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Quantenna Announces Second Quarter 2018 Financial Results
[July 30, 2018]

Quantenna Announces Second Quarter 2018 Financial Results

SAN JOSE, Calif., July 30, 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 second quarter ended July 1, 2018.

"The strength of our second quarter operating results further demonstrates the success of our product offerings. During the quarter, our latest cable MSO initiated its full volume rollout of our Wave 3 10G solution. With strong engagement and positive feedback from our customers, we are also excited about our upcoming 802.11ax solutions,” commented Dr. Sam Heidari, Chairman and Chief Executive Officer.

“We expect record revenue in the third quarter driven by continued growth from our Wave 3 10G products. We also expect record revenue from our Wave 2 products as these solutions continue expanding our addressable market into mainstream opportunities requiring a high-performance Wi-Fi experience.”

Financial Summary

 Three Months Ended   Six Months Ended  
 July 1, July 2, %
 July 1, July 2, %
Revenue$53,427  $47,085  13.5% $98,544  $84,976  16.0%
Gross Profit25,864  23,771  8.8% 48,629  42,355  14.8%
Gross Margin48.4% 50.5% (210) bps 49.3% 49.8% (50) bps
Net income (loss):           
GAAP$1,032  $169    $(2,215) $(716)  
Non-GAAP4,624  2,743    5,784  3,962   
Net income (loss) per share - diluted:           
GAAP$0.03  $0.00    $(0.06) $(0.02)  
Non-GAAP0.12  0.07    0.15  0.1   
(in thousands except per share data, unaudited)          

Commentary on the second quarter 2018 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.

Second Quarter Company Highlights

  • Record revenue of $53.4 million, representing year over year growth of 13% over the second quarter of 2017 and 18% sequential growth over the first quarter of 2018.

  • Second quarter GAAP diluted EPS of $0.03 compares to $0.00 in the second quarter of 2017. Second quarter non-GAAP dilutive EPS of $0.12 compares to $0.07 in the second quarter of 2017.

  • Second quarter GAAP operating income declined 15% compared to the second quarter of 2017. Second quarter non-GAAP operating income grew 59% compared to the second quarter of 2017.

  • Record revenue from both our Wave 3 10G and Wave 2 product segments.

  • Quantenna’s Spartan solutions are now successfully integrated into more than 20 shipping OEM designs targeting turnkey implementation by service providers. 

  • The latest cable MSO initiated a full volume rollout using our Wave 3 10G technology in their next generation gateway.

  • Introduced ViSiON, an innovative cloud-based service for Quantenna enabled devices using advanced analytics to accelerate and improve service provider deployments of best-in-class Wi-Fi devices.

  • Announced the new QSR10GU-AX Plus targeting gateways and access points based on the draft IEEE 802.11ax standard that incorporates many unique performance features only offered by Quantenna.

Business Outlook

 Third Quarter 2018
Guidance Range
Revenue$57M to $59M
Gross Margin 
GAAP48.64% +/- 50bps
Non-GAAP48.75% +/- 50bps
Operating Expense 
GAAP$26.0M to $27.0M
Non-GAAP$22.0M to $23.0M
Net income per share-diluted 
GAAP$0.04 - $0.06
Non-GAAP$0.14 - $0.16
Gross margin, operating expense and net income GAAP to Non-GAAP reconciliation relates to stock based compensation expense and change in deferred tax assets.

Webcast and Conference Call

Quantenna management will host a conference call discussing the quarterly results and business outlook following this press release at 1:30 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: 5986225. 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 changes to deferred tax balances. 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.

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 second quarter ended July 1, 2018, forecasted financial results for the third quarter of fiscal 2018, 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: 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; intense market competition, including competition from other companies that are larger and have greater resources and broader product ecosystem offerings; ability to accurately predict future revenue and expenses; potential cancellation of customer orders; risks that Quantenna may not be able to maintain its historical growth or achieve similar levels of success with respect to new products; ability to attract and retain customers and service providers; dependence on a limited number of products and customers; 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; risks related to international operations, including the uncertainty and potential impact regarding increased tariffs and escalating trade tensions among countries; dependence of our customers on components from other third parties; risks that Quantenna may not be able to manage strains associated with its growth; dependence on key personnel; stock price volatility; 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 second quarter of 2018 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 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.

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. Quantenna continues to innovate with the mission to perfect consumer’s Wi-Fi experience by establishing benchmarks for speed, range, efficiency and reliability. Quantenna takes a multidimensional approach, from silicon to system and software, to provide total Wi-Fi network solutions. For more information, visit

Quantenna Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands except per share data, unaudited)

 Three Months Ended Six Months Ended
 July 1,
 July 2,
 July 1,
 July 2,
Revenue$53,427  $47,085  $98,544  $84,976 
Cost of revenue27,563  23,314  49,915  42,621 
Gross profit25,864  23,771  48,629  42,355 
Operating expenses:       
Research and development17,084  16,055  34,685  28,688 
Sales and marketing3,979  3,276  8,474  6,191 
General and administrative4,518  4,106  8,716  7,496 
Total operating expenses25,581  23,437  51,875  42,375 
Income (loss) from operations283  334  (3,246) (20)
Interest expense  (141)   (339)
Other income, net230  186  564  387 
Income (loss) before income taxes513  379  (2,682) 28 
(Provision) benefit for income taxes519  (210) 467  (744)
Net income (loss)$1,032  $169  $(2,215) $(716)
Net income (loss) per share - basic$0.03  $0.00  $(0.06) $(0.02)
Net income (loss) per share - diluted$0.03  $0.00  $(0.06) $(0.02)
Shares used in computing net income (loss) per share:       
Basic36,511  33,881  36,179  33,494 
Diluted39,377  38,475  36,179  33,494 

