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): February 4, 2019 
 
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 February 4, 2019, Quantenna Communications, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year ended December 30, 2018. In the press release, the Company also announced that it would be holding a conference call on February 4, 2019 to discuss its financial results for the fourth quarter and fiscal year ended December 30, 2018. The full text of the press release is attached hereto as Exhibit 99.1, and a copy of the supplemental financial commentary and supplemental earnings presentation is attached hereto as Exhibit 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 February 4, 2019.
 
Supplemental Financial Commentary, dated February 4, 2019.
 
Supplemental Earnings Presentation, dated February 4, 2019.








EXHIBIT INDEX
 

Exhibit
No.
 
Description
 
Press Release issued by Quantenna Communications, Inc., dated February 4, 2019.
 
Supplemental Financial Commentary, dated February 4, 2019.
 
Supplemental Earnings Presentation, dated February 4, 2019.





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:
February 4, 2019
 
By: /s/ Tom MacMitchell
 
 
Tom MacMitchell
 
 
General Counsel

Exhibit
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12673465&doc=26
News Release
 

Quantenna Announces Fourth Quarter and Fiscal 2018 Financial Results
Record Quarterly Revenue Grew 52% Annually Driven by Quantenna’s Product Strategy
San Jose, CA – February 4, 2019 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 2018 ended December 30, 2018.
"Our strong fourth quarter and annual operating results showcase the success of our broad product portfolio as both our premium Wave 3 10G product and high-performance mainstream Wave 2 product experienced record revenue. We continue to experience strong customer engagement with our products, including our family of Wi-Fi 6 product offerings,” commented Dr. Sam Heidari, Chairman and Chief Executive Officer.
Financial Summary
 
Three Months Ended
 
 
 
Twelve Months Ended
 
 
 
December 30,
2018
 
December 31,
2017
 
% Change
 
December 30,
2018
 
December 31,
2017
 
% Change
(in thousands except per share data, unaudited)
 
 
 
 
 
 
 
 
 
 
Revenue
$
62,567

 
$
41,275

 
51.6%
 
$
220,460

 
$
176,359

 
25.0%
Gross Profit
31,283

 
21,279

 
47.0%
 
109,402

 
88,151

 
24.1%
Gross Margin
50.0
%
 
51.6
%
 
(160) bps
 
49.6
%
 
50.0
%
 
(40) bps
 
 
 
 
 
 
 
 
 
 
 
 
Net income:
 
 
 
 
 
 
 
 
 
 
 
GAAP
$
1,419

 
$
32,325

 
 
 
$
3,083

 
$
34,412

 
 
Non-GAAP
7,619

 
455

 
 
 
20,371

 
9,989

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per share - diluted:
 
 
 
 
 
 
 
 
 
 
 
GAAP
$
0.04

 
$
0.84

 
 
 
$
0.08

 
$
0.89

 
 
Non-GAAP
0.19

 
0.01

 
 
 
0.51

 
0.26

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Commentary on the fourth quarter and fiscal year 2018 financial results by Company management is available at http://ir.quantenna.com/.
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.










Fourth Quarter and Fiscal Year 2018 Company Highlights
Record revenue of $220.5 million in fiscal year 2018 represented year over year growth of 25% compared to fiscal year 2017. Record revenue of $62.6 million in the fourth quarter represented year over year growth of 52% over the fourth quarter of 2017.

Fiscal year 2018 GAAP diluted EPS of $0.08 compared to $0.89 in fiscal year 2017. Fourth quarter GAAP diluted EPS of $0.04 compared to $0.84 in the fourth quarter of 2017.

Record fiscal year 2018 non-GAAP diluted EPS of $0.51 compared to $0.26 in fiscal year 2017. Record fourth quarter of 2018 non-GAAP diluted EPS of $0.19 compared to $0.01 in the fourth quarter of 2017.

GAAP operating income of $2.8 million and non-GAAP operating income of $20.1 million in fiscal year 2018, compared to GAAP operating loss of $(0.9) million and non-GAAP operating income of $9.9 million in fiscal year 2017.

Cash from operations totaled $24.8 million in fiscal year 2018, compared to $6.6 million in fiscal year 2017, representing annual growth of 274%. Fourth quarter cash from operations totaled $5.1 million compared to $(7.6) million in the fourth quarter of 2017.

Record revenue from both our Wave 3 10G and Wave 2 product segments.

Reinforced our strategic partnership with Telefónica, a leading global service provider, with the development of new product offerings utilizing our Wi-Fi 6 solutions.

Starry Inc., a next generation service provider using 5G millimeter wave technology, will use our Wi-Fi 6 chipsets in their base station technology.

