Quantenna Announces Fourth Quarter and Fiscal 2018 Financial Results
04 Février 2019 - 10:05PM
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 2018 ended December 30, 2018.
"Our strong fourth quarter and annual operating
results showcase the success of our broad product portfolio as both
our premium Wave 3 10G product and high-performance mainstream Wave
2 product experienced record revenue. We continue to experience
strong customer engagement with our products, including our family
of Wi-Fi 6 product offerings,” commented Dr. Sam Heidari, Chairman
and Chief Executive Officer.
Financial Summary
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
|
December 30, 2018 |
|
December 31, 2017 |
|
% Change |
|
December 30, 2018 |
|
December 31, 2017 |
|
% Change |
(in
thousands except per share data, unaudited) |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
62,567 |
|
|
$ |
41,275 |
|
|
51.6% |
|
$ |
220,460 |
|
|
$ |
176,359 |
|
|
25.0% |
Gross Profit |
31,283 |
|
|
21,279 |
|
|
47.0% |
|
109,402 |
|
|
88,151 |
|
|
24.1% |
Gross Margin |
50.0 |
% |
|
51.6 |
% |
|
(160)
bps |
|
49.6 |
% |
|
50.0 |
% |
|
(40)
bps |
|
|
|
|
|
|
|
|
|
|
|
|
Net income: |
|
|
|
|
|
|
|
|
|
|
|
GAAP |
$ |
1,419 |
|
|
$ |
32,325 |
|
|
|
|
$ |
3,083 |
|
|
$ |
34,412 |
|
|
|
Non-GAAP |
7,619 |
|
|
455 |
|
|
|
|
20,371 |
|
|
9,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share -
diluted: |
|
|
|
|
|
|
|
|
|
|
|
GAAP |
$ |
0.04 |
|
|
$ |
0.84 |
|
|
|
|
$ |
0.08 |
|
|
$ |
0.89 |
|
|
|
Non-GAAP |
0.19 |
|
|
0.01 |
|
|
|
|
0.51 |
|
|
0.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commentary on the fourth quarter and fiscal year 2018 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 2018 Company
Highlights
- Record revenue of $220.5 million in fiscal year 2018
represented year over year growth of 25% compared to fiscal year
2017. Record revenue of $62.6 million in the fourth quarter
represented year over year growth of 52% over the fourth quarter of
2017.
- Fiscal year 2018 GAAP diluted EPS of $0.08 compared to $0.89 in
fiscal year 2017. Fourth quarter GAAP diluted EPS of $0.04 compared
to $0.84 in the fourth quarter of 2017.
- Record fiscal year 2018 non-GAAP diluted EPS of $0.51 compared
to $0.26 in fiscal year 2017. Record fourth quarter of 2018
non-GAAP diluted EPS of $0.19 compared to $0.01 in the fourth
quarter of 2017.
- GAAP operating income of $2.8 million and non-GAAP operating
income of $20.1 million in fiscal year 2018, compared to GAAP
operating loss of $(0.9) million and non-GAAP operating income of
$9.9 million in fiscal year 2017.
- Cash from operations totaled $24.8 million in fiscal year 2018,
compared to $6.6 million in fiscal year 2017, representing annual
growth of 274%. Fourth quarter cash from operations totaled $5.1
million compared to $(7.6) million in the fourth quarter of
2017.
- Record revenue from both our Wave 3 10G and Wave 2 product
segments.
- Reinforced our strategic partnership with Telefónica, a leading
global service provider, with the development of new product
offerings utilizing our Wi-Fi 6 solutions.
- Starry Inc., a next generation service provider using 5G
millimeter wave technology, will use our Wi-Fi 6 chipsets in their
base station technology.
- Delivered Wi-Fi 6 reference designs for next generation GPON
gateways and routers with Cortina Access, Inc.
- Introduced Spartan Essential, a turn-key design targeting
multiple consumer Wi-Fi applications such as mesh, access point for
wired extenders and boosters for upgrading existing
gateways.
- Orange S.A., the largest broadband provider in France, is using
our Wave 2 technology for its latest generation of repeaters and
set-top boxes.
