"We are pleased to report record third quarter results, demonstrating annual revenue growth of 47%, record GAAP EPS of
"While in the fourth quarter we anticipate a delay in the deployment of a key service provider program coupled with near-term softness at one other service provider customer, we continue to execute to our Wave 2 and Wave 3 10G development plans and anticipate these deployments to resume in 2018."
Financial Summary
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
2017 | 2016 | % Change | 2017 | 2016 | % Change | ||||||||||||||||
Revenue | $ | 50,108 | $ | 34,105 | 46.9 | % | $ | 135,084 | $ | 91,577 | 47.5 | % | |||||||||
Gross Profit | 24,517 | 16,858 | 45.4 | % | 66,872 | 45,125 | 48.2 | % | |||||||||||||
Gross Margin | 48.9 | % | 49.4 | % | (50) bps | 49.5 | % | 49.3 | % | 20 bps | |||||||||||
Net income (loss): | |||||||||||||||||||||
GAAP | $ | 2,802 | $ | 21 | $ | 2,087 | $ | (1,927 | ) | ||||||||||||
Non-GAAP | 5,571 | 1,055 | 9,534 | 297 | |||||||||||||||||
Net income (loss) per share - diluted: | |||||||||||||||||||||
GAAP | $ | 0.07 | $ | 0.00 | $ | 0.05 | $ | (1.84 | ) | ||||||||||||
Non-GAAP | 0.14 | 0.04 | 0.25 | 0.01 | |||||||||||||||||
(in thousands except per share data, unaudited) | |||||||||||||||||||||
Commentary on the third quarter 2017 financial results by Company management is available at http://ir.quantenna.com/.
Please see the note regarding the use of non-GAAP financial measures below, including a detailed reconciliation between GAAP and non-GAAP information in the tables included herein.
Third Quarter Company Highlights
Business Outlook
Fourth Quarter 2017 | |
Revenue | $40M to |
Gross Margin | |
GAAP | 51.4% +/- 100bps |
Non-GAAP | 51.5% +/- 100bps |
Operating Expense Growth (sequential) | |
GAAP | Up 13% |
Non-GAAP | Up 15% |
Net income (loss) per share-diluted | |
GAAP | ( |
Non-GAAP | ( |
Gross margin, operating expense and net income GAAP to Non-GAAP reconciliation relates to stock based compensation expense. | |
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Non-GAAP Financial Measures
In addition to GAAP reporting,
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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 third quarter ended
Condensed Consolidated Statements of Operations (in thousands except per share data, unaudited) | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Revenue | $ | 50,108 | $ | 34,105 | $ | 135,084 | $ | 91,577 | ||||||||||
Cost of revenue | 25,591 | 17,247 | 68,212 | 46,452 | ||||||||||||||
Gross profit | 24,517 | 16,858 | 66,872 | 45,125 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Research and development | 15,011 | 11,162 | 43,699 | 32,913 | ||||||||||||||
Sales and marketing | 3,363 | 2,172 | 9,553 | 5,571 | ||||||||||||||
General and administrative | 3,735 | 3,248 | 11,231 | 7,802 | ||||||||||||||
Total operating expenses | 22,109 | 16,582 | 64,483 | 46,286 | ||||||||||||||
Income (loss) from operations | 2,408 | 276 | 2,389 | (1,161 | ) | |||||||||||||
Interest expense | (103 | ) | (189 | ) | (442 | ) | (414 | ) | ||||||||||
Other income (expense), net | 223 | (52 | ) | 610 | (300 | ) | ||||||||||||
Income (loss) before income taxes | 2,528 | 35 | 2,557 | (1,875 | ) | |||||||||||||
Benefit (provision) for income taxes | 274 | (14 | ) | (470 | ) | (52 | ) | |||||||||||
Net income (loss) | $ | 2,802 | $ | 21 | $ | 2,087 | $ | (1,927 | ) | |||||||||
Net income (loss) per share - basic | $ | 0.08 | $ | 0.02 | $ | 0.06 | $ | (1.84 | ) | |||||||||