Delivered Wi-Fi 6 reference designs for next generation GPON gateways and routers with Cortina Access, Inc.

Introduced Spartan Essential, a turn-key design targeting multiple consumer Wi-Fi applications such as mesh, access point for wired extenders and boosters for upgrading existing gateways.

Orange S.A., the largest broadband provider in France, is using our Wave 2 technology for its latest generation of repeaters and set-top boxes.

 

 






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Business Outlook
 
First Quarter 2019
Guidance Range
Revenue
 $56M to $59M
Gross Margin
 
GAAP
50.4% +/- 50bps
Non-GAAP
50.5% +/- 50bps
Operating Expenses
 
GAAP
$27.4M to $28.4M
Non-GAAP
$23.0M to $24.0M
Net income per share-diluted
 
GAAP
$0.02 to $0.04
Non-GAAP
$0.13 to $0.15
 
 
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: 5966507. 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 fourth quarter and fiscal year 2018 ended December 30, 2018, forecasted financial results for the first quarter of fiscal 2019, 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

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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; quarterly fluctuations in revenues and operating results; risks and uncertainties related to international operations, including the impact of increased tariffs and escalating trade tensions with China directly and indirectly impacting Quantenna and its customers, end customers, vendors and partners; potential cancellation, delay or volatility of customer orders; 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; 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; the complexity of the products, including integration requirements with components from other third parties that are outside of Quantenna's control; 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; dependence of Quantenna's 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; changes in tax and other laws affecting Quantenna’s business and operations; cyberattacks; adjustments to the preliminary financial results reported in this press release and related earnings call announcement and materials for the fourth quarter of 2018 in connection with completion of the final closing process and procedures and preparation of our preparation of our Annual Report on Form 10-K; 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 Wi-Fi by establishing benchmarks for speed, range, efficiency and reliability. Quantenna takes a multidimensional approach, from silicon and system to software, and provides total Wi-Fi 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
 
Twelve Months Ended
 
December 30,
2018
 
December 31,
2017
 
December 30,
2018
 
December 31,
2017
 
 
 
 
 
 
 
 
Revenue
$
62,567

 
$
41,275

 
$
220,460

 
$
176,359

Cost of revenue
31,284

 
19,996

 
111,058

 
88,208

Gross profit
31,283

 
21,279

 
109,402

 
88,151

Operating expenses:
 
 
 
 
 
 
 
Research and development
19,054

 
16,048

 
71,522

 
59,747

Sales and marketing
3,996

 
4,487

 
16,303

 
14,040

General and administrative
5,165

 
4,069

 
18,767

 
15,299

Total operating expenses
28,215

 
24,604

 
106,592

 
89,086

Income (loss) from operations
3,068

 
(3,325
)
 
2,810

 
(935
)
Interest expense

 
(272
)
 

 
(713
)
Other income, net
432

 
509

 
1,239

 
1,118

Income (loss) before income taxes
3,500

 
(3,088
)
 
4,049

 
(530
)
Benefit (provision) for income taxes
(2,081
)
 
35,413

 
(966
)
 
34,942

Net income
$
1,419

 
$
32,325

 
$
3,083

 
$
34,412

Net income per share - basic
$
0.04

 
$
0.92

 
$
0.08

 
$
1.00

Net income per share - diluted
$
0.04

 
$
0.84

 
$
0.08

 
$
0.89

 
 
 
 
 
 
 
 
Shares used in computing net income per share:
 
 
 
 
 
 
 
Basic
37,527

 
35,316

 
36,744

 
34,259

Diluted
40,027

 
38,281

 
39,663

 
38,484



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Quantenna Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
 
December 30,
2018
 
December 31, 2017
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
38,881

 
$
24,432

Marketable securities
97,268

 
94,195

Accounts receivable
28,326

 
26,786

Inventory
20,218

 
12,662

Prepaid expenses and other current assets
5,325

 
2,744

Total current assets
190,018

 
160,819

Deferred tax assets, net
35,563

 
35,422

Property and equipment, net
13,691

 
12,511

Intangible and other assets, net
6,384

 
3,952

Total assets
$
245,656

 
$
212,704

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
9,852

 
$
3,754

Accrued liabilities and other current liabilities
25,946

 
21,065

Long-term debt, current portion

 
3,943

Total current liabilities
35,798

 
28,762

Other long-term liabilities
3,371

 
3,339

Total liabilities
39,169

 
32,101

 
 
 
 
Stockholders’ equity
 
 
 
Common stock
4

 
3

Additional paid-in capital
331,551

 
308,023

Accumulated other comprehensive loss
(935
)
 
(207
)
Accumulated deficit
(124,133
)
 
