NeoPhotonics (NPTN) Misses Q1 EPS by 3c, Beats on Revenue; Offers Soft Q2 EPS Guidance on Lower China Outlook

NeoPhotonics (NYSE: NPTN) reported Q1 EPS of ($0.25), $0.03 worse than the analyst estimate of ($0.22). Revenue for the quarter came in at $71.7 million versus the consensus estimate of $70.05 million.

GUIDANCE:

NeoPhotonics sees Q2 2017 EPS of ($0.26)-($0.19), versus the consensus of ($0.11).

Outlook for the Quarter Ending June 30, 2017

The Non-GAAP outlook for the second quarter of 2017 excludes the impact of expected amortization of intangibles of approximately $0.4 million, the anticipated impact of stock-based compensation of approximately $2.2 million, of which $0.4 million is estimated for cost of goods sold, and restructuring costs of approximately $0.7 million related to expense reduction actions subsequent to the sale of the assets of our low speed transceiver product lines.

The Company is implementing a series of cost saving measures in light of both the sale of its low speed transceiver product assets and due to the current lower market outlook from China. These changes include rationalizing the number of product lines, reducing its real estate footprint and making certain staffing reductions in line with the elimination of its low speed transceiver product line, totaling $6 to $9 million in annualized operating costs, and the Company is looking further for areas to increase savings as the year progresses. The Company expects the full quarterly impact of its cost reduction actions to be realized by the third quarter of this year, and the Company currently expects to record a pretax charge of a range of approximately $0.7 to $1.0 million for severance costs in the second quarter. The Company is seeking to continue, with limited critical hiring, to ensure its key R&D developments move apace and maintain production capabilities to respond to any upside.

First Quarter Summary

• Revenue was $71.7 million, down $27.5 million, or 28%, from the first quarter of 2016, and down $38.1 million, or 35%, from the prior quarter
• Gross margin was 25.8%, down from 31.4% in the first quarter of 2016, and down from 28.3% in the prior quarter
• Non-GAAP Gross margin was 26.3%, down from 32.8% in the first quarter of 2016, and down from 29.9% in the prior quarter
• Net loss was $11.5 million, down from net income of $2.3 million in the first quarter of 2016, and down from a net income of $2.0 million in the prior quarter
• Non-GAAP net loss was $10.7 million, down from net income of $7.0 million in the first quarter of 2016, and down from net income of $6.3 million in the prior quarter
• Diluted net loss per share was $0.27, down from net income of $0.05 per share in the first quarter of 2016 and down from net income of $0.04 per share in the prior quarter
• Non-GAAP Diluted net loss per share was $0.25, down from net income of $0.15 per share in the first quarter of 2016, and down from net income of $0.13 in the prior quarter
• Adjusted EBITDA was a loss of $5.2 million, down from a gain of $12.3 million in the first quarter of 2016, and down from a gain of $12.5 million in the prior quarter

For earnings history and earnings-related data on NeoPhotonics (NPTN) click here.

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