Form 8-K AQUANTIA CORP For: Nov 27

November 27, 2017 4:13 PM

 

 

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): November 27, 2017

 

 

AQUANTIA CORP.

(Exact name of Registrant as Specified in Its Charter)

 

 

 

Delaware   001-38270   20-1199709

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

105 E. Tasman Drive

San Jose, California

    95134
(Address of Principal Executive Offices)     (Zip Code)

(408) 238-8300

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

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 (see General Instructions A.2. below):

 

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  ☒

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.  ☒

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On November 27, 2017, Aquantia Corp., (the “Company) announced financial results for the third quarter ended September 30, 2017. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated by reference.

The press release is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information shall not be deemed incorporated by reference into any other filing with the Securities and Exchange Commission made by the Company, whether made before or after today’s date, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

No.

  

Description

99.1    Press Release issued by Aquantia Corp., dated November 27, 2017.

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.

 

    AQUANTIA CORP.
Date:    November 27, 2017     By:   /s/ Mark Voll
        Mark Voll
        Chief Financial Officer

Exhibit 99.1

Aquantia Announces Third Quarter 2017 Results

Q3 2017 Revenue up 18.6 percent from Q3 2016

San Jose, Calif. – November 27, 2017 – Aquantia Corp., (NYSE: AQ), a leader in high-speed, Multi-Gigabit Ethernet connectivity solutions, today announced financial results for its third quarter ended September 30, 2017.

Third Quarter 2017 Highlights:

 

    Revenue for the three months ended September 30, 2017 of $26.7 million, an increase of 6.2 percent sequentially and 18.6 percent year-over-year;

 

    Revenue by market for the three months ended September 30, 2017: Data Center revenue of $14.9 million, Enterprise Infrastructure revenue of $10.8 million, Access revenue of $0.9 million, and Automotive revenue of $0.1 million;

 

    Gross margin of 56.5 percent for the three months ended September 30, 2017, compared to 56.6 percent for the three months ended June 30, 2017;

 

    Operating loss of $0.9 million for the three months ended September 30, 2017, and non-GAAP operating loss of $0.5 million for the same period; and

 

    Net loss per basic share of $0.21 for the three months ended September 30, 2017, and non-GAAP net loss per basic share of $0.19 for the same period.

Third Quarter 2017 Results

Total revenue for the third quarter 2017 was $26.7 million, an increase of 6.2 percent compared to $25.2 million in the prior quarter, and an increase of 18.6 percent compared to $22.5 million in the third quarter 2016. Total revenue by market for the third quarter 2017 consisted of Data Center revenue of $14.9 million, Enterprise Infrastructure revenue of $10.8 million, Access revenue of $0.9 million, and Automotive revenue of $0.1 million. Total revenue by market for the third quarter 2016 consisted of Data Center revenue of $16.5 million and Enterprise Infrastructure revenue of $6.0 million.

Gross profit for the third quarter 2017 was $15.1 million, or 56.5 percent of revenue, compared to $14.3 million, or 56.6 percent of revenue, in the prior quarter, and $13.4 million, or 59.5 percent of revenue, in the third quarter 2016. Operating expenses for the third quarter 2017 were $16.0 million, compared to $14.6 million in the prior quarter and $12.6 million in the third quarter 2016.

Loss from operations was $0.9 million, or 3 percent of revenue, compared to $0.4 million, or 1 percent of revenue, in the prior quarter, and income from operations of $0.9 million, or 4 percent of revenue, in the third quarter 2016. Non-GAAP loss from operations was $0.5 million, or 2 percent of revenue, compared to $40,000 in the prior quarter and Non-GAAP income from operations of $1.1 million, 5% of revenue in the third quarter of 2016.


Third quarter 2017 net loss was $1.0 million, or $0.21 per basic share, compared to second quarter 2017 net loss of $1.3 million, or $0.29 per basic share, and third quarter 2016 net income of $88,000, or $0.00 per diluted share.

Non-GAAP net loss for the third quarter 2017 was $0.9 million, or $0.19 per basic share. This compares to non-GAAP net income of $23,000, or $0.00 per diluted share, for the second quarter 2017 and $0.4 million, or $0.01 per diluted share, for the third quarter 2016.

Cash, cash equivalents and short-term investments totaled $15.4 million as of September 30, 2017, compared to $18.3 million as of June 30, 2017. The Company used $2.9 million in cash for the quarter primarily due to the repayment of debt of $2.8 million. Total debt was $15.8 million as of September 30, 2017, compared to $18.4 million as of June 30, 2017.

“We are very pleased to have completed our initial public offering on November 3rd, raising more than $65 million for the company,” said Faraj Aalaei, Chariman and CEO of Aquantia. “In the third quarter, we delivered record quarterly revenue. We believe this is a testament to our products and that Aquantia’s leadership in ICs for Multi-Gig Ethernet connectivity in multiple markets gives our customers confidence to build their networks on our technology.”

