Spectra7 Announces First Quarter 2018 Financial Results
May 15 2018 - 9:30PM
Business Wire
Weak Virtual Reality Sales Hinder Revenues
while Data Center Prototype Activities Continue to Grow
(TSX:SEV) Spectra7 Microsystems Inc. (“Spectra7” or the
“Company”), a leading provider of high-performance analog
semiconductor products for broadband connectivity markets, today
announced its unaudited financial results for the three months
ended March 31, 2018. All dollar amounts in this release are
expressed in US dollars unless otherwise stated.
Q1 2018 Financial Results
- Revenue for the quarter ended March 31,
2018 was approximately $0.9 million, representing a decrease of
approximately 69% from the prior quarter. Spectra7 continues to
have a strong position in the virtual reality (“VR”) and mixed
reality (“MR”) markets, which experienced overall demand weakness
in the first quarter of 2018.
- Gross margin1 as a percentage of
revenue was approximately 55%, consistent with the prior
quarter.
- Non-IFRS expenses2 were approximately
$3.2 million, representing a decrease of approximately 16% from the
prior quarter, while IFRS operating expenses were approximately
$3.6 million, representing a decrease of approximately 12% from the
prior quarter. The significant sequential decline in expenses is
due primarily to restructuring in response to weak demand in the
first quarter. The Company has strategically pivoted internal
resources to better align with its strong traction of the data
center market.
CEO COMMENTARY
“As anticipated when we released our fiscal 2017 results, demand
for our VR and MR solutions was particularly weak following the
strong holiday season,” said Spectra7 CEO Raouf Halim. “We continue
to hold a dominant position in the tethered VR and MR markets and
expect a stronger second half of 2018. We are encouraged by the
continued increase of prototype data center revenues and believe
the production ramp of our data center solutions will contribute
meaningful revenue during the second half of 2018.”
Other Quarterly Highlights
- Data Center prototype revenue more than
tripled in the first quarter of 2018 as compared to the prior
quarter and remains on track for production revenue to increase in
the second half of 2018.
- The Company experienced continued
strong customer engagement including 10 new Data Center design-ins
in the first quarter of 2018.
- Data Center Equipment OEMs and
interconnect suppliers continue development and qualification of
Active Copper Cables for 100G and 400G applications with Spectra7
technology.
Outlook
The Company has entered the second quarter of 2018 with
increased VR backlog compared to the first quarter of 2018 and
expects sequential revenue growth in the second quarter of 2018.
Non-IFRS operating expenses are expected to remain stable, or
decrease, in the second quarter as compared to the first quarter of
2018, as the Company works to maintain operating expense discipline
and identify opportunities to reduce costs. The Company is also
pursuing strategic financing options after the repayment of the
$6.5 million term loan.
A copy of the unaudited interim consolidated financial
statements for the three month period ended March 31, 2018 and
corresponding management’s discussion and analysis will be
available under the Company’s profile on www.sedar.com.
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 design centers in
Markham, Ontario, Cork, Ireland, and Little Rock, Arkansas. For
more information, please visit www.spectra7.com.
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, those regarding the Company's future financial
position and results of operations, strategy, proposed
acquisitions, 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
MD&A for the year ended December 31, 2017. 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.
1 Additional GAAP Measure – Gross margin is presented in this
press release consistent with information presented in the
Company’s financial statements. Gross margin has been calculated by
deducting manufacturing cost of sales, and provision for inventory
write-downs from revenue. Management of the Company believes that
providing this information allows investors to better understand
the Company’s historical and future financial performance.
2 Non-IFRS expenses excludes stock-based compensation,
restructuring expenses, impairment expenses and other one-time
expenses.
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version on businesswire.com: https://www.businesswire.com/news/home/20180515006834/en/
Spectra7 Microsystems Inc.Sean Peasgood, 647-503-1034Investor
Relationsir@spectra7.comorSpectra7 Microsystems Inc.Darren Ma,
669-284-3170Chief Financial Officerpr@spectra7.com