SAN JOSE, Calif., Nov. 06, 2017 (GLOBE NEWSWIRE) -- 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 third quarter ended October 1, 2017.
“We are pleased to report record third quarter results, demonstrating annual revenue growth of 47%, record GAAP EPS of $0.07 and record non-GAAP EPS of $0.14. We experienced growing customer adoption of our newer Wave 3 10G products combined with strong shipment levels of our core Wave 2 offerings and legacy 802.11n products,” remarked Dr. Sam Heidari, Chairman and Chief Executive Officer.
“While in the fourth quarter we anticipate a delay in the deployment of a key service provider program coupled with near-term softness at one other service provider customer, we continue to execute to our Wave 2 and Wave 3 10G development plans and anticipate these deployments to resume in 2018.”
Financial Summary
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| October 1, 2017 | September 25, 2016 | % Change | October 1, 2017 | September 25, 2016 | % Change | ||||||||||||||||
| Revenue | $ | 50,108 | $ | 34,105 | 46.9 | % | $ | 135,084 | $ | 91,577 | 47.5 | % | |||||||||
| Gross Profit | 24,517 | 16,858 | 45.4 | % | 66,872 | 45,125 | 48.2 | % | |||||||||||||
| Gross Margin | 48.9 | % | 49.4 | % | (50) bps | 49.5 | % | 49.3 | % | 20 bps | |||||||||||
| Net income (loss): | |||||||||||||||||||||
| GAAP | $ | 2,802 | $ | 21 | $ | 2,087 | $ | (1,927 | ) | ||||||||||||
| Non-GAAP | 5,571 | 1,055 | 9,534 | 297 | |||||||||||||||||
| Net income (loss) per share - diluted: | |||||||||||||||||||||
| GAAP | $ | 0.07 | $ | 0.00 | $ | 0.05 | $ | (1.84 | ) | ||||||||||||
| Non-GAAP | 0.14 | 0.04 | 0.25 | 0.01 | |||||||||||||||||
| (in thousands except per share data, unaudited) | |||||||||||||||||||||
Commentary on the third quarter 2017 financial results by Company management is available at http://ir.quantenna.com/.
Please see the note regarding the use of non-GAAP financial measures below, including a detailed reconciliation between GAAP and non-GAAP information in the tables included herein.
Third Quarter Company Highlights
- Record revenue of $50.1 million, representing year over year growth of 47% over the third quarter of 2016 and 6% sequential growth over the second quarter of 2017.
- GAAP operating income grew to $2.4 million, and non-GAAP operating income grew to $5.2 million, or 10.3% of revenue. Non-GAAP operating income reached another quarterly record and grew 78% sequentially over the second quarter of 2017.
- Cash from operations totaled $7.3 million, or $0.19 per fully diluted share, while cash, cash equivalents and marketable securities grew $2.5 million sequentially to $126.9 million, or $3.29 per fully diluted share.
- Announced a partnership with AirTies to offer Internet Service Providers (ISPs) a complete turnkey managed Wi-Fi mesh solution with new classes of differentiated, premium Wi-Fi services.
- Released the Spartan AP Booster which offers service providers a cost-effective Wi-Fi performance upgrade for their existing subscriber legacy home gateways without replacing or upgrading the entire gateway.
- Entered the Over the Top (OTT) set-top box market with the Zero Memory client solution that offers unparalleled video performance to both STB and OTT clients without the need for incremental memory costs.
- Announced that Technicolor has adopted the QV860 chipset in its OWA0130 dual-band multi-function extender, augmenting the coverage of Wi-Fi gateways with a mesh network offering seamless connectivity.
- Demonstrated with Cortina Access a Dual 4x4 802.11ax 10G fiber/PON gateway reference platform at IBC 2017 in Amsterdam, bringing best of breed broadband and Wi-Fi capabilities into a single integrated platform targeting mass deployment.
