Aquantia Announces First Quarter 2019 Results

SAN JOSE, Calif.–(BUSINESS WIRE)–lt;a href=”https://twitter.com/search?q=%24AQ&src=ctag” target=”_blank”gt;$AQlt;/agt; lt;a href=”https://twitter.com/hashtag/80211ax?src=hash” target=”_blank”gt;#80211axlt;/agt;–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.

 

AQUANTIA CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

 
  Three Months Ended
March 31,
2019   2018
 
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 %
 
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
 
Loss from operations (13,245 ) (1,741 )
Other income (expense)   368   248
 
Loss before income tax expenses (12,877 ) (1,493 )
Provision for (benefit from) income taxes   190   (125 )
 
Net loss $ (13,067 ) $ (1,368 )
 
Net loss per share
Basic $ (0.37 ) $ (0.04 )
Diluted $ (0.37 ) $ (0.04 )
 
Weighted – average shares used in computing net income per share:
Basic   35,158   33,495
Diluted   35,158   33,495
 
 

AQUANTIA CORP.

RECONCILIATION OF GAAP NET LOSS

TO NON-GAAP NET LOSS

(in thousands, except per share amounts)

(Unaudited)

 
Three Months Ended
March 31,
2019   2018
 
GAAP net loss $ (13,067 ) $ (1,368 )
 
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

Amortization of acquired intangibles resulting from business
combination

  8   8
 
Non-GAAP net loss $ (10,769 ) $ (382 )
 
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 )
 
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 )
 
Weighted – average shares used in computing net income per share:
Basic   35,158   33,495
Diluted   35,158   33,495
 
 
 
 
GAAP loss from operations $ (13,050 ) $ (1,741 )
 
Stock-based compensation expense 2,290 978

Amortization of acquired intangibles resulting from business
combination

  8   8
 
Non-GAAP loss from operations $ (10,752 ) $ (755 )
 
   
AQUANTIA CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
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
 
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  
 
 
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
 
Operating lease liabilities, long-term 6,251
Other long-term liabilities   413     1,799  
 
Total liabilities   29,602     21,201  
 
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  
 
Total liabilities and stockholders’ equity $ 112,558   $ 114,423  
 

Contacts

Public Relations Contact:
Diane Vanasse
408-242-0027
[email protected]

Investor Relations Contact:
Deborah Stapleton
650-815-1239
[email protected]

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