SAN JOSE, Calif., Feb. 04, 2019 (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 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 | |||