Quantenna Communications, Inc.
Unaudited reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data)

Non-GAAP Income Statement ItemsThree months ended July 1, 2018Three months ended July 2, 2017
Revenue$53,427   $53,427 $47,085  $47,085 
Gross profit25,864 62  25,926 23,771 42 23,813 
Gross margin48.4%0.1% 48.5%50.5%0.1%50.6%
Research and development17,084 2,529  14,555 16,055 1,414 14,641 
Sales and marketing3,979 593  3,386 3,276 410 2,866 
General and administrative4,518 1,145  3,373 4,106 708 3,398 
Income from operations283 4,329  4,612 334 2,574 2,908 
(Provision) benefit for income taxes519  (737)(218)(210) (210)
Net income$1,032 $4,329 $(737)$4,624 $169 $2,574 $2,743 
Basic shares outstanding36,511   36,511 33,881  33,881 
Basic earnings per share$0.03   $0.13 $0.00  $0.08 
Diluted shares outstanding39,377   39,377 38,475  38,475 
Diluted earnings per share$0.03   $0.12 $0.00  $0.07 

Non-GAAP Income Statement ItemsSix months ended July 1, 2018Six months ended July 2, 2017
Revenue$98,544   $98,544 $84,976  $84,976 
Gross profit48,629 96  48,725 42,355 85 42,440 
Gross margin49.3%0.1% 49.4%49.8%0.1%49.9%
Research and development34,685 4,922  29,763 28,688 2,619 26,069 
Sales and marketing8,474 1,577  6,897 6,191 763 5,428 
General and administrative8,716 2,326  6,390 7,496 1,211 6,285 
Income (loss) from operations(3,246)8,921  5,675 (20)4,678 4,658 
(Provision) benefit for income taxes467  (922)(455)(744) (744)
Net income (loss)$(2,215)$8,921 $(922)$5,784 $(716)$4,678 $3,962 
Basic shares outstanding36,179   36,179 33,494  33,494 
Basic earnings per share$(0.06)  $0.16 $(0.02) $0.12 
Diluted shares outstanding36,179   39,075 33,494  38,414 
Diluted earnings per share$(0.06)  $0.15 $(0.02) $0.10 

*Income tax adjustment relating to change in US Federal and State deferred tax assets.

Quantenna Communications, Inc.
Unaudited Forward-Looking Statements Regarding Business Outlook

Business OutlookThree Months Ended September 30, 2018
 Low High
Estimated GAAP diluted earnings per share$0.04  $0.06 
Estimated stock compensation expense$(0.10) $(0.10)
Estimated Non-GAAP diluted earnings per share$0.14  $0.16 

 Quantenna Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)

 July 1,
 December 31,
Current assets   
Cash and cash equivalents$23,421  $24,432 
Marketable securities96,661  94,195 
Accounts receivable29,700  26,786 
Inventory21,391  12,662 
Prepaid expenses and other current assets2,369  2,744 
Total current assets173,542  160,819 
Deferred tax assets36,482  35,422 
Property and equipment, net12,838  12,511 
Intangible and other assets, net3,901  3,952 
Total assets$226,763  $212,704 
Liabilities and Stockholders’ Equity   
Current liabilities   
Accounts payable$8,904  $3,754 
Accrued liabilities and other current liabilities23,155  21,065 
Long-term debt, current portion  3,943 
Total current liabilities32,059  28,762 
Other long-term liabilities3,214  3,339 
Total liabilities35,273  32,101 
Stockholders’ equity   
Common stock3  3 
Additional paid-in capital321,669  308,023 
Accumulated other comprehensive loss(751) (207)
Accumulated deficit(129,431) (127,216)
Total stockholders’ equity191,490  180,603 
Total liabilities and stockholders’ equity$226,763  $212,704 

Quantenna Communications, Inc.
Condensed Consolidated Cash Flows
(in thousands, unaudited)

 Six Months Ended
 July 1, 2018 July 2, 2017
Cash flows from operating activities   
Net loss$(2,215) $(716)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation and amortization2,263  1,024 
Stock-based compensation expense8,921  4,678 
Deferred income taxes(913)  
Other247  197 
Changes in assets and liabilities:   
Accounts receivable(2,914) (3,216)
Inventory(8,729) (5,165)
Prepaid expenses and other current assets375  (1,898)
Deferred rent and other assets101  (537)
Accounts payable4,972  5,968 
Accrued liabilities and other current liabilities1,743  6,597 
Net cash provided by operating activities3,851  6,932 
Cash flows from investing activities   
Purchase of property and equipment(1,378) (2,446)
Purchase of long-term investment(590)  
Purchase of marketable securities(38,998) (71,169)
Maturities of marketable securities36,120  4,994 
Net cash used in investing activities(4,846) (68,621)
Cash flows from financing activities   
Proceeds from issuance of common stock, net5,312  3,980 
Payments of taxes withheld for vested stock awards(689)  
Payments related to intangible asset purchase(544)  
Repayments of long-term debt(3,943) (1,105)
Net cash provided by financing activities136  2,875 
Effect of exchange rates on cash and cash equivalents(152)  
Net decrease in cash and cash equivalents(1,011) (58,814)
Cash and cash equivalents   
Beginning of period24,432  117,045 
End of period$23,421  $58,231 
Quantenna Communications, Inc.
Vernon Essi, Jr.

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