Record First Half Revenue of $5.6 million, Up Over 330% from the Same Period a
Year Ago
CEO Raouf Halim Returns to Certain Strategic
and Board Duties
SAN
JOSE, Calif., Aug. 29,
2022 /CNW/ -- (TSXV: SEV) (OTCQB: SPVNF) Spectra7
Microsystems Inc. ("Spectra7" or the "Company"), a
leading provider of high-performance analog semiconductor products
for broadband connectivity markets, today announced its financial
results for the second quarter of 2022. A copy of the unaudited
condensed interim consolidated financial statements for the three
and six months ended June 30, 2022,
prepared in accordance with International Financial Reporting
Standards and the corresponding management's discussion and
analysis (the "MD&A") will be available under the Company's
profile on www.sedar.com. Unless otherwise indicated, all dollar
amounts in this press release are expressed in US dollars.
"We achieved the high-end of our updated guidance range with
first-half revenue of $5.6 million,
keeping us on pace to generate record revenue this year," said
Ron Pasek, Chairman of the Board.
"We also strengthened our balance sheet with an upsized convertible
debenture offering of CAD$8.9
million. The terms of the new debentures permit us to borrow
up to CAD$5.0 million from third
party lenders to support working capital needs as part of our
growth strategy. I remain pleased with the long-term opportunities
in our business to address the growing need for high-speed
connectivity solutions in both the hyperscale data center and AR/VR
markets."1
Q2 2022 Financial Highlights
- Revenue for the second quarter was approximately $3.5 million, up from $0.7
million in the same quarter a year ago, an increase of
approximately 380%. Second quarter revenue includes approximately
$0.9 million of the first quarter
product shipments that were delayed into the second quarter.
- Revenue for the first half of 2022 was $5.6 million, a Company record, increasing over
330% from the first half of 2021.
- Gross margin2 as a percentage of revenue for the
second quarter was 43%, compared with 59% in the second quarter of
2021, a decline due mainly to the continued higher costs to secure
wafers and supply chain capacity necessary to meet increasing
customer demand for our products.
- Non-IFRS operating expenses3 in the second quarter
were $2.4 million, up from
$1.8 million in the same period a
year ago. Second quarter of 2021 operating expenses were reduced
due to employee furloughs in response to the impact of Covid-19 at
that time. In addition, the second quarter of 2022 included costs
to support the production ramp for the Company's DreamWeVR™
products.
- Basic and diluted loss per share for the second quarter was
$(0.05), compared with a basic and
diluted loss per share of $(0.08) in
the same period a year ago.
- EBITDA4 loss in the second quarter was $(0.6) million, compared with an EBITDA loss of
approximately $(1.2) million in the
same period a year ago.
2H FY 2022 Outlook 1
The Company expects to generate record revenue in 2022. The
current outlook for revenue in the second half of 2022 is in the
range of $4.6 million to $6.0 million.5 While the demand
environment remains strong, continued supply related constraints
are impacting the current revenue outlook. At the mid-point of this
range, the projected full year results represent an annual revenue
of over $11.0 million, which would be
double the revenue generated in 2021.
Non-IFRS operating expenses3 are expected to be
between $4.5 million and $5.0 million5, which includes
increased headcount growth to support customers and development
expenses associated with new products. Non-IFRS operating
expenses were approximately $3.9
million in the second half of 2021.
Key Business Highlights
- Expanded production with a top global gaming manufacture
company that is using Spectra7's DreamWeVR™ chip sets in its next
generation head mounted display interconnect.
- Expanded availability of active copper cables with ACES to
deliver 200 and 400Gbps interconnects for data center markets
- Added two new hyperscale data center design-ins, for a total of
105 to date.
CEO Update
CEO Raouf Halim continues to be
on medical leave although Mr. Halim has resumed Board related
duties on a limited time basis. Spectra7 is continuing its business
plans uninterrupted, led by its deep bench of executive leadership.
Chair of the Board of Directors Ronald
Pasek, Chief Financial Officer Bonnie Tomei, and other members of the executive
team will continue to co-manage Mr. Halim's duties during his
leave.
RSU Grants
As a part of the annual long term incentive plan outlined in
their respective offer letters, Spectra7's board of directors has
granted 1,187,828 restricted share units ("RSUs") to the Company's
Chief Executive Officer and such number of RSUs to the Company's
Chief Financial Officer as is equal to approximately CAD
$219,000 divided by the closing price
of the common shares on the TSX Venture Exchange on August 29, 2022.
NOTES:
1 This is forward-looking information and is based on
a number of assumptions which include the current customer purchase
orders received, supply outlook and anticipated operational
expenses. See "Cautionary Notes".
2 Gross margin is a non-GAAP measure. Refer to
"Revenue and Gross Margin" in the MD&A for reconciliation to
measures reported in the Company's financial statements.
3 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. Refer to "Non-IFRS
Operating Expenses" in the MD&A for reconciliation to measures
reported in the Company's financial statements.
4 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. Refer to "EBITDA" in the MD&A for
reconciliation to measures reported in the Company's financial
statements.
5 This is forward-looking information and is based on a
number of assumptions, which include the current customer purchase
orders received, supply outlook and anticipated operational
expenses. See "Cautionary Notes".
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 data centers, 5G infrastructure,
virtual and augmented reality, 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.
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 expectation for revenue and
supply availability in the second half of 2022, the Company's
ability to obtain additional financing as permitted under the new
debentures, the Company's expected operating expenses, 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 annual
information form for the year ended December
31, 2021. 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
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SOURCE Spectra7 Microsystems Inc.