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Quantenna Announces Fourth Quarter and Fiscal 2016 Financial Results

FREMONT, Calif., Feb. 13, 2017 (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 2016 ended January 1, 2017.

“We are excited to report strong results during our first quarter as a public company. Quantenna continued its focus on delivering the best Wi-Fi solutions to existing and new customers. We believe we are well-positioned to capitalize on our deep Wi-Fi expertise and strategic customer relationships to further expand our opportunities and continue to grow our revenue in 2017 and beyond,” stated Dr. Sam Heidari, Chairman and Chief Executive Officer. 

Financial Summary

    Three Months Ended       Years Ended      
    December 27,   January 1,       December 27,   January 1,      
      2015       2017     % Change     2015       2017     % Change  
                           
Revenue $ 25,412     $ 37,492     47.5 %   $ 83,773     $ 129,069     54.1 %  
Gross Margin   51.1 %     51.5 %   40 bps       49.2 %     49.9 %   70 bps    
                           
Net income (loss)                        
GAAP   427       32           (7,045 )     (1,895 )      
Non-GAAP   672       898           (5,843 )     1,195        
                           
Net income (loss) per share - diluted                      
GAAP $ 0.02     $ 0.00         $ (9.16 )   $ (0.30 )      
Non-GAAP $ 0.02     $ 0.03         $ (7.59 )   $ 0.04        
                           
(in thousands except per share data, unaudited)                  
                           

Commentary on the fourth quarter and fiscal year 2016 financial results by Company management is available at 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.

Fourth Quarter Company Highlights

  • Quantenna commenced shipping production quantities of its QSR10G Wave 3 products, which was formally announced in September 2015.  The QSR10G is designed to be the world’s fastest Wi-Fi solution currently available in the market and leverages Quantenna’s proprietary technology architectures and advanced software and system-level algorithms.
  • Quantenna announced the industry's first 802.11ax Wi-Fi chipset, the QSR10G-AX. This product is built on Quantenna's QSR10G Wave 3 802.11ac Wi-Fi platform and adds features supported in draft 1.0 of the IEEE specification 802.11ax standard.
  • Quantenna successfully priced its initial public offering of 6,700,000 shares of common stock at a price to the public of $16.00 per share, raising approximately $100 million in proceeds, net of underwriting discounts, commissions and excluding the overallotment.
  • Quantenna received the prestigious "Most Respected Private Semiconductor Company" award at the 2016 Global Semiconductor Alliance (GSA) Awards Dinner Celebration on December 8th. The semiconductor industry's annual event honored outstanding semiconductor companies worldwide that have demonstrated excellence through their vision, strategy, execution and future opportunity.

Business Outlook

    First Quarter 2017  
    Guidance Range  
       
Revenue $34.5M to $36.5M  
Gross Margin 48% to 50%  
Operating Expense Decline (sequential) 5% to 10%  
Net income (loss) per share - diluted    
GAAP ($0.05) - ($0.03)  
Non-GAAP $0.00 - $0.02  
       

Webcast and Conference Call

Quantenna management will host a conference call discussing the quarterly and fiscal year 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: 61663823. An audio webcast and replay will be available on 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 and operating expenses on a non-GAAP basis. This non-GAAP information excludes stock-based compensation expense. 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 is a global leader and innovator of leading-edge performance Wi-Fi solutions. Quantenna introduced the world's first 10G Wi-Fi technology for a new generation of access points in home, enterprise and public spaces and continues to innovate. Quantenna's Wi-Fi solutions offer superior performance, and establish benchmarks for speed, range, efficiency and reliability. With MAUI, Quantenna's cloud-based Wi-Fi analytics platform that complement its chipset solutions, service providers can deliver real-time, automated Wi-Fi monitoring, optimization, and self-healing to their customers around the clock to help achieve the best Wi-Fi experience. Quantenna is Wi-Fi perfected. For more information, visit www.quantenna.com. Follow us on Facebook, LinkedIn and Twitter.

