[NASDAQ] Adesto Technologies Announces Fourth Quarter and Full Year 2016 Financial Results
[NASDAQ] Adesto Technologies Announces Fourth Quarter and Full Year 2016 Financial Results
  • By D.Peter Kim (info@koreaittimes.com)
  • 승인 2017.02.15 19:10
  • 댓글 0
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Adesto Technologies Corporation (NASDAQ:IOTS), a leading provider of application-specific, feature-rich, ultra-low power non-volatile memory products,on Feb.15, announced financial results for the fourth quarter and full year ended December 31, 2016.

Fourth Quarter Highlights:

  • Revenue increased 10.3% sequentially and 4.3% year-over-year to a quarterly record of $12.3 million;
  • GAAP gross margin was 50.6%, compared to 48.1% in the third quarter of 2016 and 45.6% in the fourth quarter of 2015 and;
  • GAAP operating expenses were $7.8 million, compared to $8.8 million in the previous quarter and $7.0 million in the prior year quarter;
  • Adjusted EBITDA was a loss of $111,000, compared to a loss of $2.0 million in the third quarter of 2016 and a loss of $494,000 in the fourth quarter of 2015;
  • Introduced Mavriq DS (Digital Security) Series based on Adesto’s CBRAM technology - designed for improved security in IoT and connected devices; and
  • Secured 127 design wins across the industrial, consumer, communications and automotive markets for a full year record of 280 design wins.

Commenting on the quarter, Narbeh Derhacobian, Adesto’s president and CEO, stated, “We closed out 2016 achieving our goal of growing second half revenue 15% over the first half as we continued to see a strengthening in orders across our end markets and product families as design wins ramped into production. In addition, we expanded gross margin 500 basis points over the prior year fourth quarter to 50.6%. We also sequentially decreased operating expenses over $1 million in the quarter, which contributed to a significant improvement in adjusted EBITDA and loss per share. These results make us confident in our ability to achieve our goal of adjusted EBITDA breakeven by mid-2017.

“For the full year, we secured a record number of design wins, more than doubling over the prior year. The consumer market once again represented the largest percentage of our estimate of the total dollar value opportunity of these design wins, reflecting our efforts to further expand revenue in high-volume consumer applications. In fact, revenue from our FusionFlash products, which are well-suited for battery-operated consumer devices, more than doubled over 2015 reflecting the suitability of this product line for connected IoT devices.

“Additionally, our EcoXiP product released in September is gaining strong momentum in the market as this product sets a new standard for performance, cost and power for IoT edge devices. As a result of its high, value-added feature set, we believe there is a broad market opportunity for this product with significant potential for growth.”

Mr. Derhacobian concluded, “In summary, I believe we have taken the proper steps over the past year to strengthen our financial position and balance sheet, while focusing on driving top line revenue. We expect growth in 2017 to be driven by an increasing number of design wins ramping into production as well as a higher contribution from new products as we expand our market share of the rapidly growing IoT market across a broad number of end market applications. As we look more specifically at the first quarter, we expect our revenue to reflect seasonality primarily from our consumer end market, with the second quarter anticipated to return to strong growth and reach a new quarterly revenue record.”

Fourth Quarter 2016 Results 
Revenue in the quarter ended December 31, 2016 was $12.3 million, an increase of 10.3% from $11.2 million in the third quarter of 2016 and an increase of 4.3% from $11.8 million in the fourth quarter of 2015.

Gross margin in the fourth quarter of 2016 was 50.6%, compared to 48.1% in the third quarter of 2016 and 45.6% in the fourth quarter of 2015. The increase in gross margin was due primarily to favorable product mix from the sale of higher margin products combined with the benefits from continued improvements in product costs.

GAAP operating expenses in the fourth quarter of 2016 were $7.8 million, compared to $8.8 million in the previous quarter and $7.0 million in the prior year quarter. On a non-GAAP basis, operating expenses were $6.7 million in the fourth quarter of 2016, compared to $7.7 million in the prior quarter and $6.1 million in the fourth quarter of 2015.

GAAP net loss in the fourth quarter of 2016 was $1.7 million, or ($0.11) per share, compared to a GAAP net loss of $4.1 million, or ($0.27) per share, in the third quarter of 2016 and a GAAP net loss of $3.3 million, or ($0.32) per share, in the fourth quarter of 2015.

