Second Half 2021 Revenue Expected to Be in the Range of
$4 Million - $5 Million Supported by Current Second Half
Backlog of $6 Million
SAN JOSE, Calif., Aug. 30, 2021 /CNW/ -- (TSXV:SEV)
(OTCQB:SPVND) Spectra7 Microsystems Inc. ("Spectra7" or the
"Company"), a leading provider of high-performance analog
semiconductor products for broadband connectivity markets, today
announced financial results for its second quarter of 2021. A copy
of the unaudited interim consolidated financial statements for the
three- and six-month periods ended June 30,
2021, prepared in accordance with International Financial
Reporting Standards (IFRS), and the corresponding management's
discussion and analysis (MD&A) will be available under the
Company's profile on the Canadian Securities Administrator's SEDAR
website at www.sedar.com. All amounts reported are in U.S. dollars
unless otherwise noted.
Q2 2021 Financial Highlights
- Revenue for Q2 2021 was $0.73
million, representing an increase of approximately 30% from
Q1 2021, and an increase of approximately 185% over the second
quarter of the prior year. Revenue growth in Q2 2021 remained
constrained by working capital and supply issues.
- Gross margin1 as a percentage of revenue for Q2 2021
was 59%, representing an increase of approximately 2% over the
prior quarter, and an increase of 3% over the second quarter of the
prior year.
- Non-IFRS operating expenses2 in Q2 2021 were
$1.80 million, up approximately
$0.77 million from the prior quarter,
and up $0.07 million over the same
quarter a year ago. The increase in Q2 2021 was due primarily to
annual audit fees, costs associated with the Company's annual
shareholders meeting and engineering expenses in support of data
center production ramp.
- EBITDA3 loss was approximately $0.93 million, compared with a loss of
$0.57 million in the prior quarter
and $1.3 million in the same quarter
a year ago.
2H 2021 Financial Outlook4
Led by strong data center order backlog and supply availability,
the Company expects continued revenue growth for the second half of
2021. Spectra7 currently estimates total revenue in the second half
of 2021 will be between $4.0 million
and $5.0 million, with sequential
increases in both Q3 and Q44. Operating expenses are
anticipated to be in the range of $1.6 and $2.0
million per quarter for the remainder of the year in support
of the anticipated rapid revenue growth in the second half of
20214.
With this current outlook, the Company anticipates that it will
achieve EBITDA3 profitability in Q4
20214.
CEO Q2 COMMENTARY
"We are at the beginning of what I believe will be a sustained
revenue growth trajectory in the second half of 2021, leading to
expected EBITDA profitability in Q43. My
confidence in this outlook is supported by record order backlog
with our Active Copper Cable technology from major Hyperscaler data
center operators," said Spectra7 CEO Raouf
Halim. "In the second quarter, we achieved qualification
with a major China-based data
center operator and began receiving significant orders for
production deployment of our PAM4 data center product this year.
These positive developments will serve as the foundation of our
revenue growth in the coming quarters."4
Business Highlights
- A major China-based
Hyperscaler began placing large volume orders in Q2 for
Spectra7-based 200G PAM4 Active Copper Cable (ACC)
interconnects.
- Wandtec, an innovative technology leading interconnect
supplier, announced its collaboration with Spectra7 to deliver
interconnect solutions for low power, low latency and extended
reach, targeted at major datacenter operators and high-performance
computing OEMs.
- On June 11, 2021, the Company
announced the closing of its private placement of
4,223,1405 units for gross proceeds of approximately
$5.23 million (CDN $6.33 million).
- On June 21, 2021, the Company
commenced trading on the OTCQB® Market in the United States to increase visibility to
prospective US investors.
- Continued to experience gains with its data center solutions
with four new customer design-ins in Q2 2021, for a total of
92.
Option and RSU Grants
As announced on July 13, 2021, Ms.
Bonnie Tomei, a semiconductor
industry veteran, was appointed the Company's Chief Financial
Officer. As part of her compensation plan, the board of directors
has approved a grant of 100,0005 restricted share
units and 100,0005 stock options, both of which
vest over a period of four years. The stock options are exercisable
at a price equal to the greater of CDN $1.81 and the closing price of the Company's
common shares on the TSXV on August 31,
2021, which is the first full trading day after the issuance
of the Company's financial results for the three and six month
periods ended June 30, 2021. The
expiry date of the options is August 27,
2026.
In addition, the Company has granted
811,6385 restricted share units to the Company's
Chief Executive Officer in connection with his long term equity
incentive plan for 2020 and 2021.
Appointment of New Investor Relations Firm
Spectra7 announced it has retained Darrow Associates Texas, Inc.
("Darrow") to provide investor relations services to the
Company. The primary service provided by Darrow to the Company will
be business consultation on investor communications and awareness,
arrangement of investor meetings and conferences (the
"Services"). Darrow will not promote the specific purchase
or sale of securities of the Company.