Business Outlook
|
First Quarter 2019 Guidance Range |
Revenue |
$56M
to $59M |
Gross Margin |
|
GAAP |
50.4%
+/- 50bps |
Non-GAAP |
50.5%
+/- 50bps |
Operating Expenses |
|
GAAP |
$27.4M
to $28.4M |
Non-GAAP |
$23.0M
to $24.0M |
Net income per
share-diluted |
|
GAAP |
$0.02
to $0.04 |
Non-GAAP |
$0.13
to $0.15 |
|
|
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: 5966507. 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 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 fourth quarter
and fiscal year 2018 ended December 30, 2018, forecasted
financial results for the first quarter of fiscal 2019, 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;
quarterly fluctuations in revenues and operating results; risks and
uncertainties related to international operations, including the
impact of increased tariffs and escalating trade tensions with
China directly and indirectly impacting Quantenna and its
customers, end customers, vendors and partners; potential
cancellation, delay or volatility of customer orders; 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; 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; the complexity of the products, including integration
requirements with components from other third parties that are
outside of Quantenna's control; 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;
dependence of Quantenna's 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; changes in tax and other laws affecting Quantenna’s
business and operations; cyberattacks; adjustments to the
preliminary financial results reported in this press release and
related earnings call announcement and materials for the fourth
quarter of 2018 in connection with completion of the final closing
process and procedures and preparation of our 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 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.
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 Wi-Fi by establishing benchmarks for speed, range,
efficiency and reliability. Quantenna takes a multidimensional
approach, from silicon and system to software, and provides total
Wi-Fi solutions. For more information, visit www.quantenna.com.
Quantenna Communications,
Inc.Condensed Consolidated Statements of
Operations(in thousands except per share data,
unaudited)
|
Three Months Ended |
|
Twelve Months Ended |
|
December 30, 2018 |
|
December 31, 2017 |
|
December 30, 2018 |
|
December 31, 2017 |
|
|
|
|
|
|
|
|
Revenue |
$ |
62,567 |
|
|
$ |
41,275 |
|
|
$ |
220,460 |
|
|
$ |
176,359 |
|
Cost of revenue |
31,284 |
|
|
19,996 |
|
|
111,058 |
|
|
88,208 |
|
Gross
profit |
31,283 |
|
|
21,279 |
|
|
109,402 |
|
|
88,151 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
19,054 |
|
|
16,048 |
|
|
71,522 |
|
|
59,747 |
|
Sales and
marketing |
3,996 |
|
|
4,487 |
|
|
16,303 |
|
|
14,040 |
|
General
and administrative |
5,165 |
|
|
4,069 |
|
|
18,767 |
|
|
15,299 |
|
Total
operating expenses |
28,215 |
|
|
24,604 |
|
|
106,592 |
|
|
89,086 |
|
Income
(loss) from operations |
3,068 |
|
|
(3,325 |
) |
|
2,810 |
|
|
(935 |
) |
Interest expense |
— |
|
|
(272 |
) |
|
— |
|
|
(713 |
) |
Other income, net |
432 |
|
|
509 |
|
|
1,239 |
|
|
1,118 |
|
Income
(loss) before income taxes |
3,500 |
|
|
(3,088 |
) |
|
4,049 |
|
|
(530 |
) |
Benefit (provision) for
income taxes |
(2,081 |
) |
|
35,413 |
|
|
(966 |
) |
|
34,942 |
|
Net
income |
$ |
1,419 |
|
|
$ |
32,325 |
|
|
$ |
3,083 |
|
|
$ |
34,412 |
|
Net income per share -
basic |
$ |
0.04 |
|
|
$ |
0.92 |
|
|
$ |
0.08 |
|
|
$ |
1.00 |
|
Net income per share -
diluted |
$ |
0.04 |
|
|
$ |
0.84 |
|
|
$ |
0.08 |
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
Shares used in
computing net income per share: |
|
|
|
|
|
|
|
Basic |
37,527 |
|
|
35,316 |
|
|
36,744 |
