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): April 29, 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 April 29, 2019, Quantenna Communications, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter of fiscal year 2019 ended March 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1.
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 April 29, 2019.







EXHIBIT INDEX
 

Exhibit
No.
 
Description
 
Press Release issued by Quantenna Communications, Inc., dated April 29, 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:
April 29, 2019
By: /s/ Tom MacMitchell
 
 
Tom MacMitchell
 
 
General Counsel

Exhibit
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12861798&doc=3
 

News Release
Quantenna Announces First Quarter 2019 Financial Results
Wave 3 10G Strategy Results in 28% Year-Over-Year Quarterly Revenue Growth
San Jose, CA - April 29, 2019 - Quantenna Communications, Inc. (NASDAQ:QTNA) today announced preliminary unaudited financial results for the first quarter ended March 31, 2019, with revenues of $57.7 million; GAAP net loss per share of $(0.03) and non-GAAP diluted earnings per share of $0.15.
Financial Summary
 
Three Months Ended
 
March 31,
2019
 
April 1,
2018
 
 
 
 
Revenue
$
57,678

 
$
45,117

Gross Profit
29,508

 
22,765

Gross Margin
51.2
%
 
50.5
%
 
 
 
 
Net income (loss):
 
 
 
GAAP
$
(1,105
)
 
$
(3,247
)
Non-GAAP
6,240

 
1,160

 
 
 
 
Net income (loss) per share - diluted:
 
 
 
GAAP
$
(0.03
)
 
$
(0.09
)
Non-GAAP
0.15

 
0.03

 
 
 
 
(in thousands except per share data, unaudited)
 
 

Please see the note regarding the use of non-GAAP financial measures below, including a detailed reconciliation between GAAP and non-GAAP information in the tables included herein.
First Quarter Company Highlights

Revenue of $57.7 million, representing year-over-year growth of 28% over the first quarter of 2018.

GAAP net loss per share of ($0.03) compared to ($0.09) in the first quarter of 2018. Non-GAAP dilutive EPS $0.15 compared to $0.03 in the first quarter of 2018.

GAAP gross margin of 51.2% compared to 50.5% in the first quarter of fiscal year 2018. Non-GAAP gross margin of 51.3% compared to 50.5% in the first quarter of fiscal year 2018.




Announced Qdock, a software framework enabling easy integration of third-party applications with Quantenna’s Wi-Fi solutions.

Partnered with NXP Semiconductors N.V. to develop comprehensive platforms for the Wi-Fi 6 market.

Set a new bar for Wi-Fi network performance by achieving over 2Gbit/s total throughput with Intel Wireless-AC client devices.

Announced that Quantenna’s Spartan architecture enables high-capacity mesh Wi-Fi to TIME’s Malaysian Customers.

Announced that Moscow City Telephone Network (MGTS), the fixed network division of Russian cellco Mobile TeleSystems (MTS), has adopted Quantenna’s high-performance 4x4 MIMO solution for its new GPON gateway.

Announced that Cognitive Systems’ patented Aura WiFi Motion™ technology will become a standard option for customers developing products based on the Quantenna platform.

Announced with Plume the world’s first OpenSync™ Wi-Fi 6 integration for the delivery of cloud services to the consumer, leveraging in-home Wi-Fi infrastructure.

Proposed Acquisition of Quantenna by ON Semiconductor
As previously announced on March 27, 2019, ON Semiconductor has agreed to acquire Quantenna for $24.50 per share in an all cash transaction. The acquisition consideration represents equity value of approximately $1.07 billion and enterprise value of approximately $936 million, after accounting for Quantenna’s net cash of approximately $136 million at the end of the fourth quarter of 2018. The acquisition is expected to significantly enhance ON Semiconductor’s connectivity portfolio with the addition of Quantenna’s industry leading Wi-Fi technology and software capabilities.

