SAN JOSE, Calif., Feb. 12, 2018 (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 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/events.cfm.
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 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, 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.
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
[email protected]