Q1 2018 Revenue up 20 percent from Q1 2017

SAN JOSE, Calif. — (BUSINESS WIRE) — April 26, 2018 — 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, 2018.

First Quarter 2018 Highlights:

• Revenue for the three months ended March 31, 2018 of $28.4 million, an increase of 2 percent sequentially and 20 percent year-over-year;
• Revenue by market for the three months ended March 31, 2018: Data Center revenue of $16.3 million, Enterprise Infrastructure revenue of $9.5 million, Access revenue of $2.5 million, and Automotive revenue of $47 thousand;
• Gross margin of 57 percent for the three months ended March 31, 2018, compared to 58 percent for the three months ended December 31, 2017;
• Operating loss of $1.7 million for the three months ended March 31, 2018, and non-GAAP operating loss of $0.8 million for the same period; and
• Net loss per diluted share of $0.04 for the three months ended March 31, 2018, and non-GAAP net loss per diluted share of $0.01 for the same period.

First Quarter 2018 Results

Total revenue for the first quarter 2017 was $28.4 million, an increase of 2 percent compared to $27.8 million in the prior quarter, and an increase of 20 percent compared to $23.6 million in the first quarter 2017. Total revenue by market for the first quarter 2018 consisted of Data Center revenue of $16.3 million, Enterprise Infrastructure revenue of $9.5 million, Access revenue of $2.5 million, and Automotive revenue of $47 thousand. Total revenue by market for the first quarter 2017 consisted of Data Center revenue of $15.8 million, Enterprise Infrastructure revenue of $7.6 million and Access revenue of $0.3 million.

Gross profit for the first quarter 2018 was $16.1 million, or 57 percent of revenue, compared to $16.1 million, or 58 percent of revenue, in the prior quarter, and $13.6 million, or 58 percent of revenue, in the first quarter 2017. Operating expenses in the first quarter 2018 were $17.9 million, compared to $17.1 million in the prior quarter and $14.3 million in the first quarter 2017.

Loss from operations for the first quarter 2018 was $1.7 million, or 6 percent of revenue, compared to $1.0 million, or 4 percent of revenue, in the prior quarter, and $0.7 million, or 3 percent of revenue, in the first quarter 2017. Non-GAAP loss from operations for the first quarter 2018 was $0.8 million, or 3 percent of revenue, compared to $0.3 million, 1 percent of revenue in the prior quarter and $0.4 million, 2 percent of revenue in the first quarter 2017.

First quarter 2018 net loss was $1.4 million, or a loss of $0.04 per diluted share, compared to fourth quarter 2017 net loss of $1.1 million, or a loss of $0.05 per diluted share, and first quarter 2017 net loss of $2.0 million, or $0.45 per diluted share.

Non-GAAP net loss for the first quarter 2018 was $0.4 million, or a loss of $0.01 per diluted share. This compares to non-GAAP net loss of $0.7 million, or a loss of $0.03 per diluted share for the fourth quarter 2017 and non-GAAP net loss of $1.1 million, or $0.25 per diluted share for the first quarter 2017.

“We are very pleased to begin the year with stronger than anticipated revenue that is up 20 percent over the same period last year,” said Faraj Aalaei, Chairman and CEO. “The Access segment in particular is showing great momentum as we began our first volume shipments to the service provider market. We expect to see a full slate of client connectivity devices announced at Computex in the first week of June.”

Balance Sheet

Cash, cash equivalents and short-term investments totaled $63.0 million at March 31, 2018, compared to $56.4 million at December 31, 2017. The increase of $6.6 million was primarily from changes in working capital.

Business Outlook

For the second quarter 2018, the Company expects revenue to be in the range of $29.0 million to $31.0 million, gross margin to be in the range of 56.0 percent to 58.0 percent and operating expenses to be in the range of $18.1 million to $20.3 million, which includes stock-based compensation expenses in the range of $1.6 million to $1.8 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 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.