Aquantia Announces First Quarter 2019 Results
SAN JOSE, Calif.--(BUSINESS WIRE)-- Aquantia Corp., (NYSE: AQ), a leader in high-speed, Multi-Gigabit Ethernet connectivity solutions, today announced financial results for its first quarter ended March 31, 2019.
First quarter 2019 Summary:
- Revenue for the three months ended March 31, 2019 of $17.0 million, a decrease of 42 percent sequentially and 40 percent year-over-year;
- Gross margin of 53 percent for the three months ended March 31, 2019, compared to 57 percent for the three months ended December 31, 2018;
- Operating loss of $13.2 million for the three months ended March 31, 2019, and non-GAAP operating loss of $10.8 million for the same period; and
- Net loss per diluted share of $0.37 for the three months ended March 31, 2019, and non-GAAP net loss per diluted share of $0.31 for the same period.
First Quarter 2019 Results
Total revenue for the first quarter 2019 was $17.0 million, a decrease of 42 percent compared to $29.1 million in the prior quarter, and a decrease of 40 percent compared to $28.4 million in the first quarter 2018.
Gross profit for the first quarter 2019 was $9.0 million, or 53 percent of revenue, compared to $15.7 million, or 54 percent of revenue, in the prior quarter, and $16.1 million, or 57 percent of revenue, in the first quarter 2018. Operating expenses in the first quarter 2019 were $22.2 million, compared to $21.1 million in the prior quarter and $17.9 million in the first quarter 2018.
Loss from operations for the first quarter 2019 was $13.2 million, or 78 percent of revenue, compared to $5.3 million, or 18 percent of revenue, in the prior quarter, and $1.7 million, or 6 percent of revenue, in the first quarter 2018. Non-GAAP loss from operations for the first quarter 2019 was $11.0 million, or 64 percent of revenue, compared to $3.1 million, 11 percent of revenue in the prior quarter and $0.8 million, 3 percent of revenue in the first quarter 2018.
First quarter 2019 net loss was $13.1 million, or a loss of $0.37 per diluted share, compared to fourth quarter 2018 net loss of $5.5 million, or a loss of $0.16 per diluted share, and first quarter 2018 net loss of $1.4 million, or $0.04 per diluted share.
Non-GAAP net loss for the first quarter 2019 was $10.8 million, or a loss of $0.31 per diluted share. This compares to non-GAAP net loss of $3.2 million, or a loss of $0.09 per diluted share for the fourth quarter 2018 and non-GAAP net loss of $0.4 million, or $0.01 per diluted share for the first quarter 2018.
“We experienced weaker demand in the first quarter than we had anticipated as we saw several customers push out purchase orders,” said Faraj Aalaei, Chairman and CEO. “Our technical leadership remains strong and we are encouraged by our customers’ forecast as we see the deployment of 802.11ax in the Enterprise and our 10G PON design wins with Asian service providers driving our revenue growth throughout the year.”
Balance Sheet
Cash, cash equivalents and short-term investments totaled $62.4 million at March 31, 2019, compared to $67.4 million at December 31, 2018. The decrease of $5.0 million was primarily for our operating activities.
Non-GAAP Financial Measures
In addition to GAAP reporting, the Company provides non-GAAP financial measures on loss from operations and net 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 believe 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, Access and Automotive markets. Aquantia 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 traffic and in emerging and demanding applications such as autonomous driving. Aquantia�is headquartered in Silicon Valley.�For more information, visit www.aquantia.com.
(AQ-INV)
Forward-Looking Statements
Statements in the press release for the first quarter 2019 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 deployment of the Company’s products and design wins driving revenue growth throughout the year. 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.
