A couple of companies went public last week, including GTY Technology Holdings (NASDAQ: GTYHU), Myovant Sciences Ltd. (NYSE: MYOV), and Quantenna Communications (NASDAQ: QTNA) — check them out!
GTY Technology Holdings and Myovant Sciences Ltd. debuted on October 27th, and Quantenna Communications made its market debut on October 28th.
With that being said, let’s go a little more in depth with Quantenna Communications to see what we can expect from this company’s initial public offering.
Quantenna Communications (NASDAQ: QTNA)
- IPO Date: Friday, October 28, 2016
- Industry: Semiconductors & Related Devices
- Price: $16
- Share Offering: 6.7 million
- Manager / Joint Managers: Morgan Stanley, Barclays, Deutsche Bank Securities
- Co-Managers: Needham & Company, William Blair, Roth Capital Partners
- Market Cap: $491.7 million
- Estimated $ Volume: $123 million
- Revenues: $104.9 million
- Net Income: -$1.6 million
IPO Details
Quantenna Communications (NASDAQ: QTNA) debuted on the market on Friday, October 28, 2016. It started selling shares at $16 price, and its volume would give it up to $123 million. It offered 6.7 million shares, and in addition to those shares, Quantenna will grant its underwriters the option to purchase 1 million shares.
The underwriters for the offering are Morgan Stanley, Barclays, Deutsche Bank, Needham, William Blair, and Roth Capital Partners.
Quantenna has raised more than $160 million in funding for its IPO. Its shareholders include Sequoia Capital, Venrock Associates and Sigma Partners, Southern Cross Venture Partners, and DAG Ventures.
The company plans on using the proceeds from its offering for general corporate purposes like working on capital, operating expenses, and capital expenditures.
By the Numbers
Quantenna has a market capitalization of $506.79 million, a solid base to compete with other larger companies in the semiconductor market.
Its revenue continues to increase at a current rate of 57%, while its gross margins remain steady at 49%.
The company’s net sales saw an increase of 25% to $83.8 million in 2015. At that time, it had a net loss of $7 million.
For the first nine months of 2016, Quantenna had revenue of $91.6 million — a 70.5% increase from previous year, leaving it with a net loss of $1.9 million.
Business and Market Summary
Quantenna Communications was founded in 2005 and is headquartered in Fremont, California.
It’s a leader in the design and development of advanced high-speed wireless communication solutions. Its work involves designing next-generation Wi-Fi chipsets for a high-speed Wi-Fi connection.
Its main goal as a business is delivering the most leading-edge Wi-Fi performance that will support the ever-increasing number of connected devices, so these devices will have reliable access to the plethora of digital content that’s available.
Digital content continues to rapidly grow, while the number of devices that need access to Wi-Fi is also increasing. This creates a huge demand for a Wi-Fi connection that can handle both the number of devices and high-quality content.
Quantenna aims to do just that — its focus revolves around technical innovation that’ll allow it to confront the complexity of managing and maintaining Wi-Fi network access to multiple client devices with different high-bandwidth content streams while still providing clients with network speeds, broad coverage area, and high capacity.
According to ABI Research, 2.8 billion Wi-Fi-enabled devices will be shipped worldwide in 2016 — devices like smartphones, tablets, smart home assistants, and Internet of Things devices (IoT), in which Wi-Fi is the primary IP connection — and this number is expected to increase to 4.0 billion in 2021.
Additionally, ABI Research has estimated that the global market for Wi-Fi chipsets will grow from $3.8 billion in 2016 to $5.2 billion in 2021 — a CAGR of 7%.
The diverse market for Wi-Fi chipsets includes both large and private companies, like Marvell Technology Group Ltd. (NASDAQ: MRVL) and Qualcomm Incorporated (NASDAQ: QCOM). These companies are well known within the market and have stronger financial resources; however, that isn’t necessarily discouraging news for Quantenna.
Quantenna still remains highly valued among its peers in the semiconductor industry. The semiconductor equipment industry trades at 4.38x price/sales, and Quantenna will trade at 4.33x prices/sales.
Quantenna stays ahead with its technical expertise and innovation and differs from its competitors by featuring chipsets that are 4×4 MIMO (multiple-input and multiple-output), along with their exceptional coverage and speed.
Recommendation
Quantenna is well positioned and has been growing financially at a steady rate, not to mention the company is part of a market that will continue experiencing growth as long as demand for high-speed wireless connection continues… and I don’t really see that demand slowing down anytime soon.
Quantenna would be a great addition to your portfolio and a great buy at its IPO price.
Until next time,
Monica Savaglia
Wealth Daily