(127,216
)
Total stockholders’ equity
206,487

 
180,603

Total liabilities and stockholders’ equity
$
245,656

 
$
212,704



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Quantenna Communications, Inc.
Condensed Consolidated Cash Flows
(in thousands, unaudited)
 
Year Ended
 
December 30, 2018
 
December 31, 2017
 
 
 
 
Cash flows from operating activities
 
 
 
Net income
$
3,083

 
$
34,412

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Stock based compensation
17,289

 
10,683

Depreciation and amortization
4,861

 
2,669

Deferred income taxes
53

 
(35,333
)
Other
1,067

 
635

Changes in assets and liabilities:
 
 
 
Accounts receivable
(1,540
)
 
(12,306
)
Inventory
(7,556
)
 
3,158

Prepaid expenses and other current assets
(2,581
)
 
(335
)
Deferred rent and other assets
313

 
(467
)
Accounts payable
5,791

 
(5,752
)
Accrued liabilities and other current liabilities
4,040

 
9,265

Net cash provided by operating activities
24,820

 
6,629

Cash flows from investing activities
 
 
 
Purchase of property and equipment
(5,100
)
 
(8,970
)
Purchase of long-term investment
(590
)
 

Purchase of intangible asset
(1,732
)
 

Purchase of marketable securities
(69,716
)
 
(131,790
)
Proceeds from sales of marketable securities

 
10,684

Maturities of marketable securities
66,173

 
26,440

Net cash used in investing activities
(10,965
)
 
(103,636
)
Cash flows from financing activities
 
 
 
Proceeds from issuance of common stock
8,418

 
7,675

Payment of taxes withheld for vested stock awards
(2,501
)
 
(626
)
Proceeds from initial public offering, net of issuance costs

 
(96
)
Payments related to intangible asset purchase
(1,086
)
 
(266
)
Repayments of long-term debt
(3,943
)
 
(2,406
)
Net cash provided by financing activities
888

 
4,281

Effect of exchange rate changes on cash and cash equivalents
(294
)
 
113

Net increase (decrease) in cash and cash equivalents
14,449

 
(92,613
)
Cash and cash equivalents
 
 
 
Beginning of year
24,432

 
117,045

End of year
$
38,881

 
$
24,432

 

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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 December 30, 2018
 
Three Months Ended December 31, 2017
 
GAAP
Measure
Stock-based
Compensation
Expense
Income Taxes*
Non-GAAP
Measure
 
GAAP
Measure
Stock-based
Compensation
Expense
Non-Recurring Items**
Income Taxes*
Non-GAAP
Measure
Revenue
$
62,567

 
 
$
62,567

 
$
41,275

 
 
 
$
41,275

Gross profit
31,283

53

 
31,336

 
21,279

42

 
 
21,321

Gross margin
50.0
%
0.1
%
 
50.1
%
 
51.6
%
0.1
%
 
 
51.7
%
Research and development
19,054

2,506

 
16,548

 
16,048

1,630

 
 
14,418

Sales and marketing
3,996

578

 
3,418

 
4,487

584

199

 
3,704

General and administrative
5,165

1,229

 
3,936

 
4,069

980

 
 
3,089

Income (loss) from operations
3,068

4,366


7,434

 
(3,325
)
3,236

199


110

Benefit (provision) for income taxes
(2,081
)

1,834

(247
)
 
35,413



(35,305
)
108

Net income (loss)
$
1,419

$
4,366

$
1,834

$
7,619

 
$
32,325

$
3,236

$
199

$
(35,305
)
$
455

Basic shares outstanding
37,527

 
 
37,527

 
35,316

 
 
 
35,316

Basic earnings per share
$
0.04

 
 
$
0.20

 
$
0.92

 
 
 
$
0.01

Diluted shares outstanding
40,027

 
 
40,027

 
38,281

 
 
 
38,281

Diluted earnings per share
$
0.04

 
 
$
0.19

 
$
0.84

 
 
 
$
0.01


Non-GAAP Income Statement Items
Twelve months ended December 30, 2018
 
Twelve months ended December 31, 2017
 
GAAP
Measure
Stock-based
Compensation
Expense
Income Taxes*
Non-GAAP
Measure
 
GAAP
Measure
Stock-based
Compensation
Expense
Non-Recurring Items**
Income Taxes*
Non-GAAP
Measure
Revenue
$
220,460

 
 
$
220,460

 
$
176,359

 
 
 
$
176,359

Gross profit
109,402

199

 
109,601

 
88,151

165

 
 
88,316

Gross margin
49.6
%
0.1
%
 
49.7
%
 
50.0
%
0.1
%
 
 
50.1
%
Research and development
71,522

9,676

 
61,846

 
59,747

5,616

 
 
