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  • Quantenna Announces First Quarter 2018 Financial Results

    Source: Nasdaq GlobeNewswire / 30 Apr 2018 16:06:00   America/New_York

    SAN JOSE, Calif., April 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 first quarter ended April 1, 2018.

    "Our first quarter strength bolsters our Wave 3 10G growth strategy as we experienced accelerated deployment momentum with our key cable MSO customer coupled with an additional cable MSO initiating full volume rollout. Additionally, these deployments are now sourced through two separate OEM partners, which adds additional capacity to serve demand and diversifies the supply chain. We also continue to receive inbound interest for Wave 3 10G designs due to its superior performance in the Wi-Fi landscape,” remarked Dr. Sam Heidari, Chairman and Chief Executive Officer.

    “We expect record revenue in the second quarter, driven by record Wave 3 10G revenue shipments, as we extend our customer opportunities into mainstream markets and new and existing high-performance markets that seek a full-featured and unparalleled connectivity experience.”

    Financial Summary 

     Three Months Ended  
     April 1,
     2018    		 April 2,
     2017    		 % Change
          
    Revenue$45,117  $37,891  19.1%
    Gross Profit22,765  18,584  22.5%
    Gross Margin50.5% 49.0% 150 bps
    Net income (loss):     
    GAAP$(3,247) $(884)  
    Non-GAAP1,160  1,220   
    Net income (loss) per share - diluted:     
    GAAP$(0.09) $(0.03)  
    Non-GAAP0.03  0.03   
          
    (in thousands except per share data, unaudited)    
         

    Commentary on the first quarter 2018 financial results by Company management is available at http://ir.quantenna.com/events.cfm.

    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.

    First Quarter Company Highlights

    • Revenue of $45.1 million, representing year over year growth of 19% over the first quarter of 2017 and 9% sequential growth over the fourth quarter of 2017.

    • First quarter GAAP gross margin of 50.5% compared to 49.0% in the first quarter of fiscal year 2017. First quarter non-GAAP gross margin of 50.5% compared to 49.2% in the first quarter of fiscal year 2017.

    • First quarter GAAP and non-GAAP gross profit grew 22% from the first quarter of fiscal year 2017.

    • Cash from operations generated $6.8 million in the first quarter of fiscal year 2018, compared to ($0.4) million in the first quarter of 2017. 

    • Wave 3 10G continues its leadership position in the first quarter with a cable MSO initiating a full volume rollout using our technology exclusively in their flagship next generation gateway.

    • Our cable MSO customers using our Wave 3 10G solutions are now sourcing their next generation gateways through two separate OEM partners, which adds substantial capacity to serve subscriber demand while diversifying the supply chain.

    • Partnered with Canal+ Group to deliver an end-to-end solution that enables wireless HD video redistribution from set-top box to a companion Over-The-Top (OTT) set-top box.

    • Announced enhanced Wi-Fi features on the Wave 3 QSR10G chipset family targeting gateways and access points that significantly improve the user experience of mobile Wi-Fi clients.

    • Partnered with Greenwave Systems, Inc., to deliver a full duplex 4x4 802.11ac Wave 2 Wi-Fi extender for superior whole-home coverage.

    • Collaborated with Icotera to deliver innovative next-generation fiber gateway and Wi-Fi access point solutions to the European market.

    Business Outlook

     Second Quarter 2018
    Guidance Range
    Revenue $51M to $53M
    Gross Margin 
    GAAP48% +/- 100bps
    Non-GAAP48% +/- 100bps
    Operating Expense Growth (sequential) 
    GAAPFlat to up 4%
    Non-GAAPFlat to up 5%
    Net income (loss) per share-diluted 
    GAAP ($0.04) - ($0.02)
    Non-GAAP $0.07 - $0.09
      
    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 2:00 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: 4674009. 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.

    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.

    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 first quarter ended April 1, 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; difficulties managing international operations; risks that Quantenna may not be able to manage strains associated with its growth; dependence on key personnel; stock price volatility; dependence on, and geographic concentration of, contract manufacturers, customers and end customers, assembly and test providers, and other vendors that subject Quantenna's business and results of operations to risks of natural disasters, epidemics, war and political unrest; the cyclical nature of the semiconductor industry; potential changes in tax and other laws affecting Quantenna’s business; revenue recognition impacts due to ASC 606; adjustments to the preliminary financial results reported in this press release and related earnings call announcement and materials for the first 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.