On a non-GAAP basis, net loss in the fourth quarter of 2016 was $0.6 million, or ($0.04) per share, compared to a net loss of $2.9 million, or ($0.19) per share, in the third quarter of 2016 and a net loss of $0.9 million, or ($0.07) per share, in the fourth quarter of 2015.

Adjusted EBITDA for the fourth quarter was a loss of $111,000 compared to a loss of $2.0 million in the third quarter of 2016 and a loss of $494,000 in the fourth quarter of 2015.

A reconciliation of our GAAP results to non-GAAP results is provided in the financial statement tables following the text of this press release.

Cash totaled $19.7 million as of December 31, 2016, compared to $23.1 million as of December 31, 2015.

Business Outlook
For the first quarter of 2017, the Company expects revenue to range between $11.1 million and $11.3 million. Gross margin is expected to be between 48% and 50%. GAAP operating expenses are expected to range between $8.3 million and $8.5 million, which includes approximately $0.8 million in stock-based compensation and $0.3 million in amortization of acquisition-related intangible assets.

Non-GAAP Financial Information 

To supplement our financial results presented in accordance with generally accepted accounting principles (GAAP), this press release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP net loss, non-GAAP net loss per share and non-GAAP weighted average shares outstanding. It also contains projected non-GAAP operating expenses. We believe these non-GAAP financial measures are useful in evaluating our past financial performance and future results. Our non-GAAP financial measures should not be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.  Our management regularly uses our supplemental non-GAAP financial measures internally to help us evaluate growth trends, establish budgets, measure the effectiveness of our business strategies and assess operational efficiencies. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. Our non-GAAP financial measures include adjustments based on the following items:

  • Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP financial measures. Although stock-based compensation is an important part of our employees’ compensation affecting their performance, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.
  • Amortization of acquisition-related intangible assets: We have excluded the effect of amortization of acquisition-related intangible assets from our non-GAAP financial measures. Amortization of acquisition-related intangible assets is a non-cash expense, and it is not part of our core operations. Investors should note that the use of acquisition-related intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.
  • Revaluation of preferred stock warrants: We have excluded the effect of the revaluation of preferred stock warrants from our non-GAAP financial measures. Revaluation of our preferred stock warrants is a non-cash expense and we evaluate our financial performance excluding the impact of any revaluation of preferred stock warrants. Upon the completion of our initial public offering in October 2015, all preferred stock warrants converted to common stock warrants, as a result there will be no preferred stock revaluation income or expense in future periods.
  • Gains from dispute settlements:  We have excluded the effect of the gain on settlement of an alleged liability with a former foundry supplier from our non-GAAP financial measures.  The gain on settlement is a non-cash gain, is not a recurring event and is not part of our core operations and was excluded when evaluating our financial performance.

Our non-GAAP Financial Measures are described as follows:

  • Non-GAAP net loss and net loss per share. Non-GAAP net loss is net loss as reported on our condensed consolidated statements of operations, excluding the impact of stock-based compensation, amortization of acquisition-related intangible assets, the revaluation of preferred stock warrants and gains from dispute settlements. Non-GAAP net loss per share is non-GAAP net loss divided by non-GAAP weighted average shares outstanding. Non-GAAP weighted average shares outstanding was computed to give effect to the conversion of all outstanding convertible preferred stock which occurred in connection with our initial public offering in October 2015, as if conversion had occurred at the beginning of the period.
  • Non-GAAP operating expense.  Non-GAAP operating expenses is operating expenses as reported in our condensed consolidated statements of operations, excluding the impact of stock-based compensation, amortization of acquisition-related intangible assets and gains from dispute settlements.
  • Adjusted EBITDA is net loss as reported on our consolidated statements of operations, excluding the impact of the same items excluded from the calculation of non-GAAP net loss as well as interest expense, depreciation and amortization, and our provision for income taxes.

For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of GAAP to Non-GAAP Financial Information.”