Net income (loss) per share - diluted | $ | 0.07 | $ | 0.00 | $ | 0.05 | $ | (1.84 | ) | |||||||||
Shares used in computing net income (loss) per share: | ||||||||||||||||||
Basic | 34,734 | 1,157 | (1 | ) | 33,907 | 1,048 | (1 | ) | ||||||||||
Diluted | 38,525 | 29,974 | 38,419 | 1,048 | (1 | ) | ||||||||||||
(1) The number of shares reflects the number prior to conversion of preferred stock upon the Company's IPO on | ||||||||||||||||||
Unaudited reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, except per share data) | ||||||||||||||||||||||||
Non-GAAP Income Statement Items | Three months ended | Three months ended | ||||||||||||||||||||||
GAAP Measure | Stock-based Compensation Expense | Non-GAAP Measure | GAAP Measure | Stock-based Compensation Expense | Non-GAAP Measure | |||||||||||||||||||
Revenue | $ | 50,108 | $ | 50,108 | $ | 34,105 | $ | 34,105 | ||||||||||||||||
Gross profit | 24,517 | 38 | 24,555 | 16,858 | 9 | 16,867 | ||||||||||||||||||
Gross margin | 48.9 | % | 0.1 | % | 49.0 | % | 49.4 | % | 0.0 | % | 49.5 | % | ||||||||||||
Research and development | 15,011 | 1,367 | 13,644 | 11,162 | 231 | 10,931 | ||||||||||||||||||
Sales and marketing | 3,363 | 416 | 2,947 | 2,172 | 60 | 2,112 | ||||||||||||||||||
General and administrative | 3,735 | 948 | 2,787 | 3,248 | 734 | 2,514 | ||||||||||||||||||
Income from operations | 2,408 | 2,769 | 5,177 | 276 | 1,034 | 1,310 | ||||||||||||||||||
Net income | $ | 2,802 | $ | 2,769 | $ | 5,571 | $ | 21 | $ | 1,034 | $ | 1,055 | ||||||||||||
Basic shares outstanding | 34,734 | 34,734 | 1,157 | 1,157 | ||||||||||||||||||||
Basic earnings per share | $ | 0.08 | $ | 0.16 | $ | 0.02 | $ | 0.91 | ||||||||||||||||
Diluted shares outstanding | 38,525 | 38,525 | 29,974 | 29,974 | ||||||||||||||||||||
Diluted earnings per share | $ | 0.07 | $ | 0.14 | $ | 0.00 | $ | 0.04 | ||||||||||||||||
Non-GAAP Income Statement Items | Nine months ended | Nine months ended | ||||||||||||||||||||||
GAAP Measure | Stock-based Compensation Expense | Non-GAAP Measure | GAAP Measure | Stock-based Compensation Expense | Non-GAAP Measure | |||||||||||||||||||
Revenue | $ | 135,084 | $ | 135,084 | $ | 91,577 | $ | 91,577 | ||||||||||||||||
Gross profit | 66,872 | 123 | 66,995 | 45,125 | 15 | 45,140 | ||||||||||||||||||
Gross margin | 49.5 | % | 0.1 | % | 49.6 | % | 49.3 | % | 0.0 | % | 49.3 | % | ||||||||||||
Research and development | 43,699 | 3,986 | 39,713 | 32,913 | 454 | 32,459 | ||||||||||||||||||
Sales and marketing | 9,553 | 1,179 | 8,374 | 5,571 | 120 | 5,451 | ||||||||||||||||||
General and administrative | 11,231 | 2,159 | 9,072 | 7,802 | 1,635 | 6,167 | ||||||||||||||||||
Income (loss) from operations | 2,389 | 7,447 | 9,836 | (1,161 | ) | 2,224 | 1,063 | |||||||||||||||||
Net income (loss) | $ | 2,087 | $ | 7,447 | $ | 9,534 | $ | (1,927 | ) | $ | 2,224 | $ | 297 | |||||||||||
Basic shares outstanding | 33,907 | 33,907 | 1,048 | 1,048 | ||||||||||||||||||||
Basic earnings per share | $ | 0.06 | $ | 0.28 | $ | (1.84 | ) | $ | 0.28 | |||||||||||||||
Diluted shares outstanding | 38,419 | 38,419 | 1,048 | 29,370 | ||||||||||||||||||||
Diluted earnings per share | $ | 0.05 | $ | 0.25 | $ | (1.84 | ) | $ | 0.01 | |||||||||||||||
Unaudited Forward-Looking Statements Regarding Business Outlook | ||||||||
Business Outlook | Three Months Ended | |||||||
High | Low | |||||||
Estimated GAAP diluted earnings (loss) per share | $ | (0.11 | ) | $ | (0.09 | ) | ||