|
|
34,259 |
|
Diluted |
40,027 |
|
|
38,281 |
|
|
39,663 |
|
|
38,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantenna Communications,
Inc.Condensed Consolidated Balance
Sheets(in thousands, unaudited)
|
December 30, 2018 |
|
December 31, 2017 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash
equivalents |
$ |
38,881 |
|
|
$ |
24,432 |
|
Marketable securities |
97,268 |
|
|
94,195 |
|
Accounts
receivable |
28,326 |
|
|
26,786 |
|
Inventory |
20,218 |
|
|
12,662 |
|
Prepaid
expenses and other current assets |
5,325 |
|
|
2,744 |
|
Total
current assets |
190,018 |
|
|
160,819 |
|
Deferred tax assets,
net |
35,563 |
|
|
35,422 |
|
Property and equipment,
net |
13,691 |
|
|
12,511 |
|
Intangible and other
assets, net |
6,384 |
|
|
3,952 |
|
Total
assets |
$ |
245,656 |
|
|
$ |
212,704 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current
liabilities |
|
|
|
Accounts
payable |
$ |
9,852 |
|
|
$ |
3,754 |
|
Accrued
liabilities and other current liabilities |
25,946 |
|
|
21,065 |
|
Long-term
debt, current portion |
— |
|
|
3,943 |
|
Total
current liabilities |
35,798 |
|
|
28,762 |
|
Other long-term
liabilities |
3,371 |
|
|
3,339 |
|
Total
liabilities |
39,169 |
|
|
32,101 |
|
|
|
|
|
Stockholders’
equity |
|
|
|
Common
stock |
4 |
|
|
3 |
|
Additional paid-in capital |
331,551 |
|
|
308,023 |
|
Accumulated other comprehensive loss |
(935 |
) |
|
(207 |
) |
Accumulated deficit |
(124,133 |
) |
|
(127,216 |
) |
Total
stockholders’ equity |
206,487 |
|
|
180,603 |
|
Total
liabilities and stockholders’ equity |
$ |
245,656 |
|
|
$ |
212,704 |
|
|
|
|
|
|
|
|
|
Quantenna Communications,
Inc.Condensed Consolidated Cash Flows(in
thousands, unaudited)
|
Years Ended |
|
December 30, 2018 |
|
December 31, 2017 |
|
|
|
|
Cash flows from
operating activities |
|
|
|
Net income |
$ |
3,083 |
|
|
$ |
34,412 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
Stock based
compensation |
17,289 |
|
|
10,683 |
|
Depreciation and
amortization |
4,861 |
|
|
2,669 |
|
Deferred income
taxes |
53 |
|
|
(35,333 |
) |
Other |
1,067 |
|
|
635 |
|
Changes in assets and
liabilities: |
|
|
|
Accounts
receivable |
(1,540 |
) |
|
(12,306 |
) |
Inventory |
(7,556 |
) |
|
3,158 |
|
Prepaid
expenses and other current assets |
(2,581 |
) |
|
(335 |
) |
Deferred
rent and other assets |
313 |
|
|
(467 |
) |
Accounts
payable |
5,791 |
|
|
(5,752 |
) |
Accrued
liabilities and other current liabilities |
4,040 |
|
|
9,265 |
|
Net cash provided by
operating activities |
24,820 |
|
|
6,629 |
|
Cash flows from
investing activities |
|
|
|
Purchase of property
and equipment |
(5,100 |
) |
|
(8,970 |
) |
Purchase of long-term
investment |
(590 |
) |
|
— |
|
Purchase of intangible
asset |
(1,732 |
) |
|
— |
|
Purchase of marketable
securities |
(69,716 |
) |
|
(131,790 |
) |
Proceeds from sales of
marketable securities |
— |
|
|
10,684 |
|
Maturities of
marketable securities |
66,173 |
|
|
26,440 |
|
Net cash used in
investing activities |
(10,965 |
) |
|
(103,636 |
) |
Cash flows from
financing activities |
|
|
|
Proceeds from issuance
of common stock |
8,418 |
|
|
7,675 |
|
Payment of taxes
withheld for vested stock awards |
(2,501 |
) |
|
(626 |
) |
Proceeds from initial
public offering, net of issuance costs |
— |
|
|
(96 |
) |
Payments related to
intangible asset purchase |
(1,086 |
) |
|
(266 |
) |
Repayments of long-term
debt |
(3,943 |
) |
|
(2,406 |
) |
Net cash provided by
financing activities |
888 |
|
|
4,281 |
|
Effect of exchange rate
changes on cash and cash equivalents |
(294 |
) |
|
113 |
|
Net increase (decrease)
in cash and cash equivalents |
14,449 |
|
|
(92,613 |
) |
Cash and cash
equivalents |
|
|
|
Beginning of year |
24,432 |
|
|
117,045 |
|
End of year |
$ |
38,881 |
|
|
$ |
24,432 |
|
|
|
|
|
|
|
|
|
