Mr. Raouf Halim reports

SPECTRA7 ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS

Spectra7 Microsystems Inc. has released its financial results for the three and six months ended June 30, 2023. A copy of the consolidated financial statements for the three and six months ended June 30, 2023, and the corresponding management's discussion and analysis (the MD&A) will be available under the company's profile on SEDAR+. Unless otherwise indicated, all dollar amounts in this press release are expressed in U.S. dollars.

"We are excited to report second quarter revenue of $3.3-million, and record first-half revenue of $6.4-million, as we continue to build on our exceptional growth in 2022. Gross margin also remained much stronger year-over-year, at 63 per cent in the second quarter. While these results demonstrate exciting progress, we remain focused on the larger growth opportunities we see immediately ahead," said Raouf Halim, chief executive officer.

"The rising demands of increasingly power- and data-intensive applications such as AI and ChatGPT are mandating that our hyperscale data centre partners and customers implement new 800-gigabit and 1.6-terabit standards for which our active copper cable (ACC) technologies provide the perfect balance of high speed, low cost and low power. Test and qualification activities centred around these 800 GB and 1.6 TB data rate interconnect upgrades are increasing quickly -- with particular attention to Spectra7's ACC solutions to meet top-of-the-rack and short-run connectivity requirements. We expect this process will generate orders from key data centre customers in North America by late 2023. The ACC connectivity market opportunity is estimated to reach $1-billion by 2027.

"As an early sign of our potential for success in this market, Spectra7 is currently engaged with one of the major data centre operators to deploy our ACC solutions in their AI clusters, which we expect will drive revenue growth in the coming quarters and provide additional validation of the benefits for deploying ACC solutions," said Mr. Halim.

Second quarter 2023 financial highlights:

• Second quarter 2023 revenue of $3.3-million, and $6.4-million through the first six months of 2023;
• Gross margin as a percentage of revenue in the second quarter increased to 63 per cent, from 43 per cent in the same quarter in the prior year.
• Non-IFRS (international financial reporting standards) operating expenses were $2.4-million in the second quarter, similar to $2.4-million in the same quarter in the prior year as the company continues to maintain a cost-efficient operating approach.
• Basic and diluted loss per share for the second quarter was (three cents), compared with a basic and diluted loss per share of (five cents) in the same period a year ago.
• EBITDA (earnings before interest, taxes, depreciation and amortization) loss in the second quarter was $148,000, compared with an EBITDA loss of $600,000 in the same period a year ago.

H2 2023 outlook

The company anticipates revenue for second half of 2023 to be in the range of $5.5-million to $7-million. The company also anticipates maintaining its efficient operating expense structure and non-IFRS operating expenses for H2 2023 at a range of $4.5-million and $4.9-million.

About Spectra7 Microsystems Inc.

Spectra7 Microsystems 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 centres and other connectivity markets. Spectra7 is based in San Jose, Calif., with a design centre in Cork, Ireland, and a technical support location in Dongguan, China.

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