Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 30, 2018 
 
QUANTENNA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
 
 
Delaware
 
001-37927
 
33-1127317
(State or other jurisdiction
of incorporation)
 
(Commission
File No.)
 
(IRS Employer
Identification Number)

1704 Automation Parkway
San Jose, California 95131
(Address of principal executive offices)
(669) 209-5500
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:  
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  x
 




Item 2.02.
Results of Operations and Financial Condition.
On July 30, 2018, Quantenna Communications, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter of fiscal year 2018 ended July 1, 2018. In the press release, the Company also announced that it would be holding a conference call on July 30, 2018 to discuss its financial results for the second quarter of fiscal year 2018. A copy of the press release is attached hereto as Exhibit 99.1. In addition, a copy of the supplemental financial commentary and supplemental earnings presentation is attached hereto as Exhibits 99.2 and 99.3, respectively. The press release, supplementary financial commentary and supplemental earnings presentation are incorporated herein by reference.
This information is intended to be furnished under Item 2.02 and Item 9.01 of Form 8-K, “Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01.
Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No.
 
Description
 
Press Release issued by Quantenna Communications, Inc., dated July 30, 2018.
 
Supplemental Financial Commentary, dated July 30, 2018.
 
Supplemental Earnings Presentation, dated July 30, 2018.







EXHIBIT INDEX
 

Exhibit
No.
 
Description
 
Press Release issued by Quantenna Communications, Inc., dated July 30, 2018.
 
Supplemental Financial Commentary, dated July 30, 2018.
 
Supplemental Earnings Presentation, dated July 30, 2018.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
QUANTENNA COMMUNICATIONS, INC.
Date:
July 30, 2018
By: /s/ Tom MacMitchell
 
 
Tom MacMitchell
 
 
General Counsel

Exhibit
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12376968&doc=27
 

News Release
Quantenna Announces Second Quarter 2018 Financial Results
Record Revenue Highlights Quantenna’s Wi-Fi Performance Leadership
San Jose, CA - July 30, 2018 - 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.”
Financial Summary
 
Three Months Ended
 
 
 
Six Months Ended
 
 
 
July 1,
2018
 
July 2,
2017
 
% Change
 
July 1,
2018
 
July 2,
2017
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
53,427

 
$
47,085

 
13.5%
 
$
98,544

 
$
84,976

 
16.0%
Gross Profit
25,864

 
23,771

 
8.8%
 
48,629

 
42,355

 
14.8%
Gross Margin
48.4
%
 
50.5
%
 
(210) bps
 
49.3
%
 
49.8
%
 
(50) bps
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss):
 
 
 
 
 
 
 
 
 
 
 
GAAP
$
1,032

 
$
169

 
 
 
$
(2,215
)
 
$
(716
)
 
 
Non-GAAP
4,624

 
2,743

 
 
 
5,784

 
3,962

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share - diluted:
 
 
 
 
 
 
 
 
 
 
 
GAAP
$
0.03

 
$
0.00

 
 
 
$
(0.06
)
 
$
(0.02
)
 
 
Non-GAAP
0.12

 
0.07

 
 
 
0.15

 
0.10

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands except per share data, unaudited)
 
 
 
 
 
 
 
 
 
 






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





















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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;

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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.


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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

 
 
 
 
 
 
 
 
 
 
















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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



6 of 8


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



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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
vessi@quantenna.com