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 30,
2018 |
Three Months Ended December 31,
2017 |
|
GAAP Measure |
Stock-based Compensation Expense |
Income Taxes* |
Non-GAAP Measure |
GAAP Measure |
Stock-based Compensation Expense |
Non-Recurring Items** |
Income Taxes* |
Non-GAAP Measure |
Revenue |
$ |
62,567 |
|
|
|
$ |
62,567 |
|
$ |
41,275 |
|
|
|
|
$ |
41,275 |
|
Gross profit |
31,283 |
|
53 |
|
|
31,336 |
|
21,279 |
|
42 |
|
|
|
21,321 |
|
Gross margin |
50.0 |
% |
0.1 |
% |
|
50.1 |
% |
51.6 |
% |
0.1 |
% |
|
|
51.7 |
% |
Research and
development |
19,054 |
|
2,506 |
|
|
16,548 |
|
16,048 |
|
1,630 |
|
|
|
14,418 |
|
Sales and
marketing |
3,996 |
|
578 |
|
|
3,418 |
|
4,487 |
|
584 |
|
199 |
|
|
3,704 |
|
General and
administrative |
5,165 |
|
1,229 |
|
|
3,936 |
|
4,069 |
|
980 |
|
|
|
3,089 |
|
Income (loss) from
operations |
3,068 |
|
4,366 |
|
— |
|
7,434 |
|
(3,325 |
) |
3,236 |
|
199 |
|
— |
|
110 |
|
Benefit (provision) for
income taxes |
(2,081 |
) |
— |
|
1,834 |
|
(247 |
) |
35,413 |
|
— |
|
— |
|
(35,305 |
) |
108 |
|
Net income (loss) |
$ |
1,419 |
|
$ |
4,366 |
|
$ |
1,834 |
|
$ |
7,619 |
|
$ |
32,325 |
|
$ |
3,236 |
|
$ |
199 |
|
$ |
(35,305 |
) |
$ |
455 |
|
Basic shares
outstanding |
37,527 |
|
|
|
37,527 |
|
35,316 |
|
|
|
|
35,316 |
|
Basic earnings per
share |
$ |
0.04 |
|
|
|
$ |
0.20 |
|
$ |
0.92 |
|
|
|
|
$ |
0.01 |
|
Diluted shares
outstanding |
40,027 |
|
|
|
40,027 |
|
38,281 |
|
|
|
|
38,281 |
|
Diluted earnings per
share |
$ |
0.04 |
|
|
|
$ |
0.19 |
|
$ |
0.84 |
|
|
|
|
$ |
0.01 |
|
Non-GAAP Income Statement Items |
Twelve months ended December 30,
2018 |
Twelve months ended December 31,
2017 |
|
GAAP Measure |
Stock-based Compensation Expense |
Income Taxes* |
Non-GAAP Measure |
GAAP Measure |
Stock-based Compensation Expense |
Non-Recurring Items** |
Income Taxes* |
Non-GAAP Measure |
Revenue |
$ |
220,460 |
|
|
|
$ |
220,460 |
|
$ |
176,359 |
|
|
|
|
$ |
176,359 |
|
Gross profit |
109,402 |
|
199 |
|
|
109,601 |
|
88,151 |
|
165 |
|
|
|
88,316 |
|
Gross margin |
49.6 |
% |
0.1 |
% |
|
49.7 |
% |
50.0 |
% |
0.1 |
% |
|
|
50.1 |
% |
Research and
development |
71,522 |
|
9,676 |
|
|
61,846 |
|
59,747 |
|
5,616 |
|
|
|
54,131 |
|
Sales and
marketing |
16,303 |
|
2,696 |
|
|
13,607 |
|
14,040 |
|
1,763 |
|
199 |
|
|
12,078 |
|
General and
administrative |
18,767 |
|
4,718 |
|
|
14,049 |
|
15,299 |
|
3,139 |
|
|
|
12,160 |
|
Income (loss) from
operations |
2,810 |
|
17,289 |
|
— |
|
20,099 |
|
(935 |
) |
10,683 |
|
199 |
|
— |
|
9,947 |
|
Benefit (provision) for
income taxes |
(966 |
) |
— |
|
(1 |
) |
(967 |
) |
34,942 |
|
— |
|
— |
|
(35,305 |
) |
(363 |
) |
Net income (loss) |
$ |
3,083 |
|
$ |
17,289 |
|
$ |
(1 |
) |
$ |
20,371 |
|
$ |
34,412 |
|
$ |
10,683 |
|
$ |
199 |
|
$ |
(35,305 |
) |
$ |
9,989 |
|
Basic shares
outstanding |
36,744 |
|
|
|
36,744 |
|
34,259 |
|
|
|
|
34,259 |
|
Basic earnings per
share |
$ |
0.08 |
|
|
|
$ |
0.55 |
|
$ |
1.00 |
|
|
|
|
$ |
0.29 |
|
Diluted shares
outstanding |
39,663 |
|
|
|
39,663 |
|
38,484 |
|
|
|
|
38,484 |
|
Diluted earnings per
share |
$ |
0.08 |
|
|
|
$ |
0.51 |
|
$ |
0.89 |
|
|
|
|
$ |
0.26 |
|
*Income tax adjustment relating to change in US Federal and
State deferred tax assets.
**Non-recurring items comprised of executive severance.
Quantenna Communications,
Inc.Unaudited Forward-Looking Statements Regarding
Business Outlook
Business Outlook |
Three Months Ended March 31, 2019 |
|
|
|
|
|
Low |
|
High |
Estimated GAAP diluted
earnings per share |
$ |
0.02 |
|
|
$ |
0.04 |
|
Estimated stock
compensation expense |
(0.11 |
) |
|
(0.11 |
) |
Estimated Non-GAAP
diluted earnings per share |
$ |
0.13 |
|
|
$ |
0.15 |
|
Quantenna Communications, Inc.
Vernon Essi, Jr.
669-209-5647
vessi@quantenna.com
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