Business Outlook

For the fourth quarter of 2017, the Company expects revenue to be in the range of $26.5 million to $28.0 million, gross margin to be in the range of 56 percent to 58 percent and operating expenses to be in the range of $16.5 million to $17.5 million, which includes stock-based compensation expenses in the range of $0.5 million to $0.6 million.

Non-GAAP Financial Measures

In addition to GAAP reporting, the Company provides non-GAAP financial measures on income (loss) from operations and net income (loss). These non-GAAP financial measures exclude the income statement effects of stock-based compensation expense, amortization of acquired intangibles resulting from business combination, change in fair value of convertible preferred stock warrant liability and collaboration and development expense. The Company believes that these non-GAAP financial measures help analyze the Company’s financial results, establish budgets and operational goals for managing its business and to evaluate performance. The Company also believes that the presentation of these non-GAAP financial measures provides an additional tool for investors to use in comparing Aquantia’s core business and results of operations over multiple periods with other companies in the industry, many of which present similar non-GAAP financial measures to investors. However, the non-GAAP financial measures presented may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated. The non-GAAP financial measures presented should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, comparable financial measures calculated in accordance with GAAP.


About Aquantia

Aquantia is a leader in the design, development and marketing of advanced, high-speed communications ICs for Ethernet connectivity in the Data Center, Enterprise Infrastructure and Access markets. Aquantia’s products are designed to cost-effectively deliver leading-edge data speeds for use in the latest generation of communications infrastructure to alleviate network bandwidth bottlenecks caused by the growth of global IP. Aquantia is headquartered in Silicon Valley. For more information, visit www.aquantia.com.

Forward-Looking Statements

Statements in the press release for the third quarter of 2017 regarding the Company, which are not historical facts, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terms such as “outlook,” “believe,” “expect,” “may,” “will,” “provide,” “continue,” “could,” and “should,” and the negative of these terms or other similar expressions. These statements include statements relating to: the Company’s business outlook and current expectations for upcoming quarter, including with respect to any specific projections provided; the Company’s expectations regarding growth opportunities, including data center, enterprise infrastructure, access and automotive market; and the Company’s expectations regarding product adoption. These statements are subject to significant risks and uncertainties and actual results could differ materially from those projected. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this release. These risks and uncertainties include, without limitation, risks and uncertainties related to: the Company’s ability to achieve or sustain profitable operations due to its history of losses and accumulated deficit; the Company’s dependence on a limited number of customers for a substantial portion of revenue and lack of long-term purchase commitments therefrom; the Company’s ability to achieve design wins in competitive selection processes; the Company’s ability to develop new or enhanced products in a timely manner; the size and growth potential of the markets that the Company targets and the Company’s ability to compete therein; market demand for the Company’s products, including by customers of its direct customers; reliance on third parties to manufacture, assemble and test our products as well as their ability to achieve cost and yield improvements; lengthy and expensive qualification processes; product defects; the Company’s ability to obtain and maintain intellectual property protection for its technology; developments in regulation and industry standards in the United States and other jurisdictions; and other risks inherent to the fabless semiconductor business. For a discussion of these and other related risks, please refer to the Company’s recent SEC filings which are available on the SEC’s website at www.sec.gov. These forward-looking statements are based on the Company’s expectations and assumptions as of the date of this press release. Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events or changes in the Company’s expectations.

 

Public Relations Contact:    Investor Relations Contact:
Diane Vanasse    Deborah Stapleton
408-242-0027    650-815-1239
diane.vanasse@aquantia.com    deb@stapleton.com


AQUANTIA CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollar in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2017      2016      2017      2016  

Revenue

   $ 26,718      $ 22,534      $ 75,525      $ 63,908  

Cost of revenue

     11,616        9,127        32,575        25,310  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     15,102        13,407        42,950        38,598  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating expenses

           

Research and development

     11,512        9,321        32,456        26,622  

Sales and marketing

     1,927        1,344        5,383        4,217  

General and administrative

     2,572        1,891        7,047        5,687  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     16,011        12,556        44,886        36,526  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income (loss) from operations

     (909      851        (1,936      2,072  

Other income (expense)

     (69      (785      (2,757      (2,575
  

 

 

    

 

 

    

 

 

    

 

 

 

Income (loss) before income tax expenses

     (978      66        (4,693      (503

Provision for (benefit from) income taxes

     27        (22      (331      84  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income (loss)

   $ (1,005    $ 88      $ (4,362    $ (587
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income (loss) per share

           

Basic

   $ (0.21    $ 0.02      $ (0.95    $ (0.14
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

   $ (0.21    $ 0.00      $ (0.95    $ (0.14
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted—average shares used in computing net income per share(1):

           

Basic

     4,710        4,405        4,603        4,173  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     4,710        28,368        4,603        4,173  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) The number of shares reflects the number prior to the conversion of preferred stocks.