# # #


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exhibit992supplementaryf
Quantenna Communications Second Quarter Fiscal 2018 Financial Commentary July 30, 2018 Key Financial Metrics from the Quarter Key Highlights from the Quarter • Revenue of $53.4 million vs: • Record revenue of $53.4 million, representing Y/Y ▪ $47.1 million in Q2'FY17 grew 13% Y/Y growth of 13% over Q2'FY17 and 18% Q/Q growth over ▪ $45.1 million in Q1'FY18 grew 18% Q/Q Q1'FY18. • GAAP gross margin of 48.4% • GAAP diluted EPS of $0.03 compares to $0.00 in the • Non-GAAP gross margin of 48.5% vs: Q2'FY17. Second quarter non-GAAP diluted EPS of ▪ 50.6% in Q2'FY17 declined 210bps Y/Y $0.12 compares to $0.07 in Q2'FY17. ▪ 50.5% in Q1'FY18 declined 200bps Q/Q • GAAP operating income declined 15% Y/Y compared • Operating margin in Q2'FY18: to Q2'FY17. Non-GAAP operating income grew 59% ▪ 0.5% GAAP compared to the Q2'FY17. ▪ 8.6% Non-GAAP • GAAP diluted EPS $0.03 in Q2'FY18 vs: • Record revenue from both our Wave 3 10G and Wave 2 product segments. ▪ $0.00 in Q2'FY17 ▪ ($0.09) in Q1'FY18 • Quantenna’s Spartan solutions are now successfully • Non-GAAP diluted EPS $0.12 in Q2'FY18 vs: integrated into more than 20 shipping OEM designs ▪ $0.07 in Q2'FY17 targeting turnkey implementation by service ▪ $0.03 in Q1'FY18 providers. • Operating cash flow of ($2.9) million vs: • The latest cable MSO initiated a full volume rollout ▪ $7.4 million in Q2'FY017 using our Wave 3 10G technology in their next ▪ $6.8 million in Q1'2018 generation gateway. • Cash, cash equivalents & marketable • Introduced ViSiON, an innovative cloud-based service securities $120.1 million for Quantenna enabled devices using advanced • DSO 50 days, down 2 days Q/Q analytics to accelerate and improve service provider • Annualized inventory turns 5.1x, up from deployments of best-in-class Wi-Fi devices. 4.8x Q/Q • Announced the new QSR10GU-AX Plus targeting Third Quarter FY 2018 Guidance gateways and access points based on the draft IEEE • Revenue: $57.0 to $59.0 million 802.11ax standard that incorporates many unique • GAAP gross margin: 48.64% +/- 50bps performance features only offered by Quantenna. • Non-GAAP gross margin: 48.75% +/- 50bps Financial Results Call and Webcast • GAAP OPEX: $26.0 to $27.0 million Our Q2 financial results webcast and call will commence • Non-GAAP OPEX: $22.0 to $23.0 million on July 30, 2018 at 1:30 p.m. PT (4:30 p.m. ET). The • Non-GAAP Tax Exp: Approximately $200,000 webcast may be accessed at http://ir.quantenna.com/. • GAAP earnings per share: $0.04 to $0.06 • Non-GAAP earnings per share: $0.14 to $0.16 An archive of the webcast will be available for 90 days Quantenna Communications, Inc. Revenue Segmentation by WiFi Technology (in percentage of revenue, unaudited) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Period Ending Sep 25 '16 Jan 01 '17 Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 802.11n 29% 15% 18% 17% 15% 9% 4% 3% 802.11ac Wave 2 71% 84% 79% 79% 72% 83% 83% 71% 802.11ac Wave 3 (10G) 0% 1% 3% 4% 13% 6% 13% 26% Total Semi Revenue 100% 100% 100% 100% 100% 98% 100% 100% Other 0% 0% 0% 0% 0% 2% 0% 0% Total Revenue 100% 100% 100% 100% 100% 100% 100% 100% July 30, 2018 Quantenna Q2 2018 Financial Results Page 1 of 4


