
$ |
0.84 |
|
|
$ |
0.00 |
|
|
|
|
$ |
0.89 |
|
|
$ |
(0.30 |
) |
|
|
Non-GAAP |
0.01 |
|
|
0.03 |
|
|
|
|
0.26 |
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands except per share data, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commentary on the fourth quarter and fiscal year 2017 financial
results by Company management is available at
http://ir.quantenna.com/events.cfm.
Please see the note below regarding the use of non-GAAP
financial measures, including a detailed reconciliation between
GAAP and non-GAAP information in the tables included herein.
Fourth Quarter and Fiscal Year 2017 Company
Highlights
- Revenue of $176.4 million in fiscal year 2017 represented year
over year growth of 37% compared to fiscal year 2016. Revenue of
$41.3 million in the fourth quarter represented year over year
growth of 10% over the fourth quarter of 2016.
- GAAP gross margin of 50.0% in fiscal year 2017 compared to GAAP
gross margin of 49.9% in fiscal year 2016. Fourth quarter GAAP
gross margin of 51.6% compared to 51.5% in the fourth quarter of
fiscal year 2016.
- GAAP operating loss of $(0.9) million and non-GAAP operating
income of $9.9 million in fiscal year 2017, compared to GAAP
operating loss of $(0.8) million and non-GAAP operating income of
$2.3 million in fiscal year 2016.
- Cash from operations totaled $6.6 million in fiscal year 2017,
compared to $2.3 million in fiscal year 2016.
- Wave 3 10G has achieved market acceptance as demonstrated by
nationwide deployment at a major cable MSO using our technology
exclusively in their flagship next generation gateway.
- Announced the QSR10R-AX, the industry's first solution to
combine three 4x4 802.11ax radios and integrated CPU cores for
optimal mesh repeating functionality. It supports the newest Wi-Fi
standard, 802.11ax.
Business Outlook
|
First Quarter 2018 Guidance Range |
Revenue |
$43M to $45M |
Gross Margin |
|
GAAP |
50%
+/- 100bps |
Non-GAAP |
50%
+/- 100bps |
Operating Expense
Growth (sequential) |
|
GAAP |
-1% to
4% |
Non-GAAP |
Flat
to up 5% |
Net income (loss) per
share-diluted |
|
GAAP |
($0.08) to ($0.06) |
Non-GAAP |
$0.00 to $0.02 |
|
|
Gross margin, operating
expense and net income GAAP to Non-GAAP reconciliation relates to
stock based compensation expense and amortization of deferred tax
asset. |
|
|
|
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: 9598965. 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 non-recurring items comprised
of executive severance and the release of the US Federal income tax
valuation allowance. 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 fourth quarter
and fiscal year 2017 ended December 31, 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;
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; 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; industry consolidation and
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 fourth quarter and fiscal year
2017 ended December 31, 2017 in connection with completion of
the final closing process and procedures and preparation of our
Annual Report on Form 10-K; 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 https://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 |
