Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 - QUANTENNA COMMUNICATIONS INC | exhibit993quantennaq4201.htm |
| EX-99.2 - EXHIBIT 99.2 - QUANTENNA COMMUNICATIONS INC | exhibit992quantennaq4fy2.htm |
| 8-K - 8-K - QUANTENNA COMMUNICATIONS INC | qtna-21218x8k.htm |
Exhibit 99.1
News Release
|
Quantenna Announces Fourth Quarter and Fiscal 2017 Financial Results
Major Cable MSO Initiates Nationwide Rollout of Quantenna's Wave 3 10G Solution
San Jose, CA – February 12, 2018 – 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/.
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. |
2 of 9
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,
3 of 9
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.
4 of 9
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 | |||||||||||
5 of 9
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 | |||
6 of 9
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 | |||
7 of 9
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.
8 of 9
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
# # #
9 of 9