Forward-Looking Statements

This press release contains forward-looking statements based on Quantenna’s current expectations, including statements regarding Quantenna’s financial results for the fourth quarter and fiscal year 2016 ended January 1, 2017, 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: adjustments to the preliminary financial results reported for the fourth quarter and fiscal year 2016 in connection with completion of the final closing process and procedures and preparation of our annual report of Form 10-K, risks that Quantenna may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; ability to accurately predict future revenue and expenses; challenges developing new and leading edge products on a timely basis that achieve market acceptance; ability to attract and retain customers and service providers; dependence on a limited number of products and customers; intense market competition; intellectual property litigation risks; political uncertainty; potential changes in tax and other laws affecting Quantenna’s business; risks associated with acquisitions and divestitures; product liability risks; potential cancellation of customer orders; 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, 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; and other factors that are detailed in the Securities and Exchange (“SEC”) filings of Quantenna Communications, Inc., 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   Years Ended  
              December 27,   January 1,   December 27,   January 1,  
                2015       2017       2015       2017    
                             
                             
Revenue     $ 25,412     $ 37,492     $ 83,773     $ 129,069    
Cost of revenue   12,425       18,188       42,554       64,640    
          Gross profit   12,987       19,304       41,219       64,429    
Operating expenses                
Research and development   9,545       13,691       35,575       46,604    
Sales and marketing   1,625       2,520       6,644       8,091    
General and administrative   1,302       2,757       5,212       10,559    
          Total operating expenses   12,472       18,968       47,431       65,254    
          Income (loss) from operations   515       336       (6,212 )     (825 )  
Interest expense   (137 )     (252 )     (697 )     (665 )  
Other income (expense), net   87       262       (21 )     (38 )  
          Income (loss) before income taxes   465       346       (6,930 )     (1,528 )  
Provision for income taxes   (38 )     (314 )     (115 )     (367 )  
          Net income (loss) $ 427     $ 32     $ (7,045 )   $ (1,895 )  
Net income (loss) per share - basic $ 0.49     $ 0.00     $ (9.16 )   $ (0.30 )  
Net income (loss) per share - diluted $ 0.02     $ 0.00     $ (9.16 )   $ (0.30 )  
                             
Shares used in computing net income (loss) per share:                
Basic   872   (1 )   21,246       770   (1 )   6,385    
Diluted   27,067       35,387       770       6,385    
                             
(1)  The number of shares reflects the number prior to conversion of preferred stock
                             

 

Quantenna Communications, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands, unaudited)  
              December 27,   January 1,  
                2015       2017    
Assets              
Current assets        
  Cash and cash equivalents $ 18,850     $ 117,045    
  Accounts receivable   15,717       14,480    
  Inventory   7,407       15,820    
  Prepaid expenses and other current assets   1,428       2,470    
    Total current assets   43,402       149,815    
Property and equipment, net   3,083       4,742    
Other assets   182       232    
    Total assets $ 46,667     $ 154,789    
Liabilities, Redeemable Convertible Preferred Stock, and         
 Stockholders’ Equity (Deficit)        
Current liabilities        
  Accounts payable $ 5,917     $ 7,776    
  Accrued liabilities and other current liabilities   5,617       11,801    
  Long-term debt, current portion   3,581       2,257    
    Total current liabilities   15,115       21,834    
Long-term debt and other long term liabilities   2,265       4,207    
Convertible preferred stock warrant liability   255       -    
    Total liabilities   17,635       26,041    
                     
Convertible preferred stock   184,704       -    
                     
Stockholders’ equity (deficit)        
  Common stock   -       3    
  Additional paid-in capital   4,007       290,319    
  Accumulated deficit   (159,679 )     (161,574 )  
    Total stockholders’ equity (deficit)   (155,672 )     128,748    
    Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) $ 46,667     $ 154,789    
                     

 

Quantenna Communications, Inc.  
Condensed Consolidated Cash Flows   
(in thousands, unaudited)  
                     
              Years Ended  
              December 27,   January 1,  
                2015       2017    
                     