- Partnered with SoftAtHome to offer its Smart Wi-Fi software availability on the QV860 chipset, enabling SoftAtHome to offer a high-performance mesh and repeater solution to service providers and OEM partners by levering the Quantenna 802.11ac Wi-Fi ecosystem.
Business Outlook
| Fourth Quarter 2017 Guidance Range | |
| Revenue | $40M to $42M |
| Gross Margin | |
| GAAP | 51.4% +/- 100bps |
| Non-GAAP | 51.5% +/- 100bps |
| Operating Expense Growth (sequential) | |
| GAAP | Up 13% |
| Non-GAAP | Up 15% |
| Net income (loss) per share-diluted | |
| GAAP | ($0.11) - ($0.09) |
| Non-GAAP | ($0.04) - ($0.02) |
| Gross margin, operating expense and net income GAAP to Non-GAAP reconciliation relates to stock based compensation expense. | |
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: 97831720. 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. 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, 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 third quarter ended October 1, 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; quarterly fluctuations in revenues and operating results; challenges developing new and leading edge products on a timely basis that achieve market acceptance; the complexity of the products; 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; 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 third quarter of 2017 in connection with completion of the final closing process and procedures and preparation of our Quarterly Report on Form 10-Q; 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 http://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 | Nine Months Ended | |||||||||||||||||
| October 1, 2017 | September 25, 2016 | October 1, 2017 | September 25, 2016 | |||||||||||||||
| Revenue | $ | 50,108 | $ | 34,105 | $ | 135,084 | $ | 91,577 | ||||||||||
| Cost of revenue | 25,591 | 17,247 | 68,212 | 46,452 | ||||||||||||||
| Gross profit | 24,517 | 16,858 | 66,872 | 45,125 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development | 15,011 | 11,162 | 43,699 | 32,913 | ||||||||||||||
| Sales and marketing | 3,363 | 2,172 | 9,553 | 5,571 | ||||||||||||||
| General and administrative | 3,735 | 3,248 | 11,231 | 7,802 | ||||||||||||||
| Total operating expenses | 22,109 | 16,582 | 64,483 | 46,286 | ||||||||||||||
| Income (loss) from operations | 2,408 | 276 | 2,389 | (1,161 | ) | |||||||||||||
| Interest expense | (103 | ) | (189 | ) | (442 | ) | (414 | ) | ||||||||||
| Other income (expense), net | 223 | (52 | ) | 610 | (300 | ) | ||||||||||||
| Income (loss) before income taxes | 2,528 | 35 | 2,557 | (1,875 | ) | |||||||||||||
| Benefit (provision) for income taxes | 274 | (14 | ) | (470 | ) | (52 | ) | |||||||||||
| Net income (loss) | $ | 2,802 | $ | 21 | $ | 2,087 | $ | (1,927 | ) | |||||||||
| Net income (loss) per share - basic | $ | 0.08 | $ | 0.02 | $ | 0.06 | $ | (1.84 | ) | |||||||||
| Net income (loss) per share - diluted | $ | 0.07 | $ | 0.00 | $ | 0.05 | $ | (1.84 | ) | |||||||||
| Shares used in computing net income (loss) per share: | ||||||||||||||||||
| Basic | 34,734 | 1,157 | (1 | ) | 33,907 | 1,048 | (1 | ) | ||||||||||
| Diluted | 38,525 | 29,974 | 38,419 | 1,048 | (1 | ) | ||||||||||||
| (1) The number of shares reflects the number prior to conversion of preferred stock upon the Company's IPO on November 2, 2016 | ||||||||||||||||||