 
Quantenna Communications, Inc. Consolidated Statements of Operations (GAAP) (in thousands, unaudited) Period Ending Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Sep 25 '16 Jan 01 '17 Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Revenue 34,105$ 37,492$ 37,891$ 47,085$ 50,108$ 41,275$ 45,117$ 53,427$ COGS 17,247 18,188 19,307 23,314 25,591 19,996 22,352 27,563 Gross Margin 16,858 19,304 18,584 23,771 24,517 21,279 22,765 25,864 GM % of revenue 49.4% 51.5% 49.0% 50.5% 48.9% 51.6% 50.5% 48.4% R&D 11,162 13,691 12,633 16,055 15,011 16,048 17,601 17,084 S&M 2,172 2,520 2,914 3,276 3,363 4,487 4,495 3,979 G&A 3,248 2,757 3,389 4,106 3,735 4,069 4,198 4,518 OPEX 16,582 18,968 18,936 23,437 22,109 24,604 26,294 25,581 OPEX % of revenue 48.6% 50.6% 50.0% 49.8% 44.1% 59.6% 58.3% 47.9% Operating Income (loss) 276$ 336$ (352)$ 334$ 2,408$ (3,325)$ (3,529)$ 283$ OpInc % of revenue 0.8% 0.9% -0.9% 0.7% 4.8% -8.1% -7.8% 0.5% Interest & Other Income (loss) (241) 10 3 45 120 237 334 230 Pretax Income (loss) 35 346 (349) 379 2,528 (3,088) (3,195) 513 Taxes 14 314 535 210 (274) (35,413) 52 (519) Tax Rate 40% 91% -153% 55% -11% 1147% -2% -101% Net Income (loss) 21$ 32$ (884)$ 169$ 2,802$ 32,325$ (3,247)$ 1,032$ Consolidated Statements of Operations (Non-GAAP) (in thousands, unaudited) Period Ending Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Sep 25 '16 Jan 01 '17 Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Revenue 34,105$ 37,492$ 37,891$ 47,085$ 50,108$ 41,275$ 45,117$ 53,427$ COGS 17,238 18,170 19,264 23,272 25,553 19,954 22,318 27,501 Gross Margin 16,867 19,322 18,627 23,813 24,555 21,321 22,799 25,926 GM % of revenue 49.5% 51.5% 49.2% 50.6% 49.0% 51.7% 50.5% 48.5% R&D 10,931 13,234 11,428 14,641 13,644 14,418 15,208 14,555 S&M 2,112 2,392 2,561 2,866 2,947 3,704 3,511 3,386 G&A 2,514 2,494 2,886 3,398 2,787 3,089 3,017 3,373 OPEX 15,557 18,120 16,875 20,905 19,378 21,211 21,736 21,314 OPEX % of revenue 45.6% 48.3% 44.5% 44.4% 38.7% 51.4% 48.2% 39.9% Operating Income 1,310$ 1,202$ 1,752$ 2,908$ 5,177$ 110$ 1,063$ 4,612$ OpInc % of revenue 3.8% 3.2% 4.6% 6.2% 10.3% 0.3% 2.4% 8.6% Interest & Other Income (loss) (241) 10 3 45 120 237 334 230 Pretax Income 1,069 1,212 1,755 2,953 5,297 347 1,397 4,842 Taxes 14 314 535 210 (274) (108) 237 218 Tax Rate 1% 26% 30% 7% -5% -31% 17% 5% Net Income 1,055$ 898$ 1,220$ 2,743$ 5,571$ 455$ 1,160$ 4,624$ GAAP to Non-GAAP Reconciling Items (in thousands, unaudited) Period Ending Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Sep 25 '16 Jan 01 '17 Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Stock Based Compensation COGS 9$ 18$ 43$ 42$ 38$ 42$ 34$ 62$ R&D 231 457 1,205 1,414 1,367 1,630 2,393 2,529 S&M 60 128 353 410 416 584 984 593 G&A 734 263 503 708 948 980 1,181 1,145 Total 1,034$ 866$ 2,104$ 2,574$ 2,769$ 3,236$ 4,592$ 4,329$ Non-Recurring Items S&M 199$ Income Taxes (35,305)$ 185$ 737$ July 30, 2018 Quantenna Q2 2018 Financial Results Page 2 of 4