Cash flows from operating activities        
Net loss     $ (7,045 )   $ (1,895 )  
Adjustments to reconcile net loss to net cash provided by        
(used in) operating activities        
  Depreciation and amortization   987       1,278    
  Stock-based compensation expense   1,202       3,090    
  Non-cash interest expense   271       322    
  Change in fair value of convertible preferred stock warrants liability   61       87    
  Changes in assets and liabilities        
    Accounts receivable   (5,877 )     1,237    
    Inventory   3,387       (8,413 )  
    Prepaid expenses and other current assets   541       (901 )  
    Other assets   60       (50 )  
    Accounts payable   (4,401 )     1,804    
    Accrued liabilities and other current liabilities   934       5,757    
    Deferred revenue   (2,197 )     -    
          Net cash provided by (used in) operating activities   (12,077 )     2,316    
Cash flows from investing activities        
Purchase of property and equipment   (1,761 )     (2,724 )  
Restricted cash   59       (59 )  
          Net cash used in investing activities   (1,702 )     (2,783 )  
Cash flows from financing activities        
Proceeds from issuance of convertible preferred stock, net of issuance costs   14,256       -    
Proceeds from issuance of common stock   164       1,191    
Proceeds from initial public offering, net of issuance costs   -       97,483    
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   3,000       3,854    
Repayment of long-term debt   (3,111 )     (3,816 )  
          Net cash provided by financing activities   14,309       98,662    
          Net increase in cash and cash equivalents   530       98,195    
Cash and cash equivalents        
Beginning of year   18,320       18,850    
End of year   $ 18,850     $ 117,045    
                     

 

  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 27, 2015
  Three months ended January 1, 2017
 
       
          Stock-based           Stock-based      
      GAAP    Compensation   Non-GAAP    GAAP    Compensation   Non-GAAP   
      Measure   Expense   Measure   Measure   Expense   Measure  
  Revenue   $ 25,412         $ 25,412     $ 37,492         $ 37,492    
  Gross profit     12,987       3       12,990       19,304       18       19,322    
  Gross margin     51.1 %     0 %     51.1 %     51.5 %     0 %     51.5 %  
  Research and development     9,545       77       9,468       13,691       457       13,234    
  Sales and marketing     1,625       26       1,599       2,520       128       2,392    
  General and administrative     1,302       139       1,163       2,757       263       2,494    
  Income from operations     515       245       760       336       866       1,202    
  Net income   $ 427     $ 245     $ 672     $ 32     $ 866     $ 898    
  Basic shares outstanding     872           872       21,246           21,246    
  Basic earnings per share   $ 0.49         $ 0.77     $ 0.00         $ 0.04    
  Diluted shares outstanding     27,067           27,067       35,387           35,387    
  Diluted earnings per share   $ 0.02         $ 0.02     $ 0.00         $ 0.03    
                             

 

  Quantenna Communications, Inc.  
  Unaudited reconciliation of GAAP to Non-GAAP Financial Measures  
      (In thousands, except per share data)              
                         
  Non-GAAP Income Statement Items   Year ended December 27, 2015
  Year ended January 1, 2017
 
       
          Stock-based           Stock-based      
      GAAP    Compensation   Non-GAAP    GAAP    Compensation   Non-GAAP   
      Measure   Expense   Measure   Measure   Expense   Measure  
  Revenue   $ 83,773         $ 83,773     $ 129,069         $ 129,069    
  Gross profit     41,219       9       41,228       64,429       33       64,462    
  Gross margin     49.2 %     0 %     49.2 %     49.9 %     0 %     49.9 %  
  Research and development     35,575       302       35,273       46,604       911       45,693    
  Sales and marketing     6,644       445       6,199       8,091       248       7,843    
  General and administrative     5,212       446       4,766       10,559       1,898       8,661    
  Income from operations     (6,212 )     1,202       (5,010 )     (825 )     3,090       2,265    
  Net income   $ (7,045 )   $ 1,202     $ (5,843 )   $ (1,895 )   $ 3,090     $ 1,195    
  Basic shares outstanding     770           770       6,385           6,385    
  Basic earnings per share   $ (9.16 )       $ (7.59 )   $ (0.30 )       $ 0.19    
  Diluted shares outstanding     770           770       6,385           31,113    
  Diluted earnings per share   $ (9.16 )       $ (7.59 )   $ (0.30 )       $ 0.04    
                             

 

  Quantenna Communications, Inc.  
  Unaudited Forward-Looking Statements Regarding Business Outlook  
             
  Business Outlook   Three months ended April 2, 2017
 
     
               
      High     Low  
  Estimated GAAP diluted earnings (loss) per share $ (0.03 )     $ (0.05 )  
  Estimated stock compensation expense     0.05         0.05    
  Estimated impact from dilutive shares deemed anti-dilutive due to GAAP loss     0.00         0.00    
  Estimated Non-GAAP diluted earnings per share   $ 0.02       $ 0.00    
               

 

 

Quantenna Communications, Inc.
Vernon Essi, Jr.
510-897-2684
vessi@quantenna.com

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