| 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 October 1, 2017 | Three months ended September 25, 2016 | ||||||||||||||||||||||
| GAAP Measure | Stock-based Compensation Expense | Non-GAAP Measure | GAAP Measure | Stock-based Compensation Expense | Non-GAAP Measure | |||||||||||||||||||
| Revenue | $ | 50,108 | $ | 50,108 | $ | 34,105 | $ | 34,105 | ||||||||||||||||
| Gross profit | 24,517 | 38 | 24,555 | 16,858 | 9 | 16,867 | ||||||||||||||||||
| Gross margin | 48.9 | % | 0.1 | % | 49.0 | % | 49.4 | % | 0.0 | % | 49.5 | % | ||||||||||||
| Research and development | 15,011 | 1,367 | 13,644 | 11,162 | 231 | 10,931 | ||||||||||||||||||
| Sales and marketing | 3,363 | 416 | 2,947 | 2,172 | 60 | 2,112 | ||||||||||||||||||
| General and administrative | 3,735 | 948 | 2,787 | 3,248 | 734 | 2,514 | ||||||||||||||||||
| Income from operations | 2,408 | 2,769 | 5,177 | 276 | 1,034 | 1,310 | ||||||||||||||||||
| Net income | $ | 2,802 | $ | 2,769 | $ | 5,571 | $ | 21 | $ | 1,034 | $ | 1,055 | ||||||||||||
| Basic shares outstanding | 34,734 | 34,734 | 1,157 | 1,157 | ||||||||||||||||||||
| Basic earnings per share | $ | 0.08 | $ | 0.16 | $ | 0.02 | $ | 0.91 | ||||||||||||||||
| Diluted shares outstanding | 38,525 | 38,525 | 29,974 | 29,974 | ||||||||||||||||||||
| Diluted earnings per share | $ | 0.07 | $ | 0.14 | $ | 0.00 | $ | 0.04 | ||||||||||||||||
| Non-GAAP Income Statement Items | Nine months ended October 1, 2017 | Nine months ended September 25, 2016 | ||||||||||||||||||||||
| GAAP Measure | Stock-based Compensation Expense | Non-GAAP Measure | GAAP Measure | Stock-based Compensation Expense | Non-GAAP Measure | |||||||||||||||||||
| Revenue | $ | 135,084 | $ | 135,084 | $ | 91,577 | $ | 91,577 | ||||||||||||||||
| Gross profit | 66,872 | 123 | 66,995 | 45,125 | 15 | 45,140 | ||||||||||||||||||
| Gross margin | 49.5 | % | 0.1 | % | 49.6 | % | 49.3 | % | 0.0 | % | 49.3 | % | ||||||||||||
| Research and development | 43,699 | 3,986 | 39,713 | 32,913 | 454 | 32,459 | ||||||||||||||||||
| Sales and marketing | 9,553 | 1,179 | 8,374 | 5,571 | 120 | 5,451 | ||||||||||||||||||
| General and administrative | 11,231 | 2,159 | 9,072 | 7,802 | 1,635 | 6,167 | ||||||||||||||||||
| Income (loss) from operations | 2,389 | 7,447 | 9,836 | (1,161 | ) | 2,224 | 1,063 | |||||||||||||||||
| Net income (loss) | $ | 2,087 | $ | 7,447 | $ | 9,534 | $ | (1,927 | ) | $ | 2,224 | $ | 297 | |||||||||||
| Basic shares outstanding | 33,907 | 33,907 | 1,048 | 1,048 | ||||||||||||||||||||
| Basic earnings per share | $ | 0.06 | $ | 0.28 | $ | (1.84 | ) | $ | 0.28 | |||||||||||||||
| Diluted shares outstanding | 38,419 | 38,419 | 1,048 | 29,370 | ||||||||||||||||||||
| Diluted earnings per share | $ | 0.05 | $ | 0.25 | $ | (1.84 | ) | $ | 0.01 | |||||||||||||||
| Quantenna Communications, Inc. Unaudited Forward-Looking Statements Regarding Business Outlook | ||||||||
| Business Outlook | Three Months Ended December 31, 2017 | |||||||
| High | Low | |||||||
| Estimated GAAP diluted earnings (loss) per share | $ | (0.11 | ) | $ | (0.09 | ) | ||
| Estimated stock compensation expense | 0.07 | 0.07 | ||||||
| Estimated Non-GAAP diluted earnings (loss) per share | $ | (0.04 | ) | $ | (0.02 | ) | ||
| Quantenna Communications, Inc. Condensed Consolidated Balance Sheets (in thousands, unaudited) | |||||||