54,131

Sales and marketing
16,303

2,696

 
13,607

 
14,040

1,763

199

 
12,078

General and administrative
18,767

4,718

 
14,049

 
15,299

3,139

 
 
12,160

Income (loss) from operations
2,810

17,289


20,099

 
(935
)
10,683

199


9,947

Benefit (provision) for income taxes
(966
)

(1
)
(967
)
 
34,942



(35,305
)
(363
)
Net income (loss)
$
3,083

$
17,289

$
(1
)
$
20,371

 
$
34,412

$
10,683

$
199

$
(35,305
)
$
9,989

Basic shares outstanding
36,744

 
 
36,744

 
34,259

 
 
 
34,259

Basic earnings per share
$
0.08

 
 
$
0.55

 
$
1.00

 
 
 
$
0.29

Diluted shares outstanding
39,663

 
 
39,663

 
38,484

 
 
 
38,484

Diluted earnings per share
$
0.08

 
 
$
0.51

 
$
0.89

 
 
 
$
0.26


*Income tax adjustment relating to change in US Federal and State deferred tax assets.
**Non-recurring items comprised of executive severance.

8 of 9






Quantenna Communications, Inc.
Unaudited Forward-Looking Statements Regarding Business Outlook
Business Outlook
Three Months Ended March 31, 2019





Low

High
Estimated GAAP diluted earnings per share
$
0.02


$
0.04

Estimated stock compensation expense
(0.11
)

(0.11
)
Estimated Non-GAAP diluted earnings per share
$
0.13


$
0.15



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

# # #


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exhibit992supplementaryf
Quantenna Communications Fourth Quarter Fiscal 2018 Financial Commentary February 4, 2019 Key Financial Metrics from the Quarter Key Highlights from the Quarter • Revenue of $62.6 million vs: • Record revenue of $220.5 million in FY18 represented ▪ $41.3 million in Q4'FY17 grew 52% Y/Y 25% Y/Y growth compared to fiscal year 2017. Record ▪ $59.3 million in Q3'FY18 grew 5% Q/Q revenue of $62.6 million in Q4 represented 52% Y/Y • GAAP gross margin of 50.0% growth over Q4'FY17. • Non-GAAP gross margin of 50.1% vs: • Cash from operations totaled $24.8 million in FY18, ▪ 51.7% in Q4'FY17 decreased 160bps Y/Y compared to $6.6 million in FY17, representing Y/Y ▪ 49.8% in Q3'FY18 increased 30bps Q/Q growth of 274%. Q4 cash from operations totaled $5.1 • Operating margin in Q4'FY18: million compared to $(7.6) million in Q4'FY17. ▪ 4.9% GAAP • Record revenue from both our Wave 3 10G and Wave ▪ 11.9% Non-GAAP 2 product segments. • GAAP diluted EPS $0.04 in Q4'FY18 vs: • Reinforced our strategic partnership with Telefónica, a ▪ $0.84 in Q4'FY17 leading global service provider, with the development ▪ $0.10 in Q3'FY18 of new product offerings utilizing our Wi-Fi 6 solutions. • Non-GAAP diluted EPS $0.19 in Q4'FY18 vs: ▪ $0.01 in Q4'FY17 • Starry Inc., a next generation service provider using 5G ▪ $0.17 in Q3'FY18 millimeter wave technology, will use our Wi-Fi 6 • Operating cash flow of $5.1 million chipsets in their base station technology. ▪ $(7.6) million in Q4'FY17 • Delivered Wi-Fi 6 reference designs for next ▪ $15.8 million in Q3'FY18 generation GPON gateways and routers with Cortina • Cash, cash equivalents & marketable Access, Inc. securities $136.1 million • Introduced Spartan Essential, a turn-key design • DSO 41 days, up 11 days Q/Q targeting multiple consumer Wi-Fi applications such as • Annualized inventory turns 6.2x, up from mesh, access point for wired extenders and boosters for upgrading existing gateways. 5.5x Q/Q • Orange S.A., the largest broadband provider in France, First Quarter FY 2019 Guidance is using our Wave 2 technology for its latest • Revenue: $56.0 to $59.0 million generation of repeaters and set-top boxes. • GAAP gross margin: 50.4% +/- 50bps • Non-GAAP gross margin: 50.5% +/- 50bps Financial Results Call and Webcast • GAAP OPEX: $27.4M to $28.4M Our Q4 financial results webcast and call will commence • Non-GAAP OPEX: $23.0M to $24.0M on February 4, 2019 at 1:30 p.m. PT (4:30 p.m. ET). The • Non-GAAP Tax Exp: Approximately $300,000 webcast may be accessed at http://ir.quantenna.com/. • GAAP earnings per share: $0.02 to $0.04 An archive of the webcast will be available for 90 days • Non-GAAP earnings per share: $0.13 to $0.15 from the date of this release. Quantenna Communications, Inc. Revenue Segmentation by WiFi Technology (in percentage of revenue, unaudited) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Period Ending Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Sep 30 '18 Dec 30 '18 802.11n 18% 17% 15% 9% 4% 3% 2% 3% 802.11ac Wave 2 79% 79% 72% 83% 83% 71% 68% 66% 802.11ac Wave 3 (10G) 3% 4% 13% 6% 13% 26% 30% 31% Total Semi Revenue 100% 100% 100% 98% 100% 100% 100% 100% Other 0% 0% 0% 2% 0% 0% 0% 0% Total Revenue 100% 100% 100% 100% 100% 100% 100% 100% February 4, 2019 Quantenna Q4 2018 Financial Results Page 1 of 4