 
Quantenna Communications, Inc. Condensed Consolidated Balance Sheet (in thousands, unaudited) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Period Ending Sep 25 '16 Jan 01 '17 Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Assets Current assets Cash, cash equivalents & marketable securities 17,822$ 117,045$ 114,401$ 124,389$ 126,866$ 118,627$ 120,143$ 120,082$ Accounts receivable 17,306 14,480 17,812 17,696 22,820 26,786 26,310 29,700 Inventory 10,268 15,820 13,361 20,985 23,700 12,662 18,420 21,391 Restricted Cash 1,559 - - - - - - - Prepaid expenses and other current assets 1,842 2,470 3,745 4,332 2,444 2,744 2,949 2,369 Total current assets 48,797 149,815 149,319 167,402 175,830 160,819 167,822 173,542 Deferred tax assets - - - - - 35,422 35,602 36,482 Property and equipment, net 3,842 4,742 6,025 6,380 11,215 12,511 12,415 12,838 Intangible and other assets, net 2,443 232 743 769 4,296 3,952 4,215 3,901 Total assets 55,082$ 154,789$ 156,087$ 174,551$ 191,341$ 212,704$ 220,054$ 226,763$ Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) Current liabilities Accounts payable 6,804$ 8,936$ 4,658$ 13,401$ 13,805$ 3,754$ 11,833$ 8,904$ Accrued liabilities and other current liabilities 11,144 10,641 15,401 19,147 27,054 21,065 22,394 23,155 Long-term debt, current portion 2,218 2,257 2,288 2,563 2,487 3,943 - - Total current liabilities 20,166 21,834 22,347 35,111 43,346 28,762 34,227 32,059 Long-term debt 4,342 3,680 3,539 2,445 1,900 - - - Other long term liabilities 578 527 - 425 3,413 3,339 3,222 3,214 Convertible preferred stock warrant liability 364 - - - - Total liabilities 25,450 26,041 25,886 37,981 48,659 32,101 37,449 35,273 Convertible preferred stock 184,704 - - - - - - - Stockholders’ equity (deficit) Common stock - 3 3 3 3 3 3 3 Additional paid-in capital 6,534 290,319 292,710 298,943 302,240 308,023 313,503 321,669 Accumulated deficit (161,606) (161,574) (162,512) (162,376) (159,561) (127,423) (130,901) (130,182) Total stockholders’ equity (deficit) (155,072) 128,748 130,201 136,570 142,682 180,603 182,605 191,490 Total liabilities, conv prfrrd stock and stockholders' equity 55,082$ 154,789$ 156,087$ 174,551$ 191,341$ 212,704$ 220,054$ 226,763$ Condensed Consolidated Cash Flows (in thousands, unaudited) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Period Ending Sep 25 '16 Jan 01 '17 Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Cash flows from operating activities Net income (loss) 21$ 32$ (884)$ 169$ 2,802$ 32,325$ (3,247)$ 1,032$ Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation and amortization 343 398 479 545 542 1,103 1,125 1,138 Stock-based compensation expense 1,034 866 2,104 2,574 2,769 3,236 4,592 4,329 Deferred income taxes - - - - - (35,333) (733) Other 174 160 135 62 150 288 (50) 117 Changes in assets and liabilities Accounts receivable 3,508 2,826 (3,332) 116 (5,124) (3,966) 476 (3,390) Inventory (2,819) (5,552) 2,459 (7,624) (2,715) 11,038 (5,758) (2,971) Prepaid expenses and other current assets (241) (618) (1,324) (574) 1,876 (313) (205) 580 Other assets 71 (66) (511) (27) (252) 323 58 43 Accounts payable 3,219 4,100 (4,268) 10,236 2,194 (10,354) 8,185 (3,213) Accrued liabilities 361 (1,539) 4,707 1,890 5,020 (5,912) 1,593 150 Net cash provided by (used in) operating activities 5,671 607 (435) 7,367 7,262 (7,565) 6,769 (2,918) Cash flows from investing activities Purchase of property and equipment (995) (1,103) (1,700) (746) (4,515) (2,009) (924) (454) Purchase of long-term investments & marketable securities - - - (71,169) (32,875) (27,746) (13,801) (25,787) Proceeds from sale and maturities of marketable securities - - - 4,994 10,915 21,215 11,515 24,605 Restricted cash (59) 1,500 - - - - - - Net cash provided by (used in) investing activities (1,054) 397 (1,700) (66,921) (26,475) (8,540) (3,210) (1,636) Cash flows from financing activities Proceeds from issuance of common stock, net of issuance cost 697 406 194 3,882 477 3,122 1,438 3,874 Proceeds from initial public offering, net of issuance costs - 97,483 - - - - - - Principal payments on debt (554) (551) (672) (433) (651) (650) (3,943) - Other (3,881) 881 (31) (65) - (892) (873) (360) Net cash provided by (used in) financing activities (3,738) 98,219 (509) 3,384 (174) 1,580 (3,378) 3,514 Effect of exchange rate changes on cash & cash equivalents - - - - - 113 - (152) Net increase (decrease) in cash and cash equivalents 879 99,223 (2,644) (56,170) (19,387) (14,412) 181 (1,192) Cash and cash equivalents Beginning of period 16,943 17,822 117,045 114,401 58,231 38,844 24,432 24,613 End of period 17,822 117,045 114,401 58,231 38,844 24,432 24,613 23,421 *Reclassifications of certain prior period amounts in the condensed consolidated financial statements have been made to conform to the current period presentation. July 30, 2018 Quantenna Q2 2018 Financial Results Page 3 of 4