|
Twelve Months Ended |
|
December 31, 2017 |
|
January 1, 2017 |
|
December 31, 2017 |
|
January 1, 2017 |
|
|
|
|
|
|
|
|
Revenue |
$ |
41,275 |
|
|
$ |
37,492 |
|
|
$ |
176,359 |
|
|
$ |
129,069 |
|
Cost of revenue |
19,996 |
|
|
18,188 |
|
|
88,208 |
|
|
64,640 |
|
Gross
profit |
21,279 |
|
|
19,304 |
|
|
88,151 |
|
|
64,429 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
16,048 |
|
|
13,691 |
|
|
59,747 |
|
|
46,604 |
|
Sales and
marketing |
4,487 |
|
|
2,520 |
|
|
14,040 |
|
|
8,091 |
|
General
and administrative |
4,069 |
|
|
2,757 |
|
|
15,299 |
|
|
10,559 |
|
Total
operating expenses |
24,604 |
|
|
18,968 |
|
|
89,086 |
|
|
65,254 |
|
Income
(loss) from operations |
(3,325 |
) |
|
336 |
|
|
(935 |
) |
|
(825 |
) |
Interest expense |
(272 |
) |
|
(252 |
) |
|
(713 |
) |
|
(665 |
) |
Other income (expense),
net |
509 |
|
|
262 |
|
|
1,118 |
|
|
(38 |
) |
Income
(loss) before income taxes |
(3,088 |
) |
|
346 |
|
|
(530 |
) |
|
(1,528 |
) |
Benefit (provision) for
income taxes |
35,413 |
|
|
(314 |
) |
|
34,942 |
|
|
(367 |
) |
Net
income (loss) |
$ |
32,325 |
|
|
$ |
32 |
|
|
$ |
34,412 |
|
|
$ |
(1,895 |
) |
Net income (loss) per
share - basic |
$ |
0.92 |
|
|
$ |
0.00 |
|
|
$ |
1.00 |
|
|
$ |
(0.30 |
) |
Net income (loss) per
share - diluted |
$ |
0.84 |
|
|
$ |
0.00 |
|
|
$ |
0.89 |
|
|
$ |
(0.30 |
) |
|
|
|
|
|
|
|
|
Shares used in
computing net income (loss) per share: |
|
|
|
|
|
|
|
Basic |
35,316 |
|
|
21,246 |
|
|
34,259 |
|
|
6,385 |
|
Diluted |
38,281 |
|
|
35,387 |
|
|
38,484 |
|
|
6,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantenna Communications,
Inc.Condensed Consolidated Balance
Sheets(in thousands, unaudited) |
|
|
December 31, 2017 |
|
January 1,2017 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and
cash equivalents |
$ |
24,432 |
|
|
$ |
117,045 |
|
Marketable securities |
94,195 |
|
|
— |
|
Accounts
receivable |
26,786 |
|
|
14,480 |
|
Inventory |
12,662 |
|
|
15,820 |
|
Prepaid
expenses and other current assets |
2,744 |
|
|
2,470 |
|
Total
current assets |
160,819 |
|
|
149,815 |
|
Deferred tax
assets |
35,422 |
|
|
— |
|
Property and equipment,
net |
12,511 |
|
|
4,742 |
|
Intangible assets,
net |
2,987 |
|
|
— |
|
Other long-term
assets |
965 |
|
|
232 |
|
Total
assets |
$ |
212,704 |
|
|
$ |
154,789 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current
liabilities |
|
|
|
Accounts
payable |
$ |
2,077 |
|
|
$ |
7,776 |
|
Accrued
liabilities and other current liabilities |
22,742 |
|
|
11,801 |
|
Long-term
debt, current portion |
3,943 |
|
|
2,257 |
|
Total
current liabilities |
28,762 |
|
|
21,834 |
|
Long-term debt |
— |
|
|
3,680 |
|
Other long-term
liabilities |
3,339 |
|
|
527 |
|
Total
liabilities |
32,101 |
|
|
26,041 |
|
|
|
|
|
Stockholders’
equity |
|
|
|
Common
stock |
3 |
|
|
3 |
|
Additional paid-in capital |
308,023 |
|
|
290,319 |
|
Accumulated other comprehensive loss |
(207 |
) |
|
— |
|
Accumulated deficit |
(127,216 |
) |
|
(161,574 |
) |
Total
stockholders’ equity |
180,603 |
|
|
128,748 |
|
Total
liabilities and stockholders’ equity |