Estimated stock compensation expense | 0.07 | 0.07 | ||||||
Estimated Non-GAAP diluted earnings (loss) per share | $ | (0.04 | ) | $ | (0.02 | ) | ||
Condensed Consolidated Balance Sheets (in thousands, unaudited) | |||||||
2017 | 2017 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 38,844 | $ | 117,045 | |||
Marketable securities | 88,022 | — | |||||
Accounts receivable | 22,820 | 14,480 | |||||
Inventory | 23,700 | 15,820 | |||||
Prepaid expenses and other current assets | 2,444 | 2,470 | |||||
Total current assets | 175,830 | 149,815 | |||||
Property and equipment, net | 11,215 | 4,742 | |||||
Intangible assets, net | 3,259 | — | |||||
Other long-term assets | 1,037 | 232 | |||||
Total assets | $ | 191,341 | $ | 154,789 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 12,918 | $ | 7,776 | |||
Accrued liabilities and other current liabilities | 27,941 | 11,801 | |||||
Long-term debt, current portion | 2,487 | 2,257 | |||||
Total current liabilities | 43,346 | 21,834 | |||||
Long-term debt | 1,900 | 3,680 | |||||
Other long-term liabilities | 3,413 | 527 | |||||
Total liabilities | 48,659 | 26,041 | |||||
Stockholders' equity | |||||||
Common stock | 3 | 3 | |||||
Additional paid-in capital | 302,240 | 290,319 | |||||
Accumulated other comprehensive loss | (20 | ) | — | ||||
Accumulated deficit | (159,541 | ) | (161,574 | ) | |||
Total stockholders' equity | 142,682 | 128,748 | |||||
Total liabilities and stockholders' equity | $ | 191,341 | $ | 154,789 | |||
Condensed Consolidated Cash Flows (in thousands, unaudited) | |||||||
Nine Months Ended | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Net income (loss) | $ | 2,087 | $ | (1,927 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 1,566 | 880 | |||||
Stock-based compensation expense | 7,447 | 2,224 | |||||
Accretion of discount on investments | 93 | — | |||||
Non-cash interest expense, net | 254 | 140 | |||||
Change in fair value of convertible preferred stock warrants liability | — | 109 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (8,340 | ) | (1,589 | ) | |||
Inventory | (7,880 | ) | (2,861 | ) | |||
Prepaid expenses and other current assets | (22 | ) | (283 | ) | |||
Deferred rent and other assets | (790 | ) | 16 | ||||
Accounts payable | 5,119 | (1,136 | ) | ||||
Accrued liabilities and other current liabilities | 14,660 | 6,136 | |||||
Net cash provided by operating activities | 14,194 | 1,709 | |||||
Cash flows from investing activities | |||||||
Purchase of property and equipment | (6,961 | ) | (1,621 | ) | |||
Purchase of marketable securities | (104,044 | ) | — | ||||
Proceeds from sales of marketable securities | 3,670 | — | |||||
Maturities of marketable securities | 12,239 | — | |||||
Restricted cash | — | (1,559 | ) | ||||
Net cash used in investing activities | (95,096 | ) | (3,180 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from issuance of common stock | 4,553 | 785 | |||||
Payments of offering costs | (96 | ) | (881 | ) | |||
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 | |||||
Repayments of long-term debt | (1,756 | ) | (3,265 | ) | |||
Net cash provided by financing activities | 2,701 | 443 | |||||
Net decrease in cash and cash equivalents | (78,201 | ) | (1,028 | ) | |||
Cash and cash equivalents | |||||||
Beginning of period | 117,045 | 18,850 | |||||
End of period | $ | 38,844 | $ | 17,822 | |||
Source:Quantenna Communications, Inc. Vernon Essi , Jr. 669-209-5647 [email protected]
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