 
Quantenna Communications, Inc. 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 financial commentary. Forward-Looking Statements This financial commentary 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 financial commentary 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. July 30, 2018 Quantenna Q2 2018 Financial Results Page 4 of 4


 
exhibit993supplementarye
is Wi-Fi Perfected System Cloud Semiconductors Software Analytics Investor Presentation Q2 2018


 
Safe Harbor and Non-GAAP Financial Measures This presentation contains “forward-looking” statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, product development plans, competitive position, potential growth opportunities, use of proceeds and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the risk factors listed in our 10-K filed on February 28, 2018 and subsequent 10-Q filings. Forward-looking statements represent our beliefs and assumptions only as of the date of this presentation. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. This presentation includes certain non-GAAP financial measures as defined by the SEC rules. We have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in the appendix to this presentation. 2


 
At a Glance Strong Revenue Growth Profile $MM $176 150 million+ 60+ chips shipped products with Quantenna inside $129 45% $58 CAGR Q3 guide midpoint 50+ 40+ $84 service providers OEMs / ODMs $67 $99 $40 ~400 85+ employees patents 2013 2014 2015 2016 2017 2018 3


 
Company Highlights Pioneer in both 8x8 and 4x4 advanced MIMO technology High-performance Wi-Fi leader Trendsetter and influencer within IEEE 802.11 standards body Proven execution & innovation Land and expand within each product generation yields rapid across four generations of solutions revenue growth with less incremental selling expense Over 1,400 man years of R&D and IP development Sustainable advantage & multiple Demonstrated leadership in 8x8 10G Wave 3, with nationwide barriers to entry deployment underway at scale Long product lifecycles and sticky Service provider positioning in Wi-Fi is unmatched design wins Over 90% follow-on design success with existing sockets Demonstrated initial success with Service provider telco opened up satellite opportunity >> current multiple growth drivers opportunity is cable MSO >> future is retail and enterprise Drove a 45% CAGR in revenue over last five years Attractive financial model with Generated cash from operations for the last two fiscal years significant operating leverage Strong gross margin profile of ~50% 4


