Quantenna Communications (QTNA), which reported only its second earnings result since making its IPO debut in late October, is trading higher (+7%) this morning. Since you're probably not familiar, some background would help with Quantenna. It's a supplier of Wi-Fi chipsets for the home.
Its products address the increasing complexity inherent in managing Wi-Fi network access for multiple devices in the home that have different high-bandwidth content streams, while simultaneously delivering superior network speed, broad coverage area, and high capacity and reliability. Its products have historically been sold to cable/telecom service providers for home networking applications, including home gateways, repeaters, and set-top boxes (STBs). However, the company has been branching into new end markets, including retail, outdoor, small and medium business, enterprise and consumer electronics.
The rapid growth in Wi-Fi connected devices, coupled with the steadily rising volume of IP-based web traffic (web browsing, email, Internet audio and video, file sharing, cloud computing and online gaming), has significantly increased the performance requirements of access points that power Wi-Fi networks. When Wi-Fi was first introduced, the predominant applications were email and Internet access. Today, the number of applications supported over Wi-Fi has grown to include VoIP, high-definition audio, Ultra High Definition TV, cloud computing, gaming and over-the-top video.
Service providers, including AT&T, Comcast, Orange, and Telefonica, are seeking to deploy the best Wi-Fi infrastructure inside the home. Quantenna has pioneered significant enhancements to advanced features such as higher-order MIMO, Multi-User MIMO, or MU-MIMO, transmit beamforming, and additional technologies.
Turning to the Q1 results, non-GAAP EPS improved to $0.03, up sharply from a $(1.34) loss in the prior year period. That $0.03 was better than prior guidance of $0.00-0.02. Revenue rose 55.3% year/year to $37.9 mln, which also was better than prior guidance of $34.5-36.5 mln. In terms of Q2 guidance, the company expects non-GAAP EPS of $0.04-0.06 and revenue of $42-44 mln. Both were better than expected.
In sum, investors clearly seem to be pretty pleased with QTNA's Q1 report. The stock has been mostly up and down since its IPO debut in October. However, QTNA should benefit over the longer term from the rapid growth in Wi-Fi connected devices.