The transaction has been approved by ON Semiconductor’s and Quantenna’s boards of directors and is currently expected to close in the second half of 2019. No approval of the stockholders of ON Semiconductor is required in connection with the proposed transaction. On April 22, 2019, early termination of the waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, was granted. Completion of the proposed acquisition remains subject to approval by Quantenna’s stockholders, other regulatory approvals and other customary closing conditions.

Due to the pending acquisition by ON Semiconductor, Quantenna management will not be hosting an investor conference call and will not provide forward looking guidance.

In addition, in light of the pending acquisition by ON Semiconductor, Quantenna’s board of directors has postponed its regular 2019 Annual Meeting of Stockholders, which typically occurs in June 2019. It is expected that the 2019 Annual Meeting of Stockholders would be held (and the meeting date, record date and related matters announced) later in 2019 if the acquisition by ON Semiconductor is not consummated before the end of 2019.





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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, expenses incurred in connection with the pending acquisition of the Company by ON Semiconductor Corporation, 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 first quarter ended March 31, 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; the complexity of the products, including integration requirements with components from other third parties that are outside of Quantenna's 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 impact of increased tariffs and escalating trade tensions among countries on Quantenna and its customers, end customers, vendors and partners; 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 for the first quarter of 2019 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. Additionally, there are risks and uncertainties in connection with the proposed acquisition of us by ON Semiconductor which may adversely affect our business, future opportunities, employees and common stock, including without limitation, (i) the proposed transaction may not be completed in a timely manner, or at all, (ii) the effect of the announcement or pendency of the proposed transaction, (iii) the failure to satisfy any of the conditions to the consummation of the

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proposed transaction, including the approval of the merger agreement by our stockholders and the receipt of required regulatory approvals, (iv) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, including a termination fee payable to ON Semiconductor, (v) risks related to diverting management’s attention from our ongoing business operations, (vi) the outcome of any legal proceedings that may be instituted against us related to the merger agreement or the proposed transaction, and (vii) additional costs, charges or expenses resulting from the proposed transaction. 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
 
March 31,
2019
 
April 1,
2018
 
 
 
 
Revenue
$
57,678

 
$
45,117

Cost of revenue
28,170

 
22,352

Gross profit
29,508

 
22,765

Operating expenses:
 
 
 
Research and development
19,059

 
17,601

Sales and marketing
4,357

 
4,495

General and administrative
9,275

 
4,198

Total operating expenses
32,691

 
26,294

Loss from operations
(3,183
)
 
(3,529
)
Other income, net
697

 
334

Loss before income taxes
(2,486
)
 
(3,195
)
Benefit (provision) for income taxes
1,381

 
(52
)
Net loss
$
(1,105
)
 
$
(3,247
)
Net loss per share - basic and diluted
$
(0.03
)
 
$
(0.09
)
Shares used in computing net loss per share - basic and diluted
38,080

 
35,848

 
 
 
 
















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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 March 31, 2019
Three months ended April 1, 2018
 
GAAP
Measure
Stock-based
Compensation
Expense
Acquisition-Related Expenses**
Income Taxes*
Non-GAAP
Measure
GAAP
Measure
Stock-based
Compensation
Expense
Income Taxes*
Non-GAAP
Measure
Revenue
$
57,678

 
 
 
$
57,678

$
45,117

 
 
$
45,117

Gross profit
29,508

85

2

 
29,595

22,765

34

 
22,799

Gross margin
51.2
%
0.1
%
 
 
51.3
%
50.5
%
0.1
%
 
50.5
%
Research and development
19,059

2,890

26

 
16,143

17,601

2,393

 
15,208

Sales and marketing
4,357

749

6

 
3,602

4,495

984

 
3,511

General and administrative
9,275

1,506

3,966

 
3,803

4,198

1,181

 
3,017

Income (loss) from operations
(3,183
)
5,230

4,000

 
6,047

(3,529
)
4,592

 
1,063

Benefit (Provision) for income taxes
1,381



(1,885
)
(504
)
(52
)