 
Product Family History and R&D Roadmap 5th Generation QSR10GU-AX Plus 9.6Gbps QSR10GU-AX 9.6Gbps 4th Generation QSR10G 9.6Gbps QSR5G-AX 5.3Gbps 3rd Generation 2nd Generation 1st Generation QHS600 600Mbps QHS710 600Mbps QSR1000 QSR2000C 1.7Gbps 1.7Gbps 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 5


 
Our Value Proposition with 8x8 MIMO Throughput (log) 10 Gbps Whole home coverage. And beyond….. 5 Gbps Quantenna’s 8x8 MIMO Delivers 1Gbps at Range 1 Gbps 500 Mbps 2x2 4x4 8x8 Wi-Fi Gbps Range Footprint: 2x2 MIMO 4x4 MIMO 8x8 MIMO Distance 6


 
Premium Strategy Drives Share Gains Each Tech Cycle Launch next- generation products Premium Premium Mainstream Mainstream Low Cost Low Cost Current Wi-Fi Generation Future Wi-Fi Generation  Continue leadership in the premium  Extend the previous generation to mainstream with market with new products cost-optimized products and introduce new products 7


 
Sizing Up the Premium Wi-Fi Market Total Wi-Fi Chipset Revenue Total Wi-Fi Enabled Device Shipments Quantenna’s premium Wi-Fi 2017-2022 2017-2022 CAGR technology leads the high CAGR performance, fixed-point 0.3 B 33% device market. 28% $1.9 B 0.8 B * $0.6 B 0.1 B Premium Wi-Fi in 6% Fixed-Point Devices -2% 0.6 B Mainstream Wi-Fi in $1.2 B Fixed-Point Devices $1.3 B 2.8 B Wi-Fi in Portable 6% Devices 3% 2.1 B * Premium Wi-Fi chipsets are defined by 4x4 MIMO or higher performance. $2.1 B $2.4 B 2017 2022 2017 2022 Source: ABI Research Wi-Fi Device Report 2Q 2018 and Quantenna assumptions Portable Devices include smartphones, feature phones, mobile device accessories, portable PCs, tablets, PC accessories, portable consumer electronics, smart home nodes and wearables. Non-Portable Devices include networking, connected home devices, gateways, set-top boxes, televisions, gaming consoles, desktop PCs, automotive, industrial, IoT, and others. 8


 
Explosive IP Traffic Growth Stresses Wi-Fi Bottleneck Worldwide IP Traffic in Exabytes per Month Cloud Switch Fabric up to 100Gbps 2016-2021 CAGR Wi-Fi (fixed & mobile) Infrastructure Wireline 127 EB (Fiber, G.fast & (incl. VoD) 26% DOCSIS 3.1) Mobile up to 10Gbps (carrier) 16% 103 EB Home 40 EB Wi-Fi up to 49 EB 46% 48 EB 1Gbps 7 EB 2016 2021 Wi-Fi will deliver 48% of WW IP traffic growth from 2016-2021 Source: Cisco Visual Networking Index: Forecast and Methodology for Consumer & Business IP Traffic, 2016-2021; updated June 6, 2017 9


 
New Initiatives Expanding Served Markets Spartan Products 5GHz + 2.4GHz: Cable Gateway, Emerging Markets Bridge, STB 5GHz only: Telco US, Europe 802.11ax Wave 3 Wave 2 2017 2018+ 10


 
Q2 2018 Financial Highlights Record quarterly revenue of $53.4 million Strong Revenue Growth Profile $MM $MM • 13% Y/Y growth vs Q2 2017 60 200 • 18% Q/Q growth vs Q1 2018 21% 13% YoY • 21% Y/Y growth TTM 2018 50 YoY 160 Gross margin of 48.5% • Above midpoint of 47% to 49% guidance 40 range 120 Operating cash flow positive year to date 30 • YTD cash from ops $3.9 million or 80 $0.10/share 20 Strong Earnings Performance 40 10 • $4.6 million net income • $0.12 in EPS 0 0 – Exceeded $0.07 to $0.09 guidance range Q2 2017 Q2 2018 TTM Q2 TTM Q2 2017 2018 *Gross margin, income and EPS figures are fully diluted based on non-GAAP reporting which excludes stock-based compensation and other specified one-time items. See reconciliation table. TTM means trailing twelve months. 11


