Record H1 2023 Revenue and Gross Margin at 63%
SAN JOSE, Calif., Aug. 22, 2023 /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 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 www.sedarplus.ca. Unless otherwise indicated, all dollar amounts in this press release are expressed in US 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% in the second quarter.2 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 center partners and customers implement new 800G and 1.6TB standards for which our Active Copper Cable (ACC) technologies provide the perfect balance of high speed, low cost and low power.1 Test and qualification activities centered around these 800G and 1.6TB 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 center customers in North America by late 2023.1 The ACC connectivity market opportunity is estimated to reach $1 billion by 2027.3
"As an early sign of our potential for success in this market, Spectra7 is currently engaged with one of the major data center 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,"1 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 margin2 as a percentage of revenue in the second quarter increased to 63%, from 43% in the same quarter in the prior year.
- Non-IFRS operating expenses4 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 $(0.03), compared to a basic and diluted loss per share of $(0.05) in the same period a year ago.
- EBITDA5 loss in the second quarter was $148,000, compared with an EBITDA loss of $600,000 in the same period a year ago.
2H 2023 Outlook1
The Company anticipates revenue for second half of 2023 to be in the range of $5.5 million to $7.0 million . The Company also anticipates maintaining its efficient operating expense structure and non-IFRS operating expenses4 for the 2H 2023 at a range of $4.5 million and $4.9 million .
Notes:
1 This is forward-looking information and is based on a number of assumptions, which include the current and anticipated customer purchase orders received, supply outlook and anticipated operational expenditures. See "Cautionary Notes".
2 Gross margin is a non-GAAP measure which is computed as revenue less cost of sales divided by revenue. Refer to "Revenue and Gross Margin" in the MD&A, which is available on SEDAR at www.sedarplus.ca, for a reconciliation to measures reported in the Company's financial statements.
3 Spectra7 internally generated model based on 650Group silicon chipsets for Ethernet optical transceivers and active cable alternatives posted July 2023 .
4 Non-IFRS operating expenses is a non-GAAP measure which includes research and development, sales and marketing, general and administrative expenses and depreciation and amortization for capital equipment and right-of-use assets and excludes share-based compensation expenses, non-recurring termination costs, interest and related financing costs, change in fair value of warrant liabilities, foreign exchange gain/loss and gain/loss from property and equipment disposal. Refer to "Non-GAAP Measures" in the MD&A, which is available on SEDAR at www.sedarplus.ca, for a reconciliation to measures reported in the Company's financial statements in the previous quarter.
5 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. Refer to "Non-GAAP Measures" in the MD&A for reconciliation to measures reported in the Company's financial statements.
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 a technical support location in Dongguan, China . For more information, please visit www.spectra7.com.
Neither the TSX Venture Exchange nor its regulation services provider (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, the Company's expected revenue in the second half of 2023, the expected datacenter upgrade cycle, the expected size of the ACC connectivity market by 2027, the expected orders from datacenter customers in North America, the expected implementation of ACC technology in response to increased power and data demands, and the Company's ability to maintain its efficient operating expense structure and working capital management and 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. 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, 2022 . 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:
Matt Kreps
Darrow Associates
214-597-8200
[email protected]
Spectra7 Microsystems Inc.
Bonnie Tomei
Chief Financial Officer
408-770-2915
[email protected]
SOURCE Spectra7 Microsystems Inc.
