Quantenna Communications
Feb 13, 2017

Quantenna Announces Fourth Quarter and Fiscal 2016 Financial Results

FREMONT, Calif., Feb. 13, 2017 (GLOBE NEWSWIRE) -- Quantenna Communications, Inc. (NASDAQ:QTNA), a global leader and innovator of leading-edge performance Wi-Fi solutions, today announced preliminary unaudited financial results for the fourth quarter and fiscal year 2016 ended January 1, 2017.

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

Financial Summary

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

Commentary on the fourth quarter and fiscal year 2016 financial results by Company management is available at at http://ir.quantenna.com/.

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

Fourth Quarter Company Highlights

Business Outlook

  First Quarter 2017 
  Guidance Range 
    
Revenue$34.5M to $36.5M 
Gross Margin48% to 50% 
Operating Expense Decline (sequential)5% to 10% 
Net income (loss) per share - diluted  
GAAP($0.05) - ($0.03) 
Non-GAAP$0.00 - $0.02 
    

Webcast and Conference Call

Quantenna management will host a conference call discussing the quarterly and fiscal year results and business outlook following this press release at 2:00 p.m Pacific Time today. Individuals interested in listening to the conference call may do so by dialing (877)-239-5585 for domestic callers or (661)-378-9806 for international callers. Please reference Conference ID: 61663823. An audio webcast and replay will be available on on the "Investor Relations" section of Quantenna's website at http://ir.quantenna.com/events.cfm.

Non-GAAP Financial Measures

In addition to GAAP reporting, Quantenna provides information regarding net income, gross profit and operating expenses on a non-GAAP basis. This non-GAAP information excludes stock-based compensation expense. These non-GAAP measures are used by the Company's management for the purposes of evaluating the underlying operating performance of the Company, establishing internal budgets, comparing performance with internal forecasts and goals, strategic planning, benchmarking against other companies, to provide a more consistent basis of comparison and to enable more meaningful period to period comparisons. These non-GAAP measures are provided in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial data is included in the supplemental financial tables included in this press release.

About Quantenna Communications

Quantenna is a global leader and innovator of leading-edge performance Wi-Fi solutions. Quantenna introduced the world's first 10G Wi-Fi technology for a new generation of access points in home, enterprise and public spaces and continues to innovate. Quantenna's Wi-Fi solutions offer superior performance, and establish benchmarks for speed, range, efficiency and reliability. With MAUI, Quantenna's cloud-based Wi-Fi analytics platform that complement its chipset solutions, service providers can deliver real-time, automated Wi-Fi monitoring, optimization, and self-healing to their customers around the clock to help achieve the best Wi-Fi experience. Quantenna is Wi-Fi perfected. For more information, visit www.quantenna.com. Follow us on Facebook, LinkedIn and Twitter.

Forward-Looking Statements

This press release contains forward-looking statements based on Quantenna's current expectations, including statements regarding Quantenna's financial results for the fourth quarter and fiscal year 2016 ended January 1, 2017, expected future business and financial performance, growth opportunities, product technologies and customer relationships. The words "believe," "estimate," "expect," "intend," "anticipate," "plan," "project," "will" and similar phrases as they relate to Quantenna are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Quantenna and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are the following: adjustments to the preliminary financial results reported for the fourth quarter and fiscal year 2016 in connection with completion of the final closing process and procedures and preparation of our annual report of Form 10-K, risks that Quantenna may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; ability to accurately predict future revenue and expenses; challenges developing new and leading edge products on a timely basis that achieve market acceptance; ability to attract and retain customers and service providers; dependence on a limited number of products and customers; intense market competition; intellectual property litigation risks; political uncertainty; potential changes in tax and other laws affecting Quantenna's business; risks associated with acquisitions and divestitures; product liability risks; potential cancellation of customer orders; difficulties managing international operations; risks that Quantenna may not be able to manage strains associated with its growth; dependence on key personnel; stock price volatility; dependence on, and geographic concentration of, contract manufacturers, assembly and test providers, and other vendors that subject Quantenna's business and results of operations to risks of natural disasters, epidemics, war and political unrest; the cyclical nature of the semiconductor industry; and other factors that are detailed in the Securities and Exchange ("SEC") filings of Quantenna Communications, Inc., which you may obtain for free at the SEC's website at http://www.sec.gov. Quantenna disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