About Adesto Technologies 
Adesto Technologies (NASDAQ:IOTS) is a leading provider of application-specific, ultra-low power non-volatile memory products. The company has designed and built a portfolio of innovative products with intelligent features to conserve energy and enhance performance, including Fusion Serial Flash, DataFlash®, EcoXiP™ and products based on Conductive Bridging RAM (CBRAM®). CBRAM® is a breakthrough technology platform that enables 100 times less energy consumption than today’s memory technologies without sacrificing speed and performance. Adesto is focused on delivering differentiated solutions and helping its customers usher in the era of the Internet of Things (IoT)

Forward looking Statements
The quotes of our Chief Executive Officer in this release regarding our prospects for growth, product momentum and expected revenue performance, as well as all statements under “Business Outlook” are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: our ability to predict the timing of design wins entering production and the potential future revenue associated with our design wins; market adoption of our CBRAM-based products; our limited operating history; our rate of growth; our ability to predict customer demand for our existing and future products and to secure adequate manufacturing capacity; consumer demand conditions affecting our end markets; our ability to manage our growth; our ability to hire, retain and motivate employees; the effects of competition, including price competition; technological, regulatory and legal developments; and developments in the economy and financial markets.

For a detailed discussion of these and other risk factors, please refer to our filings with the Securities and Exchange Commission, including the final prospectus related to our initial public offering.

All information provided in this release and in the attachments is as of February 14, 2017, and stockholders of Adesto are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Adesto does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after this February 14, 2017 press release, or to reflect the occurrence of unanticipated events.

ADESTO TECHNOLOGIES CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except for share and per share amounts)  
  (unaudited)  
                                   
           Three Months Ended December 31,     Year Ended December 31,   
          2016       2015     2016     2015    
                                   
 Revenue       $    12,330        $    11,826      $    43,968      $    43,259    
 Cost of revenue          6,087           6,429         22,618         24,775    
   Gross profit          6,243           5,397         21,350         18,484    
 Operating expenses:                               
   Research and development          3,369           3,482         15,896         12,795    
   Sales and marketing          2,711           2,156         11,026         8,345    
   General and administrative          1,709           1,389         6,693         3,978    
   Gain from settlement with former foundry supplier          -            -          (1,962 )       -     
     Total operating expenses          7,789           7,027         31,653         25,118    
 Loss from operations          (1,546 )         (1,630 )       (10,303 )       (6,634 )  
 Other income (expense):                               
   Interest expense, net          (217 )         (293 )       (1,275 )       (1,115 )  
   Other income (expense), net          (21 )         (1,478 )       (50 )       (695 )  
     Total other income (expense), net          (238 )         (1,771 )       (1,325 )       (1,810 )  
 Loss before benefit from income taxes          (1,784 )         (3,401 )       (11,628 )       (8,444 )  
 Benefit from income taxes          (62 )         (137 )       (16 )       (61 )  
 Net loss       $    (1,722 )      $    (3,264 )    $    (11,612 )    $    (8,383 )  
                                   
 Net loss per share:                               
   Basic and diluted       $    (0.11 )      $    (0.32 )    $    (0.77 )    $    (2.79 )  
 Weighted average number of shares used in computing                               
 net loss per share:                               
   Basic and diluted          15,349,715           10,265,217         15,085,973         3,007,929    
                                   

 

ADESTO TECHNOLOGIES CORPORATION  
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION  
(in thousands, except for share and per share amounts)  
 (unaudited)   
                                     
           Three Months Ended  Year Ended  
            December 31, 
2016
      December 31, 
2015
    December 31, 
2016
      December 31, 
2015
 
                                     
GAAP gross profit        $      6,243        $      5,397      $      21,350        $      18,484    
Stock-based compensation expense             21             13           81             19    
Amortization of acquisition-related intangible assets             -              -            -              -     
Non-GAAP gross profit        $      6,264        $      5,410      $      21,431        $      18,503    
                                     
GAAP research and development expenses        $      3,369        $      3,482      $      15,896        $      12,795    
Stock-based compensation expense             (251 )           (197 )         (1,038 )           (263 )  
Amortization of acquisition-related intangible assets             (121 )           (121 )         (484 )           (484 )  
Non-GAAP research and development expenses        $      2,997        $      3,164      $      14,374        $      12,048    
                                     
GAAP sales and marketing expenses        $      2,711        $      2,156      $      11,026        $      8,345    
Stock-based compensation expense             (176 )           (116 )         (706 )           (153 )  
Amortization of acquisition-related intangible assets             (187 )           (188 )         (751 )           (752 )  
Non-GAAP sales and marketing expenses        $      2,348        $      1,852      $      9,569        $      7,440    
                                     