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AQUANTIA CORP. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except per share amounts) |
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(Unaudited) |
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| � | Three Months Ended | |||||||
| March 31, | ||||||||
| 2019 | � | 2018 | ||||||
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| Revenue | $ | 17,022 | $ | 28,358 | ||||
| � | ||||||||
| Cost of revenue | 8,056 | 12,241 | ||||||
| � | � | � | � | |||||
| Gross profit | � | 8,966 | � | 16,117 | ||||
| Gross Profit Margin | 52.7 | % | 56.8 | % | ||||
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| Operating expenses | ||||||||
| Research and development | 16,070 | 12,574 | ||||||
| Sales and marketing | 2,719 | 2,287 | ||||||
| General and administrative | � | 3,422 | � | 2,997 | ||||
| Total operating expenses | � | 22,211 | � | 17,858 | ||||
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| Loss from operations | (13,245 | ) | (1,741 | ) | ||||
| Other income (expense) | � | 368 | � | 248 | ||||
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| Loss before income tax expenses | (12,877 | ) | (1,493 | ) | ||||
| Provision for (benefit from) income taxes | � | 190 | � | (125 | ) | |||
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| Net loss | $ | (13,067 | ) | $ | (1,368 | ) | ||
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| Net loss per share | ||||||||
| Basic | $ | (0.37 | ) | $ | (0.04 | ) | ||
| Diluted | $ | (0.37 | ) | $ | (0.04 | ) | ||
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| Weighted - average shares used in computing net income per share: | ||||||||
| Basic | � | 35,158 | � | 33,495 | ||||
| Diluted | � | 35,158 | � | 33,495 | ||||
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AQUANTIA CORP. |
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RECONCILIATION OF GAAP NET LOSS |
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TO NON-GAAP NET LOSS |
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(in thousands, except per share amounts) |
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(Unaudited) |
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| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | � | 2018 | ||||||
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| GAAP net loss | $ | (13,067 | ) | $ | (1,368 | ) | ||
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| Stock-based compensation expense: | ||||||||
| Cost of revenue | 66 | 25 | ||||||
| Research and development | 1,232 | 573 | ||||||
| Sales and marketing | 350 | 111 | ||||||
| General and administrative | � | 642 | � | 269 | ||||
| Total stock-based compensation expense | 2,290 | 978 | ||||||
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Amortization of acquired intangibles resulting from business combination |
� | 8 | � | 8 | ||||
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| Non-GAAP net loss | $ | (10,769 | ) | $ | (382 | ) | ||
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| GAAP basic earnings per share | $ | (0.37 | ) | $ | (0.04 | ) | ||
| Effect of non-GAAP adjustments on basic earnings per share | � | 0.06 | � | 0.03 | ||||
| Non-GAAP basic earnings per share | $ | (0.31 | ) | $ | (0.01 | ) | ||
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| GAAP diluted earnings per share | $ | (0.37 | ) | $ | (0.04 | ) | ||
| Effect of non-GAAP adjustments on diluted earnings per share | � | 0.06 | � | 0.03 | ||||
| Non-GAAP diluted earnings per share | $ | (0.31 | ) | $ | (0.01 | ) | ||
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| Weighted - average shares used in computing net income per share: | ||||||||
| Basic | � | 35,158 | � | 33,495 | ||||
| Diluted | � | 35,158 | � | 33,495 | ||||
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| GAAP loss from operations | $ | (13,050 | ) | $ | (1,741 | ) | ||
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| Stock-based compensation expense | 2,290 | 978 | ||||||
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Amortization of acquired intangibles resulting from business combination |
� | 8 | � | 8 | ||||
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| Non-GAAP loss from operations | $ | (10,752 | ) | $ | (755 | ) | ||
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| AQUANTIA CORP. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands) | ||||||||
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| March 31, | December 31, | |||||||
| � | 2019 | � | � | 2018 | � | |||
| (unaudited) | (audited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 8,480 | $ | 6,684 | ||||
| Short-term investments | 53,895 | 60,730 | ||||||
| Accounts receivable, net | 10,350 | 16,927 | ||||||
| Inventories | 17,015 | 14,474 | ||||||
| Prepaid expenses and other current assets | � | 1,801 | � | � | 2,018 | � | ||
| Total current assets | 91,541 | 100,833 | ||||||
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| Property and equipment, net | 11,211 | 9,225 | ||||||
| Operating lease assets, net | 5,644 | - | ||||||
| Intangible assets, net | 3,546 | 3,748 | ||||||
| Other assets | � | 616 | � | � | 617 | � | ||
| Total assets | $ | 112,558 | � | $ | 114,423 | � | ||
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| Liabilities and shareholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 6,349 | $ | 5,495 | ||||
| Accrued liabilities | 15,750 | 13,907 | ||||||
| Operating lease liabilities, short-term | � | 839 | � | � | - | � | ||
| Total current liabilities | 22,938 | 19,402 | ||||||
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| Operating lease liabilities, long-term | 6,251 | - | ||||||
| Other long-term liabilities | � | 413 | � | � | 1,799 | � | ||
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| Total liabilities | � | 29,602 | � | � | 21,201 | � | ||
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| Stockholders' equity: | ||||||||
| Common stock | - | - | ||||||
| Additional paid-in capital | 303,473 | 300,791 | ||||||
| Accumulated comprehensive loss | (4 | ) | (123 | ) | ||||
| Accumulated deficit | � | (220,513 | ) | � | (207,446 | ) | ||
| Total stockholders’ equity | � | 82,956 | � | � | 93,222 | � | ||
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| Total liabilities and stockholders' equity | $ | 112,558 | � | $ | 114,423 | � | ||
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View source version on businesswire.com: https://www.businesswire.com/news/home/20190506005276/en/
Public Relations Contact:
Diane Vanasse
408-242-0027
[email protected]
Investor Relations Contact:
Deborah Stapleton
650-815-1239
[email protected]
Source: Aquantia Corp.