(MENAFNEditorial) SAN JOSE, Calif., Feb. 12, 2018 (GLOBE NEWSWIRE) -- Quantenna Communications, Inc. (NASDAQ:), 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 .
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 .
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
(Nasdaq:) 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 .
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-
Recurring
Items* Income
Taxes** 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-
Recurring
Items* Income
Taxes** 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
MENAFN1302201800703653ID1096458431
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