$ |
212,704 |
|
|
$ |
154,789 |
|
|
|
|
|
|
|
|
|
Quantenna Communications,
Inc.Condensed Consolidated Cash Flows(in
thousands, unaudited) |
|
|
Years Ended |
|
December 31,2017 |
|
January 1,2017 |
|
|
|
|
Cash flows from
operating activities |
|
|
|
Net income (loss) |
$ |
34,412 |
|
|
$ |
(1,895 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities: |
|
|
|
Release of valuation
allowances for the deferred tax assets |
(35,333 |
) |
|
— |
|
Depreciation and
amortization |
2,669 |
|
|
1,278 |
|
Stock-based
compensation expense |
10,683 |
|
|
3,065 |
|
Accretion of discount
on investments |
207 |
|
|
— |
|
Non-cash interest
expense, net |
474 |
|
|
347 |
|
Change in fair value of
convertible preferred stock warrants liability |
— |
|
|
87 |
|
Non-cash foreign
exchange gain |
(46 |
) |
|
— |
|
Changes in assets and
liabilities: |
|
|
|
Accounts
receivable |
(12,306 |
) |
|
1,237 |
|
Inventory |
3,158 |
|
|
(8,413 |
) |
Prepaid
expenses and other current assets |
(335 |
) |
|
(901 |
) |
Deferred
rent and other assets |
(467 |
) |
|
(50 |
) |
Accounts
payable |
(5,752 |
) |
|
1,804 |
|
Accrued
liabilities and other current liabilities |
9,265 |
|
|
5,757 |
|
Net cash provided by
operating activities |
6,629 |
|
|
2,316 |
|
Cash flows from
investing activities |
|
|
|
Purchase of property
and equipment |
(8,970 |
) |
|
(2,724 |
) |
Purchase of marketable
securities |
(131,790 |
) |
|
— |
|
Proceeds from sales of
marketable securities |
10,684 |
|
|
— |
|
Maturities of
marketable securities |
26,440 |
|
|
— |
|
Restricted cash |
— |
|
|
(59 |
) |
Net cash used in
investing activities |
(103,636 |
) |
|
(2,783 |
) |
Cash flows from
financing activities |
|
|
|
Proceeds from issuance
of common stock |
7,675 |
|
|
1,191 |
|
Payment of taxes
withheld for vested stock awards |
(626 |
) |
|
— |
|
Proceeds from initial
public offering, net of issuance costs |
(96 |
) |
|
97,483 |
|
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 |
|
Payments related to
intangible asset purchase |
(266 |
) |
|
— |
|
Repayments of long-term
debt |
(2,406 |
) |
|
(3,816 |
) |
Net cash provided by
financing activities |
4,281 |
|
|
98,662 |
|
Effect of exchange rate
changes on cash and cash equivalents |
113 |
|
|
— |
|
Net increase (decrease)
in cash and cash equivalents |
(92,613 |
) |
|
98,195 |
|
Cash and cash
equivalents |
|
|
|
Beginning of year |
117,045 |
|
|
18,850 |
|
End of year |
$ |
24,432 |
|
|
$ |
117,045 |
|
|
|
|
|
|
|
|
|
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 December 31,
2017 |
Three Months Ended January 1,
2017 |
|
GAAP Measure |
Stock-based Compensation Expense |
Non-RecurringItems* |
IncomeTaxes** |
Non-GAAP Measure |
GAAP Measure |
Stock-based Compensation Expense |
Non-GAAP Measure |
Revenue |
$ |
41,275 |
|
|
|
|
$ |
41,275 |
|
$ |
37,492 |
|
|
$ |
37,492 |
|
Gross profit |
21,279 |
|
42 |
|
|
|
21,321 |
|
19,304 |
|
18 |
|
19,322 |
|
Gross margin |
51.6 |
% |
0.1 |
% |
|
|
51.7 |
% |
51.5 |
% |
0.0 |
% |
51.5 |
% |
Research and
development |
16,048 |
|
1,630 |
|
|
|
14,418 |
|
13,691 |
|
457 |
|
13,234 |
|
Sales and
marketing |
4,487 |
|
584 |
|
199 |
|
|
3,704 |