 
Quantenna Communications, Inc. Consolidated Statements of Operations (GAAP) (in thousands, unaudited) Period Ending Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Sep 30 '18 Dec 30 '18 Revenue 37,891$ 47,085$ 50,108$ 41,275$ 45,117$ 53,427$ 59,349$ 62,567$ COGS 19,307 23,314 25,591 19,996 22,352 27,563 29,859 31,284 Gross Margin 18,584 23,771 24,517 21,279 22,765 25,864 29,490 31,283 GM % of revenue 49.0% 50.5% 48.9% 51.6% 50.5% 48.4% 49.7% 50.0% R&D 12,633 16,055 15,011 16,048 17,601 17,084 17,783 19,054 S&M 2,914 3,276 3,363 4,487 4,495 3,979 3,833 3,996 G&A 3,389 4,106 3,735 4,069 4,198 4,518 4,886 5,165 OPEX 18,936 23,437 22,109 24,604 26,294 25,581 26,502 28,215 OPEX % of revenue 50.0% 49.8% 44.1% 59.6% 58.3% 47.9% 44.7% 45.1% Operating Income (loss) (352)$ 334$ 2,408$ (3,325)$ (3,529)$ 283$ 2,988$ 3,068$ Op Inc % of revenue -0.9% 0.7% 4.8% -8.1% -7.8% 0.5% 5.0% 4.9% Interest & Other Income 3 45 120 237 334 230 243 432 Pretax Income (loss) (349) 379 2,528 (3,088) (3,195) 513 3,231 3,500 Taxes 535 210 (274) (35,413) 52 (519) (648) 2,081 Tax Rate -153% 55% -11% 1147% -2% -101% -20% 59% Net Income (loss) (884)$ 169$ 2,802$ 32,325$ (3,247)$ 1,032$ 3,879$ 1,419$ Consolidated Statements of Operations (Non-GAAP) (in thousands, unaudited) Period Ending Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Sep 30 '18 Dec 30 '18 Revenue 37,891$ 47,085$ 50,108$ 41,275$ 45,117$ 53,427$ 59,349$ 62,567$ COGS 19,264 23,272 25,553 19,954 22,318 27,501 29,809 31,231 Gross Margin 18,627 23,813 24,555 21,321 22,799 25,926 29,540 31,336 GM % of revenue 49.2% 50.6% 49.0% 51.7% 50.5% 48.5% 49.8% 50.1% R&D 11,428 14,641 13,644 14,418 15,208 14,555 15,535 16,548 S&M 2,561 2,866 2,947 3,704 3,511 3,386 3,292 3,418 G&A 2,886 3,398 2,787 3,089 3,017 3,373 3,723 3,936 OPEX 16,875 20,905 19,378 21,211 21,736 21,314 22,550 23,902 OPEX % of revenue 44.5% 44.4% 38.7% 51.4% 48.2% 39.9% 38.0% 38.2% Operating Income 1,752$ 2,908$ 5,177$ 110$ 1,063$ 4,612$ 6,990$ 7,434$ Op Inc % of revenue 4.6% 6.2% 10.3% 0.3% 2.4% 8.6% 11.8% 11.9% Interest & Other Income 3 45 120 237 334 230 243 432 Pretax Income 1,755 2,953 5,297 347 1,397 4,842 7,233 7,866 Taxes 535 210 (274) (108) 237 218 265 247 Tax Rate 30% 7% -5% -31% 17% 5% 4% 3% Net Income 1,220$ 2,743$ 5,571$ 455$ 1,160$ 4,624$ 6,968$ 7,619$ GAAP to Non-GAAP Reconciling Items (in thousands, unaudited) Period Ending Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Sep 30 '18 Dec 30 '18 Stock Based Compensation COGS 43$ 42$ 38$ 42$ 34$ 62$ 50$ 53$ R&D 1,205 1,414 1,367 1,630 2,393 2,529 2,248 2,506 S&M 353 410 416 584 984 593 541 578 G&A 503 708 948 980 1,181 1,145 1,163 1,229 Total 2,104$ 2,574$ 2,769$ 3,236$ 4,592$ 4,329$ 4,002$ 4,366$ Non-Recurring Items S&M 199$ Income Taxes (35,305)$ 185$ 737$ 913$ (1,834)$ February 4, 2019 Quantenna Q4 2018 Financial Results Page 2 of 4


