Company on Track for Profitability in the Second Half of 2021 as Q1 Revenue Rebounds Almost 5x Over Prior Year
SAN JOSE, Calif., May 31, 2021 /PRNewswire/ — (TSXV:SEV) Spectra7 Microsystems Inc. (“Spectra7” or the “Company”), a leading provider of high-performance analog semiconductor products for broadband connectivity markets, today announced its financial results for the three months ended March 31, 2021. A copy of the unaudited condensed interim consolidated financial statements for the three months ended March 31, 2021 prepared in accordance with International Financial Reporting Standards and the corresponding management’s discussion and analysis (“MD&A”) will be available under the Company’s profile on www.sedar.com. All amounts are in US dollars unless otherwise noted.
Q1 2021 Financial Summary
- Revenue for Q1 2021 was $0.56 million, representing an increase of approximately 47% over the prior quarter and approximately 380% over the same period in the prior year. Revenue in Q1 remained severely constrained by working capital and product supply.
- Gross margin1 as a percentage of revenue for Q1 2021 was 57%, representing an increase of approximately 13% sequentially and a 3% increase from the same period in the prior year, driven by favorable product mix.
- Non-IFRS operating expenses in Q1 2021 was $1.03 million, up approximately $0.09 million sequentially and down $0.30 million from the same period in the prior year, reflecting continued strong spending controls by the Company.
- EBITDA2 loss of approximately $0.57 million compared to a loss of approximately $0.63 million in the prior quarter, and a loss of $0.94 million in the same period in the prior year. This narrowed EBITDA loss is now at its lowest point in the Company’s history.
Capital Raise
The Company closed the first tranche of its brokered private placement led by Cormark Securities Inc. on May 14, 2021. The first tranche of the private placement consisted of the issuance of 170,689,567 units (the “Units”) at a price of $0.03 per Unit. The Company also completed a concurrent non-brokered offering of 12,700,800 Units. In aggregate, the gross proceeds to the Company from the private placement and the non-brokered offering were approximately CDN $5.5 million. The net proceeds from the private placement and the non-brokered offering are intended to be used for working capital to support revenue growth, the payment of interest on its outstanding convertible debentures and for general corporate purposes. For further details on the private placement and the non-brokered offering, see the Company’s press release dated May 14, 2021.
Update on Data Center Market Traction
- The Company continues to experience strong market traction with its data center solutions and announced 4 new customer design-ins in the first quarter of 2021, for a total of 88 to date.
- The Company announced a collaboration with Wandtec on 100, 200 and 400G data center interconnects using Spectra7 56Gbps GaugeChanger™ ICs.
CEO COMMENTARY
“We continued our revenue recovery in Q1 from depressed COVID-19 levels3, despite working capital constraints,” said Spectra7 CEO Raouf Halim. “The Company’s order backlog is continuing to grow in Q2 and now is at record levels driven by continuing strong orders for our Data Center Active Copper Cable solutions, and we expect to grow revenues strongly and achieve profitability in the second half of this year.”
NOTES:
1 Gross margin is a non-GAAP measure. Refer to “Revenue and Gross Margin” in the Company’s interim MD&A for the three months ended March 31, 2021 for reconciliation to measures reported in the Company’s financial statements.
2 EBITDA or earnings before interest, tax, depreciation, and amortization is a non-GAAP measure. EBITDA excludes share-based compensation, amortization, depreciation, interest, and tax expenses.
3 Refer to the Company’s interim MD&A for the three months ended March 31, 2021 for more details on the impact of the COVID-19 on the Company’s operations.
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 a design center in Cork, Ireland and technical support location in Dongguan, China. For more information, please visit www.spectra7.com.
Neither the TSX Venture Exchange nor its regulation services provided (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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 projections for growth in revenues and a profitable second half of 2021, the Company’s expected use of the net proceeds from the private placement and non-brokered offering, the Company’s strategy, 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. Management’s projection that the Company will reach profitability in the second half of 2021 is based on a number of key assumptions including: significant revenue growth driven by key hyperscaler data center customers, continued operational expense controls, and the availability of semi conductor wafer supply. 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 Management’s Discussion and Analysis for the year ended December 31, 2020. 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.
For more information, please contact:
Spectra7 Microsystems Inc.
Justin Leighton
Investor Relations
647-578-7996
ir@spectra7.com
Spectra7 Microsystems Inc.
David Mier
Chief Financial Officer
925-858-7011
pr@spectra7.com
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SOURCE Spectra7 Microsystems Inc.
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