|
2,520 |
|
128 |
|
2,392 |
|
General and
administrative |
4,069 |
|
980 |
|
|
|
3,089 |
|
2,757 |
|
263 |
|
2,494 |
|
Income (loss) from
operations |
(3,325 |
) |
3,236 |
|
199 |
|
— |
|
110 |
|
336 |
|
866 |
|
1,202 |
|
Benefit (provision) for
income taxes |
35,413 |
|
— |
|
— |
|
(35,305 |
) |
108 |
|
(314 |
) |
— |
|
(314 |
) |
Net income (loss) |
$ |
32,325 |
|
$ |
3,236 |
|
$ |
199 |
|
$ |
(35,305 |
) |
$ |
455 |
|
$ |
32 |
|
$ |
866 |
|
$ |
898 |
|
Basic shares
outstanding |
35,316 |
|
|
|
|
35,316 |
|
21,246 |
|
|
21,246 |
|
Basic earnings per
share |
$ |
0.92 |
|
|
|
|
$ |
0.01 |
|
$ |
0.00 |
|
|
$ |
0.04 |
|
Diluted shares
outstanding |
38,281 |
|
|
|
|
38,281 |
|
35,387 |
|
|
35,387 |
|
Diluted earnings per
share |
$ |
0.84 |
|
|
|
|
$ |
0.01 |
|
$ |
0.00 |
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Income Statement Items |
Twelve months ended December 31,
2017 |
Twelve months ended January 1,
2017 |
|
GAAP Measure |
Stock-based Compensation Expense |
Non-RecurringItems* |
IncomeTaxes** |
Non-GAAP Measure |
GAAP Measure |
Stock-based Compensation Expense |
Non-GAAP Measure |
Revenue |
$ |
176,359 |
|
|
|
|
$ |
176,359 |
|
$ |
129,069 |
|
|
$ |
129,069 |
|
Gross profit |
88,151 |
|
165 |
|
|
|
88,316 |
|
64,429 |
|
33 |
|
64,462 |
|
Gross margin |
50.0 |
% |
0.1 |
% |
|
|
50.1 |
% |
49.9 |
% |
0.0 |
% |
49.9 |
% |
Research and
development |
59,747 |
|
5,616 |
|
|
|
54,131 |
|
46,604 |
|
911 |
|
45,693 |
|
Sales and
marketing |
14,040 |
|
1,763 |
|
199 |
|
|
12,078 |
|
8,091 |
|
248 |
|
7,843 |
|
General and
administrative |
15,299 |
|
3,139 |
|
|
|
12,160 |
|
10,559 |
|
1,898 |
|
8,661 |
|
Income (loss) from
operations |
(935 |
) |
10,683 |
|
199 |
|
— |
|
9,947 |
|
(825 |
) |
3,090 |
|
2,265 |
|
Benefit (provision) for
income taxes |
34,942 |
|
— |
|
— |
|
(35,305 |
) |
(363 |
) |
(367 |
) |
— |
|
(367 |
) |
Net income (loss) |
$ |
34,412 |
|
$ |
10,683 |
|
$ |
199 |
|
$ |
(35,305 |
) |
$ |
9,989 |
|
$ |
(1,895 |
) |
$ |
3,090 |
|
$ |
1,195 |
|
Basic shares
outstanding |
34,259 |
|
|
|
|
34,259 |
|
6,385 |
|
|
6,385 |
|
Basic earnings per
share |
$ |
1.00 |
|
|
|
|
$ |
0.29 |
|
$ |
(0.30 |
) |
|
$ |
0.19 |
|
Diluted shares
outstanding |
38,484 |
|
|
|
|
38,484 |
|
6,385 |
|
|
31,113 |
|
Diluted earnings per
share |
$ |
0.89 |
|
|
|
|
$ |
0.26 |
|
$ |
(0.30 |
) |
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Non-recurring items comprised of executive severance.
**Income tax adjustment relating to recognition of US Federal
deferred tax asset pursuant to release of valuation allowance.
Quantenna Communications,
Inc.Unaudited Forward-Looking Statements Regarding
Business Outlook |
|
|
Business Outlook |
Three Months Ended April 1, 2018 |
|
|
|
|
|
High |
|
Low |
Estimated GAAP diluted
earnings (loss) per share |
$ |
(0.06 |
) |
|
$ |
(0.08 |
) |
Estimated stock
compensation expense |
(0.08 |
) |
|
(0.08 |
) |
Estimated Non-GAAP
diluted earnings (loss) per share |
$ |
0.02 |
|
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
Quantenna Communications, Inc.
Vernon Essi, Jr.
669-209-5647
vessi@quantenna.com
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