Aquantia Announces First Quarter 2018 Results

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’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.

Conference Call Information

The Company will hold its first quarter 2018, earnings conference call at 1:15 PM Pacific time (4:15 PM Eastern time) on Thursday, April 26, 2018. To access the call in the U.S., please dial +1 412-317-5415, approximately 15 minutes prior to the start of the conference call.

A live audio webcast of the conference call and an archive for the replay will be available on the investor section of Aquantia’s website at https://investors.aquantia.com/. To access the replay, please dial +1 412-317-0088; access code 10119354.

(AQ-INV)

Forward-Looking Statements

Statements in the press release for the first quarter 2018 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 the identify 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.

   
AQUANTIA CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended
March 31,
2018 2017
 
Revenue $ 28,358 $ 23,643
 
Cost of revenue 12,241 10,047
   

Gross profit

  16,117     13,596  
Gross Profit Margin 56.8 % 57.5 %
 
Operating expenses
Research and development 12,574 10,407
Sales and marketing 2,287 1,634
General and administrative   2,997     2,227  
Total operating expenses   17,858     14,268  
 
Income (loss) from operations (1,741 ) (672 )
Other income (expense)   248     (1,202 )
 
Income (loss) before income tax expenses (1,493 ) (1,874 )
Provision for (benefit from) income taxes   (125 )   151  
 
Net income (loss) $ (1,368 ) $ (2,025 )
 
Net income (loss) per share
Basic $ (0.04 ) $ (0.45 )
Diluted $ (0.04 ) $ (0.45 )
 
Weighted - average shares used in computing net income per share:
Basic (1)   33,591     4,477  
Diluted   33,591     4,477  
 
 
 

(1) The number of shares for 2017 does not reflect the conversion of convertible preferred stocks to common shares.

 
   
AQUANTIA CORP.
RECONCILIATION OF GAAP NET INCOME/(LOSS)
TO NON-GAAP NET INCOME (LOSS)
(in thousands, except per share amounts)
(Unaudited)
 

Three Months Ended

March 31,

2017 2016
 
GAAP net income (loss) $ (1,368 ) $ (2,025 )
 
Stock-based compensation expense:
Cost of revenue 25 7
Research and development 573 132
Sales and marketing 111 27
General and administrative   269     76  
Total stock-based compensation expense   978     242  
 
 
 

Amortization of acquired intangibles resulting from business combination

8 8

Change in fair value of convertible preferred stock warrant liability

  -     660  
 
Non-GAAP net income (loss) $ (382 ) $ (1,115 )
 
GAAP basic earnings per share $ (0.04 ) $ (0.45 )
Effect of non-GAAP adjustments on basic earnings per share   0.03     0.20  
Non-GAAP basic earnings per share $ (0.01 ) $ (0.25 )
 
GAAP diluted earnings per share $ (0.04 ) $ (0.45 )
Effect of non-GAAP adjustments on diluted earnings per share   0.03     0.20  
Non-GAAP diluted earnings per share $ (0.01 ) $ (0.25 )
 
Weighted - average shares used in computing net income per share:
Basic (1)   33,591     4,477  
Diluted   33,591     4,477  
 
GAAP Income (loss) from operations $ (1,741 ) $ (672 )
 
Stock-based compensation expense 978 242

Amortization of acquired intangibles resulting from business combination

  8     8  
 
Non-GAAP income (loss) from operations $ (755 ) $ (422 )
 

(1) The number of shares for 2017 does not reflect the conversion of convertible preferred stocks to common shares.

 
       
AQUANTIA CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
March 31, December 31,
2018 2017
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 4,606 $ 8,040
Short-term investments 58,435 48,362
Accounts receivable, net 10,417 15,012
Inventories 16,156 18,469
Prepaid expenses and other current assets  

3,466

    5,623  
Total current assets

93,080

95,506
 
Property and equipment, net 9,447 9,973
Intangible assets, net 4,354 4,556
Other assets   535     331  
Total assets $ 107,486   $ 110,366  
 
 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 5,792 $ 7,059
Accrued liabilities   8,039     9,217  
Total current liabilities 13,831 16,276
 
Other long-term liabilities   3,179     3,176  
 
Total liabilities   17,010     19,452  
 
Stockholders' equity (deficit):
Common stock - -
Additional paid-in capital 289,675 288,719
Accumulated comprehensive loss (227 ) (96 )
Accumulated deficit   (199,042 )   (197,709 )
Total stockholders’ equity (deficit)   90,406     90,914  
 
Total liabilities and stockholders' equity deficit $ 107,416   $ 110,366  
 

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