Spectra7 Announces 107% Revenue Growth for 2022, Pre-announces Q1 2023 and Outlook for Q2 2023

Rhea-AI Summary

Spectra7 Microsystems reported significant financial growth, with 2022 revenue surpassing $11.3 million, a 107% increase from $5.5 million in 2021. The fourth quarter of 2022 also showed strong performance with revenue of $3.0 million, a 15% year-over-year rise.

Looking forward, the company anticipates generating revenue from its new 800G/1.6TB data center products beginning in the second half of 2023. Preliminary Q1 2023 revenue is expected to be $3.1 million, reflecting a 43% increase compared to Q1 2022.

On the cost side, non-IFRS operating expenses for Q4 2022 were $2.0 million, a 5% increase year-over-year.

Positive

• Revenue for 2022 was $11.3 million, up 107% from 2021.
• Q4 2022 revenue reached $3.0 million, a 15% increase year-over-year.
• Preliminary Q1 2023 revenue expected at $3.1 million, a 43% rise from Q1 2022.
• Strong order backlog and improved supply anticipated for 2023.
• EBITDA loss in Q4 reduced to $38,000, down from $147,000 a year ago.

Negative

• Basic and diluted loss per share for Q4 was $(0.04), compared to $(0.03) a year prior.
• Operating expenses in Q4 2022 increased by 5% year-over-year.

AR/VR Drives Revenue Growth in 2022, New 800G/1.6TB Datacenter Products Expected to Begin Generating Revenue in Second Half of 2023

SAN JOSE, Calif., April 25, 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 and a business update for the three months and full year ended December 31, 2022, preliminary Q1 2023 results, and its initial outlook for Q2 2023. A copy of the audited consolidated financial statements for the year ended December 31, 2022, and the corresponding management's discussion and analysis (the "MD&A") will be available under the Company's profile on www.sedar.com. Unless otherwise indicated, all dollar amounts in this press release are expressed in US dollars.

"We had a strong 2022 despite supply constraints, more than doubling revenue year-over-year to $11.3 million. Volumes ramped in our AR/VR product line with a market leading game console manufacturer and hyperscale data center activity continued to progress with key datacenter partners and customers," said Raouf Halim, Chief Executive Officer.

"Data center customers are increasingly engaged in test and qualification activities, specifically around AI and infrastructure applications, on the rapidly advancing new switches that require 800G and 1.6TB data rate interconnects. These switches are to support the high data throughput and reduced power consumption requirements for efficient operation. We believe that Active Copper Cable ("ACC") is the most power and cost-efficient solution to meet these requirements for top-of-the-rack and short-run connectivity, an estimated $1 billion market by 2026¹.  We have a growing list of customers seeking to incorporate our ACC solutions for their needs.  We expect to receive orders from key datacenter customers in North America and Europe in the second half of 2023." ²

"We started 2023 with a strong order backlog and anticipate supply availability to improve steadily throughout 2023, which would enable us to meet our goal of EBITDA³ profitability by the end of the year," ² said Mr. Halim.

Fourth quarter and full year 2022 financial highlights

• Fourth quarter 2022 revenue of $3.0 million, up approximately 15% year-over-year, and full-year 2022 revenue was $11.3 million, an increase of approximately 107% compared to $5.5 million in the previous year.

• Preliminary fourth quarter gross margin⁴ as a percentage of revenue in the fourth quarter increased to approximately 59%. Full-year gross margin was 50%.

• Non-IFRS operating expenses⁵ were $2.0 million in the fourth quarter, up approximately 5% year-over-year while the Company continues to control its spending. Full-year non-IFRS operating expenses were $8.8 million.

• Basic and diluted loss per share for the fourth quarter was $(0.04), compared with a basic and diluted loss per share of $(0.03) in the same period a year ago.

• EBITDA³ loss in the fourth quarter was $38,000, compared with an EBITDA³ loss of $147,000 in the same period a year ago.

• The Company strengthened its balance sheet with gross proceeds of a CDN$6.0 million private placement in March 2023.

Preliminary first quarter 2023 revenue results²

The Company expects to report revenue of approximately $3.1 million for the first quarter of 2023, compared with $2.1 million in the first quarter of 2022. This would represent an increase of approximately 43% from the prior-year quarter.

Q2 2023 Outlook²

The Company anticipates revenue for second quarter of 2023 to be in the range of $3.1 million to $3.3 million.

Restricted Share Unit Grants

The Company's board of directors has approved the grant of an aggregate of 568,090 restricted share units to the Company's executive officers and directors pursuant to the Company's restricted share unit plan. The restricted share units shall vest on the one year anniversary of the grant date.

Notes:

¹ Spectra7 internally generated model based on 650Group silicon chipsets for Ethernet optical transceivers and active cable alternatives posted June 3, 2022.
² 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".
³ 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 annual financial statements.
⁴ 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, for reconciliation to measures reported in the Company's financial statements.
⁵ 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 expense, 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 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 Q2 revenue, EBITDA results, revenue improvement and supply availability, expected orders for applications in North America and Europe, and acceleration in the data market, 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 MD&A. 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
ir@spectra7.com

Spectra7 Microsystems Inc.
Bonnie Tomei
Chief Financial Officer
669-212-1089
ir@spectra7.com

Spectra7 Microsystems Inc.
John Mitchell
Public Relations
650-269-3043
pr@spectra7.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/spectra7-announces-107-revenue-growth-for-2022-pre-announces-q1-2023-and-outlook-for-q2-2023-301807543.html

SOURCE Spectra7 Microsystems Inc.

FAQ

What were Spectra7's revenue results for 2022?

Spectra7 reported revenue of $11.3 million for 2022, an increase of 107% from the previous year.

What is the expected revenue for Q1 2023 for SPVNF?

The company anticipates Q1 2023 revenue to be approximately $3.1 million, which would represent a 43% increase from Q1 2022.

What is the outlook for Spectra7 in Q2 2023?

Spectra7 forecasts Q2 2023 revenue to be between $3.1 million and $3.3 million.

How much was the EBITDA loss in Q4 2022 for SPVNF?

The EBITDA loss for Q4 2022 was $38,000, an improvement from $147,000 in the same period last year.

What are the expected future products contributing to Spectra7's revenue?

Spectra7 expects to start generating revenue from new 800G/1.6TB data center products in the second half of 2023.