 
Wi-Fi Technology Segmentation Highlights • 802.11ac Wave 3 (10G) revenue Technology Cycles Drive Growth – Q2 grew $8.0 million or 137% Q/Q $MM to $13.9 million 60 – Q3 revenue expected to grow Q/Q to the range of $16-18 million 50 • 802.11ac Wave 2 revenue 40 – Q2 grew 1% Q/Q to $37.9 million – Q3 revenue is expected to be 30 slightly up Q/Q • 802.11n revenue 20 – Q2 declined 11% Q/Q to $1.6 million 10 – Q3 revenue is expected to decline 0 Q/Q and for the remainder of 2018 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Other 802.11n 802.11ac Wave2 802.11ac Wave3 (10G) 12


 
Operating Results & Guidance 2016 2017 Q1 2018 Q2 2018 Q3 2018 Guidance Revenue $129.1 $176.4 $45.1 $53.4 $57mm - $59mm GAAP: 48.64% +/- 50bps Gross Margin 51% 49% 50% 50% non-GAAP: 48.75% +/- 50bps GAAP: $26mm to $27mm OPEX 48% 40% 48% 44% non-GAAP: $22mm to $23mm GAAP: $0.04 – $0.06 EPS $0.03 $0.12 $0.04 $0.26 non-GAAP: $0.14 – $0.16 *Gross margin, OPEX and EPS figures are based on non-GAAP reporting which excludes stock-based compensation and other one-time items. 13


 
Balance Sheet Summary 2016 2017 Q1 2018 Q2 2018 Cash, Cash Equivalents $117.0 $118.6 $120.1 $120.1 & Marketable Securities Total Assets $154.8 $212.7 $220.1 $226.8 Total Debt $5.9 $3.9 $0.0 $0.0 Total Liabilities $26.0 $32.1 $37.4 $35.3 Total Stockholders’ $128.7 $180.6 $182.6 $191.5 Equity 14


 
Appendix 15


 
Non-GAAP to GAAP Operating Margin Reconciliation 2015 2016 2017 Q1 2018 Q2 2018 Non-GAAP Gross Margin 49% 50% 50% 51% 49% SBC: Gross Margin 0% 0% 0% 0% 0% GAAP Gross Margin 49% 50% 50% 51% 48% Non-GAAP Operating Margin (6%) 2% 6% 2% 9% SBC: R&D 0% 1% 3% 5% 5% SBC: S&M 1% 0% 1% 2% 1% SBC: G&A 1% 1% 2% 3% 2% Non-recurring items 0% 0% 0% 0% 0% GAAP Operating Margin (7%) (1%) (1%) (8%) 1% SBC means stock-based compensation, non-recurring items comprised of executive severance, percentages may not total due to rounding 16


 
Non-GAAP to GAAP Net Margin Reconciliation 2015 2016 2017 Q1 2018 Q2 2018 Non-GAAP Net Margin (7%) 1% 6% 3% 9% SBC: Gross Margin 0% 0% 0% 0% 0% SBC: R&D 0% 1% 3% 5% 5% SBC: S&M 1% 0% 1% 2% 1% SBC: G&A 1% 1% 2% 3% 2% Non-recurring items 0% 0% (20%) 0% (1%) GAAP Net Margin (8%) (1%) 20% (7%) 2% SBC means stock-based compensation, non-recurring items comprised of executive severance and income tax adjustment relating to recognition of US Federal deferred tax asset pursuant to release of valuation allowance. Percentages may not total due to rounding 17


 
Wi-Fi Perfected™ System Cloud Semiconductors Software Analytics 18