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.”
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
GAAP
48.64% +/- 50bps
Non-GAAP
48.75% +/- 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 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 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 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 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 www.quantenna.com.
Quantenna Communications, Inc. Condensed Consolidated Statements of Operations (in thousands except per share data, unaudited)
Three Months Ended
Six Months Ended
July 1, 2018
July 2, 2017
July 1, 2018
July 2, 2017
Revenue
$
53,427
$
47,085
$
98,544
$
84,976
Cost of revenue
27,563
23,314
49,915
42,621
Gross profit
25,864
23,771
48,629
42,355
Operating expenses:
Research and development
17,084
16,055
34,685
28,688
Sales and marketing
3,979
3,276
8,474
6,191
General and administrative
4,518
4,106
8,716
7,496
Total operating expenses
25,581
23,437
51,875
42,375
Income (loss) from operations
283
334
(3,246
)
(20
)
Interest expense
—
(141
)
—
(339
)
Other income, net
230
186
564
387
Income (loss) before income taxes
513
379
(2,682
)
28
(Provision) benefit for income taxes
519
(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:
Basic
36,511
33,881
36,179
33,494
Diluted
39,377
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 Items
Three months ended July 1, 2018
Three months ended July 2, 2017
GAAP Measure
Stock-based Compensation Expense
Income Taxes*
Non-GAAP Measure
GAAP Measure
Stock-based Compensation Expense
Non-GAAP Measure
Revenue
$
53,427
$
53,427
$
47,085
$
47,085
Gross profit
25,864
62
25,926
23,771
42
23,813
Gross margin
48.4
%
0.1
%
48.5
%
50.5
%
0.1
%
50.6
%
Research and development
17,084
2,529
14,555
16,055
1,414
14,641
Sales and marketing
3,979
593
3,386
3,276
410
2,866
General and administrative
4,518
1,145
3,373
4,106
708
3,398
Income from operations
283
4,329
4,612
334
2,574
2,908
(Provision) benefit for income taxes
519
—
(737
)
(218
)
(210
)
—
(210
)
Net income
$
1,032
$
4,329
$
(737
)
$
4,624
$
169
$
2,574
$
2,743
Basic shares outstanding
36,511
36,511
33,881
33,881
Basic earnings per share
$
0.03
$
0.13
$
0.00
$
0.08
Diluted shares outstanding
39,377
39,377
38,475
38,475
Diluted earnings per share
$
0.03
$
0.12
$
0.00
$
0.07
Non-GAAP Income Statement Items
Six months ended July 1, 2018
Six months ended July 2, 2017
GAAP Measure
Stock-based Compensation Expense
Income Taxes*
Non-GAAP Measure
GAAP Measure
Stock-based Compensation Expense
Non-GAAP Measure
Revenue
$
98,544
$
98,544
$
84,976
$
84,976
Gross profit
48,629
96
48,725
42,355
85
42,440
Gross margin
49.3
%
0.1
%
49.4
%
49.8
%
0.1
%
49.9
%
Research and development
34,685
4,922
29,763
28,688
2,619
26,069
Sales and marketing
8,474
1,577
6,897
6,191
763
5,428
General and administrative
8,716
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 taxes
467
—
(922
)
(455
)
(744
)
—
(744
)
Net income (loss)
$
(2,215
)
$
8,921
$
(922
)
$
5,784
$
(716
)
$
4,678
$
3,962
Basic shares outstanding
36,179
36,179
33,494
33,494
Basic earnings per share
$
(0.06
)
$
0.16
$
(0.02
)
$
0.12
Diluted shares outstanding
36,179
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 Outlook
Three 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, 2018
December 31, 2017
Assets
Current assets
Cash and cash equivalents
$
23,421
$
24,432
Marketable securities
96,661
94,195
Accounts receivable
29,700
26,786
Inventory
21,391
12,662
Prepaid expenses and other current assets
2,369
2,744
Total current assets
173,542
160,819
Deferred tax assets
36,482
35,422
Property and equipment, net
12,838
12,511
Intangible and other assets, net
3,901
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 liabilities
23,155
21,065
Long-term debt, current portion
—
3,943
Total current liabilities
32,059
28,762
Other long-term liabilities
3,214
3,339
Total liabilities
35,273
32,101
Stockholders’ equity
Common stock
3
3
Additional paid-in capital
321,669
308,023
Accumulated other comprehensive loss
(751
)
(207
)
Accumulated deficit
(129,431
)
(127,216
)
Total stockholders’ equity
191,490
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 amortization
2,263
1,024
Stock-based compensation expense
8,921
4,678
Deferred income taxes
(913
)
—
Other
247
197
Changes in assets and liabilities:
Accounts receivable
(2,914
)
(3,216
)
Inventory
(8,729
)
(5,165
)
Prepaid expenses and other current assets
375
(1,898
)
Deferred rent and other assets
101
(537
)
Accounts payable
4,972
5,968
Accrued liabilities and other current liabilities
1,743
6,597
Net cash provided by operating activities
3,851
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 securities
36,120
4,994
Net cash used in investing activities
(4,846
)
(68,621
)
Cash flows from financing activities
Proceeds from issuance of common stock, net
5,312
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 activities
136
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 period
24,432
117,045
End of period
$
23,421
$
58,231
Quantenna Communications, Inc.
Vernon Essi, Jr.
669-209-5647
[email protected]