(185
)
(237
)
Net income (loss)
$
(1,105
)
$
5,230

$
4,000

$
(1,885
)
$
6,240

$
(3,247
)
$
4,592

$
(185
)
$
1,160

Basic shares outstanding
38,080

 
 
 
38,080

35,848

 
 
35,848

Basic earnings per share
$
(0.03
)
 
 
 
$
0.16

$
(0.09
)
 
 
$
0.03

Diluted shares outstanding
38,080

 
 
 
40,642

35,848

 
 
38,703

Diluted earnings per share
$
(0.03
)
 
 
 
$
0.15

$
(0.09
)
 
 
$
0.03


*Income tax adjustment relating to change in US Federal and State deferred tax assets.
** Expenses incurred in connection with the pending acquisition of the Company by ON Semiconductor Corporation.





























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Quantenna Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
 
March 31,
2019
 
December 30, 2018
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
40,750

 
$
38,881

Marketable securities
95,729

 
97,268

Accounts receivable
35,096

 
28,326

Inventory
18,203

 
20,218

Prepaid expenses and other current assets
2,465

 
5,325

Total current assets
192,243

 
190,018

Deferred tax assets
37,425

 
35,563

Property and equipment, net
21,610

 
13,691

Intangible and other assets, net
6,681

 
6,384

Total assets
$
257,959

 
$
245,656

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
8,962

 
$
9,852

Accrued liabilities and other current liabilities
28,193

 
25,946

Total current liabilities
37,155

 
35,798

Other long-term liabilities
8,642

 
3,371

Total liabilities
45,797

 
39,169

 
 
 
 
Stockholders’ equity
 
 
 
Common stock
4

 
4

Additional paid-in capital
337,813

 
331,551

Accumulated other comprehensive loss
(417
)
 
(935
)
Accumulated deficit
(125,238
)
 
(124,133
)
Total stockholders’ equity
212,162

 
206,487

Total liabilities and stockholders’ equity
$
257,959

 
$
245,656



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Quantenna Communications, Inc.
Condensed Consolidated Cash Flows
(in thousands, unaudited)
 
Three Months Ended
 
March 31, 2019
 
April 1, 2018
 
 
 
 
Cash flows from operating activities
 
 
 
Net loss
$
(1,105
)
 
$
(3,247
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
1,995

 
1,125

Stock-based compensation expense
5,230

 
4,592

Deferred income taxes
(2,009
)
 

Other
136

 
(50
)
Changes in assets and liabilities:
 
 
 
Accounts receivable
(6,770
)
 
476

Inventory
2,015

 
(5,758
)
Prepaid expenses and other assets
2,294

 
(147
)
Accounts payable
(910
)
 
8,725

Accrued liabilities and other current liabilities
(6
)
 
1,053

Non-current liabilities
(635
)
 

Net cash provided by operating activities
235

 
6,769

Cash flows from investing activities
 
 
 
Purchase of property and equipment
(941
)
 
(924
)
Purchase of long-term investment

 
(590
)
Purchase of marketable securities
(21,480
)
 
(13,211
)
Proceeds from sales and maturities of marketable securities
23,211

 
11,515

Net cash provided by (used in) investing activities
790

 
(3,210
)
Cash flows from financing activities
 
 
 
Proceeds from issuance of common stock
2,964

 
1,438

Payments of taxes withheld for vested stock awards
(1,932
)
 
(601
)
Payments related to intangible asset purchase
(272
)
 
(272
)
Repayments of long-term debt

 
(3,943
)
Net cash provided by (used in) financing activities
760

 
(3,378
)
Effect of exchange rates on cash and cash equivalents
84

 

Net increase in cash and cash equivalents
1,869

 
181

Cash and cash equivalents
 
 
 
Beginning of period
38,881

 
24,432

End of period
$
40,750

 
$
24,613

 
 
 
 

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

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