| October 1, 2017 | January 1, 2017 | ||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 38,844 | $ | 117,045 | |||
| Marketable securities | 88,022 | — | |||||
| Accounts receivable | 22,820 | 14,480 | |||||
| Inventory | 23,700 | 15,820 | |||||
| Prepaid expenses and other current assets | 2,444 | 2,470 | |||||
| Total current assets | 175,830 | 149,815 | |||||
| Property and equipment, net | 11,215 | 4,742 | |||||
| Intangible assets, net | 3,259 | — | |||||
| Other long-term assets | 1,037 | 232 | |||||
| Total assets | $ | 191,341 | $ | 154,789 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 12,918 | $ | 7,776 | |||
| Accrued liabilities and other current liabilities | 27,941 | 11,801 | |||||
| Long-term debt, current portion | 2,487 | 2,257 | |||||
| Total current liabilities | 43,346 | 21,834 | |||||
| Long-term debt | 1,900 | 3,680 | |||||
| Other long-term liabilities | 3,413 | 527 | |||||
| Total liabilities | 48,659 | 26,041 | |||||
| Stockholders’ equity | |||||||
| Common stock | 3 | 3 | |||||
| Additional paid-in capital | 302,240 | 290,319 | |||||
| Accumulated other comprehensive loss | (20 | ) | — | ||||
| Accumulated deficit | (159,541 | ) | (161,574 | ) | |||
| Total stockholders’ equity | 142,682 | 128,748 | |||||
| Total liabilities and stockholders’ equity | $ | 191,341 | $ | 154,789 | |||
| Quantenna Communications, Inc. Condensed Consolidated Cash Flows (in thousands, unaudited) | |||||||
| Nine Months Ended | |||||||
| October 1, 2017 | September 25, 2016 | ||||||
| Cash flows from operating activities | |||||||
| Net income (loss) | $ | 2,087 | $ | (1,927 | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 1,566 | 880 | |||||
| Stock-based compensation expense | 7,447 | 2,224 | |||||
| Accretion of discount on investments | 93 | — | |||||
| Non-cash interest expense, net | 254 | 140 | |||||
| Change in fair value of convertible preferred stock warrants liability | — | 109 | |||||
| Changes in assets and liabilities: | |||||||
| Accounts receivable | (8,340 | ) | (1,589 | ) | |||
| Inventory | (7,880 | ) | (2,861 | ) | |||
| Prepaid expenses and other current assets | (22 | ) | (283 | ) | |||
| Deferred rent and other assets | (790 | ) | 16 | ||||
| Accounts payable | 5,119 | (1,136 | ) | ||||
| Accrued liabilities and other current liabilities | 14,660 | 6,136 | |||||
| Net cash provided by operating activities | 14,194 | 1,709 | |||||
| Cash flows from investing activities | |||||||
| Purchase of property and equipment | (6,961 | ) | (1,621 | ) | |||
| Purchase of marketable securities | (104,044 | ) | — | ||||
| Proceeds from sales of marketable securities | 3,670 | — | |||||
| Maturities of marketable securities | 12,239 | — | |||||
| Restricted cash | — | (1,559 | ) | ||||
| Net cash used in investing activities | (95,096 | ) | (3,180 | ) | |||
| Cash flows from financing activities | |||||||
| Proceeds from issuance of common stock | 4,553 | 785 | |||||
| Payments of offering costs | (96 | ) | (881 | ) | |||
| 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 | |||||
| Repayments of long-term debt | (1,756 | ) | (3,265 | ) | |||
| Net cash provided by financing activities | 2,701 | 443 | |||||
| Net decrease in cash and cash equivalents | (78,201 | ) | (1,028 | ) | |||
| Cash and cash equivalents | |||||||
| Beginning of period | 117,045 | 18,850 | |||||
| End of period | $ | 38,844 | $ | 17,822 | |||