 
Quantenna Communications, Inc. Condensed Consolidated Balance Sheet (in thousands, unaudited) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Period Ending Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Sep 30 '18 Dec 30 '18 Assets Current assets Cash, cash equivalents & marketable securities $ 114,401 $ 124,389 $ 126,866 $ 118,627 $ 120,143 $ 120,082 $ 132,030 $ 136,149 Accounts receivable 17,812 17,696 22,820 26,786 26,310 29,700 20,081 28,326 Inventory 13,361 20,985 23,700 12,662 18,420 21,391 21,578 20,218 Prepaid expenses and other current assets 3,745 4,332 2,444 2,744 2,949 2,369 6,512 5,325 Total current assets 149,319 167,402 175,830 160,819 167,822 173,542 180,201 190,018 Deferred tax assets - - - 35,422 35,602 36,482 37,443 35,563 Property and equipment, net 6,025 6,380 11,215 12,511 12,415 12,838 13,418 13,691 Intangible and other assets, net 743 769 4,296 3,952 4,215 3,901 3,571 6,384 Total assets $ 156,087 $ 174,551 $ 191,341 $ 212,704 $ 220,054 $ 226,763 $ 234,633 $ 245,656 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 4,658 $ 13,401 $ 13,805 $ 3,754 $ 11,833 $ 8,904 $ 10,255 $ 9,852 Accrued liabilities and other current liabilities 15,401 19,147 27,054 21,065 22,394 23,155 23,220 25,946 Long-term debt, current portion 2,288 2,563 2,487 3,943 - - - - Total current liabilities 22,347 35,111 43,346 28,762 34,227 32,059 33,475 35,798 Long-term debt 3,539 2,445 1,900 - - - - - Other long term liabilities - 425 3,413 3,339 3,222 3,214 2,670 3,371 Total liabilities 25,886 37,981 48,659 32,101 37,449 35,273 36,145 39,169 Stockholders’ equity Common stock 3 3 3 3 3 3 3 4 Additional paid-in capital 292,710 298,943 302,240 308,023 313,503 321,669 324,931 331,551 Accumulated deficit and other accumulated loss (162,512) (162,376) (159,561) (127,423) (130,901) (130,182) (126,446) (125,068) Total stockholders’ equity 130,201 136,570 142,682 180,603 182,605 191,490 198,488 206,487 Total liabilities and stockholders' equity $ 156,087 $ 174,551 $ 191,341 $ 212,704 $ 220,054 $ 226,763 $ 234,633 $ 245,656 Condensed Consolidated Cash Flows (in thousands, unaudited) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Period Ending Apr 02 '17 Jul 02 '17 Oct 01 '17 Dec 31 '17 Apr 01 '18 Jul 01 '18 Sep 30 '18 Dec 30 '18 Cash flows from operating activities Net income (loss) $ (884) 169$ 2,802$ 32,325$ $ (3,247) 1,032$ 3,879$ 1,419$ Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation and amortization 479 545 542 1,103 1,125 1,138 1,204 1,394 Stock-based compensation expense 2,104 2,574 2,769 3,236 4,592 4,329 4,002 4,366 Deferred income taxes - - - (35,333) (733) (908) 1,874 Other 135 62 150 288 (50) 117 458 362 Changes in assets and liabilities Accounts receivable (3,332) 116 (5,124) (3,966) 476 (3,390) 9,619 (8,245) Inventory 2,459 (7,624) (2,715) 11,038 (5,758) (2,971) (187) 1,360 Prepaid expenses and other current assets (1,324) (574) 1,876 (313) (205) 580 (4,143) 1,187 Other assets (511) (27) (252) 323 58 43 58 154 Accounts payable (4,268) 10,236 2,194 (10,354) 8,185 (3,213) 1,526 (707) Accrued liabilities 4,707 1,890 5,020 (5,912) 1,593 150 332 1,965 Net cash provided by (used in) operating activities (435) 7,367 7,262 (7,565) 6,769 (2,918) 15,840 5,129 Cash flows from investing activities Purchase of property and equipment (1,700) (746) (4,515) (2,009) (924) (454) (2,584) (1,138) Purchase of intangible asset - - - - - - - (1,732) Purchase of long-term investments & marketable securities - (71,169) (32,875) (27,746) (13,801) (25,787) (8,919) (21,799) Proceeds from sale and maturities of marketable securities - 4,994 10,915 21,215 11,515 24,605 8,139 21,914 Net cash provided by (used in) investing activities (1,700) (66,921) (26,475) (8,540) (3,210) (1,636) (3,364) (2,755) Cash flows from financing activities Proceeds from issuance of common stock, net of issuance cost 194 3,882 477 3,122 1,438 3,874 779 2,327 Principal payments on debt (672) (433) (651) (650) (3,943) - - - Other (31) (65) - (892) (873) (360) (2,010) (344) Net cash provided by (used in) financing activities (509) 3,384 (174) 1,580 (3,378) 3,514 (1,231) 1,983 Effect of exchange rate changes on cash & cash equivalents - - - 113 - (152) (107) (35) Net increase (decrease) in cash and cash equivalents (2,644) (56,170) (19,387) (14,412) 181 (1,192) 11,138 4,322 Cash and cash equivalents Beginning of period 117,045 114,401 58,231 38,844 24,432 24,613 23,421 34,559 End of period 114,401 58,231 38,844 24,432 24,613 23,421 34,559 38,881 February 4, 2019 Quantenna Q4 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 fourth quarter and fiscal year 2018 ended December 30, 2018, forecasted financial results for the first quarter of fiscal 2019, 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; quarterly fluctuations in revenues and operating results; risks and uncertainties related to international operations, including the impact of increased tariffs and escalating trade tensions with China directly and indirectly impacting Quantenna and its customers, end customers, vendors and partners; potential cancellation, delay or volatility of customer orders; 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; 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; the complexity of the products, including integration requirements with components from other third parties that are outside of Quantenna's control; 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; dependence of Quantenna's 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; changes in tax and other laws affecting Quantenna’s business and operations; cyberattacks; adjustments to the preliminary financial results reported in this financial commentary and related earnings call announcement and materials for the fourth quarter of 2018 in connection with completion of the final closing process and procedures and preparation of our preparation of our Annual Report on Form 10-K; 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 Wi-Fi by establishing benchmarks for speed, range, efficiency and reliability. Quantenna takes a multidimensional approach, from silicon and system to software, and provides total Wi-Fi solutions. For more information, visit www.quantenna.com. February 4, 2019 Quantenna Q4 2018 Financial Results Page 4 of 4