GAAP general and administrative expenses        $      1,709        $      1,389      $      6,693        $      3,978    
Stock-based compensation expense             (387 )           (264 )         (1,518 )           (352 )  
Amortization of acquisition-related intangible assets             -              -            -              -     
Non-GAAP general and administrative expenses        $      1,322        $      1,125      $      5,175        $      3,626    
                                     
GAAP operating expenses        $      7,789        $      7,027      $      31,653        $      25,118    
Stock-based compensation expense             (814 )           (577 )         (3,262 )           (768 )  
Amortization of acquisition-related intangible assets             (308 )           (309 )         (1,235 )           (1,236 )  
Gain from settlement with former foundry supplier             -              -            1,962             -     
Non-GAAP operating expenses        $      6,667        $      6,141      $      29,118        $      23,114    
                                     
GAAP loss from operations        $      (1,546 )      $      (1,630 )    $      (10,303 )      $      (6,634 )  
Stock-based compensation expense             835             590           3,343             787    
Amortization of acquisition-related intangible assets             308             309           1,235             1,236    
Gain from settlement with former foundry supplier             -              -            (1,962 )           -     
Non-GAAP loss from operations        $      (403 )      $      (731 )    $      (7,687 )      $      (4,611 )  
                                     
                                     
Reconciliation from GAAP net loss to adjusted EBITDA:                          
GAAP net loss:        $      (1,722 )      $      (3,264 )    $      (11,612 )      $      (8,383 )  
  Stock-based compensation expense             835             590           3,343             787    
  Revaluation of preferred stock warrants             -              1,428           -              906    
  Gain from settlement with former foundry supplier           -              -            (1,962 )           -     
  Amortization of acquisition-related intangible assets           308             309           1,235             1,236    
     Non-GAAP net loss      (579 )           (937 )         (8,996 )           (5,454 )  
  Interest expense             227             300           1,321             1,122    
  Provision for income taxes             (62 )           (137 )         (16 )           (61 )  
  Depreciation and amortization             303             280           987             1,453    
     Adjusted EBITDA   $      (111 )      $      (494 )    $      (6,704 )      $      (2,940 )  
                                     
                                     
Non-GAAP basic and diluted net loss per share         $ (0.04 )       $ (0.07 )     $ (0.60 )       $ (0.52 )  
                                     
Reconciliation of shares used in computing non-GAAP                              
net loss per share:                                  
Basic and diluted shares:                                  
  Weighted-average shares used in calculating                                   
  GAAP basic and diluted net loss per share           15,349,715           10,265,617         15,085,973           3,007,929    
   Incremental shares upon conversion of convertible preferred                               
   stock in connection with IPO                    2,972,198                 7,566,482    
Weighted-average shares used in calculating non-GAAP                                
basic and diluted net loss per share             15,349,715             13,237,815           15,085,973             10,574,411    
                                     

 

ADESTO TECHNOLOGIES CORPORATION  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(in thousands)  
(unaudited)  
                       
          December 31,     December 31,  
          2016       2015    
Assets                
Current assets:                
  Cash and cash equivalents   $   19,719       $   23,089    
  Accounts receivable, net       6,111           6,536    
  Inventories       5,182           7,368    
  Prepaid expenses       462           1,155    
  Other current assets       105           1,186    
    Total current assets       31,579           39,334    
Property and equipment, net       5,962           909    
Intangible assets, net       8,324           9,559    
Other non-current assets       296           114    
Goodwill       22           22    
Total assets   $   46,183       $   49,938    
Liabilities and Stockholders' Equity                
Current liabilities:                
  Accounts payable       5,167           9,680    
  Income taxes payable       32           52    
  Accrued compensation and benefits       1,599           893    
  Accrued expenses and other current liabilities       2,144           1,413    
  Term loan       6,466           5,606    
    Total current liabilities       15,408           17,644    
Line of credit       1,807           -     
Term loan, non-current       9,775           7,814    
Deferred rent, non-current       2,826           -     
Deferred tax liability, non-current       2           1    
      Total liabilities       29,818           25,459    
                       
Stockholders' equity                
  Common stock       2           2    
  Additional paid-in capital       110,749           107,167    
  Accumulated other comprehensive loss       (230 )         (146 )  
  Accumulated deficit       (94,156 )         (82,544 )  
Total stockholders' equity       16,365           24,479    
Total liabilities and stockholders' equity   $   46,183       $   49,938    

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