Quantenna Communications, Inc. 
Condensed Consolidated Statements of Operations 
(in thousands except per share data, unaudited)
               
       Three Months Ended Years Ended 
        December 27, January 1, December 27, January 1, 
        2015   2017   2015   2017  
               
               
Revenue  $25,412  $37,492  $83,773  $129,069  
Cost of revenue 12,425   18,188   42,554   64,640  
     Gross profit 12,987   19,304    41,219   64,429  
Operating expenses        
Research and development 9,545   13,691   35,575   46,604  
Sales and marketing 1,625   2,520   6,644   8,091  
General and administrative 1,302   2,757   5,212    10,559  
     Total operating expenses 12,472   18,968   47,431   65,254  
     Income (loss) from operations 515   336   (6,212)  (825) 
Interest expense (137)  (252)  (697)  (665) 
Other income (expense), net 87   262   (21)  (38) 
     Income (loss) before income taxes 465   346   (6,930)  (1,528) 
Provision for income taxes (38)  (314)  (115)  (367) 
     Net income (loss)$427  $32  $(7,045) $(1,895) 
Net income (loss) per share - basic$0.49  $0.00  $(9.16) $(0.30) 
Net income (loss) per share - diluted$0.02  $0.00  $(9.16) $(0.30) 
               
Shares used in computing net income (loss) per share:        
Basic 872 (1) 21,246   770 (1) 6,385  
Diluted 27,067   35,387   770   6,385   
               
(1)  The number of shares reflects the number prior to conversion of preferred stock
               

 

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

 

Quantenna Communications, Inc. 
Condensed Consolidated Cash Flows  
(in thousands, unaudited) 
           
       Years Ended 
       December 27, January 1, 
        2015   2017  
           
Cash flows from operating activities    
Net loss  $(7,045) $(1,895) 
Adjustments to reconcile net loss to net cash provided by    
(used in) operating activities    
 Depreciation and amortization 987   1,278  
 Stock-based compensation expense 1,202   3,090  
 Non-cash interest expense 271   322   
 Change in fair value of convertible preferred stock warrants liability 61   87   
 Changes in assets and liabilities    
  Accounts receivable (5,877)  1,237  
  Inventory 3,387    (8,413) 
  Prepaid expenses and other current assets 541   (901) 
  Other assets 60   (50) 
  Accounts payable (4,401)  1,804  
  Accrued liabilities and other current liabilities 934   5,757  
  Deferred revenue (2,197)  -  
     Net cash provided by (used in) operating activities (12,077)  2,316  
Cash flows from investing activities    
Purchase of property and equipment (1,761)  (2,724) 
Restricted cash 59   (59) 
     Net cash used in investing activities (1,702)  (2,783) 
Cash flows from financing activities    
Proceeds from issuance of convertible preferred stock, net of issuance costs 14,256   -  
Proceeds from issuance of common stock 164   1,191  
Proceeds from initial public offering, net of issuance costs -   97,483  
Proceeds from revolving line of credit, net of fees paid -   2,950  
Repayment of revolving line of credit -   (3,000) 
Proceeds from issuance of long-term debt, net of fees paid 3,000   3,854  
Repayment of long-term debt  (3,111)  (3,816) 
      Net cash provided by financing activities 14,309   98,662  
     Net increase in cash and cash equivalents 530   98,195  
Cash and cash equivalents    
Beginning of year 18,320   18,850  
End of year $18,850  $117,045  
            

 

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

 

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

 

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

 

 

Quantenna Communications, Inc.

Vernon Essi, Jr.

510-897-2684

vessi@quantenna.com

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Source: Quantenna Communications

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