Weak Virtual Reality Sales Hinder Revenues while Data Center
Prototype Activities Continue to Grow
Company Website:
http://www.spectra7.com/
SAN JOSE, Calif. -- (Business Wire)
(TSX:SEV) Spectra7 Microsystems Inc. (“Spectra7” or the “Company”), a
leading provider of high-performance analog semiconductor products for
broadband connectivity markets, today announced its unaudited financial
results for the three months ended March 31, 2018. All dollar amounts in
this release are expressed in US dollars unless otherwise stated.
Q1 2018 Financial Results
-
Revenue for the quarter ended March 31, 2018 was approximately $0.9million,
representing a decrease of approximately 69% from thepriorquarter.
Spectra7 continues to have a strong position in the virtual reality
(“VR”) and mixed reality (“MR”) markets, which experienced overall
demand weakness in the first quarter of 2018.
-
Gross margin1 as a percentage of revenue was approximately
55%, consistent with the prior quarter.
-
Non-IFRS expenses2 were approximately $3.2 million,
representing a decrease of approximately 16% from the prior quarter,
while IFRS operating expenses were approximately $3.6million,
representing a decrease of approximately 12% from the prior quarter.
The significant sequential decline in expenses is due primarily to
restructuring in response to weak demand in the first quarter. The
Company has strategically pivoted internal resources to better align
with its strong traction of the data center market.
CEO COMMENTARY
“As anticipated when we released our fiscal 2017 results, demand for our
VR and MR solutions was particularly weak following the strong holiday
season,” said Spectra7 CEO Raouf Halim. “We continue to hold a dominant
position in the tethered VR and MR markets and expect a stronger second
half of 2018. We are encouraged by the continued increase of prototype
data center revenues and believe the production ramp of our data center
solutions will contribute meaningful revenue during the second half of
2018.”
Other Quarterly Highlights
-
Data Center prototype revenue more than tripled in the first quarter
of 2018 as compared to the prior quarter and remains on track for
production revenue to increase in the second half of 2018.
-
The Company experienced continued strong customer engagement including
10 new Data Center design-ins in the first quarter of 2018.
-
Data Center Equipment OEMs and interconnect suppliers continue
development and qualification of Active Copper Cables for 100G and
400G applications with Spectra7 technology.
Outlook
The Company has entered the second quarter of 2018 with increased VR
backlog compared to the first quarter of 2018 and expects sequential
revenue growth in the second quarter of 2018. Non-IFRS operating
expenses are expected to remain stable, or decrease, in the second
quarter as compared to the first quarter of 2018, as the Company works
to maintain operating expense discipline and identify opportunities to
reduce costs. The Company is also pursuing strategic financing options
after the repayment of the $6.5 million term loan.
A copy of the unaudited interim consolidated financial statements for
the three month period ended March 31, 2018 and corresponding
management’s discussion and analysis will be available under the
Company’s profile on www.sedar.com.
ABOUT SPECTRA7 MICROSYSTEMS INC.
Spectra7 Microsystems Inc. is a high performance analog semiconductor
company delivering unprecedented bandwidth, speed and resolution to
enable disruptive industrial design for leading electronics
manufacturers in virtual reality, augmented reality, mixed reality, data
centers and other connectivity markets. Spectra7 is based in San Jose,
California with design centers in Markham, Ontario, Cork, Ireland, and
Little Rock, Arkansas. For more information, please visit www.spectra7.com.
CAUTIONARY NOTES
Certain statements contained in this press release constitute
"forward-looking statements". All statements other than statements of
historical fact contained in this press release, including, without
limitation, those regarding the Company's future financial position and
results of operations, strategy, proposed acquisitions, plans,
objectives, goals and targets, and any statements preceded by, followed
by or that include the words "believe", "expect", "aim", "intend",
"plan", "continue", "will", "may", "would", "anticipate", "estimate",
"forecast", "predict", "project", "seek", "should" or similar
expressions or the negative thereof, are forward-looking statements.
These statements are not historical facts but instead represent only the
Company's expectations, estimates and projections regarding future
events. These statements are not guarantees of future performance and
involve assumptions, risks and uncertainties that are difficult to
predict. Therefore, actual results may differ materially from what is
expressed, implied or forecasted in such forward-looking statements.
Additional factors that could cause actual results, performance or
achievements to differ materially include, but are not limited to the
risk factors discussed in the Company's annual MD&A for the year ended
December 31, 2017. Management provides forward-looking statements
because it believes they provide useful information to investors when
considering their investment objectives and cautions investors not to
place undue reliance on forward-looking information. Consequently, all
of the forward-looking statements made in this press release are
qualified by these cautionary statements and other cautionary statements
or factors contained herein, and there can be no assurance that the
actual results or developments will be realized or, even if
substantially realized, that they will have the expected consequences
to, or effects on, the Company. These forward-looking statements are
made as of the date of this press release and the Company assumes no
obligation to update or revise them to reflect subsequent information,
events or circumstances or otherwise, except as required by law.
1 Additional GAAP Measure – Gross margin is presented in this
press release consistent with information presented in the Company’s
financial statements. Gross margin has been calculated by deducting
manufacturing cost of sales, and provision for inventory write-downs
from revenue. Management of the Company believes that providing this
information allows investors to better understand the Company’s
historical and future financial performance.
2 Non-IFRSexpenses excludes stock-based compensation,
restructuring expenses, impairment expenses and other one-time expenses.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180515006834/en/
Contacts:
Spectra7 Microsystems Inc.
Sean Peasgood, 647-503-1034
Investor
Relations
ir@spectra7.com
or
Spectra7
Microsystems Inc.
Darren Ma, 669-284-3170
Chief Financial
Officer
pr@spectra7.com
Source: Spectra7 Microsystems Inc.
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