Darrow has agreed to comply with all applicable securities laws
and the policies of the TSX Venture Exchange (the "TSXV") in
providing the Services. Darrow has been engaged by the Company for
an initial period of six months starting August 23, 2021, which engagement may be renewed
automatically for successive two-month periods. Darrow will be paid
monthly service fees of up to $9,000
and has been granted 24,000 restricted share units. Except for
these restricted share units, Darrow does not have any interest,
directly or indirectly, in the Company or its securities or any
right or intent to acquire such an interest.
NOTES:
1 Gross margin is a non-GAAP measure. Refer to
"Revenue and Gross Margin" in the Company's interim MD&A for
the three and six months ended June 30,
2021, for reconciliation to measures reported in the
Company's financial statements.
2 Non-IFRS operating expenses is a
non-GAAP measure which includes research and development, sales and
marketing, general and administrative expenses and depreciation and
amortization for capital equipment and right-of-use assets and
excludes share-based compensation expense, non-recurring
termination costs, interest and related financing costs, change in
fair value of warrant liabilities, foreign exchange gain/loss and
gain/loss from property and equipment disposal.
3 EBITDA or earnings before interest, tax,
depreciation, and amortization is a non-GAAP measure. EBITDA
excludes share-based compensation, amortization, depreciation,
interest, and tax expenses.
4 This is forward-looking information and is based
on a number of assumptions which includes the current customer
purchase orders received, supply outlook and anticipated
operational expenditures. See "Cautionary Notes".
5 On August 13, 2021,
the Company completed a consolidation of its common shares on the
basis of 50 old common shares for 1 new common share. The number of
units is presented on a post-consolidation basis.
ABOUT SPECTRA7 MICROSYSTEMS INC.
Spectra7 Microsystems Inc. is a high-performance analog
semiconductor company delivering unprecedented bandwidth, speed and
resolution to enable disruptive industrial design for leading
electronics manufacturers in virtual reality, augmented reality,
mixed reality, data centers and other connectivity markets.
Spectra7 is based in San Jose,
California with a design center in Cork, Ireland and technical support location
in Dongguan, China. For more
information, please visit www.spectra7.com.
ABOUT DARROW ASSOCIATES TEXAS, INC.
Darrow Associates Texas, Inc. provides investor relations
advisory services and has built its reputation on customer support
and developing award winning IR programs for its clients. Darrow
operates offices in New York City,
Silicon Valley, and Austin. For
more information, please
visit www.darrowir.com.
Neither the TSX Venture Exchange nor its regulation services
provided (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
CAUTIONARY NOTES
Certain statements contained in this press release constitute
"forward-looking statements". All statements other than statements
of historical fact contained in this press release, including,
without limitation, the Company's revenue expectations in the
second half of 2021, the Company's projection of EBIDTA
profitability in Q4 2021, the Company's ability to deliver
interconnect solutions pursuant to its collaboration with Wandtec,
the renewal of Darrow's contract with Spectra7 for successive
periods, and the Company's strategy, plans, objectives, goals and
targets, and any statements preceded by, followed by or that
include the words "believe", "expect", "aim", "intend", "plan",
"continue", "will", "may", "would", "anticipate", "estimate",
"forecast", "predict", "project", "seek", "should" or similar
expressions or the negative thereof, are forward-looking
statements. These statements are not historical facts but instead
represent only the Company's expectations, estimates and
projections regarding future events. These statements are not
guarantees of future performance and involve assumptions, risks and
uncertainties that are difficult to predict. Therefore, actual
results may differ materially from what is expressed, implied or
forecasted in such forward-looking statements. Additional factors
that could cause actual results, performance or achievements to
differ materially include, but are not limited to the risk factors
discussed in the Company's Management's Discussion and Analysis for
the year ended December 31, 2020.
Management provides forward-looking statements because it believes
they provide useful information to investors when considering their
investment objectives and cautions investors not to place undue
reliance on forward-looking information. Consequently, all of the
forward-looking statements made in this press release are qualified
by these cautionary statements and other cautionary statements or
factors contained herein, and there can be no assurance that the
actual results or developments will be realized or, even if
substantially realized, that they will have the expected
consequences to, or effects on, the Company. These forward-looking
statements are made as of the date of this press release and the
Company assumes no obligation to update or revise them to reflect
subsequent information, events or circumstances or otherwise,
except as required by law.
For more information, please contact:
Matt Kreps/Jim Fanucchi
Darrow Associates
214-597-8200
ir@spectra7.com
Spectra7 Microsystems Inc.
Bonnie Tomei
Chief Financial Officer
669-212-1089
ir@spectra7.com
Spectra7 Microsystems Inc.
John Mitchell
Public Relations
650-269-3043
pr@spectra7.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/spectra7-announces-second-quarter-revenue-up-185-year-over-year-301365307.html
SOURCE Spectra7 Microsystems Inc.