fins out Expects Q4 2021 EBITDA Profitability Based on Revenue Outlook of $2.5 Million - $3.5 Million
SAN JOSE, Calif., Nov. 29, 2021 /PRNewswire/ -- (TSXV:SEV) (OTCQB:SPVNF) Spectra7 Microsystems Inc. ("Spectra7" or the "Company"), a leading provider of high-performance analog semiconductor products for broadband connectivity markets, today announced financial results for its third quarter of 2021. A copy of the unaudited interim consolidated financial statements for the three and nine month periods ended September 30, 2021, prepared in accordance with International Financial Reporting Standards (IFRS), and the corresponding management's discussion and analysis (MD&A) will be available under the Company's profile on the Canadian Securities Administrator's SEDAR website at www.sedar.com. All amounts reported are in U.S. dollars unless otherwise noted.
Q3 2021 Financial Highlights
- Revenue was $1.57 million for Q3 2021, an increase of approximately 114% sequentially from Q2 2021, and an increase of approximately 456% from the third quarter of 2020.
- Gross margin1 as a percentage of revenue for Q3 2021 was 57%, a decrease of approximately 1% sequentially, and an increase of 2% over the third quarter of 2020.
- Non-IFRS operating expenses2 in Q3 2021 were $2.04 million, up approximately $0.25 million from the prior quarter, and up $0.97 million over the same quarter a year ago. The increase was due primarily to increased costs related to production ramp to meet rapidly growing data center customer demand.
- EBITDA3 loss was approximately $0.94 million, compared with a loss of $1.15 million in the prior quarter and $0.72 million in the same quarter a year ago.
CEO Q3 COMMENTARY
"Our revenue continued its positive momentum in the third quarter, supported by increased customer volumes, record order backlog which has continued to grow and several new design-ins for our Active Copper Cable technology," said Spectra7 CEO Raouf Halim. "To support the rapid increase in orders, we raised approximately CDN $14.8 million in an expanded and oversubscribed private placement transaction during October. A portion of these proceeds have already been deployed for additional foundry allocations and inventory as we scale our business. In Q4 we expect to roughly double our revenue sequentially and forecast reaching EBITDA profitability. Looking further out, I am confident our growth trajectory will continue through fiscal 2022."4
BUSINESS HIGHLIGHTS
- Began production shipments in Q3 to a major China-based hyperscaler for Spectra7-based 200G PAM4 Active Copper Cable (ACC) interconnects.
- Demonstrated Spectra7's new GC1122 product for 112Gbps PAM4 based 800Gbps ACC interconnects at both DesignCon in August and CIOE in September.
- Added three new customer design-ins for Spectra7 ACC data center solutions in Q3 2021, for a total of 95.
Q4 2021 Financial Outlook4
Led by strong data center order backlog and increased supply availability, Spectra7 currently estimates total revenue in the fourth quarter of 2021 will be between $2.5 million and $3.5 million, a sequential increase of approximately 91% at the midpoint. Operating expenses are anticipated to be in the range of $1.6 to $2.0 million in support of the anticipated rapid revenue growth4. The Company anticipates that it will achieve EBITDA3 profitability in Q4 20214.
Option and RSU Grants
As a part of its annual compensation review, Spectra7's board of directors has approved the grant of an aggregate of 770,000 restricted share units ("RSUs") to the Company's executive officers and 41,826 RSUs to certain directors. In addition, the Company has cancelled 24,000 RSUs previously granted to Darrow Associates Texas, Inc., a firm which provides investor relations services to the Company and, in its place, granted options to purchase up to 80,000 common shares, exercisable at CDN$1.90. The options vest quarterly over 12 months and are exercisable until November 29, 2026.