     

    Quantenna Communications, Inc.
    Condensed Consolidated Statements of Operations
    (in thousands except per share data, unaudited)
      
     Three Months Ended
     April 1,
     2018    		 April 2,
     2017
        
    Revenue$45,117  $37,891 
    Cost of revenue22,352  19,307 
    Gross profit22,765  18,584 
    Operating expenses:   
    Research and development17,601  12,633 
    Sales and marketing4,495  2,914 
    General and administrative4,198  3,389 
    Total operating expenses26,294  18,936 
    Loss from operations(3,529) (352)
    Interest expense—  (197)
    Other income (expense), net334  200 
    Loss before income taxes(3,195) (349)
    Provision for income taxes(52) (535)
    Net loss$(3,247) $(884)
    Net loss per share - basic and diluted$(0.09) $(0.03)
    Shares used in computing net loss per share - basic and diluted35,848  33,107 
        


     
    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 April 1, 2018Three months ended April 2, 2017
     GAAP
    Measure    		Stock-based
    Compensation
    Expense    		Income Taxes*Non-GAAP
    Measure    		GAAP
    Measure    		Stock-based
    Compensation
    Expense    		Non-GAAP
    Measure
    Revenue$45,117   $45,117 $37,891  $37,891 
    Gross profit22,765 34  22,799 18,584 43 18,627 
    Gross margin50.5%0.1% 50.5%49.0%0.1%49.2%
    Research and development17,601 2,393  15,208 12,633 1,205 11,428 
    Sales and marketing4,495 984  3,511 2,914 353 2,561 
    General and administrative4,198 1,181  3,017 3,389 503 2,886 
    Income (loss) from operations(3,529)4,592  1,063 (352)2,104 1,752 
    Benefit (provision) for income taxes(52)— (185)(237)(535)— (535)
    Net income (loss)$(3,247)$4,592 $(185)$1,160 $(884)$2,104 $1,220 
    Basic shares outstanding35,848   35,848 33,107  33,107 
    Basic earnings per share$(0.09)  $0.03 $(0.03) $0.04 
    Diluted shares outstanding35,848   38,703 33,107  38,371 
    Diluted earnings per share$(0.09)  $0.03 $(0.03) $0.03 
                    

    *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 April 1, 2018
         
      Low High
    Estimated GAAP diluted loss per share $(0.04) $(0.02)
    Estimated stock compensation expense (0.11) (0.11)
    Estimated Non-GAAP diluted earnings per share $0.07  $0.09 


     
     
    Quantenna Communications, Inc.
    Condensed Consolidated Balance Sheets
    (in thousands, unaudited)
        
     April 1,
    2018    		 December 31,
    2017
    Assets   
    Current assets   
    Cash and cash equivalents$24,613  $24,432 
    Marketable securities95,530  94,195 
    Accounts receivable26,310  26,786 
    Inventory18,420  12,662 
    Prepaid expenses and other current assets2,949  2,744 
    Total current assets167,822  160,819 
    Deferred tax assets35,602  35,422 
    Property and equipment, net12,415  12,511 
    Intangible and other assets, net4,215  3,952 
    Total assets$220,054  $212,704 
    Liabilities and Stockholders’ Equity   
    Current liabilities   
    Accounts payable$10,696  $2,077 
    Accrued liabilities and other current liabilities23,531  22,742 
    Long-term debt, current portion—  3,943 
    Total current liabilities34,227  28,762 
    Other long-term liabilities3,222  3,339 
    Total liabilities37,449  32,101 
        
    Stockholders’ equity   
    Common stock3  3 
    Additional paid-in capital313,503  308,023 
    Accumulated other comprehensive loss(438) (207)
    Accumulated deficit(130,463) (127,216)
    Total stockholders’ equity182,605  180,603 
    Total liabilities and stockholders’ equity$220,054  $212,704 


     
     
    Quantenna Communications, Inc.
    Condensed Consolidated Cash Flows
    (in thousands, unaudited)
      
     Three Months Ended
     April 1, 2018 April 2, 2017
        
    Cash flows from operating activities   
    Net loss$(3,247) $(884)
    Adjustments to reconcile net loss to net cash provided by (used in) operating activities:   
    Depreciation and amortization1,125  479 
    Stock-based compensation expense4,592  2,104 
    Other(50) 135 
    Changes in assets and liabilities:   
    Accounts receivable476  (3,332)
    Inventory(5,758) 2,459 
    Prepaid expenses and other current assets(205) (1,324)
    Deferred rent and other assets58  (511)
    Accounts payable8,725  (5,870)
    Accrued liabilities and other current liabilities1,053  6,309 
       Net cash provided by (used in) operating activities6,769  (435)
    Cash flows from investing activities   
    Purchase of property and equipment(924) (1,700)
    Purchase of long-term investment(590) — 
    Purchase of marketable securities(13,211) — 
    Maturities of marketable securities11,515  — 
          Net cash used in investing activities(3,210) (1,700)
    Cash flows from financing activities   
    Proceeds from issuance of common stock, net1,438  163 
    Payments of taxes withheld for vested stock awards(601) — 
    Payments related to intangible asset purchase(272) — 
    Repayments of long-term debt(3,943) (672)
       Net cash used in financing activities(3,378) (509)
       Net increase (decrease) in cash and cash equivalents181  (2,644)
    Cash and cash equivalents   
    Beginning of period24,432  117,045 
    End of period$24,613  $114,401 
        


     

     

     

    Quantenna Communications, Inc.
Vernon Essi, Jr.
669-209-5647
vessi@quantenna.com

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