 
exhibit993supplementaryi
is Wi-Fi Perfected System Cloud Semiconductors Software Analytics Supplementary Earnings Presentation Q4 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


 
Company Highlights Pioneer in 8x8, 5x5, 4x4 and 2x4 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 1,700 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 41% CAGR in revenue over last six years Attractive financial model with Generated cash from operations for the last three fiscal years significant operating leverage Strong gross margin profile of ~50% 3


 
At a Glance Strong Revenue Growth Profile $MM 200 million+ 60+ $220 chips shipped products with Quantenna inside $176 41% CAGR $129 50+ 40+ service providers OEMs / ODMs $84 $67 $40 ~415 95+ employees Issued and pending patents worldwide 2013 2014 2015 2016 2017 2018 4


 
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 5


 
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. 6


 
Explosive IP Traffic Growth Stresses Wi-Fi Bottleneck Worldwide IP Traffic in Exabytes per Month Cloud Switch Fabric up to 100Gbps 2017-2022 CAGR Wi-Fi (fixed & mobile) Infrastructure Wireline (Fiber, G.fast & (incl. VoD) 202 EB DOCSIS 3.1) Mobile 30% up to 10Gbps (carrier) 116 EB Home 15% Wi-Fi 54 EB up to 58 EB 46% 77 EB 1Gbps 12 EB 2017 2022 Wi-Fi expected to deliver 54% of WW IP traffic growth from 2017-2022 Source: Cisco Visual Networking Index: Forecast and Trends, 2017-2022; published November 26, 2018 7


 
Q4 2018 Income Statement Highlights* Record quarterly revenue of $62.6 million Strong Revenue Growth Profile $MM $MM • 52% Y/Y growth vs Q4 2017 80 240 • 5% Q/Q growth vs Q3 2018 70 25% 210 Record annual revenue of $220.5 million YoY • 25% Y/Y growth vs FY2017 60 180 52% YoY Gross margin of 50.1% 50 150 Record quarterly earnings performance 40 120 • $7.6 million net income • $0.19 in EPS 30 90 Record annual earnings performance 20 60 • $20.4 million net income 10 30 • $0.51 in EPS 0 0 Q4 2017 Q4 2018 FY 2017 FY2018 *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. 8