- more -


AQUANTIA CORP.

RECONCILIATION OF GAAP NET INCOME/(LOSS)

TO NON-GAAP NET INCOME

(Dollar in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2017     2016      2017     2016  

GAAP net income (loss)

   $ (1,005   $ 88      $ (4,362   $ (587

Stock-based compensation expense:

         

Cost of revenue

     12       8        26       23  

Research and development

     251       153        544       359  

Sales and marketing

     46       24        110       70  

General and administrative

     99       72        277       254  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total stock-based compensation expense

     408       257        957       706  
  

 

 

   

 

 

    

 

 

   

 

 

 

Amortization of acquired intangibles resulting from business combination

     9       9        25       25  

Change in fair value of convertible preferred stock warrant liability

     (317     —          1,383       (78
  

 

 

   

 

 

    

 

 

   

 

 

 

Non-GAAP net income (loss)

   $ (905   $ 354      $ (1,997   $ 66  
  

 

 

   

 

 

    

 

 

   

 

 

 

GAAP basic earnings per share

   $ (0.21   $ 0.02      $ (0.95   $ (0.14

Effect of non-GAAP adjustments on basic earnings per share

     0.02       0.06        0.51       0.16  
  

 

 

   

 

 

    

 

 

   

 

 

 

Non-GAAP basic earnings per share

   $ (0.19   $ 0.08      $ (0.43   $ 0.02  
  

 

 

   

 

 

    

 

 

   

 

 

 

GAAP diluted earnings per share

   $ (0.21   $ 0.00      $ (0.95   $ (0.14

Effect of non-GAAP adjustments on diluted earnings per share

     0.02       0.01        0.52       0.16  
  

 

 

   

 

 

    

 

 

   

 

 

 

Non-GAAP diluted earnings per share

   $ (0.19   $ 0.01      $ (0.43   $ 0.02  
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted—average shares used in computing net income per share(1):

         

Basic

     4,710       4,405        4,603       4,173  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

     4,710       28,368        4,603       4,173  
  

 

 

   

 

 

    

 

 

   

 

 

 

(1)      The number of shares reflects the number prior to the conversion of preferred stocks.

       

GAAP Income (loss) from operations

   $ (909   $ 851      $ (1,936   $ 2,072  

Stock-based compensation expense

     408       257        957       706  

Amortization of acquired intangibles resulting from business combination

     9       9        25       25  
  

 

 

   

 

 

    

 

 

   

 

 

 

Non-GAAP income (loss) from operations

   $ (492   $ 1,117      $ (954   $ 2,803  
  

 

 

   

 

 

    

 

 

   

 

 

 

- more -


AQUANTIA CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar in thousands)

 

     September 30,
2017
    December 31,
2016
 
     (unaudited)     (audited)  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 13,529     $ 28,893  

Short-term investments

     1,850       —    

Accounts receivable, net

     12,389       11,495  

Inventories

     15,673       7,017  

Prepaid expenses and other current assets

     3,745       1,609  
  

 

 

   

 

 

 

Total current assets

     47,186       49,014  
  

 

 

   

 

 

 

Property and equipment, net

     8,521       8,122  

Acquired intangible assets, net

     4,757       5,363  

Other assets

     4,742       3,210  
  

 

 

   

 

 

 

Total assets

   $ 65,206     $ 65,709  
  

 

 

   

 

 

 

Liabilities, convertible preferred shares and shareholders’ equity (deficit)

    

Current liabilities:

    

Accounts payable

   $ 5,357     $ 4,757  

Accrued liabilities

     9,513       6,751  

Long-term debt, current portion

     10,784       11,238  

Bank borrowings—line of credit

     5,000       —    
  

 

 

   

 

 

 

Total current liabilities

     30,654       22,746  
  

 

 

   

 

 

 

Long-term debt, net

     —         6,991  

Convertible preferred stock warrant liability

     3,530       12,885  

Other long-term liabilities

     3,118       3,460  
  

 

 

   

 

 

 

Total liabilities

     37,302       46,082  
  

 

 

   

 

 

 

Convertible preferred stock

     210,269       199,434  
  

 

 

   

 

 

 

Stockholders’ equity (deficit):

    

Common stock

     —         —    

Additional paid-in capital

     14,289       12,419  

Accumulated comprehensive loss

     —         —    

Accumulated deficit

     (196,654     (192,226
  

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     (182,365     (179,807
  

 

 

   

 

 

 

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

   $ 65,206     $ 65,709  
  

 

 

   

 

 

 

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