 
Q4 2018 Cash Flow and Balance Sheet Highlights* Generated $5M in CFFO in Q4 2018 Strong Operating Cash Flow Performance • $0.13 per share $MM $MM 30 30 • Compares to ($8M) usage in Q4 2017 Generated $25M in CFFO in FY2018 • $0.63 per share 20 20 • 274% Y/Y growth 274% Cumulatively generated $31M in CFFO YoY over the last two years 10 10 • $0.80 per share Generated $20M in FCF in FY 2018 0 0 • $0.50 per share Cash, cash equivalents and investments of $136M and no debt -10 -10 • $3.40 per share Q4 2017 Q4 2018 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. CFFO means Cash Flow From Operations and FCF means Free Cash Flow. 9


 
Wi-Fi Technology Segmentation Highlights 802.11ac Wave 3 (10G) revenue Technology Cycles Drive Growth Q4 was a record at $19.4 million $MM • Q/Q growth of 9% or $1.6 million 70 • Y/Y growth of 683% or $16.9 million 60 • Q1 revenue expected to decline approximately $3 million Q/Q 50 802.11ac Wave 2 revenue 40 Q4 was a record at $41.3 million • Q/Q growth of 2% or $0.9 million 30 • Y/Y growth of 21% or $7.0 million 20 • Q1 revenue is expected to decline approximately $2 million Q/Q 10 802.11n revenue 0 • Q4 increased 58% Q/Q or $0.7 million Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 • Q4 revenue expected decline Q/Q Other 802.11n 802.11ac Wave2 802.11ac Wave3 (10G) 10


 
New Initiatives Expanding Served Markets Wave 3 & Wi-Fi 6 raise bar in premium Wi-Fi, even as Wave 2 design wins continue Complete Hardware Platforms RBOM Initiatives Software Adaptive 8x8 New Platforms End Markets 5GHz + New SPARTAN 2.4GHz: Geographies Mesh Cable Gateway, Bridge, STB US, Europe NextGen 5GHz only: Wi-Fi 6 Telco Wave 3 Wave 2 2018 2019+ 11


 
Operating Results & Guidance* 2017 Q3 2018 Q4 2018 2018 Q1 2019 Guidance Revenue (M) $176.4 $59.3 $62.6 $220.5 $56M - $59M GAAP: 50.4% +/- 50bps Gross Margin 50% 50% 50% 50% Non-GAAP: 50.5% +/- 50bps GAAP: $27.4M to 28.4M OPEX 38% 38% 44% 41% Non-GAAP: $23.0M to $24.0M GAAP: $0.02 – $0.04 EPS $0.17 $0.19 $0.26 $0.51 Non-GAAP: $0.13 – $0.15 *Gross margin, OPEX and EPS figures are based on non-GAAP reporting which excludes stock-based compensation and other one-time items. 12


 
Balance Sheet Summary (in millions) 2017 Q2 2018 Q3 2018 2018 Cash, Cash Equivalents $118.6 $120.1 $132.0 $136.1 & Marketable Securities Total Assets $212.7 $226.8 $234.6 $245.7 Total Debt $3.9 $0.0 $0.0 $0.0 Total Liabilities $32.1 $35.3 $36.1 $39.2 Total Stockholders’ $180.6 $191.5 $198.5 $206.5 Equity 13


 
Appendix 14


 
Non-GAAP to GAAP Operating Margin Reconciliation* 2016 2017 Q3 2018 Q4 2018 2018 Non-GAAP Gross Margin 50% 50% 50% 50% 50% SBC: Gross Margin 0% 0% 0% 0% 0% GAAP Gross Margin 50% 50% 50% 50% 50% Non-GAAP Operating Margin 2% 6% 12% 12% 9% SBC: R&D 1% 3% 4% 4% 4% SBC: S&M 0% 1% 1% 1% 1% SBC: G&A 1% 2% 2% 2% 2% Non-recurring items 0% 0% 0% 0% 0% GAAP Operating Margin (1%) (1%) 5% 5% 1% *SBC means stock-based compensation, non-recurring items comprised of executive severance, percentages may not total due to rounding 15


 
Non-GAAP to GAAP Net Margin Reconciliation* 2016 2017 Q3 2018 Q4 2018 2018 Non-GAAP Net Margin 1% 6% 12% 12% 9% SBC: Gross Margin 0% 0% 0% 0% 0% SBC: R&D 1% 3% 4% 4% 4% SBC: S&M 0% 1% 1% 1% 1% SBC: G&A 1% 2% 2% 2% 2% Non-recurring items 0% (20%) (1%) (3%) 0% GAAP Net Margin (1%) 20% 6% 2% 1% *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 16


 
Wi-Fi Perfected™ System Cloud Semiconductors Software Analytics 17